10-Q

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

HERITAGE GLOBAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

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



	September 30, 2026			December 31, 2025
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	15,591		$	20,522
Accounts receivable, net		2,805			1,857
Current portion of notes receivable, net		963			4,528
Inventory – equipment		6,621			5,931
Other current assets		925			756
Total current assets		26,905			33,594
Non-current portion of notes receivable, net		3,370			4,893
Equity method investments		3,175			21,060
Property and equipment, net		12,106			10,884
Right-of-use assets		903			1,518
Intangible assets, net		6,428			3,100
Goodwill		13,954			7,446
Deferred tax assets		9,509			4,402
Other assets		814			1,542
Total assets	$	77,164		$	88,439

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	5,472		$	6,487
Payables to sellers		9,177			7,273
Current portion of third party debt		2,000			—
Current portion of lease liabilities		686			829
Other current liabilities		1,604			948
Total current liabilities		18,939			15,537
Non-current portion of third party debt		4,100			4,100
Non-current portion of lease liabilities		372			790
Other non-current liabilities		637			1,029
Total liabilities		24,048			21,456

Stockholders’ equity:
Preferred stock, $10.00 par value, authorized 10,000,000 shares; issued and outstanding 563 of Series N as of September 30, 2026 and December 31, 2025; 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 37,755,137 and 37,639,211 shares as of September 30, 2026 and December 31, 2025, respectively; and outstanding 34,647,415 and 34,741,553 shares as of September 30, 2026 and December 31, 2025, respectively		378			376
Additional paid-in capital		297,017			296,477
Accumulated deficit		(238,391	)		(224,257	)
Treasury stock at cost, 3,107,722 and 2,897,658 shares as of September 30, 2026 and December 31, 2025, respectively		(5,894	)		(5,619	)
Total stockholders’ equity		53,116			66,983
Total liabilities and stockholders’ equity	$	77,164		$	88,439

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

HERITAGE GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

(unaudited)


	Three Months Ended September 30,					Nine Months Ended September 30,
	2026			2025		2026			2025
Revenues:
Services revenue	$	9,821		$	7,475	$	24,642		$	25,389
Asset sales		4,770			3,885		14,939			13,734
Total revenues		14,591			11,360		39,581			39,123

Operating costs and expenses:
Cost of services revenue		2,363			1,451		4,535			6,098
Cost of asset sales		3,003			2,609		9,180			9,303
Selling, general and administrative		7,980			5,968		26,439			18,642
Depreciation and amortization		206			120		620			356
Total operating costs and expenses		13,552			10,148		40,774			34,399
Earnings (loss) of equity method investments		5			89		(17,666	)		212
Operating income (loss)		1,044			1,301		(18,859	)		4,936
Interest and other (expense) income, net		(83	)		34		(168	)		108
Income (loss) before income tax (benefit) expense		961			1,335		(19,027	)		5,044
Income tax (benefit) expense		(76	)		750		(4,893	)		1,758
Net income (loss)	$	1,037		$	585	$	(14,134	)	$	3,286

Weighted average common shares outstanding – basic		34,739,768			34,547,477		34,655,037			35,585,976
Weighted average common shares outstanding – diluted		35,070,982			35,205,152		34,655,037			36,255,562
Net income (loss) per share – basic	$	0.03		$	0.02	$	(0.41	)	$	0.09
Net income (loss) per share – diluted	$	0.03		$	0.02	$	(0.41	)	$	0.09

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

HERITAGE GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS 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, 2025		563	$	6		37,639,211	$	376	$	296,477		$	(224,257	)		2,897,658	$	(5,619	)	$	66,983
Issuance of restricted common stock		—		—		100,000		1		(1	)		—			—		—			—
Stock-based compensation expense		—		—		—		—		211			—			—		—			211
Repurchase of common stock		—		—		—		—		—			—			106,799		(141	)		(141	)
Net income		—		—		—		—		—			717			—		—			717
Balance as of March 31, 2026		563		6		37,739,211		377		296,687			(223,540	)		3,004,457		(5,760	)		67,770
Issuance of common stock from stock option awards		—		—		7,956		—		(7	)		—			—		—			(7	)
Stock-based compensation expense		—		—		—		—		171			—			—		—			171
Repurchase of common stock		—		—		—		—		—			—			103,265		(134	)		(134	)
Net loss		—		—		—		—		—			(15,888	)		—		—			(15,888	)
Balance as of June 30, 2026		563		6		37,747,167		377		296,851			(239,428	)		3,107,722		(5,894	)		51,912
Issuance of common stock from stock option awards		—		—		7,970		1		(8	)		—			—		—			(7	)
Stock-based compensation expense		—		—		—		—		174			—			—		—			174
Repurchase of common stock		—		—		—		—		—			—			—		—			—
Net income		—		—		—		—		—			1,037			—		—			1,037
Balance as of September 30, 2026		563	$	6		37,755,137	$	378	$	297,017		$	(238,391	)		3,107,722	$	(5,894	)	$	53,116

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

HERITAGE GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (continued)

(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

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

HERITAGE GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of US dollars) (unaudited)


	Nine Months Ended September 30,
	2026			2025
Cash flows from operating activities:
Net (loss) income	$	(14,134	)	$	3,286
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Amortization of deferred issuance costs and fees, net		(29	)		(8	)
Loss (earnings) of equity method investments		17,666			(212	)
Noncash credit loss provision (recovery)		3,512			(35	)
Amortization of right-of-use assets		615			514
Depreciation and amortization		620			356
Deferred taxes		(5,107	)		1,179
Stock-based compensation expense		556			713
Changes in operating assets and liabilities:
Accounts receivable		(946	)		(282	)
Inventory – equipment		(690	)		(263	)
Other current assets		(102	)		297
Accounts payable and accrued liabilities		(1,014	)		130
Payables to sellers		1,904			(600	)
Lease liabilities		(561	)		(518	)
Other current liabilities		27			—
Net cash provided by operating activities		2,317			4,557

Cash flows from investing activities:
Investment in notes receivable		(2,008	)		(4,433	)
Payments received on notes receivable		3,610			5,132
Acquisitions		(9,191	)		—
Investment in participating interest		—			(1,575	)
Return of investment in participating interest		728			45
Investment in equity method investments		(2,000	)		(1,575	)
Return of investment in equity method investments		1,729			1,135
Cash distributions from equity method investments		490			212
Purchase of property and equipment		(1,543	)		(7,861	)
Net cash used in investing activities		(8,185	)		(8,920	)

Cash flows from financing activities:
Proceeds from debt payable to third parties		3,000			4,100
Repayment of debt payable to third parties		(1,000	)		(395	)
Proceeds from secured borrowing		—			1,050
Repayments of secured borrowing		(774	)		—
Payments of tax withholdings related to issuance of restricted common stock and stock option awards		(14	)		(80	)
Repurchase of common stock		(275	)		(2,627	)
Net cash provided by financing activities		937			2,048
Net change in cash and cash equivalents		(4,931	)		(2,315	)
Cash and cash equivalents as of beginning of period		20,522			21,749
Cash and cash equivalents as of end of period	$	15,591		$	19,434

Supplemental cash flow information:
Cash paid for taxes	$	656		$	557
Cash paid for interest, net of amounts capitalized	$	160		$	37
Noncash purchase of property and equipment	$	—		$	138

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

HERITAGE GLOBAL INC.

NOTES TO CONDENSED CONSOLIDATED 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”), BioSurplus LLC (“BioSurplus”), National Loan Exchange Inc. (“NLEX”), Heritage Global LLC (“HG LLC”), Heritage Global Capital LLC (“HGC”), Heritage ALT LLC (“ALT”), Heritage DebtX LLC ("DebtX"), and HG Boston Note LLC (“Boston Note”). These entities, collectively, are referred to as “the Company,” “us” “we” or “our” in these condensed consolidated financial statements. These condensed 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 in 2012, NLEX in 2014, ALT in 2021, DebtX and Boston Note in 2026, 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. As of September 30, 2026, the Company’s reportable segments consisted of (1) Auction and Liquidation through HGP and BioSurplus, (2) Refurbishment & Resale through ALT, (3) Consumer Loans through NLEX, (4) Specialty Lending through HGC, and (5) Commercial Loans through DebtX and Boston Note. On July 30, 2026, the Board of Directors (the “Board”) of the Company authorized a strategic plan (the “Exit Plan”) to wind down the Company's Specialty Lending segment. The decision followed the Board's evaluation of the segment's operating performance, risk profile and future prospects, including continued deterioration in the segment's largest borrower relationship.

During the third quarter of 2026, the Company commenced implementation of the Exit Plan. The Exit Plan includes the orderly wind down of the Company's Specialty Lending operations, including the management, disposition or exit of certain joint venture investments and lending activities associated with the segment. During the wind-down period, the Company may continue to manage existing lending relationships and pursue recovery and restructuring efforts designed to maximize recoveries from the remaining portfolio. In connection with the execution of the Exit Plan, the Company has incurred and expects to incur costs associated with exit activities, consisting primarily of professional services expenses directly related to the Exit Plan. Such costs were not material for the three months ended September 30, 2026, and are not expected to be material in the aggregate. The Company will continue to incur ordinary operating expenses, primarily compensation and related costs for employees administering the wind-down of the remaining loan portfolio, which are recognized as incurred within selling, general and administrative expenses in the condensed consolidated statements of income. The Company expects the wind-down to be completed by the end of 2027, with HGC operating expenses expected to decline beginning in the first quarter. The actual timing may differ from the Company’s current estimates and will depend on the duration and scope of the activities necessary to execute the Exit Plan.

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, 2025, filed with the SEC on March 12, 2026 (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, 2026. The accompanying condensed consolidated balance sheet as of December 31, 2025 has been derived from the audited consolidated balance sheet as of December 31, 2025, contained in the Company’s Form 10-K.

Repurchase Program

The Board 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. 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 expiration of the 2022 Repurchase Program, the Board 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, 2026, the Company had approximately $7.2 million in aggregate dollar value of shares that may be purchased under the 2025 Repurchase Program.

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.

Revenue 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 four reportable segments: Auction and Liquidation, Refurbishment & Resale, Consumer Loans and Commercial Loans. 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 2% of total revenues for the three and nine months ended September 30, 2026 and 2025), 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 $1.0 million as of September 30, 2026 and $0.9 million as of December 31, 2025, and is reflected in other current 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 consumer loan 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.

For commercial loan sale transactions, funds are not held by the Company on the seller’s behalf. The Company’s commission and other fees due from the seller are generally recognized at the time the sale transaction is closed and the invoice is issued.

The Company evaluates revenue from Auction and Liquidation, Consumer Loans and Commercial Loans 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.

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. On July 30, 2026, the Board authorized the Exit Plan to wind down the Company’s Specialty Lending segment. Refer to Note 1 – Basis of Presentation for additional information.

Through its Refurbishment & 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 & 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 share of payments received from the nonaccrual loans, including interest, will be applied against the outstanding loan balance.

On July 30, 2026, the Board authorized the Exit Plan to wind down the Company’s Specialty Lending segment. Refer to Note 1 – Basis of Presentation for additional information. As of September 30, 2026, and as a result of the wind down, the full amount of loans held on the Company’s balance sheet have been placed in nonaccrual status. The amortized cost basis of loans in nonaccrual status was $7.5 million and is recorded within notes receivable. As of September 30, 2026, the Company's notes receivable balance of nonaccrual loans net of the $3.8 million allowance for credit losses, was $3.7 million.

Specialty Lending - Equity method investments impairment

Investments in nonconsolidated entities accounted for under the equity method are assessed for impairment when there are indicators of a loss in value, such as a lack of sustained earnings capacity or a current fair value less than the investment's carrying amount. When it is determined such a loss in value is other than temporary, an impairment charge is recognized for the difference between the investment's carrying value and its estimated fair value. When determining whether a decline in value is other than temporary, management considers factors such as the duration and extent of the decline, the investee's financial condition and near-term prospects, and our ability and intention to retain our investment for a period that will be sufficient to allow for any anticipated recovery in the value of the investment. Management's estimate of fair value of an investment is based on the income approach. For the income approach, the fair value is typically based on the present value of expected future cash flows using discount rates believed to be consistent with those used by principal market participants.

Given the senior lender's priority position in cash flows generated from the underlying loan portfolios with the Company’s largest borrower (including the impacted loans that were placed in nonaccrual status in June 2024) and the change in collection strategy as well as the senior lender's sole and exclusive authority over defaulted loans, we believe we will not recover the carrying amount of our equity method investments in a liquidation event and we have determined that the loss in investment value is other than temporary. As a result, the Company concluded the asset was impaired and recorded a noncash impairment charge of $18.2 million during the three months ended June 30, 2026, reducing its carrying value to zero. The charge is included in the condensed consolidated statement of income for the nine months ended September 30, 2026.

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 year ended December 31, 2025 and the nine months ended September 30, 2026, respectively (in thousands):


	Accounts Receivable			Notes Receivable			Total
Balance as of December 31, 2024	$	132		$	383		$	515
(Recovery) provision for credit losses		23			(43	)		(20	)
Balance as of December 31, 2025		155			340			495
(Recovery) provision for credit losses		(124	)		3,514			3,390
Balance as of September 30, 2026	$	31		$	3,854		$	3,885

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 September 30, 2026 and December 31, 2025, the reserve for credit losses related to accounts receivable was less than $0.1 million and approximately $0.2 million, respectively.

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.

The Company evaluates its allowance for credit losses over its notes receivable related to loans to buyers of charged-off and nonperforming receivable portfolios in its specialty lending segment individually for each loan and borrower using discounted cash flows based on estimated collections. 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.

During the three months ended June 30, 2026, the Company increased its allowance for credit losses related to loans to buyers of charged-off and nonperforming receivable portfolios by $3.5 million primarily due to the continuation of difficulties with the Company’s largest borrower, including a further decline in the second quarter of 2026. Refer to Note 1 – Basis of Presentation for additional information.

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 related to the financing of laboratory equipment are similar in character to transactions undertaken by smaller banking institutions. For its notes receivables related to the financing of laboratory equipment sales, 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, 2026 management determined that the SCALE rate plus 1% to be appropriate for the notes receivables related to the financing of laboratory equipment sales.

As of September 30, 2026 and December 31, 2025, the Company's allowance for credit losses related to notes receivable outstanding was approximately $3.9 million and $0.3 million, respectively.

Business combinations

Effective January 1, 2026 Heritage DebtX LLC (“DebtX”), a wholly owned subsidiary of Heritage Global, Inc., acquired substantially all of the assets of The Debt Exchange, Inc. for approximately $8.5 million in cash. Effective July 31, 2026, HG Boston Note LLC (“Boston Note”), a wholly owned subsidiary of Heritage Global, Inc., acquired substantially all of the assets of Boston Note & Mortgage III, LLC for approximately $1.7 million, in both upfront cash and contingent consideration. The purchase price allocations for both acquisitions were based on an evaluation of the appropriate fair values and represent management's best estimate.

Recently adopted accounting pronouncements

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, with adoption permitted on a prospective basis. The Company adopted this standard for the year ended December 31, 2025 and applied the new disclosure requirements prospectively.

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 to simplify the estimation of 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. While the Company adopted this pronouncement for the fiscal year beginning January 1, 2026, the Company elected the practical expedient permitted under this ASU and the adoption has no material impact on the Company's consolidated financial statements.

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 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.

In December 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270): Narrow-Scope Improvements,” which clarifies interim disclosure requirements by improving the navigability of the required interim disclosures and clarifying when that guidance is applicable. The standard is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the potential impact the adoption of this standard will have on its consolidated financial statements and disclosures, which is not expected to be material.

Note 3 – Business Combinations

The Company has determined the following transactions to be business combinations in accordance with ASC 805 Business Combinations. Accordingly, the assets acquired and liabilities assumed in the transactions were recorded at their estimated acquisition fair values, while transaction costs associated with the acquisitions were expensed as incurred pursuant to the purchase method of accounting in accordance with ASC 805. The Company’s purchase price allocations were based on an evaluation of the appropriate fair values and represent management’s best estimate based on available data. Fair values are determined based on the requirements of ASC Topic 820, Fair Value Measurement (“ASC 820”).

DebtX

Effective January 1, 2026 (the “DebtX Acquisition Date”) and pursuant to an Asset Purchase Agreement dated January 9, 2026, Heritage DebtX LLC (“DebtX”), a wholly owned subsidiary of Heritage Global, Inc., completed the acquisition of substantially all of the assets of The Debt Exchange, Inc., a provider of loan sale advisory services for commercial and consumer debt. The acquisition enhances the Company’s capabilities in financial advisory services and expands its customer relationships within the banking and financial services sector. The total purchase consideration paid to The Debt Exchange, Inc. was approximately $8.5 million, consisting of cash paid at closing and amounts placed into escrow.

The following table summarizes the allocation of the purchase consideration to the estimated fair values of assets acquired and liabilities assumed as of the DebtX Acquisition Date (in thousands):


Other current assets	$	67
Property and equipment		38
Intangible assets		3,060
Goodwill		5,301
Other current liabilities		(6	)
Purchase price	$	8,460

The $3.1 million of intangible assets are attributable to $1.3 million of customer relationships which will be amortized over a useful life of 15 years, $1.8 million for the DebtX trade name which has an indefinite useful life, and approximately $26,000 of noncompete agreements which will be amortized over one year.

The excess of the consideration transferred over the fair values of assets acquired and liabilities assumed was recorded as goodwill, which was primarily attributed to increased synergies that are expected to be achieved from the acquisition. Goodwill is expected to be deductible for income tax purposes.

The financial results of DebtX have been included in the Company's consolidated financial statements since the DebtX Acquisition Date and have been reported as the Commercial Loans segment within the Company's Financial Assets Division. For the nine months ended September 30, 2026, DebtX contributed revenue of $3.3 million and net loss of $1.0 million to the Company's consolidated results.

For the year ended December 31, 2025, The Debt Exchange, Inc. reported, on a standalone basis, revenues of approximately $6.6 million and operating income of approximately $0.8 million. As the acquisition was effective on January 1, 2026, these unaudited results were not included in the Company’s consolidated results of operations for the year ended December 31, 2025.

The Company incurred acquisition-related costs of $0.3 million that consisted primarily of legal and advisory services. These costs are included in selling, general and administrative expenses for the year ended December 31, 2025.

Unaudited Pro Forma Financial Information

The unaudited pro forma financial information presented in the table below (in thousands) is provided for illustrative purposes only and summarizes the combined results of operations of the Company and DebtX for the three and nine months ended September 30, 2026 and 2025. For purposes of this pro forma presentation, the acquisition of substantially all of the assets of The Debt Exchange, Inc. is assumed to have occurred on January 1, 2025. The pro forma financial information for all periods presented also includes the estimated business combination accounting effects resulting from this acquisition, notably amortization expense from the acquired intangible assets and certain other integration related impacts.

This unaudited pro forma financial information should not be relied upon as being indicative of the historical results that would have been obtained if the acquisition had actually occurred on January 1, 2025, and are not intended to be a projection of future trends or results.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026			2025
			pro forma					pro forma
Pro forma revenues	$	14,591	$	12,369	$	39,581		$	44,319
Pro forma net operating income	$	1,044	$	1,044	$	(18,859	)	$	5,471
Pro forma net income	$	1,037	$	398	$	(14,134	)	$	3,676

Pro forma net income per share - basic	$	0.03	$	0.01	$	(0.41	)	$	0.10
Pro forma net income per share - diluted	$	0.03	$	0.01	$	(0.41	)	$	0.10

Boston Note

Effective July 31, 2026 (the “Boston Note Acquisition Date”) HG Boston Note LLC (“Boston Note”), a wholly owned subsidiary of Heritage Global, Inc., completed the acquisition of substantially all of the assets of Boston Note & Mortgage III, LLC, (the “Seller”) a nationwide broker and buyer of privately held loans, notes, and mortgages, commonly known as seller notes or carry-back notes. The acquisition allows the Company's Financial Assets Division to enter additional financial asset classes and distribution channels. The total purchase consideration expected to be paid to the Seller is approximately $1.7 million, including $0.7 million of cash paid at closing and $1.0 million of estimated contingent consideration.

The purchase agreement provides for additional cash payments of up to $1.3 million in aggregate if Boston Note achieves specified net operating income milestones over the three years following the acquisition. The purchase agreement also provides for additional payments equal to 15% of Boston Note’s net operating income in excess of $0.5 million for each milestone period. The contingent consideration is not contingent on the continued employment of the sellers. The undiscounted amount the Company could be required to pay ranges from zero to $1.3 million, plus additional amounts under the excess net operating income provision, which is not subject to a maximum. The Company recognized the acquisition-date fair value of the contingent consideration of $0.6 million and $0.4 million within other current liabilities and other non-current liabilities, respectively.

The liability is remeasured to fair value at each reporting date, and changes are recognized in interest and other (expense) income, net. As of September 30, 2026, the fair value of the contingent consideration was $0.6 million and $0.4 million recorded within other current liabilities and other non-current liabilities, respectively. The Company recognized an increase in the fair value of less than $0.1 million during the three months ended September 30, 2026 since the Boston Note Acquisition Date which solely reflects the passage of time.

The fair value of the contingent consideration liability was estimated using a combination of Monte Carlo simulation and probability-weighted expected payment models. The resulting payments are discounted to present value using a risk-adjusted discount rate. Significant unobservable inputs include projected net operating income, net operating income volatility of 30% to 38%, and a risk-adjusted discount rate of 12%. Because these inputs are not observable in the market, the liability is classified within Level 3 of the fair value hierarchy. An increase in projected net operating income or volatility would generally increase the fair value of the liability, while an increase in the discount rate would decrease it.

The following table summarizes the allocation of the purchase consideration to the estimated fair values of assets acquired as of the Boston Note Acquisition Date (in thousands):


Intangible assets	$	530
Goodwill		1,207
Purchase price	$	1,737

The identifiable intangible asset acquired consists of the Boston Note trade name, which the Company expects to continue using following the acquisition. The Company determined that the trade name has an indefinite useful life, as there are no legal, regulatory, contractual, competitive, economic or other factors expected to limit the period over which it will contribute to the Company’s cash flows. Accordingly, the trade name is not amortized and will be tested for impairment annually, or more frequently if events or changes in circumstances indicate that it may be impaired.

The excess of the consideration transferred over the fair values of assets acquired was recorded as goodwill, which was primarily attributed to increased synergies that are expected to be achieved from the acquisition. Goodwill is expected to be deductible for income tax purposes. The purchase price allocation is preliminary and subject to change during the measurement period, primarily for the valuation of the trade name and contingent consideration.

The financial results of Boston Note have been included in the Company's consolidated financial statements since the Boston Note Acquisition Date and have been reported within the Commercial Loans segment within the Company's Financial Assets Division. For the two months ended September 30, 2026, Boston Note contributed revenue of $0.4 million and net income of $0.3 million to the Company's consolidated results.

Pro forma results of operations have not been presented because the historical results of operations of the acquired business were not material to the Company’s consolidated results of operations.

The Company incurred acquisition-related costs of $0.1 million that consisted primarily of legal and advisory services. These costs are included in selling, general and administrative expenses during the three months ended September 30, 2026.

Note 4 – Accounts Receivable, net

As further discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, 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. With respect to appraisal service fees, ALT's laboratory equipment sales and DebtX's loan sale advisory service fees, the Company extends credit to entities and institutions of significance, such as well-known academic and financial institutions and U.S. government agencies. 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, 2026, the Company recorded no material adjustments for credit losses in selling, general and administrative expense on the condensed consolidated statements of income related to accounts receivable. As of September 30, 2026 and December 31, 2025, the reserve for credit losses was less than $0.1 million and approximately $0.2 million, respectively.

Note 5 – 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 discussed in Note 1, the Company commenced implementation of a strategic plan to wind down its Specialty Lending segment during the third quarter of 2026. The Company's estimate of expected credit losses incorporates borrower-specific information, expected recovery values, collateral considerations and other relevant factors. During the wind-down period, the Company will continue to actively manage and pursue recovery of its remaining Specialty Lending assets and lending relationships.

As of September 30, 2026 and December 31, 2025, 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 $3.7 million and $8.8 million, respectively. The activity during the nine months ended September 30, 2026 includes the additional investment in notes receivable of approximately $1.3 million, which was offset by principal payments made by borrowers of approximately $3.0 million and a $3.5 million increase to the allowance for credit losses, related to the Board's decision to wind down the Specialty Lending segment. As of September 30, 2026 and December 31, 2025, the amortized cost basis of notes receivable in nonaccrual status was $7.5 million and $4.9 million, respectively.

As of September 30, 2026 and December 31, 2025, 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 $0.7 million and $0.6 million, respectively. The activity during the nine months ended September 30, 2026 includes the investment in notes receivable of approximately $0.7 million, which was offset by principal payments made by purchasers of $0.6 million and an immaterial amount of deferred financing fees, and allowance for credit losses.

The table below shows the Company’s lending activity for the nine months ended September 30, 2026 (in thousands):



Notes receivable as of December 31, 2025	$	9,804
Investment in notes receivable		2,008
Principal repayments		(3,610	)
Notes receivable, as of September 30, 2026		8,202
Deferred financing fees and costs, net		(15	)
Allowance for credit losses		(3,854	)
Notes receivable, net, as of September 30, 2026	$	4,333

Note 6 – Stock-based Compensation

As of September 30, 2026, 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, 2025 contained in the Company’s Form 10-K.

Stock Options

During the nine months ended September 30, 2026, the Company issued options to purchase 1,160,000 shares of common stock to certain of the Company’s employees and canceled 45,000 options to purchase common stock as a result of employee resignations. During the same period, the Company issued 15,926 shares of common stock pursuant to the cashless exercise of options to purchase 52,125 shares of common stock.

The following summarizes the changes in common stock options for the nine months ended September 30, 2026:


	Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (In thousands)
Outstanding as of December 31, 2025		2,172,600		$	1.76		5.1	$	408
Granted		1,160,000		$	1.28
Exercised		(52,125	)	$	0.60
Forfeited		(45,000	)	$	0.70
Outstanding as of September 30, 2026		3,235,475		$	1.62		6.2	$	402

Options exercisable as of September 30, 2026		1,854,225		$	1.73		4.1	$	379

The Company recognized stock-based compensation expense related to common stock options of $0.4 million for both the nine months ended September 30, 2026 and 2025, respectively. As of September 30, 2026, there was approximately $1.0 million of unrecognized stock-based compensation expense related to unvested common stock options outstanding, which is expected to be recognized over a weighted average period of 1.7 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.

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,
	Grant Date	Vesting Date	Restricted Stock Granted		Per Share Grant Date Fair Value		2025		2026		September 30, 2026
Employees	March 7, 2024	March 7, 2025		128,044	$	2.93		67		—		—
Non-executive directors	March 7, 2024	March 7, 2025		75,000	$	2.93		40		—		—
Employees	January 1, 2025	December 31, 2028 [1]		125,000	$	1.85		43		43		130
Employees	March 6, 2025	March 6, 2026		68,051	$	2.11		82		26		—
Non-executive directors	March 6, 2025	March 6, 2026		100,000	$	2.11		120		38		—
Non-executive directors	March 5, 2026	March 5, 2027 [2]		100,000	$	1.30		—		74		56
Total							$	352	$	181	$	186

[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 5, 2027.

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 $0.2 million and $0.4 million for the nine months ended September 30, 2026 and 2025, respectively. The unrecognized stock-based compensation expense as of September 30, 2026 was approximately $0.2 million, which is expected to be recognized over a weighted average period of 1.6 years.

Note 7 – Equity Method Investments

The Company has significant influence over the operations and financial policies of each of its equity method investments.

Joint ventures formed in connection with the Company's Auction and Liquidation segment

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.

In December 2022, DHC8 LLC, of which the Company held a 13.33% share was formed to provide funding and receive principal and interest payments as a result of the initial investment. This joint venture was dissolved in June 2025.

In September 2026, the Company invested $2.0 million in AGC JV Holdings, LLC, which was formed to purchase certain real estate assets and machinery and equipment among partners in a joint venture, for a 20% share of the joint venture. The Company may be required to contribute up to approximately $0.4 million of additional capital.

Joint ventures formed in connection with the Company's Specialty Lending segment

In March 2020, HGC Origination I LLC and HGC Funding I LLC, of which the Company initially held a 25% share in each, 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. HGC Funding I LLC was dissolved in December 2025.

In May 2023, HGC MPG Funding LLC, of which the Company initially held 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.

As discussed in Note 1, the Company commenced implementation of a strategic plan to wind down its Specialty Lending segment during the third quarter of 2026. During the second quarter of 2026, the Company identified indicators of a potential other than temporary decline in value of its equity method investments in HGC Origination I LLC and HGC MPG Funding LLC. In evaluating these indicators, management considered the expected recoverability of future cash flows from the underlying investments, including the anticipated impact of the Company's exit strategy and underlying portfolio performance. Based on this evaluation, the Company concluded that the decline in value of these equity method investments was other than temporary. Accordingly, during the three months ended June 30, 2026, the Company recorded a noncash impairment charge of $18.2 million to reduce the carrying value of the investments to their estimated fair value. The estimated fair value was determined using an income-based valuation approach that incorporated management's assumptions regarding expected future cash flows and recoveries.

The table below details the Company’s joint venture revenues, earnings, assets, and liabilities for the nine months ended and as of September 30, 2026 (in thousands):


	KNFH II LLC		DLZ Solutions LLC		AGC JV Holdings LLC		HGC Origination I LLC		HGC MPG Funding LLC		Total
Revenue	$	115	$	2,795	$	—	$	3,432	$	3,591	$	9,933
Gross profit		115		2,795		—		3,432		3,591		9,933
Operating income		19		2,599		—		3,294		3,305		9,217
Net income		19		2,599		—		3,297		3,305		9,220
Assets		6,668		255		24,691		23,896		26,781		82,291
Liabilities		1,986		199		14,691		—		27		16,903

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 Origination I LLC and HGC Funding I LLC		HGC MPG Funding LLC		Total
Revenues	$	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

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, 2026, 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. In March 2026, the Seller exercised its purchase option and the joint venture received payment in full. As of September 30, 2026, the Company has recorded approximately $0.6 million in life-to-date earnings in equity method investments and approximately $0.2 million in cost of services revenue related to the investment on the condensed 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. 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. In March 2026, the Seller made an additional principal payment which reduces the contractual purchase price upon the exercise of the purchase option. As of September 30, 2026, the Company reflects its participating interest of $0.8 million on its balance sheet within other long-term assets. The Company has recorded approximately $185,000 in life-to-date services revenue and approximately $62,000 in life-to-date costs of services revenue related to the investment on the condensed consolidated statement of income.

Note 8 – 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, 2026 and 2025, 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,
	2026		2025		2026		2025
Basic weighted average shares outstanding		34,739,768		34,547,477		34,655,037		35,585,976
Treasury stock effect of common stock options and restricted stock awards		331,214		657,675		—		669,586
Diluted weighted average common shares outstanding		35,070,982		35,205,152		34,655,037		36,255,562

Because the Company reported a net loss for the nine months ended September 30, 2026, incremental shares from stock options and restricted stock awards were excluded from diluted loss per share because their effect would have been anti-dilutive. Accordingly, diluted weighted-average shares and diluted loss per share equal basic weighted-average shares and basic loss per share for that period. For the three months ended September 30, 2026 and 2025, there were potential common shares of 2.8 million and 0.9 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, 2026 and 2025, there were potential common shares of 2.8 million and 0.9 million, respectively, that were excluded from the computation of diluted EPS, as the inclusion of such common shares would have been anti-dilutive.

Note 9 – 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.

On March 1, 2026, the Company vacated its Del Mar leased office space and determined that it would no longer use the facility in its operations. The Company is marketing the space for sublease and remains obligated for payments under the original lease through February 28, 2027. As a result of the change in use, management evaluated the related operating lease right-of-use asset for impairment under ASC 360, Property, Plant, and Equipment. As of September 30, 2026, the Company determined that the remaining carrying amount of the right-of-use asset was not recoverable and recorded a noncash impairment loss of approximately $25,000, bringing the carrying amount to zero. The impairment loss is included in selling, general and administrative expense in the accompanying condensed consolidated statement of income.

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


	September 30,		December 31,
	2026		2025
Right-of-use assets:
Del Mar, CA	$	—	$	197
Hayward, CA		695		933
San Diego, CA		131		231
Edwardsville, IL		77		157
Total right-of-use assets	$	903	$	1,518

Lease liabilities
Del Mar, CA	$	78	$	205
Hayward, CA		757		1,003
San Diego, CA		144		250
Edwardsville, IL		79		161
Total lease liabilities	$	1,058	$	1,619

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 1.7 years and the weighted average discount rate is 5.3% as of September 30, 2026.

Lease expense is recognized on a straight-line basis over the lease term. For the nine months ended September 30, 2026 and 2025, lease expense was approximately $0.7 million and $0.6 million, respectively. As of September 30, 2026, 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):


2026 (remainder of year from October 1, 2026 to December 31, 2026)	$	210
2027		573
2028		299
Total undiscounted future minimum lease payments		1,082
Less: imputed interest		(24	)
Present value of lease liabilities	$	1,058

Note 10 – 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 is used as the Company’s corporate headquarters and as 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. The Company capitalized a total of $2.7 million in building improvements and the building was placed in service on March 1, 2026 with a total depreciable cost of approximately $5.6 million.

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 was considered rental income and classified as service revenue on our 2025 audited 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, 2026			December 31, 2025
Building	$	6,536		$	3,797
Land		4,985			4,985
Furniture, fixtures and office equipment		959			361
Software and technology assets		851			577
Vehicles		11			11
Construction in progress		—			2,031
		13,342			11,762
Accumulated depreciation		(1,236	)		(878	)
Property and equipment, net	$	12,106		$	10,884

Note 11 – Intangible Assets and Goodwill

Intangible assets

The Company’s identifiable intangible assets as of September 30, 2026 and December 31, 2025 are shown below (in thousands except for lives):


	Remaining		Carrying Value							Carrying Value
	Life		December 31,							September 30,
	(years)		2025		Additions		Amortization			2026
Amortizable intangible assets:
Trade Name (ALT)		14.9	$	510	$	—	$	(25	)	$	485
Vendor Relationship (ALT)		—		153		—		(153	)		—
Customer Relationship (DebtX)		14.3		—		1,272		(64	)		1,208
Noncompete Agreements (DebtX)		0.3		—		26		(20	)		6
Total amortizable intangible assets				663		1,298		(262	)		1,699

Indefinite-lived intangible assets:
Trade Name (NLEX)	N/A			2,437		—		—			2,437
Trade Name (DebtX)	N/A			—		1,762		—			1,762
Trade Name (Boston Note)	N/A			—		530		—			530
Total intangible assets			$	3,100	$	3,590	$	(262	)	$	6,428

Amortization expense during the nine months ended September 30, 2026 and 2025 was $0.3 million and $0.2 million, respectively. The Company estimates that the residual value for intangible assets is not significant.

As of September 30, 2026, 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
2026 (remainder of year from October 1, 2026 to December 31, 2026)	$	36
2027		117
2028		117
2029		117
2030		117
Thereafter		1,195
Total estimated amortization expense	$	1,699

Goodwill

The Company’s goodwill relates to its acquisition of various entities. Goodwill consists of the following at September 30, 2026 and December 31, 2025 (in thousands):


	September 30, 2026		December 31, 2025
ALT	$	1,861	$	1,861
HGP		2,041		2,041
NLEX		3,544		3,544
DebtX		5,301		—
Boston Note		1,207		—
Total goodwill	$	13,954	$	7,446

In 2026 the Company recognized goodwill of $5.3 million related to the acquisition of substantially all of the assets of The Debt Exchange, Inc. and goodwill of $1.2 million related to the acquisition of substantially all of the assets of Boston Note & Mortgage III, LLC. There were no impairments recorded to the carrying value of goodwill during the nine months ended September 30, 2026 or 2025.

Note 12 – Debt

Outstanding debt as of September 30, 2026 and December 31, 2025 is summarized as follows (in thousands):


	September 30, 2026		December 31, 2025
Current:
2026 Credit Facility	$	2,000	$	—
Total third party debt, current		2,000		—

Non-current:
Mortgage		4,100		4,100
Total third party debt, non-current		4,100		4,100

Total third party debt	$	6,100	$	4,100

As of September 30, 2026, the estimated principal repayments on outstanding non-current debt for the remainder of the current fiscal year, the next five fiscal years and thereafter is shown below (in thousands):


Year	Amount
2026 (remainder of year from October 1, 2026 to December 31, 2026)	$	—
2027		—
2028		55
2029		70
2030		75
Thereafter		3,900
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.

Per the Loan Modification Agreement and Reaffirmation of Loan (the “2023 Modification Agreement”), effective as of May 26, 2023, by and between the Company and Lender, the applicable interest rate spread and floor of the 2021 Credit Facility 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 2023 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 nine 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.

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

On June 25, 2026 the Company and Lender entered into a change in terms agreement that extends the maturity date of the 2021 Credit Facility to July 27, 2026. The 2021 Credit Facility matured on July 27, 2026 with no outstanding balance.

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 are used as the Company’s corporate headquarters, and 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 Nancy Ridge 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, 2026 was $4.1 million.

2026 Credit Facility

On September 16, 2026, Heritage Global Inc. (the “Company”) entered into a promissory note, a business loan agreement and commercial security agreement (collectively, the “2026 Credit Facility”) with C3bank, National Association (the “Lender”). The 2026 Credit Facility provides for a $10.0 million revolving line of credit, subject to curtailment provisions that limit the amount that may be outstanding at any time by reference to, among other things, the Company’s trailing earnings, as defined in the agreement. As a result, the amount available under the 2026 Credit Facility may be less than $10.0 million. The Company is permitted to use the proceeds of the 2026 Credit Facility solely for its business operations.

The maturity date of the 2026 Credit Facility is January 16, 2028 (the “Maturity Date”). The 2026 Credit Facility sets the interest rate spread and interest rate floor to accrue at a variable interest rate, which is based on the rate of interest last quoted by The Wall Street Journal as the “prime rate,” plus a margin of 1.00% (such rate not to be less than 7.500% per annum). Additionally, the 2026 Credit Facility includes a loan covenant to provide that the Company shall pay the Lender an annual unused line fee, payable quarterly every three (3) months in arrears within ten (10) days thereof, commencing on September 16, 2026, and continuing through the Maturity Date.

The Company is the borrower under the 2026 Credit Facility. The 2026 Credit Facility is secured by a security interest in certain

of the Company’s and its certain 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.

The availability of additional draws under the 2026 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 2026 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 2026 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.

As of September 30, 2026, there was $2.0 million outstanding on the 2026 Credit Facility, and approximately $7.0 million was available for additional borrowings.

Note 13 – Income Taxes

As of September 30, 2026, the Company had aggregate federal net operating loss carry-forwards of $15.5 million available for utilization against taxable income achieved in 2026 and beyond. These net operating loss carry forwards begin to expire in 2026. 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 due to the noncash charges related to the Board's decision to wind down the Specialty Lending segment and uncertainty with respect to future taxable income, the Company has provided a partial valuation allowance against its net deferred tax assets. During the three months ended June 30, 2026, the Company increased the valuation allowance against its deferred tax assets by $0.3 million and made no changes during the three months ended September 30, 2026, maintaining the valuation allowance against its deferred tax assets of approximately $0.3 million. The Company did not have a valuation allowance as of December 31, 2025. The Company has no net operating loss carry forwards limited under Section 382 of the Internal Revenue Code as of September 30, 2026.

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

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 2026.

Note 14 – 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, David Ludwig. The total amount paid to the related party for the nine months ended September 30, 2026 and 2025 was approximately $94,000 and $92,000, respectively, and is included in selling, general and administrative expenses in the unaudited condensed consolidated statements of income.

Note 15 – Segment Information

Ross Dove, the Company’s Chief Executive Officer, is the chief operating decision maker. The CODM uses segment operating income (loss) to assess segment performance and allocate resources. The CODM is not regularly provided segment asset information, and the Company therefore does not disclose segment assets.

The following tables set forth certain financial information for the Company's reportable segments for the three month periods ended September 30, 2026 and 2025 (in thousands):


	Three Months Ended September 30, 2026
	Auction and Liquidation			Refurbishment & Resale			Consumer Loans			Commercial Loans			Specialty Lending			Corporate and other			Consolidated
Gross profit [1]	$	3,663		$	1,480		$	2,882		$	1,175		$	25		$	—		$	9,225
Operating expenses [2]		(2,650	)		(1,014	)		(1,543	)		(1,435	)		(272	)		(1,272	)		(8,186	)
Earnings from equity method investments		5			—			—			—			—			—			5
Operating income (loss)	$	1,018		$	466		$	1,339		$	(260	)	$	(247	)	$	(1,272	)	$	1,044


	Three Months Ended September 30, 2025
	Auction and Liquidation			Refurbishment & Resale			Consumer Loans			Commercial Loans		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

The following tables set forth certain financial information for the Company's reportable segments for the nine month periods ended September 30, 2026 and 2025 (in thousands):


	Nine Months Ended September 30, 2026
	Auction and Liquidation			Refurbishment & Resale			Consumer Loans			Commercial Loans			Specialty Lending			Corporate and other			Consolidated
Gross profit [1]	$	8,624		$	4,310		$	8,811		$	3,603		$	518		$	—		$	25,866
Operating expenses [2]		(7,071	)		(3,085	)		(4,659	)		(4,333	)		(4,298	)		(3,613	)		(27,059	)
Earnings from equity method investments		527			—			—			—			(18,193	)		—			(17,666	)
Operating income (loss)	$	2,080		$	1,225		$	4,152		$	(730	)	$	(21,973	)	$	(3,613	)	$	(18,859	)


	Nine Months Ended September 30, 2025
	Auction and Liquidation			Refurbishment & Resale			Consumer Loans			Commercial Loans		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

[1] Within the Company’s Industrial Asset division, management allocates gross profit resulting from certain auctions from Auction 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, 2026, the total amount of gross profit allocated to ALT from HGP was approximately $0.1 million, as compared to the total amount of gross profit allocated to ALT during the same period of 2025 of approximately $0.5 million. During the nine months ended September 30, 2026, the total amount of gross profit allocated to ALT from HGP was approximately $0.2 million, as compared to the total amount of gross profit allocated to ALT during the same period of 2025 of approximately $1.1 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. No interest expense has been allocated to operating segments during the three or nine months ended September 30, 2026 and 2025.

Note 16 – Subsequent Events

The Company has evaluated events subsequent to September 30, 2026 for potential recognition or disclosure in its condensed consolidated financial statements. There have been no subsequent events requiring recognition or disclosure in this Quarterly Report on Form 10-Q, other than noted below.

On October 12, 2026, in connection with the Exit Plan, the Company entered into a forbearance agreement with a Specialty Lending borrower whose loans were on nonaccrual status as of September 30, 2026. The agreement provides for repayment of the outstanding principal balance of approximately $3.0 million through September 1, 2027. The Company considered the terms of the agreement in estimating its allowance for credit losses as of September 30, 2026.

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., a Florida Corporation ("HG") (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, 2026 and 2025, 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, 2025, filed with the Securities and Exchange Commission (“SEC”) on March 12, 2026 (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 6130 Nancy Ridge Drive, San Diego, CA 92121. 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.

The organization chart below outlines our basic domestic corporate structure as of September 30, 2026.


			Heritage Global Inc. (1)




100%	100%	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)	Heritage DebtX LLC (7) (Delaware)	HG Boston Note LLC (7) (Delaware)

100%	100%

BioSurplus LLC (2) (California)	Heritage ALT LLC (4) (Delaware)

____________________

(1) Registrant.

(2) Auction and Liquidation.

(3) Holding Company.

(4) Refurbishment and Resale.

(5) Consumer Loans.

(6) Specialty Lending.

(7) Commercial Loans.

DebtX Asset Acquisition

As discussed further under Note 3 – Business Combinations, effective January 1, 2026 (the “DebtX Acquisition Date”) and pursuant to an Asset Purchase Agreement dated January 9, 2026, Heritage DebtX LLC (“DebtX”), a wholly owned subsidiary of HG, completed the acquisition of substantially all of the assets of The Debt Exchange, Inc., a provider of loan sale advisory services for commercial and consumer debt. The acquisition enhances the Company’s capabilities in financial advisory services and expands its customer relationships within the banking and financial services sector. Following the acquisition, the financial results of DebtX have been included in the Company's consolidated financial statements since the DebtX Acquisition Date and have been reported as the Commercial Loans segment within the Company's Financial Assets Division.

Wind Down of Specialty Lending Segment

As discussed in Note 1, on July 30, 2026, the Board authorized a strategic plan (the“Exit Plan”) to wind down the Company's Specialty Lending segment. During the third quarter of 2026, the Company commenced implementation of the Exit Plan, including efforts to wind down or exit certain joint venture investments and lending activities associated with the segment. The Company expects the wind down process to continue through 2027. During the wind down period, management will continue to manage existing lending relationships, pursue recovery and restructuring efforts, and seek to maximize recoveries from the remaining portfolio assets.

Boston Note Asset Acquisition

As discussed further under Note 3 – Business Combinations, effective July 31, 2026 (the “Boston Note Acquisition Date”) and pursuant to an Asset Purchase Agreement dated July 31, 2026, HG Boston Note, LLC (“Boston Note”), a wholly owned subsidiary of HG, completed the acquisition of substantially all of the assets of Boston Note & Mortgage III, LLC, a Massachusetts limited liability company, and nationwide broker and buyer of privately held loans, notes and mortgages, commonly seller or carry-back notes. Boston Note specializes in sourcing and brokering real estate-secured assets directly from individual and institutional sellers, including CRE-backed seller notes, jumbo residential notes, and liquidity for non-performing seller notes. The acquisition allows the Company's Financial Assets Division to enter additional financial asset classes and distribution channels. Following the acquisition, the financial results of Boston Note have been included in the Company's consolidated financial statements since the Boston Note Acquisition Date and have been reported within the Commercial Loans segment within the Company's Financial Assets Division.

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.

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 beginning in June 2024 and therefore is in default. Our share of payments received from the nonaccrual loans, including interest, will be applied against the outstanding loan balance. As of September 30, 2026 the amortized cost basis of loans in nonaccrual status was $7.5 million and is recorded within notes receivable. As of September 30, 2026, the Company's notes receivable balance of nonaccrual loans net of the $3.8 million allowance for credit losses, was $3.7 million.

Based upon the continuation of difficulties with the Company’s largest borrower, including a further decline in the second quarter of 2026, on July 30, 2026, the Board authorized a strategic plan to wind down the Company’s Specialty Lending segment beginning in the third quarter of 2026. Refer to Note 1 – Basis of Presentation for additional information.

Specialty Lending - Equity method investments impairment

Given the senior lender's priority position in cash flows generated from the underlying loan portfolios with the Company’s largest borrower (including the impacted loans that were placed in nonaccrual status in June 2024) and the change in collection strategy as well as the senior lender's sole and exclusive authority over defaulted loans, we believe we will not recover the carrying amount of our equity method investments in a liquidation event and we have determined that the loss in investment value is other than temporary. As a result, the Company concluded the asset was impaired and recorded a noncash impairment charge of $18.2 million during the three months ended June 30, 2026. As of September 30, 2026, the Company had no equity method investment balance related to its Specialty Lending segment.

Industry and Competition

Our business consists primarily of the auction, appraisal, refurbishment and asset advisory services provided by our Industrial Assets division and the consumer loan brokerage, commercial loan 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 consumer and commercial loan brokerages, principal based auction services, refurbishment and resale, and advisory services and secured financing on laboratory equipment sales. 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 revolving credit has increased above pre‑pandemic levels, and credit card delinquencies and charge-offs have risen to at or above pre‑pandemic benchmarks. While recent data indicate these metrics have begun to stabilize and, in some measures moderate, we believe credit card charge-offs and nonperforming receivables are likely to remain elevated. Under adverse macroeconomic conditions, delinquencies and charge-off rates could increase further, potentially expanding the supply of charged-off and nonperforming portfolios available for sale. 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.

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 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. 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. Effective August 1, 2026, David Ludwig transitioned to the role of Senior Advisor to the Company, and Tom Ludwig was appointed President of NLEX, effective January 1, 2026. Tom, who continues to serve as General Counsel, has been with NLEX for 19 years and has previously held roles as Chief Compliance Officer and Senior Vice President of Operations, overseeing multiple facets of the consumer loans business.

Financial Assets Division

Our Financial Assets Division provides services to issuers of consumer and commercial 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.

Consumer Loan 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 $250 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. While lower flow volumes have pressured current fee revenue, we continue to see longer-term growth opportunities 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.

Commercial Loan Segment

Through DebtX, we provide end-to-end sale and valuation services for performing and non-performing commercial & industrial, commercial real estate, multifamily, and residential real estate loan portfolios. We facilitate the entire loan sale process from portfolio analysis and pricing, deal preparation, deal marketing, trade execution, and closing. We structure each loan sale to achieve optimal results for our clients, which typically includes a combination of highest price, certainty of execution, efficient timing, and data security and privacy. Through Boston Note, we broker the sale and purchase of privately held loans, notes, and mortgages, commonly known as seller notes or carry-back notes.

Specialty Lending Segment

Through HGC, we have historically provided specialty financing solutions to investors in charged-off and nonperforming asset portfolios. On July 30, 2026, the Board authorized a strategic plan to wind down the Company’s Specialty Lending segment beginning in the third quarter of 2026. Refer to Note 1 – Basis of Presentation for additional information.

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 consumer loans, commercial loans 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.

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.

Business combinations

Acquisitions are accounted for under ASC Topic 805, Business Combinations (“ASC 805”), which requires that assets acquired and liabilities assumed that are deemed to be a business are recorded based on their respective acquisition date fair values. ASC 805 further requires that separately identifiable intangible assets be recorded at their acquisition date fair values and that the excess of consideration paid over the fair value of assets acquired and liabilities assumed (including identifiable intangible assets) should be recorded as goodwill. Effective January 1, 2026 we acquired substantially all of the assets of The Debt Exchange, Inc. for approximately $8.5 million. The purchase price allocation was based on an evaluation of the appropriate fair values and represents management's best estimate. On July 31, 2026, we acquired substantially all of the assets of Boston Note & Mortgage III, LLC (the “Seller”), a nationwide broker and buyer of privately held loans, notes, and mortgages, commonly known as seller notes or carry-back notes. Following the transaction, Boston Note does business as Boston Note, a Heritage Global company, within our Commercial Loans segment. The total purchase consideration expected to be paid to the Seller is approximately $1.7 million, including $0.7 million of cash paid at closing and $1.0 million of estimated contingent consideration. See Note 3 to our condensed consolidated financial statements for further detail.

The critical accounting policies used in the preparation of our audited consolidated financial statements are discussed in our Form 10-K. Other than stated above, there were no material changes to these policies during the nine months ended September 30, 2026.

Management’s Discussion of Financial Condition

Liquidity and Capital Resources

Liquidity

We had working capital of $8.0 million and $18.1 million as of September 30, 2026 and December 31, 2025, respectively.

Our current assets as of September 30, 2026 decreased to $26.9 million compared to $33.6 million as of December 31, 2025. This change was primarily due to a decrease in cash of $4.9 million, as further discussed below, a decrease in the current portion of notes receivable of $3.5 million primarily due to an increased allowance for credit losses, partially offset by an increase in accounts receivable of $0.9 million, and an increase in inventory of $0.7 million.

Our current liabilities as of September 30, 2026 increased to $18.9 million compared to $15.5 million as of December 31, 2025. The most significant changes were an increase of $2.0 million in our borrowings under the line of credit and an increase of $1.9 million in payables to sellers due to the timing of certain asset liquidation settlements, partially offset by a decrease of $1.0 million in accounts payable and accrued liabilities.

During the nine months ended September 30, 2026, our primary sources of cash were cash on hand, cash provided by our operating activities and principal repayments on our outstanding loans. Cash disbursements during the nine months ended September 30, 2026 consisted primarily of approximately $8.5 million cash paid for the acquisition of substantially all of the assets of The Debt Exchange, Inc., cash paid for the acquisition of substantially all of the assets of Boston Note & Mortgage III, LLC, investments in notes receivable, equity method investments, and capital expenditures related to improvements to our new building.

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 ongoing operations and availability under the Company's 2026 Credit Facility with C3bank.

Our indebtedness consists of the Mortgage (as defined below) of $4.1 million and $2.0 million borrowed under our 2026 Credit Facility (as defined below).

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 is used as the Company’s corporate headquarters and as 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, 2026, we had an outstanding balance of $4.1 million on the Mortgage.

On September 16, 2026, we entered into a promissory note, a business loan agreement and commercial security agreement (collectively, the “2026 Credit Facility”) with the Lender. The 2026 Credit Facility provides for a $10.0 million revolving line of credit, subject to curtailment provisions that limit the amount that may be outstanding at any time by reference to, among other things, our trailing earnings, as defined in the agreement governing the 2026 Credit Facility, which is filed as Exhibit 10.3 to this Quarterly Report on Form 10-Q. We are permitted to use the proceeds of the 2026 Credit Facility solely for our business operations. As of September 30, 2026, we had $2.0 million outstanding on the 2026 Credit Facility, and approximately $7.0 million was available for additional borrowings. We expect to have a total of approximately $8.6 million available within the 2026 Credit Facility as of the issuance date as a result of the curtailment provisions. A decline in our operating results could reduce the amount available under the 2026 Credit Facility and could require us to repay outstanding borrowings if the amount outstanding is greater than the amount available.

Capital Resources

As of September 30, 2026 and December 31, 2025, we had stockholders’ equity of $53.1 million and $67.0 million, respectively.

The decrease in stockholders' equity of $13.9 million is mainly due to noncash charges recognized in the second quarter of 2026, in connection with the implementation of the Exit Plan. The noncash charges did not result in any cash expenditures and did not affect our cash balances or liquidity as of September 30, 2026. Accordingly, the charges are not expected to affect our ability to fund its ongoing business activities or future operations.

In connection with the execution of the Exit Plan, we have incurred and expect to incur costs associated with exit activities, consisting primarily of professional services expenses directly related to the Exit Plan. Such costs were not material for the three months ended September 30, 2026, and are not expected to be material in the aggregate. We will continue to incur ordinary operating expenses, primarily compensation and related costs for employees administering the wind-down of the remaining loan portfolio, which are recognized as incurred within selling, general and administrative expenses in the condensed consolidated statements of income. We expect the wind-down to be completed by the end of 2027, with HGC operating expenses expected to decline beginning in the first quarter. The actual timing may differ from our current estimates and will depend on the duration and scope of the activities necessary to execute the Exit Plan.

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 and the 2026 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. We believe that our current capital resources are 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, 2026 were $15.6 million as compared to $20.5 million as of December 31, 2025, a decrease of approximately $4.9 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, 2026 payables to sellers was $9.2 million, resulting in a net cash available balance of $6.4 million compared to available cash of $13.2 million as of December 31, 2025.

Cash From Operating Activities

Cash provided by operations was $2.3 million during the nine months ended September 30, 2026 as compared to cash provided by operations of $4.6 million during the same period in 2025. The approximate $2.2 million change was primarily attributable to a decrease of $2.1 million in net income adjusted for noncash items and a decrease in operating assets and liabilities of $0.1 million during the nine months ended September 30, 2026 as compared to the same period in 2025.

The changes in operating assets and liabilities during the nine months ended September 30, 2026 as compared to the same period in 2025 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 From Investing Activities

Cash used in investing activities during the nine months ended September 30, 2026 was $8.2 million compared to cash used in investing activities of $8.9 million during the same period in 2025.

Cash used in investing activities during the nine months ended September 30, 2026 consisted primarily of the purchase price paid for the acquisitions of substantially all of the assets of The Debt Exchange, Inc. and Boston Note & Mortgage III, LLC for a total of $9.2 million, the purchase of property and equipment of $1.5 million, investments in notes receivable of $2.0 million, and investments in equity method investments of $2.0 million. Cash used in investing activities during the nine months ended September 30, 2026 was offset by payments received on notes receivable of $3.6 million, return of investment and cash distributions received from equity method investments of $2.2 million, and return of participating interest of $0.7 million.

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 From Financing Activities

Cash provided by financing activities was approximately $0.9 million during the nine months ended September 30, 2026 compared to cash provided by financing activities of $2.0 million during the nine months ended September 30, 2025. Financing activities during the nine months ended September 30, 2026 consisted primarily of proceeds from debt payable to third parties of $3.0 million, offset by repayments of debt payable to third parties of $1.0 million, repayments of secured borrowing of $0.8 million and repurchases of our common stock of $0.3 million. 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.

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 three and nine months ended September 30, 2026 and 2025 (in thousands).


	Three Months Ended September 30,					Change						Nine Months Ended September 30,					Change
	2026			2025		Dollars			Percent			2026			2025		Dollars			Percent
Revenues:
Services revenue	$	9,821		$	7,475	$	2,346			31	%	$	24,642		$	25,389	$	(747	)		(3	)%
Asset sales		4,770			3,885		885			23	%		14,939			13,734		1,205			9	%
Total revenues		14,591			11,360		3,231			28	%		39,581			39,123		458			1	%

Operating costs and expenses:
Cost of services revenue		2,363			1,451		912			63	%		4,535			6,098		(1,563	)		(26	)%
Cost of asset sales		3,003			2,609		394			15	%		9,180			9,303		(123	)		(1	)%
Selling, general and administrative		7,980			5,968		2,012			34	%		26,439			18,642		7,797			42	%
Depreciation and amortization		206			120		86			72	%		620			356		264			74	%
Total operating costs and expenses		13,552			10,148		3,404			34	%		40,774			34,399		6,375			19	%
Earnings of equity method investments		5			89		(84	)		(94	)%		(17,666	)		212		(17,878	)		(8433	)%
Operating income (loss)		1,044			1,301		(257	)		(20	)%		(18,859	)		4,936		(23,795	)		(482	)%
Interest and other (expense) income, net		(83	)		34		(117	)		(344	)%		(168	)		108		(276	)		(256	)%
Income (loss) before income tax (benefit) expense		961			1,335		(374	)		(28	)%		(19,027	)		5,044		(24,071	)		(477	)%
Income tax (benefit) expense		(76	)		750		(826	)		(110	)%		(4,893	)		1,758		(6,651	)		(378	)%
Net income (loss)	$	1,037		$	585	$	452			77	%	$	(14,134	)	$	3,286	$	(17,420	)		(530	)%

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 our charged-off receivables and loan sale brokerage services, (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, Consumer Loans segment, Commercial Loans 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 Consumer Loan segment, through NLEX, brokers charged-off receivables in the U.S. and Canada on behalf of financial institutions. The Commercial Loans segment, through DebtX and Boston Note, provides loan sale advisement and valuation services. The Specialty Lending segment, through HGC, has historically provided specialty financing solutions to investors in charged-off and nonperforming asset portfolios. On July 30, 2026, the Board authorized the Exit Plan to wind down the Company’s Specialty Lending segment. Refer to Note 1 – Basis of Presentation for additional information.

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, BioSurplus and HGC represents incremental costs for managing these segments as part of their sister segments (HGP for ALT and BioSurplus, 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 tables set forth certain financial information for the Company's reportable segments for the three month periods ended September 30, 2026 and 2025 (in thousands):


	Three Months Ended September 30, 2026
	Auction and Liquidation			Refurbishment & Resale			Consumer Loans			Commercial Loans			Specialty Lending			Corporate and other			Consolidated
Gross profit [1]	$	3,663		$	1,480		$	2,882		$	1,175		$	25		$	—		$	9,225
Operating expenses [2]		(2,650	)		(1,014	)		(1,543	)		(1,435	)		(272	)		(1,272	)		(8,186	)
Earnings from equity method investments		5			—			—			—			—			—			5
Operating income (loss)	$	1,018		$	466		$	1,339		$	(260	)	$	(247	)	$	(1,272	)	$	1,044


	Three Months Ended September 30, 2025
	Auction and Liquidation			Refurbishment & Resale			Consumer Loans			Commercial Loans		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

The following tables set forth certain financial information for the Company's reportable segments for the nine month periods ended September 30, 2026 and 2025 (in thousands):


	Nine Months Ended September 30, 2026
	Auction and Liquidation			Refurbishment & Resale			Consumer Loans			Commercial Loans			Specialty Lending			Corporate and other			Consolidated
Gross profit [1]	$	8,624		$	4,310		$	8,811		$	3,603		$	518		$	—		$	25,866
Operating expenses [2]		(7,071	)		(3,085	)		(4,659	)		(4,333	)		(4,298	)		(3,613	)		(27,059	)
Earnings from equity method investments		527			—			—			—			(18,193	)		—			(17,666	)
Operating income (loss)	$	2,080		$	1,225		$	4,152		$	(730	)	$	(21,973	)	$	(3,613	)	$	(18,859	)


	Nine Months Ended September 30, 2025
	Auction and Liquidation			Refurbishment & Resale			Consumer Loans			Commercial Loans		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

[1] Within the Company’s Industrial Assets division, management allocates gross profit resulting from certain auctions from Auction 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, 2026, the total amount of gross profit allocated to ALT from HGP was approximately $0.1 million, as compared to the total amount of gross profit allocated to ALT during the same period of 2025 of approximately $0.5 million. During the nine months ended September 30, 2026, the total amount of gross profit allocated to ALT from HGP was approximately $0.2 million, as compared to the total amount of gross profit allocated to ALT during the same period of 2025 of approximately $1.1 million.

Three-Month Period Ended September 30, 2026 Compared to Three-Month Period Ended September 30, 2025

Revenues and cost of revenues – Revenues were $14.6 million during the three months ended September 30, 2026 compared to $11.4 million during the same period in 2025. Costs of services revenue and asset sales were $5.4 million during the three months ended September 30, 2026 compared to $4.1 million during the three months ended September 30, 2025. The gross profit of these items was $9.2 million during the three months ended September 30, 2026 compared to $7.3 million during the same period in 2025, an increase of approximately $1.9 million, or approximately 26%. The increase in gross profit in the third quarter of 2026 compared to the third quarter of 2025 is primarily due to an increase in gross profit generated from DebtX and Boston Note beginning in January and August of 2026, respectively, as well as improved auction activity.

Selling, general and administrative expense – Selling, general and administrative expense was $8.0 million during the three months ended September 30, 2026 compared to $6.0 million during the same period in 2025.

Significant components of selling, general and administrative expense for the three months ended September 30, 2026 and 2025 are shown below (in thousands):


	Three Months Ended September 30,
	2026		2025			% change
Compensation
Auction and liquidation	$	1,833	$	1,370			34	%
Refurbishment and resale		641		678			(5	)%
Consumer loans		1,098		1,236			(11	)%
Commercial loans		1,090		—			100	%
Specialty lending		182		245			(26	)%
Corporate and other		564		582			(3	)%
Stock-based compensation		174		204			(15	)%
Board of Directors fees		123		123			0	%
Accounting, tax and legal professional fees		596		353			69	%
Insurance		153		144			6	%
Occupancy		396		347			14	%
Travel and entertainment		211		134			57	%
Advertising and promotion		233		176			32	%
Information technology support		367		212			73	%
Provision for credit losses		2		(32	)		100	%
Other		317		196			62	%
Total selling, general & administrative expense	$	7,980	$	5,968			34	%

Selling, general and administrative expense during the three months ended September 30, 2026 increased by approximately $2.0 million compared to the selling, general and administrative expense during the same period of 2025. The increase in selling, general and administrative expense during the three months ended September 30, 2026 was primarily due to the inclusion of the operations of DebtX and Boston Note beginning in January and August of 2026, respectively, and an increase in commissions related to increased auction activity.

Depreciation and amortization expense – Depreciation and amortization expense was $0.2 million during the three month period ended September 30, 2026 compared to $0.1 million during the three month period ended September 30, 2025.

Nine-Month Period Ended September 30, 2026 Compared to Nine-Month Period Ended September 30, 2025

Revenues and cost of revenues – Revenues were $39.6 million during the nine months ended September 30, 2026 compared to $39.1 million during the same period in 2025. Costs of services revenue and asset sales were $13.7 million during the nine months ended September 30, 2026 compared to $15.4 million during the same period in 2025. The gross profit of these items was $25.9 million during the nine months ended September 30, 2026 compared to $23.7 million during the same period in 2025, an increase of approximately $2.2 million, or approximately 9%. The increase in gross profit during the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 is primarily due to the inclusion of gross profit generated from DebtX and Boston Note beginning in January and August of 2026, respectively, offset by normal changes in the timing and magnitude of asset liquidation transactions and a decrease in gross profit generated by our consumer loans segment.

Selling, general and administrative expense – Selling, general and administrative expense was $26.4 million during the nine months ended September 30, 2026 compared to $18.6 million during the same period of 2025.

Significant components of selling, general and administrative expense for the nine months ended September 30, 2026 and 2025 are shown below (in thousands):


	Nine Months Ended September 30,
	2026		2025			% change
Compensation
Auction and liquidation	$	4,783	$	4,357			10	%
Refurbishment and resale		1,985		2,123			(7	)%
Consumer loans		3,421		3,972			(14	)%
Commercial loans		3,423		—			100	%
Specialty lending		622		813			(23	)%
Corporate and other		1,614		1,819			(11	)%
Stock-based compensation		556		713			(22	)%
Board of Directors fees		368		368			0	%
Accounting, tax and legal professional fees		1,292		974			33	%
Insurance		461		459			0	%
Occupancy		1,258		1,014			24	%
Travel and entertainment		593		403			47	%
Advertising and promotion		597		513			16	%
Information technology support		1,111		550			102	%
Provision for credit losses		3,512		(36	)		100	%
Other		843		600			41	%
Total selling, general & administrative expense	$	26,439	$	18,642			42	%

Selling, general and administrative expense during the nine months ended September 30, 2026 increased by approximately $7.8 million compared to the selling, general and administrative expense during the same period of 2025. The increase in selling, general and administrative expense during the nine months ended September 30, 2026 was primarily due to the increased allowance for credit losses on notes receivable and the inclusion of the operations of DebtX and Boston Note beginning in January and August of 2026, respectively.

Depreciation and amortization expense – Depreciation and amortization expense was $0.6 million during the nine months ended September 30, 2026 compared to $0.4 million in the same period in 2025.

Earnings in equity method investments – Earnings in equity method investments were a loss of $17.7 million during the nine months ended September 30, 2026 compared to earnings of $0.2 million during the same period in 2025. The $17.9 million decrease is primarily due to the impairment charges recorded in 2026 related to the winding down of the Company’s Specialty Lending segment based upon the continuation of difficulties with the Company’s largest borrower. Given the senior lender's priority position in cash flows

generated from the underlying loan portfolios with the Company’s largest borrower (including the impacted loans that were placed in nonaccrual status in June 2024) and the change in collection strategy as well as the senior lender's sole and exclusive authority over defaulted loans, the Company concluded the asset was impaired and recorded a noncash impairment charge of $18.2 million during the three months ended June 30, 2026.

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 condensed 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 is EBITDA further adjusted for stock-based compensation expense, noncash provision for or recovery of credit losses and noncash impairment of equity-method investments related specifically to the wind down of our Specialty Lending segment pursuant to the Exit Plan as discussed in Note 1. 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,
	2026			2025			2026			2025
Net income (loss)	$	1,037		$	585		$	(14,134	)	$	3,286
Add back:
Depreciation and amortization		206			120			620			356
Interest and other expense (income), net		83			(34	)		168			(108	)
Income tax (benefit) expense		(76	)		750			(4,893	)		1,758
EBITDA		1,250			1,421			(18,239	)		5,292

Management add back:
Stock-based compensation		174			204			556			713
Noncash provision for credit losses		—			—			3,512			—
Noncash impairment of equity method investments		—			—			18,156			—
Adjusted EBITDA	$	1,424		$	1,625		$	3,985		$	6,005

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 to 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, 2026.

Further, there were no changes in our internal control over financial reporting during the three months ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


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


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


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).

10.1		Amended and Restated Employment Agreement, by and between Heritage Global Inc. and David Ludwig, effective as of August 1, 2026 (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, filed on August 13, 2026 (File No. 001-39471), and incorporated herein by reference).

10.2*		Promissory Note, by and between Heritage Global Inc. and C3bank, National Association, effective as of September 11, 2026.

10.3*		Business Loan Agreement, by and between Heritage Global Inc. and C3bank, National Association, effective as of September 11, 2026.

10.4*†		Pledge and Security Agreement, by and between Heritage Global Inc. and C3bank, National Association, effective as of September 11, 2026.

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)


	Heritage Global Inc.

Date: November 5, 2026	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)


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


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


Part I.	Financial Information

Item 1.	Financial Statements	3

	Condensed Consolidated Balance Sheets as of September 30, 2026 (unaudited) and December 31, 2025	3

	Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2026 and 2025 (unaudited)	4

	Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2026 and 2025 (unaudited)	5

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2026 and 2025 (unaudited)	7

	Notes to Unaudited Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45

Item 4.	Controls and Procedures	45

Part II.	Other Information

Item 1.	Legal Proceedings	46

Item 1A.	Risk Factors	46

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46

Item 3.	Defaults Upon Senior Securities	46

Item 4.	Mine Safety Disclosures	46

Item 5.	Other Information	47

Item 6.	Exhibits	48

	Signature Page	49