HNNA 10-K & 10-Q changes, risk factors and insider trading

The securities markets are inherently volatile and may be affected by factors beyond our control, including global economic conditions, industry trends, interest and inflation rate fluctuations, political factors, the imposition of economic sanctions, trade policies and tariffs, public health crises, natural disasters, geopolitical instability and war, including the invasion by Russia into Ukraine and the conflict between Israel and Hamas, as well as actions taken by other countries in response to such conflicts, and other factors that are difficult to predict. Because our assets under management is largely concentrated in equity products, our results are particularly susceptible to downturns in the equity markets. We derive all of our operating revenues from investment advisory fees and shareholder service fees paid to us by the Hennessy Funds. These fees are calculated as a percentage of the average daily net asset value of the Hennessy Funds. Accordingly, our revenues increase or decrease as our average assets under management increases or decreases, which is affected by market appreciation or depreciation and purchases and redemptions of shares of the Hennessy Funds. Changing market conditions could also cause an impairment to the value of our management contract asset.

For the past several years, approximately 75% of our assets under management has been concentrated in five or six of our funds. During fiscal year 2024,2025, our average assets under management was concentrated in the following five funds: (i) the Hennessy Cornerstone Mid Cap 30 Fund (27%34% of average assets under management); (ii) the Hennessy Focus Fund (18%13% of average assets under management); (iii) the Hennessy GasCornerstone UtilityGrowth Fund (12% of average assets under management); (iv) the Hennessy JapanGas Utility Fund (10%11% of average assets under management); and (v) the Hennessy Cornerstone GrowthJapan Fund (9% of average assets under management). Consequently, our revenues followed a similar pattern of concentration: (a) the Hennessy Cornerstone Mid Cap 30 Fund (26%33% of total revenue); (b) the Hennessy Focus Fund (21%16% of total revenue); (c) the Hennessy Cornerstone Growth Fund (12% of total revenue); (d) the Hennessy Japan Fund (10% of total revenue); (d) the Hennessy Cornerstone Growth Fund (9% of total revenue); and (e) the Hennessy CornerstoneGas ValueUtility Fund (8%7% of total revenue). As a result, our operating results are particularly dependent upon the performance of a small number of funds and our ability to maintain and grow assets under management in these funds. These funds have from time to time experienced significant redemptions and may do so again in the future. A significant increase in redemptions for any reason would reduce our assets under management and revenues.

We utilize a unitary fee structure for the Hennessy Stance ESGSustainable ETF, and we bear the risk that the Fund’s operating expenses may increase and lead to a reduction in our revenues from the fund.

The Hennessy Stance ESGSustainable ETF pays us a unitary fee under its investment advisory agreement with us. Under a unitary fee structure, we bear all operating expenses incurred in connection with providing services to the fund. The operating expenses covered by the unitary fee include third party data providers, transfer agency, custody, fund administration, legal, audit and other services. Additionally, for no compensation, we pay all other operating expenses of the fund, including sub-advisory fees, with the exception of the following: (i) the management fees paid to us; (ii) distribution fees and expenses paid by the fund under any distribution plan adopted pursuant to Rule 12b-1 under the Investment Company Act; (iii) interest expenses; (iv) brokerage expenses, trading expenses, and other expenses (such as stamp taxes) in connection with the execution of portfolio transactions or in connection with creation or redemption transactions; (v) compensation paid to the independent trustees of the fund and fees paid to independent trustees’ counsel; (vi) tax expenses and governmental fees; and (vii) extraordinary expenses not incurred in the course of ordinary business (the “Excluded Fees”). The fund and its shareholders bear the costs of Excluded Fees. The unitary fee structure generally eliminates the possibility for any decrease in the total fund expense ratio during periods when assets under management increase, which could lead to increased profitability for us if we are able to achieve economies of scale. On the other hand, if the fund’s operating expenses increase (other than Excluded Fees), this will lead to a reduction in our profitability from the fund.

Generally, if a sub‑advisor experiences a change of control but we do not, we could continue acting as an advisor to the applicable Hennessy Fund, but the shareholders of such Hennessy Fund would have to approve a new sub‑advisory agreement for the sub‑advisor. However, for the Hennessy Stance ESGSustainable ETF, we have the authority to appoint and replace unaffiliated sub‑advisors and to enter into and make material amendments to the related sub‑advisory agreements without shareholder approval. This is because we sought and received an exemptive order from the SEC in 2023 to operate under a manager of managers structure and subsequently obtained shareholder approval to implement such structure for the Hennessy Stance ESGSustainable ETF. Under the manager of managers structure, we have ultimate responsibility, subject to oversight of and approval by the Hennessy Funds’ Board of Trustees, for overseeing the Hennessy Funds’ unaffiliated sub-advisors and recommending their hiring, termination, or replacement. We have not yet received, and do not have an estimated timeline for receiving, shareholder approval to operate under a manager of managers structure for the Hennessy Mutual Funds that are sub‑advised.

We dependrely on information technology,technology and anyinfrastructure. Any failures of orof, damage to, attack on or unauthorized access to our information technology systems or facilities, or those of third parties with whichwhom we doconduct business, including as a result of cyber ‑attacks, could resultsignificantly in significant limits onlimit our ability to conduct our operations andeffectively, activities,increase our costs, and cause reputational damage.

If anymaterial ofinformation thesesecurity eventsincidents wereoccur toin occur,the future, we could suffer aexperience financial loss,losses, abusiness disruption of our business,disruptions, liability to the Hennessy Funds and their investors, regulatory intervention, or reputational damage, any of which could have abe material adverseand effectcould onmaterially adversely affect our business, results of operations, and financial condition. We also may be required to expend significant additional resources to modifystrengthen our protective measures or to investigate and remediate vulnerabilities or other exposures. In addition, our cybersecurity insurance may not cover all losses and damages from such events and our ability to maintain or obtain sufficient insurance coverage in the future may be limited.

Finally, cybersecurity and data privacy are high priorities for many regulators,regulators worldwide, and many jurisdictions have enacted laws and regulations in these areas. EnactmentCompliance ofwith evolving privacy laws orand cybersecurity regulations have,has resulted, and may continue to,to resultresult, in additional costs of compliance or litigation.potential Inlitigation addition,exposure. whileWhile we strive to comply with the relevantapplicable laws and regulations, any failure to complydo so could result in regulatory investigationsinvestigations, andpenalties, penalties as well asor negative publicity, any of which could materially adversely affect our business, results of operations, and financial condition.

Against this positive equity performance backdrop, all 17 Hennessy Funds posted positive returns for the one‑year periodand three-year periods ended September 30, 2024.2025. The longer‑term performance numbers remain strong, with 15 of the Hennessy Funds posting positive returns for the three-year period ended September 30, 2024. Finally, all 16 Hennessy Funds with at least 10 years of operating history postedposting positive returns for both the 5-year and 10‑year periods ended September 30, 2024.2025.

Total assets under management as of the end of fiscal year 20242025 was $4.6$4.2 billion, ana increasedecrease of $1.6$0.40 billion, or 53.1%,8.6%, compared to the end of fiscal year 2023.2024. The increasedecrease in total assets was attributable to market appreciation, net inflowsoutflows offrom the Hennessy Funds, and thewas purchasepartly of assets related to the management of two mutual funds previously managedoffset by CCMmarket that were reorganized into the Hennessy Stance ESG ETF.appreciation.

The principal asset on our balance sheet, the management contract asset, represents the capitalized costs incurred in connection with the purchase of assets related to the management of investment funds. As of the end of fiscal year 2024,2025, this asset had a net balance of $82.3$82.6 million, an increase of $1.0$0.3 million since the end of fiscal year 2023.2024. This increase is related to the purchasecosts ofassociated assets related towith the managementdefinitive ofagreement twosigned mutualwith fundsSTF previouslyManagement, managed by CCM that were reorganized into the Hennessy Stance ESG ETF. (See Note 5LP in ItemMarch 8, “Financial Statements and Supplementary Data.”)2025.

Our total assets under management as of the end of fiscal year 20242025 was $4.6$4.2 billion, ana increasedecrease of $1.6$0.40 billion, or 53.1%,8.6%, compared to the end of fiscal year 2023.2024. The primary sources of our revenues, liquidity, and cash flow are our investment advisory fees and shareholder service fees, which are based on, and generated by, our average assets under management. Our average assets under management for fiscal year 20242025 was $3.7$4.5 billion. As of the end of fiscal year 2024,2025, we had cash and cash equivalents of $63.9$72.4 million.

The increasedecrease in cash used in financinginvesting activities of $0.2$0.6 million was due to repurchasescosts related to the purchase of sharesthe underlyingCCM vested restricted stock units (“RSUs”) from employees to satisfy tax withholding obligations arisingFunds in connectionthe prior year being greater than costs associated with the vestingdefinitive ofagreement RSUssigned with STF Management, LP in the current period.year.

Dividend Payments. We have consistently paid dividends each year since 2005. Our quarterly dividend rate per share remained constant during fiscal years 20242025 and 2023,2024, and our dividend payments totaled $4.3 million and $4.2 million in each such fiscal year.years 2025 and 2024, respectively.

We collect investment advisory fees from each Hennessy Fund at differing annual rates. These annual rates range between 0.40% and 1.25% of average daily net assets. Average daily net assets of the Hennessy Funds for fiscal year 20242025 was $3.7$4.5 billion, which represents an increase of $0.7$0.8 billion, or 23.2%,21.6%, compared to fiscal year 2023.2024. The Hennessy Fund with the largest average daily net assets for fiscal year 20242025 was the Hennessy Cornerstone Mid Cap 30 Fund, with $981$1.5 million.billion. We collect an investment advisory fee from the Hennessy Cornerstone Mid Cap 30 Fund at an annual rate of 0.74% of average daily net assets. The Hennessy Fund with the second largest average daily net assets for fiscal year 20242025 was the Hennessy Focus Fund, with $645$573 million. We collect an investment advisory fee from the Hennessy Focus Fund at an annual rate of 0.90% of average daily net assets. However, we pay a sub‑advisory fee at an annual rate of 0.29% to the fund’s sub‑advisor, which reduces the net operating profit contribution of the fund to our financial operations.

Total assets under management as of the end of fiscal year 20242025 was $4.6$4.2 billion, ana increasedecrease of $1.6$0.40 billion, or 53.1%,8.6%, compared to the end of fiscal year 2023.2024. The increasedecrease in total assets was attributable to market appreciation, net inflowsoutflows offrom the Hennessy Funds, andpartly the purchase of assets related to the management of two mutual funds previously managedoffset by CCMmarket that were reorganized into the Hennessy Stance ESG ETF.appreciation.

The only Hennessy FundsFund with the three largest amounts of net inflows werewas as follows:

Redemptions as a percentage of assets under management decreasedincreased from an average of 2.5% per month during fiscal year 2023 to an average of 2.3% per month during fiscal year 2024.2024 to an average of 3.6% per month during fiscal year 2025.

Comparing fiscal year 20232024 to fiscal year 2024,2025, total operating expenses increased by 17.5%,7.8%, from $17.7$20.8 million to $20.8$22.4 million. As a percentage of total revenue, total operating expenses decreased 3.57.1 percentage points to 70.1%.63.0%. The increase in dollar value of operating expenses was primarily due to increases in compensation and benefits and generalfund distribution and administrativeother expenses.

General and Administrative Expense: Comparing fiscal year 20232024 to fiscal year 2024,2025, general and administrative expense increaseddecreased by 18.3%2.8% from $5.5$6.5 million to $6.5$6.3 million. As a percentage of total revenue, general and administrative expense decreased 0.94.2 percentage points to 21.9%.17.7%. The dollar value increasedecrease in general and administrative expense was primarily due to increasesa decrease in sales and distribution expenses (not including fees paid to various financial institutions that offer the Hennessy Funds as potential investments to their clients, which are reflected in “Fund Distribution and Other Expense”), as well as professional services expenses,expense in the current period.

Fund Distribution and Other Expense: The distribution component of fund distribution and other expense consists of fees paid to various financial institutions that offer the Hennessy Funds as potential investments to their clients. When the Hennessy Funds are purchased through one of these financial institutions, the institution typically charges an asset‑based fee, which is recorded as a fund distribution expense on our statement of operations to the extent paid by us. The Hennessy Mutual Funds, withbut the exception ofnot the Hennessy Stance ESGSustainable ETF, may be purchased directly,directly and when purchased directly, we do not incur any such expense. These fees generally increase or decrease in line with the net assets of the Hennessy Funds held through these financial institutions, which are affected by inflows, outflows, and fund performance. In addition, some financial institutions charge a minimum fee if the average daily net assets of a Hennessy Fund held by such an institution are less than a threshold amount. In such cases, we pay the minimum fee.

The other component of fund distribution and other expense consists of fees incurred by us for the operations of the Hennessy Stance ESGSustainable ETF. We receive a unitary investment advisory fee from the Hennessy Stance ESGSustainable ETF and then pay all of its operating expenses (with limited exceptions), including fund administration, fund accounting, transfer agency, custody, licensing, audit, and tax services.

Comparing fiscal year 2023 2024 to fiscal year 2024, 2025, fund distribution and other expense increased by 68.3%, 25.9%, from $0.49 $0.8 million to $0.82 $1.0 million. As a percentage of total revenue, fund distribution and other expense increased 0.8 0.1 percentage points to 2.8%. 2.9%. The increase of fund distribution and other expense was due to increased average daily net assets of the Hennessy Mutual Funds, which in turn increases the fees we pay to financial institutions. Additionally, fund distribution and other expense increased due to the additional expenses relating to the Hennessy Stance ESG ETF resulting from the purchase of assets related to the management of the two mutual funds previously managed by CCM that were reorganized into the Hennessy Stance ESG ETF.

Sub-Advisory Fees Expense: Comparing fiscal year 20232024 to fiscal year 2024,2025, sub‑advisory fees expense increaseddecreased by 10.9%,0.5%, from $3.8$4.2 million to $4.2$4.1 million. As a percentage of total revenue, sub‑advisory fees expense decreased 1.52.4 percentage points to 14.1%.11.7%. The dollar value increasedecrease in sub‑advisory fees expense was due to ana increasedecrease in average daily net assets of the sub‑advised Hennessy Funds, with an additional increase due to the expense associated with new sub‑advisory relationships relating to the Hennessy Stance ESG ETF that began in December 2022.Funds.

Depreciation Expense: Comparing fiscal year 20232024 to fiscal year 2024,2025, depreciation expense increased by 6.1%18.9% from $0.23$0.2 million to $0.24$0.3 million due to additional fixed asset purchases.million. As a percentage of total revenue, depreciation expense decreasedremained 0.2the percentagesame pointsat 0.8% in both periods. The dollar value increase in depreciation expense was due to 0.8%.additional fixed asset purchases.

Comparing fiscal year 20232024 to fiscal year 2024,2025, interest income increaseddecreased from $2.52$3.1 million to $3.11$2.8 million. The increasedecrease was due to increaseddecreased interest ratesrates, andpartly offset by increased principal balances.

Comparing fiscal year 20232024 to fiscal year 2024,2025, interest expense increased by 0.8% from $2.26$2.28 million to $2.28$2.29 million. The increase in interest expense was due to the manner in which interest expense is calculated underin U.S.accordance GAAP.with accounting principles generally accepted in the United States. The issuance costs related to the 2026 Notes that have been capitalized are amortized over time and therefore increase the carrying amount of the 2026 Notes. As the carrying amount of the 2026 Notes increases, the interest expense on the 2026 Notes for financial statement purposes also increases.

Comparing fiscal year 20232024 to fiscal year 2024,2025, income tax expense increased by 42.5%,40.4%, from $1.8$2.6 million to $2.6$3.7 million. The increase in income tax expense was due to higher net operating income in the current period, partially offset by a lower effective income tax rate in the current period. The lower effective tax rate in the current period is due to an increased tax benefit in the current period due to restricted stock vesting at a higher share price.

The management contracts we have purchased are considered intangible assets with an indefinite life and we account for them in accordance with Accounting Standards Codification 350: Intangibles – Goodwill and Other (“ASC 350”). Pursuant to ASC 350, an entity first assesses qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform a quantitative impairment test. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. If an entity determines that it is more likely than not that an indefinite‑lived intangible asset is impaired, then it must conduct an impairment analysis. We were able to forego the annual impairmentquantitative analysis for fiscal year 20242025 as the more-likely-than-not threshold was not met as of the end of fiscal year 2024.2025.

The Japanese equity market was up 4.69%17.24% in U.S. dollar terms over the sixnine months ended MarchJune 31,30, 2026, as measured by the Tokyo Stock Price Index. During the period, Japanese equities traded higher as aggressivethe corporateboom governancein reforms,artificial aintelligence weakand yensemiconductor boostingdemand exportercoupled profits,with aan returnaccommodative political agenda seemed to moderatehave inflation,given andhope renewedto foreigninvestors investmentfor drovesustained aneconomic increase in share values.growth.

For the one‑, three‑, five-, and ten yearten-year periods ending MarchJune 31,30, 2026, all 17 Hennessy Funds posted positive total returns (except that the Hennessy Sustainable ETF does not have ten years of performance history).

Total assets under management as of MarchJune 31,30, 2026, was $3.9$4.4 billion, aan decreaseincrease of $0.3$0.1 billion, or 7.8%,2.6%, compared to MarchJune 31,30, 2025. The decreaseincrease in total assets was attributable to market appreciation, substantially offset by net outflows from the Hennessy Funds, partly offset by market appreciation.Funds.

The following table illustrates the quarter‑by‑quarter changes in our assets under management since the quarter ended MarchJune 31,30, 2025:

As stated above, the fees we receive for providing investment advisory and shareholder services are based on average assets under management. The following table shows average assets under management for each quarter since the quarter ended MarchJune 31,30, 2025:

The principal asset on our balance sheet, the management contract asset, represents the capitalized costs incurred in connection with the purchase of the assets related to the management of investment funds. As of MarchJune 31,30, 2026, this asset had a net balance of $82.3 million, compared to $82.6 million as of September 30, 2025. This decrease is related to a current period expense of previously capitalized costs as a result of the termination on January 1, 2026 of the definitive agreement signed with STF Management, LP in March 2025.

We continually review our capital requirements to ensure that we have funding available to support our business model. Management anticipates that cash and other liquid assets on hand as of MarchJune 31,30, 2026, will be sufficient to meet our capital requirements for one year from the issuance date of this report, as well as our longer-term capital requirements for periods beyond one year from the issuance date of this report. To the extent that liquid resources and cash provided by operations are not adequate to meet long-term capital requirements, management plans to raise additional capital by either, or both, seeking bank financing or accessing the capital markets. There can be no assurance that we will be able to raise additional capital.

As discussed above, on October 20, 2021, we completed a public offering of our 2026 Notes in the aggregate principal amount of $40.25 million. The 2026 Notes mature on December 31, 2026, and may now bewere redeemed in whole oron inJune part30, at any time or from time to time at our option.2026.

Our total assets under management as of MarchJune 31,30, 2026, was $3.9$4.4 billion, aan decreaseincrease of $0.3$0.1 billion, or 7.8%,2.6%, compared to MarchJune 31,30, 2025. The primary sources of our revenue, liquidity, and cash flow are our investment advisory fees and shareholder service fees, which are based on and generated by our average assets under management. Our average assets under management for the sixnine months ended MarchJune 31,30, 2026, was $4.2 billion, a decrease of $0.6$0.4 billion, or 12.9%,7.8%, compared to the sixnine months ended MarchJune 31,30, 2025. As of MarchJune 31,30, 2026, we had cash and cash equivalents of $73.0$35.4 million.million and no debt.

The decrease in cash used in investing activities of $0.1$0.3 million was due to decreasedcapitalized purchasescosts ofassociated propertywith anda equipmentformer asset purchase agreement in the currentprevious period.

The increase in cash used in financing activities of $0.1$40.5 million was due to the increased dollar amountredemption of dividends paid as a result of an increased dividend rate and having more shares outstanding in the current2026 periodNotes thanon inJune the30, prior comparable period.2026.

Total revenue comprises investment advisory fees and shareholder service fees. Comparing the three months ended June 30, 2025, to the three months ended June 30, 2026, total revenue increased by 4.2%, from $8.1 million to $8.4 million, investment advisory fees increased by 4.2%, from $7.5 million to $7.8 million, and shareholder service fees increased by 3.1%, from $0.5 million to $0.6 million. In eachthe three-month period, the decreaseincrease in investment advisory fees was due mainly to decreasedincreased average daily net assets of the Hennessy Funds,Funds in the current period, and the decreaseincrease in shareholder service fees was due to aan decreaseincrease in the average daily net assets held in Investor Class shares of the Hennessy Mutual Funds.Funds in the current period. Assets held in Investor Class shares of the Hennessy Mutual Funds are subject to a shareholder service fee, whereas assets held in Institutional Class shares of the Hennessy Mutual Funds are not subject to a shareholder service fee.

We collect investment advisory fees from each of the Hennessy Funds at differing annual rates. These annual rates range between 0.40% and 1.25% of average daily net assets. Average daily net assets of the Hennessy Funds for the three months ended MarchJune 31,30, 2026, was $4.2$4.3 billion, which represents aan decreaseincrease of $0.6$0.2 billion, or 12.2%,4.0%, compared to the three months ended MarchJune 31,30, 2025, and average daily net assets of the Hennessy Funds for the sixnine months ended MarchJune 31,30, 2026, was $4.2 billion, which represents a decrease of $0.6$0.4 billion, or 12.9%,7.8%, compared to the sixnine months ended MarchJune 31,30, 2025. The Hennessy Fund with the largest average daily net assets for the three and sixnine months ended MarchJune 31,30, 2026, was the Hennessy Cornerstone Mid Cap 30 Fund, with $1.2$1.3 billion forand both$1.2 periods.billion, respectively. We collect an investment advisory fee from the Hennessy Cornerstone Mid Cap 30 Fund at an annual rate of 0.74% of average daily net assets. The Hennessy Fund with the second largest average daily assets for the three andmonths sixended June 30, 2026, was the Hennessy Gas Utility Fund, with $0.5 billion. We collect an investment advisory fee from the Hennessy Gas Utility Fund at an annual rate of 0.40% of average daily net assets. The Hennessy Fund with the second largest average daily assets for the nine months ended MarchJune 31,30, 2026,2026 was the Hennessy Focus Fund, with $0.5 billion for both periods.billion. We collect an investment advisory fee from the Hennessy Focus Fund at an annual rate of 0.90% of average daily net assets. However, we pay a sub‑advisory fee at an annual rate of 0.29% to the fund’s sub-advisor, which reduces the net operating profit contribution of the fund to our financial operations.

Total assets under management as of MarchJune 31,30, 2026, was $3.9$4.4 billion, aan decreaseincrease of $0.3$0.1 billion, or 7.8%,2.6%, compared to MarchJune 31,30, 2025. The decreaseincrease in total assets was attributable to market appreciation, substantially offset by net outflows from the Hennessy Funds, partly offset by market appreciation.Funds.

Redemptions as a percentage of assets under management decreased from an average of 5.5%3.6% per month during the three months ended MarchJune 31,30, 2025, to an average of 2.6%1.8% per month during the three months ended MarchJune 31,30, 2026. Redemptions as a percentage of assets under management decreased from an average of 4.0%3.9% per month during the sixnine months ended MarchJune 31,30, 2025 to an average of 2.8%2.5% per month during the sixnine months ended MarchJune 31,30, 2026.

Comparing the three months ended MarchJune 31,30, 2025, to the three months ended MarchJune 31,30, 2026, total operating expenses decreasedincreased by 5.2% from $5.8$5.2 million to $5.5 million. As a percentage of total revenue, total operating expenses increased 5.10.7 percentage points to 67.9%.65.3%. The dollar value decreaseincrease in operating expenses was due to decreasesincreases in the compensation and benefits, general and administrative, fundsub-advisory distributionfees, and other, and sub-advisory feesdepreciation categories, partly offset by ana increasedecrease in depreciationfund distribution and other expense.

Comparing the sixnine months ended MarchJune 31,30, 2025, to the sixnine months ended MarchJune 31,30, 2026, total operating expenses decreased by 4.0%1.1% from $11.7$16.9 million to $11.2$16.7 million. As a percentage of total revenue, total operating expenses increased 6.64.8 percentage points to 68.3%.67.3%. The dollar value decrease in operating expenses was due to decreases in the compensation and benefits, fund distribution and other, and sub-advisory fees categories, partly offset by increases in general and administrative and depreciation expense categories.

GeneralCompensation and AdministrativeBenefits Expense: Comparing the three months ended MarchJune 31,30, 2025, to the three months ended MarchJune 31,30, 2026, generalcompensation and administrativebenefits expense decreasedincreased by 9.0%,1.9%, from $1.8$2.5 million to $1.6$2.6 million. As a percentage of total revenue, generalcompensation and administrativebenefits expense increaseddecreased 0.60.7 percentage points to 20.1%.30.4%. The dollar value decreaseincrease in generalcompensation and administrativebenefits expense was primarilydue to an increase in salaries due to decreasedhigher salesheadcount, andpartially distributionoffset expenseby a decrease in incentive-based compensation, in the current period.

Comparing the sixnine months ended MarchJune 31,30, 2025, to the sixnine months ended MarchJune 31,30, 2026, generalcompensation and administrativebenefits expense increaseddecreased by 2.9%,4.5%, from $3.5$7.9 million to $3.6$7.6 million. As a percentage of total revenue, generalcompensation and administrativebenefits expense increased 3.41.2 percentage points to 21.6%.30.6%. The increasedollar value decrease in generalcompensation and administrativebenefits expense was primarily due to thea termination on January 1, 2026, of the definitive agreement signed with STF Management, LPdecrease in Marchincentive-based 2025 and the related expense of previously capitalized costscompensation in the current period.

Comparing the three months ended MarchJune 31,30, 2025, to the three months ended MarchJune 31,30, 2026, fund distribution and other expense decreased by 7.2%,3.6%, from $0.3 million to $0.2 million. As a percentage of total revenue, fund distribution and other expense increaseddecreased 0.2 percentage points to 2.9%.

Comparing the sixnine months ended MarchJune 31,30, 2025, to the sixnine months ended MarchJune 31,30, 2026, fund distribution and other expense decreased by 12.8%,9.8%, from $0.52$0.77 million to $0.45$0.69 million. As a percentage of total revenue, fund distribution and other expense increasedremained 0.1the percentagesame points toat 2.8%.

In eachboth period,periods, the dollar value decrease in fund distribution and other expense was primarily due to decreased averageoperating dailyexpenses netrelating assets acrossto the Hennessy FundsSustainable ETF in the current period, which in turn decreases the fees we pay to financial institutions.period.

Sub-Advisory Fees Expense: Comparing the three months ended MarchJune 31,30, 2025, to the three months ended MarchJune 31,30, 2026, sub-advisory fees expense decreasedincreased by 2.7%,8.7%, from $1.03$0.94 million to $1.00$1.02 million. As a percentage of total revenue, sub-advisory fees expense increased 1.20.5 percentage points to 12.3%.12.2%. The increase in sub-advisory fees expense was due to increased average daily net assets of the sub‑advised Hennessy Funds in the current period.

Comparing the sixnine months ended MarchJune 31,30, 2025, to the sixnine months ended MarchJune 31,30, 2026, sub-advisory fees expense decreasedremained bythe 5.4%,same fromat $2.2 million to $2.0$3.1 million. As a percentage of total revenue, sub-advisory fees expense increased 1.0 percentage points to 12.4%.

Depreciation Expense: Comparing the three months ended MarchJune 31,30, 2025, to the three months ended MarchJune 31,30, 2026, depreciation expense increased by 24.6%4.1% from $0.07 million to $0.09$0.08 million. As a percentage of total revenue, depreciation expense increasedremained 0.4the percentagesame pointsat to 1.1%.0.9%.

Comparing the sixnine months ended MarchJune 31,30, 2025, to the sixnine months ended MarchJune 31,30, 2026, depreciation expense increased by 16.9%12.3% from $0.13$0.20 million to $0.15$0.23 million. As a percentage of total revenue, depreciation expense increased 0.20.1 percentage points to 0.9%.

Interest income consists of interest earned on cash and cash equivalents. Comparing the three months ended MarchJune 31,30, 2025, to the three months ended MarchJune 31,30, 2026, interest income decreased from $0.7 million to $0.6 million. Comparing the sixnine months ended MarchJune 31,30, 2025, to the sixnine months ended MarchJune 31,30, 2026, interest income decreased from $1.4$2.1 million to $1.3$1.9 million. In each period, the decrease in interest income resulted from decreased interest rates in the current period.

Comparing the three months ended MarchJune 31,30, 2025, to the three months ended MarchJune 31,30, 2026, interest expense increased from $0.57 million to $0.58$0.76 million. Comparing the sixnine months ended MarchJune 31,30, 2025, to the sixnine months ended MarchJune 31,30, 2026, interest expense increased from $1.14$1.72 million to $1.15$1.91 million. In each period, the increase in interest expense was primarily due to the manner in which interest expense is calculated under U.S. GAAP. The issuance costs related to the 2026 Notes that have been capitalized are amortized over time and therefore increase the carrying amount of the 2026 Notes. As the carrying amountredemption of the 2026 Notes increases,on June 30, 2026, and the interestrelated expense onof unamortized issuance costs in the 2026current Notes for financial statement purposes also increases.period.

Comparing the threenine months ended MarchJune 31,30, 2025, to the threenine months ended MarchJune 31,30, 2026, income tax expense decreased by 24.4%,23.3%, from $1.0$2.9 million to $0.7$2.3 million. Comparing the six months ended March 31, 2025, to the six months ended March 31, 2026, income tax expense decreased by 29.5%, from $2.1 million to $1.5 million. In each period, theThe decrease in income tax expense was due to decreased net operating income.income in the current period.

Comparing the three months ended MarchJune 31,30, 2025, to the three months ended MarchJune 31,30, 2026, net income decreased by 26.1%,5.8%, from $2.6$2.1 million to $1.9$2.0 million. Comparing the six months ended March 31, 2025, to the six months ended March 31, 2026, net income decreased by 29.1%, from $5.4 million to $3.8 million. In each period, theThe decrease in net income was primarily due to decreasedthe revenueredemption of the 2026 Notes on June 30, 2026, and the related expense of unamortized issuance costs in the current period.