Heritage Global Inc.
For the period ended Jun 30, 2026. Filed Aug 13, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 13, 2026
HGBL$1.25-1.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-07.
0001193125-26-211813
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-13.
0001193125-26-349109
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 108 previous paragraphs and 121 current paragraphs.
67 unchanged; 32 reworded; 18 added; 9 removed; 0 previous and 4 current paragraphs rearranged.
Tables are not compared: 6 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (18)
Current report
Wind Down of Specialty Lending Segment
Current report
As discussed further under Note 16 – Recent Developments, on July 30, 2026, the Board authorized a strategic plan (the “Exit Plan”) to wind down the Company’s Specialty Lending segment. As part of the Exit Plan, HGC will take steps to wind down or exit its position in the joint ventures through which HGC conducts a portion of the business of Specialty Lending segment. The Company anticipates that the Exit Plan will commence in the third quarter of 2026 and the completion date will depend on the duration and scope of the activities necessary to implement the Exit Plan.
Current report
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 16 - Subsequent Events, and the Company’s Current Report on Form 8-K, filed with the SEC on July 31, 2026, for additional information.
Current report
Specialty Lending - Equity method investments impairment
Current report
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.
Current report
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 16 - Subsequent Events, and the Company’s Current Report on Form 8-K, filed with the SEC on July 31, 2026, for additional information.
Current report
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 non-cash impairment charge of $18.2 million during the three months ended June 30, 2026.
Current report
On June 25, 2026 we entered into a change in terms agreement with the Lender that extends the maturity date of the 2021 Credit Facility to July 27, 2026. The 2021 Credit Facility matured on July 27, 2026 and we are actively working with the Lender to establish a new line of credit which management believes will be executed in the third quarter of 2026. As of June 30, 2026, we had no outstanding balance on the 2021 Credit Facility. Management’s liquidity conclusion does not depend on obtaining the replacement facility.
Current report
The decrease in stockholders' equity of $15.1 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 the Company’s cash balances or liquidity as of June 30, 2026. Accordingly, the charge is not expected to affect the Company’s ability to fund its ongoing business activities or future operations.
Current report
In connection with the implementation of the Exit Plan, the Company expects to incur cash expenditures consisting primarily of employee-related costs related to the wind down process and professional services expenses. The total amount of these expenditures have yet to be determined and will depend on the duration and scope of the activities necessary to implement the Exit Plan.
Current report
Cash From Operating Activities
Current report
Cash From Investing Activities
Current report
Cash From Financing Activities
Current report
Earnings in Equity Method Investments –Earnings in equity method investments was a loss of approximately $18.2 million during the three months ended June 30, 2026 compared to earnings of approximately $79,000 during the same period in 2025. The approximate $18.1 million decrease is 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 non-cash impairment charge of $18.2 million during the three months ended June 30, 2026.
Current report
Six-Month Period Ended June 30, 2026 Compared to Six-Month Period Ended June 30, 2025
Current report
Selling, general and administrative expense –Selling, general and administrative expense was $18.5 million during the six months ended June 30, 2026 compared to $12.7 million during the same period of 2025.
Current report
Depreciation and amortization expense –Depreciation and amortization expense was $0.4 million during the six months ended June 30, 2026 compared to $0.2 million in the same period in 2025.
Current report
Earnings in Equity Method Investments – Earnings in equity method investments were a loss of $17.7 million during the six months ended June 30, 2026 compared to earnings of $0.1 million during the same period in 2025. The $17.8 million decrease is 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 non-cash impairment charge of $18.2 million during the three months ended June 30, 2026.
Removed paragraphs (9)
Previous report
In coordination with our senior lenders, we are actively engaged in a workout process with respect to loans currently in nonaccrual status, with the objective of maximizing recoveries over the remaining economic life of the underlying collateral. Our recovery strategy is centered on the monetization of the charged-off and nonperforming consumer receivable portfolios securing these loans and is expected to occur over multiple years. The primary component of the workout strategy involves transitioning a greater portion of the underlying consumer accounts into legal collection channels. During the fourth quarter of 2025, we reached a restructuring agreement with the senior lender for HGC MPG Funding LLC. As a result of this restructuring agreement and our regular quarterly portfolio analysis, we have determined it appropriate to place all loans associated with our joint ventures with senior lenders in nonaccrual status given the senior lender’s priority position in cash flows generated from the underlying portfolios. As of both March 31, 2026 and December 31, 2025, the balance of additional loans placed in nonaccrual status was approximately $1.7 million.
Previous report
Specialty Lending - Concentration and credit risk
Previous report
As of March 31, 2026, we held a gross balance of investments in notes receivable of $27.3 million, recorded in both notes receivable and equity method investments, and consisting of one borrower’s note balance of approximately $21.4 million, representing 78% of our total gross notes receivable balance as of March 31, 2026, as compared to 76% as of December 31, 2025. As discussed further above, our largest borrower is in default. As a result, the balance of the loans outstanding with our largest borrower were in nonaccrual status as of March 31, 2026. Whether we will realize any return with respect to the impacted loans is uncertain.
Previous report
We do not evaluate concentration risk solely based on balance due from specific borrowers, but also consider the number of portfolio purchases, type of charged off accounts within the portfolio, and the seller of the portfolio when determining the overall risk. Of the balance due from one borrower of $21.4 million, there are 11 distinct loan agreements, the underlying portfolio of accounts are diversified throughout FinTech, installment loans and credit card accounts, and further diversified amongst six separate sellers of these charged off portfolios.
Previous report
We mitigate this concentration risk by requiring, and monitoring, security from each borrower consisting of their charged off and nonperforming receivable portfolios. We engage in a due diligence process that leverages our valuation expertise, knowledge and experience in the underlying nonperforming receivable portfolios marketplace. In the event of default, we are entitled to call the unpaid interest and principal balances and receive all net collections directly. We may also recover our investment by engaging a third party to collect on the underlying charged off or nonperforming receivable portfolio or the underlying portfolio can be sold through our Consumer Loans segment. In certain cases, our recovery options may be subject to concurrence of the originator or other prior holder of the assets.
Previous report
Cash Flows From Operating Activities
Previous report
Cash Flows From Investing Activities
Previous report
Cash Flows From Financing Activities
Previous report
Earnings in Equity Method Investments – Earnings in equity method investments were approximately $0.5 million and $44,000 during both the three months ended March 31, 2026 and 2025. The increase in earnings in equity method investments during the three months ended March 31, 2026 was primarily due to the seller's exercise of the purchase option to repurchase the real estate assets in the DLZ Solutions joint venture, as discussed in Note 7 - Equity Method Investments.
Reworded paragraphs (32)
Previous wording
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 Florda Corporation ("HG") together with its consolidated subsidiaries, “we”, “us”, “our” or the “Company”, and the related notes thereto for the three month periods ended March 31, 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”).
Current wording
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 six month periods ended June 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”).
Previous wording
Pursuant to the terms of existing credit agreements, our largest borrower was required to collect on underlying charged off and nonperforming consumer loan portfolios and remit a required minimum monthly payment to us. However, this borrower became unable to make the required minimum monthly payments and therefore is in default. While in default, this borrower continues to collect on the underlying charged off and nonperforming consumer loan portfolios but must remit all such net collections to us and senior lenders. These remittances of net collections have not met the amount of the required minimum monthly payments since June of 2024. We determined that (1) it is not probable that the projected cash flows expected from the borrower’s collection efforts on the underlying charged off or nonperforming receivable portfolio will be sufficient to satisfy all of the outstanding principal balance and contractual interest payments, and (2) it is not probable that the borrower will be able to meet the minimum required principal and interest payments through other operational cash flows. We do not expect to realize any return with respect to these loans in 2025, and whether we will realize any return with respect to these loans is uncertain. As we continue to work closely with the borrower and its senior lenders in an effort to mitigate the default in an efficient and effective manner, the impacted loans have been placed in nonaccrual status beginning in June 2024. In addition, there was a balance of $1.5 million from our share of other loans within affiliated Joint Ventures that are impacted by the default with our largest borrower and have been placed in nonaccrual status as of June 2024. Our share of payments received from this borrower, including interest, will be applied against the outstanding loan balance. As of March 31, 2026, the amortized cost basis of loans in nonaccrual status was $23.7 million, of which $4.8 million is recorded within notes receivable and $18.9 million is recorded within equity method investments.
Current wording
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 June 30, 2026, the amortized cost basis of loans in nonaccrual status was $4.6 million and is recorded within notes receivable. As of June 30, 2026, the Company's notes receivable balance of nonaccrual loans net of the $3.5 million allowance for credit losses, was $1.1 million
Previous wording
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, advisory services and secured lending services. Further, our business is event-driven and we have repeat, forward-flow contracts in place with industry leading customers. We expect to drive growth in our revenue streams by taking different roles, and using partners as needed.
Current wording
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.
Previous wording
Our Financial Assets Division provides services to issuers of consumer credit that are looking to monetize nonperforming and charged-off loans — loans that creditors have written off as uncollectable. Nonperforming and charged-off loans typically originate from banks that issue unsecured consumer credit.
Current wording
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.
Previous wording
Through HGC, we provide specialty financing solutions to investors in charged-off and nonperforming asset portfolios. Since the inception of HGC in 2019, we have issued $160.7 million in total loans to investors by both self- funded loans and in partnership with senior lenders. Our portion of the total loans funded since inception is $74.3 million. Our income from secured lending consists of upfront fees, interest income, monthly monitoring fees and backend profit share. As of March 31, 2026, our net balance related to investments in loans to buyers of charged-off and nonperforming receivable portfolios was $26.3 million, of which $8.1 million is classified as notes receivable and $18.2 million is classified as equity method investments.
Current wording
As of June 30, 2026, through HGC, we provide specialty financing solutions to investors in charged-off and nonperforming asset portfolios. Since the inception of HGC in 2019, we have issued $161.0 million in total loans to investors by both self- funded loans and in partnership with senior lenders. Our portion of the total loans funded since inception is $74.5 million. Our income from secured lending consists of upfront fees, interest income, monthly monitoring fees and backend profit share. As of June 30, 2026, our net balance related to investments in loans to buyers of charged-off and nonperforming receivable portfolios was $3.9 million, which is classified as notes receivable on our condensed consolidated balance sheet. 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 16 - Subsequent Events, and the Company’s Current Report on Form 8-K, filed with the SEC on July 31, 2026, for additional information.
Previous wording
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 three months ended March 31, 2026.
Current wording
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 six months ended June 30, 2026.
Previous wording
We had working capital of $11.6 million and $18.1 million as of March 31, 2026 and December 31, 2025, respectively.
Current wording
We had working capital of $9.4 million and $18.1 million as of June 30, 2026 and December 31, 2025, respectively.
Previous wording
Our current assets as of March 31, 2026 decreased to $23.8 million compared to $33.6 million as of December 31, 2025. This change was primarily due to a decrease in cash of $8.9 million, as further discussed below, and a decrease in inventory of $0.6 million.
Current wording
Our current assets as of June 30, 2026 decreased to $23.0 million compared to $33.6 million as of December 31, 2025. This change was primarily due to a decrease in cash of $7.3 million, as further discussed below, a decrease in the current portion of notes receivable of $3.7 million primarily due to an increased allowance for credit losses, and a decrease in inventory of $0.4 million, partially offset by an increase in accounts receivable of $0.6 million.
Previous wording
Our current liabilities as of March 31, 2026 decreased to $12.2 million compared to $15.5 million as of December 31, 2025. The most significant changes were a decrease of $2.0 million in payables to sellers due to the timing of certain asset liquidation settlements and a decrease of $1.4 million in accounts payable and accrued liabilities.
Current wording
Our current liabilities as of June 30, 2026 decreased to $13.6 million compared to $15.5 million as of December 31, 2025. The most significant changes were a decrease of $0.6 million in payables to sellers due to the timing of certain asset liquidation settlements and a decrease of $1.0 million in accounts payable and accrued liabilities.
Previous wording
During the three months ended March 31, 2026, our primary source of cash was cash on hand and principal repayments on outstanding loans. Cash disbursements during the three months ended March 31, 2026 consisted primarily of approximately $8.5 million cash paid for the acquisition of substantially all of the assets of The Debt Exchange, Inc., investments in notes receivable, repurchases of our common stock, and capital expenditures related to improvements to our new building.
Current wording
During the six months ended June 30, 2026, our primary source of cash was cash on hand and principal repayments on outstanding loans. Cash disbursements during the six months ended June 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., investments in notes receivable, repurchases of our common stock, and capital expenditures related to improvements to our new building.
Previous wording
We believe we can fund our operations and our debt service obligations for 12 months from the date of filing this quarterly report and beyond through a combination of working capital, cash flows from our on-going operations and accessing financing from our existing line of credit.
Current wording
We believe we can fund our operations and our debt service obligations for 12 months from the date of filing this quarterly report and beyond through a combination of working capital, cash flows from our on-going operations and accessing financing from a future credit facility, currently being negotiated with C3bank and expected to be executed in the third quarter of 2026.
Previous wording
Our indebtedness consists of a promissory note, a business loan agreement and commercial security agreement (collectively, the “Mortgage Loan Agreement”) with C3bank, National Association, that provides for a $4.1 million term loan (the “Mortgage”) and any amounts borrowed under our 2021 Credit Facility.
Current wording
Our indebtedness consists of a promissory note, a business loan agreement and commercial security agreement (collectively, the “Mortgage Loan Agreement”) with C3bank, National Association, that provides for a $4.1 million term loan (the “Mortgage”).
Previous wording
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 a warehouse and office space for the operations of Heritage Global Partners, Inc., our subsidiary that operates our Auction and Liquidation segment. As of March 31, 2026, we had an outstanding balance of $4.1 million on the Mortgage.
Current wording
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 June 30, 2026, we had an outstanding balance of $4.1 million on the Mortgage.
Previous wording
On December 27, 2024, the Company entered into a Loan Modification Agreement and Reaffirmation of Loan (the “Sixth Modification Agreement”), by and between the Company and the Lender. The Sixth Modification Agreement modifies and reaffirms the 2021 Credit Facility to, among other things, extend the maturity date to June 27, 2026, modify the applicable interest rate, and further modify the loan covenants. We are permitted to use the proceeds of the loan solely for our business operations. As of March 31, 2026, we had no outstanding balance on the 2021 Credit Facility.
Current wording
On December 27, 2024, the Company entered into a Loan Modification Agreement and Reaffirmation of Loan (the “Sixth Modification Agreement”), by and between the Company and the Lender. The Sixth Modification Agreement modifies and reaffirms the 2021 Credit Facility to, among other things, extend the maturity date to June 27, 2026, modify the applicable interest rate, and further modify the loan covenants. We are permitted to use the proceeds of the loan solely for our business operations.
Previous wording
As of March 31, 2026 and December 31, 2025, we had stockholders’ equity of $67.8 million and $67.0 million, respectively.
Current wording
As of June 30, 2026 and December 31, 2025, we had stockholders’ equity of $51.9 million and $67.0 million, respectively.
Previous wording
We determine our future capital and operating requirements based upon our current and projected operating performance and contractual commitments. We expect to be able to finance our future operations through a combination of working capital, future net cash flows from operating activities and our 2021 Credit Facility. Our contractual requirements are limited to the outstanding debt and lease commitments with related and unrelated parties. Capital requirements are generally limited to our purchases of surplus and distressed assets and our investment activity under our Specialty Lending segment. We believe that our current capital resources, including available borrowing capacity from our 2021 Credit Facility is sufficient for these requirements. In the event additional capital is needed, we believe we can obtain additional debt financing through capital partners.
Current wording
We determine our future capital and operating requirements based upon our current and projected operating performance and contractual commitments. We expect to be able to finance our future operations through a combination of working capital, future net cash flows from operating activities and a new credit facility with C3bank, which we expect to be in place prior to the end of the third quarter of 2026. Our contractual requirements are limited to the outstanding debt and lease commitments with related and unrelated parties. Capital requirements are generally limited to our purchases of surplus and distressed assets and our investment activity under our Specialty Lending segment. We believe that our current capital resources are sufficient for these requirements. In the event additional capital is needed, we believe we can obtain additional debt financing through capital partners.
Previous wording
Cash and cash equivalents as of March 31, 2026 were $11.6 million as compared to $20.5 million as of December 31, 2025, a decrease of approximately $8.9 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 March 31, 2026, payables to sellers was $5.3 million, resulting in a net cash available balance of $6.2 million compared to available cash of $13.2 million as of December 31, 2025.
Current wording
Cash and cash equivalents as of June 30, 2026 were $13.2 million as compared to $20.5 million as of December 31, 2025, a decrease of approximately $7.3 million. The total cash amount reflected on our balance sheet represents the total cash and cash equivalents held on account. Cash amounts owed to our clients are identified as payables to sellers within current liabilities. We view cash net of payables to sellers as available for operations or investment purposes. As of June 30, 2026 payables to sellers was $6.7 million, resulting in a net cash available balance of $6.5 million compared to available cash of $13.2 million as of December 31, 2025.
Previous wording
Cash used in operating activities was $2.7 million during the three months ended March 31, 2026 as compared to cash provided by operating activities of $2.6 million during the same period in 2025. The approximate $5.3 million change was primarily attributable to a decrease in operating assets and liabilities of $4.1 million and a decrease of $1.2 million in net income adjusted for noncash items during the three months ended March 31, 2026 as compared to the same period in 2025.
Current wording
Cash used in operations was $1.1 million during the six months ended June 30, 2026 as compared to cash provided by operations of $4.5 million during the same period in 2025. The approximate $5.6 million change was attributable to a decrease of $1.9 million in net income adjusted for noncash items and a decrease in operating assets and liabilities of $3.6 million during the six months ended June 30, 2026 as compared to the same period in 2025.
Previous wording
The changes in operating assets and liabilities during the three months ended March 31, 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.
Current wording
The changes in operating assets and liabilities during the six months ended June 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.
Previous wording
Cash used in investing activities during the three months ended March 31, 2026 was $5.4 million compared to cash used in investing activities of $9.5 million during the same period in 2025.
Current wording
Cash used in investing activities during the six months ended June 30, 2026 was $5.2 million compared to cash used in investing activities of $8.6 million during the same period in 2025.
Previous wording
Cash used in investing activities during the three months ended March 31, 2026 consisted primarily of the purchase price paid for the acquisition of substantially all of the assets of The Debt Exchange, Inc. of $8.5 million, the purchase of property and equipment of $0.6 million, and investments in notes receivable of $1.0 million. Cash used in investing activities during the three months ended March 31, 2026 was offset by payments received on notes receivable of $1.9 million, return of investment and cash distributions received from equity method investments of $2.1 million and return of investment in participating interest of $0.6 million.
Current wording
Cash used in investing activities during the six months ended June 30, 2026 consisted primarily of the purchase price paid for the acquisition of substantially all of the assets of The Debt Exchange, Inc. of $8.5 million, the purchase of property and equipment of $0.8 million, and investments in notes receivable of $2.0 million. Cash used in investing activities during the six months ended June 30, 2026 was offset by payments received on notes receivable of $3.1 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.
Previous wording
Cash used in investing activities during the three months ended March 31, 2025 consisted primarily of purchase of property and equipment of $7.4 million, investments in notes receivable of $1.3 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 three months ended March 31, 2025 was offset by payments received on notes receivable of $1.6 million and return of investment and cash distributions received from equity method investments of $0.8 million.
Current wording
Cash used in investing activities during the six months ended June 30, 2025 consisted primarily of purchase of property and equipment of $7.6 million, investments in notes receivable of $3.0 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 six months ended June 30, 2025 was offset by payments received on notes receivable of $3.9 million and return of investment and cash distributions received from equity method investments of $1.3 million.
Previous wording
Cash used in financing activities was approximately $0.9 million during the three months ended March 31, 2026 compared to cash provided by financing activities of $3.9 million during the three months ended March 31, 2025. Financing activities during the three months ended March 31, 2026 consisted primarily of repayments of secured borrowing of $0.7 million and repurchases of our common stock of $0.1 million. Cash provided by financing activities during the three months ended March 31, 2025 consisted primarily of $4.1 million in proceeds from our Mortgage and $1.1 million of proceeds from secured borrowing, partially offset by $1.0 million in repurchases of our common stock.
Current wording
Cash used in financing activities was approximately $1.0 million during the six months ended June 30, 2026 compared to cash provided by financing activities of $2.2 million during the six months ended June 30, 2025. Financing activities during the six months ended June 30, 2026 consisted primarily of repayments of secured borrowing of $0.8 million and $0.3 million in repurchases of our common stock. Financing activities during the six months ended June 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.
Previous wording
The following table sets out the Company’s condensed consolidated results of operations for the three months ended March 31, 2026 and 2025 (in thousands).
Current wording
The following table sets out the Company’s condensed consolidated results of operations for the three and six months ended June 30, 2026 and 2025 (in thousands).
Previous wording
The following table sets forth certain financial information for the Company's reportable segments for the three months ended March 31, 2026 and 2025 (in thousands):
Current wording
The following tables set forth certain financial information for the Company's reportable segments for the three month periods ended June 30, 2026 and 2025 (in thousands):
Previous wording
[1] Within the Company’s Industrial Asset division, management allocates gross profit resulting from certain auctions from Auctions and Liquidation (HGP) to Refurbishment & Resale (ALT). From time to time, ALT may source and refer an auction project to HGP or directly sell lab equipment inventory through the auction channel. In these instances, the profits relating to these transactions are allocated to ALT rather than accounted for under the segment profit or loss of HGP. During the three months ended March 31, 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 $0.3 million.
Current wording
[1] Within the Company’s Industrial Asset division, management allocates gross profit resulting from certain auctions from Auctions and Liquidation (HGP) to Refurbishment & Resale (ALT). From time to time, ALT may source and refer an auction project to HGP or directly sell lab equipment inventory through the auction channel. In these instances, the profits relating to these transactions are allocated to ALT rather than accounted for under the segment profit or loss of HGP. During the three months ended June 30, 2026, the total amount of gross profit allocated to ALT from HGP was not material, as compared to the total amount of gross profit allocated to ALT during the same period of 2025 of approximately $0.4 million. During the six months ended June 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 $0.6 million.
Previous wording
[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 months ended March 31, 2026 or March 31, 2025.
Current wording
[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 six months ended June 30, 2026 and 2025.
Previous wording
Revenues and cost of revenues –Revenues were $12.7 million during the three months ended March 31, 2026 compared to $13.5 million during the same period in 2024. Costs of services revenue and asset sales were $4.4 million during the three months ended March 31, 2026 compared to $5.4 million during the three months ended March 31, 2025. The gross profit of these items was $8.3 million during the three months ended March 31, 2026 compared to $8.0 million during the same period in 2025, an increase of approximately $0.3 million, or approximately 4%. The increase in gross profit during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 is primarily due to normal changes in the timing and magnitude of transactions, in addition to the inclusion of gross profit from DebtX beginning in the first quarter of 2026.
Current wording
Revenues and cost of revenues –Revenues were $12.3 million during the three months ended June 30, 2026 compared to $14.3 million during the same period in 2025. Costs of services revenue and asset sales were $3.9 million during the three months ended June 30, 2026 compared to $5.9 million during the three months ended June 30, 2025. The gross profit of these items was $8.3 million during the three months ended June 30, 2026 compared to $8.4 million during the same period in 2025, a decrease of approximately $0.1 million, or approximately 1%. The decrease in gross profit in the second quarter of 2026 compared to the second quarter of 2025 is primarily due to a decrease in gross profit generated by our consumer loans segment and normal changes in the timing and magnitude of transactions, offset by the inclusion of gross profit from DebtX beginning in the first quarter of 2026.
Previous wording
Selling, general and administrative expense –Selling, general and administrative expense was $7.6 million during the three months ended March 31, 2026 compared to $6.5 million during the same period in 2025.
Current wording
Selling, general and administrative expense –Selling, general and administrative expense was $10.8 million during the three months ended June 30, 2026 compared to $6.1 million during the same period in 2025.
Previous wording
Selling, general and administrative expense during the three months ended March 31, 2026 increased by approximately $1.1 million compared to the selling, general and administrative expense during same period of 2025. The increase in selling, general and administrative expense during the three months ended March 31, 2026 was primarily due to the acquisition of substantially all of the assets of The Debt Exchange, Inc.
Current wording
Selling, general and administrative expense during the three months ended June 30, 2026 increased by approximately $4.7 million compared to the selling, general and administrative expense during same period of 2025. The increase in selling, general and administrative expense during the three months ended June 30, 2026 was primarily due to the increased allowance for credit losses on notes receivable and the acquisition of substantially all of the assets of The Debt Exchange, Inc.
Previous wording
Depreciation and amortization expense –Depreciation and amortization expense was approximately $0.2 million and $0.1 million during the three month periods ended March 31, 2026 and 2025, respectively.
Current wording
Depreciation and amortization expense –Depreciation and amortization expense was $0.2 million during the three month period ended June 30, 2026 compared to $0.1 million during the three month period ended June 30, 2025.
Previous wording
We prepared our unaudited condensed consolidated financial statements in accordance with GAAP. We define EBITDA as net income plus depreciation and amortization, interest expense, and provision for income taxes. Adjusted EBITDA reflects EBITDA adjusted further to eliminate the effects of stock-based compensation. Management uses EBITDA and Adjusted EBITDA in assessing the Company’s results, evaluating the Company’s performance and in reaching operating and strategic decisions. Management believes that the presentation of EBITDA and Adjusted EBITDA, when considered together with our GAAP financial statements and the reconciliation to the most directly comparable GAAP financial measure, is useful in providing investors a more complete understanding of the factors and trends affecting the underlying performance of the Company on a historical and ongoing basis. Our use of EBITDA and Adjusted EBITDA is not meant to be, and should not be, considered in isolation or as a substitute for, or superior to, any GAAP financial measure. You should carefully evaluate the financial information below, which reconciles our GAAP reported net income to EBITDA and Adjusted EBITDA for the periods presented (in thousands).
Current wording
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. 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).
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
The following tables set forth certain financial information for the Company's reportable segments for the six month periods ended June 30, 2026 and 2025 (in thousands):
Current report — wording carried from elsewhere
Revenues and cost of revenues –Revenues were $25.0 million during the six months ended June 30, 2026 compared to $27.8 million during the same period in 2025. Costs of services revenue and asset sales were $8.4 million during the six months ended June 30, 2026 compared to $11.3 million during the same period in 2025. The gross profit of these items was $16.6 million during the six months ended June 30, 2026 compared to $16.4 million during the same period in 2025, an increase of approximately $0.2 million, or approximately 1%. The increase in gross profit during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 is primarily due to the inclusion of gross profit from DebtX beginning in 2026, offset by to normal changes in the timing and magnitude of asset liquidation transactions and a decrease in gross profit generated by our consumer loans segment.
Current report — wording carried from elsewhere
Significant components of selling, general and administrative expense for the six months ended June 30, 2026 and 2025 are shown below (in thousands):
Current report — wording carried from elsewhere
Selling, general and administrative expense during the six months ended June 30, 2026 increased by approximately $5.8 million compared to the selling, general and administrative expense during same period of 2025. The increase in selling, general and administrative expense during the six months ended June 30, 2026 was primarily due to the increased allowance for credit losses on notes receivable and the acquisition of substantially all of the assets of The Debt Exchange, Inc.