Company: HGBL
Filing Date: 2025-03-13
Form Type: 10-K
Source: 0000950170-25-038691
Chunk: 37

Company: Heritage Global Inc.
Filing Date: 2025-03-13
Form: 10-K
Item: Item 15
Chunk 37
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, whereas HGC Origination I LLC, HGC Funding I LLC, and HGC MPG Funding LLC were formed in connection with the Financial Assets division. The Company has significant influence over the operations and financial policies of each of its equity method investments. In accordance with ASC 326, the Company performs a review of notes receivable on a quarterly basis for each of its specialty lending investments. For the year ended December 31, 2024, the Company’s share of the joint venture’s provision for credit losses was approximately $1.0 million, representing a credit loss rate of 4.5% specific to its equity method investments, which was primarily related to HGC Origination I LLC and HGC MPG Funding LLC. The provision for credit losses was primarily driven by increases in loan balances. As of December 31, 2023, the Company's share of the allowance for credit losses was approximately $0.9 million, representing a credit loss rate of 4.3% specific to its equity method investments. As of December 31, 2024, the Company has recorded no actual credit losses through its equity method investments. As of December 31, 2024, the amortized cost basis of the Company's share of loans in nonaccrual status recorded in equity method investments was $18.3 million.Based on the nature of our equity method investments, the joint venture entities' revenues and gross profit are not materially different and furthermore, operating income and net income have no material differences. The table below details the Company’s joint venture revenues, earnings, assets, and liabilities as of December 31, 2024 (in thousands): 

        Year Ended December 31, 2024

        KNFH LLC

        DHC8 LLC

        KNFH II LLC

        HGC Funding I LLC and Origination I LLC

        HGC MPG Funding LLC

        Total

        Revenues
         
        $
        —

        $
        2,478

        $
        13,263

        $
        5,002

        $
        5,416

        $
        26,159

        Gross profit

        —

        2,478

        5,226

        5,002

        5,416

        18,122

        Operating income

        —

        2,018

        5,044

        4,971

        5,412

        17,444