PhenixFIN Corp

Previous wording

During the three and six months ended March 31, 2024, the Company recorded an expense of $504,890 and $809,690, respectively, for these awards. During the three and six months ended March 31, 2023, the Company did not record an expense for these awards.

Current wording

During the three and nine months ended June 30, 2024, the Company recorded an expense of $684,735 and $1,494,425, respectively, for these awards. During the three and nine months ended June 30, 2023, the Company recorded an expense of $159,000 and $159,000, respectively, for these awards.

Previous wording

As of March 31, 2024 and September 30, 2023, our portfolio had a fair market value of approximately $220.0 million and $226.5 million, respectively.

Current wording

As of June 30, 2024 and September 30, 2023, our portfolio had a fair market value of approximately $233.7 million and $226.5 million, respectively.

Previous wording

During the six months ended March 31, 2024, we received proceeds from sale and settlements of investments of $45.6 million, including principal proceeds, net realized losses on investments of $1.6 million and invested $30.8 million.

Current wording

During the nine months ended June 30, 2024, we received proceeds from sale and settlements of investments of $87.9 million, including principal proceeds, net realized gains on investments of $7.1 million and invested $85.5 million.

Previous wording

During the six months ended March 31, 2023, we received proceeds from sale and settlements of investments of $26.9 million, including principal and dividend proceeds, realized net losses on investments of $0.8 million, and invested $26.0 million.

Current wording

During the nine months ended June 30, 2023, we received proceeds from sale and settlements of investments of $39.8 million, including principal and dividend proceeds, realized net losses on investments of $2.1 million, and invested $49.3 million.

Previous wording

As of March 31, 2024, our income-bearing investment portfolio based upon cost represented 84.0% of our total portfolio of which 57.6% bore interest based on floating rates, such as SOFR or LIBOR, 16.8% bore interest at fixed rates, and 25.6% are income-producing equity investments. As of September 30, 2023, our income-bearing investment portfolio based upon cost represented 88.2% of our total portfolio of which 59.5% bore interest based on floating rates, such as LIBOR or SOFR, 13.9% bore interest at fixed rates, and 26.6% are income-producing equity investments. As of March 31, 2024, the Company had a weighted average yield of 13.6% on debt and other income producing investments. The weighted average yield of our total portfolio does not represent the total return to our stockholders.

Current wording

As of June 30, 2024, our income-bearing investment portfolio based upon cost represented 85.2% of our total portfolio of which 59.0% bore interest based on floating rates, such as SOFR or LIBOR, 17.8% bore interest at fixed rates, and 23.2% are income-producing equity investments. As of September 30, 2023, our income-bearing investment portfolio based upon cost represented 88.2% of our total portfolio of which 59.5% bore interest based on floating rates, such as LIBOR or SOFR, 13.9% bore interest at fixed rates, and 26.6% are income-producing equity investments. As of June 30, 2024, the Company had a weighted average yield of 13.8% on debt and other income producing investments. The weighted average yield of our total portfolio does not represent the total return to our stockholders.

Previous wording

Operating results for three and six months ended March 31, 2024 and 2023 are as follows (dollars in thousands):

Current wording

Operating results for three and nine months ended June 30, 2024 and 2023 are as follows (dollars in thousands):

Previous wording

For the three months ended March 31, 2023, investment income totaled $4.9 million, of which $2.7 million was attributable to portfolio interest, approximately $1.5 million was attributable to dividend income, $0.6 million was attributable to fee and other income, and $0.1 million was attributable to interest on cash and cash equivalents. For the six months ended March 31, 2023, investment income totaled $9.6 million, of which $5.3 million was attributable to portfolio interest, approximately $3.5 million was attributable to dividend income, $0.6 million was attributable to fee and other income, and $0.2 million was attributable to interest on cash and cash equivalents. Dividend income was received from three investments during the six months ended March 31, 2023.

Current wording

For the three months ended June 30, 2024, investment income totaled $6.2 million, of which $4.2 million was attributable to portfolio interest, approximately $1.5 million was attributable to dividend income, $0.4 million was attributable to fee and other income, and $0.1 million was attributable to interest on cash and cash equivalents. For the nine months ended June 30, 2024, investment income totaled $16.6 million, of which $10.5 million was attributable to portfolio interest, approximately $5.2 million was attributable to dividend income, $0.5 million was attributable to fee and other income, and $0.4 million was attributable to interest on cash and cash equivalents. Dividend income was received from nine investments during the nine months ended June 30, 2024.

Previous wording

For the three months ended March 31, 2024, investment income totaled $4.7 million, of which $2.7 million was attributable to portfolio interest, approximately $1.7 million was attributable to dividend income, $0.1 million was attributable to fee and other income, and $0.2 million was attributable to interest on cash and cash equivalents. For the six months ended March 31, 2024, investment income totaled $10.4 million, of which $6.4 million was attributable to portfolio interest, approximately $3.7 million was attributable to dividend income, $0.1 million was attributable to fee and other income, and $0.2 million was attributable to interest on cash and cash equivalents. Dividend income was received from eight investments during the six months ended March 31, 2024.

Current wording

For the three months ended June 30, 2023, investment income totaled $4.8 million, of which $2.7 million was attributable to portfolio interest, approximately $1.9 million was attributable to dividend income, $0.1 million was attributable to fee and other income, and $0.1 million was attributable to interest on cash and cash equivalents. For the nine months ended June 30, 2023, investment income totaled $14.5 million, of which $8.0 million was attributable to portfolio interest, approximately $5.5 million was attributable to dividend income, $0.7 million was attributable to fee and other income, and $0.3 million was attributable to interest on cash and cash equivalents. Dividend income was received from ten investments during the nine months ended June 30, 2023.

Previous wording

Operating expenses for the three and six months ended March 31, 2024 and 2023 are as follows (dollars in thousands):

Current wording

Operating expenses for the three and nine months ended June 30, 2024 and 2023 are as follows (dollars in thousands):

Previous wording

For the three months ended March 31, 2024, total operating expenses increased by $1.0 million, or 30.3% compared to the three months ended March 31, 2023. For the six months ended March 31, 2024, total operating expenses increased by $1.9 million, or 30.8% compared to the six months ended March 31, 2023.

Current wording

For the three months ended June 30, 2024, total operating expenses increased by $0.6 million, or 17.5% compared to the three months ended June 30, 2023. For the nine months ended June 30, 2024, total operating expenses increased by $2.5 million, or 25.9% compared to the nine months ended June 30, 2023.

Previous wording

Interest and financing expenses for the three months ended March 31, 2024 increased by $0.2 million, or 13.4% compared to the three months ended March 31, 2023. Interest and financing expenses for the six months ended March 31, 2024 increased by $0.5 million, or 18.9% compared to the six months ended March 31, 2023. The increase in interest and financing expenses for the six months ended March 31, 2024 was primarily due to increased borrowings on the credit facility.

Current wording

Interest and financing expenses for the three months ended June 30, 2024 increased by $0.3 million, or 21.7% compared to the three months ended June 30, 2023. Interest and financing expenses for the nine months ended June 30, 2024 increased by $0.8 million, or 19.9% compared to the nine months ended June 30, 2023. The increase in interest and financing expenses for the nine months ended June 30, 2024 was primarily due to increased borrowings on the credit facility.

Previous wording

Professional fees and general and administrative expenses for the three months ended March 31, 2024 increased by $0.1 million, or 13.1% compared to the three months ended March 31, 2023. Professional fees and general and administrative expenses for the six months ended March 31, 2024 increased by $0.2 million, or 16.7% compared to the six months ended March 31, 2023.

Current wording

Professional fees and general and administrative expenses for the three months ended June 30, 2024 increased by $0.1 million, or 16.9% compared to the three months ended June 30, 2023. Professional fees and general and administrative expenses for the nine months ended June 30, 2024 increased by $0.3 million, or 16.7% compared to the nine months ended June 30, 2023.

Previous wording

During the three and six months ended March 31, 2024, we recognized $1.8 million and $1.6 of realized loses, respectively on our portfolio investments. The realized losses were primarily due to the sale of 1888 Industrial Services for $8.8 million offset by realized gain on Maritime Wireless Holdings for $7.0 million.

Current wording

During the three and nine months ended June 30, 2024, we recognized $8.7 million and $7.1 million of realized gains, respectively on our portfolio investments. The realized gains were primarily due to a realized gain on Maritime Wireless Holdings for $7.0 million and a realized gain on Kemmerer Operations, LLC for $8.5 million, offset by a loss on the sale of 1888 Industrial Services for $8.8 million.

Previous wording

During the three and six months ended March 31, 2023, we recognized $0.8 million of realized losses on our portfolio investments. The realized losses were primarily due to the write off of Walker Edison Furniture Company for $2.1 million and proceeds from Footprint for $1.2 million of a gain.

Current wording

During the three and nine months ended June 30, 2023, we recognized $1.3 million and $2.1 million of realized losses, respectively on our portfolio investments. The realized losses were primarily due to the write off of Walker Edison Furniture Company for $2.1 million and proceeds from Footprint for $1.2 million of a gain.

Previous wording

For the three months ended March 31, 2024, we had $6.6 million of net unrealized appreciation on investments. The net unrealized appreciation resulted from the reversal of the realized loss on 1888 Industrial Services and unrealized appreciation primarily on Kemmerer Operations LLC, FST Holdings Parent LLC, and PHH Mortgage Corporation, offset by the reversal of the unrealized gain on Maritime Wireless Holdings.

Current wording

For the three months ended June 30, 2024, we had $8.1 million of net unrealized depreciation on investments. The net unrealized depreciation resulted from the reversal of the unrealized gain on Kemmerer Operations, LLC for $8.0 million and unrealized depreciation on ECC Capital Corp. for $1.2 million, offset by unrealized appreciation on JFL-NGS-WGS Partners, LLC for $1.1 million.

Previous wording

For the six months ended March 31, 2024, we had $9.2 million of net unrealized appreciation on investments. The net unrealized appreciation resulted from the reversal of the realized loss on 1888 Industrial Services and unrealized appreciation primarily on Kemmerer Operations LLC, Chimera Investment Corporation, FST Holdings Parent LLC, NVTN LLC, and PHH Mortgage Corporation, offset by the reversal of the unrealized gain on Maritime Wireless Holdings.

Current wording

For the nine months ended June 30, 2024, we had $1.1 million of net unrealized appreciation on investments. The net unrealized appreciation resulted from the reversal of the unrealized loss on 1888 Industrial Services and unrealized appreciation primarily on Chimera Investment Corporation, FST Holdings Parent LLC, Power Stop LLC, and PHH Mortgage Corporation, offset by the reversal of the unrealized gain on Maritime Wireless Holdings and Kemmerer Operations, LLC.

Previous wording

For the three months ended March 31, 2023, we had $5.7 million of net unrealized appreciation on investments. The net unrealized appreciation resulted from fair market value appreciation primarily attributable to Kemmerer Operations, Maritime Wireless, the reversal of the realized loss on Walker Edison which was offset by the unrealized depreciation on Lucky Bucks.

Current wording

For the three months ended June 30, 2023, we had $9.0 million of net unrealized appreciation on investments. The net unrealized appreciation resulted from fair market value appreciation primarily attributable to Kemmerer Operations, Maritime Wireless, the reversal of the realized loss on Walker Edison which was offset by the unrealized depreciation on Lucky Bucks.

Previous wording

For the six months ended March 31, 2023, we had $8.0 million of net unrealized appreciation on investments. The net unrealized appreciation resulted from fair market value appreciation primarily attributable to Level One asset along with Kemmerer Operations, Maritime Wireless, the reversal of the realized loss on Walker Edison which was offset by the unrealized depreciation on Lucky Bucks.

Current wording

For the nine months ended June 30, 2023, we had $17.1 million of net unrealized appreciation on investments. The net unrealized appreciation resulted from fair market value appreciation primarily attributable to Level 1 assets along with Kemmerer Operations, Maritime Wireless, the reversal of the realized loss on Walker Edison which was offset by the unrealized depreciation on Lucky Bucks.

Previous wording

Certain consolidated subsidiaries of ours are subject to U.S. federal and state income taxes. These taxable subsidiaries are not consolidated with the Company for income tax purposes, but are consolidated for GAAP purposes, and may generate income tax liabilities or assets from temporary differences in the recognition of items for financial reporting and income tax purposes at the subsidiaries. For the three and six months ended March 31, 2024 and 2023, the Company did not record a change in provision for deferred taxes on the unrealized (appreciation)/depreciation on investments.

Current wording

Certain consolidated subsidiaries of ours are subject to U.S. federal and state income taxes. These taxable subsidiaries are not consolidated with the Company for income tax purposes, but are consolidated for GAAP purposes, and may generate income tax liabilities or assets from temporary differences in the recognition of items for financial reporting and income tax purposes at the subsidiaries. For the three and nine months ended June 30, 2024 and 2023, the Company did not record a change in provision for deferred taxes on the unrealized (appreciation)/depreciation on investments.

Previous wording

For the three months ended March 31, 2024, we recorded a net increase in net assets resulting from operations of $5.4 million compared to a net increase in net assets resulting from operations of $6.7 million for the three months ended March 31, 2023. Total Net Assets decreased from the last quarter due to share repurchases in the amount of $1.8 million. Based on 2,048,622 and 2,095,193 weighted average common shares outstanding for the three months ended March 31, 2024 and 2023, respectively, our per share net increase in net assets resulting from operations was $2.62 for the three months ended March 31, 2024 and $3.20 for the three months ended March 31, 2023.

Current wording

For the three months ended June 30, 2024, we recorded a net increase in net assets resulting from operations of $2.6 million compared to a net increase in net assets resulting from operations of $8.9 million for the three months ended June 30, 2023. Total Net Assets decreased from the last quarter due to share repurchases in the amount of $31.2 thousand. Based on 2,019,786 and 2,090,691 weighted average common shares outstanding for the three months ended June 30, 2024 and 2023, respectively, our per share net increase in net assets resulting from operations was $1.29 for the three months ended June 30, 2024 and $4.26 for the three months ended June 30, 2023.

Previous wording

For the six months ended March 31, 2024, we recorded a net increase in net assets resulting from operations of $9.9 million compared to a net increase in net assets resulting from operations of $10.7 million for the six months ended March 31, 2023. Total Net Assets decreased from the last quarter due to share repurchases in the amount of $2.3 million. Based on 2,060,723 and 2,098,041 weighted average common shares outstanding for the six months ended March 31, 2024 and 2023, respectively, our per share net increase in net assets resulting from operations was $4.81 for the six months ended March 31, 2024 and $5.08 for the six months ended March 31, 2023.

Current wording

For the nine months ended June 30, 2024, we recorded a net increase in net assets resulting from operations of $12.5 million compared to a net increase in net assets resulting from operations of $19.6 million for the nine months ended June 30, 2023. Total Net Assets decreased from the last quarter due to share repurchases in the amount of $2.4 million. Based on 2,047,127 and 2,095,591 weighted average common shares outstanding for the nine months ended June 30, 2024 and 2023, respectively, our per share net increase in net assets resulting from operations was $6.11 for the nine months ended June 30, 2024 and $9.34 for the nine months ended June 30, 2023.

Previous wording

As of March 31, 2024 and September 30, 2023, we had $19.1 million and $6.0 million, respectively, in cash and cash equivalents.

Current wording

As of June 30, 2024 and September 30, 2023, we had $8.9 million and $6.0 million, respectively, in cash and cash equivalents.

Previous wording

On January 11, 2021, the Company announced that its board of directors approved a share repurchase program. On February 9, 2022, the Board of Directors approved the expansion of the amount authorized for repurchase under the Company’s share repurchase program from $15 million to $25 million. On February 8, 2023, the Board of Directors approved the further expansion of the amount authorized for repurchase under the Company’s share repurchase program from $25 million to $35 million. Under the share repurchase program, the Company repurchased an aggregate of 703,219 shares of common stock through March 31, 2024, or 25.8 % of shares outstanding as of the program’s inception, with a total cost of $28.1 million. The total remaining amount authorized under the expanded share repurchase program at March 31, 2024 was approximately $6.9 million.

Current wording

On January 11, 2021, the Company announced that its board of directors approved a share repurchase program. On February 9, 2022, the Board of Directors approved the expansion of the amount authorized for repurchase under the Company’s share repurchase program from $15 million to $25 million. On February 8, 2023, the Board of Directors approved the further expansion of the amount authorized for repurchase under the Company’s share repurchase program from $25 million to $35 million. Under the share repurchase program, the Company repurchased an aggregate of 703,931 shares of common stock through June 30, 2024, or 25.8% of shares outstanding as of the program’s inception, with a total cost of $28.1 million. The total remaining amount authorized under the expanded share repurchase program at June 30, 2024 was approximately $6.9 million.

Previous wording

On December 15, 2022, the Company and its wholly-owned subsidiaries executed a three-year, $50 million revolving credit facility (the “Credit Facility”) with WoodForest Bank, N.A. (“WoodForest”), Valley National Bank, and Axiom Bank, (collectively, the “Lenders”). WoodForest is the administrative agent, sole bookrunner and sole lead arranger. As of March 31, 2024, there was $28.4 million outstanding borrowings by the Company under the Credit Facility.

Current wording

On December 15, 2022, the Company and its wholly-owned subsidiaries executed a three-year, $50 million revolving credit facility (the “Credit Facility”) with WoodForest Bank, N.A. (“WoodForest”), Valley National Bank, and Axiom Bank, (collectively, the “Lenders”). WoodForest is the administrative agent, sole bookrunner and sole lead arranger. As of June 30, 2024, there was $27.6 million outstanding borrowings by the Company under the Credit Facility.

Previous wording

On May 2, 2024, the Company issued a 5.25% note due November 1, 2028 in the principal amount of $1,661,498 to National Security Insurance Company. The financial terms of the note are substantially the same as the 2028 Notes.

Current wording

On May 2, 2024, the Company issued a 5.25% note due November 1, 2028 in the principal amount of $1,661,498 to National Security Insurance Company (the “2028 Promissory Note”). The financial terms of the note are substantially the same as the 2028 Notes.

Previous wording

As of March 31, 2024 and September 30, 2023, we had commitments under loan and financing agreements to fund up to $3.1 million to three portfolio companies and $3.4 million to four portfolio companies, respectively. These commitments are primarily composed of senior secured term loans and revolvers, and the determination of their fair value is included in the Consolidated Schedule of Investments. The commitments are generally subject to the borrowers meeting certain criteria such as compliance with covenants and certain operational metrics. The terms of the borrowings and financings subject to commitment are comparable to the terms of other loan and equity securities in our portfolio. A summary of the composition of the unfunded commitments as of March 31, 2024 and September 30, 2023 is shown in the table below (dollars in thousands):

Current wording

As of June 30, 2024 and September 30, 2023, we had commitments under loan and financing agreements to fund up to $2.9 million to three portfolio companies and $3.4 million to four portfolio companies, respectively. These commitments are primarily composed of senior secured term loans and revolvers, and the determination of their fair value is included in the Consolidated Schedule of Investments. The commitments are generally subject to the borrowers meeting certain criteria such as compliance with covenants and certain operational metrics. The terms of the borrowings and financings subject to commitment are comparable to the terms of other loan and equity securities in our portfolio. A summary of the composition of the unfunded commitments as of June 30, 2024 and September 30, 2023 is shown in the table below (dollars in thousands):

Previous wording

In December 2023, the Company established a subsidiary to serve as a regulated insurance company. The Company purchased 100,000 shares of the subsidiary’s common stock for a purchase price of $1.00 per share on February 8, 2024. This subsidiary also entered into a merger agreement pursuant to which it agreed to acquire a controlling interest in VR Insurance SPV, LLC, a company primarily engaged in the insurance business through its subsidiaries (“VR”), and to provide additional capital to such company. The Company’s total investment in the insurance subsidiary and VR is expected to approximate $49 million. The merger transaction is presently expected to close in the first half of 2024, subject to various closing conditions, including insurance regulatory approvals.

Current wording

In December 2023, the Company established a subsidiary to serve as a regulated insurance company. The Company purchased 100,000 shares of the subsidiary’s common stock for a purchase price of $1.00 per share on February 8, 2024. This subsidiary also entered into a merger agreement pursuant to which it agreed to acquire a controlling interest in VR Insurance SPV, LLC, a company primarily engaged in the insurance business through its subsidiaries (“VR”), and to provide additional capital to such company. The Company’s total investment in the insurance subsidiary and VR is expected to approximate $49 million. The merger transaction is presently expected to close during 2024, subject to various closing conditions, including insurance regulatory approvals.

Previous wording

We intend to pay quarterly dividends to our stockholders out of assets legally available for distribution. We cannot assure you that we will achieve investment results that will allow us to pay a specified level of dividends or year-to-year increases in dividends. In addition, the inability to satisfy the asset coverage test applicable to us as a BDC could limit our ability to pay dividends. All dividends will be paid at the discretion of our board of directors and will depend on our earnings, our financial condition, maintenance of our RIC tax treatment, compliance with applicable BDC regulations and such other factors as our board of directors may deem relevant from time to time. We cannot assure you that we will pay dividends to our stockholders in the future.

Current wording

We intend to pay dividends to our stockholders out of assets legally available for distribution. We cannot assure you that we will achieve investment results that will allow us to pay a specified level of dividends or year-to-year increases in dividends. In addition, the inability to satisfy the asset coverage test applicable to us as a BDC could limit our ability to pay dividends. All dividends will be paid at the discretion of our board of directors and will depend on our earnings, our financial condition, maintenance of our RIC tax treatment, compliance with applicable BDC regulations and such other factors as our board of directors may deem relevant from time to time. We cannot assure you that we will pay dividends to our stockholders in the future.

Previous wording

The Company did not declare any distribution payments during the three and six months ended March 31, 2024 and 2023.

Current wording

The Company did not declare any distribution payments during the three and nine months ended June 30, 2023.

Previous wording

*Non-accrual:*We place loans on non-accrual status when principal and interest payments are past due by 90 days or more, or when there is reasonable doubt that we will collect principal or interest. Accrued interest is generally reversed when a loan is placed on non-accrual. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in our management’s judgment, are likely to remain current. At March 31, 2024, certain investments in three portfolio companies held by the Company were on non-accrual status with a combined fair value of approximately $21.1 million, or 9.6% of the fair value of our portfolio. At September 30, 2023, certain investments in four portfolio companies held by the Company were on non-accrual status with a combined fair value of approximately $6.5 million, or 2.9% of the fair value of our portfolio.

Current wording

*Non-accrual:*We place loans on non-accrual status when principal and interest payments are past due by 90 days or more, or when there is reasonable doubt that we will collect principal or interest. Accrued interest is generally reversed when a loan is placed on non-accrual. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in our management’s judgment, are likely to remain current. At June 30, 2024, certain investments in three portfolio companies held by the Company were on non-accrual status with a combined fair value of approximately $3.3 million, or 1.4% of the fair value of our portfolio. At September 30, 2023, certain investments in four portfolio companies held by the Company were on non-accrual status with a combined fair value of approximately $6.5 million, or 2.9% of the fair value of our portfolio.