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Acquisitions | 9 Months Ended
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Sep. 30, 2021
Business Combinations [Abstract] |
Acquisitions | Note 14 – Acquisitions The Company has determined that the acquisition of certain assets and liabilities of American Laboratory Trading constitutes a business acquisition as defined by ASC 805, Business Combinations. Accordingly, the assets acquired and liabilities assumed in the transaction were recorded at their estimated acquisition fair values, while transaction costs associated with the acquisition were expensed as incurred pursuant to the purchase method of accounting in accordance with ASC 805. The Company’s purchase price allocation was based on an evaluation of the appropriate fair values and represents management’s best estimate based on available data. Fair values are determined based on the requirements of ASC 820, Fair Value Measurement (“ASC 820”). On August 23, 2021, the Company acquired (the “Transaction”) certain assets and liabilities of American Laboratory Trading pursuant to the terms and conditions of an Asset Purchase Agreement (the “Asset Purchase Agreement”), dated August 18, 2021, among the Company, American Laboratory Trading and certain individuals named therein. The aggregate purchase price paid to American Laboratory Trading was approximately $4.3 million, consisting of $2.3 million in cash, as adjusted for American Laboratory Trading's working capital, and the $2.0 million ALT Note. The Asset Purchase Agreement contains customary representations and warranties and covenants by each party. American Laboratory Trading and ALT are obligated, subject to certain limitations, to indemnify the other under the Asset Purchase Agreement for losses arising from certain breaches of the Asset Purchase Agreement and for certain other liabilities, subject to applicable limitations set forth in the Asset Purchase Agreement. HGI has guaranteed the obligations of ALT under the terms of the Asset Purchase Agreement and the ALT Note. On August 23, 2021, in connection with the Transaction, a wholly-owned subsidiary of HGI (“RE Purchaser”), acquired the real property used in ALT’s business (the “Property”) pursuant to a Purchase and Sale Agreement (the “Real Estate Purchase Agreement” and together with the Purchase Agreement, the “Agreements”), dated August 18, 2021, between 12 Colton Road, LLC and RE Purchaser. The purchase price for the Property was $1.3 million. The Real Estate Purchase Agreement contains customary representations and warranties and covenants by each party. The parties to the Real Estate Purchase Agreement are obligated, subject to certain limitations, to indemnify the other under the Real Estate Purchase Agreement for losses arising from certain breaches of the Real Estate Purchase Agreement and other liabilities, subject to applicable limitations set forth in the Real Estate Purchase Agreement. ALT is a supplier of refurbished lab equipment and a provider of surplus asset services for the life sciences. The acquisition enhances the Company’s position in the biotech sector. Acquisition-related costs consisted of external fees for advisory, legal, and other professional services and totaled approximately $0.1 million and $0.2 million for the three and nine months ended September 30, 2021, respectively. The fair value estimates for the assets acquired and liabilities assumed were based upon valuations using information known and knowable as of the date of this filing. Changes to these assumptions and estimates could cause an impact to the valuation of assets acquired, including intangible assets, goodwill and the related tax impacts of the acquisition, as well as legal and other contingencies. The amounts recognized will be finalized as the information necessary to complete the analysis is obtained, but no later than one year after the acquisition date. The major classes of assets and liabilities to which we have preliminarily allocated the purchase price were as follows (in thousands):
Accounts receivable | $ | 337 |
Inventory – equipment |  | 1,122 |
Intangible assets |  | 1,360 |
Goodwill |  | 1,677 |
Other assets |  | 7 |
Accounts payable and accrued liabilities |  | (185 | )
Purchase price | $ | 4,318 |
The $1.4 million of intangible assets are attributable to $1.0 million of customer relationships that will be amortized over a period of five years and $0.4 million for the American Laboratory Trading trade name, which has an indefinite life. The excess of the consideration transferred over the fair values of assets acquired and liabilities assumed was recorded as goodwill, which was primarily attributed to increased synergies that are expected to be achieved from the acquisition. Goodwill is expected to be deductible for income tax purposes. The financial results of ALT have been included in our condensed consolidated financial statements since the date of the acquisition and contributed an immaterial amount of revenue and net income from the date of acquisition through September 30, 2021. ALT is reported as part of our Industrial Assets segment. Unaudited Pro Forma Financial Information The unaudited pro forma financial information in the table below is provided for illustrative purposes only and summarizes the combined results of operations of the Company and ALT. For purposes of this pro forma presentation, the acquisition of ALT is assumed to have occurred on January 1, 2020. The pro forma financial information for all periods presented also includes the estimated business combination accounting effects resulting from this acquisition, notably amortization expense from the acquired intangible assets, interest expense from the ALT Note, and certain other integration related impacts. This unaudited pro forma financial information should not be relied upon as being indicative of the historical results that would have been obtained if the acquisition had actually occurred on January 1, 2020, nor of the results of operations that may be obtained in the future. The amounts presented below (in thousands) are preliminary based on management’s best estimate and will be finalized as the information necessary to complete the analysis is obtained.
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Pro forma revenues |  | $ | 7,037 |  |  | $ | 8,817 |  |  | $ | 22,264 |  |  | $ | 21,985 |
Pro forma net income |  | $ | 456 |  |  | $ | 1,491 |  |  | $ | 2,325 |  |  | $ | 4,288 |
Pro forma net income per share - basic |  | $ | 0.01 |  |  | $ | 0.05 |  |  | $ | 0.07 |  |  | $ | 0.15 |
Pro forma net income per share - diluted |  | $ | 0.01 |  |  | $ | 0.05 |  |  | $ | 0.06 |  |  | $ | 0.14 |

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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- References No definition available. + Details
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