[Executive Summary](index=1&type=section&id=1.%20Executive%20Summary) Beneficient strengthened its financial and operational foundation in Q1 Fiscal 2026, improving cost management, completing new primary capital transactions, increasing liquidity, and becoming current on SEC filings [Company Overview](index=1&type=section&id=1.1.%20Company%20Overview) Beneficient (Ben) is a technology-enabled platform providing exit opportunities and primary capital solutions, along with trust and custody services, to alternative asset holders via its proprietary online platform, AltAccess - Beneficient (NASDAQ: BENF) operates a technology-enabled platform, AltAccess, offering exit opportunities, primary capital solutions, and related trust/custody services for alternative asset holders[1](index=1&type=chunk) [First Quarter Fiscal 2026 Highlights](index=1&type=section&id=1.2.%20First%20Quarter%20Fiscal%202026%20Highlights) The first quarter of fiscal 2026 saw Beneficient make significant progress in strengthening its financial and operational foundation, marked by improved cost management, new primary capital transactions, increased liquidity through asset sales, and becoming current on SEC filings - The company made meaningful progress in strengthening its financial and operational foundation, focusing on reducing expenses, completing new primary capital transactions, and generating additional liquidity through asset sales[2](index=2&type=chunk) - Beneficient became current on its SEC filings, demonstrating compliance with Nasdaq's reporting requirements within the granted extension period[5](index=5&type=chunk) - Board Chairman Thomas Hicks and interim CEO James Silk converted an aggregate of **$52.6 million** of personally held BCH Preferred Series A-1 holdings into shares of the Company's Class A common stock on October 15, 2025, as part of plans to regain Nasdaq compliance[5](index=5&type=chunk) [Business Segments and Loan Portfolio](index=1&type=section&id=2.%20Business%20Segments%20and%20Loan%20Portfolio) Beneficient operates through Ben Liquidity, offering financing for alternative asset exits, and Ben Custody, providing trust and custody administration, supported by a highly diversified loan portfolio strategy [Business Segments Description](index=2&type=section&id=2.1.%20Business%20Segments%20Description) Beneficient operates through two primary business segments: Ben Liquidity, which provides financing for alternative asset exits, and Ben Custody, offering full-service trust and custody administration [Ben Liquidity](index=2&type=section&id=2.1.1.%20Ben%20Liquidity) Ben Liquidity provides simple, rapid, and cost-effective liquidity products through proprietary financing and trust structures, facilitating the exchange of customer alternative assets for consideration - Ben Liquidity offers simple, rapid, and cost-effective liquidity products through proprietary financing and trust structures (Customer ExAlt Trusts), facilitating the exchange of customer alternative assets for consideration[10](index=10&type=chunk) Interest Income | Metric | Fiscal 1Q26 (June 30, 2025) | Fiscal 4Q25 (March 31, 2025) | Change % vs. Prior Quarter | | :--------------- | :-------------------------- | :--------------------------- | :------------------------- | | Interest Income | $8.8 million | $9.2 million | -4.5% | - The decrease in interest income was primarily due to a higher percentage of loans being placed on nonaccrual status, partially offset by compounding interest on remaining loans[12](index=12&type=chunk) Operating Loss | Metric | Fiscal 1Q26 (June 30, 2025) | Fiscal 4Q25 (March 31, 2025) | Change % vs. Prior Quarter | | :--------------- | :-------------------------- | :--------------------------- | :------------------------- | | Operating Loss | $(6.0) million | $(12.3) million | 51.3% (Improvement) | - The improvement in operating performance was due to lower intersegment credit losses in the current fiscal period, partly because of the disposition of certain investments that generated earlier loan payments[12](index=12&type=chunk) [Ben Custody](index=2&type=section&id=2.1.2.%20Ben%20Custody) Ben Custody offers full-service trust and custody administration for Customer ExAlt Trusts, earning fees based on assets in custody - Ben Custody provides full-service trust and custody administration services to trustees of Customer ExAlt Trusts, earning fees calculated as a percentage of assets in custody[11](index=11&type=chunk) NAV of Alternative Assets in Custody | Metric | As of June 30, 2025 | As of March 31, 2025 | | :----------------------------------- | :------------------ | :------------------- | | NAV of alternative assets in custody | $298.1 million | $338.2 million | - The decrease in NAV was driven by dispositions of certain alternative assets, distributions, and unrealized losses on existing assets, offset by **$11.8 million** of new originations[11](index=11&type=chunk) [Loan Portfolio Strategy and Diversification](index=1&type=section&id=2.2.%20Loan%20Portfolio%20Strategy%20and%20Diversification) Beneficient's loan portfolio strategy, built on the OptimumAlt endowment model, focuses on diversification across various alternative asset classes, industry sectors, geographies, and investment vintages. As of June 30, 2025, the portfolio was highly diversified, supporting a net loan portfolio of $230.7 million - Ben's balance sheet strategy for ExAlt Loan origination is based on the portfolio endowment model, utilizing patent-pending OptimumAlt technologies to guide diversification across **seven alternative asset classes**, over **11 industry sectors**, and at least **six countrywide exposures**[5](index=5&type=chunk)[6](index=6&type=chunk) - As of June 30, 2025, the loan portfolio was supported by a highly diversified alternative asset collateral portfolio, spanning approximately **200 private market funds** and **590 investments** across various asset classes, industry sectors, and geographies[7](index=7&type=chunk) Fair Value of Investments and Net Loan Portfolio | Metric | As of June 30, 2025 | As of Prior Fiscal Year End | | :----------------------------------- | :------------------ | :-------------------------- | | Fair Value of Investments (Collateral) | $263.8 million | $291.4 million | | Net Loan Portfolio | $230.7 million | $244.1 million | - Reported investments for June 30, 2025, include three additional primary capital transactions with an initial aggregate value of **$11.8 million**[5](index=5&type=chunk) - The collateral for the Company's ExAlt loan portfolio is expected to increase by more than **$11.7 million** of interests in alternative assets due to three new primary capital transactions entered into during the fiscal 2026 first quarter[5](index=5&type=chunk) - Asset sales of certain investments held by Customer ExAlt Trusts generated **$38.1 million** in gross proceeds, used to pay down debt and provide working capital[5](index=5&type=chunk) Loan Balance Breakdown | Metric | As of June 30, 2025 | | :----------------------------------- | :------------------ | | Total Gross Loan Balance | $583.4 million | | Total Allowance for Credit Losses | $352.7 million | | Loan Balance Net of Allowance for Credit Losses | $230.7 million | [Financial Results](index=3&type=section&id=3.%20Financial%20Results) Beneficient reported a consolidated GAAP revenue of $(12.6) million and a net loss of $(65.1) million for Q1 Fiscal 2026, with total assets decreasing and liabilities increasing, while segment performance varied [Consolidated Fiscal First Quarter Results](index=3&type=section&id=3.1.%20Consolidated%20Fiscal%20First%20Quarter%20Results) Beneficient reported a consolidated GAAP revenue of $(12.6) million and a net loss attributable to common shareholders of $(65.1) million for Q1 Fiscal 2026. Total assets decreased by 5.7% to $334.5 million, while total liabilities increased to $364.4 million [Consolidated Income Statement](index=3&type=section&id=3.1.1.%20Consolidated%20Income%20Statement) The consolidated income statement for Q1 Fiscal 2026 shows GAAP revenues of $(12.6) million and a net loss attributable to common shareholders of $(65.1) million Consolidated Income Statement Metrics | Metric | Fiscal 1Q26 (June 30, 2025) (in thousands) | Fiscal 4Q25 (March 31, 2025) (in thousands) | Fiscal 1Q25 (June 30, 2024) (in thousands) | Change % vs. Prior Quarter | | :------------------------------------------ | :----------------------------------------- | :---------------------------------------- | :---------------------------------------- | :------------------------- | | GAAP Revenues | $(12,623) | $(30,969) | $10,046 | 59.2% | | Adjusted Revenues | $(12,622) | $(30,963) | $10,411 | 59.2% | | GAAP Operating Income (Loss) | $(92,648) | $(45,295) | $44,338 | NM | | Adjusted Operating Income (Loss) | $(25,438) | $(42,945) | $(4,725) | 40.8% | | Basic Class A EPS | $(7.19) | $12.11 | NM | NM | | Diluted Class A EPS | $(7.19) | $0.17 | NM | NM | Consolidated Income Statement Summary | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | | :------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Total revenues | $(12,623) | $10,046 | | Total operating expenses | $80,025 | $(34,292) | | Net income (loss) before income taxes | $(92,648) | $44,338 | | Net income (loss) attributable to Beneficient common shareholders | $(65,076) | $47,667 | | Class A - basic EPS | $(7.19) | $12.11 | | Class A - diluted EPS | $(7.19) | $0.17 | - Operating expenses for Fiscal 1Q26 were **$80.0 million**, including a **$62.8 million** loss contingency accrual, compared to **$(34.3) million** in Fiscal 1Q25, which included a **$(55.0) million** release of loss contingency accrual and a **$3.4 million** goodwill impairment[5](index=5&type=chunk) - Excluding non-cash goodwill impairment and loss contingency accruals/releases, operating expenses declined **1%** to **$17.2 million** in Fiscal 1Q26 from **$17.3 million** in Fiscal 1Q25[5](index=5&type=chunk) [Consolidated Balance Sheet](index=4&type=section&id=3.1.2.%20Consolidated%20Balance%20Sheet) The consolidated balance sheet as of June 30, 2025, indicates total assets of $334.5 million and total liabilities of $364.4 million, with a significant equity deficit Consolidated Balance Sheet Assets | Metric | As of June 30, 2025 (in thousands) | As of March 31, 2025 (in thousands) | Change % | | :--------------------------- | :--------------------------------- | :---------------------------------- | :------- | | Investments, at Fair Value | $263,769 | $291,371 | (9.5)% | | All Other Assets | $57,723 | $50,490 | 14.3% | | Goodwill and Intangible Assets, Net | $13,014 | $13,014 | —% | | Total Assets | $334,506 | $354,875 | (5.7)% | Consolidated Balance Sheet Liabilities and Equity | Metric | As of June 30, 2025 (in thousands) | As of March 31, 2025 (in thousands) | | :--------------------------- | :--------------------------------- | :---------------------------------- | | Cash and cash equivalents | $7,612 | $1,346 | | Total liabilities | $364,377 | $299,274 | | Total equity (deficit) | $(120,397) | $(34,925) | [Business Segment Financial Performance (Attributable to Ben's Equity Holders)](index=4&type=section&id=3.2.%20Business%20Segment%20Financial%20Performance%20(Attributable%20to%20Ben's%20Equity%20Holders)) Segment revenues attributable to Ben's equity holders decreased by 8.4% quarter-over-quarter to $13.1 million. Ben Liquidity saw a revenue increase, while Ben Custody and Corporate & Other experienced declines. Total segment operating loss significantly widened to $(76.4) million [Segment Revenues](index=4&type=section&id=3.2.1.%20Segment%20Revenues) Total segment revenues attributable to Ben's equity holders decreased by 8.4% to $13.1 million, with Ben Liquidity revenues increasing and Ben Custody and Corporate & Other revenues declining Segment Revenues Attributable to Ben's Equity Holders | Segment | Fiscal 1Q26 (June 30, 2025) (in thousands) | Fiscal 4Q25 (March 31, 2025) (in thousands) | Fiscal 1Q25 (June 30, 2024) (in thousands) | Change % vs. Prior Quarter | | :---------------------------- | :----------------------------------------- | :---------------------------------------- | :---------------------------------------- | :------------------------- | | Ben Liquidity | $8,837 | $8,459 | $10,849 | 4.5% | | Ben Custody | $4,183 | $5,396 | $5,382 | (22.5)% | | Corporate & Other | $38 | $398 | $4 | (90.5)% | | Total Segment Revenues Attributable to Ben's Equity Holders | $13,058 | $14,253 | $16,235 | (8.4)% | - Revenues applicable to Ben Custody were **$4.2 million** for Fiscal 1Q26, a decrease from **$5.4 million** in Fiscal 4Q25, primarily due to lower NAV of alternative assets held in custody at the beginning of the period[17](index=17&type=chunk) [Segment Operating Income (Loss)](index=4&type=section&id=3.2.2.%20Segment%20Operating%20Income%20(Loss)) Total segment operating loss attributable to Ben's equity holders significantly widened to $(76.4) million, driven by a substantial loss in Corporate & Other, despite an improved operating loss in Ben Liquidity Segment Operating Income (Loss) Attributable to Ben's Equity Holders | Segment | Fiscal 1Q26 (June 30, 2025) (in thousands) | Fiscal 4Q25 (March 31, 2025) (in thousands) | Fiscal 1Q25 (June 30, 2024) (in thousands) | Change % vs. Prior Quarter | | :---------------------------- | :----------------------------------------- | :---------------------------------------- | :---------------------------------------- | :------------------------- | | Ben Liquidity | $(6,015) | $(12,340) | $(514) | 51.3% | | Ben Custody | $3,128 | $4,165 | $1,287 | (24.9)% | | Corporate & Other | $(73,549) | $(8,487) | $44,091 | NM | | Total Segment Operating Income (Loss) Attributable to Ben's Equity Holders | $(76,436) | $(16,662) | $44,864 | NM | Adjusted Segment Operating Income (Loss) Attributable to Ben's Equity Holders | Segment | Fiscal 1Q26 (June 30, 2025) (in thousands) | Fiscal 4Q25 (March 31, 2025) (in thousands) | Fiscal 1Q25 (June 30, 2024) (in thousands) | Change % vs. Prior Quarter | | :---------------------------- | :----------------------------------------- | :---------------------------------------- | :---------------------------------------- | :------------------------- | | Adjusted Ben Liquidity | $(6,015) | $(12,340) | $(509) | 51.3% | | Adjusted Ben Custody | $3,128 | $4,632 | $4,416 | (32.5)% | | Adjusted Corporate & Other | $(6,340) | $(6,143) | $(8,459) | (3.2)% | | Total Adjusted Segment Operating Income (Loss) Attributable to Ben's Equity Holders | $(9,227) | $(13,851) | $(4,552) | 33.4% | - Ben Custody's operating income decreased to **$3.1 million** from **$4.2 million** in the prior quarter, mainly due to declining revenues and increased employee and professional services expenses, partially offset by intersegment credit losses[17](index=17&type=chunk) [Capital and Liquidity](index=3&type=section&id=3.3.%20Capital%20and%20Liquidity) As of June 30, 2025, Beneficient held $7.6 million in cash and cash equivalents and had total debt of $108.4 million, supported by distributions from alternative assets and proceeds from asset dispositions Cash and Debt | Metric | As of June 30, 2025 | | :--------------------------- | :------------------ | | Cash and cash equivalents | $7.6 million | | Total debt | $108.4 million | Distributions and Proceeds | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | | Distributions received from alternative assets | $3.7 million | $7.2 million | | Proceeds from disposition of certain investments | $24.1 million | N/A | - Total investments (at fair value) of **$263.8 million** at June 30, 2025, supported Ben Liquidity's loan portfolio[17](index=17&type=chunk) [Non-GAAP Financial Measures](index=9&type=section&id=4.%20Non-GAAP%20Financial%20Measures) Beneficient provides non-GAAP financial measures, including Adjusted Revenues and Adjusted Operating Income (Loss), to offer insights into underlying business trends and recurring core operating results, with detailed reconciliations and definitions [Non-GAAP Reconciliations](index=9&type=section&id=4.1.%20Non-GAAP%20Reconciliations) Beneficient provides detailed reconciliations for its non-GAAP financial measures, including Adjusted Revenues and Adjusted Operating Income (Loss), to their most directly comparable GAAP measures across consolidated and segment levels for the reported periods Consolidated Non-GAAP Reconciliation (Three Months Ended June 30, 2025) | Metric | Consolidated (in thousands) | | :------------------------------------------ | :-------------------------- | | Total revenues (GAAP) | $(12,623) | | Mark to market adjustment on interests in GWG Wind Down Trust | $1 | | Adjusted revenues | $(12,622) | | Operating income (loss) (GAAP) | $(92,648) | | Mark to market adjustment on interests in GWG Wind Down Trust | $1 | | Accrual (release) of loss contingency related to arbitration award | $62,831 | | Share-based compensation expense | $461 | | Legal and professional fees | $3,917 | | Adjusted operating income (loss) | $(25,438) | Consolidated Non-GAAP Reconciliation (Three Months Ended March 31, 2025) | Metric | Consolidated (in thousands) | | :------------------------------------------ | :-------------------------- | | Total revenues (GAAP) | $(30,969) | | Mark to market adjustment on interests in GWG Wind Down Trust | $6 | | Adjusted revenues | $(30,963) | | Operating income (loss) (GAAP) | $(45,295) | | Mark to market adjustment on interests in GWG Wind Down Trust | $6 | | Share-based compensation expense | $487 | | Legal and professional fees | $1,857 | | Adjusted operating income (loss) | $(42,945) | Consolidated Non-GAAP Reconciliation (Three Months Ended June 30, 2024) | Metric | Consolidated (in thousands) | | :------------------------------------------ | :-------------------------- | | Total revenues (GAAP) | $10,046 | | Mark to market adjustment on interests in GWG Wind Down Trust | $365 | | Adjusted revenues | $10,411 | | Operating income (loss) (GAAP) | $44,338 | | Mark to market adjustment on interests in GWG Wind Down Trust | $365 | | Goodwill impairment | $3,394 | | Accrual (release) of loss contingency related to arbitration award | $(54,973) | | Share-based compensation expense | $994 | | Legal and professional fees | $1,157 | | Adjusted operating income (loss) | $(4,725) | [Non-GAAP Definitions and Limitations](index=11&type=section&id=4.2.%20Non-GAAP%20Definitions%20and%20Limitations) Beneficient uses non-GAAP financial measures like Adjusted Revenues and Adjusted Operating Income (Loss) to provide insights into underlying business trends and recurring core business operating results. These measures exclude specific non-recurring or non-cash items but are not substitutes for GAAP measures and have limitations regarding liquidity assessment - Non-GAAP financial measures are presented to help investors understand underlying business trends and facilitate period-to-period comparison of recurring core business operating results[39](index=39&type=chunk) - Adjusted revenue excludes the effect of mark-to-market adjustments on related party equity securities, specifically interests in the GWG Wind Down Trust[40](index=40&type=chunk) - Adjusted operating income (loss) adjusts GAAP operating income (loss) for revenue adjustments, credit losses on related party debt securities, non-cash asset impairment, share-based compensation, and specific legal/professional fees related to bankruptcy, lawsuits, and arbitration[41](index=41&type=chunk) - These non-GAAP measures are not GAAP performance or liquidity measures, are unaudited, and should not be considered alternatives or more meaningful than GAAP revenues or operating income (loss)[42](index=42&type=chunk) - They do not reflect significant cash flow uses like capital expenditures, interest payments, or debt repayments[42](index=42&type=chunk) [Corporate Information](index=6&type=section&id=5.%20Corporate%20Information) This section provides information on Beneficient's investor relations activities and important legal disclaimers regarding forward-looking statements and securities offerings [Investor Relations](index=6&type=section&id=5.1.%20Investor%20Relations) Beneficient plans to host an investor webcast and conference call to update on company performance, strategy, and transactions. Contact information for investor inquiries is provided - Beneficient expects to host a webcast and conference call in the coming weeks to provide investors with an update on the Company's performance, strategy, and transactions[29](index=29&type=chunk) [Legal Disclaimers and Forward-Looking Statements](index=6&type=section&id=5.2.%20Legal%20Disclaimers%20and%20Forward-Looking%20Statements) The communication is for informational purposes only and does not constitute an offer of securities. It contains forward-looking statements subject to risks and uncertainties, including the ability to consummate liquidity transactions, regain Nasdaq compliance, and obtain stockholder approval for a reverse stock split. The company disclaims any obligation to update these statements - The information provided is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities[32](index=32&type=chunk) - The press release contains forward-looking statements regarding demand for solutions, market growth, transaction negotiation, loan portfolio diversification, and shareholder value, identified by words like 'anticipate,' 'expect,' 'plan,' and 'will'[33](index=33&type=chunk) - These forward-looking statements are subject to risks and uncertainties, including the ability to consummate liquidity transactions, timely demonstrate Nasdaq bid price compliance, regain Nasdaq stockholders' equity requirement compliance, cure other Nasdaq Listing Rule deficiencies, and obtain stockholder approval for a reverse stock split[33](index=33&type=chunk) - The company expressly disclaims any obligation to publicly update or review any forward-looking statements, except as required by applicable law[33](index=33&type=chunk)

FORM 10-Q Filing Information [Filing Details](index=1&type=section&id=Filing%20Details) Beneficient, a Nevada corporation, filed its Form 10-Q for Q2 2025, trading on Nasdaq as BENF/BENFW, and is classified as a non-accelerated filer, smaller reporting, and emerging growth company - Beneficient is a Nevada corporation, filing a Quarterly Report on Form 10-Q for the period ended **June 30, 2025**[2](index=2&type=chunk) Trading Information | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :-------------------------------------------------------------------------------------------------------------- | :---------------- | :---------------------------------------- | | Class A common stock, par value $0.001 per share | BENF | Nasdaq Stock Market LLC | | Warrants, each whole warrant exercisable for one share of Class A common stock, par value $0.001 per share, and one share of Series A convertible preferred stock, par value $0.001 per share | BENFW | Nasdaq Stock Market LLC | Filer Status | Large accelerated filer | ☐ | Accelerated filer | ☐ | | :---------------------- | :-- | :-------------------- | :-- | | Non-accelerated filer | ☒ | Smaller reporting company | ☒ | | | | Emerging growth company | ☒ | [Explanatory Note](index=3&type=section&id=Explanatory%20Note) The company executed an **80-to-1 reverse stock split** on April 18, 2024, to maintain Nasdaq listing, with all share and per share amounts retroactively adjusted - The Company effected an **80-to-1 reverse stock split** of its Common Stock, effective **April 18, 2024**, to maintain its Nasdaq listing, with all share and per share amounts retroactively adjusted[9](index=9&type=chunk) [Summary of Risk Factors](index=3&type=section&id=Summary%20of%20Risk%20Factors) Beneficient faces significant risks including limited operating history, fair value estimation inaccuracies, Nasdaq non-compliance, HCLP loan defaults, former CEO conflicts, and a material weakness in internal controls, raising substantial doubt about its going concern ability - Key risks include lack of significant operating history, potential inaccuracies in fair value estimates of illiquid assets, and ongoing non-compliance with Nasdaq listing requirements[11](index=11&type=chunk) - The company has been notified of events of default on the HCLP Loan Agreement and is subject to litigation, with attempts by HCLP to secure collateral[11](index=11&type=chunk) - A material weakness in internal control over financial reporting was identified but has been remediated as of **June 30, 2025**, with failure to maintain effective controls potentially impacting financial condition and stock price[11](index=11&type=chunk) - Current inability to raise sufficient capital, recurring losses, negative cash flows, existing debt defaults, and an arbitration award raise substantial doubt about the company's ability to continue as a going concern[12](index=12&type=chunk) PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) This section presents Beneficient's unaudited consolidated financial statements for Q2 2025, highlighting a decrease in total assets to **$334.5 million**, an increase in total liabilities to **$364.4 million**, a net loss of **$92.6 million**, and an accumulated deficit of **$2.07 billion** Consolidated Statements of Financial Condition (June 30, 2025 vs. March 31, 2025) | (Dollars in thousands) | June 30, 2025 | March 31, 2025 | | :--------------------------------- | :------------ | :------------- | | **ASSETS** | | | | Cash and cash equivalents | $7,612 | $1,346 | | Investments, at fair value | 263,769 | 291,371 | | Total assets | $334,506 | $354,875 | | **LIABILITIES, TEMPORARY EQUITY, AND EQUITY (DEFICIT)** | | | | Total liabilities | 364,377 | 299,274 | | Total temporary equity | 90,526 | 90,526 | | Total equity (deficit) | (120,397) | (34,925) | | Total liabilities, temporary equity, and equity (deficit) | $334,506 | $354,875 | Consolidated Statements of Comprehensive Income (Loss) (Three Months Ended June 30, 2025 vs. 2024) | (Dollars in thousands, except per share amounts) | 2025 | 2024 | | :----------------------------------------------- | :------------ | :------------ | | Total revenues | $(12,623) | $10,046 | | Total operating expenses | 80,025 | (34,292) | | Net income (loss) before income taxes | $(92,648) | $44,338 | | Net income (loss) | $(92,648) | $44,310 | | Net income (loss) attributable to Beneficient common shareholders | $(65,076) | $47,667 | | Class A - basic EPS | $(7.19) | $12.11 | | Class A - diluted EPS | $(7.19) | $0.17 | Consolidated Statements of Cash Flows (Three Months Ended June 30, 2025 vs. 2024) | (Dollars in thousands) | 2025 | 2024 | | :----------------------------------------- | :------------ | :------------ | | Net cash used in operating activities | $(10,836) | $(10,647) | | Net cash provided by investing activities | 26,455 | 6,392 | | Net cash (used in) provided by financing activities | (9,353) | 991 | | Net increase (decrease) in cash and cash equivalents | 6,266 | (3,264) | | Cash and cash equivalents at end of period | $7,612 | $4,713 | [1. Overview of the Business](index=12&type=section&id=1.%20Overview%20of%20the%20Business) Beneficient is a technology-enabled financial services holding company providing liquidity and trust services for alternative assets, but faces significant going concern doubts due to recurring losses, debt defaults, and an arbitration award - Beneficient provides liquidity solutions and trust products/services to the alternative assets industry through its online platform, Ben AltAccess, targeting MHNW individuals, STMI investors, FAMOs, and GPs[34](index=34&type=chunk)[35](index=35&type=chunk) - Ben Liquidity offers proprietary ExAlt Plan financings, making ExAlt Loans to Customer ExAlt Trusts collateralized by alternative assets, while Ben Custody provides trust and custody administration services[37](index=37&type=chunk)[38](index=38&type=chunk) - The company has historically generated net losses, resulting in an accumulated deficit of **$2.1 billion** as of **June 30, 2025**, and faces substantial doubt about its ability to continue as a going concern due to outstanding obligations, debt defaults, and a confirmed arbitration award[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk) - A **1-for-80 reverse stock split** was effective **April 18, 2024**, to regain compliance with Nasdaq's minimum bid price requirement[53](index=53&type=chunk)[54](index=54&type=chunk) [2. Summary of Significant Accounting Policies](index=16&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) Beneficient's U.S. GAAP consolidated financial statements include subsidiaries and Customer ExAlt Trusts (VIEs), with intercompany eliminations impacting income allocation, and rely on significant estimates for fair value, credit losses, and contingencies - Consolidated financial statements include Ben, its subsidiaries, and Customer ExAlt Trusts (VIEs) where Ben is the primary beneficiary, with intercompany transactions eliminated for financial reporting but impacting income allocation to equity holders[61](index=61&type=chunk)[64](index=64&type=chunk) - Key estimates include fair value of alternative asset investments, allowance for credit losses, income/loss allocation to equity holders, legal loss contingencies, and goodwill impairment[66](index=66&type=chunk) - Adopted ASU **2023-07** (Segment Reporting) for the annual period beginning **April 1, 2024**, with no material impact, and is assessing ASU **2024-03** (Expense Disaggregation) and ASU **2023-09** (Income Tax Disclosures) for future periods[68](index=68&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk) [3. Understanding our Financial Statements and the Impact to the Common Shareholder](index=18&type=section&id=3.%20Understanding%20our%20Financial%20Statements%20and%20the%20Impact%20to%20the%20Common%20Shareholder) Consolidated financial statements include Customer ExAlt Trusts as VIEs, where their investment income/losses are allocated to noncontrolling interests, while Ben Liquidity and Ben Custody's intercompany interest and fee income directly impact net income attributable to Beneficient's and BCH's equity holders - Customer ExAlt Trusts are consolidated VIEs, but their investment income/loss and financial instrument gains/losses are allocated to noncontrolling interests and do not directly impact net income attributable to Beneficient's common shareholders[72](index=72&type=chunk)[73](index=73&type=chunk) - Interest and fee income earned by Ben Liquidity and Ben Custody from Customer ExAlt Trusts, though eliminated in consolidation, directly impact net income attributable to Ben's and BCH's equity holders[74](index=74&type=chunk) Ben Liquidity and Ben Custody Revenue (Three Months Ended June 30, 2025 vs. 2024) | Revenue Source | 2025 (in thousands) | 2024 (in thousands) | | :------------------------------------------- | :------------------ | :------------------ | | Ben Liquidity interest income | $8,800 | $10,800 | | Ben Custody trust services & administration | $4,200 | $5,400 | [4. De-SPAC Merger Transaction](index=19&type=section&id=4.%20De-SPAC%20Merger%20Transaction) The de-SPAC merger with Avalon Acquisition, Inc. completed on June 7, 2023, involved a Forward Purchase Agreement, BCG recapitalization, and conversion of Avalon securities into Beneficient's Class A common stock, Series A preferred stock, and Warrants, with Beneficient as the accounting acquirer - The company completed its de-SPAC merger transaction with Avalon Acquisition, Inc. on **June 7, 2023**, with Beneficient treated as the accounting acquirer[32](index=32&type=chunk)[92](index=92&type=chunk) - The transaction involved a Forward Purchase Agreement, BCG Recapitalization, and conversion of Avalon securities into Beneficient Class A common stock, Series A preferred stock, and Warrants[80](index=80&type=chunk)[85](index=85&type=chunk)[88](index=88&type=chunk) Shares and Warrants Issued Post-Business Combination | Security Type | Shares/Warrants Issued | | :------------------------ | :--------------------- | | Class A common stock | 2,367,244 | | Class B common stock | 239,256 | | Warrants | 23,757,500 | - As of **June 30, 2025**, and **March 31, 2025**, there were **24,699,725 Warrants** outstanding with a fair value of **$0.2 million**, classified as a liability[98](index=98&type=chunk) [5. Investments, at Fair Value](index=22&type=section&id=5.%20Investments,%20at%20Fair%20Value) Investments held by Customer ExAlt Trusts, primarily alternative assets, totaled **$263.8 million** as of June 30, 2025, a decrease from **$291.4 million** due to dispositions and NAV adjustments, with the diversified portfolio concentrated in private equity and venture capital Composition of Investments, at Fair Value (in thousands) | Investment Type | June 30, 2025 | March 31, 2025 | | :-------------------------------- | :------------ | :------------- | | Alternative assets | $231,586 | $259,113 | | Public equity securities | 3,995 | 4,065 | | Debt securities available-for-sale | 1,687 | 1,687 | | Other equity securities and interests | 26,501 | 26,506 | | **Total investments, at fair value** | **$263,769** | **$291,371** | - The decrease in alternative assets by **$27.6 million** since **March 31, 2025**, was due to dispositions, distributions, and downward NAV adjustments, partially offset by **$11.8 million** in new originations[100](index=100&type=chunk) Alternative Investments Portfolio Summary by Asset Class (June 30, 2025 vs. March 31, 2025) | Asset Class | June 30, 2025 Carrying Value (in thousands) | March 31, 2025 Carrying Value (in thousands) | | :---------------- | :---------------------------------------- | :----------------------------------------- | | Private Equity | $114,895 | $120,008 | | Venture Capital | 89,260 | 109,361 | | Natural Resources | 12,201 | 12,691 | | Private Real Estate | 6,978 | 6,454 | | Hedge Funds | 3,572 | 3,931 | | Other | 4,680 | 6,668 | | **Total** | **$231,586** | **$259,113** | - As of **June 30, 2025**, the portfolio had exposure to **204 alternative asset investment funds**, with **91%** in private companies[103](index=103&type=chunk) [6. Fair Value Measurements](index=24&type=section&id=6.%20Fair%20Value%20Measurements) Fair value measurements categorize financial instruments into Level 1, 2, and 3, with **$231.6 million** in NAV-valued investments excluded, resulting in a **$12.8 million** loss for Q2 2025, and a **$3.4 million** goodwill impairment charge recognized in Q1 fiscal 2025 - Fair value measurements are based on a three-level hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[112](index=112&type=chunk)[117](index=117&type=chunk) - Investments valued using NAV as a practical expedient totaled **$231.6 million** as of **June 30, 2025**, and resulted in a **$12.8 million** loss for the three months ended **June 30, 2025**[114](index=114&type=chunk) Financial Instruments at Fair Value (June 30, 2025) | (Dollars in thousands) | Level 1 | Level 2 | Level 3 | Total | | :--------------------------------- | :------ | :------ | :------ | :------ | | **Assets:** | | | | | | Public equity securities | $3,995 | $— | $— | $3,995 | | Other equity interests | — | 4 | — | 4 | | Debt securities available-for-sale, other | — | — | 1,687 | 1,687 | | **Liabilities:** | | | | | | Warrants liability | 170 | 27 | — | 197 | - A non-cash goodwill impairment charge of **$3.4 million** was recognized during the three months ended **June 30, 2024**, due to a significant decline in Class A common stock price and market capitalization, with no impairment required for the three months ended **June 30, 2025**[124](index=124&type=chunk) [7. Debt](index=28&type=section&id=7.%20Debt) Beneficient issued up to **$4.0 million** in convertible debentures and warrants to Yorkville in August 2024, with debentures fully repaid by February 2025, while Yorkville Warrants, classified as a liability, have a nominal fair value as of June 30, 2025 - In **August 2024**, Beneficient issued up to **$4.0 million** in convertible debentures and warrants to Yorkville, with the debentures fully repaid by their **February 2025** maturity[129](index=129&type=chunk)[130](index=130&type=chunk) - The Yorkville Warrants, exercisable for Class A common stock at **$2.63 per share**, are classified as a liability and measured at fair value using the Black-Scholes model, with a nominal fair value as of **June 30, 2025**[131](index=131&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk) [8. Debt Due to Related Parties](index=29&type=section&id=8.%20Debt%20Due%20to%20Related%20Parties) Beneficient's debt due to related parties totaled **$108.4 million** as of June 30, 2025, including HCLP First and Second Lien Credit Agreements in default for **$94.5 million** principal and **$21.2 million** accrued interest, which the company is challenging due to alleged document fabrication Debt Due to Related Parties (in thousands) | (Dollars in thousands) | June 30, 2025 | March 31, 2025 | | :---------------------------- | :------------ | :------------- | | First Lien Credit Agreement | $21,260 | $21,260 | | Second Lien Credit Agreement | 72,983 | 72,983 | | Term Loan | 12,376 | 22,000 | | Other borrowings | 2,321 | 2,292 | | Unamortized debt discount, net | (547) | (639) | | **Total debt due to related parties** | **$108,393** | **$117,896** | - HCLP declared events of default on the First and Second Lien Credit Agreements, demanding immediate payment of approximately **$94.5 million** principal and **$21.2 million** accrued interest as of **June 30, 2025**, with the company evaluating the validity of these obligations due to alleged document fabrication by the former CEO[144](index=144&type=chunk)[145](index=145&type=chunk)[148](index=148&type=chunk) - The HH-BDH Credit Agreement (Term Loan) has experienced defaults on payment obligations, financial covenants, and reporting requirements, triggering a cross-default provision due to the HCLP default, with ongoing negotiations for waivers and amendments[159](index=159&type=chunk)[160](index=160&type=chunk) Aggregate Maturities of Principal on Debt Due to Related Parties (in thousands) | Fiscal Year Ending March 31 | Debt Due to Related Parties | | :-------------------------- | :-------------------------- | | 2026 | $108,940 | | 2027 | — | | 2028 | — | | 2029 | — | | 2030 | — | [9. Share-based Compensation](index=33&type=section&id=9.%20Share-based%20Compensation) Beneficient's share-based awards under the BMP Equity Incentive Plan and 2023 Long Term Incentive Plan were retroactively adjusted for the **1-for-80 reverse stock split**, resulting in a **$0.5 million** share-based compensation expense for Q2 2025, with **$2.1 million** in unrecognized expense remaining - Share-based awards under the BMP Equity Incentive Plan and **2023 Incentive Plan** were retroactively adjusted for the **1-for-80 reverse stock split**[163](index=163&type=chunk) - The **2023 Incentive Plan** allows for grants of RSUs, stock options, and other awards, with vesting typically over a multi-year period[172](index=172&type=chunk)[173](index=173&type=chunk) Share-based Compensation Expense (Three Months Ended June 30, 2025 vs. 2024) | (dollars in thousands) | 2025 | 2024 | | :-------------------------- | :--- | :--- | | BMP equity units | $66 | $113 | | Restricted stock units | 373 | 832 | | Other | 22 | 49 | | **Total share-based compensation** | **$461** | **$994** | - Unrecognized share-based compensation expense totaled **$2.1 million** as of **June 30, 2025**, expected to be recognized over the next five fiscal years[178](index=178&type=chunk) [10. Equity](index=35&type=section&id=10.%20Equity) Beneficient's equity structure comprises Class A and B common stock, Series A and B preferred stock, and various noncontrolling interests in BCH and Customer ExAlt Trusts, with Class B common stock carrying **10 votes per share**, and a Standby Equity Purchase Agreement with Yorkville allowing sales of up to **$250 million** of Class A common stock - Class A common stock has **one vote per share**, while Class B common stock has **10 votes per share**, with both classes voting as a single class on most matters[180](index=180&type=chunk) - The company has a Standby Equity Purchase Agreement (SEPA) with Yorkville, allowing it to sell up to **$250.0 million** of Class A common stock, with approximately **$240.7 million** remaining available as of **June 30, 2025**[183](index=183&type=chunk)[184](index=184&type=chunk)[46](index=46&type=chunk) - BCH Preferred A-0 receives a quarterly guaranteed payment of **1.50%** of its initial capital balance and has redemption rights, with a portion re-designated as non-redeemable in **September and November 2024**[201](index=201&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk) Noncontrolling Interests Rollforward (Three Months Ended June 30, 2025) | (Dollars in thousands) | Trusts | FLP | BCH Preferred Series A-0 Non Redeemable | BCH Preferred Series A-1 | Total Noncontrolling Interests | | :--------------------------------------------------- | :---------- | :-- | :-------------------------------------- | :----------------------- | :----------------------------- | | Balance, March 31, 2025 | $(201,518) | $— | $160,526 | $173,068 | $132,076 | | Net income (loss) | (16,212) | (189) | 2,957 | (15,795) | (29,239) | | Preferred A-0 Unit Accounts guaranteed payment accrual | — | — | (2,957) | — | (2,957) | | Reclass of distributions payable to noncontrolling interest holder | (921) | — | — | — | (921) | | Issuance of equity in connection with recent financings | 295 | — | — | — | 295 | | Miscellaneous adjustment to previously allocated FLP Subclass 3 income | — | 189 | — | — | 189 | | **Balance, June 30, 2025** | **$(218,356)** | **$—** | **$160,526** | **$157,273** | **$99,443** | [11. Net Income (Loss) per Share](index=42&type=section&id=11.%20Net%20Income%20(Loss)%20per%20Share) For Q2 2025, Beneficient reported a net loss attributable to common shareholders of **$(65.1) million**, resulting in basic and diluted EPS of **$(7.19)** for both Class A and Class B common stock, with diluted EPS equal to basic due to the net loss Net Income (Loss) Attributable to Beneficient Common Shareholders (Three Months Ended June 30, 2025 vs. 2024) | (Dollars in thousands, except per share amounts) | 2025 | 2024 | | :----------------------------------------------- | :------------ | :------------ | | Net income (loss) attributable to Beneficient common shareholders | $(65,076) | $47,667 | | Class A - basic | $(7.19) | $12.11 | | Class B - basic | $(7.19) | $12.11 | | Class A - diluted | $(7.19) | $0.17 | | Class B - diluted | $(7.19) | $0.17 | - For **Q2 2025**, diluted EPS for common shareholders was the same as basic EPS due to the net loss position[235](index=235&type=chunk) Anti-Dilutive Shares Not Recognized (Three Months Ended June 30, 2025 vs. 2024) | Shares | 2025 | 2024 | | :-------------------------- | :------------ | :------------ | | Series B Preferred Stock | 34,410,774 | — | | Preferred Series A Subclass 0 | 833,557,399 | — | | Preferred Series A Subclass 1 | 2,682,497,381 | — | | Warrants | 26,025,107 | 30,874,686 | | **Total anti-dilutive shares** | **3,577,945,953** | **31,003,688** | [12. Income Taxes](index=44&type=section&id=12.%20Income%20Taxes) Beneficient reported no income tax expense for Q2 2025, compared to **$28 thousand** in the same period of 2024 Income Tax Expense (Three Months Ended June 30, 2025 vs. 2024) | (Dollars in thousands) | 2025 | 2024 | | :--------------------- | :--- | :--- | | Current expense | $— | $28 | | Deferred expense | — | — | | **Income tax expense** | **$—** | **$28** | [13. Related Parties](index=44&type=section&id=13.%20Related%20Parties) Beneficient has extensive related party transactions with its former CEO, Mr. Heppner, and his controlled entities, including **$0.6 million** in services agreement expenses and **$10.8 million** accrued for an expired aircraft sublease, while evaluating the validity of HCLP loan obligations due to alleged document fabrication - Related parties include employees, directors, and entities directly or indirectly controlled by or benefiting Mr. Heppner, the former CEO and Chairman[239](index=239&type=chunk) - Expenses from the services agreement with Bradley Capital (a Related Entity) were **$0.6 million** for the three months ended **June 30, 2025**, with **$4.5 million** owed as of that date[245](index=245&type=chunk)[542](index=542&type=chunk) - An expired aircraft sublease with Bradley Capital has **$10.8 million** in accrued costs as of **June 30, 2025**, reflected in accounts payable[248](index=248&type=chunk) - The company incurred approximately **$1.9 million** in legal fees on behalf of Mr. Heppner for the three months ended **June 30, 2025**, under indemnification provisions, with most expected to be covered by D&O insurance[246](index=246&type=chunk) - Beneficient is evaluating the validity of its HCLP Loan Agreement obligations and liens due to credible evidence that Mr. Heppner participated in fabricating and delivering fake documents regarding his relationship to HCLP[256](index=256&type=chunk)[257](index=257&type=chunk) [14. Variable Interest Entities](index=49&type=section&id=14.%20Variable%20Interest%20Entities) Beneficient consolidates CT Risk Management, L.L.C. and Customer ExAlt Trusts as VIEs, with their assets restricted to settling their own obligations, and as of June 30, 2025, Customer ExAlt Trusts held **$265.0 million** in total assets and **$3.5 million** in total liabilities - Beneficient consolidates CT Risk Management, L.L.C. (CT) and Customer ExAlt Trusts as Variable Interest Entities (VIEs) because it is deemed the primary beneficiary, having the power to direct significant activities and absorb potential losses[274](index=274&type=chunk)[276](index=276&type=chunk)[278](index=278&type=chunk) - Assets of Customer ExAlt Trusts are restricted to settling their own obligations, and there is no recourse to Beneficient for their liabilities, except for potentially funding capital calls[278](index=278&type=chunk) Consolidated VIEs Financial Condition (Dollars in thousands) | (Dollars in thousands) | June 30, 2025 | March 31, 2025 | | :--------------------------------- | :------------ | :------------- | | **Assets:** | | | | Cash and cash equivalents | $1,165 | $717 | | Investments, at fair value | 263,769 | 291,371 | | Other assets | 50 | 378 | | **Total Assets of VIEs** | **$264,984** | **$292,466** | | **Liabilities:** | | | | Accounts payable and accrued expense | $3,515 | $3,107 | | Other liabilities | — | 95 | | **Total Liabilities of VIEs** | **$3,515** | **$3,202** | Consolidated VIEs Comprehensive Income (Loss) (Three Months Ended June 30, 2025 vs. 2024) | (Dollars in thousands) | 2025 | 2024 | | :-------------------------------------- | :------------ | :------------ | | Total revenues | $(12,851) | $9,853 | | Total operating expenses | 801 | 1,265 | | Net income (loss) | $(13,652) | $8,588 | | Net income (loss) attributable to noncontrolling interests | $(16,212) | $(526) | [15. Segment Reporting](index=51&type=section&id=15.%20Segment%20Reporting) Beneficient operates three reportable segments: Ben Liquidity, Ben Custody, and Customer ExAlt Trusts, with intersegment transactions eliminated in consolidation but impacting income allocation to equity holders, and the CEO assessing performance on an unconsolidated basis - Beneficient has three reportable segments: Ben Liquidity, Ben Custody, and Customer ExAlt Trusts, with the Corporate & Other category including unallocated overhead, equity-based compensation, and operations of Ben Insurance Services and Ben Markets[281](index=281&type=chunk)[283](index=283&type=chunk)[285](index=285&type=chunk) - Intersegment transactions between operating subsidiaries and Customer ExAlt Trusts are eliminated in consolidated financial statements but directly impact income allocation to Ben's and BCH's equity holders[282](index=282&type=chunk) Segment Operating Income (Loss) (Three Months Ended June 30, 2025) | (in thousands) | Ben Liquidity | Ben Custody | Customer ExAlt Trusts | Corporate & Other | Consolidating Eliminations | Consolidated | | :---------------------- | :------------ | :---------- | :-------------------- | :---------------- | :------------------------- | :----------- | | Total revenues | $8,837 | $4,183 | $(12,851) | $38 | $(12,830) | $(12,623) | | Total expenses | 14,852 | 1,055 | 41,125 | 73,587 | (50,594) | 80,025 | | **Operating income (loss)** | **$(6,015)** | **$3,128** | **$(53,976)** | **$(73,549)** | **$37,764** | **$(92,648)** | Segment Total Assets (As of June 30, 2025) | (in thousands) | Ben Liquidity | Ben Custody | Customer ExAlt Trusts | Corporate & Other | Consolidating Eliminations | Total Assets | | :------------------------------ | :------------ | :---------- | :-------------------- | :---------------- | :------------------------- | :----------- | | Loans to Customer ExAlt Trusts, net | $230,669 | $— | $— | $— | $(230,669) | $— | | Investments, at fair value | — | — | 263,769 | — | — | 263,769 | | Other assets | 2,651 | 21,241 | 16,063 | 50,582 | (32,814) | 57,723 | | Goodwill and intangible assets, net | — | 7,469 | — | 5,545 | — | 13,014 | | **Total Assets** | **$233,320** | **$28,710** | **$279,832** | **$56,127** | **$(263,483)** | **$334,506** | [16. Risks and Uncertainties](index=54&type=section&id=16.%20Risks%20and%20Uncertainties) Beneficient's investments, primarily alternative assets held by Customer ExAlt Trusts, are exposed to market, credit, currency, and interest rate risks, with the portfolio concentrated in Food and Staples Retailing (**27.6%**) and North America (**47.7%**) as of June 30, 2025, and further impacted by geopolitical conflicts and macroeconomic conditions - Investments held by Customer ExAlt Trusts are exposed to market, credit, currency, and interest rate risks, affecting fair value, monetization, and income recognition[288](index=288&type=chunk) Alternative Asset Portfolio by Industry Sector (June 30, 2025 vs. March 31, 2025) | Industry Sector | June 30, 2025 Value (in thousands) | June 30, 2025 Percent of Total | March 31, 2025 Value (in thousands) | March 31, 2025 Percent of Total | | :------------------------------------ | :--------------------------------- | :----------------------------- | :-------------------------------- | :------------------------------ | | Food and staples retailing | $63,997 | 27.6% | $63,846 | 24.6% | | Software and services | 25,771 | 11.1% | 41,460 | 16.0% | | Diversified financials | 21,889 | 9.5% | 22,273 | 8.6% | | Utilities | 19,719 | 8.5% | 15,432 | 6.0% | | Semiconductors and semiconductor equipment | 15,216 | 6.6% | 15,426 | 6.0% | | Health care equipment and services | 12,145 | 5.2% | 13,464 | 5.2% | | Capital goods | 5,723 | 2.5% | 20,532 | 7.9% | | Other | 67,126 | 29.0% | 66,680 | 25.7% | | **Total** | **$231,586** | **100.0%** | **$259,113** | **100.0%** | Alternative Asset Portfolio by Geography (June 30, 2025 vs. March 31, 2025) | Geography | June 30, 2025 Value (in thousands) | June 30, 2025 Percent of Total | March 31, 2025 Value (in thousands) | March 31, 2025 Percent of Total | | :------------ | :--------------------------------- | :----------------------------- | :-------------------------------- | :------------------------------ | | North America | $110,453 | 47.7% | $135,066 | 52.1% | | South America | 64,657 | 27.9% | 64,969 | 25.1% | | Asia | 39,638 | 17.1% | 41,948 | 16.2% | | Europe | 16,710 | 7.2% | 17,018 | 6.6% | | Africa | 128 | 0.1% | 112 | — | | **Total** | **$231,586** | **100.0%** | **$259,113** | **100.0%** | - Ongoing geopolitical conflicts (Russia-Ukraine, Israel-Hamas) and macroeconomic conditions (inflation, volatile interest rates) could negatively impact the economy, business activity, and the performance of Customer ExAlt Trusts' investments, affecting revenue and net income[292](index=292&type=chunk)[293](index=293&type=chunk)[294](index=294&type=chunk)[295](index=295&type=chunk)[296](index=296&type=chunk) [17. Commitments and Contingencies](index=55&type=section&id=17.%20Commitments%20and%20Contingencies) Beneficient has unfunded capital commitments of **$39.2 million** as of June 30, 2025, for alternative asset funds, and is involved in several legal proceedings, including the Paul Capital Advisors lawsuit (up to **$350 million** exposure), a **$62.8 million** arbitration award loss contingency, and GWG Holdings-related litigations with a **$34.5 million** settlement expected to be covered by insurance - Unfunded capital commitments for Customer ExAlt Trusts totaled **$39.2 million** as of **June 30, 2025**, with Ben obligated to lend funds if trusts cannot meet these commitments[299](index=299&type=chunk) - The Paul Capital Advisors lawsuit alleges breaches of contract and fraud, with a maximum potential exposure of up to **$350 million** plus costs and expenses[302](index=302&type=chunk)[305](index=305&type=chunk) - The Texas Fifth Court of Appeals confirmed an arbitration award, leading to a **$62.8 million** loss contingency (including interest and fees) recorded for the three months ended **June 30, 2025**[308](index=308&type=chunk)[309](index=309&type=chunk) - A settlement agreement for GWG Holdings-related litigation was approved by the Bankruptcy Court, with a **$34.5 million** estimated liability and corresponding insurance recovery recorded, expected to be fully funded by insurance proceeds[314](index=314&type=chunk)[315](index=315&type=chunk)[319](index=319&type=chunk)[322](index=322&type=chunk) - The SEC's investigation related to the company concluded on **July 1, 2024**, with no enforcement actions recommended[326](index=326&type=chunk) [18. Supplemental Cash Flow Information](index=61&type=section&id=18.%20Supplemental%20Cash%20Flow%20Information) For Q2 2025, cash paid for taxes was de minimis, and cash paid for interest was **$0.6 million**, with noncash investing and financing activities including **$11.5 million** in Series B preferred stock issuance and a **$4.6 million** accrual for BCH Preferred A-0 guaranteed payment Cash Paid for Taxes and Interest (Three Months Ended June 30, 2025 vs. 2024) | (Dollars in thousands) | 2025 | 2024 | | :--------------------- | :--- | :--- | | Cash paid for taxes | de minimis | de minimis | | Cash paid for interest | $600 | $1,000 | - Noncash investing and financing activities for **Q2 2025** included **$11.5 million** issuance of Series B preferred stock and **$0.3 million** issuance of noncontrolling interest in connection with recent financings, and a **$4.6 million** accrual for BCH Preferred A-0 guaranteed payment[338](index=338&type=chunk) [19. Subsequent Events](index=61&type=section&id=19.%20Subsequent%20Events) Subsequent events include asset sales by Customer ExAlt Trusts totaling approximately **$14.0 million** through October 7, 2025, leadership changes with Thomas O. Hicks elected Chairman and James G. Silk named Interim CEO, and a limited conversion of BCH Preferred A-1 on October 15, 2025, resulting in the issuance of over **101 million** shares of Class A common stock - Asset sales by Customer ExAlt Trusts through **October 7, 2025**, generated approximately **$14.0 million** in gross proceeds, used for beneficiary distributions and loan repayments, including **$5.0 million** to HH-BDH LLC[336](index=336&type=chunk)[337](index=337&type=chunk)[339](index=339&type=chunk) - Thomas O. Hicks was elected Chairman of the Board on **June 30, 2025**, and James G. Silk was named Interim CEO on **July 20, 2025**, following Brad K. Heppner's resignation on **June 19, 2025**[340](index=340&type=chunk) - On **October 15, 2025**, a limited conversion of **$52.6 million** of BCH Preferred A-1 resulted in the issuance of **101,294,288 shares** of Class A common stock[341](index=341&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=63&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Beneficient's financial condition and results for Q2 2025, highlighting a consolidated net loss of **$(92.6) million** due to decreased revenues and a **$62.8 million** arbitration award accrual, with significant liquidity concerns raising substantial doubt about its going concern ability - Beneficient is a technology-enabled financial services company providing liquidity solutions and trust services for alternative assets, primarily through Ben Liquidity and Ben Custody[345](index=345&type=chunk)[346](index=346&type=chunk)[348](index=348&type=chunk) Consolidated Revenues (Three Months Ended June 30, 2025 vs. 2024) | (in thousands) | 2025 | 2024 | | :---------------------------------- | :------------ | :------------ | | Investment income (loss), net | $(12,776) | $11,028 | | Gain (loss) on financial instruments, net | (45) | (1,183) | | Interest and dividend income | 10 | 12 | | Trust services and administration revenues | 188 | 189 | | **Total revenues** | **$(12,623)** | **$10,046** | Consolidated Expenses (Three Months Ended June 30, 2025 vs. 2024) | (in thousands) | 2025 | 2024 | | :------------------------------------------------ | :------------ | :------------ | | Employee compensation and benefits | $3,331 | $3,850 | | Interest expense | 3,415 | 4,288 | | Professional services | 7,957 | 5,544 | | Provision for credit losses | — | 524 | | Loss on impairment of goodwill | — | 3,394 | | Accrual (release) of loss contingency related to arbitration award | 62,831 | (54,973) | | Other expenses | 2,491 | 3,081 | | **Total expenses** | **$80,025** | **$(34,292)** | - The company's liquidity and capital resources are severely constrained, with substantial doubt about its ability to continue as a going concern due to recurring net losses, negative cash flows, events of default on related party debts, and a confirmed **$62.8 million** arbitration award[495](index=495&type=chunk)[501](index=501&type=chunk)[502](index=502&type=chunk)[509](index=509&type=chunk) [Overview](index=63&type=section&id=Overview) Beneficient is a technology-enabled financial services company providing liquidity solutions and trust services for alternative assets through Ben Liquidity and Ben Custody via its AltAccess platform, with Customer ExAlt Trusts consolidated but their income/loss allocated to noncontrolling interests - Beneficient provides liquidity solutions and trust products/services to the alternative assets industry through its online platform, Ben AltAccess, targeting MHNW individuals, STMI investors, FAMOs, and GPs[345](index=345&type=chunk) - Ben Liquidity finances liquidity transactions via ExAlt Loans to Customer ExAlt Trusts, collateralized by alternative assets, while Ben Custody provides trustee, custody, and administration services[346](index=346&type=chunk)[348](index=348&type=chunk) - The company plans to expand into Ben Insurance Services and Ben Markets, with all products and services designed to be delivered digitally through the AltAccess platform[350](index=350&type=chunk)[351](index=351&type=chunk) - Customer ExAlt Trusts are consolidated VIEs, but their investment income/loss is allocated to noncontrolling interests, while interest and fee income earned by Ben Liquidity and Ben Custody from these trusts directly impact income allocated to Ben's and BCH's equity holders[353](index=353&type=chunk)[359](index=359&type=chunk) [How We Generate Revenue](index=66&type=section&id=How%20We%20Generate%20Revenue) Consolidated revenue primarily stems from changes in fair value of Customer ExAlt Trusts' investments, while Ben Liquidity earns interest income on ExAlt Loans and Ben Custody earns fee income, with recent asset sales generating significant gross proceeds - Consolidated revenue is primarily from changes in fair value of investments held by Customer ExAlt Trusts[365](index=365&type=chunk) - Ben Liquidity earns interest income on ExAlt Loans, and Ben Custody earns fee income (upfront and recurring) for trust services, with these revenues, though eliminated in consolidation, directly impacting income allocated to equity holders[368](index=368&type=chunk) Ben Liquidity and Ben Custody Revenue (Three Months Ended June 30, 2025 vs. 2024) | Revenue Source | 2025 (in thousands) | 2024 (in thousands) | | :------------------------------------------- | :------------------ | :------------------ | | Ben Liquidity interest income | $8,800 | $10,800 | | Ben Custody trust services & administration | $4,200 | $5,400 | - Recent asset sales initiatives generated approximately **$25.1 million** in gross proceeds from **June 6, 2025**, and **July 1, 2025**, and an additional **$11.6 million** on **August 8, 2025**, with further sales of **$1.4 million** in **October 2025**[366](index=366&type=chunk)[367](index=367&type=chunk) [Basis of Presentation](index=67&type=section&id=Basis%20of%20Presentation) Beneficient's consolidated financial statements include subsidiaries and Customer ExAlt Trusts (VIEs), with intercompany eliminations impacting income allocation to equity holders, and primary consolidated assets and revenues allocated to noncontrolling interests - Consolidated financial statements include Ben, its subsidiaries, and Customer ExAlt Trusts (VIEs), with intercompany transactions eliminated but impacting income allocation to equity holders[373](index=373&type=chunk)[375](index=375&type=chunk) - Primary consolidated assets are investments held by Customer ExAlt Trusts, and primary revenues are investment income/loss and financial instrument gains/losses, which are allocated to noncontrolling interests[374](index=374&type=chunk) - Noncontrolling interests represent third-party ownership in BCH and Customer ExAlt Trusts, adjusted for their proportionate share of earnings/losses and distributions[378](index=378&type=chunk) [Recent Developments](index=68&type=section&id=Recent%20Developments) Recent developments include leadership changes with Thomas O. Hicks as Chairman and James G. Silk as Interim CEO following Brad K. Heppner's resignation amidst allegations, an Asset Sales Initiative generating **$38.1 million** in proceeds, recent financings involving Series B preferred stock, ongoing Nasdaq non-compliance issues, a confirmed **$62.8 million** arbitration award, and a proposed transaction to revise BCH liquidation priority unlikely to proceed as planned - Thomas O. Hicks was elected Chairman on **June 30, 2025**, and James G. Silk became Interim CEO on **July 20, 2025**, following Brad K. Heppner's resignation due to alleged document fabrication related to HCLP[379](index=379&type=chunk)[380](index=380&type=chunk) - The Asset Sales Initiative generated approximately **$38.1 million** in gross proceeds from alternative asset sales through **October 2025** to address cash flow constraints and satisfy obligations[381](index=381&type=chunk)[382](index=382&type=chunk)[383](index=383&type=chunk)[384](index=384&type=chunk)[385](index=385&type=chunk) - Beneficient issued Series B-6, B-7, and B-8 Resettable Convertible Preferred Stock in exchange for limited partner interests in investment funds, totaling approximately **$11.7 million** in NAV[386](index=386&type=chunk)[387](index=387&type=chunk)[388](index=388&type=chunk) - The company faces Nasdaq non-compliance for bid price, periodic reporting, and stockholders' equity, with an extension granted for compliance, and a reverse stock split is anticipated to address the bid price requirement[392](index=392&type=chunk)[393](index=393&type=chunk)[394](index=394&type=chunk)[396](index=396&type=chunk)[398](index=398&type=chunk) - An arbitration award of **$62.8 million** (including interest and fees) was confirmed against the company on **October 10, 2025**, reversing a prior vacating order[401](index=401&type=chunk)[402](index=402&type=chunk) - A proposed transaction to revise BCH liquidation priority is not expected to be consummated on initial terms due to Mr. Heppner's resignation[406](index=406&type=chunk) [Key Factors Affecting Our Business](index=72&type=section&id=Key%20Factors%20Affecting%20Our%20Business) Beneficient's business is affected by its ability to execute new strategies, attract customers, deploy capital into attractive collateral, manage Class A common stock price volatility, maintain data and regulatory advantages, and navigate global macroeconomic conditions and capital access - Future performance depends on the ability to execute new strategies, attract customers, and successfully deploy financing capital into attractive alternative asset investments[408](index=408&type=chunk)[409](index=409&type=chunk) - Volatility in Class A common stock price impacts the ability to engage customers and accept stock as consideration, and can trigger goodwill impairment assessments[409](index=409&type=chunk) - Maintaining data and regulatory advantages, competitive positioning, and navigating unpredictable global macroeconomic conditions (e.g., geopolitical conflicts, inflation, interest rates) are crucial[409](index=409&type=chunk)[410](index=410&type=chunk) - The ability to access capital at attractive rates is a key factor, as adverse market conditions could limit financing availability and increase costs[410](index=410&type=chunk) [Current Events](index=74&type=section&id=Current%20Events) Ongoing geopolitical conflicts (Israel-Hamas, Russia-Ukraine) and global economic conditions (inflation, volatile interest rates) pose significant risks to Beneficient, potentially impacting Customer ExAlt Trusts' investments, liquidity, earnings, and capital raising ability, though the direct impact remains uncertain - Ongoing geopolitical conflicts (Israel-Hamas, Russia-Ukraine) and macroeconomic conditions (inflation, volatile interest rates) could negatively impact the global economy and the performance of Customer ExAlt Trusts' investments[411](index=411&type=chunk)[412](index=412&type=chunk) - These events may lead to reduced liquidity, earnings, and cash flow, impairment charges, challenges in raising capital, and reduced opportunities for future liquidity solution transactions[412](index=412&type=chunk)[414](index=414&type=chunk) - Management is evaluating the impact but concludes that while a negative effect is reasonably possible, the specific impact is not readily determinable as of the financial statements' date[415](index=415&type=chunk) [Factors Affecting the Comparability of Our Financial Condition and Results of Operations](index=75&type=section&id=Factors%20Affecting%20the%20Comparability%20of%20Our%20Financial%20Condition%20and%20Results%20of%20Operations) Comparability of Beneficient's financial results is affected by GWG Holdings' bankruptcy, vesting of performance-based equity awards, goodwill impairment charges (e.g., **$3.4 million** in Q1 fiscal 2025), and the accrual of a **$62.8 million** arbitration award loss contingency in Q2 2025 versus a **$55.0 million** release in Q2 2024 - GWG Holdings' bankruptcy resulted in conversion of securities to interests in the GWG Wind Down Trust, accounted for at fair value, leading to nominal net losses in **Q2 2025**[416](index=416&type=chunk) - Vesting of performance-based equity awards, particularly after the **June 2023** public listing, impacted compensation expense, with **$0.1 million** recognized in **Q2 2025** versus **$0.5 million** in **Q2 2024**[416](index=416&type=chunk) - A non-cash goodwill impairment charge of **$3.4 million** was recorded in **Q1 fiscal 2025** (Q2 2024 calendar) due to a significant decline in Class A common stock price, with cumulative impairment through **June 30, 2025**, totaling **$2.4 billion**[416](index=416&type=chunk) - A **$62.8 million** loss contingency related to an arbitration award was accrued in **Q2 2025**, contrasting with a **$55.0 million** release in **Q2 2024**, significantly affecting comparability[416](index=416&type=chunk) [Key Performance Indicators](index=76&type=section&id=Key%20Performance%20Indicators) Beneficient uses GAAP and non-GAAP measures, including adjusted revenue and adjusted operating income (loss), to assess performance, monitoring operating metrics like loan payments received for Ben Liquidity and fee payments for Ben Custody, alongside financial condition indicators such as loans to Customer ExAlt Trusts, allowance for credit losses, and investments at fair value - Key performance indicators include non-GAAP adjusted revenue and adjusted operating income (loss), which exclude mark-to-market adjustments on GWG Wind Down Trust interests, credit losses, non-cash asset impairment, share-based compensation, and specific legal/professional costs[417](index=417&type=chunk)[419](index=419&type=chunk)[420](index=420&type=chunk) Key Operating Metrics (Three Months Ended June 30, 2025 vs. 2024) | (in thousands) | 2025 | 2024 | | :------------------------------ | :------------ | :------------ | | **Ben Liquidity** | | | | Loan payments received | $24,609 | $4,246 | | Operating income (loss) | (6,015) | (514) | | Adjusted operating income (loss) | (6,015) | (509) | | **Ben Custody** | | | | Fee payments received | $1,350 | $1,516 | | Operating income (loss) | 3,128 | 1,287 | | Adjusted operating income (loss) | 3,128 | 4,416 | | **Consolidated** | | | | Revenue | $(12,623) | $10,046 | | Adjusted revenue | (12,622) | 10,411 | | Operating income (loss) | (92,648) | 44,338 | | Adjusted operating income (loss) | (25,438) | (4,725) | Key Financial Condition Metrics (June 30, 2025 vs. March 31, 2025) | (dollars in thousands) | June 30, 2025 | March 31, 2025 | | :-------------------------------------- | :------------ | :------------- | | **Ben Liquidity** | | |\ | Loans to Customer ExAlt Trusts, net | $230,669 | $244,070 | | Allowance to total loans | 60.46% | 58.39% | | Nonperforming loans to total loans | 53.74% | 50.53% | | **Ben Custody** | | | | Fees receivable | $18,761 | $16,890 | | Deferred revenue | 16,858 | 17,762 | | **Customer ExAlt Trusts** | | | | Investments, at fair value | $263,769 | $291,371 | | Distributions to Original Loan Balance | 0.77 x | 0.75 x | | Total Value to Original Loan Balance | 1.03 x | 1.04 x | [Principal Revenue and Expense Items](index=77&type=section&id=Principal%20Revenue%20and%20Expense%20Items) Beneficient's consolidated revenues primarily derive from investment income (loss), net, and financial instrument gains/losses, while key expenses include interest expense, employee compensation, professional services, provision for credit losses, and goodwill impairment, with intersegment revenues impacting income allocation to equity holders - Consolidated revenues are primarily from investment income (loss), net (changes in NAV of alternative assets), and gain (loss) on financial instruments, net[427](index=427&type=chunk)[429](index=429&type=chunk) - Principal consolidated expenses include interest expense (on senior debt and HH-BDH loans), employee compensation and benefits (including share-based compensation), professional services, provision for credit losses, and goodwill impairment[427](index=427&type=chunk)[429](index=429&type=chunk) - Intersegment revenues, such as interest income on ExAlt Loans and trust services/administration fees from Customer ExAlt Trusts to Ben Liquidity and Ben Custody, are eliminated in consolidation but impact income allocated to equity holders[428](index=428&type=chunk) [Results of Operations — Three Months Ended June 30, 2025 and 2024 (Unaudited)](index=79&type=section&id=RESULTS%20OF%20OPERATIONS%20%E2%80%94%20THREE%20MONTHS%20ENDED%20JUNE%2030%2C%202025%20AND%202024%20(UNAUDITED)) Beneficient reported a consolidated net loss of **$(92.6) million** for Q2 2025, a significant decline from **$44.3 million** net income in 2024, primarily due to a **$23.8 million** decrease in investment income and a **$62.8 million** arbitration award accrual, with varied segment performance Consolidated Results of Operations (Three Months Ended June 30, 2025 vs. 2024) | (in thousands) | 2025 | 2024 | | :------------------------------------------------ | :------------ | :------------ | | Total revenues | $(12,623) | $10,046 | | Total expenses | 80,025 | (34,292) | | Operating income (loss) | $(92,648) | $44,338 | | Income tax expense | — | 28 | | **Net income (loss)** | **$(92,648)** | **$44,310** | [CONSOLIDATED](index=81&type=section&id=CONSOLIDATED) Consolidated revenues decreased by **$23.8 million** to **$(12.6) million** for Q2 2025, primarily due to downward NAV adjustments, while total operating expenses increased significantly to **$80.0 million** from **$(34.3) million** due to a **$62.8 million** arbitration award accrual versus a **$55.0 million** release in the prior year Consolidated Revenues (Three Months Ended June 30, 2025 vs. 2024) | (in thousands) | 2025 | 2024 | | :---------------------------------- | :------------ | :------------ | | Investment income (loss), net | $(12,776) | $11,028 | | Gain (loss) on financial instruments, net | (45) | (1,183) | | Interest and dividend income | 10 | 12 | | Trust services and administration revenues | 188 | 189 | | **Total revenues** | **$(12,623)** | **$10,046** | - Investment income (loss), net decreased by **$23.8 million**, driven by **$14.6 million** in downward NAV adjustments and **$0.8 million** in downward quoted market price adjustments, partially offset by foreign currency impacts[433](index=433&type=chunk) Consolidated Expenses (Three Months Ended June 30, 2025 vs. 2024) | (in thousands) | 2025 | 2024 | | :------------------------------------------------ | :------------ | :------------ | | Employee compensation and benefits | $3,331 | $3,850 | | Interest expense | 3,415 | 4,288 | | Professional services | 7,957 | 5,544 | | Provision for credit losses | — | 524 | | Loss on impairment of goodwill | — | 3,394 | | Accrual (release) of loss contingency related to arbitration award | 62,831 | (54,973) | | Other expenses | 2,491 | 3,081 | | **Total expenses** | **$80,025** | **$(34,292)** | - A **$62.8 million** accrual for an arbitration award was recognized in **Q2 2025**, contrasting with a **$55.0 million** release in **Q2 2024**, significantly impacting total expenses[441](index=441&type=chunk) [BEN LIQUIDITY](index=84&type=section&id=BEN%20LIQUIDITY) Ben Liquidity's operating loss increased to **$(6.0) million** for Q2 2025, from **$(0.5) million** in the prior year, primarily due to a **$2.0 million** decrease in interest income from nonaccrual loans and a **$3.4 million** increase in provision for credit losses Ben Liquidity Results of Operations (Three Months Ended June 30, 2025 vs. 2024) | (in thousands) | 2025 | 2024 | | :---------------------------------- | :------------ | :------------ | | Interest income | $8,837 | $10,849 | | Employee compensation and benefits | 384 | 430 | | Interest expense | 3,346 | 3,081 | | Professional services | 614 | 474 | | Provision for credit losses | 10,269 | 6,927 | | Other expenses | 239 | 451 | | **Total expenses** | **14,852** | **11,363** | | **Operating income (loss)** | **$(6,015)** | **$(514)** | - Interest income decreased by **$2.0 million** due to a higher percentage of loans being placed on nonaccrual status[444](index=444&type=chunk) - Provision for credit losses increased to **$10.3 million** from **$6.9 million**, primarily due to interest capitalization outpacing loan paydowns[446](index=446&type=chunk) [BEN CUSTODY](index=84&type=section&id=BEN%20CUSTODY) Ben Custody's operating income increased to **$3.1 million** for Q2 2025, from **$1.3 million** in the prior year, despite a **$1.2 million** decrease in revenues, primarily due to the absence of a **$3.1 million** goodwill impairment charge recognized in the prior year Ben Custody Results of Operations (Three Months Ended June 30, 2025 vs. 2024) | (in thousands) | 2025 | 2024 | | :---------------------------------------- | :---------- | :---------- | | Trust services and administration revenues | $4,183 | $5,382 | | Employee compensation and benefits | 647 | 356 | | Professional services | 209 | 396 | | Loss on impairment of goodwill | — | 3,129 | | Other expenses | 199 | 214 | | **Total expenses** | **1,055** | **4,095** | | **Operating income (loss)** | **$3,128** | **$1,287** | - Trust services and administration revenues decreased by **$1.2 million** due to a decline in the NAV of alternative assets held by Customer ExAlt Trusts[448](index=448&type=chunk) - Operating income increased primarily because no goodwill impairment test was required in **Q2 2025**, compared to a **$3.1 million** impairment charge in **Q2 2024**[449](index=449&type=chunk) [CUSTOMER EXALT TRUSTS](index=85&type=section&id=CUSTOMER%20EXALT%20TRUSTS) The Customer ExAlt Trusts segment reported an operating loss of **$(54.0) million** for Q2 2025, significantly wider than the **$(29.6) million** loss in the prior year, driven by a **$23.8 million** decrease in investment income and a **$2.3 million** increase in interest expense Customer ExAlt Trusts Results of Operations (Three Months Ended June 30, 2025 vs. 2024) | (in thousands) | 2025 | 2024 | | :---------------------------------- | :------------ | :------------ | | Investment income (loss), net | $(12,776) | $11,028 | | Gain (loss) on financial instruments, net | (75) | (1,175) | | **Total revenues** | **(12,851)** | **9,853** | | Interest expense | 37,145 | 34,799 | | Professional services | 406 | 622

Group 1: Beneficient (BENF) - Beneficient experienced a significant stock price increase of 123.50%, reaching a day high of $1.05, with 487,058,365 shares traded [1][5] - The company has reported reduced operating costs and new product launches, positioning it for growth in adjacent markets [1] Group 2: Iron Horse Acquisitions Corp. Warrant (IROHW) - Iron Horse Acquisitions Corp. Warrant saw a 71.43% increase in stock price, reaching $0.12, with 292,633 shares traded, indicating growing interest in the company's business prospects [2] Group 3: Sunrise New Energy Co., Ltd. (EPOW) - Sunrise New Energy Co., Ltd. experienced a 57.95% increase in stock price, reaching $1.42 with a day high of $1.59, trading 48,846,415 shares, and is involved in graphite anode material for electric vehicles [2] Group 4: Innovation Beverage Group Limited (IBG) - Innovation Beverage Group Limited saw a 50.79% increase in stock price, reaching $4.74 with 58,516,680 shares traded, and is exploring a potential merger with BlockFuel Energy Inc. to expand its portfolio and market reach [3] Group 5: Market Overview - The recent price movements across various sectors indicate a dynamic market environment, with companies experiencing significant changes that attract investor and analyst attention [4][5]

Market Overview - U.S. stocks traded lower, with the Dow Jones falling more than 100 points, down 0.26% to 46,195.25, NASDAQ down 0.21% to 22,544.07, and S&P 500 down 0.17% to 6,649.65 [1] - Health care shares increased by 0.8%, while energy stocks decreased by 1.7% [1] Company Performance - Paychex (NASDAQ: PAYX) stock fell around 4% after reporting fiscal Q1 2026 results, with sales growth of 17% year-over-year to $1.540 billion, exceeding analyst estimates of $1.538 billion [2] - Adjusted EPS of $1.22 beat the consensus estimate of $1.21, and the company raised its fiscal 2026 adjusted EPS guidance to $5.43-$5.53, compared to the analyst consensus of $5.45 [2] Commodity Market - Oil prices fell by 1.8% to $62.33, while gold prices rose by 0.5% to $3,875.40 [4] - Silver decreased by 0.4% to $46.825, and copper fell by 0.5% to $4.8680 [4] International Markets - European shares were mostly higher, with the eurozone's STOXX 600 gaining 0.2% and Spain's IBEX 35 Index rising 0.8% [5] - Asian markets closed mixed, with Japan's Nikkei 225 down 0.25% and Hong Kong's Hang Seng up 0.87% [6] Economic Indicators - The Dallas Fed's general business activity index fell 12 points to -5.6 in September [7] - U.S. job openings rose by 19,000 to 7.227 million in August [10] - The Chicago Business Barometer declined to 40.6 in September from 41.5 in the previous month, below market expectations of 43 [10] - The S&P CoreLogic Case-Shiller Home Price Index increased by 1.8% year-over-year in July, while the FHFA house price index declined by 0.1% from the previous month [10] Stock Movements - Zhengye Biotechnology Holding Limited (NASDAQ: ZYBT) shares surged 70% to $3.72, while Beneficient (NASDAQ: BENF) shares rose 62% to $0.5898 after reporting fourth-quarter results [8] - Sunrise New Energy Co., Ltd. (NASDAQ: EPOW) shares increased by 52% to $1.37 following a patent grant [8] - Erayak Power Solution Group Inc. (NASDAQ: RAYA) shares dropped 45% to $4.6888, and NovaBay Pharmaceuticals, Inc. (NYSE: NBY) fell 13% to $1.35 [8]

Business Operations - Ben Liquidity's primary business unit focuses on providing liquidity products and services, with a significant emphasis on alternative asset liquidity and fiduciary financing[53]. - The AltAccess platform automates approximately 77% of transaction processes, aiming to enhance internal controls compliance and accelerate closing timelines[60]. - The ExAlt Plan facilitates liquidity and primary capital transactions, allowing customers to receive financing in as little as 15 days, or within 2-3 days for qualifying assets[62]. - Ben Liquidity generates revenue through monthly interest income and transaction fees, while Ben Custody earns fees based on a percentage of net asset value and unfunded capital commitments[78]. - The ExAlt Plan offers three core products: The Ben ExchangeTrust™, The Ben InterchangeTrust™, and The Ben LiquidTrust, designed to provide flexible financing solutions[67]. - Ben Custody provides full-service custody and trust administration services, addressing the regulatory burdens of holding alternative assets[54]. - The AltAccess platform is the first online portal specifically designed for customers to access a range of liquidity and capital solutions[58]. - The company aims to streamline operations by having an in-house broker-dealer, which is expected to reduce transaction costs and enhance service delivery[55]. - The automation and digital technologies employed in the AltAccess platform are intended to support increased transaction growth and improve efficiency[61]. Financial Performance - As of March 31, 2025, Ben Liquidity's loan portfolio has an aggregate original loan balance of approximately $906.8 million, backed by alternative assets with a net asset value of approximately $1.2 billion[90]. - Ben Liquidity has earned stated interest income of approximately $427.7 million from ExAlt Loans issued in connection with liquidity financings[90]. - The total allowance for credit losses on ExAlt Loans was $342.5 million, with a total gross loan balance of $586.5 million as of March 31, 2025[94]. - ExAlt Loans have a maturity date of 12 years, with variable interest rates established off a base rate of 10% or 14% depending on the loan origination date[101]. - The primary source of repayment for ExAlt Loans is the collateral, which includes cash flows from alternative assets, with expected annual revenue of approximately 7% to 14% of each loan balance[102]. - As of March 31, 2025, the ExAlt Loan Collateral Portfolio consists of interests in professionally managed funds and other investments valued at $291.4 million[90]. - Ben Liquidity successfully sold its first Participation ExAlt Loan for $72.5 million in the first calendar quarter of 2022[103]. Market Analysis - The global alternative investment market is estimated to consist of more than $19 trillion in assets under management, with approximately $8.3 trillion held by U.S.-based investors[112]. - The current focus markets of MHNW investors comprise approximately $1.7 trillion, while U.S.-based STMI investors account for approximately $1.8 trillion[112]. - The transaction volume in the U.S. secondary liquidity market was approximately $153 billion in 2024, growing from approximately $49 billion in 2013, representing a compound annual growth rate of 12.0%[112]. - The estimated annual market demand for liquidity by MHNW individual investors and STMI could exceed $60 billion, representing 1.5% to 2.2% of their aggregate outstanding alternative investment holdings[114]. - The total market for liquidity in the alternative asset class is estimated at $200 billion, with $64 billion of current estimated liquidity demand going underserved[115]. Regulatory Environment - The company plans to resubmit its application for an insurance charter to provide insurance products to affiliates, which will generate premium income upon approval[56]. - The company received a charter from the State of Kansas under the TEFFI Act, allowing it to operate as a regulated trust company, enhancing its competitive advantage[127]. - The TEFFI Act positions Kansas as a preferred low-tax jurisdiction for specialized trust companies offering alternative asset financial products and services[128]. - The company is the first to provide liquidity to alternative asset investors through a regulated trust company, using its own balance sheet to facilitate liquidity solutions[129]. - The company is subject to extensive regulation, including oversight from the SEC, FINRA, and the OSBC, which could impact its operations and financial condition[147][148]. - The cumulative effect of current laws and regulations could significantly increase operational costs and negatively impact profitability[153]. - Future legislation and regulatory reforms may significantly influence the company's operations and financial condition[154]. - The Kansas Legislature adopted the TEFFI Act in April 2021, allowing for the chartering of Kansas TEFFIs with fiduciary powers[155]. - The TEFFI Act mandates that the board of directors of a TEFFI must consist of 5 to 25 members, with at least one director being a Kansas resident[160]. Technology and Innovation - The company plans to leverage technological innovation to enhance underwriting, risk management, and compliance functions[134]. - The company estimates that its proprietary technology can provide customers with liquidity in as little as 30 days, and within two to three days for certain qualifying assets[118]. - The company completed the acquisition of MHT Securities, now known as AltAccess Securities Company, enhancing its broker-dealer capabilities[149]. - There are 8 pending non-provisional U.S. utility patent applications covering systems and processes related to the company's liquidity products and trust services[192]. Human Resources and Corporate Culture - The company employed approximately 55 employees as of September 22, 2025[195]. - The company offers a full complement of health and welfare benefits, including health, dental, vision, life insurance, and a 401(k) retirement plan[193]. - The company promotes equity ownership for employees through various incentive plans, including the 2023 Long Term Incentive Plan[193]. - The company focuses on building a workforce that is responsive to customer needs and innovative in creating new products and services[194]. - The company actively supports equal opportunity employment and provides an equitable and inclusive working environment[194]. Competitive Landscape - The company faces significant competition from other firms in the alternative assets industry, which may have greater resources and lower costs of funds[140]. - The expansion into complementary lines of business is a strategic focus, with plans to explore additional products critical to the alternative investment market[135]. Intellectual Property - As of September 22, 2025, the company owns 21 trademark registrations in the United States for its BEN house mark and related sub-brands[190]. - The company has three active trademark applications in the United States currently being prosecuted towards registration[190]. - The company holds three copyright registrations in the United States for its proprietary software platforms as of September 22, 2025[191].

Executive Summary & Highlights [Management Commentary & Outlook](index=1&type=section&id=1.1_ManagementCommentaryOutlook) Beneficient's Fiscal 2025 was transformative, streamlining operations, resolving legal issues, and transitioning leadership, now focusing on expanding liquidity programs and automation - **Fiscal 2025** was a turning point for Beneficient, marked by streamlined operations and execution of its business plan[3](index=3&type=chunk) - Following fiscal year-end, the company continued to resolve legal issues and completed a key executive transition[3](index=3&type=chunk) - Beneficient is positioned to help clients unlock value from their alternative assets through innovative solutions[3](index=3&type=chunk) - Future plans include expanding Preferred Liquidity Provider and Primary Commitment programs, and improving automation and technology-driven service enhancements[4](index=4&type=chunk) [Fourth Quarter Fiscal 2025 and Recent Highlights](index=1&type=section&id=1.2_Q4FY25RecentHighlights) Beneficient reported a decrease in investments' fair value and net loan portfolio, with operating expenses significantly declining in Q4 and FY25 due to reduced non-cash goodwill impairment and loss contingencies, alongside key legal settlements and new executive leadership appointments Investments and Loan Portfolio Overview | Metric | March 31, 2025 | March 31, 2024 | Change | | :-------------------------------- | :------------- | :------------- | :----- | | Investments (Fair Value) | $291.4 million | $329.1 million | -11.5% | | Net Loan Portfolio | $244.1 million | $256.2 million | -4.7% | - Completed three additional Primary Capital transactions with an initial value totaling **$11.8 million**, as part of the ExchangeTrust Product Plan[4](index=4&type=chunk) Operating Expenses (GAAP) | Period | FY25 | FY24 | Change | | :-------------------- | :----- | :----- | :----- | | Q4 Operating Expenses | $14.3 million | $151.9 million | -91% | | FY Operating Expenses | $16.2 million | $2.5 billion | -99% | Operating Expenses (Excluding Non-Cash Items) | Period | FY25 | FY24 | Change | | :-------------------- | :----- | :----- | :----- | | Q4 Operating Expenses | $14.3 million | $28.8 million | -50% | | FY Operating Expenses | $67.5 million | $140.6 million | -52% | - Received approval from the Bankruptcy Court for the settlement to resolve all claims related to previously disclosed lawsuits concerning GWG Holdings, Inc[4](index=4&type=chunk) - Completed the sale of certain investments held by Customer ExAlt Trusts for over **$36 million** in gross proceeds, used to pay down debt and provide working capital[4](index=4&type=chunk) - Appointed Thomas O. Hicks as Chairman of the Board and James G. Silk as interim Chief Executive Officer on July 21, 2025[4](index=4&type=chunk)[5](index=5&type=chunk) Loan Portfolio Overview [Business Strategy](index=2&type=section&id=2.1_BusinessStrategy) Beneficient's core business provides financing for alternative asset liquidity or early exits, resulting in a balance sheet primarily composed of loans collateralized by a diversified alternative asset portfolio, guided by patent-pending OptimumAlt technology - Ben's business plan focuses on providing financing for liquidity or early investment exits for alternative asset marketplace participants[6](index=6&type=chunk) - The balance sheet is organically developed and largely comprised of loans collateralized by a well-diversified alternative asset portfolio[6](index=6&type=chunk) - The ExAlt Loan origination strategy is built on the portfolio endowment model for fiduciary financings, utilizing patent-pending OptimumAlt technology[7](index=7&type=chunk) [Portfolio Diversification](index=2&type=section&id=2.2_PortfolioDiversification) As of March 31, 2025, Ben's loan portfolio is highly diversified across approximately 210 private market funds and 710 investments, spanning seven asset classes, over 11 industry sectors, and at least six countrywide exposures, with a net loan balance of $244.0 million - Loan portfolio is supported by a highly diversified alternative asset collateral portfolio, providing diversification across approximately **210 private market funds** and **710 investments**[8](index=8&type=chunk) - Diversification spans **seven asset classes**, over **11 industry sectors**, at least **six countrywide exposures**, and multiple vintages of investment dates[7](index=7&type=chunk) Loan Portfolio Balance (March 31, 2025) | Metric | Amount (in thousands) | | :------------------------------------ | :-------------------- | | Gross Loan Balance | $586,500 | | Allowance for Credit Losses | $342,500 | | Net Loan Balance | $244,000 | - The Company has been granted an extension to regain compliance with Nasdaq listing rules, subject to reporting and bid price requirements[12](index=12&type=chunk) - The Company is proactively investigating the validity of obligations under HCLP credit agreements to protect shareholder interests and strengthen its financial position[12](index=12&type=chunk) Business Segment Performance [Segment Performance Overview (Narrative)](index=3&type=section&id=3.1_SegmentPerformanceOverviewNarrative) In Q4 FY25, Ben Liquidity's interest income decreased due to nonaccrual loans, leading to an increased operating loss, while Ben Custody maintained stable revenues and improved operating income due to fewer credit losses, despite a decrease in NAV; for the full FY25, both segments saw significant operating loss improvements from reduced goodwill impairment and credit losses, despite revenue declines [Ben Liquidity Performance](index=3&type=section&id=3.1.1_BenLiquidityPerformance) Ben Liquidity experienced a Q4 FY25 interest income decline and increased operating loss due to nonaccrual loans, but its FY25 operating loss significantly improved due to lower non-cash goodwill impairment and credit losses Ben Liquidity Q4 FY25 Performance | Metric | Q4 FY25 (in thousands) | Q3 FY25 (in thousands) | Change % QoQ | | :-------------------- | :--------------------- | :--------------------- | :----------- | | Interest Income | $8,459 | $11,297 | -25.1% | | Operating Loss | $(12,340) | $(2,853) | NM | - Q4 FY25 interest income decline primarily due to a higher percentage of loans being placed on **nonaccrual status**[17](index=17&type=chunk) Ben Liquidity FY25 Performance | Metric | FY25 (in thousands) | FY24 (in thousands) | Change % YoY | | :-------------------- | :------------------ | :------------------ | :----------- | | Interest Income | $42,583 | $46,947 | -9.3% | | Operating Loss | $(12,802) | $(1,810,964) | +99.3% | | Adjusted Operating Loss | $(12,797) | $(41,177) | +68.9% | - FY25 operating loss improved significantly due to lower **non-cash goodwill impairment** (**$1.7 billion** in FY24) and credit losses[17](index=17&type=chunk) [Ben Custody Performance](index=3&type=section&id=3.1.2_BenCustodyPerformance) Ben Custody maintained stable Q4 FY25 revenues with improved operating income due to fewer credit losses, despite a decrease in NAV, and saw significant FY25 operating income improvement from reduced non-cash goodwill impairment Ben Custody Q4 FY25 Performance | Metric | Q4 FY25 (in thousands) | Q3 FY25 (in thousands) | Change % QoQ | | :-------------------- | :--------------------- | :--------------------- | :----------- | | Revenues | $5,396 | $5,410 | -0.3% | | Operating Income | $4,165 | $3,507 | +18.8% | | Adjusted Operating Income | $4,632 | $4,847 | -4.4% | Ben Custody NAV | Metric | March 31, 2025 (in millions) | March 31, 2024 (in millions) | Change | | :------------------------------------ | :--------------------------- | :--------------------------- | :----- | | NAV of Alternative Assets in Custody | $338.2 | $381.2 | -11.3% | - Decrease in NAV driven by **distributions** and **unrealized losses**, partially offset by **$1.4 million** of new originations[17](index=17&type=chunk) Ben Custody FY25 Performance | Metric | FY25 (in thousands) | FY24 (in thousands) | Change % YoY | | :-------------------- | :------------------ | :------------------ | :----------- | | Revenues | $21,574 | $24,534 | -12.1% | | Operating Income (Loss) | $13,288 | $(588,811) | NM | | Adjusted Operating Income | $18,522 | $19,764 | -6.3% | - FY25 operating income improvement primarily due to significantly lower **non-cash goodwill impairment** (**$3.4 million** in FY25 vs **$583.3 million** in FY24)[17](index=17&type=chunk) [Consolidated Financial Tables](index=4&type=section&id=3.2_ConsolidatedFinancialTables) Beneficient's consolidated financial tables for Q4 and YTD FY25 show a substantial improvement in GAAP revenues and operating loss, largely due to reduced non-cash goodwill impairment and loss contingencies, with the balance sheet indicating a decrease in total assets but a significant improvement in total equity deficit year-over-year [Consolidated Fiscal Fourth Quarter Results (Income Statement Summary)](index=4&type=section&id=3.2.1_ConsolidatedIncomeStatementSummary) Consolidated Fiscal Fourth Quarter Results (in thousands) | Metric | Fiscal 4Q25 | Fiscal 4Q24 | Change % vs. Prior Quarter | YTD Fiscal 2025 | YTD Fiscal 2024 | Change % vs. Prior YTD | | :------------------------------------ | :---------- | :---------- | :------------------------- | :-------------- | :-------------- | :--------------------- | | GAAP Revenues | $(30,969) | $(42,957) | NM | $(7,943) | $(98,696) | 92.0 % | | Adjusted Revenues | $(30,963) | $(39,717)

Core Insights - Beneficient has undergone a transformative year, significantly reducing operating costs, launching new products, and improving its financial position, positioning itself to capitalize on adjacent market growth opportunities [1][2]. Financial Performance - For the fourth quarter of fiscal 2025, Beneficient reported investments with a fair value of $291.4 million, down from $329.1 million at the end of the previous fiscal year [3]. - Operating expenses decreased by 91% to $14.3 million in Q4 2025 compared to $151.9 million in Q4 2024, which included a non-cash goodwill impairment of $68.1 million [3]. - For the fiscal year 2025, operating expenses were $16.2 million, a significant drop from $2.5 billion in fiscal 2024, which was impacted by a non-cash goodwill impairment of $2.4 billion [3]. - The company achieved an operating loss of $12.8 million for the year ended March 31, 2025, an improvement from an operating loss of $1.8 billion in the same period in 2024 [15]. Business Segments - Ben Liquidity recognized $8.5 million of interest income for Q4 2025, down 25.1% from the previous quarter, primarily due to a higher percentage of loans being placed on nonaccrual status [15]. - Ben Custody revenues were $21.6 million for the year ended March 31, 2025, a decrease of 12.1% compared to the prior year, mainly due to lower net asset values of alternative assets [14]. - The net asset value of alternative assets held in custody decreased to $338.2 million as of March 31, 2025, from $381.2 million a year earlier [15]. Strategic Developments - The company completed three additional Primary Capital transactions totaling an initial value of $11.8 million after March 31, 2025, as part of its ExchangeTrust Product Plan [3]. - Beneficient announced the approval of a settlement to resolve claims related to GWG Holdings, Inc., which is subject to final court approval [3]. - The company appointed Thomas O. Hicks as Chairman of the Board and James G. Silk as interim CEO on July 21, 2025 [3]. Market Positioning - Beneficient aims to democratize the global alternative asset investment market by providing solutions to mid-to-high net worth individuals and small-to-midsized institutions [39]. - The company’s proprietary online platform, AltAccess, facilitates exit opportunities and primary capital solutions for holders of alternative assets [1][39].

Core Viewpoint - Beneficient has received approval from the Nasdaq Hearings Panel to continue its listing on Nasdaq, contingent upon the company meeting certain compliance requirements, including filing delayed reports and maintaining a minimum bid price of $1.00 per share [1]. Group 1: Compliance and Reporting - The company is actively working with its auditor to complete and file the Delayed Reports, which include the Annual Report on Form 10-K for the fiscal year ended March 31, 2025, and the Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 [2]. - If the company fails to regain compliance with the bid price requirement, it plans to seek stockholder approval for a reverse stock split to meet the $1.00 bid price requirement for a minimum of 10 consecutive trading days [2]. Group 2: Company Overview - Beneficient aims to democratize the global alternative asset investment market by providing solutions to mid-to-high net worth individuals, small-to-midsized institutions, and General Partners seeking exit options and capital solutions [3]. - The company's proprietary online platform, AltAccess, allows customers to explore exit options and receive proposals securely [3]. Group 3: Regulatory Framework - Beneficient Fiduciary Financial, L.L.C., a subsidiary of the company, has received its charter under the State of Kansas' Technology-Enabled Fiduciary Financial Institution (TEFFI) Act and is subject to regulatory oversight [4].

Core Points - Beneficient (NASDAQ: BENF) has been notified by Nasdaq regarding potential delisting due to delays in filing its Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, which violates Nasdaq's periodic reporting requirements [1] - The company has previously faced issues with non-compliance related to the minimum bid price requirement and delays in filing its Annual Report on Form 10-K for the fiscal year ended March 31, 2025, which also put its securities at risk of delisting [2] - Beneficient has requested a hearing before the Nasdaq Hearings Panel to present its compliance plan and seek an extension for meeting the listing criteria [3] Company Overview - Beneficient aims to democratize the global alternative asset investment market by providing solutions for mid-to-high net worth individuals and small-to-midsized institutions to unlock value in their alternative assets [4] - The company's AltQuote tool offers customers various exit options quickly, while the AltAccess portal allows secure exploration of opportunities and proposals [4] - Beneficient's subsidiary, Beneficient Fiduciary Financial, L.L.C., operates under the Kansas Technology-Enabled Fiduciary Financial Institution Act and is regulated by the Office of the State Bank Commissioner [5]

Core Viewpoint - Beneficient has announced the separation of the roles of Chairman and CEO, appointing Thomas O. Hicks as Chairman and James G. Silk as interim CEO, aiming to enhance leadership and drive shareholder value [1][3]. Group 1: Leadership Changes - Thomas O. Hicks, a private equity pioneer, has a successful track record, having raised over $12 billion across six funds and completed more than $50 billion in leveraged acquisitions [2]. - James G. Silk, with over 20 years of experience in financial services, previously served as Executive Vice President and Chief Legal Officer at Beneficient, overseeing operations and legal groups [4][5]. - Hicks expressed eagerness to lead the company and emphasized the importance of appointing the right interim CEO, highlighting Silk's belief in the company's strategy and experience [3]. Group 2: Company Overview - Beneficient is a technology-enabled platform that provides exit opportunities and primary capital solutions for holders of alternative assets through its online platform, AltAccess [1][7]. - The company aims to democratize the global alternative asset investment market, targeting mid-to-high net worth individuals and small-to-midsized institutions [7]. - Beneficient's AltQuote® tool offers customers a range of potential exit options quickly, while the AltAccess® portal allows secure exploration of opportunities [7]. Group 3: Regulatory and Operational Aspects - Beneficient Fiduciary Financial, a subsidiary of Beneficient, operates under the Kansas Technology-Enabled Fiduciary Financial Institution Act and is subject to regulatory oversight [8].