Forward Looking Statements

Certain statements in this report are forward-looking within the meaning of the federal securities laws. Although management believes that the expectations reflected in the forward-looking statements are reasonable, future levels of activity, performance or achievements cannot be guaranteed. Additionally, management does not assume responsibility for the accuracy or completeness of these statements. There is no regulation requiring an update of any of the forward-looking statements after the date of this report to conform these statements to actual results or to changes in our expectations.

Our business activities are affected by many factors, including redemptions by mutual fund shareholders, general economic and financial conditions, movement of interest rates, competitive conditions, industry regulation, fluctuation in the stock market, and others, many of which are beyond the control of our management.

Statements regarding the following subjects are forward-looking by their nature:

• our business strategy, including our ability to identify and complete future acquisitions;

• market trends and risks;

• our assumptions about changes in the market place, especially with the extreme volatility in the global and US financial markets;

• our estimates for future performance;

• our estimates regarding anticipated revenues and operating expenses; and

• our ability to retain the mutual fund assets we currently manage.

Although we seek to maintain cost controls, a significant portion of our expenses are fixed and do not vary greatly. As a result, substantial fluctuations in our revenue can directly impact our net income from period to period.

Overview

We derive our operating revenue from management fees and shareholder servicing fees paid to us by the Hennessy Funds. These fees are calculated as a percentage of the average daily net assets in our mutual funds and vary from fund to fund. The fees we receive fluctuate with changes in the total net asset value of the assets in our mutual funds, which are affected by our investment performance, redemptions, completed acquisitions of management agreements, market conditions and the success of our marketing efforts. Total assets under management were $775 million as of June 30, 2009.

Our total assets under management have decreased since June 30, 2008, mainly due to market depreciation and redemption activity. Market impact is unpredictable. The uncertainty in the marketplace has caused fluctuations in fund performance which may cause decreases in fund inflows as shareholders react. The following table illustrates the changes in assets under management from June 30, 2008 through June 30, 2009:

                                                                Assets Under Management
                                               At Each Quarter End, June 30, 2008 through June 30, 2009
                                      6/30/2008        9/30/2008       12/31/2008       3/31/2009       6/30/2009
                                                                    (In Thousands)
Beginning assets undermanagement     $ 1,098,695      $ 1,094,791      $   876,069      $  641,344      $  699,176

Acquisition inflows                           -                -                -          158,293              -

Organic inflows                           63,237           92,452           27,178          14,029          16,696

Redemptions                             (105,092 )        (85,497 )        (81,761 )       (46,416 )       (47,371 )

Market appreciation (depreciation)        37,951         (225,677 )       (180,142 )       (68,074 )       106,017


Ending assets undermanagement        $ 1,094,791      $   876,069      $   641,344      $  699,176      $  774,518

The principal asset on our balance sheet, management contracts - net of accumulated amortization, represents the capitalized costs incurred in connection with the acquisition of management agreements. As of June 30, 2009, this asset had a net balance of $21.5 million.

The principal liability on our balance sheet is the long-term bank debt incurred in connection with the acquisition of the management agreements for the Lindner Funds and the Henlopen Fund. As of June 30, 2009, this liability, including the current portion of long-term debt, had a balance of $2.2 million.

Results of Operations

The following table displays items in the statements of income as dollar amounts
and as percentages of total revenue for the three months ended June 30, 2009 and
2008:



                                                 Three Months Ended June 30,
                                               2009                        2008
                                              (In thousands, except percentages)
                                                    Percent                     Percent
                                                    of Total                    of Total
                                      Amounts       Revenue       Amounts       Revenue
   Revenue:
   Investment advisory fees           $  1,382          88.1 %    $  2,045          88.2 %
   Shareholder service fees                183          11.7           268          11.6
   Other                                     3           0.2             5           0.2

   Total revenue                         1,568         100.0         2,318         100.0


   Operating expenses:
   Compensation and benefits               756          48.2           653          28.2
   General and administrative              573          36.5           529          22.8
   Mutual fund distribution                137           8.7           374          16.1
   Amortization and depreciation            29           1.9           166           7.2

   Total operating expenses              1,495          95.3         1,722          74.3


   Operating income                         73           4.7           596          25.7

   Interest expense                         13           0.8            77           3.3
   Other income                             (7 )        (0.4 )         (84 )        (3.6 )


   Income before income tax expense         67           4.3           603          26.0

   Income tax expense                       44           2.8           263          11.3

   Net income                         $     23           1.5 %    $    340          14.7 %

Revenues: Total revenue decreased 32.4% to $1.6 million in the three months ended June 30, 2009, due to decreased average assets under management. Investment advisory fees decreased 32.4% to $1.4 million in the three months ended June 30, 2009, and shareholder service fees decreased 31.7% to $0.2 million in the three months ended June 30, 2009. These decreases resulted from decreases in the average daily net assets of our mutual funds, which can differ considerably from total net assets of our mutual funds at the end of an accounting period. Total net assets in our mutual funds decreased by $320.3 million, or 29.3%, as of June 30, 2009, from $1.095 billion as of the end of the prior comparable period. The $320.3 million decrease in net mutual funds assets is attributable to market depreciation of $367.9 million and redemptions of $261.1 million, partly offset by organic inflows of $150.4 million and an acquisition of $158.3 million. Redemptions as a percentage of assets under management decreased from an average of 3.1% per month to 2.1% per month during the same period.

Operating Expenses: Total operating expenses decreased 13.2% to $1.5 million in the three months ended June 30, 2009, from $1.7 million in the prior comparable period. The decrease is due to declines in assets held on no transaction fee platforms and reduced amortization expense. As a percentage of total revenue, total operating expenses increased by 21.0% to 95.3% in the three months ended June 30, 2009, as compared to 74.3% in the prior comparable period.

Compensation and Benefits: Compensation and benefits increased 15.8% to $0.76 million in the three months ended June 30, 2009, from $0.65 million in the prior comparable period. The increase resulted primarily from the creation of a new position in June, 2008 of the President of the Hennessy Funds, who is also the head of our distribution and sales efforts. Additionally, there have been no layoffs of existing employees in the current period despite the economic turmoil. As a percentage of total revenue, compensation and benefits increased by 20.0% to 48.2% for the three months ended June 30, 2009, compared to 28.2% in the prior comparable period.

General and Administrative Expenses: General and administrative expense increased 8.3% to $0.57 million in the three months ended June 30, 2009, from $0.53 million in the prior comparable period, primarily due to sub-advisor fees on the newly acquired Hennessy Select Large Value Fund. As a percentage of total revenue, general and administrative expense increased by 13.7% to 36.5% in the three months ended June 30, 2009, from 22.8% in the prior comparable period.

Mutual Fund Distribution Expenses: Distribution expense decreased 63.4% to $0.1 million in the three months ended June 30, 2009, from $0.4 million in the prior comparable period. As a percentage of total revenue, distribution expense decreased by 7.4% to 8.7% for the three months ended June 30, 2009, compared to 16.1% in the prior comparable period. The decreased costs are partly due to decreased assets held through mutual fund supermarkets such as Charles Schwab, Fidelity and TD Ameritrade. The decrease is also due to the creation of institutional class shares, which are not subject to no transaction fees on the mutual fund platforms.

Amortization and Depreciation Expense: Amortization and depreciation expense decreased 82.5% to $0.03 million in the three months ended June 30, 2009, from $0.2 million in the prior comparable period. The decrease is a result of the non-compete agreement being fully amortized as of June 30, 2008. As a percentage of total revenue, amortization and depreciation expenses decreased by 5.3% to 1.9% for the three months ended June 30, 2009, compared to 7.2% in the prior comparable period.

Interest Expense: Interest expense decreased by $0.06 million from the prior comparable period due to declining interest rates. Additionally, principal payments of $0.2 million were made through December, 2008, at which time a large payment of $3.5 million was made. Monthly principal payments of $0.06 million began in February, 2009. As a percentage of total revenue, interest expense decreased by 2.5% to 0.8% for the three months ended June 30, 2009, compared to 3.3% in the prior comparable period.

Other Income: Other income decreased by $0.08 million from the prior comparable period due to lower interest rates earned on our cash balance as well as a reduction in cash due to loan payments and an acquisition. As a percentage of total revenue, other income decreased by 3.2% to 0.4% for the three months ended June 30, 2009, compared to 3.6% in the prior comparable period.

Income Taxes: The provision for income taxes decreased 83.3% to a tax expense of $0.04 million in the three months ended June 30, 2009, from a tax expense of $0.26 million in the prior comparable period. The change is due to a decrease in income before tax from the prior period.

Net Income: Net income decreased by 93.2% to a net income of $0.02 million in the three months ended June 30, 2009, compared to net income of $0.34 million in the prior comparable period, as a result of the factors discussed above.

The following table displays items in the statements of income as dollar amounts and as percentages of total revenue for the nine months ended June 30, 2009 and 2008:

                                                                Nine Months Ended June 30,
                                                    2009                           2008
                                                            (In thousands, except percentages)
                                                                 Percent                        Percent
                                                                 of Total                       of Total
                                                  Amounts        Revenue         Amounts        Revenue
Revenue:
Investment advisory fees                          $  3,666           88.1 %      $  7,120           87.7 %
Shareholder service fees                               483           11.6             959           11.8
Other                                                   11            0.3              35            0.5

Total revenue                                        4,160          100.0           8,114          100.0


Operating expenses:
Compensation and benefits                            2,182           52.5           2,141           26.4
General and administrative                           1,610           38.7           1,576           19.4
Mutual fund distribution                               472           11.3           1,428           17.6
Amortization and depreciation                           91            2.2             495            6.1

Total operating expenses                             4,355          104.7           5,640           69.5


Operating income (loss)                               (195 )         (4.7 )         2,474           30.5

Interest expense                                        75            1.8             319            3.9
Other income                                           (31 )         (0.8 )          (336 )         (4.1 )


Income (loss) before income tax expense               (239 )         (5.7 )         2,491           30.7

Income tax expense (benefit)                           (55 )         (1.3 )         1,035           12.8

Net income (loss)                                 $   (184 )         (4.4 )%     $  1,456           17.9 %

Revenues: Total revenue decreased 48.7% to $4.2 million in the nine months ended June 30, 2009, due to decreased average assets under management. Investment advisory fees decreased 48.5% to $3.7 million in the nine months ended June 30, 2009, and shareholder service fees decreased 49.6% to $0.5 million in the nine months ended June 30, 2009. These decreases resulted from decreases in the average daily net assets of our mutual funds, which can differ considerably from total net assets of our mutual funds at the end of an accounting period. Total net assets in our mutual funds decreased by $320.3 million, or 29.3%, as of June 30, 2009, from $1.095 billion as of the end of the prior comparable period. The $320.3 million decrease in net mutual funds assets is attributable to market depreciation of $367.9 million and redemptions of $261.1 million, partly offset by organic inflows of $150.4 million and an acquisition of $158.3 million. Redemptions as a percentage of assets under management decreased from an average of 3.1% per month to 2.1% per month during the same period.

Operating Expenses: Total operating expenses decreased 22.8% to $4.4 million in the nine months ended June 30, 2009, from $5.6 million in the prior comparable period. The decrease is due to lower spending in mutual fund distribution expense and amortization and depreciation expense. As a percentage of total revenue, total operating expenses increased by 35.2% to 104.7% in the nine months ended June 30, 2009, as compared to 69.5% in the prior comparable period.

Compensation and Benefits: Compensation and benefits increased 1.9% to $2.18 million in the nine months ended June 30, 2009, from $2.14 million in the prior comparable period. The increase resulted primarily from the creation of a new position in June, 2008 of the President of the Hennessy Funds, who is also the head of our distribution and sales efforts. Additionally, there have been no layoffs of existing employees in the current period despite the economic turmoil. As a percentage of total revenue, compensation and benefits increased by 26.1% to 52.5% for the nine months ended June 30, 2009, compared to 26.4% in the prior comparable period.

General and Administrative Expenses: General and administrative expense increased 2.2% to $1.61 million in the nine months ended June 30, 2009, from $1.58 million in the prior comparable period, primarily due to increased sub-advisor fees on the newly acquired Hennessy Select Large Value Fund. As a percentage of total revenue, general and administrative expense increased by 19.3% to 38.7% in the nine months ended June 30, 2009, from 19.4% in the prior comparable period.

Mutual Fund Distribution Expenses: Distribution expense decreased 66.9% to $0.5 million in the nine months ended June 30, 2009, from $1.4 million in the prior comparable period. As a percentage of total revenue, distribution expense decreased by 6.3% to 11.3% for the nine months ended June 30, 2009, compared to 17.6% in the prior comparable period. The decreased costs are partly due to decreased assets held through mutual fund supermarkets such as Charles Schwab, Fidelity and TD Ameritrade. The decrease is also due to the creation of institutional class shares, which are not subject to no transaction fees on the mutual fund platforms.

Amortization and Depreciation Expense: Amortization and depreciation expense decreased 81.6% to $0.09 million in the nine months ended June 30, 2009, from $0.5 million in the prior comparable period. The decrease is a result of the non-compete agreement being fully amortized as of June 30, 2008. As a percentage of total revenue, amortization and depreciation expenses decreased by 3.9% to 2.2% for the nine months ended June 30, 2009, compared to 6.1% in the prior comparable period.

Interest Expense: Interest expense decreased by $0.2 million from the prior comparable period due to declining interest rates. Additionally, principal payments of $0.2 million were made through December, 2008, at which time a large payment of $3.5 million was made. Monthly principal payments of $0.06 million began in February, 2009. As a percentage of total revenue, interest expense decreased by 2.1% to 1.8% for the nine months ended June 30, 2009, compared to 3.9% in the prior comparable period.

Other Income: Other income decreased by $0.3 million from the prior comparable period due to lower interest rates earned on our cash balance, as well as decreased cash due to loan payments and an acquisition. As a percentage of total revenue, other income decreased by 3.3% to 0.8% for the nine months ended June 30, 2009, compared to 4.1% in the prior comparable period.

Income Taxes: The provision for income taxes decreased 105.3% to a tax benefit of $0.06 million in the nine months ended June 30, 2009, from a tax expense of $1.04 million in the prior comparable period. The change is due to a decrease in income before tax from the prior period to become a loss before tax in the current period.

Net Income (Loss): Net income decreased by 112.6% to a net loss of $0.2 million in the nine months ended June 30, 2009, compared to net income of $1.5 million in the prior comparable period, as a result of the factors discussed above.

Recent Accounting Pronouncements

In September, 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("FAS 157"), which is effective for our fiscal year 2009. In February, 2008, the FASB issued FASB Staff Position FAS 157-2 "Effective Date of FASB Statement No. 157," which delayed the effective date of FAS 157 for all non-financial assets and liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis, to the fiscal year beginning after November 15, 2008 (our fiscal year 2010). The Company adopted FAS 157 for all financial assets and liabilities as of October 1, 2008, as discussed in Footnote 10. We do not expect the full adoption of FAS 157 (per Staff Position 157-2) to have an effect on our financial statements or results of operations.

In February, 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Liabilities" ("FAS 159") which permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The Company adopted FAS 159 as of October 1, 2008. As of June 30, 2009, the Company did not elect any of its financial assets or liabilities using the provisions of FAS 159. As such, the adoption of FAS 159 did not have an impact on our financial statements or results of operations.

In January, 2009, the FASB Staff issued amendments to EITF Issue No. 99-20, "Recognition of Interest Income on Purchased Beneficial Interest and Beneficial Interests That Continue to Be Held by a Transferor in Securitized Financial Assets" ("FSP EITF 99-20-1"), which is effective immediately. FSP EITF 99-20-1 was issued to achieve a more consistent determination of whether an other-than-temporary impairment has occurred. It retains and emphasizes the objective of an other-than-temporary impairment assessment and the related disclosure requirements in FAS 115, "Accounting for Certain Investments in Debt and Equity Securities." The Company's investment in the Hennessy Micro Cap Growth Fund, LLC (held as an available for sale security) has been assessed as having a temporary impairment as of June 30, 2009. The amendments presented in FSP EITF 99-20-1 have not changed this determination. The adoption of FSP EITF 99-20-1 did not have an impact on our financial statements or results of operations.

In April, 2009, the FASB Staff issued amendments to FASB Statement No. 107, "Disclosure about Fair Value of Financial Instruments" and amendments to APB Opinion No. 28 "Interim Financial Reporting" ("FSP FAS 107-1 and APB 28-

1"), which are effective for interim reporting periods ending after June 15, 2009 (the Company's third fiscal quarter of 2009). FAS 107-1 and APB 28-1 were issued to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. They also require disclosures in summarized financial information to be reported at interim periods. We do not anticipate the adoption of FSP FAS 107-1 and APB 28-1 to have any effect on our financial reporting for our next fiscal quarter.

In April, 2009, the FASB Staff issued additional guidance for estimating fair value in accordance with FASB Statement No. 157, "Fair Value Measurements" when the volume and level of activity for the asset or liability have significantly decreased ("FSP FAS 157-4"), which is effective for interim reporting periods ending after June 15, 2009 (the Company's third fiscal quarter of 2009). FSP FAS 157-4 emphasizes that even if there has been a significant decrease in the volume and level of activity for the asset or liability and regardless of the valuation technique(s) used, the objective of a fair value measurement remains the same. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. We do not anticipate the adoption of FSP FAS 157-4 to have any effect on our financial statements or results of operations for our next fiscal quarter.

In May, 2009, the FASB issued FASB Statement No. 165, "Subsequent Events" ("FAS 165"). FAS 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. FAS 165, which includes a new required disclosure of the date through which an entity has evaluated subsequent events, is effective for interim or annual periods ending after June 15, 2009. The adoption of FAS 165 did not have an impact on our financial statements or results of operations.

In June, 2009, the FASB issued FASB Statement No. 167, "Amendments to FASB Interpretation No. 46(R)" ("FAS 167"). FAS 167 clarifies and improves financial reporting by entities involved with variable interest entities. This Statement is effective for the annual period beginning after November 15, 2009 (the Company's fiscal year 2011). We do not anticipate the adoption of FAS 167 to have any effect on our financial statements or results of operations.

In June, 2009, the FASB Staff issued FASB Statement No. 168, "The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles - a replacement of FAS Statement No. 162" ("FAS 168"), which is effective July 1, 2009 and will apply to all interim periods ending after September 15, 2009 (the Company's fourth fiscal quarter of 2009). FAS 168 establishes the FASB Accounting Standards Codification (the "Codification") as the single source of authoritative U.S. accounting and reporting standards applicable for all non-governmental entities, with the exception of guidance issued by the SEC and its staff. FAS 168 will amend the Company's disclosure for references to accounting guidance to include reference to the applicable section of the Codification.

Critical Accounting Policies

Accounting policies, methods, and estimates are an integral part of the financial statements prepared by management and are based upon management's current judgments. Those judgments are normally based on knowledge and experience with regard to past and current events and assumptions about future events. Certain accounting policies, methods, and estimates are particularly

sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management's current judgment.

The management agreements acquired by the Company are considered intangible assets with an indefinite life. In June 2001, the Financial Accounting Standards Board issued FASB Statement No. 142, "Goodwill and Other Intangible Assets." FASB No. 142 addresses financial accounting and reporting for acquired goodwill and other intangible assets and supersedes APB No. 17, Intangible Assets. Under FASB Statement No. 142, goodwill and intangible assets that have indefinite . . .