What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2025-12-03 compared with 2024-12-11 · 58 added, 58 removed, 200 unchanged (37% of the section changed)

49 unchanged sentences

equities had strong, positive performance for the one‑year period ended September 30, 2025, with the S&P 500 ® Index returning 17.60% and the Dow Jones Industrial Average returning 11.50% for the period (on a total return basis).

Equity prices advanced in anticipation of the Federal Reserve lowering its benchmark interest rate, which ultimately happened in September.

Further, the markets have appeared to continue pricing in the prospect of several more rate cuts over the next year as market participants have appeared to continue to view recent inflation data in a favorable light.

While lower short-term interest rates have propelled the market higher, a strong second quarter earnings season and the expectation of a reasonably robust third quarter earnings season seem to have given investors increased confidence that the economy is on firm footing.

According to Bloomberg, consensus estimates call for the economy to grow 2.6% in 2024.

While that rate is slightly behind last year’s growth rate of 2.9%, we believe it is nonetheless a stronger rate than many had predicted at the beginning of the year.

Equity prices advanced in anticipation of the Federal Reserve lowering its benchmark interest rate in September.

Further, the markets, according to Bloomberg, are pricing in roughly two rate cuts in 2025 and four rate cuts by the end of 2026.

While inflation remains above the Federal Reserve’s 2% target, the market seems to be comfortable with underlying economic fundamentals.

Based on expected third quarter earnings for companies in the S&P 500, the market is projecting, according to FactSet Earnings Insight, strong revenue growth and even stronger earnings growth for S&P 500 companies.

The prospect of strong margins, driven by pricing power and expense controls, has likely provided relief to market participants that are concerned over the prospect of slowing economic growth.

Yields on long-term U.S.

bonds decreased meaningfully during the one‑year period ended September 30, 2024, as the Federal Reserve has started to lower its benchmark interest rate.

After the rate cut in September 2024, investors appear to have continued to price in further reductions in interest rates.

According to Bloomberg, the market is currently pricing in nearly two more rate cuts by the end of the year and roughly six rate cuts by the end of 2025.

Recent inflation data seems to have calmed the nerves of investors who feared that inflation would continue to be a headwind.

Inflation data released for September 2024 indicated that consumer prices increased 2.4% from a year earlier, compared to 2.5% in August 2024, according to the Labor Department.

The 2.4% rate is the smallest annual increase since February 2021 and now only modestly above the Federal Reserve’s stated goal of 2.0% inflation.

For the one‑year period ended September 30, 2024, 10-year U.S.

Treasury Note yields fell from approximately 4.57% to 3.78%.

bonds increased during the one‑year period ended September 30, 2025, as inflation continues to hover above the Federal Reserve’s target inflation rate of 2%.

Despite this, investors appear to have started to increasingly focus on softer economic and employment data to support the belief that the Federal Reserve will continue to be more accommodative over the next year.

The August employment report indicated that the unemployment rate climbed to 4.3%, which is near a four-year high.

ADP Research estimated a loss of 32,000 private sector jobs last month and Carlyle Group’s “shadow” labor report shows similar weakness in employment trends.

While expected real GDP growth for 2025 was recently revised up to 1.8%, according to Bloomberg, it is nonetheless well off the nearly 3% year-over-year growth seen in 2023 and 2024.

The Japanese equity market increased 17.73% (in U.S.

dollar terms) for the one‑year period ended September 30, 2025, as measured by the Tokyo Stock Price Index (TOPIX).

In our view, business sentiment in Japan remains strong, with the Bank of Japan stating that it expects large companies to increase capital spending by 10.6% in the current fiscal year through March 2025.

Bank of Japan Governor Kazuo Ueda has said that the central bank will continue to raise interest rates as long as business conditions remain strong, which is expected to help keep inflation under control around 2.0%.

Against this positive equity performance backdrop, all 17 Hennessy Funds posted positive returns for the one‑year period ended September 30, 2024.

The longer‑term performance numbers remain strong, with 15 of the Hennessy Funds posting positive returns for the three-year period ended September 30, 2024.

Finally, all 16 Hennessy Funds with at least 10 years of operating history posted positive returns for both the 5-year and 10‑year periods ended September 30, 2024.

Strong performance has largely been the result of a weaker yen enhancing the competitiveness of Japan’s exports abroad.

Foreign capital inflows, buoyed by an increased emphasis on shareholder friendly corporate governance efforts have helped as well.

Reforms aimed at improving capital efficiency among corporations have raised investor expectations of increased public company returns.

Against this positive equity performance backdrop, all 17 Hennessy Funds posted positive returns for the one‑year and three-year periods ended September 30, 2025.

The longer‑term performance numbers remain strong, with all 16 Hennessy Funds with at least 10 years of operating history posting positive returns for both the 5-year and 10‑year periods ended September 30, 2025.

As always, we are committed to providing superior service to investors and employing a consistent and disciplined approach to investing based on a buy‑and‑hold philosophy that rejects the idea of market timing.

9 unchanged sentences

While numbers have declined in recent years, we continue to focus significant efforts on financial advisors who own two or more Hennessy Funds or hold a position of over $500,000 in an effort to build and maintain brand loyalty among our top tier of advisors.

Total assets under management as of the end of fiscal year 2024 was $4.6 billion, an increase of $1.6 billion, or 53.1%, compared to the end of fiscal year 2023.

The increase in total assets was attributable to market appreciation, net inflows of the Hennessy Funds, and the purchase of assets related to the management of two mutual funds previously managed by CCM that were reorganized into the Hennessy Stance ESG ETF.

Total assets under management as of the end of fiscal year 2025 was $4.2 billion, a decrease of $0.40 billion, or 8.6%, compared to the end of fiscal year 2024.

The decrease in total assets was attributable to net outflows from the Hennessy Funds, and was partly offset by market appreciation.

The following table illustrates the year-by-year changes in our assets under management over the past three fiscal years:

4 unchanged sentences

Organic inflows

Market appreciation (depreciation)

Market appreciation

Ending assets under management

6 unchanged sentences

Institutional Class

Hennessy Stance ESG ETF

Hennessy Sustainable ETF

Average assets under management

1 unchanged sentence

As of the end of fiscal year 2025, this asset had a net balance of $82.6 million, an increase of $0.3 million since the end of fiscal year 2024.

This increase is related to the purchase of assets related to the management of two mutual funds previously managed by CCM that were reorganized into the Hennessy Stance ESG ETF.

(See Note 5 in Item 8, “Financial Statements and Supplementary Data.”)

This increase is related to the costs associated with the definitive agreement signed with STF Management, LP in March 2025.

On October 20, 2021, we completed a public offering of the 2026 Notes in the aggregate principal amount of $40.25 million, which included the full exercise of the underwriters’ overallotment option.

10 unchanged sentences

The 2026 Notes mature on December 31, 2026, and may be redeemed in whole or in part at any time or from time to time at our option on or after December 31, 2023.

Our total assets under management as of the end of fiscal year 2024 was $4.6 billion, an increase of $1.6 billion, or 53.1%, compared to the end of fiscal year 2023.

Our total assets under management as of the end of fiscal year 2025 was $4.2 billion, a decrease of $0.40 billion, or 8.6%, compared to the end of fiscal year 2024.

The primary sources of our revenues, liquidity, and cash flow are our investment advisory fees and shareholder service fees, which are based on, and generated by, our average assets under management.

9 unchanged sentences

The increase in cash provided by operating activities of $4.6 million was mainly due to increased net income in the current period.

The increase in cash used in investing activities of $0.5 million was due to the purchase of assets related to the management of two mutual funds previously managed by CCM that were reorganized into the Hennessy Stance ESG STF.

The increase in cash used in financing activities of $0.2 million was due to repurchases of shares underlying vested restricted stock units (“RSUs”) from employees to satisfy tax withholding obligations arising in connection with the vesting of RSUs in the current period.

The decrease in cash used in investing activities of $0.6 million was due to costs related to the purchase of the CCM Funds in the prior year being greater than costs associated with the definitive agreement signed with STF Management, LP in the current year.

The increase in cash used in financing activities of $0.1 million was due to repurchases of shares underlying RSUs from employees to satisfy tax withholding obligations arising in connection with the vesting of RSUs in the current period.

Dividend Payments .

We have consistently paid dividends each year since 2005.

Our quarterly dividend rate remained constant during fiscal years 2024 and 2023, and our dividend payments totaled $4.2 million in each such fiscal year.

Our quarterly dividend rate per share remained constant during fiscal years 2025 and 2024, and our dividend payments totaled $4.3 million and $4.2 million in fiscal years 2025 and 2024, respectively.

On October 20, 2021, we completed a public offering of our 2026 Notes in the aggregate principal amount of $40.25 million, which included the full exercise of the underwriters’ overallotment option.

30 unchanged sentences

Average daily net assets of the Hennessy Funds for fiscal year 2025 was $4.5 billion, which represents an increase of $0.8 billion, or 21.6%, compared to fiscal year 2024.

The Hennessy Fund with the largest average daily net assets for fiscal year 2024 was the Hennessy Cornerstone Mid Cap 30 Fund, with $981 million.

The Hennessy Fund with the largest average daily net assets for fiscal year 2025 was the Hennessy Cornerstone Mid Cap 30 Fund, with $1.5 billion.

We collect an investment advisory fee from the Hennessy Cornerstone Mid Cap 30 Fund at an annual rate of 0.74% of average daily net assets.

2 unchanged sentences

However, we pay a sub‑advisory fee at an annual rate of 0.29% to the fund’s sub‑advisor, which reduces the net operating profit contribution of the fund to our financial operations.

Total assets under management as of the end of fiscal year 2024 was $4.6 billion, an increase of $1.6 billion, or 53.1%, compared to the end of fiscal year 2023.

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

Total assets under management as of the end of fiscal year 2025 was $4.2 billion, a decrease of $0.40 billion, or 8.6%, compared to the end of fiscal year 2024.

The decrease in total assets was attributable to net outflows from the Hennessy Funds, partly offset by market appreciation.

The only Hennessy Fund with net inflows was as follows:

Fiscal Year Ended September 30, 2025

Hennessy Cornerstone Mid Cap 30 Fund

Hennessy Cornerstone Growth Fund

Hennessy Japan Fund

Hennessy Midstream Fund

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

1 unchanged sentence

Hennessy Focus Fund

Hennessy Gas Utility Fund

Hennessy Value Fund

Redemptions as a percentage of assets under management decreased from an average of 2.5% per month during fiscal year 2023 to an average of 2.3% per month during fiscal year 2024.

Hennessy Mid Cap 30 Fund

Hennessy Cornerstone Growth Fund

Redemptions as a percentage of assets under management increased from an average of 2.3% per month during fiscal year 2024 to an average of 3.6% per month during fiscal year 2025.

Operating Expenses

1 unchanged sentence

As a percentage of total revenue, total operating expenses decreased 7.1 percentage points to 63.0%.

The increase in dollar value of operating expenses was primarily due to increases in compensation and benefits and general and administrative expenses.

The increase in dollar value of operating expenses was primarily due to increases in compensation and benefits and fund distribution and other expenses.

Compensation and Benefits Expense :

3 unchanged sentences

General and Administrative Expense :

Comparing fiscal year 2023 to fiscal year 2024, general and administrative expense increased by 18.3% from $5.5 million to $6.5 million.

Comparing fiscal year 2024 to fiscal year 2025, general and administrative expense decreased by 2.8% from $6.5 million to $6.3 million.

As a percentage of total revenue, general and administrative expense decreased 4.2 percentage points to 17.7%.

The dollar value increase in general and administrative expense was primarily due to increases in sales and distribution expenses (not including fees paid to various financial institutions that offer the Hennessy Funds as potential investments to their clients, which are reflected in “Fund Distribution and Other Expense”), as well as professional services expenses, in the current period.

The decrease in general and administrative expense was primarily due to a decrease in professional services expense in the current period.

Fund Distribution and Other Expense :

Fund distribution and other expense consists primarily of financial institution fees incurred by us for distribution of the Hennessy Funds and also for the operations of the Hennessy Sustainable ETF.

Fund distribution and other expense does not include sub‑advisory fees, which are shown separately.

The distribution component of fund distribution and other expense consists of fees paid to various financial institutions that offer the Hennessy Funds as potential investments to their clients.

When the Hennessy Funds are purchased through one of these financial institutions, the institution typically charges an asset‑based fee, which is recorded as a fund distribution expense on our statement of operations to the extent paid by us.

The Hennessy Mutual Funds, with the exception of the Hennessy Stance ESG ETF, may be purchased directly, and when purchased directly, we do not incur any such expense.

The Hennessy Mutual Funds, but not the Hennessy Sustainable ETF, may be purchased directly and when purchased directly, we do not incur any such expense.

These fees generally increase or decrease in line with the net assets of the Hennessy Funds held through these financial institutions, which are affected by inflows, outflows, and fund performance.

5 unchanged sentences

fee minimums at various financial institutions.

The other component of fund distribution and other expense consists of fees incurred by us for the operations of the Hennessy Stance ESG ETF.

We receive a unitary investment advisory fee from the Hennessy Stance ESG ETF and then pay all of its operating expenses (with limited exceptions), including fund administration, fund accounting, transfer agency, custody, licensing, audit, and tax services.

Comparing fiscal year 2023 to fiscal year 2024, fund distribution and other expense increased by 68.3%, from $0.49 million to $0.82 million.

As a percentage of total revenue, fund distribution and other expense increased 0.8 percentage points to 2.8%.

The other component of fund distribution and other expense consists of fees incurred by us for the operations of the Hennessy Sustainable ETF.

We receive a unitary investment advisory fee from the Hennessy Sustainable ETF and then pay all of its operating expenses (with limited exceptions), including fund administration, fund accounting, transfer agency, custody, licensing, audit, and tax services.

Comparing fiscal year

2024 to fiscal year

2025, fund distribution and other expense

$0.8 million to

$1.0 million.

As a percentage of total revenue, fund distribution and other expense

0.1 percentage points to

The increase of fund distribution and other expense was due to increased average daily net assets of the Hennessy Mutual Funds, which in turn increases the fees we pay to financial institutions.

Additionally, fund distribution and other expense increased due to the additional expenses relating to the Hennessy Stance ESG ETF resulting from the purchase of assets related to the management of the two mutual funds previously managed by CCM that were reorganized into the Hennessy Stance ESG ETF.

Sub-Advisory Fees Expense :

Comparing fiscal year 2023 to fiscal year 2024, sub‑advisory fees expense increased by 10.9%, from $3.8 million to $4.2 million.

Comparing fiscal year 2024 to fiscal year 2025, sub‑advisory fees expense decreased by 0.5%, from $4.2 million to $4.1 million.

As a percentage of total revenue, sub‑advisory fees expense decreased 2.4 percentage points to 11.7%.

The dollar value increase in sub‑advisory fees expense was due to an increase in average daily net assets of the sub‑advised Hennessy Funds, with an additional increase due to the expense associated with new sub‑advisory relationships relating to the Hennessy Stance ESG ETF that began in December 2022.

The decrease in sub‑advisory fees expense was due to a decrease in average daily net assets of the sub‑advised Hennessy Funds.

Depreciation Expense :

Comparing fiscal year 2023 to fiscal year 2024, depreciation expense increased by 6.1% from $0.23 million to $0.24 million due to additional fixed asset purchases.

As a percentage of total revenue, depreciation expense decreased 0.2 percentage points to 0.8%.

Comparing fiscal year 2024 to fiscal year 2025, depreciation expense increased by 18.9% from $0.2 million to $0.3 million.

As a percentage of total revenue, depreciation expense remained the same at 0.8% in both periods.

The dollar value increase in depreciation expense was due to additional fixed asset purchases.

Interest Income

Comparing fiscal year 2023 to fiscal year 2024, interest income increased from $2.52 million to $3.11 million.

The increase was due to increased interest rates and increased principal balances.

Comparing fiscal year 2024 to fiscal year 2025, interest income decreased from $3.1 million to $2.8 million.

The decrease was due to decreased interest rates, partly offset by increased principal balances.

Interest Expense

Comparing fiscal year 2024 to fiscal year 2025, interest expense increased by 0.8% from $2.28 million to $2.29 million.

The increase in interest expense was due to the manner in which interest expense is calculated under U.S.

The increase in interest expense was due to the manner in which interest expense is calculated in accordance with accounting principles generally accepted in the United States.

The issuance costs related to the 2026 Notes that have been capitalized are amortized over time and therefore increase the carrying amount of the 2026 Notes.

2 unchanged sentences

Comparing fiscal year 2024 to fiscal year 2025, income tax expense increased by 40.4%, from $2.6 million to $3.7 million.

The increase in income tax expense was due to higher net operating income in the current period, partially offset by a lower effective income tax rate in the current period.

The lower effective tax rate in the current period is due to an increased tax benefit in the current period due to restricted stock vesting at a higher share price.

The increase in income tax expense was due to higher net operating income in the current period.

Comparing fiscal year 2024 to fiscal year 2025, net income increased by 40.3%, from $7.1 million to $10.0 million.

17 unchanged sentences

If an entity determines that it is more likely than not that an indefinite‑lived intangible asset is impaired, then it must conduct an impairment analysis.

We were able to forego the annual impairment analysis for fiscal year 2024 as the more-likely-than-not threshold was not met as of the end of fiscal year 2024.

We were able to forego the quantitative analysis for fiscal year 2025 as the more-likely-than-not threshold was not met as of the end of fiscal year 2025.

The costs related to our purchase of assets related to the management of investment funds are capitalized as incurred.

3 unchanged sentences

We reviewed accounting pronouncements issued between December 11, 2024, the filing date of our most recent previously filed Annual Report on Form 10-K, and December 3, 2025, the filing date of this Annual Report on Form 10-K, and are currently in the process of evaluating the impact of adoption on our financial position, results of operations, and disclosures.

There have been no other significant changes to our critical accounting policies and estimates during fiscal year 2024.

See Note 1(k) of the Notes to Financial Statements for a discussion of recently issued and adopted accounting standards.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity