Heritage Global Inc. - FORM 8-K/A - EX-99.2 - EXHIBIT 99.2

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file	filename
8-K/A - FORM 8-K/A - Heritage Global Inc.	form8ka.htm
EX-99.1 - EXHIBIT 99.1 - Heritage Global Inc.	exhibit99-1.htm

Exhibit 99.2

HERITAGE GLOBAL INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of March 31, 2014
(In thousands of US dollars, except share and per share amounts)

								Pro-forma
		HGI			NLEX			Adjustments			HGI
		Actual			Actual			(Note 1)			Pro-forma
ASSETS
Current assets:
Cash and cash equivalents	$	2,802		$	87		$	(2,000	)	$	889
Amounts receivable (net of allowance for doubtful accounts of $0)		868			—			—			868
Deposits		17			—			—			17
Inventory – equipment		441			—			—			441
Other current assets		448			9			—			457
Income taxes recoverable		22			—			—			22
Total current assets		4,598			96			(2,000	)		2,694
Non-current assets:
Inventory – real estate		6,328			—			—			6,328
Asset liquidation investments		1,011			—			—			1,011
Investments		1,747			—			—			1,747
Property, plant and equipment, net		34			7			—			41
Intangible assets, net		4,697			—			—			4,697
Goodwill		5,301			—			6,342			11,643
Total assets	$	23,716		$	103		$	4,342		$	28,161

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	5,368		$	247		$	-		$	5,615
Debt payable to third parties		1,248			—			—			1,248
Debt payable to a related party		3,057			—			—			3,057
Total current liabilities		9.673			247			-			9,920
Non-current liabilities:
Contingent consideration		—			—			4,198			4,198
Total liabilities		9,673			247			4,198			14,118

Commitments and contingencies

Equity:
Preferred stock, $10.00 par value, authorized 10,000,000 shares; issued and outstanding 575 Class N shares at March 31, 2014, liquidation preference of $575 at March 31, 2014		6			—			—			6
Common stock, $0.01 par value, authorized 300,000,000 shares; issued and outstanding 28,167,408 shares at March 31, 2014		282			15			(15	)		282
Additional paid-in capital		283,330			28			(28	)		283,330
Accumulated deficit		(269,525	)		(187	)		187			(269,525	)
Accumulated other comprehensive loss		(50	)		—			—			(50	)
Total equity		14,043			(144	)		144			14,043
Total liabilities and equity	$	23,716		$	103		$	4,342		$	28,161

Note 1 – NLEX purchase equation
DR Goodwill	6,342
DR Common stock	15
DR Additional paid-in capital	28
CR Accumulated deficit		187
CR Cash		2,000
CR Contingent consideration		4,198

HERITAGE GLOBAL INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF
COMPREHENSIVE INCOME (LOSS)
For the year ended December 31, 2013
(In thousands of US dollars, except per share amounts)

		HGI			NLEX		HGI
		Actual			Actual		Pro-Forma

Revenue:
Asset liquidation
Asset sales	$	2,046		$	—	$	2,046
Commissions and other		6,022			4,997		11,019
Total asset liquidation revenue		8,068			4,997		13,065
Intellectual property licensing		824			—		824
Total revenue		8,892			4,997		13,889

Operating costs and expenses:
Asset liquidation		2,423			—		2,423
Inventory maintenance		283			—		283
Patent licensing and maintenance		191			—		191
Selling, general and administrative, including expenses paid to related parties		9,660			3,455		13,115
Depreciation and amortization		472			10		482
Total operating costs and expenses		13,029			3,465		16,494
		(4,137	)		1,532		(2,605	)
Earnings of equity accounted asset liquidation investments (net of tax of $0)		1,200			—		1,200
Operating income (loss)		(2,937	)		1,532		(1,405	)
Other expense:
Interest expense – third party		(388	)		—		(388	)
Interest expense – related party		(168	)		—		(168	)
Total other expense		(556	)		—		(556	)
Income (loss) before the undernoted		(3,493	)		1,532		(1,961	)
Income tax expense		3,029			—		3,029
Earnings of other equity accounted investments (net of tax of $0)		126			—		126
Net income (loss)		(6,396	)		1,532		(4,864	)
Other comprehensive loss:
Currency translation adjustment (net of tax of $0)		(37	)		—		(37	)
Comprehensive income (loss)	$	(6,433	)	$	1,532	$	(4,901	)

Weighted average common shares outstanding – basic and diluted (in thousands)		28,610					28,610

Net loss per share – basic and diluted	$	(0.22	)			$	(0.17	)

HERITAGE GLOBAL INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF
COMPREHENSIVE LOSS
For the three months ended March 31, 2014
(In thousands of US dollars, except per share amounts)

		HGI			NLEX			HGI
		Actual			Actual			Pro-Forma

Revenue:
Asset liquidation
Asset sales	$	975		$	—		$	975
Commissions and other		1,010			771			1,781
Total revenue		1,985			771			2,756

Operating costs and expenses:
Asset liquidation		404			—			404
Inventory maintenance		61			—			61
Patent licensing and maintenance		11			—			11
Selling, general and administrative, including expenses paid to related parties		2,138			796			2,934
Depreciation and amortization		118			1			119
Total operating costs and expenses		2,732			797			3,529
		(747	)		(26	)		(773	)
Loss of equity accounted asset liquidation investments (net of tax of $0)		(30	)		—			(30	)
Operating loss		(777	)		(26	)		(803	)
Other expense:
Interest expense – third party		(71	)		—			(71	)
Interest expense – related party		(67	)		—			(67	)
Total other expense		(138	)		—			(138	)
Loss before the undernoted		(915	)		(26	)		(941	)
Income tax expense		24,667			—			24,667
Earnings of other equity accounted investments (net of tax of $0)		11			—			11
Net loss		(25,571	)		(26	)		(25,597	)
Other comprehensive loss:
Currency translation adjustment (net of tax of $0)		(6	)		—			(6	)
Comprehensive loss	$	(25,577	)	$	(26	)	$	(25,603	)

Weighted average common shares outstanding – basic and diluted (in thousands)		28,167						28,167

Net loss per share – basic and diluted	$	(0.91	)				$	(0.91	)

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