Note 16 – Stockholders’ Equity

Capital Stock

The Company’s authorized capital stock consists of 300,000,000 common shares with a par value of $0.01 per share and 10,000,000 preferred shares with a par value of $10.00 per share.

During 2025 and 2024 the Company issued 1,445 and 45,752 shares of common stock, respectively, pursuant to the exercise of stock options.

Each share of Series N preferred stock has a voting entitlement equal to 40 common shares, votes with the common stock on an as-converted basis and is senior to all other preferred stock of the Company. Dividends, if any, will be paid on an as-converted basis equal to common stock dividends. The conversion value of each share of Series N preferred stock is $1,000, and each share is convertible to 40 common shares at the rate of $25.00 per common share. The holders of shares of Series N preferred stock are entitled to liquidation preference over common stockholders equivalent to $1,000 per share. No shares of the Company’s Series N preferred stock were converted during 2025 or 2024.

Stock-Based Compensation Plans

At December 31, 2025, the Company had four active stock-based compensation plans which are described below. The fourth of these plans received approval at the Company’s 2022 Annual Meeting of Shareholders, and replaces the 2016 Plan for awards made after June 8, 2022.

2010 Non-Qualified Stock Option Plan

In 2010, the Company’s Board approved the 2010 Non-Qualified Stock Option Plan (the “2010 Plan”) to induce certain key employees of the Company or any of its subsidiaries who are in a position to contribute materially to the Company’s prosperity to remain with the Company, to offer such persons incentives and rewards in recognition of their contributions to the Company’s progress, and to encourage such persons to continue to promote the best interests of the Company. The Company reserved 1,250,000 shares of common stock (subject to adjustment under certain circumstances) for issuance or transfer upon exercise of options granted under the 2010 Plan. Options may be issued under the 2010 Plan to any key employees or consultants selected by the Company’s Board (or an appropriately qualified committee). Options may not be granted with an exercise price less than the fair market value of the common stock of the Company as of the day of the grant. Options granted pursuant to the plan are subject to limitations on transfer and execution and may be issued subject to vesting conditions. Options may also be forfeited in certain circumstances. No awards under this plan were granted during 2025 or 2024.


2010 Plan	2025		2024
Options outstanding, beginning of year		217,500		238,750
Options exercised		—		(21,250	)
Options outstanding, end of year		217,500		217,500

The outstanding options vest over four years at exercise prices ranging from $0.40 to $2.77 per share.

Other Options Issued

In 2021, the Company’s Board approved the issuance of options to purchase 150,000 shares at an exercise price of $1.78 to certain accredited personnel. In 2020, the Company’s Board approved the issuance of options to purchase 90,000 shares at an exercise price of $1.41 to certain accredited personnel. Shares issued upon exercise of these options are not registered for public sale. No awards under this plan were granted during 2025 or 2024.


Other Options	2025		2024
Options outstanding, beginning of year		293,125		383,125
Options exercised		—		(90,000	)
Options outstanding, end of year		293,125		293,125

The outstanding options vest over four years at exercise prices ranging from $0.70 to $1.78 per share.

Heritage Global Inc. 2016 Stock Option Plan

In 2016, the Company adopted the Heritage Global Inc. 2016 Stock Option Plan (the “2016 Plan”) which provided for the issuance of incentive stock options and non-qualified stock options up to an aggregate of 3,150,000 shares of common stock (subject to adjustment in the event of stock dividends, stock splits, and other similar events). Options may be forfeited in certain circumstances. On June 8, 2022 the 2016 plan was replaced by the 2022 Heritage Global Inc. Equity Incentive Plan, and as such, no awards under this plan were granted during 2025 or 2024.


2016 Plan	2025			2024
Options outstanding, beginning of year		1,065,850			1,079,850
Options exercised		(4,500	)		(10,000	)
Options forfeited		(33,000	)		(4,000	)
Options outstanding, end of year		1,028,350			1,065,850

The outstanding options under the 2016 Plan vest over four years at exercise prices ranging from $0.45 to $3.33 per share.

2022 Heritage Global Inc. Equity Incentive Plan

In 2022, at the Company's 2022 Annual Meeting of Shareholders, the Company's shareholders approved the 2022 Heritage Global Inc. Equity Incentive Plan, which replaces the Heritage Global Inc. 2016 Plan and authorized the issuance of an aggregate of 3.5 million shares of Common Stock for awards made after June 8, 2022. Options may not be granted with an exercise price less than the fair market value of the common stock of the Company as of the day of the grant. Options granted pursuant to the plan are subject to limitations on transfer and execution and may be issued subject to vesting conditions. Options may also be forfeited in certain circumstances. In 2025 and 2024, the Company issued options to purchase 70,000 and 112,500 shares of common stock to certain of the Company's employees under this plan, respectively.


2022 Plan	2025			2024
Options outstanding, beginning of year		655,125			563,625
Options granted		70,000			112,500
Options exercised		(9,500	)		(3,750	)
Options forfeited		(82,000	)		(17,250	)
Options outstanding, end of year		633,625			655,125

The outstanding options under the 2022 Plan vest over four years at exercise prices ranging from $1.60 to $3.55 per share.

Stock-Based Compensation Expense

Total compensation cost related to stock options was $0.4 million in 2025 and $0.7 million in 2024. These amounts were recorded in selling, general and administrative expense in both years. During 2025 and 2024, options to purchase 14,000 and 125,000 shares were exercised, respectively. There was an immaterial tax benefit recognized by the Company related to these option exercises in 2025, as compared to a $0.1 million tax benefit recognized in 2024.

In connection with the stock option grants during 2025 and 2024, the fair value of each option grant was estimated on the date of the grant using the Black-Scholes option pricing model with the following weighted-average assumptions:


	2025	2024
Risk-free interest rate	4%	4%
Expected life (years)	6	7
Expected volatility	69%	73%
Expected dividend yield	Zero	Zero

The risk-free interest rates are those for U.S. Treasury constant maturities for terms matching the expected term of the option. The expected life of the options is calculated according to the simplified method for estimating the expected term of the options, based on the vesting period and contractual term of each option grant. Expected volatility is based on the Company’s historical volatility. The Company has never paid a dividend on its common stock and therefore the expected dividend yield is zero.

The following summarizes the changes in common stock options:


	2025							2024
	Options			Weighted Average Exercise Price		Aggregate Intrinsic Value (In thousands)		Options			Weighted Average Exercise Price		Aggregate Intrinsic Value (In thousands)
Outstanding at beginning of year		2,231,600		$	1.77				2,265,350		$	1.71
Granted		70,000			2.11				112,500			2.01
Exercised		(14,000	)		1.88				(125,000	)		0.83
Forfeited		(115,000	)		2.27				(21,250	)		1.88
Outstanding at end of year		2,172,600		$	1.76	$	408		2,231,600		$	1.77	$	971

Options exercisable at year end		1,794,975		$	1.62	$	408		1,536,725		$	1.48	$	926

Weighted-average fair value of options granted during the year				$	1.39						$	1.46

As of December 31, 2025, the Company had unvested options for the purchase of 377,625 shares with a weighted average grant date fair value of $1.81 per share. As of December 31, 2024, the Company had unvested options for the purchase of 694,875 shares with a weighted average grant date fair value of $1.81 per share. At December 31, 2025 and 2024, the aggregate intrinsic value of exercisable options was $0.4 million and $0.9 million, respectively. At December 31, 2025 and 2024, the aggregate intrinsic value of options exercised was approximately $2,500 and $0.1 million, respectively.

As of December 31, 2025, the total unrecognized stock-based compensation expense related to unvested stock options was $0.5 million, which is expected to be recognized over a weighted-average period of 1.4 years.

The total fair value of options vesting during 2025 and 2024 was $0.5 million and $0.6 million, respectively. The unvested options have no associated performance conditions. In general, the Company’s employee turnover is low, and the Company expects that the majority of the unvested options will vest according to the standard four-year timetable.

The following table summarizes information about all stock options outstanding as of December 31, 2025:


Exercise price	Options Outstanding		Weighted Average Remaining Life (years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Remaining Life (years)		Weighted Average Exercise Price
$ 0.40 to $ 0.53		401,350		1.1	$	0.45		401,350		1.1	$	0.45
$ 0.70 to $ 0.85		180,625		3.5	$	0.73		180,625		3.5	$	0.73
$ 1.37 to $ 1.90		828,125		5.8	$	1.66		728,000		5.6	$	1.66
$ 2.11 to $ 3.55		762,500		6.7	$	2.80		485,000		6.1	$	2.86
		2,172,600						1,794,975

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.

The following summarizes the restricted stock awards and related stock based compensation expense in 2025 and 2024 (in thousands, except share count and award fair value):


							Compensation Expense for the year ended,				Unrecognized Compensation Expense as of,
	Grant Date	Vesting Date	Restricted Stock Granted		Grant Date Fair Value		2024		2025		December 31, 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		45		—		—
Employees	March 7, 2024	March 7, 2025		128,044	$	2.93		308		67		—
Non-executive directors	March 7, 2024	March 7, 2025		75,000	$	2.93		180		40		—
Employees	January 1, 2025	December 31, 2028 [1]		125,000	$	1.85		—		58		173
Employees	March 6, 2025	March 6, 2026		68,051	$	2.11		—		118		26
Non-executive directors	March 6, 2025	March 6, 2026 [2]		100,000	$	2.11		—		173		38
Total							$	533	$	456	$	237

[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's unrecognized stock-based compensation expense related to restricted stock as of December 31, 2025 is expected to be recognized over a weighted average period of 1.4 years. The tax benefit recognized by the Company related to restricted stock awards was approximately $0.4 million in both 2025 and 2024.

- Definition

The entire disclosure for equity.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 815
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 8A
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480434/815-10-50-8A

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481112/505-10-50-13

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481112/505-10-50-13

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481112/505-10-50-14

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147477968/946-235-50-2

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147477968/946-235-50-2

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 505
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147478448/946-505-50-6

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 815
-SubTopic 40
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480237/815-40-50-6

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480008/505-10-S99-1

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 505
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org/505/tableOfContent

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481112/505-10-50-13

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481112/505-10-50-13

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (i)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481112/505-10-50-13

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481112/505-10-50-14

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481112/505-10-50-14

Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 16
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481112/505-10-50-16

Reference 17: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 18
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481112/505-10-50-18

Reference 18: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 18
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481112/505-10-50-18

Reference 19: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 18
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481112/505-10-50-18

+ Details

Heritage Global Inc. 10-K