Good day, and thank you for standing by. Welcome to the Beneficent Second Quarter Fiscal 2026 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Dan Callahan, Director of Communications. Please go ahead.

Good morning, everyone, and thank you for joining us on Beneficent's fiscal second quarter 2026 conference call and webcast. In addition to the call and webcast, we issued a results press release last Friday that was posted to the shareholders section of our website at shareholders.trustbend.com. Today's webcast, as the operator indicated, is being recorded and a replay will be available on the company's website. On today's call, management's prepared remarks may contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ from those discussed today. Actual results and future events could materially differ from those discussed in these forward-looking statements because of factors described in our earnings press release and the risk factors section of our Form 10-K and in subsequent filings we make with the Securities and Exchange Commission. Forward-looking statements represent management's current estimates and Beneficent assumes no obligation to update any forward-looking statements in the future. Today's call also contains certain non-GAAP financial measures. Please refer to our earnings press release, which is available on our website, for important disclosures regarding such measures, including reconciliation to the most comparable gap financial measures. At this time, I'm pleased to introduce James Silk, the interim CEO for Beneficent. He was appointed to that position by the board in July of this year. Mr. Silk previously served as executive vice president and chief legal officer for Beneficent from January 2020 until May 2024. During that time, he was integral to the development of the company's corporate structure, the completion of the company's business combination transaction and the navigation of the complex legal issues associated with running the company's business. Additionally, Mr. Silk oversaw the company's operations, underwriting risks, and legal groups. After James completes his remarks, Greg Azell, Chief Financial Officer, will provide some financial highlights. I'll now hand the call over to James. Thank you, everyone.

So, well, a lot has happened over the past six months. The profession has faced some meaningful challenges. The foundations of Beneficent's business and the market opportunity remaining strong. When I talked to the board about returning, this was back in July, it was clear they were united and committed to Ben, which is important to me. And since my return, management, myself, and others have been focused on stabilizing the company. Getting the company to a place we can execute on our mission to provide liquidity, primary capital, customers, and the alternative asset market. It's our core business. And I'm committed to that mission and has been energizing to lead the charge during this transition period. As it relates to recent developments, as we previously disclosed, in June, we separated from our former chairman and CEO, Brad Hefner. That occurred just before our annual report was to be filed. That separation occurred after the company identified credible evidence that Mr. Hefner had committed fraud against the company. Also, as previously disclosed, Mr. Hefner was recently indicted and now faces multiple criminal charges. The company is considering all available options related to Mr. Hefner's conduct, including counterclaims and litigation against Mr. Hefner. The company also intends to vigorously pursue claims regarding the validity of over $100 million of debt reportedly owed to an entity related to Mr. Hefner. Overall, While unpleasant, we believe this is an opportunity for the company to move past Mr. Hefner, both reputationally and substantively, and ultimately better position the company to execute going forward. Another important recent development concerns a previously disclosed agreement to settle all claims pending in the lawsuits related to GWG against the company, its subsidiaries, and each of their current and former directors and officers. That settlement has been approved by the GWG Barrington Court. The District Court for the Northern District of Texas has granted the motion for preliminary approval of that settlement, and a hearing on final approval of that settlement has been set for January of 2026. So important progress on that front. Importantly, the settlement is within insurance limits and requires no out-of-pocket payments by the company. I would also note that the claims against Mr. Hefner's entities are not included in that settlement. Company has also worked to regain compliance with NASDAQ listing rules. previously disclosed the company was not in compliance with the Nasdaq periodic reporting requirement with their filings being delayed primarily due to the timing of the developments surrounding mr. Hefner's education now as of the first quarter 10 Q filing a few weeks ago we're now back in line with our periodic reporting and in fact thanks to our incredibly dedicated accounting team we filed a 10 K and 210 Q's in just over six weeks so much credit to that team we've also gained compliance with the market value of listed securities requirements this too finally the company continues to take steps or gain compliance of Nasdaq bid price requirement more specifically we anticipate holding a special meeting on December 1st 2025 to seek shareholder approval of a reverse stock split of its common stock bottom line in terms of Nasdaq compliance is that we worked on a plan of compliance we presented that plan to the NASDAQ panel and we've been executing on that plan. Importantly, as part of that plan to regain compliance with NASDAQ, continued listing requirements, and what I would view as a strong show of confidence in the company's future, Tom Hicks, our board share, converted approximately 53 million of our preferred units in the company's subsidiary into the company's Class A common shares. In connection with that conversion, we agreed not to sell the shares until october 20 october 1st 2028 so three years we've also agreed to forego any potential appreciation of the converted shares during that lock-up period and we also agreed during that lock-up period to vote those shares with the board's recommendations for all matters other than the election of directors we believe that trends and aligns our interests with those of of our common shareholders and reinforces leadership's confidence in the company's mission in the future. Final note on developments, we also continue to focus on our relationships related to Kansas. We are committed to Kansas, we appreciate Kansas, and will continue to work to deliver on our obligations to Kansas and its community. So far, I've focused on recent developments. We realize to that end, we've cut costs and operating expenses, which Greg we'll discuss further. We've also reduced our legitimate third-party debt from $27 million in January to under $4 million as of today. We are also streamlining operations and plan to roll out simpler ways to provide liquidity and capital to customers. We're also exploring adjacent markets where our solutions may work at minimal extra costs. For example, we're reviewing our existing tools and tech and are looking for ways to put them to use. We're just having a little bit of

technical difficulty with James' line. So, you bear with us. We'll be back with James in just a few moments. In the meantime, Greg, why don't we have you run through the financials and then we'll pick up with James when we're able to get him back on the line. I apologize to everybody

for this. That sounds good, Dan. Yeah, we'll turn our results now, our attention out of the quarterly results and financial position as of September 30th, 2025. First, I'll start with a few highlights from the quarter. We reported investments with a fair value of $244 million. These investments serve as collateral for Ben Liquidity's net loan portfolio of $223 million. Revenues were at negative $2.8 million and $15.4 million for the second quarter and year-to-date periods in fiscal 2026 as compared to a positive $8.6 million and $18.6 million in the prior year. GAP revenues principally reflect mark-to-market adjustments on the investments that serve as collateral to FIN's loan portfolio, which for the current fiscal year also includes adjustments to fair value for investments that we have deemed probable of being sold at an amount less than the most recently reported GP value. These arise specific to our asset sales initiatives that we have previously disclosed. Operating expenses were $50.1 million in the second quarter of fiscal 2026 as compared to $22.3 million in the same period for fiscal 2025. On a year-to-date basis, operating expenses for fiscal 2026 were $95.1 million, which included the accrual of a loss contingency of $62.8 million and additional interest expense on the loss contingency accrual of $1.7 million as compared to negative $12.0 million for the prior quarter which included the release of a loss contingency accrual of $55.0 million and a non-cash goodwill impairment of $3.7 million. Excluding the non-cash goodwill impairment and the accrual or release of a loss contingency including post-judgment interest in each period as applicable, operating expenses were $13.4 million in the second quarter of fiscal 2026 as compared to $22.00 million in the same period for fiscal 2025. With these same exclusions on a year-to-date basis, operating expense for fiscal 2026 was $30.6 million as compared to $39.3 million in the prior year. Reported gap net loss attributable to BIN's common shareholders for the current quarter was $3.6 million and $68.7 million for the current year-to-date period, primarily reflecting negative mark-to-market adjustments on investments as part of the asset sales initiative and the accrual of the loss contingency, including post-judgment interest, impacting both the current quarter and the year-to-date period for fiscal 2026. During the current fiscal year, we have completed asset sales or equity redemptions of certain investments held by the Customer Exalt Trust, which has resulted in an aggregate of $46.4 million in gross proceeds on a year-to-date basis through the filing date of our Form 10-Q last Friday. These proceeds have been used to pay down certain debt and provide working capital. Next, we'll move on to our primary business segments, Ben Liquidity, which generates interest revenue for supplying liquidity off the balance sheet, and Ben Custody, which produces fee revenue for the use of the platform and trust services. As typical, I will be focusing my discussion on these business segments as it's their operations along with corporate and other that accrues to Ben's equity holders. During the second quarter of fiscal 2026, Ben Liquidity recognized $8.5 million of interest income, a decrease of 3.8% from the quarter ended June 30, 2025, primarily due to a higher percentage of loans being placed on non-accrual status, partially offset by the effects of compounding interest on the remaining loans. Ben Liquidity recognized $17.3 million of interest income for the six months ended September 30, 2025, down 24.1 percent compared to the prior year period, primarily due to lower loans, net of the allowance for credit loss, resulting from higher levels of non-accrual loans and loan prepayments, partially offset by new loans originated during the period. Operating loss for the fiscal second quarter was $0.8 million, an improvement from an operating loss of $6 million for the quarter ended June 30, 2025. The increase in operating performance was due to lower intersegment credit losses in the current fiscal period as compared to the quarter ended June 30, 2025, due in part because of the disposition of certain investments during the period, which generated loan repayments at BIN liquidity sooner than had been estimated in prior period calculation of the intersegment credit losses. Trading loss was $6.8 million for the six months ended September 30, 2025, declining from operating income of $2.4 million in the prior year period. This decrease is partially a result of lower revenues, period over period, plus an increase in the intersegment credit losses in the current fiscal year as compared to the same period in the prior year. Moving on to BIN custody, NAV of Alternative Assets and Other Securities held in custody was $271.4 million as of September 30, 2025, compared to $338.2 million as of March 31, 2025. The decrease was driven by disposition of certain alternative assets, distributions, and unrealized losses on existing assets, principally related to the disposition of assets as part of our asset sales initiative, and adjustments to NAV based on updated information reported from the fund's investment sponsor or manager during the period. offset by $11.8 million of new originations. Revenues applicable to bin custody were $3.1 million for the fiscal second quarter, compared to $4.2 million for the quarter ended June 30, 2025. The decrease was the result of the lower NAV of alternative assets and other securities held in custody at the beginning of the period when such fees are calculated, along with certain upfront intersegment fees that are amortized into revenue over time being fully recognized in a prior period. In custody revenues were $7.3 million for the six months ended September 30, 2025, down 32.5% compared to the prior year period, primarily due to lower NAV of alternative assets and other securities held in custody, along with certain upfront intersegment fees that are amortized into revenues over time being fully recognized in a prior year period. Operating income for the second fiscal quarter decreased to $2.3 million from $3.1 million for the quarter ended June 30, 2025. The decrease was primarily due to the decline in revenues applicable to this operating segment, as described earlier, and employee and professional service expenses, offset by slightly lower segment operating expenses. Operating income was $5.4 million for the six months ended September 30, 2025, compared to operating income of $5.6 million in the prior year period. While revenues declined in the current year period as compared to the same period in the prior year, operating expenses declined by a similar amount, primarily due to non-cash goodwill impairment in the prior year period of $3.4 million. No such impairment was recorded in the current year period. Adjusted operating income for the six months ended September 30, 2025 was $5.4 million compared to adjusted operating income of $9.0 million in the prior year period, with the decrease in adjusted operating income primarily due to lower revenue related to lower NAV of alternative assets, all set by slightly higher operating expenses during the current year fiscal period. As of September 30th, 2025, the company had cash and cash equivalents of $4.9 million and total debt of $104.0 million. Distributions received from alternative assets and other securities held in custody totaled $7.8 million and proceeds received from asset sales totaled $37.2 million for the six months ended September 30th, 2025. This concludes my prepared

marks on the financials. Well, we're going to throw it to James, who is back and up and running.

James, we'll ask if you were talking about the conversion. All right. Can you guys, Dan, can you hear me? Yes. Okay. Well, this is exciting, obviously. While we're doing it live, this is

not recorded unless this is one of the more creative ways to demonstrate live performance.

Moving back to the conversion. So as part of our plan to regain compliance with the NASDAQ continued listing requirements, Tom Hicks, our board chair, and myself converted 53 million of our preferred units into the company's Class A common shares. Now, in connection with that conversion, we agreed not to sell the shares until October 1st, 2028, so three years. We've also agreed to forego any potential appreciation in the value of the converted shares during the lock-up period. Finally, we also agreed to vote those shares with the board's recommendation for all matters other than in the election of the directors. We believe this transaction aligns our interests with our common shareholders and reinforces leadership's confidence in the company's mission and future. I also want to point out, I also want to highlight that we continue to focus in our relationship with Kansas in short we're committed to Kansas we appreciate Kansas and will continue to work to deliver on our obligations to Kansas and its communities but that's that's the recent developments but we realize the next steps are crucial on the success of our business plan and strategy to that end we've cut costs and operating expenses which Greg outlined we've also reduced our legitimate third-party debt from 27 million in January to under 4 million as of today. We're also streamlining operations and plan to roll out simpler ways to provide liquidity and capital to customers. We're also exploring adjacent markets where our solutions may work with minimal extra costs. For example, we are reviewing our existing tools in tech and are looking for new ways to put them to use. Put simply, we're working towards making Beneficent leaner, more flexible, and easier for a target market to understand and do business with. By carrying out these steps, we believe we'll be better positioned to seize new opportunities. The market for early liquidity services is large and growing. A Jeffrey study in July found that private market secondaries accelerated and reached a six-month record in the first half of this year. Global transaction volumes reached $103 billion. dollars. That's a 51% increase from $68 billion in the first half of 2024. Accordingly, we believe investors and alternative assets need liquidity and other services, and we have the solution to meet those needs. I'll close by simply saying that I'm very excited about our future, and I'm glad to be back helping management and the employees on our positive path forward. With that, I'll turn it back over to Dan to close out and take any questions.

Yeah, operator, we're available for questions. And would anybody hit star one and we can have questions for us.

Thank you. As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by. We'll compile the Q&A roster. Our first question comes from the line of Michael Kim with ZAC Small Cap Research. Your line is now open.

Hey, everyone. Good morning. Thanks for taking my question. First, James, I understand that the core value propositions of the company remain intact, but just curious how your strategic vision might differ a bit and what your priorities are going forward. particularly as it relates to re-accelerating origination volumes.

Thank you, Michael. That's a very good question. I think management going forward will be focused on implementing the business model in our core space, which is the sort of high net worth or ultra high net worth market, focusing on transactions in that 5 to 25 million range that has been sort of a core part of our early model. I think the difference would be that previously there's been a focus on perhaps larger transactions, more foundational, and I think our approach will be more approaching with more of an incremental approach in terms of the size of the transactions. Thank you, Michael. Got it. Makes sense.

And then maybe as you have discussions with some of these high net worth investors, have you gotten a sense that maybe prospective customers might be taking a bit of a pause in terms of allocation decisions, just given sort of market volatility? and as you work through sort of the management transition? And then related to that, any update on timing as it relates to naming a permanent CEO?

So a couple questions there. In terms of dealing with our customer base, I think the need for liquidity and sort of taking timing, I think the need is there. Obviously, I think the market wants to see us stabilize before we begin to move forward, which is what we're doing and, quite frankly, what I believe we've done and positioned ourselves to move forward. In terms of my role as the interim CEO, the board continues to evaluate sort of this transition period, and I'm sure the board will be communicating in short order in terms of its approach, in terms of the permanent CEO position. But the focus right now has been on stabilizing. We're now shifting more to optimizing our model. As I mentioned before, we're simplifying our approach to our products. And I think that will be the point at which we'll have a further development in that regard.

And then maybe just one question for Greg. appreciate some of the incremental color around on the expense side, but as we look forward, just curious to get your perspective on sort of further opportunities to rationalize the cost base, particularly as it relates to sort of corporate and other expenses. Yeah, good question,

Michael um yeah I mean we continually evaluate all of our you know vendors and and for ways to be more efficient um I think we've we've you know as you've seen over time we've really ratcheted those kind of base expenses down there are some additional opportunities there that that we evaluate um but I think they'll be more modest and and incremental reductions versus some of the the more drastic changes that we've seen, you know, comparing the last six months in terms of cost reductions.

Okay. Makes sense. Thanks for taking my questions.

Thank you. Our next question comes from the line of Brendan McCarthy with Sidoti and Company. Your line is now open.

Great. Good morning, everybody. Appreciate you taking my questions here. I just wanted to have a, or start off on the balance sheet. I think in the press release it mentioned there was roughly 104 million in debt on the balance sheet. Can you provide color on, I guess, kind of the breakdown of that debt? Is all of that stemming from the credit agreement with BCH, and how can we kind of think about the debt going forward?

That's a good question. I'll take that, Greg. So on our balance sheet of September 30th, $104 million, about $7 million, about $8 million of that was related to our, we call it the HICS credit facility, called HHBDH in the footnotes. The rest of that is primarily related to the HCLP loans, and the HCLP loans, as a reminder, are the notes with Brad-related, Brad Heppner-related entities that were investigating the validity of those amounts at this time. And, Greg, it'd be worth noting,

sorry, just to follow up on that, the HICS-TCB loan is now, the balance of that is below $4 million. And as Greg noted, the HCLP loan is the Brad Heppner-related debt, which we intend to challenge and has obviously been the centerpiece of the criminal indictment against Mr. Heppner. So we will pursue all remedies as it relates to that debt. Understood. I appreciate that. And

And I think there was talk about really exploring adjacent markets, perhaps ways to simplify the operating model. How can investors really think about what that ultimately means, looking ahead for Beneficent?

Sure. From the standpoint of simplifying the model, it's both a cost and transparency process. The current product, the way things are designed, results in a fair number of internal entities that increases some costs and complications on our side. So we're simplifying that from an internal standpoint. And then from a transparency standpoint, the goal is to develop products where the revenues and the cash flows from those products and from those services flow more cleanly into the public company in a way that shareholders can understand easier and also designed to basically provide more value to the common shareholders by going through a little bit of a cleaner approach. In terms of the adjacent markets, the company has developed over time a fair amount of technology for its internal purposes, including AI-generated tools that help in both portfolio management as well as data extraction. And these have been internal tools, and we're looking now to externalize some of those either directly through technology or together with some of the trust-related services that we can provide.

Got it. That's helpful. That makes sense. Has there been, you know, conversation with end market customers just related to potentially outsourcing that technology?

Or is that still in the more earlier? Yes, we're having some conversations, nothing to report, but yes, you know, we are exploring both the market receptionist as well as ways to refine what we have internally and make it more outward facing. And so those are part of discussions that we're having.

Great. Great. That's good to hear. And last question for me just on the core liquidity business. Is most of the pipeline still more focused in the PCP channel or is there other interest in the general kind of broad liquidity transaction area?

right now it's it's the the channel has reflects sort of where we were i'd say three four months ago just given the focus on stabilizing getting ourselves current on our filings resolving the nasdaq compliance matters and obviously moving forward off of mr hepner so the pipeline is or rather, you know, the deal flow is probably more leaning towards the PCP, but that's a, you know, we are sort of moving forward. As we've gotten into this, you know, current honor filings, we're sort of reopening the process. So, you know, that will evolve, I think, over the sort of the near-medium term.

That's great. Thanks, James. Thanks, Greg. That's all for me, and congrats on the progress.

Thank you, Brendan.

Thank you, and I'm currently showing no further questions at this time. I would now like to turn the call back over to Dan Callahan for closing remarks.

Thank you, everybody, for joining us and bearing with us through our technical difficulties. If you want to listen to the replay, it will be available on the shareholder section of trustbend.com. Thanks again for joining us this morning, and have a great rest of your day.

This concludes today's conference. Thank you for your participation. You may now disconnect.