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$HGBL
·
10-K
Heritage Global Inc. · Mar 12, 4:01 PM ET
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Heritage Global Inc. 10-K
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Contents
148
Overview and History
Industrial Assets Division
Financial Assets Division
Corporate Information
Employees
Properties
We lease or rent office space in several locations in the United States. The principal locations are Del Mar, CA, Hayward, CA, and San Diego, CA, which are related to HGP’s operations, and Edwardsville, IL, which is related to NLEX’s operations. We own a warehouse and office space located in East Lyme, CT, which is related to our ALT operations, and a warehouse and office space located in San Diego, CA which is used as the Company’s corporate headquarters and as warehouse and office space for the operations of HGP.
As of March 2026, we have moved from our leased office space in Del Mar, CA, to our newly owned and renovated office space and warehouse located in San Diego, CA. Our intention is to sublease the Del Mar office space for the remaining term, while still utilizing the previous warehouse space, also in San Diego near the new building.
Industry and Competition
Our Competitive Strengths
Financial Assets Division
Industrial Assets Division
Government Regulation
Available Information
Item 1A. Risk Factors.
Competition and Economic Risks
We face significant competition in our business.
Our business is subject to inventory risk and credit risk.
Our operating results are subject to significant fluctuation.
Operational and Governmental Risks
We are subject to the risks associated with managing growth.
A portion of our business is conducted through Joint Ventures.
We are dependent upon key personnel.
Disruptions to information systems and those of certain third-party service providers utilized by us could adversely impact our operations, reputation and brand.
The auction portion of our business may be subject to a variety of additional costly government regulations.
Certain categories of merchandise that we sell are subject to government restrictions.
We are subject to the U.S. Foreign Corrupt Practices Act (“FCPA”).
Our business is subject to environmental risk.
Changes in tax laws or their interpretations, or becoming subject to additional foreign, U.S. federal, state or local taxes, could negatively affect our business, financial condition and results of operations.
If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.
Capitalization and General Market Risks
We may require additional financing in the future, which may not be available, or may not be available on favorable terms.
Provisions in our organizational documents and Florida or certain other state laws could delay or prevent a change in control of our company, which could adversely affect the price of our common stock.
Our Board of Directors may issue additional shares of preferred stock without stockholder approval.
We may conduct future offerings of our common stock and preferred stock that may diminish our investors’ pro rata ownership and depress our stock price.
The market price of our common stock may be volatile and this may adversely affect our stockholders.
We have a material amount of goodwill which, if it becomes impaired, would result in a reduction in our net income.
We may not be able to utilize income tax loss carry forwards.
We have not declared any dividends on our common stock to date and have no expectation of doing so in the foreseeable future.
Our executive officers, directors and their affiliates hold a large percentage of our common stock and their interests may differ from other stockholders.
There is a limited public trading market for our common stock. Our stock price could be extremely volatile and may decline substantially from the public offering price. As a result, you may not be able to resell your shares at or above the price you paid for them.
We could be delisted from Nasdaq, which could seriously harm the liquidity of our stock and our ability to raise capital.
The financial reporting obligations of being a public company in the United States are expensive and time consuming and place significant additional demands on our management.
Item 1B. Unresolved Staff Comments
Item 2. Properties.
Item 3. Legal Proceedings.
Item 4. Mine Safety Disclosures.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
Holders
Dividends
Recent Sales of Unregistered Securities.
Item 6. [Reserved].
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Business Overview, Recent Developments and Outlook
Liquidity and Capital Resources
Management’s Discussion of Results of Operations
Key Performance Indicators
Recently adopted accounting pronouncements
Critical Accounting Policies
Revenue recognition
Nonaccrual Loans
Notes receivable, net
Equity Method Investments
Deferred income taxes
Stock-based compensation
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
Item 8. Financial Statements and Supplementary Data.
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Management’s Annual Report on Internal Control Over Financial Reporting
Changes in Internal Control over Financial Reporting
Item 9B. Other Information.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Code of Ethics
Item 11. Executive Compensation.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Item 14. Principal Accountant Fees and Services.
PART IV
Item 15. Exhibits and Financial Statement Schedules
Item 16. Form 10-K Summary
SIGNATURES
INDEX OF FINANCIAL STATEMENTS
Title of Document
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Opinion on the Financial Statements
Basis for Opinion
Critical Audit Matter
Allowance for Credit Losses over Nonaccrual Loans
Note 1 – Description of Business and Principles of Consolidation
Repurchase Program
Note 2 – Summary of Significant Accounting Policies
Use of estimates
Reclassifications
Nature of Business
Specialty Lending - Concentration and credit risk
Cash and cash equivalents
Accounts receivable, net
Notes receivable, net
Inventory - equipment
Equity method investments
Fair value of financial instruments
Intangible assets
Goodwill
Deferred income taxes
Liabilities and contingencies
Revenue recognition
Nonaccrual Loans
Cost of services revenue and asset sales
Stock-based compensation
Advertising
Recently adopted accounting pronouncements
Future accounting pronouncements
Note 3 – Notes Receivable, net
Note 4 – Equity Method Investments
Note 5 - Lessor Arrangement
Note 6 – Earnings per Share
Note 7 – Leases
Note 8 – Property and Equipment, net
Note 9 – Intangible Assets and Goodwill
Intangible assets
Goodwill
Note 10 – Accounts Receivable and Accounts Payable
Accounts receivable, net
Accounts payable and accrued liabilities
Note 11 – Debt
2021 Credit Facility
ALT Note
2023 Credit Facility
Mortgage
Note 12 – Commitments and Contingencies
Note 13 – Income Taxes
Note 14 – Related Party Transactions
Note 15 – Legal Proceedings
Note 16 – Stockholders’ Equity
Capital Stock
Stock-Based Compensation Plans
Stock-Based Compensation Expense
Restricted Stock
Note 17 – Segment Information
The following table sets forth certain financial information for the Company's reportable segments (in thousands):
Asset Purchase Agreement
Employment Agreement with Bruce Hounsell
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