Company: HGBL
Filing Date: 2025-03-13
Form Type: 10-K
Source: 0000950170-25-038691
Chunk: 35

Company: Heritage Global Inc.
Filing Date: 2025-03-13
Form: 10-K
Item: Item 15
Chunk 35
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 financing fees, and allowance for credit losses.The table below shows the Company’s lending activity: 

        2024

        2023

        Notes receivable, beginning of year
         
        $
        18,262

        $
        9,163

        Investment in notes receivable

        5,675

        29,826

        Noncash transfer of notes receivable to equity method investments

        (2,487
        )

        (8,851
        )

        Principal repayments

        (11,041
        )

        (11,876
        )

        Notes receivable, end of year

        10,409

        18,262

        Deferred financing fees and costs, net

        (52
        )

        (141
        )

        Allowance for credit losses

        (383
        )

        (650
        )

        Notes receivable, net, end of year
         
        $
        9,974

        $
        17,471

      In accordance with ASC 326, the Company performs a review of notes receivable on a quarterly basis. During 2023, the Company recorded a provision for credit losses in selling, general and administrative expense on the consolidated statement of income of approximately $0.5 million. As of December 31, 2024 and 2023, the allowance for credit losses was approximately $0.4 million and $0.7 million, respectively. The change in allowance for credit losses in 2024 was primarily driven by decreases in loan balances. The Company's credit loss reserve rate specific to its notes receivable balance as of December 31, 2024 was 3.7%. As of December 31, 2024, the Company has recorded no actual credit losses on notes receivable. As of December 31, 2024, the amortized cost basis of notes receivable in nonaccrual status was approximately $5.3 million. There were no notes receivable in nonaccrual status as of December 31, 2023.

Note 4 – Lessor ArrangementIn 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,