Good day, and thank you for standing by. Welcome to the Beneficient Second Quarter Fiscal 2026 Earnings Conference Call. [Operator Instructions] 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 Beneficient'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 at Shareholders section of our website at shareholders.trustben.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 Beneficient 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 reconciliations to the most comparable GAAP financial measures. At this time, I am pleased to introduce James Silk, the interim CEO for Beneficient. 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 Beneficient 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 Ezell, Chief Financial Officer, will provide some financial highlights. I'll now hand the call over to James.

Well, a lot has happened over the past 6 months, has faced some challenges. The of Beneficient's business and our market opportunity remains 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 in the alternative asset market. It's our core business. And I'm committed to that mission and has been energizing to lead the chart 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 Heppner. That occurred just before our annual report was filed. That separation occurred after the company identified credible evidence that Mr. Heppner had committed fraud against the company. Also, as previously disclosed, Mr. Heppner was recently indicted and now faces multiple criminal charges. The company is considering all available options related to Mr. Heppner's conduct, including counterclaims and litigation against Mr. Heppner. The company also intends to vigorously pursue claims regarding the validity of over $100 million of debt poorly owed to an entity related to Mr. Heppner. Overall, while unpleasant, we believe this is an opportunity for the company to move past Mr. Heppner, both reputationally and substantively and ultimately better position the company to execute going forward. Another important recent development concerns the previously disclosed agreement to settle all claims pending in the lawsuits related to GWG against the company, its subsidiaries in each of their current and former directors and officers. That settlement has been approved by the GWG Busy Court. The district court…

Ladies and gentlemen, please stand by your conference. We'll resume momentarily.

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. Yes, we'll turn our results now our attention now to the quarterly results and financial position as of September 30, 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 a 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. GAAP revenues principally reflect mark-to-market adjustments on the investments that serve as collateral to Ben'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 $15.1 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 noncash goodwill impairment of $3.7 million. Excluding the noncash 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 $22.0 million in the same period for fiscal 2025. With these same exclusions on a year-to-date basis, operating expense…

Well, we're going to throw it to James, who is back and up and running. James, we'll ask, 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 plant 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. In connection with that conversion, we agreed not to sell the shares until October 1, 2028, so 3 years. We've also agreed to forgo any potential appreciation in the value of the converted shares during the lockup period. Finally, 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 interest 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 we'll continue to work to deliver on our obligations to Kansas and its communities. But 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 cost, for example, we are reviewing our existing tools and tech and are looking for new ways to put them to use. Put simply, we're working towards making beneficial leaner, more flexible and easier for our 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 Jefferies study in July found that private market secondaries accelerated and reached a 6-month record in the first half of this year. Global transaction volumes reached $103 billion. 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 solutions 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.

Yes. Operator, we're available for questions.

[Operator Instructions] Our first question comes from the line of Michael Kim with Small-Cap Research.

First, James, I understand 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 reaccelerating 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 million to $25 million range that has been sort of a core part of our early model. I think the difference would be that the -- 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. Okay. 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 of questions there. In terms of dealing with our customer base, I think the need for liquidity and sort of taking timing, 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 positions ourselves to move forward. In terms of my role as the interim CEO, we continue to -- we continue 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 -- for further developments in that regard.

Got it. And then maybe just one question for Greg. I 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.

Yes, good question, Michael. I mean, we continually evaluate all of our vendors and ways to be more efficient. I think we've -- as you've seen over time, we really ratcheted those kind of base expenses down. There are some additional opportunities there that we evaluate, but I think there'll be more modest and incremental reductions versus some of the more drastic changes that we've seen comparing the last 6 months in terms of cost reductions.

Our next question comes from the line of Brendan McCarthy with Sidoti & Company.

Great. Just wanted to have a -- start off on the balance sheet. I think in the press release, you 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?

Yes, it's a good question. I'll take that. It's Greg. So on our balance sheet as of September 30, $104 million, about -- 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 we're investigating the validity of those amounts at this time.

And Greg, it's worth noting -- sorry, just to follow up on that, right, the HIC/TCV 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 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 Beneficient?

Sure. From the standpoint of simplifying the model, it's both the 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 -- 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 -- basically 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 that has been a -- 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 a conversation with end market customers just related to potentially outsourcing that technology? Or is that still more...

Yes, we're having some conversations, nothing to report. But yes, we are exploring both the market receptiveness, 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. 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 the channel has -- reflects sort of where we were, I'd say, 3, 4 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. Heppner. So -- the pipeline is -- or rather the deal flow is probably more leaning towards the PCP, but that's a -- we are sort of moving forward, as you've gotten into this current on our filings, we're sort of reopening the process. So that will evolve, I think, over the sort of the near medium term.

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 Shareholders section of trustben.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.