BENFW

Management Statement and Operational Highlights

• Recent Developments: Separated from former Chairman and CEO Brad Heppner after credible evidence of fraud; Heppner indicted on criminal charges. Settled lawsuits related to GWG, within insurance limits. Regained NASDAQ compliance, including periodic reporting, market value of listed securities, and working on good price requirements. Tom Hicks converted $53 million of preferred units to common shares with lockup and voting agreements.
• Costs and Debt: Cut operating expenses; reduced legitimate third-party debt from $27 million in January to under $4 million. Streamlining operations and exploring adjacent markets, reviewing existing tools and tech.

Guidance

• Focus on core market of high net worth/ultra-high net worth in $5M to $25M transactions, with incremental approach. Explore adjacent markets using existing tech. Market for early liquidity services is large and growing, with Jefferies study showing private market secondaries growth.

Segment Performance

• Liquidity: In Q2 2026, Ben's liquidity recognized $8.5 million of interest income, a 3.8% decrease from Q2 2025, primarily due to more loans on nonaccrual status. Operating loss was $0.8 million, an improvement from $6 million in Q2 2025. Year-to-date (YTD) ended September 30, 2025, interest income was $17.3 million, down 24.1% from prior year, with operating loss at $6.8 million, down from $2.4 million YTD prior year.
• Bank Custody: NAV of alternative assets and other securities held in custody was $271.4 million as of September 30, 2025, down from $338.2 million in Q1 2025. Revenues applicable to Ben custody were $3.1 million in Q2 2026 and $7.3 million YTD, both down. Operating income was $2.3 million in Q2 2026 and $5.4 million YTD, slightly down from prior year.

Risks

• Fraud by Brad Heppner leading to criminal charges and potential litigation. NASDAQ compliance challenges previously faced. Uncertainty around debt related to Heppner-related entities.

Q: How might strategic vision differ going forward and priorities for reaccelerating origination volumes?

A: Focus on core high net worth market with incremental approach vs. previously larger transactions. Need to stabilize before moving forward, shifting to optimizing model and simplifying products.

Q: Breakdown of debt on balance sheet?

A: ~$8M related to HICS credit facility, rest primarily HCLP loans related to Brad Heppner, which will be challenged. HIC/TCV loan balance below $4M.

Q: Thoughts on adjacent markets and simplifying operating model?

A: Simplifying internal entities for cost and transparency; externalizing internal technology like AI-generated tools. Exploring market receptiveness for outward-facing products.

Q: Core liquidity business pipeline focus?

A: Pipeline leans towards PCP, but evolving as stabilizing and NASDAQ compliance matters are resolved.