UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES AND EXCHANGE ACT OF 1934

November 4, 2016 (January 12, 2016)

Date of report (Date of earliest event reported)

 

HERITAGE GLOBAL INC.

(Exact Name of Registrant as Specified in its Charter)

 

FLORIDA

(State or Other Jurisdiction of

Incorporation or Organization)

 

0-17973

 

59-2291344

(Commission File No.)

 

(I.R.S. Employer Identification No.)

12625 High Bluff Drive, Suite 305, San Diego, CA 92130

(Address of Principal Executive Offices)

 

(858) 847-0656

(Registrants Telephone Number, Including Area Code)

N/A

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 


Item 1.01 Entry into a Material Definitive Agreement.

Item 1.02 Termination of a Material Definitive Agreement.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

On January 12, 2016, a subsidiary of Heritage Global Inc. (the “Company”) entered into a loan agreement with a trust jointly controlled by certain executive officers of the Company (the “Trust”).  The Company received proceeds of $0.4 million.  The loan accrued interest at 10% per annum and was payable within 90 days of the loan date.  The Trust is jointly controlled by the Company’s Chief Executive Officer, Ross Dove (the “CEO”) and President and Chief Operating Officer, Kirk Dove (the “COO”). The proceeds from the loan were used to purchase assets for resale by the Company.  There were no covenants tied to the loan agreement.  The loan agreement provided the Trust with a secured position on the proceeds received by the Company from the resale of the assets.  

On August 17, 2016, the Company entered into a loan agreement with an entity owned by the CEO and COO (the “Entity”), and with the CEO.  The Company received proceeds of $0.3 million from each of the Entity and the CEO.  The loan accrues interest at 10% per annum and is payable within 180 days of the loan date.   The proceeds from the loan were used to purchase assets for resale by the Company.  There were no covenants tied to the loan agreement.  The loan agreement provided the Entity and the CEO with a secured position on the proceeds received by the Company from the resale of the assets.

On March 23, 2016, the Company repaid $0.4 million of outstanding principal, plus accrued interest, on the related party loan with the Trust, and terminated the loan agreement.  There were no early termination penalties or other fees incurred by the Company.  

These summaries are qualified in their entirety by reference to the full text of the loan agreements, which are attached hereto as Exhibit 10.1 and 10.2, and incorporated by reference herein.        

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit No.

 

Description

10.1

 

Loan Agreement between Heritage Global Partners, Inc. and the Zel Dove Trust UAD 10/31/2006, effective as of January 12, 2016.

10.2

 

Loan Agreement between Heritage Global Partners, Inc., the Dove Holdings Corporation, and Ross Dove, effective as of August 17, 2016.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

Heritage Global Inc.

 

 

 

Date:  November 4, 2016

By:

/s/ Scott A. West

 

Name:

Scott A. West

 

Title:

Chief Financial Officer

 

Exhibit 10.1

January 12, 2016

DEAL FINANCING MEMORANDUM

 

Deal name:

 

Doctor’s Medical Center

Location:

 

San Pablo, California

 

 

 

Description:

 

Purchase for resale of complete contents of a hospital, including but not necessarily limited to hospital beds, test & measurement equipment, x-ray equipment, radiology, instrumentation, facility support, and mechanics (collectively, the “Assets”). Assets to be resold on or about February 17, 2016.

 

 

 

Price:

 

$725,000 for all assets.       Heritage Global Partners, Inc. (“HGP”)’s share is 33.33% for $241,667.       HGP is a wholly-owned subsidiary of Heritage Global Inc.

 

 

 

Source of

Funds:

 

Zel Dove Trust UAD 10/31/2006

 

 

 

Amount:

 

$241,667

 

 

 

Funding Date:

 

1/13/16

 

 

 

Interest:

 

10% per annum on outstanding balance.

 

 

 

Term:

 

Payable in full with all accrued interest within 90 day s.

 

 

 

Security:

 

First priority security interest in all Assets and/or HGP’s interest therein. Funds to be repaid with interest from the distribution(s) of HGP’s portion of proceeds resulting from the resale of the Assets prior to any proceeds being retained by HGP.

 

Investment Committee

Approval:

 

January 12, 2016

 

APPROVED

 

/s/ Allan Silber

Allan Silber

Chairman, Heritage Global, Inc.

 

Date:    January 19, 2016

 

 

January 12, 2016

DEAL FINANCING MEMORANDUM

 

Deal name:

 

Arena Pharmaceuticals, Inc.

Location:

 

San Diego, California

 

 

 

Description:

 

Purchase for resale of pharmaceutical processing equipment (collectively, the “Assets”). Assets to be resold on or about February 18, 2016.

 

 

 

Price:

 

$100,000.  Assets to be purchased by Heritage Global Partners, Inc. (“HGP” ) . HGP is a wholly-owned subsidiary of Heritage Global Inc.

 

 

 

Source of

Funds:

 

Zel Dove Trust UAD 10/31/2006

 

 

 

Amount:

 

$100,000

 

 

 

Funding Date:

 

1/13/16

 

 

 

Interest:

 

10% per annum on outstanding balance.

 

 

 

Term:

 

Payable in full with all accrued interest within 90 day s .

 

 

 

Security:

 

First priority security interest in all Assets and/or HGP’s interest therein. Funds to be repaid with interest from the distribution(s) of HGP’s portion of proceeds resulting from the resale of the Assets prior to any proceeds being retained by HGP.

 

 

 

Investment Committee

Approval:

 

December 21, 2015.     (Approved by Kirk Dove, HGP’s president, without full committee meeting as transaction is at threshold for Mr. Dove’s approval.)

 

APPROVED

 

/s/ Allan Silber

Allan Silber

Chairman, Heritage Global, Inc.

 

Date:    January 19, 2016

 

 

January 12, 2016

DEAL FINANCING MEMORANDUM

 

Deal name:

 

lmpax Laboratories, Inc.

Location:

 

Philadelphia, Pennsylvania

 

 

 

Description:

 

Purchase for resale of three complete packaging lines for pharmaceutical products along with miscellaneous  components  and auxiliary parts for packaging processes such as tapers, sealers, labelers, tables, etc. (collectively, the “Assets”).  Assets to be resold on or about February 17, 2016.

 

 

 

Price:

 

$120,000 for all assets.     Heritage Global Partners, Inc. (“HGP”)’s share is 33.33% for $40,000.     HGP is a wholly-owned subsidiary of Heritage Global Inc.

 

 

 

Source of

Funds:

 

Zel Dove Trust UAD 10/31/2006

 

 

 

Amount:

 

$40,000

 

 

 

Funding Date:

 

1/13/16

 

 

 

Interest:

 

10% per annum on outstanding balance.

 

 

 

Term:

 

Payable in full with all accrued interest within 90 day s .

 

 

 

Security:

 

First priority security interest in all Assets and/or HGP’s interest therein. Funds to be repaid with interest from the distribution(s) of HGP’s portion of proceeds resulting from the resale of the Assets prior to any proceeds being retained by HGP.

 

 

 

Investment Committee

Approval:

 

December 21, 2015.   (Approved by Kirk Dove, HGP’s president, without full committee meeting as transaction is below threshold for Mr. Dove’s approval.)

 

APPROVED

 

/s/ Allan Silber

Allan Silber

Chairman, Heritage Global, Inc.

 

Date:    January 19, 2016

 

 

January 12, 2016

DEAL FINANCING MEMORANDUM

 

Deal name:

 

XBiotech USA, Inc.

Location:

 

Austin, Texas

 

 

 

Description:

 

Purchase for resale of pharmaceutical tabletop lab equipment, including but not necessarily limited an FPLC, PCR System and centrifuges (benchtop and floor) models (collectively, the “Assets”). Assets to be resold on or about January 18, 2016.

 

 

 

Price:

 

$22,000 for all assets.     Assets to be purchased by Heritage Global Partners, Inc. (“HGP”).     HGP is a wholly-owned  subsidiary of Heritage Global Inc.

 

 

 

Source of

Funds:

 

Zel Dove Trust UAD 10/31/2006

 

 

 

Amount:

 

$22,000

 

 

 

Funding Date:

 

1/13/16

 

 

 

Interest:

 

10% per annum on outstanding balance.

 

 

 

Term:

 

Payable in full with all accrued interest within 90 days.

 

 

 

Security:

 

First priority security interest in all Assets. Funds to be repaid with interest from the distribution(s) of HGP’s portion of proceeds resulting from the resale of the Assets prior to any proceeds being retained by HGP.

 

 

 

Investment Committee

Approval:

 

December 22, 2015.   (Approved by Kirk Dove, HGP’s president, without full committee meeting as transaction is below threshold for Mr. Dove’s approval.)

 

APPROVED

 

/s/ Allan Silber

Allan Silber

Chairman, Heritage Global, Inc.

 

Date:    January 19, 2016

 

 

 

Exhibit 10.2

August 17, 2016

DEAL FINANCING MEMORANDUM

 

Deal name:

 

Sanofi-Aventis U.S. LLC

Location:

 

Kansas City, Missouri

 

 

 

Description:

 

Purchase for resale of entire personal property contents of a 690,000 SF pharmaceutical manufacturing facility, including but not necessarily limited to multiple production lines and specialized equipment, laboratory equipment, processing machinery and equipment and facility support equipment on a wall-to-wall, ceiling-to-floor basis (collectively, the "Assets"). Assets to be resold commencing late September, 2016.

 

 

 

Price:

 

$3,885,000 for all assets. Heritage Global Partners, Inc. ("HGP"), a wholly-owned subsidiary of Heritage Global Inc., will purchase a 25% undivided interest in the Assets for $971,250.

 

 

 

Source of

Funds:

 

The Dove Holdings Corporation  $250,000

 

 

Ross Dove (individually)              $300,000

 

 

 

 

 

Balance of funds to be provided by HGP internally.

 

 

 

Funding Date:

 

8/19/16

 

 

 

Interest:

 

10% per annum on outstanding balance.

 

 

 

Term:

 

Payable in full with all accrued interest within 180 days.

 

 

 

Security:

 

First priority security interest in HGP's 25% undivided interest in the Assets. Funds to be repaid to The Dove Holdings Corporation and Ross Dove pari passu with interest from the distribution(s) of HGP's portion of proceeds resulting from the resale of the Assets prior to any proceeds being retained by HGP.

 

Investment Committee

Approval:

 

August 17, 2016.

 

APPROVED

 

/s/ Allan Silber

Allan Silber

Chairman, Heritage Global Inc.

 

Date:    August 17, 2016