What changed in this filing

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Item 1. Business

2025-12-12 compared with 2024-12-17 · 760 added, 741 removed, 272 unchanged (85% of the section changed)

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”).

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

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 to qualify as 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 investments in privately-held companies.

The Company may also make debt, equity or other investments in publicly-traded

(These investments may also include investments in other BDCs, closed-end funds or real estate investment trusts (“REITs”).)

We 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.

We believe there are attractive opportunities

in the private debt market for non-bank investors like the Company.

We lend directly to many companies that are underserved by the traditional

banking system and generally seek to avoid broadly marketed investment opportunities.

We also believe there are attractive private equity

investment opportunities.

We source investment opportunities primarily through direct relationships with financial sponsors and other

market participants, industry specialists, as well as financial intermediaries such as investment banks and commercial banks.

Our Investment Team is responsible for sourcing

investment opportunities, conducting industry research, performing diligence on potential investments, structuring our investments and

monitoring our portfolio companies on an ongoing basis.

Our Investment Team draws on its expertise in lending to and investing in predominantly

privately held companies in a range of sectors, including industrials, transportation, energy and natural resources, financials, gemstones/jewelry,

insurance and real estate.

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

As a BDC, we are required to comply with regulatory

requirements, including limitations on our use of debt.

We are permitted to, and expect to continue to, finance our investments through

However, as a BDC, we are only generally allowed to borrow amounts such that our asset coverage, as defined in the 1940 Act,

equals at least 200% (or 150% if certain requirements under the 1940 Act are met) after such borrowing.

The amount of leverage that we

employ will depend on our assessment of market conditions and other factors at the time of any proposed borrowing.

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.

Our principal executive office is located at 445

Park Avenue, 10th Floor, New York, NY and our telephone number is (212) 859-0390.

Investment Process Overview

Sourcing and Origination .

source investment opportunities through our management team’s network of long-standing relationships.

Our sourcing efforts are led

by our senior investment professionals, who leverage their experience in the sourcing and origination of investments.

Initial Evaluation .

We use a systematic,

consistent approach to credit evaluation, which typically consists of (i) a preliminary due diligence review conducted by the Company,

(ii) an initial diligence meeting with the portfolio company’s management team, investment bank or private equity sponsor, (iii)

an initial indication of interest and terms, and (iv) preparation of memoranda including potential portfolio company overviews, investment

considerations and risks, financial model and return information.

Due Diligence & Underwriting .

undertake continued diligence, which expands on the investment thesis, risks and mitigants, and competition factors of our potential investment

opportunities.

We may conduct third party reviews, on-site visits and/or background checks in connection with our potential investments

in portfolio companies.

Portfolio Management .

We undertake a proactive

monitoring process of our portfolio companies, whereby we conduct monthly financial review and monitoring of compliance with covenants,

maintain ongoing dialogue with portfolio company management and owners, and exercise board observer rights where appropriate.

Rating Criteria.

We generally use an investment

rating system to characterize and monitor the credit profile and our expected level of returns on each debt investment in our portfolio.

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

Company has formed and expects to continue to form certain taxable subsidiaries (the “Taxable Subsidiaries”), which are taxed

as corporations for federal income tax purposes.

These Taxable Subsidiaries allow us to, among other things, hold equity securities of

portfolio companies organized as pass-through entities while continuing to satisfy the requirements to qualify as a RIC under the Code.

Company’s investment objective is to generate current income and capital appreciation.

The management team seeks to achieve this

objective primarily through making loans and private equity 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 real estate investment trusts (“REITs”).) We 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 and an insurance

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.

believe there are attractive opportunities in the private debt market for non-bank investors like the Company.

We lend directly to many

companies that are underserved by the traditional banking system and generally seek to avoid broadly marketed investment opportunities.

We also believe there are attractive private equity investment opportunities.

We source investment opportunities primarily through direct

relationships with financial sponsors and other market participants, industry specialists, as well as financial intermediaries such as

investment banks and commercial banks.

Investment Team is responsible for sourcing investment opportunities, conducting industry research, performing diligence on potential

investments, structuring our investments and monitoring our portfolio companies on an ongoing basis.

Our Investment Team draws on its

expertise in lending to and investing in predominantly privately held companies in a range of sectors, including industrials, transportation,

energy and natural resources, financials, gemstones/jewelry, insurance and real estate.

a BDC, we are required to comply with regulatory requirements, including limitations on our use of debt.

We are permitted to, and expect

to continue to, finance our investments partially through borrowings.

However, as a BDC, we are only generally allowed to borrow amounts

such that our asset coverage, as defined in the 1940 Act, equals at least 200% (or 150% if certain requirements under the 1940 Act are

met) after such borrowing.

The amount of leverage that we employ will depend on our assessment of market conditions and other factors

at the time of any proposed borrowing.

of September 30, 2025, the Company’s asset coverage was 207.8% 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.

principal executive office is located at 445 Park Avenue, 10th Floor, New York, NY and our telephone number is (212) 859-0390.

Process Overview

and Origination .

We typically source investment opportunities through our management team’s network of long-standing relationships.

Our sourcing efforts are led by our senior investment professionals, who leverage their experience in the sourcing and origination of

We use a systematic, consistent approach to credit evaluation, which typically consists of (i) a preliminary due diligence

review conducted by the Company, (ii) an initial diligence meeting with the portfolio company’s management team, investment bank

or private equity sponsor, (iii) an initial indication of interest and terms, and (iv) preparation of memoranda including potential portfolio

company overviews, investment considerations and risks, financial model and return information.

Diligence & Underwriting .

We typically undertake continued diligence, which expands on the investment thesis, risks and mitigants,

and competition factors of our potential investment opportunities.

We may conduct third party reviews, on-site visits and/or background

checks in connection with our potential investments in portfolio companies.

We undertake a proactive monitoring process of our portfolio companies, whereby we conduct monthly financial review and

monitoring of compliance with covenants, maintain ongoing dialogue with portfolio company management and owners, and exercise board observer

rights where appropriate.

We generally use an investment rating system to characterize and monitor the credit profile and our expected level of returns

on each debt investment in our portfolio.

We use a five-level numeric rating scale.

The following is a description of the conditions associated with each investment rating:

Credit Rating

Investments that are performing above expectations.

Investments that are performing within expectations, with risks that are neutral or favorable compared to risks at the time of origination.

All new loans are rated ‘2’.

Investments that are performing below expectations and that require closer monitoring, but where no loss of interest, dividend or principal is expected.

Companies rated ‘3’ may be out of compliance with financial covenants, however, loan payments are generally not past due.

Investments that are performing below expectations and for which risk has increased materially since origination.

Some loss of interest or dividend is expected but no loss of principal.

In addition to the borrower being generally out of compliance with debt covenants, loan payments may be past due (but generally not more than 180 days past due).

Investments that are performing substantially below expectations and whose risks have increased substantially since origination.

Most or all of the debt covenants are out of compliance and payments are substantially delinquent.

The following is a description of the conditions

associated with each investment rating:

Investments that are performing

above expectations.

that are performing within expectations, with risks that are neutral or favorable compared to risks at the time of origination.

new investments are rated ‘2’.

that are performing below expectations and that require closer monitoring, but where no loss of interest, dividend or principal is

Companies rated ‘3’ may be out of compliance with financial covenants, however, loan payments are generally

not past due.

that are performing below expectations and for which risk has increased materially since origination.

Some loss of interest or dividend

is expected but no loss of principal.

In addition to the borrower being generally out of compliance with debt covenants, loan payments

may be past due (but generally not more than 180 days past due).

that are performing substantially below expectations and whose risks have increased substantially since origination.

of the debt covenants are out of compliance and payments are substantially delinquent.

Some loss of principal is expected.

Investment Structure

Once we have determined that a prospective portfolio

company is suitable for investment, we work with the management of that portfolio company and its other capital providers to structure

an investment.

We negotiate among these parties to agree on how our investment is expected to perform relative to the other capital in

the portfolio company’s capital structure.

We typically structure our debt investments as follows:

Senior Secured First Lien Term Loans We

structure these investments as senior secured loans.

We obtain security interests in the assets of the portfolio companies that serve

as collateral in support of the repayment of such loans.

This collateral generally takes the form of first-priority liens on the assets

of the portfolio company borrower.

Our senior secured loans may provide for amortization of principal with the majority of the amortization

due at maturity.

Senior Secured Second Lien Term Loans We

structure these investments as junior, secured loans.

We obtain security interests in the assets of these portfolio companies that serve

as collateral in support of the repayment of such loans.

This collateral generally takes the form of second-priority liens on the assets

of a portfolio company.

These loans typically provide for amortization of principal in the initial years of the loans, with the majority

of the amortization due at maturity.

Senior Secured First Lien Notes We structure

these investments as senior secured loans.

we have determined that a prospective portfolio company is suitable for investment, we work with the management of that company and its

other capital providers to structure an investment.

We negotiate among these parties to agree on how our investment is expected to perform

relative to the other capital in the portfolio company’s capital structure.

structure our debt investments as follows:

Secured First Lien Term Loans We structure these investments as senior secured loans.

We obtain security interests in the assets

of the portfolio companies that serve as collateral in support of the repayment of such loans.

This collateral generally takes the form

of first-priority liens on the assets of the portfolio company borrower.

Our senior secured loans may provide for amortization of principal

with the majority of the amortization due at maturity.

Secured Second Lien Term Loans We structure these investments as junior, secured loans.

We obtain security interests in the assets

of these portfolio companies that serve as collateral in support of the repayment of such loans.

This collateral generally takes the

form of second-priority liens on the assets of a portfolio company.

These loans typically provide for amortization of principal in the

initial years of the loans, with the majority of the amortization due at maturity.

Secured First Lien Notes We structure these investments as senior secured loans.

We obtain security interests in the assets of these

portfolio companies that serve as collateral in support of the repayment of such notes.

This collateral generally takes the form of priority

liens on the assets of a portfolio company.

These notes typically have interest-only payments (often representing a combination of cash

pay and payment-in-kind, or (“PIK”), interest), with amortization of principal due at maturity.

PIK interest represents contractually

deferred interest added to the loan balance that is generally due at the end of the loan term and recorded as interest income on an accrual

basis to the extent such amounts are expected to be collected.

and Minority Equity Securities In some cases, we may also receive nominally priced warrants or options to buy a minority equity interest

in the portfolio company in connection with a debt investment.

As a result, as a portfolio company appreciates in value, we may achieve

additional investment return from this equity interest.

We may structure such warrants to include provisions protecting our rights as

a minority-interest holder, as well as a “put,” or right to sell such securities back to the issuer, upon the occurrence

of specified events.

In many cases, we may also seek to obtain registration rights in connection with these equity interests, which may

include demand and “piggyback” registration rights.

Loans We structure our unitranche loans, which combine the characteristics of traditional senior secured first lien term loans and

subordinated notes as senior secured loans.

We obtain security interests in the assets of these portfolio companies that serve as collateral

in support of the repayment of such notes.

This collateral generally takes the form of priority liens on the assets of a portfolio company.

These notes typically have interest-only payments (often representing a combination of cash pay and payment-in-kind, or (“PIK”),

interest), with amortization of principal due at maturity.

PIK interest represents contractually deferred interest added to the loan balance

that is generally due at the end of the loan term and recorded as interest income on an accrual basis to the extent such amounts are expected

to be collected.

Warrants and Minority Equity Securities In

some cases, we may also receive nominally priced warrants or options to buy a minority equity interest in the portfolio company in connection

with a debt investment.

As a result, as a portfolio company appreciates in value, we may achieve additional investment return from this

equity interest.

We may structure such warrants to include provisions protecting our rights as a minority-interest holder, as well as

a “put,” or right to sell such securities back to the issuer, upon the occurrence of specified events.

In many cases, we may

also seek to obtain registration rights in connection with these equity interests, which may include demand and “piggyback”

registration rights.

Unitranche Loans We structure our unitranche

loans, which combine the characteristics of traditional senior secured first lien term loans and subordinated notes as senior secured

We obtain security interests in the assets of these portfolio companies that serve as collateral in support of the repayment of

This collateral generally takes the form of first-priority liens on the assets of a portfolio company.

Unitranche loans typically

provide for amortization of principal in the initial years of the loans, with the majority of the amortization due at maturity.

Unsecured Debt We structure these investments

as unsecured, subordinated loans that provide for relatively high, fixed interest rates that provide us with significant current interest

These loans typically have interest-only payments (often representing a combination of cash pay and payment-in-kind, or PIK, interest),

with amortization of principal due at maturity.

Subordinated notes generally allow the borrower to make a large lump sum payment of principal

at the end of the loan term, and there is a risk of loss if the borrower is unable to pay the lump sum or refinance the amount owed at

The valuation of subordinated notes are generally more volatile than secured loans and may involve a greater risk of loss of

Subordinated notes often include a PIK feature, which effectively operates as negative amortization of loan principal.

We expect to hold most of our investments to maturity

or repayment, but we may realize or sell some of our investments earlier if a liquidity event occurs, such as a sale or recapitalization

transaction, or the worsening of the credit quality of the portfolio company.

The Company has invested in its affiliate, FlexFIN,

LLC (“FlexFIN”), which operates an asset-based lending business under which it enters into secured loans and secured financing

structures with borrowers engaged in the gemstone/jewelry industry.

FlexFIN will generally structure these loans as sale/repurchase transactions

under which the collateral (that is, the gemstones/jewelry) remains under FlexFIN’s ownership during the entire term of the loan.

Managerial Assistance

As a BDC, we offer, and must provide upon request,

managerial assistance to certain of our portfolio companies.

This assistance could involve, among other things, monitoring the operations

of our portfolio companies, participating in board and management meetings, consulting with and advising officers of portfolio companies

and providing other organizational and financial guidance.

We may receive fees for these services.

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

in support of the repayment of these loans.

This collateral generally takes the form of first-priority liens on the assets of a portfolio

Unitranche loans typically provide for amortization of principal in the initial years of the loans, with the majority of the

amortization due at maturity.

Debt We structure these investments as unsecured, subordinated loans that provide for relatively high, fixed and floating interest

rates that provide us with significant current interest income.

These loans typically have interest-only payments (often representing

a combination of cash pay and payment-in-kind, or PIK, interest), with amortization of principal due at maturity.

Subordinated notes

generally allow the borrower to make a large lump sum payment of principal at the end of the loan term, and there is a risk of loss if

the borrower is unable to pay the lump sum or refinance the amount owed at maturity.

The valuation of subordinated notes is generally

more volatile than secured loans and may involve a greater risk of loss of principal.

Subordinated notes often include a PIK feature,

which effectively operates as negative amortization of loan principal.

expect to hold most of our investments to maturity or repayment, but we may realize or sell some of our investments earlier if a liquidity

event occurs, such as a sale or recapitalization transaction, or the worsening of the credit quality of the portfolio company.

Company has invested in its affiliate, FlexFIN, LLC (“FlexFIN”), which operates an asset-based lending business under which

it enters into secured loans and secured financing structures with borrowers engaged in the gemstone/jewelry industry.

FlexFIN will generally

structure these loans as sale/repurchase transactions under which the collateral (that is, the gemstones/jewelry) remains under FlexFIN’s

ownership during the entire term of the loan.

Company has invested in its affiliate, NVTN LLC, which is a restaurant concept with locations throughout the US, mostly in budget

friendly tourist destinations.

NVTN LLC has developed an identifiable brand for its high-energy, unique themed restaurant concept that

targets tourists and business travelers in high foot traffic locations.

October 1, 2024, the Company acquired 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.

a BDC, we offer, and must provide upon request, managerial assistance to certain of our portfolio companies.

This assistance could involve,

among other things, monitoring the operations of our portfolio companies, participating in board and management meetings, consulting

with and advising officers of portfolio companies and providing other organizational and financial guidance.

We may receive fees for

these services.

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.

We are also subject to certain regulatory requirements relating to our borrowings.

For a discussion of such requirements, see

“Regulation - Senior Securities.”

We may, from time to time, seek to retire or repurchase

our common stock through cash purchases, as well as retire, cancel or purchase our outstanding debt through cash purchases and/or exchanges,

in open market purchases, privately negotiated transactions or otherwise.

Such repurchases or exchanges, if any, will depend on prevailing

market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors.

The amounts involved may be

Our primary competitors to provide financing to

private companies are public and private funds, commercial and investment banks, commercial finance companies, other BDCs, Small Business

Investment Companies (“SBICs”) and private equity and hedge funds.

Some competitors may have access to funding sources that

are not available to us.

In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could

allow them to consider a wider variety of investments and establish more relationships than us.

Furthermore, many of our competitors are

not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC or to the distribution and other requirements we must

satisfy to maintain our favorable RIC tax treatment.

Human Capital Resources

As of September 30, 2024, the internalized management

team consists of 3 investment professionals and 6 employees/consultants overall.

This team includes our executive officers, investment

and finance professionals, and administrative staff.

Our senior management team consists of David Lorber, our chief executive officer,

and Ellida McMillan, our chief financial officer.

As an internally managed BDC, the success of our

business and investment strategy, including achieving our investment objective, depends in material part on our professional team.

depend upon the members of our management team and our investment professionals for the identification, final selection, structuring,

closing and monitoring of our investments.

Our professional team has critical experience and relationships on which we rely to implement

our business plan.

We expect that the members of our management team and our investment professionals will maintain key informal relationships,

which we will use to help identify and gain access to investment opportunities.

If we do not attract, develop and retain highly talented

professionals, we may not be able to operate our business as we expect and our operating results could be adversely affected.

For a discussion of such requirements, see “Regulation - Senior Securities.”

may, from time to time, seek to retire or repurchase our common stock through cash purchases, as well as retire, cancel or purchase our

outstanding debt through cash purchases and/or exchanges, in open market purchases, privately negotiated transactions or otherwise.

repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual and regulatory

restrictions and other factors.

The amounts involved may be material.

primary competitors to provide financing to private companies are public and private funds, commercial and investment banks, commercial

finance companies, other BDCs, Small Business Investment Companies (“SBICs”) and private equity and hedge funds.

Some competitors

may have access to funding sources that are not available to us.

In addition, some of our competitors may have higher risk tolerances

or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than

Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC or to

the distribution and other requirements we must satisfy to maintain our favorable RIC tax treatment.

Capital Resources

of September 30, 2025, the internalized management team consists of 4 investment professionals and 7 employees/consultants overall.

team includes our executive officers, investment and finance professionals, and administrative staff.

Our senior management team consists

of David Lorber, our chief executive officer, and Ellida McMillan, our chief financial officer.

an internally managed BDC, the success of our business and investment strategy, including achieving our investment objective, depends

in material part on our professional team.

We depend upon the members of our management team and our investment professionals for the

identification, final selection, structuring, closing and monitoring of our investments.

Our professional team has critical experience

and relationships on which we rely to implement our business plan.

We expect that the members of our management team and our investment

professionals will maintain key informal relationships, which we will use to help identify and gain access to investment opportunities.

If we do not attract, develop and retain highly talented professionals, we may not be able to operate our business as we expect and our

operating results could be adversely affected.

See “Item 1A.

Risk Factors.”

Administration

Since January 1, 2021, we have operated pursuant

to an internalized management structure.

To lead the internalized management team, the Board approved the appointment of David Lorber,

who had served as an independent director of the Company since April 2019, as Chief Executive Officer, and Ellida McMillan as Chief Financial

Officer of the Company, each effective January 1, 2021.

In connection with the adoption by the board of

directors of an internalized management structure, on November 19, 2020, the Company entered into a Fund Accounting Servicing Agreement

and an Administration Servicing Agreement on customary terms with U.S.

Bancorp Fund Services, LLC d/b/a U.S.

Bank Global Fund Services

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

To lead the internalized management team, the Board

approved the appointment of David Lorber, who had served as an independent director of the Company since April 2019, as Chief Executive

Officer, and Ellida McMillan as Chief Financial Officer of the Company, each effective January 1, 2021.

connection with the adoption by the board of directors of an internalized management structure, on November 19, 2020, the Company entered

into a Fund Accounting Servicing Agreement and an Administration Servicing Agreement on customary terms with U.S.

Bancorp Fund Services,

LLC d/b/a U.S.

Bank Global Fund Services (“U.S.

Bancorp affiliate also served as the Company’s custodian.

The Company’s administrative

and custodial relationship with U.S.

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

Bancorp terminated on August 9, 2022.

SS&C Technologies, Inc.

(“SS&C”) has since

served as administrator of the Company and has provided us with fund accounting and financial reporting services pursuant to its Services

Agreement with the Company.

SS&C Technologies,

(“SS&C”) has since served as administrator of the Company and has provided us with fund accounting and financial

reporting services pursuant to its Services Agreement with the Company.

Effective September 12, 2022, Computershare Trust Company, N.A.

(“Computershare”) serves as custodian

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

Information Available

We maintain a website at http://www.phenixfc.com .

We make available, free of charge, on our website, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on

Form 8-K and amendments to those reports as soon as reasonably practicable after we electronically file such material with, or furnish

it to, the U.S.

(“Computershare”) serves as custodian for the Company pursuant to its Loan Administration and Custodial Agreement with the

maintain a website at http://www.phenixfc.com .

We make available, free of charge, on our website, our annual report on Form 10-K,

quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports as soon as reasonably practicable after we

electronically file such material with, or furnish it to, the U.S.

Securities and Exchange Commission, or the SEC.

Information contained on our website is not incorporated by reference

into this annual report on Form 10-K and you should not consider information contained on our website to be part of this annual report

on Form 10-K or any other report we file with the SEC.

Summary of Risk Factors

Investing in our securities involves a high degree

Information contained

on our website is not incorporated by reference into this annual report on Form 10-K and you should not consider information contained

on our website to be part of this annual report on Form 10-K or any other report we file with the SEC.

of Risk Factors

in our securities involves a high degree of risk.

You should carefully consider the information in “Item 1A.

Risk Factors”, including, but not limited to, the following

Certain Risks in the Current Environment

We are operating in a period of market disruption and economic uncertainty, which may adversely affect the yields, and increase the risks of, our investment, and make it more difficult for us to raise equity capital.

Events outside of our control could negatively affect our portfolio companies and make their valuation uncertain, increase our funding costs and limit access to capital.

Rising interest rates may increase borrowing costs, reduce the net return on debt investments, and increase the risk of default on our portfolio company loans.

Other events could negatively impact our cost of borrowing and the net return on our investments.

Risks Related to our Business

We operate under an internalized operating structure and may incur significant costs and face significant risks associated with being self-managed.

Because we use borrowed funds, we are exposed to risks typically associated with leverage, potentially magnifying the risk of investing in us.

Lack of liquidity in our investments may adversely affect our business.

A substantial portion of our portfolio investments are recorded at fair value as determined by our valuation designee, and there may be uncertainty regarding the value of our portfolio investments.

Also, we are not limited with respect to the proportion of our assets that may be invested in securities of a single issuer.

We are exposed to risks associated with changes in interest rates on

loans under our credit facility and loans to our portfolio companies, which bear interest based on SOFR or LIBOR.

Changes in interest

rates also affect our cost of capital and net investment income.

Our investments may not be managed effectively.

Risk Factors”,

including, but not limited to, the following risks:

Risks in the Current Environment

are operating in a period of market disruption and economic uncertainty, which may adversely

affect the yields, increase the risks of our investment, and make it more difficult for us

to raise equity capital.

outside of our control could negatively affect our portfolio companies and make their valuation

uncertain, increase our funding costs and/or limit access to capital.

interest rates may increase borrowing costs, reduce the net return on debt investments, and

increase the risk of default on our portfolio company loans.

Other events could negatively

impact our cost of borrowing and the net return on our investments.

Related to our Business

operate under an internalized operating structure and may incur significant costs and face

significant risks associated with being self-managed.

Because we use borrowed funds, we are exposed

to risks typically associated with leverage, potentially magnifying the risk of investing in us.

Lack of liquidity in our investments

may adversely affect our business.

A substantial portion of

our portfolio investments are recorded at fair value as determined by our valuation designee, and there may be uncertainty regarding

the value of our portfolio investments.

Also, we are not limited with respect to the proportion of our assets that may be invested

in securities of a single issuer.

are exposed to risks associated with changes in interest rates on loans under our credit

facility and loans to our portfolio companies, which bear interest based on SOFR.

in interest rates also affect our cost of capital and net investment income.

investments may not be managed effectively.

We may change our investment objective and strategies.

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Failure to remain a BDC could reduce our operating flexibility.

We may be unable to pay distributions to shareholders, particularly if we realize income without receiving cash.

Failures of our information, cybersecurity and disaster recovery systems could disrupt our business.

Risks Related to our Investments

We may not realize gains from our equity investments, which may be risky and highly speculative.

We may be unable to make follow-on investments in portfolio companies, which could impair their value.

If portfolio companies prepay loans, our yields will be reduced if we cannot invest at an equal or higher rate.

We invest in securities of

foreign companies, which may involve significant risks.

Our investment in a lender to the jewelry business, which comprises 12.1% of our assets, is subject to volatility in prices of gemstones/jewelry and the risk of fraud and counterfeiting.

We may invest in

“unitranche” and “covenant-lite” debt instruments, which have higher yields but entail greater risk.

also be subject to the risks associated with investments in distressed issuers, hedging transactions and sector

concentration.

The disposition of our investments may result in contingent liabilities.

Risks Related to our Operations as a BDC and a RIC

Regulations governing our operation as a BDC may limit our ability to raise additional capital.

We depend upon our

management and investment teams and would be significantly affected by their loss.

As an internally managed BDC, we may be

restricted by the compensation to them that we may offer.

Future tax reform legislation relating to BDC’s may adversely affect our investments and our business.

If a sufficient portion of our assets are not qualifying assets, we could fail to qualify as a BDC.

We would be subject to corporate-level income tax if we did not qualify as a RIC or satisfy RIC distribution requirements.

Risks Relating to an Investment in our Securities

Investing in our securities may involve above average risk, and the market price of our shares fluctuates.

Our shares have not traded at or above NAV since the first quarter of 2015.

may be unable to pay distributions to shareholders, particularly if we realize income without

receiving cash.

of our information, cybersecurity and disaster recovery systems could disrupt our business.

Related to our Investments

may not realize gains from our equity investments, which may be risky and highly speculative.

We may be unable to make follow-on investments in portfolio companies, which could impair

portfolio companies prepay loans, our yields will be reduced if we cannot invest at an equal

or higher rate.

may invest in securities of foreign companies, which may involve significant risks.

investment in a lender to the jewelry business, which comprises 11.7% of our assets, is subject

to volatility in prices of gemstones/jewelry and the risk of fraud and counterfeiting.

investment in NSG, which comprises 15.3% of our assets, is subject to volatility due to capital

markets and the U.S.

economy generally, as well as evolving regulatory requirements.

may invest in “unitranche” and “covenant-lite” debt instruments,

which have higher yields but entail greater risk.

We may also be subject to the risks associated

with investments in distressed issuers, hedging transactions and sector concentration.

disposition of our investments may result in contingent liabilities.

Related to our Operations as a BDC and a RIC

Regulations governing our

operation as a BDC may limit our ability to raise additional capital.

We depend upon our management

and investment teams and would be significantly affected by their loss.

As an internally managed BDC, we may be restricted by the

compensation to them that we may offer.

Future tax reform legislation

relating to BDC’s may adversely affect our investments and our business.

If a sufficient portion

of our assets are not qualifying assets, we could fail to qualify as a BDC.

We would be subject to corporate-level income tax if

we did not qualify as a RIC or satisfy RIC distribution requirements.

Relating to an Investment in our Securities

Investing in our securities

may involve above average risk, and the market price of our shares fluctuates.

Our shares have not traded at or above NAV since the

first quarter of 2015.

NAV per share may be diluted if we sell shares or convertible securities below NAV per share.

Provisions of Delaware law and our charter documents could deter a takeover, depressing our share price.

Our issuance of preferred stock could affect the volatility of our NAV

and market value, and may give preferred stock holders rights adverse to common stock holders.

Our credit facility places restrictions

on our activities.

We could be negatively affected if we become subject to any securities class actions and derivative lawsuits.

Risks Related to the Life Insurance and Annuities

Business of NSG

● A ssumptions regarding policyholder behavior may be incorrect, requiring NSG

to increase its reserves.

● Data underlying morbidity and mortality on which NSG relies may be insufficient,

incorrect or incomplete, and public health crises may adversely impact NSG’s business, financial condition or results of operations.

Risks Related to the Property & Casualty Insurance Business

● Models used by NSG to evaluate risk are subject to uncertainty, and losses may differ materially from

Provisions of Delaware

law and our charter documents could deter a takeover, depressing our share price.

Our issuance of preferred

stock could affect the volatility of our NAV and market value, and may give preferred stock holders rights adverse to common stock

Our credit facility places restrictions on our activities.

We could be negatively

affected if we become subject to any securities class actions and derivative lawsuits.

Related to the Life Insurance and Annuities Business of NSG

Assumptions regarding policyholder behavior may be

incorrect, requiring NSG to increase its reserves.

Data underlying morbidity

and mortality on which NSG relies may be insufficient, incorrect or incomplete, and public health crises may adversely impact NSG’s

business, financial condition or results of operations.

Related to the Property & Casualty Insurance Business of NSG

Models used by NSG to evaluate risk are subject to

uncertainty, and losses may differ materially from estimates.

NSG’s expense reserves may be inadequate to cover losses.

● NSG is subject to unexpected changes in the interpretation of the coverage provisions of its policies.

● NSG’s failure to accurately and timely pay claims could materially and adversely affect its business.

● The property and casualty insurance business is historically cyclical in nature.

Risks Related to the Insurance Business Generally

● NSG relies on insurance retail agents and brokers, and its business is subject to intense competition.

● Insurance companies are subject to extensive regulation, and failure to satisfy regulatory requirements

could subject NSG to operational restrictions or other sanctions.

● NSG may be unable to purchase reinsurance in amounts desired on acceptable terms, and reinsurers may

default or fail to perform.

Climate change could have a material adverse effect on NSG’s business.

● Performance of NSG’s investment portfolio is subject to a variety of investment risks, including

NSG is subject to unexpected

changes in the interpretation of the coverage provisions of its policies.

NSG’s failure to

accurately and timely pay claims could materially and adversely affect its business.

The property and casualty

insurance business is historically cyclical in nature.

Related to the Insurance Business Generally

NSG relies on insurance

retail agents and brokers, and its business is subject to intense competition.

Insurance companies are

subject to extensive regulation, and failure to satisfy regulatory requirements could subject NSG to operational restrictions or

other sanctions.

NSG may be unable to purchase

reinsurance in amounts desired on acceptable terms, and reinsurers may default or fail to perform.

Climate change could have a material

adverse effect on NSG’s business.

● Performance

of NSG’s investment portfolio is subject to a variety of investment risks, including

conditions in the capital markets and the U.S.

economy generally.

● NSG will be required to increase its reserves if they are inadequate, adversely affecting its liquidity.

● Employees of NSG or its third-party service providers may take excessive risks resulting in losses.

We have built a diverse portfolio that includes

senior secured first lien term loans, senior secured second lien term loans, equity, unitranche loans, senior secured first lien notes,

subordinated notes, warrants and minority equity securities by investing approximately $10 million to $50 million of capital, on average,

in the securities of portfolio companies.

The following table shows the portfolio composition

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

will be required to increase its reserves if they are inadequate, adversely affecting its

of NSG or its third-party service providers may take excessive risks resulting in losses.

have built a diverse portfolio that includes senior secured first lien term loans, senior secured second lien term loans, equity, unitranche

loans, senior secured first lien notes, subordinated notes, warrants and minority equity securities by investing approximately $10 million

to $50 million of capital, on average, in the securities of portfolio companies.

following table shows the portfolio composition by industry grouping at fair value as of September 30, 2025 (dollars in thousands):

Aerospace & Defense

Hotel, Gaming & Leisure

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Consumer Discretionary

Aerospace & Defense

The following table shows the portfolio composition

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

Banking, Finance, Insurance & Real Estate

following table shows the portfolio composition by industry grouping at fair value as of September 30, 2024 (dollars in thousands):

Hotel, Gaming & Leisure

High Tech Industries

Construction & Building

High Tech Industries

Metals & Mining

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Aerospace & Defense

The following table sets forth certain information

as of September 30, 2024 for each portfolio company in which we had an investment.

Other than these investments, our only formal relationship

with our portfolio companies is the managerial assistance that we provide upon request and the board observer or participation rights

we may receive in connection with our investment.

Portfolio Company

Par Amount/Shares/Units

following table sets forth certain information as of September 30, 2025 for each portfolio company in which we had an investment.

than these investments, our only formal relationship with our portfolio companies is the managerial assistance that we provide upon request

and the board observer or participation rights we may receive in connection with our investment.

of Portfolio Company

Due at Maturity

of Net Assets

Around Roustabout, LLC

Senior Secured

First Lien Term Loan C

Senior Secured First Lien

FM Holdings, LLC

Aerospace & Defense

First Lien Term Loans

Angus Steakhouses, LLC

Hotel, Gaming & Leisure

Senior Secured First Lien

Delayed Draw Term Loan

Angus Steakhouses, LLC

Hotel, Gaming & Leisure

Senior Secured First Lien

Super Priority Delayed Draw Term Loan

Angus Steakhouses, LLC

Hotel, Gaming & Leisure

Senior Secured First Lien

Mobile Services

Senior Secured First Lien

for Disabled Vets, LLC (dba Reps for Vets)

Secured First Lien Term Loan

for Disabled Vets, LLC (dba Reps for Vets)

Secured First Lien Term Loan B

Seotowncenter, Inc.

Associates Holdco I, LLC

First Lien Term Loans

Lien Term Loans

Investment Corp.

Preferred Equity

Investment Corp.

Preferred Equity

Diversified Holdings

Property CTL Pass Through Trust

Financing, LLC

Broadcasting &

Senior Secured First Lien

Financing, LLC

Broadcasting &

Senior Secured First Lien

Capital Corp.

Senior Secured Promissory

Y-Grade Services, LP

First Lien Term Loans

Brands Group, LLC

Senior Secured First Lien

Equity Interest

Secured Promissory Note

BSP Realty Trust, Inc.

Holdings Parent, LLC

High Tech Industries

Accessories Group, LLC

Consumer goods:

Construction & Building

Senior Secured Notes

Secured Notes

Mortgage Capital, Inc.

Preferred Equity

Partners, LLC

Construction & Building

Operations, LLC

Metals & Mining

Senior Secured First Lien

Secured First Lien Term Loan

NewHoldCo, LLC

Consumer Discretionary

Portfolio Company

Amount/Shares/Units

of Net Assets

Science Group Corporation

Containers, Packaging &

Consumer Discretionary

First Out Exit Term Loan

Consumer Discretionary

Second Out Term Loan

Investment Holdings, LLC (dba Colibri)

Senior Secured First Lien

Discretionary

Bucks, LLC (dba Arc Gaming & Technologies, LLC)

Discretionary

Out Exit Term Loan

Bucks, LLC (dba Arc Gaming & Technologies, LLC)

Discretionary

Out Term Loan

Precision Investment Holdings LLC

Secured First Lien Term Loan

Precision Investment Holdings LLC

Secured First Lien Revolver

Precision Investment Holdings LLC

Secured Delayed Draw Term Loan

Precision Investment Holdings LLC

Financial, Inc.

Preferred Equity

Financial, Inc.

Bidco US, Inc.

Broadcasting &

First Lien Term Loans

York Mortgage Trust, Inc.

Preferred Equity

Group Holdings

Construction & Building

Senior Secured First Lien

Captive, Inc.

Hotel, Gaming & Leisure

Senior Secured Revolving

Hotel, Gaming & Leisure

Senior Secured First Lien

Hotel, Gaming & Leisure

Senior Secured First Lien

Broadcasting & Subscription

Lien Term Loans

Bidco US, Inc.

Secured Notes

Partners, LLC

Secured First Lien Term Loan B

Security Group Holdings, Inc.

Gaming & Leisure

Secured Revolving Note

Gaming & Leisure

Secured First Lien Term Loan B

Gaming & Leisure

Secured First Lien Term Loan C

Mortgage Corp.

Senior Secured Notes

Senior Secured First Lien

Acquisition Inc.

(dba Paragon Films)

Senior Secured

First Lien Term Loan

Secured Notes

Secured First Lien Term Loan

Secured Revolving Note

Secured First Lien Revolver

Secured First Lien Term Loan

Acquisition, LLC (dba Soccer Shots Franchising)

Senior Secured First Lien

Delayed Draw Term Loan

Secured First Lien Term Loan

Acquisition, LLC (dba Soccer Shots Franchising)

Senior Secured First Lien

Secured First Lien Revolver

(dba Industrial Flow Solutions Holdings, LLC)

First Lien Term Loans

Lien Term Loans

Capital Partners II, L.P.

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Holdings, Inc.

Broadcasting &

Senior Secured First Lien

Pooling Vehicle, LLC

Broadcasting & Subscription

Secured First Lien Term Loan

Holdings, Inc.

Aerospace & Defense

Secured Revolving Note

Secured First Lien Term Loan

Roofco, LLC (dba SMC Roofing Solutions LLC)

First Out Delayed Draw Term

Out Delayed Draw Term Loan

Roofco, LLC (dba SMC Roofing Solutions LLC)

First Out Term Loan

Out Term Loan

Roofco, LLC (dba SMC Roofing Solutions LLC)

Last Out Delayed Draw Term

Delayed Draw Term Loan

Roofco, LLC (dba SMC Roofing Solutions LLC)

Last Out Term Loan

All interest is payable in cash and/or PIK, and all SOFR or LIBOR represents 1 Month, 3 Month or 6 Month respective rates unless otherwise indicated.

For each debt investment, we have provided the current spread over index interest rate as of September 30, 2024.

As of September 30, 2024, our income-bearing

investment portfolio, which represented 84.5% of our total portfolio, had a weighted average yield based upon cost of our portfolio investments

interest is payable in cash and/or PIK, and all SOFR represents 1 Month, 3 Month or 6 Month

respective rates unless otherwise indicated.

For each debt investment, we have provided the

current spread over index interest rate or the fixed rate as of September 30, 2025.

of September 30, 2025, our income-bearing investment portfolio, which represented 64.8% of our total portfolio, had a weighted average

yield based upon cost of our portfolio investments of approximately 12.8% and 58.8% of our income-bearing investment portfolio bore interest

based on floating rates, such as SOFR, 14.9% of our income-bearing investment portfolio bore interest at fixed rates, and 26.3% of our

income-bearing investment portfolio are income-producing equity investments.

As of September 30, 2024, our income-bearing investment

portfolio, which represented 84.5% of our total portfolio, had a weighted average yield based upon cost of our portfolio investments

of approximately 12.3% and 57.9% of our income-bearing investment portfolio bore interest based on floating rates, such SOFR or LIBOR,

1 unchanged sentence

income-producing equity investments.

As of September 30, 2023, our income-bearing investment portfolio, which represented 88.2% of our

total portfolio, had a weighted average yield based upon cost of our portfolio investments of approximately 13.3% and 59.5% of our income-bearing

investment portfolio bore interest based on floating rates, such LIBOR or SOFR, 13.9% of our income-bearing investment portfolio bore

interest at fixed rates, and 26.6% of our income-bearing investment portfolio are income-producing equity investments.

The weighted average

yield of our total portfolio does not represent the total return to our stockholders.

The weighted average yield on income producing

investments is computed based upon a combination of the cash flows to date and the contractual interest payments, principal amortization

and fee notes due at maturity without giving effect to closing fees received, base management fees, incentive fees or general fund related

For each floating rate loan, the projected fixed-rate equivalent coupon rate used to forecast the interest cash flows was calculated

by adding the interest rate spread specified in the relevant loan document to the fixed-rate equivalent floating rate, duration-matched

to the specific loan, adjusted by the floating rate floor and/or cap in place on that loan.

Overview of Portfolio Companies

Set forth below is a brief description of the business of our portfolio

companies as of September 30, 2024:

Portfolio Company

Brief Description of Portfolio Company

All Around Roustabout, LLC

All Around Roustabout LLC (“AAR”) provides field support services to oil and gas independent producers, drilling companies and midstream companies in the Denver-Julesburg Basin and Permian Basin.

AAR builds, repairs, modifies and maintains oil and gas production equipment, sites, wells and pipelines.

Altisource S.A.R.L.

Altisource operates as an integrated service provider and marketplace for the real estate and mortgage industries.

It provides property preservation and inspection services, payment management technologies, and a vendor management oversight software-as-a-service (“SaaS”) platform.

Arcline FM Holdings, LLC

Arcline FM Holdings, LLC (d/b/a Fairbanks Morse Defense) is a provider of propulsion systems, ancillary power, motors, and controllers for the US Navy and Coast Guard, and provides necessary parts and maintenance, repair and overhaul (MRO) services to its long lived installed base of equipment.

Black Angus Steakhouses, LLC

Black Angus Steakhouses, LLC, founded in 1964 and headquartered in Los Altos, CA, operates restaurants across six states including California, Arizona, Alaska, New Mexico, Washington, and Hawaii.

Blufox Mobile, LLC

Blufox Mobile, LLC, founded in 2018 and headquartered in Plainview, NY, is the largest retailer for Comcast Corporation’s consumer brand, Xfinity.

The Company provides Comcast’s mobile phone, internet, cable television, home voice communications, and home security to residential customers across the U.S.

(primarily the East Coast, TX, and FL).

Boostability Seotowncenter, Inc.

The weighted average yield of our total portfolio does not represent the total return to our stockholders.

The weighted average yield on income producing investments is computed based upon a combination of the cash flows to date and the contractual

interest payments, principal amortization and fee notes due at maturity without giving effect to closing fees received, base management

fees, incentive fees or general fund related expenses.

For each floating rate loan, the projected fixed-rate equivalent coupon rate used

to forecast the interest cash flows was calculated by adding the interest rate spread specified in the relevant loan document to the

fixed-rate equivalent floating rate, duration-matched to the specific loan, adjusted by the floating rate floor and/or cap in place on

of Portfolio Companies

below is a brief description of the business of our portfolio companies as of September 30, 2025:

Description of Portfolio Company

for Disabled Vets, LLC (dba Reps for Vets)

Advocates for Disabled

Vets, LLC d.b.a Reps For Vets is a national disability firm that specializes in assisting U.S.

veterans in obtaining non-taxable

disability benefits from The Department of Veteran Affairs (VA).

Altisource operates as

an integrated service provider and marketplace for the real estate and mortgage industries.

It provides property preservation and

inspection services, payment management technologies, and a vendor management oversight software-as-a-service (“SaaS”)

Seotowncenter, Inc.

is a tech-enabled business services company that delivers white label search engine optimization and local search and digital campaign fulfillment to the small and midsize business market.

CB&L Associates Holdco I, LLC

CBL owns, develops, acquires, leases, manages, and operates regional shopping malls, open-air and mixed-use centers, outlet centers, associated centers, community centers, office and other properties.

Seotowncenter, Inc.

a tech-enabled business services company that delivers white label search engine optimization and local search and digital campaign

fulfillment to the small and midsize business market.

Associates Holdco I, LLC

CBL owns, develops, acquires,

leases, manages, and operates regional shopping malls, open-air and mixed-use centers, outlet centers, associated centers, community

centers, office and other properties.

Properties are in 24 states, primarily in the southeastern and midwestern United States.

Chimera Investment Corp.

Investment Corp.

Chimera Investment Corp.

is an internally managed REIT that is primarily engaged in the business of investing in a diversified portfolio of mortgage assets, including residential mortgage loans, Agency residential mortgage-backed securities (“RMBS”), Non-Agency RMBS, Agency commercial mortgage-backed securities (“CMBS”), and other real estate-related assets.

Portfolio Company

Brief Description of Portfolio Company

Copper Property CTL Pass Through Trust

Copper Property CTL Pass Through Trust was established to acquire 160 retail properties and 6 warehouse distribution centers (the “Properties”) from J.C.

is an internally managed REIT that is primarily engaged in the business of investing in a diversified portfolio of mortgage assets,

including residential mortgage loans, Agency residential mortgage-backed securities (“RMBS”), Non-Agency RMBS, Agency

commercial mortgage-backed securities (“CMBS”), and other real estate-related assets.

Diversified Holdings

Compass Diversified Holdings

is a private equity firm specializing in add on acquisitions, buyouts, industry consolidation, recapitalization, late stage, and

middle market investments

Property CTL Pass Through Trust

Copper Property CTL Pass

Through Trust was established to acquire 160 retail properties and 6 warehouse distribution centers (the “Properties”)

Penney as part of its Chapter 11 plan of reorganization.

The Trust’s operations consist solely of owning, leasing and selling the Properties.

DirecTV Financing, LLC

DirecTV Financing, LLC offers digital entertainment services in the United States using satellite and IP-based technologies as well as streaming options that do not require either satellite or wired IP services.

The Company’s customer base primarily consists of residential customers.

ECC Capital Corp.

ECC Capital Corporation, formed in 2004, is a specialty finance and asset management company that currently manages a portfolio of nonconforming, runoff residential mortgage assets and owns the associated mortgage servicing rights.

Epic Y-Grade Services, LP

Epic Y-Grade Services, LP is a fully integrated natural gas liquids (NGL) system consisting of ~1,100 miles of y-grade, ethane, propane, normal butane, isobutane, and natural gasoline pipelines, and fractionation facilities providing product supply to petrochemical companies, refineries, and export markets across the Texas Gulf Coast from Corpus Christi to Sweeny, TX.

First Brands Group, LLC

First Brands Group, LLC is an automotive aftermarket platform offering comprehensive solutions for consumable maintenance and mission-critical repair parts under a portfolio of brands.

FlexFIN operates an asset-based lending business under which it enters into secured loans and secured financing structures with borrowers engaged in the gemstone/jewelry industry.

Franklin BSP Realty Trust, Inc.

is a real estate finance company that primarily originates, acquires and manages a diversified portfolio of commercial real estate debt investments secured by properties located within and outside the United States.

FST Holdings Parent, LLC

FST is a privately held provider of diversified technical services to the semiconductor / microelectronics, life sciences, data center, government, and higher-education industries.

Global Accessories Group, LLC

Global Accessories Group, LLC, headquartered in New York City, designs, manufactures, and sells custom-themed jewelry and accessory collections.

These collections are tailored to leading retailers in the specialty, department store, off-price and juniors markets.

The Trust’s operations consist solely of owning, leasing

and selling the Properties.

Capital Corp.

ECC Capital Corporation,

formed in 2004, is a specialty finance and asset management company that currently manages a portfolio of nonconforming, runoff residential

mortgage assets and owns the associated mortgage servicing rights.

FlexFIN operates an asset-based

lending business under which it enters into secured loans and secured financing structures with borrowers engaged in the gemstone/jewelry

BSP Realty Trust, Inc.

Franklin BSP Realty Trust,

is a real estate finance company that primarily originates, acquires and manages a diversified portfolio of commercial real

estate debt investments secured by properties located within and outside the United States.

FST is a privately

held provider of diversified technical services to the semiconductor / microelectronics, life sciences, data center, government,

and higher-education industries.

Innovate Corp.

is a diversified holding company that has a portfolio of subsidiaries in a variety of operating segments, infrastructure, life sciences, and broadcasting.

Portfolio Company

Brief Description of Portfolio Company

Invesco Mortgage Capital, Inc.

Invesco Mortgage Capital Inc.

is a Maryland corporation primarily focused on investing in, financing and managing mortgage-backed securities (“MBS”) and other mortgage-related assets.

JFL-NGS-WCS Partners, LLC

is a diversified

holding company that has a portfolio of subsidiaries in a variety of operating segments, infrastructure, life sciences, and broadcasting.

Invesco Mortgage Capital,

Invesco Mortgage Capital

is a Maryland corporation primarily focused on investing in, financing and managing mortgage-backed securities (“MBS”)

and other mortgage-related assets.

Partners, LLC

NGS-WCS Group Holdings

JFL-NGS-WCS Partners, LLC and NGS-WCS Group Holdings were formed in November 2020 when NorthStar Group Services, a provider of environmental remediation and deconstruction services, merged with Waste Control Specialists, a leading provider of hazardous and radioactive waste disposal, storage, and treatment for commercial and government customers.

JFL-NGS-WCS Partners, LLC

and NGS-WCS Group Holdings were formed in November 2020 when NorthStar Group Services, a provider of environmental remediation and

deconstruction services, merged with Waste Control Specialists, a leading provider of hazardous and radioactive waste disposal, storage,

and treatment for commercial and government customers.

Kemmerer Operations, LLC

Kemmerer Operations, LLC, location in Wyoming, is a producer of high-value thermal coal and surface-mined coal.

Lighting Science Group Corporation

Lighting Science Group Corporation (“LSG”) is a light emitting diode (“LED”) lighting technology company.

LSG designs, develops and markets general illumination products that exclusively use LEDs as their light source.

LSG’s product portfolio includes LED-based retrofit lamps (replacement bulbs) used in existing light fixtures as well as purpose-built LED-based luminaires (light fixtures).

Lucky Bucks, LLC

Kemmerer Operations, LLC, located in Wyoming, is a

producer of high-value thermal coal and surface-mined coal.

Bucks, LLC (dba Arc Gaming & Technologies, LLC)

LB NewHoldCo, LLC

Lucky Bucks, LLC and LB NewHoldCo, LLC owns and operates digital gaming terminals, or Coin Operated Amusement Machines, in the state Georgia.

McKissock Investment Holdings, LLC (dba Colibri)

Colibri is a provider of career lifecycle management for mandatory professional education solutions across various end markets including Financial & Accounting Services, Real Estate, Healthcare, Valuation & Property Services and Teaching.

LLC and LB NewHoldCo, LLC owns and operates digital gaming terminals, or Coin Operated Amusement Machines, in the state of Georgia.

Precision Investment Holdings LLC

MB Precision Holdings LLC

machines, fabricates, and assembles complex, mission-critical component parts for large, industrial manufacturing companies across

the aerospace, defense, and industrial power end-markets.

The Company operates three machining facilities in Phoenix, AZ, Cincinnati,

OH, and Winslow, ME.

MFA Financial, Inc.

is an internally-managed REIT primarily engaged in investing in residential mortgage assets, with a focus on residential whole loans, residential mortgage securities, and mortgage servicing rights-related assets.

Neptune Bidco US Inc.

an internally-managed REIT primarily engaged in investing in residential mortgage assets, with a focus on residential whole loans,

residential mortgage securities, and mortgage servicing rights-related assets.

Bidco US Inc.

(dba Nielsen)

Nielsen, founded in 1923, is a global provider of audience measurement, and data and analytics to programmers, content creators and distributors, and advertisers.

Nielsen’s audience estimates are one of the primary metrics used to determine the value of programming and advertising in the U.S.

Nielsen, founded in 1923,

is a global provider of audience measurement, and data and analytics to programmers, content creators and distributors, and advertisers.

Nielsen’s audience estimates are one of the primary metrics used to determine the value of programming and advertising in the

television advertising marketplace.

New York Mortgage Trust, Inc.

NY Mortgage Trust is a REIT that acquires, invests in, finances and manages mortgage-related single-family and multi-family residential assets in the US.

New York Mortgage Trust,

NY Mortgage Trust is a

REIT that acquires, invests in, finances and manages mortgage-related single-family and multi-family residential assets in the US.

NSG Captive Inc.

is an Alabama protected cell captive insurance company

and is the ultimate controlling party of National Security Group, Inc.

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.

NVTN LLC (d/b/a “Dick’s Last Resort”), established in 1985 and headquartered in Nashville, TN, is a “eatertainment” restaurant concept with locations throughout the US, mostly in budget friendly tourist destinations.

NVTN LLC has developed an identifiable brand for its high-energy, unique themed restaurant concept that targets tourists and business travelers in high foot traffic locations.

parent of National Security Group Inc.

NSG, headquartered in Elba, AL, is a specialty underwriter of property,

casualty, annuities, life, accident and health insurance, primarily in the Southeastern US.

NVTN LLC (d/b/a “Dick’s

Last Resort”), established in 1985 and headquartered in Nashville, TN, is a “eatertainment” restaurant concept

with locations throughout the US, mostly in budget friendly tourist destinations.

NVTN LLC has developed an identifiable brand

for its high-energy, unique themed restaurant concept that targets tourists and business travelers in high foot traffic locations.

Onity Group Inc.

Onity Group Inc., a financial

services company, originates and services forward and reverse mortgage loans in the United States, the United States Virgin Islands,

India, and the Philippines.

PHH Mortgage Corp.

services and originates forward and reverse mortgage loans.

The Company has been servicing mortgages since 1988 and commenced origination of forward mortgage loans in 2012 and reverse mortgage loans in 2013.

Portfolio Company

Brief Description of Portfolio Company

Point.360, headquartered in Los Angeles, CA is a full-service content management company with several facilities strategically located throughout Los Angeles supporting all aspects of postproduction.

and originates forward and reverse mortgage loans.

The Company has been servicing mortgages since 1988 and commenced origination

of forward mortgage loans in 2012 and reverse mortgage loans in 2013.

Power Stop LLC

Power Stop LLC manufactures and distributes braking systems for cars, trucks, SUVs, performance vehicles, and severe duty trucks and tows.

The Company offers brake kits, caliper kits, brake pads, brake rotors, calipers, brake shoes, and pad wear sensors.

It provides products through a network of distributors in Europe, North America, South America, the Middle East, and Africa;

Power Stop LLC manufactures

and distributes braking systems for cars, trucks, SUVs, performance vehicles, and severe duty trucks and tows.

The Company offers

brake kits, caliper kits, brake pads, brake rotors, calipers, brake shoes, and pad wear sensors.

It provides products through a network

of distributors in Europe, North America, South America, the Middle East, and Africa;

and online retailers.

Secure Acquisition Inc.

(dba Paragon Films)

Paragon Films, Inc.

manufactures and supplies stretch film products to customers in various industries in the United States, Canada, Mexico, South America, and internationally.

SS Acquisition, LLC (dba Soccer Shots Franchising)

Soccer Shots Franchising is a franchised-based system operating in the U.S.

and Canada that provides children’s enrichment programs with a unique emphasis on social, cognitive, and linguistic skill through soccer.

Stancor (dba Industrial Flow Solutions Holdings, LLC)

Stancor, founded in 1985 and based out of Monroe, CT, is a designer and manufacturer of electric submersible pumps, control, accessories, and parts.

Staples, Inc.

Staples is a B2B distributor of office supplies in North America and provider of e-commerce via Staples.com.

Tamarix Capital Partners II, L.P.

is a licensed SBIC formed to generate attractive-risk adjusted returns by making debt and preferred equity investments in United States-based, lower middle market companies operating across a broad cross-section of industries and sectors.

Thryv Holdings, Inc.

PREIT Associates

is a publicly traded real estate investment trust and primarily owns retail shopping malls across 8 states, primarily located in

the Mid-Atlantic region.

PSB Group, LLC is a franchisor

that owns a portfolio of ten home-services brands.

PSB provides interior and exterior home services including painting,

plumbing, cleaning, handyman, organizing, garage door repair, shelving, and junk removal, among other services.

Redwood Trust Inc.

real estate investment trust that invests in mortgages for single-family and rental properties and also acquires, sells, and securitizes

residential loans.

Acquisition, LLC (dba Soccer Shots Franchising)

Soccer Shots Franchising

is a franchised-based system operating in the U.S.

and Canada that provides children’s enrichment programs with a unique emphasis

on social, cognitive, and linguistic skill through soccer.

content creators to provide content analysis, ideation, prediction, planning, and resources to maximize ad revenue while streamlining

the content creation process.

(dba Industrial Flow Solutions Holdings, LLC)

Stancor, founded in 1985

and based out of Monroe, CT, is a designer and manufacturer of electric submersible pumps, control, accessories, and parts.

Staples is a B2B distributor

of office supplies in North America and provider of e-commerce via Staples.com.

Capital Partners II, L.P.

Tamarix Capital Partners

is a licensed SBIC formed to generate attractive-risk adjusted returns by making debt and preferred equity investments in

United States-based, lower middle market companies operating across a broad cross-section of industries and sectors.

Holdings, Inc.

Thryv Holdings, Inc.

is a provider of print and digital marketing solutions to small and medium sized businesses and SaaS end-to-end customer experience tools.

Velocity Pooling Vehicle, LLC

Velocity Pooling Vehicle, LLC, headquartered in Coppell, TX, is a manufacturer, distributor and retailer of branded aftermarket products for the powersports industry.

The Company’s brands include Vance & Hines, Kuryakyn, Mustang, Performance Machine, and others.

Wingman Holdings, Inc.

a provider of print and digital marketing solutions to small and medium sized businesses and SaaS end-to-end customer experience

Wingman Holdings, Inc.

(f/k/a Crow Precision Components, LLC) is a Fort Worth, TX based forger of aluminum and steel used for mission critical aircraft components, among other end markets.

XYZ Roofco, LLC (dba SMC Roofing Solutions LLC)

SMC Roofing is a residential re-roofing platform that focuses on the insurance-driven weather damage market, specifically hail and windstorm damage.

Payment of Our Expenses

Since January 1, 2021, we are internally managed

and do not pay any external investment advisory fees, but instead directly incur the operating costs associated with employing professionals

We bear all costs and expenses of our operations and transactions, including, but not limited to those related to:

our organization and continued corporate existence;

calculating our net asset value (“NAV”) (including the cost and expenses of any independent valuation firms);

expenses, including travel expense, incurred by our professionals or payable to third parties performing due diligence on prospective portfolio companies, monitoring our investments and, if necessary, enforcing our rights;

interest payable on debt incurred to finance our investments;

the costs of all offerings of common shares and other securities;

operating costs associated with employing investment professionals and other staff;

distributions on our shares;

administration fees payable under our administration agreement;

custodial fees related to our assets

amounts payable to third parties relating to, or associated with, making investments;

transfer agent and custodial fees;

all registration and listing fees;

WHI Global, LLC and Wingman

Holdings, Inc.

are a vertically integrated manufacturer of precision metal components and complex assemblies for the aerospace, defense,

and industrial markets.

Roofco, LLC (dba SMC Roofing Solutions LLC)

SMC Roofing is a residential

re-roofing platform that focuses on the insurance-driven weather damage market, specifically hail and windstorm damage.

of Our Expenses

January 1, 2021, we are internally managed and do not pay any external investment advisory fees, but instead directly incur the operating

costs associated with employing professionals and staff.

We bear all costs and expenses of our operations and transactions, including,

but not limited to those related to:

organization and continued corporate existence;

● calculating

our net asset value (“NAV”) (including the cost and expenses of any independent

valuation firms);

including travel expense, incurred by our professionals or payable to third parties performing

due diligence on prospective portfolio companies, monitoring our investments and, if necessary,

enforcing our rights;

payable on debt incurred to finance our investments;

costs of all offerings of common shares and other securities;

costs associated with employing investment professionals and other staff;

● distributions

on our shares;

administration fees payable

under our administration agreement;

custodial fees related

to our assets

payable to third parties relating to, or associated with, making investments;

agent and custodial fees;

registration and listing fees;

federal, state and local taxes;

independent directors’ fees and expenses;

costs of preparing and filing reports or other documents with the SEC or other regulators;

the costs of any reports, proxy statements or other notices to our stockholders, including printing costs;

our fidelity bond;

the operating lease of our office space;

directors and officers/errors and omissions liability insurance, and any other insurance premiums;

indemnification payments;

direct costs and expenses of administration, including audit and legal costs.

Administration Agreement

In connection with the adoption by the board of

directors of an internalized management structure, on November 19, 2020, the Company entered into a Fund Accounting Servicing Agreement

and an Administration Servicing Agreement on customary terms with U.S.

Bancorp affiliate also served as the Company’s

● independent

directors’ fees and expenses;

of preparing and filing reports or other documents with the SEC or other regulators;

costs of any reports, proxy statements or other notices to our stockholders, including printing

fidelity bond;

operating lease of our office space;

and officers/errors and omissions liability insurance, and any other insurance premiums;

● indemnification

costs and expenses of administration, including audit and legal costs.

Administration

connection with the adoption by the board of directors of an internalized management structure, on November 19, 2020, the Company entered

into a Fund Accounting Servicing Agreement and an Administration Servicing Agreement on customary terms with U.S.

affiliate also served as the Company’s custodian.

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

Bancorp terminated on August 9, 2022.

since served as administrator of the Company and has provided us with fund accounting and financial reporting services pursuant to its

Services Agreement with the Company.

Effective September 12, 2022, Computershare serves as custodian for the Company pursuant to its Loan

Administration and Custodial Agreement with the Company.

For the years ended September 30, 2024, 2023 and 2022, we incurred $0.3 million,

$0.3 million and $0.3 million in administrator expenses, respectively.

Internalized Management Structure

On November 18, 2020, the board of directors approved

adoption of an internalized management structure effective January 1, 2021.

To lead the internalized management team, the

board appointed David Lorber, who had served as an independent director of the Company since April 2019, as Chief Executive Officer and

Ellida McMillan, who previously served as Chief Financial Officer and Chief Operating Officer of Alcentra Capital Corporation, a NASDAQ-traded

BDC, from April 2017 until it merged into Crescent Capital BDC, Inc.

in February 2020, as Chief Financial Officer of the Company, each

effective January 1, 2021.

Lorber is paid an annual base salary of $530,000, and Ms.

McMillan is paid an annual base salary of $350,000,

and each is eligible for one or more discretionary cash bonuses.

The internalized management team is responsible

for the day-to-day management and operations of the Company, under the oversight of the board.

The internalized management team presently

consists of 3 investment professionals and 6 employees/consultants overall.

The Company retained ACA Group, the successor to Alaric Compliance

Services, LLC, whose officer serves as the Company’s Chief Compliance Officer.

As discussed above, the Company has also entered

into a services agreement on customary terms with SS&C, which serves as the Company’s administrator, as well as a loan administration

and custodial agreement on customary terms with Computershare, who serves as our primary custodian.

We have elected to be regulated as a BDC under

the 1940 Act.

The 1940 Act contains prohibitions and restrictions relating to transactions between BDCs and their affiliates, principal

underwriters and affiliates of those affiliates or underwriters and requires that a majority of the directors be persons other than “interested

persons”, as that term is defined in the 1940 Act.

In addition, the 1940 Act provides that we may not change the nature of our business

so as to cease to be, or to withdraw our election as, a BDC unless approved by “a majority of our outstanding voting securities.”

As a BDC, we are required to meet an asset coverage

ratio, reflecting the value of our total assets to our total senior securities, which include all of our borrowings and any preferred

stock we may issue in the future, of at least 200%.

However, in March 2018, the Small Business Credit Availability Act (the “SBCA”)

modified the 1940 Act by allowing a BDC to increase the maximum amount of leverage it may incur from 200% to 150%, if certain requirements

Under the 1940 Act, 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 on 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.

The Company has not sought

stockholder or independent director approval to reduce its asset coverage ratio to 150%.

On March 23, 2018, the SBCA was signed into law

and, among other things, instructs the SEC to issue rules or amendments to rules allowing BDCs to use the same registration, offering

and communication processes that are available to operating companies.

The rules and amendments specified by the SBCA became self-implementing

on March 24, 2019.

On April 8, 2020, the SEC adopted rules and amendments to implement certain provisions of the SBCA (the “Final

Rules”) that, among other things, modify the registration, offering, and communication processes available to BDCs relating to:

(i) the shelf offering process to permit the use of short-form registration statements on Form N-2 and incorporation by reference;

the ability to qualify for well-known seasoned issuer status;

(iii) the immediate or automatic effectiveness of certain filings made in

connection with continuous public offerings;

and (iv) communication processes and prospectus delivery.

In addition, the SEC adopted rules

that will require BDCs to comply with certain structured data and inline XBRL requirements.

The Final Rules generally became effective

on August 1, 2020, except that a BDC eligible to file short-form registration statements on Form N-2, like the Company, must comply with

the Inline XBRL structured data requirements for its financial statements, registration statement cover page, and certain prospectus information

by August 1, 2022.

We may also be prohibited under the 1940 Act from

knowingly participating in certain transactions with our affiliates without the prior approval of our directors who are not interested

persons and, in some cases, prior approval by the SEC.

Qualifying Assets

Under the 1940 Act, a BDC may not acquire any

asset other than assets of the type listed in Section 55(a) of the 1940 Act, which are referred to as qualifying assets, unless, at the

time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets.

The principal categories of

qualifying assets relevant to our business are the following:

Securities purchased in transactions not involving any public offering from the issuer of such securities, which issuer (subject to certain limited exceptions) is an eligible portfolio company, or from any person who is, or has been during the preceding 13 months, an affiliated person of an eligible portfolio company, or from any other person, subject to such rules as may be prescribed by the SEC.

An eligible portfolio company is defined in the 1940 Act as any issuer which:

is organized under the laws of, and has its principal place of business in, the United States;

is not an investment company (other than a small business investment company wholly owned by the Company) or a company that would be an investment company but for certain exclusions under the 1940 Act;

terminated on August 9, 2022.

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

financial reporting services pursuant to its Services Agreement with the Company.

Effective September 12, 2022, Computershare serves

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

For the years ended September

30, 2025, 2024 and 2023, we incurred $0.4 million, $0.3 million and $0.3 million in administrator expenses, respectively.

Management Structure

November 18, 2020, the board of directors approved adoption of an internalized management structure effective January 1, 2021.

lead the internalized management team, the board appointed David Lorber, who had served as an independent director of the Company since

April 2019, as Chief Executive Officer and Ellida McMillan, who previously served as Chief Financial Officer and Chief Operating Officer

of Alcentra Capital Corporation, a NASDAQ-traded BDC, from April 2017 until it merged into Crescent Capital BDC, Inc.

in February 2020,

as Chief Financial Officer of the Company, each effective January 1, 2021.

Lorber is paid an annual base salary of $530,000, and

McMillan is paid an annual base salary of $350,000, and each is eligible for one or more discretionary cash bonuses.

internalized management team is responsible for the day-to-day management and operations of the Company, under the oversight of the board.

The internalized management team presently consists of 4 investment professionals and 7 employees/consultants overall.

The Company retained

ACA Group, the successor to Alaric Compliance Services, LLC, whose officer serves as the Company’s Chief Compliance Officer.

discussed above, the Company has also entered into a services agreement on customary terms with SS&C, which serves as the Company’s

administrator, as well as a loan administration and custodial agreement on customary terms with Computershare, who serves as our primary

have elected to be regulated as a BDC under the 1940 Act.

The 1940 Act contains prohibitions and restrictions relating to transactions

between BDCs and their affiliates, principal underwriters and affiliates of those affiliates or underwriters and requires that a majority

of the directors be persons other than “interested persons”, as that term is defined in the 1940 Act.

In addition, the 1940

Act provides that we may not change the nature of our business so as to cease to be, or to withdraw our election as, a BDC unless approved

by “a majority of our outstanding voting securities.”

a BDC, we are required to meet an asset coverage ratio, reflecting the value of our total assets to our total senior securities, which

include all of our borrowings and any preferred stock we may issue in the future, of at least 200%.

However, in March 2018, the Small

Business Credit Availability Act (the “SBCA”) modified the 1940 Act by allowing a BDC to increase the maximum amount of leverage

it may incur from 200% to 150%, if certain requirements 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 on 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.

The Company has not sought stockholder or independent director approval to reduce its asset coverage ratio

March 23, 2018, the SBCA was signed into law and, among other things, instructs the SEC to issue rules or amendments to rules allowing

BDCs to use the same registration, offering and communication processes that are available to operating companies.

The rules and amendments

specified by the SBCA became self-implementing on March 24, 2019.

On April 8, 2020, the SEC adopted rules and amendments to implement

certain provisions of the SBCA (the “Final Rules”) that, among other things, modify the registration, offering, and communication

processes available to BDCs relating to:

(i) the shelf offering process to permit the use of short-form registration statements on Form

N-2 and incorporation by reference;

(ii) the ability to qualify for well-known seasoned issuer status;

(iii) the immediate or automatic

effectiveness of certain filings made in connection with continuous public offerings;

and (iv) communication processes and prospectus

In addition, the SEC adopted rules that will require BDCs to comply with certain structured data and inline XBRL requirements.

The Final Rules generally became effective on August 1, 2020, except that a BDC eligible to file short-form registration statements on

Form N-2, like the Company, must comply with the Inline XBRL structured data requirements for its financial statements, registration

statement cover page, and certain prospectus information by August 1, 2022.

may also be prohibited under the 1940 Act from knowingly participating in certain transactions with our affiliates without the prior

approval of our directors who are not interested persons and, in some cases, prior approval by the SEC.

the 1940 Act, a BDC may not acquire any asset other than assets of the type listed in Section 55(a) of the 1940 Act, which are referred

to as qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s

total assets.

The principal categories of qualifying assets relevant to our business are the following:

(1) Securities

purchased in transactions not involving any public offering from the issuer of such securities,

which issuer (subject to certain limited exceptions) is an eligible portfolio company, or

from any person who is, or has been during the preceding 13 months, an affiliated person

of an eligible portfolio company, or from any other person, subject to such rules as may

be prescribed by the SEC.

An eligible portfolio company is defined in the 1940 Act as any

issuer which:

is organized under the

laws of, and has its principal place of business in, the United States;

is not an investment company

(other than a small business investment company wholly owned by the Company) or a company that would be an investment company but

for certain exclusions under the 1940 Act;

satisfies any of the following:

has a market capitalization of less than $250 million or does not have any class of securities listed on a national securities exchange;

is controlled by a BDC or a group of companies including a BDC, the BDC actually exercises a controlling influence over the management or policies of the eligible portfolio company, and, as a result thereof, the BDC has an affiliated person who is a director of the eligible portfolio company;

is a small and solvent company having total assets of not more than $4 million and capital and surplus of not less than $2 million.

Securities of an eligible portfolio company purchased from any person in a private transaction if there is no ready market for such securities and we already own 60% of the outstanding equity of the eligible portfolio company.

Securities received in exchange for or distributed on or with respect to securities described above, or pursuant to the exercise of warrants or rights relating to such securities.

Securities of any eligible portfolio company which we control.

Securities purchased in a private transaction from a U.S.

issuer that is not an investment company or from an affiliated person of the issuer, or in transactions incident thereto, if the issuer is in bankruptcy and subject to reorganization or if the issuer, immediately prior to the purchase of its securities was unable to meet its obligations as they came due without material assistance other than conventional lending or financing arrangements.

has a market capitalization

of less than $250 million or does not have any class of securities listed on a national securities exchange;

is controlled by a BDC

or a group of companies including a BDC, the BDC actually exercises a controlling influence over the management or policies of the

eligible portfolio company, and, as a result thereof, the BDC has an affiliated person who is a director of the eligible portfolio

is a small and solvent

company having total assets of not more than $4 million and capital and surplus of not less than $2 million.

Securities of an eligible

portfolio company purchased from any person in a private transaction if there is no ready market for such securities and we already

own 60% of the outstanding equity of the eligible portfolio company.

Securities received in

exchange for or distributed on or with respect to securities described above, or pursuant to the exercise of warrants or rights relating

to such securities.

Securities of any eligible

portfolio company which we control.

Securities purchased in

a private transaction from a U.S.

issuer that is not an investment company or from an affiliated person of the issuer, or in transactions

incident thereto, if the issuer is in bankruptcy and subject to reorganization or if the issuer, immediately prior to the purchase

of its securities was unable to meet its obligations as they came due without material assistance other than conventional lending

or financing arrangements.

Cash, cash equivalents, U.S.

Government securities or high-quality debt securities maturing in one year or less from the time of investment.

The regulations defining and interpreting qualifying

assets may change over time.

We may adjust our investment focus needed to comply with and/or take advantage of any regulatory, legislative,

administrative or judicial actions in this area.

Managerial Assistance to Portfolio Companies

A BDC must have been organized and have its principal

place of business in the United States and must be operated for the purpose of making investments in the types of securities described

in “Regulation — Qualifying Assets” above.

However, in order to count portfolio securities as qualifying assets for

the purpose of the 70% requirement, the BDC generally must either control the issuer of the securities or must offer to make available

to the issuer of the securities significant managerial assistance.

Where the BDC purchases such securities in conjunction with one or

more other persons acting together, the BDC will satisfy this test if one of the other persons in the group makes available such managerial

Making available managerial assistance means, among other things, any arrangement whereby the BDC, through its directors,

officers or employees, offers to provide, and, if accepted, does so provide, significant guidance and counsel concerning the management,

operations or business objectives and policies of a portfolio company.

Temporary Investments

Pending investment in other types of “qualifying

assets”, as described above, our investments may consist of cash, cash equivalents, U.S.

Government securities or high-quality debt

securities maturing in one year or less from the time of investment, which we refer to, collectively, as temporary investments, so that

70% of our assets are qualifying assets.

Typically, we will invest in highly rated commercial paper, U.S.

government securities

or high-quality debt securities maturing in one year or less from the time of investment.

regulations defining and interpreting qualifying assets may change over time.

We may adjust our investment focus needed to comply with

and/or take advantage of any regulatory, legislative, administrative or judicial actions in this area.

Assistance to Portfolio Companies

BDC must have been organized and have its principal place of business in the United States and must be operated for the purpose of making

investments in the types of securities described in “Regulation — Qualifying Assets” above.

However, in order to count

portfolio securities as qualifying assets for the purpose of the 70% requirement, the BDC generally must either control the issuer of

the securities or must offer to make available to the issuer of the securities significant managerial assistance.

Where the BDC purchases

such securities in conjunction with one or more other persons acting together, the BDC will satisfy this test if one of the other persons

in the group makes available such managerial assistance.

Making available managerial assistance means, among other things, any arrangement

whereby the BDC, through its directors, officers or employees, offers to provide, and, if accepted, does so provide, significant guidance

and counsel concerning the management, operations or business objectives and policies of a portfolio company.

investment in other types of “qualifying assets”, as described above, our investments may consist of cash, cash equivalents,

government securities or high-quality debt securities maturing in one year or less from the time of investment, which we refer to,

collectively, as temporary investments, so that 70% of our assets are qualifying assets.

Typically, we will invest in highly rated commercial

government agency notes, U.S.

Treasury bills or in repurchase agreements relating to such securities that are fully collateralized by cash or securities issued by the

Treasury bills or in repurchase agreements relating to such securities that are fully collateralized

by cash or securities issued by the U.S.

government or its agencies.

A repurchase agreement involves the purchase by an investor, such as us, of a specified security and

the simultaneous agreement by the seller to repurchase it at an agreed-upon future date and at a price which is greater than the purchase

price by an amount that reflects an agreed-upon interest rate.

There is no percentage restriction on the proportion of our assets that

may be invested in such repurchase agreements.

However, certain diversification tests that must be met in order to qualify as a RIC for

federal income tax purposes will typically require us to limit the amount we invest with any one counterparty.

We will monitor the

creditworthiness of the counterparties with which we enter into repurchase agreement transactions.

Senior Securities

We are permitted, under specified conditions,

to issue multiple classes of indebtedness and one class of stock senior to our common stock if our asset coverage, as defined in the 1940

Act, is at least equal to 200% (or 150% if certain requirements are met) immediately after each such issuance.

In addition, while any

preferred stock or publicly traded debt securities are outstanding, we may be prohibited from making distributions to our stockholders

or the repurchasing of such securities or shares unless we meet the applicable asset coverage ratios at the time of the distribution or

We may also borrow amounts up to 5% of the value of our total assets for temporary or emergency purposes without regard to

asset coverage.

A repurchase agreement involves the purchase by an investor, such

as us, of a specified security and the simultaneous agreement by the seller to repurchase it at an agreed-upon future date and at a price

which is greater than the purchase price by an amount that reflects an agreed-upon interest rate.

There is no percentage restriction

on the proportion of our assets that may be invested in such repurchase agreements.

However, certain diversification tests that must

be met in order to qualify as a RIC for U.S.

federal income tax purposes will typically require us to limit the amount we invest with

any one counterparty.

We will monitor the creditworthiness of the counterparties with which we enter into repurchase agreement transactions.

are permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to our common stock

if our asset coverage, as defined in the 1940 Act, is at least equal to 200% (or 150% if certain requirements are met) immediately after

each such issuance.

In addition, while any preferred stock or publicly traded debt securities are outstanding, we may be prohibited from

making distributions to our stockholders or the repurchasing of such securities or shares unless we meet the applicable asset coverage

ratios at the time of the distribution or repurchase.

We may also borrow amounts up to 5% of the value of our total assets for temporary

or emergency purposes without regard to asset coverage.

For a discussion of the risks associated with leverage, see “Item 1A.

Risk Factors—Risks Related to our Business—Because

we use borrowed funds to make investments or fund our business operations, we are exposed to risks typically associated with leverage

which increase the risk of investing in us.”

Code of Ethics

We have adopted a code of ethics pursuant to Rule

17j-1 under the 1940 Act that establishes procedures for personal investments and restricts certain personal securities transactions.

Personnel subject to each code may invest in securities for their personal investment accounts, including securities that may be purchased

or held by us, so long as such investments are made in accordance with the code’s requirements.

The code of ethics is available

at our website, www.phenixfc.com , and is available on the EDGAR Database on the SEC’s Internet site at http://www.sec.gov .

Factors—Risks Related to our Business—Because we use borrowed funds to make investments or fund our business operations,

we are exposed to risks typically associated with leverage which increase the risk of investing in us.”

have adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act that establishes procedures for personal investments and restricts

certain personal securities transactions.

Personnel subject to each code may invest in securities for their personal investment accounts,

including securities that may be purchased or held by us, so long as such investments are made in accordance with the code’s requirements.

The code of ethics is available at our website, www.phenixfc.com , and is available on the EDGAR Database on the SEC’s Internet

site at http://www.sec.gov .

are committed to maintaining the privacy of stockholders and to safeguarding our non-public personal information.

73 unchanged sentences

gain not distributed to our stockholders.

We will be subject to a nondeductible U.S.

excise tax of 4% on undistributed income if we do not distribute at least the sum of 98% of our ordinary income in any calendar year,

98.2% of our capital gain net income for each one-year period ending on October 31 of such year, and any income and capital gain net

income that we recognized in preceding years, but were not distributed during such years, and on which we did not pay U.S.

federal income

Depending on the level of investment company taxable income (“ICTI”) earned in a tax year and the amount of net capital

gains recognized in such tax year, we may choose to carry forward ICTI in excess of current year dividend distributions into the next

In order to eliminate our liability for income tax, and to the extent necessary to maintain our qualification as a RIC, any

such carryover ICTI and net capital gains must be distributed before the end of that next tax year through a dividend declared prior

to the 15th day of the 9th month after the close of the taxable year in which such ICTI was generated.

To the extent that we determine

that our estimated current year annual taxable income will be in excess of estimated current year dividend distributions for U.S.

excise tax purposes, we accrue U.S.

federal excise tax, if any, on estimated excess taxable income as taxable income is earned.

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.

will be subject to a nondeductible U.S.

federal excise tax of 4% on undistributed income if we do not distribute at least the sum of

98% of our ordinary income in any calendar year, 98.2% of our capital gain net income for each one-year period ending on October 31 of

such year, and any income and capital gain net income that we recognized in preceding years, but were not distributed during such years,

and on which we did not pay U.S.

federal income tax.

Depending on the level of investment company taxable income (“ICTI”)

earned in a tax year and the amount of net capital gains recognized in such tax year, we may choose to carry forward ICTI in excess of

current year dividend distributions into the next tax year.

In order to eliminate our liability for income tax, and to the extent necessary

to maintain our qualification as a RIC, any such carryover ICTI and net capital gains must be distributed before the end of that next

tax year through a dividend declared prior to the 15th day of the 9th month after the close of the taxable year in which such ICTI was

To the extent that we determine that our estimated current year annual taxable income will be in excess of estimated current

year dividend distributions for U.S.

federal excise tax purposes, we accrue U.S.

federal excise tax, if any, on estimated excess taxable

income as taxable income is earned.

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, 2024.

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

2 unchanged sentences

to be treated as a BDC under the 1940 Act at all times during each taxable year;

in each taxable year at least 90% of our gross income from dividends, interest, payments with respect to certain securities loans,

gains from the sale of stock or other securities, or other income derived with respect to our business of investing in such stock

or securities, and net income derived from interests in “qualified publicly traded partnerships” (generally, partnerships

that are traded on an established securities market or tradable on a secondary market, other than partnerships that could qualify

as RICs if such partnerships were domestic corporations) (the “90% Income Test”);

in each taxable year at least 90% of our gross income from dividends, interest, payments

with respect to certain securities loans, gains from the sale of stock or other securities,

or other income derived with respect to our business of investing in such stock or securities,

and net income derived from interests in “qualified publicly traded partnerships”

(generally, partnerships that are traded on an established securities market or tradable

on a secondary market, other than partnerships that could qualify as RICs if such partnerships

were domestic corporations) (the “90% Income Test”);

our holdings so that at the end of each quarter of the taxable year:

least 50% of the value of our assets consists of cash, cash equivalents, U.S.

government securities, securities of other RICs, and

other securities if such other securities of any one issuer do not represent more than 5% of the value of our assets or more than

10% of the outstanding voting securities of the issuer;

securities, securities of other RICs, and other securities if such other securities of any

one issuer do not represent more than 5% of the value of our assets or more than 10% of the

outstanding voting securities of the issuer;

more than 25% of the value of our assets is invested in the securities, other than U.S.

government securities or securities of other

RICs, of one issuer or of two or more issuers that are controlled, as determined under applicable tax rules, by us and that are engaged

in the same or similar or related trades or businesses or in the securities of one or more qualified publicly traded partnerships

(the “Diversification Tests”).

securities or securities of other RICs, of one issuer or of two or more issuers that are

controlled, as determined under applicable tax rules, by us and that are engaged in the same

or similar or related trades or businesses or in the securities of one or more qualified

publicly traded partnerships (the “Diversification Tests”).

may invest in partnerships, including qualified publicly traded partnerships, which may result in our being subject to state, local or

99 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business