PhenixFIN Corp 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are subject to financial market risks, including changes in interest rates. Changes in interest rates may affect both our cost of funding and our interest income from portfolio investments and cash and cash equivalents. Our investment income will be affected by changes in various interest rates, including SOFR, to the extent our debt investments include floating interest rates. In the future, we expect other loans in our portfolio will have floating interest rates. In 2023, the Federal Reserve raised short-term interest rates and has indicated additional interest rate increases may come. In addition, U.S. and global capital markets and credit markets have experienced a higher level of stress due to the higher interest rate environment, pandemics, and other market events, which has resulted in an increase in the level of volatility across such markets. We may hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts subject to the requirements of the 1940 Act. For the year ended September 30, 2024, we did not engage in hedging activities. As 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 rates. In contrast, a rise in the general level of interest rates can be expected to lead to higher interest rates applicable to any variable rate investments we hold and to declines in the value of any fixed rate investments we hold. In addition, a rise in interest rates may increase the likelihood that a portfolio company defaults on a loan. However, many of our variable rate investments provide for an interest rate floor, which may prevent our interest income from increasing until benchmark interest rates increase beyond a threshold amount. The composition of our floating rate debt investments by cash interest rate floor as of September 30, 2024 was as follows (dollars in thousands): September 30, 2024 SOFR and LIBOR Floor Fair Value % of Floating Rate Portfolio Under 1% $ 30,576 27.3 % 1% to under 2% 45,566 40.7 2% to under 3% 2,642 2.4 3% to under 4% - - 4% to under 5% 7,111 6.4 No Floor 25,917 23.2 Total $ 111,812 100.0 % Based on our Consolidated Statements of Assets and Liabilities as of September 30, 2024, the following table (dollars in thousands) shows the approximate increase/(decrease) in components of net assets resulting from operations of hypothetical reference rate changes in interest rates, assuming no changes in our investment and capital structure. Change in Interest Rates Interest Income (1) Interest Expense Net Increase/ (Decrease) Up 300 basis points $ 4,400 $ (2,300 ) $ 2,100 Up 200 basis points 2,900 (1,600 ) 1,300 Up 100 basis points 1,500 (800 ) 700 Down 100 basis points (1,500 ) 800 (700 ) Down 200 basis points (2,900 ) 1,600 (1,300 ) Down 300 basis points (4,400 ) 2,300 (2,100 ) (1) Assumes no defaults or prepayments by portfolio companies over the next twelve months. 70 Item 8. Consolidated Financial Statements and Supplementary Data INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Reports of Independent Registered Public Accounting Firms F-2 Consolidated Statements of Assets and Liabilities as of September 30, 2024 and 2023 F-5 Consolidated Statements of Operations for the years ended September 30, 2024, 2023 and 2022 F-6 Consolidated Statements of Changes in Net Assets for the years ended September 30, 2024, 2023 and 2022 F-7 Consolidated Statements of Cash Flows for the years ended September 30, 2024, 2023 and 2022 F-8 Consolidated Schedules of Investments as of September 30, 2024 and 2023 F-9 Notes to Consolidated Financial Statements F-18 F- 1 Reports of Independent Registered Public Accounting Firms To the Shareholders and Board of Directors PhenixFIN Corporation: Opinion on the Consolidated Financial Statements 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. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. 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 to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. 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 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 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. 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 inputs. As of September 30, 2024, the fair value of level 3 investments was $140.3 million. F- 2 We identified the assessment of the fair value of level 3 investments for which unobservable inputs were used as a critical audit matter. The key assumptions used to estimate the fair value of these investments related to the market yield associated with the portfolio company used in an income approach and the selection of financial performance multiples of comparative companies used in a market approach. Evaluating these assumptions involved a high degree of subjective auditor judgment and involvement of professionals with specialized skills and knowledge. Changes in these assumptions could have a significant impact on the estimated fair value of investments. 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 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 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, 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. /s/ KPMG LLP We have served as the Company’s auditor since 2023. New York, New York December 16, 2024 F- 3 To the Shareholders and the Board of Directors of PhenixFIN Corporation Opinion on the Financial Statements 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. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of the Company’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of investments owned as of September 30, 2022, by correspondence with the custodians, directly with designees of the portfolio companies and debt agents, as applicable, when replies were not received from designees of the portfolio companies and debt agents, we performed other auditing procedures. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Ernst & Young LLP We have served as the Company’s auditor from 2010 to 2022. New York, New York December 16, 2022 F- 4 PHENIXFIN CORPORATION Consolidated Statements of Assets and Liabilities September 30, 2024 September 30, 2023 Assets: Investments at fair value 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 $ 20,564,242 and $ 48,233,910 , respectively) 14,750,785 37,289,617 Controlled investments (amortized cost of $ 97,016,429 and $ 82,437,692 , respectively) 70,931,647 63,640,043 Total Investments at fair value 227,915,858 226,460,691 Cash and cash equivalents 67,571,559 5,988,223 Receivables: Other receivable 65,838 31,425 Interest receivable 1,313,598 971,115 Dividends receivable 23,468 161,479 Receivable for investments sold 2,955,775 3,940,175 Other assets 1,066,323 833,000 Deferred tax asset 887,099 - Deferred financing costs 760,680 699,124 Prepaid share repurchase 101,115 199,019 Due from Affiliate 90,500 409,214 Total Assets $ 302,751,813 $ 239,693,465 Liabilities: Credit facility and notes payable (net of debt issuance costs of $ 1,510,815 and $ 1,688,835 , respectively) $ 135,723,636 $ 84,253,106 Accounts payable and accrued expenses 5,570,150 3,066,984 Interest and fees payable 768,043 690,398 Other liabilities 294,063 432,698 Due to Affiliate 88,148 - Payable for investments purchased - 4,123,059 Deferred revenue - 421,685 Total Liabilities 142,444,040 92,987,930 Commitments and Contingencies (see Note 8) Net Assets: Common Shares, $ 0.001 par value; 5,000,000 shares authorized; 2,723,709 shares issued; 2,019,778 and 2,073,713 common shares outstanding, respectively 2,020 2,074 Capital in excess of par value 704,909,588 694,812,239 Total distributable earnings (loss) ( 544,603,835 ) ( 548,108,778 ) Total Net Assets 160,307,773 146,705,535 Total Liabilities and Net Assets $ 302,751,813 $ 239,693,465 Net Asset Value Per Common Share $ 79.37 $ 70.75 The accompanying notes are an integral part of these consolidated financial statements. F- 5 PHENIXFIN CORPORATION Consolidated Statements of Operations For the Years Ended September 30, 2024 2023 2022 Interest Income: Interest from investments Non-controlled, non-affiliated investments: Cash $ 10,231,111 $ 8,031,539 $ 5,207,850 Payment in-kind 938,879 506,555 444,741 Affiliated investments: Cash 742,881 1,925,293 639,733 Payment in-kind - 460,856 374,981 Controlled investments: Cash 2,121,713 667,312 2,489,381 Payment in-kind 268,831 557,981 - Total interest income 14,303,415 12,149,536 9,156,686 Dividend income Non-controlled, non-affiliated investments 2,691,393 3,139,592 1,996,374 Affiliated investments 199,388 - - Controlled investments 3,972,352 3,716,676 3,507,051 Total dividend income 6,863,133 6,856,268 5,503,425 Interest from cash and cash equivalents 500,079 400,031 139,942 Fee income (see Note 9) 514,949 324,290 420,279 Other income 22 402,138 323,828 Total Investment Income 22,181,598 20,132,263 15,544,160 Expenses: Interest and financing expenses 6,609,473 5,531,833 5,113,105 Salaries and benefits 6,850,792 4,186,852 2,952,106 Professional fees, net 1,462,766 1,404,676 1,340,828 General and administrative expenses 1,093,922 983,274 1,103,125 Directors fees 750,000 728,833 712,000 Insurance expenses 378,854 466,319 590,178 Administrator expenses (see Note 6) 301,931 320,310 301,281 Total expenses 17,447,738 13,622,097 12,112,623 Net Investment Income 4,733,860 6,510,166 3,431,537 Realized and unrealized gains (losses) on investments Net realized gains (losses): Non-controlled, non-affiliated investments 740,924 ( 10,538,228 ) 810,240 Affiliated investments ( 1,991,456 ) ( 1,018,267 ) 4,408,961 Controlled investments 8,542,831 23,456 1,850 Total net realized gains (losses) 7,292,299 ( 11,533,039 ) 5,221,051 Net change in unrealized gains (losses): Non-controlled, non-affiliated investments 7,862,162 15,954,552 ( 16,701,153 ) Affiliated investments 5,130,836 7,327,399 96,490 Controlled investments ( 7,287,134 ) 8,659,262 2,141,326 Total net change in unrealized gains (losses) 5,705,864 31,941,213 ( 14,463,337 ) Loss on extinguishment of debt (see Note 5) - - ( 296,197 ) Deferred tax benefit (expense) 887,099 - - Total realized and unrealized gains (losses) 13,885,262 20,408,174 ( 9,538,483 ) Net Increase (Decrease) in Net Assets Resulting from Operations $ 18,619,122 $ 26,918,340 $ ( 6,106,946 ) Weighted average basic and diluted earnings per common share $ 9.13 $ 12.87 $ ( 2.63 ) Weighted average common shares outstanding - basic and diluted (see Note 11) 2,040,253 2,092,326 2,323,601 The accompanying notes are an integral part of these consolidated financial statements. F- 6 PHENIXFIN CORPORATION Consolidated Statements of Changes in Net Assets Common Stock Shares Par Amount Capital in Excess of Par Value Total Distributable Earnings/(Loss) Total Net Assets Balance at September 30, 2021 2,517,221 $ 2,517 $ 688,866,642 $ ( 545,175,178 ) $ 143,693,981 OPERATIONS Net investment income (loss) - - - 3,431,537 3,431,537 Net realized gains (losses) on investments - - - 5,221,051 5,221,051 Net change in unrealized appreciation (depreciation) on investments - - - ( 14,463,337 ) ( 14,463,337 ) Net loss on extinguishment of debt - - - ( 296,197 ) ( 296,197 ) CAPITAL SHARE TRANSACTIONS Distributions declared - - ( 265,798 ) - ( 265,798 ) Repurchase of common shares ( 415,092 ) ( 415 ) ( 16,475,414 ) - ( 16,475,829 ) Tax reclassification of shareholders’ equity in accordance with generally accepted accounting principles - - 3,276,372 ( 3,276,372 ) - Total Increase (Decrease) in Net Assets ( 415,092 ) ( 415 ) ( 13,464,840 ) ( 9,383,318 ) ( 22,848,573 ) Balance at September 30, 2022 2,102,129 2,102 675,401,802 ( 554,558,496 ) 120,845,408 OPERATIONS Net investment income (loss) - - - 6,510,166 6,510,166 Net realized gains (losses) on investments - - - ( 11,533,039 ) ( 11,533,039 ) Net change in unrealized appreciation (depreciation) on investments - - - 31,941,213 31,941,213 CAPITAL SHARE TRANSACTIONS Repurchase of common shares ( 28,416 ) ( 28 ) ( 1,058,185 ) - ( 1,058,213 ) Tax reclassification of shareholders’ equity in accordance with generally accepted accounting principles - - 20,468,622 ( 20,468,622 ) - Total Increase (Decrease) in Net Assets ( 28,416 ) ( 28 ) 19,410,437 6,449,718 25,860,127 Balance at September 30, 2023 2,073,713 2,074 694,812,239 ( 548,108,778 ) 146,705,535 OPERATIONS Net investment income (loss) - - - 4,733,860 4,733,860 Net realized gains (losses) on investments - - - 7,292,299 7,292,299 Net change in unrealized appreciation (depreciation) on investments - - - 5,705,864 5,705,864 Deferred tax benefit (expense) - - - 887,099 887,099 CAPITAL SHARE TRANSACTIONS Distributions declared - - - ( 2,645,925 ) ( 2,645,925 ) Repurchase of common shares ( 53,935 ) ( 54 ) ( 2,370,905 ) - ( 2,370,959 ) Tax reclassification of shareholders’ equity in accordance with generally accepted accounting principles - - 12,468,254 ( 12,468,254 ) - Total Increase (Decrease) in Net Assets ( 53,935 ) ( 54 ) 10,097,349 3,504,943 13,602,238 Balance at September 30, 2024 2,019,778 $ 2,020 $ 704,909,588 $ ( 544,603,835 ) $ 160,307,773 The accompanying notes are an integral part of these consolidated financial statements. F- 7 PHENIXFIN CORPORATION Consolidated Statements of Cash Flows For the Years Ended September 30, 2024 2023 2022 Cash Flows from Operating Activities: Net increase (decrease) in net assets resulting from operations $ 18,619,122 $ 26,918,340 $ ( 6,106,946 ) 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 112,313,260 66,642,920 123,801,226 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 ) ( 819,722 ) Net amortization of premium (discount) on investments ( 388,667 ) ( 1,560,684 ) ( 219,513 ) Amortization of debt issuance cost 347,908 370,329 368,471 Amortization of deferred financing cost 565,619 286,597 - Net realized (gains) losses from investments ( 7,292,299 ) 11,533,039 ( 5,221,051 ) Net unrealized (gains) losses on investments ( 5,705,864 ) ( 31,941,213 ) 14,463,337 Loss on extinguishment of debt - - 296,197 (Increase) decrease in operating assets: Fees receivable - - 1,872,700 Interest receivable ( 342,483 ) ( 243,539 ) ( 356,000 ) Due from affiliate 318,714 ( 137,252 ) ( 271,962 ) Receivable for investments sold 984,400 ( 3,940,175 ) - Dividends receivable 138,011 107,851 ( 188,119 ) Paydown receivable - 112,500 179,515 Other receivable ( 34,413 ) 5,567 ( 36,992 ) Prepaid share repurchase 97,904 290,137 - Deferred tax benefit (expense) ( 887,099 ) - - Other assets ( 233,323 ) 359,677 159,069 Increase (decrease) in operating liabilities: Payable for investments purchased ( 4,123,059 ) ( 12,426,941 ) 14,964,000 Accounts payable and accrued expenses 2,503,166 1,026,707 623,753 Due to Affiliate 88,148 - ( 280,323 ) Administrator expenses payable - ( 74,911 ) 6,991 Interest and fees payable 77,645 187,273 503,125 Deferred revenue ( 421,685 ) 96,083 325,602 Other liabilities ( 138,635 ) ( 140,251 ) ( 40,586 ) Net cash provided by (used in) operating activities 16,104,773 ( 20,706,050 ) ( 29,298,371 ) Cash Flows from Financing Activities: Debt issuance 76,471,498 36,441,941 57,500,000 Paydowns on debt ( 25,178,988 ) ( 30,521,800 ) ( 55,325,000 ) Debt issuance costs paid ( 169,888 ) - ( 2,311,036 ) Deferred financing costs ( 627,175 ) ( 935,721 ) - Distributions paid to shareholders ( 2,645,925 ) - ( 265,798 ) Repurchase of common shares ( 2,370,959 ) ( 1,058,213 ) ( 16,964,985 ) Net cash provided by (used in) financing activities 45,478,563 3,926,207 ( 17,366,819 ) Net increase (decrease) in cash and cash equivalents 61,583,336 ( 16,779,843 ) ( 46,665,190 ) Cash and cash equivalents, beginning of period 5,988,223 22,768,066 69,433,256 Cash and cash equivalents, end of period $ 67,571,559 $ 5,988,223 $ 22,768,066 Supplemental information: Interest paid during the period $ 5,532,959 $ 4,647,166 $ 4,241,510 Non-cash purchase of investments $ 45,900,000 $ - $ - Non-cash sale of investments $ 45,900,000 $ - $ - The accompanying notes are an integral part of these consolidated financial statements. F- 8 PHENIXFIN CORPORATION Consolidated Schedule of Investments As of September 30, 2024 Company (1) Industry Type of Investment Maturity Par Amount/ Shares/Units (2) Amortized Cost (3) Fair Value (4) % of Net Assets (5) 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. Services: 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 % 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. F- 9 PHENIXFIN CORPORATION Consolidated Schedule of Investments (continued) As of September 30, 2024 Company (1) Industry Type of Investment Maturity Par Amount/ Shares/Units (2) Amortized Cost (3) Fair Value (4) % of Net Assets (5) 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. 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) 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 % 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. Services: 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) 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 % 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. F- 10 PHENIXFIN CORPORATION Consolidated Schedule of Investments (continued) As of September 30, 2024 Company (1) Industry Type of Investment Maturity Par Amount/ Shares/Units (2) Amortized Cost (3) Fair Value (4) % of Net Assets (5) Affiliated Investments: (6) 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 % Senior Secured First Lien Super Priority Delayed Draw Term Loan (SOFR + CSA + 9.00 % PIK, 1.00 % Floor)(10)(20)(23) 1/31/2025 2,223,303 1,920,960 1,647,776 1.03 % Equity - 17.92 % Membership Interest(21) - - - 0.00 % 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: (7) 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 % The accompanying notes are an integral part of these consolidated financial statements. F- 11 PHENIXFIN CORPORATION Consolidated Schedule of Investments (continued) As 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. Dollars (“$”) unless otherwise noted. (3) Net unrealized depreciation for U.S. 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 $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. (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, 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 loan. The negative fair value, if applicable, is the result of the capitalized discount on the loan. (9) Not in use. (10) The investment was on non-accrual status as of September 30, 2024. (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, 2024, non-qualifying assets represented 13.1% of total assets. (12) This 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. (13) This investment represents a Level 1 security in the ASC 820 table as of September 30, 2024 (see Note 4). (14) This investment represents a Level 2 security in the ASC 820 table as of September 30, 2024 (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 investment is held through PhenixFIN Investment Holdings FST, LLC. (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 SOFR plus a 5.345% spread on 3/31/2025. (20) Credit Spread Adjustment (“CSA”) (21) Non-income producing security. (22) Not in use. (23) The interest rate on these loans is subject to 1 month SOFR, which as of September 30, 2024 was 4.85% (24) The interest rate on these loans is subject to 3 month SOFR, which as of September 30, 2024 was 4.59%. (25) The interest rate on these loans is subject to 6 month SOFR, which as of September 30, 2024 was 4.25%. (26) The 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. F- 12 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 Assets (5) 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. Services: 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. (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 (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. F- 13 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 Assets (5) 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) 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. Services: 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 % 11,947 664,131 - 0.00 % Wingman Holdings, Inc. 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. F- 14 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 Assets (5) Affiliated Investments: (6) 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 % 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 % 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. F- 15 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 Assets (5) Controlled Investments: (7) 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 % 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. F- 16 PHENIXFIN CORPORATION Consolidated Schedule of Investments (continued) As of September 30, 2023 (1) 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. Dollars (“$”) unless otherwise noted. (3) Net unrealized depreciation for U.S. federal income tax purposes totaled $(38,550,032). The tax cost basis of investments is $265,010,723 as of September 30, 2023. (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 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, 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%. (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. F- 17 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements September 30, 2024 Note 1. Organization PhenixFIN Corporation (“PhenixFIN.” the “Company,” “we” and “us”) is an internally-managed non-diversified closed-end management investment company incorporated in Delaware that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). We completed our initial public offering (“IPO”) and commenced operations on January 20, 2011. The Company has elected, and intends to qualify annually, to be treated, for U.S. federal income tax purposes, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). 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 purposes. These Taxable Subsidiaries allow us to, among other things, hold equity securities of portfolio companies organized as pass-through entities while continuing to satisfy the requirements of a RIC under the Code. The Company’s investment objective is to generate current income and capital appreciation. The management team seeks to achieve this objective primarily through making loans, private equity or other investments in privately-held companies. The Company may also make debt, equity or other investments in publicly-traded companies. (These investments may also include investments in other BDCs, closed-end funds or REITs.) We may also pursue other strategic opportunities and invest in other assets or operate other businesses to achieve our investment objective, such as operating and managing an asset-based lending business. The portfolio generally consists of senior secured first lien term loans, senior secured second lien term loans, senior secured bonds, preferred equity and common equity. Occasionally, we will receive warrants or other equity participation features which we believe will have the potential to increase total investment returns. Our loan and other debt investments are primarily rated below investment grade or are unrated. Investments in below investment grade securities are considered predominantly speculative with respect to the issuer’s capacity to pay interest and repay principal when due. Since January 4, 2021, the common stock trades on the NASDAQ Global Market under the trading symbol “PFX.” Note 2. Significant Accounting Policies Basis of Presentation The Company is an investment company following the accounting and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 946 (“ASC 946”), Financial Services – Investment Companies. The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with U.S. generally accepted accounting principles (“GAAP”) and include the consolidated accounts of the Company and its wholly owned subsidiaries PhenixFIN Small Business Fund, LP, PhenixFIN 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. These reclassifications have no effect on the Company’s financial positions or its results of operations as previously recorded. F- 18 Note 2. Significant Accounting Policies (continued) Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 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 Costs 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 Liabilities. Deferred financing costs related to any credit facilities are presented on the Consolidated Statements of Assets and Liabilities. Indemnification In the normal course of business, the Company enters into contractual agreements that provide general indemnifications against losses, costs, claims and liabilities arising from the performance of individual obligations under such agreements. The Company has had no material claims or payments pursuant to such agreements. The Company’s individual maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. However, based on management’s experience, the Company expects the risk of loss to be remote. Revenue Recognition Interest income, adjusted for amortization of 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 due. 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. F- 19 Note 2. Significant Accounting Policies (continued) 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. Other income includes fees for providing managerial assistance to our portfolio companies and is recognized as revenue when earned. For 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. 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 recognized. Realized 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 portfolio companies that we “control” as “Control Investments.” Under the 1940 Act, we would be deemed to be an “Affiliated Person” of a portfolio company if we own between 5 % and 25 % of the portfolio company’s outstanding voting securities or we are under common control with such portfolio company. We refer to such investments in Affiliated Persons as “Affiliated Investments.” Valuation of Investments The Company applies fair value accounting to all of its financial instruments in accordance with the 1940 Act and ASC Topic 820 - Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework used to measure fair value and requires disclosures for fair value measurements. In accordance with ASC 820, the Company has categorized its financial instruments carried at fair value, based on the priority of the valuation technique, into a three-level fair value hierarchy as discussed in Note 4. Fair value is a market-based measure considered from the perspective of 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. F- 20 Note 2. Significant Accounting Policies (continued) 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 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. 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 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. F- 21 Note 2. Significant Accounting Policies (continued) The methodologies and information that the Company utilizes when applying the Market Approach for performing investments include, among other things: ● valuations of comparable public companies (“Guideline Comparable Approach”); ● recent sales of private and public comparable companies (“Guideline Comparable Approach”); ● recent acquisition prices of the company, debt securities or equity securities (“Recent Arms-Length Transaction”); ● external valuations of the portfolio company, offers from third parties to buy the company (“Estimated Sales Proceeds Approach”); ● subsequent sales made by the Company of its investments (“Expected Sales Proceeds Approach”); and ● estimating the value to potential buyers. The methodologies and information that the Company utilizes when applying the Income Approach for performing investments include: ● discounting the forecasted cash flows of the portfolio company or securities (Discounted Cash Flow (“DCF”) Approach); and ● Black-Scholes model or simulation models or a combination thereof (Income Approach - Option Model) with respect to the valuation of warrants. For non-performing investments, we may estimate the liquidation or collateral value of the portfolio company’s assets and liabilities using an expected recovery model (Market Approach - Expected Recovery Analysis or Estimated Liquidation Proceeds). We undertake a multi-step valuation process each quarter when valuing investments for which market quotations are not readily available, as described below: ● our quarterly valuation process generally begins with each portfolio investment being 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. F- 22 Note 2. 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 nature. 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. 2023-09, “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 such ICTI. F- 23 Note 2. Significant Accounting Policies (continued) The Company is subject to a nondeductible U.S. federal excise tax of 4 % on undistributed income if it does not distribute at least 98 % of its ordinary income in any calendar year and 98.2 % of its capital gain net income for each one-year period ending on October 31 of such calendar year and any income realized, but not distributed, in preceding years and on which it did not pay federal income tax. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year dividend distributions for excise tax purposes, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned. There was no provision for federal excise tax for the calendar year ended 2023 accrued at September 30, 2024, for the calendar year ended 2022 accrued at September 30, 2023 and the calendar year ended 2021 accrued at September 30, 2022. 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 had a deferred tax asset of $ 20.9 million and $ 23.1 million, respectively, consisting primarily of net operating losses and net unrealized losses on the investments held within its Taxable Subsidiaries. As of September 30, 2024 and 2023, the Company has booked a valuation 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 purposes. Interest income on non-accrual investments is not recognized for financial reporting purposes, but generally is recognized in ICTI. Because any original issue discount or other amounts accrued will be included in the Company’s ICTI for the year of accrual, the Company may be required to make a distribution to its stockholders in order to satisfy the minimum distribution requirements, even though the Company will not have received and may not ever receive any corresponding cash amount. ICTI also excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized. 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 as follows: For the Years Ended September 30 2024 2023 2022 Capital in excess of par value $ 12,468,254 $ 20,468,622 $ 3,276,372 Accumulated undistributed net investment income/(loss) ( 12,468,254 ) ( 20,468,622 ) ( 3,276,372 ) Total distributable earnings (loss) - - - F- 24 Note 2. Significant Accounting Policies (continued) 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 2024 2023 2022 Ordinary income $ 2,645,925 $ - $ 265,798 Distributions of long term capital gains - - - Return of capital - - - Distributions on a tax basis $ 2,645,925 $ - $ 265,798 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. 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 2024 2023 2022 Undistributed ordinary income $ 1,918,290 $ 2,389,267 $ - Accumulated capital and other losses (1) ( 515,131,566 ) ( 512,809,528 ) ( 485,107,934 ) Other temporary differences ( 41,229 ) ( 57,438 ) ( 73,646 ) Unrealized appreciation/(depreciation) ( 31,349,330 ) ( 37,631,079 ) ( 69,376,916 ) Components of distributable earnings/(accumulated deficits) at year end $ ( 544,603,835 ) ( 548,108,778 ) $ ( 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, 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. Segments The Company invests in various industries. The Company separately evaluates the performance of each of its investment relationships. However, because each of these investment relationships has similar business and economic characteristics, they have been aggregated into a single investment segment. All applicable segment disclosures are included in or can be derived from the Company’s financial statements. See Note 3 for further information. F- 25 Note 2. Significant Accounting Policies (continued) Company Investment Risk, Concentration of Credit Risk, and Liquidity Risk The Company has broad discretion in making investments. Investments generally consist of debt instruments that may be affected by business, financial market or legal uncertainties. Prices of investments may be volatile, and a variety of factors that are inherently difficult to predict, such as domestic or international economic and political developments, may significantly affect the results of the Company’s activities and the value of its investments. In addition, the value of the Company’s portfolio may fluctuate as the general level of interest rates fluctuate. The value of the Company’s investments in loans may be detrimentally affected to the extent, among other things, that a borrower defaults on its obligations, there is insufficient collateral and/or there are extensive legal and other costs incurred in collecting on a defaulted loan, observable secondary or primary market yields for similar instruments issued by comparable companies increase materially or risk premiums required in the market between smaller companies, such as our borrowers, and those for which market yields are observable increase materially. The Company’s assets may, at any time, include securities and other financial instruments or obligations that are illiquid or thinly traded, making purchase or sale of such securities and financial instruments at desired prices or in desired quantities difficult. Furthermore, the sale of any such investments may be possible only at substantial discounts, and it may be extremely difficult to value any such investments accurately. Note 3. Investments 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 Percentage Fair Value Percentage Senior Secured First Lien Term Loans $ 129,957 49.8 % $ 113,990 50.0 % Senior Secured Notes 18,127 7.0 18,476 8.1 Fund Investment 1,746 0.7 1,525 0.7 Equity/Warrants 110,930 42.5 93,925 41.2 Total Investments $ 260,760 100.0 % $ 227,916 100.0 % 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 Percentage Fair Value Percentage Senior Secured First Lien Term Loans $ 139,103 52.5 % $ 103,004 45.6 % Senior Secured Notes 9,512 3.6 8,922 3.9 Fund Investment 1,027 0.4 792 0.3 Equity/Warrants 115,369 43.5 113,743 50.2 Total Investments $ 265,011 100.0 % $ 226,461 100.0 % In connection with certain of the Company’s investments, the Company receives warrants that are obtained for the objective of increasing the total investment returns and are not held for hedging purposes. At September 30, 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. F- 26 Note 3. Investments (continued) The following table shows the portfolio composition by industry grouping at fair value at September 30, 2024 (dollars in thousands): Fair Value Percentage Real Estate $ 50,162 22.0 % Services: Business 46,706 20.5 Services: Consumer 28,121 12.3 Hotel, Gaming & Leisure 24,253 10.6 Construction & Building 17,095 7.5 High Tech Industries 12,352 5.5 Automotive 12,316 5.4 Metals & Mining 12,161 5.3 Media: Broadcasting & Subscription 9,003 4.0 Energy: Oil & Gas 4,333 1.9 Packaging 3,505 1.5 Consumer Discretionary 3,456 1.5 Aerospace & Defense 2,827 1.2 Banking 1,525 0.7 Insurance 101 0.1 Total $ 227,916 100.0 % The following table shows the portfolio composition by industry grouping at fair value at September 30, 2023 (dollars in thousands): Fair Value Percentage Services: Business $ 47,083 20.7 % Banking, Finance, Insurance & Real Estate 43,755 19.3 Hotel, Gaming & Leisure 34,158 15.1 Services: Consumer 18,292 8.1 High Tech Industries 15,472 6.8 Construction & Building 14,676 6.5 Metals & Mining 12,517 5.5 Media: Broadcasting & Subscription 11,665 5.2 Automotive 9,520 4.2 Consumer Discretionary 6,920 3.1 Energy: Oil & Gas 5,384 2.4 Packaging 3,396 1.5 Aerospace & Defense 2,645 1.2 Retail 978 0.4 Total $ 226,461 100.0 % 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. F- 27 Note 3. Investments (continued) The following table shows the portfolio composition by geographic location at fair value at September 30, 2024 (dollars in thousands): Fair Value Percentage Northeast $ 87,269 38.3 % Southeast 61,276 26.9 Midwest 34,648 15.2 West 31,951 14.0 Southwest 2,749 1.2 Mid-Atlantic 375 0.2 International 9,648 4.2 Total $ 227,916 100.0 % The following table shows the portfolio composition by geographic location at fair value at September 30, 2023 (dollars in thousands): Fair Value Percentage Northeast $ 92,081 40.7 % Southeast 60,116 26.5 Midwest 32,782 14.5 West 25,608 11.3 Southwest 7,661 3.4 Mid-Atlantic 201 0.1 International 8,012 3.5 Total $ 226,461 100.0 % 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: Name of Investment (1) (2) Type of Investment Fair Value at September 30, 2023 Purchases/(Sales) of or Advances/ (Distributions) Transfers In/(Out) of Affiliates Unrealized Gain/(Loss) Realized Gain/(Loss) Fair Value at September 30, 2024 Earned Income Affiliated Investments All Around Roustabout, LLC Senior Secured First Lien Term Loan C $ 751,479 $ ( 1,096,561 ) $ ( 196,411 ) $ 439,778 $ 101,715 $ - $ 123,326 Senior Secured First Lien Term Loan A - - - 9,473,068 ( 9,473,068 ) - - Revolving Credit Facility 4,632,177 ( 5,112,074 ) - - 479,897 - 158,704 Black Angus Steakhouses, LLC Senior Secured First Lien Delayed Draw Term Loan 875,749 - - ( 124,542 ) - 751,207 - Senior Secured First Lien Term Loan 1,459,249 - - ( 1,459,249 ) - - - Senior Secured First Lien Super Priority DDTL 1,920,960 - - ( 273,184 ) - 1,647,776 - FST Holdings Parent, LLC Equity 10,000,003 - - 2,351,799 - 12,351,802 199,388 Maritime Wireless Holdings LLC Senior Secured First Lien Term Loan B 7,500,000 ( 7,373,166 ) - ( 126,834 ) - - 535,851 Equity 10,150,000 ( 11,900,000 ) - ( 5,150,000 ) 6,900,000 - - Total Affiliated Investments $ 37,289,617 $ ( 25,481,801 ) $ ( 196,411 ) $ 5,130,836 $ ( 1,991,456 ) $ 14,750,785 $ 1,017,269 F- 28 Note 3. Investments (continued) Name of Investment (1)(2) Type of Investment Fair Value at September 30, 2023 Purchases/(Sales) of or Advances/ (Distributions) Transfers In/(Out) of Controlled Unrealized Gain/(Loss) Realized Gain/(Loss) Fair Value at September 30, 2024 Earned Income Controlled Investments ECC Capital Corp. Senior Secured First Lien Term Loan - 7,422,012 - - - 7,422,012 962,959 Equity - 4,257,002 - 614,998 - 4,872,000 33,280 FlexFIN, LLC Equity Interest 38,870,711 ( 2,187,665 ) - - - 36,683,046 3,972,352 Kemmerer Operations, LLC Senior Secured First Lien Term Loan 3,383,877 5,769,816 ( 9,153,693 ) - - - 268,831 Equity 9,133,052 ( 10,378,988 ) - ( 7,296,895 ) 8,542,831 - - NSG Captive, Inc. Equity - 101,000 - - - 101,000 - NVTN LLC Senior Secured First Lien Delayed Draw Term Loan 7,214,856 ( 1,693,577 ) - ( 21,279 ) - 5,500,000 1,035,741 Senior Secured First Lien Term Loan B 5,037,547 - - 11,316,042 - 16,353,589 423,013 Equity - 11,900,000 - ( 11,900,000 ) - - - Total Controlled Investments $ 63,640,043 $ 15,189,600 $ ( 9,153,693 ) $ ( 7,287,134 ) $ 8,542,831 $ 70,931,647 $ 6,696,176 Name of Investment(1)(2) Type of Investment Fair Value at September 30, 2022 Purchases/(Sales) of or Advances/ (Distributions) Transfers In/(Out) of Affiliates Unrealized Gain/(Loss) Realized Gain/(Loss) Fair Value at September 30, 2023 Earned Income Affiliated Investments 1888 Industrial Services, LLC Senior Secured First Lien Term Loan C $ - $ - $ - $ 751,479 $ - $ 751,479 $ 84,559 Revolving Credit Facility 4,151,562 215,622 - 264,993 - 4,632,177 553,233 Black Angus Steakhouses, LLC Senior Secured First Lien Delayed Draw Term Loan 758,929 116,820 - - - 875,749 232,614 Senior Secured First Lien Term Loan 1,547,918 - - ( 88,669 ) - 1,459,249 159,780 Senior Secured First Lien Super Priority Delayed Draw Term Loan 1,500,000 420,960 - - - 1,920,960 360,670 FST Holdings Parent, LLC Equity - 10,000,000 - 3 - 10,000,003 121,385 Kemmerer Operations, LLC Senior Secured First Lien Term Loan 2,378,510 - ( 2,378,510 ) - - - 89,743 Equity 694,702 - ( 962,717 ) 268,015 - - - Maritime Wireless Holdings LLC Senior Secured First Lien Term Loan A - ( 5,000,704 ) 4,900,000 - 100,704 - 218,788 Senior Secured First Lien Term Loan B - 23,166 7,350,000 126,834 - 7,500,000 565,377 Equity - - 5,000,000 5,150,000 - 10,150,000 - US Multifamily, LLC Equity 1,282,571 ( 1,018,344 ) - 854,744 ( 1,118,971 ) - - Total Affiliated Investments $ 12,314,192 $ 4,757,520 $ 13,908,773 $ 7,327,399 $ ( 1,018,267 ) $ 37,289,617 $ 2,386,149 Name of Investment (1)(2) Type of Investment Fair Value at September 30, 2022 Purchases/(Sales) of or Advances/ (Distributions) Transfers In/(Out) of Controlled Unrealized Gain/(Loss) Realized Gain/(Loss) Fair Value at September 30, 2023 Earned Income Controlled Investments FlexFIN, LLC Equity Interest $ 47,136,146 $ ( 8,265,435 ) $ - $ - - $ 38,870,711 $ 3,716,676 Kemmerer Operations, LLC Senior Secured First Lien Term Loan - 981,911 2,378,510 - 23,456 3,383,877 557,981 Equity - 873,440 962,717 7,296,895 - 9,133,052 - NVTN LLC Senior Secured First Lien Delayed Draw Term Loan 7,192,927 - - 21,929 - 7,214,856 667,312 Senior Secured First Lien Term Loan B 3,697,109 - - 1,340,438 - 5,037,547 - Total Controlled Investments $ 58,026,182 $ ( 6,410,084 ) $ 3,341,227 $ 8,659,262 $ 23,456 $ 63,640,043 $ 4,941,969 (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, 2024, 2023 and 2022. 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. F- 29 Note 3. 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. Note 4. Fair Value Measurements The Company follows ASC 820 for measuring the fair value of portfolio investments. Fair value is the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters, or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation models involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity. The Company’s fair value analysis includes an analysis of the value of any unfunded loan commitments. Financial investments recorded at fair value in the consolidated financial statements are categorized for disclosure purposes based upon the level of judgment associated with the inputs used to measure their value. The valuation hierarchical levels are based upon the transparency of the inputs to the valuation of the investment as of the measurement date. Investments which are valued using NAV as a practical expedient are excluded from this hierarchy, and certain prior period amounts have been reclassified to conform to the current period presentation. The three levels are defined below: ● Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities at the measurement date. ● Level 2 - Valuations based on 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 Note 2). Consistent with our valuation policy, we evaluate the source of inputs, including any markets in which our investments are trading, in determining fair value. The following table presents the fair value measurements of our investments, by major class according to the fair value hierarchy, as of September 30, 2024 (dollars in thousands): Fair Value Hierarchy as of September 30, 2024 Investments: Level 1 Level 2 Level 3 Total Senior Secured First Lien Term Loans $ - $ 45,003 $ 68,987 $ 113,990 Senior Secured Notes - 11,054 7,422 18,476 Equity/Warrants 30,044 - 63,881 93,925 Total $ 30,044 $ 56,057 $ 140,290 $ 226,391 Investments measured at net asset value (1) 1,525 Total Investments, at fair value $ 227,916 (1) Certain investments that are measured at fair value using NAV have not been categorized in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amount presented in the Consolidated Statements of Assets and Liabilities. F- 30 Note 4. 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 Investments: Level 1 Level 2 Level 3 Total Senior Secured First Lien Term Loans $ - $ 20,505 $ 82,499 $ 103,004 Senior Secured Notes - 8,922 - 8,922 Equity/Warrants 24,709 6,217 82,817 113,743 Total $ 24,709 $ 35,644 $ 165,316 $ 225,669 Investments measured at net asset value(1) 792 Total Investments, at fair value $ 226,461 (1) Certain investments that are measured at fair value using NAV have not been categorized in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amount presented in the Consolidated Statements of Assets and Liabilities. 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 First Lien Term Loans Senior Secured Notes Equities/ Warrants Total Balance as of September 30, 2023 $ 82,499 $ - $ 82,817 $ 165,316 Purchases and other adjustments to cost 31,590 34,000 50,146 115,736 Sales (including repayments or maturities) ( 32,879 ) ( 26,578 ) ( 63,578 ) ( 123,035 ) Net realized gains/(losses) from investments ( 8,728 ) - 15,331 6,603 Net unrealized gains/(losses) 19,634 - ( 20,835 ) ( 1,201 ) Transfer in/(out) ( 23,129 ) - - ( 23,129 ) Balance as of September 30, 2024 $ 68,987 $ 7,422 $ 63,881 $ 140,290 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 First Lien Term Loans Senior Secured Second Lien Term Loans Senior Secured Notes Equities/ Warrants Total Balance as of September 30, 2022 $ 74,252 $ 2,607 $ - $ 69,816 $ 146,675 Purchases and other adjustments to cost 23,481 - - 29,571 53,052 Sales (including repayments or maturities) ( 12,840 ) ( 2,607 ) ( 191 ) ( 33,213 ) ( 48,851 ) Net realized gains/(losses) from investments 162 5 9 ( 9,574 ) ( 9,398 ) Net unrealized gains/(losses) ( 2,556 ) ( 5 ) 182 26,217 23,838 Transfer in/(out) - - - - - Balance as of September 30, 2023 $ 82,499 $ - $ - $ 82,817 $ 165,316 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. F- 31 Note 4. Fair Value Measurements (continued) 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 Input 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 Input 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. F- 32 Note 5. Borrowings As a BDC, we are generally only allowed to employ leverage to the extent that our asset coverage, as defined in the 1940 Act, equals at least 200 % after giving effect to such leverage. The amount of leverage that we employ at any time depends on our assessment of the market and other factors at the time of any proposed borrowing. However, in March 2018, the Small Business Credit Availability Act modified the 1940 Act by allowing a BDC to increase the maximum amount of leverage it may incur from 200 % to 150 % 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 Aggregate Principal Available (1) Principal Amount Outstanding Carrying Value Fair Value Aggregate Principal Available (1) Principal Amount Outstanding Carrying Value Fair Value 2028 Notes $ 57,500 $ 57,500 $ 56,143 $ 51,980 $ 57,500 $ 57,500 $ 55,811 $ 49,105 2028 Promissory Note 1,661 1,661 1,508 1,661 - - - - Revolving Credit Facility 9,427 78,073 78,073 78,073 21,558 28,442 28,442 28,442 Total debt $ 68,588 $ 137,234 $ 135,724 $ 131,714 $ 79,058 $ 85,942 $ 84,253 $ 77,547 (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. F- 33 Note 5. Borrowings (continued) 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. The Credit Facility has a maturity date of December 15, 2025. 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 unchanged. 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 and exceptions that are described in the documents governing the Credit Facility. Amounts available to borrow under the Credit Facility (and the incurrence of certain other permitted debt) are also subject to compliance with a borrowing base that applies different advance rates to different types of assets (based on their value as determined pursuant to the Credit Facility) that are pledged as collateral. As of September 30, 2024, the Company was in compliance in all respects with the terms of the Credit Facility. 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 2023 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. F- 34 Note 5. Borrowings (continued) On December 12, 2016, the Company entered into an “At-The-Market” (“ATM”) debt distribution agreement with FBR Capital Markets & Co., through which the Company could offer for sale, from time to time, up to $ 40.0 million in aggregate principal amount of the 2023 Notes. The Company sold $ 1,573,872 of the 2023 Notes at an average price of $ 25.03 per note, and raised $ 38.6 million in net proceeds, through the ATM debt distribution agreement. On March 10, 2018, the Company redeemed $ 13.0 million in aggregate principal amount of the 2023 Notes. On December 31, 2018, the Company redeemed $ 12.0 million in aggregate principal amount of the 2023 Notes. The redemption was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $ 0.3 million and was recorded on the Consolidated Statements of Operations as a loss on extinguishment of debt. On December 21, 2020, the Company announced that it completed the application process for and was authorized to transfer the listing of the 2023 Notes to the NASDAQ Global Market. The listing and trading of the 2023 Notes on the NYSE ceased at the close of trading on December 31, 2020. Effective January 4, 2021, the 2023 Notes began trading on the NASDAQ Global Market under the trading symbol “PFXNL.” 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. The Company funded the redemption of the 2023 Notes with loans obtained under the Credit Facility. 2028 Notes 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”). The Offering occurred on November 15, 2021, pursuant to the Company’s effective shelf registration statement on Form N-2 previously filed with the SEC. Effective November 16, 2021, the 2028 Notes began trading on the NASDAQ Global Market under the trading symbol “PFXNZ.” On November 15, 2021, the Company and U.S. Bank National Association, as trustee, entered into a Fourth Supplemental Indenture to its base Indenture, dated February 7, 2012, between the Company and the Trustee. The Fourth Supplemental Indenture relates to the Offering of the 2028 Notes. 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 Note”). The financial terms of the note are substantially the same as the 2028 Notes. F- 35 Note 5. Borrowings (continued) 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. As 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 Note 4. 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. As 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 For the year ended September 30, 2024 September 30, 2023 2028 Notes 2028 Promissory Note Total 2023 Notes 2028 Notes Total Total debt issuance costs at beginning of period $ 1,689 $ - $ 1,689 $ 39 $ 2,020 $ 2,059 Debt issuance costs during the period - 169 169 - - - Amortized debt issuance costs 332 15 347 39 331 370 Unamortized debt issuance costs $ 1,357 $ 154 $ 1,511 $ - $ 1,689 $ 1,689 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, 2024 2023 2022 2023 Notes Interest $ - $ 410 $ 1,749 2028 Notes Interest 3,019 3,019 2,996 2028 Promissory Note 36 - - Credit Facility Interest 2,533 1,390 - Commitment fees 108 56 - Amortization of deferred financing costs 566 287 - Amortization of debt issuance costs 347 370 368 Total $ 6,609 $ 5,532 $ 5,113 Weighted average stated interest rate 6.3 % 5.9 % 6.0 % Weighted average debt outstanding $ 88,467 $ 81,600 $ 85,398 Note 6. Agreements 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. A U.S. Bancorp affiliate also served as the Company’s custodian. The Company’s administrative and custodial relationship with U.S. Bancorp 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 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. F- 36 Note 6. 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. 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 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 $ 890,000 Ellida McMillan, Chief Financial Officer 380,000 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. F- 37 Note 7. Related Party Transactions 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 LLC. 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. Note 8. Commitments 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 Films) - Senior Secured First Lien Delayed Draw Term Loan $ - $ 517 NVTN LLC - Senior Secured First Lien Delayed Draw Term Loan - 220 Deer Management Systems LLC - Senior Secured First Lien Delayed Draw Term Loan - 600 XYZ Roofco, LLC (dba SMC Roofing Solutions LLC) - First Out Delayed Draw Term Loan 57 - XYZ Roofco, LLC (dba SMC Roofing Solutions LLC) - Last Out Delayed Draw Term Loan 246 - Tamarix Capital Partners II, L.P. - Fund Investment 1,313 2,038 Total unfunded commitments $ 1,616 $ 3,375 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. The lease commenced September 1, 2021 and expires November 30, 2026. Upon entering into the lease on September 1, 2021, PhenixFIN recorded a right-of-use asset and a lease liability as of that date. Total operating lease cost incurred by PhenixFIN for the 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. F- 38 Note 8. 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, Amount 2025 $ 161,050 2026 161,680 2027 27,417 Thereafter - 350,147 Difference between undiscounted and discounted cash flows ( 56,084 ) $ 294,063 Note 9. Fee Income 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, 2024 2023 2022 Prepayment fee $ - $ - $ 235 Administrative agent fee 75 169 94 Amendment fee - 53 4 Other fees 440 102 87 Fee income $ 515 $ 324 $ 420 Note 10. Directors Fees 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 of $ 8,000 . 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. F- 39 Note 11. Earnings Per Share In accordance with the provisions of ASC Topic 260 - Earnings per Share, basic earnings per share is computed by dividing earnings available to common stockholders by the weighted average number of shares outstanding during the period. Other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. The Company does not have any potentially dilutive common shares as of September 30, 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, 2024 2023 2022 Basic and diluted: Net increase (decrease) in net assets resulting from operations $ 18,619 $ 26,918 $ ( 6,107 ) Weighted average shares of common stock outstanding - basic and diluted 2,040,253 2,092,326 2,323,601 Earnings (loss) per share of common stock - basic and diluted $ 9.13 $ 12.87 $ ( 2.63 ) F- 40 Note 12. Financial Highlights 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, 2024 2023 2022 2021 2020 Per share data Net Asset Value per share at Beginning of Period $ 70.75 $ 57.49 $ 57.08 $ 55.30 $ 79.46 Results of Operations: Net Investment Income/(Loss) (1) 2.32 3.11 1.48 6.92 ( 1.00 ) Net Realized Gain/(Loss) on Investments 3.57 ( 5.51 ) 2.24 ( 15.86 ) ( 18.35 ) Net Unrealized Gain/(Loss) on Investments 2.81 15.27 ( 6.22 ) 9.47 ( 3.90 ) Net loss on extinguishment of debt - - ( 0.13 ) ( 0.05 ) ( 0.91 ) Deferred tax benefit (expense) 0.43 - - - - Net Increase (Decrease) in Net Assets Resulting from Operations 9.13 12.87 ( 2.63 ) 0.48 ( 24.16 ) Capital Share Transactions Distributions declared ( 1.31 ) - ( 0.12 ) - - Repurchase of common stock under stock repurchase program (2) 0.80 0.39 3.16 1.30 - Net Increase (Decrease) Resulting from Capital Share Transactions ( 0.51 ) 0.39 3.04 1.30 - Net Asset Value per share at End of Period $ 79.37 $ 70.75 $ 57.49 $ 57.08 $ 55.30 Net Assets at End of Period $ 160,307,773 $ 146,705,535 $ 120,845,408 $ 143,693,981 $ 150,619,517 Shares Outstanding at End of Period 2,019,778 2,073,713 2,102,129 2,517,221 2,723,709 Per share market value at end of period $ 47.60 $ 37.90 $ 34.88 $ 42.90 $ 17.83 Total return based on market value (3) 29.05 % 8.66 % ( 18.69 %) 140.61 % ( 65.58 %) Total return based on net asset value (4) 11.08 % 21.40 % ( 15.90 %) ( 4.60 %) ( 30.41 %) Portfolio turnover rate 43.90 % 32.62 % 69.43 % 24.97 % 5.66 % Ratios: Ratio of net investment/(loss) income to average net assets after waivers, discounts and reimbursements (5) 3.06 % 4.80 % 2.55 % 12.44 % ( 1.64 %) Ratio of total expenses to average net assets 11.27 % 10.04 % 9.02 % 9.26 % 14.64 % Supplemental Data: Percentage of non-recurring fee income (5) 2.32 % 1.61 % 2.70 % 7.94 % 2.33 % Average debt outstanding (6) $ 88,467,130 $ 81,599,762 $ 85,397,690 $ 82,930,098 $ 189,038,998 Average debt outstanding per weighted average common share $ 43.36 $ 39.18 $ 36.75 $ 30.97 $ 69.40 Asset coverage ratio per unit (7) $ 2,168 $ 2,707 $ 2,550 $ 2,856 $ 1,992 Senior Securities Outstanding (8) 2021 Notes (9) $ - $ - $ - $ - $ 74,012,825 2023 Notes $ - $ - $ 22,521,800 $ 77,846,800 $ 77,846,800 2028 Notes $ 57,500,000 $ 57,500,000 $ 57,500,000 $ - $ - 2028 Promissory Note $ 1,661,498 - - - - Credit Facility $ 78,072,953 $ 28,241,941 $ - $ - $ - (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. F- 41 Note 12. 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. (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. (7) Asset coverage per unit is the ratio of the carrying value of our total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness. Asset coverage per unit is expressed in terms of dollar amounts per $ 1,000 of indebtedness. As of September 30, 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. Note 13. Dividends 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. The dividends declared during the year ended September 30, 2024 were derived from net investment income, determined on a tax basis. 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. The Company did not declare any regular distribution payments during the years ended September 30, 2024, 2023 and 2022. F- 42 Note 14. Share Transactions 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: Month Ended Shares Repurchased Repurchase Price Per Share Aggregate Consideration for Repurchased Shares February 2021 13,082 $ 30.25 - $ 30.96 397,384 March 2021 12,241 $ 30.25 - $ 34.42 393,938 April 2021 14,390 $ 33.11 - $ 34.89 491,469 May 2021 25,075 $ 34.56 - $ 39.93 976,440 August 2021 141,700 $ 41.03 - $ 42.28 5,944,213 January 2022 7,312 $ 39.07 - $ 40.88 293,756 February 2022 170,589 $ 39.53 - $ 41.00 6,908,864 March 2022 132,054 $ 39.24 - $ 40.57 5,306,885 April 2022 2,942 $ 39.07 - $ 41.00 117,758 May 2022 3,391 $ 37.70 - $ 39.78 131,338 June 2022 3,515 $ 37.28 - $ 39.19 135,063 July 2022 700 $ 36.40 - $ 37.23 25,864 August 2022 3,081 $ 28.24 - $ 37.79 112,456 September 2022 91,508 $ 36.80 - $ 37.50 3,443,845 October 2022 701 $ 35.20 - $ 36.14 14,434 November 2022 1,103 $ 34.53 - $ 35.28 38,790 December 2022 1,501 $ 33.26 - $ 34.84 51,295 January 2023 2,052 $ 32.78 - $ 34.84 68,665 February 2023 3,131 $ 33.06 - $ 39.03 115,430 March 2023 2,003 $ 37.02 - $ 38.89 76,214 April 2023 649 $ 35.79 - $ 37.03 23,671 May 2023 100 $ 36.53 - $36.53 3,658 June 2023 2,300 $ 33.63 - $ 38.76 85,556 August 2023 14,751 $ 36.98 - $ 39.41 575,728 September 2023 125 $ 38.11 - $38.11 4,772 November 2023 475 $ 37.03 - $ 37.78 17,825 December 2023 12,748 $ 37.53 - $ 41.03 520,749 March 2024 40,000 $ 45.03 - $45.03 1,801,205 April 2024 700 $ 43.76 - $43.76 30,637 May 2024 12 $ 44.82 - $44.82 543 Total 703,931 $ 28,108,445 During the year ended September 30, 2024, 54,060 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. Note 15. Subsequent Events Management has evaluated subsequent events through the date of issuance of the consolidated financial statements included herein. Other than the items disclosed herein, there have been no subsequent events that occurred during such period that would require disclosure in this Form 10-K or would be required to be recognized in the Consolidated Financial Statements as of and for the year ended September 30, 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 assets. F- 43 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.