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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

OR

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-39471

HERITAGE GLOBAL INC.

(Exact name of registrant as specified in its charter)

Florida | 59-2291344
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.)

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

(Address of Principal Executive Offices)

(858) 847-0659
(Registrant’s Telephone Number)

N/A

(Registrant’s Former Name)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered

Common stock, $0.01 par value HGBL The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer | ☐ |  | Accelerated Filer | ☐
Non-Accelerated Filer | ☒ |  | Smaller reporting company | ☒
|  |  | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

As of November 1, 2025, there were 34,741,553 shares of common stock outstanding, $0.01 par value.

TABLE OF CONTENTS

Part I. | Financial Information |
Item 1. | Financial Statements | 3
| Condensed Consolidated Balance Sheets as of September 30, 2025 (unaudited) and December 31, 2024 | 3
| Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2025 and 2024 (unaudited) | 4
| Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2025 and 2024 (unaudited) | 5
| Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024 (unaudited) | 6
| Notes to Unaudited Condensed Consolidated Financial Statements | 8
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 25
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 37
Item 4. | Controls and Procedures | 37
Part II. | Other Information |
Item 1. | Legal Proceedings | 38
Item 1A. | Risk Factors | 38
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 38
Item 3. | Defaults Upon Senior Securities | 38
Item 4. | Mine Safety Disclosures | 38
Item 5. | Other Information | 39
Item 6. | Exhibits | 40
| Signature Page | 41

2

PART I – FINANC I AL INFORMATION

Item 1 – Financ ial Statements.

HERITAGE GLOBAL INC.

CONDENSED CONSOLIDA TED BALANCE SHEETS

(In thousands of US dollars, except share and per share amounts)

|  | September 30, 2025 |  |  | December 31, 2024 |
ASSETS |  | (unaudited) |  |  |  |
Current assets: |  |  |  |  |  |
Cash and cash equivalents |  | $ | 19,434 |  |  | $ | 21,749 |
Accounts receivable, net |  |  | 1,839 |  |  |  | 1,559 |
Current portion of notes receivable, net |  |  | 4,158 |  |  |  | 3,416 |
Inventory – equipment |  |  | 5,611 |  |  |  | 5,348 |
Other current assets |  |  | 762 |  |  |  | 1,056 |
Total current assets |  |  | 31,804 |  |  |  | 33,128 |
Non-current portion of notes receivable, net |  |  | 5,162 |  |  |  | 6,558 |
Equity method investments |  |  | 21,333 |  |  |  | 20,892 |
Property and equipment, net |  |  | 9,486 |  |  |  | 1,643 |
Right-of-use assets |  |  | 1,694 |  |  |  | 2,208 |
Intangible assets, net |  |  | 3,164 |  |  |  | 3,362 |
Goodwill |  |  | 7,446 |  |  |  | 7,446 |
Deferred tax assets |  |  | 4,829 |  |  |  | 6,008 |
Other assets |  |  | 1,591 |  |  |  | 64 |
Total assets |  | $ | 86,509 |  |  | $ | 81,309 |
LIABILITIES AND STOCKHOLDERS’ EQUITY |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |
Accounts payable and accrued liabilities |  | $ | 6,248 |  |  | $ | 5,979 |
Payables to sellers |  |  | 6,817 |  |  |  | 7,417 |
Current portion of third party debt |  |  | — |  |  |  | 395 |
Current portion of lease liabilities |  |  | 823 |  |  |  | 807 |
Total current liabilities |  |  | 13,888 |  |  |  | 14,598 |
Non-current portion of third party debt |  |  | 4,100 |  |  |  | — |
Non-current portion of lease liabilities |  |  | 976 |  |  |  | 1,510 |
Other non-current liabilities |  |  | 1,050 |  |  |  | — |
Total liabilities |  |  | 20,014 |  |  |  | 16,108 |
Stockholders’ equity: |  |  |  |  |  |
Preferred stock, $10.00 par value, authorized 10,000,000 shares; issued and outstanding 563 of Series N as of September 30, 2025 and December 31, 2024; with liquidation preference over common stockholders equivalent to $1,000 per share |  |  | 6 |  |  |  | 6 |
Common stock, $0.01 par value, authorized 300,000,000 shares; issued 37,639,211 and 37,380,944 shares as of September 30, 2025 and December 31, 2024, respectively; and outstanding 34,741,553 and 35,718,361 shares as of September 30, 2025 and December 31, 2024, respectively |  |  | 376 |  |  |  | 374 |
Additional paid-in capital |  |  | 296,290 |  |  |  | 295,657 |
Accumulated deficit |  |  | (224,558 | ) |  |  | (227,844 | )
Treasury stock at cost, 2,897,658 and 1,662,583 shares as of September 30, 2025 and December 31, 2024, respectively |  |  | (5,619 | ) |  |  | (2,992 | )
Total stockholders’ equity |  |  | 66,495 |  |  |  | 65,201 |
Total liabilities and stockholders’ equity |  | $ | 86,509 |  |  | $ | 81,309 |

The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.

3

HERITAGE GLOBAL INC.

CONDENSED CONSOLIDATED S TATEMENTS OF INCOME

(In thousands of US dollars, except share and per share amounts)

(unaudited)

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |
Services revenue |  | $ | 7,475 |  |  | $ | 8,063 |  |  | $ | 25,389 |  |  | $ | 25,527 |
Asset sales |  |  | 3,885 |  |  |  | 2,347 |  |  |  | 13,734 |  |  |  | 9,067 |
Total revenues |  |  | 11,360 |  |  |  | 10,410 |  |  |  | 39,123 |  |  |  | 34,594 |
Operating costs and expenses: |  |  |  |  |  |  |  |  |  |  |  |
Cost of services revenue |  |  | 1,451 |  |  |  | 1,735 |  |  |  | 6,098 |  |  |  | 4,665 |
Cost of asset sales |  |  | 2,609 |  |  |  | 1,458 |  |  |  | 9,303 |  |  |  | 6,140 |
Selling, general and administrative |  |  | 5,968 |  |  |  | 5,686 |  |  |  | 18,642 |  |  |  | 18,390 |
Depreciation and amortization |  |  | 120 |  |  |  | 152 |  |  |  | 356 |  |  |  | 440 |
Total operating costs and expenses |  |  | 10,148 |  |  |  | 9,031 |  |  |  | 34,399 |  |  |  | 29,635 |
Earnings of equity method investments |  |  | 89 |  |  |  | 100 |  |  |  | 212 |  |  |  | 2,622 |
Operating income |  |  | 1,301 |  |  |  | 1,479 |  |  |  | 4,936 |  |  |  | 7,581 |
Interest income (expense), net |  |  | 34 |  |  |  | 17 |  |  |  | 108 |  |  |  | (183 | )
Income before income tax expense |  |  | 1,335 |  |  |  | 1,496 |  |  |  | 5,044 |  |  |  | 7,398 |
Income tax expense |  |  | 750 |  |  |  | 407 |  |  |  | 1,758 |  |  |  | 2,013 |
Net income |  | $ | 585 |  |  | $ | 1,089 |  |  | $ | 3,286 |  |  | $ | 5,385 |
Weighted average common shares outstanding – basic |  |  | 34,547,477 |  |  |  | 36,576,931 |  |  |  | 35,585,976 |  |  |  | 36,641,820 |
Weighted average common shares outstanding – diluted |  |  | 35,205,152 |  |  |  | 37,189,029 |  |  |  | 36,255,562 |  |  |  | 37,292,200 |
Net income per share – basic |  | $ | 0.02 |  |  | $ | 0.03 |  |  | $ | 0.09 |  |  | $ | 0.15 |
Net income per share – diluted |  | $ | 0.02 |  |  | $ | 0.03 |  |  | $ | 0.09 |  |  | $ | 0.14 |

The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.

4

HERITAGE GLOBAL INC.

CONDENSED CONSOLIDATED STATEM ENTS OF STOCKHOLDERS’ EQUITY

(In thousands of US dollars, except share amounts)
(unaudited)

|  |  |  |  |  |  |  |  |  |  | Additional |  |  |  |  |  |  |  |  |  |
|  | Preferred stock |  |  | Common stock |  |  | paid-in |  |  | Accumulated |  |  | Treasury stock |  |  |  |
|  | Shares |  |  | Amount |  |  | Shares |  |  | Amount |  |  | capital |  |  | deficit |  |  | Shares |  |  | Amount |  |  | Total |
Balance as of December 31, 2024 |  |  | 563 |  |  | $ | 6 |  |  |  | 37,380,944 |  |  | $ | 374 |  |  | $ | 295,657 |  |  | $ | (227,844 | ) |  |  | 1,662,583 |  |  | $ | (2,992 | ) |  | $ | 65,201 |
Issuance of restricted common stock |  |  | — |  |  |  | — |  |  |  | 256,822 |  |  |  | 2 |  |  |  | (79 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (77 | )
Stock-based compensation expense |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 280 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 280 |
Repurchase of common stock |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 490,651 |  |  |  | (1,042 | ) |  |  | (1,042 | )
Net income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,064 |  |  |  | — |  |  |  | — |  |  |  | 1,064 |
Balance as of March 31, 2025 |  |  | 563 |  |  | $ | 6 |  |  |  | 37,637,766 |  |  | $ | 376 |  |  | $ | 295,858 |  |  | $ | (226,780 | ) |  |  | 2,153,234 |  |  | $ | (4,034 | ) |  | $ | 65,426 |
Issuance of common stock from stock option awards |  |  | — |  |  |  | — |  |  |  | 1,445 |  |  |  | — |  |  |  | (1 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1 | )
Stock-based compensation expense |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 229 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 229 |
Repurchase of common stock |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 744,424 |  |  |  | (1,585 | ) |  |  | (1,585 | )
Net income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,637 |  |  |  | — |  |  |  | — |  |  |  | 1,637 |
Balance as of June 30, 2025 |  |  | 563 |  |  | $ | 6 |  |  |  | 37,639,211 |  |  | $ | 376 |  |  | $ | 296,086 |  |  | $ | (225,143 | ) |  |  | 2,897,658 |  |  | $ | (5,619 | ) |  | $ | 65,706 |
Stock-based compensation expense |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 204 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 204 |
Net income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 585 |  |  |  | — |  |  |  | — |  |  |  | 585 |
Balance as of September 30, 2025 |  |  | 563 |  |  | $ | 6 |  |  |  | 37,639,211 |  |  | $ | 376 |  |  | $ | 296,290 |  |  | $ | (224,558 | ) |  |  | 2,897,658 |  |  | $ | (5,619 | ) |  | $ | 66,495 |

|  |  |  |  |  |  |  |  |  |  | Additional |  |  |  |  |  |  |  |  |  |
|  | Preferred stock |  |  | Common stock |  |  | paid-in |  |  | Accumulated |  |  | Treasury stock |  |  |  |
|  | Shares |  |  | Amount |  |  | Shares |  |  | Amount |  |  | capital |  |  | deficit |  |  | Shares |  |  | Amount |  |  | Total |
Balance as of December 31, 2023 |  |  | 563 |  |  | $ | 6 |  |  |  | 37,157,616 |  |  | $ | 372 |  |  | $ | 294,522 |  |  | $ | (233,026 | ) |  |  | 396,175 |  |  | $ | (794 | ) |  | $ | 61,080 |
Issuance of common stock from stock option awards |  |  | — |  |  |  | — |  |  |  | 1,200 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Issuance of restricted common stock |  |  | — |  |  |  | — |  |  |  | 177,576 |  |  |  | 1 |  |  |  | (76 | ) |  |  | — |  |  |  |  |  |  | — |  |  |  | (75 | )
Stock-based compensation expense |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 228 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 228 |
Net income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,799 |  |  |  | — |  |  |  | — |  |  |  | 1,799 |
Balance as of March 31, 2024 |  |  | 563 |  |  | $ | 6 |  |  |  | 37,336,392 |  |  | $ | 373 |  |  | $ | 294,674 |  |  | $ | (231,227 | ) |  |  | 396,175 |  |  | $ | (794 | ) |  | $ | 63,032 |
Issuance of common stock from stock option awards |  |  | — |  |  |  | — |  |  |  | 4,793 |  |  |  | — |  |  |  | (6 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (6 | )
Stock-based compensation expense |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 290 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 290 |
Net income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,497 |  |  |  | — |  |  |  | — |  |  |  | 2,497 |
Balance as of June 30, 2024 |  |  | 563 |  |  | $ | 6 |  |  |  | 37,341,185 |  |  | $ | 373 |  |  | $ | 294,958 |  |  | $ | (228,730 | ) |  |  | 396,175 |  |  | $ | (794 | ) |  | $ | 65,813 |
Stock-based compensation expense |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 283 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 283 |
Repurchase of common stock |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 601,449 |  |  |  | (1,058 | ) |  |  | (1,058 | )
Net income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,089 |  |  |  | — |  |  |  | — |  |  |  | 1,089 |
Balance as of September 30, 2024 |  |  | 563 |  |  | $ | 6 |  |  |  | 37,341,185 |  |  | $ | 373 |  |  | $ | 295,241 |  |  | $ | (227,641 | ) |  |  | 396,175 |  |  | $ | (1,852 | ) |  | $ | 66,127 |

The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.

5

HERITAGE GLOBAL INC.

CONDENSED CONSOLIDATED S TATEMENTS OF CASH FLOWS

(In thousands of US dollars)

(unaudited)

|  | Nine Months Ended September 30, |
|  | 2025 |  |  | 2024 |
Cash flows from operating activities: |  |  |  |  |  |
Net income |  | $ | 3,286 |  |  | $ | 5,385 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |  |
Amortization of deferred issuance costs and fees, net |  |  | (8 | ) |  |  | (77 | )
Earnings of equity method investments |  |  | (212 | ) |  |  | (2,622 | )
Noncash credit loss recovery |  |  | (35 | ) |  |  | (228 | )
Amortization of right-of-use assets |  |  | 514 |  |  |  | 484 |
Depreciation and amortization |  |  | 356 |  |  |  | 440 |
Deferred taxes |  |  | 1,179 |  |  |  | 1,375 |
Stock-based compensation expense |  |  | 713 |  |  |  | 801 |
Changes in operating assets and liabilities: |  |  |  |  |  |
Accounts receivable |  |  | (282 | ) |  |  | 1,032 |
Inventory – equipment |  |  | (263 | ) |  |  | 353 |
Other current assets |  |  | 297 |  |  |  | (382 | )
Accounts payable and accrued liabilities |  |  | 130 |  |  |  | (965 | )
Payables to sellers |  |  | (600 | ) |  |  | 8,150 |
Lease liabilities |  |  | (518 | ) |  |  | (492 | )
Net cash provided by operating activities |  |  | 4,557 |  |  |  | 13,254 |
Cash flows from investing activities: |  |  |  |  |  |
Investment in notes receivable |  |  | (4,433 | ) |  |  | (5,047 | )
Payments received on notes receivable |  |  | 5,132 |  |  |  | 9,039 |
Investment in participating interest |  |  | (1,575 | ) |  |  | — |
Return of investment in participating interest |  |  | 45 |  |  |  | — |
Investment in equity method investments |  |  | (1,575 | ) |  |  | (343 | )
Return of investment in equity method investments |  |  | 1,135 |  |  |  | 2,744 |
Cash distributions from equity method investments |  |  | 212 |  |  |  | 2,622 |
Purchase of property and equipment |  |  | (7,861 | ) |  |  | (134 | )
Net cash (used in) provided by investing activities |  |  | (8,920 | ) |  |  | 8,881 |
Cash flows from financing activities: |  |  |  |  |  |
Proceeds from debt payable to third parties |  |  | 4,100 |  |  |  | — |
Repayment of debt payable to third parties |  |  | (395 | ) |  |  | (6,704 | )
Proceeds from secured borrowing |  |  | 1,050 |  |  |  | — |
Payments of tax withholdings related to issuance of restricted common stock and stock option awards |  |  | (80 | ) |  |  | (81 | )
Repurchase of common stock |  |  | (2,627 | ) |  |  | (1,058 | )
Net cash provided by (used in) financing activities |  |  | 2,048 |  |  |  | (7,843 | )
Net change in cash and cash equivalents |  |  | (2,315 | ) |  |  | 14,292 |
Cash and cash equivalents as of beginning of period |  |  | 21,749 |  |  |  | 12,279 |
Cash and cash equivalents as of end of period |  | $ | 19,434 |  |  | $ | 26,571 |
Supplemental cash flow information: |  |  |  |  |  |
Cash paid for taxes |  | $ | 557 |  |  | $ | 682 |
Cash paid for interest |  | $ | 37 |  |  | $ | 326 |
Noncash change in lease liabilities and right-of-use assets |  | $ | — |  |  | $ | 327 |
Noncash transfer of notes receivable to equity method investments |  | $ | — |  |  | $ | 2,487 |
Noncash purchase of property and equipment |  | $ | 138 |  |  | $ | — |

6

The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.

7

HERITAGE GLOBAL INC.

NOTES TO CONDENSED CO NSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1 –Basis of Presentation

These unaudited condensed consolidated interim financial statements include the accounts of Heritage Global Inc. ("HG") together with its subsidiaries, including Heritage Global Partners, Inc. (“HGP”), National Loan Exchange Inc. (“NLEX”), Heritage Global LLC (“HG LLC”), Heritage Global Capital LLC (“HGC”), and Heritage ALT LLC (“ALT”). These entities, collectively, are referred to as "the Company,” "us" “we” or “our” in these consolidated financial statements. These consolidated financial statements were prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”), as outlined in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and include the assets, liabilities, revenues, and expenses of all subsidiaries over which HG exercises control. All significant intercompany accounts and transactions have been eliminated upon consolidation.

The Company began its operations in 2009 with the establishment of HG LLC. The business was subsequently expanded by the acquisitions of HGP, NLEX, and ALT in 2012, 2014, and 2021 respectively, and the creation of HGC in 2019. As a result, HG is positioned to provide an array of value-added capital and financial asset solutions: auction and appraisal services, traditional asset disposition sales, and specialty financing solutions. The Company’s reportable segments consist of Auction and Liquidation, through HGP, Refurbishment & Resale, through ALT, Brokerage, through NLEX and Specialty Lending, through HGC.

The Company prepared the unaudited condensed consolidated interim financial statements included herein pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). In the opinion of management, these unaudited condensed financial statements reflect all adjustments that are necessary to present fairly the results for the interim periods included herein. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations; however, the Company believes that the disclosures are appropriate. These unaudited condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 13, 2025 (the “Form 10-K”).

The results of operations for the interim periods are not necessarily indicative of those operating results to be expected for any subsequent interim period or for the entire year ending December 31, 2025. The accompanying condensed consolidated balance sheet as of December 31, 2024 has been derived from the audited consolidated balance sheet as of December 31, 2024, contained in the Company’s Form 10-K.

Repurchase Program

The Company’s Board of Directors previously authorized a share repurchase program (“2022 Repurchase Program”), which permitted the Company to purchase up to an aggregate of $6.0 million in common shares over a three year period ended on June 30, 2025. The Company repurchased 744,424 shares in the open market for a purchase price of approximately $1.6 million during the three months ended June 30, 2025. The 2022 Repurchase Program ended on June 30, 2025, with the Company utilizing approximately $5.6 million of the authorized $6.0 million for the repurchase of 2,897,658 common shares in the open market.

Following the termination of the 2022 Repurchase Program on June 30, 2025, the Company’s Board of Directors authorized a new share repurchase program (the “2025 Repurchase Program”) on July 31, 2025. The 2025 Repurchase Program authorizes the repurchase of up to $7.5 million of the Company’s outstanding common stock through June 30, 2028. The timing and actual number of shares repurchased will depend on various factors, including share price, general business and market conditions, and the opportunities within the Company’s operations. As of September 30, 2025, no shares have been repurchased under the 2025 Repurchase Program.

8

Note 2 – Summary of Significant Accounting Policies

Use of estimates

The preparation of the Company’s unaudited condensed consolidated interim financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Management bases its estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results could differ from those estimates.

Significant estimates include the assessment of collectability of revenue recognized and the valuation of accounts receivable and notes receivable, inventory, investments, goodwill and intangible assets, liabilities, deferred income tax assets and liabilities, including projecting future years’ taxable income, and stock-based compensation. These estimates have the potential to significantly impact our condensed consolidated interim financial statements, either because of the significance of the financial statement item to which they relate, or because they require judgment and estimation due to the uncertainty involved in measuring, at a specific point in time, events that are continuous in nature.

Reven ue recognition

The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) and ASC Topic 310, Receivables (“ASC 310”).

Services revenue generally consists of commissions and fees from providing auction services, appraisals, brokering of sales transactions, and secured lending. Asset sales revenue generally consists of proceeds obtained through sales of purchased assets. With the exception of revenue generated within our Specialty Lending segment, revenue is recognized for both services revenue and asset sales revenue based on the ASC 606 standard recognition model, which consists of the following: (1) an agreement exists between two or more parties that creates enforceable rights and obligations, (2) the performance obligations are clearly identified, (3) the transaction price has been determined, (4) the transaction price has been properly allocated to each performance obligation, and (5) the entity satisfies a performance obligation by transferring a promised good or service to a customer for each of the entities.

All services and asset sales revenue from contracts with customers consists of three reportable segments: Auction and Liquidation, Refurbishment & Resale, and Brokerage. Generally, revenue is recognized at the point in time in which the performance obligation has been satisfied and full consideration is received. The exception to recognition at a point in time occurs when certain contracts provide for advance payments recognized over a period of time. Services revenue recognized over a period of time is not material in comparison to total revenues (less than 1% of total revenues for the three and nine months ended September 30, 2025 and 2024), and therefore not reported on a disaggregated basis. Further, as certain contracts stipulate that the customer make advance payments, amounts not recognized within the reporting period are considered deferred revenue and the Company’s “contract liability”. The deferred revenue balance was approximately $0.7 million and $0.6 million as of September 30, 2025 and December 31, 2024, respectively, and is reflected in accounts payable and accrued liabilities on the condensed consolidated balance sheets. The deferred revenue balance is primarily related to customer deposits on asset sales within the Refurbishment & Resale segment. The Company records receivables in certain situations based on timing of payments for Auction and Liquidation transactions held at the end of the reporting period; however, revenue is generally recognized in the period that the Company satisfies the performance obligation and cash is collected. The Company does not record a “contract asset” for partially satisfied performance obligations.

For auction services and brokerage sale transactions, funds are typically collected from buyers and are held by the Company on the seller's behalf. The funds are included in cash and cash equivalents in the condensed consolidated balance sheets. The Company releases the funds to the seller, less the Company's commission and other fees due, after the buyer has accepted the goods. The amount of cash held on behalf of the sellers is recorded as payables to sellers in the accompanying condensed consolidated balance sheets.

The Company evaluates revenue from Auction and Liquidation and Brokerage segment transactions in accordance with the accounting guidance to determine whether to report such revenue on a gross or net basis. The Company has determined that it acts as an agent for its fee based transactions and therefore reports the revenue from transactions in which the Company acts as an agent on a net basis.

The Company also earns income through transactions that involve the Company acting jointly with one or more additional purchasers or lenders, pursuant to a partnership, joint venture or limited liability company agreement (collectively, “Joint Ventures”). For these transactions, in which the Company’s ownership share meets the criteria for the equity method investments under ASC Topic 323, Equity Method and Joint Ventures, the Company does not record revenue or expense. Instead, the Company’s proportionate share of the net income (loss) is reported as earnings of equity method investments. In general, the Joint Ventures apply the same revenue recognition and other accounting policies as the Company.

9

Through its Specialty Lending segment, the Company provides specialty financing solutions to investors in charged-off and nonperforming asset portfolios. The Company recognizes revenue generated by lending activity in accordance with ASC 310. Fees collected in relation to the issuance of loans include loan origination fees, interest income, portfolio monitoring fees, and a backend profit share percentage related to the underlying asset portfolio.

The monitoring fees and the backend profit share are considered a separate earnings process as compared to the origination fees and interest income. Monitoring fees are recorded at the agreed upon rate, and at the moment in which payments are made by the borrower. The backend profit share is recognized in accordance with the agreed upon rate at the time in which the amount is realizable and earned. The recognition policy was established due to the uncertainty of timing of the receipt of backend profit share and the amount of backend profit share which will be realized.

Through its Refurbishment and Resale segment, the Company offers financing on its standard laboratory equipment sales. The Company recognizes revenue upon shipment of its financed products in accordance with ASC 606. The Company records a loan receivable for the unpaid balance of the order. A loan amortization table is created upon shipment outlining the principal and interest income portion of each future payment. These loans are classified as held-for-investment and accounted for under the guidelines of ASC 310.

For both the Specialty Lending and Refurbishment and Resale segments, loan origination fees are offset with any direct origination costs and are deferred upon issuance of the loan and amortized over the lives of the related loans, as an adjustment to interest income. The interest method is used to arrive at a periodic interest cost (including amortization) that will represent a level effective rate on the sum of the face amount of the debt and (plus or minus) the unamortized premium or discount and expense at the beginning of each period.

Nonaccrual Loans

The Company determines a loan to be in a default status when the minimum payment amount has not been received within the grace period of the payment due date. The status of default does not solely trigger nonaccrual loan status. The Company considers quantitative and qualitative factors when evaluating a loan in default status to determine the likelihood of recovering the outstanding principal balance and contractual interest payments. The Company also monitors its borrowers’ financial standing and performance on an ongoing basis and regularly updates the collection forecasts for the underlying charged off or nonperforming receivable portfolios related to each outstanding loan. If management determines (1) it is not probable that the projected cash flows expected from the borrower’s collection efforts on the underlying charged off or nonperforming receivable portfolio will be sufficient to satisfy all of the outstanding principal balance and contractual interest payments, and (2) it is not probable that the borrower will be able to meet the minimum required principal and interest payments through other operational cash flows, the Company will place the loans on nonaccrual status. If, based on its analysis, the Company elects to maintain accrual status after initial payment default, the loan will generally be placed on nonaccrual status if principal or interest payments become 90 days past due.

The accrual of interest is generally discontinued when a loan is placed in nonaccrual status. Interest received on such loans is accounted for using the cost-recovery or the cash-basis method, until qualifying for return to accrual. Under the cost-recovery method, interest income is not recognized until the loan balance is reduced to zero. Under the cash-basis method, interest payments received by the creditor are recorded as interest income provided the amount does not exceed the amount that would have been earned at the loan’s original effective interest rate. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current, there is a sustained period of repayment performance, and all remaining principal and interest payments are deemed probable.

Pursuant to the terms of existing credit agreements, the Company's largest borrower was required to collect on underlying charged off and nonperforming consumer loan portfolios and remit a required minimum monthly payment to the Company. However, this borrower became unable to make the required minimum monthly payments beginning in June 2024 and therefore is in default. The Company's largest borrower continues to collect on the underlying charged off and nonperforming consumer loan portfolios and remit net collections to the Company and senior lenders. The Company has determined (1) it is not probable that the projected cash flows expected from the borrower’s collection efforts on the underlying charged off or nonperforming receivable portfolio will be sufficient to satisfy all of the outstanding principal balance and contractual interest payments, and (2) it is not probable that the borrower will be able to meet the minimum required principal and interest payments through other operational cash flows. While the Company continues to work closely with the borrower and its senior lenders in an effort to mitigate the default in an efficient and effective manner, the impacted loans were placed in nonaccrual status in June 2024. In addition, there was a balance of $1.5 million from the Company’s share of other loans within its affiliated joint ventures that are impacted by the default with the largest borrower and were placed in nonaccrual status in June 2024. The Company's share of payments received from the nonaccrual loans, including interest, will be applied against the outstanding loan balance. As of September 30, 2025, the amortized cost basis of loans in nonaccrual status was $22.3 million, of which $4.8 million is recorded within notes receivable and $17.5 million is recorded within equity method investments.

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Specialty Lending - Concentration and credit risk

As of September 30, 2025, the Company held a gross balance of investments in notes receivable of $28.4 million, recorded in both notes receivable and equity method investments. The Company's portfolio includes its largest borrower’s gross note receivable balance of approximately $21.7 million, representing 76% of our total gross notes receivable balance as of September 30, 2025, as compared to 74% as of December 31, 2024. As discussed further in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Nonaccrual Loans, our largest borrower is in default. As a result, the balance of the loans outstanding with our largest borrower were in nonaccrual status as of September 30, 2025. Whether we will realize any return with respect to the impacted loans is uncertain. The Company does not intend to hold highly concentrated balances due from one borrower as part of its long-term strategy but will, in the short term, have concentration risk on its path to an established and diversified portfolio.

The Company does not evaluate concentration risk solely based on balance due from specific borrowers, but also considers the number of portfolio purchases, type of charged off accounts within the portfolio, and the seller of the portfolio when determining the overall risk. Of the balance due from one borrower of $21.7 million, there are 11 distinct loan agreements. The underlying portfolio of accounts are diversified throughout FinTech loans, installment loans and credit card accounts, and further diversified amongst six separate sellers of these charged off portfolios.

The Company mitigates this concentration risk by requiring, and monitoring, security from each borrower consisting of their charged off and nonperforming receivable portfolios. The Company engages in a due diligence process that leverages its valuation expertise, knowledge and experience in the underlying nonperforming receivable portfolios marketplace. In the event of default, the Company is entitled to call the unpaid interest and principal balances and receive all net collections directly. The Company may also recover its investment by engaging a third party to collect on the underlying charged off or nonperforming receivable portfolio or the underlying portfolio can be sold through the Company's Brokerage segment. In certain cases, the Company’s recovery options are subject to concurrence of the originator or other prior holder of the assets.

Allowance for credit losses

The Company applies a current expected credit loss model, which is an impairment model based on expected losses rather than incurred losses. The expected credit losses, and subsequent adjustments to such losses, are recorded through an allowance account that is deducted from, or added to, the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the consolidated balance sheet at the amount expected to be collected.

The table below summarizes the allowance for credit loss balance as of, and the changes made during the years ending December 31, 2024 and 2023 and the nine months ended September 30, 2025, respectively (in thousands):

|  | Accounts Receivable |  |  | Notes Receivable |  |  | Equity Method Investments |  |  | Total |
Balance as of December 31, 2023 |  | $ | 132 |  |  | $ | 650 |  |  | $ | 898 |  |  | $ | 1,680 |
(Recovery) provision for credit losses |  |  | — |  |  |  | (267 | ) |  |  | 88 |  |  |  | (179 | )
Balance as of December 31, 2024 |  |  | 132 |  |  |  | 383 |  |  |  | 986 |  |  |  | 1,501 |
(Recovery) provision for credit losses |  |  | 2 |  |  |  | (37 | ) |  |  | 1 |  |  |  | (34 | )
Balance as of September 30, 2025 |  | $ | 134 |  |  | $ | 346 |  |  | $ | 987 |  |  | $ | 1,467 |

Accounts receivable

The Company carries accounts receivable at the face amounts less an allowance for estimated credit losses. The Company estimates its reserve for credit losses using relevant available information from internal and external sources relating to past events, current conditions and reasonable and supportable forecasts.

The Company only extends credit to entities and institutions of significance, such as well-known academic and financial institutions and U.S. government agencies. Consequently, historical accounts receivable credit losses are nearly zero, which provides the starting point for management’s assessment of the reserve for credit losses for its accounts receivable. The Company estimates its expected credit losses for accounts receivable based on historical credit loss experience, its assessment of current conditions, and other relevant available information from internal and external sources on a quarterly basis.

As of both September 30, 2025 and December 31, 2024, the reserve for credit losses related to accounts receivable was approximately $0.1 million.

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Notes receivable

Under ASC 326, the Company evaluates notes receivable as a single pool, for individual notes receivable and borrowers with similar risk characteristics. Notes receivable and borrowers that do not share risk characteristics are evaluated on an individual basis. Management evaluates the Company's notes receivables related to financing laboratory equipment sales within the notes receivable pool. Management estimates the reserve balance using relevant available information from internal and external sources relating to past events, current conditions and reasonable and supportable forecasts. Historical credit loss experience typically provides the basis for an estimation of expected credit losses; however, the Company lacks sufficient data upon which to base a historical estimation. Additionally, since the Company began recording notes receivable on the condensed consolidated balance sheets, the Company has recorded no actual credit losses to notes receivable.

Lacking historical internal data upon which to base a reserve for credit losses to notes receivable, the Company, under ASC 326, estimates its reserve using external credit loss experience data. Management observes that the Company's notes receivable are similar in character to transactions undertaken by smaller banking institutions. The Company estimates its expected credit losses based on the Scaled Current Expected Credit Loss (CECL) Allowance Loss Estimator ("SCALE rate") available from the Federal Reserve. The SCALE rate methodology is endorsed by the FASB and the Conference of State Bank Supervisors. Management determined under ASC 326 that the SCALE rate, a generally applicable rate, may be appropriately adjusted by its assessment of observable facts and relevant circumstances indicating that the factors analyzed in the determination of the SCALE rate may not conform to the Company's operations and borrower assessments.

As of September 30, 2025, the SCALE rate was 1.3922% and the Company's credit loss allowance rate specific to notes receivable was 3.6%. The increase over the SCALE rate was due to both the above mentioned risks presented by a concentrated balance with a single borrower and declining collections industry-wide. As of September 30, 2025 and December 31, 2024, the Company's allowance for credit losses related to notes receivable outstanding was approximately $0.3 million and $0.4 million, respectively. In order to evaluate the need for an adjustment to the receivable balance related to credit losses, or impairment, the Company performs a review of all outstanding loan receivables on a quarterly basis to determine if any indicators exist that suggest the loan will not be fully recoverable and assess the credit quality of the loan receivables. This review includes monthly and cumulative key performance indicators for each loan and borrower, as well as evaluation of borrower's financial condition.

Equity method investments

Similar to notes receivable, the loans held by the Joint Ventures are evaluated on a quarterly basis to determine if an adjustment to the allowance for credit losses is needed.

As of September 30, 2025, the SCALE rate was 1.3922% and the credit loss allowance rate specific to equity method investments was 4.6%. The increase over the SCALE rate was due to both the above mentioned risks presented by a concentrated balance with a single borrower and declining collections industry-wide. As of both September 30, 2025 and December 31, 2024, the Company's allowance for credit losses related to its equity method investments was approximately $1.0 million.

Recently adopted accounting pronouncements

In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" ("ASU 2023-07"), which, among other updates, requires enhanced disclosures about significant segment expenses regularly provided to the chief operating decision maker, as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, and requires retrospective adoption. The Company adopted ASU 2023-07 as of December 31, 2024 and as a result has expanded its segment reporting disclosures. See Note 15 for further details.

On December 14, 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU 2023-09"), which requires enhanced annual disclosures with respect to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, and may be adopted on a prospective or retrospective basis. Early adoption is permitted. The Company has adopted this standard effective January 1, 2025. ASU 2023-09 will have no accounting impact but will require additional disclosure related to certain income tax calculations beginning with the Company's Annual Report on Form 10-K for the year ended December 31, 2025.

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Future accounting pronouncements

On November 4, 2024, the FASB issued ASU 2024-03, "Reporting Comprehensive Income—Expense Disaggregation Disclosures" ("ASU 2024-03") which requires disaggregated disclosure of income statement expenses for public business entities. ASU 2024-03 does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. ASU 2024-03 is effective for all public business entities for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company anticipates that ASU 2024-03 will have no accounting impact but will require additional disclosure to further detail certain income statement expense information.

In July 2025, the FASB issued an accounting pronouncement (ASU 2025-05) related to credit losses for accounts receivable and contract assets. The amendments in this update provide a practical expedient that permits an entity to assume that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets. This update is effective for annual periods beginning after December 15, 2025, including interim periods within those fiscal years, though early adoption is permitted. The Company plans to adopt this pronouncement for the fiscal year beginning January 1, 2026 and anticipates that ASU 2025-05 will not have a material impact on the Company's consolidated financial statements.

In September 2025, the FASB issued an accounting pronouncement (ASU 2025-06) related to accounting for internal-use software costs. The amendments in this update improve the operability of the guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods. This update is effective for annual periods beginning after December 15, 2027, including interim periods within those fiscal years, though early adoption is permitted. The Company plans to adopt this pronouncement for our fiscal year beginning January 1, 2028 and anticipates that ASU 2025-06 will not have a material impact on the Company's consolidated financial statements.

Note 3 – Accounts Receivable, net

As further discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, the Company’s accounts receivable are primarily related to the operations of its business. With respect to auction proceeds and asset dispositions, including NLEX’s brokerage transactions, the assets are not released to the buyer until payment has been received. The Company, therefore, is not exposed to significant collectability risk relating to these receivables. Given this experience, together with the ongoing business relationships between the Company and its joint venture partners, the Company has not historically required a formal credit quality assessment in connection with these activities. The Company has not experienced any significant collectability issues with its accounts receivable. As the Company’s business expands, more comprehensive credit assessments may be required.

In accordance with ASC 326, the Company performs a review of accounts receivables on a quarterly basis. During the nine months ended September 30, 2025, the Company recorded no material adjustments for credit losses in selling, general and administrative expense on the consolidated statement of income related to accounts receivable. As of both September 30, 2025 and December 31, 2024, the reserve for credit losses was approximately $0.1 million.

Note 4 – Notes Receivable, net

The Company’s notes receivable, net consists of investments in loans to buyers of charged-off and nonperforming receivable portfolios through HGC and financing of laboratory equipment sales through ALT.

As of September 30, 2025 and December 31, 2024, the Company’s outstanding notes receivable balance related to loans to buyers of charged-off and nonperforming receivable portfolios, net of unamortized deferred fees and costs on originated loans, and adjusted for the allowance for credit losses was $8.9 million and $9.6 million, respectively. The activity during the nine months ended September 30, 2025 includes the additional investment in notes receivable of approximately $4.0 million, which was offset by principal payments made by borrowers of approximately $4.7 million.

As of both September 30, 2025 and December 31, 2024, the Company’s outstanding notes receivable balance related to financing of laboratory equipment sales, net of unamortized deferred fees and costs on originated loans and adjusted for the reserve for credit losses was $0.4 million. The activity during the nine months ended September 30, 2025 includes the investment in notes receivable of approximately $0.4 million, which was offset by principal payments made by purchasers of $0.4 million and an immaterial amount of deferred financing fees, and allowance for credit losses.

13

The table below shows the Company’s lending activity for the nine months ended September 30, 2025 (in thousands):

Notes receivable, net, December 31, 2024 |  | $ | 10,409 |
Investment in notes receivable |  |  | 4,433 |
Principal repayments |  |  | (5,132 | )
Notes receivable, as of September 30, 2025 |  |  | 9,710 |
Deferred financing fees and costs, net |  |  | (44 | )
Allowance for credit losses |  |  | (346 | )
Notes receivable, net, September 30, 2025 |  | $ | 9,320 |

In accordance with ASC 326, the Company performs a review of notes receivable on a quarterly basis. During the nine months ended September 30, 2025, the Company made no material changes to the provision for credit losses in selling, general and administrative expense on the consolidated statement of income. As of September 30, 2025 and December 31, 2024, the amortized cost basis of notes receivable in nonaccrual status was $4.8 million and $5.3 million, respectively.

Note 5 – Stock-based Compensation

As of September 30, 2025, the Company had four stock-based compensation plans, which are described more fully in Note 16 – Stockholders' Equity - Stock-Based Compensation Plans of the Company's audited consolidated financial statements for the year ended December 31, 2024 contained in the Company’s Form 10-K.

Stock Options

During the nine months ended September 30, 2025, the Company issued options to purch ase 70,000 shares of com mon stock to certain of the Company’s employees. During the same period, the Company canceled 83,50 0 options to purchase common stock as a result of employee resignations.

The following summarizes the changes in common stock options for the nine months ended September 30, 2025:

|  | Options |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Term (Years) |  |  | Aggregate Intrinsic Value (In thousands) |
Outstanding as of December 31, 2024 |  |  | 2,231,600 |  |  | $ | 1.77 |  |  |  | 6.0 |  |  | $ | 971 |
Granted |  |  | 70,000 |  |  | $ | 2.11 |  |  |  |  |  |  |
Exercised |  |  | (14,000 | ) |  | $ | 1.88 |  |  |  |  |  |  |
Forfeited |  |  | (83,500 | ) |  | $ | 2.95 |  |  |  |  |  |  |
Outstanding as of September 30, 2025 |  |  | 2,204,100 |  |  | $ | 1.74 |  |  |  | 5.3 |  |  | $ | 761 |
Options exercisable as of September 30, 2025 |  |  | 1,791,600 |  |  | $ | 1.59 |  |  |  | 4.6 |  |  | $ | 754 |

The Company recognized stock-based compensation expense related to common stock optio ns of $0.4 million for both the nine months ended September 30, 2025 and 2024. As of September 30, 2025, there was approximately $0.6 million o f unrecognized stock-based compensation expense related to unvested common stock options outstanding, which is expected to be recognized over a weighted average period of 1.4 years.

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 of the shares of common stock on the date of grant and recognized as compensation expense on a straight-line basis over the requisite service period.

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The following summarizes the restricted stock awards and related stock-based compensation expense (in thousands, except share count and award fair value):

|  | Grant Date | Vesting Date | Restricted Stock Granted |  | Per Share Grant Date Fair Value |  | Compensation Expense for the nine months ended September 30, |  | Unrecognized Compensation Expense as of, |
|  |  |  |  |  |  |  | 2024 |  | 2025 |  | September 30, 2025 |
Employees |  | March 1, 2023 | March 1, 2024 |  | 97,290 |  | $ | 2.53 |  |  | — |  |  | — |  |  | — |
Non-executive directors |  | March 31, 2023 | March 31, 2024 |  | 90,000 |  | $ | 2.87 |  |  | 43 |  |  | — |  |  | — |
Employees |  | March 7, 2024 | March 7, 2025 |  | 128,044 |  | $ | 2.93 |  |  | 213 |  |  | 67 |  |  | — |
Non-executive directors |  | March 7, 2024 | March 7, 2025 |  | 75,000 |  | $ | 2.93 |  |  | 125 |  |  | 40 |  |  | — |
Employees |  | January 1, 2025 | December 31, 2028 [1] |  | 125,000 |  | $ | 1.85 |  |  | — |  |  | 43 |  |  | 188 |
Employees |  | March 6, 2025 | March 6, 2026 |  | 68,051 |  | $ | 2.11 |  |  | — |  |  | 82 |  |  | 62 |
Non-executive directors |  | March 6, 2025 | March 6, 2026 [2] |  | 100,000 |  | $ | 2.11 |  |  | — |  |  | 120 |  |  | 91 |
Total |  |  |  |  |  |  |  | $ | 381 |  | $ | 352 |  | $ | 341 |

[1] These restricted stock awards vest 25% annually over four years, until fully vested on December 31, 2028.

[2] These restricted stock awards vest 25% quarterly over one year, until fully vested on March 6, 2026.

The Company determined the fair value of the shares awarded by using the closing price of our common stock as of the grant date. Stock-based compensation expense related to the restricted stock awards was approximately $0.4 million for both the nine months ended September 30, 2025 and 2024. The unrecognized stock-based compensation expense as of September 30, 2025 was approximately $0.3 million, which is expected to be recognized over a weighted average period of 1.9 years.

15

Note 6 – Equity Method Investments

In November 2018, CPFH LLC, of which the Company holds a 25% share, was formed to purchase certain real estate assets among partners in a joint venture. In March 2020, HGC Origination I LLC and HGC Funding I LLC were formed as joint ventures with a partner for purposes of conducting business relating to the sourcing, origination and funding of loans to debt purchasing clients. In April 2022, KNFH LLC, of which the Company holds a 25% share, was formed to purchase certain real estate assets and machinery and equipment among partners in a joint venture. In December 2022, DHC8 LLC, of which the Company holds a 13.33% share was formed to provide funding and receive principal and interest payments as a result of the initial investment. In May 2023, HGC MPG Funding LLC, of which the Company holds a 25% share, was formed as a joint venture with a partner for purposes of conducting business relating to the sourcing, origination and funding of loans to debt purchasing clients. In December 2023, KNFH II LLC, of which the Company holds a 25% share, was formed to purchase certain real estate assets and machinery and equipment among partners in a joint venture. In January 2025, DLZ Solutions LLC ("DLZ"), a joint venture in which the Company holds a 20% share, entered into a purchase agreement to purchase certain real estate assets and a lease agreement to lease back the purchased real estate assets to the seller. CPFH LLC, KNFH LLC, DHC8 LLC, KNFH II LLC, and DLZ are joint ventures formed in connection with the Company’s Industrial Assets division, whereas HGC Origination I LLC, HGC Funding I LLC, and HGC MPG Funding LLC were formed in connection with the Financial Assets division. The Company has significant influence over the operations and financial policies of each of its equity method investments.

In accordance with ASC 326, the Company performs a review of notes receivable on a quarterly basis for each of its specialty lending investments. During the nine months ended September 30, 2025, the Company made no material adjustment for its share of the joint venture’s provision for credit losses. As of September 30, 2025, the Company's share of the allowance for credit losses was primarily related to HGC Origination I LLC and HGC MPG Funding LLC. As of September 30, 2025, the Company has incurred no actual credit losses through its equity method investments. As of September 30, 2025, the amortized cost basis of the Company's share of loans in nonaccrual status recorded in equity method investments was $17.5 million.

The table below details the Company’s joint venture revenues, earnings, assets, and liabilities for the nine months ended and as of September 30, 2025 (in thousands):

|  | DHC8 LLC |  |  | KNFH II LLC |  |  | DLZ Solutions LLC |  |  | HGC Funding I LLC and Origination I LLC |  |  | HGC MPG Funding LLC |  |  | Total |
Revenue |  | $ | 140 |  |  | $ | (8 | ) |  | $ | 488 |  |  | $ | 3,511 |  |  | $ | 4,134 |  |  | $ | 8,264 |
Gross profit |  |  | 140 |  |  |  | (8 | ) |  |  | 488 |  |  |  | 3,511 |  |  |  | 4,134 |  |  |  | 8,264 |
Operating income (loss) |  |  | 54 |  |  |  | (158 | ) |  |  | 368 |  |  |  | 3,489 |  |  |  | 4,116 |  |  |  | 7,870 |
Net income (loss) |  |  | 54 |  |  |  | (158 | ) |  |  | 368 |  |  |  | 3,494 |  |  |  | 4,116 |  |  |  | 7,875 |
Assets |  |  | 67 |  |  |  | 7,270 |  |  |  | 8,298 |  |  |  | 23,135 |  |  |  | 29,830 |  |  |  | 68,601 |
Liabilities |  |  | 67 |  |  |  | 2,038 |  |  |  | 143 |  |  |  | 5 |  |  |  | — |  |  |  | 2,252 |

The table below details the Company’s joint venture revenues, earnings, assets, and liabilities for the nine months ended and as of September 30, 2024 (in thousands):

|  | DHC8 LLC |  |  | KNFH II LLC |  |  | HGC Funding I LLC and Origination I LLC |  |  | HGC MPG Funding LLC |  |  | Total |
Revenues |  | $ | 751 |  |  | $ | 13,249 |  |  | $ | 3,705 |  |  | $ | 3,987 |  |  | $ | 21,692 |
Gross profit |  |  | 751 |  |  |  | 5,213 |  |  |  | 3,705 |  |  |  | 3,987 |  |  |  | 13,656 |
Operating income |  |  | 590 |  |  |  | 5,120 |  |  |  | 3,656 |  |  |  | 3,987 |  |  |  | 13,353 |
Net income |  |  | 590 |  |  |  | 5,120 |  |  |  | 3,656 |  |  |  | 3,987 |  |  |  | 13,353 |
Assets |  |  | 2,068 |  |  |  | 7,966 |  |  |  | 26,113 |  |  |  | 33,066 |  |  |  | 69,213 |
Liabilities |  |  | 1,038 |  |  |  | — |  |  |  | 972 |  |  |  | — |  |  |  | 2,010 |

16

Lessor Arrangements

In December 2023, the Company, with certain partners making up the KNFH II LLC joint venture, entered into a purchase and sale agreement for a pharmaceutical plant in Fenton, Missouri, including land, a building, and all machinery and equipment held within, with a purchase price of $8.0 million.

In April 2024, KNFH II LLC entered into a purchase and sale agreement for the machinery and equipment within the pharmaceutical plant with a purchase price of $5.0 million. Additionally, KNFH II LLC entered into a lease agreement for the lease of the real estate assets; the building and land. This lease agreement includes a purchase option with a purchase price of $8.0 million that is expected to be exercised by the lessee. The lessor arrangement is classified as a sales-type lease, and, therefore, the present value of future lease payments, including the purchase option, has been recognized as revenue and a lease receivable as of the effective date. As of September 30, 2025, the Company recognized approximately $1.2 million in life-to-date earnings of equity method investments, related to the Company’s share of net income attributable to KNFH II LLC.

On January 29, 2025, DLZ, a joint venture in which the Company holds a 20% share, entered into a purchase agreement for a pharmaceutical plant in Huntsville, Alabama, including land and a building, with a purchase price of approximately $7.8 million. Simultaneously, DLZ entered into a lease agreement with the Seller, for the lease of the real estate assets, the building and land. This lease agreement includes a purchase option exercisable prior to the end of the first 18-month lease term with a purchase price of approximately $9.7 million. Concurrently, the Company sold a one-third economic interest in cash flows related to the DLZ investment, which is reflected as a secured borrowing on its balance sheet within other non-current liabilities. As of September 30, 2025, the Company has recorded approximately $74,000 in earnings in equity method investments and approximately $25,000 in cost of services revenue related to the investment on the consolidated statement of income.

Additionally, on January 29, 2025, the Company purchased a 20% participating interest in a financial asset for approximately $1.6 million. The participants’ investment was used to purchase machinery and equipment at the same pharmaceutical plant in Huntsville, Alabama for approximately $7.8 million. The participants entered into a lease agreement to lease the purchased machinery and equipment back to the seller with an 18-month lease term which includes purchase option exercisable prior to the end of the term with a purchase price of approximately $9.5 million. As of September 30, 2025, the Company reflects its participating interest of $1.5 million on its balance sheet within other long-term assets. Concurrently, the Company sold a one-third economic interest in cash flows related to its participating interest, which is reflected as a secured borrowing on its balance sheet within other non-current liabilities. As of September 30, 2025, the Company has recorded approximately $77,000 in services revenue and approximately $26,000 in costs of services revenue related to the investment on the consolidated statement of income.

Note 7 – Earnings Per Share

The Company is required, in periods in which it has net income, to calculate basic earnings per share (“basic EPS”) using the two-class method. The two-class method is required because the Company’s shares of Series N preferred stock, each of which is convertible to 40 common shares, have the right to receive dividends or dividend equivalents should the Company declare dividends on its common stock. Under the two-class method, earnings for the period are allocated on a pro-rata basis to the common and preferred stockholders. The weighted-average number of common and preferred shares outstanding during the period is then used to calculate basic EPS for each class of shares. For both the three and nine months ended September 30, 2025 and 2024, the earnings allocated to the outstanding preferred shares were not material.

In periods in which the Company records a net loss, basic loss per share is calculated by dividing the loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. As the preferred stock does not participate in losses, the two-class method is not used in periods in which the Company records a net loss.

Stock options and other potential common shares are included in the calculation of diluted earnings per share (“diluted EPS”). In calculating diluted EPS, such shares are assumed to be exercised or converted, except when their effect would be anti-dilutive.

The table below shows the calculation of the number of shares used in computing diluted EPS:

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Basic weighted average shares outstanding |  |  | 34,547,477 |  |  |  | 36,576,931 |  |  |  | 35,585,976 |  |  |  | 36,641,820 |
Treasury stock effect of common stock options and restricted stock awards |  |  | 657,675 |  |  |  | 612,098 |  |  |  | 669,586 |  |  |  | 650,380 |
Diluted weighted average common shares outstanding |  |  | 35,205,152 |  |  |  | 37,189,029 |  |  |  | 36,255,562 |  |  |  | 37,292,200 |

17

For the three months ended September 30, 2025 and 2024, there were potential common shares of 0.9 million and 0.6 million, respectively, that were excluded from the computation of diluted EPS, as the inclusion of such common shares would have been anti-dilutive. For the nine months ended September 30, 2025 and 2024, there were potential common share s of 0.9 million and 0.7 million, respectively, that were excluded from the computation of diluted EPS, as the inclusion of such common shares would have been anti-dilutive.

Note 8 – Leases

The Company leases office and warehouse space in four locations: Del Mar, California, Hayward, California, San Diego, California and Edwardsville, Illinois. The Company determined that all of its lease arrangements are classified as operating leases.

On August 12, 2022, the Company entered into an agreement with Liberty Industrial Park, LLC pursuant to which the Company leases 6,627 square feet of industrial space in San Diego, California. The commencement date of the lease was September 1, 2022 and the lease term expires on August 30, 2027. It provides for an initial monthly base rent of $11,266, which increases on an annual basis to $13,180 per month in the final year. In addition, the Company is obligated to pay its share of maintenance costs of common areas.

On June 1, 2023, the Company amended its Edwardsville office building lease with David Ludwig, extending the term of the agreement to May 31, 2027 and setting rent amounts for the new term. It provides for an initial monthly base rent of $9,412, which increases on an annual basis to $9,914 per month in the final year.

On September 23, 2024, the Company amended its Del Mar office lease with OF 09 Hacienda, LLC, extending the term of the agreement by 24 months to February 28, 2027 and setting rent amounts for the new term. The amended Del Mar office lease provides for an initial monthly base rent of $14,660 beginning March 1, 2025 and increases on an annual basis to $15,099 per month in the final year.

The right-of-use assets and lease liabilities for each lease location are as follows (in thousands):

|  | September 30, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
Right-of-use assets: |  |  |  |  |  |
Del Mar, CA |  | $ | 238 |  |  | $ | 357 |
Hayward, CA |  |  | 1,010 |  |  |  | 1,236 |
San Diego, CA |  |  | 263 |  |  |  | 357 |
Edwardsville, IL |  |  | 183 |  |  |  | 258 |
Total right-of-use assets |  | $ | 1,694 |  |  | $ | 2,208 |
Lease liabilities |  |  |  |  |  |
Del Mar, CA |  | $ | 246 |  |  | $ | 364 |
Hayward, CA |  |  | 1,082 |  |  |  | 1,311 |
San Diego, CA |  |  | 284 |  |  |  | 381 |
Edwardsville, IL |  |  | 187 |  |  |  | 261 |
Total lease liabilities |  | $ | 1,799 |  |  | $ | 2,317 |

The Company’s leases generally do not provide an implicit rate, and, therefore, the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within the same particular economic environment. The Company used its incremental borrowing rate as of January 1, 2019 for operating leases that commenced prior to that date. As of January 1, 2019, the Company’s incremental borrowing rate was 5.25%. For leases commencing after January 1, 2019 the Company uses its incremental borrowing rate at time of commencement. On September 1, 2022, June 1, 2023, and September 23, 2024, the Company’s incremental borrowing rate was 5.50%, 7.25%, and 6.25%, respectively. The weighted average remaining lease term for operating leases is 2.5 years and the weighted average discount rate is 5.5% as of September 30, 2025.

18

Lease expense is recognized on a straight-line basis over the lease term. For both the nine month periods ended September 30, 2025 and 2024, lease expense was approximately $0.6 million. As of September 30, 2025, undiscounted future minimum lease payments related to leases that have initial or remaining lease terms in excess of one year are as follows (in thousands):

2025 (remainder of year from October 1, 2025 to December 31, 2025) |  | $ | 203 |
2026 |  |  | 830 |
2027 |  |  | 573 |
2028 |  |  | 299 |
Total undiscounted future minimum lease payments |  |  | 1,905 |
Less: imputed interest |  |  | (106 | )
Present value of lease liabilities |  | $ | 1,799 |

Note 9 – Property and Equipment, net

Property and equipment are recorded at historical cost. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives on a straight-line basis. The life of the building acquired in connection with the ALT purchase transaction was determined to be 25 years. Leasehold improvements are amortized over the useful life of the asset or the lease term, whichever is shorter. Estimated service lives are five years for furniture, fixtures and office equipment and three years for software and technology assets. Expenditures for repairs and maintenance not considered to substantially lengthen the life of the asset or increase capacity or efficiency are charged to expense as incurred.

On February 11, 2025, the Company purchased real estate for $7.4 million consisting of land and a building which will be used as the Company’s future corporate headquarters and as future warehouse and office space for the operations of HGP. The Company allocated $2.8 million of the purchase price to the building and $4.6 million to the land. The life of the building was determined to be 30 years and depreciation will begin when the building is placed into service upon the completion of construction in progress. As of September 30, 2025, the Company capitalized $0.6 million of construction in progress related to ongoing building improvements. Also included in the purchase transaction was an agreement for a short-term leaseback to the seller, which ended on March 31, 2025, and resulted in a credit within the closing statement of approximately $0.1 million. This credit is considered rental income and classified as service revenue on our consolidated statement of income, and reflected as gross profit within our Corporate and other segment.

The following summarizes the components of the Company’s property and equipment (in thousands):

|  | September 30, 2025 |  |  | December 31, 2024 |
Building |  | $ | 3,797 |  |  | $ | 985 |
Land |  |  | 4,985 |  |  |  | 397 |
Furniture, fixtures and office equipment |  |  | 352 |  |  |  | 352 |
Software and technology assets |  |  | 452 |  |  |  | 443 |
Vehicles |  |  | 11 |  |  |  | 11 |
Construction in progress |  |  | 591 |  |  |  | - |
|  |  | 10,188 |  |  |  | 2,188 |
Accumulated depreciation |  |  | (702 | ) |  |  | (545 | )
Property and equipment, net |  | $ | 9,486 |  |  | $ | 1,643 |

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Note 10 – Intangible Assets and Goodwill

Intangible assets

The Company’s identifiable intangible assets as of September 30, 2025 and December 31, 2024 are shown below (in thousands except for lives):

|  | Remaining |  |  | Carrying Value |  |  |  |  |  | Carrying Value |
|  | Life |  |  | December 31, |  |  |  |  |  | September 30, |
|  | (years) |  |  | 2024 |  |  | Amortization |  |  | 2025 |
Amortizable intangible assets: |  |  |  |  |  |  |  |  |  |  |  |
Trade Name (ALT) |  |  | 15.9 |  |  | $ | 542 |  |  | $ | (25 | ) |  | $ | 517 |
Vendor Relationship (ALT) |  |  | 0.9 |  |  |  | 383 |  |  |  | (173 | ) |  |  | 210 |
Total amortizable intangible assets |  |  |  |  |  | 925 |  |  |  | (198 | ) |  |  | 727 |
Indefinite-lived intangible assets: |  |  |  |  |  |  |  |  |  |  |  |
Trade Name (NLEX) |  | N/A |  |  |  | 2,437 |  |  |  | — |  |  |  | 2,437 |
Total intangible assets |  |  |  |  | $ | 3,362 |  |  | $ | (198 | ) |  | $ | 3,164 |

Amortization expense during the nine months ended September 30, 2025 and 2024 was $0.2 million and $0.3 million, respectively. T he Company estimates that the residual value for intangible assets is no t significant.

As of September 30, 2025, the estimated amortization expense for the remainder of the current fiscal year and the next five fiscal years and thereafter is shown below (in thousands):

Year |  | Amount |
2025 (remainder of year from October 1, 2025 to December 31, 2025) |  | $ | 66 |
2026 |  |  | 186 |
2027 |  |  | 33 |
2028 |  |  | 33 |
2029 |  |  | 33 |
Thereafter |  |  | 376 |
Total estimated amortization expense |  | $ | 727 |

Goodwill

The Company’s goodwill relates to its acquisition of various entities. Goodwill consists of the following at September 30, 2025 and December 31, 2024 (in thousands):

|  | September 30, 2025 |  |  | December 31, 2024 |
ALT |  | $ | 1,861 |  |  | $ | 1,861 |
HGP |  |  | 2,041 |  |  |  | 2,041 |
NLEX |  |  | 3,544 |  |  |  | 3,544 |
Total goodwill |  | $ | 7,446 |  |  | $ | 7,446 |

There were no additions to goodwill and no impairments recorded to the carrying value of goodwill during either the nine months ended September 30, 2025 or 2024.

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Note 11 – Debt

Outstanding debt as of September 30, 2025 and December 31, 2024 is summarized as follows (in thousands):

|  | September 30, 2025 |  |  | December 31, 2024 |
Current: |  |  |  |  |  |
ALT Note |  | $ | — |  |  | $ | 395 |
2021 Credit Facility |  |  | — |  |  |  | — |
Total third party debt, current |  |  | — |  |  |  | 395 |
Non-current: |  |  |  |  |  |
Mortgage |  |  | 4,100 |  |  |  | — |
Total third party debt, non-current |  |  | 4,100 |  |  |  | — |
Total third party debt |  | $ | 4,100 |  |  | $ | 395 |

As of September 30, 2025, the estimated principal repayments on outstanding debt for the remainder of the current fiscal year, the next five fiscal years and thereafter is shown below (in thousands):

Year |  | Amount |
2025 (remainder of year from October 1, 2025 to December 31, 2025) |  | $ | — |
2026 |  |  | — |
2027 |  |  | — |
2028 |  |  | 55 |
2029 |  |  | 70 |
Thereafter |  |  | 3,975 |
Total estimated principal repayments |  | $ | 4,100 |

2021 Credit Facility

On May 5, 2021, the Company entered into a promissory note, business loan agreement, commercial security agreement and pledge agreement (the “2021 Credit Facility”) with C3bank, National Association ("Lender") for a $10.0 million revolving line of credit. The Company is permitted to use the proceeds of the loan solely for its business operations. The Company is the borrower under the 2021 Credit Facility. The 2021 Credit Facility is secured by a security interest in certain of the Company’s subsidiaries’ current and future tangible and intangible assets, inventory, chattel paper, accounts, equipment and general intangibles, and a pledge of the equity of the direct and indirect subsidiaries of the Company.

On August 23, 2022, the Company entered into a Loan Modification Agreement and Reaffirmation of Loan (the “First Modification Agreement”), effective as of April 1, 2022, by and between the Company and Lender. The First Modification Agreement modified and reaffirmed the 2021 Credit Facility to provide for, among other things, the arrangement of financial covenants, which remained unchanged, into two categories: (i) financial covenants used to resize the maximum principal amount available to the Company as of the date of determination (as determined by Lender in its sole discretion), and (ii) financial covenants to be maintained by the Company.

21

On May 26, 2023, the Company entered into a Loan Modification Agreement and Reaffirmation of Loan (the “Second Modification Agreement”), effective as of May 26, 2023, by and between the Company and Lender. The Second Modification Agreement modified and reaffirmed the 2021 Credit Facility to, among other things, extend the maturity date, modify the applicable interest rate, and further modify the loan covenants. The applicable interest rate spread and floor was modified to be the Wall Street Journal Prime rate plus 1.00% (such rate not to be less than 6.75% per annum). Additionally, the Second Modification Agreement modified the loan covenants to provide that the Company shall pay the Lender an annual unused line fee, payable on the earlier of (a) bi-annually every six (6) months in arrears, within ten (10) days thereof, commencing on October 27, 2023, or (b) the payment in full of the 2021 Credit Facility, but only if the average balance of the 2021 Credit Facility for the respective six months is below $5.0 million. The availability of additional draws under the 2021 Credit Facility is conditioned, among other things, on the compliance with certain customary representations and warranties, including default, insolvency or bankruptcy, material adverse change in financial condition and any guarantor’s attempt to revise its guarantee. The agreement governing the 2021 Credit Facility also contains customary affirmative covenants regarding, among other things, the maintenance of records, maintenance of certain insurance coverage, compliance with governmental requirements and maintenance of several financial covenants. The 2021 Credit Facility contains certain customary financial covenants and negative covenants that, among other things, include restrictions on the Company’s ability to create, incur or assume indebtedness for borrowed money, including capital leases or to sell, transfer, mortgage, assign, pledge, lease, grant a security interest in, or encumber any of the Company’s assets.

On July 24, 2024 the Company entered into a Loan Modification Agreement and Reaffirmation of Loan effective as of July 24, 2024, to modify certain loan covenants.

On October 4, 2024 the Company entered into a Loan Modification Agreement and Reaffirmation of Loan, effective as of October 4, 2024, to extend the maturity date of the 2021 Credit Facility.

The Company entered into a Loan Modification Agreement and Reaffirmation of Loan (the “Fifth Modification Agreement”), effective as of December 27, 2024, to extend the maturity date of the 2021 Credit Facility to June 27, 2026. The Fifth Modification Agreement also raises the interest rate floor by 0.25% to 7.0% and modifies certain compliance covenants.

As of September 30, 2025 there was no outstanding balance on the 2021 Credit Facility and the Company was in compliance with all financial and negative covenants.

ALT Note

On August 23, 2021, the Company entered into a $2.0 million subordinated promissory note with an interest rate of 3% per annum and a maturity date of August 23, 2025 (the “ALT Note”) as part of the aggregate purchase price paid to acquire certain assets and liabilities of American Laboratory Trading. The ALT Note required 48 equal installments of approximately $44,000 with the final payment made in August 2025. There is no outstanding balance on the ALT Note as of September 30, 2025.

Mortgage

On February 6, 2025, Heritage Nancy Ridge LLC (“Heritage Nancy Ridge”), an indirect and wholly owned subsidiary of the Company entered into a promissory note, a business loan agreement and commercial security agreement (collectively, the “Mortgage Loan Agreement”) with C3bank, National Association (the “Lender”). The Mortgage Loan Agreement provides for a $4.1 million term loan (the “Mortgage”). Heritage Nancy Ridge used the proceeds of the Mortgage to purchase real property and the building located at 6130 Nancy Ridge Drive in San Diego, California (the “Nancy Ridge Property”) on February 11, 2025, which will be used as the Company’s future corporate headquarters and as future warehouse and office space for the operations of Heritage Global Partners, Inc., a subsidiary of the Company that operates the Auction and Liquidation segment of the Company.

The maturity date of the Mortgage Loan Agreement is February 5, 2035. The Mortgage Loan Agreement sets the interest rate to accrue at a rate of 6.5% for the first three years of the Mortgage. For the remainder of the term, the Mortgage Loan Agreement sets the interest rate spread and interest rate floor to accrue at a variable interest rate, which is based on the one-month Term SOFR as published daily by CME Group, plus a margin of 2.25%. Additionally, the Mortgage Loan Agreement provides that in the event of prepayment, Heritage Nancy Ridge shall pay the Lender a prepayment fee during the first year of the Mortgage equal to three percent (3%) of the amount prepaid, followed by two percent (2%) of the amount prepaid in year two of the Mortgage, and one percent (1%) of the amount prepaid in year three of the Mortgage.

Heritage Ridge Nancy is the borrower and the Company is the guarantor under the Mortgage Loan Agreement. The Mortgage Loan Agreement is secured by a security interest in the Nancy Ridge Property. The Mortgage Loan Agreement contains customary affirmative covenants regarding, among other things, the maintenance of records, maintenance of certain insurance coverage, compliance with governmental requirements and maintenance of several financial covenants. The Mortgage Loan Agreement also contains certain customary financial covenants and negative covenants. The outstanding balance of the Mortgage as of September 30, 2025 was $4.1 million.

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Note 12 – Income Taxes

As of September 30, 2025, the Company had aggregate federal net operating loss carry-forwards of $41.0 million. These net operating loss carry forwards begin to expire in 2025. The Company has no net operating loss carry forwards limited under Section 382 of the Internal Revenue Code as of September 30, 2025.

The reported tax expense varies from the amount that would be provided by applying the statutory U.S. Federal income tax rate to the income from operations before taxes primarily as a result of the impact of state income taxes.

The Company records net deferred tax assets to the extent that it believes such assets will more likely than not be realized. As a result of cumulative losses and uncertainty with respect to future taxable income, the Company has provided a partial valuation allowance against its net deferred tax assets. At September 30, 2025 management reevaluated the Company's performance during the current fiscal year and forecast for the fourth quarter of 2025 and concluded that it is more likely than not that the Company will be able to utilize $22.5 million of the remaining $41.0 million federal net operating loss carry-forwards. Based on management's new estimate, the Company believes it is appropriate to increase the valuation allowance to a total of $3.9 million, recognizing $0.4 million as a discrete expense (tax effected at 21%) at September 30, 2025. As of September 30, 2025 and December 31, 2024, the Company's valuation allowance against its deferred tax assets was approximately $3.9 million and $3.5 million, respectively.

In July 2025, the One Big Beautiful Bill Act (the “OBBB”) was enacted into law, which includes significant tax related provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The Company currently does not expect the OBBB to have a material impact on its annual effective tax rate in 2025.

Note 13 – Related Party Transactions

As part of the operations of NLEX, the Company leases office space in Edwardsville, IL that is owned by the President of NLEX and a member of the board of directors of the Company, David Ludwig. The total amount paid to the related party for the nine month periods ended September 30, 2025 and 2024 was approximately $92,000 and $85,000, respectively, and is included in selling, general and administrative expenses in the unaudited condensed consolidated statements of income.

Note 14 – Segment Information

The following tables sets forth certain financial information for the Company's reportable segments for the three month periods ended September 30, 2025 and 2024 (in thousands):

|  | Three Months Ended September 30, 2025 |
|  | Auction and Liquidation |  |  | Refurbishment & Resale |  |  | Brokerage |  |  | Specialty Lending |  |  | Corporate and other |  |  | Consolidated |
Gross profit [1] |  | $ | 2,405 |  |  | $ | 1,430 |  |  | $ | 3,166 |  |  | $ | 299 |  |  | $ | — |  |  | $ | 7,300 |
Operating expenses [2] |  |  | (1,964 | ) |  |  | (984 | ) |  |  | (1,701 | ) |  |  | (257 | ) |  |  | (1,182 | ) |  |  | (6,088 | )
Earnings from equity method investments |  |  | 32 |  |  |  | — |  |  |  | — |  |  |  | 57 |  |  |  | — |  |  |  | 89 |
Operating income (loss) |  | $ | 473 |  |  | $ | 446 |  |  | $ | 1,465 |  |  | $ | 99 |  |  | $ | (1,182 | ) |  | $ | 1,301 |

|  | Three Months Ended September 30, 2024 |
|  | Auction and Liquidation |  |  | Refurbishment & Resale |  |  | Brokerage |  |  | Specialty Lending |  |  | Corporate and other |  |  | Consolidated |
Gross profit [1] |  | $ | 2,418 |  |  | $ | 1,066 |  |  | $ | 3,297 |  |  | $ | 436 |  |  | $ | — |  |  | $ | 7,217 |
Operating expenses [2] |  |  | (1,864 | ) |  |  | (913 | ) |  |  | (1,642 | ) |  |  | (351 | ) |  |  | (1,068 | ) |  |  | (5,838 | )
Earnings from equity method investments |  |  | 29 |  |  |  | — |  |  |  | — |  |  |  | 71 |  |  |  | — |  |  |  | 100 |
Operating income (loss) |  | $ | 583 |  |  | $ | 153 |  |  | $ | 1,655 |  |  | $ | 156 |  |  | $ | (1,068 | ) |  | $ | 1,479 |

23

The following tables sets forth certain financial information for the Company's reportable segments for the nine month periods ended September 30, 2025 and 2024 (in thousands):

|  | Nine Months Ended September 30, 2025 |
|  | Auction and Liquidation |  |  | Refurbishment & Resale |  |  | Brokerage |  |  | Specialty Lending |  |  | Corporate and other |  |  | Consolidated |
Gross profit [1] |  | $ | 8,134 |  |  | $ | 4,173 |  |  | $ | 10,252 |  |  | $ | 1,099 |  |  | $ | 64 |  |  | $ | 23,722 |
Operating expenses [2] |  |  | (6,053 | ) |  |  | (3,052 | ) |  |  | (5,210 | ) |  |  | (921 | ) |  |  | (3,762 | ) |  |  | (18,998 | )
Earnings from equity method investments |  |  | 31 |  |  |  | — |  |  |  | — |  |  |  | 181 |  |  |  | — |  |  |  | 212 |
Operating income (loss) |  | $ | 2,112 |  |  | $ | 1,121 |  |  | $ | 5,042 |  |  | $ | 359 |  |  | $ | (3,698 | ) |  | $ | 4,936 |

|  | Nine Months Ended September 30, 2024 |
|  | Auction and Liquidation |  |  | Refurbishment & Resale |  |  | Brokerage |  |  | Specialty Lending |  |  | Corporate and other |  |  | Consolidated |
Gross profit [1] |  | $ | 8,022 |  |  | $ | 2,874 |  |  | $ | 10,794 |  |  | $ | 2,099 |  |  | $ | — |  |  | $ | 23,789 |
Operating expenses [2] |  |  | (5,913 | ) |  |  | (2,702 | ) |  |  | (5,132 | ) |  |  | (1,581 | ) |  |  | (3,502 | ) |  |  | (18,830 | )
Earnings from equity method investments |  |  | 1,391 |  |  |  | — |  |  |  | — |  |  |  | 1,231 |  |  |  | — |  |  |  | 2,622 |
Operating income (loss) |  | $ | 3,500 |  |  | $ | 172 |  |  | $ | 5,662 |  |  | $ | 1,749 |  |  | $ | (3,502 | ) |  | $ | 7,581 |

[1] Within the Company’s Industrial Asset division, management allocates gross profit resulting from certain auctions from Auctions and Liquidation (HGP) to Refurbishment & Resale (ALT). From time to time, ALT may source and refer an auction project to HGP or directly sell lab equipment inventory through the auction channel. In these instances, the profits relating to these transactions are allocated to ALT rather than accounted for under the segment profit or loss of HGP. During the three months ended September 30, 2025, the total amount of gross profit allocated to ALT from HGP was approximately $0.5 million, as compared to the total amount of gross profit allocated to ALT during the same period of 2024 of approximately $0.3 million. During the nine months ended September 30, 2025, the total amount of gross profit allocated to ALT from HGP was approximately $1.1 million, as compared to the total amount of gross profit allocated to ALT during the same period of 2024 of approximately $0.8 million.

[2] All financing arrangements are originated with Corporate and other. Management may determine from time to time that interest incurred from financing arrangements are directly attributable to a specific segment. As a result, interest incurred may be charged to the segment and included in that segment’s profit or loss as a charge to operating expense. During the three months ended September 30, 2024, no interest was allocated to Specialty Lending (HGC) from Corporate and other. During the nine months ended September 30, 2024, the total amount of interest allocated to Specialty Lending (HGC) from Corporate and other was approximately $0.3 million. No interest expense has been allocated to operating segments during the nine months ended September 30, 2025.

Note 16 – Subsequent Events

The Company has evaluated events subsequent to September 30, 2025 for potential recognition or disclosure in its condensed consolidated financial statements. There have been no material subsequent events requiring recognition or disclosure in this Quarterly Report on Form 10-Q.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with the information contained in the unaudited condensed consolidated interim financial statements of Heritage Global Inc. (together with its consolidated subsidiaries, “we”, “us”, “our” or the “Company”) and the related notes thereto for the three and nine month periods ended September 30, 2025 and 2024, appearing elsewhere herein, and in conjunction with the Management’s Discussion and Analysis of Financial Condition and Results of Operations set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (“SEC”) on March 13, 2025 (the “Form 10-K”).

Forward Looking Information

This Quarterly Report on Form 10-Q (the “Report”) contains certain “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995 that are based on management’s exercise of business judgment as well as assumptions made by, and information currently available to, management. When used in this document, the words “may,” "will,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” and words of similar import, are intended to identify any forward-looking statements. You should not place undue reliance on these forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These statements are subject to certain risks, uncertainties, and assumptions, including variability in magnitude and timing of asset liquidation transactions, the collectability of the charged off receivables that secure our loan portfolio, the impact of tariffs and other changes in the U.S. national and global economies, and interest rate and foreign exchange rate sensitivity, as well as the important factors noted under Item 1A “Risk Factors” in our Form 10-K, and as noted below. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results could differ materially from those anticipated in these forward-looking statements. We undertake no obligation, and do not intend, to update, revise or otherwise publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of any unanticipated events. Although we believe that our expectations are based on reasonable assumptions, we can give no assurance that our expectations will materialize.

Overview, History and Recent Developments

Heritage Global Inc. was incorporated in Florida in 1983 under the name “MedCross, Inc.” Our name was changed to “I-Link Incorporated” in 1997, to “Acceris Communications Inc.” in 2003, to “C2 Global Technologies Inc.” in 2005, to “Counsel RB Capital Inc.” in 2011, and to Heritage Global Inc. in 2013. The most recent name change more closely identifies HG with its auction and specialty lending business lines.

Our corporate headquarters are located at 12625 High Bluff Drive, Suite 305, San Diego, CA 92130. Our telephone number is (858) 847-0659 and our corporate website is www.hginc.com. Information contained on our website is not incorporated by reference into this Form 10-Q.

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The organization chart below outlines our basic domestic corporate structure as of September 30, 2025.

|  |  |  |  | Heritage Global Inc. (1) |  |  |  |  |
| 100% |  | 100% |  |  | 100% |  | 100% |
| Heritage Global Partners, Inc. (2) (California) |  | Heritage Global LLC (3) (Delaware) |  |  | National Loan Exchange, Inc. (5) (Illinois) |  | Heritage Global Capital LLC (6) (Delaware) |
|  |  | 100% |  |  |  |  |  |  |  |
|  |  | Heritage ALT LLC (4) (Delaware) |  |  |  |  |  |  |  |

____________________

(1) Registrant.

(2) Auction and Liquidation.

(3) Holding Company.

(4) Refurbishment and Resale.

(5) Brokerage.

(6) Specialty Lending.

Nonaccrual Loans

We determine a loan to be in default status when the minimum payment amount has not been received within the grace period of the payment due date. The status of default does not solely trigger nonaccrual loan status. We consider quantitative and qualitative factors when evaluating a loan in default status to determine the likelihood of recovering the outstanding principal balance and contractual interest payments. We also monitor financial standing and performance of our borrowers on an ongoing basis and regularly update the collection forecasts for the underlying charged off or nonperforming receivable portfolios related to each outstanding loan. If we determine (1) it is not probable that the projected cash flows expected from the borrower’s collection efforts on the underlying charged off or nonperforming receivable portfolio will be sufficient to satisfy all of the outstanding principal balance and contractual interest payments, and (2) it is not probable that the borrower will be able to meet the minimum required principal and interest payments through other operational cash flows, we will place the loans on nonaccrual status. If, based on our analysis, we elect to maintain accrual status after initial payment default, the loan will generally be placed on nonaccrual status if principal or interest payments become 90 days past due.

The accrual of interest is generally discontinued and all accrued interest is reversed against interest income when a loan is placed on nonaccrual status. Interest received on such loans is accounted for using the cost-recovery or the cash-basis method, until qualifying for return to accrual. Under the cost-recovery method, interest income is not recognized until the loan balance is reduced to zero. Under the cash-basis method, interest payments received by the creditor are recorded as interest income provided the amount does not exceed the amount that would have been earned at the loan’s original effective interest rate. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current, there is a sustained period of repayment performance, and all remaining principal and interest payments are deemed probable.

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Pursuant to the terms of existing credit agreements, our largest borrower was required to collect on underlying charged off and nonperforming consumer loan portfolios and remit a required minimum monthly payment to us. However, this borrower became unable to make the required minimum monthly payments and therefore is in default. While in default, this borrower continues to collect on the underlying charged off and nonperforming consumer loan portfolios but must remit all such net collections to us and senior lenders. These remittances of net collections have not met the amount of the required minimum monthly payments since June of 2024. We determined that (1) it is not probable that the projected cash flows expected from the borrower’s collection efforts on the underlying charged off or nonperforming receivable portfolio will be sufficient to satisfy all of the outstanding principal balance and contractual interest payments, and (2) it is not probable that the borrower will be able to meet the minimum required principal and interest payments through other operational cash flows. We do not expect to realize any return with respect to these loans in 2025, and whether we will realize any return with respect to these loans is uncertain. As we continue to work closely with the borrower and its senior lenders in an effort to mitigate the default in an efficient and effective manner, the impacted loans have been placed in nonaccrual status beginning in June 2024. In addition, there was a balance of $1.5 million from our share of other loans within affiliated Joint Ventures that are impacted by the default with our largest borrower and have been placed in nonaccrual status as of June 2024. Our share of payments received from this borrower, including interest, will be applied against the outstanding loan balance. As of September 30, 2025, the amortized cost basis of loans in nonaccrual status was $22.3 million, of which $4.8 million is recorded within notes receivable and $17.5 million is recorded within equity method investments. As of December 31, 2024, the amortized cost basis of loans in nonaccrual status was $23.5 million, of which $5.3 million is recorded within notes receivable and $18.2 million is recorded within equity method investments.

Industry and Competition

Our business consists primarily of the auction, appraisal, refurbishment and asset advisory services provided by our Industrial Assets division and the charged-off receivable brokerage and specialty financing services provided by our Financial Assets division, each of which is further described below. Our business also includes the purchase and sale, including at auction, of industrial machinery and equipment, real estate, inventories, charged-off receivable and distressed debt. The market for all of these services and assets is highly fragmented. To acquire auction or appraisal contracts, or assets for resale, we compete with other liquidators, auction companies, dealers and brokers. We also compete with them for potential purchasers and lenders. Some competitors have significantly greater financial and marketing resources and name recognition.

We believe that our business is positioned to grow in all economic cycles. As the economy encounters situations of recession, flattening yield curves and rising credit costs, our business may experience wider margins on principal asset sales, a favorable lending cycle for charged-off and nonperforming asset portfolios, higher volumes of nonperforming assets and building surplus inventories and bankruptcies. In times of economic growth, our business has demonstrated its ability to experience growth based on our competitive advantages in the industry, including our domain expertise related to deal sourcing and execution capabilities, our diversification of integrated service platforms and our experience across underserved markets. We intend to continue to leverage our competitive advantages to grow within each segment and across platforms through increasing synergies, maintaining high incremental margins, improving earnings predictability, strengthening financial metrics reflected on our balance sheet and managing expenses.

Our business strategy in the Specialty Lending and Auction and Liquidation segments includes the option of partnering with one or more additional purchasers or lenders, pursuant to a partnership, joint venture or limited liability company agreement (collectively, “Joint Ventures”). These Joint Ventures give us access to more opportunities, help to mitigate some of the competition from the market’s larger participants, and contribute to our objective to be the leading resource for clients requiring financial and industrial asset solutions.

Our Competitive Strengths

We believe we have attributes that differentiate us from our competitors and that provide us with significant competitive advantages. Our key competitive strengths are described below.

Differentiated business model. We believe we have diversified business lines serving the financial and industrial asset liquidation market. We have multiple revenue streams including our brokerage, principal based auction services, refurbishment and resale, advisory services and secured lending services. Further, our business is event-driven and we have repeat, forward-flow contracts in place with industry leading customers. We expect to drive growth in our revenue streams by taking different roles, and using partners as needed.

Compelling macro growth drivers. Historically, recessions drive an increased supply of surplus assets and an increased demand for liquidation services, which we believe we are well-positioned to provide. Further, consumer lending and resulting charge-offs, specifically via credit cards, are expected to continue their upward trend to meet, and possibly exceed, pre-pandemic levels, which we believe will drive an increased supply of charged off and non-performing assets. Additionally, we believe an active market for mergers and acquisitions in manufacturing industries drives demand for industrial asset liquidations and our services. The market in which we operate is highly fragmented, presenting a continued opportunity for the Company to increase market share and drive consolidation.

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High return on invested capital - We believe we have an opportunity to drive improved auction economics by serving more frequently in the role of principal rather than the lower margin role of broker.

Strong management team. We have built an experienced executive-level management team with deep domain expertise. Our President and Chief Executive Officer, Ross Dove, is a third-generation auctioneer and a pioneering innovator in applying technology to the asset liquidation industry. Mr. Dove began his career in the auction business over forty years ago, beginning with a small family-owned auction house and helping to expand it into a global firm, DoveBid, which was sold to a third party in 2008. In addition, our senior management team has deep domain expertise in both industrial asset and financial asset transactions. On September 17, 2020, we entered into an Employment Agreement with Kirk Dove, the former President and Chief Operating Officer of the Company. Upon his resignation, Kirk Dove continued his employment with us in an advisory capacity, and is expected to do so until December 31, 2027. Also, during 2020, Nick Dove was appointed as President, Industrial Assets Division, and David Ludwig was appointed as President, Financial Assets Division. Nick Dove previously served as Executive Vice President of Sales of Heritage Global Partners since August 2017. David Ludwig previously served as President of NLEX, a wholly owned subsidiary of the Company, and has served in such capacity since the Company acquired NLEX in 2014.

Financial Assets Division

Our Financial Assets Division provides services to issuers of consumer credit that are looking to monetize nonperforming and charged-off loans — loans that creditors have written off as uncollectable. Nonperforming and charged-off loans typically originate from banks that issue unsecured consumer credit.

Brokerage Segment

Through NLEX, we act as an advisor for sales of charged-off and nonperforming asset portfolios via an electronic auction exchange platform for banks and other debt holders throughout the United States and Canada. Since the 1980s, NLEX has sold over $200 billion face value of performing, nonperforming and charged-off assets. NLEX sales range from credit card, secured and unsecured consumer and business loans, and automobile defaults to real estate nonperforming loans. The typical credit we broker sells at a discount to face value, and we typically receive a commission for these services from both buyers and sellers. We have existing relationships with high quality, top-tier and mid-tier debt buyers. In addition to its creditor relationships, NLEX has continued to be opportunistic as new lending facilities, such as FinTech, peer-to-peer and more recently Buy Now Pay Later lenders have expanded the availability of consumer credit. Because of growing volume in this industry, and due to continued elevated delinquency and charge-off rates, we anticipate growth opportunities in our brokerage segment as these sectors evolve. Given many of our clients' limited resources in this space, we have also implemented post-sale support, further entrenching NLEX with our dedicated clients as well as differentiating us from competitors.

Specialty Lending Segment

Through HGC, we provide specialty financing solutions to investors in charged-off and nonperforming asset portfolios. Since the inception of HGC in 2019, we have issued $158.5 million in total loans to investors by both self- funded loans and in partnership with senior lenders. Our portion of the total loans funded since inception is $72.1 million. Our income from secured lending consists of upfront fees, interest income, monthly monitoring fees and backend profit share. As of September 30, 2025, our net balance related to investments in loans to buyers of charged-off and nonperforming receivable portfolios was $27.3 million, of which $8.9 million is classified as notes receivable and $18.4 million is classified as equity method investments.

Specialty Lending - Concentration and credit risk

As of September 30, 2025, we held a gross balance of investments in notes receivable of $28.4 million, recorded in both notes receivable and equity method investments, and consisting of one borrower’s note balance of approximately $21.7 million, representing 76% of our total gross notes receivable balance as of September 30, 2025, as compared to 74% as of December 31, 2024. As discussed further above, our largest borrower is in default. As a result, the balance of the loans outstanding with our largest borrower were in nonaccrual status as of September 30, 2025. Whether we will realize any return with respect to the impacted loans is uncertain. We do not intend to hold highly concentrated balances due from one borrower as part of its long-term strategy but will in the short term have concentration risk on our path to an established and diversified portfolio.

We do not evaluate concentration risk solely based on balance due from specific borrowers, but also consider the number of portfolio purchases, type of charged off accounts within the portfolio, and the seller of the portfolio when determining the overall risk. Of the balance due from one borrower of $21.7 million, there are 11 distinct loan agreements, the underlying portfolio of accounts are diversified throughout FinTech, installment loans and credit card accounts, and further diversified amongst six separate sellers of these charged off portfolios.

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We mitigate this concentration risk by requiring, and monitoring, security from each borrower consisting of their charged off and nonperforming receivable portfolios. We engage in a due diligence process that leverages our valuation expertise, knowledge and experience in the underlying nonperforming receivable portfolios marketplace. In the event of default, we are entitled to call the unpaid interest and principal balances and receive all net collections directly. We may also recover our investment by engaging a third party to collect on the underlying charged off or nonperforming receivable portfolio or the underlying portfolio can be sold through our Brokerage segment. In certain cases, our recovery options may be subject to concurrence of the originator or other prior holder of the assets.

Industrial Assets Division

Our Industrial Assets Division advises enterprise and financial customers on the sale of industrial assets, mostly from surplus and sometimes distressed circumstances while acting as an agent, guarantor or principal in the sale.

Auction and Liquidation Segment

Through HGP, we offer a global full-service auction, appraisal and asset advisory firm, including the acquisition of turnkey manufacturing facilities and used industrial machinery and equipment. The fees for our services typically range from 15%–50%, depending on our role and the transaction. This division predominantly targets sellers of surplus or distressed “inside the building” assets. Our buyers consist of both end-users and dealers.

Refurbishment & Resale Segment

Through ALT, we have specialized our offering in the biotech and pharma sectors, which have been key verticals over the past decade. ALT focuses on refurbishing and reselling laboratory equipment.

Our management team has decades of domain expertise with the ability to leverage extensive industry relationships, real time access to databases of buyers and sales, as well as a deep understanding of the underlying asset value across the more than 25 industrial sectors in which we operate. We believe we have the opportunity for growth in our auction services through our ability to secure ongoing contracts with large multinational sellers, to be a first mover in emerging sectors, and to gain market share in sectors in which we are currently less active. Our extensive network and ability to find and source new opportunities are key factors for expansion. We believe we have the opportunity for growth in our valuation services through the addition of incremental bank-approved vendor lists, geographic expansion and through deeper penetration with our existing bank relationships.

Government Regulation and Activities

We are subject to federal, state and local consumer protection laws, including laws protecting the privacy of customer non-public information and regulations prohibiting unfair and deceptive trade practices. Many jurisdictions also regulate “auctions” and “auctioneers” and may regulate online auction services. These consumer protection laws and regulations could result in substantial compliance costs and could interfere with the conduct of our business.

Legislation in the United States has increased public companies’ regulatory and compliance costs as well as the scope and cost of work provided by independent registered public accountants and legal advisors. As regulatory and compliance guidelines continue to evolve, we may incur additional costs in the future, which may or may not be material, in order to comply with legislative requirements or rules, pronouncements and guidelines by regulatory bodies.

The current domestic and international political environment have contributed to uncertainty surrounding the future state of the global economy. While it is difficult to predict the ultimate effect of tariffs, trade disputes, and related matters on our business, to the extent that imported goods are subject to tariffs that reduce their availability and increase their price, demand may increase for the used industrial assets sold at our auctions, which could benefit our business. With respect to our Financial Assets Division, an economic downturn could increase the amount of distressed debt, which would tend to increase opportunities for our brokerage and specialty lending businesses, but could also reduce the collectability of the charged off receivables purchased by our debt buyers, which would negatively affect our specialty lending business.

Critical Accounting Policies and Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations references our unaudited condensed consolidated interim financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). This requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Management bases its estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results could differ from those estimates.

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Significant estimates include the assessment of collectability of revenue recognized and the valuation of accounts receivable and notes receivable, inventory, investments, goodwill and intangible assets, liabilities, deferred income tax assets and liabilities including projecting future years’ taxable income, and stock-based compensation. These estimates have the potential to significantly impact our consolidated financial statements, either because of the significance of the financial statement item to which they relate, or because they require judgment and estimation due to the uncertainty involved in measuring, at a specific point in time, events that are continuous in nature.

We have no off-balance sheet arrangements.

We have not paid any dividends, and do not expect to pay any dividends in the future.

The critical accounting policies used in the preparation of our audited consolidated financial statements are discussed in our Form 10-K. There were no material changes to these policies during the nine months ended September 30, 2025.

Management’s Discussion of Financial Condition

Liquidity and Capital Resources

Liquidity

We had working capital of $17.9 million and $18.5 million as of September 30, 2025 and December 31, 2024, respectively.

Our current assets as of September 30, 2025 decreased to $31.8 million compared to $33.1 million as of December 31, 2024. This change was primarily due to a decrease in cash of $2.3 million and a decrease in other current assets of $0.3 million, partially offset by an increase in inventory of $0.3 million, an increase in the current portion of notes receivable of $0.8 million, and an increase in accounts receivable of $0.2 million. Our current liabilities as of September 30, 2025 decreased to $13.9 million compared to $14.6 million as of December 31, 2024. The most significant changes were a decrease of $0.6 million in payables to sellers due to the timing of certain asset liquidation settlements and a decrease of $0.4 million in the current portion of third party debt, partially offset by an increase of $0.2 million in accounts payable and accrued liabilities.

During the nine months ended September 30, 2025, our primary source of cash was cash on hand, cash provided by operating activities, principal repayments on outstanding loans, and proceeds from a promissory note, a business loan agreement and commercial security agreement (collectively, the “Mortgage Loan Agreement”) with C3bank, National Association, that provides for a $4.1 million term loan (the “Mortgage”). Cash disbursements during the nine months ended September 30, 2025 consisted primarily of investments in notes receivable, investments in equity method investments including related participating interest, repurchases of our common stock, and the purchase of our new building for $7.4 million.

We believe we can fund our operations and our debt service obligations for 12 months from the date of filing this quarterly report and beyond through a combination of working capital, cash flows from our on-going operations and accessing financing from our existing line of credit.

Our indebtedness consists of the Mortgage of $4.1 million and any amounts borrowed under our 2021 Credit Facility. The Company also had indebtedness that consisted of a promissory note dated August 23, 2021 (the “ALT Note”) issued in the amount of $2.0 million as part of the aggregate purchase price paid to acquire certain assets and liabilities of American Laboratory Trading. The Company repaid the ALT Note in full in August, 2025. As of September 30, 2025, we had no outstanding balance on the ALT Note.

On February 6, 2025 we entered into “the Mortgage Loan Agreement” with C3bank, National Association (the “Lender”). The Mortgage Loan Agreement provides for the Mortgage which we used to purchase real property and the building located at 6130 Nancy Ridge Drive in San Diego, California on February 11, 2025. This property will be used as the Company’s future corporate headquarters and as future warehouse and office space for the operations of Heritage Global Partners, Inc., our subsidiary that operates our Auction and Liquidation segment. As of September 30, 2025, we had an outstanding balance of $4.1 million on the Mortgage.

On December 27, 2024, the Company entered into a Loan Modification Agreement and Reaffirmation of Loan (the “Fifth Modification Agreement”), by and between the Company and the Lender. The Fifth Modification Agreement modifies and reaffirms the 2021 Credit Facility to, among other things, extend the maturity date to June 27, 2026, modify the applicable interest rate, and further modify the loan covenants. We are permitted to use the proceeds of the loan solely for our business operations. As of September 30, 2025, we had no outstanding balance on the 2021 Credit Facility.

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Capital Resources

As of September 30, 2025 and December 31, 2024, we had stockholders’ equity of $66.5 million and $65.2 million, respectively.

We determine our future capital and operating requirements based upon our current and projected operating performance and contractual commitments. We expect to be able to finance our future operations through a combination of working capital, future net cash flows from operating activities and our 2021 Credit Facility. Our contractual requirements are limited to the outstanding debt and lease commitments with related and unrelated parties. Capital requirements are generally limited to our purchases of surplus and distressed assets and our investment activity under our Specialty Lending segment. We believe that our current capital resources, including available borrowing capacity from our 2021 Credit Facility is sufficient for these requirements. In the event additional capital is needed, we believe we can obtain additional debt financing through capital partners.

Cash Position and Cash Flows

Cash and cash equivalents as of September 30, 2025 were $19.4 million as compared to $21.7 million as of December 31, 2024, a decrease of approximately $2.3 million. The total cash amount reflected on our balance sheet represents the total cash and cash equivalents held on account. Cash amounts owed to our clients are identified as payables to sellers within current liabilities. We view cash net of payables to sellers as available for operations or investment purposes. As of September 30, 2025 payables to sellers was $6.8 million, resulting in a net cash available balance of $12.6 million compared to available cash of $14.3 million as of December 31, 2024.

Cash Flows From Operating Activities

Cash provided by operating activities was $4.6 million during the nine months ended September 30, 2025 as compared to $13.3 million during the same period in 2024. The approximate $8.7 million change was primarily attributable to a decrease in operating assets and liabilities of $8.9 million offset by an increase of $0.2 million in net income adjusted for noncash items during the nine months ended September 30, 2025 as compared to the same period in 2024.

The changes in operating assets and liabilities during the nine months ended September 30, 2025 as compared to the same period in 2024 are primarily due to the nature of our operations. We earn revenue from discrete asset liquidation deals that vary considerably with respect to their magnitude and timing, and that can consist of fees, commissions, asset sale proceeds, or a combination thereof. The operating assets and liabilities associated with these deals are, therefore, subject to the same variability and can be quite different at the end of any given period.

Cash Flows From Investing Activities

Cash used in investing activities during the nine months ended September 30, 2025 was $8.9 million compared to cash provided by investing activities of $8.9 million during the same period in 2024.

Cash used in investing activities during the nine months ended September 30, 2025 consisted primarily of purchase of property and equipment of $7.9 million, investments in notes receivable of $4.4 million, investment in equity method investments of $1.6 million and an investment in a participating interest of $1.6 million. Cash used in investing activities during the nine months ended September 30, 2025 was offset by payments received on notes receivable of $5.1 million and return of investment and cash distributions received from equity method investments of $1.3 million.

Cash provided by investing activities during the nine months ended September 30, 2024 consisted primarily of payments received on notes receivable of $9.0 million and return of investment and cash distributions received from equity method investments of $5.3 million. Cash provided by investing activities during the nine months ended September 30, 2024 was offset by cash used in investing activities primarily of investments in notes receivable of $5.0 million and equity method investments of $0.3 million.

Cash Flows From Financing Activities

Cash provided by financing activities was approximately $2.0 million during the nine months ended September 30, 2025 compared to cash used in financing activities of $7.8 million during the nine months ended September 30, 2024. Financing activities during the nine months ended September 30, 2025 consisted primarily of $4.1 million in proceeds from our Mortgage and $1.1 million of proceeds from secured borrowing, partially offset by $2.6 million in repurchases of our common stock and $0.4 million in repayments of third party debt. Cash used in financing activities during the nine months ended September 30, 2024 consisted primarily of $6.3 million in repayments of our Term Loan, $0.4 million in repayments to our ALT Note and $1.1 million in repurchases of our common stock.

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Contractual Obligations

Our significant contractual obligations are our third party loans, client and partner asset liquidation settlement payments and lease obligations. The loan and lease obligations are fully described in the notes to the consolidated financial statements included in our Form 10-K.

Management’s Discussion of Results of Operations

The following table sets out the Company’s condensed consolidated results of operations for the nine months ended September 30, 2025 and 2024 (in thousands).

|  | Three Months Ended September 30, |  |  | Change |  |  | Nine Months Ended September 30, |  |  | Change |
|  | 2025 |  |  | 2024 |  |  | Dollars |  |  | Percent |  |  | 2025 |  |  | 2024 |  |  | Dollars |  |  | Percent |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Services revenue |  | $ | 7,475 |  |  | $ | 8,063 |  |  | $ | (588 | ) |  |  | (7 | )% |  | $ | 25,389 |  |  | $ | 25,527 |  |  | $ | (138 | ) |  |  | (1 | )%
Asset sales |  |  | 3,885 |  |  |  | 2,347 |  |  |  | 1,538 |  |  |  | 66 | % |  |  | 13,734 |  |  |  | 9,067 |  |  |  | 4,667 |  |  |  | 51 | %
Total revenues |  |  | 11,360 |  |  |  | 10,410 |  |  |  | 950 |  |  |  | 9 | % |  |  | 39,123 |  |  |  | 34,594 |  |  |  | 4,529 |  |  |  | 13 | %
Operating costs and expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of services revenue |  |  | 1,451 |  |  |  | 1,735 |  |  |  | (284 | ) |  |  | (16 | )% |  |  | 6,098 |  |  |  | 4,665 |  |  |  | 1,433 |  |  |  | 31 | %
Cost of asset sales |  |  | 2,609 |  |  |  | 1,458 |  |  |  | 1,151 |  |  |  | 79 | % |  |  | 9,303 |  |  |  | 6,140 |  |  |  | 3,163 |  |  |  | 52 | %
Selling, general and administrative |  |  | 5,968 |  |  |  | 5,686 |  |  |  | 282 |  |  |  | 5 | % |  |  | 18,642 |  |  |  | 18,390 |  |  |  | 252 |  |  |  | 1 | %
Depreciation and amortization |  |  | 120 |  |  |  | 152 |  |  |  | (32 | ) |  |  | (21 | )% |  |  | 356 |  |  |  | 440 |  |  |  | (84 | ) |  |  | (19 | )%
Total operating costs and expenses |  |  | 10,148 |  |  |  | 9,031 |  |  |  | 1,117 |  |  |  | 12 | % |  |  | 34,399 |  |  |  | 29,635 |  |  |  | 4,764 |  |  |  | 16 | %
Earnings of equity method investments |  |  | 89 |  |  |  | 100 |  |  |  | (11 | ) |  |  | (11 | )% |  |  | 212 |  |  |  | 2,622 |  |  |  | (2,410 | ) |  |  | (92 | )%
Operating income |  |  | 1,301 |  |  |  | 1,479 |  |  |  | (178 | ) |  |  | (12 | )% |  |  | 4,936 |  |  |  | 7,581 |  |  |  | (2,645 | ) |  |  | (35 | )%
Interest income (expense), net |  |  | 34 |  |  |  | 17 |  |  |  | 17 |  |  |  | 100 | % |  |  | 108 |  |  |  | (183 | ) |  |  | 291 |  |  |  | (159 | )%
Income before income tax expense |  |  | 1,335 |  |  |  | 1,496 |  |  |  | (161 | ) |  |  | (11 | )% |  |  | 5,044 |  |  |  | 7,398 |  |  |  | (2,354 | ) |  |  | (32 | )%
Income tax expense |  |  | 750 |  |  |  | 407 |  |  |  | 343 |  |  |  | 84 | % |  |  | 1,758 |  |  |  | 2,013 |  |  |  | (255 | ) |  |  | 13 | %
Net income |  | $ | 585 |  |  | $ | 1,089 |  |  | $ | (504 | ) |  |  | (46 | )% |  | $ | 3,286 |  |  | $ | 5,385 |  |  | $ | (2,099 | ) |  |  | (39 | )%

Our revenue has several components: (1) traditional fee based asset disposition services, such as commissions from on-line and webcast auctions, liquidations and negotiated sales, and commissions from the NLEX charged-off receivables business, (2) the acquisition and subsequent disposition of distressed and surplus assets, including industrial machinery and equipment and real estate, and (3) fees and interest earned for appraisal, management advisory services and specialty lending services.

We report segment information based on the “management” approach. The management approach designates the internal reporting used by the Chief Operating Decision Maker (CODM), which was determined to be Ross Dove, CEO, for making decisions and assessing performance as the source of our reportable segments. We manage our business primarily on differentiated revenue streams for services offered. Our reportable segments consist of the Auction and Liquidation segment, Refurbishment & Resale segment, Brokerage segment, and Specialty Lending segment. The Auction and Liquidation segment, through HGP, operates as a global full-service auction, appraisal and asset advisory firm, including the acquisition of turnkey manufacturing facilities and used industrial machinery and equipment. The Refurbishment & Resale segment, through ALT, acquires, refurbishes and supplies specialized laboratory equipment. The Brokerage segment, through NLEX, brokers charged-off receivables in the U.S. and Canada on behalf of financial institutions. The Specialty Lending segment, through HGC, provides specialty financing solutions to investors in charged-off and nonperforming asset portfolios.

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Our CODM evaluates the performance of the Company's reportable segments based primarily on operating income and routinely receives internal reports that analyze operating income for the reporting segments. The CODM is not routinely provided detailed information regarding significant operating expenses by segment, and such information is not considered critical for allocating resources or assessing the performance of each segment. Our operating expenses are comprised mainly of fixed and variable compensation, marketing, outside services such as audit, legal and information technology, occupancy, and other regulatory costs incurred as a public entity. Additionally, earnings from equity method investments related to significant transactions involving real estate, machinery and equipment in the Company's Auction and Liquidation segment and Joint Venture lending activity related to the Company's Specialty Lending segment are significant in the computation of segment operating income and reported separately as shown in the table below.

Notwithstanding the foregoing, the reported segment operating income for ALT and HGC represents incremental costs for managing these segments as part of their sister segments (HGP for ALT and NLEX for HGC). As such, the reported operating income for ALT and HGC does not represent their true standalone contribution, as we do not attempt to allocate existing fixed divisional overhead costs of the sister divisions to the newer segments. Similarly, corporate overhead cost is not allocated to the operating divisions for management reporting purposes. Further, we do not utilize segmented asset information to evaluate the performance of our reportable segments and do not include intercompany transfers between segments for management reporting purposes.

The following table sets forth certain financial information for the Company's reportable segments for the three month periods ended September 30, 2025 and 2024 (in thousands):

|  | Three Months Ended September 30, 2025 |
|  | Auction and Liquidation |  |  | Refurbishment & Resale |  |  | Brokerage |  |  | Specialty Lending |  |  | Corporate and other |  |  | Consolidated |
Gross profit [1] |  | $ | 2,405 |  |  | $ | 1,430 |  |  | $ | 3,166 |  |  | $ | 299 |  |  | $ | — |  |  | $ | 7,300 |
Operating expenses [2] |  |  | (1,964 | ) |  |  | (984 | ) |  |  | (1,701 | ) |  |  | (257 | ) |  |  | (1,182 | ) |  |  | (6,088 | )
Earnings from equity method investments |  |  | 32 |  |  |  | — |  |  |  | — |  |  |  | 57 |  |  |  | — |  |  |  | 89 |
Operating income (loss) |  | $ | 473 |  |  | $ | 446 |  |  | $ | 1,465 |  |  | $ | 99 |  |  | $ | (1,182 | ) |  | $ | 1,301 |

|  | Three Months Ended September 30, 2024 |
|  | Auction and Liquidation |  |  | Refurbishment & Resale |  |  | Brokerage |  |  | Specialty Lending |  |  | Corporate and other |  |  | Consolidated |
Gross profit [1] |  | $ | 2,418 |  |  | $ | 1,066 |  |  | $ | 3,297 |  |  | $ | 436 |  |  | $ | — |  |  | $ | 7,217 |
Operating expenses [2] |  |  | (1,864 | ) |  |  | (913 | ) |  |  | (1,642 | ) |  |  | (351 | ) |  |  | (1,068 | ) |  |  | (5,838 | )
Earnings from equity method investments |  |  | 29 |  |  |  | — |  |  |  | — |  |  |  | 71 |  |  |  | — |  |  |  | 100 |
Operating income (loss) |  | $ | 583 |  |  | $ | 153 |  |  | $ | 1,655 |  |  | $ | 156 |  |  | $ | (1,068 | ) |  | $ | 1,479 |

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The following tables sets forth certain financial information for the Company's reportable segments for the nine month periods ended September 30, 2025 and 2024 (in thousands):

|  | Nine Months Ended September 30, 2025 |
|  | Auction and Liquidation |  |  | Refurbishment & Resale |  |  | Brokerage |  |  | Specialty Lending |  |  | Corporate and other |  |  | Consolidated |
Gross profit [1] |  | $ | 8,134 |  |  | $ | 4,173 |  |  | $ | 10,252 |  |  | $ | 1,099 |  |  | $ | 64 |  |  | $ | 23,722 |
Operating expenses [2] |  |  | (6,053 | ) |  |  | (3,052 | ) |  |  | (5,210 | ) |  |  | (921 | ) |  |  | (3,762 | ) |  |  | (18,998 | )
Earnings from equity method investments |  |  | 31 |  |  |  | — |  |  |  | — |  |  |  | 181 |  |  |  | — |  |  |  | 212 |
Operating income (loss) |  | $ | 2,112 |  |  | $ | 1,121 |  |  | $ | 5,042 |  |  | $ | 359 |  |  | $ | (3,698 | ) |  | $ | 4,936 |

|  | Nine Months Ended September 30, 2024 |
|  | Auction and Liquidation |  |  | Refurbishment & Resale |  |  | Brokerage |  |  | Specialty Lending |  |  | Corporate and other |  |  | Consolidated |
Gross profit [1] |  | $ | 8,022 |  |  | $ | 2,874 |  |  | $ | 10,794 |  |  | $ | 2,099 |  |  | $ | — |  |  | $ | 23,789 |
Operating expenses [2] |  |  | (5,913 | ) |  |  | (2,702 | ) |  |  | (5,132 | ) |  |  | (1,581 | ) |  |  | (3,502 | ) |  |  | (18,830 | )
Earnings from equity method investments |  |  | 1,391 |  |  |  | — |  |  |  | — |  |  |  | 1,231 |  |  |  | — |  |  |  | 2,622 |
Operating income (loss) |  | $ | 3,500 |  |  | $ | 172 |  |  | $ | 5,662 |  |  | $ | 1,749 |  |  | $ | (3,502 | ) |  | $ | 7,581 |

[1] Within the Company’s Industrial Asset division, management allocates gross profit resulting from certain auctions from Auctions and Liquidation (HGP) to Refurbishment & Resale (ALT). From time to time, ALT may source and refer an auction project to HGP or directly sell lab equipment inventory through the auction channel. In these instances, the profits relating to these transactions are allocated to ALT rather than accounted for under the segment profit or loss of HGP. During the three months ended September 30, 2025, the total amount of gross profit allocated to ALT from HGP was approximately $0.5 million, as compared to the total amount of gross profit allocated to ALT during the same period of 2024 of approximately $0.3 million. During the nine months ended September 30, 2025, the total amount of gross profit allocated to ALT from HGP was approximately $1.1 million, as compared to the total amount of gross profit allocated to ALT during the same period of 2024 of approximately $0.8 million.

[2] All financing arrangements are originated with Corporate and other. Management may determine from time to time that interest incurred from financing arrangements are directly attributable to a specific segment. As a result, interest incurred may be charged to the segment and included in that segment’s profit or loss as a charge to operating expense. During the three months ended September 30, 2024, no interest was allocated to Specialty Lending (HGC) from Corporate and other. During the nine months ended September 30, 2024, the total amount of interest allocated to Specialty Lending (HGC) from Corporate and other was approximately $0.3 million. No interest expense has been allocated to operating segments during the nine months ended September 30, 2025.

Three-Month Period Ended September 30, 2025 Compared to Three-Month Period Ended September 30, 2024

Revenues and cost of revenues – Revenues were $11.4 million during the three months ended September 30, 2025 compared to $10.4 million during the same period in 2024. Costs of services revenue and asset sales were $4.1 million during the three months ended September 30, 2025 compared to $3.2 million during the three months ended September 30, 2024. The gross profit of these items was $7.3 million during the three months ended September 30, 2025 compared to $7.2 million during the same period in 2024, an increase of approximately $0.1 million, or approximately 1%. The increase in gross profit in the third quarter of 2025 compared to the third quarter of 2024 is primarily due to normal changes in the timing and magnitude of transactions.

Selling, general and administrative expense – Selling, general and administrative expense was $6.0 million during the three months ended September 30, 2025 compared to $5.7 million during the same period in 2024.

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Significant components of selling, general and administrative expense for the three months ended September 30, 2025 and 2024 are shown below (in thousands):

|  | Three Months Ended September 30, |  |  |  |
|  | 2025 |  |  | 2024 |  |  | % change |
Compensation |  |  |  |  |  |  |  |  |
Auction and liquidation |  | $ | 1,370 |  |  | $ | 1,359 |  |  |  | 1 | %
Refurbishment and resale |  |  | 678 |  |  |  | 599 |  |  |  | 13 | %
Brokerage |  |  | 1,236 |  |  |  | 1,215 |  |  |  | 2 | %
Specialty lending |  |  | 245 |  |  |  | 311 |  |  |  | (21 | )%
Corporate and other |  |  | 582 |  |  |  | 451 |  |  |  | 29 | %
Stock-based compensation |  |  | 204 |  |  |  | 283 |  |  |  | (28 | )%
Board of Directors fees |  |  | 123 |  |  |  | 123 |  |  |  | 0 | %
Accounting, tax and legal professional fees |  |  | 353 |  |  |  | 337 |  |  |  | 5 | %
Insurance |  |  | 144 |  |  |  | 144 |  |  |  | 0 | %
Occupancy |  |  | 347 |  |  |  | 317 |  |  |  | 9 | %
Travel and entertainment |  |  | 134 |  |  |  | 125 |  |  |  | 7 | %
Advertising and promotion |  |  | 176 |  |  |  | 155 |  |  |  | 14 | %
Information technology support |  |  | 212 |  |  |  | 164 |  |  |  | 29 | %
Provision for credit losses |  |  | (32 | ) |  |  | (44 | ) |  |  | 27 | %
Other |  |  | 196 |  |  |  | 147 |  |  |  | 33 | %
Total selling, general & administrative expense |  | $ | 5,968 |  |  | $ | 5,686 |  |  |  | 5 | %

Selling, general and administrative expense during the third quarter of 2025 increased by approximately $0.3 million compared to the selling, general and administrative expense during the third quarter of 2024. Selling, general and administrative expense through the three months ended September 30, 2025 were generally consistent with selling, general and administrative expense during the same period of 2024.

Depreciation and amortization expense – Depreciation and amortization expense was $0.1 million during both the three month periods ended September 30, 2025 and 2024.

Earnings in Equity Method Investments – Earnings in equity method investments were $0.1 million during both the three months ended September 30, 2025 and 2024.

Nine-Month Period Ended September 30, 2025 Compared to Nine-Month Period Ended September 30, 2024

Revenues and cost of revenues – Revenues were $39.1 million during the nine months ended September 30, 2025 compared to $34.6 million during the same period in 2024. Costs of services revenue and asset sales were $15.4 million during the nine months ended September 30, 2025 compared to $10.8 million during the same period in 2024. The gross profit of these items was $23.7 million during the nine months ended September 30, 2025 compared to $23.8 million during the same period in 2024, a decrease of approximately $0.1 million, or less than 1%. The decrease in gross profit during the none months ended September 30, 2025 compared to the same period of 2024 is primarily due to normal changes in the timing and magnitude of asset liquidation transactions.

Selling, general and administrative expense – Selling, general and administrative expense was $18.6 million during the nine months ended September 30, 2025 compared to $18.4 million during the same period in 2024.

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Significant components of selling, general and administrative expense for the nine months ended September, 2025 and 2024 are shown below (in thousands):

|  | Nine Months Ended September 30, |  |  |  |
|  | 2025 |  |  | 2024 |  |  | % change |
Compensation |  |  |  |  |  |  |  |  |
Auction and liquidation |  | $ | 4,357 |  |  | $ | 4,256 |  |  |  | 2 | %
Refurbishment and resale |  |  | 2,123 |  |  |  | 1,788 |  |  |  | 19 | %
Brokerage |  |  | 3,972 |  |  |  | 3,971 |  |  |  | 0 | %
Specialty lending |  |  | 813 |  |  |  | 1,287 |  |  |  | (37 | )%
Corporate and other |  |  | 1,819 |  |  |  | 1,741 |  |  |  | 4 | %
Stock-based compensation |  |  | 713 |  |  |  | 801 |  |  |  | (11 | )%
Board of Directors fees |  |  | 368 |  |  |  | 279 |  |  |  | 32 | %
Accounting, tax and legal professional fees |  |  | 974 |  |  |  | 1,237 |  |  |  | (21 | )%
Insurance |  |  | 459 |  |  |  | 437 |  |  |  | 5 | %
Occupancy |  |  | 1,014 |  |  |  | 943 |  |  |  | 8 | %
Travel and entertainment |  |  | 403 |  |  |  | 458 |  |  |  | (12 | )%
Advertising and promotion |  |  | 513 |  |  |  | 430 |  |  |  | 19 | %
Information technology support |  |  | 550 |  |  |  | 446 |  |  |  | 23 | %
Provision for credit losses |  |  | (36 | ) |  |  | (219 | ) |  |  | 84 | %
Other |  |  | 600 |  |  |  | 535 |  |  |  | 12 | %
Total selling, general & administrative expense |  | $ | 18,642 |  |  | $ | 18,390 |  |  |  | 1 | %

Selling, general and administrative expense through the third quarter of 2025 increased by approximately $0.3 million compared to selling, general and administrative expense through the third quarter of 2024. Selling, general and administrative expense through the nine months ended September 30, 2025 were generally consistent with selling, general and administrative expense during the same period of 2024.

Depreciation and amortization expense – Depreciation and amortization expense was $0.4 million during both the nine months ended September 30, 2025 and 2024.

Earnings in Equity Method Investments – Earnings in equity method investments were $0.2 million during the nine months ended September 30, 2025 compared to $2.6 million during the same period in 2024. The $2.4 million decrease is mainly due to our $1.3 million share of earnings from the KNFH II LLC joint venture recorded in the second quarter of 2024 and partially due to a lower amount of earnings in equity method investments under the modified cost recovery method in our Specialty Lending segment.

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Key Performance Indicators

We monitor a number of financial and non-financial measures on a regular basis in order to track our underlying operational performance and trends. Other than operating income (a GAAP financial measure as shown in our consolidated statements of income), which we believe is the most important measure of our operational performance and trends, we believe that EBITDA and Adjusted EBITDA (non-GAAP financial measures) are key performance indicators (“KPIs”) for our business. These KPIs may not be defined or calculated in the same way as similar KPIs used by other companies.

We prepared our unaudited condensed consolidated financial statements in accordance with GAAP. We define EBITDA as net income plus depreciation and amortization, interest expense, and provision for income taxes. Adjusted EBITDA reflects EBITDA adjusted further to eliminate the effects of stock-based compensation. Management uses EBITDA and Adjusted EBITDA in assessing the Company’s results, evaluating the Company’s performance and in reaching operating and strategic decisions. Management believes that the presentation of EBITDA and Adjusted EBITDA, when considered together with our GAAP financial statements and the reconciliation to the most directly comparable GAAP financial measure, is useful in providing investors a more complete understanding of the factors and trends affecting the underlying performance of the Company on a historical and ongoing basis. Our use of EBITDA and Adjusted EBITDA is not meant to be, and should not be, considered in isolation or as a substitute for, or superior to, any GAAP financial measure. You should carefully evaluate the financial information below, which reconciles our GAAP reported net income to EBITDA and Adjusted EBITDA for the periods presented (in thousands).

|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Net income |  | $ | 585 |  |  | $ | 1,089 |  |  | $ | 3,286 |  |  | $ | 5,385 |
Add back: |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 120 |  |  |  | 152 |  |  |  | 356 |  |  |  | 440 |
Interest expense, net |  |  | (34 | ) |  |  | (17 | ) |  |  | (108 | ) |  |  | 183 |
Income tax expense |  |  | 750 |  |  |  | 407 |  |  |  | 1,758 |  |  |  | 2,013 |
EBITDA |  |  | 1,421 |  |  |  | 1,631 |  |  |  | 5,292 |  |  |  | 8,021 |
Management add back: |  |  |  |  |  |  |  |  |  |  |  |
Stock based compensation |  |  | 204 |  |  |  | 283 |  |  | 713 |  |  | 801 |
Adjusted EBITDA |  | $ | 1,625 |  |  | $ | 1,914 |  |  | $ | 6,005 |  |  | $ | 8,822 |

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

As a Smaller Reporting Company, we are not required to provide the information required by this item.

Item 4. Controls and Procedures.

As of the end of the period covered by this Report, our Chief Executive Officer and Principal Financial Officer (the “Certifying Officers”) conducted evaluations of our disclosure controls and procedures. As defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the term “disclosure controls and procedures” means controls and other procedures of an issuer that are designed to ensure that information required t o be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including the Certifying Officers, to allow timely decisions regarding required disclosure. Based on this evaluation, the Certifying Officers have concluded that our disclosure controls and procedures were effective as of September 30, 2025.

Further, there were no changes in our internal control over financial reporting during the nine months ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHE R INFORMATION

Item 1. Legal Proceedings

There have been no material changes to the legal proceedings discussed in our Form 10-K.

Item 1A. R isk Factors

As a Smaller Reporting Company, we are not required to provide the information required by this item.

Item 2. Unregistered Sales of Equi ty Securities and Use of Proceeds.

None.

Item 3. Defaults Upo n Senior Securities.

None.

Item 4. Mine Saf ety Disclosures.

Not applicable.

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Item 5. Other Information.

Rule 10b5-1 Trading Plans of Directors and Section 16 Officers

During the fiscal quarter ended September 30, 2025, none of our directors or officers (as defined in Exchange Act Rule 16a-1(f)) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (in each case, as defined in Item 408 of Regulation S-K).

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Item 6. Exhibits.

(a) Exhibits

Exhibit No. |  | Identification of Exhibit
3.1 |  | Second Amended and Restated Articles of Incorporation (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on June 7, 2024 (File No. 001-39471), and incorporated herein by reference)
3.2 |  | Restated Bylaws, as amended (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on September 30, 2020 (File No. 001-39471), and incorporated herein by reference).
4.1 |  | Warrant Agreement by and between Heritage Global Inc. and Napier Park Industrial Asset Acquisition, LP, effective as of March 19, 2019 (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 25, 2019 (File No. 000-17973), and incorporated herein by reference).
31.1 |  | Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) as adopted under Section 302 of the Sarbanes-Oxley Act of 2002
31.2 |  | Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) as adopted under Section 302 of the Sarbanes-Oxley Act of 2002
32.1 |  | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 |  | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS |  | Inline XBRL Instance Document
101.SCH |  | Inline XBRL Taxonomy Extension Schema Document
101.CAL |  | Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF |  | Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB |  | Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE |  | Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 |  | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith

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SIGNAT URES

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 thereunder duly authorized.

|  | Heritage Global Inc.
Date: November 6, 2025 |  | By: |  | /s/ Ross Dove
|  |  |  | Ross Dove
|  |  |  | Chief Executive Officer
|  |  |  | (Principal Executive Officer)
|  | By: |  | /s/ Brian J. Cobb
|  |  |  | Brian J. Cobb
|  |  |  | Chief Financial Officer
|  |  |  | (Principal Financial Officer and Principal Accounting Officer)

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