Ross. Hi. Nice to meet you. I'm Crystal. Dove is your last name? Dove, D-O-V-E, like the bird. Okay. They are going to give you exactly 25 minutes. Fine. Five-minute mark. You're going to see them hold up a sign in the back that says. Mine's more interactive. Okay. They can more efficiently. You still only have 25 minutes. I know. I know. Okay. They're going to hold up a sign in the back that says you have five minutes left, three minutes, four minutes. Okay. I'm not worried about it. Make sure you're speaking to the microphone so that the webcam can hear you. All right. I'm an auctioneer. First time ever I had a microphone. All right. Good afternoon. The next Planet MicroCap presentation is Heritage Global. We have Ross Dove. Thank you. I'll talk for a few minutes, and then I'm going to hopefully make this interactive. Instead of me just rambling on for 25 minutes, we can do kind of like a Q&A. You can ask me some questions. I actually have some questions I'm going to ask you guys that maybe you could help me out and give me some answers on to help me do a better job at my company and maybe get this darn stock up. I'll take it from here. I wanted to go to—there you go. I'm a one-slide guy. There's like a 35-slide deck, but I promise you I'll never get off the first slide because I'm too old and I started doing sales a long time before they invented PowerPoint. Heritage Global is 15 years old, trades on the Nasdaq, about an $80 million market cap, which we're screaming and complaining about all the way to the fact that we think it's better, but that's where it is. Couple bucks stock price, been profitable for three-quarters of a decade since we've run it. We'll always stay profitable because we're a disciplined, well-run little shop. We do two things, really. We focus on financial assets and we focus on industrial assets, primarily as a disposition firm, as a lending firm, as a valuation firm. We sell hard-to-sell stuff that we think is easy to sell because we're a market maker. I'll start on the financial side, which is kind of easier to explain quicker because it's really one thing. It's charged-off loans. A long time ago, there was this thing called S&Ls that maybe some of you are old enough to remember. When they shut down the S&Ls, the FDIC hired my predecessor firm to auction off hundreds of billions of dollars of struggling credit cards, auto loans, real estate loans from the failed S&Ls. When we were all done with that three-year run, we woke up and said, "Shit. We have these unbelievable buyers." That's a bad word. We said, "Shoot." We said, "Shoot." We had these unbelievable buyers and no longer a seller. The government was out of S&Ls and it was basically an over with business. We said, "Let's take it to the private sector." All of the banks that remained have non-performing loans, have charged-off loans. There wasn't really a business of selling loans once they were written off. We were a pioneer that created the business of selling written-off loans, credit card loans, and auto loans. We did it for the biggest banks in the world who eventually built recovery departments and basically stopped using us. When they stopped using us, we broad-based it into regional banks. Fast forward 25 years, there's constantly been new clients. Right now, 60% of the business is what we call alternative lending. Worked for PayPal, worked for Lending Club, worked for all the buy now, pay later people selling charged-off loans. It's about half our revenue stream in financial assets. It's a brokerage called NLEX. Why is that growing now? Because an auctioneer's dream was the invention of buy now, pay later. It's like I woke up and I almost couldn't believe my fortune that they thought everyone's going to pay later. What happens is you go on a cruise, you lose your money gambling in the casino, you drink a ton of rum and Cokes, you get off the cruise, and you get a bill to pay later. You go, "Oh, man, that was a good cruise, but I'm broke." That turns into a charge-off where you can't collect. The only way you get that guy to pay is you basically give it to somebody like us at NLEX. We sell it for $0.05, $0.10 on the dollar to somebody who goes out and works really hard to collect $0.20 on the dollar, getting a judgment, getting a garnishment, and chasing them down. That's a growing business. If you want to know why we're going to do good, I always say we're going to do good at Heritage when supply is going to grow. Why is supply going to grow? Because the younger generation came out of the pandemic and spent like crazy with no real plan to pay off all their bills. They got spoiled by a pandemic that basically gave them free money from the government. All of a sudden, the free money from the government stopped and we woke up. Hi. I'm Ross. Ross. Hi. Nice to meet you. I'm Crystal. Dove is your last name? Dove, D-O-V-E, like the bird. Okay. They are going to give you exactly 25 minutes. Fine. Five-minute mark. You're going to see them hold up a sign in the back that says. Mine's more interactive. Okay. They can more efficiently. You still only have 25 minutes. I know. I know. Okay. They're going to hold up a sign in the back that says you have five minutes left, three minutes. Okay. I'm not worried about it. Make sure you're speaking to the microphone so that the webcam can hear you. All right. I'm an auctioneer. First time ever I had a microphone. All right. Good afternoon. The next Planet MicroCap presentation is Heritage Global. We have Ross Dove. Thank you. I'll talk for a few minutes, and then I'm going to hopefully make this interactive. Instead of me just rambling on for 25 minutes, we can do kind of like a Q&A. You can ask me some questions. I actually have some questions I'm going to ask you guys that maybe you could help me out and give me some answers on to help me do a better job at my company and maybe get this darn stock up. I'll take it from here. I wanted to go to—there you go. I'm a one-slide guy. There's like a 35-slide deck, but I promise you I'll never get off the first slide because I'm too old and I started doing sales a long time before they invented PowerPoint. Heritage Global is 15 years old, trades on the Nasdaq, about an $80 million market cap, which we're screaming and complaining about all the way to the fact that we think it's better, but that's where it is. Couple bucks stock price, been profitable for three-quarters of a decade since we've run it. We'll always stay profitable because we're a disciplined, well-run little shop. We do two things, really. We focus on financial assets and we focus on industrial assets, primarily as a disposition firm, as a lending firm, as a valuation firm. We sell hard-to-sell stuff that we think is easy to sell because we're a market maker. I'll start on the financial side, which is kind of easier to explain quicker because it's really one thing. It's charged-off loans. A long time ago, there was this thing called S&Ls that maybe some of you are old enough to remember. When they shut down the S&Ls, the FDIC hired my predecessor firm to auction off hundreds of billions of dollars of struggling credit cards, auto loans, real estate loans from the failed S&Ls. When we were all done with that three-year run, we woke up and said, "Shit. We have these unbelievable buyers." That's a bad word. We said, "Shoot." We said, "Shoot." We had these unbelievable buyers and no longer a seller. The government was out of S&Ls and it was basically an over with business. We said, "Let's take it to the private sector." All of the banks that remained have non-performing loans, have charged-off loans. There wasn't really a business of selling loans once they were written off. We were a pioneer that created the business of selling written-off loans, credit card loans, and auto loans. We did it for the biggest banks in the world who eventually built recovery departments and basically stopped using us. When they stopped using us, we broad-based it into regional banks. Fast forward 25 years, there's constantly been new clients. Right now, 60% of the business is what we call alternative lending. Worked for PayPal, worked for Lending Club, worked for all the buy now, pay later people selling charged-off loans. It's about half our revenue stream in financial assets. It's a brokerage called NLEX. Why is that growing now? Because an auctioneer's dream was the invention of buy now, pay later. It's like I woke up and I almost couldn't believe my fortune that they thought everyone's going to pay later. What happens is you go on a cruise, you lose your money gambling in the casino, you drink a ton of rum and Cokes, you get off the cruise, and you get a bill to pay later. You go, "Oh, man, that was a good cruise, but I'm broke." That turns into a charge-off where you can't collect. The only way you get that guy to pay is you basically give it to somebody like us at NLEX. We sell it for $0.05, $0.10 on the dollar to somebody who goes out and works really hard to collect $0.20 on the dollar, getting a judgment, getting a garnishment, and chasing them down. That's a growing business. If you want to know why we're going to do good, I always say we're going to do good at Heritage when supply is going to grow. Why is supply going to grow? Because the younger generation came out of the pandemic and spent like crazy with no real plan to pay off all their bills. They got spoiled by a pandemic that basically gave them free money from the government. All of a sudden, the free money from the government stopped and we woke up and we've got over $1 trillion of credit card debt. The first time in our history, the credit card debt and auto debt was that high. You say, "Why aren't I making more money now?" Because it takes a year or two for the credit card debt to go all the way down to charge-offs. It starts out they're not paying. They try to collect in full. After they try to collect in full, they try to settle. A year or a year and a half later, they say, "We give up. We charge it off. Give it to those junk dealers at NLEX and let them get $0.05, $0.10 on the dollar." That wave of assets you saw grow to a trillion dollars is going to be my wave of asset sales starting probably June, July, August of this year. You are going to see it grow and you are going to see two years of growth. That is reason A that you should buy my stock now and get paid later rather than buy now the other way. Buy now and get paid later is what I am telling you about Heritage. Now we will move on to the second half of the business. Obviously on that half, there are other businesses. There is a lending business that is a boutique business in comparison. The primary business is selling from regional banks and selling from basically all of the different fintech players as a broker. On the flip side of the business is an industrial auction company that was founded by my grandfather and a predecessor company that's literally from right after the Great Depression founded. I grew up with a grandfather and a father that were auctioneers, basically flying all around the world as we built a business on the ladder. I got 15, could have been 20, could have been 30. All of a sudden, I woke up one day and they said, "We don't need you anymore." The internet disintermediated me as a bid caller. There was this thing called the internet. For two years, I tried to beat the internet and say, "Hey, I can get more money with the microphone yelling," and figured out that that was the big lie. We converted it basically to an online marketplace. We grew the online marketplace to Heritage Global. Heritage Global does about 200 auctions a year. About half the auctions are for household name global companies you all know. We're the auctioneer for Pfizer. We're the auctioneer for Amgen. We do auctions for Halliburton. We've done auctions for Boeing, for Raytheon. I could go on and on. Those are fee-based commission auctions where they hire us because they're selling surplus assets or closing a plant. The other half of that business is basically happening for two things: really, really good times. Everybody says, "Oh, you make your money off the stress." I kill it during really good times if really good times are M&A. Because in M&A, if you're going to do a merger or an acquisition and you're Pfizer and you've got $100 billion in the bank and you're going to buy a company, you're not buying the company because you want their microscopes that are HPLCs or their DNA sequencers. You're buying the company because you want their patents, you want their intellectual capital, you want their scientists, and you don't need another machine to make a pill or to make a tablet or a cream. Under M&A, we do really well in every industry. We also do really well when, so to speak, the oomph hits the fan and there's trouble. When is there trouble? There's trouble for two reasons. One reason is a marketplace leaves North America. I'm an old guy. I had two years where I did nothing but textile plants. I had two years where I did nothing but semiconductor plants. What we call that in the auction business is selling peanuts when the circus is in town. Those businesses are transitional. What happened is I learned my lesson that you don't want to be in a business that goes away. I had a huge year in 2000 where I did 300 dot-com companies. Woke up one day, there were no more dot-com companies. What we figured out is get into the industries and the sectors that cannot go away. Our biggest sector is pharma because you do not outsource scientists and trying to cure drugs to another country. It stays here forever. Another sector that stays here forever is defense. Boeing is not going to leave or McDonnell Douglas or Raytheon or Hughes Aircraft. They're not going to leave America. Defense stays here. Obviously, food and beverage stays here. We're in 50 sectors. Those are the three sectors that we're most active in because we can grow those continually for the long run. That's 200 auctions a year. It's $100 million in sales. Why is that going to grow? It's going to grow because what's happened now is twofold. The first thing that's going to happen is there's been this massive push on the environment not to put surplus assets into landfill. I did this all my life, and the big company said, "I don't want to sell my used equipment to a little company. I'm only getting $0.05, $0.10, $0.15 on the dollar. I'll just scrap it." Now scrapping it is unpopular. It's bad business practice, not to support the supply chain. And to support an ethical supply chain, they're all pressured now to basically sell their surplus assets. Repurposing is now a part of the DNA of corporations, which it wasn't for most of my life. It's growing because they're paying more attention to the back end of the supply chain. That's number one. Number two is this big push to right-sizing, they call it. Right-sizing means shrinking your personnel. It doesn't mean right-sizing it. It means shrinking it. As you get row personnel and as you try to put more AI into your business, as you try to put more robotics into your business, you create a bunch of surplus equipment. The surplus equipment business is growing. Right now, it's super hot. Why is it super hot? Because everyone is worried about, and I don't want to get geopolitical, everyone's worried about tariffs and clogging up the supply chain like what we watched during the pandemic. If the supply chain does get clogged up, used equipment goes way up in value because it takes longer to get new equipment. Or if new equipment becomes more expensive, used equipment goes up with it. In the end of the day, this is, and this is not political on either side, every auctioneer on Earth is going, "Wow, this could be good for us." On a self-serving reason, I see two or three years in front of me of a lot of financial assets coming to market. That's a macro fact. I see the layoff tracker going up. You guys can look at the amount of layoffs that happened in the last six months, and you can say, "How come we're only making $1,500,000 or $2,250,000 instead of $3,000,000 or $4,000,000?" I can tell you why. Because it takes a year for those layoffs to turn into revenue for us. We're a year delay. They announced the layoffs. It takes three to six months to actually do them. After they do the layoffs over six months, they wake up and say, "Wow, what are we going to do with all that equipment in building B when there's nobody in building B anymore and all the machines are there? Let's go figure out what to do with them, and then I get to business." There is this built-in backlog. If you just look at everything that's happened over the last 18 months and just step back and say, "I see everything that's happened. Who's going to win going forward?" Some people, it impacted right then. Some people, it impacts six months, a year, a year and a half later. We're in that sweet spot that's unarguable that when you see basically non-performing loans going up, you have to say, "Hey, a year from now, some of those loans are going to get charged off, and some of those loans are going to get sold through a broker." When you see six months and eight months ago, all of these plant closure announcements and all of these layoffs, you say, "What's going to happen?" You say, "Six months, a year from now, somebody's going to have to deal with all that surplus." We are heading in. We've been profitable for seven or eight years. We've never had a losing quarter. We've had spikes in our revenue. If you're looking to invest in a software services type company that has sequential quarter-over-quarter growth, you're in the wrong room. If you're looking to invest in a company that can have a slow quarter and only make $1 million and then come back and make $3 million, you're in the right room if you think this is a company that you believe is going to grow because you believe supply is going to grow. If you ask yourself one question, "When do I buy stock in an auctioneer, in a broker, and in a liquidator? When do I sell stock in an auctioneer, a broker, or a liquidator?" I buy it when I believe there's going to be more stuff to sell, and I sell it when I believe there's going to be less stuff to sell because you know that we know how to execute or we wouldn't have been profitable all these quarters. The question is, if you believe we know how to execute, then your belief becomes, do I believe they're going to find more things to sell next year than last year? If I believe that, then I take a look around and I say, there's not that many companies here making money. This one has made money every quarter for three quarters of a decade during all kinds of economies, and I think they're moving into a sweet spot for the next two or three years. I really feel fortunate that I'm so young that I got an easy ride here while I'm still learning the business. I'm done. How long did that take? How long? 16 minutes? All right, we got nine minutes. Somebody ask me a question, something worthwhile. Somebody, come on. If you don't, I'm going to start repeating myself. There you go. I think on the industrial side, I think that this whole sentiment is going to actually not just go away. In the end of the day, it's not just about auctioning off government assets. It's all the companies that rely upon government contracts. A big part of it is spend management. So the defense industry. This presentation has now finished. Please check.