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.

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.