10-Q 1 f10q0623_phenixfincorp.htm QUARTERLY REPORT

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

Form 10-Q

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period Ended June 30, 2023

 

or

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from            to            

 

Commission file number: 1-35040

 

PHENIXFIN CORPORATION

(Exact Name of Registrant as Specified in its Charter)

 

Delaware   27-4576073
(State or Other Jurisdiction of   (I.R.S. Employer
Incorporation or Organization)   Identification No.)

 

445 Park Avenue, 10th Floor, New York, NY   10022
(Address of Principal Executive Offices)   (Zip Code)

 

(212) 859-0390

(Registrant’s Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock, par value $0.001 per share   PFX   The NASDAQ Global Market
5.25% Notes due 2028   PFXNZ   The NASDAQ Global Market

 

Securities registered pursuant to Section 12(g) of the Act: None

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐  Accelerated filer ☐   Non-accelerated filer ☒  Smaller reporting company ☐  Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ☐ No ☒

 

The Registrant had 2,088,589 shares of common stock, $0.001 par value, outstanding as of August 10, 2023.

 

 

 

 

 

 

PHENIXFIN CORPORATION

 

TABLE OF CONTENTS

 

  Page
PART I. Financial Information  
   
Item 1. Financial Statements  
   
Consolidated Statements of Assets and Liabilities as of June 30, 2023 (unaudited) and September 30, 2022 1
   
Consolidated Statements of Operations for the three and nine months ended June 30, 2023 and 2022 (unaudited) 2
   
Consolidated Statements of Changes in Net Assets for the three and nine months ended June 30, 2023 and 2022 (unaudited) 3
   
Consolidated Statements of Cash Flows for the nine months ended June 30, 2023 and 2022 (unaudited) 4
   
Consolidated Schedules of Investments as of June 30, 2023 (unaudited) and September 30, 2022 5
   
Notes to Consolidated Financial Statements (unaudited) 19
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 41
   
Item 3. Quantitative and Qualitative Disclosures About Market Risk 55
   
Item 4. Controls and Procedures 56
   
Part II. Other Information 57
   
Item 1. Legal Proceedings 57
   
Item 1A. Risk Factors 57
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 60
   
Item 3. Defaults Upon Senior Securities 60
   
Item 4. Mine Safety Disclosures 60
   
Item 5. Other Information 60
   
Item 6. Exhibits 60
   
SIGNATURES 62

 

i

 

 

PHENIXFIN CORPORATION

Consolidated Statements of Assets and Liabilities

 

   June 30,
2023
(Unaudited)		   September 30,
2022		 
Assets:        
Investments at fair value        
Non-controlled, non-affiliated investments (amortized cost of $142,762,992 and $147,378,917, respectively)  $124,234,092   $122,616,275 
Affiliated investments (amortized cost of $50,295,960 and $30,585,884, respectively)   35,336,778    12,314,192 
Controlled investments (amortized cost of $79,039,463 and $85,483,093, respectively)   59,115,748    58,026,182 
Total Investments at fair value   218,686,618    192,956,649 
Cash and cash equivalents   10,876,185    22,768,066 
Receivables:          
Interest receivable   865,458    727,576 
Paydown receivable   
-
    112,500 
Dividends receivable   220,636    269,330 
Other receivable   6,835    36,992 
Prepaid share repurchase   11,443    489,156 
Deferred financing costs   763,744    50,000 
Due from Affiliate   

396,419

    271,962 
Other assets   615,438    1,192,677 
Total Assets  $232,442,776   $218,874,908 
           
Liabilities:          
Credit facility and note payable (net of debt issuance costs of $1,782,166 and $2,059,164, respectively)  $83,959,776   $77,962,636 
Investments purchased payable   5,118,912    
-
 
Accounts payable and accrued expenses   2,018,046    2,040,277 
Interest and fees payable   669,577    503,125 
Other liabilities   466,500    572,949 
Deferred revenue   255,301    325,602 
Administrator expenses payable (see Note 6)   -    74,911 
Due to broker   
-
    16,550,000 
Total Liabilities   92,488,112    98,029,500 
           
Commitments and Contingencies (see Note 8)   
 
    
 
 
           
Net Assets:          
           
Common Shares, $0.001 par value; 5,000,000 shares authorized; 2,723,709 shares issued; 2,088,589 and 2,102,129 common shares outstanding, respectively   2,089    2,102 
Capital in excess of par value   674,934,277    675,401,802 
Total distributable earnings (loss)   (534,981,702)   (554,558,496)
Total Net Assets   139,954,664    120,845,408 
Total Liabilities and Net Assets  $232,442,776   $218,874,908 
           
Net Asset Value Per Common Share  $67.01   $57.49 

 

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

 

1

 

 

PHENIXFIN CORPORATION

Consolidated Statements of Operations

(Unaudited)

 

   For the Three Months Ended
June 30,		   For the Nine Months Ended
June 30,		 
   2023   2022   2023   2022 
                 
Interest Income:                
Interest from investments                
Non-controlled, non-affiliated investments:                
Cash  $1,794,974   $1,468,171   $5,827,756   $3,748,190 
Payment in-kind   110,477    102,063    336,257    340,636 
Affiliated investments:                    
Cash   652,304    (23,496)   1,111,785    486,569 
Payment in-kind   
-
    93,275    
-
    283,036 
Controlled investments:                    
Cash   30,610    4,375    282,425    1,365,035 
Payment in-kind   134,550    
-
    380,287    
-
 
Total interest income   2,722,915    1,644,388    7,938,510    6,223,466 
Dividend income   1,926,049    1,846,507    5,461,782    3,463,386 
Interest from cash and cash equivalents   95,356    9,255    313,053    18,025 
Fee income (see Note 9)   94,482    65,014    339,136    420,279 
Other income   
-
    93,394    401,986    323,828 
Total Investment Income   4,838,802    3,658,558    14,454,467    10,448,984 
                     
Expenses:                    
Interest and financing expenses   1,415,102    1,201,623    4,029,874    3,910,361 
Salaries and benefits   1,277,797    1,037,602    2,937,420    1,973,770 
Professional fees, net   310,878    469,550    1,036,024    936,895 
General and administrative expenses   253,298    362,989    674,456    849,684 
Directors fees   170,833    164,500    541,333    540,000 
Insurance expenses   115,654    155,449    361,125    469,803 
Administrator expenses (see Note 6)   76,351    58,881    232,172    210,162 
Total expenses   3,619,913    3,450,594    9,812,404    8,890,675 
Net Investment Income   1,218,889    207,964    4,642,063    1,558,309 
                     
Realized and unrealized gains (losses) on investments                    
Net realized gains (losses):                    
Non-controlled, non-affiliated investments   (1,374,437)   (188,638)   (2,199,059)   749,791 
Affiliated investments   30,211    
-
    30,211    14,737,897 
Controlled investments   858    925    24,131    1,850 
Total net realized gains (losses)   (1,343,368)   (187,713)   (2,144,717)   15,489,538 
Net change in unrealized gains (losses):                    
Non-controlled, non-affiliated investments   3,907,130    (9,623,302)   6,233,742    (11,630,618)
Affiliated investments   2,322,910    405,381    3,312,510    (8,529,483)
Controlled investments   2,811,099    (31,533)   7,533,196    1,954,912 
Total net change in unrealized gains (losses)   9,041,139    (9,249,454)   17,079,448    (18,205,189)
Loss on extinguishment of debt (see Note 5)   
-
    
-
    
-
    (296,197)
Total realized and unrealized gains (losses)   7,697,771    (9,437,167)   14,934,731    (3,011,848)
                     
Net Increase (Decrease) in Net Assets Resulting from Operations  $8,916,660   $(9,229,203)  $19,576,794   $(1,453,539)
                     
Weighted average basic and diluted earnings per common share
  $4.26   $(4.19)  $9.34   $(0.61)
Weighted average common shares outstanding - basic and diluted (see Note 11)
   2,090,691    2,202,115    2,095,591    2,372,849 

 

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

 

2

 

 

PHENIXFIN CORPORATION

Consolidated Statements of Changes in Net Assets

(Unaudited)

 

   Common Stock         
   Shares   Par Amount   Capital in
Excess of Par
Value		   Total
Distributable
Earnings/(Loss)		   Total Net
Assets		 
Balance at March 31, 2022   2,207,794   $2,208   $676,357,446   $(537,399,514)  $138,960,140 
                          
OPERATIONS                         
Net investment income (loss)   -    
-
    
-
    207,964    207,964 
Net realized gains (losses) on investments   -    
-
    
-
    (187,713)   (187,713)
Net change in unrealized appreciation (depreciation) on investments   -    
-
    
-
    (9,249,454)   (9,249,454)
CAPITAL SHARE TRANSACTIONS                         
Distributions to shareholders   -    
-
    (265,798)   
-
    (265,798)
Repurchase of common shares   (10,376)   (10)   (384,149)   
-
    (384,159)
Total Increase (Decrease) in Net Assets   (10,376)   (10)   (649,947)   (9,229,203)   (9,879,160)
                          
Balance at June 30, 2022   2,197,418   $2,198   $675,707,499   $(546,628,717)  $129,080,980 
                          
Balance at March 31, 2023   2,091,638   $2,092   $675,047,159   $(543,898,362)  $131,150,889 
OPERATIONS                         
Net investment income (loss)   -    
-
    
-
    1,218,889    1,218,889 
Net realized gains (losses) on investments   -    
-
    
-
    (1,343,368)   (1,343,368)
Net change in unrealized appreciation (depreciation) on investments   -    
-
    
-
    9,041,139    9,041,139 
Net loss on extinguishment of debt   -    
-
    
-
    
-
    
-
 
CAPITAL SHARE TRANSACTIONS                         
Repurchase of common shares   (3,049)   (3)   (112,882)   
-
    (112,885)
Total Increase (Decrease) in Net Assets   (3,049)   (3)   (112,882)   8,916,660    8,803,775 
                          
Balance at June 30, 2023   2,088,589   $2,089   $674,934,277   $(534,981,702)  $139,954,664 
                          
Balance at September 30, 2021   2,517,221   $2,517   $688,866,642   $(545,175,178)  $143,693,981 
OPERATIONS                         
Net investment income (loss)   -    
-
    
-
    1,558,309    1,558,309 
Net realized gains (losses) on investments   -    
-
    
-
    15,489,538    15,489,538 
Net change in unrealized appreciation (depreciation) on investments   -    
-
    
-
    (18,205,189)   (18,205,189)
Net loss on extinguishment of debt   -    
-
    
-
    (296,197)   (296,197)
CAPITAL SHARE TRANSACTIONS                         
Distributions declared   -    
-
    (265,798)   
-
    (265,798)
Repurchase of common shares   (319,803)   (319)   (12,893,345)   
-
    (12,893,664)
Total Increase (Decrease) in Net Assets   (319,803)   (319)   (13,159,143)   (1,453,539)   (14,613,001)
                          
Balance at June 30, 2022   2,197,418   $2,198   $675,707,499   $(546,628,717)  $129,080,980 
                          
Balance at September 30, 2022   2,102,129   $2,102   $675,401,802   $(554,558,496)  $120,845,408 
                          
OPERATIONS                         
Net investment income (loss)   -    
-
    
-
    4,642,063    4,642,063 
Net realized gains (losses) on investments   -    
-
    
-
    (2,144,717)   (2,144,717)
Net change in unrealized appreciation (depreciation) on investments   -    
-
    
-
    17,079,448    17,079,448 
CAPITAL SHARE TRANSACTIONS                         
Repurchase of common shares   (13,540)   (13)   (467,525)   
-
    (467,538)
Total Increase (Decrease) in Net Assets   (13,540)   (13)   (467,525)   19,576,794    19,109,256 
                          
Balance at June 30, 2023   2,088,589   $2,089   $674,934,277   $(534,981,702)  $139,954,664 

 

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

 

3

 

 

PHENIXFIN CORPORATION

Consolidated Statements of Cash Flows

(Unaudited)

 

   For the Nine Months Ended
June 30,		 
   2023   2022 
Cash Flows from Operating Activities:        
Net increase (decrease) in net assets resulting from operations   $19,576,794   $(1,453,539)
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:          
Investment increases due to payment-in-kind interest    (716,544)   (623,672)
Net amortization of premium (discount) on investments   (505,040)   (147,211)
Amortization of debt issuance cost    286,750    265,279 
Amortization of deferred financing cost   198,530    
-
 
Net realized (gains) losses from investments    2,144,717    (15,489,538)
Net unrealized (gains) losses on investments   (17,079,448)   18,205,189 
Proceeds from sale and settlements of investments    39,760,986    104,539,257 
Purchases, originations and participations   (49,334,640)   (137,627,348)
Loss on extinguishment of debt    
-
    296,197 
(Increase) decrease in operating assets:          
Fees receivable    
-
    1,872,700 
Interest receivable   (137,882)   (890,617)
Due from affiliate    (124,457)   (132,763)
Dividends receivable   48,694    (188,119)
Paydown receivable    112,500    123,149 
Other receivable   30,157    
-
 
Prepaid share repurchase    477,713    
-
 
Other assets   577,239    534,925 
Increase (decrease) in operating liabilities:           
Due to broker   (16,550,000)   (1,586,000)
Accounts payable and accrued expenses    (22,231)   (116,666)
Due to affiliates   
-
    (280,323)
Administrator expenses payable    (74,911)   (892)
Interest and fees payable   166,452    503,125 
Deferred revenue    (70,301)   279,032 
Investments purchased payable   5,118,912    
-
 
Other liabilities    (106,449)   (6,859)
Net cash provided by (used in) operating activities    (16,222,459)   (31,924,694)
Cash Flows from Financing Activities:           
Debt issuance    32,241,942    57,500,000 
Paydowns on debt    (26,521,800)   (55,325,000)
Debt issuance costs paid   (9,752)   (2,311,036)
Deferred financing costs    (912,274)   
-
 
Repurchase of common shares   (467,538)   (12,989,760)
Net cash provided by (used in) financing activities    4,330,578    (13,125,796)
Net increase (decrease) in cash and cash equivalents    (11,891,881)   (45,050,490)
Cash and cash equivalents, beginning of period    22,768,066    69,433,256 
Cash and cash equivalents, end of period   $10,876,185   $24,382,766 
           
Supplemental information:           
Interest paid during the period   $2,608,928   $3,141,957 

 

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

 

4

 

 

PHENIXFIN CORPORATION

Consolidated Schedule of Investments

As of June 30, 2023

(Unaudited)

 

Company(1)  Industry  Type of Investment  Maturity   Par Amount/
Shares/Units(2)		   Amortized
Cost(3)		   Fair
Value(4)		   % of Net 
Assets(5)		 
                           
Non-Controlled/Non-Affiliated Investments:                    
                               
Altisource S.A.R.L.(11)  Services: Business  Senior Secured First Lien Term Loan B  (SOFR + 5.00%, 4.50% PIK)(25)  4/30/2025   $9,103,884   $7,966,112   $7,346,833    5.25%
      Warrants(21)  5/22/2027    102,167    -    404,581    0.29%
              9,206,051    7,966,112    7,751,414    5.54%
                               
Arcline FM Holdings, LLC  Aerospace & Defense  First Lien Term Loans (SOFR + 4.75%, 0.75% SOFR Floor)(25)  6/23/2028    2,686,329    2,588,950    2,651,407    1.89%
              2,686,329    2,588,950    2,651,407    1.89%
                               
Be Green Packaging, LLC  Containers, Packaging & Glass  Equity - 417 Common Units(21)       417    416,250    -    0.00%
              417    416,250    -    0.00%
                               
Boostability Seotowncenter, Inc.  Services: Business  Equity - 833,152 Common Units(21)       833,152    66,475    -    0.00%
              833,152    66,475    -    0.00%
                               
CB&L Associates Holdco I, LLC(11)  Banking, Finance, Insurance & Real Estate  First Lien Term Loan (SOFR + 2.75%, 1.00% SOFR Floor)(14)(24)  11/1/2026     5,992,703    4,938,748    4,779,181    3.41%
              5,992,703    4,938,748    4,779,181    3.41%
                               
Chimera Investment Corp.(11)  Banking, Finance, Insurance & Real Estate  Equity - 117,310 Class C Preferred Units(13)(15)       117,310    2,884,724    2,293,410    1.64%
      Equity - 30,000 Class B Preferred Units(13)(27)       30,000    581,358    627,000    0.45%
              147,310    3,466,082    2,920,410    2.09%
                               
Copper Property CTL Pass Through Trust  Banking, Finance, Insurance & Real Estate  Equity Certificates(14)       597,795    7,615,420    6,175,221    4.41%
                               
DataOnline Corp.  High Tech Industries  Senior Secured First Lien Term Loan (LIBOR + 6.25%, 1.00% LIBOR Floor)(23)  11/13/2025    4,825,000    4,825,000    4,728,500    3.38%
      Revolving Credit Facility  (LIBOR + 6.25%, 1.00% LIBOR Floor)(23)  11/13/2025    714,286    714,286    700,000    0.50%
              5,539,286    5,539,286    5,428,500    3.88%
                               
Deer Management Systems LLC  Consumer Discretionary  First Lien Term Loan (SOFR + 8.25%, 3.00% SOFR + CSA Floor)(8)(25)  5/1/2028    3,400,000    3,332,000    3,357,500    2.40%
              3,400,000    3,332,000    3,357,500    2.40%
                               
DirecTV Financing, LLC  Media: Broadcasting & Subscription  Senior Secured First Lien Term Loan (SOFR + 5.00%, 0.75% SOFR Floor)(14)(24)  8/2/2027    4,212,500    4,212,500    4,101,922    2.93%
              4,212,500    4,212,500    4,101,922    2.93%
                               
Dream Finders Homes, LLC  Construction & Building  Preferred Equity  (8.00% PIK)       5,634,315    5,634,315    5,352,600    3.82%
              5,634,315    5,634,315    5,352,600    3.82%
                               
First Brands Group, LLC  Automotive  Senior Secured First Lien Term Loan (SOFR + 5.00%, 1.00% SOFR Floor)(26)  3/30/2027    3,929,648    3,929,648    3,851,055    2.75%
      Senior Secured First Lien Term Loan (SOFR + 5.00%, 1.00% SOFR Floor)(26)  3/30/2027    1,990,000    1,910,400    1,950,200    1.39%
              5,919,648    5,840,048    5,801,255    4.14%

 

5

 

 

PHENIXFIN CORPORATION

Consolidated Schedule of Investments

As of June 30, 2023

(Unaudited)

 

Company(1)  Industry  Type of Investment  Maturity   Par Amount/
Shares/Units(2)		   Amortized
Cost(3)		   Fair
Value(4)		   % of Net 
Assets(5)		 
Franklin BSP Realty Trust, Inc.(11)  Banking, Finance, Insurance & Real Estate  Equity - 392,745 Common Units(13)       392,745    6,428,865    5,561,269    3.97%
              392,745    6,428,865    5,561,269    3.97%
                               
Global Accessories Group, LLC  Consumer goods: Non-durable  Equity - 3.8% Membership Interest(21)       380    151,337    -    0.00%
              380    151,337    -    0.00%
                               
Great AJAX Corp.(11)  Banking, Finance, Insurance & Real Estate  Equity - 110,732 Common Units(13)       110,732    1,494,094    678,787    0.49%
              110,732    1,494,094    678,787    0.49%
                               
Innovate Corp.(11)  Construction & Building  8.50% Senior Secured Notes(14)  2/1/2026    2,750,000    2,615,913    2,138,125    1.53%
              2,750,000    2,615,913    2,138,125    1.53%
                               
Invesco Mortgage Capital, Inc.(11)  Banking, Finance, Insurance & Real Estate  Equity - 205,000 Class C Preferred Units(13)(16)       205,000    5,035,506    4,276,300    3.06%
              205,000    5,035,506    4,276,300    3.06%
                               
JFL-NGS-WCS Partners, LLC  Construction & Building  Senior Secured First Lien Term Loan B (SOFR + 5.50%, 1.00% SOFR Floor)(24)  11/12/2026    867,466    870,759    865,298    0.62%
      Equity - 10,000,000 Units(21)       10,000,000    10,000,000    11,674,369    8.34%
              10,867,466    10,870,759    12,539,667    8.96%
                               
Lighting Science Group Corporation  Containers, Packaging & Glass  Warrants - 0.62% of Outstanding Equity(21)       5,000,000    955,680    -    0.00%
              5,000,000    955,680    -    0.00%
                               
Lucky Bucks, LLC(28)  Consumer Discretionary  Senior Secured First Lien Term Loan(LIBOR + 5.50%, 0.75% LIBOR Floor)(10)(23)  7/30/2027    9,716,418    7,372,839    1,457,274    1.04%
      Senior Secured First Lien Term Loan(SOFR + 10.00%, 1.00% SOFR + CSA Floor)(24)  10/6/2023    914,832    896,535    914,832    0.65%
      Senior Secured First Lien Term Loan(SOFR + 10.00%, 1.00% SOFR + CSA Floor)(24)  10/6/2023    304,944    266,155    304,944    0.22%
              10,936,194    8,535,529    2,677,050    1.91%
                               
McKissock Investment Holdings, LLC (dba Colibri)  Services: Consumer  Senior Secured First Lien Term Loan (SOFR + CSA + 5.00%, 0.75% SOFR + CSA Floor)(20)(25)  3/10/2029    4,937,495    4,893,502    4,739,995    3.39%
              4,937,495    4,893,502    4,739,995    3.39%

 

6

 

 

PHENIXFIN CORPORATION

Consolidated Schedule of Investments

As of June 30, 2023

(Unaudited)

 

Company(1)  Industry  Type of Investment  Maturity   Par Amount/
Shares/Units(2)		   Amortized
Cost(3)		   Fair
Value(4)		   % of Net 
Assets(5)		 
MFA Financial, Inc.(11)  Banking, Finance, Insurance & Real Estate  Equity - 97,426 Class C Preferred Units(13)(19)       97,426    2,318,487    1,922,215    1.37%
              97,426    2,318,487    1,922,215    1.37%
                               
New York Mortgage Trust, Inc.(11)  Banking, Finance, Insurance & Real Estate  Equity -  165,000 Class E Preferred Units(13)(18)       165,000    4,102,076    3,580,500    2.56%
              165,000    4,102,076    3,580,500    2.56%
                               
PennyMac Financial Services, Inc.(11)  Banking, Finance, Insurance & Real Estate  Equity - 66,500 Common Units(13)       66,500    4,362,213    4,675,615    3.34%
              66,500    4,362,213    4,675,615    3.34%
                               
Point.360  Services: Business  Senior Secured First Lien Term Loan (LIBOR + 6.00% PIK)(10)(21)  7/8/2020    2,777,366    2,103,712    -    0.00%
              2,777,366    2,103,712    -    0.00%
                               
Power Stop LLC  Automotive  Senior Secured First Lien Term Loan (LIBOR + 4.75, 0.50% LIBOR Floor)(22)  1/26/2029    4,937,500    4,894,234    3,801,875    2.72%
              4,937,500    4,894,234    3,801,875    2.72%
                               
Rithm Capital Corp.(11)  Banking, Finance, Insurance & Real Estate  Equity - 206,684 Class B Preferred Units(13)(17)       206,684    5,129,170    4,706,195    3.36%
              206,684    5,129,170    4,706,195    3.36%
                               
Secure Acquisition Inc. (dba Paragon Films)  Packaging  Senior Secured First Lien Term Loan (LIBOR + 5.00%, 0.50% LIBOR Floor)(23)  12/16/2028    3,439,224    3,427,042    3,404,832    2.43%
      Senior Secured First Lien Delayed Draw Term Loan  (LIBOR + 5.00%, 0.50% LIBOR Floor)(8)(12)(23)  12/16/2028    -    (970)   -    0.00%
              3,439,224    3,426,072    3,404,832    2.43%

 

7

 

 

PHENIXFIN CORPORATION

Consolidated Schedule of Investments

As of June 30, 2023

(Unaudited)

 

Company(1)  Industry  Type of Investment  Maturity   Par Amount/
Shares/Units(2)		   Amortized
Cost(3)		   Fair
Value(4)		   % of Net 
Assets(5)		 
Sendero Drilling Company, LLC  Energy: Oil & Gas  Unsecured Debt(9.00%)(21)  8/1/2023    161,250    153,520    161,250    0.12%
              161,250    153,520    161,250    0.12%
                               
SS Acquisition, LLC (dba Soccer Shots Franchising)  Services: Consumer  Senior Secured First Lien Term Loan (SOFR + CSA + 6.50%, 1.00% SOFR Floor)(24)  12/30/2026    6,666,667    6,586,133    6,666,667    4.76%
      Senior Secured First Lien Delayed Draw Term Loan  (SOFR + 6.50%, 1.00% SOFR Floor)(24)  12/30/2026    3,200,000    3,200,000    3,200,000    2.29%
              9,866,667    9,786,133    9,866,667    7.05%
                               
SMART Financial Operations, LLC  Retail  Equity - 700,000 Class A Preferred Units(21)       700,000    700,000    62,530    0.04%
              700,000    700,000    62,530    0.04%
                               
Stancor (dba Industrial Flow Solutions Holdings, LLC)  Services: Business  Equity - 338,736.11 Class A Units(21)       338,736    308,652    204,379    0.15%
              338,736    308,652    204,379    0.15%
                               
Staples, Inc.  Services: Consumer  First Lien Term Loan (LIBOR + 4.50%, 0.0% LIBOR Floor)(14)(23)  9/12/2024    3,701,800    3,647,795    3,618,509    2.60%
              3,701,800    3,647,795    3,618,509    2.60%
                               
Tamarix Capital Partners II, L.P.(11)  Banking, Finance, Insurance & Real Estate  Fund Investment(8)(21)       1,026,818    1,026,818    962,400    0.70%
              1,026,818    1,026,818    962,400    0.70%
                               
Thryv Holdings, Inc.(11)  Media: Broadcasting & Subscription  Senior Secured First Lien Term Loan (SOFR + 8.50%, 1.00% SOFR Floor)(14)(24)  3/1/2026    6,408,619    6,324,325    6,336,522    4.54%
              6,408,619    6,324,325    6,336,522    4.54%
                               
Velocity Pooling Vehicle, LLC  Automotive  Equity - 5,441 Class A Units(21)       5,441    302,464    -    0.00%
      Warrants - 0.65% of Outstanding Equity(21)  3/30/2028    6,506    361,667    -    0.00%
              11,947    664,131    -    0.00%
                               
Watermill-QMC Midco, Inc.  Automotive  Equity - 1.30% Partnership Interest(9)(21)       518,283    518,283    -    0.00%
              518,283    518,283    -    0.00%
                               
Wingman Holdings, Inc.  Aerospace & Defense  Equity - 350 Common Shares(21)       350    700,000    -    0.00%
              350    700,000    -    0.00%
                               
Subtotal Non-Controlled/Non-Affiliated Investments            $113,793,688   $142,762,992   $124,234,092    88.80%

 

8

 

 

PHENIXFIN CORPORATION

Consolidated Schedule of Investments

As of June 30, 2023

(Unaudited)

 

Company(1)  Industry  Type of Investment  Maturity   Par Amount/
Shares/Units(2)		   Amortized
Cost(3)		   Fair
Value(4)		   % of Net
Assets(5)		 
Affiliated Investments:(6)                          
1888 Industrial Services, LLC  Energy: Oil & Gas  Senior Secured First Lien Term Loan A (LIBOR + 5.00% PIK, 1.00% LIBOR Floor)(10)(21)(23)  8/31/2024   $9,946,741   $9,473,068   $-    0.00%
      Senior Secured First Lien Term Loan C (LIBOR + 5.00%, 1.00% LIBOR Floor)

(23)

  8/31/2024    1,231,932    1,191,257    763,798    0.55%
      Revolving Credit Facility  (LIBOR + 5.00%, 1.00% LIBOR Floor)(12)(23)  8/31/2024    4,632,177    4,632,177    4,632,177    3.31%
      Equity - 21,562 Class A Units(21)       21,562    -    -    - 
              15,832,412    15,296,502    5,395,975    3.86%
                               
Black Angus Steakhouses, LLC  Hotel, Gaming & Leisure  Senior Secured First Lien Delayed Draw Term Loan  (SOFR + 9.00% PIK, 1.00% SOFR Floor)(24)  1/31/2024    844,737    768,844    844,737    0.60%
      Senior Secured First Lien Term Loan (SOFR + 9.00% PIK, 1.00% SOFR Floor)(10)(24)  1/31/2024    8,412,596    7,767,533    1,446,967    1.03%
      Senior Secured First Lien Super Priority Delayed Draw Term Loan (SOFR + 9.00% PIK, 1.00% SOFR Floor)(8)(24)  1/31/2024    1,686,463    1,519,796    1,686,463    1.21%
      Equity - 17.92% Membership Interest       -    -    -    0.00%
              10,943,796    10,056,173    3,978,167    2.84%
                               
FST Holdings Parent, LLC  High Tech Industries  Equity - 500,438 Class A Units(21)       500,438    8,000,000    8,000,000    5.72%
              500,438    8,000,000    8,000,000    5.72%
                               
Maritime Wireless Holdings LLC  Hotel, Gaming & Leisure  Senior Secured First Lien Term Loan A (SOFR + CSA + 9.00%, 1.00% SOFR + CSA Floor)(20)(24)  2/15/2024    3,500,000    3,429,508    3,491,250    2.49%
      Senior Secured First Lien Term Loan B (SOFR + CSA + 9.00%, 1.00% SOFR + CSA Floor)(20)(24)  5/31/2027    7,500,000    7,348,945    7,481,250    5.35%
      Equity(21)       5,000,000    5,000,000    6,925,000    4.95%
              16,000,000    15,778,453    17,897,500    12.79%
                               
US Multifamily, LLC  Banking, Finance, Insurance & Real Estate  Equity - 33,300 Preferred Units(21)       33,300    1,164,832    65,136    0.05%
              33,300    1,164,832    65,136    0.05%
                               
Subtotal Affiliated Investments            $43,309,946   $50,295,960   $35,336,778    25.26%

 

9

 

 

PHENIXFIN CORPORATION

Consolidated Schedule of Investments

As of June 30, 2023

(Unaudited)

 

Company(1)  Industry  Type of Investment  Maturity   Par Amount/
Shares/Units(2)		   Amortized Cost(3)   Fair
Value(4)		   % of Net 
Assets(5)		 
Controlled Investments:(7)                          
FlexFIN, LLC  Services: Business  Equity Interest      $34,124,077   $34,124,077   $34,124,077    24.38%
              34,124,077    34,124,077    34,124,077    24.38%
                               
Kemmerer Holdings, LLC  Metals & Mining  Senior Secured First Lien Term Loan (15.00% PIK)  6/21/2025    4,732,281    4,732,281    4,732,281    3.38%
      Equity - 31 Common Units(21)       31    1,836,157    9,155,202    6.54%
              4,732,312    6,568,438    13,887,483    9.92%
                               
NVTN LLC  Hotel, Gaming & Leisure  Senior Secured First Lien Delayed Draw Term Loan  (LIBOR + 4.00% Cash, 1.00% LIBOR Floor)(8)(22)  12/31/2024    7,309,985    7,309,885    7,207,547    5.15%
      Senior Secured First Lien Term Loan B  (LIBOR + 9.25% PIK, 1.00% LIBOR Floor)(10)(21)  12/31/2024    17,552,420    13,916,083    3,896,641    2.78%
      Senior Secured First Lien Term Loan C (LIBOR + 12.00% PIK, 1.00% LIBOR Floor)(10)(21)  12/31/2024    11,506,159    7,570,056    -    0.00%
      Equity - 1,000 Class A Units(21)       1,000    9,550,924    -    0.00%
              36,369,564    38,346,948    11,104,188    7.93%
                               
Subtotal Control Investments            $75,225,953   $79,039,463   $59,115,748    42.23%
                               
   Total Investments, June 30, 2023      $232,329,587   $272,098,415   $218,686,618    156.29%

 

10

 

 

PHENIXFIN CORPORATION

Consolidated Schedule of Investments

As of June 30, 2023

(Unaudited)

 

(1) Most of our investments are domiciled in the United States. See Note 3 for a summary of portfolio composition by geographic location. Certain investments also have international operations.
(2) Par amount is presented for debt investments and the amount includes accumulated payment-in-kind (“PIK”) interest, as applicable, and is net of repayments, while the number of shares or units owned is presented for equity investments. Par amount is denominated in U.S. Dollars (“$”) unless otherwise noted.
(3) Net unrealized depreciation for U.S. federal income tax purposes totaled $(53,411,797).
  The tax cost basis of investments is $272,098,415 as of June 30, 2023.
  The amortized cost represents the original cost adjusted for the amortization or accretion of premium or discount, as applicable, on debt investments using the effective interest method.
(4) Unless otherwise indicated, all securities are valued using significant unobservable inputs, which are categorized as Level 3 assets under the definition of ASC 820 fair value hierarchy (see Note 4).
(5) Percentage is based on net assets of $139,954,664 as of June 30, 2023.
(6) Affiliated Investments are defined by the 1940 Act as investments in companies in which the Company owns between 5% and 25% outstanding voting securities or is under common control with such portfolio company.
(7) Control Investments are defined by the Investment Company Act of 1940, as amended (the “1940 Act”), as investments in companies in which the Company owns more than 25% of the voting securities or maintains greater than 50% of the board representation.
(8) The investment has an unfunded commitment as of June 30, 2023 (see Note 8), and fair value includes the value of any unfunded commitments. The negative cost, if applicable, is the result of the capitalized discount being greater than the principal amount outstanding on the loan. The negative fair value, if applicable, is the result of the capitalized discount on the loan.
(9) Represents 1.3% partnership interest in Watermill-QMC Partners, LP and Watermill-EMI Partners, LP.
(10) The investment was on non-accrual status as of June 30, 2023.
(11) The investment is not a qualifying asset as defined under Section 55(a) of 1940 Act, in a whole, or in part. As of June 30, 2023, non-qualifying assets represented 21.63% of total assets.
(12) This investment earns 0.50% commitment fee on all unused commitment as of June 30, 2023, and is recorded as a component of interest income on the Consolidated Statements of Operations.
(13) This investment represents a Level 1 security in the ASC 820 table as of June 30, 2023 (see Note 4).
(14) This investment represents a Level 2 security in the ASC 820 table as of June 30, 2023 (see Note 4).
(15) The interest rate on this investment is fixed-to-floating and will shift to 3 month LIBOR plus a 4.743% spread on 9/30/2025.
(16) The interest rate on this investment is fixed-to-floating and will shift to 3 month LIBOR plus a 5.29% spread on 9/27/2027.
(17) The interest rate on this investment is fixed-to-floating and will shift to 3 month LIBOR plus a 5.64% spread on 8/15/2024.
(18) The interest rate on this investment is fixed-to-floating and will shift to 3 month LIBOR plus a 6.429% spread on 1/15/2025.
(19) The interest rate on this preferred equity is fixed-to-floating and will shift to 3 month LIBOR plus a 5.345% spread on 3/31/2025.
(20) Credit Spread Adjustment (“CSA”)
(21) Non-income producing security.
(22) The interest rate on these loans is subject to 1 month LIBOR, which as of June 30, 2023 was 5.22%.
(23) The interest rate on these loans is subject to 3 month LIBOR, which as of June 30, 2023 was 5.55%.
(24) The interest rate on these loans is subject to 1 month SOFR, which as of June 30, 2023 was 5.07%.
(25) The interest rate on these loans is subject to 3 month SOFR, which as of June 30, 2023 was 5.00%.
(26) The interest rate on these loans is subject to 6 month SOFR, which as of June 30, 2023 was 4.78%.
(27) The interest rate on this investment is fixed-to-floating and will shift to 3 month LIBOR plus a 5.791% spread on 3/31/2024.
(28) The Company filed for bankruptcy and PhenixFIN provided DIP Financing as of June 30, 2023.

 

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

 

11

 

 

PHENIXFIN CORPORATION

Consolidated Schedule of Investments

As of September 30, 2022

 

Company(1)  Industry  Type of Investment  Maturity    Par Amount/
Shares/Units(2)		   Amortized
Cost(3)		   Fair
Value(4)		   % of Net 
Assets(5)		 
Non-Controlled/Non-Affiliated Investments:                     
                            
Altisource S.A.R.L.(11)  Services: Business  Senior Secured First Lien Term Loan B (LIBOR + 4.00%, 1.00% LIBOR Floor)(14)  4/3/2024    $6,486,419   $5,825,616   $5,448,591    4.51%
               6,486,419    5,825,616    5,448,591    4.51%
                                
Be Green Packaging, LLC  Containers, Packaging & Glass  Equity - 417 Common Units        1    416,250    -    0.00%
               1    416,250    -    0.00%
                                
Boostability Seotowncenter, Inc.  Services: Business  Equity - 3,434,169.6 Common Units        833,152    66,475    -    0.00%
               833,152    66,475    -    0.00%
                                
Chimera Investment Corp.(11)  Banking, Finance, Insurance & Real Estate  Equity - 117,310 Class C Preferred Units(13)(15)        117,310    2,884,724    1,915,672    1.59%