What changed in this filing

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2024-12-17 compared with 2023-12-22 · 1450 added, 1426 removed, 620 unchanged (82% of the section changed)

17 unchanged sentences

did not engage in hedging activities.

As of September 30, 2023, 59.6% of our income-bearing investment portfolio

bore interest based on floating rates based upon fair value.

The substantial majority of this component of our portfolio bore interest

based on a SOFR reference rate.

Certain such investments used a LIBOR reference rate at September 30, 2023, but no such investments utilize

a LIBOR reference rate as of the date of this report.

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 the applicable reference rates are not offset by a corresponding

of September 30, 2024, 53.7% of our income-bearing investment portfolio bore interest based on floating rates based upon fair value.

The substantial majority of this component of our portfolio bore interest based on a SOFR reference rate.

Certain such investments used

a LIBOR reference rate at September 30, 2024.

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 the applicable reference rates are not offset by a corresponding

increase in the spread over the reference rates 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 reference

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.

composition of our floating rate debt investments by cash interest rate floor as of September 30, 2023 was as follows (dollars in thousands):

and SOFR Floor

Rate Portfolio

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

The composition of our floating rate debt investments by cash interest rate floor as of September 30, 2024 was as follows (dollars

in thousands):

September 30, 2024

SOFR and LIBOR Floor

% of Floating Rate Portfolio

1% to under 2%

2% to under 3%

3% to under 4%

4% to under 5%

on our Consolidated Statements of Assets and Liabilities as of September 30, 2024, the following table (dollars in thousands) shows the

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rates, assuming no changes in our investment and capital structure.

Interest Rates

Change in Interest Rates

Interest Income (1)

Interest Expense

Net Increase/ (Decrease)

Up 300 basis points

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Down 300 basis points

Assumes no defaults or

prepayments by portfolio companies over the next twelve months.

no defaults or prepayments by portfolio companies over the next twelve months.

Consolidated Financial Statements and Supplementary Data

TO CONSOLIDATED FINANCIAL STATEMENTS

of Independent Registered Public Accounting Firm s

of Independent Registered Public Accounting Firms

Statements of Assets and Liabilities as of September 30, 2024 and 2023

8 unchanged sentences

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statement of assets and

liabilities of PhenixFIN Corporation and subsidiaries (the Company), including the consolidated schedule of investments, as of September 30,

2023, the related consolidated statements of operations, changes in net assets, and cash flows for the year ended September 30, 2023,

and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present

fairly, in all material respects, the financial position of the Company as of September 30, 2023, and the results of its operations

and its cash flows for the year ended September 30, 2023, in conformity with U.S.

We have audited the accompanying consolidated statements of assets

and liabilities of PhenixFIN Corporation and subsidiaries (the Company), including the consolidated schedules of investments, as of September 30,

2024 and 2023, the related consolidated statements of operations, changes in net assets, and cash flows for each of the years in the two-year

period ended September 30, 2024, and the related notes (collectively, the consolidated financial statements).

In our opinion, the

consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30,

2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended September 30,

2024, in conformity with U.S.

generally accepted accounting principles.

2 unchanged sentences

Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required

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of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of 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 consolidated financial statements

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an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding of internal

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

1 unchanged sentence

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material

Our audits included performing procedures to assess the risks of material

misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial

Such procedures also included confirmation of securities owned as of September 30, 2023, by correspondence with custodians,

Such procedures also included confirmation of securities owned as of September 30, 2024 and 2023, by correspondence with custodians,

portfolio companies, agents or by other appropriate auditing procedures.

Our audit also included evaluating the accounting principles

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

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 consolidated 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 consolidated financial statements and

(2) involved our especially challenging, subjective, or complex judgments.

The communication of a 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 accounts or disclosures to which it relates.

The critical audit matter communicated

below is a matter arising from the current period audit of the consolidated 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 consolidated financial

statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a 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 accounts or disclosures to which it relates.

Fair value of investments

As discussed in

Notes 2, 3 and 4 of the consolidated financial statements, the Company measures its investments at fair value.

The Company determines

the fair value of investments that are not publicly traded and whose market quotations are not readily available using one or more methodologies

including the market approach and income approach, which requires the Company to make subjective judgments and estimates using unobservable

As of September 30, 2023, the fair value of level 3 investments was $165.3 million.

As discussed in Notes 2, 3 and 4 of the consolidated financial statements,

the Company measures its investments at fair value.

The Company determines the fair value of investments that are not publicly traded

and whose market quotations are not readily available using one or more methodologies including the market approach and income approach,

which requires the Company to make subjective judgments and estimates using unobservable inputs.

As of September 30, 2024, the fair value

of level 3 investments was $140.3 million.

We identified the

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in these assumptions could have a significant impact on the estimated fair value of investments.

The following are the procedures we performed to address

this critical audit matter.

We evaluated the design of certain internal controls over the Company’s process to estimate the fair

value of level 3 investments, including controls related to the determination of market yield and financial performance multiples assumptions.

We evaluated the Company’s ability to estimate fair value by comparing prior period fair values for a selection of investments to

transaction prices of transactions occurring subsequent to the prior period valuation date.

The following are the primary procedures we performed to

address this critical audit matter.

We evaluated the design of certain internal controls over the Company’s process to estimate

the fair value of level 3 investments, including controls related to the determination of market yield and financial performance multiples

We evaluated the Company’s ability to estimate fair value by comparing prior period fair values for a selection of

investments to transaction prices occurring subsequent to the prior period valuation date.

We involved valuation professionals with specialized

skills and knowledge who, for a selection of the Company’s investments, evaluated the Company’s estimate of fair value by

developing an independent estimate of fair value using independent market yields and financial performance multiples that were developed

using relevant market and portfolio company financial information and comparing such estimates to the fair values recorded by the Company

for the selected investments.

We have served as the Company’s auditor since 2023.

New York, New York

skills and knowledge who, for a selection of the Company’s investments, assisted in evaluating the Company’s estimate of fair

value by developing an independent estimate of fair value using independent market yields and financial performance multiples that were

developed using relevant market and portfolio company financial information and comparing such estimates to the fair values recorded by

the Company for the selected investments.

We have served

as the Company’s auditor since 2023.

December 16, 2024

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Opinion on the Financial Statements

We have audited the accompanying consolidated statement of assets and

liabilities of PhenixFIN Corporation (the Company), including the consolidated schedule of investments, as of September 30, 2022, the

related consolidated statements of operations, changes in net assets, and cash flows for each of the two years in the period ended September

30, 2022, 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, 2022,

and the results of its operations, changes in its net assets, and its cash flows for each of the two years in the period ended September

30, 2022 in conformity with U.S.

We have audited the accompanying consolidated statements of operations,

changes in net assets, and cash flows of PhenixFIN Corporation (the Company), for the year ended September 30, 2022, 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 results of its operations, changes in its net assets, and its cash flows for the year ended

September 30, 2022 in conformity with U.S.

generally accepted accounting principles.

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Investments at fair value

Non-controlled, non-affiliated investments (amortized cost of $ 134,339,121

and $ 147,378,917 , respectively)

Non-controlled, non-affiliated investments (amortized cost of $ 143,179,354 and $ 134,339,121 respectively)

$ 142,233,426

$ 125,531,031

Affiliated investments (amortized cost of $ 48,223,910 and $ 30,585,884 ,

Affiliated investments (amortized cost of $ 20,564,242 and $ 48,233,910 , respectively)

Controlled investments (amortized cost of $ 97,016,429 and $ 82,437,692 ,

respectively)

Controlled investments (amortized cost of $ 82,437,692 and $ 85,483,093 , respectively)

Total Investments at fair value

Cash and cash equivalents

Other receivable

Interest receivable

Paydown receivable

Dividends receivable

Other receivable

Receivable for investments sold

Deferred tax asset

Deferred financing costs

Due from affiliate

Prepaid share repurchase

Receivable for investments sold

Due from Affiliate

$ 302,751,813

$ 239,693,465

Credit facility and note payable (net of debt issuance costs of $ 1,688,835 and $ 2,059,164 , respectively)

Payable for investments purchased

Credit facility and notes payable (net of debt issuance costs of $ 1,510,815 and $ 1,688,835 , respectively)

$ 135,723,636

Accounts payable and accrued expenses

1 unchanged sentence

Other liabilities

Due to Affiliate

Payable for investments purchased

Deferred revenue

Administrator expenses payable (see Note 6)

Total Liabilities

26 unchanged sentences

Dividend income

Non-controlled, non-affiliated investments

Affiliated investments

Controlled investments

Total dividend income

Interest from cash and cash equivalents

1 unchanged sentence

Total Investment Income

Base management fees (see Note 6)

Interest and financing expenses

15 unchanged sentences

Controlled investments

( 40,144,795 )

Total net realized gains (losses)

( 11,533,039 )

( 42,485,528 )

Net change in unrealized gains (losses):

1 unchanged sentence

( 16,701,153 )

( 5,022,484 )

Affiliated investments

( 10,342,450 )

Controlled investments

( 7,287,134 )

Total net change in unrealized gains (losses)

1 unchanged sentence

Loss on extinguishment of debt (see Note 5)

Deferred tax benefit (expense)

Total realized and unrealized gains (losses)

( 9,538,483 )

( 17,244,811 )

Net Increase (Decrease) in Net Assets Resulting from Operations

12 unchanged sentences

Net realized gains (losses) on investments

Net change in unrealized appreciation (depreciation) on investments

( 14,463,337 )

Net change in unrealized appreciation (depreciation) on investments

Net loss on extinguishment of debt

9 unchanged sentences

( 9,383,318 )

Balance at September 30, 2021

( 22,848,573 )

$ ( 545,175,178 )

Balance at September 30, 2022

( 554,558,496 )

1 unchanged sentence

Net realized gains (losses) on investments

Net change in unrealized appreciation (depreciation) on investments

( 11,533,039 )

Net loss on extinguishment of debt

Net change in unrealized appreciation (depreciation) on investments

CAPITAL SHARE TRANSACTIONS

Distributions declared

Repurchase of common shares

4 unchanged sentences

Total Increase (Decrease) in Net Assets

( 13,464,840 )

( 9,383,318 )

( 22,848,573 )

Balance at September 30, 2023

( 548,108,778 )

$ ( 554,558,496 )

$ 120,845,408

Net investment income (loss)

Net realized gains (losses) on investments

( 11,533,039 )

Net change in unrealized appreciation (depreciation) on investments

Net loss on extinguishment of debt

Deferred tax benefit (expense)

CAPITAL SHARE TRANSACTIONS

Distributions declared

( 2,645,925 )

Repurchase of common shares

4 unchanged sentences

Total Increase (Decrease) in Net Assets

( 19,410,437 )

Balance at September 30, 2024

9 unchanged sentences

Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:

Proceeds from sale and settlements of investments

Purchases, originations and participations

( 99,173,887 )

( 76,652,712 )

( 173,321,143 )

Investment increases due to payment-in-kind interest

( 1,207,710 )

( 1,525,392 )

Net amortization of premium (discount) on investments

4 unchanged sentences

( 7,292,299 )

Net unrealized (gains) losses on investments

( 5,221,051 )

( 25,363,072 )

Proceeds from sale and settlements of investments

Purchases, originations and participations

( 76,652,712 )

Net unrealized (gains) losses on investments

( 5,705,864 )

3 unchanged sentences

Fees receivable

( 1,753,672 )

Interest receivable

6 unchanged sentences

Prepaid share repurchase

Deferred tax benefit (expense)

Increase (decrease) in operating liabilities:

1 unchanged sentence

( 4,123,059 )

( 12,426,941 )

Accounts payable and accrued expenses

Due to affiliates

Due to Affiliate

Administrator expenses payable

1 unchanged sentence

Deferred revenue

Management and incentive fees payable, net

( 1,392,022 )

Other liabilities

8 unchanged sentences

( 55,325,000 )

Distributions paid to shareholders

Debt issuance costs paid

1 unchanged sentence

Deferred financing costs

Distributions paid to shareholders

( 2,645,925 )

Repurchase of common shares

4 unchanged sentences

( 17,366,819 )

( 82,216,269 )

Net increase (decrease) in cash and cash equivalents

5 unchanged sentences

Interest paid during the period

Non-cash purchase of investments

Non-cash sale of investments

accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

of September 30, 2024

of Investment

Shares/Units (2)

Non-Controlled/Non-Affiliated

Altisource S.A.R.L.(11)

Senior Secured First Lien Term Loan B

(SOFR + CSA + 5.00 %, 3.75 % PIK)(20)(25)

Arcline FM Holdings, LLC

Aerospace & Defense

First Lien Term Loans

(SOFR + CSA + 4.75 %, 0.75 % Floor)(20)(25)

Be Green Packaging, LLC

Containers, Packaging & Glass

Equity - 417 Common Units(21)

Company (1) Industry Type of Investment Maturity Par Amount/

Shares/Units (2) Amortized

Cost (3) Fair

Value (4) % of Net

Non-Controlled/Non-Affiliated Investments:

All Around Roustabout, LLC Energy:

Oil & Gas Senior Secured First Lien Term Loan C 8/31/2026 $ 350,000 $ 196,411 $ 350,000 0.22 %

350,000 196,411 350,000 0.22 %

Altisource S.A.R.L.(11) Services:

Business Senior Secured First Lien Term Loan B (SOFR + CSA + 5.00 %, 3.75 % PIK)(20)(24) 4/30/2025 $ 14,004,684 $ 11,029,605 $ 9,565,199 5.97 %

Warrants(21) 5/22/2027 97,899 - 82,725 0.05 %

14,102,583 11,029,605 9,647,924 6.02 %

Arcline FM Holdings, LLC Aerospace & Defense First Lien Term Loans (SOFR + 4.50 %, 0.75 % Floor)(14)(25) 6/23/2028 2,658,987 2,571,184 2,660,649 1.66 %

2,658,987 2,571,184 2,660,649 1.66 %

Blufox Mobile Services Services:

Consumer Senior Secured First Lien Term Loan (SOFR + 9.50 % + 4.00 % PIK Toggle, 4.00 % Floor)(23) 4/12/2028 7,111,139 7,047,816 7,111,139 4.44 %

7,111,139 7,047,816 7,111,139 4.44 %

Boostability Seotowncenter, Inc.

Equity - 833,152 Common Units(21)

CB&L Associates Holdco I, LLC (11)

Banking, Finance, Insurance & Real Estate

First Lien Term Loan

(SOFR + CSA+ 2.75 %, 1.00 % Floor)(14)(20)(24)

Chimera Investment Corp.(11)

Banking, Finance, Insurance & Real Estate

Equity - 117,310 Class C Preferred Units(13)(15)

Business Equity - 833,152 Common Units(21) 833,152 66,475 - 0.00 %

833,152 66,475 - 0.00 %

CB&L Associates Holdco I, LLC(11) Real Estate First Lien Term Loan (SOFR + CSA+ 2.75 %, 1.00 % Floor)(14)(20)(23) 11/1/2025 5,384,063 4,541,408 5,034,099 3.14 %

5,384,063 4,541,408 5,034,099 3.14 %

Chimera Investment Corp.(11) Real Estate Equity - 137,310 Class C Preferred Units(13)(15) 137,310 3,343,083 3,110,072 1.94 %

Equity - 105,480 Class D Preferred Units(13)(24) 105,480 2,305,206 2,561,054 1.60 %

Property CTL Pass Through Trust

Finance, Insurance & Real Estate

Certificates(14)

DataOnline Corp.

High Tech Industries

Senior Secured First Lien Term Loan

(SOFR + CSA + 5.50 %, 1.00 % Floor)(20)(25)

Revolving Credit Facility

(SOFR + CSA + 5.50 %, 1.00 % Floor)(20)(25)

Deer Management Systems LLC

Consumer Discretionary

First Lien Term Loan

(SOFR + CSA + 8.25 %, 3.00 % Floor)(8)(20)(25)

DirecTV Financing, LLC

Broadcasting & Subscription

Senior Secured First Lien Term Loan

(SOFR + CSA + 5.00 %, 0.75 % Floor)(14)(20)(24)

First Brands Group, LLC

Senior Secured First Lien Term Loan

(SOFR + CSA + 5.00 %, 1.00 % Floor)(20)(26)

Franklin BSP Realty Trust, Inc.(11)

Banking, Finance, Insurance & Real Estate

Equity - 226,107 Common Units(13)

Global Accessories Group, LLC

Consumer goods:

Equity - 3.8 % Membership Interest(21)

Innovate Corp.(11)

Construction & Building

8.50 % Senior Secured Notes(14)

Invesco Mortgage Capital, Inc.(11)

Banking, Finance, Insurance & Real Estate

Equity - 205,000 Class C Preferred Units(13)(16)

JFL-NGS-WCS Partners, LLC

Construction & Building

Senior Secured First Lien Term Loan B

(SOFR + CSA+ 5.50 %, 1.00 % Floor)(20)(24)

Equity - 10,000,000 Units(21)

Lighting Science Group Corporation

Containers, Packaging & Glass

Warrants - 0.62 % of Outstanding Equity(21)

accompanying notes are an integral part of these consolidated financial statements.

242,790 5,648,289 5,671,126 3.54 %

Copper Property CTL Pass Through Trust Real Estate Equity Certificates(13) 637,795 7,678,355 7,664,893 4.78 %

637,795 7,678,355 7,664,893 4.78 %

DirecTV Financing, LLC Media:

Broadcasting & Subscription Senior Secured First Lien Term Loan (SOFR + CSA + 5.00 %, 0.75 % Floor)(14)(20)(23) 8/2/2027 3,639,523 3,641,793 3,639,523 2.27 %

Senior Secured First Lien Term Loan (SOFR + CSA + 5.25 %, 0.75 % Floor)(14)(20)(23) 8/2/2029 932,500 921,969 916,764 0.57 %

4,572,023 4,563,762 4,556,287 2.84 %

Epic Y-Grade Services, LP Energy:

Oil & Gas First Lien Term Loan (SOFR + 5.75 %, 0.00 % Floor)(14)(23) 6/30/2029 4,000,000 3,906,938 3,982,500 2.48 %

4,000,000 3,906,938 3,982,500 2.48 %

First Brands Group, LLC Automotive Senior Secured First Lien Term Loan (SOFR + CSA + 5.00 %, 1.00 % Floor)(14)(20)(24) 3/30/2027 3,879,397 3,879,397 3,830,905 2.39 %

3,879,397 3,879,397 3,830,905 2.39 %

Franklin BSP Realty Trust, Inc.(11) Real Estate Equity - 66,107 Common Units(13) 66,107 907,782 863,357 0.54 %

66,107 907,782 863,357 0.54 %

Global Accessories Group, LLC Consumer goods:

Non-durable Equity - 3.8 % Membership Interest(21) 380 151,337 - 0.00 %

380 151,337 - 0.00 %

Innovate Corp.(11) Construction & Building 8.50 % Senior Secured Notes(14) 2/1/2026 4,250,000 3,714,663 3,392,031 2.12 %

4,250,000 3,714,663 3,392,031 2.12 %

Invesco Mortgage Capital, Inc.(11) Real Estate Equity - 192,300 Class C Preferred Units(13)(16) 192,300 4,725,994 4,624,815 2.88 %

192,300 4,725,994 4,624,815 2.88 %

NGS-WCS Group Holdings Construction & Building Senior Secured First Lien Term Loan B (SOFR + 4.75 %, 0.50 % Floor)(23) 5/31/2030 997,500 992,748 1,002,488 0.63 %

JFL-NGS-WCS Partners, LLC Construction & Building Equity - 10,000,000 Units(21) 10,000,000 10,000,000 12,700,000 7.92 %

10,997,500 10,992,748 13,702,488 8.55 %

Kemmerer Operations, LLC Metals & Mining Senior Secured First Lien Term Loan (SOFR + 5.00 %, 0.00 % Floor)(24) 12/31/2028 12,161,321 12,161,321 12,161,321 7.59 %

12,161,321 12,161,321 12,161,321 7.59 %

Lighting Science Group Corporation Containers, Packaging & Glass Warrants - 0.62 % of Outstanding Equity(21) 5,000,000 955,680 - 0.00 %

5,000,000 955,680 - 0.00 %

The accompanying notes are an integral part of these consolidated financial statements.

PHENIXFIN CORPORATION

Schedule of Investments (continued)

of September 30, 2024

of Investment

Shares/Units (2)

Lucky Bucks, LLC

Consumer Discretionary

Equity - 180,739 Membership Units (21)

Second Out Exit Term Loan

(SOFR + CSA + 7.50 %, 1.00 % Floor)(20)(24)

First Out Exit Term Loan

(SOFR + CSA + 7.50 %, 1.00 % Floor)(20)(24)

McKissock Investment Holdings, LLC (dba Colibri)

Senior Secured First Lien Term Loan

(SOFR + CSA + 5.00 %, 0.75 % Floor)(20)(25)

MFA Financial, Inc.(11)

Banking, Finance, Insurance & Real Estate

Equity - 97,426 Class C Preferred Units(13)(19)

New York Mortgage Trust, Inc.(11)

Banking, Finance, Insurance & Real Estate

Equity - 165,000 Class E Preferred Units(13)(18)

PennyMac Financial Services, Inc.(11)

Banking, Finance, Insurance & Real Estate

Equity - 29,500 Common Units(13)

Company (1) Industry Type of Investment Maturity Par Amount/

Shares/Units (2) Amortized

Cost (3) Fair

Value (4) % of Net

Lucky Bucks, LLC Consumer Discretionary Priority Second Out Term Loan(SOFR + CSA + 7.50 %, 1.00 % Floor)(20)(23) 10/2/2029 $ 1,351,031 $ 1,324,010 $ 1,351,031 0.84 %

Priority First Out Exit Term Loan(SOFR + CSA + 7.50 %, 1.00 % Floor)(20)(23) 10/2/2028 684,370 621,820 684,370 0.43 %

LB NewHoldCo, LLC Equity - 180,739 Membership Units(21) 180,739 174,393 1,420,305 0.89 %

2,216,140 2,120,223 3,455,706 2.16 %

McKissock Investment Holdings, LLC (dba Colibri) Services:

Consumer Senior Secured First Lien Term Loan (SOFR + CSA + 5.00 %, 0.75 % Floor)(14)(20)(24) 3/10/2029 4,874,543 4,840,100 4,868,450 3.04 %

4,874,543 4,840,100 4,868,450 3.04 %

MFA Financial, Inc.(11) Real Estate Equity - 97,426 Class C Preferred Units(13)(19) 97,426 2,318,487 2,308,996 1.44 %

97,426 2,318,487 2,308,996 1.44 %

Neptune Bidco US, Inc.

(dba Nielsen) Media:

Broadcasting & Subscription First Lien Term Loan (SOFR + CSA + 5.00 %, 0.50 % Floor)(14)(20)(24) 4/11/2029 1,994,949 1,885,227 1,865,278 1.16 %

1,994,949 1,885,227 1,865,278 1.16 %

New York Mortgage Trust, Inc.(11) Real Estate Equity - 165,000 Class E Preferred Units(13)(18) 165,000 4,102,076 4,039,200 2.52 %

165,000 4,102,076 4,039,200 2.52 %

PHH Mortgage Corp.

Banking, Finance, Insurance & Real Estate

7.875 % Senior Secured Note(14)

Senior Secured First Lien Term Loan

(LIBOR + 6.00 % PIK)(10)(21)

Power Stop LLC

Senior Secured First Lien Term Loan

(SOFR + CSA + 4.75 %, 0.50 % Floor)(20)(24)

Rithm Capital Corp.(11)

Banking, Finance, Insurance & Real Estate

Equity - 206,684 Class B Preferred Units(13)(17)

Real Estate 7.875 % Senior Secured Note(14) 3/15/2026 7,686,000 6,990,720 7,661,981 4.78 %

7,686,000 6,990,720 7,661,981 4.78 %

Point.360 Services:

Business Senior Secured First Lien Term Loan (LIBOR + 6.00 % PIK)(10)(21) 7/8/2020 2,777,366 2,103,712 - 0.00 %

2,777,366 2,103,712 - 0.00 %

Power Stop LLC Automotive Senior Secured First Lien Term Loan (SOFR + CSA + 4.75 %, 0.50 % Floor)(14)(20)(24) 1/26/2029 8,838,431 8,289,487 8,484,894 5.29 %

8,838,431 8,289,487 8,484,894 5.29 %

Secure Acquisition Inc.

(dba Paragon Films)

Senior Secured First Lien Term Loan

(SOFR + CSA + 5.00 %, 0.50 % Floor)(20)(25)

Senior Secured First Lien Delayed Draw Term Loan (SOFR + CSA + 5.00 %, 0.50 % Floor)(8)(12)(20)(25)

SS Acquisition, LLC (dba Soccer Shots Franchising)

Senior Secured First Lien Term Loan (SOFR + CSA + 6.50 %, 1.00 % Floor)(20)(24)

(dba Paragon Films) Packaging Senior Secured First Lien Term Loan (SOFR + 4.25 %, 0.50 % Floor)(14)(24) 12/16/2028 3,509,670 3,499,674 3,505,283 2.19 %

3,509,670 3,499,674 3,505,283 2.19 %

SS Acquisition, LLC (dba Soccer Shots Franchising) Services:

Consumer Senior Secured First Lien Term Loan (SOFR + CSA + 6.50 %, 1.00 % Floor)(20)(23) 12/30/2026 6,666,667 6,612,831 6,666,667 4.16 %

Senior Secured First Lien Delayed Draw Term Loan (SOFR + CSA + 6.50 %, 1.00 % Floor)(20)(23) 12/30/2026 3,200,000 3,171,118 3,200,000 2.00 %

SMART Financial Operations, LLC

Equity - 700,000 Class A Preferred Units(21)

Stancor (dba Industrial Flow Solutions Holdings, LLC)

Equity - 338,736.11 Class A Units(21)

9,866,667 9,783,949 9,866,667 6.16 %

Stancor (dba Industrial Flow Solutions Holdings, LLC) Services:

Business Equity - 358,867 Class A Units(21) 358,867 345,491 375,105 0.23 %

358,867 345,491 375,105 0.23 %

Staples, Inc.

First Lien Term Loan (LIBOR + 4.50 %)(14)

Capital Partners II, L.P.(11)

Finance, Insurance & Real Estate

Investment(8)(21)

Thryv Holdings, Inc.(11)

Broadcasting & Subscription

Senior Secured First Lien Term Loan (SOFR + CSA + 8.50 %, 1.00 % Floor)(14)(20)(24)

Velocity Pooling Vehicle, LLC

Equity - 5,441 Class A Units(21)

Consumer First Lien Term Loan (SOFR + 5.75 %, 0.50 % Floor)(14)(24) 9/1/2029 4,000,000 3,845,748 3,632,500 2.27 %

4,000,000 3,845,748 3,632,500 2.27 %

Tamarix Capital Partners II, L.P.(11) Banking Fund Investment(8)(21) N/A 1,746,049 1,524,911 0.96 %

- 1,746,049 1,524,911 0.96 %

Thryv Holdings, Inc.(11) Media:

Broadcasting & Subscription Senior Secured First Lien Term Loan (SOFR + 6.75 %, 1.00 % Floor)(14)(23) 5/1/2029 2,550,000 2,526,140 2,581,875 1.61 %

2,550,000 2,526,140 2,581,875 1.61 %

Velocity Pooling Vehicle, LLC Automotive Equity - 5,441 Class A Units(21) 5,441 302,464 - 0.00 %

Warrants - 0.65 % of Outstanding Equity(21) 3/30/2028 6,506 361,667 - 0.00 %

11,947 664,131 - 0.00 %

Wingman Holdings, Inc.

Aerospace & Defense

Equity - 350 Common Shares(21)

Non-Controlled/Non-Affiliated Investments

Aerospace & Defense Equity - 350 Common Shares(21) 350 700,000 166,795 0.10 %

350 700,000 166,795 0.10 %

XYZ Roofco, LLC (dba SMC Roofing Solutions LLC) Services:

Consumer First Out Term Loan (SOFR + 3.50 %, 2.00 % Floor)(24)

10/16/2028 646,390 650,342 641,542 0.40 %

First Out Delayed Draw Term Loan (SOFR + 3.50 %, 2.00 % Floor)(8)(24)

10/16/2028 32,366 33,259 32,123 0.02 %

accompanying notes are an integral part of these consolidated financial statements.

Last Out Term Loan (SOFR + 11.75 %, 2.00 % Floor)(24)

10/16/2028 1,863,568 1,853,360 1,830,956 1.14 %

Last Out Delayed Draw Term Loan (SOFR + 11.75 %, 2.00 % Floor)(8)(24)

10/16/2028 140,082 142,014 137,630 0.09 %

2,682,406 2,678,975 2,642,251 1.65 %

Subtotal Non-Controlled/Non-Affiliated Investments 128,069,299 $ 143,179,354 $ 142,233,426 88.75 %

The accompanying notes are an integral part of these consolidated financial statements.

PHENIXFIN CORPORATION

Schedule of Investments (continued)

of September 30, 2024

of Investment

Shares/Units (2)

1888 Industrial Services, LLC

Senior Secured First Lien Term Loan A (SOFR + 5.00 % PIK, 1.00 % Floor)(10)(21)(25)

Senior Secured First Lien Term Loan C (SOFR + 5.00 %, 1.00 % Floor)(25)

Revolving Credit Facility (SOFR + 5.00 %, 1.00 % Floor)(12)(25)

Equity - 21,562 Class A Units(21)

Black Angus Steakhouses, LLC

Hotel, Gaming & Leisure

Senior Secured First Lien Delayed Draw Term Loan (SOFR + CSA + 9.00 % PIK, 1.00 % Floor)(20)(24)

Company (1) Industry Type of Investment Maturity Par Amount/

Shares/Units (2) Amortized Cost (3) Fair Value (4) % of Net

Affiliated Investments:

Black Angus Steakhouses, LLC Hotel, Gaming & Leisure Senior Secured First Lien Delayed Draw Term Loan (SOFR + CSA + 9.00 % PIK, 1.00 % Floor)(10)(20)(23) 1/31/2025 1,013,584 875,749 751,207 0.47 %

Senior Secured First Lien Term Loan (SOFR + CSA + 9.00 % PIK, 1.00 % Floor)(10)(20)(23) 1/31/2025 15,090,314 7,767,533 - 0.00 %

1 unchanged sentence

Equity - 17.92 % Membership Interest(21) - - - 0.00 %

FST Holdings Parent, LLC

High Tech Industries

Equity - 625,548 Class A Units

Maritime Wireless Holdings LLC

Hotel, Gaming & Leisure

Senior Secured First Lien Term Loan B (SOFR + CSA + 9.00 %, 1.00 % Floor)(20)(24)

Equity - 500,000 Class A Units(21)

Affiliated Investments

of Investment

Shares/Units (2)

Kemmerer Holdings, LLC

Metals & Mining

Senior Secured First Lien Term Loan ( 15.00 % PIK)

Equity - 31 Common Units(21)

Hotel, Gaming & Leisure

Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 4.00 % Cash, 1.00 % LIBOR Floor)(8)(22)

Senior Secured First Lien Term Loan B (LIBOR + 9.25 % PIK, 1.00 % LIBOR Floor)(10)(21)

Senior Secured First Lien Term Loan C (LIBOR + 12.00 % PIK, 1.00 % LIBOR Floor)(10)(21)

Equity - 1,000 Class A Units(21)

Control Investments

Investments, September 30, 2023

18,327,201 10,564,242 2,398,983 1.50 %

FST Holdings Parent, LLC High Tech Industries Equity - 625,548 Class A Units(17) 625,548 10,000,000 12,351,802 7.71 %

625,548 10,000,000 12,351,802 7.71 %

Subtotal Affiliated Investments 18,952,749 $ 20,564,242 $ 14,750,785 9.21 %

Controlled Investments:

ECC Capital Corp.

Real Estate Equity - 84,000,000 Units(13)(21) 84,000,000 4,257,002 4,872,000 3.04 %

Senior Secured Promissory Note (SOFR + 5.00 %, 0.00 % Floor)(24) 12/31/2031 7,422,012 7,422,012 7,422,012 4.63 %

91,422,012 11,679,014 12,294,012 7.67 %

FlexFIN, LLC Services:

Business Equity Interest 36,683,045 $ 36,683,045 $ 36,683,045 22.88 %

36,683,045 36,683,045 36,683,045 22.88 %

NSG Captive, Inc.

Insurance Equity - 100,000 Units(21) 100,000 101,000 101,000 0.06 %

100,000 101,000 101,000 0.06 %

NVTN LLC Hotel, Gaming & Leisure Senior Secured Revolving Note (SOFR + 7.00 %, 2.00 % Floor)(23) 12/31/2026 5,500,000 5,616,309 5,500,000 3.43 %

Senior Secured First Lien Term Loan B (AFR, 2.00 % Floor)(26) 12/31/2026 17,552,420 13,916,082 16,353,590 10.20 %

Senior Secured First Lien Term Loan C (SOFR + 12.00 % PIK, 2.00 % Floor)(10) 12/31/2026 11,506,159 7,570,055 - 0.00 %

Equity - 1,000 Class A Units 1,000 21,450,924 - 0.00 %

34,559,579 48,553,370 21,853,590 13.63 %

Subtotal Control Investments 162,764,636 $ 97,016,429 $ 70,931,647 44.24 %

Total Investments, September 30, 2024 309,786,684 $ 260,760,025 $ 227,915,858 142.20 %

accompanying notes are an integral part of these consolidated financial statements.

PHENIXFIN CORPORATION

Schedule of Investments (continued)

of September 30, 2024

(1) Substantially

all of our investments are domiciled in the United States.

Certain investments also have international operations.

(2) Par amount is presented for debt investments and the amount includes accumulated payment-in-kind (“PIK”) interest, as applicable, and is net of repayments, while the number of shares or units owned is presented for equity investments.

Par amount is denominated in U.S.

amount is presented for debt investments and the amount includes accumulated payment-in-kind (“PIK”) interest, as applicable,

and is net of repayments, while the number of shares or units owned is presented for equity investments.

Par amount is denominated in

Dollars (“$”) unless otherwise noted.

1 unchanged sentence

federal income tax purposes totaled

$(31,349,330).

The tax cost basis of investments is $259,682,623 as of September 30, 2024.

The amortized cost represents the original cost adjusted for the amortization or accretion of premium or discount, as applicable, on debt investments using the effective interest method.

(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 $146,705,535 as of September 30, 2023.

(6) Affiliated Investments are defined by Investment Company Act of 1940 Act, as amended (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, 2023 (see Note 8), and fair value includes the value of any unfunded commitments.

The negative cost, if applicable, is the result of the capitalized discount being greater than the principal amount outstanding on the loan.

The amortized cost represents

the original cost adjusted for the amortization or accretion of premium or discount, as applicable, on debt investments using the effective

interest method.

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 $160,307,773 as of September 30, 2024.

(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.

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.

investment has an unfunded commitment as of September 30, 2024 (see Note 8), and fair value includes the value of any unfunded commitments.

The negative cost, if applicable, is the result of the capitalized discount being greater than the principal amount outstanding on the

The negative fair value, if applicable, is the result of the capitalized discount on the loan.

(9) The interest rate on this investment is fixed-to-floating and will shift to 3 month SOFR plus a CSA of 0.262% plus a 5.379% spread on 3/30/2024.

(10) The investment was on non-accrual status as of September 30, 2023.

(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, 2023, non-qualifying assets represented 20.21% of total assets.

(12) This investment earns 0.50% commitment fee on all unused commitment as of September 30, 2023, and is recorded as a component of interest income on the Consolidated Statements of Operations.

(13) This investment represents a Level 1 security in the ASC 820 table as of September 30, 2023 (see Note 4).

(14) This investment represents a Level 2 security in the ASC 820 table as of September 30, 2023 (see Note 4).

(15) The interest rate on this preferred equity is fixed-to-floating and will shift to 3 month SOFR plus a CSA of 0.262% plus a 4.743% spread on 9/30/2025.

(16) The interest rate on this preferred equity is fixed-to-floating and will shift to 3 month SOFR plus a CSA of 0.262% plus a 5.29% spread on 9/27/2027.

(17) 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.

(18) The interest rate on this preferred equity is fixed-to-floating and will shift to 3 month SOFR plus a CSA of 0.262% plus a 6.429% spread on 1/15/2025.

(19) 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.

(20) Credit Spread Adjustment (“CSA”)

(21) Non-income producing security.

(22) The interest rate on these loans is subject to 1 month LIBOR, which as of September 30, 2023 was 5.43%.

(24) The interest rate on these loans is subject to 1 month SOFR, which as of September 30, 2023 was 5.32%.

(25) The interest rate on these loans is subject to 3 month SOFR, which as of September 30, 2023 was 5.27%.

(26) The interest rate on these loans is subject to 6 month SOFR, which as of September 30, 2023 was 5.17%.

accompanying notes are an integral part of these consolidated financial statements.

Schedule of Investments

of September 30, 2022

of Investment

Shares/Units (2)

Non-Controlled/Non-Affiliated

Altisource S.A.R.L.(11)

Senior Secured First Lien Term Loan B (LIBOR + 4.00 %, 1.00 % LIBOR Floor)(14)

Be Green Packaging, LLC

Containers, Packaging & Glass

Equity - 417 Common Units

investment was on non-accrual status as of September 30, 2024.

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, 2024, non-qualifying

assets represented 13.1% of total assets.

investment earns 0.50% commitment fee on all unused commitment as of September 30, 2024, and is recorded as a component of interest income

on the Consolidated Statements of Operations.

investment represents a Level 1 security in the ASC 820 table as of September 30, 2024 (see Note 4).

investment represents a Level 2 security in the ASC 820 table as of September 30, 2024 (see Note 4).

interest rate on this preferred equity is fixed-to-floating and will shift to 3 month SOFR plus a CSA of 0.262% plus a 4.743% spread

on 9/30/2025.

interest rate on this preferred equity is fixed-to-floating and will shift to 3 month SOFR plus a CSA of 0.262% plus a 5.29% spread on

(17) The investment is held through PhenixFIN Investment Holdings FST, LLC.

interest rate on this preferred equity is fixed-to-floating and will shift to 3 month SOFR plus a CSA of 0.262% plus a 6.429% spread

on 1/15/2025.

(19) The interest rate on this preferred equity is fixed-to-floating and

will shift to 3 month SOFR plus a 5.345% spread on 3/31/2025.

Spread Adjustment (“CSA”)

(21) Non-income

producing security.

interest rate on these loans is subject to 1 month SOFR, which as of September 30, 2024 was 4.85%

interest rate on these loans is subject to 3 month SOFR, which as of September 30, 2024 was 4.59%.

interest rate on these loans is subject to 6 month SOFR, which as of September 30, 2024 was 4.25%.

interest rate on these loans is subject to the monthly Applicable Federal Rate, which as of September 30, 2024 was 4.48%.

The accompanying notes are an integral part of these consolidated financial statements.

PHENIXFIN CORPORATION

Consolidated Schedule of Investments

As of September 30, 2023

Company (1) Industry Type of Investment Maturity Par Amount/

Shares/Units (2) Amortized Cost (3) Fair

Value (4) % of Net

Non-Controlled/Non-Affiliated Investments:

Altisource S.A.R.L.(11) Services:

Business Senior Secured First Lien Term Loan B

(SOFR + CSA + 5.00 %, 3.75 % PIK)(20)(24) 4/30/2025 $ 9,565,710 $ 8,507,963 $ 7,805,619 5.31 %

Warrants(21) 5/22/2027 75,080 - 206,470 0.14 %

9,640,790 8,507,963 8,012,089 5.45 %

Arcline FM Holdings, LLC Aerospace & Defense First Lien Term Loans

(SOFR + CSA + 4.75 %, 0.75 % Floor)(20)(24) 6/23/2028 2,679,494 2,591,013 2,644,660 1.80 %

2,679,494 2,591,013 2,644,660 1.80 %

Be Green Packaging, LLC Containers, Packaging & Glass Equity - 417 Common Units(21) 417 416,250 - 0.00 %

417 416,250 - 0.00 %

Boostability Seotowncenter, Inc.

Equity - 3,434,169.6 Common Units

Business Equity - 833,152 Common Units(21) 833,152 66,475 - 0.00 %

833,152 66,475 - 0.00 %

CB&L Associates Holdco I, LLC (11) Banking, Finance, Insurance & Real Estate First Lien Term Loan

(SOFR + CSA+ 2.75 %, 1.00 % Floor)(14)(20)(23) 11/1/2025 5,916,102 4,990,179 5,191,380 3.53 %

5,916,102 4,990,179 5,191,380 3.53 %

Chimera Investment Corp.

Banking, Finance, Insurance & Real Estate

Equity - 117,310 Class C Preferred Units(13)(15)

Property CTL Pass Through Trust

Finance, Insurance & Real Estate

Certificates(14)

CPI International, Inc.

Aerospace & Defense

Senior Secured Second Lien Term Loan (LIBOR + 7.25 %, 1.00 % LIBOR Floor)

(11) Banking, Finance, Insurance & Real Estate Equity - 117,310 Class C Preferred Units(13)(15) 117,310 2,884,724 2,116,271 1.44 %

Equity - 163,601 Class D Preferred Units(13)(9) 163,601 3,463,275 3,414,353 2.32 %

280,911 6,347,999 5,530,624 3.76 %

Copper Property CTL Pass Through Trust Banking, Finance, Insurance & Real Estate Equity Certificates(14) 597,795 7,547,670 6,217,067 4.23 %

DataOnline Corp.

High Tech Industries

Senior Secured First Lien Term Loan (LIBOR + 6.25 %, 1.00 % LIBOR Floor)

Revolving Credit Facility (LIBOR + 6.25 %, 1.00 % LIBOR Floor)

DirecTV Financing, LLC

Broadcasting & Subscription

Senior Secured First Lien Term Loan (LIBOR + 5.00 %, 0.75 % LIBOR Floor)(14)

Dream Finders Homes, LLC

Construction & Building

Preferred Equity ( 8.00 % PIK)

accompanying notes are an integral part of these consolidated financial statements.

Schedule of Investments (continued)

of September 30, 2022

of Investment

Shares/Units (2)

First Brands Group, LLC

Senior Secured First Lien Term Loan (SOFR + 5.00 %, 1.00 % SOFR Floor)

Footprint Holding Company Inc.

Equity - 150 Common Units

Franklin BSP Realty Trust, Inc.(11)

Banking, Finance, Insurance & Real Estate

Equity - 529,914 Common Units(13)

Global Accessories Group, LLC

Consumer goods:

Equity - 3.8 % Membership Interest

Great AJAX Corp.(11)

Banking, Finance, Insurance & Real Estate

Equity - 254,922 Common Units(13)

Innovate Corp.

Construction & Building

8.50 % Senior Secured Notes(14)

Invesco Mortgage Capital, Inc.(11)

Banking, Finance, Insurance & Real Estate

Equity - 205,000 Class C Preferred Units(13)(16)

JFL-NGS-WCS Partners, LLC

Construction & Building

Senior Secured First Lien Term Loan B (LIBOR + 5.50 %, 1.00 % LIBOR Floor)

- 10,000,000 Units

Lighting Science Group Corporation

Containers, Packaging & Glass

Warrants - 0.62 % of Outstanding Equity

Lucky Bucks, LLC

Consumer Discretionary

Senior Secured First Lien Term Loan(LIBOR + 5.50 %, 0.75 % LIBOR Floor)

accompanying notes are an integral part of these consolidated financial statements.

Schedule of Investments (continued)

of September 30, 2022

of Investment

Shares/Units (2)

Maritime Wireless Holdings LLC

Hotel, Gaming & Leisure

Senior Secured First Lien Term Loan A (SOFR + CSA + 9.00 %, 1.00 % SOFR + CSA Floor)(20)

Senior Secured First Lien Term Loan B (SOFR + CSA + 9.00 %, 1.00 % SOFR + CSA Floor)(20)

Promissory Note

McKissock Investment Holdings, LLC (dba Colibri)

Senior Secured First Lien Term Loan (SOFR + CSA + 5.00 %, 0.75 % SOFR + CSA Floor)(20)

MFA Financial, Inc.(11)

Banking, Finance, Insurance & Real Estate

Equity - 97,426 Class C Preferred Units(13)(19)

New York Mortgage Trust, Inc.(11)

Banking, Finance, Insurance & Real Estate

Equity - 165,000 Class E Preferred Units(13)(18)

PennyMac Financial Services, Inc.(11)

Banking, Finance, Insurance & Real Estate

Equity - 81,500 Common Units(13)

Senior Secured First Lien Term Loan (LIBOR + 6.00 % PIK)(10)

Power Stop LLC

Senior Secured First Lien Term Loan(LIBOR + 4.75 , 0.50 % LIBOR Floor)

Rithm Capital Corp.(11)

Banking, Finance, Insurance & Real Estate

Equity - 206,684 Class B Preferred Units(13)(17)

High Tech Industries Senior Secured First Lien Term Loan (SOFR + CSA + 5.50 %, 1.00 % Floor)(20)(24) 11/13/2025 4,812,500 4,812,500 4,764,375 3.24 %

Revolving Credit Facility (SOFR + CSA + 5.50 %, 1.00 % Floor)(20)(24) 11/13/2025 714,286 714,286 707,143 0.48 %

5,526,786 5,526,786 5,471,518 3.72 %

Deer Management Systems LLC Consumer Discretionary First Lien Term Loan (SOFR + CSA + 8.25 %, 3.00 % Floor)(8)(20)(24) 5/1/2028 3,357,500 3,294,306 3,323,925 2.26 %

3,357,500 3,294,306 3,323,925 2.26 %

DirecTV Financing, LLC Media:

Broadcasting & Subscription Senior Secured First Lien Term Loan (SOFR + CSA + 5.00 %, 0.75 % Floor)(14)(20)(23) 8/2/2027 4,100,000 4,100,000 4,003,908 2.72 %

4,100,000 4,100,000 4,003,908 2.72 %

First Brands Group, LLC Automotive Senior Secured First Lien Term Loan (SOFR + CSA + 5.00 %, 1.00 % Floor)(20)(25) 3/30/2027 3,919,598 3,919,598 3,880,402 2.64 %

3,919,598 3,919,598 3,880,402 2.64 %

Franklin BSP Realty Trust, Inc.(11) Banking, Finance, Insurance & Real Estate Equity - 226,107 Common Units(13) 226,107 3,572,788 2,993,657 2.04 %

226,107 3,572,788 2,993,657 2.04 %

Global Accessories Group, LLC Consumer goods:

Non-durable Equity - 3.8 % Membership Interest(21) 380 151,337 - 0.00 %

380 151,337 - 0.00 %

Innovate Corp.(11) Construction & Building 8.50 % Senior Secured Notes(14) 2/1/2026 2,750,000 2,615,913 2,076,250 1.41 %

2,750,000 2,615,913 2,076,250 1.41 %

Invesco Mortgage Capital, Inc.(11) Banking, Finance, Insurance & Real Estate Equity - 205,000 Class C Preferred Units(13)(16) 205,000 5,035,506 3,989,300 2.71 %

205,000 5,035,506 3,989,300 2.71 %

JFL-NGS-WCS Partners, LLC Construction & Building Senior Secured First Lien Term Loan B (SOFR + CSA+ 5.50 %, 1.00 % Floor)(20)(23) 11/12/2026 861,605 864,482 865,913 0.59 %

Equity - 10,000,000 Units(21) 10,000,000 10,000,000 11,733,525 7.98 %

10,861,605 10,864,482 12,599,438 8.57 %

Lighting Science Group Corporation Containers, Packaging & Glass Warrants - 0.62 % of Outstanding Equity(21) 5,000,000 955,680 - 0.00 %

5,000,000 955,680 - 0.00 %

The accompanying notes are an integral part

of these consolidated financial statements.

PHENIXFIN CORPORATION

Consolidated Schedule of Investments (continued)

As of September 30, 2023

Company (1) Industry Type of Investment Maturity Par Amount/

Shares/Units (2) Amortized Cost (3) Fair Value (4) % of Net

Lucky Bucks, LLC Consumer Discretionary Equity - 180,739 Membership Units (21) 180,739 174,393 1,545,318 1.05 %

Second Out Exit Term Loan (SOFR + CSA + 7.50 %, 1.00 % Floor)(20)(23) 10/2/2029 1,361,240 1,334,015 1,361,240 0.93 %

First Out Exit Term Loan (SOFR + CSA + 7.50 %, 1.00 % Floor)(20)(23) 10/2/2028 689,541 626,519 689,541 0.47 %

2,231,520 2,134,927 3,596,099 2.45 %

McKissock Investment Holdings, LLC (dba Colibri) Services:

Consumer Senior Secured First Lien Term Loan

(SOFR + CSA + 5.00 %, 0.75 % Floor)(20)(24) 3/12/2029 4,924,535 4,883,570 4,776,799 3.25 %

4,924,535 4,883,570 4,776,799 3.25 %

MFA Financial, Inc.(11) Banking, Finance, Insurance & Real Estate Equity - 97,426 Class C Preferred Units(13)(19) 97,426 2,318,487 1,856,940 1.26 %

97,426 2,318,487 1,856,940 1.26 %

New York Mortgage Trust, Inc.(11) Banking, Finance, Insurance & Real Estate Equity - 165,000 Class E Preferred Units(13)(18) 165,000 4,102,076 3,677,850 2.50 %

165,000 4,102,076 3,677,850 2.50 %

PennyMac Financial Services, Inc.(11) Banking, Finance, Insurance & Real Estate Equity - 29,500 Common Units(13) 29,500 1,921,275 1,964,700 1.34 %

29,500 1,921,275 1,964,700 1.34 %

PHH Mortgage Corp.

Banking, Finance, Insurance & Real Estate 7.875 % Senior Secured Note(14) 3/15/2026 7,686,000 6,895,720 6,845,344 4.66 %

7,686,000 6,895,720 6,845,344 4.66 %

Point.360 Services:

Business Senior Secured First Lien Term Loan

(LIBOR + 6.00 % PIK)(10)(21) 7/8/2020 2,777,366 2,103,712 - 0.00 %

2,777,366 2,103,712 - 0.00 %

Power Stop LLC Automotive Senior Secured First Lien Term Loan

(SOFR + CSA + 4.75 %, 0.50 % Floor)(20)(23) 1/26/2029 6,919,937 6,515,010 5,639,748 3.84 %

6,919,937 6,515,010 5,639,748 3.84 %

Rithm Capital Corp.(11) Banking, Finance, Insurance & Real Estate Equity - 206,684 Class B Preferred Units(13)(17) 206,684 5,129,170 4,695,860 3.20 %

206,684 5,129,170 4,695,860 3.20 %

Secure Acquisition Inc.

(dba Paragon Films)(8)

Senior Secured First Lien Term Loan(LIBOR + 5.00 %, 0.50 % LIBOR Floor)

Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 5.00 %, 0.50 % LIBOR Floor)(12)

accompanying notes are an integral part of these consolidated financial statements.

Schedule of Investments (continued)

of September 30, 2022

of Investment

Shares/Units (2)

Sendero Drilling Company, LLC

Unsecured Debt ( 9.00 %)(10)

SS Acquisition, LLC (dba Soccer Shots Franchising)(8)

Senior Secured First Lien Term Loan (LIBOR + 6.50 %, 1.00 % LIBOR Floor)

SMART Financial Operations, LLC

Equity - 700,000 Class A Preferred Units

Stancor (dba Industrial Flow Solutions Holdings, LLC)

Equity - 338,736.11 Class A Units

(dba Paragon Films) Packaging Senior Secured First Lien Term Loan

(SOFR + CSA + 5.00 %, 0.50 % Floor)(20)(24) 12/16/2028 3,430,517 3,418,570 3,396,212 2.31 %

Senior Secured First Lien Delayed Draw Term Loan

(SOFR + CSA + 5.00 %, 0.50 % Floor)(8)(12)(20)(24) 12/16/2028 - ( 970 ) - 0.00 %

3,430,517 3,417,600 3,396,212 2.31 %

SS Acquisition, LLC (dba Soccer Shots Franchising) Services:

Consumer Senior Secured First Lien Term Loan

(SOFR + CSA + 6.50 %, 1.00 % Floor)(20)(23) 12/30/2026 6,666,667 6,592,976 6,666,667 4.54 %

Senior Secured First Lien Delayed Draw Term Loan

(SOFR + CSA + 6.50 %, 1.00 % Floor)(20)(23) 12/30/2026 3,200,000 3,160,542 3,200,000 2.18 %

9,866,667 9,753,518 9,866,667 6.72 %

SMART Financial Operations, LLC Retail Equity - 700,000 Class A Preferred Units(21) 700,000 700,000 978,140 0.67 %

700,000 700,000 978,140 0.67 %

Stancor (dba Industrial Flow Solutions Holdings, LLC) Services:

Business Equity - 338,736.11 Class A Units(21) 338,736 308,652 200,566 0.14 %

338,736 308,652 200,566 0.14 %

Staples, Inc.

First Lien Term Loan (LIBOR + 4.50 %, 0.0 % LIBOR Floor)(14)

Thryv Holdings, Inc.(11)

Senior Secured First Lien Term Loan B (LIBOR + 8.50 %, 1.00 % LIBOR Floor)

Velocity Pooling Vehicle, LLC

Equity - 5,441 Class A Units

Consumer First Lien Term Loan

(LIBOR + 4.50 %)(14) 9/12/2024 3,692,159 3,655,672 3,648,315 2.48 %

3,692,159 3,655,672 3,648,315 2.48 %

Tamarix Capital Partners II, L.P.(11) Banking, Finance, Insurance & Real Estate Fund Investment(8)(21) N/A 1,026,818 792,346 0.54 %

- 1,026,818 792,346 0.54 %

Thryv Holdings, Inc.(11) Media:

Broadcasting & Subscription Senior Secured First Lien Term Loan

(SOFR + CSA + 8.50 %, 1.00 % Floor)(14)(20)(23) 3/1/2026 7,656,442 7,604,838 7,661,227 5.21 %

7,656,442 7,604,838 7,661,227 5.21 %

Velocity Pooling Vehicle, LLC Automotive Equity - 5,441 Class A Units(21) 5,441 302,464 - 0.00 %

Warrants - 0.65 % of Outstanding Equity(21) 3/30/2028 6,506 361,667 - 0.00 %

Walker Edison Furniture Company LLC

Consumer goods:

Equity - 13,044 Common Units

Watermill-QMC Midco, Inc.

Equity - 1.30 % Partnership Interest(9)

11,947 664,131 - 0.00 %

Wingman Holdings, Inc.

Aerospace & Defense

Equity - 350 Common Shares

Non-Controlled/Non-Affiliated Investments

Aerospace & Defense Equity - 350 Common Shares(21) 350 700,000 - 0.00 %

350 700,000 - 0.00 %

Subtotal Non-Controlled/Non-Affiliated Investments $ 106,630,423 $ 134,339,121 $ 125,531,031 85.41 %

The accompanying notes are an integral part of

these consolidated financial statements.

PHENIXFIN CORPORATION

Consolidated Schedule of Investments (continued)

As of September 30, 2023

Company (1) Industry Type of Investment Maturity Par Amount/

Shares/Units (2) Amortized Cost (3) Fair Value (4) % of Net

Affiliated Investments:

1888 Industrial Services, LLC Energy:

Oil & Gas Senior Secured First Lien Term Loan A

(SOFR + 5.00 % PIK, 1.00 % Floor)(10)(21)(24) 8/31/2024 $ 9,946,741 $ 9,473,068 $ - 0.00 %

Senior Secured First Lien Term Loan C

(SOFR + 5.00 %, 1.00 % Floor)(24) 8/31/2024 1,231,932 1,191,257 751,479 0.51 %

Revolving Credit Facility

(SOFR + 5.00 %, 1.00 % Floor)(12)(24) 8/31/2024 4,632,177 4,632,177 4,632,177 3.15 %

Equity - 21,562 Class A Units(21) 21,562 - - -

15,832,412 15,296,502 5,383,656 3.66 %

Black Angus Steakhouses, LLC Hotel, Gaming & Leisure Senior Secured First Lien Delayed Draw Term Loan (SOFR + CSA + 9.00 % PIK, 1.00 % Floor)(20)(23) 1/31/2024 875,749 875,749 875,749 0.60 %

Senior Secured First Lien Term Loan (SOFR + CSA + 9.00 % PIK, 1.00 % Floor)(10)(20)(23) 1/31/2024 13,029,115 7,767,533 1,459,249 0.99 %

Senior Secured First Lien Super Priority Delayed Draw Term Loan (SOFR + CSA + 9.00 % PIK, 1.00 % Floor)(20)(23) 1/31/2024 1,920,960 1,920,960 1,920,960 1.31 %

Equity - 17.92 % Membership Interest(21) - - - 0.00 %

15,825,824 10,564,242 4,255,958 2.90 %

accompanying notes are an integral part of these consolidated financial statements.

Schedule of Investments (continued)

of September 30, 2022

of Investment

Shares/Units (2)

1888 Industrial Services, LLC(8)

Senior Secured First Lien Term Loan A (LIBOR + 5.00 % PIK, 1.00 % LIBOR Floor)(10)

Senior Secured First Lien Term Loan C(LIBOR + 5.00 %, 1.00 % LIBOR Floor)

Revolving Credit Facility (LIBOR + 5.00 %, 1.00 % LIBOR Floor)(12)

FST Holdings Parent, LLC High Tech Industries Equity - 625,548 Class A Units 625,548 10,000,000 10,000,003 6.81 %

625,548 10,000,000 10,000,003 6.81 %

Maritime Wireless Holdings LLC Hotel, Gaming & Leisure Senior Secured First Lien Term Loan B (SOFR + CSA + 9.00 %, 1.00 % Floor)(20)(23) 5/31/2027 7,500,000 7,373,166 7,500,000 5.10 %

Equity - 500,000 Class A Units(21) 5,000,000 5,000,000 10,150,000 6.91 %

Black Angus Steakhouses, LLC(8)

Hotel, Gaming & Leisure

Senior Secured First Lien Delayed Draw Term Loan (SOFR + CSA + 9.00 %, 1.00 % SOFR Floor)

Senior Secured First Lien Term Loan (SOFR + CSA + 9.00 % PIK, 1.00 % SOFR Floor)(10)

Senior Secured First Lien Super Priority Delayed Draw Term Loan (SOFR + CSA + 9.00 %, 1.00 % SOFR Floor)

Equity - 17.92 % Membership Interest

Kemmerer Operations, LLC(8)

Metals & Mining

Senior Secured First Lien Term Loan( 15.00 % PIK)

Equity - 6.78 Common Units

US Multifamily, LLC

Banking, Finance, Insurance & Real Estate

Equity - 33,300 Preferred Units

Affiliated Investments

accompanying notes are an integral part of these consolidated financial statements.

12,500,000 12,373,166 17,650,000 12.01 %

Subtotal Affiliated Investments $ 44,783,784 $ 48,233,910 $ 37,289,617 25.38 %

The accompanying notes are an integral part

of these consolidated financial statements.

PHENIXFIN CORPORATION

Consolidated Schedule of Investments (continued)

As of September 30, 2023

of Investment

Shares/Units (2)

Hotel, Gaming & Leisure

Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 4.00 % Cash, 1.00 % LIBOR Floor)

Senior Secured First Lien Term Loan B (LIBOR + 9.25 % PIK, 1.00 % LIBOR Floor)(10)

Senior Secured First Lien Term Loan C(LIBOR + 12.00 % PIK, 1.00 % LIBOR Floor)(10)

Equity - 1,000 Class A Units

Control Investments

Investments, September 30, 2022

Company (1) Industry Type of Investment Maturity Par Amount/

Shares/Units (2) Amortized Cost (3) Fair Value (4) % of Net

Controlled Investments:

FlexFIN, LLC Services:

Business Equity Interest $ 38,870,711 $ 38,870,711 $ 38,870,711 26.45 %

38,870,711 38,870,711 38,870,711 26.45 %

Kemmerer Holdings, LLC Metals & Mining Senior Secured First Lien Term Loan ( 15.00 % PIK) 6/21/2025 3,383,877 3,383,877 3,383,877 2.30 %

Equity - 31 Common Units(21) 31 1,836,157 9,133,052 6.22 %

3,383,908 5,220,034 12,516,929 8.52 %

NVTN LLC Hotel, Gaming & Leisure Senior Secured First Lien Delayed Draw Term Loan

(LIBOR + 4.00 % Cash, 1.00 % LIBOR Floor)(8)(22) 12/31/2024 7,309,552 7,309,885 7,214,856 4.91 %

Senior Secured First Lien Term Loan B

(LIBOR + 9.25 % PIK, 1.00 % LIBOR Floor)(10)(21) 12/31/2024 17,552,420 13,916,083 5,037,547 3.43 %

Senior Secured First Lien Term Loan C

(LIBOR + 12.00 % PIK, 1.00 % LIBOR Floor)(10)(21) 12/31/2024 11,506,159 7,570,055 - 0.00 %

Equity - 1,000 Class A Units(21) 1,000 9,550,924 - 0.00 %

36,369,131 38,346,947 12,252,403 8.34 %

accompanying notes are an integral part of these consolidated financial statements.

Subtotal Control Investments $ 78,623,750 $ 82,437,692 $ 63,640,043 43.31 %

Total Investments, September 30, 2023 $ 230,037,957 $ 265,010,723 $ 226,460,691 154.40 %

The accompanying notes are an integral part of

these consolidated financial statements.

PHENIXFIN CORPORATION

Consolidated Schedule of Investments (continued)

10 unchanged sentences

(5) Percentage is based on net assets of $146,705,535 as of September 30, 2023.

(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.

1 unchanged sentence

The negative cost, if applicable, is the result of the capitalized discount being greater than the principal amount outstanding on the loan.

The negative fair value, if applicable, is the result of the capitalized discount on the loan.

(9) Represents 1.3% partnership interest in Watermill-QMC Partners, LP and Watermill-EMI Partners, LP.

The negative fair value, if applicable, is the result of the capitalized discount on the loan commitment.

(9) The interest rate on this investment is fixed-to-floating and will shift to 3 month SOFR plus a CSA of 0.262% plus a 5.379% spread on 3/30/2024.

(10) The investment was on non-accrual status as of September 30, 2023.

(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, 2022, 17.24% of the Company’s portfolio investments were non-qualifying assets.

As of September 30, 2023, non-qualifying assets represented 20.21% of total assets.

(12) This investment earns 0.50% commitment fee on all unused commitment as of September 30, 2023, and is recorded as a component of interest income on the Consolidated Statements of Operations.

1 unchanged sentence

(14) This investment represents a Level 2 security in the ASC 820 table as of September 30, 2023 (see Note 4).

(15) The interest rate on this loan is fixed-to-floating and will shift to 3 month LIBOR plus a 4.743% spread on 9/30/2025.

(16) The interest rate on this loan is fixed-to-floating and will shift to 3 month LIBOR plus a 5.29% spread on 9/27/2027.

(17) The interest rate on this loan is fixed-to-floating and will shift to 3 month LIBOR plus a 5.64% spread on 8/15/2024.

(18) The interest rate on this loan is fixed-to-floating and will shift to 3 month LIBOR plus a 6.429% spread on 1/15/2025.

(15) The interest rate on this preferred equity is fixed-to-floating and will shift to 3 month SOFR plus a CSA of 0.262% plus a 4.743% spread on 9/30/2025.

(16) The interest rate on this preferred equity is fixed-to-floating and will shift to 3 month SOFR plus a CSA of 0.262% plus a 5.29% spread on 9/27/2027.

(17) 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.

(18) The interest rate on this preferred equity is fixed-to-floating and will shift to 3 month SOFR plus a CSA of 0.262% plus a 6.429% spread on 1/15/2025.

(19) 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.

(20) Credit Spread Adjustment (“CSA”)

accompanying notes are an integral part of these consolidated financial statements.

to Consolidated Financial Statements

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.

(21) Non-income producing security.

(22) The interest rate on these loans is subject to 1 month LIBOR, which as of September 30, 2023 was 5.43%.

(23) The interest rate on these loans is subject to 1 month SOFR, which as of September 30, 2023 was 5.32%.

(24) The interest rate on these loans is subject to 3 month SOFR, which as of September 30, 2023 was 5.27%.

(25) The interest rate on these loans is subject to 6 month SOFR, which as of September 30, 2023 was 5.17%.

The accompanying notes are an integral part of

these consolidated financial statements.

PHENIXFIN CORPORATION

Notes to Consolidated Financial Statements

September 30, 2024

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

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 was a wholly owned subsidiary of Medley LLC, which was controlled by Medley

Management Inc.

MDLM), a publicly traded asset management firm, which in turn was 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, MDLM, 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.

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.

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

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

January 4, 2021, the common stock trades on the NASDAQ Global Market under the trading symbol “PFX.”

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.

federal income tax purposes,

as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

Through December 31, 2020, we were an externally managed company.

Since January 1, 2021, we have operated under our present internalized

management structure.

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

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

(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.

Since January 4, 2021, the common stock trades

on the NASDAQ Global Market under the trading symbol “PFX.”

Significant Accounting Policies

of Presentation

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.

Certain prior period information has been reclassified to conform to current period

presentation.

These reclassifications have no effect on the Company’s financial positions or its results of operations as previously

of Estimates in the Preparation of Financial Statements

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.

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 SLF Funding I LLC, PhenixFIN Investment Holdings, LLC,

PhenixFIN Investment Holdings Omnivere, LLC, PhenixFIN Investment Holdings AAR, LLC, and PhenixFIN Investment Holdings Amvestar, LLC.

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.

Certain prior period information has been reclassified to conform to current period presentation.

reclassifications have no effect on the Company’s financial positions or its results of operations as previously recorded.

Significant Accounting Policies (continued)

Use of Estimates in the Preparation of Financial

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.

Restricted Cash and Cash Equivalents

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, 2023 and 2022, we had $ 6.0 million and

$ 22.8 million in cash and cash equivalents, respectively, none of which is restricted.

Issuance Costs

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.

Debt issuance costs related to any credit facilities and unsecured notes are presented

net against the outstanding debt balance on the Consolidated Statements of Assets and Liabilities.

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, 2024 and 2023, we had $ 67.6 million and $ 6.0 million in cash and cash equivalents,

respectively, none of which is restricted.

Debt Issuance Costs and Deferred Financing

Debt issuance costs, incurred in connection with

unsecured notes (see Note 5) are deferred and amortized over the life of the respective instrument.

Deferred financing costs related to

the issuance of revolving debt obligations (see Note 5) are deferred and amortized over the life of the respective obligation.

Debt issuance

costs related to any unsecured notes are presented net against the outstanding debt balance on the Consolidated Statements of Assets and

Deferred financing costs related to any credit facilities are presented on the Consolidated Statements of Assets and Liabilities.

Indemnification

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.

income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis.

Discounts and premiums to par

value on investments purchased are accreted and amortized into interest income over the life of the respective investment.

Loan origination

fees, original issue discount (“OID”) and market discounts or premiums are capitalized and amortized into interest income

using the effective interest method or straight-line method, as applicable.

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

premium and accretion of discount, is recorded on an accrual basis.

Discounts and premiums to par value on investments purchased are accreted

and amortized into interest income over the life of the respective investment.

Loan origination fees, original issue discount (“OID”)

and market discounts or premiums are capitalized and amortized into interest income using the effective interest method or straight-line

method, as applicable.

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

For the years ended September 30, 2024, 2023 and 2022, the Company earned approximately $ 1.2 million, $ 1.5 million, $ 0.8 million

in PIK interest, respectively.

Significant Accounting Policies (continued)

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, 2023, 2022 and 2021, the Company earned

approximately $ 1.5 million, $ 0.8 million, $ 0.9 million in PIK interest, respectively.

and transaction break-up fees associated with investments in portfolio companies are recognized as income when we become entitled to

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, 2023, 2022 and 2021, fee income was approximately

$ 0.3 million, $ 0.4 million and $ 2.6 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 using the specific identification method, without regard to unrealized gains or losses previously

No losses relating to restructuring transactions occurred during the years ended September 30, 2023, 2022 and 2021.

reports changes in fair value of investments as a component of the net unrealized appreciation/(depreciation) on investments in the Consolidated

Statements of Operations.

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,

2023, certain investments in four portfolio companies held by the Company were on non-accrual status with a combined fair value of approximately

$ 6.5 million, or 2.9 % of the fair value of our portfolio.

At September 30, 2022, certain investments in five portfolio companies held

by the Company were on non-accrual status with a combined fair value of approximately $ 5.2 million, or 2.7 % of the fair value of our

Classification

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

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.

income includes fees for providing managerial assistance to our portfolio companies and is recognized as revenue when earned.

the years ended September 30, 2024, 2023 and 2022, fee income was approximately $ 0.5 million, $ 0.3 million and $ 0.4 million, respectively

(see Note 9).

Investment transactions are accounted for on a trade date basis.

gains or losses on investments are measured by the difference between the net proceeds from the disposition and the amortized cost basis

of investment using the specific identification method, without regard to unrealized gains or losses previously recognized.

gains relating to restructuring transactions that occurred during the year ended September 30, 2024 were $ 6.9 million.

No realized losses

relating to restructuring transactions occurred during the year ended September 30, 2024.

No realized gains or losses relating to restructuring

transactions occurred during the years ended September 30, 2023 and 2022.

The Company reports changes in fair value of investments as

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, 2024, certain investments in three portfolio

companies held by the Company were on non-accrual status with a combined fair value of approximately $ 2.4 million, or 1.1 % of the fair

value of our portfolio.

At September 30, 2023, certain investments in four portfolio companies held by the Company were on non-accrual

status with a combined fair value of approximately $ 6.5 million, or 2.9 % 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 Affiliated Persons as “Affiliated Investments.”

of Investments

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

Fair value is a market-based measure considered from the perspective of a market participant 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.

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.

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.

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 a market participant 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.

Significant Accounting Policies (continued)

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 our Chief Financial Officer, the Company’s Valuation Designee,

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.

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.

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.

Income Approach is used, the fair value measurement reflects current market expectations about those future amounts.

Company has engaged third-party valuation firms (the “Valuation Firms”) to assist it and its Valuation Designee (the Chief

Financial Officer) 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.

the market yield analysis, the value of the Company’s loans are 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.

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.

methodologies and information that the Company utilizes when applying the Market Approach for performing investments include, among other

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”);

sales made by the Company of its investments (“Expected Sales Proceeds Approach”);

estimating the value to

potential buyers.

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 our Chief Financial Officer, the Company’s Valuation Designee, 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 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.

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 Valuation Designee (the Chief Financial Officer) 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 are 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

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.

Significant Accounting Policies (continued)

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);

Black-Scholes model or

simulation models or a combination thereof (Income Approach - Option Model) with respect to the valuation of warrants.

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).

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 initially valued by a Valuation Firm;

Available third-party market

data will be reviewed by Company personnel designated by the Valuation Designee (“Fair Value Personnel”) and the Valuation

Available portfolio company

data and general industry data are then reviewed by the Fair Value Personnel.

Preliminary valuation conclusions

are then documented and discussed with the Fair Value Personnel.

The Valuation Designee

then determines the fair value of each investment in the Company’s portfolio in good faith based on such discussions, the Company’s

Valuation Policy and the Valuation Firms’ final estimated valuations.

The Valuation Designee’s

report is then presented to the Board of Directors and the Audit Committee.

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 pandemics, wars or other

market events 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.

of Financial Instruments

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

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 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”);

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);

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 initially valued by a Valuation Firm;

Available third-party market data will be reviewed by Company personnel designated by the Valuation Designee (“Fair Value Personnel”) and the Valuation Firm.

Available portfolio company data and general industry data are then reviewed by the Fair Value Personnel.

Preliminary valuation conclusions are then documented and discussed with the Fair Value Personnel.

The Valuation Designee then determines the fair value of each investment in the Company’s portfolio in good faith based on such discussions, the Company’s Valuation Policy and the Valuation Firms’ final estimated valuations.

The Valuation Designee’s report is then presented to the Board of Directors and the Audit Committee.

Significant Accounting Policies (continued)

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 pandemics, wars or other events 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.

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

The carrying amounts and fair values of our long-term obligations are discussed in Note 5.

Recent Accounting Pronouncements

The Company considers the applicability and impact

of all accounting standard updates (“ASU”) FASB.

ASUs not listed were assessed by the Company and either determined to be

not applicable or expected to have minimal impact on its Consolidated Financial Statements.

In November 2023, the FASB issued ASU 2023-07,

“Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 202307”),” which enhances

disclosure requirements about significant segment expenses that are regularly provided to the chief operating decision maker (the “CODM”).

ASU 2023-07, among other things, (i) requires a single segment public entity to provide all of the disclosures as required by Topic 280,

(ii) requires a public entity to disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s)

of segment profit or loss in assessing segment performance and deciding how to allocate resources and (iii) provides the ability for a

public entity to elect more than one performance measure.

ASU 2023-07 is effective for the fiscal years beginning after December 15, 2023,

and interim periods beginning with the first quarter ended March 31, 2025.

Early adoption is permitted and retrospective adoption is required

for all prior periods presented.

The Company is currently assessing the impact of this guidance, however, the Company does not expect

a material impact on its Consolidated Financial Statements.

In December 2023, the FASB issued ASU No.

“Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”),” which intends to improve the

transparency of income tax disclosures.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 and is to be adopted

on a prospective basis with the option to apply retrospectively.

The Company is currently assessing the impact of this guidance, however,

the Company does not expect a material impact to its Consolidated Financial Statements.

Other than the aforementioned guidance, the Company’s

management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a

material effect on the accompanying Consolidated Financial Statements.

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

Significant Accounting Policies (continued)

Company is subject to a nondeductible U.S.

7 unchanged sentences

calendar year ended 2022 accrued at September 30, 2023 and the calendar year ended 2021 accrued at September 30, 2022.

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, 2023 and 2022, 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, 2023,

2022 and 2021, the Company did not record a change in provision for deferred taxes on the unrealized (appreciation)/depreciation on investments.

On December 13,

2024, the Company identified that it did not distribute at least 90 % of its investment company taxable income for the tax year ended

September 30, 2023.

The Company filed Form 8927 on December 16, 2024 notifying the IRS.

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, 2024 and 2023, 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, 2024, 2023 and 2022, the Company did not

record a change in provision for deferred taxes on the unrealized (appreciation)/depreciation on investments.

As of September 30, 2024 and 2023, the Company

2 unchanged sentences

As of September 30, 2024 and 2023, the Company has booked a valuation

allowance of $ 23.1 million and $ 26.2 million, respectively, against its deferred tax asset.

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.

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.

also excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they

are realized.

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, 2023, 2022 and 2021, 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:

allowance of $ 20.0 million and $ 23.1 million, respectively, against its deferred tax asset, as for the year ended September 30, 2024 it

anticipated that its Taxable Subsidiaries would be unable to fully utilize their generated net losses.

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

Interest income on non-accrual investments is not recognized for financial reporting purposes, but generally is recognized

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.

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, 2024, 2023 and 2022, the Company reclassified for book purposes amounts arising from permanent book/tax differences related to the

different tax treatment of investments in wholly-owned subsidiaries and book/tax differences in deductibility of executive compensation

For the Years Ended September 30

4 unchanged sentences

( 3,276,372 )

Accumulated net realized gain/(loss) from investments

( 5,640,866 )

Total distributable earnings (loss)

Significant Accounting Policies (continued)

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, 2023, 2022 and 2021 were as follows:

the Years Ended September 30

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, 2024, 2023 and 2022 were as follows:

For the Years Ended September 30

Ordinary income

1 unchanged sentence

Return of capital

Distributions on a tax

Distributions on a tax basis

For federal income tax purposes, the cost of investments owned at September

30, 2024, 2023 and 2022 were approximately $ 259.6 million, $ 264.1 million and $ 262.6 million, respectively.

September 30, 2023, 2022 and 2021, 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:

At September 30, 2024, 2023 and 2022, 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

13 unchanged sentences

$ ( 554,558,496 )

(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, 2023, the Company had a long-term capital loss carryforward available

to offset future realized capital gains of $ 509,966,576 and a short-term capital loss carryforward of $ 2,842,952

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.

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, 2023.

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.

Company invests in various industries.

The Company separately evaluates the performance of each of its investment relationships.

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.

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, 2024,

the Company had a long-term capital loss carryforward available to offset future realized capital gains of $ 512,539,871 and a short-term

capital loss carryforward of $ 2,591,695 .

Net capital losses incurred after October 31 (post-October losses) and net investment losses

incurred after December 31 (late-year losses), and within the taxable year, may be elected to be deferred to the first business day of

the Fund’s next taxable year.

As of the most recent fiscal period ended September 30, 2024, the Fund did not elect to defer any

late year losses.

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, 2024.

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.

The Company invests in various industries.

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.

Significant Accounting Policies (continued)

Investment Risk, Concentration of Credit Risk, and Liquidity Risk

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.

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

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.

the sale of any such investments may be possible only at substantial discounts, and it may be extremely difficult to value any such investments

composition of our investments as of September 30, 2023 as a percentage of our total portfolio, at amortized cost and fair value were

as follows (dollars in thousands):

Company Investment Risk, Concentration of Credit Risk, and Liquidity

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.

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.

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.

The composition of our investments as of September

30, 2024 as a percentage of our total portfolio, at amortized cost and fair value were as follows (dollars in thousands):

Amortized Cost

4 unchanged sentences

Total Investments

composition of our investments as of September 30, 2022 as a percentage of our total portfolio, at amortized cost and fair value were

as follows (dollars in thousands):

The composition of our investments as of September

30, 2023 as a percentage of our total portfolio, at amortized cost and fair value were as follows (dollars in thousands):

Amortized Cost

Senior Secured First Lien Term

Senior Secured Second Lien Term Loans

Senior Secured First Lien Term Loans

Senior Secured Notes

Unsecured Debt

Fund Investment

Equity/Warrants

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, 2023 and 2022, the total fair value of warrants

was $ 206.5 thousand and $ 62.6 thousand, respectively, and were included in investments at fair value on the Consolidated Statements of

Assets and Liabilities.

During the year ended September 30, 2023, the Company acquired additional warrants in one existing portfolio

During the year ended September 30, 2022, the Company did not acquire any additional warrants in an existing portfolio

During the year ended September 30, 2021, the Company acquired additional warrants in one existing portfolio company.

unrealized depreciation related to warrants for the years ended September 30, 2023, 2022 and 2021 was $ 143.9 thousand, $ 299.1 thousand

and $ 981.4 thousand, 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.

Total Investments

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, 2024 and 2023, the total fair value of warrants was $ 82.7 thousand and $ 206.5 thousand,

respectively, and were included in investments at fair value on the Consolidated Statements of Assets and Liabilities.

During the year

ended September 30, 2024, the Company did not acquire any additional warrants in an existing portfolio company.

During the year ended

September 30, 2023, the Company acquired additional warrants in an existing portfolio company.

During the year ended September 30,

2022, the Company did not acquire any additional warrants in any existing portfolio companies.

Total change in unrealized depreciation related to warrants for the

years ended September 30, 2024, 2023 and 2022 was $ 123.7 thousand, $ 143.9 thousand and $ 299.1 thousand, respectively, and was recorded

on the Consolidated Statements of Operations as net change in unrealized appreciation/(depreciation) on investments.

The warrants are

received in connection with individual investments and are not subject to master netting arrangements.

Investments (continued)

following table shows the portfolio composition by industry grouping at fair value at September 30, 2023 (dollars in thousands):

Banking, Finance, Insurance & Real Estate

The following table shows the portfolio composition

by industry grouping at fair value at September 30, 2024 (dollars in thousands):

Hotel, Gaming & Leisure

High Tech Industries

Construction & Building

High Tech Industries

Metals & Mining

2 unchanged sentences

Aerospace & Defense

following table shows the portfolio composition by industry grouping at fair value at September 30, 2022 (dollars in thousands):

Fair Value Percentage

Business $ 52,851 27.5 %

Hotel, Gaming & Leisure 31,947 16.7

The following table shows the portfolio composition

by industry grouping at fair value at September 30, 2023 (dollars in thousands):

Banking, Finance, Insurance & Real Estate

Consumer 21,243 11.0

Construction & Building 17,724 9.1

Automotive 8,075 4.2

Consumer Discretionary 6,208 3.2

Hotel, Gaming & Leisure

High Tech Industries

Broadcasting & Subscription 4,220 2.2

Oil & Gas 4,152 2.2

Packaging 3,361 1.7

Construction & Building

Metals & Mining

Broadcasting & Subscription

Consumer Discretionary

Aerospace & Defense

Retail 121 0.1

Total $ 192,957 100.0 %

Company invests in portfolio companies principally located in the United States.

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

following table shows the portfolio composition by geographic location at fair value at September 30, 2023 (dollars in thousands):

The Company invests in portfolio companies principally

located in the United States.

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.

Investments (continued)

The following table shows the portfolio composition

by geographic location at fair value at September 30, 2024 (dollars in thousands):

International

following table shows the portfolio composition by geographic location at fair value at September 30, 2022 (dollars in thousands):

The following table shows the portfolio composition

by geographic location at fair value at September 30, 2023 (dollars in thousands):

International

Investments (continued)

With Affiliated/Controlled Companies

Company had investments in portfolio companies designated as Affiliated Investments and Controlled Investments under the 1940 Act.

with Affiliated Investments and Controlled Investments during the years ended September 30, 2023 and 2022 were as follows:

Investment (1)(2)

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, 2024 and 2023 were as follows:

of Investment (1) (2)

of Investment

September 30, 2023

2 unchanged sentences

(Distributions)

Transfers In/(Out)

of Affiliates

September 30, 2024

Industrial Services, LLC

All Around Roustabout, LLC

Secured First Lien Term Loan C

$ ( 1,096,561 )

$ ( 196,411 )

Secured First Lien Term Loan A

( 9,473,068 )

Credit Facility

( 5,112,074 )

Angus Steakhouses, LLC

1 unchanged sentence

Secured First Lien Term Loan

Secured First Lien Super Priority Delayed Draw Term Loan

Holdings Parent, LLC

Operations, LLC

Secured First Lien Term Loan

( 1,459,249 )

Secured First Lien Super Priority DDTL

Holdings Parent, LLC

Wireless Holdings LLC

Secured First Lien Term Loan A

$ ( 5,000,704 )

Secured First Lien Term Loan B

Multifamily, LLC

( 7,373,166 )

( 11,900,000 )

( 5,150,000 )

Affiliated Investments

$ ( 25,481,801 )

Investment (1)(2)

$ ( 196,411 )

$ ( 1,991,456 )

Investments (continued)

of Investment (1)(2)

of Investment

September 30, 2023

2 unchanged sentences

(Distributions)

Transfers In/(Out)

of Controlled

September 30, 2024

Capital Corp.

Secured First Lien Term Loan

( 2,187,665 )

1 unchanged sentence

Secured First Lien Term Loan

( 9,153,693 )

( 10,378,988 )

( 7,296,895 )

Captive, Inc.

Secured First Lien Delayed Draw Term Loan

( 1,693,577 )

Secured First Lien Term Loan B

Controlled Investments

( 11,900,000 )

Investments (continued)

Investment (1)(2)

Total Controlled Investments

$ ( 9,153,693 )

$ ( 7,287,134 )

of Investment(1)(2)

of Investment

September 30, 2022

2 unchanged sentences

(Distributions)

Transfers In/(Out)

of Affiliates

Value at September 30,

September 30, 2023

Industrial Services, LLC

Secured First Lien Term Loan B

$ ( 19,468,870 )

Secured First Lien Term Loan C

3 unchanged sentences

Secured First Lien Term Loan

Secured First Lien Super Priority DDTL

Investors Holdings 1 LLC

( 3,448,219 )

Energy Services International LLC

Secured First Lien Term Loan

( 4,910,671 )

( 2,417,897 )

Partners, LLC

( 26,807,520 )

( 26,805,513 )

Partners, LLC

( 8,084,639 )

( 7,970,361 )

Secured First Lien Super Priority Delayed Draw Term Loan

Holdings Parent, LLC

Operations, LLC

Secured First Lien Term Loan

Secured First Lien Delayed Draw Term Loan

Secured First Lien Term Loan A

( 2,378,510 )

Wireless Holdings LLC

Secured First Lien Term Loan A

( 5,000,704 )

Secured First Lien Term Loan B

( 6,483,741 )

Acquisition Holdings Corporation

( 1,000,000 )

Multifamily, LLC

Secured First Lien Term Loan

( 1,018,344 )

2 unchanged sentences

$ ( 1,018,267 )

Investments (continued)

Investment (1)(2)

of Investment (1)(2)

of Investment

September 30, 2022

(Sales) of or

Purchases/(Sales)

of or Advances/

(Distributions)

Transfers In/(Out)

of Controlled

September 30, 2023

Controlled Investments

Secured First Lien Delayed Draw Term Loan

Priority Senior Secured First Lien Term Loan

$ ( 8,265,435 )

Operations, LLC

Secured First Lien Term Loan

Secured First Lien Delayed Draw Term Loan

Secured First Lien Term Loan B

Secured First Lien Term Loan C

Controlled Investments

$ ( 6,410,084 )

(1) The par amount and additional detail are shown in the Consolidated Schedules of Investments.

(2) 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.

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, 2023, 2022 and 2021.

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.

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, 2023, 2022 and 2021.

Unconsolidated

Significant Subsidiaries

accordance with the SEC’s Regulation S-X and GAAP, the Company evaluated and determined that it had one subsidiary, FlexFIN, LLC,

that is deemed to be a “significant subsidiary” as of September 30, 2023.

In accordance with Rule 3-09, separate audited

financial statements of FlexFIN, LLC for the year ended September 30, 2023 are being filed herewith as Exhibit 99.2.

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, 2024, 2023

Transfers in/(out) of Affiliated Investments and Controlled Investments represent the fair value for the quarter an investment

became or was removed as an Affiliated Investment or a Controlled Investment.

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, 2024,

2023 and 2022.

Investments (continued)

Unconsolidated Significant Subsidiaries

In accordance with the SEC’s Regulation

S-X and GAAP, the Company evaluated and determined that it had one subsidiary, FlexFIN, LLC, that is deemed to be a “significant

subsidiary” as of September 30, 2024.

In accordance with Rule 3-09, separate audited financial statements of FlexFIN, LLC for the

year ended September 30, 2024 are being filed herewith as Exhibit 99.2.

Fair Value Measurements

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.

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:

1 - Valuations based on quoted prices in active markets for identical assets or liabilities at the measurement date.

2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly

or indirectly.

3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

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.

Fair Value Measurements (continued)

following table presents the fair value measurements of our investments, by major class according to the fair value hierarchy, as of

September 30, 2023 (dollars in thousands):

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

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

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 quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

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

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, 2024 (dollars in thousands):

Fair Value Hierarchy as of September 30, 2024

1 unchanged sentence

Senior Secured Notes

Unsecured Debt

Equity/Warrants

3 unchanged sentences

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.

following table presents the fair value measurements of our investments, by major class according to the fair value hierarchy, as of

September 30, 2022 (dollars in thousands):

Value Hierarchy as of September 30, 2022

Senior Secured First Lien Term

Senior Secured Second Lien Term Loans

Fair Value Measurements (continued)

The following table presents the fair value measurements

of our investments, by major class according to the fair value hierarchy, as of September 30, 2023 (dollars in thousands):

Fair Value Hierarchy as of September 30, 2023

Senior Secured First Lien Term Loans

Senior Secured Notes

Unsecured Debt

Equity/Warrants

following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the year ended

September 30, 2023 (dollars in thousands):

Senior Secured First Lien Term Loans

Senior Secured Second Lien Term Loans

Equities/ Warrants

Investments measured at net asset value(1)

Total Investments, at fair value

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, 2024 (dollars in thousands):

Senior Secured

Secured Notes

Balance as of September 30, 2023

5 unchanged sentences

Balance as of September 30, 2024

following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the year ended

September 30, 2022 (dollars in thousands):

as of September 30, 2021

and other adjustments to cost

realized gains/(losses) from investments

unrealized gains/(losses)

(33,347 ) (1)

as of September 30, 2022

(1) FlexFIN, LLC was reclassed as an Equity from Secured Debt during the quarter ended December 31, 2021.

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, 2023 (dollars in thousands):

Senior Secured

Secured Notes

Balance as of September 30, 2022

Purchases and other adjustments to cost

Sales (including repayments or maturities)

Net realized gains/(losses) from investments

Net unrealized gains/(losses)

Transfer in/(out)

Balance as of September 30, 2023

Net change in unrealized gain (loss) for the years

ended September 30, 2024 and 2023 included in earnings related to Level 3 investments still held as of September 30, 2024 and 2023 was

approximately $ 2.1 million and $ 26.5 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, including any repayments or maturities.

Fair Value Measurements (continued)

Net change in unrealized gain (loss) for the years ended September

30, 2023 and 2022 included in earnings related to investments still held as of September 30, 2023 and 2022 was approximately $ 26.5 million

and $( 2.5 ) million, respectively.

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.

represent net proceeds received from investments sold, including any repayments or maturities.

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.

the year ended September 30, 2023, no investments were transferred in or out of Level 3 .

During the year ended September 30, 2022, $5,248 (in thousands) of investments were transferred out of Level 3 and $1,923 (in thousands)

of investments were transferred into Level 3.

following table presents the quantitative information about Level 3 fair value measurements of our investments, as of September 30, 2023

(dollars in thousands):

Valuation Methodology

Unobservable Input

(Weighted Average)

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, 2024, $ 23.1 million

of investments were transferred out of Level 3 and no investments were transferred into Level 3.

During the year ended September 30, 2023,

no investments were transferred in or out of Level 3.

The following table presents the quantitative

information about Level 3 fair value measurements of our investments, as of September 30, 2024 (dollars in thousands):

Fair Value Valuation Methodology Unobservable Input Range

(Weighted Average) Impact to

Valuation From

An Increase In

Senior Secured First Lien Term Loans

Income Approach

8.50% - 32.0% (13.78%)

Senior Secured First Lien Term Loans

Market Approach

Revenue Multiple

0.3x - 0.3x (0.3x)

Senior Secured First Lien Term Loans

Market Approach

EBITDA Multiple

1.7x - 5.0x (3.1x)

Senior Secured First Lien Term Loans

Market Approach

LTM EBITDA Multiple

5.8x - 6.8x (6.3x)

Equity/Warrants

Cost Approach

Collateral Value

Equity/Warrants

Market Approach

5.8x – 6.8x (6.3x)

Equity/Warrants

Market Approach

EBITDA Multiple

1.8x – 36.8x (2.8x)

Equity/Warrants

Recent Purchase

Purchase Price

N/A – N/A (N/A)

Equity/Warrants

Income Approach

DLOM (Discount for lack of Marketability)

3.0x – 3.2x (3.1x)

following table presents the quantitative information about Level 3 fair value measurements of our investments, as of September 30, 2022

(dollars in thousands):

(Weighted Average)

Secured First Lien Term Loans

Income Approach

8.50% - 24.00% (10.57%)

Secured First Lien Term Loans

Market Approach

EBITDA Multiple

4.0x – 5.0x (4.5x)

Secured First Lien Term Loans

Market Approach

Revenue Multiple

0.2x – 0.3x (2.5x)

Secured First Lien Term Loans

Income Approach

Market Spread

5.75% - 6.25% (6.00%)

Secured Second Lien Term Loans

Market Approach

EBITDA Multiple

9.0x – 10.0x (9.5x)

Equity/Warrants

Cost Approach

Replacement Cost

Equity/Warrants

Market Approach

EBITDA Multiple

2.0x – 21.0x (17.4x)

Equity/Warrants

Market Approach

8.50% - 13.25% (12.75%)

Equity/Warrants

Market Approach

Sum of the Parts/Estimated Proceeds

8.1x – 11.4x (9.8x)

Fair Value Measurements (continued)

significant unobservable inputs used in the fair value measurement of the Company’s debt and derivative investments are market

Increases in market yields would result in lower fair value measurements.

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.

Senior Secured First Lien Term Loans $ 65,236 Income Approach Market Yield 3.5% - 42.5% (15.3%) Decrease

Senior Secured First Lien Term Loans 2,399 Market Approach EBITDA Multiple 1.8x - 2.3x (2.0x) Increase

Senior Secured First Lien Term Loans 1,002 Market Approach Market Spread 4.5% - 5.0% (4.75%) Decrease

Senior Secured First Lien Term Loans 350 Cost Approach Collateral Value N/A N/A

Senior Secured Notes 7,422 Recent Purchase Purchase Price N/A N/A

Equity/Warrants 36,683 Cost Approach Collateral Value N/A N/A

Equity/Warrants 27,014 Market Approach EBITDA Multiple 4.3x - 10.3x (8.4x) Increase

Equity/Warrants 101 Recent Purchase Purchase Price N/A N/A

Equity/Warrants 83 Income Approach DLOM (Discount for lack of Marketability) 27.0%-31.0% (29.0%) Decrease

Total $ 140,290

The following table presents the quantitative

information about Level 3 fair value measurements of our investments, as of September 30, 2023 (dollars in thousands):

Fair Value Valuation Methodology Unobservable Input Range

(Weighted Average) Impact to

Valuation From

An Increase In

Senior Secured First Lien Term Loans $ 69,943 Income Approach Market Yield 8.50% - 32.0% (13.78%) Decrease

Senior Secured First Lien Term Loans 751 Market Approach Revenue Multiple 0.3x - 0.3x (0.3x) Increase

Senior Secured First Lien Term Loans 10,939 Market Approach EBITDA Multiple 1.7x - 5.0x (3.1x) Increase

Senior Secured First Lien Term Loans 866 Market Approach LTM EBITDA Multiple 5.8x - 6.8x (6.3x) Increase

Equity/Warrants 38,870 Cost Approach Collateral Value N/A N/A

Equity/Warrants 11,734 Market Approach LTM Multiple 5.8x - 6.8x (6.3x) Increase

Equity/Warrants 22,007 Market Approach EBITDA Multiple 1.8x - 36.8x (2.8x) Increase

Equity/Warrants 10,000 Recent Purchase Purchase Price N/A - N/A (N/A) N/A

Equity/Warrants 206 Income Approach DLOM (Discount for lack of Marketability) 3.0x - 3.2x (3.1x) Decrease

Total $ 165,316

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.

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, 2023 and September 30,

2022, the Company deemed the contingent consideration to be uncollectible.

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.

was requested or obtained and the Company is still subject to the 200 % requirement.

of September 30, 2023, the Company’s asset coverage was 270.7 % 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.

of September 30, 2022, the Company’s asset coverage was 255.0 % 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.

Company’s outstanding debt excluding debt issuance costs as of September 30, 2023 and 2022 were as follows (dollars in thousands):

Amount Outstanding

Principal Available

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

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 %

of asset coverage, 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.

No approval was requested or obtained and the Company is still subject to the 200 % requirement.

As of September 30, 2024, the Company’s

asset coverage was 216.8 % 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, 2023, the Company’s

asset coverage was 270.7 % 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.

The Company’s outstanding debt excluding

debt issuance costs as of September 30, 2024 and 2023 were as follows (dollars in thousands):

September 30, 2024

September 30, 2023

Available (1)

Principal Amount Outstanding

Carrying Value

Available (1)

Principal Amount Outstanding

Carrying Value

2028 Promissory Note

Revolving Credit Facility

(1) For the 2028 Notes and 2028 Promissory Note, this represents

the total principal amount and for the Revolving Credit Facility, this represents the undrawn principal amount.

Borrowings (continued)

December 15, 2022, the Company entered into a 3 year $ 50.0 million revolving credit facility (the “Credit Facility”) with

Woodforest National Bank (“Woodforest’).

Credit Facility

On December 15, 2022, the Company entered into

a 3 year $ 50.0 million revolving credit facility (the “Credit Facility”) with Woodforest National Bank (“Woodforest’).

Woodforest is the administrative agent, sole bookrunner and sole lead arranger.

Under the Credit Facility, the Company is required to comply with various

covenants, reporting requirements and other customary requirements for similar revolving credit facilities, including, without limitation,

covenants related to:

(a) limitations on the incurrence of additional indebtedness and liens, (b) limitations on certain investments,

(c) limitations on certain restricted payments, (d) maintaining a certain minimum stockholders’ equity, (e) maintaining a ratio

of total assets to total indebtedness of the Company and its consolidated subsidiaries (subject to certain exceptions) of not less than

2.0:1.0, (f) limitations on pledging certain unencumbered assets, and (g) limitations on the creation or existence of agreements that

prohibit liens on certain properties of the Company and certain of its subsidiaries.

The Credit Facility has a maturity date of December 15,

On January 17, 2023, the Company borrowed $ 23.2 million

under the Credit Facility and used these proceeds to redeem $ 22.6 million in aggregate principal amount of the issued and outstanding

2023 Notes, comprising all issued and outstanding 2023 Notes.

The 2023 Notes were redeemed at 100 % of their principal amount, plus

accrued and unpaid interest thereon from September 30, 2022 through, but excluding January 17, 2023 (the “Redemption Date”).

On February 21, 2024 (the “First Amendment

Effective Date”), in order to increase the size of the Credit Facility, the parties to the Credit Facility amended the terms of

the Credit Facility, effective as of the First Amendment Effective Date (the “First Amendment”).

The First Amendment increased

the principal amount of loan available under the Credit Facility by $ 12.5 million to $ 62.5 million.

All other material terms

of the Credit Facility remain unchanged.

On August 5, 2024 (the “Second Amendment

Effective Date”), in order to increase the size of the Credit Facility, the parties to the Credit Facility amended the Credit Facility,

effective as of the Second Amendment Effective Date (the “Second Amendment”).

The Second Amendment increased the principal

amount of loan available under the Credit Facility by $ 25 million to $ 87.5 million.

All other material terms of the Credit Facility remain

Under the Credit Facility, the Company is required

to comply with various covenants, reporting requirements and other customary requirements for similar revolving credit facilities, including,

without limitation, covenants related to:

(a) limitations on the incurrence of additional indebtedness and liens, (b) limitations on certain

investments, (c) limitations on certain restricted payments, (d) maintaining a certain minimum stockholders’ equity, (e) maintaining

a ratio of total assets to total indebtedness of the Company and its consolidated subsidiaries (subject to certain exceptions) of not

less than 2.0:1.0, (f) limitations on pledging certain unencumbered assets, and (g) limitations on the creation or existence of agreements

that prohibit liens on certain properties of the Company and certain of its subsidiaries.

These covenants are subject to important limitations

4 unchanged sentences

As of September 30, 2024, the Company was in compliance in all respects with the terms of the Credit Facility.

of September 30, 2023 and September 30, 2022, there was $ 28.4 million and $ 0.0 million outstanding, respectively, under the Credit Facility.

loans under the Credit Facility bear a monthly interest rate at Term SOFR + 2.90 %.

The Company is also subject to a commitment fee of

0.25 %, which shall accrue on the actual daily amount of the undrawn portion of the revolving credit.

January 17, 2023, the Company borrowed $23.2 million under the Credit Facility and used these proceeds to redeem $22.6 million in aggregate

principal amount of the issued and outstanding 2023 Notes, comprising all issued and outstanding 2023 Notes.

The 2023 Notes were redeemed

at 100% of their principal amount, plus accrued and unpaid interest thereon from September 30, 2022 through, but excluding January 17,

2023 (the “Redemption Date”).

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

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.

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 bore 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.

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.

As of September 30, 2024 and September 30, 2023,

there was $ 78.1 million and $ 28.4 million outstanding, respectively, under the Credit Facility.

Outstanding loans under the Credit Facility bear

a monthly interest rate at Term SOFR + 2.90 %.

The Company is also subject to a commitment fee of 0.25 %, which shall accrue on the actual

daily amount of the undrawn portion of the revolving credit.

Unsecured Notes

On March 18, 2013, the Company issued $ 60.0 million

in aggregate principal amount of 6.125 % unsecured notes that matured 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 bore 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.

Borrowings (continued)

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.

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 $ 0.2

million and was recorded on the Consolidated Statements of Operations as a loss on extinguishment of debt.

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

Effective January 4, 2021, the 2023 Notes began trading on the NASDAQ Global Market under the trading symbol “PFXNL.”

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.

16, 2021, the Company redeemed $ 55,325,000 in aggregate principal amount of the issued and outstanding 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.

December 15, 2022, the Company caused notices to be issued to the holders of its 2023 Notes regarding the Company’s exercise of

its option to redeem $ 22,521,800 in aggregate principal amount of issued and outstanding 2023 Notes, comprising all issued and outstanding

2023 Notes, at a price equal to 100 % of the principal amount of the 2023 Notes, plus accrued and unpaid interest thereon from September

30, 2022, through, but excluding, January 17, 2023 in accordance with the terms of the indenture governing the 2023 Notes.

The redemption

was completed on January 17, 2023.

The Company funded the redemption of the 2023 Notes with loans obtained under the Credit Facility.

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 that mature on November

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

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

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.

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.”

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.

On December 16, 2021, the Company redeemed $ 55,325,000 in

aggregate principal amount of the issued and outstanding 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 15, 2022, the Company caused notices

to be issued to the holders of its 2023 Notes regarding the Company’s exercise of its option to redeem $ 22,521,800 in aggregate

principal amount of issued and outstanding 2023 Notes, comprising all issued and outstanding 2023 Notes, at a price equal to 100 %

of the principal amount of the 2023 Notes, plus accrued and unpaid interest thereon from September 30, 2022, through, but excluding, January

17, 2023 in accordance with the terms of the indenture governing the 2023 Notes.

The redemption was completed on January 17, 2023.

Company funded the redemption of the 2023 Notes with loans obtained under the Credit Facility.

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 that mature on November 1,

2028 (the “2028 Notes” or the “Notes”).

3 unchanged sentences

on the NASDAQ Global Market under the trading symbol “PFXNZ.”

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.

Value of Debt Obligations

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 2023 Notes and the 2028 Notes, which are or were publicly traded, is based upon closing market quotes as of the

measurement date.

As of September 30, 2023 and 2022 with respect to the 2028 Notes, and as of September 30, 2022 with respect to the

2023 Notes, such notes are deemed to be Level 1 in the fair value hierarchy, as defined in Note 4.

As of September 30, 2023, the Credit

Facility is deemed to be Level 3 in the fair value hierarchy, as defined in Note 4.

On November 15, 2021, the Company and U.S.

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.

2028 Promissory Note

On May 2, 2024, the Company issued a 5.25 %

note due November 1, 2028 in the principal amount of $ 1,661,498 to National Security Insurance Company (the “2028 Promissory

The financial terms of the note are substantially the same as the 2028 Notes.

Borrowings (continued)

issuance costs related to the 2023 Notes and the 2028 Notes are reported on the Consolidated Statements of Assets and Liabilities as

a direct deduction from the face amount of the 2023 Notes and the 2028 Notes.

As of September 30, 2023 and September 30, 2022, debt issuance

costs related to the 2023 Notes and the 2028 Notes were as follows (dollars in thousands):

debt issuance costs at beginning of period

Amortized debt issuance

Unamortized debt issuance

the years ended September 30, 2023, 2022 and 2021, the components of interest expense, amortized debt issuance costs, amortized deferred

financing costs, weighted average stated interest rate and weighted average outstanding debt balance for the 2023 Notes and the 2028

Notes were as follows (dollars in thousands):

the Years Ended September 30,

2021 Notes Interest

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

2028 Notes, which are publicly traded, is based upon closing market quotes as of the measurement date.

As of September 30, 2024 and

September 30, 2023, the 2028 Notes are deemed to be Level 1 in the fair value hierarchy, as defined in Note 4.

As of September 30,

2024, the 2028 Promissory Note is deemed to be Level 3 in the fair value hierarchy, as defined in Note 4.

of September 30, 2024 and September 30, 2023, the Credit Facility is deemed to be Level 3 in the fair value hierarchy, as defined in

Debt issuance costs related to the 2028 Notes

are reported on the Consolidated Statements of Assets and Liabilities as a direct deduction from the face amount of the 2028 Notes.

of September 30, 2024 and September 30, 2023, debt issuance costs related to the 2023 Notes and the 2028 Notes were as follows (dollars

in thousands):

For the year ended

September 30, 2024

September 30, 2023

2028 Promissory Note

Total debt issuance costs at beginning of period

Debt issuance costs during the period

Amortized debt issuance costs

Unamortized debt issuance costs

For the years ended September 30, 2024, 2023 and

2022, the components of interest expense, amortized debt issuance costs, amortized deferred financing costs, weighted average stated interest

rate and weighted average outstanding debt balance for the 2023 Notes, 2028 Notes and Credit Facility were as follows (dollars in thousands):

For the Years Ended September 30,

2023 Notes Interest

2023 Notes Premium

2028 Notes Interest

2028 Promissory Note

Credit Facility Interest

Commitment fees

Amortization of deferred

financing costs

Amortization of debt

issuance costs

Amortization of deferred financing costs

Amortization of debt issuance costs

Weighted average stated interest rate

Weighted average debt outstanding

Management Agreement and Expense Support Agreement

to January 1, 2021, we operated pursuant to an investment management agreement with MCC Advisors which expired on December 31, 2020.

Since January 1, 2021, we have operated pursuant to an internalized management structure.

In addition, prior to January 1, 2021, the

Company was party to an expense support agreement with MCC Advisors and Medley LLC, which expired by its terms at the close of business

on December 31, 2020, in connection with the Company’s adoption of the internalized management structure.

Base Management

Fee and Incentive Fee

December 31, 2020, the investment management agreement with MCC Advisors provided for a base management fee and an incentive fee.

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

The base management fee was to be calculated based on the average value of the Company’s gross assets at the end of

the two most recently completed calendar quarters and was to be appropriately pro-rated for any partial quarter.

For the year ended September

30, 2021, the Company incurred base management fees to MCC Advisors of $ 1.1 million.

No incentive fee was payable for the year ended

September 30, 2021.

Since January 1, 2021, the Company no longer incurs management fees under its current internalized structure.

Agreements (continued)

Administration

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.

affiliate also served as the Company’s custodian.

Administration Agreement

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 affiliate also served as

the Company’s custodian.

The Company’s administrative and custodial relationship with U.S.

terminated on August 9, 2022.

SS&C has since served as administrator of the Company and has provided the Company with fund accounting

and financial reporting services pursuant to the services agreement with the Company.

Effective September 12, 2022, Computershare serves

as custodian for the Company pursuant to its Loan Administration and Custodial Agreement with the Company.

For the years ended September

30, 2023, 2022 and 2021, we incurred $ 0.3 million, $ 0.3 million and $ 0.6 million in administrator expenses, respectively.

of September 30, 2023 and 2022, $ 0 million and $ 0.1 million, respectively, were included in “administrator expenses payable”

in the accompanying Consolidated Statements of Assets and Liabilities.

Cash Incentive Plan

May 9, 2022, the board of directors of the Company adopted the PhenixFIN 2022 Long-Term Cash Incentive Plan (the “CIP”) pursuant

to the recommendation by the Compensation Committee of the board of directors.

The CIP provides for performance-based cash awards to

key employees of the Company, as approved by the Compensation Committee, based on the achievement of pre-established financial goals

for the approved performance period.

The performance goals may be expressed as one or a combination of net asset value of the Company,

net asset value per share of the Company’s common stock, changes in the market price of shares of the Company’s common stock,

individual performance metrics and/or such other goals and objectives the Committee considers relevant in connection with accomplishing

the purposes of the CIP.

connection with the approval of the CIP, the Compensation Committee in April 2022, approved awards for the three year performance period

commencing on January 1, 2022 and ending on December 31, 2024 (the “2022 LTIP Plan”).

Each participant is eligible to receive

an amount of cash equal to 0 %- 200 % of the target award set forth in the table below (“Target Performance Award”), based on

the achievement of net asset value (“NAV”) and NAV per share goals (weighted at 30 % and 70 %, respectively) as of the end

of the performance period (the “Performance Goals”).

Bancorp terminated on August

SS&C has since served as administrator of the Company and has provided the Company with fund accounting and financial

reporting services pursuant to the services agreement with the Company.

Effective September 12, 2022, Computershare serves as

custodian for the Company pursuant to its Loan Administration and Custodial Agreement with the Company.

For each of the years ended

September 30, 2024, 2023 and 2022, we incurred $ 0.3 million in administrator expenses.

As of September 30, 2024 and 2023, $ 0.0 million

was included in “administrator expenses payable” in the accompanying Consolidated Statements

of Assets and Liabilities.

Agreements (continued)

Long-Term Cash Incentive Plan

On May 9, 2022, the board of directors of the

Company adopted the PhenixFIN 2022 Long-Term Cash Incentive Plan (the “CIP”) pursuant to the recommendation by the Compensation

Committee of the board of directors.

The CIP provides for performance-based cash awards to key employees of the Company, as approved by

the Compensation Committee, based on the achievement of pre-established financial goals for the approved performance period.

The performance

goals may be expressed as one or a combination of net asset value of the Company, net asset value per share of the Company’s common

stock, changes in the market price of shares of the Company’s common stock, individual performance metrics and/or such other goals

and objectives the Committee considers relevant in connection with accomplishing the purposes of the CIP.

In connection with the approval of the CIP, the

Compensation Committee in April 2022, approved awards for the three-year performance period commencing on October 1, 2021 and ending on

September 30, 2024 (the “2022 LTIP Plan”).

Each participant is eligible to receive an amount of cash equal to 0 %- 200 %

of the target award set forth in the table below (“Target Performance Award”), based on the achievement of net asset value

(“NAV”) and NAV per share goals (weighted at 30 % and 70 %, respectively) as of the end of the performance period

(the “Performance Goals”).

Performance is evaluated separately for each Performance Goal.

is made with respect to a Performance Goal if a threshold level of performance is not achieved.

Each Performance Goal is subject to (i)

a threshold level of performance at which a percentage of the Target Performance Award attributable to that Performance Goal may be paid

and below which no payment is made pursuant to an award, (ii) a target level of performance at which 100 % of the Target Performance Award

attributable to that Performance Goal may be paid and (iii) a maximum level of performance, at which 200 % of the Target Performance Award

attributable to that Performance Goal may be paid, in each case subject to such other terms and conditions of an award.

Between threshold,

target and maximum performance levels for each Performance Goal, the portion of that award attributed to the Performance Goal shall be

interpolated in a linear progression.

December 2022, pursuant to the CIP, the Compensation Committee approved awards for Mr.

No payment is made with respect

to a Performance Goal if a threshold level of performance is not achieved.

Each Performance Goal is subject to (i) a threshold level of

performance at which a percentage of the Target Performance Award attributable to that Performance Goal may be paid and below which no

payment is made pursuant to an award, (ii) a target level of performance at which 100 % of the Target Performance Award attributable

to that Performance Goal may be paid and (iii) a maximum level of performance, at which 200 % of the Target Performance Award attributable

to that Performance Goal may be paid, in each case subject to such other terms and conditions of an award.

Between threshold, target and

maximum performance levels for each Performance Goal, the portion of that award attributed to the Performance Goal shall be interpolated

in a linear progression.

In December 2022, pursuant to the CIP, the Compensation

Committee approved awards for Mr.

Lorber and Ms.

McMillan for the three-year performance

period commencing on January 1, 2023 and ending on December 31, 2025 (the “2023 LTIP Plan”).

Each participant is eligible

to receive an amount of cash equal to a percentage of the target award amount set forth above based on the factors described above.

Compensation Committee, in approving the awards, evaluated each Performance Goal separately.

Target Performance Award for each executive officer for both the 2022 LTIP plan and 2023 LTIP plan is set forth in the table below:

David Lorber, Chairman of the Board

and Chief Executive Officer

McMillan for the three-year performance period commencing on October 1, 2022 and ending

on September 30, 2025 (the “2023 LTIP Plan”).

Each participant is eligible to receive an amount of cash equal to a percentage

of the target award amount set forth above based on the factors described above.

The Compensation Committee, in approving the awards,

evaluated each Performance Goal separately.

In December 2023, pursuant to the CIP, the Compensation

Committee approved awards for Mr.

Lorber and Ms.

McMillan for the three-year performance period commencing on October 1, 2023 and ending

on September 30, 2026 (the “2024 LTIP Plan”).

Each participant is eligible to receive an amount of cash equal to a percentage

of their target award amount set forth above based on the factors described above.

The Compensation Committee, in approving the awards,

evaluated each Performance Goal separately.

The Target Performance Award for each executive

officer for the 2022 LTIP Plan, 2023 LTIP Plan, and the 2024 LTIP Plan is set forth in the table below:

Name and Title

Dollar Value of Target Award

David Lorber, Chairman of the Board and Chief Executive Officer

Ellida McMillan, Chief Financial Officer

the year ended September 30, 2023, the Company recorded an accrual of $ 317,000 , for these awards.

During the years ended September 30,

2022 and 2021, the Company did not record an accrual.

During the years ended September 30, 2024 and

September 30, 2023, the Company recorded an accrual of $ 2,798,437 and $ 317,000 , respectively, for these awards.

During the year ended

September 30, 2022 the Company did not record an accrual.

To date, no amounts have been paid under these awards.

Related Party Transactions

from Affiliates

from affiliates at September 30, 2023 and September 30, 2022 consists of certain legal and general and administrative expenses paid by

the Company on behalf of certain of its affiliates.

Reimbursements Related to Professional Fees

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 years ended September 30,

2023, 2022 and 2021, the Company received insurance proceeds of $ 0 million, $ 0 million and $ 2.1 million, respectively.

The reimbursements

have been recorded as an offset or reduction in professional fees and expenses on the Consolidated Statements of Operations.

of September 30, 2023 and 2022, we had commitments under loan and financing agreements to fund up to $ 3.4 million to four portfolio companies

and $ 6.0 million to six portfolio companies, respectively.

These commitments are primarily composed of senior secured delayed draw term

loans and revolvers, and the determination of their fair value is included in the Consolidated Schedules of Investments.

The commitments

are generally subject to the borrowers meeting certain criteria such as compliance with covenants and certain operational metrics.

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, 2023 and 2022 is shown in the table below (dollars in thousands):

SS Acquisition, LLC (dba Soccer

Shots Franchisin–) - Senior Secured First Lien Delayed Draw Term Loan

Kemmerer Operations, L–C - Senior Secured

First Lien Delayed Draw Term Loan

During the year ended September 30, 2024, the Company entered into

a related party transaction with NVTN LLC whereby the $ 11.9 million of equity of Maritime Wireless Holdings LLC was transferred to NVTN

Due from/to Affiliates

Due from affiliates at September 30, 2024 and

September 30, 2023 consists of certain legal and general and administrative expenses paid by the Company on behalf of certain of its affiliates.

Due to affiliates at September 30, 2024 and September 30, 2023 consists of certain expenses payable by the Company to certain of its affiliates.

Unfunded commitments

As of September 30, 2024 and 2023, we had commitments

under loan and financing agreements to fund up to $ 1.6 million to two portfolio companies and $ 3.4 million to four portfolio companies,

respectively.

These commitments are primarily composed of senior secured delayed draw term loans and revolvers, and the determination

of their fair value is included in the Consolidated Schedules 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, 2024 and 2023 is shown in the table below (dollars in thousands):

September 30, 2024

September 30, 2023

Secure Acquisition Inc.

(dba Paragon Film–)

- Senior Secured First Lien Delayed Draw Term Loan

NVTN L–C - Senior Secured First Lien

Delayed Draw Term Loan

Black Angus Steakhouses, LLC Senior Secured

First Lien Super Priority Delayed Draw Term Loan

1888 Industrial Services, L–C - Revolving

Credit Facility

Deer Management Systems L–C - Senior

Secured First Lien Delayed Draw Term Loan

Tamarix Capital Partners

(dba Paragon Films) - Senior Secured First Lien Delayed Draw Term Loan

NVTN LLC - Senior Secured First Lien Delayed Draw Term Loan

Deer Management Systems LLC - Senior Secured First Lien Delayed Draw Term Loan

XYZ Roofco, LLC (dba SMC Roofing Solutions LLC) - First Out Delayed Draw Term Loan

XYZ Roofco, LLC (dba SMC Roofing Solutions LLC) - Last Out Delayed Draw Term Loan

Tamarix Capital Partners II, L.P.

- Fund Investment

Total unfunded commitments

Company evaluates 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.

entering into the lease on September 1, 2021, PhenixFIN recorded a right-of-use asset and a lease liability as of that date.

operating lease cost incurred by PhenixFIN for the years ended September 30, 2023 and 2022 was $ 141,330 and $ 129,552 , respectively.

the year ended September 30, 2021, the Company made a security deposit of $ 72,000 and prepaid rent of $ 12,000 and no operating lease

costs were incurred.

As of September 30, 2023 and 2022, the asset related to the operating lease was $ 449,815 and $ 513,142 , respectively,

and is included in the Other assets balance on the Consolidated Balance Sheet.

As of September 30, 2023 and 2022, the lease liability

was $ 432,698 and $ 570,695 , respectively, and is included in the Other liabilities balance on the Consolidated Statements of Assets and

As of September 30, 2023 and 2022, the remaining lease term was approximately three and four years , respectively, for each

of the respective periods and the implied borrowing rate was 5.25 % for each of the respective periods.

following table shows future minimum payments under PhenixFIN’s operating lease as of September 30, 2023:

Years Ended September 30,

Difference between undiscounted

and discounted cash flows

income consists of 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, 2023, 2022 and 2021 (dollars in thousands):

the Years Ended September 30,

Lease obligations

The Company evaluates its leases to determine

whether they should be classified as operating or financing leases.

PhenixFIN identified one operating lease for its office space.

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 years ended September 30, 2024, 2023 and 2022 was $ 141,330 , $ 141,330 and $ 129,552 , respectively.

As of September 30, 2024 and

2023, the asset related to the operating lease was $ 322,131 and $ 449,815 , respectively, and is included in the Other assets balance on

the Consolidated Balance Sheet.

As of September 30, 2024 and 2023, the lease liability was $ 294,063 and $ 432,698 , respectively, and is

included in the Other liabilities balance on the Consolidated Statements of Assets and Liabilities.

As of September 30, 2024 and 2023,

the remaining lease term was approximately two and three years , respectively, for each of the respective periods and the implied borrowing

rate was 5.25 % for each of the respective periods.

Commitments (continued)

The following table shows future minimum payments

under PhenixFIN’s operating lease as of September 30, 2024:

For the Years Ended September 30,

Difference between undiscounted and discounted cash flows

Fee income consists of 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, 2024, 2023 and 2022 (dollars in thousands):

For the Years Ended September 30,

Prepayment fee

2 unchanged sentences

Directors Fees

each of calendar years 2021 and 2022, the Company’s independent directors each received an annual fee of $ 100,000 .

the lead independent director received an annual retainer of $ 30,000 ;

the chair of the Audit Committee received an annual retainer of

$ 25,000 , and each of its other members received an annual retainer of $ 12,500 ;

and the chairs of the Nominating and Corporate Governance

Committee and of the Compensation Committee each received an annual retainer of $ 15,000 and each of the other members of these committees

received annual retainers of $ 8,000 .

The Company’s independent directors also received a fee of $ 3,000 for each board meeting

and $ 2,500 for each committee meeting that they attended.

the 2023 calendar period through April 30, 2023, the independent directors were subject to the foregoing fee structure.

Effective May

1, 2023, the structure was modified (simplified) such that each of the Company’s independent directors receives an annual fee of

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 receives an annual retainer of $ 15,000 and each of the

other members of these committees receives annual retainers of $ 8,000 .

The Company’s independent directors no longer receive fees

for each board and committee meeting that they attend.

board service compensation is paid to directors who are “interested persons” of the Company (as such term is defined in the

For the years ended September 30, 2023, 2022 and 2021, the Company recognized $ 0.7 million, $ 0.7 million and $ 1.0 million,

for directors’ fees expense, respectively.

For the calendar year 2022, the Company’s

independent directors each received an annual fee of $ 100,000 .

In addition, the lead independent director received an annual retainer

of $ 30,000 ;

the chair of the Audit Committee received an annual retainer of $ 25,000 , and each of its other members received an annual

retainer of $ 12,500 ;

and the chairs of the Nominating and Corporate Governance Committee and of the Compensation Committee each received

an annual retainer of $ 15,000 and each of the other members of these committees received annual retainers of $ 8,000 .

The Company’s

independent directors also received a fee of $ 3,000 for each board meeting and $ 2,500 for each committee meeting that they attended.

For the 2023 calendar period through April 30,

2023, the independent directors were subject to the foregoing fee structure.

Effective May 1, 2023, the structure was modified (simplified)

such that each of the Company’s independent directors receives an annual fee of $ 150,000 .

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 receives an annual retainer of $ 15,000 and each of the other members of these committees receives annual retainers

The Company’s independent directors no longer receive fees for each board and committee meeting that they attend.

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, 2024,

2023 and 2022, the Company recognized $ 0.8 million, $ 0.7 million and $ 0.7 million, for directors’ fees expense, respectively.

Earnings Per Share

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, 2023, 2022 and 2021.

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, 2023, 2022 and 2021 (dollars in thousands, except share and per share amounts):

the Years Ended September 30,

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, 2024, 2023 and 2022.

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, 2024, 2023 and 2022 (amounts in thousands, except shares and per share amounts):

For the Years Ended September 30,

Basic and diluted:

Net increase (decrease) in net

assets resulting from operations

Weighted average shares of common stock

outstanding - basic and diluted

Net increase (decrease) in net assets resulting from operations

Weighted average shares of common stock outstanding - basic and diluted

Earnings (loss) per share of common stock - basic and diluted

Financial Highlights

The following

is a schedule of financial highlights for the years ended September 30, 2023, 2022, 2021, 2020 and 2019:

the Years Ended September 30,

The following is a schedule of financial highlights for the years ended

September 30, 2024, 2023, 2022, 2021 and 2020:

For the Years Ended September 30,

Per share data

Asset Value per share at Beginning of Period

Net Asset Value per share at Beginning of Period

Results of Operations:

Investment Income/(Loss)(1)

Realized Gain/(Loss) on Investments

Unrealized Gain/(Loss) on Investments

loss on extinguishment of debt

Increase (Decrease) in Net Assets Resulting from Operations

Net Investment Income/(Loss) (1)

Net Realized Gain/(Loss) on Investments

Net Unrealized Gain/(Loss) on Investments

Net loss on extinguishment of debt

Deferred tax benefit (expense)

Net Increase (Decrease) in Net Assets Resulting from Operations

Capital Share Transactions

Distributions

of common stock under stock repurchase program

Increase (Decrease) Resulting from Capital Share Transactions

Asset Value per share at End of Period

Assets at End of Period

$ 146,705,535

$ 120,845,408

$ 143,693,981

$ 150,619,517

$ 216,432,530

Shares Outstanding

at End of Period

Per share market

value at end of period

return based on market value(2)

return based on net asset value (3)

turnover rate

Financial Highlights (continued)

of net investment/(loss) income to average net assets after waivers, discounts and reimbursements

of total expenses to average net assets

of non-recurring fee income

Average debt outstanding(4)

$ 189,038,998

$ 347,991,878

Distributions declared

Repurchase of common stock under stock repurchase program (2)

Net Increase (Decrease) Resulting from Capital Share Transactions

Net Asset Value per share at End of Period

Net Assets at End of Period

Shares Outstanding at End of Period

Per share market value at end of period

Total return based on market value (3)

Total return based on net asset value (4)

Portfolio turnover rate

Ratio of net investment/(loss) income to average net assets after waivers, discounts and reimbursements (5)

Ratio of total expenses to average net assets

Supplemental Data:

Percentage of non-recurring fee income (5)

Average debt outstanding (6)

per weighted average common share

coverage ratio per unit(5)

Average debt outstanding per weighted average common share

Asset coverage ratio per unit (7)

Senior Securities Outstanding (8)

2021 Notes (9)

2028 Promissory Note

Credit Facility

Israeli Notes(7)

(1) Net investment income/(loss) excluding management and incentive fee waivers, discounts and reimbursements based on total weighted average common stock outstanding equals $ 3.11 , $ 1.48 , $ 6.92 , $( 3.35 ), and $( 7.66 ) per share for the years ended September 30, 2023, 2022, 2021, 2020, and 2019, respectively.

(1) Net investment income/(loss) excluding

management and incentive fee waivers, discounts and reimbursements based on total weighted average common stock outstanding equals $ 2.32 ,

$ 3.11 , $ 1.48 , $ 6.92 and $( 3.35 ) per share for the years ended September 30, 2024, 2023, 2022, 2021, and 2020, respectively.

(2) The amount shown at this caption is the balancing amount derived from the other figures in the schedule.

The amount shown at this caption for a share outstanding throughout the period may not agree with the repurchase of common stock because of the timing of repurchase of the Company’s shares.

Financial Highlights (Continued)

(3) 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) Total return is historical and assumes changes in NAV, reinvestments of all dividends at prices obtained under the Company’s dividend reinvestment plan, and no sales charges for the period.

(5) Represents the impact of the non-recurring fees as a percentage of total investment income.

(6) Based on daily weighted average carrying value of debt outstanding during the period.

1 unchanged sentence

Asset coverage per unit is expressed in terms of dollar amounts per $ 1,000 of indebtedness.

of September 30, 2023, the Company’s asset coverage was 270.7 % after giving effect to leverage and therefore the Company’s

asset coverage was above 200 %, the minimum asset coverage requirement under the 1940 Act.

(6) 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.

(7) During the year ended September 30, 2020, the Israeli Notes were redeemed in full and ceased trading on the TASE on April 14, 2020.

dividends and distributions to common stockholders are recorded on the ex-dividend date.

Any amounts to be paid out as a dividend are

determined by our board of directors.

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.

Company did not declare any regular distribution payments during the years ended September 30, 2023, 2022 and 2021.

During the year ended

September 30, 2022, a special dividend was declared in the amount of $ 265,798 on June 24, 2022 payable on July 13, 2022 to Stockholders

of record on July 5, 2022.

As of September 30, 2024, the Company’s asset coverage was 216.8 % after giving effect to leverage and therefore the Company’s asset coverage was above 200 %, the minimum asset coverage requirement under the 1940 Act.

(8) Total amount of each class of senior securities outstanding at the end of the period excluding debt issuance costs.

(9) 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.

Any dividends and distributions to common stockholders

are recorded on the ex-dividend date.

Any amounts to be paid out as a dividend are 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.

On May 9, 2024, the Board of Directors declared

a special dividend of $ 1.31 per share.

This dividend was paid on June 10, 2024 to stockholders of record as of May 27, 2024.

dividends declared during the year ended September 30, 2024 were derived from net investment income, determined on a tax basis.

the year ended September 30, 2022, a special dividend was declared in the amount of $ 265,798 on June 24, 2022 payable on July 13, 2022

to Stockholders of record on July 5, 2022.

The Company did not declare any regular distribution payments during the years ended September

30, 2024, 2023 and 2022.

Share Transactions

January 11, 2021, the Company announced that its board of directors approved a share repurchase program.

February 8, 2023, the Board of Directors approved the expansion of the amount authorized for repurchase under the Company’s share

repurchase program from $ 25 million to $ 35 million.

Since announcing this share repurchase program on January 11, 2021, the Company has

repurchased an aggregate of 649,996 shares of common stock through September 30, 2023 with a total cost of approximately $ 25.7 million,

or 23.9 % of shares outstanding as of the program’s inception.

The total remaining amount authorized under the expanded share repurchase

program is approximately $ 9.3 million.

following table sets forth the number of shares of common stock repurchased by the Company at an average price of $ 39.60 per share under

its share repurchase program from February 10, 2021 through September 30, 2023:

Price Per Share

Consideration for Repurchased Shares

On February 8, 2023, the Board of Directors approved

the expansion of the amount authorized for repurchase under the Company’s share repurchase program from $ 25 million to $ 35 million.

Since announcing this share repurchase program on January 11, 2021, the Company has repurchased an aggregate of 703,931 shares

of common stock through September 30, 2024 with a total cost of approximately $ 28.1 million, or 25.8 % of shares outstanding

as of the program’s inception.

The total remaining amount authorized under the expanded share repurchase program is approximately

$ 6.9 million.

The following table sets forth the number of

shares of common stock repurchased by the Company at an average price of $ 39.93 per share under its share repurchase program from February

10, 2021 through September 30, 2024:

Shares Repurchased

Repurchase Price

Aggregate Consideration for Repurchased Shares

February 2021

30 unchanged sentences

$ 38.11 - $38.11

November 2023

$ 37.03 - $ 37.78

December 2023

$ 37.53 - $ 41.03

$ 45.03 - $45.03

$ 43.76 - $43.76

$ 44.82 - $44.82

During the year ended September 30, 2024, 54,060

shares were transferred into treasury, including 300 shares that were repurchased during the year ended September 30, 2022 and

transferred into treasury during the year ended September 30, 2023.

shares were transferred into treasury, including 125 shares that were repurchased during the year ended September 30, 2023 and transferred

into treasury during the year ended September 30, 2024.

Subsequent Events

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, 2023.

In December 2023, the Company established a subsidiary to serve as a regulated insurance company.

This subsidiary

also entered into a merger agreement pursuant to which it agreed to acquire a controlling interest in VR Insurance SPV, LLC, a company

primarily engaged in the insurance business through its subsidiaries (“VR”), and to provide additional capital to such company.

Our subsidiary’s controlling interest in VR is being acquired pursuant to a plan of reorganization duly adopted by VR which calls

for the merger and recapitalization of VR.

The Company’s total investment in the insurance subsidiary and VR is expected to approximate

$ 49 million.

The merger transaction is presently expected to close in the first half of 2024 and is subject to various closing conditions,

including insurance regulatory approvals.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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, 2024.

On October 1, 2024, the Company consummated the acquisition of approximately

80 % of the equity of The National Security Group, an Alabama based insurance holding company (“NSG”).

NSG is a nationwide

underwriter of life, accident, and health insurance.

In addition, NSG is a specialty underwriter of property and casualty insurance throughout

the southeast, other than Florida and Louisiana.

The Company has entered into a contract with NSG to manage a portion of its investment

Changes in and Disagreements with Accountants

on Accounting and Financial Disclosure

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

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk