# Hennessy Advisors Inc: Form 10-Q for the period ended Mar 31, 2025

- Company: [Hennessy Advisors Inc](/companies/hnna.md) (CIK 1145255)
- Form: 10-Q
- Filed: 2025-05-07
- Accepted by EDGAR: May 7, 2025, 20:15 ET
- Period: 2025-03-31
- Accession: 0001437749-25-015126
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1145255/000143774925015126/hnna20250331_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1145255/000143774925015126/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-01-01 to 2025-03-31 | $9.3m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2024-10-01 to 2025-03-31 | $19.0m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 3 months, 2025-01-01 to 2025-03-31 | $3.5m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2024-10-01 to 2025-03-31 | $7.3m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2025-01-01 to 2025-03-31 | $572.0k | us-gaap:InterestExpense |
| Interest expense | 6 months, 2024-10-01 to 2025-03-31 | $1.1m | us-gaap:InterestExpense |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | $973.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2024-10-01 to 2025-03-31 | $2.1m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | $2.6m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2024-10-01 to 2025-03-31 | $5.4m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.33 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2024-10-01 to 2025-03-31 | $0.69 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.33 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2024-10-01 to 2025-03-31 | $0.70 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 7,912,156 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2024-10-01 to 2025-03-31 | 7,890,031 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2024-10-01 to 2025-03-31 | $6.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2024-10-01 to 2025-03-31 | $198.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 6 months, 2024-10-01 to 2025-03-31 | $2.1m | us-gaap:PaymentsOfDividends |
| Cash and equivalents | at 2025-03-31 | $67.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-03-31 | $71.8m | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-31 | $155.5m | us-gaap:Assets |
| Current liabilities | at 2025-03-31 | $4.0m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-03-31 | $60.3m | us-gaap:Liabilities |
| Shareholders' equity | at 2025-03-31 | $95.2m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 32,150 characters.

**Forward‑Looking Statements**

This report contains “forward-looking statements” within the meaning of the securities laws, for which we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. In some cases, forward‑looking statements can be identified by terminology such as “expect,” “anticipate,” “intend,” “may,” “plan,” “will,” “should,” “could,” “would,” “assume,” “believe,” “estimate,” “predict,” “potential,” “project,” “continue,” “seek,” and similar expressions, as well as statements in the future tense. We have based these forward-looking statements on our current expectations and projections about future events, based on information currently available to us. Forward‑looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at which, or means by which, such performance or results will be achieved.

Forward-looking statements are subject to risks, uncertainties, and assumptions, including those described in our Annual Report on Form 10‑K for the fiscal year ended September 30, 2024, including under the section entitled “Risk Factors” in such report. Unforeseen developments could cause actual performance or results to differ substantially from those expressed in or suggested by the forward-looking statements. Management does not assume responsibility for the accuracy or completeness of these forward-looking statements. There is no regulation requiring an update of any of the forward-looking statements after the date of this report to conform these statements to actual results or to changes in our expectations.

Our business activities are affected by many factors, including, without limitation, redemptions by investors in the Hennessy Funds, taxes, general economic and business conditions, interest rate movements, inflation, the personal savings rate, competitive conditions, industry regulation, and fluctuations in the stock market, many of which are beyond the control of our management. Further, the business and regulatory environments in which we operate remain complex, uncertain, and subject to change. We expect that regulatory requirements and developments will cause us to incur additional administrative and compliance costs. Notwithstanding the variability in our economic and regulatory environments, we remain focused on the investment performance of the Hennessy Funds and on providing high‑quality customer service to investors.

Our business strategy centers on (i) the identification, completion, and integration of future acquisitions and (ii) organic growth, through both the retention of the fund assets we currently manage and the generation of inflows into the funds we manage. The success of our business strategy may be influenced by the factors discussed in the section titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024. All statements regarding our business strategy, as well as statements regarding market trends and risks and assumptions about changes in the marketplace, are forward-looking by their nature.

### Overview

Our primary business activity is providing investment advisory services to a family of 16 open-end mutual funds and one ETF branded as the Hennessy Funds. We manage 12 of the 17 Hennessy Funds internally. For the remaining five funds, we have delegated the day‐to‑day portfolio management responsibilities to sub‑advisors, subject to our oversight. We oversee the selection and continued employment of each sub‑advisor, review each fund’s investment performance, and monitor each sub‑advisor’s adherence to each applicable fund’s investment objectives, policies, and restrictions. In addition, we conduct ongoing reviews of the compliance programs of sub‑advisors and make onsite visits to sub‑advisors, as feasible. Our secondary business activity is providing shareholder services to investors in the Hennessy Mutual Funds.

We derive our operating revenues from investment advisory fees paid to us by the Hennessy Funds and shareholder service fees paid to us by the Hennessy Mutual Funds. These fees are calculated as a percentage of the average daily net assets of each Hennessy Fund. The percentage amount of the investment advisory fees varies by fund. The percentage amount of the shareholder service fees is consistent across all Hennessy Mutual Funds, but shareholder service fees are charged on Investor Class shares only. The dollar amount of the fees we receive fluctuates with changes in the average net asset value of each Hennessy Fund, which is affected by each fund’s investment performance, purchases and redemptions of shares, general market conditions, and the success of our marketing, sales, and public relations efforts.

On a total return basis, the Dow Jones Industrial Average was up 0.05% for the six months ending March 31, 2025. During the most recent quarter, equity prices decreased modestly as investor thoughts turned toward the potential effects of dramatic cuts in government employment. With the economy contracting slightly in the recent quarter and tariffs causing increased uncertainty, the market is now pricing in between three and four rate cuts by the Federal Reserve by the end of 2025, according to Bloomberg. Investors appear to be anticipating a softening economy. The announced yet fluctuating tariffs appear to have further confounded investors as both the scope and timing of these levies has been in flux.

Long-term U.S. bond yields decreased during the three months ended March 31, 2025. Inflation remains above the Federal Reserve’s 2% inflation goal. Projections compiled by Bloomberg estimate that the Consumer Price Index will advance by 3.2% in 2025 after increasing by 3.0% in 2024. Even in 2027, the estimate for CPI only moderates to 2.4% growth. With this being the case, we expect investors will be focused on the implications for a slowdown in economic activity as the full weight of government and corporate layoffs and tariffs continue to be digested by the market.

The Japanese equity market was down 2.62% in U.S. dollar terms over the six months ended March 31, 2025, as measured by the Tokyo Stock Price Index. During the period, Japanese equities traded lower as corporate reforms and low inflation have driven returns on equity to four-decade highs.

For the twelve months ending March 31, 2025, 13 of 17 Hennessy Funds generated positive total returns, with three of the four that were negative being down less than 1%. In addition, for the three‑year period ending March 31, 2025, all 17 Hennessy Funds posted positive annualized total returns. Lastly, over the longer term, the 16 Hennessy Funds with over five and ten years of operating history all posted positive returns in the five- and ten-year periods ended March 31, 2025.

As always, we are committed to providing superior service to investors and employing a consistent and disciplined approach to investing based on a buy‑and‑hold philosophy that rejects the idea of market timing. Our goal is to provide products that investors can have confidence in, knowing their money is invested as promised and with their best interests in mind. Accordingly, we continually seek new and improved ways to support investors in the Hennessy Funds, including by providing market insights, sector highlights, and other resources to help them manage their fund investments with confidence. We operate a robust and leading‑edge marketing automation and customer relationship management (CRM) system, with a database of over 100,000 financial advisors, in addition to retail investors. We utilize this technology both to help retain assets and to drive new purchases into the Hennessy Funds. We employ a comprehensive marketing and sales program consisting of content, digital, social media, and traditional marketing initiatives and proactive meetings. In addition, our consistent annual public relations campaigns have resulted in the Hennessy brand name appearing on TV, radio, print, or online media on average once every two to three days.

We provide service to nearly 200,000 fund accounts nationwide, including accounts held by investors who employ financial advisors to assist them with investing as well as accounts held by retail investors who invest directly with us. We serve approximately 11,100 financial advisors who utilize the Hennessy Funds on behalf of their clients, including roughly 500 who purchased one of our Funds for the first time during the most recent quarter. Approximately 18% of such advisors own two or more Hennessy Funds, and over 650 advisors hold a position of over $500,000. While numbers have declined in recent years, we continue to focus significant efforts on building and maintaining brand loyalty among our top tier of advisors.

Total assets under management as of March 31, 2025, was $4.3 billion, an increase of $0.4 billion, or 10.5%, compared to March 31, 2024. The increase in total assets was attributable to net inflows into the Hennessy Funds, market appreciation, and the purchase of the assets related to the management of the CCM Funds.

The following table illustrates the quarter‑by‑quarter changes in our assets under management since the quarter ended March 31, 2024:

*(In thousands)*

|  | Fiscal Quarter Ended March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Beginning assets under management | $4,778,982 | $4,642,363 | $4,027,831 | $3,852,602 | $3,280,372 |
| Acquisition inflows | - | - | - | - | 59,220 |
| Organic inflows | 411,904 | 544,985 | 458,284 | 434,967 | 434,435 |
| Redemptions | (786,936) | (375,276) | (273,406) | (256,726) | (222,001) |
| Market appreciation (depreciation) | (148,260) | (33,090) | 429,654 | (3,012) | 300,576 |
| Ending assets under management | $4,255,690 | $4,778,982 | $4,642,363 | $4,027,831 | $3,852,602 |

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 March 31, 2024:

*(In thousands)*

| Hennessy Mutual Funds | Fiscal Quarter Ended March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Investor Class | $2,443,179 | $2,570,073 | $2,373,526 | $2,182,858 | $2,026,028 |
| Institutional Class | 2,204,908 | 2,150,654 | 1,875,008 | 1,595,824 | 1,347,491 |
| Hennessy Stance ESG ETF | 98,293 | 103,324 | 107,740 | 114,450 | 86,377 |
| Average assets under management | $4,746,380 | $4,824,051 | $4,356,274 | $3,893,132 | $3,459,896 |

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 March 31, 2025, this asset had a net balance of $82.3 million, unchanged since September 30, 2024.

On October 20, 2021, we completed a public offering of the 2026 Notes in the aggregate principal amount of $40.25 million, which included the full exercise of the underwriters’ overallotment option. The 2026 Notes mature on December 31, 2026, and may now be redeemed in whole or in part at any time or from time to time at our option. The 2026 Notes bear interest at 4.875% per annum, payable on the last day of each calendar quarter and at maturity, beginning December 31, 2021. The 2026 Notes are direct unsecured obligations, rank equally in right of payment with any of our future unsecured unsubordinated indebtedness, senior to any of our future indebtedness that expressly provides that it is subordinate to the 2026 Notes, effectively subordinate to all of our future secured indebtedness, and structurally subordinate to all future indebtedness and other obligations of any future subsidiaries of ours.

The 2026 Notes are the principal liability on our balance sheet at $39.6 million, net of issuance costs.

### Liquidity and Capital Resources

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 March 31, 2025, 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 be redeemed in whole or in part at any time or from time to time at our option.

Our total assets under management as of March 31, 2025, was $4.3 billion, an increase of $0.4 billion, or 10.5%, compared to March 31, 2024. 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 six months ended March 31, 2025, was $4.8 billion, an increase of $1.5 billion, or 47.3%, compared to the six months ended March 31, 2024. As of March 31, 2025, we had cash and cash equivalents of $67.6 million.

The following table summarizes key financial data relating to our liquidity and use of cash:

*(In thousands)*

|  | For the Six Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Net cash provided by operating activities | $5,979 | $2,289 |
| Net cash used in investing activities | (241) | (1,110) |
| Net cash used in financing activities | (2,098) | (2,062) |
| Net increase (decrease) in cash and cash equivalents | $3,640 | $(883) |

The increase in cash provided by operating activities of $3.7 million was primarily due to increased net income in the current period.

The decrease in cash used in investing activities of $0.9 million was primarily due to the costs associated with the purchase of assets related to the management of the CCM Funds in the prior comparable period.

The increase in cash used in financing activities of $0.04 million was due to the increased dollar amount of dividends paid as a result of having more shares outstanding in the current period than in the prior comparable period.

### Results of Operations

The following table sets forth items in the statements of income as dollar amounts and as percentages of total revenue:

*(In thousands, except percentages)*

| Revenue | Three Months Ended March 31, 2025 Amount | Percent of Total Revenue | 2024 Amount | Percent of Total Revenue |
| --- | ---: | ---: | ---: | ---: |
| Investment advisory fees | $8,673 | 93.5% | $6,436 | 92.7% |
| Shareholder service fees | 603 | 6.5 | 504 | 7.3 |
| Total revenue | 9,276 | 100.0 | 6,940 | 100.0 |
| Operating expenses |  |  |  |  |
| Compensation and benefits | 2,674 | 28.8 | 2,253 | 32.5 |
| General and administrative | 1,799 | 19.5 | 1,464 | 21.1 |
| Fund distribution and other | 251 | 2.7 | 201 | 2.9 |
| Sub-advisory fees | 1,032 | 11.1 | 1,046 | 15.1 |
| Depreciation | 69 | 0.7 | 57 | 0.7 |
| Total operating expenses | 5,825 | 62.8 | 5,021 | 72.3 |
| Net operating income | 3,451 | 37.2 | 1,919 | 27.7 |
| Interest income | (677) | (7.3) | (771) | (11.1) |
| Interest expense | 572 | 6.2 | 568 | 8.2 |
| Income before income tax expense | 3,556 | 38.3 | 2,122 | 30.6 |
| Income tax expense | 973 | 10.5 | 582 | 8.4 |
| Net income | $2,583 | 27.8% | $1,540 | 22.2% |

*(In thousands, except percentages)*

| Revenue | Six Months Ended March 31, 2025 Amount | Percent of Total Revenue | 2024 Amount | Percent of Total Revenue |
| --- | ---: | ---: | ---: | ---: |
| Investment advisory fees | $17,734 | 93.4% | $12,101 | 92.5% |
| Shareholder service fees | 1,250 | 6.6 | 983 | 7.5 |
| Total revenue | 18,984 | 100.0 | 13,084 | 100.0 |
| Operating expenses |  |  |  |  |
| Compensation and benefits | 5,440 | 28.7 | 4,119 | 31.4 |
| General and administrative | 3,452 | 18.2 | 3,188 | 24.4 |
| Fund distribution and other | 516 | 2.7 | 350 | 2.7 |
| Sub-advisory fees | 2,165 | 11.4 | 1,957 | 15.0 |
| Depreciation | 130 | 0.7 | 126 | 0.9 |
| Total operating expenses | 11,703 | 61.6 | 9,740 | 74.4 |
| Net operating income | 7,281 | 38.4 | 3,344 | 25.6 |
| Interest income | (1,386) | (7.3) | (1,557) | (11.9) |
| Interest expense | 1,144 | 6.0 | 1,135 | 8.7 |
| Income before income tax expense | 7,523 | 39.6 | 3,766 | 28.8 |
| Income tax expense | 2,106 | 11.1 | 1,026 | 7.9 |
| Net income | $5,417 | 28.5% | $2,740 | 20.9% |

18

*Revenue – Investment Advisory Fees and Shareholder Service Fees*

Total revenue comprises investment advisory fees and shareholder service fees. Comparing the three months ended March 31, 2024, to the three months ended March 31, 2025, total revenue increased by 33.7%, from $6.9 million to $9.3 million, investment advisory fees increased by 34.8%, from $6.4 million to $8.7 million, and shareholder service fees increased by 19.6%, from $0.5 million to $0.6 million. Comparing the six months ended March 31, 2024, to the six months ended March 31, 2025, total revenue increased by 45.1%, from $13.1 million to $19.0 million, investment advisory fees increased by 46.5%, from $12.1 million to $17.7 million, and shareholder service fees increased by 27.2%, from $1.0 million to $1.3 million.

In both periods, the increase in investment advisory fees was due mainly to increased average daily net assets of the Hennessy Funds, and the increase in shareholder service fees was due to an increase in the average daily net assets held in Investor Class shares of the Hennessy Mutual Funds. 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 March 31, 2025, was $4.7 billion, which represents an increase of $1.3 billion, or 37.2%, compared to the three months ended March 31, 2024, and average daily net assets of the Hennessy Funds for the six months ended March 31, 2025, was $4.8 billion, which represents an increase of $1.5 billion, or 47.3%, compared to the six months ended March 31, 2024. The Hennessy Fund with the largest average daily net assets for the three and six months ended March 31, 2025, was the Hennessy Cornerstone Mid Cap 30 Fund, with $1.7 billion for both periods. 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 and six months ended March 31, 2025, was the Hennessy Focus Fund, with $0.6 billion for both periods. 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 March 31, 2025, was $4.3 billion, an increase of $0.4 billion, or 10.5%, compared to March 31, 2024. The increase in total assets was attributable to net inflows into the Hennessy Funds, market appreciation, and the purchase of the assets related to the management of the CCM Funds.

The Hennessy Funds with the three largest amounts of net inflows were as follows:

| Three Months Ended March 31, 2025 |  | Six Months Ended March 31, 2025 |  |
| --- | --- | --- | --- |
| **Fund Name** | **Amount** | **Fund Name** | **Amount** |
| Hennessy Midstream Fund | $3 million | Hennessy Cornerstone Mid Cap 30 Fund | $49 million |
| Hennessy Energy Transition Fund | 1 million | Hennessy Midstream Fund | 6 million |
| Hennessy Balanced Fund | 0.5 million | Hennessy Balanced Fund | 0.01 million |

The Hennessy Funds with the three largest amounts of net outflows were as follows:

| Three Months Ended March 31, 2025 |  | Six Months Ended March 31, 2025 |  |
| --- | --- | --- | --- |
| **Fund Name** | **Amount** | **Fund Name** | **Amount** |
| Hennessy Cornerstone Mid Cap 30 Fund | $(171) million | Hennessy Focus Fund | $(157) million |
| Hennessy Focus Fund | (107) million | Hennessy Small Cap Financial Fund | (23) million |
| Hennessy Cornerstone Growth Fund | (42) million | Hennessy Gas Utility Fund | (22) million |

Redemptions as a percentage of assets under management increased from an average of 2.2% per month during the three months ended March 31, 2024, to an average of 5.5% per month during the three months ended March 31, 2025. Redemptions as a percentage of assets under management decreased from an average of 2.5% per month during the six months ended March 31, 2024, to an average of 4.0% per month during the six months ended March 31, 2025.

#### Operating Expenses

Comparing the three months ended March 31, 2024, to the three months ended March 31, 2025, total operating expenses increased by 16.0%, from $5.0 million to $5.8 million. As a percentage of total revenue, total operating expenses decreased 9.5 percentage points to 62.8%. The dollar value increase in operating expenses was due to increases in all expense categories other than sub-advisory fee expense, which moderately decreased.

Comparing the six months ended March 31, 2024, to the six months ended March 31, 2025, total operating expenses increased by 20.2%, from $9.7 million to $11.7 million. As a percentage of total revenue, total operating expenses decreased 12.8 percentage points to 61.6%. The dollar value increase in operating expenses was due to increases in all expense categories.

Compensation and Benefits Expense: Comparing the three months ended March 31, 2024, to the three months ended March 31, 2025, compensation and benefits expense increased by 18.7%, from $2.3 million to $2.7 million. As a percentage of total revenue, compensation and benefits expense decreased 3.7 percentage points to 28.8%.

Comparing the six months ended March 31, 2024, to the six months ended March 31, 2025, compensation and benefits expense increased by 32.1%, from $4.1 million to $5.4 million. As a percentage of total revenue, compensation and benefits expense decreased 2.7 percentage points to 28.7%.

In both periods, the dollar value increase in compensation and benefit expense was due to an increase in incentive-based compensation in the current period.

General and Administrative Expense: Comparing the three months ended March 31, 2024, to the three months ended March 31, 2025, general and administrative expense increased by 22.9%, from $1.5 million to $1.8 million. As a percentage of total revenue, general and administrative expense decreased 1.6 percentage points to 19.5%.

Comparing the six months ended March 31, 2024, to the six months ended March 31, 2025, general and administrative expense increased by 8.3%, from $3.2 million to $3.5 million. As a percentage of total revenue, general and administrative expense decreased 6.2 percentage points to 18.2%.

In both periods, the dollar value increase in general and administrative expense was due to increased commission expense on sales of the Hennessy Funds in the current period.

Fund Distribution and Other Expense: Fund distribution and other expense consists primarily of financial institution fees incurred by us for distribution of the Hennessy Funds and also for the operations of the Hennessy Stance ESG ETF. Fund distribution and other expense does not include sub‑advisory fees, which are shown separately.

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, but not the Hennessy Stance ESG ETF, may be purchased 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 distribution component of fund distribution and other expenses is affected by many factors, including the following:

- average daily net assets held by financial institutions;
- the split of average daily net assets held by financial institutions in Institutional Class shares of the Hennessy Mutual Funds versus Investor Class shares of the Hennessy Mutual Funds; and
- fee minimums at various financial institutions.

The other component of fund distribution and other expense consists of fees incurred by us for the operations of the Hennessy Stance ESG ETF. We receive a unitary investment advisory fee from the Hennessy Stance ESG 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 the three months ended March 31, 2024, to the three months ended March 31, 2025, fund distribution and other expense increased by 24.9%, from $0.2 million to $0.3 million. As a percentage of total revenue, fund distribution and other expense decreased 0.2 percentage points to 2.7%.

Comparing the six months ended March 31, 2024, to the six months ended March 31, 2025, fund distribution and other expense increased by 47.4%, from $0.4 million to $0.5 million. As a percentage of total revenue, fund distribution and other expense remained the same at 2.7%.

In both periods, the dollar value increase in fund distribution and other expense was primarily due to increased average daily net assets across the Hennessy Funds.

Sub-Advisory Fees Expense: Comparing the three months ended March 31, 2024, to the three months ended March 31, 2025, sub-advisory fees expense decreased by 1.3%, from $1.05 million to $1.03 million. As a percentage of total revenue, sub-advisory fees expense decreased 4.0 percentage points to 11.1%. The decrease in sub-advisory fees expense was due to decreased average daily net assets of the sub‑advised Hennessy Funds.

Comparing the six months ended March 31, 2024, to the six months ended March 31, 2025, sub-advisory fees expense increased by 10.6%, from $2.0 million to $2.2 million. As a percentage of total revenue, sub-advisory fees expense decreased 3.6 percentage points to 11.4%. The dollar value increase in sub-advisory fees expense was due to increased average daily net assets of the sub‑advised Hennessy Funds.

Depreciation Expense: Comparing the three months ended March 31, 2024, to the three months ended March 31, 2025, depreciation expense increased by 21.1% from $0.06 million to $0.07 million. As a percentage of total revenue, depreciation expense remained the same at 0.7%.

Comparing the six months ended March 31, 2024, to the six months ended March 31, 2025, depreciation expense increased by 3.2% from $0.126 million to $0.130 million. As a percentage of total revenue, depreciation expense decreased 0.2 percentage points to 0.7%.

The dollar value increase in depreciation expense in both periods resulted from more fixed asset purchases in the current period.

#### Interest Income

Interest income consists of interest earned on cash and cash equivalents. Comparing the three months ended March 31, 2024, to the three months ended March 31, 2025, interest income decreased from $0.8 million to $0.7 million. Comparing the six months ended March 31, 2024, to the six months ended March 31, 2025, interest income decreased from $1.6 million to $1.4 million. In both periods, the decrease in interest income resulted from decreased interest rates in the current period.

#### Interest Expense

Comparing the three months ended March 31, 2024, to the three months ended March 31, 2025, interest expense increased from $0.568 million to $0.572 million. Comparing the six months ended March 31, 2024, to the six months ended March 31, 2025, interest expense increased from $1.135 million to $1.144 million. In both periods, the increase in interest expense was 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 amount of the 2026 Notes increases, the interest expense on the 2026 Notes for financial statement purposes also increases.

#### Income Tax Expense

Comparing the three months ended March 31, 2024, to the three months ended March 31, 2025, income tax expense increased by 67.2%, from $0.6 million to $1.0 million. Comparing the six months ended March 31, 2024, to the six months ended March 31, 2025, income tax expense increased by 105.3%, from $1.0 million to $2.1 million. In both periods, the increase in income tax expense was due to increased net operating income, as well as a higher effective income tax rate in the current period due to a greater exposure to state income tax liability based on the location of investors in the Hennessy Funds.

#### Net Income

Comparing the three months ended March 31, 2024, to the three months ended March 31, 2025, net income increased by 67.7%, from $1.5 million to $2.6 million. Comparing the six months ended March 31, 2024, to the six months ended March 31, 2025, net income increased by 97.7%, from $2.7 million to $5.4 million. In both periods, the increase in net income was primarily due to increased revenue in the current period.

### Critical Accounting Policies and Estimates

Our financial statements and accompanying notes are prepared in accordance with U.S. GAAP, which require the use of estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. These accounting policies, methods, and estimates are an integral part of the financial statements prepared by management and are based upon management’s current judgments. Those judgments are normally based on knowledge and experience with regard to past and current events and assumptions about future events. Certain accounting policies, methods, and estimates are particularly sensitive because of their significance to the financial statements and because future events affecting them may differ markedly from management’s current judgment. For a discussion of the accounting policies and estimates that we believe are most critical to understanding our results of operations and financial position, see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10‑K for the fiscal year ended September 30, 2024. There has been no material change to our critical accounting estimates disclosed in such Annual Report.

## Controls and procedures

As filed, 1,010 characters.

### Evaluation of Disclosure Controls and Procedures

Management performed an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report. Based on such evaluation, management, including the Company’s principal executive officer and principal financial officer, concluded that the Company’s disclosure controls and procedures are effective as of the end of the period covered by this report.

### Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting as defined in Rules 13a-15(f) of the Exchange Act that occurred during the fiscal quarter ended March 31, 2025, and that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 150 characters.

There have been no material changes from the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended September 30, 2024.

Filed May 7, 2025.
Source: SEC EDGAR, the filing index for accession 0001437749-25-015126. Last ingested by Listed: Oct 24, 2026, 15:05 ET. No prices; not investment advice.