Company: HGBL
Filing Date: 2025-03-13
Form Type: 10-K
Source: 0000950170-25-038691
Chunk: 15

Company: Heritage Global Inc.
Filing Date: 2025-03-13
Form: 10-K
Item: Item 15
Chunk 15
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 Notes 2 and 3, the Company has recognized an allowance for credit losses for notes receivable of $0.4 million and within the Company’s portion of equity method investments of $1.0 million. The allowance is a valuation account that is deducted from the carrying amount of notes receivable and equity method investments to present the net amount of notes receivable and equity method investments expected to be collected. The Company’s analysis uses forecasts of expected cash receipts provided by an external specialist, which are then applied to a cash flow waterfall to project expected cash receipts. The shortfall in projected cash receipts is used as the Company’s estimate of the allowance. We identified the use of specialist and forecasts of cash receipts as a critical audit matter as auditing the forecasts required significant auditor judgment.

The primary procedures we performed to address this critical audit matter include the following:

•Obtained an understanding of management’s estimate regarding the allowance for credit losses including the method, assumptions, and data used to develop the estimate by reviewing management prepared memorandum and analysis.

•Evaluated management’s assessment of the external specialist.

•Examined the underlying data used in determining the allowance for credit losses, including forecasts provided by the external specialist.

•Evaluated the Company’s waterfall calculations and the application of forecasted cash receipts.

 /s/ UHY LLP

We have served as the Company's auditor since 2022.

West Des Moines, IowaMarch 13, 2025

F-2

HERITAGE GLOBAL INC.

CONSOLIDATED BALANCE SHEETS

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

    December 31,

    2024

    2023

    ASSETS

    Current assets:

    Cash and cash equivalents
     
    $
    21,749

    $
    12,279

    Accounts receivable, net

    1,559

    1,910

    Current portion of notes receivable, net

    3,416

    6,581

    Inventory – equipment

    5,348

    5,074

    Other current assets

    1,056

    448

    Total current assets

    33,128

    26,292

    Non-current portion of notes receivable, net

    6,558

    10,890

    Equity method investments, net

    20,892

    21,361

    Right-of-use assets

    2,