PhenixFIN Corp 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are subject to financial market risks, including changes in interest rates. Changes in interest rates may affect both our cost of funding and our interest income from portfolio investments and cash and cash equivalents. Our investment income will be affected by changes in various interest rates, including LIBOR, to the extent our debt investments include floating interest rates. In the future, we expect other loans in our portfolio will have floating interest rates. In addition, U.S. and global capital markets and credit markets have experienced a higher level of stress due to the global COVID-19 pandemic, which has resulted in an increase in the level of volatility across such markets. We may hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts subject to the requirements of the 1940 Act. For the year ended September 30, 2021, we did not engage in hedging activities. As of September 30, 2021, 58.1% of our income-bearing investment portfolio bore interest based on floating rates based upon fair value. In connection with the COVID-19 pandemic, the U.S. Federal Reserve and other central banks have reduced certain interest rates and LIBOR has decreased. A prolonged reduction in interest rates will reduce our gross investment income and could result in a decrease in our net investment income if such decreases in LIBOR are not offset by a corresponding increase in the spread over LIBOR that we earn on any portfolio investments, a decrease in our operating expenses, including with respect to any income incentive fee, or a decrease in the interest rate of our floating interest rate liabilities tied to LIBOR. In contrast, a rise in the general level of interest rates can be expected to lead to higher interest rates applicable to any variable rate investments we hold and to declines in the value of any fixed rate investments we hold. In addition, a rise in interest rates may increase the likelihood that a portfolio company defaults on a loan. However, many of our variable rate investments provide for an interest rate floor, which may prevent our interest income from increasing until benchmark interest rates increase beyond a threshold amount. The composition of our floating rate debt investments by cash interest rate LIBOR floor as of September 30, 2021 was as follows (dollars in thousands): September 30, 2021 LIBOR Floor Fair Value % of Floating Rate Portfolio Under 1% $ - - % 1% to under 2% 59,323 100.0 2% to under 3% - - No Floor - - Total $ 59,323 100.0 % Based on our Consolidated Statements of Assets and Liabilities as of September 30, 2021, the following table (dollars in thousands) shows the approximate increase/(decrease) in components of net assets resulting from operations of hypothetical LIBOR base rate changes in interest rates, assuming no changes in our investment and capital structure. Change in Interest Rates Interest Income (1) Interest Expense Net Increase/ (Decrease) Up 300 basis points $ 6,500 $ (2,300 ) $ 4,200 Up 200 basis points 4,300 (1,600 ) 2,700 Up 100 basis points 2,200 (800 ) 1,400 Down 100 basis points (2,200 ) 800 (1,400 ) Down 200 basis points (4,300 ) 1,600 (2,700 ) Down 300 basis points (6,500 ) 2,300 (4,200 ) (1) Assumes no defaults or prepayments by portfolio companies over the next twelve months. 73 Item 8. Consolidated Financial Statements and Supplementary Data INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm F-1 Consolidated Statements of Assets and Liabilities as of September 30, 2021 and 2020 F-3 Consolidated Statements of Operations for the years ended September 30, 2021, 2020 and 2019 F-4 Consolidated Statements of Changes in Net Assets for the years ended September 30, 2021, 2020 and 2019 F-5 Consolidated Statements of Cash Flows for the years ended September 30, 2021, 2020 and 2019 F-6 Consolidated Schedules of Investments as of September 30, 2021 and 2020 F-7 Notes to Consolidated Financial Statements F-18 74 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of PhenixFIN Corporation Opinion on the Financial Statements We have audited the accompanying consolidated statements of assets and liabilities of PhenixFIN Corporation (the Company), including the consolidated schedules of investments, as of September 30, 2021 and 2020, the related consolidated statements of operations, changes in net assets, and cash flows for each of the three years in the period ended September 30, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 30, 2021 and 2020, and the results of its operations, changes in its net assets, and its cash flows for each of the three years in the period ended September 30, 2021 in conformity with U.S. generally accepted accounting principles. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of investments owned as of September 30, 2021 and 2020, by correspondence with the custodians, directly with designees of the portfolio companies, debt agents and brokers, as applicable, or by other appropriate auditing procedures where replies were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates. F- 1 Valuation of investments using significant unobservable inputs and assumptions Description of the Matter At September 30, 2021, the fair value of the Company’s investments categorized as Level 3 within the fair value hierarchy (Level 3 investments) totaled $115.8 million. As further described in Notes 2 and 4 to the Company’s consolidated financial statements, management determines the fair value of Level 3 investments by using valuation methodologies (e.g., market or income approach) and associated techniques including, among others, valuations of comparable public companies, recent sales of private and public comparable companies, discounted cash flows, and/or enterprise value analysis. These techniques require management to make judgments about the significant unobservable inputs and assumptions including, among others, market yields, EBITDA multiples, and revenue multiples. Auditing the fair value of the Company’s Level 3 investments is complex, as the unobservable inputs and assumptions used by the Company require significant management judgment or estimation and have a significant effect on the fair value measurements of such investments. Also, applying audit procedures to address the estimation uncertainty involves a high degree of auditor subjectivity. How We Addressed the Matter in Our Audit Our audit procedures performed to test the fair value of the Company’s Level 3 investments included, among others and on a sample basis, evaluating the Company’s valuation methodologies and significant unobservable inputs and assumptions used in the valuations, as well as testing the mathematical accuracy of the Company’s valuation models utilized to calculate the fair value. For a sample of Level 3 investments, we obtained and reviewed management’s valuation models and compared the significant portfolio company-specific inputs used in the models to credit agreements, underlying source documents, and/or portfolio company financial information provided to the Company by the investees, as applicable. We assessed whether the significant unobservable inputs and assumptions used by the Company were developed in a manner consistent with its valuation policies. We also evaluated the appropriateness of the inputs and assumptions used in the fair value estimates by comparing them to portfolio company financial information and/or available market information and evaluated the appropriateness of any significant adjustments. Additionally, for a sample of Level 3 investments and with the assistance of our valuation specialists, we developed independent fair value estimates to compare to the Company’s fair value measurements by using market information from third-party sources, such as market multiples and market yields, and/or portfolio company financial information, as applicable. We searched for and evaluated information that corroborated or contradicted the Company's significant unobservable inputs and assumptions. We also evaluated subsequent events and transactions and considered whether they corroborated or contradicted the Company's year-end valuations. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2010. New York, New York December 20, 2021 F- 2 PHENIXFIN CORPORATION Consolidated Statements of Assets and Liabilities September 30, 2021 September 30, 2020 Assets: Investments at fair value Non-controlled, non-affiliated investments (amortized cost of $92,214,167 and $117,360,954, respectively) $ 84,152,678 $ 114,321,948 Affiliated investments (amortized cost of $75,963,427 and $92,898,755, respectively) 57,595,245 84,873,023 Controlled investments (amortized cost of $39,490,097 and $117,874,821, respectively) 9,891,860 47,548,578 Total Investments at fair value 151,639,783 246,743,549 Cash and cash equivalents 69,433,256 56,522,148 Receivables: Fees receivable 1,872,700 119,028 Interest receivable 371,576 624,524 Paydown receivable 292,015 - Dividends receivable 81,211 - Other assets 1,401,746 2,093,559 Total Assets $ 225,092,287 $ 306,102,808 Liabilities: Notes payable (net of debt issuance costs of $412,795 and $905,624, respectively) $ 77,434,005 $ 150,960,662 Due to broker 1,586,000 - Accounts payable and accrued expenses 1,416,524 2,108,225 Due to affiliates 280,323 53,083 Administrator expenses payable (see Note 6) 67,920 156,965 Management and incentive fees payable (see Note 6) - 1,392,022 Interest and fees payable - 801,805 Deferred revenue - 10,529 Other liabilities 613,534 - Total Liabilities 81,398,306 155,483,291 Commitments and Contingencies (see Note 8) Net Assets: Common Shares, $0.001 par value; 5,000,000 shares authorized; 2,723,709 shares issued; 2,517,221 and 2,723,709 common shares outstanding, respectively 2,517 2,724 Capital in excess of par value 688,866,642 672,381,617 Total distributable earnings (loss) (545,175,178 ) (521,764,824 ) Total Net Assets 143,693,981 150,619,517 Total Liabilities and Net Assets $ 225,092,287 $ 306,102,808 Net Asset Value Per Common Share $ 57.08 $ 55.30 See accompanying notes to consolidated financial statements. F- 3 PHENIXFIN CORPORATION Consolidated Statements of Operations For the Years Ended September 30 2021 2020 2019 Interest Income: Interest from investments Non-controlled, non-affiliated investments: Cash $ 5,974,807 $ 9,137,394 $ 25,368,027 Payment in-kind 609,964 863,744 1,755,260 Affiliated investments: Cash 1,099,809 1,182,294 2,197,555 Payment in-kind 327,804 2,425,557 2,604,279 Controlled investments: Cash 75,000 84,505 337,956 Payment in-kind - 500,767 2,800,890 Total interest income 8,087,384 14,194,261 35,063,967 Dividend income 21,564,348 6,256,250 8,218,480 Interest from cash and cash equivalents 10,402 378,077 712,017 Fee income (see Note 9) 2,566,519 692,988 2,304,287 Other income 78,204 - - Total Investment Income 32,306,857 21,521,576 46,298,751 Expenses: Base management fees (see Note 6) 1,146,403 6,358,750 11,189,646 Interest and financing expenses 5,800,100 14,935,017 24,049,485 General and administrative expenses 1,012,147 3,285,259 7,398,534 Salaries and benefits 1,993,277 - - Administrator expenses (see Note 6) 612,983 2,226,831 3,323,989 Insurance expenses 1,619,536 1,463,391 623,064 Directors fees 1,039,717 1,451,077 1,258,378 Professional fees, net (see Note 8) 559,975 (4,768,050 ) 19,323,082 Expenses before expense support reimbursement and management and incentive fee waivers 13,784,138 24,952,275 67,166,178 Expense support reimbursement (see Note 6) - (710,294 ) - Total expenses net of expense support reimbursement and management and incentive fee waivers 13,784,138 24,241,981 67,166,178 Net Investment Income 18,522,719 (2,720,405 ) (20,867,427 ) Realized and unrealized gains (losses) on investments Net realized gains (losses): Non-controlled, non-affiliated investments 7,747,672 (9,973,416 ) (24,762,224 ) Affiliated investments (10,088,405 ) (928,990 ) (7,670,970 ) Controlled investments (40,144,795 ) (39,076,425 ) (79,739,742 ) Total net realized gains (losses) (42,485,528 ) (49,978,831 ) (112,172,936 ) Net change in unrealized gains (losses): Non-controlled, non-affiliated investments (5,022,484 ) 9,898,237 20,727,499 Affiliated investments (10,342,450 ) 2,648,353 (6,864,255 ) Controlled investments 40,728,006 (23,178,993 ) 24,634,707 Total net change in unrealized gains (losses) 25,363,072 (10,632,403 ) 38,497,951 Loss on extinguishment of debt (see Note 5) (122,355 ) (2,481,374 ) (2,032,655 ) Total realized and unrealized gains (losses) (17,244,811 ) (63,092,608 ) (75,707,640 ) Net Increase (Decrease) in Net Assets Resulting from Operations $ 1,277,908 $ (65,813,013 ) $ (96,575,067 ) Weighted Average Basic and diluted earnings per common share $ 0.48 $ (24.16 ) $ (35.46 ) Weighted Average Basic and diluted net investment income (loss) per common share $ 6.92 $ (1.00 ) $ (7.66 ) Weighted Average Common Shares Outstanding - Basic and Diluted (see Note 11) 2,677,891 2,723,709 2,723,709 Dividends Declared per Common Share $ - $ - $ 3.00 See accompanying notes to consolidated financial statements. F- 4 PHENIXFIN CORPORATION Consolidated Statements of Changes in Net Assets Common Stock Total Shares Par Amount Capital in Excess of Par Value Distributable Earnings/(Loss) Total Net Assets Balance at September 30, 2018 2,723,709 $ 2,724 $ 698,638,520 $ (377,462,517 ) $ 321,178,727 OPERATIONS Net investment income (loss) - - - (20,867,427 ) (20,867,427 ) Net realized gains (losses) on investments - - - (112,172,936 ) (112,172,936 ) Net change in unrealized appreciation (depreciation) on investments - - - 38,497,951 38,497,951 Net loss on extinguishment of debt - - - (2,032,655 ) (2,032,655 ) SHAREHOLDER DISTRIBUTIONS Return of Capital - - (8,171,130 ) - (8,171,130 ) Tax reclassification of shareholders’ equity in accordance with generally accepted accounting principles - - (16,882,923 ) 16,882,923 - Total Increase (Decrease) in Net Assets - - (25,054,053 ) (79,692,144 ) (104,746,197 ) Balance at September 30, 2019 2,723,709 2,724 673,584,467 (457,154,661 ) 216,432,530 OPERATIONS Net investment income (loss) - - - (2,720,405 ) (2,720,405 ) Net realized gains (losses) on investments - - - (49,978,831 ) (49,978,831 ) Net change in unrealized appreciation (depreciation) on investments - - - (10,632,403 ) (10,632,403 ) Net loss on extinguishment of debt - - - (2,481,374 ) (2,481,374 ) SHAREHOLDER DISTRIBUTIONS Tax reclassification of shareholders’ equity in accordance with generally accepted accounting principles - - (1,202,850 ) 1,202,850 - Total Increase (Decrease) in Net Assets - - (1,202,850 ) (64,610,163 ) (65,813,013 ) Balance at September 30, 2020 2,723,709 2,724 672,381,617 (521,764,824 ) 150,619,517 OPERATIONS Net investment income (loss) - - - 18,522,719 18,522,719 Net realized gains (losses) on investments - - - (42,485,528 ) (42,485,528 ) Net change in unrealized appreciation (depreciation) on investments - - - 25,363,072 25,363,072 Net loss on extinguishment of debt - - - (122,355 ) (122,355 ) CAPITAL SHARE TRANSACTIONS Repurchase of common shares (206,488 ) (207 ) (8,203,237 ) - (8,203,444 ) Tax reclassification of shareholders’ equity in accordance with generally accepted accounting principles - - 24,688,262 (24,688,262 ) - Total Increase (Decrease) in Net Assets (206,488 ) (207 ) 16,485,025 (23,410,354 ) (6,925,536 ) Balance at September 30, 2021 2,517,221 $ 2,517 $ 688,866,642 $ (545,175,178 ) $ 143,693,981 See accompanying notes to consolidated financial statements. F- 5 PHENIXFIN CORPORATION Consolidated Statements of Cash Flows For the Years Ended September 30 2021 2020 2019 Cash Flows from Operating Activities: Net increase (decrease) in net assets resulting from operations $ 1,277,908 $ (65,813,013 ) $ (96,575,067 ) Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities: Investment increases due to payment-in-kind interest (937,768 ) (4,211,154 ) (9,606,292 ) Net amortization of premium (discount) on investments (44,455 ) (118,290 ) (286,665 ) Amortization of debt issuance cost 363,812 2,870,483 3,022,516 Net realized (gain) loss from investments 42,485,528 49,978,831 112,172,936 Net unrealized (appreciation) depreciation on investments (25,363,072 ) 10,632,403 (38,497,951 ) Proceeds from sale and settlements of investments 124,303,888 110,627,326 261,233,495 Purchases, originations and participations (45,340,354 ) (16,763,667 ) (66,474,607 ) Loss on extinguishment of debt 122,355 2,481,374 2,032,655 (Increase) decrease in operating assets: Other assets (1) 1,305,347 880,172 446,711 Interest receivable 252,948 967,883 4,784,670 Receivable for dispositions and investments sold - 419,299 (259,042 ) Receivable for paydowns (292,015 ) - - Fees receivable (1,753,672 ) (10,723 ) 78,971 Dividends receivable (81,211 ) - - Increase (decrease) in operating liabilities: Accounts payable and accrued expenses (691,701 ) (9,848,530 ) 9,020,922 Interest and fees payable (801,805 ) (2,102,943 ) (375,270 ) Management and incentive fees payable, net (1,392,022 ) (839,153 ) (1,116,499 ) Administrator expenses payable (89,045 ) (704,820 ) 53,239 Deferred revenue (10,529 ) (93,054 ) (88,569 ) Due to affiliate 227,240 8,746 5,286 Due to broker 1,586,000 - - Net cash provided by (used in) operating activities 95,127,377 78,361,170 179,571,439 Paydowns on debt (74,012,825 ) (106,122,925 ) (163,122,780 ) Debt issuance costs paid - - (14,361 ) Payments of cash dividends - - (8,171,130 ) Offering costs paid - - 354,754 Repurchase of common shares (8,203,444 ) - - Net cash provided by (used in) financing activities (82,216,269 ) (106,122,925 ) (170,953,517 ) Net increase (decrease) in cash and cash equivalents 12,911,108 (27,761,755 ) 8,617,922 Cash and cash equivalents, beginning of period 56,522,148 84,283,903 75,665,981 Cash and cash equivalents, end of period $ 69,433,256 $ 56,522,148 $ 84,283,903 Supplemental information: Interest paid during the year $ 6,601,905 $ 14,167,477 $ 21,402,239 Supplemental non-cash information: Non-cash purchase of investments $ - $ 12,950,924 $ 20,576,235 Non-cash sale of investments $ - $ 12,950,924 $ 20,528,752 Cash $ 69,433,256 $ 56,522,148 $ 68,245,213 Restricted Cash - - 16,038,690 Total cash and restricted cash shown in the statement of cash flows $ 69,433,256 $ 56,522,148 $ 84,283,903 (1) Excludes non-cash recognition of a right of use asset of $613,534. See accompanying notes to consolidated financial statements. F- 6 PHENIXFIN CORPORATION Consolidated Schedule of Investments September 30, 2021 Company (1) Industry Type of Investment Maturity Par Amount (2) Cost (3) Fair Value (4) % of Net Assets (5) Non-Controlled/Non-Affiliated Investments : Alpine SG, LLC (8) High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 5.75% Cash, 1.00% LIBOR Floor) (14) 11/16/2022 $ 4,715,808 $ 4,715,809 $ 4,715,809 3.29 % Senior Secured Incremental First Lien Term Loan (LIBOR + 8.50% Cash, 1.00% LIBOR Floor) (14) 11/16/2022 472,087 472,087 472,087 0.33 % Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 5.75% Cash, 1.00% LIBOR Floor) (14) 11/16/2022 2,277,293 2,277,293 2,277,293 1.58 % Senior Secured Incremental First Lien Term Loan (LIBOR + 6.50% Cash, 1.00% LIBOR Floor) (14) 11/16/2022 4,174,037 4,107,317 4,174,037 2.90 % Senior Secured Incremental First Lien Term Loan (LIBOR + 6.50% Cash, 1.00% LIBOR Floor) (14) 11/16/2022 2,999,802 2,946,540 2,999,802 2.09 % Senior Secured Incremental First Lien Term Loan (LIBOR + 6.50% Cash, 1.00% LIBOR Floor) (14) 11/16/2022 1,000,000 982,916 1,000,000 0.70 % 15,639,027 15,501,962 15,639,028 10.89 % Autosplice, Inc. Automotive Senior Secured First Lien Term Loan (LIBOR + 8.00% Cash & 2.00% PIK, 1.00% LIBOR Floor) (14) 4/30/2022 11,826,036 11,826,036 11,826,036 8.23 % 11,826,036 11,826,036 11,826,036 8.23 % Be Green Packaging, LLC Containers, Packaging & Glass Equity - 417 Common Units 1 416,250 - 0.00 % 1 416,250 - 0.00 % Chimera Investment Corp. (11) Banking, Finance, Insurance & Real Estate Equity - 117,310 Class C Preferred Units (17)(20) 117,310 2,884,724 3,019,559 2.10 % 117,310 2,884,724 3,019,559 2.10 % Cleaver-Brooks, Inc. Manufacturing 7.875% Senior Secured Notes (18) 3/1/2023 9,364,000 9,306,052 9,270,360 6.45 % 9,364,000 9,306,052 9,270,360 6.45 % CM Finance SPV, LLC Energy: Oil & Gas Unsecured Debt (10) 101,463 101,463 - 0.00 % 101,463 101,463 - 0.00 % CPI International, Inc. Aerospace & Defense Senior Secured Second Lien Term Loan (LIBOR + 7.25% Cash, 1.00% LIBOR Floor) (13) 7/28/2025 2,607,062 2,599,906 2,489,744 1.73 % 2,607,062 2,599,906 2,489,744 1.73 % DataOnline Corp. High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor) (14) 11/13/2025 4,912,500 4,912,500 4,863,375 3.39 % Revolving Credit Facility (LIBOR + 6.25% Cash, 1.00% LIBOR Floor) (14)(16) 11/13/2025 714,286 714,286 707,143 0.49 % 5,626,786 5,626,786 5,570,518 3.88 % Dividend and Income Fund (11) Banking, Finance, Insurance & Real Estate Equity - 87,483 Common Units (17) 87,483 1,281,845 1,275,502 0.89 % 87,483 1,281,845 1,275,502 0.89 % Dream Finders Homes, LLC (11) Construction & Building Preferred Equity (8.00% PIK) 4,905,011 4,905,011 4,757,860 3.31 % 4,905,011 4,905,011 4,757,860 3.31 % F- 7 Company (1) Industry Type of Investment Maturity Par Amount (2) Cost (3) Fair Value (4) % of Net Assets (5) Footprint Acquisition, LLC Services: Business Preferred Equity (8.75% PIK) (10) 4,049,398 4,049,398 2,956,061 2.06 % Equity - 150 Common Units 150 - - 0.00 % 4,049,548 4,049,398 2,956,061 2.06 % Global Accessories Group, LLC Consumer goods: Non-durable Equity - 3.8% Membership Interest 380 151,337 - 0.00 % 380 151,337 - 0.00 % Great AJAX Corp. (11) Banking, Finance, Insurance & Real Estate Equity - 253,651 Common Units (17) 253,651 3,316,414 3,421,752 2.38 % 253,651 3,316,414 3,421,752 2.38 % Invesco Mortgage Capital, Inc. (11) Banking, Finance, Insurance & Real Estate Equity - 205,000 Class C Preferred Units (17)(21) 205,000 5,035,506 5,217,250 3.63 % 205,000 5,035,506 5,217,250 3.63 % Lighting Science Group Corporation Containers, Packaging & Glass Warrants - 0.62% of Outstanding Equity (18) 5,000,000 955,680 - 0.00 % 5,000,000 955,680 - 0.00 % MFA Financial, Inc. Banking, Finance, Insurance & Real Estate Equity - 31,692 Class C Preferred Units (17)(24) 31,692 762,171 778,989 0.54 % 31,692 762,171 778,989 0.54 % New Residential Investment Corp. (11) Banking, Finance, Insurance & Real Estate Equity - 206,684 Class B Preferred Units (17)(22) 206,684 5,129,170 5,206,370 3.62 % 206,684 5,129,170 5,206,370 3.62 % New York Mortgage Trust, Inc. (11) Banking, Finance, Insurance & Real Estate Equity - 165,000 Class E Preferred Units (17)(23) 165,000 4,102,076 4,182,750 2.91 % 165,000 4,102,076 4,182,750 2.91 % Point.360 Services: Business Senior Secured First Lien Term Loan (LIBOR + 6.00% PIK) (10)(15) 7/8/2020 2,777,366 2,103,712 - 0.00 % 2,777,366 2,103,712 - 0.00 % RateGain Technologies, Inc. Hotel, Gaming & Leisure Unsecured Debt (4.50% Cash) (12) 10/2/2023 532,671 532,671 - 0.00 % Unsecured Debt (4.50% Cash) (12) 4/1/2024 704,762 704,762 - 0.00 % 1,237,433 1,237,433 - 0.00 % Redwood Services Group, LLC (8) Services: Business Revolving Credit Facility (LIBOR + 6.00% Cash, 1.00% LIBOR Floor) (13)(16) 6/6/2023 175,000 175,000 175,000 0.12 % 175,000 175,000 175,000 0.12 % Sendero Drilling Company, LLC Energy: Oil & Gas Unsecured Debt (9.00% Cash) (10) 8/1/2022 233,750 222,544 - 0.00 % 233,750 222,544 - 0.00 % Seotowncenter, Inc. Services: Business Equity - 3,434,169.6 Common Units 3,434,170 566,475 - 0.00 % 3,434,170 566,475 - 0.00 % F- 8 Company (1) Industry Type of Investment Maturity Par Amount (2) Cost (3) Fair Value (4) % of Net Assets (5) SMART Financial Operations, LLC Retail Equity - 700,000 Class A Preferred Units 700,000 700,000 - 0.00 % 700,000 700,000 - 0.00 % Stancor, Inc. Services: Business Equity - 263,814.43 Class A Units 263,814 263,814 - 0.00 % 263,814 263,814 - 0.00 % Thryv Holdings, Inc. (11) Services: Business Senior Secured First Lien Term Loan B (LIBOR + 8.50% Cash, 1.00% LIBOR Floor) (13) 3/1/2026 5,770,000 5,610,988 5,863,763 4.08 % 5,770,000 5,610,988 5,863,763 4.08 % Velocity Pooling Vehicle, LLC Automotive Equity - 5,441 Class A Units 5,441 302,464 64,167 0.05 % Warrants - 0.65% of Outstanding Equity 3/30/2028 6,506 361,667 76,727 0.05 % 11,947 664,131 140,894 0.10 % Walker Edison Furniture Company LLC Consumer goods: Durable Equity - 10,244 Common Units 10,244 1,500,000 2,361,242 1.64 % 10,244 1,500,000 2,361,242 1.64 % Watermill-QMC Midco, Inc. Automotive Equity - 1.3% Partnership Interest (9) 518,283 518,283 - 0.00 % 518,283 518,283 - 0.00 % Wingman Holdings, Inc. (f/k/a Crow Precision Components, LLC) Aerospace & Defense Equity - 350 Common Units 350 700,000 - 0.00 % 350 700,000 - 0.00 % Subtotal Non-Controlled/Non-Affiliated Investments $ 75,318,491 $ 92,214,167 $ 84,152,678 58.56 % Affiliated Investments : (6) 1888 Industrial Services, LLC (8) Energy: Oil & Gas Senior Secured First Lien Term Loan A (LIBOR + 5.00% PIK, 1.00% LIBOR Floor) (10)(14) 9/30/2021 (25) $ 9,946,741 $ 9,473,066 $ - 0.00 % Senior Secured First Lien Term Loan B (LIBOR + 8.00% PIK, 1.00% LIBOR Floor) (10)(14) 9/30/2021 (25) 25,937,520 19,468,870 - 0.00 % Senior Secured First Lien Term Loan C (LIBOR + 5.00%, 1.00% LIBOR Floor) (14) 9/30/2021 (25) 1,231,932 1,191,257 24,637 0.02 % Revolving Credit Facility (LIBOR +5.00% PIK, 1.00% LIBOR Floor) (14)(16) 9/30/2021 (25) 3,554,069 3,554,069 3,554,069 2.47 % Equity - 17,493.63 Class A Units - - - 0.00 % 40,670,262 33,687,262 3,578,706 2.49 % Black Angus Steakhouses, LLC (8) Hotel, Gaming & Leisure Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor) (13) 6/30/2022 758,929 758,929 758,929 0.53 % Senior Secured First Lien Term Loan (LIBOR + 9.00% PIK, 1.00% LIBOR Floor) (10)(13) 6/30/2022 8,412,596 7,767,533 2,279,814 1.59 % Senior Secured First Lien Super Priority DDTL (LIBOR + 9.00% Cash, 1.00% LIBOR Floor) (13)(16) 6/30/2022 1,500,000 1,500,000 1,500,000 1.04 % 10,671,525 10,026,462 4,538,743 3.16 % F- 9 Company (1) Industry Type of Investment Maturity Par Amount (2) Cost (3) Fair Value (4) % of Net Assets (5) Caddo Investors Holdings 1 LLC (11) Forest Products & Paper Equity - 6.15% Membership Interest (19) 2,528,826 2,528,826 3,454,786 2.40 % 2,528,826 2,528,826 3,454,786 2.40 % Dynamic Energy Services International LLC Energy: Oil & Gas Senior Secured First Lien Term Loan (LIBOR + 13.50% PIK) (10)(15) 12/31/2021 12,109,957 7,328,568 - 0.00 % Equity - 12,350,000 Class A Units 12,350,000 - - 0.00 % 24,459,957 7,328,568 - 0.00 % JFL-NGS Partners, LLC Construction & Building Equity - 57,300 Class B Units 57,300 57,300 26,862,813 18.69 % 57,300 57,300 26,862,813 18.69 % JFL-WCS Partners, LLC Environmental Industries Equity - 129,588 Class B Units 129,588 129,588 8,099,949 5.64 % 129,588 129,588 8,099,949 5.64 % Kemmerer Operations, LLC (8) Metals & Mining Senior Secured First Lien Term Loan (15.00% PIK) 6/21/2023 2,381,985 2,381,985 2,360,547 1.64 % Senior Secured First Lien Delayed Draw Term Loan (15.00% PIK) (16) 6/21/2023 163,915 163,915 162,441 0.11 % Equity - 6.7797 Common Units 7 962,717 553,746 0.39 % 2,545,907 3,508,617 3,076,734 2.14 % Path Medical, LLC Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan A (LIBOR + 9.50% Cash, 1.00% LIBOR Floor) (10)(13) 10/11/2021 5,805,894 5,805,894 2,249,835 1.57 % Senior Secured First Lien Term Loan B (LIBOR + 13.00% PIK, 1.00% LIBOR Floor) (10)(13) 10/11/2021 7,646,823 6,483,741 - 0.00 % Warrants - 7.68% of Outstanding Equity 123,867 499,751 - 0.00 % 13,576,584 12,789,386 2,249,835 1.57 % URT Acquisition Holdings Corporation Services: Business Warrants 28,912 - 920,000 0.64 % 28,912 - 920,000 0.64 % US Multifamily, LLC (11) Banking, Finance, Insurance & Real Estate Senior Secured First Lien Term Loan (10.00% Cash) 12/31/2022 2,577,418 2,577,418 2,577,418 1.79 % Equity - 33,300 Preferred Units 33,300 3,330,000 2,236,261 1.56 % 2,610,718 5,907,418 4,813,679 3.35 % Subtotal Affiliated Investments $ 97,279,579 $ 75,963,427 $ 57,595,245 40.08 % Controlled Investments : (7) FlexFIN LLC Services: Business Equity Interest $ 2,500,000 $ 2,500,000 $ 2,500,000 1.74 % 2,500,000 2,500,000 2,500,000 1.74 % NVTN LLC (8) Hotel, Gaming & Leisure Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 4.00% Cash, 1.00% LIBOR Floor) (10)(13)(16) 12/31/2024 6,565,875 6,565,875 6,414,860 4.47 % Senior Secured First Lien Super Priority DDTL (LIBOR + 4.00% Cash, 1.00% LIBOR Floor) (13)(16) 12/31/2024 1,000,000 998,150 977,000 0.68 % Senior Secured First Lien Term Loan B (LIBOR + 9.25% PIK, 1.00% LIBOR Floor) (10)(13) 12/31/2024 14,963,195 12,305,096 - 0.00 % F- 10 Company (1) Industry Type of Investment Maturity Par Amount (2) Cost (3) Fair Value (4) % of Net Assets (5) Senior Secured First Lien Term Loan C (LIBOR + 12.00% PIK, 1.00% LIBOR Floor) (10)(13) 12/31/2024 10,014,223 7,570,054 - 0.00 % Equity - 787.4 Class A Units 9,550,922 9,550,922 - 0.00 % 42,094,215 36,990,097 7,391,860 5.15 % Subtotal Control Investments $ 44,594,215 $ 39,490,097 $ 9,891,860 6.89 % Total Investments, September 30, 2021 $ 217,192,285 $ 207,667,691 $ 151,639,783 105.53 % The accompanying notes are an integral part of these consolidated financial statements. F- 11 (1) All of our investments are domiciled in the United States. Certain investments also have international operations. (2) Par amount includes accumulated payment-in-kind (“PIK”) interest, as applicable, and is net of repayments. (3) Net unrealized depreciation for U.S. federal income tax purposes totaled $55,318,330. The tax cost basis of investments is $206,958,113 as of September 30, 2021. (4) Unless otherwise indicated, all securities are valued using significant unobservable inputs, which are categorized as Level 3 assets under the definition of ASC 820 fair value hierarchy (see Note 4). (5) Percentage is based on net assets of $143,693,981 as of September 30, 2021. (6) Affiliated Investments are defined by the 1940 Act as investments in companies in which the Company owns between 5% and 25% outstanding voting securities or is under common control with such portfolio company. (7) Control Investments are defined by the Investment Company Act of 1940, as amended (the “1940 Act”), as investments in companies in which the Company owns more than 25% of the voting securities or maintains greater than 50% of the board representation. (8) The investment has an unfunded commitment as of September 30, 2021 (see Note 8), and fair value includes the value of any unfunded commitments. (9) Represents 1.3% partnership interest in Watermill-QMC Partners, LP and Watermill-EMI Partners, LP. (10) The investment was on non-accrual status as of September 30, 2021. (11) The investment is not a qualifying asset as defined under Section 55(a) of 1940 Act, in a whole, or in part. As of September 30, 2021, 20.18% of the Company’s portfolio investments were non-qualifying assets. (12) Security is non-income producing. (13) The interest rate on these loans is subject to the greater of a London Interbank Offering Rate (“LIBOR”) floor, or 1 month LIBOR plus a base rate. The 1 month LIBOR as of September 30, 2021 was 0.08%. (14) The interest rate on these loans is subject to the greater of a LIBOR floor, or 3 month LIBOR plus a base rate. The 3 month LIBOR as of September 30, 2021 was 0.13 %. (15) The interest rate on these loans is subject to 3 month LIBOR plus a base rate. The 3 month LIBOR as of September 30, 2021 was 0.13 %. (16) This investment earns 0.50% commitment fee on all unused commitment as of September 30, 2021, and is recorded as a component of interest income on the Consolidated Statements of Operations. (17) This investment represents a Level 1 security in the ASC 820 table as of September 30, 2021 (see Note 4). (18) This investment represents a Level 2 security in the ASC 820 table as of September 30, 2021 (see Note 4). (19) As a practical expedient, the Company uses net asset value (“NAV”) to determine the fair value of this investment. (20) The interest rate on this preferred equity is fixed-to-floating and will shift to 3 month LIBOR plus a 4.743% spread on 9/30/2025. (21) The interest rate on this preferred equity is fixed-to-floating and will shift to 3 month LIBOR plus a 5.29% spread on 9/27/2027. (22) The interest rate on this preferred equity is fixed-to-floating and will shift to 3 month LIBOR plus a 5.64% spread on 8/15/2024. (23) The interest rate on this preferred equity is fixed-to-floating and will shift to 3 month LIBOR plus a 6.429% spread on 1/15/2025. (24) The interest rate on this preferred equity is fixed-to-floating and will shift to 3 month LIBOR plus a 5.345% spread on 3/31/2025. (25) The maturity date was extended to May 1, 2023 subsequent to September 30, 2021. F- 12 PHENIXFIN CORPORATION Consolidated Schedule of Investments September 30, 2020 Company (1) Industry Type of Investment Maturity Par Amount (2) Cost (3) Fair Value (6) % of Net Assets (4) Non-Controlled/Non-Affiliated Investments: Alpine SG, LLC High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 5.75% Cash, 1.00% LIBOR Floor) (13) 11/16/2022 4,715,809 4,715,809 4,466,815 3.0 % Senior Secured Incremental First Lien Term Loan (LIBOR + 8.50% Cash, 1.00% LIBOR Floor) (13) 11/16/2022 472,087 472,087 472,087 0.3 % Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 5.75% Cash, 1.00% LIBOR Floor) (13) 11/16/2022 2,277,293 2,277,293 2,157,052 1.4 % Revolving Credit Facility (LIBOR + 5.75% Cash, 1.00% LIBOR Floor) (13)(15) 11/16/2022 1,000,000 1,000,000 947,200 0.6 % 8,465,189 8,465,189 8,043,154 American Dental Partners, Inc. Healthcare & Pharmaceuticals Senior Secured Second Lien Term Loan (LIBOR + 8.50% Cash, 1.00% LIBOR Floor) (13) 9/25/2023 4,387,500 4,387,500 3,948,750 2.6 % 4,387,500 4,387,500 3,948,750 Autosplice, Inc. High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 8.00% Cash, 1.00% LIBOR Floor) (13) 12/17/2021 12,780,349 12,780,349 11,898,505 7.9 % 12,780,349 12,780,349 11,898,505 Avantor, Inc. (10) Wholesale Equity - 545,931 Common Units (16) — 9,553,793 12,277,988 8.2 % — 9,553,793 12,277,988 Be Green Packaging, LLC Containers, Packaging & Glass Equity - 417 Common Units — 416,250 — 0.0 % — 416,250 — CM Finance SPV, LLC Banking, Finance, Insurance & Real Estate Unsecured Debt 6/24/2021 101,463 101,463 101,463 0.1 % 101,463 101,463 101,463 CPI International, Inc. Aerospace & Defense Senior Secured Second Lien Term Loan (LIBOR + 7.25% Cash, 1.00% LIBOR Floor) (12) 7/28/2025 2,607,062 2,598,252 2,219,392 1.5 % 2,607,062 2,598,252 2,219,392 Crow Precision Components, LLC Aerospace & Defense Equity - 350 Common Units — 700,000 723,131 0.5 % — 700,000 723,131 CT Technologies Intermediate Holdings, Inc. (11) Healthcare & Pharmaceuticals Senior Secured Second Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor) (13) 12/1/2022 7,500,000 7,500,000 6,832,500 4.5 % 7,500,000 7,500,000 6,832,500 DataOnline Corp. (7) High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor) (13) 11/13/2025 4,962,500 4,962,500 4,786,331 3.2 % Revolving Credit Facility (LIBOR + 6.25% Cash, 1.00% LIBOR Floor) (13)(15) 11/13/2025 535,714 535,714 510,357 0.3 % 5,498,214 5,498,214 5,296,688 Dream Finders Homes, LLC Construction & Building Preferred Equity (8.00% PIK) 4,531,472 4,531,472 3,928,786 2.6 % 4,531,472 4,531,472 3,928,786 F- 13 Company (1) Industry Type of Investment Maturity Par Amount (2) Cost (3) Fair Value (6) % of Net Assets (4) Footprint Acquisition, LLC Services: Business Preferred Equity (8.75% PIK) 3,969,998 3,969,998 3,969,998 2.6 % Equity - 150 Common Units — — 1,960,830 1.3 % 3,969,998 3,969,998 5,930,828 Global Accessories Group, LLC (11) Consumer goods: Non-durable Equity - 3.8% Membership Interest — 151,337 — 0.0 % — 151,337 — Impact Group, LLC Services: Business Senior Secured First Lien Term Loan (LIBOR + 7.37% Cash, 1.00% LIBOR Floor) (13) 6/27/2023 3,219,964 3,219,964 2,994,565 2.0 % Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 7.37% Cash, 1.00% LIBOR Floor) (13) 6/27/2023 9,330,056 9,330,056 8,676,952 5.8 % 12,550,020 12,550,020 11,671,517 — InterFlex Acquisition Company, LLC Containers, Packaging & Glass Senior Secured First Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor) (12) 8/18/2022 12,098,406 12,098,406 11,987,100 8.0 % 12,098,406 12,098,406 11,987,100 Lighting Science Group Corporation Containers, Packaging & Glass Warrants - 0.62% of Outstanding Equity (17) 2/19/2024 — 955,680 — 0.0 % — 955,680 — Manna Pro Products, LLC Consumer goods: Non-durable Senior Secured First Lien Term Loan (LIBOR + 6.00% Cash, 1.00% LIBOR Floor) (12) 12/8/2023 5,343,674 5,343,674 5,123,515 3.4 % Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.00% Cash, 1.00% LIBOR Floor) (12) 12/8/2023 1,085,219 1,085,219 1,040,508 0.7 % 6,428,893 6,428,893 6,164,023 Point.360 Services: Business Senior Secured First Lien Term Loan (LIBOR + 6.00% PIK) (9)(14)(21) 7/8/2020 2,777,366 2,103,712 186,083 0.1 % 2,777,366 2,103,712 186,083 RateGain Technologies, Inc. Hotel, Gaming & Leisure Unsecured Debt (18) 7/31/2020 704,106 704,106 — 0.0 % Unsecured Debt (18) 7/31/2021 761,905 761,905 — 0.0 % 1,466,011 1,466,011 — Redwood Services Group, LLC (7) Services: Business Revolving Credit Facility (LIBOR + 6.00% Cash, 1.00% LIBOR Floor) (12 )(15) 6/6/2023 700,000 700,000 647,500 0.4 % 700,000 700,000 647,500 Sendero Drilling Company, LLC Energy: Oil & Gas Unsecured Debt (8.00% Cash) (9) 8/31/2021 488,750 465,319 — 0.0 % 488,750 465,319 — Seotowncenter, Inc. Services: Business Equity - 3,434,169.6 Common Units — 566,475 686,834 0.5 % — 566,475 686,834 SFP Holding, Inc. Construction & Building Senior Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor) (13) 9/1/2022 4,776,955 4,776,955 4,733,962 3.1 % Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor) (13) 9/1/2022 1,852,522 1,852,522 1,835,850 1.2 % Equity - 101,165.93 Common Units in CI (Summit) Investment Holdings LLC — 1,067,546 657,578 0.4 % 6,629,477 7,697,023 7,227,390 F- 14 Company (1) Industry Type of Investment Maturity Par Amount (2) Cost (3) Fair Value (6) % of Net Assets (4) SMART Financial Operations, LLC Retail Equity - 700,000 Class A Preferred Units — 700,000 343,000 0.2 % — 700,000 343,000 Stancor, Inc. Services: Business Equity - 263,814.43 Class A Units — 263,814 150,374 0.1 % — 263,814 150,374 Starfish Holdco, LLC High Tech Industries Senior Secured Second Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor) (12) 8/18/2025 1,000,000 989,935 926,500 0.6 % 1,000,000 989,935 926,500 — URT Acquisition Holdings Corporation Services: Business Unsecured Debt (10.00% PIK) 6/23/2021 2,567,929 2,567,929 2,567,929 1.7 % 2,567,929 2,567,929 2,567,929 Velocity Pooling Vehicle, LLC Automotive Senior Secured First Lien Term Loan (LIBOR + 11.00% PIK, 1.00% LIBOR Floor) (13) 4/28/2023 1,014,440 951,628 1,014,440 0.7 % Equity - 5,441 Class A Units — 302,464 12,841 0.0 % Warrants - 0.65% of Outstanding Equity 3/30/2028 — 361,667 15,354 0.0 % 1,014,440 1,615,759 1,042,635 Walker Edison Furniture Company LLC Consumer goods: Durable Senior Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor) (13) 9/26/2024 3,519,878 3,519,878 3,519,878 2.3 % Equity - 1,500 Common Units — 1,500,000 6,000,000 4.0 % 3,519,878 5,019,878 9,519,878 Watermill-QMC Midco, Inc. Automotive Equity - 1.3% Partnership Interest (8) — 518,283 — 0.0 % — 518,283 — Subtotal Non-Controlled/Non-Affiliated Investments $ 101,082,417 $ 117,360,954 $ 114,321,948 Affiliated Investments : (20) 1888 Industrial Services, LLC (7) Energy: Oil & Gas Senior Secured First Lien Term Loan A (LIBOR + 5.00% PIK, 9/30/2021 9,946,741 9,473,067 — 0.0 % 1.00% LIBOR Floor) (9)(13) Senior Secured First Lien Term Loan B (LIBOR + 8.00% PIK, 1.00% LIBOR Floor) (9)(13) 9/30/2021 25,937,520 19,468,870 — 0.0 % Senior Secured First Lien Term Loan C (LIBOR + 5.00%, 1.00% LIBOR Floor) (9)(13) 9/30/2021 1,231,932 1,191,257 1,166,763 0.8 % Revolving Credit Facility (LIBOR + 5.00% PIK, 1.00% LIBOR Floor) (13)(15) 9/30/2021 3,554,069 3,554,069 3,554,069 2.4 % Equity - 17,493.63 Class A Units — — — 0.0 % 40,670,262 33,687,263 4,720,832 Access Media Holdings, LLC Media: Broadcasting & Subscription Senior Secured First Lien Term Loan (10.00% PIK) (9)(21) 7/22/2020 11,105,630 8,446,385 1,110,563 0.7 % Preferred Equity Series A 1,600,000 1,600,000 — 0.0 % Preferred Equity Series AA 800,000 800,000 — 0.0 % Preferred Equity Series AAA 971,200 971,200 — 0.0 % Equity - 16 Common Units — — — 0.0 % 14,476,830 11,817,585 1,110,563 Black Angus Steakhouses, LLC Hotel, Gaming & Leisure Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor) (12) 12/31/2020 758,929 758,929 758,929 0.5 % Senior Secured First Lien Term Loan (LIBOR + 9.00% PIK, 1.00% LIBOR Floor) (9)(12) 12/31/2020 8,412,596 7,767,532 5,047,557 3.4 % Equity - 17.9% Membership Interest — — — 0.0 % 9,171,525 8,526,461 5,806,486 F- 15 Company (1) Industry Type of Investment Maturity Par Amount (2) Cost (3) Fair Value (6) % of Net Assets (4) Caddo Investors Holdings 1 LLC (10) Forest Products & Paper Equity - 6.15% Membership Interest (19) — 2,528,826 2,990,776 2.0 % — 2,528,826 2,990,776 — Dynamic Energy Services International LLC Energy: Oil & Gas Senior Secured First Lien Term Loan (LIBOR + 13.50% PIK) (9)(14) 12/31/2021 12,930,235 7,824,974 905,116 0.6 % Equity - 12,350,000 Class A Units — — — 0.0 % 12,930,235 7,824,974 905,116 JFL-NGS Partners, LLC Construction & Building Preferred Equity - A-2 Preferred (3.00% PIK) 1,795,034 1,795,034 1,795,034 1.2 % Preferred Equity - A-1 Preferred (3.00% PIK) 232,292 232,292 232,292 0.2 % Equity - 57,300 Class B Units — 57,300 38,780,067 25.7 % 2,027,326 2,084,626 40,807,393 — JFL-WCS Partners, LLC Environmental Industries Preferred Equity - Class A Preferred (6.00% PIK) 1,310,649 1,310,649 1,310,649 0.9 % Equity - 129,588 Class B Units — 129,588 4,535,580 3.0 % 1,310,649 1,440,237 5,846,229 — Kemmerer Operations, LLC (7) Metals & Mining Senior Secured First Lien Term Loan (15.00% PIK) 6/21/2023 2,051,705 2,051,705 2,051,705 1.4 % Senior Secured First Lien Delayed Draw Term Loan (15.00% PIK) 6/21/2023 515,699 515,699 515,699 0.4 % Equity - 6.7797 Common Units — 962,717 962,717 0.6 % 2,567,404 3,530,121 3,530,121 Path Medical, LLC Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan A (LIBOR + 9.50% Cash, 1.00% LIBOR Floor) (12) 10/11/2021 5,905,080 5,905,080 5,905,080 3.9 % Senior Secured First Lien Term Loan B (LIBOR + 13% PIK, 1.00% LIBOR Floor) (9)(12) 10/11/2021 7,783,840 6,599,918 6,794,514 4.5 % Warrants - 7.68% of Outstanding Equity 1/9/2027 — 499,751 — 0.0 % 13,688,920 13,004,749 12,699,594 US Multifamily, LLC (10) Banking, Finance, Insurance & Real Estate Senior Secured First Lien Term Loan (10.00% Cash) 6/17/2021 5,123,913 5,123,913 5,123,913 3.4 % Equity - 33,300 Preferred Units — 3,330,000 1,332,000 0.9 % 5,123,913 8,453,913 6,455,913 Subtotal Affiliated Investments $ 101,967,064 $ 92,898,755 $ 84,873,023 Controlled Investments : (5) MCC Senior Loan Strategy JV I LLC (10) Multisector Holdings Equity - 87.5% ownership of MCC Senior Loan Strategy JV I LLC — 79,887,500 41,018,500 27.2 % — 79,887,500 41,018,500 F- 16 Company (1) Industry Type of Investment Maturity Par Amount (2) Cost (3) Fair Value (6) % of Net Assets (4) NVTN LLC (7) Hotel, Gaming & Leisure Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 4.00% Cash, 1.00% LIBOR Floor) (9)(12) 12/31/2024 6,565,875 6,565,875 4,530,078 3.0 % Senior Secured First Lien Super Priority DDTL (LIBOR + 4.00% Cash, 1.00% LIBOR Floor) (9)(12) 12/31/2024 2,000,000 1,995,374 2,000,000 1.3 % Senior Secured First Lien Term Loan B (LIBOR + 9.25% PIK, 1.00% LIBOR Floor) (9)(12) 12/31/2024 14,963,195 12,305,096 — 0.0 % Senior Secured First Lien Term Loan C (LIBOR + 12.00% 12/31/2024 10,014,223 7,570,054 — 0.0 % PIK, 1.00% LIBOR Floor) (9)(12) Equity - 787.4 Class A Units — 9,550,922 — 0.0 % 33,543,293 37,987,321 6,530,078 Subtotal Control Investments $ 33,543,293 $ 117,874,821 $ 47,548,578 Total Investments, September 30, 2020 $ 236,592,774 $ 328,134,530 $ 246,743,549 163.8 % (1) All of our investments are domiciled in the United States. Certain investments also have international operations. (2) Par amount includes accumulated payment-in-kind (“PIK”) interest, as applicable, and is net of repayments. (3) Gross unrealized appreciation, gross unrealized depreciation, and net unrealized depreciation for U.S. federal income tax purposes totaled $53,757,923, $134,877,746, and $81,119,823, respectively. The tax cost basis of investments is $327,863,372 as of September 30, 2020. (4) Percentage is based on net assets of $150,619,517 as of September 30, 2020. (5) Control Investments are defined by the Investment Company Act of 1940, as amended (the “1940 Act”), as investments in companies in which the Company owns more than 25% of the voting securities or maintains greater than 50% of the board representation. (6) Unless otherwise indicated, all securities are valued using significant unobservable inputs, which are categorized as Level 3 assets under the definition of ASC 820 fair value hierarchy (see Note 4). (7) The investment has an unfunded commitment as of September 30, 2020 (see Note 8),and includes an analysis of the value of any unfunded commitments. (8) Represents 1.3% partnership interest in Watermill-QMC Partners, LP and Watermill-EMI Partners, LP. (9) The investment was on non-accrual status as of September 30, 2020. (10) The investment is not a qualifying asset as defined under Section 55(a) of 1940 Act, in a whole, or in part. As of September 30, 2020, 25.4% of the Company’s portfolio investments were non-qualifying assets. (11) A portion of this investment was sold via a participation agreement. The amount stated is the portion retained by the Company (see Note 3). (12) The interest rate on these loans is subject to the greater of a London Interbank Offering Rate (“LIBOR”) floor, or 1 month LIBOR plus a base rate. The 1 month LIBOR as of September 30, 2020 was 0.15%. (13) The interest rate on these loans is subject to the greater of a LIBOR floor, or 3 month LIBOR plus a base rate. The 3 month LIBOR as of September 30, 2020 was 0.23%. (14) The interest rate on these loans is subject to 3 month LIBOR plus a base rate. The 3 month LIBOR as of September 30, 2020 was 0.24%. (15) This investment earns 0.50% commitment fee on all unused commitment as of September 30, 2020, and is recorded as a component of interest income on the Consolidated Statements of Operations. (16) This investment represents a Level 1 security in the ASC 820 table as of September 30, 2020 (see Note 4). (17) This investment represents a Level 2 security in the ASC 820 table as of September 30, 2020 (see Note 4). (18) Security is non-income producing. (19) As a practical expedient, the Company uses net asset value (“NAV”) to determine the fair value of this investment. (20) Affiliated Investments are defined by the 1940 Act as investments in companies in which the Company owns between 5% and 25% outstanding voting securities or is under common control with such portfolio company. (21) The investment was past due as of September 30, 2020. See accompanying notes to consolidated financial statements. F- 17 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements September 30, 2021 Note 1. Organization PhenixFIN Corporation (“PhenixFIN.” the “Company,” “we” and “us”) is an internally-managed non-diversified closed end management investment company incorporated in Delaware that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). We completed our initial public offering (“IPO”) and commenced operations on January 20, 2011. The Company has elected, and intends to qualify annually, to be treated, for U.S. federal income tax purposes, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). On November 18, 2020, the board of directors of the Company approved the adoption of an internalized management structure, effective January 1, 2021. Until close of business on December 31, 2020 we were externally managed and advised by MCC Advisors LLC (“MCC Advisors”), pursuant to an investment management agreement. MCC Advisors is a wholly owned subsidiary of Medley LLC, which is controlled by Medley Management Inc. (NYSE: MDLY), a publicly traded asset management firm (“MDLY”), which in turn is controlled by Medley Group LLC, an entity wholly owned by the senior professionals of Medley LLC. We use the term “Medley” to refer collectively to the activities and operations of Medley Capital LLC, Medley LLC, MDLY, Medley Group LLC, MCC Advisors, associated investment funds and their respective affiliates. Since January 1, 2021 the Company has been managed pursuant to an internalized management structure. On March 26, 2013, our wholly owned subsidiary, Medley SBIC, LP (“SBIC LP”), a Delaware limited partnership that we own directly and through our wholly owned subsidiary, Medley SBIC GP, LLC, received a license from the Small Business Administration (“SBA”) to operate as a Small Business Investment Company (“SBIC”) under Section 301(c) of the Small Business Investment Company Act of 1958, as amended. Effective July 1, 2019, SBIC LP surrendered its SBIC license and changed its name to Medley Small Business Fund, LP. In addition, Medley SBIC GP, LLC changed its name to Medley Small Business Fund GP, LLC. Medley Small Business Fund, LP and Medley Small Business Fund GP, LLC have since changed their names to PhenixFIN Small Business Fund, LP and PhenixFIN Small Business Fund GP, LLC, respectively. The Company has formed and expects to continue to form certain taxable subsidiaries (the “Taxable Subsidiaries”), which are taxed as corporations for federal income tax purposes. These Taxable Subsidiaries allow us to, among other things, hold equity securities of portfolio companies organized as pass-through entities while continuing to satisfy the requirements of a RIC under the Code. The Company’s investment objective is to generate current income and capital appreciation. The management team seeks to achieve this objective primarily through making loans, private equity or other investments in privately-held companies. The Company may also make debt, equity or other investments in publicly-traded companies. (These investments may also include investments in other BDCs, closed-end funds or REITs.) We may also pursue other strategic opportunities and invest in other assets or operate other businesses to achieve our investment objective, such as operating and managing an asset-based lending business. The portfolio generally consists of senior secured first lien term loans, senior secured second lien term loans, senior secured bonds, preferred equity and common equity. Occasionally, we will receive warrants or other equity participation features which we believe will have the potential to increase total investment returns. Our loan and other debt investments are primarily rated below investment grade or are unrated. Investments in below investment grade securities are considered predominantly speculative with respect to the issuer’s capacity to pay interest and repay principal when due. Reverse Stock Split; Authorized Share Reduction At the Company’s 2020 Annual Meeting of Stockholders held on June 30, 2020 (the “Annual Meeting”), stockholders approved a proposal to grant discretionary authority to the Company’s board of directors to amend the Company’s Certificate of Incorporation (the “Certificate of Incorporation”) to effect a reverse stock split of its common stock, of 1-20 (the “Reverse Stock Split”) and with the Reverse Stock Split to be effective at such time and date, if at all, as determined by the board of directors, but not later than 60 days after stockholder approval thereof and, if and when the reverse stock split is effected, reduce the number of authorized shares of common stock by the approved reverse stock split ratio (the “Authorized Share Reduction”). Following the 2020 Annual Meeting, on July 7, 2020, the board of directors determined that it was in the best interests of the Company and its stockholders to implement the Reverse Stock Split and the Authorized Share Reduction. Accordingly, on July 13, 2020, the Company filed a Certificate of Amendment (the “Certificate of Amendment”) to the Certificate of Incorporation with the Secretary of State of the State of Delaware to effect the Reverse Stock Split and the Authorized Share Reduction. F- 18 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 Pursuant to the Certificate of Amendment, effective as of 5:00 p.m., Eastern Time, on July 24, 2020 (the “Effective Time”), each twenty (20) shares of common stock issued and outstanding, immediately prior to the Effective Time, automatically and without any action on the part of the respective holders thereof, were combined and converted into one (1) share of common stock. In connection with the Reverse Stock Split, the Certificate of Amendment provided for a reduction in the number of authorized shares of common stock from 100,000,000 to 5,000,000 shares of common stock. No fractional shares were issued as a result of the Reverse Stock Split. Instead, any stockholder who would have been entitled to receive a fractional share as a result of the Reverse Stock Split received cash payments in lieu of such fractional shares (without interest and subject to backup withholding and applicable withholding taxes). On December 21, 2020, the Company announced that it completed the application process for and was authorized to transfer the listing of its shares of common stock to the NASDAQ Global Market. The listing and trading of the common stock on the NYSE ceased at the close of trading on December 31, 2020. Since January 4, 2021, the common stock trades on the NASDAQ Global Market under the trading symbol “PFX.” Sale of MCC JV On October 8, 2020, the Company, Great American Life Insurance Company (“GALIC”), MCC Senior Loan Strategy JV I LLC (the “MCC JV”), and an affiliate of Golub Capital LLC (“Golub”) entered into a Membership Interest Purchase Agreement pursuant to which a fund affiliated with and managed by Golub concurrently purchased all of the Company’s interest in the MCC JV and all of GALIC’s interest in the MCC JV for a pre-adjusted gross purchase price of $156.4 million and an adjusted gross purchase price (which constitutes the aggregate consideration for the membership interests) of $145.3 million (giving effect to adjustments primarily for principal and interest payments from portfolio companies of MCC JV from July 1, 2020 through October 7, 2020), resulting in net proceeds (before transaction expenses) of $41.0 million and $6.6 million for the Company and GALIC, respectively. COVID-19 Developments The COVID-19 pandemic continues to have adverse consequences on the U.S. and global economies, as well as on the Company (including certain portfolio companies) in particular. The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual portfolio companies, remains uncertain. The Company’s performance (including that of certain of its portfolio companies) was negatively impacted during the pandemic. The longer-term impact of COVID-19 on the operations and the performance of the Company (including certain portfolio companies) is difficult to predict, but may continue to be adverse. The longer-term potential impact on such operations and performance could depend to a large extent on future developments and actions taken by authorities and other entities to mitigate COVID-19 and its economic impact. The impacts, as well as the uncertainty over impacts to come, of COVID-19 (including the Delta variant) have adversely affected the performance of the Company (including certain portfolio companies) and may continue to do so in the future. Further, the potential exists for additional variants of COVID-19, including the Omicron variant , to impede the global economic recovery and exacerbate geographic differences in the spread of, and response to, COVID-19. F- 19 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 Note 2. Significant Accounting Policies Basis of Presentation The Company is an investment company following the accounting and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 946 (“ASC 946”), Financial Services – Investment Companies. The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with U.S. generally accepted accounting principles (“GAAP”) and include the consolidated accounts of the Company and its wholly owned subsidiaries PhenixFIN Small Business Fund, LP (“PhenixFIN Small Business Fund”) and PhenixFIN SLF Funding I LLC (“PhenixFIN SLF”), and its wholly owned Taxable Subsidiaries. All references made to the “Company,” “we,” and “us” herein include PhenixFIN Corporation and its consolidated subsidiaries, except as stated otherwise. Additionally, the accompanying consolidated financial statements of the Company and related financial information have been prepared pursuant to the requirements for reporting on Form 10-K and Article 10 of Regulation S-X of the Securities Act of 1933. Cash, Restricted Cash and Cash Equivalents The Company considers cash equivalents to be highly liquid investments with original maturities of three months or less. Cash and cash equivalents include deposits in a money market account. The Company deposits its cash in financial institutions and, at times, such balances may be in excess of the Federal Deposit Insurance Corporation insurance limits. As of September 30, 2021 and 2020, we had $69.4 million and $56.5 million in cash and cash equivalents, respectively. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Debt Issuance Costs Debt issuance costs incurred in connection with any credit facilities and unsecured notes (see Note 5) are deferred and amortized over the life of the respective credit facility or instrument. Indemnification In the normal course of business, the Company enters into contractual agreements that provide general indemnifications against losses, costs, claims and liabilities arising from the performance of individual obligations under such agreements. The Company has had no material claims or payments pursuant to such agreements. The Company’s individual maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. However, based on management’s experience, the Company expects the risk of loss to be remote. Revenue Recognition Interest income, adjusted for amortization of premiums and accretion of discounts, is recorded on an accrual basis. Dividend income, which represents dividends from equity investments and distributions from Taxable Subsidiaries, is recorded on the ex-dividend date and when the distribution is received, respectively. The Company holds debt investments in its portfolio that contain a payment-in-kind (“PIK”) interest provision. PIK interest, which represents contractually deferred interest added to the investment balance that is generally due at maturity, is recorded on the accrual basis to the extent such amounts are expected to be collected. PIK interest is not accrued if the Company does not expect the issuer to be able to pay all principal and interest when due. For the years ended September 30, 2021, 2020 and 2019, the Company earned approximately $0.9 million, $3.8 million, and $7.2 million in PIK interest, respectively. F- 20 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 Origination/closing, amendment and transaction break-up fees associated with investments in portfolio companies are recognized as income when we become entitled to such fees. Prepayment penalties received by the Company for debt instruments paid back to the Company prior to the maturity date are recorded as income upon repayment of debt. Administrative agent fees received by the Company are capitalized as deferred revenue and recorded as fee income when the services are rendered. For the years ended September 30, 2021, 2020 and 2019, fee income was approximately $2.6 million, $0.7 million and $2.3 million, respectively (see Note 9). Investment transactions are accounted for on a trade date basis. Realized gains or losses on investments are measured by the difference between the net proceeds from the disposition and the amortized cost basis of investment, without regard to unrealized gains or losses previously recognized. During the years ended September 30, 2020 and 2019, $0.9 million and $47.8 million, respectively, of the Company’s realized losses were related to certain non-cash restructuring transactions, which are recorded on the Consolidated Statements of Operations as a component of net realized gain/(loss) from investments. The Company reports changes in fair value of investments as a component of the net unrealized appreciation/(depreciation) on investments in the Consolidated Statements of Operations. Management reviews all loans that become 90 days or more past due on principal or interest or when there is reasonable doubt that principal or interest will be collected for possible placement on management’s designation of non-accrual status. Interest receivable is analyzed regularly and may be reserved against when deemed not collectible. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current, although we may make exceptions to this general rule if the loan has sufficient collateral value and is in the process of collection. At September 30, 2021, certain investments in 9 portfolio companies held by the Company were on non-accrual status with a combined fair value of approximately $13.9 million, or 9.2% of the fair value of our portfolio. At September 30, 2020, certain investments in eight portfolio companies held by the Company were on non-accrual status with a combined fair value of approximately $21.7 million, or 8.8% of the fair value of our portfolio. Investment Classification The Company classifies its investments in accordance with the requirements of the 1940 Act. Under the 1940 Act, we would be deemed to “control” a portfolio company if we owned more than 25% of its outstanding voting securities and/or had the power to exercise control over the management or policies of such portfolio company. We refer to such investments in portfolio companies that we “control” as “Control Investments.” Under the 1940 Act, we would be deemed to be an “Affiliated Person” of a portfolio company if we own between 5% and 25% of the portfolio company’s outstanding voting securities or we are under common control with such portfolio company. We refer to such investments in Affiliated Persons as “Affiliated Investments.” Valuation of Investments The Company applies fair value accounting to all of its financial instruments in accordance with the 1940 Act and ASC Topic 820 - Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework used to measure fair value and requires disclosures for fair value measurements. In accordance with ASC 820, the Company has categorized its financial instruments carried at fair value, based on the priority of the valuation technique, into a three-level fair value hierarchy as discussed in Note 4. Fair value is a market-based measure considered from the perspective of the market participant who holds the financial instrument rather than an entity specific measure. Therefore, when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that management believes market participants would use in pricing the financial instrument at the measurement date. Investments for which market quotations are readily available are valued at such market quotations, which are generally obtained from an independent pricing service or multiple broker-dealers or market makers. We weight the use of third-party broker quotations, if any, in determining fair value based on our understanding of the level of actual transactions used by the broker to develop the quote and whether the quote was an indicative price or binding offer. However, debt investments with remaining maturities within 60 days that are not credit impaired are valued at cost plus accreted discount, or minus amortized premium, which approximates fair value. Investments for which market quotations are not readily available are valued at fair value as determined by the Company’s board of directors based upon input from management and third-party valuation firms. Because these investments are illiquid and because there may not be any directly comparable companies whose financial instruments have observable market values, these loans are valued using a fundamental valuation methodology, consistent with traditional asset pricing standards, that is objective and consistently applied across all loans and through time. Investments in investment funds are valued at fair value. Fair values are generally determined utilizing the NAV supplied by, or on behalf of, management of each investment fund, which is net of management and incentive fees or allocations charged by the investment fund and is in accordance with the “practical expedient”, as defined by FASB Accounting Standards Update (“ASU”) 2009-12, Investments in Certain Entities that Calculate Net Asset Value per Share . NAVs received by, or on behalf of, management of each investment fund are based on the fair value of the investment funds’ underlying investments in accordance with policies established by management of each investment fund, as described in each of their financial statements and offering memorandum. If the Company is in the process of the sale of an investment fund, fair value will be determined by actual or estimated sale proceeds. F- 21 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 The methodologies utilized by the Company in estimating the fair value of its investments categorized as Level 3 generally fall into the following two categories: ● The “Market Approach” uses prices and other relevant information generated by market transactions involving identical or comparable (that is, similar) assets, liabilities, or a group of assets and liabilities, such as a business. ● The “Income Approach” converts future amounts (for example, cash flows or income and expenses) to a single current (that is, discounted) amount. When the Income Approach is used, the fair value measurement reflects current market expectations about those future amounts. The Company has engaged third-party valuation firms (the “Valuation Firms”) to assist it and its board of directors in the valuation of its portfolio investments. The valuation reports generated by the Valuation Firms consider the evaluation of financing and sale transactions with third parties, expected cash flows and market-based information, including comparable transactions, performance multiples, and movement in yields of debt instruments, among other factors. The Company uses a market yield analysis under the Income Approach or an enterprise model of valuation under the Market Approach, or a combination thereof. In applying the market yield analysis, the value of the Company’s loans is determined based upon inputs such as the coupon rate, current market yield, interest rate spreads of similar securities, the stated value of the loan, and the length to maturity. In applying the enterprise model, the Company uses a waterfall analysis, which takes into account the specific capital structure of the borrower and the related seniority of the instruments within the borrower’s capital structure into consideration. To estimate the enterprise value of the portfolio company, we weigh some or all of the traditional market valuation methods and factors based on the individual circumstances of the portfolio company in order to estimate the enterprise value. The methodologies and information that the Company utilizes when applying the Market Approach for performing investments include, among other things: ● valuations of comparable public companies (“Guideline Comparable Approach”); ● recent sales of private and public comparable companies (“Guideline Comparable Approach”); ● recent acquisition prices of the company, debt securities or equity securities (“Recent Arms-Length Transaction”); ● external valuations of the portfolio company, offers from third parties to buy the company (“Estimated Sales Proceeds Approach”); ● subsequent sales made by the company of its investments (“Expected Sales Proceeds Approach”); and ● estimating the value to potential buyers. The methodologies and information that the Company utilizes when applying the Income Approach for performing investments include: ● discounting the forecasted cash flows of the portfolio company or securities (Discounted Cash Flow (“DCF”) Approach); and ● Black-Scholes model or simulation models or a combination thereof (Income Approach - Option Model) with respect to the valuation of warrants. For non-performing investments, we may estimate the liquidation or collateral value of the portfolio company’s assets and liabilities using an expected recovery model (Market Approach - Expected Recovery Analysis or Estimated Liquidation Proceeds). We undertake a multi-step valuation process each quarter when valuing investments for which market quotations are not readily available, as described below: ● our quarterly valuation process generally begins with each portfolio investment being internally valued by a Valuation Firm; ● preliminary valuation conclusions are then documented and discussed with senior management; ● the audit committee of the board of directors reviews the preliminary valuations with management and the Valuation Firms; and ● the board of directors discusses the valuations and determines the fair value of each investment in the Company’s portfolio in good faith based on the input of management, the respective Valuation Firms and the audit committee. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ from the values that would have been used had a readily available market value existed for such investments, and the differences could be material. In addition, changes in the market environment (including the impact of COVID-19 on financial markets), portfolio company performance, and other events may occur over the lives of the investments that may cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned. F- 22 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 Fair Value of Financial Instruments The carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts payable and accrued expenses, approximate fair value due to their short-term nature. The carrying amounts and fair values of our long-term obligations are discussed in Note 5. Recent Accounting Pronouncements In March 2020, the FASB issued ASU 2020-04, “Reference rate reform (Topic 848)—Facilitation of the effects of reference rate reform on financial reporting.” The amendments in this update provide optional expedients and exceptions for applying U.S. GAAP to certain contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform and became effective upon issuance for all entities. The Company has agreements that have LIBOR as a reference rate with certain portfolio companies and also with certain lenders. Many of these agreements include language for choosing an alternative successor rate if LIBOR reference is no longer considered to be appropriate. Contract modifications are required to be evaluated in determining whether the modifications result in the establishment of new contracts or the continuation of existing contracts. In January 2021, the FASB issued ASU 2021-01, “Reference rate reform (Topic 848),” which expanded the scope of Topic 848. ASU 2020-04 and ASU 2021-01 are effective through December 31, 2022 when the Company plans to apply the amendments in this update to account for contract modifications due to changes in reference rates. The Company does not believe the adoption of ASU 2020-04 and ASU 2021-01 will have a material impact on its consolidated financial statements and disclosures. In May 2020, the SEC adopted rule amendments that impacted the requirement of investment companies, including BDCs, to disclose the financial statements of certain of their portfolio companies or certain acquired funds (the “Final Rules”). The Final Rules adopted a new definition of “significant subsidiary” set forth in Rule 1-02(w)(2) of Regulation S-X under the Securities Act. Rules 3-09 and 4-08(g) of Regulation S-X require investment companies to include separate financial statements or summary financial information, respectively, in such investment company’s periodic reports for any portfolio company that meets the definition of “significant subsidiary.” The Final Rules adopt a new definition of “significant subsidiary” applicable only to investment companies that (i) modifies the investment test and the income test, and (ii) eliminates the asset test currently in the definition of “significant subsidiary” in Rule 1-02(w) of Regulation S-X. The new Rule 1-02(w)(2) of Regulation S-X is intended to more accurately capture those portfolio companies that are more likely to materially impact the financial condition of an investment company. The Final Rules became effective on January 1, 2021. The Company evaluated the impact of the Final Rules and determined its impact not to be material and began voluntary compliance with the Final Rules since the quarter ended June 30, 2020. Federal Income Taxes The Company has elected, and intends to qualify annually, to be treated as a RIC under Subchapter M of the Code. In order to continue to qualify as a RIC and be eligible for tax treatment under Subchapter M of the Code, among other things, the Company is required to meet certain source of income and asset diversification requirements and timely distribute to its stockholders at least 90% of the sum of investment company taxable income (“ICTI”), as defined by the Code, including PIK interest, and net tax exempt interest income (which is the excess of gross tax exempt interest income over certain disallowed deductions) for each taxable year. Depending on the level of ICTI earned in a tax year, the Company may choose to carry forward ICTI in excess of current year dividend distributions into the next tax year. Any such carryover ICTI must be distributed before the end of that next tax year through a dividend declared prior to filing the final tax return related to the year which generated such ICTI. The Company is subject to a nondeductible U.S. federal excise tax of 4% on undistributed income if it does not distribute at least 98% of its ordinary income in any calendar year and 98.2% of its capital gain net income for each one-year period ending on October 31 of such calendar year and any income realized, but not distributed, in preceding years and on which it did not pay federal income tax. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year dividend distributions for excise tax purposes, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned. There was no provision for federal excise tax for the calendar year ended 2020 accrued at September 30, 2021 and the calendar year ended 2019 accrued at September 30, 2020. For the calendar year ended December 31, 2018, there was no excise tax expense as the Company distributed at least 98% of its ordinary income and 98.2% of its capital gains. The Company’s Taxable Subsidiaries accrue income taxes payable based on the applicable corporate rates on the unrealized gains generated by the investments held by the Taxable Subsidiaries. As of September 30, 2021 and 2020, the Company did not record a deferred tax liability on the Consolidated Statements of Assets and Liabilities. The change in provision for deferred taxes is included as a component of net realized and unrealized gain/(loss) on investments in the Consolidated Statements of Operations. For the years ended September 30, 2021, 2020 and 2019, the Company did not record a change in provision for deferred taxes on the unrealized (appreciation)/depreciation on investments. As of September 30, 2021 and 2020, the Company had a deferred tax asset of $22.2 million and $22.8 million, respectively, consisting primarily of net operating losses and net unrealized losses on the investments held within its Taxable Subsidiaries. As of September 30, 2021 and 2020, the Company has booked a valuation allowance of $22.2 million and $22.8 million, respectively, against its deferred tax asset. ICTI generally differs from net investment income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses. The Company may be required to recognize ICTI in certain circumstances in which it does not receive cash. For example, if the Company holds debt obligations that are treated under applicable tax rules as having original issue discount, the Company must include in ICTI each year a portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by the Company in the same taxable year. The Company may also have to include in ICTI other amounts that it has not yet received in cash, such as 1) PIK interest income and 2) interest income from investments that have been classified as non-accrual for financial reporting purposes. Interest income on non-accrual investments is not recognized for financial reporting purposes, but generally is recognized in ICTI. Because any original issue discount or other amounts accrued will be included in the Company’s ICTI for the year of accrual, the Company may be required to make a distribution to its stockholders in order to satisfy the minimum distribution requirements, even though the Company will not have received and may not ever receive any corresponding cash amount. ICTI also excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized. F- 23 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 Permanent differences between ICTI and net investment income for financial reporting purposes are reclassified among capital accounts in the financial statements to reflect their tax character. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes. During the years ended September 30, 2021, 2020 and 2019, the Company reclassified for book purposes amounts arising from permanent book/tax differences related to the different tax treatment of net operating losses and investments in wholly-owned subsidiaries as follows: For the years ended September 30 2021 2020 2019 Capital in excess of par value $ 24,688,262 $ (1,202,850 ) $ (16,882,923 ) Accumulated undistributed net investment income/(loss) (19,047,396 ) 1,202,850 23,174,206 Accumulated net realized gain/(loss) from investments (5,640,866 ) — (6,291,283 ) For income tax purposes, distributions paid to stockholders are reported as ordinary income, return of capital, long term capital gains or a combination thereof. The tax character of distributions paid for the years ended September 30, 2021, 2020 and 2019 were as follows: For the years ended September 30 2021 2020 2019 Ordinary income $ — $ — $ — Distributions of long-term capital gains — — — Return of capital — — 8,171,130 Distributions on a tax basis $ — $ — $ 8,171,130 For federal income tax purposes, the cost of investments owned at September 30, 2021, 2020 and 2019 were approximately $206.9 million, $327.9 million, and $464.9 million, respectively. At September 30, 2021, 2020 and 2019, the components of distributable earnings/(accumulated deficits) on a tax basis detailed below differ from the amounts reflected in the Company’s Consolidated Statements of Assets and Liabilities by temporary and other book/tax differences, primarily relating to the tax treatment of certain fee income and organizational expenses, as follows: For the years ended September 30 2021 2020 2019 Undistributed ordinary income $ 265,798 $ — $ — Accumulated capital and other losses (1) (490,032,788 ) (440,538,935 ) (389,066,323 ) Other temporary differences (89,856 ) (106,066 ) (122,274 ) Unrealized appreciation/(depreciation) (55,318,332 ) (81,119,823 ) (67,966,064 ) Components of distributable earnings/(accumulated deficits) at year end $ (545,175,178 ) $ (521,764,824 ) $ (457,154,661 ) (1) Under the Regulated Investment Company Modernization Act of 2010, net capital losses recognized for tax years beginning after December 22, 2010, may be carried forward indefinitely, and their character is retained as short-term or long-term losses. As of September 30, 2021, the Company had a long-term capital loss carryforward available to offset future realized capital gains of $488,446,626 and a short-term capital loss carryforward of $1,586,162. The Company accounts for income taxes in conformity with ASC Topic 740 - Income Taxes (“ASC 740”). ASC 740 provides guidelines for how uncertain tax positions should be recognized, measured, presented and disclosed in financial statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions deemed to meet a “more-likely-than-not” threshold would be recorded as a tax benefit or expense in the current period. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Consolidated Statements of Operations. There were no material uncertain income tax positions at September 30, 2021. Although we file federal and state tax returns, our major tax jurisdiction is federal. The Company’s federal and state tax returns for the prior three fiscal years remain open, subject to examination by the Internal Revenue Service and applicable state tax authorities. Retroactive Adjustments for Reverse Stock Split and the Authorized Share Reduction The per share amount of the common stock and the authorized shares of common stock in the audited financial statements and notes thereto have been retroactively adjusted for all periods presented to give effect to the Reverse Stock Split effected on July 24, 2020. See Note 1 for more information regarding the Reverse Stock Split and the Authorized Share Reduction. Segments The Company invests in various industries. The Company separately evaluates the performance of each of its investment relationships. However, because each of these investment relationships has similar business and economic characteristics, they have been aggregated into a single investment segment. All applicable segment disclosures are included in or can be derived from the Company’s financial statements. See Note 3 for further information. F- 24 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 Company Investment Risk, Concentration of Credit Risk, and Liquidity Risk The Company has broad discretion in making investments. Investments generally consist of debt instruments that may be affected by business, financial market or legal uncertainties. Prices of investments may be volatile, and a variety of factors that are inherently difficult to predict, such as domestic or international economic and political developments, may significantly affect the results of the Company’s activities and the value of its investments. In addition, the value of the Company’s portfolio may fluctuate as the general level of interest rates fluctuate. The value of the Company’s investments in loans may be detrimentally affected to the extent, among other things, that a borrower defaults on its obligations, there is insufficient collateral and/or there are extensive legal and other costs incurred in collecting on a defaulted loan, observable secondary or primary market yields for similar instruments issued by comparable companies increase materially or risk premiums required in the market between smaller companies, such as our borrowers, and those for which market yields are observable increase materially. The Company’s assets may, at any time, include securities and other financial instruments or obligations that are illiquid or thinly traded, making purchase or sale of such securities and financial instruments at desired prices or in desired quantities difficult. Furthermore, the sale of any such investments may be possible only at substantial discounts, and it may be extremely difficult to value any such investments accurately. Company performance (including that of certain of its portfolio companies) has been and may continue to be negatively impacted by the COVID-19 pandemic’s effects. The COVID-19 pandemic has adversely impacted economies and capital markets around the world in ways that may continue and may change in unforeseen ways for an indeterminate period. The pandemic has also adversely affected various businesses, including some in which we are invested. The COVID-19 pandemic may exacerbate pre-existing business performance, political, social and economic risks affecting certain companies and countries generally. The impacts, as well as the uncertainty over impacts to come, of COVID-19 (including the Delta variant) have adversely affected the performance of the Company (including certain portfolio companies) and may continue to do so in the future. Further, the potential exists for additional variants of COVID-19, including the Omicron variant, to impede the global economic recovery and exacerbate geographic differences in the spread of, and response to, COVID-19. Note 3. Investments The composition of our investments as of September 30, 2021 as a percentage of our total portfolio, at amortized cost and fair value were as follows (dollars in thousands): Amortized Cost Percentage Fair Value Percentage Senior Secured First Lien Term Loans $ 136,740 65.7 % $ 61,934 40.9 % Senior Secured Second Lien Term Loans 2,600 1.3 2,490 1.6 Senior Secured Notes 9,306 4.5 9,270 6.1 Secured Debt 2,500 1.2 2,500 1.6 Unsecured Debt 1,561 0.8 - - Equity/Warrants 54,961 26.5 75,446 49.8 Total Investments $ 207,668 100.0 % $ 151,640 100.0 % The composition of our investments as of September 30, 2020 as a percentage of our total portfolio, at amortized cost and fair value were as follows (dollars in thousands): Amortized Cost Percentage Fair Value Percentage Senior Secured First Lien Term Loans $ 178,843 54.5 % $ 106,463 43.2 % Senior Secured Second Lien Term Loans 15,476 4.7 13,927 5.6 Unsecured Debt 4,601 1.4 2,669 1.1 MCC Senior Loan Strategy JV I LLC 79,888 24.4 41,019 16.6 Equity/Warrants 49,327 15.0 82,666 33.5 Total $ 328,135 100.0 % $ 246,744 100.0 % In connection with certain of the Company’s investments, the Company receives warrants that are obtained for the objective of increasing the total investment returns and are not held for hedging purposes. At September 30, 2021 and 2020, the total fair value of warrants was $996.7 thousand and $15.3 thousand, respectively, and were included in investments at fair value on the Consolidated Statements of Assets and Liabilities. During the year ended September 30, 2021, the Company acquired additional warrants in one existing portfolio company. During the year ended September 30, 2020, the Company had no warrant activity. Total unrealized depreciation related to warrants for the years ended September 30, 2021, 2020, and 2019 was $981.4 thousand, $9.6 thousand, and $0.5 million, respectively, and was recorded on the Consolidated Statements of Operations as net unrealized appreciation/(depreciation) on investments. The warrants are received in connection with individual investments and are not subject to master netting arrangements. F- 25 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 The following table shows the portfolio composition by industry grouping at fair value at September 30, 2021 (dollars in thousands): Fair Value Percentage Construction & Building $ 31,619 20.8 % Banking, Finance, Insurance & Real Estate 27,916 18.4 High Tech Industries 21,210 14.0 Services: Business 12,415 8.2 Automotive 11,967 7.9 Hotel, Gaming & Leisure 11,931 7.9 Manufacturing 9,270 6.1 Environmental Industries 8,100 5.3 Energy: Oil & Gas 3,579 2.4 Forest Products & Paper 3,455 2.3 Metals & Mining 3,077 2.0 Aerospace & Defense 2,490 1.6 Consumer goods: Durable 2,361 1.6 Healthcare & Pharmaceuticals 2,250 1.5 Total $ 151,640 100.0 % The following table shows the portfolio composition by industry grouping at fair value at September 30, 2020 (dollars in thousands): Fair Value Percentage Construction & Building $ 51,964 21.1 % Multisector Holdings 41,019 16.6 High Tech Industries 26,165 10.6 Healthcare & Pharmaceuticals 23,481 9.5 Services: Business 21,841 8.9 Hotel, Gaming & Leisure 12,337 5.0 Wholesale 12,278 5.0 Containers, Packaging & Glass 11,987 4.8 Consumer goods: Durable 9,520 3.8 Banking, Finance, Insurance & Real Estate 6,557 2.7 Consumer goods: Non-durable 6,164 2.5 Environmental Industries 5,846 2.4 Energy: Oil & Gas 5,626 2.3 Metals & Mining 3,530 1.4 Forest Products & Paper 2,991 1.2 Aerospace & Defense 2,942 1.2 Media: Broadcasting & Subscription 1,110 0.5 Automotive 1,043 0.4 Retail 343 0.1 Total $ 246,744 100.0 % F- 26 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 The Company invests in portfolio companies principally located in North America. The geographic composition is determined by the location of the corporate headquarters of the portfolio company, which may not be indicative of the primary source of the portfolio company’s business. The following table shows the portfolio composition by geographic location at fair value at September 30, 2021 (dollars in thousands): Fair Value Percentage Northeast $ 54,211 35.8 % West 44,030 29.0 Southeast 28,887 19.0 Southwest 17,418 11.5 Midwest 7,094 4.7 Total $ 151,640 100.0 % The following table shows the portfolio composition by geographic location at fair value at September 30, 2020 (dollars in thousands): Fair Value Percentage Northeast $ 98,555 39.9 % West 55,400 22.5 Southeast 42,321 17.1 Midwest 27,574 11.2 Mid-Atlantic 13,334 5.4 Southwest 9,560 3.9 Total $ 246,744 100.0 % F- 27 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 Transactions With Affiliated/Controlled Companies The Company had investments in portfolio companies designated as Affiliated Investments and Controlled Investments under the 1940 Act. Transactions with Affiliated Investments and Controlled Investments during the years ended September 30, 2021 and 2020 were as follows: Name of Investment (3) Type of Investment Fair Value at September 30, 2020 Purchases/ (Sales) of or Advances/ (Distributions) Transfers In/(Out) of Affiliates Unrealized Gain/(Loss) Realized Gain/(Loss) Fair Value at September 30, 2021 Income Earned Affiliated Investments 1888 Industrial Services, LLC Senior Secured First Lien Term Loan A $ - $ - $ - $ - $ - $ - $ - Senior Secured First Lien Term Loan B - - - - - - - Senior Secured First Lien Term Loan C 1,166,763 - - (1,142,124 ) - 24,639 93,832 Revolving Credit Facility 3,554,069 - - - - 3,554,069 219,687 Access Media Holdings, LLC Senior Secured First Lien Term Loan 1,110,563 (1,239,334 ) - 7,335,819 (7,207,048 ) - - Preferred Equity Series A - - - 1,600,000 (1,600,000 ) - - Preferred Equity Series AA - - - 800,000 (800,000 ) - - Preferred Equity Series AAA - - - 971,200 (971,200 ) - - Black Angus Steakhouses,LLC Senior Secured First Lien Delayed Draw Term Loan 758,929 - - - - 758,929 76,947 Senior Secured First Lien Term Loan 5,047,557 - - (2,767,743 ) - 2,279,814 - Senior Secured First Lien Super Priority DDTL - 1,500,000 - - - 1,500,000 125,262 Caddo Investors Holdings 1 LLC Equity 2,990,776 - - 464,010 - 3,454,786 - Dynamic Energy Services International LLC Senior Secured First Lien Term Loan 905,116 (820,278 ) - (408,709 ) 323,871 - - JFL-NGS Partners, LLC Preferred Equity A-2 1,795,034 (2,110,987 ) - - 315,953 - (16,377 ) Preferred Equity A-1 232,292 - - - (232,292 ) - (2,119 ) Equity 38,780,067 - - (11,917,254 ) - 26,862,813 - JFL-WCS Partners, LLC Preferred Equity Class A 1,310,649 (1,330,460 ) - - 19,811 - (53,623 ) Equity 4,535,580 - - 3,564,369 - 8,099,949 - Kemmerer Operations, LLC Senior Secured First Lien Term Loan 2,051,705 330,280 - (21,438 ) - 2,360,547 330,418 Senior Secured First Lien Delayed Draw Term Loan 515,699 (351,784 ) - (1,474 ) - 162,441 54,849 Equity 962,717 - - (408,971 ) - 553,746 - Path Medical, LLC Senior Secured First Lien Term Loan A 5,905,080 (99,186 ) - (3,556,059 ) - 2,249,835 105,026 Senior Secured First Lien Term Loan B 6,794,514 (137,017 ) - (6,678,337 ) 20,840 - 2,974 URT Acquisition Holdings Corporation Unsecured Debt - (2,609,589 ) 2,567,929 - 41,660 - 168,642 Warrants - - - 920,000 - 920,000 - US Multifamily, LLC Senior Secured First Lien Term Loan 5,123,913 (2,546,497 ) - - - 2,577,416 322,095 Equity 1,332,000 - - 904,261 - 2,236,261 - Total Affiliated Investments $ 84,873,023 $ (9,414,852 ) $ 2,567,929 $ (10,342,450 ) $ (10,088,405 ) $ 57,595,245 $ 1,427,613 F- 28 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 Name of Investment (3) Type of Investment Fair Value at September 30, 2020 Purchases/ (Sales) of or Advances/ (Distributions) Transfers In/(Out) of Affiliates Unrealized Gain/(Loss) Realized Gain/(Loss) Fair Value at September 30, 2021 Income Earned Controlled Investments FlexFin LLC Equity Interest $ - $ 2,500,000 $ - $ - $ - $ 2,500,000 $ 75,000 MCC Senior Loan Strategy JV I LLC(1)(2) Equity 41,018,500 (39,739,929 ) - 38,869,000 (40,147,571 ) - - NVTN LLC Senior Secured First Lien Term Loan 4,530,078 - - 1,884,782 - 6,414,860 - Super Priority Senior Secured First Lien Term Loan 2,000,000 (1,000,000 ) - (25,776 ) 2,776 977,000 - Total Controlled Investments $ 47,548,578 $ (38,239,929 ) $ - $ 40,728,006 $ (40,144,795 ) $ 9,891,860 $ 75,000 Name of Investment (3) Type of Investment Fair Value at September 30, 2019 Purchases/ (Sales) of or Advances/ (Distributions) Transfers In/(Out) of Affiliates Unrealized Gain/(Loss) Realized Gain/(Loss) Fair Value at September 30, 2020 Income Earned Affiliated Investments 1888 Industrial Services, LLC Senior Secured First Lien Term Loan A $ 9,304,145 $ 168,923 $ — $ (9,473,068 ) $ — $ — $ 167,086 Senior Secured First Lien Term Loan B 5,886,892 — — (5,886,892 ) — — — Senior Secured First Lien Term Loan C 1,170,014 21,242 — (24,493 ) — 1,166,763 21,012 Senior Secured First Lien Term Loan D 224,456 (224,456 ) — — — — 15,103 Senior Secured First Lien Term Loan E — — — — — — 53,342 Revolving Credit Facility 4,387,025 (832,956 ) — — — 3,554,069 246,271 Equity — — — — — — — Access Media Holdings, LLC Senior Secured First Lien Term Loan 2,509,089 — — (1,398,526 ) — 1,110,563 — Preferred Equity Series A — — — — — — — Preferred Equity Series AA — — — — — — — Preferred Equity Series AAA (100,800 ) — — 100,800 — — — Equity — — — — — — — Black Angus Steakhouses, LLC Senior Secured First Lien Delayed Draw Term Loan — — 758,929 — — 758,929 11,148 Senior Secured First Lien Term Loan — — 5,863,872 (816,315 ) — 5,047,557 — Equity — — — — — — — Caddo Investors Holdings 1 LLC Equity 2,830,051 2,452 — 158,273 — 2,990,776 — Dynamic Energy Services International LLC Senior Secured First Lien Term Loan 1,264,841 — — (359,725 ) — 905,116 — Revolving Credit Facility 545,103 (545,103 ) — — — — 6,692 Equity — — — — — — — JFL-NGS Partners, LLC Preferred Equity A-2 20,150,684 (18,355,650 ) — — — 1,795,034 352,315 Preferred Equity A-1 2,607,661 (2,375,369 ) — — — 232,292 45,592 Equity 19,096,371 — — 19,683,696 — 38,780,067 — JFL-WCS Partners, LLC Preferred Equity Class A 1,236,269 74,380 — — — 1,310,649 77,412 Equity 2,755,041 — — 1,780,539 — 4,535,580 — Kemmerer Operations, LLC Senior Secured First Lien Term Loan 1,766,511 285,194 — — — 2,051,705 285,313 Senior Secured First Lien Delayed Draw Term Loan 706,604 (190,905 ) — — — 515,699 80,201 Equity 962,717 — — — — 962,717 — F- 29 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 Name of Investment (3) Type of Investment Fair Value at September 30, 2019 Purchases/ (Sales) of or Advances/ (Distributions) Transfers In/(Out) of Affiliates Unrealized Gain/(Loss) Realized Gain/(Loss) Fair Value at September 30, 2020 Income Earned Path Medical, LLC Senior Secured First Lien Term Loan 8,845,167 (8,639,959 ) — 449,792 (655,000 ) — 1,203,692 Senior Secured First Lien Term Loan A 3,047,473 (3,010,987 ) — 237,504 (273,990 ) — 380,499 Senior Secured First Lien Term Loan C 344,291 (344,463 ) — 172 — — 17,776 Senior Secured First Lien Term Loan A — 5,905,080 — — — 5,905,080 51,670 Senior Secured First Lien Term Loan B — 6,599,918 — 194,596 — 6,794,514 — Equity — — — — — — — US Multifamily, LLC Senior Secured First Lien Term Loan 6,670,000 (1,546,087 ) — — — 5,123,913 592,727 Equity 3,330,000 — — (1,998,000 ) — 1,332,000 — Total Affiliated Investments $ 99,539,605 $ (23,008,746 ) $ 6,622,801 $ 2,648,353 $ (928,990 ) $ 84,873,023 $ 3,607,851 Name of Investment (3) Type of Investment Fair Value at September 30, 2019 Purchases/ (Sales) of or Advances/ (Distributions) Transfers In/(Out) of Affiliates Unrealized Gain/(Loss) Realized Gain/(Loss) Fair Value at September 30, 2020 Income Earned Controlled Investments MCC Senior Loan Strategy JV I LLC (1)(2) Equity $ 69,948,970 $ 1,312,500 $ — $ (30,242,970 ) $ — $ 41,018,500 $ 6,256,250 NVTN LLC Senior Secured First Lien Term Loan 4,255,990 2,309,885 — (2,035,797 ) — 4,530,078 62,840 Super Priority Senior Secured First Lien Term Loan — 1,995,374 — 4,626 — 2,000,000 1,983 Senior Secured First Lien Term Loan B 7,152,352 — — (7,152,352 ) — — — Senior Secured First Lien Term Loan C — — — — — — — Equity — — — — — — — TPG Plastics LLC Senior Secured Second Lien Term Loan 352,984 (352,984 ) — — — — 12,806 Unsecured Debt 278,810 (278,810 ) — — — — 6,876 Unsecured Debt 1,644,751 (1,630,312 ) — 1,672,398 (1,686,837 ) — — URT Acquisition Holdings Corporation Senior Secured Second Lien Term Loan 18,905,403 1,594,416 — — (20,499,819 ) — 500,767 Preferred Equity 4,914,667 (2,533,622 ) — 1,638,223 (4,019,268 ) — — Equity — (66,378 ) — 12,936,879 (12,870,501 ) — — Total Controlled Investments $ 107,453,927 $ 2,350,069 $ — $ (23,178,993 ) $ (39,076,425 ) $ 47,548,578 $ 6,841,522 (1) The Company and GALIC were the members of MCC JV, a joint venture formed as a Delaware limited liability company that was not consolidated by either member for financial reporting purposes. The members of MCC JV made capital contributions as investments by MCC JV were completed, and all portfolio and other material decisions regarding MCC JV were submitted to MCC JV’s board of managers, which was comprised of an equal number of members appointed by each of the Company and GALIC. Approval of MCC JV’s board of managers required the unanimous approval of a quorum of the board of managers, with a quorum consisting of equal representation of members appointed by each of the Company and GALIC. Because management of MCC JV was shared equally between the Company and GALIC, the Company did not have operational control over MCC JV for purposes of the 1940 Act or otherwise. On October 8, 2020, the Company, GALIC, MCC JV, and an affiliate of Golub entered into a Membership Interest Purchase Agreement pursuant to which a fund affiliated with and managed by Golub concurrently purchased all of the Company’s interest in MCC JV and all of GALIC’s interest in MCC JV. (2) Amount of income earned represented distributions from MCC JV to the Company and is a component of dividend income, net of provisional taxes in the Consolidated Statements of Operations. (3) The par amount and additional detail are shown in the Consolidated Schedule of Investments. (4) Securities with a zero value at the beginning and end of the period, and those that had no transaction activity were excluded from the roll forward. F- 30 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 Purchases/(sales) of or advances to/(distributions) from Affiliated Investments and Controlled Investments represent the proceeds from sales and settlements of investments, purchases, originations and participations, investment increases due to PIK interest as well as net amortization of premium/(discount) on investments and are included in the purchases and sales presented on the Consolidated Statements of Cash Flows for the years ended September 30, 2021, 2020 and 2019. Transfers in/(out) of Affiliated Investments and Controlled Investments represent the fair value for the month an investment became or was removed as an Affiliated Investment or a Controlled Investment, as applicable. Income received from Affiliated Investments and Controlled Investments is included in total investment income on the Consolidated Statements of Operations for the years ended September 30, 2021, 2020 and 2019. Loan Participation Sales The Company may sell portions of its investments via participation agreements to a managed account, managed by an affiliate and non-affiliate of the Company. At September 30, 2021, there were no participation agreements outstanding. At September 30, 2020, there were two participation agreements outstanding with an aggregate fair value of $6.8 million. The transfer of the participated portion of the investments met the criteria set forth in ASC 860, Transfers and Servicing for treatment as a sale. In each case, the Company’s loan participation agreements satisfy the following conditions: ● transferred investments have been isolated from the Company, and put presumptively beyond the reach of the Company and its creditors, even in bankruptcy or other receivership, ● each participant has the right to pledge or exchange the transferred investments it received, and no condition both constrains the participant from taking advantage of its right to pledge or exchange and provides more than a trivial benefit to the Company; and ● the Company, its consolidated affiliates or its agents do not maintain effective control over the transferred investments through either: (i) an agreement that entitles and/or obligates the Company to repurchase or redeem the assets before maturity, or (ii) the ability to unilaterally cause the holder to return specific assets, other than through a cleanup call. Such investments where the Company has retained proportionate interests are included in the Consolidated Schedule of Investments. All of these investments are classified within Level 3 of the fair value hierarchy, as defined in Note 4. During the year ended September 30, 2021, the Company did not collect interest and principal payments on behalf of any participant, since there were no participation agreements outstanding. During the years ended September 30, 2020 and 2019, the Company collected interest and principal payments on behalf of the participants in aggregate amounts of $2.7 million and $3.7 million, respectively. Under the terms of the participation agreements, the Company collected and remitted periodic payments to the participants equal to the participant’s proportionate share of any principal and interest payments received by the Company from the underlying investee companies. MCC Senior Loan Strategy JV I LLC On March 27, 2015, the Company and GALIC entered into a limited liability company operating agreement to co-manage MCC JV. All portfolio and other material decisions regarding MCC JV were submitted to MCC JV’s board of managers, which was comprised of four members, two of whom were selected by the Company and the other two of whom were selected by GALIC. The Company concluded that it did not operationally control MCC JV. As the Company did not operationally control MCC JV, it did not consolidate the operations of MCC JV within the consolidated financial statements. On August 4, 2015, MCC JV entered into a senior secured revolving credit facility (the “JV Facility”) led by Credit Suisse AG, Cayman Islands Branch (“CS”) with commitments of $100 million subject to leverage and borrowing base restrictions. On March 30, 2017, the Company amended the JV Facility previously administered by CS and facilitated the assignment of all rights and obligations of CS under the JV Facility to Deutsche Bank AG, New York Branch (“DB”) and increased the total loan commitments to $200 million. On March 29, 2019, the JV Facility reinvestment period was extended from March 30, 2019 to June 28, 2019. On June 28, 2019, the JV Facility reinvestment period was further extended from June 28, 2019 to October 28, 2019. On October 28, 2019, the JV Facility reinvestment period was further extended from October 28, 2019 to March 31, 2020 and the interest rate was modified from bearing an interest rate of LIBOR (with a 0.00% floor) + 2.50% per annum to LIBOR (with a 0.00% floor) + 2.75% per annum. Effective as of March 31, 2020, the maturity date of the JV Facility was extended to March 31, 2023. As of September 30, 2020, there was approximately $111.3 million outstanding under the JV Facility. On March 31, 2020, the JV Facility ended its reinvestment period and entered its amortization period, during which time the interest rate was increased to LIBOR (with a 0.00% floor) + 3.00% per annum. On April 20, 2020, the JV Facility was amended to (i) during each 12-month period during the amortization period permit the sale of investments below a price of 97% as long as the sale was approved by DB and the balance of all such investments sold is not greater than 30% of the adjusted balance of all loans as of the first date of each 12-month period and (ii) establish a target effective advance rate at various measurement dates during the amortization period. All principal collections were to be swept to amortize the amount outstanding under the JV Facility and interest collections were to be swept, as applicable, in order to meet the target effective advance rate for the applicable period. F- 31 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 On October 8, 2020, the Company, GALIC, MCC JV, and an affiliate of Golub entered into a Membership Interest Purchase Agreement pursuant to which a fund affiliated with and managed by Golub concurrently purchased all of the Company’s interest in MCC JV and all of GALIC’s interest in MCC JV for a pre-adjusted gross purchase price of $156.4 million and an adjusted gross purchase price (which constitutes the aggregate consideration for the membership interests) of $145.3 million (giving effect to adjustments primarily for principal and interest payments from portfolio companies of MCC JV from July 1, 2020 through October 7, 2020), resulting in net proceeds (before transaction expenses) of $41.0 million and $6.6 million for the Company and GALIC, respectively. Due to the sale transaction on October 8, 2020, the Company no longer held an investment in MCC JV at September 30, 2021. At September 30, 2020, MCC JV had total investments at fair value of $163.1 million. As of September 30, 2020, MCC JV’s portfolio was comprised of senior secured first lien term loans of 45 borrowers. As of September 30, 2020, certain investments in one portfolio company held by MCC JV were on non-accrual status. Below is a summary of MCC JV’s portfolio, excluding equity investments, as of September 30, 2020, followed by a listing of the individual investments in MCC JV’s portfolio as of September 30, 2020: September 30, 2020 Senior secured loans (1) $ 182,514,110 Weighted average current interest rate on senior secured loans (2) 6.02 % Number of borrowers in MCC JV 45 Largest loan to a single borrower (1) $ 10,653,501 Total of five largest loans to borrowers (1) $ 39,191,213 (1) At par value. (2) Computed as the (a) annual stated interest rate on accruing senior secured loans, divided by (b) total senior secured loans at par. MCC JV Loan Portfolio as of September 30, 2020 Company Industry Type of Investment Maturity Par Amount Cost Fair Value (2) % of Net Assets (3) 4Over International, LLC Media: Advertising, Printing & Senior Secured First Lien Term Loan (LIBOR + 6.00%, 6/7/2022 $ 10,653,501 $ 10,653,501 $ 9,995,115 16.8 % Publishing 1.00% LIBOR Floor) (1) 10,653,501 10,653,501 9,995,115 Cardenas Markets LLC Retail Senior Secured First Lien Term Loan (LIBOR + 5.75%, 11/29/2023 5,293,750 5,269,829 5,287,398 8.9 % 1.00% LIBOR Floor) (1) 5,293,750 5,269,829 5,287,398 CHA Consulting, Inc. Construction & Building Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor) (1) 4/10/2025 1,340,389 1,336,046 1,274,308 2.1 % Senior Secured First Lien Term Loan (LIBOR + 4.50%, 4/10/2025 592,500 592,500 563,290 0.9 % 1.00% LIBOR Floor) (1) 1,932,889 1,928,546 1,837,598 Covenant Surgical Partners, Inc. Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 4.00%) (1) 7/1/2026 4,950,187 4,909,373 4,435,496 7.4 % 4,950,187 4,909,373 4,435,496 CT Technologies Intermediate Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 4.25%, 12/1/2021 5,086,116 5,005,862 4,875,042 8.2 % Holdings, Inc. 1.00% LIBOR Floor) (1) 5,086,116 5,005,862 4,875,042 F- 32 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 Company Industry Type of Investment Maturity Par Amount Fair Value (2) Cost % of Net Assets (3) Envision Healthcare Corporation Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 3.75%, 1.00% 10/10/2025 1,940,438 1,888,530 1,397,503 2.3 % LIBOR Floor) (1) 1,940,438 1,888,530 1,397,503 GC EOS Buyer, Inc. Automotive Senior Secured First Lien Term Loan (LIBOR + 4.50%, 8/1/2025 1,420,440 1,404,814 1,304,532 2.2 % 1.00% LIBOR Floor) (1) 1,420,440 1,404,814 1,304,532 GK Holdings, Inc. Services: Business Senior Secured First Lien Term Loan (LIBOR + 6.00%, 1/20/2021 2,877,863 2,876,803 2,142,856 3.6 % 1.00% LIBOR Floor) (1) 2,877,863 2,876,803 2,142,856 Glass Mountain Pipeline Holdings, Energy: Oil & Gas Senior Secured First Lien Term Loan (LIBOR + 4.50%, 12/23/2024 4,850,625 4,839,587 2,601,390 4.4 % LLC 1.00% LIBOR Floor) (1) 4,850,625 4,839,587 2,601,390 Golden West Packaging Group LLC Forest Products & Paper Senior Secured First Lien Term Loan (LIBOR + 5.25%, 6/20/2023 4,069,771 4,069,771 3,968,027 6.7 % 1.00% LIBOR Floor) (1) 4,069,771 4,069,771 3,968,027 High Ridge Brands Co. Consumer Goods: Non-Durable Senior Secured First Lien Term Loan (LIBOR + 7.00%, 6/30/2022 1,732,439 1,724,570 593,187 1.0 % 1.00% LIBOR Floor) (1)(4) 1,732,439 1,724,570 593,187 Highline Aftermarket Acquisitions, Automotive Senior Secured First Lien Term Loan (LIBOR + 3.50%, 4/26/2025 4,025,000 4,016,286 3,597,545 6.0 % LLC 1.00% LIBOR Floor) (1) 4,025,000 4,016,286 3,597,545 Infogroup, Inc. High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 6.50%, 4/3/2023 4,825,000 4,804,770 4,224,770 7.1 % 1.00% LIBOR Floor) (1) 4,825,000 4,804,770 4,224,770 Intermediate LLC High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 4.00%, 7/1/2026 2,722,500 2,708,089 2,513,684 4.2 % 1.00% LIBOR Floor) (1) 2,722,500 2,708,089 2,513,684 Isagenix International, LLC Wholesale Senior Secured First Lien Term Loan (LIBOR + 5.75%, 6/16/2025 2,626,629 2,616,715 1,337,742 2.2 % 1.00% LIBOR Floor) (1) 2,626,629 2,616,715 1,337,742 IXS Holdings, Inc. Automotive Senior Secured First Lien Term Loan (LIBOR + 5.00%, 3/5/2027 994,874 985,714 981,543 1.6 % 1.00% LIBOR Floor) (1) 994,874 985,714 981,543 Keystone Acquisition Corp. Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 5.25%, 5/1/2024 6,099,815 6,040,757 5,505,083 9.2 % 1.00% LIBOR Floor) (1) 6,099,815 6,040,757 5,505,083 KNB Holdings Corporation Consumer Goods: Durable Senior Secured First Lien Term Loan (LIBOR + 5.50%, 4/26/2024 4,743,170 4,694,643 1,992,131 3.3 % 1.00% LIBOR Floor) (1) 4,743,170 4,694,643 1,992,131 Liason Acquisition, LLC High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 4.50%, 12/20/2026 3,466,288 3,458,579 3,372,351 5.7 % 1.00% LIBOR Floor) (1) 3,466,288 3,458,579 3,372,351 F- 33 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 Company Industry Type of Investment Maturity Par Amount Cost Fair Value (2) % of Net Assets (3) LifeMiles Ltd. Services: Consumer Senior Secured First Lien Term Loan (LIBOR + 5.50%, 8/18/2022 4,229,263 4,220,573 3,880,349 6.5 % 1.00% LIBOR Floor) (1) 4,229,263 4,220,573 3,880,349 Manna Pro Products, LLC Consumer Goods: Non-Durable Senior Secured First Lien Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor) (1) 12/8/2023 2,998,542 2,998,542 2,875,002 4.8 % Senior Secured First Lien Delayed Draw Term Loan 12/8/2023 608,958 608,958 583,869 1.0 % (LIBOR + 6.00%, 1.00% LIBOR Floor) (1) 3,607,500 3,607,500 3,458,871 Mileage Plus Holdings, LLC Transportation: Consumer Senior Secured First Lien Term Loan (LIBOR + 5.25%, 6/21/2027 4,401,819 4,407,746 4,475,769 7.5 % 1.00% LIBOR Floor) (1) 4,401,819 4,407,746 4,475,769 NGS US Finco, LLC Capital Equipment Senior Secured First Lien Term Loan (LIBOR + 4.25%, 10/1/2025 2,943,223 2,932,700 2,755,445 4.6 % 1.00% LIBOR Floor) (1) 2,943,223 2,932,700 2,755,445 Northern Star Industries, Inc. Capital Equipment Senior Secured First Lien Term Loan (LIBOR + 4.50%, 3/28/2025 4,143,750 4,130,394 3,630,754 6.1 % 1.00% LIBOR Floor) (1) 4,143,750 4,130,394 3,630,754 Offen, Inc. Transportation: Cargo Senior Secured First Lien Term Loan (LIBOR + 5.00%) (1) 6/22/2026 3,626,659 3,596,886 3,494,880 5.9 % 3,626,659 3,596,886 3,494,880 Patriot Rail Company LLC Transportation: Cargo Senior Secured First Lien Term Loan (LIBOR + 5.25%, 10/19/2026 1,741,250 1,711,104 1,730,454 2.9 % 1.00% LIBOR Floor) (1) 1,741,250 1,711,104 1,730,454 PetroChoice Holdings, Inc. Chemicals, Plastics and Rubber Senior Secured First Lien Term Loan (LIBOR + 5.00%, 8/19/2022 6,279,803 6,270,073 5,418,842 9.1 % 1.00% LIBOR Floor) (1) 6,279,803 6,270,073 5,418,842 Port Townsend Holdings Company, Forest Products & Paper Senior Secured First Lien Term Loan (LIBOR + 4.75%, 4/3/2024 2,945,600 2,928,240 2,632,777 4.4 % Inc. 1.00% LIBOR Floor) (1) 2,945,600 2,928,240 2,632,777 PT Network, LLC Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 5.50%, 11/30/2023 4,955,627 4,638,237 4,460,064 7.5 % 1.00% LIBOR Floor, 2% PIK) (1)(5) Class C Common Stock 1 — — 4,955,628 4,638,237 4,460,064 F- 34 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 Company Industry Type of Investment Maturity Par Amount Cost Fair Value (2) % of Net Assets (3) PVHC Holding Corp Containers, Packaging and Glass Senior Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor) (1) 8/5/2024 1,952,427 1,946,107 1,850,511 3.1 % 1,952,427 1,946,107 1,850,511 Quartz Holding Company High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 4.00%, 1.00% LIBOR Floor) (1) 4/2/2026 3,936,357 3,924,382 3,847,789 6.5 % 3,936,357 3,924,382 3,847,789 RB Media, Inc. Media: Diversified & Production Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor) (1) 8/29/2025 5,651,270 5,620,482 5,605,495 9.4 % 5,651,270 5,620,482 5,605,495 Salient CRGT Inc. High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor) (1) 2/28/2022 2,533,036 2,518,601 2,343,058 3.9 % 2,533,036 2,518,601 2,343,058 SFP Holding, Inc. Construction & Building Senior Secured First Lien Term Loan (LIBOR + 6.25%, 1.00% LIBOR Floor) (1) 9/1/2022 4,776,954 4,739,017 4,733,961 7.9 % Senior Secured First Lien Term Loan (LIBOR + 6.25%, 1.00% LIBOR Floor) (1) 9/1/2022 1,852,521 1,852,521 1,835,849 3.1 % 6,629,475 6,591,538 6,569,810 Shift4 Payments, LLC Banking, Finance, Insurance & Real Estate Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor) (1) 11/29/2024 7,304,819 7,283,042 7,255,877 12.2 % 7,304,819 7,283,042 7,255,877 Simplified Logistics, LLC Services: Business Senior Secured First Lien Term Loan (LIBOR + 6.50%, 1.00% LIBOR Floor) (1) 2/27/2022 3,447,500 3,447,500 3,358,899 5.6 % 3,447,500 3,447,500 3,358,899 Syniverse Holdings, Inc. High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor) (1) 3/9/2023 2,905,253 2,891,007 2,229,200 3.7 % 2,905,253 2,891,007 2,229,200 The Octave Music Group, Inc. Media: Diversified & Production Senior Secured First Lien Term Loan (LIBOR + 4.75%,1.00% LIBOR Floor) (1) 5/29/2025 5,896,552 5,844,063 5,071,034 8.5 % 5,896,552 5,844,063 5,071,034 ThoughtWorks, Inc. High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 3.75%, 1.00% LIBOR Floor) (1) 10/11/2024 2,627,704 2,620,849 2,585,136 4.3 % 2,627,704 2,620,849 2,585,136 Vero Parent, Inc. High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor) (1) 8/16/2024 3,875,924 3,856,982 3,813,522 6.4 % 3,875,924 3,856,982 3,813,522 Wawona Delaware Holdings, LLC Beverage & Food Senior Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor) (1) 9/11/2026 945,350 937,295 912,358 1.5 % 945,350 937,295 912,358 Wheels Up Partners LLC Aerospace & Defense Senior Secured First Lien Term Loan (LIBOR + 8.55%, 1.00% LIBOR Floor) (1) 10/15/2021 1,509,917 1,497,761 1,509,917 2.5 % 1,509,917 1,497,761 1,509,917 F- 35 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 Company Industry Type of Investment Maturity Par Amount Cost Fair Value (2) % of Net Assets (3) Wok Holdings Inc. Retail Senior Secured First Lien Term Loan (LIBOR + 6.50%, 1.00% LIBOR Floor) (1) 3/1/2026 6,550,249 6,505,809 4,864,216 8.2 % 6,550,249 6,505,809 4,864,216 Wrench Group LLC Services: Consumer Senior Secured First Lien Term Loan (LIBOR + 4.25%, 1.00% LIBOR Floor) (1) 4/30/2026 2,942,820 2,920,082 2,834,231 4.8 % 2,942,820 2,920,082 2,834,231 Xebec Global Holdings, LLC High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor) (1) 2/12/2024 8,053,168 8,053,168 8,053,168 13.5 % 8,053,168 8,053,168 8,053,168 Z Medica, LLC Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor) (1) 9/29/2022 2,566,500 2,566,500 2,528,002 4.3 % 2,566,500 2,566,500 2,528,002 Total Investments, September 30, 2020 $ 182,514,111 $ 181,365,360 $ 163,133,421 273.5 % (1) Represents the annual current interest rate as of September 30, 2020. All interest rates are payable in cash, unless otherwise noted. (2) Represents the fair value in accordance with ASC 820 as reported by MCC JV. The determination of such fair value is not included in the Company’s board of directors’ valuation process described elsewhere herein. (3) Percentage is based on MCC JV’s net assets of $59,617,800 as of September 30, 2020. (4) This investment was on non-accrual status as of September 30, 2020. (5) Par amount includes accumulated PIK interest and is net of repayments. Below is certain summarized financial Information for MCC JV as of September 30, 2020, and for the years ended September 30, 2020 and 2019: September 30, 2020 Selected Consolidated Statement of Assets and Liabilities Information: Investments in loans at fair value (amortized cost of $181,365,360) $ 163,133,421 Cash 6,055,178 Other assets 1,148,102 Total assets $ 170,336,701 Line of credit (net of debt issuance costs of $1,574,115) $ 109,745,367 Other liabilities 424,095 Interest payable 549,439 Total liabilities 110,718,901 Members’ capital 59,617,800 Total liabilities and members’ capital $ 170,336,701 For the Years Ended September 30 2020 2019 Selected Consolidated Statement of Operations Information: Total revenues $ 15,727,674 $ 20,351,843 Total expenses (9,346,799 ) (10,962,484 ) Net unrealized appreciation/(depreciation) (8,203,330 ) (9,055,476 ) Net realized gain/(loss) (12,851,425 ) (772,239 ) Net income/(loss) $ (14,673,880 ) $ (438,356 ) F- 36 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 Unconsolidated Significant Subsidiaries The Company evaluated and determined that it had no significant subsidiaries as of September 30, 2021. Note 4. Fair Value Measurements The Company follows ASC 820 for measuring the fair value of portfolio investments. Fair value is the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters, or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation models involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity. The Company’s fair value analysis includes an analysis of the value of any unfunded loan commitments. Financial investments recorded at fair value in the consolidated financial statements are categorized for disclosure purposes based upon the level of judgment associated with the inputs used to measure their value. The valuation hierarchical levels are based upon the transparency of the inputs to the valuation of the investment as of the measurement date. Investments which are valued using NAV as a practical expedient are excluded from this hierarchy, and certain prior period amounts have been reclassified to conform to the current period presentation. The three levels are defined below: ● Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities at the measurement date. ● Level 2 - Valuations based on inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable at the measurement date. This category includes quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in non-active markets including actionable bids from third parties for privately held assets or liabilities, and observable inputs other than quoted prices such as yield curves and forward currency rates that are entered directly into valuation models to determine the value of derivatives or other assets or liabilities. ● Level 3 - Valuations based on inputs that are unobservable and where there is little, if any, market activity at the measurement date. The inputs for the determination of fair value may require significant management judgment or estimation and are based upon management’s assessment of the assumptions that market participants would use in pricing the assets or liabilities. These investments include debt and equity investments in private companies or assets valued using the Market or Income Approach and may involve pricing models whose inputs require significant judgment or estimation because of the absence of any meaningful current market data for identical or similar investments. The inputs in these valuations may include, but are not limited to, capitalization and discount rates, beta and EBITDA multiples. The information may also include pricing information or broker quotes which include a disclaimer that the broker would not be held to such a price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimer would result in classification as Level 3 information, assuming no additional corroborating evidence. In addition to using the above inputs in investment valuations, the Company continues to employ a valuation policy approved by the board of directors that is consistent with ASC 820 (see Note 2). Consistent with our valuation policy, we evaluate the source of inputs, including any markets in which our investments are trading, in determining fair value. The following table presents the fair value measurements of our investments, by major class according to the fair value hierarchy, as of September 30, 2021 (dollars in thousands): Fair Value Hierarchy as of September 30, 2021 Investments: Level 1 Level 2 Level 3 Total Senior Secured First Lien Term Loans $ - $ - $ 61,934 $ 61,934 Senior Secured Second Lien Term Loans - - 2,490 2,490 Senior Secured Notes - 9,270 - 9,270 Secured Debt - - 2,500 2,500 Equity/Warrants 23,102 - 48,889 71,991 Total $ 23,102 $ 9,270 $ 115,813 $ 148,185 Investments measured at net asset value (1) 3,455 Total Investments, at fair value $ 151,640 (1) Certain investments that are measured at fair value using NAV have not been categorized in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amount presented in the Consolidated Statements of Assets and Liabilities. F- 37 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 The following table presents the fair value measurements of our investments, by major class according to the fair value hierarchy, as of September 30, 2020 (dollars in thousands): Level 1 Level 2 Level 3 Total Senior Secured First Lien Term Loans $ — $ — $ 106,463 $ 106,463 Senior Secured Second Lien Term Loans — — 13,927 13,927 Unsecured Debt — — 2,669 2,669 MCC Senior Loan Strategy JV I LLC (1) — — 41,019 41,019 Equity/Warrants 12,278 — 67,397 79,675 Total $ 12,278 $ — $ 231,475 $ 243,753 Investments measured at net asset value (2) 2,991 Total Investments, at fair value $ 246,744 (1) MCC Senior Loan Strategy JV I LLC was sold on October 8, 2020 and as such fair value was measured as a Level 3 investment as of September 30, 2020. Previously fair value had been measured using NAV. (2) Certain investments that are measured at fair value using NAV have not been categorized in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amount presented in the Consolidated Statements of Assets and Liabilities. The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the year ended September 30, 2021 (dollars in thousands): Senior Secured First Lien Term Loans Senior Secured Second Lien Term Loans Secured Debt Unsecured Debt MCC Senior Loan Strategy JV I LLC Equities/ Warrants Total Balance as of September 30, 2020 $ 106,463 $ 13,927 $ - $ 2,669 $ 41,019 $ 67,397 $ 231,475 Purchases and other adjustments to cost 11,026 - 2,500 - - - 13,526 Sales (28,374 ) (11,892 ) - (3,070 ) (39,740 ) (7,635 ) (90,711 ) Net realized gains/(losses) from investments (24,818 ) 4 - 30 (40,148 ) 311 (64,621 ) Net unrealized gains/(losses) (2,363 ) 451 - 371 38,869 (11,184 ) 26,144 Balance as of September 30, 2021 $ 61,934 $ 2,490 $ 2,500 $ - $ - $ 48,889 $ 115,813 The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the year ended September 30, 2020 (dollars in thousands): Senior Senior MCC Secured Secured Senior First Lien Second Loan Term Lien Term Unsecured Strategy Equities/ Loans Loans Debt JV I LLC Warrants Total Balance as of September 30, 2019 $ 192,770 $ 36,508 $ 2,653 $ — $ 78,329 $ 310,260 Purchases and other adjustments to cost 1,820 655 168 — 1,259 3,902 Originations 28,085 945 2,500 — 182 31,712 Sales (186 ) (1,237 ) — — (5,714 ) (7,137 ) Settlements (86,048 ) (613 ) (721 ) — (24,881 ) (112,263 ) Net realized gains/(losses) from investments (929 ) (23,362 ) — — (18,577 ) (42,868 ) Net transfers in and/or out of Level 3 — — — 41,019 — 41,019 Net unrealized gains/(losses) (29,049 ) 1,031 (1,931 ) — 36,799 6,850 Balance as of September 30, 2020 $ 106,463 $ 13,927 $ 2,669 $ 41,019 $ 67,397 $ 231,475 F- 38 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 Net change in unrealized gain (loss) for the years ended September 30, 2021 and 2020 included in earnings related to investments still held as of September 30, 2021 and 2020 was approximately $(24.3) million and $(42.6) million, respectively. Purchases and other adjustments to cost include purchases of new investments at cost, effects of refinancing/restructuring, accretion/amortization of income from discount/premium on debt securities, and PIK. Sales represent net proceeds received from investments sold. Settlements represent principal paydowns received. A review of the fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets or liabilities. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in/out of the Level 3 category as of the beginning of the quarter in which the reclassifications occur. During the year ended September 30, 2021, none of our investments transferred into or out of Level 3. During the year ended September 30, 2020 MCC JV transferred into the Level 3 category as the investment was sold subsequently to September 30, 2020 (see Note 3). In previous periods, as a practical expedient the Company had used the net asset value of MCC JV to determine the fair value of the investment. The following table presents the quantitative information about Level 3 fair value measurements of our investments, as of September 30, 2021 (dollars in thousands): Fair Value Valuation Methodology Unobservable Input Range (Weighted Average) Senior Secured First Lien Term Loans $ 25,783 Market Approach Market Yield 7.50% - 102.38% (32.78% ) Senior Secured First Lien Term Loans 15,639 Market Approach Arms Length Transaction N/A Senior Secured First Lien Term Loans 7,567 Market Approach (Guideline Comparable) Market Yield 5.00% - 8.00% (5.55% ) Senior Secured First Lien Term Loans 4,539 Market Approach EBITDA Multiple (1) 4.50x - 5.50x (5.00x ) Senior Secured First Lien Term Loans 3,579 Enterprise Value Analysis Revenue Multiple (1) 0.40x - 0.50x (0.45x ) Senior Secured First Lien Term Loans 2,577 Market Approach Capitalization Rate 4.50% - 5.50% (5.00% ) Estimated Proceeds $1.04 - $8.10 ($4.57 ) Senior Secured First Lien Term Loans 2,250 Market Approach Revenue Multiple (1) 0.25x - 0.40x (0.33x ) Senior Secured Second Lien Term Loans 2,490 Market Approach (Guideline Comparable) EBITDA Multiple (1) 9.75x - 10.75x (10.25x ) Secured Debt 2,500 Cost Approach Replacement Cost N/A Equity/Warrants 38,939 Market Approach EBITDA Multiple (1) 1.25x - 12.75x (12.31x ) Equity/Warrants 4,758 Market Approach Market Yield 10.50% - 12.00% (11.25% ) Equity/Warrants 2,956 Market Approach Revenue Multiple (1) 0.11x - 0.40x (0.16x ) Equity/Warrants 2,236 Market Approach Capitalization Rate 4.50% - 5.50% (5.00% ) Estimated Proceeds $1.04 - $8.10 ($4.57 ) Total $ 115,813 (1) Represents inputs used when the Company has determined that market participants would use such multiples when measuring the fair value of these investments. F- 39 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 The following table presents the quantitative information about Level 3 fair value measurements of our investments, as of September 30, 2020 (dollars in thousands): Fair Value Valuation Methodology Unobservable Input Range (Weighted Average) Senior Secured First Lien Term Loans $ 50,135 Income Approach (DCF) Market yield 7.52% - 15.27% (10.34%) Senior Secured First Lien Term Loans 55,856 Market Approach (Guideline Revenue Multiple (1) 0.25x - 0.50x (0.49x) Comparable)//Income Approach (DCF)/ EBITDA Multiple (1) 2.50x - 8.50x (5.73x) Enterprise Value Analysis Capitalization Rate 5.50x - 5.50x (5.50x) Discount Rate 17.90% - 17.90% (17.90%) Expected Proceeds $8.25 - $52.00 ($45.65) Senior Secured First Lien Term Loans 472 Recent Arms-Length Transaction Recent Arms Length Transaction N/A Senior Secured Second Lien Term Loan 9,978 Income Approach (DCF) Market yield 12.01% - 14.82% (14.01%) Senior Secured Second Lien Term Loans 3,949 Market Approach (Guideline EBITDA Multiple (1) 8.00x - 8.00x (8.00x) Comparable)/Income Approach (DCF) Discount Rate 21.00% - 21.00% (21.00%) Unsecured Debt — Market Approach (Guideline Comparable) EBITDA Multiple (1) 2.50x - 4.50x (3.50x) Unsecured Debt 2,669 Recent Arms-Length Transaction Recent Arms Length Transaction N/A MCC Senior Loan Strategy JV I LLC 41,019 Recent Arms-Length Transaction Recent Arms Length Transaction N/A Equity 63,468 Market Approach (Guideline Revenue Multiple (1) 0.50x - 0.88x (0.69x) Comparable)/Income Approach/Enterprise EBITDA Multiple (1) 2.50x - 9.50x (8.25x) Value Analysis Capitalization Rate 5.50% - 5.50% (5.50%) Discount Rate 14.50% - 14.50% (14.50%) Expected Proceeds $8.25 - $52.00 ($38.00) Equity 3,929 Income Approach (DCF) Market Yield 15.40% - 15.40% (15.40%) Total $ 231,475 (1) Represents inputs used when the Company has determined that market participants would use such multiples when measuring the fair value of these investments. F- 40 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 The significant unobservable inputs used in the fair value measurement of the Company’s debt and derivative investments are market yields. Increases in market yields would result in lower fair value measurements. The significant unobservable inputs used in the fair value measurement of the Company’s equity/warrants investments are comparable company multiples of revenue or EBITDA for the latest twelve months (“LTM”), next twelve months (“NTM”) or a reasonable period a market participant would consider. Increases in EBITDA multiples in isolation would result in higher fair value measurement. In September 2017, the Company entered into an agreement with Global Accessories Group, LLC (“Global Accessories”), in which the Company exchanged its full position in Lydell Jewelry Design Studio, LLC for a 3.8% membership interest in Global Accessories, which is included in the Consolidated Schedule of Investments. As part of the agreement, the Company is entitled to contingent consideration in the form of cash payments (“Earnout”), as well as up to an additional 5% membership interest (“AMI”), provided Global Accessories achieves certain financial benchmarks through calendar year ended 2022. The Earnout and AMI were initially recorded with an aggregate fair value of $2.4 million on the transaction date using the Income Approach and were included on the Consolidated Statements of Assets and Liabilities in other assets. The contingent consideration is remeasured to fair value at each reporting date until the contingency is resolved. Any changes in fair value will be recognized in earnings. As of September 30, 2021 and September 30, 2020, the Company deemed the contingent consideration to be uncollectible. Note 5. Borrowings As a BDC, we are generally only allowed to employ leverage to the extent that our asset coverage, as defined in the 1940 Act, equals at least 200% after giving effect to such leverage. The amount of leverage that we employ at any time depends on our assessment of the market and other factors at the time of any proposed borrowing. However, in March 2018, the Small Business Credit Availability Act modified the 1940 Act by allowing a BDC to increase the maximum amount of leverage it may incur from 200% to 150%, if certain requirements under the 1940 Act are met. Under the 1940 Act, we are allowed to increase our leverage capacity if stockholders representing at least a majority of the votes cast, when a quorum is present, approve a proposal to do so. If we receive stockholder approval, we would be allowed to increase our leverage capacity on the first day after such approval. Alternatively, the 1940 Act allows the majority of our independent directors to approve an increase in our leverage capacity, and such approval would become effective after the one-year anniversary of such approval. In either case, we would be required to make certain disclosures on our website and in SEC filings regarding, among other things, the receipt of approval to increase our leverage, our leverage capacity and usage, and risks related to leverage. As of September 30, 2021, the Company’s asset coverage was 285.6% after giving effect to leverage and therefore the Company’s asset coverage was greater than 200%, the minimum asset coverage requirement applicable presently to the Company under the 1940 Act. As of September 30, 2020, the Company’s asset coverage was 199.2% after giving effect to leverage and therefore the Company’s asset coverage was below 200%, the minimum asset coverage requirement under the 1940 Act. As a result, the Company was prohibited from making distributions to stockholders, including the payment of any dividend, and could not employ further leverage until the Company’s asset coverage was at least 200% after giving effect to such leverage. F- 41 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 The Company’s outstanding debt excluding debt issuance costs as of September 30, 2021 and 2020 was as follows (dollars in thousands): September 30, 2021 September 30, 2020 Aggregate Principal Available Principal Amount Outstanding Carrying Value Fair Value Aggregate Principal Available Principal Amount Outstanding Carrying Value Fair Value 2021 Notes $ - $ - $ - $ - $ 74,013 $ 74,013 $ 73,803 $ 73,095 2023 Notes 77,847 77,847 77,434 79,092 77,847 77,847 77,158 72,460 Total debt $ 77,847 $ 77,847 $ 77,434 $ 79,092 $ 151,860 $ 151,860 $ 150,961 $ 145,555 Unsecured Notes 2021 Notes On December 17, 2015, the Company issued $70.8 million in aggregate principal amount of 6.50% unsecured notes that mature on January 30, 2021 (the “2021 Notes”). On January 14, 2016, the Company closed an additional $3.25 million in aggregate principal amount of the 2021 Notes, pursuant to the partial exercise of the underwriters’ option to purchase additional notes. The 2021 Notes bore interest at a rate of 6.50% per year, payable quarterly on January 30, April 30, July 30 and October 30 of each year, beginning January 30, 2016. On October 21, 2020, the Company caused notices to be issued to the holders of the 2021 Notes regarding the Company’s exercise of its option to redeem, in whole, the issued and outstanding 2021 Notes, pursuant to Section 1104 of the Indenture dated as of February 7, 2012, between the Company and U.S. Bank National Association, as trustee, and Section 101(h) of the Third Supplemental Indenture dated as of December 17, 2015. The Company redeemed $74,012,825 in aggregate principal amount of the issued and outstanding 2021 Notes on November 20, 2020 (the “Redemption Date”). The 2021 Notes were redeemed at 100% of their principal amount ($25 per 2021 Note), plus the accrued and unpaid interest thereon from October 31, 2020, through, but excluding, the Redemption Date. The Company funded the redemption of the 2021 Notes with cash on hand. 2023 Notes On March 18, 2013, the Company issued $60.0 million in aggregate principal amount of 6.125% unsecured notes that mature on March 30, 2023 (the “2023 Notes”). On March 26, 2013, the Company closed an additional $3.5 million in aggregate principal amount of the 2023 Notes, pursuant to the partial exercise of the underwriters’ option to purchase additional notes. As of March 30, 2016, the 2023 Notes may be redeemed in whole or in part at any time or from time to time at the Company’s option. The 2023 Notes bear interest at a rate of 6.125% per year, payable quarterly on March 30, June 30, September 30 and December 30 of each year, beginning June 30, 2013. On December 12, 2016, the Company entered into an “At-The-Market” (“ATM”) debt distribution agreement with FBR Capital Markets & Co., through which the Company could offer for sale, from time to time, up to $40.0 million in aggregate principal amount of the 2023 Notes. The Company sold 1,573,872 of the 2023 Notes at an average price of $25.03 per note, and raised $38.6 million in net proceeds, through the ATM debt distribution agreement. On March 10, 2018, the Company redeemed $13.0 million in aggregate principal amount of the 2023 Notes. On December 31, 2018, the Company redeemed $12.0 million in aggregate principal amount of the 2023 Notes. The redemption was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.3 million and was recorded on the Consolidated Statements of Operations as a loss on extinguishment of debt. On December 21, 2020, the Company announced that it completed the application process for and was authorized to transfer the listing of the 2023 Notes to the NASDAQ Global Market. The listing and trading of the 2023 Notes on the NYSE ceased at the close of trading on December 31, 2020. Effective January 4, 2021, the 2023 Notes began trading on the NASDAQ Global Market under the trading symbol “PFXNL.” F- 42 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 Secured Notes Israeli Notes On January 26, 2018, the Company priced a debt offering in Israel of $121.3 million of Israeli Notes (as defined below). The Israeli Notes were listed on the TASE and denominated in New Israeli Shekels, but linked to the US Dollar at a fixed exchange rate which mitigates any currency exposure to the Company. On June 5, 2018, the Company announced that on June 1, 2018, its board of directors authorized the Company to repurchase and retire up to $20 million of the Company’s outstanding Israeli Notes on the TASE. During the quarter ended December 31, 2018, the Company exchanged $1.0 million United States Dollars to New Israeli Shekels at a rate of 3.73 USD/NIS in order to repurchase the Israeli Notes on the TASE. As the Israeli Notes were trading below par at the time of the repurchase, and the USD/NIS (foreign currency) spot rate was higher than the fixed exchange rate agreed upon in the deed of trust, the Company was able to repurchase and retire 3,812,000 units, which resulted in $1,119,201 aggregate principal amount of the Israeli Notes being retired. The redemption was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized gain of $0.1 million and was recorded on the Consolidated Statements of Operations as a gain on extinguishment of debt. On December 31, 2019, in addition to the scheduled 12.5% quarterly amortization payment, the Company used proceeds from its principal repayments in assets held by PhenixFIN SLF and PhenixFIN Small Business Fund to pre-pay an additional $19.1 million of the Israeli Notes. The pre-payment was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.9 million and was recorded on the Consolidated Statements of Operations as a net loss on extinguishment of debt. On March 31, 2020, in addition to the scheduled 12.5% quarterly amortization payment, the Company used proceeds from its principal repayments in assets held by PhenixFIN SLF and PhenixFIN Small Business Fund to pre-pay an additional $19.8 million of the Israeli Notes. The pre-payment was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.9 million and was recorded on the Consolidated Statements of Operations as a loss on extinguishment of debt. On April 14, 2020, the Company repaid the remaining $21.1 million of Israeli Notes outstanding, and as such is no longer subject to any covenants relating thereto. The Israeli Notes were redeemed at 100% of their principal amount, plus the accrued interest thereon, through April 14, 2020. Fair Value of Debt Obligations The fair values of our debt obligations are determined in accordance with ASC 820, which defines fair value in terms of the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. The fair value of the Notes, which are publicly traded, is based upon closing market quotes as of the measurement date. As of September 30, 2021 and September 30, 2020, the Notes would be deemed to be Level 1 in the fair value hierarchy, as defined in Note 4. In accordance with ASU 2015-03, the debt issuance costs related to the Notes are reported on the Consolidated Statements of Assets and Liabilities as a direct deduction from the face amount of the Notes. As of September 30, 2021 and September 30, 2020, debt issuance costs related to the Notes were as follows (dollars in thousands): September 30, 2021 September 30, 2020 2023 Notes Total 2021 Notes 2023 Notes Total Total debt issuance costs $ 3,102 $ 3,102 $ 3,226 $ 3,102 $ 6,328 Amortized debt issuance costs 2,689 2,689 3,016 2,406 5,422 Unamortized debt issuance costs $ 413 $ 413 $ 210 $ 696 $ 906 F- 43 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 For the years ended September 30, 2021, 2020 and 2019, the components of interest expense, amortized debt issuance costs, weighted average stated interest rate and weighted average outstanding debt balance for the Notes were as follows (dollars in thousands): For the Years Ended September 30 2021 2020 2019 2021 Notes Interest $ 668 $ 4,811 $ 4,811 2023 Notes Interest 4,768 4,768 4,954 2023 Notes Premium (3 ) (3 ) (3 ) Israeli Notes Interest - 2,486 6,817 Amortization of debt issuance costs 367 2,873 2,735 Total $ 5,800 $ 14,935 $ 19,314 Weighted average stated interest rate 7.0 % 6.4 % 6.1 % Weighted average outstanding balance $ 82,930 $ 189,039 $ 273,211 Note 6. Agreements Investment Management Agreement We had entered into an investment management agreement with MCC Advisors on January 11, 2011 (the “Investment Management Agreement”), which expired on December 31, 2020. Under the terms of the Investment Management Agreement, MCC Advisors: ● determined the composition of our portfolio, the nature and timing of the changes to our portfolio and the manner of implementing such changes; ● identified, evaluated and negotiated the structure of the investments we made (including performing due diligence on our prospective portfolio companies); and ● executed, closed, monitored and administered the investments we made, including the exercise of any voting or consent rights. MCC Advisors’ services under the Investment Management Agreement were not exclusive, and it was free to furnish similar services to other entities so long as its services to us were not impaired. Pursuant to the Investment Management Agreement, we paid MCC Advisors a fee for investment advisory and management services consisting of a base management fee and a two-part incentive fee. On December 3, 2015, MCC Advisors recommended and, in consultation with the Board, agreed to reduce fees under the Investment Management Agreement. Beginning January 1, 2016, the base management fee was reduced to 1.50% on gross assets above $1 billion. In addition, MCC Advisors reduced its incentive fee from 20% on pre-incentive fee net investment income over an 8% hurdle, to 17.5% on pre-incentive fee net investment income over a 6% hurdle. Moreover, the revised incentive fee includes a netting mechanism and is subject to a rolling three-year look back from January 1, 2016 forward. Under no circumstances would the new fee structure result in higher fees to MCC Advisors than fees under the prior investment management agreement. F- 44 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 The following discussion of our base management fee and two-part incentive fee reflect the terms of the fee waiver agreement executed by MCC Advisors on February 8, 2016 (the “Fee Waiver Agreement”). The terms of the Fee Waiver Agreement were effective as of January 1, 2016 and were a permanent reduction in the base management fee and incentive fee on net investment income payable to MCC Advisors for the investment advisory and management services it provided under the Investment Management Agreement. The Fee Waiver Agreement did not change the second component of the incentive fee, which was the incentive fee on capital gains. On January 15, 2020, the Company’s board of directors, including all of the independent directors, approved the renewal of the Investment Management Agreement through the later of April 1, 2020 or so long as the Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019 (the “Amended MCC Merger Agreement”), by and between the Company and Sierra (the “Amended MCC Merger Agreement”) was in effect, but no longer than a year; provided that, if the Amended MCC Merger Agreement was terminated by Sierra, then the termination of the Investment Management Agreement would be effective on the 30th day following receipt of Sierra’s notice of termination to the Company. On May 1, 2020, the Company received a notice of termination of the Amended MCC Merger Agreement from Sierra. Under the Amended MCC Merger Agreement, either party was permitted, subject to certain conditions, to terminate the Amended MCC Merger Agreement if the merger was not consummated by March 31, 2020. Sierra elected to do so on May 1, 2020. As result of the termination by Sierra of the Amended MCC Merger Agreement on May 1, 2020, the Investment Management Agreement would have been terminated effective as of May 31, 2020. On May 21, 2020, the Board, including all of the independent directors, extended the term of the Investment Management Agreement through the end of the then-current quarter, June 30, 2020. On June 12, 2020, the Board, including all of the independent directors, extended the term of the Investment Management Agreement through September 30, 2020. On September 29, 2020, the Board, including all of the independent directors, extended the term of the Investment Management Agreement through December 31, 2020. Mr. Brook Taube, our Chairman and Chief Executive Officer through December 31, 2020 and one of our directors through January 21, 2021 and Mr. Seth Taube, one of our directors through January 21, 2021 are both affiliated with MCC Advisors and Medley. On November 18, 2020, the Board approved the adoption of an internalized management structure effective January 1, 2021. The new management structure replaces the current Investment Management and Administration Agreements with MCC Advisors LLC, which expired on December 31, 2020. To lead the internalized management team, the Board approved the appointment of David Lorber, who had served as an independent director of the Company since April 2019, as interim Chief Executive Officer, and Ellida McMillan as Chief Financial Officer of the Company, each effective January 1, 2021. In connection with his appointment, Mr. Lorber stepped down from the Compensation Committee of the Board, the Nominating and Corporate Governance Committee of the Board, and the Special Committee of the Board. Base Management Fee Through December 31, 2020, for providing investment advisory and management services to us, MCC Advisors received a base management fee. The base management fee was calculated at an annual rate of 1.75% (0.4375% per quarter) of up to $1.0 billion of the Company’s gross assets and 1.50% (0.375% per quarter) of any amounts over $1.0 billion of the Company’s gross assets and was payable quarterly in arrears. The base management fee was calculated based on the average value of the Company’s gross assets at the end of the two most recently completed calendar quarters. For the years ended September 30, 2021, 2020 and 2019, the Company incurred base management fees to MCC Advisors of $1.1 million, $6.4 million and $11.2 million, respectively. Since January 1, 2021, the Company no longer incurs management fees under its current internalized structure. F- 45 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 Incentive Fee Through December 31, 2020, the incentive fee had two components, as follows: Incentive Fee Based on Income The first component of the incentive fee was payable quarterly in arrears and was based on our pre-incentive fee net investment income earned during the calendar quarter for which the incentive fee was being calculated. MCC Advisors was entitled to receive the incentive fee on net investment income from us if our Ordinary Income (as defined below) exceeded a quarterly “hurdle rate” of 1.5%. The hurdle amount was calculated after making appropriate adjustments to the Company’s net assets, as determined as of the beginning of each applicable calendar quarter, in order to account for any capital raising or other capital actions as a result of any issuances by the Company of its common stock (including issuances pursuant to our dividend reinvestment plan), any repurchase by the Company of its own common stock, and any dividends paid by the Company, each as may have occurred during the relevant quarter. The second component of the incentive fee was determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Management Agreement as of the termination date) and equaled 20.0% of our cumulative aggregate realized capital gains less cumulative realized capital losses, unrealized capital depreciation (unrealized depreciation on a gross investment-by-investment basis at the end of each calendar year) and all capital gains upon which prior performance-based capital gains incentive fee payments were previously made to the investment adviser. For the years ended September 30, 2021, 2020, and 2019, the Company did not incur any incentive fees on net investment income because pre-incentive fee net investment income did not exceed the hurdle amount under the formula set forth in the Investment Management Agreement. The Investment Management Agreement terminated as of December 31, 2020, and the Company no longer incurs incentive fees under the Investment Management Agreement as a result. As of September 30, 2021 and 2020, $0 and $1.4 million, respectively, were included in “management and incentive fees payable” in the accompanying Consolidated Statements of Assets and Liabilities. As of September 30, 2020 and 2019, $1.4 million and $2.2 million, respectively, were included in “management and incentive fees payable” in the accompanying Consolidated Statements of Assets and Liabilities. Administration Agreement On January 19, 2011, the Company entered into an administration agreement with MCC Advisors. Pursuant to the administration agreement, MCC Advisors furnished us with office facilities and equipment, clerical, bookkeeping, recordkeeping and other administrative services related to the operations of the Company. We reimbursed MCC Advisors for our allocable portion of overhead and other expenses incurred by it performing its obligations under the administration agreement, including rent and our allocable portion of the cost of our Chief Financial Officer and Chief Compliance Officer and their respective staffs. From time to time, our administrator was able to pay amounts owed by us to third-party service providers and we would subsequently reimburse our administrator for such amounts paid on our behalf. In connection with the adoption by the board of directors of an internalized management structure, on November 19, 2020, the Company entered into a Fund Accounting Servicing Agreement and an Administration Servicing Agreement on customary terms with U.S. Bancorp Fund Services, LLC d/b/a U.S. Bank Global Fund Services (“U.S. Bancorp”). The administration agreement with MCC Advisors terminated by its terms on December 31, 2020. Effective January 1, 2021, US Bancorp serves as custodian and provides us with fund accounting and financial reporting services pursuant to the Fund Accounting Servicing Agreement and Administration Servicing Agreement. For the years ended September 30, 2021, 2020 and 2019, we incurred $0.6 million, $2.2 million, and $3.3 million in administrator expenses, respectively. As of September 30, 2021 and 2020, $0.1 million and $0.2 million, respectively, were included in “administrator expenses payable” in the accompanying Consolidated Statements of Assets and Liabilities. F- 46 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 Expense Support Agreement On June 12, 2020, the Company entered into an expense support agreement (the “Expense Support Agreement”) with MCC Advisors and Medley LLC, pursuant to which MCC Advisors and Medley LLC agreed (jointly and severally) to cap the management fee and all of the Company’s other operating expenses (except interest expenses, certain extraordinary strategic transaction expenses and other expenses approved by the Special Committee (as defined in Note 10)) at $667,000 per month (the “Cap”). Under the Expense Support Agreement, the Cap became effective on June 1, 2020. On September 29, 2020, the board of directors, including all of the independent directors, extended the term of the Expense Support Agreement through the end of quarter ending December 31, 2020. The Expense Support Agreement expired by its terms at the close of business on December 31, 2020, in connection with the adoption of the internalized management structure by the board of directors. Note 7. Related Party Transactions Due to Affiliate Due to affiliate consists of certain general and administrative expenses paid by an affiliate on behalf of the Company. Note 8. Commitments Insurance Reimbursements Related to Professional Fees The Company has received insurance proceeds under its insurance policy primarily relating to the legal expenses associated with the dismissed stockholder class action, captioned as FrontFour Capital Group LLC, et al. v Brook Taube et al. During the year ended September 30, 2021, the Company received $2.1 million of insurance proceeds. During the year ended September 30, 2020, the Company received $6.1 million of insurance proceeds. The reimbursements have been recorded as an offset or reduction in professional fees and expenses on the Consolidated Statements of Operations. Unfunded commitments As of September 30, 2021 and 2020, we had commitments under loan and financing agreements to fund up to $4.9 million to six portfolio companies and $3.9 million to five portfolio companies, respectively. These commitments are primarily composed of senior secured term loans and revolvers, and the determination of their fair value is included in the Consolidated Schedule of Investments. The commitments are generally subject to the borrowers meeting certain criteria such as compliance with covenants and certain operational metrics. The terms of the borrowings and financings subject to commitment are comparable to the terms of other loan and equity securities in our portfolio. A summary of the composition of the unfunded commitments as of September 30, 2021 and 2020 is shown in the table below (dollars in thousands): September 30, 2021 September 30, 2020 Redwood Services Group, LLC - Revolver $ 1,575 $ 1,050 1888 Industrial Services, LLC - Revolver 1,078 1,078 Alpine SG - Revolver 1,000 - Kemmerer Operations, LLC - Delayed Draw Term Loan 908 908 NVTN LLC - DDTL 220 220 Black Angus Steakhouses, LLC - Super Priority DDTL 167 - DataOnline Corp. - Revolver - 179 NVTN LLC - Super Priority DDTL - 500 Total unfunded commitments $ 4,948 $ 3,935 F- 47 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 Lease obligations Effective January 1, 2019, ASC 842 required that a lessee evaluate its leases to determine whether they should be classified as operating or financing leases. PhenixFIN identified one operating lease for its office space. The lease commenced September 1, 2021 and expires November 30, 2026. Upon entering into the lease on September 1, 2021, PhenixFIN recorded a right-of-use asset and a lease liability as of that date. Total operating lease cost incurred by PhenixFIN for the year ended September 30, 2021 was $84,000. As of September 30, 2021, the asset related to the operating lease was $613,500 and is included in the Other assets balance on the Consolidated Balance Sheet. The lease liability was $(613,500) and is included in the Other liabilities balance on the Consolidated Balance Sheet. As of September 30, 2021, the remaining lease term was five years and the implied borrowing rate was 5.25%. The following table shows future minimum payments under PhenixFIN’s operating lease as of September 30, 2021: For the Years Ended September 30, Amount 2022 $ 84,000 2023 144,000 2024 144,000 2025 144,000 2026 144,000 Thereafter 24,000 684,000 Difference between undiscounted and discounted cash flows (70,466 ) $ 613,534 Note 9. Fee Income Fee income consists of origination/closing fees, amendment fees, prepayment penalty and other miscellaneous fees which are non-recurring in nature, as well as administrative agent fees, which are recurring in nature. The following table summarizes the Company’s fee income for the years ended September 30, 2021, 2020 and 2019 (dollars in thousands): For the Years Ended September 30 2021 2020 2019 Administrative agent fee $ 414 $ 192 $ 316 Prepayment fee - 139 1,281 Amendment fee 94 171 306 Other fees 2,059 90 56 Origination fee - 101 345 Fee income $ 2,567 $ 693 $ 2, 304 F- 48 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 Note 10. Directors Fees During calendar year 2021, the Company’s independent directors each receive an annual fee of $100,000. In addition, the lead independent director receives an annual retainer of $30,000; the chair of the Audit Committee receives an annual retainer of $25,000, and each of its other members receives an annual retainer of $12,500; and the chairs of the Nominating and Corporate Governance Committee and of the Compensation Committee each receive an annual retainer of $15,000 and each of the other members of these committees receive annual retainers of $8,000. The Company’s independent directors also receive a fee of $3,000 for each board meeting and $2,500 for each committee meeting that they attend. Prior to calendar year 2021, the Company’s independent directors each received an annual fee of $90,000. They also received $3,000, plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each board meeting, and $2,500, plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each Audit Committee, Nominating and Corporate Governance Committee, Transition Committee and Compensation Committee meeting. The chair of the Audit Committee received an annual fee of $25,000 and the chair of the Nominating and Corporate Governance Committee and the Compensation Committee received an annual fee of $10,000 for their additional services in these capacities. In addition, other members of the Audit Committee received an annual fee of $12,500, and other members of the Nominating and Corporate Governance Committee and the Compensation Committee received an annual fee of $6,000. On January 26, 2018, the board of directors established the special committee of the Board, comprised solely of directors who are not “interested persons” of the Company as such term is defined in Section 2(a)(19) of the 1940 Act (the “Special Committee”), for the purpose of assessing the merits of various proposed strategic transactions. As compensation for serving on the Special Committee, each independent director received a one-time retainer of $25,000 plus reimbursement of out-of-pocket expenses, consistent with the Company’s policies for reimbursement of members of the board of directors. In addition, the chairman of the Special Committee received a monthly fee of $15,000 and other members received a monthly fee of $10,000. The Special Committee as well as the Transition Committee have each been dissolved and are each no longer in operation. No board service compensation is paid to directors who are “interested persons” of the Company (as such term is defined in the 1940 Act). For the years ended September 30, 2021, 2020 and 2019, we accrued $1.0 million, $1.5 million, and $1.3 million for directors’ fees expense, respectively. Note 11. Earnings Per Share In accordance with the provisions of ASC Topic 260 - Earnings per Share, basic earnings per share is computed by dividing earnings available to common stockholders by the weighted average number of shares outstanding during the period. Other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. The Company does not have any potentially dilutive common shares as of September 30, 2021, 2020 and 2019. The following information sets forth the computation of the weighted average basic and diluted net increase/(decrease) in net assets per share from operations for the years ended September 30, 2021, 2020 and 2019 (dollars in thousands, except share and per share amounts): For the Years Ended September 30 2021 2020 2019 Basic and diluted: Net increase (decrease) in net assets resulting from operations $ 1,278 $ (65,813 ) $ (96,575 ) Weighted average shares of common stock outstanding - basic and diluted 2,677,891 2,723,709 2,723,709 Earnings (loss) per share of common stock - basic and diluted $ 0.48 $ (24.16 ) $ (35.46 ) F- 49 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 Note 12. Financial Highlights The following is a schedule of financial highlights for the years ended September 30, 2021, 2020, 2019, 2018 and 2017: For the Years Ended September 30 2021 2020 2019 2018 2017 Per share data Net Asset Value per share at Beginning of Period $ 55.30 $ 79.46 $ 117.92 $ 169.04 $ 189.78 Results of Operations: Net Investment Income/(Loss) (1) 6.92 (1.00 ) (7.66 ) 4.55 13.35 Net Realized Gain/(Loss) on Investments (15.86 ) (18.35 ) (41.18 ) (32.76 ) (26.83 ) Net Unrealized Gain/(Loss) on Investments 9.47 (3.90 ) 14.13 (11.82 ) 7.95 Change in provision for deferred taxes on unrealized appreciation/(depreciation) on investments - - - 0.17 0.40 Net loss on extinguishment of debt (0.05 ) (0.91 ) (0.75 ) (0.87 ) (0.40 ) Net Increase (Decrease) in Net Assets Resulting from Operations 0.48 (24.16 ) (35.46 ) (40.73 ) (5.53 ) Capital Share Transactions Distributions from net investment income - - (3.00 ) (10.40 ) (15.20 ) Repurchase of common stock under stock repurchase program 1.30 - - - - Other (4) - - - 0.01 (0.01 ) Net Increase (Decrease) Resulting from Capital Share Transactions 1.30 - (3.00 ) (10.39 ) (15.21 ) Net Asset Value per share at End of Period $ 57.08 $ 55.30 $ 79.46 $ 117.92 $ 169.04 Net Assets at End of Period 143,693,981 $ 150,619,517 $ 216,432,530 $ 321,178,727 $ 460,429,317 Shares Outstanding at End of Period 2,517,221 2,723,709 2,723,709 2,723,709 2,723,709 Per share market value at end of period $ 42.90 $ 17.83 $ 51.80 $ 76.40 $ 119.40 Total return based on market value (2) 140.61 % (65.58 %) (29.91 %) (27.82 %) (12.73 %) Total return based on net asset value (3) (4.60 %) (30.41 %) (29.47 %) (21.29 %) (0.68 %) Portfolio turnover rate 24.97 % 5.66 % 11.93 % 26.46 % 26.01 % F- 50 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 The following is a schedule of ratios and supplemental data for the years ended September 30, 2021, 2020, 2019, 2018 and 2017: For the Years Ended September 30 2021 2020 2019 2018 2017 Ratios: Ratio of net investment/(loss) income to average net assets after waivers, discounts and reimbursements (5) 12.44 % (1.64 %) (7.96 %) 3.37 % 7.50 % Ratio of total expenses to average net assets after waivers, discounts and reimbursements (5) 9.26 % 14.64 % 25.62 % 14.77 % 12.35 % Ratio of incentive fees to average net assets after waivers (5) 0.00 % 0.00 % 0.00 % 0.00 % 0.18 % Supplemental Data: Ratio of net operating expenses and credit facility related expenses to average net assets (5)(12) 9.26 % 15.07 % 25.62 % 14.77 % 12.17 % Percentage of non-recurring fee income (6) 7.94 % 2.33 % 4.29 % 5.78 % 6.23 % Average debt outstanding (7) 82,930,098 189,038,998 347,991,878 451,590,779 514,726,703 Average debt outstanding per common share 30.97 69.40 127.76 165.80 188.98 Asset coverage ratio per unit (8) 2,856 1,992 1,842 2,126 2,327 Total Debt Outstanding (13) Revolving Credit Facility - - - - 68,000,000 Term Loan Facility - - - - 102,000,000 2021 Notes (11) - 74,012,825 74,012,825 74,012,825 74,012,825 2023 Notes 77,846,800 77,846,800 77,846,800 89,846,800 102,846,800 Israeli Notes (10) - - 105,136,927 121,275,690 - SBA Debentures - - - 135,000,000 150,000,000 Average market value per unit: 2019 Notes (9) N/A N/A N/A N/A 25.39 2021 Notes (11) N/A 23.61 24.82 25.48 25.80 2023 Notes 24.94 21.68 24.28 25.02 25.18 Israeli Notes (10) N/A N/A 254.43 273.95 N/A F- 51 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 (1) Net investment income/(loss) excluding management and incentive fee waivers, discounts and reimbursements based on total weighted average common stock outstanding equals $6.92, $(3.35), $(7.66), $4.41, and $13.32 per share for the years ended September 30, 2021, 2020, 2019, 2018, and 2017, respectively. (2) Total return is historical and assumes changes in share price, reinvestments of all dividends and distributions at prices obtained under the Company’s dividend reinvestment plan, and no sales charge for the period. (3) Total return is historical and assumes changes in NAV, reinvestments of all dividends and distributions at prices obtained under the Company’s dividend reinvestment plan, and no sales charge for the period. (4) Represents the impact of the different share amounts used in calculating per share data as a result of calculating certain per share data based upon the weighted average basic shares outstanding during the period and certain per share data based on the shares outstanding as of a period end or transaction date. (5) For the year ended September 30, 2021, prior to the effect of Expense Support Agreement, the ratio of net investment income/(loss), total expenses, incentive fees, and operating expenses and credit facility related expenses to average net assets is 12.44%, 9.26%, 0.00%, and 9.26%, respectively. For the year ended September 30, 2020, excluding management and incentive fee waivers, the ratio of net investment income/(loss), total expenses, incentive fees, and operating expenses and credit facility related expenses to average net assets is (5.94)%, 18.94%, 0.00%, and 18.94%, respectively. For the year ended September 30, 2019, excluding management and incentive fee waivers, the ratio of net investment income/(loss), total expenses, incentive fees, and operating expenses and credit facility related expenses to average net assets is (7.96)%, 25.62%, 0.00%, and 25.62%, respectively. For the year ended September 30, 2018, excluding management and incentive fee waivers, the ratio of net investment income/(loss), total expenses, incentive fees, and operating expenses and credit facility related expenses to average net assets is 3.26%, 14.88%, 0.00%, and 14.88%, respectively. For the year ended September 30, 2017, excluding management and incentive fee waivers, the ratio of net investment income/(loss), total expenses, incentive fees, and operating expenses and credit facility related expenses to average net assets is 7.48%, 12.37%, 0.18%, and 12.18%, respectively. (6) Represents the impact of the non-recurring fees as a percentage of total investment income. (7) Based on daily weighted average carrying value of debt outstanding during the period. (8) Asset coverage per unit is the ratio of the carrying value of our total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness. Asset coverage per unit is expressed in terms of dollar amounts per $1,000 of indebtedness. As of September 30, 2021, the Company’s asset coverage was 285.6% after giving effect to leverage and therefore the Company’s asset coverage was above 200%, the minimum asset coverage requirement under the 1940 Act. (9) During the year ended September 30, 2017, the 2019 Notes were redeemed in full and ceased trading on February 17, 2017. The average price for the year ended September 30, 2017 reflects the period from October 1, 2016 through February 17, 2017. (10) During the year ended September 30, 2020, the Israeli Notes were redeemed in full and ceased trading on the TASE on April 14, 2020. (11) During the year ended September 30, 2021, the 2021 Notes were redeemed in full and ceased trading on November 20, 2020. The average price for the year ended September 30, 2021 reflects the period from October 1, 2020 through November 20, 2020. (12) Excludes incentive fees. (13) Total amount of each class of senior securities outstanding at the end of the period excluding debt issuance costs. F- 52 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 Note 13. Dividends Dividends and distributions to common stockholders are recorded on the ex-dividend date. The amount to be paid out as a dividend is determined by our board of directors. We have adopted an “opt out” dividend reinvestment plan for our common stockholders. As a result, if we declare a cash dividend or other distribution, each stockholder that has not “opted out” of our dividend reinvestment plan will have its dividends automatically reinvested in additional shares of our common stock rather than receiving cash dividends. Stockholders who receive distributions in the form of shares of common stock will be subject to the same federal, state and local tax consequences as if they received cash distributions. The Company did not make any distributions during the years ended September 30, 2021 and 2020. Note 14. Share Transactions On January 11, 2021, the Company announced that its board of directors approved a share repurchase program. The following table sets forth the number of shares of common stock repurchased by the Company at an average price of $33.94 per share under its share repurchase program from February 10, 2021 through September 30, 2021: Month Ended Shares Repurchased Repurchase Price Per Share Aggregate Consideration for Repurchased Shares February 2021 13,082 $30.25 - $30.96 $ 397,384 March 2021 12,241 $30.25 - $34.42 393,938 April 2021 14,390 $33.11 - $34.89 491,469 May 2021 25,075 $34.56 - $39.93 976,440 August 2021 141,700 $41.03 - $42.28 5,944,213 Total 206,488 $ 8,203,444 The Company’s net asset value per share was increased by approximately $1.31 as a result of the share repurchases. Note 15. Selected Quarterly Financial Data (Unaudited) The following tables represent selected unaudited quarterly financial data for the Company during the years ended September 30, 2021 and 2020 (dollars in thousands, except per share amounts): September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 Consolidated Statement of Operations data: Total investment income $ 4,368 $ 8,684 $ 6,454 $ 12,801 Net investment income 1,076 5,430 3,687 8,330 Total realized and unrealized gains/(losses) (37,529 ) 1,539 4,100 14,768 Loss on extinguishment of debt - - - (122 ) Net increase/(decrease) in net assets resulting from operations (7,040 ) 6,969 7,787 (6,438 ) Earnings per share (2.63 ) 2.60 2.87 (2.36 ) Net asset value per common share at period end $ 57.08 $ 58.49 $ 55.91 $ 52.94 F- 53 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) September 30, 2021 September 30, 2020 June 30, 2020 March 31, 2020 December 31, 2019 Consolidated Statement of Operations data: Total investment income $ 4,420 $ 4,309 $ 5,301 $ 7,491 Net investment income/(loss) (858 ) (719 ) (4,216 ) 3,073 Net realized and unrealized gain/(loss) 2,082 8,984 (73,663 ) 1,986 Change in provision for deferred taxes on unrealized gain/(loss) on investments 50 36 (86 ) — Loss on extinguishment of debt — (697 ) (895 ) (889 ) Net increase/(decrease) in net assets resulting from operations 1,274 7,604 (78,860 ) 4,170 Earnings per share 0.47 2.79 (28.95 ) 1.53 Net asset value per common share at period end $ 55.30 $ 54.83 $ 52.04 $ 80.99 Note 16. Subsequent Events Management has evaluated subsequent events through the date of issuance of the consolidated financial statements included herein. Other than the items disclosed herein, there have been no subsequent events that occurred during such period that would require disclosure in this Form 10-K or would be required to be recognized in the Consolidated Financial Statements as of and for the year ended September 30, 2021. On November 9, 2021, the Company entered into an underwriting agreement, by and between the Company and Oppenheimer & Co. Inc., as representative of the several underwriters, in connection with the issuance and sale (the “Offering”) of $57,500,000 (including the underwriters’ option to purchase up to $7,500,000 aggregate principal amount) in aggregate principal amount of its 5.25% Notes due 2028 (the “2028 Notes”). The Offering occurred on November 15, 2021, pursuant to the Company’s effective shelf registration statement on Form N-2 previously filed with the SEC, as supplemented by a preliminary prospectus supplement dated November 8, 2021, the pricing term sheet dated November 9, 2021 and a final prospectus supplement dated November 9, 2021. Effective November 16, 2021, the 2028 Notes began trading on the NASDAQ Global Market under the trading symbol “PFXNZ.” On November 15, 2021, the Company and U.S. Bank National Association, as trustee entered into a Fourth Supplemental Indenture to its base Indenture, dated February 7, 2012, between the Company and the Trustee. The Fourth Supplemental Indenture relates to the Offering of the 2028 Notes. On November 15, 2021, the Company caused notices to be issued to the holders of the 2023 Notes regarding the Company’s exercise of its option to redeem $55,325,000 in aggregate principal amount of the issued and outstanding 2023 Notes on December 16, 2021. F- 54 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.