UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549


Form 10-Q
ýQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2020
or
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


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

For the Quarterly Period Ended June 30, 2021

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

MEDLEY CAPITAL 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, 9th Floor, New York, NY 
280 Park Avenue, 6th Floor East, New York, NY 100171001710022
(Address of Principal Executive Offices) (Zip Code)


(212) 759-0777
859-0390

(Registrant’s Telephone Number, Including Area Code)

 _____________________________________________________________________________________________________

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

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareMCCPFXThe New York Stock Exchange
6.500% Notes due 2021MCXThe New York Stock ExchangeNASDAQ Global Market
6.125% Notes due 2023MCVPFXNLThe New York Stock ExchangeNASDAQ 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 ý ☒ 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 ý         Non-accelerated filer ¨      Smaller reporting company ¨        Emerging growth company ¨

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 ☒

ý


The Registrant had 2,723,7112,658,921 shares of common stock, $0.001 par value, outstanding as of August 7, 2020.11, 2021.


PHENIXFIN CORPORATION


MEDLEY CAPITAL CORPORATION

TABLE OF CONTENTS

Part I. Financial Information
  
Item 1. Financial Statements
  
1
  
2
  
4
3
  
6
4
  
7
5
  
19
22
  
1
60
  
18
77
  
19
77
  
Part II. Other Information78
  
20
78
  
21
80
  
24
83
  
24
83
  
24
83
  
24
83
  
72
84
  
SIGNATURES
76
88

i


PHENIXFIN CORPORATION




Medley Capital Corporation

Consolidated Statements of Assets and Liabilities

  June 30,
2021 (Unaudited)		  September 30,
2020		 
Assets:      
Investments at fair value      
Non-controlled, non-affiliated investments (amortized cost of $109,219,571 and $117,360,954, respectively) $105,407,064  $114,321,948 
Affiliated investments (amortized cost of $78,821,547 and $92,898,755, respectively)  68,722,983   84,873,023 
Controlled investments (amortized cost of $37,489,171 and $117,874,821, respectively)  7,488,473   47,548,578 
Total Investments at fair value  181,618,520   246,743,549 
Cash and cash equivalents  52,864,911   56,522,148 
Receivables:        
Interest receivable  289,832   624,524 
Fees receivable  106,528   119,028 
Dividends receivable  66,445   - 
Other assets  1,003,437   2,093,559 
Total Assets $235,949,673  $306,102,808 
         
Liabilities:        
Notes payable (net of debt issuance costs of $482,346 and $905,624, respectively) $77,364,454  $150,960,662 
Interest and fees payable  -   801,805 
Due to affiliate  -   53,083 
Due to broker  284,067   - 
Management and incentive fees payable (see Note 6)  -   1,392,022 
Administrator expenses payable (see Note 6)  60,685   156,965 
Accounts payable and accrued expenses  1,547,888   2,108,225 
Deferred revenue  14,003   10,529 
Total Liabilities  79,271,097   155,483,291 
         
Commitments and Contingencies (see Note 8)        
         
Net Assets:        
Common Shares, $0.001 par value; 5,000,000 shares authorized; 2,723,709 shares issued; 2,678,921 and 2,723,709 common shares outstanding, respectively  2,679   2,724 
Capital in excess of par value  670,122,430   672,381,617 
Total distributable earnings (loss)  (513,446,533)  (521,764,824)
Total Net Assets $156,678,576  $150,619,517 
Total Liabilities and Net Assets $235,949,673  $306,102,808 
         
Net Asset Value Per Common Share $58.49  $55.30 

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


PHENIXFIN CORPORATION

Consolidated Statements of Operations

(Unaudited)

  For the Three Months Ended
June 30		  For the Nine Months Ended
June 30		 
  2021  2020  2021  2020 
Interest Income:            
Interest from investments            
Non-controlled, non-affiliated investments:            
Cash $1,578,657   1,961,009  $4,785,374   7,499,171 
Payment in-kind  186,733   138,018   356,762   465,339 
Affiliated investments:                
Cash  249,157   291,569   797,776   691,010 
Payment in-kind  286,444   487,065   286,444   2,141,327 
Controlled investments:                
Cash  -   -   -   84,505 
Payment in-kind  -   -   -   500,767 
Total interest income  2,300,991   2,877,661   6,226,356   11,382,119 
Dividend income  6,307,408   1,225,000   20,979,143   4,725,000 
Interest from cash and cash equivalents  3,862   4,319   5,308   376,747 
Fee income (see Note 9)  71,443   202,122   650,323   617,654 
Other income  -   -   78,204   - 
Total Investment Income  8,683,704   4,309,102   27,939,334   17,101,520 
Expenses:                
Base management fees (see Note 6)  -   1,317,223   1,146,403   4,966,728 
Interest and financing expenses  1,260,825   2,736,136   4,538,520   12,312,183 
General and administrative expenses  294,022   540,066   856,396   3,140,305 
Salaries and Benefits  679,229   -   1,011,546   - 
Administrator expenses (see Note 6)  106,578   614,535   546,372   1,742,419 
Insurance expenses  444,832   333,816   1,404,312   988,394 
Directors fees  179,000   347,500   875,217   960,000 
Professional fees, net (see Note 8)  289,200   (511,519)  113,797   (4,796,964)
Expenses before expense support reimbursement and management and incentive fee waivers  3,253,686   5,377,757   10,492,563   19,313,065 
Expense support reimbursement (see Note 6)  -   (349,427)  -   (349,427)
Total expenses net of expense support reimbursement and management and incentive fee waivers  3,253,686   5,028,330   10,492,563   18,963,638 
Net Investment Income  5,430,018   (719,228)  17,446,771   (1,862,118)
Realized and unrealized gains (losses) on investments                
Net realized gains (losses):                
Non-controlled, non-affiliated investments  38,852   (532,253)  4,093,500   (690,167)
Affiliated investments  19,811   -   (10,433,117)  - 
Controlled investments  1,850   (37,389,588)  (40,145,720)  (39,076,425)
Total net realized gains (losses)  60,513   (37,921,841)  (46,485,337)  (39,766,592)
Net change in unrealized gains (losses):                
Non-controlled, non-affiliated investments  (1,794,173)  7,379,695   (773,501)  (8,422,875)
Affiliated investments  1,513,353   8,137,213   (2,072,831)  2,558,480 
Controlled investments  1,759,025   31,389,160   40,325,544   (17,062,311)
Total net change in unrealized gains (losses)  1,478,205   46,906,068   37,479,212   (22,926,706)
Change in provision for deferred taxes on unrealized (appreciation) depreciation on investments  -   35,970   -   (49,694)
Loss on extinguishment of debt (see Note 5)  -   (697,191)  (122,355)  (2,481,374)
Total realized and unrealized gains (losses)  1,538,718   8,323,006   (9,128,480)  (65,224,366)
Net Increase (Decrease) in Net Assets Resulting from Operations $6,968,736  $7,603,778  $8,318,291  $(67,086,484)
Weighted Average Basic and diluted earnings per common share $2.60  $2.79  $3.07  $(24.63)
Weighted Average Basic and diluted net investment income (loss) per common share $2.02  $(0.26) $6.44  $(0.68)
Weighted Average Common Shares Outstanding - Basic and Diluted (see Note 11)  2,683,093   2,723,711  2,707,794   2,723,711

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

 June 30, 2020September 30, 2019
(unaudited)
ASSETS 
Investments at fair value  
Non-controlled/non-affiliated investments (amortized cost of $139,960,645 and $204,736,370, respectively)$116,696,866  $189,895,466  
Affiliated investments (amortized cost of $86,468,874 and $108,310,029, respectively)80,256,929  99,539,605  
Controlled investments (amortized cost of $117,874,821 and $154,601,177, respectively)53,665,259  107,453,927  
Total investments at fair value250,619,054  396,888,998  
Cash and cash equivalents52,203,301  68,245,213  
Restricted cash (see Note 2)—  16,038,690  
Other assets2,041,805  2,973,731  
Interest receivable662,860  1,592,406  
Receivable for dispositions and investments sold1,302,278  419,299  
Fees receivable119,028  108,305  
Total assets$306,948,326  $486,266,642  
LIABILITIES  
Notes payable (net of debt issuance costs of $1,134,394 and $5,274,164, respectively)$150,732,566  $251,731,729  
Accounts payable and accrued expenses4,375,939  11,956,755  
Interest and fees payable801,805  2,904,748  
Management and incentive fees payable (see Note 6)1,317,223  2,231,175  
Administrator expenses payable (see Note 6)265,108  861,785  
Deferred revenue29,006  103,583  
Due to affiliate30,939  44,337  
Deferred tax liability49,694  —  
Total liabilities$157,602,280  $269,834,112  
Guarantees and Commitments (see Note 8)  
NET ASSETS  
Common stock, par value $0.001 per share, 5,000,000 common shares authorized, 2,723,711 and 2,723,711 common shares issued and outstanding, respectively(1)
$2,724  $2,724  
Capital in excess of par value673,584,468  673,584,468  
Total distributable earnings/(loss)(524,241,146) (457,154,662) 
Total net assets149,346,046  216,432,530  
Total liabilities and net assets$306,948,326  $486,266,642  
NET ASSET VALUE PER SHARE(1)
$54.83  $79.46  


PHENIXFIN CORPORATION

(1)Authorized, issued and outstanding common shares and net asset value per share have been adjusted for the periods shown to reflect the one-for-twenty reverse stock split effected on July 24, 2020 on a retroactive basis, as describedConsolidated Statements of Changes in Note 1.Net Assets

(Unaudited)

  Shares  Par Amount  Capital in
Excess of
Par Value		  Total
Distributable
Earnings/(Loss)		  Total
Net Assets		 
Balance at March 31, 2020  2,723,711  $2,724  $673,584,468  $(531,844,924) $141,742,268 
OPERATIONS                    
Net investment income (loss)  -   -   -   (719,228)  (719,228)
Net realized gains (losses) on investments  -   -   -   (37,921,841)  (37,921,841)
Net change in unrealized appreciation (depreciation) on investments  -   -   -   46,906,068   46,906,068 
Change in provision for deferred taxes on unrealized (appreciation) depreciation on investments  -   -   -   35,970   35,970 
Net loss on extinguishment of debt  -   -   -   (697,191)  (697,191)
Total Increase (Decrease) in Net Assets  -   -   -   7,603,778   7,603,778 
Balance at June 30, 2020  2,723,711  $2,724  $673,584,468  $(524,241,146) $149,346,046 
Balance at March 31, 2021  2,703,936  $2,704  $671,589,690  $(520,415,269) $151,177,125 
OPERATIONS                    
Net investment income (loss)  -   -   -   5,430,018   5,430,018 
Net realized gains (losses) on investments  -   -   -   60,513   60,513 
Net change in unrealized appreciation (depreciation) on investments  -   -   -   1,478,205   1,478,205 
   -   -   -   6,968,736   6,968,736 
CAPITAL SHARE TRANSACTIONS                    
Repurchase of common shares  (25,015)  (25)  (1,467,260)  -   (1,467,285)
   (25,015)  (25)  (1,467,260)  -   (1,467,285)
Total Increase (Decrease) in Net Assets  (25,015)  (25)  (1,467,260)  6,968,736   5,501,451 
Balance at June 30, 2021  2,678,921  $2,679  $670,122,430  $(513,446,533) $156,678,576 
Balance at September 30, 2019  2,723,711  $2,724  $673,584,468  $(457,154,662) $216,432,530 
OPERATIONS                    
Net investment income (loss)  -   -   -   (1,862,118)  (1,862,118)
Net realized gains (losses) on investments  -   -   -   (39,766,592)  (39,766,592)
Net change in unrealized appreciation (depreciation) on investments  -   -   -   (22,926,706)  (22,926,706)
Change in provision for deferred taxes on unrealized (appreciation) depreciation on investments  -   -   -   (49,694)  (49,694)
Net loss on extinguishment of debt  -   -   -   (2,481,374)  (2,481,374)
Total Increase (Decrease) in Net Assets  -   -   -   (67,086,484)  (67,086,484)
Balance at June 30, 2020  2,723,711  $2,724  $673,584,468  $(524,241,146) $149,346,046 
Balance at September 30, 2020  2,723,709  $2,724  $672,381,617  $(521,764,824) $150,619,517 
OPERATIONS                    
Net investment income (loss)  -   -   -   17,446,771   17,446,771 
Net realized gains (losses) on investments  -   -   -   (46,485,337)  (46,485,337)
Net change in unrealized appreciation (depreciation) on investments  -   -   -   37,479,212   37,479,212 
Net loss on extinguishment of debt  -   -   -   (122,355)  (122,355)
   -   -   -   8,318,291   8,318,291 
CAPITAL SHARE TRANSACTIONS                    
Repurchase of common shares  (44,788)  (45)  (2,259,187)  -   (2,259,232)
   (44,788)  (45)  (2,259,187)  -   (2,259,232)
Total Increase (Decrease) in Net Assets  (44,788)  (45)  (2,259,187)  8,318,291   6,059,059 
Balance at June 30, 2021  2,678,921  $2,679  $670,122,430  $(513,446,533) $156,678,576 

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


PHENIXFIN CORPORATION

Consolidated Statements of Cash Flows

(Unaudited)

  For the Nine Months Ended
June 30		 
  2021  2020 
Cash Flows from Operating Activities:      
Net increase (decrease) in net assets resulting from operations $8,318,291  $(67,086,484)
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  (643,206)  (3,539,584)
Net amortization of premium (discount) on investments  (13,366)  (91,980)
Amortization of debt issuance cost  294,261   2,642,386 
Net realized (gain) loss from investments  46,485,337   39,766,592 
Net deferred income taxes  -   49,694 
Net unrealized (gains) losses on investments  (37,479,212)  22,926,706 
Proceeds from sale and settlements of investments  87,789,083   103,367,413 
Purchases, originations and participations  (31,013,606)  (16,159,203)
Loss on extinguishment of debt  122,355   2,481,374 
(Increase) decrease in operating assets:        
Other assets  1,090,122   931,926 
Interest receivable  334,692   929,546 
Receivable for dispositions and investments sold  -   (882,979)
Fees receivable  12,500   (10,723)
Dividends receivable  (66,445)  - 
Increase (decrease) in operating liabilities:        
Accounts payable and accrued expenses  (560,337)  (7,580,816)
Interest and fees payable  (801,805)  (2,102,943)
Management and incentive fees payable, net  (1,392,022)  (913,952)
Administrator expenses payable  (96,280)  (596,677)
Deferred revenue  3,474   (74,577)
Due to affiliate  (53,083)  (13,398)
Due to broker  284,067   - 
Net cash provided by (used in) operating activities  72,614,820   74,042,321 
Cash Flows from Financing Activities:        
Paydowns on debt  (74,012,825)  (106,122,923)
Repurchase of common shares  (2,259,232)  - 
Net cash provided by (used in) financing activities  (76,272,057)  (106,122,923)
Net increase (decrease) in cash and cash equivalents  (3,657,237)  (32,080,602)
Cash and cash equivalents, beginning of period  56,522,148   84,283,903 
Cash and cash equivalents, end of period $52,864,911  $52,203,301 
         
Supplemental information:        
Interest paid during the period $5,340,325  $11,772,739 

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


PHENIXFIN CORPORATION

Consolidated Schedule of Investments

As of June 30, 2021

(Unaudited)

Company(1) Industry Type of Investment Maturity  Par
Amount(2)		  Cost(3)  Fair
Value(4)		  % of
Net Assets(5)		 
                    

Non-Controlled/Non-Affiliated Investments:

                    
                         
Alpine SG, LLC (8) High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 5.75% Cash, 1.00% LIBOR Floor)(14)  11/16/2022  $4,715,809  $4,715,809  $4,715,806   3.01%
    Senior Secured Incremental First Lien Term Loan (LIBOR + 8.50% Cash, 1.00% LIBOR Floor)(14)  11/16/2022   472,087   472,087   472,087   0.30%
    Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 5.75% Cash, 1.00% LIBOR Floor)(14)  11/16/2022   2,277,293   2,277,293   2,277,293   1.45%
    Senior Secured Incremental First Lien Term Loan (LIBOR + 6.50% Cash, 1.00% LIBOR Floor)(14)  11/16/2022   4,174,037   4,094,287   4,174,037   2.66%
           11,639,226   11,559,476   11,639,223   7.42%
                         
Autosplice, Inc. Automotive Senior Secured First Lien Term Loan (LIBOR + 8.00% Cash & 2.00% PIK, 1.00% LIBOR Floor)(14)  4/30/2022   11,854,234   11,854,234   11,854,234   7.57%
           11,854,234   11,854,234   11,854,234   7.57%
                         
Be Green Packaging, LLC Containers, Packaging & Glass Equity - 417 Common Units      1   416,250   -   0.00%
           1   416,250   -   0.00%
                         
Chimera Investment Corp.(11) Banking, Finance, Insurance & Real Estate Equity - 112,310 Class C Preferred Units(18)(21)     112,310   2,755,253   2,904,337   1.85%
           112,310   2,755,253   2,904,337   1.85%
                         
Cleaver-Brooks, Inc. Manufacturing 7.875% Senior Secured Notes(19)  3/1/2023   3,764,000   3,756,540   3,726,360   2.38%
           3,764,000   3,756,540   3,726,360   2.38%
                         
CM Finance SPV, LLC Energy: Oil & Gas Unsecured Debt(10)      101,463   101,463   -   0.00%
           101,463   101,463   -   0.00%


Company(1) Industry Type of Investment Maturity  Par
Amount(2)		  Cost(3)  Fair
Value(4)		  % of
Net Assets(5)		 
                    
CPI International, Inc. Aerospace & Defense Senior Secured Second Lien Term Loan (LIBOR + 7.25% Cash, 1.00% LIBOR Floor)(13)  7/28/2025   2,607,062   2,599,755   2,483,227   1.58%
           2,607,062   2,599,755   2,483,227   1.58%
                         

Crow Precision Components, LLC

 Aerospace & Defense Equity - 350 Common Units      350   700,000   127,474   0.08%
           350   700,000   127,474   0.08%
                         
DataOnline Corp.(8) High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor)(14)  11/13/2025   4,925,000   4,925,000   4,826,500   3.08%
    Revolving Credit Facility (LIBOR + 6.25% Cash, 1.00% LIBOR Floor)(14)(16)  11/13/2025   607,143   607,143   592,857   0.38%
           5,532,143   5,532,143   5,419,357   3.46%
                         
Dividend and Income Fund(11) Banking, Finance, Insurance & Real Estate Equity - 45,653 Common Units(18)      45,653   665,852   676,121   0.43%
           45,653   665,852   676,121   0.43%
                         

Dream Finders Homes, LLC(11)

 Construction & Building Preferred Equity (8.00% PIK)      4,808,834   4,808,834   4,616,481   2.95%
           4,808,834   4,808,834   4,616,481   2.95%
                         
Footprint Acquisition, LLC Services: Business Preferred Equity (8.75% PIK)(10)      4,049,398   4,049,398   2,348,651   1.50%
    Equity - 150 Common Units      150   -   -   0.00%
           4,049,548   4,049,398   2,348,651   1.50%
                         
Global Accessories Group, LLC Consumer goods: Non-durable Equity - 3.8% Membership Interest      380   151,337   -   0.00%
           380   151,337   -   0.00%
                         

Great AJAX Corp.(11)

 Banking, Finance, Insurance & Real Estate Equity - 37,254 Common Units(18)      37,254   469,512   483,557   0.31%
           37,254   469,512   483,557   0.31%


Company(1) Industry Type of Investment Maturity  Par
Amount(2)		  Cost(3)  Fair
Value(4)		  % of
Net Assets(5)		 
                    

Non-Controlled/ Non-Affiliated Investments:

                    
                     
Impact Group, LLC Services: Business Senior Secured First Lien Term Loan (LIBOR + 7.37% Cash, 1.00% LIBOR Floor)(14)  6/27/2023   3,159,309   3,159,309   3,159,309   2.02%
    Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 7.37% Cash, 1.00% LIBOR Floor)(14)  6/27/2023   9,155,136   9,155,136   9,155,136   5.84%
           12,314,445   12,314,445   12,314,445   7.86%
                         
InterFlex Acquisition Company, LLC Containers, Packaging & Glass Senior Secured First Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor)(13)  8/18/2022   11,535,906   11,535,906   11,535,906   7.36%
           11,535,906   11,535,906   11,535,906   7.36%
                         
Invesco Mortgage Capital, Inc.(11) Banking, Finance, Insurance & Real Estate Equity - 205,000 Class C Preferred Units(18)(22)     205,000   5,035,506   5,139,350   3.28%
           205,000   5,035,506   5,139,350   3.28%
                         
Lighting Science Group Corporation Containers, Packaging & Glass Warrants - 0.62% of Outstanding Equity      5,000,000   955,680   -   0.00%
           5,000,000   955,680   -   0.00%
                         
New Residential Investment Corp.(11) Banking, Finance, Insurance & Real Estate Equity - 159,583 Class B Preferred Units(18)(23)     159,583   3,948,103   4,096,496   2.61%
           159,583   3,948,103   4,096,496   2.61%
                         
New York Mortgage Trust, Inc.(11) Banking, Finance, Insurance & Real Estate Equity - 135,000 Class E Preferred Units(18)(24)     135,000   3,335,657   3,488,400   2.23%
           135,000   3,335,657   3,488,400   2.23%
                         
Point.360 Services: Business Senior Secured First Lien Term Loan (LIBOR + 6.00% PIK)(10)(15)  7/8/2020   2,777,366   2,103,712   -   0.00%
           2,777,366   2,103,712   -   0.00%


Company(1) Industry Type of Investment Maturity  Par
Amount(2)		  Cost(3)  Fair
Value(4)		  % of
Net Assets(5)		 
                         
RateGain Technologies, Inc. Hotel, Gaming & Leisure Unsecured Debt(10)(12)  10/2/2023   589,821   589,821   -   0.00%
    Unsecured Debt(10)(12)  4/1/2024   761,905   761,905   -   0.00%
           1,351,726   1,351,726   -   0.00%
                         
Redwood Services Group, LLC(8) Services: Business Revolving Credit Facility (LIBOR + 6.00% Cash, 1.00% LIBOR Floor)(13)(16)  6/6/2023   175,000   175,000   157,500   0.10%
           175,000   175,000   157,500   0.10%
                         
Sendero Drilling Company, LLC Energy: Oil & Gas Unsecured Debt (9.00% Cash)(10)  8/1/2022   297,500   283,238   -   0.00%
           297,500   283,238   -   0.00%
                         
Seotowncenter, Inc. Services: Business Equity - 3,434,169.6 Common Units      3,434,170   566,475   -   0.00%
           3,434,170   566,475   -   0.00%
                         
SFP Holding, Inc. Services: Business Senior Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor)(14)  9/1/2022   4,744,636   4,744,636   4,697,190   3.00%
    Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor)(14)  9/1/2022   1,839,544   1,839,544   1,821,149   1.16%
    Equity - 101,165.93 Common Units in CI (Summit) Investment Holdings LLC      101,166   1,067,547   863,957   0.55%
           6,685,346   7,651,727   7,382,296   4.71%
                         
SMART Financial Operations, LLC Retail Equity - 700,000 Class A Preferred Units      700,000   700,000   -   0.00%
           700,000   700,000   -   0.00%

Company(1) Industry Type of Investment Maturity  Par
Amount(2)		  Cost(3)  Fair
Value(4)		  % of
Net Assets(5)		 
                         
Stancor, Inc. Services: Business Equity - 263,814.43 Class A Units      263,814   263,814   204,946   0.13%
           263,814   263,814   204,946   0.13%
                         
Thryv Holdings, Inc.(11) Services: Business Senior Secured First Lien Term Loan B (LIBOR + 8.50% Cash, 1.00% LIBOR Floor)(13)(19)  3/1/2026   6,120,000   5,944,492   6,120,000   3.91%
           6,120,000   5,944,492   6,120,000   3.91%
                         
Velocity Pooling Vehicle, LLC Automotive Senior Secured First Lien Term Loan (LIBOR + 11.00%, 1.00% LIBOR Floor)(14)  4/28/2023   1,014,440   951,629   1,014,440   0.65%
    Equity - 5,441 Class A Units      5,441   302,464   62,299   0.04%
    Warrants - 0.65% of Outstanding Equity  3/30/2028   6,506   361,667   74,429   0.05%
           1,026,387   1,615,760   1,151,168   0.74%
                         
Walker Edison Furniture Company LLC Consumer goods: Durable Equity - 10,244 Common Units      10,244   1,500,000   7,537,535   4.81%
           10,244   1,500,000   7,537,535   4.81%
                         
Watermill-QMC Midco, Inc. Automotive Equity - 1.3% Partnership Interest(9)      518,283   518,283   -   -0.02%
           518,283   518,283   -   -0.02%
                         
Subtotal Non-Controlled/
Non-Affiliated Investments		         $97,262,228  $109,219,571  $105,407,064   67.28%

Company(1) Industry Type of Investment Maturity  Par
Amount(2)		  Cost(3)  Fair
Value(4)		  % of
Net Assets(5)		 
                    

Non-Controlled/Non-Affiliated Investments:

                    
                     
Affiliated Investments:(6)                      
                         
1888 Industrial Services, LLC(8) Energy: Oil & Gas Senior Secured First Lien Term Loan A (LIBOR + 5.00% PIK, 1.00% LIBOR Floor)(10)(14)  9/30/2021   9,946,740   9,473,066   -   0.00%
    Senior Secured First Lien Term Loan B (LIBOR + 8.00% PIK, 1.00% LIBOR Floor)(10)(14)  9/30/2021   25,937,520   19,468,870   -   0.00%
    Senior Secured First Lien Term Loan C (LIBOR + 5.00%, 1.00% LIBOR Floor)(10)(14)  9/30/2021   1,231,932   1,191,257   197,109   0.13%
    Revolving Credit Facility (LIBOR +5.00%, 1.00% LIBOR Floor)(14)(16)(25)  9/30/2021   3,554,069   3,554,069   3,554,069   2.27%
    Equity - 17,493.63 Class A Units      21,562   -   -   0.00%
           40,691,823   33,687,262   3,751,178   2.40%
                         
Black Angus Steakhouses, LLC(8) Hotel, Gaming & Leisure Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor)(13)  6/30/2022   758,929   758,929   758,929   0.48%
    Senior Secured First Lien Term Loan (LIBOR + 9.00% PIK, 1.00% LIBOR Floor)(10)(13)  6/30/2022   8,412,596   7,767,533   2,136,799   1.36%
    Senior Secured First Lien Super Priority DDTL (LIBOR + 9.00% Cash, 1.00% LIBOR Floor)(13)(16)  6/30/2022   1,500,000   1,500,000   1,500,000   0.96%
           10,671,525   10,026,462   4,395,728   2.80%
                         
Caddo Investors Holdings 1 LLC(11) Forest Products & Paper Equity - 6.15% Membership Interest(20)      2,528,826   2,528,826   3,766,822   2.40%
           2,528,826   2,528,826   3,766,822   2.40%

Company(1) Industry Type of Investment Maturity  Par
Amount(2)		  Cost(3)  Fair
Value(4)		  % of
Net Assets(5)		 
                         
Dynamic Energy Services International LLC Energy: Oil & Gas Senior Secured First Lien Term Loan (LIBOR + 13.50% PIK)(10)(15)  12/31/2021   12,930,235   7,824,975   -   0.00%
    Equity - 12,350,000 Class A Units      12,350,000   -   -   0.00%
           25,280,235   7,824,975   -   0.00%
                         
JFL-NGS Partners, LLC Construction & Building Equity - 57,300 Class B Units      57,300   57,300   33,383,212   21.31%
           57,300   57,300   33,383,212   21.31%
                         
JFL-WCS Partners, LLC Environmental Industries Equity - 129,588 Class B Units      129,588   129,588   10,070,454   6.43%
           129,588   129,588   10,070,454   6.43%
                         
Kemmerer Operations, LLC(8) Metals & Mining Senior Secured First Lien Term Loan (15.00% PIK)  6/21/2023   2,294,047   2,294,047   2,294,047   1.45%
    Senior Secured First Lien Delayed Draw Term Loan (15.00% PIK)(16)  6/21/2023   288,614   288,614   288,614   0.18%
    Equity - 6.7797 Common Units      7   962,717   276,078   0.18%
           2,582,668   3,545,378   2,858,739   1.81%
                         
Path Medical, LLC Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan A (LIBOR + 9.50% Cash, 1.00% LIBOR Floor)(10)(13)  10/11/2021   5,905,080   5,905,080   2,911,204   1.85%
    Senior Secured First Lien Term Loan B (LIBOR + 13.00% PIK, 1.00% LIBOR Floor)(10)(13)  10/11/2021   7,783,840   6,599,918   -   0.00%
    Warrants - 7.68% of Outstanding Equity      123,867   499,751   -   0.00%
           13,812,787   13,004,749   2,911,204   1.85%
                         
URT Acquisition Holdings Corporation Services: Business Unsecured Debt (10.00% Cash)(17)  12/4/2024   2,109,589   2,109,589   2,109,589   1.35%
    Warrants      28,912   -   1,070,000   0.68%
           2,138,501   2,109,589   3,179,589   2.03%
                         
US Multifamily, LLC(11) Banking, Finance, Insurance & Real Estate Senior Secured First Lien Term Loan (10.00% Cash)  12/31/2022   2,577,418   2,577,418   2,577,418   1.65%
    Equity - 33,300 Preferred Units      33,300   3,330,000   1,828,639   1.17%
           2,610,718   5,907,418   4,406,057   2.82%
                         
Subtotal Affiliated Investments         $100,503,971  $78,821,547  $68,722,983   43.86%

Company(1) Industry Type of Investment Maturity  Par
Amount(2)		  Cost(3)  Fair
Value(4)		  % of
Net Assets(5)		 
                         
Controlled Investments:(7)                     
                         
NVTN LLC(8) Hotel, Gaming & Leisure Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 4.00% Cash, 1.00% LIBOR Floor)(10)(13)(16)  11/9/2021   6,565,875   6,565,875   6,027,473   3.85%
    Senior Secured First Lien Super Priority DDTL (LIBOR + 4.00% Cash, 1.00% LIBOR Floor)(13)(16)  12/31/2024   1,500,000   1,497,224   1,461,000   0.93%
    Senior Secured First Lien Term Loan B (LIBOR + 9.25% PIK, 1.00% LIBOR Floor)(10)(13)  11/9/2021   14,963,195   12,305,096   -   0.00%
    Senior Secured First Lien Term Loan C (LIBOR + 12.00% PIK, 1.00% LIBOR Floor)(10)(13)  11/9/2021   10,014,223   7,570,054   -   0.00%
    Equity - 787.4 Class A Units      9,550,922   9,550,922   -   0.00%
           42,594,215   37,489,171   7,488,473   4.78%
                         
Subtotal Control Investments         $42,594,215  $37,489,171  $7,488,473   4.78%
                         
Total Investments, June 30, 2021         $240,360,414  $225,530,289  $181,618,520   115.92%


(1)All of our investments are domiciled in the United States. Certain investments also have international operations.
(2)Par amount includes accumulated payment-in-kind (“PIK”) interest, as applicable, and is net of repayments.
(3)Net unrealized depreciation for U.S. federal income tax purposes totaled $44,153,134.
The tax cost basis of investments is $225,771,654 as of June 30, 2021.
(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 $156,678,576 as of June 30, 2021.
(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, 2021 (see Note 8), and fair value includes the value of any unfunded commitments.
(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, 2021.
(11)The investment is not a qualifying asset as defined under Section 55(a) of 1940 Act, in whole, or in part. As of June 30, 2021, 14.51% of the Company's portfolio investments were non-qualifying assets.
(12)Security is non-income producing.
(13)The interest rate on these loans is subject to the greater of a London Interbank Offering Rate (“LIBOR”) floor, or 1 month LIBOR plus a base rate. The 1 month LIBOR as of June 30, 2021 was 0.10%.
(14)The interest rate on these loans is subject to the greater of a LIBOR floor, or 3 month LIBOR plus a base rate. The 3 month LIBOR as of June 30, 2021 was 0.15%.
(15)The interest rate on these loans is subject to 3 month LIBOR plus a base rate. The 3 month LIBOR as of June 30, 2021 was 0.15%.
(16)This investment earns 0.50% commitment fee on all unused commitment as of June 30, 2021, and is recorded as a component of interest income on the Consolidated Statements of Operations.
(17)In lieu of paying 10.00% Cash, URT Acquisition Holdings Corporation may elect to pay 12.00% PIK. This security has been paying 10.00% Cash since 12/31/2020.
(18)This investment represents a Level 1 security in the ASC 820 table as of June 30, 2021 (see Note 4).
(19)This investment represents a Level 2 security in the ASC 820 table as of June 30, 2021 (see Note 4).
(20)As a practical expedient, the Company uses net asset value (“NAV”) to determine the fair value of this investment.
(21)The interest rate on this loan is fixed-to-floating and will shift to 3 month LIBOR plus a 4.743% spread on 9/30/2025.
(22)The interest rate on this loan is fixed-to-floating and will shift to 3 month LIBOR plus a 5.29% spread on 9/27/2027.
(23)The interest rate on this loan is fixed-to-floating and will shift to 3 month LIBOR plus a 5.64% spread on 8/15/2024.
(24)The interest rate on this loan is fixed-to-floating and will shift to 3 month LIBOR plus a 6.429% spread on 1/15/2025.
(25)In lieu of paying 5.00% Cash, 1888 Industrial Services, LLC may elect to pay 5.00% PIK. This security has been paying 5.00% Cash.


PHENIXFIN CORPORATION

Consolidated Schedule of Investments

September 30, 2020

Company(1) Industry Type of Investment Maturity Par
Amount(2)		  Cost(3)  Fair
Value(6)		  % of
Net Assets(4)		 
                   
Non-Controlled/Non-Affiliated Investments:              
                   
Alpine SG, LLC High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 5.75% Cash, 1.00% LIBOR Floor)(13) 11/16/2022  4,715,809   4,715,809   4,466,815   3.0%
    Senior Secured Incremental First Lien Term Loan (LIBOR + 8.50% Cash, 1.00% LIBOR Floor)(13) 11/16/2022  472,087   472,087   472,087   0.3%
    Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 5.75% Cash, 1.00% LIBOR Floor)(13) 11/16/2022  2,277,293   2,277,293   2,157,052   1.4%
    Revolving Credit Facility (LIBOR + 5.75% Cash, 1.00% LIBOR Floor)(13)(15) 11/16/2022  1,000,000   1,000,000   947,200   0.6%
         8,465,189   8,465,189   8,043,154     
                       
American Dental Partners, Inc. Healthcare & Pharmaceuticals Senior Secured Second Lien Term Loan (LIBOR + 8.50% Cash, 1.00% LIBOR Floor)(13) 9/25/2023  4,387,500   4,387,500   3,948,750   2.6%
         4,387,500   4,387,500   3,948,750     
                       
Autosplice, Inc. High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 8.00% Cash, 1.00% LIBOR Floor)(13) 12/17/2021  12,780,349   12,780,349   11,898,505   7.9%
         12,780,349   12,780,349   11,898,505     
                       
Avantor, Inc.(10) Wholesale Equity - 13,695  Common Units(16)    —   9,553,793   12,277,988   8.2%
         —   9,553,793   12,277,988     
                       
Be Green Packaging, LLC Containers, Packaging & Glass Equity - 417 Common Units    —   416,250   —   0.0%
         —   416,250   —     
                       
CM Finance SPV, LLC Banking, Finance, Insurance & Real Estate Unsecured Debt 6/24/2021  101,463   101,463   101,463   0.1%
         101,463   101,463   101,463     
                       
CPI International, Inc. Aerospace & Defense Senior Secured Second Lien Term Loan (LIBOR + 7.25% Cash, 1.00% LIBOR Floor)(12) 7/28/2025  2,607,062   2,598,252   2,219,392   1.5%
         2,607,062   2,598,252   2,219,392     


Company(1) Industry Type of Investment Maturity Par
Amount(2)		  Cost(3)  Fair
Value(6)		  % of
Net Assets(4)		 
                   
Crow Precision Components, LLC Aerospace & Defense Equity - 350 Common Units    —   700,000   723,131   0.5%
         —   700,000   723,131     
                       
CT Technologies Intermediate Holdings, Inc.(11) Healthcare & Pharmaceuticals Senior Secured Second Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor)(13) 12/1/2022  7,500,000   7,500,000   6,832,500   4.5%
         7,500,000   7,500,000   6,832,500     
                       
DataOnline Corp.(7) High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor)(13) 11/13/2025  4,962,500   4,962,500   4,786,331   3.2%
    Revolving Credit Facility (LIBOR + 6.25% Cash, 1.00% LIBOR Floor)(13)(15) 11/13/2025  535,714   535,714   510,357   0.3%
         5,498,214   5,498,214   5,296,688     
                       
Dream Finders Homes, LLC Construction & Building Preferred Equity (8.00% PIK)    4,531,472   4,531,472   3,928,786   2.6%
         4,531,472   4,531,472   3,928,786     
                   
Footprint Acquisition, LLC Services: Business Preferred Equity (8.75% PIK)    3,969,998   3,969,998   3,969,998   2.6%
    Equity - 150 Common Units    —   —   1,960,830   1.3%
         3,969,998   3,969,998   5,930,828     
                       
Global Accessories Group, LLC(11) Consumer goods: Non-durable Equity - 3.8% Membership Interest    —   151,337   —   0.0%
         —   151,337   —     
                       
Impact Group, LLC Services: Business Senior Secured First Lien Term Loan (LIBOR + 7.37% Cash, 1.00% LIBOR Floor)(13) 6/27/2023  3,219,964   3,219,964   2,994,565   2.0%
    Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 7.37% Cash, 1.00% LIBOR Floor)(13) 6/27/2023  9,330,056   9,330,056   8,676,952   5.8%
         12,550,020   12,550,020   11,671,517   — 
                       
InterFlex Acquisition Company, LLC Containers, Packaging & Glass Senior Secured First Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor)(12) 8/18/2022  12,098,406   12,098,406   11,987,100   8.0%
         12,098,406   12,098,406   11,987,100     


Company(1) Industry Type of Investment Maturity Par
Amount(2)		  Cost(3)  Fair
Value(6)		  % of
Net Assets(4)		 
                   
Lighting Science Group Corporation Containers, Packaging & Glass Warrants - 0.62% of Outstanding Equity(17) 2/19/2024  —   955,680   —   0.0%
         —   955,680   —     
                       
Manna Pro Products, LLC Consumer goods: Non-durable Senior Secured First Lien Term Loan (LIBOR + 6.00% Cash, 1.00% LIBOR Floor)(12) 12/8/2023  5,343,674   5,343,674   5,123,515   3.4%
    Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.00% Cash, 1.00% LIBOR Floor)(12) 12/8/2023  1,085,219   1,085,219   1,040,508   0.7%
         6,428,893   6,428,893   6,164,023     
                       
Point.360 Services: Business Senior Secured First Lien Term Loan (LIBOR + 6.00% PIK)(9) (14)(21) 7/8/2020  2,777,366   2,103,712   186,083   0.1%
         2,777,366   2,103,712   186,083     
                       
RateGain Technologies, Inc. Hotel, Gaming & Leisure Unsecured Debt(18) 7/31/2020  704,106   704,106   —   0.0%
    Unsecured Debt(18) 7/31/2021  761,905   761,905   —   0.0%
         1,466,011   1,466,011   —     
                       
Redwood Services Group, LLC(7) Services: Business Revolving Credit Facility (LIBOR + 6.00% Cash, 1.00% LIBOR Floor)(12 )(15) 6/6/2023  700,000   700,000   647,500   0.4%
         700,000   700,000   647,500     
                       
Sendero Drilling Company, LLC Energy: Oil & Gas Unsecured Debt (8.00% Cash)(9) 8/31/2021  488,750   465,319   —   0.0%
         488,750   465,319   —     
                       
Seotowncenter, Inc. Services: Business Equity - 3,434,169.6 Common Units    —   566,475   686,834   0.5%
         —   566,475   686,834     
                       
SFP Holding, Inc. Construction & Building Senior Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor)(13) 9/1/2022  4,776,955   4,776,955   4,733,962   3.1%
    Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor)(13) 9/1/2022  1,852,522   1,852,522   1,835,850   1.2%
    Equity - 101,165.93 Common Units in CI (Summit) Investment Holdings LLC    —   1,067,546   657,578   0.4%
         6,629,477   7,697,023   7,227,390     


Company(1) Industry Type of Investment Maturity Par
Amount(2)		  Cost(3)  Fair
Value(6)		  % of
Net Assets(4)		 
                   
SMART Financial Operations, LLC Retail Equity - 700,000 Class A Preferred Units    —   700,000   343,000   0.2%
         —   700,000   343,000     
                       
Stancor, Inc. Services: Business Equity - 263,814.43 Class A Units    —   263,814   150,374   0.1%
         —   263,814   150,374     
                       
Starfish Holdco, LLC High Tech Industries Senior Secured Second Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor)(12) 8/18/2025  1,000,000   989,935   926,500   0.6%
         1,000,000   989,935   926,500   — 
                       
URT Acquisition Holdings Corporation Services: Business Unsecured Debt (10.00% PIK) 6/23/2021  2,567,929   2,567,929   2,567,929   1.7%
         2,567,929   2,567,929   2,567,929     
                       
Velocity Pooling Vehicle, LLC Automotive Senior Secured First Lien Term Loan (LIBOR + 11.00% PIK, 1.00% LIBOR Floor)(13) 4/28/2023  1,014,440   951,628   1,014,440   0.7%
    Equity - 5,441 Class A Units    —   302,464   12,841   0.0%
    Warrants - 0.65% of Outstanding Equity 3/30/2028  —   361,667   15,354   0.0%
         1,014,440   1,615,759   1,042,635     
                       
Walker Edison Furniture Company LLC Consumer goods: Durable Senior Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor)(13) 9/26/2024  3,519,878   3,519,878   3,519,878   2.3%
    Equity - 1,500 Common Units    —   1,500,000   6,000,000   4.0%
         3,519,878   5,019,878   9,519,878     
                       
Watermill-QMC Midco, Inc. Automotive Equity - 1.3% Partnership Interest(8)    —   518,283   —   0.0%
         —   518,283   —     
                       
Subtotal Non-Controlled/Non-Affiliated Investments $101,082,417  $117,360,954  $114,321,948     


Company(1) Industry Type of Investment Maturity Par
Amount(2)		  Cost(3)  Fair
Value(6)		  % of
Net Assets(4)		 
                       
Affiliated Investments:(20)                  
                       
1888 Industrial Services, LLC(7) Energy: Oil & Gas Senior Secured First Lien Term Loan A (LIBOR + 5.00% PIK, 1.00% LIBOR Floor)(9)(13) 9/30/2021  9,946,741   9,473,067   —   0.0%
    Senior Secured First Lien Term Loan B (LIBOR + 8.00% PIK, 1.00% LIBOR Floor)(9)(13) 9/30/2021  25,937,520   19,468,870   —   0.0%
    Senior Secured First Lien Term Loan C (LIBOR + 5.00%, 1.00% LIBOR Floor)(9)(13) 9/30/2021  1,231,932   1,191,257   1,166,763   0.8%
    Revolving Credit Facility (LIBOR + 5.00% PIK, 1.00% LIBOR Floor)(13)(15) 9/30/2021  3,554,069   3,554,069   3,554,069   2.4%
    Equity - 17,493.63 Class A Units    —   —   —   0.0%
         40,670,262   33,687,263   4,720,832     
                       
Access Media Holdings, LLC Media: Broadcasting & Subscription Senior Secured First Lien Term Loan (10.00% PIK)(9)(21) 7/22/2020  11,105,630   8,446,385   1,110,563   0.7%
    Preferred Equity Series A    1,600,000   1,600,000   —   0.0%
    Preferred Equity Series AA    800,000   800,000   —   0.0%
    Preferred Equity Series AAA    971,200   971,200   —   0.0%
    Equity - 16 Common Units    —   —   —   0.0%
         14,476,830   11,817,585   1,110,563     
                       
Black Angus Steakhouses, LLC Hotel, Gaming & Leisure Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor)(12) 12/31/2020  758,929   758,929   758,929   0.5%
    Senior Secured First Lien Term Loan (LIBOR + 9.00% PIK, 1.00% LIBOR Floor)(9)(12) 12/31/2020  8,412,596   7,767,532   5,047,557   3.4%
                   
    Equity - 17.9% Membership Interest    —   —   —   0.0%
         9,171,525   8,526,461   5,806,486     
                       
Caddo Investors Holdings 1 LLC(10) Forest Products & Paper Equity - 6.15% Membership Interest(19)    —   2,528,826   2,990,776   2.0%
         —   2,528,826   2,990,776   — 


Company(1) Industry Type of Investment Maturity Par
Amount(2)		  Cost(3)  Fair
Value(6)		  % of
Net Assets(4)		 
                   
Dynamic Energy Services International LLC Energy: Oil & Gas Senior Secured First Lien Term Loan (LIBOR + 13.50% PIK) (9)(14) 12/31/2021  12,930,235   7,824,974   905,116   0.6%
    Equity - 12,350,000 Class A Units    —   —   —   0.0%
         12,930,235   7,824,974   905,116     
                       
JFL-NGS Partners, LLC Construction & Building Preferred Equity - A-2 Preferred (3.00% PIK)    1,795,034   1,795,034   1,795,034   1.2%
    Preferred Equity - A-1 Preferred (3.00% PIK)    232,292   232,292   232,292   0.2%
    Equity - 57,300 Class B Units    —   57,300   38,780,067   25.7%
         2,027,326   2,084,626   40,807,393   — 
                       
JFL-WCS Partners, LLC Environmental Industries Preferred Equity - Class A Preferred (6.00% PIK)    1,310,649   1,310,649   1,310,649   0.9%
    Equity - 129,588 Class B Units    —   129,588   4,535,580   3.0%
         1,310,649   1,440,237   5,846,229   — 
                       
Kemmerer Operations, LLC(7) Metals & Mining Senior Secured First Lien Term Loan (15.00% PIK) 6/21/2023  2,051,705   2,051,705   2,051,705   1.4%
    Senior Secured First Lien Delayed Draw Term Loan (15.00% PIK) 6/21/2023  515,699   515,699   515,699   0.4%
    Equity - 6.7797 Common Units    —   962,717   962,717   0.6%
         2,567,404   3,530,121   3,530,121     
                       
Path Medical, LLC Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan A (LIBOR + 9.50% Cash, 1.00% LIBOR Floor)(12) 10/11/2021  5,905,080   5,905,080   5,905,080   3.9%
    Senior Secured First Lien Term Loan B (LIBOR + 13.00% PIK, 1.00% LIBOR Floor)(9)(12) 10/11/2021  7,783,840   6,599,918   6,794,514   4.5%
    Warrants - 7.68% of Outstanding Equity 1/9/2027  —   499,751   —   0.0%
         13,688,920   13,004,749   12,699,594     
                       
US Multifamily, LLC(10) Banking, Finance, Insurance & Real Estate Senior Secured First Lien Term Loan (10.00% Cash) 6/17/2021  5,123,913   5,123,913   5,123,913   3.4%
    Equity - 33,300 Preferred Units    —   3,330,000   1,332,000   0.9%
         5,123,913   8,453,913   6,455,913     
                       
Subtotal Affiliated Investments   $101,967,064  $92,898,755  $84,873,023     


Company(1) Industry Type of Investment Maturity Par
Amount(2)		  Cost(3)  Fair
Value(6)		  % of
Net Assets(4)		 
                   
Controlled Investments:(5)                  
                       
MCC Senior Loan Strategy JV I LLC(10) Multisector Holdings Equity - 87.5% ownership of MCC Senior Loan Strategy JV I LLC    —   79,887,500   41,018,500   27.2%
         —   79,887,500   41,018,500     
NVTN LLC(7) Hotel, Gaming & Leisure Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 4.00% Cash, 1.00% LIBOR Floor)(9)(12) 12/31/2024  6,565,875   6,565,875   4,530,078   3.0%
    Senior Secured First Lien Super Priority DDTL (LIBOR + 4.00% Cash, 1.00% LIBOR Floor)(9)(12) 12/31/2024  2,000,000   1,995,374   2,000,000   1.3%
    Senior Secured First Lien Term Loan B (LIBOR + 9.25% PIK, 1.00% LIBOR Floor)(9)(12) 12/31/2024  14,963,195   12,305,096   —   0.0%
                   
    Senior Secured First Lien Term Loan C (LIBOR + 12.00% PIK, 1.00% LIBOR Floor)(9)(12) 12/31/2024  10,014,223   7,570,054   —   0.0%
    Equity - 787.4 Class A Units    —   9,550,922   —   0.0%
         33,543,293   37,987,321   6,530,078     
                       
Subtotal Control Investments $33,543,293  $117,874,821  $47,548,578     
                       
Total Investments, September 30, 2020 $236,592,774  $328,134,530  $246,743,549   163.8%

(1)All of our investments are domiciled in the United States. Certain investments also have international operations.
(2)Par amount includes accumulated payment-in-kind (“PIK”) interest, as applicable, and is net of repayments.
(3)Gross unrealized appreciation, gross unrealized depreciation, and net unrealized depreciation for U.S. federal income tax purposes totaled $53,757,923, $134,877,746, and $81,119,823, respectively. The tax cost basis of investments is $327,863,372 as of September 30, 2020.


(4)Percentage is based on net assets of $150,619,517 as of September 30, 2020.
(5)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.
(6)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).
(7)The investment has an unfunded commitment as of September 30, 2020 (see Note 8) and includes an analysis of the value of any unfunded commitments.
(8)Represents 1.3% partnership interest in Watermill-QMC Partners, LP and Watermill-EMI Partners, LP.
(9)The investment was on non-accrual status as of September 30, 2020.
(10)The investment is not a qualifying asset as defined under Section 55(a) of 1940 Act, in a whole, or in part. As of September 30, 2020, 25.4% of the Company’s portfolio investments were non-qualifying assets.
(11)A portion of this investment was sold via a participation agreement. The amount stated is the portion retained by the Company (see Note 3).
(12)The interest rate on these loans is subject to the greater of a London Interbank Offering Rate (“LIBOR”) floor, or 1 month LIBOR plus a base rate. The 1 month LIBOR as of September 30, 2020 was 0.15%.
(13)The interest rate on these loans is subject to the greater of a LIBOR floor, or 3 month LIBOR plus a base rate. The 3 month LIBOR as of September 30, 2020 was 0.23%.
(14)The interest rate on these loans is subject to 3 month LIBOR plus a base rate. The 3 month LIBOR as of September 30, 2020 was 0.24%.
(15)This investment earns 0.50% commitment fee on all unused commitment as of September 30, 2020 and is recorded as a component of interest income on the Consolidated Statements of Operations.
(16)This investment represents a Level 1 security in the ASC 820 table as of September 30, 2020 (see Note 4).
(17)This investment represents a Level 2 security in the ASC 820 table as of September 30, 2020 (see Note 4).

(18)Security is non-income producing.
(19)As a practical expedient, the Company uses net asset value (“NAV”) to determine the fair value of this investment.
(20)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.
(21)The investment was past due as of September 30, 2020.

See accompanying notes to consolidated financial statements.


F-1


PHENIXFIN CORPORATION

Medley Capital Corporation


Consolidated Statements of Operations
 For the three months ended June 30For the nine months ended June 30
 2020201920202019
(unaudited)(unaudited)(unaudited)(unaudited)
INVESTMENT INCOME
Interest from investments  
Non-controlled/non-affiliated investments:  
Cash$1,961,009  $5,663,055  $7,499,171  $21,250,292  
Payment-in-kind138,018  306,022  465,339  1,484,205  
Affiliated investments:  
Cash291,569  495,962  691,010  1,707,679  
Payment-in-kind487,065  668,601  2,141,327  2,284,966  
Controlled investments:  
Cash—  85,759  84,505  249,217  
Payment-in-kind—  819,580  500,767  2,608,437  
Total interest income2,877,661  8,038,979  11,382,119  29,584,796  
Dividend income1,225,000  2,012,500  4,725,000  6,104,027  
Interest from cash and cash equivalents4,319  139,981  376,747  512,510  
Fee income (see Note 9)202,122  1,202,563  617,654  1,981,400  
Total investment income4,309,102  11,394,023  17,101,520  38,182,733  
EXPENSES    
Base management fees (see Note 6)1,317,223  2,688,946  4,966,728  8,958,472  
Incentive fees (see Note 6)—  —  —  —  
Interest and financing expenses2,736,136  6,833,680  12,312,183  18,741,485  
General and administrative540,066  1,161,988  3,140,305  4,646,854  
Administrator expenses (see Note 6)614,535  762,428  1,742,419  2,462,204  
Insurance333,816  127,446  988,394  363,623  
Directors fees347,500  419,725  960,000  1,088,575  
Professional fees, net (see Note 8)(511,519) 3,222,912  (4,796,964) 14,580,192  
Expenses before expense support reimbursement and management and incentive fee waivers5,377,757  15,217,125  19,313,065  50,841,405  
Expense support reimbursement (see Note 6)(349,427) —  (349,427) —  
Management fee waiver (see Note 6)—  —  —  —  
Incentive fee waiver (see Note 6)—  —  —  —  
Total expenses net of expense support reimbursement and management and incentive fee waivers5,028,330  15,217,125  18,963,638  50,841,405  
NET INVESTMENT INCOME/(LOSS)(719,228) (3,823,102) (1,862,118) (12,658,672) 
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS    
Net realized gain/(loss) from investments
Non-controlled/non-affiliated investments(532,253) (8,962,845) (690,167) (24,762,224) 
Affiliated investments—  —  —  —  
Controlled investments(37,389,588) —  (39,076,425) (51,538,556) 
Net realized gain/(loss) from investments(37,921,841) (8,962,845) (39,766,592) (76,300,780) 
Net unrealized appreciation/(depreciation) on investments
Non-controlled/non-affiliated investments7,379,695  5,159,471  (8,422,875) 25,323,391  
Affiliated investments8,137,213  (653,138) 2,558,480  (6,126,691) 
Controlled investments31,389,160  (20,155,432) (17,062,311) 6,764,059  
Net unrealized appreciation/(depreciation) on investments46,906,068  (15,649,099) (22,926,706) 25,960,759  
Change in provision for deferred taxes on unrealized (appreciation)/depreciation on investments35,970  —  (49,694) —  
Loss on extinguishment of debt (see Note 5)(697,191) (1,805,802) (2,481,374) (1,928,773) 
Net realized and unrealized gain/(loss) on investments8,323,006  (26,417,746) (65,224,366) (52,268,794) 
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS$7,603,778  $(30,240,848) $(67,086,484) $(64,927,466) 
WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE(1)
$2.79  $(11.10) $(24.63) $(23.84) 
WEIGHTED AVERAGE - BASIC AND DILUTED NET INVESTMENT INCOME/(LOSS) PER COMMON SHARE(1)
$(0.26) $(1.40) $(0.68) $(4.65) 
WEIGHTED AVERAGE COMMON STOCK OUTSTANDING - BASIC AND DILUTED (SEE NOTE 11)(1)
2,723,711  2,723,711  2,723,711  2,723,711  
DIVIDENDS DECLARED PER COMMON SHARE(2)
$—  $—  $—  $3.00  
F-2

(1)Basic and diluted shares has been adjusted for the periods shown to reflect the one-for-twenty reverse stock split effected on July 24, 2020 on a retroactive basis, as described in Note 1.
(2)Dividends declared per common share has been adjusted for the periods shown to reflect the one-for-twenty reverse stock split effected on July 24, 2020 on a retroactive basis, as described in Note 1.

See accompanying notes to consolidated financial statements.
F-3



Medley Capital Corporation

Consolidated Statements of Changes in Net Assets
(unaudited)
Common StockTotal Distributable Earnings/(Loss)Total Net Assets
Shares(1)
Par AmountCapital in Excess of Par Value
Balance at March 31, 20192,723,711  $2,724  $698,638,520  $(420,320,268) $278,320,976  
OPERATIONS
Net investment income/(loss)—  —  —  (3,823,102) (3,823,102) 
Net realized gain/(loss) from investments—  —  —  (8,962,845) (8,962,845) 
Net unrealized appreciation/(depreciation) on investments—  —  —  (15,649,099) (15,649,099) 
Net loss on extinguishment of debt—  —  —  (1,805,802) (1,805,802) 
SHAREHOLDER DISTRIBUTIONS
Distributions from earnings—  —  —  —  —  
Total increase/(decrease) in net assets—  —  —  (30,240,848) (30,240,848) 
Balance at June 30, 20192,723,711  $2,724  $698,638,520  $(450,561,116) $248,080,128  
Balance at March 31, 20202,723,711  $2,724  $673,584,468  $(531,844,924) $141,742,268  
OPERATIONS
Net investment income/(loss)—  —  —  (719,228) (719,228) 
Net realized gain/(loss) from investments—  —  —  (37,921,841) (37,921,841) 
Net unrealized appreciation/(depreciation) on investments—  —  —  46,906,068  46,906,068  
Change in provision for deferred taxes on unrealized (appreciation)/depreciation on investments—  —  —  35,970  35,970  
Net loss on extinguishment of debt—  —  —  (697,191) (697,191) 
Total increase/(decrease) in net assets—  —  —  7,603,778  7,603,778  
Balance at June 30, 20202,723,711  $2,724  $673,584,468  $(524,241,146) $149,346,046  
(1)Shares of Common Stock have been adjusted for the periods shown to reflect the one-for-twenty reverse stock split effected on July 24, 2020 on a retroactive basis, as described in Note 1.

See accompanying notes to consolidated financial statements.























F-4






Medley Capital Corporation

Consolidated Statements of Changes in Net Assets
(unaudited) (continued)
Common StockTotal Distributable Earnings/(Loss)Total Net Assets
Shares(1)
Par AmountCapital in Excess of Par Value
Balance at September 30, 20182,723,711  $2,724  $698,638,520  $(377,462,517) $321,178,727  
OPERATIONS
Net investment income/(loss)—  —  —  (12,658,672) (12,658,672) 
Net realized gain/(loss) from investments—  —  —  (76,300,780) (76,300,780) 
Net unrealized appreciation/(depreciation) on investments—  —  —  25,960,759  25,960,759  
Net loss on extinguishment of debt—  —  —  (1,928,773) (1,928,773) 
SHAREHOLDER DISTRIBUTIONS
Distributions from earnings—  —  —  (8,171,133) (8,171,133) 
Total increase/(decrease) in net assets—  —  —  (73,098,599) (73,098,599) 
Balance at June 30, 20192,723,711  $2,724  $698,638,520  $(450,561,116) $248,080,128  
Balance at September 30, 20192,723,711  $2,724  $673,584,468  $(457,154,662) $216,432,530  
OPERATIONS
Net investment income/(loss)—  —  —  (1,862,118) (1,862,118) 
Net realized gain/(loss) from investments—  —  —  (39,766,592) (39,766,592) 
Net unrealized appreciation/(depreciation) on investments—  —  —  (22,926,706) (22,926,706) 
Change in provision for deferred taxes on unrealized (appreciation)/depreciation on investments—  —  —  (49,694) (49,694) 
Net loss on extinguishment of debt—  —  —  (2,481,374) (2,481,374) 
Total increase/(decrease) in net assets—  —  —  (67,086,484) (67,086,484) 
Balance at June 30, 20202,723,711  $2,724  $673,584,468  $(524,241,146) $149,346,046  
(1)Shares of Common Stock have been adjusted for the periods shown to reflect the one-for-twenty reverse stock split effected on July 24, 2020 on a retroactive basis, as described in Note 1.

See accompanying notes to consolidated financial statements.




















F-5

Medley Capital Corporation

Consolidated Statements of Cash Flows
 For the nine months ended June 30
 20202019
(unaudited)(unaudited)
Cash flows from operating activities  
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS$(67,086,484) $(64,927,466) 
ADJUSTMENTS TO RECONCILE NET INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS TO NET CASH PROVIDED/(USED) BY OPERATING ACTIVITIES:
Investment increases due to payment-in-kind interest(3,539,584) (7,510,243) 
Net amortization of premium/(discount) on investments(91,980) (254,750) 
Amortization of debt issuance costs2,642,386  1,989,860  
Net realized (gain)/loss from investments39,766,592  76,300,780  
Net deferred income taxes49,694  —  
Net unrealized (appreciation)/depreciation on investments22,926,706  (25,960,759) 
Proceeds from sale and settlements of investments103,367,413  196,207,945  
Purchases, originations and participations(16,159,203) (59,132,412) 
Loss on extinguishment of debt2,481,374  1,928,773  
(Increase)/decrease in operating assets:
Other assets931,926  (1,183,192) 
Interest receivable929,546  2,929,704  
Receivable for dispositions and investments sold(882,979) (101,014) 
Fees receivable(10,723) 24,180  
Increase/(decrease) in operating liabilities:
Accounts payable and accrued expenses(7,580,816) 9,023,022  
Interest and fees payable(2,102,943) 1,087,978  
Management and incentive fees payable, net(913,952) (658,728) 
Administrator expenses payable(596,677) (46,118) 
Deferred revenue(74,577) (112,999) 
Due to affiliate(13,398) 3,736  
NET CASH PROVIDED/(USED) BY OPERATING ACTIVITIES74,042,321  129,608,297  
Cash flows from financing activities
Paydowns on debt(106,122,923) (147,999,337) 
Debt issuance costs paid—  (14,361) 
Payments of cash dividends—  (8,171,133) 
Offering costs paid—  354,753  
NET CASH PROVIDED/(USED) BY FINANCING ACTIVITIES(106,122,923) (155,830,078) 
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS(32,080,602) (26,221,781) 
CASH, RESTRICTED CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD84,283,903  75,665,981  
CASH, RESTRICTED CASH AND CASH EQUIVALENTS, END OF PERIOD$52,203,301  $49,444,200  
Supplemental Information:  
Interest paid during the period$11,772,739  $15,663,647  
Supplemental non-cash information:
Payment-in-kind interest income$3,107,433  $6,377,608  
Net amortization of premium/(discount) on investments$91,980  $254,750  
Amortization of debt issuance costs$(2,642,386) $(1,989,860) 
Non-cash purchase of investments$—  $19,192,916  
Reconciliation to the Consolidated Statement of Assets and LiabilitiesJune 30, 2020September 30, 2019
(unaudited)
Cash and cash equivalents$52,203,301  $68,245,213  
Restricted cash—  16,038,690  
Total cash and cash equivalents and restricted cash$52,203,301  $84,283,903  

See accompanying notes to consolidated financial statements.
F-6

Medley Capital Corporation

Consolidated Schedule of Investments

June 30, 2020
(unaudited)
Company(1)
IndustryType of InvestmentMaturity
Par Amount(2)
Cost(3)
Fair Value(6)
% of
Net Assets(4)
Non-Controlled/Non-Affiliated Investments:
     
Alpine SG, LLCHigh Tech Industries
Senior Secured First Lien Term Loan (LIBOR + 5.75% Cash, 1.00% LIBOR Floor)(13)
11/16/2022$4,715,809  $4,715,809  $4,459,269  3.0 %
Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 5.75% Cash, 1.00% LIBOR Floor)(13)
11/16/20222,277,293  2,277,293  2,153,408  1.4 %
Revolving Credit Facility (LIBOR + 5.75% Cash, 1.00% LIBOR Floor)(13)(15)
11/16/20221,000,000  1,000,000  996,500  0.7 %
7,993,102  7,993,102  7,609,177  
American Dental Partners, Inc.Healthcare & Pharmaceuticals
Senior Secured Second Lien Term Loan (LIBOR + 8.50% Cash, 1.00% LIBOR Floor)(13)
9/25/20234,387,500  4,387,500  3,290,625  2.2 %
4,387,500  4,387,500  3,290,625  
Autosplice, Inc.High Tech Industries
Senior Secured First Lien Term Loan (LIBOR + 8.00% Cash, 1.00% LIBOR Floor)(13)
12/17/202112,780,349  12,780,349  12,009,694  8.0 %
12,780,349  12,780,349  12,009,694  
Avantor, Inc.(10)
Wholesale
Equity - 764,040 Common Units(16)
—  13,370,700  12,458,382  8.3 %
—  13,370,700  12,458,382  
Be Green Packaging, LLCContainers, Packaging & GlassEquity - 417 Common Units—  416,250  —  0.0 %
—  416,250  —  
Black Angus Steakhouses, LLCHotel, Gaming & Leisure
Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor)(13)
12/31/2020625,000  625,000  625,000  0.4 %
Senior Secured First Lien Term Loan (LIBOR + 9.00% PIK, 1.00% LIBOR Floor)(9)(13)
12/31/20208,201,220  7,767,533  5,863,872  3.9 %
8,826,220  8,392,533  6,488,872  
CPI International, Inc.Aerospace & Defense
Senior Secured Second Lien Term Loan (LIBOR + 7.25% Cash, 1.00% LIBOR Floor)(12)
7/28/20252,608,688  2,599,447  2,165,211  1.5 %
2,608,688  2,599,447  2,165,211  
Crow Precision Components, LLCAerospace & DefenseEquity - 350 Common Units—  700,000  723,132  0.5 %
—  700,000  723,132  
CT Technologies Intermediate Holdings, Inc.(11)
Healthcare & Pharmaceuticals
Senior Secured Second Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor)(12)
12/1/20227,500,000  7,500,000  6,677,250  4.5 %
7,500,000  7,500,000  6,677,250  
DataOnline Corp.(7)
High Tech Industries
Senior Secured First Lien Term Loan (LIBOR + 5.75% Cash, 1.00% LIBOR Floor)(13)
11/13/20254,975,000  4,975,000  4,756,100  3.2 %
Revolving Credit Facility (LIBOR + 5.75% Cash, 1.00% LIBOR Floor)(13)(15)
11/13/2025535,714  535,714  504,286  0.3 %
5,510,714  5,510,714  5,260,386  
Dream Finders Homes, LLCConstruction & BuildingPreferred Equity (8.00% PIK)4,441,903  4,441,903  3,495,778  2.3 %
4,441,903  4,441,903  3,495,778  
F-7

Company(1)
IndustryType of InvestmentMaturity
Par Amount(2)
Cost(3)
Fair Value(6)
% of
Net Assets(4)
Footprint Acquisition, LLCServices:  BusinessPreferred Equity (8.75% PIK)3,884,252  3,884,252  3,884,252  2.6 %
Equity - 150 Common Units—  —  1,960,830  1.3 %
3,884,252  3,884,252  5,845,082  
Global Accessories Group, LLC(11)
Consumer goods:  Non-durableEquity - 3.8% Membership Interest—  151,337  —  0.0 %
—  151,337  —  
The Imagine Group, LLCMedia: Advertising, Printing & Publishing
Senior Secured Second Lien Term Loan (LIBOR + 8.75% Cash, 1.00% LIBOR Floor)(9)(12)
6/21/20233,000,000  2,783,988  204,000  0.1 %
3,000,000  2,783,988  204,000  
Impact Group, LLCServices:  Business
Senior Secured First Lien Term Loan (LIBOR + 7.37% Cash, 1.00% LIBOR Floor)(13)
6/27/20233,228,629  3,228,629  2,821,821  1.9 %
Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 7.37% Cash, 1.00% LIBOR Floor)(13)
6/27/20239,355,044  9,355,044  8,176,309  5.5 %
12,583,673  12,583,673  10,998,130  
InterFlex Acquisition Company, LLCContainers, Packaging & Glass
Senior Secured First Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor)(12)
8/18/202212,696,675  12,696,675  11,998,358  8.0 %
12,696,675  12,696,675  11,998,358  
Lighting Science Group CorporationContainers, Packaging & Glass
Warrants - 0.56% of Outstanding Equity(17)
2/19/2024—  955,680  —  0.0 %
—  955,680  —  
Manna Pro Products, LLCConsumer goods:  Non-durable
Senior Secured First Lien Term Loan (LIBOR + 6.00% Cash, 1.00% LIBOR Floor)(12)
12/8/20235,357,411  5,357,411  4,997,929  3.4 %
Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.00% Cash, 1.00% LIBOR Floor)(12)
12/8/20231,087,967  1,087,967  1,014,964  0.7 %
6,445,378  6,445,378  6,012,893  
Point.360Services:  Business
Senior Secured First Lien Term Loan (LIBOR + 6.00% PIK)(9)(14)
7/8/20202,720,424  2,103,712  182,268  0.1 %
2,720,424  2,103,712  182,268  
RateGain Technologies, Inc.Hotel, Gaming & Leisure
Unsecured Debt(18)
7/31/2020704,106  704,106  352,053  0.2 %
Unsecured Debt(18)
7/31/2021761,905  761,905  380,952  0.3 %
1,466,011  1,466,011  733,005  
Redwood Services Group, LLC(7)
Services:  Business
Revolving Credit Facility (LIBOR + 6.00% Cash, 1.00% LIBOR Floor)(13)(15)
6/6/20231,225,000  1,225,000  1,063,475  0.7 %
1,225,000  1,225,000  1,063,475  
Sendero Drilling Company, LLCEnergy:  Oil & Gas
Unsecured Debt (8.00% Cash)(9)
8/31/2021531,250  519,282  —  0.0 %
531,250  519,282  —  
Seotowncenter, Inc.Services:  BusinessEquity - 3,434,169.6 Common Units—  566,475  686,834  0.5 %
—  566,475  686,834  
F-8

Company(1)
IndustryType of InvestmentMaturity
Par Amount(2)
Cost(3)
Fair Value(6)
% of
Net Assets(4)
SFP Holding, Inc.Construction & Building
Senior Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor)(13)
9/1/20224,787,867  4,787,867  4,680,140  3.1 %
Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor)(13)
9/1/20221,857,200  1,857,200  1,815,413  1.2 %
Equity - 94,393.87 Common Units in CI (Summit) Investment Holdings LLC—  1,067,547  657,579  0.4 %
6,645,067  7,712,614  7,153,132  
Ship Supply Acquisition CorporationServices:  Business
Senior Secured First Lien Term Loan (LIBOR + 8.00% Cash, 1.00% LIBOR Floor)(9)(13)
7/31/20207,369,067  7,175,125  —  0.0 %
7,369,067  7,175,125  —  
SMART Financial Operations, LLCRetailEquity - 700,000 Class A Preferred Units—  700,000  343,000  0.2 %
—  700,000  343,000  
Stancor, Inc.Services:  BusinessEquity - 263,814.43 Class A Units—  263,814  150,374  0.1 %
—  263,814  150,374  
Starfish Holdco, LLCHigh Tech Industries
Senior Secured Second Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor)(12)
8/18/20251,000,000  989,107  902,100  0.6 %
1,000,000  989,107  902,100  
URT Acquisition Holdings CorporationServices:  BusinessUnsecured Debt (10.00% PIK)6/23/20212,504,795  2,504,795  2,504,795  1.7 %
2,504,795  2,504,795  2,504,795  
Velocity Pooling Vehicle, LLCAutomotive
Senior Secured First Lien Term Loan (LIBOR + 11.00% PIK, 1.00% LIBOR Floor)(13)(20)
4/28/2023984,256  915,932  738,192  0.5 %
Equity - 5,441 Class A Units—  302,464  —  0.0 %
Warrants - 0.65% of Outstanding Equity3/30/2028—  361,667  —  0.0 %
984,256  1,580,063  738,192  
Walker Edison Furniture Company LLCConsumer goods:  Durable
Senior Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor)(13)
9/26/20243,542,883  3,542,883  3,252,721  2.2 %
Equity - 1,500 Common Units—  1,500,000  3,750,000  2.5 %
3,542,883  5,042,883  7,002,721  
Watermill-QMC Midco, Inc.Automotive
Equity - 1.3% Partnership Interest(8)
—  518,283  —  0.0 %
—  518,283  —  
Subtotal Non-Controlled/Non-Affiliated Investments$120,647,207  $139,960,645  $116,696,866  
F-9

Company(1)
IndustryType of InvestmentMaturity
Par Amount(2)
Cost(3)
Fair Value(6)
% of
Net Assets(4)
Affiliated Investments:(21)
1888 Industrial Services, LLC(7)
Energy:  Oil & Gas
Senior Secured First Lien Term Loan A (LIBOR + 5.00% PIK, 1.00% LIBOR Floor)(9)(13)
9/30/2021$9,796,528  $9,473,068  $—  0.0 %
Senior Secured First Lien Term Loan B (LIBOR + 8.00% PIK, 1.00% LIBOR Floor)(9)(13)
9/30/202125,354,370  19,468,870  —  0.0 %
Senior Secured First Lien Term Loan C (LIBOR + 5.00% PIK, 1.00% LIBOR Floor)(9)(13)
6/30/20211,231,932  1,191,257  1,166,763  0.8 %
Senior Secured First Lien Term Loan D (LIBOR + 5.00% PIK, 1.00% LIBOR Floor)(13)
9/18/2020236,334  236,334  236,334  0.2 %
Senior Secured First Lien Term Loan E (LIBOR + 5.00% PIK, 1.00% LIBOR Floor)(13)
9/18/2020851,840  851,840  851,840  0.6 %
Revolving Credit Facility (LIBOR + 5.00% PIK, 1.00% LIBOR Floor)(13)(15)
9/30/20213,499,040  3,499,040  3,499,040  2.3 %
Equity - 21,562.16 Class A Units—  —  —  0.0 %
40,970,044  34,720,409  5,753,977  
Access Media Holdings, LLC(7)
Media:  Broadcasting & Subscription
Senior Secured First Lien Term Loan (10.00% PIK)(9)
7/22/202010,826,587  8,446,385  1,623,988  1.1 %
Preferred Equity Series A1,600,000  1,600,000  —  0.0 %
Preferred Equity Series AA800,000  800,000  —  0.0 %
Preferred Equity Series AAA971,200  971,200  (100,800) (0.1)%
Equity - 16 Common Units—  —  —  0.0 %
14,197,787  11,817,585  1,523,188  
Caddo Investors Holdings 1 LLC(10)
Forest Products & Paper
Equity - 6.15% Membership Interest(19)
—  2,528,826  3,045,315  2.0 %
—  2,528,826  3,045,315  
Dynamic Energy Services International LLCEnergy:  Oil & Gas
Senior Secured First Lien Term Loan (LIBOR + 13.50% PIK)(9)(14)
12/31/202112,484,400  7,824,974  873,908  0.6 %
Equity - 12,350,000 Class A Units—  —  —  0.0 %
12,484,400  7,824,974  873,908  
JFL-NGS Partners, LLCConstruction & BuildingPreferred Equity - A-2 Preferred (3.00% PIK)1,795,034  1,795,034  1,795,034  1.2 %
Preferred Equity - A-1 Preferred (3.00% PIK)232,292  232,292  232,292  0.2 %
Equity - 57,300 Class B Units—  57,300  38,780,067  26.0 %
2,027,326  2,084,626  40,807,393  
JFL-WCS Partners, LLCEnvironmental IndustriesPreferred Equity - Class A Preferred (6.00% PIK)1,310,649  1,310,649  1,310,649  0.9 %
Equity - 129,588 Class B Units—  129,588  3,369,288  2.3 %
1,310,649  1,440,237  4,679,937  
Kemmerer Operations, LLC(7)
Metals & MiningSenior Secured First Lien Term Loan (15.00% PIK)6/21/20231,975,960  1,975,960  1,975,960  1.3 %
Senior Secured First Lien Delayed Draw Term Loan (15.00% PIK)6/21/2023496,660  496,660  496,660  0.3 %
Equity - 6.7797 Common Units—  962,717  962,717  0.7 %
2,472,620  3,435,337  3,435,337  
F-10

Company(1)
IndustryType of InvestmentMaturity
Par Amount(2)
Cost(3)
Fair Value(6)
% of
Net Assets(4)
Path Medical, LLCHealthcare & Pharmaceuticals
Senior Secured First Lien Term Loan (LIBOR + 9.50% Cash, 1.00% LIBOR Floor)(13)
10/11/202110,301,610  10,121,092  9,556,804  6.4 %
Senior Secured First Lien Term Loan A (LIBOR + 9.50% Cash, 1.00% LIBOR Floor)(13)
10/11/20213,549,269  3,542,124  3,292,657  2.2 %
Warrants - 7.68% of Outstanding Equity1/9/2027—  499,751  —  0.0 %
13,850,879  14,162,967  12,849,461  
US Multifamily, LLC(10)
Banking, Finance, Insurance & Real EstateSenior Secured First Lien Term Loan (10.00% Cash)6/17/20215,123,913  5,123,913  5,123,913  3.4 %
Equity - 33,300 Preferred Units—  3,330,000  2,164,500  1.5 %
5,123,913  8,453,913  7,288,413  
Subtotal Affiliated Investments $92,437,618  $86,468,874  $80,256,929  
Controlled Investments:(5)
MCC Senior Loan Strategy JV I LLC(10)
Multisector Holdings
Equity - 87.5% ownership of MCC Senior Loan Strategy JV I LLC(19)
—  79,887,500  47,135,181  31.6 %
—  79,887,500  47,135,181  
NVTN LLC(7)
Hotel, Gaming & Leisure
Senior Secured First Lien Term Loan (LIBOR + 4.00% Cash, 1.00% LIBOR Floor)(9)(12)
12/31/20246,565,875  6,565,875  4,530,078  3.0 %
Senior Secured First Lien Term Loan (LIBOR + 4.00% Cash, 1.00% LIBOR Floor)(9)(12)
12/31/20242,000,000  1,995,374  2,000,000  1.3 %
Senior Secured First Lien Term Loan B (LIBOR + 9.25% PIK, 1.00% LIBOR Floor)(9)(12)
12/31/202414,577,997  12,305,096  —  0.0 %
Senior Secured First Lien Term Loan C (LIBOR + 12.00% PIK, 1.00% LIBOR Floor)(9)(12)
12/31/20249,688,771  7,570,054  —  0.0 %
Equity - 787.4 Class A Units—  9,550,922  —  0.0 %
32,832,643  37,987,321  6,530,078  
Subtotal Control Investments$32,832,643  $117,874,821  $53,665,259  
Total Investments, June 30, 2020$245,917,468  $344,304,340  $250,619,054  167.8 %

(1)All of our investments are domiciled in the United States. Certain investments also have international operations.
(2)Par amount includes accumulated payment-in-kind (“PIK”) interest, as applicable, and is net of repayments.
(3)Gross unrealized appreciation, gross unrealized depreciation, and net unrealized depreciation for U.S. federal income tax purposes totaled $46,972,318, $139,025,778, and $92,053,460, respectively. The tax cost basis of investments is $342,672,514 as of June 30, 2020.
(4)Percentage is based on net assets of $149,346,046 as of June 30, 2020.
(5)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.
(6)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).
(7)The investment has an unfunded commitment as of June 30, 2020 (see Note 8), and includes an analysis of the value of any unfunded commitments.
(8)Represents 1.3% partnership interest in Watermill-QMC Partners, LP and Watermill-EMI Partners, LP.
(9)The investment was on non-accrual status as of June 30, 2020.
(10)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, 2020, 27.9% of the Company's portfolio investments were non-qualifying assets.
(11)A portion of this investment was sold via a participation agreement. The amount stated is the portion retained by the Company (see Note 3).
(12)The interest rate on these loans is subject to the greater of a London Interbank Offering Rate (“LIBOR”) floor, or 1 month LIBOR plus a base rate. The 1 month LIBOR as of June 30, 2020 was 0.18%.
(13)The interest rate on these loans is subject to the greater of a LIBOR floor, or 3 month LIBOR plus a base rate. The 3 month LIBOR as of June 30, 2020 was 0.31%.
(14)The interest rate on these loans is subject to 3 month LIBOR plus a base rate. The 3 month LIBOR as of June 30, 2020 was 0.31%.
(15)This investment earns 0.50% commitment fee on all unused commitment as of June 30, 2020, and is recorded as a component of interest income on the Consolidated Statements of Operations.
(16)This investment represents a Level 1 security in the ASC 820 table as of June 30, 2020 (see Note 4).
F-11

(17)This investment represents a Level 2 security in the ASC 820 table as of June 30, 2020 (see Note 4).
(18)Security is non-income producing.
(19)As a practical expedient, the Company uses net asset value (“NAV”) to determine the fair value of this investment.
(20)The investment was on partial non-accrual status as of June 30, 2020.
(21)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.

See accompanying notes to consolidated financial statements.
F-12

Medley Capital Corporation

Consolidated Schedule of Investments

September 30, 2019
Company(1)
IndustryType of InvestmentMaturity
Par Amount(2)
Cost(3)
Fair Value(6)
% of
Net Assets(4)
Non-Controlled/Non-Affiliated Investments:
     
Alpine SG, LLC(7)
High Tech Industries
Senior Secured First Lien Term Loan (LIBOR + 5.50% Cash, 1.00% LIBOR Floor)(13)(22)
11/16/2022$5,061,750  $5,061,750  $5,020,244  2.3 %
Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 5.50% Cash, 1.00% LIBOR Floor)(13)(22)
11/16/20222,444,350  2,444,350  2,424,306  1.1 %
Revolving Credit Facility (LIBOR + 5.50% Cash, 1.00% LIBOR
Floor)(13)(16)
11/16/2022—  —  (8,200) 0.0 %
7,506,100  7,506,100  7,436,350  
American Dental Partners, Inc.Healthcare & Pharmaceuticals
Senior Secured Second Lien Term Loan (LIBOR + 8.50% Cash, 1.00% LIBOR Floor)(13)
9/25/20234,387,500  4,387,500  4,274,741  2.0 %
4,387,500  4,387,500  4,274,741  
Autosplice, Inc.High Tech Industries
Senior Secured First Lien Term Loan (LIBOR + 8.00% Cash, 1.00% LIBOR Floor)(13)
6/17/202013,336,018  13,336,018  13,252,001  6.1 %
13,336,018  13,336,018  13,252,001  
Avantor, Inc.(10)
Wholesale
Equity - 942,160 Common Units(17)
—  16,487,800  13,849,752  6.4 %
—  16,487,800  13,849,752  
Barry's Bootcamp Holdings, LLCServices:  Consumer
Senior Secured First Lien Term Loan (LIBOR + 6.00% Cash, 1.00% LIBOR Floor)(13)(23)
7/14/20227,609,499  7,609,499  7,609,499  3.5 %
Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.50% Cash, 1.00% LIBOR Floor)(13)
7/14/20221,268,251  1,268,251  1,268,251  0.6 %
Revolving Credit Facility (LIBOR + 6.00% Cash, 1.00% LIBOR
Floor)(13)(16)(22)
7/14/20224,400,000  4,400,000  4,400,000  2.0 %
13,277,750  13,277,750  13,277,750  
Be Green Packaging, LLCContainers, Packaging & GlassEquity - 417 Common Units—  416,250  —  0.0 %
—  416,250  —  
Black Angus Steakhouses, LLC(7)
Hotel, Gaming & Leisure
Senior Secured First Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor)(13)(23)
4/24/20207,341,518  7,341,518  7,307,747  3.4 %
Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor)(13)
4/24/2020—  —  (4,107) 0.0 %
Revolving Credit Facility (LIBOR + 9.00% Cash, 1.00% LIBOR
Floor)(13)(16)
4/24/2020892,857  892,857  890,804  0.4 %
8,234,375  8,234,375  8,194,444  
Capstone Nutrition Development, LLCHealthcare & PharmaceuticalsEquity - 13,833.1916 Common Units—  1,383,319  1,383,319  0.6 %
—  1,383,319  1,383,319  
CPI International, Inc.Aerospace & Defense
Senior Secured Second Lien Term Loan (LIBOR + 7.25% Cash, 1.00% LIBOR Floor)(12)
7/28/20253,010,025  2,998,111  2,937,483  1.4 %
3,010,025  2,998,111  2,937,483  
F-13

Company(1)
IndustryType of InvestmentMaturity
Par Amount(2)
Cost(3)
Fair Value(6)
% of
Net Assets(4)
Crow Precision Components, LLCAerospace & DefenseEquity - 350 Common Units—  700,000  666,998  0.3 %
—  700,000  666,998  
CT Technologies Intermediate Holdings, Inc.(11)
Healthcare & Pharmaceuticals
Senior Secured Second Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor)(12)
12/1/20227,500,000  7,500,000  6,345,750  2.9 %
7,500,000  7,500,000  6,345,750  
DataOnline Corp.(7)
High Tech Industries
Senior Secured First Lien Term Loan (LIBOR + 5.75% Cash, 1.00% LIBOR Floor)(13)(22)
7/31/202515,840,000  15,840,000  15,607,152  7.2 %
Revolving Credit Facility (LIBOR + 5.75% Cash, 1.00% LIBOR
Floor)(13)(16)
7/31/2024—  —  (18,900) 0.0 %
15,840,000  15,840,000  15,588,252  
Dermatologists of Southwestern Ohio, LLCHealthcare & Pharmaceuticals
Senior Secured First Lien Term Loan (LIBOR + 6.50% Cash, 1.00% LIBOR Floor)(12)(23)
4/20/20221,065,457  1,065,457  1,056,614  0.5 %
Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.50% Cash, 1.00% LIBOR Floor)(12)(23)
4/20/2022404,248  404,248  400,893  0.2 %
1,469,705  1,469,705  1,457,507  
Dream Finders Homes, LLCConstruction & BuildingSenior Secured First Lien Term Loan B (10.00% Cash)4/1/20201,613,455  1,613,455  1,613,455  0.7 %
Preferred Equity (8.00% PIK)4,185,480  4,185,480  3,315,319  1.5 %
5,798,935  5,798,935  4,928,774  
FKI Security Group, LLCCapital Equipment
Senior Secured First Lien Term Loan (LIBOR + 8.50% Cash, 1.00% LIBOR Floor)(13)(23)
3/30/202010,906,250  10,906,250  10,680,491  4.9 %
10,906,250  10,906,250  10,680,491  
Footprint Acquisition, LLCServices:  BusinessPreferred Equity (8.75% PIK)7,281,664  7,281,664  7,281,664  3.4 %
Equity - 150 Common Units—  —  3,347,965  1.5 %
7,281,664  7,281,664  10,629,629  
Freedom Powersports, LLCAutomotive
Senior Secured First Lien Term Loan (LIBOR + 10.00% Cash, 1.50% LIBOR Floor)(13)
11/11/20199,450,000  9,450,000  9,450,000  4.4 %
9,450,000  9,450,000  9,450,000  
Global Accessories Group, LLC(11)
Consumer goods:  Non-durableEquity - 3.8% Membership Interest—  151,337  151,339  0.1 %
—  151,337  151,339  
The Imagine Group, LLCMedia: Advertising, Printing & Publishing
Senior Secured Second Lien Term Loan (LIBOR + 8.75% Cash, 1.00% LIBOR Floor)(12)
6/21/20233,000,000  2,968,775  1,715,100  0.8 %
3,000,000  2,968,775  1,715,100  
Impact Group, LLCServices:  Business
Senior Secured First Lien Term Loan (LIBOR + 6.50% Cash, 1.00% LIBOR Floor)(13)(23)
6/27/20233,254,623  3,254,623  3,104,911  1.4 %
Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.50% Cash, 1.00% LIBOR Floor)(13)(23)
6/27/20239,430,010  9,430,010  8,996,229  4.2 %
12,684,633  12,684,633  12,101,140  
F-14

Company(1)
IndustryType of InvestmentMaturity
Par Amount(2)
Cost(3)
Fair Value(6)
% of
Net Assets(4)
InterFlex Acquisition Company, LLCContainers, Packaging & Glass
Senior Secured First Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor)(12)(23)
8/18/202213,259,175  13,259,175  12,637,320  5.8 %
13,259,175  13,259,175  12,637,320  
L & S Plumbing Partnership, Ltd.Construction & Building
Senior Secured First Lien Term Loan (LIBOR + 7.50% Cash, 1.00% LIBOR Floor)(13)(22)
2/15/20225,345,754  5,345,754  5,345,754  2.5 %
5,345,754  5,345,754  5,345,754  
Lighting Science Group CorporationContainers, Packaging & Glass
Warrants - 0.56% of Outstanding Equity(18)
2/19/2024—  955,680  —  0.0 %
—  955,680  —  
Manna Pro Products, LLCConsumer goods:  Non-durable
Senior Secured First Lien Term Loan (LIBOR + 6.00% Cash, 1.00% LIBOR Floor)(12)
12/8/20235,398,622  5,398,622  5,132,470  2.4 %
Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.00% Cash, 1.00% LIBOR Floor)(12)
12/8/20231,096,209  1,096,209  1,042,166  0.5 %
6,494,831  6,494,831  6,174,636  
Point.360Services:  Business
Senior Secured First Lien Term Loan (LIBOR + 6.00% PIK)(9)(15)
7/8/20202,563,464  2,103,712  590,366  0.3 %
2,563,464  2,103,712  590,366  
Quantum Spatial, Inc.Aerospace & Defense
Senior Secured First Lien Term Loan (LIBOR + 5.25% Cash, 1.00% LIBOR Floor)(12)
9/5/20245,000,000  5,000,000  5,000,000  2.3 %
5,000,000  5,000,000  5,000,000  
RateGain Technologies, Inc.Hotel, Gaming & Leisure
Unsecured Debt(19)(23)
7/31/2020761,905  761,905  761,905  0.4 %
Unsecured Debt(19)(23)
7/31/2021761,905  761,905  761,905  0.4 %
1,523,810  1,523,810  1,523,810  
Redwood Services Group, LLC(7)
Services:  Business
Revolving Credit Facility (LIBOR + 6.00% Cash, 1.00% LIBOR
Floor)(13)(16)
6/6/2023875,000  875,000  860,475  0.4 %
875,000  875,000  860,475  
Sendero Drilling Company, LLCEnergy:  Oil & GasUnsecured Debt (8.00% Cash)8/31/2021850,000  850,000  850,000  0.4 %
850,000  850,000  850,000  
Seotowncenter, Inc.Services:  BusinessEquity - 3,434,169.6 Common Units—  566,475  1,236,301  0.6 %
—  566,475  1,236,301  
SFP Holding, Inc.Construction & Building
Senior Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor)(13)(23)
9/1/20224,820,605  4,820,605  4,775,291  2.2 %
Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor)(13)(23)
9/1/20221,871,234  1,871,234  1,853,644  0.9 %
Equity - 94,393.87 Common Units in CI (Summit) Investment Holdings LLC(23)
—  985,673  849,545  0.4 %
6,691,839  7,677,512  7,478,480  
Ship Supply Acquisition CorporationServices:  Business
Senior Secured First Lien Term Loan (LIBOR + 8.00% Cash, 1.00% LIBOR Floor)(9)(13)(23)
7/31/20207,433,740  7,239,798  —  0.0 %
7,433,740  7,239,798  —  
SMART Financial Operations, LLCRetailEquity - 700,000 Class A Preferred Units—  700,000  532,000  0.2 %
—  700,000  532,000  
F-15

Company(1)
IndustryType of InvestmentMaturity
Par Amount(2)
Cost(3)
Fair Value(6)
% of
Net Assets(4)
Stancor, Inc.Services:  BusinessEquity - 263,814.43 Class A Units—  263,815  274,367  0.1 %
—  263,815  274,367  
Starfish Holdco, LLCHigh Tech Industries
Senior Secured Second Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor)(12)(22)
8/18/20252,000,000  1,975,691  1,977,000  0.9 %
2,000,000  1,975,691  1,977,000  
Velocity Pooling Vehicle, LLCAutomotive
Senior Secured First Lien Term Loan (LIBOR + 11.00% PIK, 1.00% LIBOR Floor)(13)
4/28/2023894,050  832,281  789,715  0.4 %
Equity - 5,441 Class A Units—  302,464  20,893  0.0 %
Warrants - 0.65% of Outstanding Equity3/30/2028—  361,667  24,983  0.0 %
894,050  1,496,412  835,591  
Walker Edison Furniture Company LLCConsumer goods:  Durable
Senior Secured First Lien Term Loan (LIBOR + 6.50% Cash, 1.00% LIBOR Floor)(13)(23)
9/26/20243,611,900  3,611,900  3,611,900  1.7 %
Equity - 1,500 Common Units—  1,500,000  2,557,657  1.2 %
3,611,900  5,111,900  6,169,557  
Watermill-QMC Midco, Inc.Automotive
Equity - 1.3% Partnership Interest(8)
—  518,283  88,989  0.0 %
—  518,283  88,989  
Subtotal Non-Controlled/Non-Affiliated Investments$180,226,518  $204,736,370  $189,895,466  
Affiliated Investments:(24)
1888 Industrial Services, LLCEnergy:  Oil & Gas
Senior Secured First Lien Term Loan A (LIBOR + 5.00% PIK, 1.00% LIBOR Floor)(13)
9/30/2021$9,304,145  $9,304,145  $9,304,145  4.3 %
Senior Secured First Lien Term Loan B (LIBOR + 8.00% PIK, 1.00% LIBOR Floor)(9)(13)
9/30/202123,547,567  19,468,870  5,886,892  2.7 %
Senior Secured First Lien Term Loan C (LIBOR + 5.00% PIK, 1.00% LIBOR Floor)(13)
6/30/20211,170,014  1,170,014  1,170,014  0.5 %
Senior Secured First Lien Term Loan D (LIBOR + 5.00% PIK, 1.00% LIBOR Floor)(13)
9/18/2020224,456  224,456  224,456  0.1 %
Revolving Credit Facility (LIBOR + 5.00% PIK, 1.00% LIBOR
Floor)(13)(16)
9/30/20214,387,025  4,387,025  4,387,025  2.0 %
Equity - 21,562.16 Class A Units—  —  —  0.0 %
38,633,207  34,554,510  20,972,532  
Access Media Holdings, LLC(7)
Media:  Broadcasting & Subscription
Senior Secured First Lien Term Loan (10.00% PIK)(9)
7/22/202010,036,355  8,446,385  2,509,089  1.2 %
Preferred Equity Series A1,600,000  1,600,000  —  0.0 %
Preferred Equity Series AA800,000  800,000  —  0.0 %
Preferred Equity Series AAA971,200  971,200  (100,800) 0.0 %
Equity - 16 Common Units—  —  —  0.0 %
13,407,555  11,817,585  2,408,289  
Caddo Investors Holdings 1 LLC(10)
Forest Products & Paper
Equity - 6.15% Membership Interest(21)
—  2,526,373  2,830,051  1.3 %
—  2,526,373  2,830,051  
F-16

Company(1)
IndustryType of InvestmentMaturity
Par Amount(2)
Cost(3)
Fair Value(6)
% of
Net Assets(4)
Dynamic Energy Services International LLC(7)
Energy:  Oil & Gas
Senior Secured First Lien Term Loan (LIBOR + 13.50% PIK)(9)(15)
12/31/202111,124,375  7,824,974  1,264,841  0.6 %
Revolving Credit Facility (12.00% Cash)12/31/2019545,103  545,103  545,103  0.2 %
Equity - 12,350,000 Class A Units—  —  —  0.0 %
11,669,478  8,370,077  1,809,944  
JFL-NGS Partners, LLCConstruction & BuildingPreferred Equity - A-2 Preferred (3.00% PIK)20,150,684  20,150,684  20,150,684  9.3 %
Preferred Equity - A-1 Preferred (3.00% PIK)2,607,661  2,607,661  2,607,661  1.2 %
Equity - 57,300 Class B Units—  57,300  19,096,371  8.8 %
22,758,345  22,815,645  41,854,716  
JFL-WCS Partners, LLCEnvironmental IndustriesPreferred Equity - Class A Preferred (6.00% PIK)1,236,269  1,236,269  1,236,269  0.6 %
Equity - 129,588 Class B Units—  129,588  2,755,041  1.3 %
1,236,269  1,365,857  3,991,310  
Kemmerer Operations, LLC(7)
Metals & MiningSenior Secured First Lien Term Loan (15.00% PIK)6/21/20231,766,511  1,766,511  1,766,511  0.8 %
Senior Secured First Lien Delayed Draw Term Loan (15.00% PIK)6/21/2023706,604  706,604  706,604  0.3 %
Equity - 6.7797 Common Units—  962,717  962,717  0.4 %
2,473,115  3,435,832  3,435,832  
Path Medical, LLCHealthcare & Pharmaceuticals
Senior Secured First Lien Term Loan (LIBOR + 9.50% PIK, 1.00% LIBOR Floor)(13)
10/11/20219,534,512  9,294,959  8,845,167  4.1 %
Senior Secured First Lien Term Loan A (LIBOR + 9.50% PIK, 1.00% LIBOR Floor)(13)
10/11/20213,284,977  3,284,977  3,047,473  1.4 %
Senior Secured First Lien Term Loan C (LIBOR + 10.00% Cash, 1.00% LIBOR Floor)(13)
10/11/2021344,463  344,463  344,291  0.2 %
Warrants - 7.68% of Outstanding Equity1/9/2027—  499,751  —  0.0 %
13,163,952  13,424,150  12,236,931  
US Multifamily, LLC(10)
Banking, Finance, Insurance & Real Estate
Senior Secured First Lien Term Loan (10.00% Cash)(22)
6/17/20216,670,000  6,670,000  6,670,000  3.1 %
Equity - 33,300 Preferred Units—  3,330,000  3,330,000  1.5 %
6,670,000  10,000,000  10,000,000  
Subtotal Affiliated Investments $110,011,921  $108,310,029  $99,539,605  
Controlled Investments:(5)
MCC Senior Loan Strategy JV I LLC(10)
Multisector Holdings
Equity - 87.5% ownership of MCC Senior Loan Strategy JV I LLC(21)
—  78,575,000  69,948,970  32.3 %
—  78,575,000  69,948,970  
NVTN LLCHotel, Gaming & Leisure
Senior Secured First Lien Term Loan (LIBOR + 4.00% Cash, 1.00% LIBOR Floor)(12)
11/9/20204,255,990  4,255,990  4,255,990  2.0 %
Senior Secured First Lien Term Loan B (LIBOR + 9.25% PIK, 1.00% LIBOR Floor)(9)(12)
11/9/202013,436,693  12,305,096  7,152,352  3.3 %
Senior Secured First Lien Term Loan C (LIBOR + 12.00% PIK, 1.00% LIBOR Floor)(9)(12)
11/9/20208,747,134  7,570,054  —  0.0 %
Equity - 787.4 Class A Units—  9,550,922  —  0.0 %
26,439,817  33,682,062  11,408,342  
F-17

Company(1)
IndustryType of InvestmentMaturity
Par Amount(2)
Cost(3)
Fair Value(6)
% of
Net Assets(4)
TPG Plastics LLCChemicals, Plastics & Rubber
Senior Secured Second Lien Term Loan (Prime + 10.00% Cash)(14)
12/31/2019352,984  352,984  352,984  0.2 %
Unsecured Debt (10.00% Cash)(20)
278,810  278,810  278,810  0.1 %
Equity - 35 Class B Units—  3,317,149  1,644,751  0.8 %
631,794  3,948,943  2,276,545  
URT Acquisition Holdings CorporationServices:  Business
Senior Secured Second Lien Term Loan (LIBOR + 8.00% PIK, 2.00% LIBOR Floor)(13)
5/2/202218,905,403  18,905,403  18,905,403  8.7 %
Preferred Equity (12.00% PIK)(9)
6,552,890  6,552,890  4,914,667  2.3 %
Equity - 397,466 Common Units—  12,936,879  —  0.0 %
25,458,293  38,395,172  23,820,070  
Subtotal Control Investments$52,529,904  $154,601,177  $107,453,927  
Total Investments, September 30, 2019$342,768,343  $467,647,576  $396,888,998  183.4 %

(1)All of our investments are domiciled in the United States. Certain investments also have international operations.
(2)Par amount includes accumulated payment-in-kind (“PIK”) interest, as applicable, and is net of repayments.
(3)Gross unrealized appreciation, gross unrealized depreciation, and net unrealized depreciation for U.S. federal income tax purposes totaled $28,155,804, $96,121,868, and $67,966,064, respectively. The tax cost basis of investments is $464,855,062 as of September 30, 2019.
(4)Percentage is based on net assets of $216,432,530 as of September 30, 2019.
(5)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.
(6)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).
(7)The investment has an unfunded commitment as of September 30, 2019 (see Note 8), and includes an analysis of the value of any unfunded commitments.
(8)Represents 1.3% partnership interest in Watermill-QMC Partners, LP and Watermill-EMI Partners, LP.
(9)The investment was on non-accrual status as of September 30, 2019.
(10)The investment is not a qualifying asset as defined under Section 55(a) of 1940 Act, in a whole, or in part. As of September 30, 2019, 24.3% of the Company's portfolio investments were non-qualifying assets.
(11)A portion of this investment was sold via a participation agreement. The amount stated is the portion retained by Medley Capital Corporation (see Note 3).
(12)The interest rate on these loans is subject to the greater of a London Interbank Offering Rate (“LIBOR”) floor, or 1 month LIBOR plus a base rate. The 1 month LIBOR as of September 30, 2019 was 2.04%.
(13)The interest rate on these loans is subject to the greater of a LIBOR floor, or 3 month LIBOR plus a base rate. The 3 month LIBOR as of September 30, 2019 was 2.10%.
(14)These loans bear interest at an alternate base rate, or in the case of these particular investments the Prime Rate set by the Federal Reserve, plus a given spread. The Prime Rate in effect at September 30, 2019 was 5.00%.
(15)The interest rate on these loans is subject to 3 month LIBOR plus a base rate. The 3 month LIBOR as of September 30, 2019 was 2.10%.
(16)This investment earns 0.50% commitment fee on all unused commitment as of September 30, 2019, and is recorded as a component of interest income on the Consolidated Statements of Operations.
(17)This investment represents a Level 1 security in the ASC 820 table as of September 30, 2019 (see Note 4).
(18)This investment represents a Level 2 security in the ASC 820 table as of September 30, 2019 (see Note 4).
(19)Security is non-income producing.
(20)This investment is scheduled to repay a percentage of the outstanding principal on a quarterly basis. Upon TPG Plastics, LLC obtaining all environmental and product testing authorizations, licenses and permits from all applicable governmental authorities, the remaining outstanding principal is expected to be repaid in full.
(21)As a practical expedient, the Company uses net asset value (“NAV”) to determine the fair value of this investment.
(22)All or a portion of this investment is held in Medley SLF Funding I LLC (see Note 5).
(23)All or a portion of this investment is held in Medley Small Business Fund, LP (see Note 5).
(24)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. The September 30, 2019 presentation has been revised to conform to the current year presentation.


See accompanying notes to consolidated financial statements.
F-18

MEDLEY CAPITAL CORPORATION
Notes to Consolidated Financial Statements

June 30, 2020

2021

(unaudited)


Note 1. Organization

Medley Capital

PhenixFIN Corporation (the(“PhenixFIN”, the “Company,” “we” and “us”) is a non-diversified closed endclosed-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”). We areOn November 18, 2020, the board of directors of the Company approved the adoption of an internalized management structure, effective January 1, 2021. Until close of business on December 31, 2020 we were externally managed and advised by MCC Advisors LLC (“MCC Advisors”), which is registered with the Securities and Exchange Commission (the “SEC”) as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), pursuant to an investment management agreement. MCC Advisors is a wholly owned subsidiary of Medley LLC, which is controlled by Medley Management Inc. (NYSE: MDLY), a publicly traded asset management firm (“MDLY”), which in turn is controlled by Medley Group LLC, an entity wholly owned by the senior professionals of Medley LLC. We use the term “Medley” to refer collectively to the activities and operations of Medley Capital LLC, Medley LLC, MDLY, Medley Group LLC, MCC Advisors, associated investment funds and their respective affiliates.


affiliates herein. Since January 1, 2021 the Company has been managed pursuant to an internalized management structure.

On March 26, 2013, our wholly owned subsidiary, Medley SBIC, LP (“SBIC LP”), a Delaware limited partnership that we own directly and through our wholly owned subsidiary, Medley SBIC GP, LLC, received a license from the Small Business Administration (“SBA”) to operate as a Small Business Investment Company (“SBIC”) under Section 301(c) of the Small Business Investment Company Act of 1958, as amended. Effective July 1, 2019, SBIC LP surrendered its SBIC license and changed its name to Medley Small Business Fund, LP (“Medley Small Business Fund”).LP. In addition, Medley SBIC GP, LLC changed its name to Medley Small Business Fund GP, LLC. See Note 5 for further information.


Medley Small Business Fund, LP and Medley Small Business Fund GP, LLC have since changed their names to PhenixFIN Small Business Fund, LP and PhenixFIN Small Business Fund GP, LLC, respectively.

The Company has formed and expects to continue to form certain taxable subsidiaries (the “Taxable Subsidiaries”), which are taxed as corporations for federal income tax purposes. These Taxable Subsidiaries allow us to, among other things, hold equity securities of portfolio companies organized as pass-through entities while continuing to satisfy the requirements of a RIC under the Code.


The Company’s investment objective is to generate current income and capital appreciation by lendingappreciation. The management team seeks to privately-held middle market companies,achieve this objective primarily through directly originated transactions,making loans, private equity or other investments in privately-held companies. The Company may also make debt, equity or other investments in publicly-traded companies. (These investments may also include investments in other BDCs, closed-end funds or REITs.) We may also pursue other strategic opportunities and invest in other assets or operate other businesses to help these companies fund acquisitions, growth or refinancing.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, and senior secured second lien term loans.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 the total investment returns.


NYSE Continued Listing Status

On April 10, 2020, 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 Company received written notification, from the NYSE that it was not in compliance with an NYSE continued listing standard in Section 802.01C of the NYSE Listed Company Manual (“Section 802.01C”) because the average closing price of the Company’s common stock over a period of 30 consecutive trading days was below $1.00 per share. The Company can regain compliance with Section 802.01C at any time during the six-month cure period if, on the last trading day of any calendar month during the cure period, it has (i) a closing share price of at least $1.00 per shareissuer’s capacity to pay interest and (ii) an average closing price of at least $1.00 per share over the 30 trading-day period ending on the last trading day of that month. As described in detail below, the Company effected the Reverse Stock Split (as defined below), effective as of July 24, 2020, which is intended to bring the Company into compliance with Section 802.01C.
repay principal when due.


Reverse Stock Split; Authorized Share Reduction

At the Company’s 2020 Annual Meeting of Stockholders held on June 30, 2020 (the “Annual“2020 Annual Meeting”), stockholders approved a proposal to grant discretionary authority to the Company’s board of directors to amend the Company’s Certificate of Incorporation (the “Certificate of Incorporation”) to effect a reverse stock split of its common stock, of 1-20 (the “Reverse Stock Split”) and with the Reverse Stock Split to be effective at such time and date, if at all, as determined by the board of directors, but not later than 60 days after stockholder approval thereof and, if and when the reverse stock split is effected, reduce the number of authorized shares of common stock by the approved reverse stock split ratio (the “Authorized Share Reduction”).


Following the 2020 Annual Meeting, on July 7, 2020, the board of directors determined that it was in the best interests of the Company and its stockholders to implement the Reverse Stock Split and the Authorized Share Reduction. Accordingly, on July 13, 2020, the Company filed a Certificate of Amendment (the “Certificate of Amendment”) to the Certificate of Incorporation with the Secretary of State of the State of Delaware to effect the Reverse Stock Split and the Authorized Share Reduction.



PHENIXFIN CORPORATION

Notes to Consolidated Financial Statements (continued)

June 30, 2021

(unaudited)

Note 1. Organization (continued)

Pursuant to the Certificate of Amendment, effective as of 5:00 p.m., Eastern Time, on July 24, 2020 (the “Effective Time”), each twenty (20) shares of common stock issued and outstanding, immediately prior to the Effective Time, automatically and without any action on the part of the respective holders thereof, were combined and converted into one (1) share of common stock. In connection with the Reverse Stock Split, the Certificate of Amendment provided for a reduction in the number of authorized shares of common stock from 100,000,000 to 5,000,000 shares of common stock. No fractional shares were issued as a result of the Reverse Stock Split. Instead, any stockholder who would have been entitled to receive a fractional share as a result of the Reverse Stock Split received cash payments in lieu of such fractional shares (without interest and subject to backup withholding and applicable withholding taxes).


The

On December 21, 2020, the Company announced that it completed the application process for and was authorized to transfer the listing of its shares of common stock beganto the NASDAQ Global Market. The listing and trading on a split-adjusted basisof the common stock on the NYSE ceased at the market openclose of trading on July 27,December 31, 2020. The trading symbol forSince January 4, 2021, the common stock remains “MCC.”


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The Reverse Stock Split was intended to bring the Company into compliance with the $1.00 minimum average closing share price requirement (the “Minimum Share Price Requirement”) for continued listingtrades on the NYSE. NASDAQ Global Market under the trading symbol “PFX.” 

Sale of MCC JV

On August 3,October 8, 2020, the Company, received written noticeGreat American Life Insurance Company (“GALIC”), MCC Senior Loan Strategy JV I LLC (the “MCC JV”), and an affiliate of Golub Capital LLC (“Golub”) entered into a Membership Interest Purchase Agreement pursuant to which a fund affiliated with and managed by Golub concurrently purchased all of the Company’s interest in the MCC JV and all of GALIC’s interest in the MCC JV for a pre-adjusted gross purchase price of $156.4 million and an adjusted gross purchase price (which constitutes the aggregate consideration for the membership interests) of $145.3 million (giving effect to adjustments primarily for principal and interest payments from portfolio companies of MCC JV from July 1, 2020 through October 7, 2020), resulting in net proceeds (before transaction expenses) of $41.0 million and $6.6 million for the Company and GALIC, respectively, on the terms and subject to the conditions set forth in the Membership Interest Purchase Agreement, including the representations, warranties, covenants and indemnities contained therein. In connection with the closing of the transaction on October 8, 2020, MCC JV repaid in full all outstanding borrowings under, and terminated, its senior secured revolving credit facility, dated as of August 4, 2015, as amended, administered by Deutsche Bank AG, New York Branch.

COVID-19 Developments

The COVID-19 pandemic continues to have adverse consequences on the U.S. and global economies, as well as on the Company (including certain portfolio companies) in particular. The ultimate economic fallout from the NYSEpandemic, and the long-term impact on economies, markets, industries and individual portfolio companies, remains uncertain. The Company’s performance (including that of certain of its portfolio companies) was negatively impacted during the pandemic. The longer-term impact of COVID-19 on the operations and the performance of the Company has regained compliance with(including certain portfolio companies) is difficult to predict, but may continue to be adverse. The longer-term potential impact on such operations and performance could depend to a large extent on future developments and actions taken by authorities and other entities to mitigate COVID-19 and its economic impact. The impacts, as well as the Minimum Share Price Requirement afteruncertainty over impacts to come, of COVID-19 have adversely affected the Company’s average closing price overperformance of the Company (including certain portfolio companies) and may continue to do so in the future. Further, the potential exists for variants of COVID-19, including the Delta variant, to impede the global economic recovery and exacerbate geographic differences in the spread of, and response to, COVID-19.


PHENIXFIN CORPORATION

Notes to Consolidated Financial Statements (continued)

June 30, consecutive trading day period ending on July 31, 2020 was above $1.00 per share as required under Section 802.01C.

2021


(unaudited)

Note 2. Significant Accounting Policies


Basis of Presentation

The Company followsis an investment company following the accounting and reporting guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, (“ASC 946”).Financial Services – Investment Companies. The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with U.S. generally accepted accounting principles (“GAAP”) and include the consolidated accounts of the Company and its wholly owned subsidiaries PhenixFIN Small Business Fund, LP (f/k/a Medley Small Business Fund, LP) (“PhenixFIN Small Business Fund”) and PhenixFIN SLF Funding I LLC (f/k/a Medley SLF Funding I LLC ("Medley SLF"LLC) (“PhenixFIN SLF”), and its wholly owned Taxable Subsidiaries. All references made to the “Company,” “we,” and “us” herein include Medley CapitalPhenixFIN Corporation and its consolidated subsidiaries, except as stated otherwise. Additionally, the accompanying consolidated financial statements of the Company and related financial information have been prepared pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X of the Securities Act of 1933. In the opinion of management, the consolidated financial statements reflect all adjustments and reclassifications, which are of a normal recurring nature, that are necessary for the fair presentation of financial results as of and for the periods presented. Therefore, this Form 10-Q should be read in conjunction with the Company'sCompany’s annual report on Form 10-K for the year ended September 30, 2019.2020. The current period'speriod’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the fiscal year ending September 30, 2020.  

2021.


Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.


Cash and Cash Equivalents

The Company considers cash equivalents to be highly liquid investments with original maturities of three months or less. Cash and cash equivalents include deposits in a money market account. The Company deposits its cash in financial institutions and, at times, such balances may be in excess of the Federal Deposit Insurance Corporation insurance limits. As of June 30, 2020, we had $52.2 million in cash and cash equivalents. As of September 30, 2019, we had $68.2 million in cash and cash equivalents, and $16.0 million of restricted cash, which was restricted for the purposes of repaying principal and interest on our Series A Israeli Notes (the “Israeli Notes”).


Debt Issuance Costs

Debt issuance costs incurred in connection with any credit facilities and unsecured notes and SBA-guaranteed debentures (“SBA Debentures”) (see Note 5) are deferred and amortized over the life of the respective credit facility or instrument.


Indemnification

Indemnification

In the normal course of business, the Company enters into contractual agreements that provide general indemnifications against losses, costs, claims and liabilities arising from the performance of individual obligations under such agreements. The Company has had no material claims or payments pursuant to such agreements. The Company’s individual maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. However, based on management’s experience, the Company expects the risk of loss to be remote.


Revenue Recognition

Interest income, adjusted for amortization of premiums and accretion of discounts, is recorded on an accrual basis. Dividend income, which represents dividends from equity investments and distributions from Taxable Subsidiaries, is recorded on the ex-dividend date and when the distribution is received, respectively.


The Company holds debt investments in its portfolio that contain a payment-in-kind (“PIK”) interest provision. PIK interest, which represents contractually deferred interest added to the investment balance that is generally due at maturity, is recorded on the accrual basis to the extent such amounts are expected to be collected. PIK interest is not accrued if the Company does not expect the issuer to be able to pay all principal and interest when due. For the three and nine months ended June 30, 2020, 2021, the Company earned approximately $0.6 million$0.5 and $3.1$0.6 million in PIK interest, respectively. For the three and nine months ended June 30, 2019, 2020, the Company earned approximately $1.8$0.6 million and $6.4$3.1 million in PIK interest, respectively.


PHENIXFIN CORPORATION


Notes to Consolidated Financial Statements (continued)

June 30, 2021

(unaudited)

Note 2. Significant Accounting Policies (continued)

Revenue Recognition (continued)

Origination/closing, amendment and transaction break-up fees associated with investments in portfolio companies are recognized as income when we become entitled to such fees. Prepayment penalties received by the Company for debt instruments paid back to the Company prior to the maturity date are recorded as income upon repayment of debt. Administrative agent fees received by the Company are capitalized as deferred revenue and recorded as fee income when the services are rendered. For the three and nine months ended June 30, 2020,2021, fee income was approximately $0.2$0.1 million and $0.6$0.7 million, respectively (see Note 9). For the three and nine months ended June 30, 2019,2020, fee income was approximately $1.2$0.2 million and $2.0$0.6 million, respectively (see Note 9).


F-20

Investment transactions are accounted for on a trade date basis. Realized gains or losses on investments are measured by the difference between the net proceeds from the disposition and the amortized cost basis of investment, without regard to unrealized gains or losses previously recognized. There were no realized gains or losses related to non-cash restructuring transactions during the three and nine months ended June 30, 2020. During the three2021 and nine months ended June 30, 2019, $8.7 million and $19.6 million of our realized losses, respectively, were related to certain non-cash restructuring transactions, which is recorded on the Consolidated Statements of Operations as a component of net realized gain/(loss) from investments.2020. The Company reports changes in fair value of investments as a component of the net unrealized appreciation/(depreciation) on investments in the Consolidated Statements of Operations.


Management reviews all loans that become 90 days or more past due on principal or interest or when there is reasonable doubt that principal or interest will be collected for possible placement on management’s designation of non-accrual status. Interest receivable is analyzed regularly and may be reserved against when deemed uncollectible. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current, although we may make exceptions to this general rule if the loan has sufficient collateral value and is in the process of collection. At June 30, 2020,2021, certain investments in nineten portfolio companies held by the Company were on non-accrual status with a combined fair value of approximately $16.4$13.6 million, or 6.6% of the fair value of our portfolio. At June 30, 2020, certain investments in one portfolio company held by the Company was on partial non-accrual status with a fair value of approximately $0.7 million, or 0.3%7.5% of the fair value of our portfolio. At September 30, 2019,2020, certain investments in seveneight portfolio companies held by the Company were on non-accrual status with a combined fair value of approximately $22.3$21.7 million, or 5.6%8.8% of the fair value of our portfolio.


Investment Classification

The Company classifies its investments in accordance with the requirements of the 1940 Act. Under the 1940 Act, we would be deemed to “control” a portfolio company if we owned more than 25% of its outstanding voting securities and/or had the power to exercise control over the management or policies of such portfolio company. We refer to such investments in portfolio companies that we “control” as “Control Investments.” Under the 1940 Act, we would be deemed to be an “Affiliated Person” of a portfolio company if we own between 5% and 25% of the portfolio company’s outstanding voting securities or we are under common control with such portfolio company. We refer to such investments in Affiliated Persons as “Affiliated Investments.”


Valuation of Investments

The Company applies fair value accounting to all of its financial instruments in accordance with the 1940 Act and ASC Topic 820 - Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework used to measure fair value and requires disclosures for fair value measurements. In accordance with ASC 820, the Company has categorized its financial instruments carried at fair value, based on the priority of the valuation technique, into a three-level fair value hierarchy as discussed in Note 4. Fair value is a market-based measure considered from the perspective of the market participant who holds the financial instrument rather than an entity specific measure. Therefore, when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that management believes market participants would use in pricing the financial instrument at the measurement date.


Investments for which market quotations are readily available are valued at such market quotations, which are generally obtained from an independent pricing service or multiple broker-dealers or market makers. We weight the use of third-party broker quotations, if any, in determining fair value based on our understanding of the level of actual transactions used by the broker to develop the quote and whether the quote was an indicative price or binding offer. However, debt investments with remaining maturities within 60 days that are not credit impaired are valued at cost plus accreted discount, or minus amortized premium, which approximates fair value. Investments for which market quotations are not readily available are valued at fair value as determined by the Company’s board of directors based upon input from management and third partythird-party valuation firms. Because these investments are illiquid and because there may not be any directly comparable companies whose financial instruments have observable market values, these loans are valued using a fundamental valuation methodology, consistent with traditional asset pricing standards, that is objective and consistently applied across all loans and through time.


Investments in investment funds are valued at fair value. Fair values are generally determined utilizing the NAV supplied by, or on behalf of, management of each investment fund, which is net of management and incentive fees or allocations charged by the investment fund and is in accordance with the “practical expedient”, as defined by FASB Accounting Standards Update (“ASU”) 2009-12, Investments in Certain Entities that Calculate Net Asset Value per Share. NAVs received by, or on behalf of, management of each investment fund are based on the fair value of the investment funds’ underlying investments in accordance with policies established by management of each investment fund, as described in each of their financial statements and offering memorandum. If the Company is in the process of the sale of an investment fund, fair value will be determined by actual or estimated sale proceeds.



PHENIXFIN CORPORATION

Notes to Consolidated Financial Statements (continued)

June 30, 2021

(unaudited)

Note 2. Significant Accounting Policies (continued)

Valuation of Investments (continued)

The methodologies utilized by the Company in estimating the fair value of its investments categorized as Level 3 generally fall into the following two categories:


•The “Market Approach” uses prices and other relevant information generated by market transactions involving identical or comparable (that is, similar) assets, liabilities, or a group of assets and liabilities, such as a business.

•The “Income Approach” converts future amounts (for example, cash flows or income and expenses) to a single current (that is, discounted) amount. When the Income Approach is used, the fair value measurement reflects current market expectations about those future amounts.

●The “Market Approach” uses prices and other relevant information generated by market transactions involving identical or comparable (that is, similar) assets, liabilities, or a group of assets and liabilities, such as a business.

●The “Income Approach” converts future amounts (for example, cash flows or income and expenses) to a single current (that is, discounted) amount. When the Income Approach is used, the fair value measurement reflects current market expectations about those future amounts.

The Company useshas engaged third-party valuation firms (the “Valuation Firms”) to assist theit and its board of directors in the valuation of its portfolio investments. The valuation reports generated by the third-party valuation firmsValuation Firms consider the evaluation of financing and sale transactions with third parties, expected cash flows and market basedmarket-based information, including comparable transactions, performance multiples, and movement in yields of debt instruments, among other factors. The Company uses a market yield analysis under the Income Approach or an enterprise model of valuation under the Market Approach, or a combination thereof. In applying the market yield analysis, the value of the Company’s loans is determined based upon inputs such as the coupon rate,

F-21

current market yield, interest rate spreads of similar securities, the stated value of the loan, and the length to maturity. In applying the enterprise model, the Company uses a waterfall analysis, which takes into account the specific capital structure of the borrower and the related seniority of the instruments within the borrower’s capital structure into consideration. To estimate the enterprise value of the portfolio company, we weigh some or all of the traditional market valuation methods and factors based on the individual circumstances of the portfolio company in order to estimate the enterprise value.

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


•valuations of comparable public companies (“Guideline Comparable Approach”);

•recent sales of private and public comparable companies (“Guideline Comparable Approach”);

•recent acquisition prices of the company, debt securities or equity securities (“Recent Arms-Length Transaction”);

•external valuations of the portfolio company, offers from third parties to buy the company (“Estimated Sales Proceeds Approach”);

•subsequent sales made by the company of its investments (“Expected Sales Proceeds Approach”); and

•estimating the value to potential buyers.

●valuations of comparable public companies (“Guideline Comparable Approach”);

●recent sales of private and public comparable companies (“Guideline Comparable Approach”);

●recent acquisition prices of the company, debt securities or equity securities (“Recent Arms-Length Transaction”);

●external valuations of the portfolio company, offers from third parties to buy the company (“Estimated Sales Proceeds Approach”);

●subsequent sales made by the company of its investments (“Expected Sales Proceeds Approach”); and

●estimating the value to potential buyers.

The methodologies and information that the Company utilizes when applying the Income Approach for performing investments include:


•

●discounting the forecasted cash flows of the portfolio company or securities (Discounted Cash Flow (“DCF”) Approach); and

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


PHENIXFIN CORPORATION

Notes to Consolidated Financial Statements (continued)

June 30, 2021

(unaudited)

Note 2. Significant Accounting Policies (continued)

Valuation of the portfolio company or securities (Discounted Cash Flow (“DCF”) Approach); andInvestments (continued)


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

For non-performing investments, we may estimate the liquidation or collateral value of the portfolio company’s assets and liabilities using an expected recovery model (Market Approach - Expected Recovery Analysis or Estimated Liquidation Proceeds).


We undertake a multi-step valuation process each quarter when valuing investments for which market quotations are not readily available, as described below:


•our quarterly valuation process begins with each portfolio investment being internally valued by the valuation professionals;

•preliminary valuation conclusions are then documented and discussed with senior management; and

•an independent valuation firm engaged by our board of directors reviews approximately one third of these preliminary valuations each quarter on a rotating quarterly basis on non-fiscal year-end quarters, such that each of these investments will be valued by independent valuation firms at least twice per annum when combined with the fiscal year-end review of all the investments by independent valuation firms.

In addition, all of our investments are subject to the following valuation process:

•the audit committee of our board of directors reviews the preliminary valuations of the valuation professionals, senior management and independent valuation firms; and

•our board of directors discusses valuations and determines the fair value of each investment in our portfolio in good faith based on the input of MCC Advisors, the respective independent valuation firms and the audit committee.

●our quarterly valuation process begins with each portfolio investment being initially valued by one or more Valuation Firms;

●preliminary valuation conclusions will then be documented and discussed with senior management;

●the audit committee of the board of directors reviews the preliminary valuations with management and the Valuation Firms; and

●the board of directors discusses the valuations and determines the fair value of each investment in the Company’s portfolio in good faith based on the input of management, the respective Valuation Firms and the audit committee.

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ from the values that would have been used had a readily available market value existed for such investments, and the differences could be material. In addition, changes in the market environment (including the impact of COVID-19 on the financial market)markets), portfolio company performance, and other events may occur over the lives of the investments that may cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned.


Fair Value of Financial Instruments

The carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts payable and accrued expenses, approximate fair value due to their short-term nature. The carrying amounts and fair values of our long-term obligations are discussed in Note 5.


RecentRecently Adopted Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). The primary focus of ASU 2018-13 is to improve the effectiveness of the disclosure requirements for fair value measurements. The changes affect all companies that are required to include fair value measurement disclosures. In general, the amendments in ASU 2018-13 are effective for all entities for fiscal years and interim periods within those fiscal years, beginning after
F-22

December 15, 2019. After evaluating ASU 2018-13, the Company found no material changes to its fair value disclosures in the notes to the consolidated financial statements were necessary to comply with the pronouncement.

In March 2020, the FASB issued ASU 2020-04, "Reference“Reference rate reform (Topic 848)—Facilitation of the effects of reference rate reform on financial reporting."” The amendments in this update provide optional expedients and exceptions for applying U.S. GAAP to certain contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform and became effective upon issuance for all entities. The Company has agreements that have LIBOR as a reference rate with certain portfolio companies and also with certain lenders. Many of these agreements include language for choosing an alternative successor rate if LIBOR reference is no longer considered to be appropriate. Contract modifications are required to be evaluated in determining whether the modifications result in the establishment of new contracts or the continuation of existing contracts. The standard isIn January 2021, the FASB issued ASU 2021-01, “Reference rate reform (Topic 848),” which expanded the scope of Topic 848. ASU 2020-04 and ASU 2021-01 are effective as of March 12, 2020 through December 31, 2022 andwhen the Company plans to apply the amendments in this update to account for contract modifications due to changes in reference rates. The Company does not believe that itthe adoption of ASU 2020-04 and ASU 2021-01 will have a material impact on its consolidated financial statements and disclosures.



PHENIXFIN CORPORATION

Notes to Consolidated Financial Statements (continued)

June 30, 2021

(unaudited)

Note 2. Significant Accounting Policies (continued)

Recently Adopted Accounting Pronouncements (continued)

In May 2020, the SEC adopted rule amendments that will impactimpacted the requirement of investment companies, including BDCs, to disclose the financial statements of certain of their portfolio companies or certain acquired funds (the “Final Rules”). The Final Rules adopted a new definition of “significant subsidiary” set forth in Rule 1-02(w)(2) of Regulation S-X under the Securities Act. Rules 3-09 and 4-08(g) of Regulation S-X require investment companies to include separate financial statements or summary financial information, respectively, in such investment company’s periodic reports for any portfolio company that meets the definition of “significant subsidiary.” The Final Rules adopt a new definition of “significant subsidiary” applicable only to investment companies that (i) modifies the investment test and the income test, and (ii) eliminates the asset test currently in the definition of “significant subsidiary” in Rule 1-02(w) of Regulation S-X. The new Rule 1-02(w)(2) of Regulation S-X is intended to more accurately capture those portfolio companies that are more likely to materially impact the financial condition of an investment company. The Final Rules will bebecame effective on January 1, 2021, but voluntary compliance is permitted in advance of the effective date.2021. The Company has evaluated the impact of the Final RuleRules and has determined its impact not to be material and as such, has adopted it forbegan voluntary compliance with the Final Rules since the quarter ended June 30, 2020.


Federal Income Taxes

The Company has elected, and intends to qualify annually, to be treated as a RIC under Subchapter M of the Code. In order to continue to qualify as a RIC and be eligible for tax treatment under Subchapter M of the Code, among other things, the Company is required to meet certain source of income and asset diversification requirements and timely distribute to its stockholders at least 90% of the sum of investment company taxable income (“ICTI”) including PIK,, as defined by the Code, including PIK interest, and net tax exempt interest income (which is the excess of our gross tax exempt interest income over certain disallowed deductions) for each taxable year in order to be eligible for tax treatment under Subchapter M of the Code.year. Depending on the level of ICTI earned in a tax year, the Company may choose to carry forward ICTI in excess of current year dividend distributions into the next tax year. Any such carryover ICTI must be distributed before the end of that next tax year through a dividend declared prior to filing the final tax return related to the year which generated such ICTI.


The Company is subject to a nondeductible U.S. federal excise tax of 4% on undistributed income if it does not distribute at least 98% of its ordinary income in any calendar year and 98.2% of its capital gain net income for each one-year period ending on October 31 of such calendar year.year and any income realized, but not distributed, in preceding years and on which it did not pay federal income tax. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year dividend distributions for excise tax purposes, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned. For the calendar years ended 2020 and 2019, accruedThere was no provision for federal excise tax at June 30, 20202021 and June 30, 2019, respectively, the Company distributed at least 98% of its ordinary income and 98.2% of its capital gains, and as such, was not subject to federal excises taxes.


2020.

The Company’s Taxable Subsidiaries accrue income taxes payable based on the applicable corporate rates on the unrealized gains generated by the investments held by the Taxable Subsidiaries. As of June 30, 2020, the Company recorded a deferred tax liability of $49,694 on the Consolidated Statements of Assets2021 and Liabilities. As of September 30, 2019,2020, the Company did not record a deferred tax liability on the Consolidated Statements of Assets and Liabilities. The change in provision for deferred taxes is included as a component of net realized and unrealized gain/(loss) on investments in the Consolidated Statements of Operations. For the three and nine months ended June 30, 2020,2021 the Company recordeddid not record a change in provision for deferred taxes on the unrealized (appreciation)/depreciation on investments of $35,970. Forinvestments. By comparison, for the three and nine months ended June 30, 2020, the Company recorded a change in provision for deferred taxes on the unrealized appreciation(appreciation)/depreciation on investments of $49,694. For the three$36.0 thousand and nine months ended June 30, 2019, the Company did not record a change in provision for deferred taxes on the unrealized (appreciation)/depreciation on investments.


$(49.7) thousand, respectively.

As of June 30, 20202021 and September 30, 2019,2020, the Company had a deferred tax asset of $20.6$19.9 million and $20.9$22.8 million, respectively, consisting primarily of net operating losses and net unrealized losses on the investments held within its Taxable Subsidiaries. As of June 30, 20202021 and September 30, 2019,2020, the Company has booked a valuation allowance of $20.6$19.9 million and $20.9$22.8 million, respectively, against its deferred tax asset.


ICTI generally differs from net investment income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses. The Company may be required to recognize ICTI in certain circumstances in which it does not receive cash. For example, if the Company holds debt obligations that are treated under applicable tax rules as having original issue discount, the Company must include in ICTI each year a portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by the Company in the same taxable year. The Company may also have to include in ICTI other amounts that it has not yet received in cash, such as 1) PIK interest income and 2) interest income from investments that have been classified as non-accrual for financial reporting purposes. Interest income on non-accrual investments is not recognized for financial reporting purposes, but generally is recognized in ICTI. Because any original issue discount or other amounts accrued will be included in the Company’s ICTI for the year of accrual, the Company may be required to make a distribution to its stockholders in order to satisfy the minimum distribution requirements, even though the Company will not have received and may not ever receive any corresponding cash amount. ICTI also excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized.


The Company accounts for income taxes in conformity with ASC Topic 740 - Income Taxes (“ASC 740”). ASC 740 provides guidelines for how uncertain tax positions should be recognized, measured, presented and disclosed in financial statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-

F-23

than-not”“more-likely-than-not” of being sustained by the applicable tax authority. Tax positions deemed to meet a “more-likely-than-not” threshold would be recorded as a tax benefit or expense in the current period. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Consolidated Statements of Operations. There were no material uncertain income tax positions at June 30, 2020.2021.   Although we file federal and state tax returns, our major tax jurisdiction is federal. The Company’s federal and state tax returns for the prior three fiscal years remain open, subject to examination by the Internal Revenue Service.Service and applicable state tax authorities.



PHENIXFIN CORPORATION

Notes to Consolidated Financial Statements (continued)

June 30, 2021

(unaudited)

Note 2. Significant Accounting Policies (continued)

Retroactive Adjustments for Reverse Stock Split and the Authorized Share Reduction


The per share amount of the common stock and the authorized shares of common stock in the unaudited financial statements and notes thereto have been retroactively adjusted for all periods presented to give effect to the Reverse Stock Split effected on July 24, 2020. See Note 1 for more information regarding the Reverse Stock Split and the Authorized Share Reduction.


Segments

Segments

The Company invests in various industries. The Company separately evaluates the performance of each of its investment relationships. However, because each of these investment relationships has similar business and economic characteristics, they have been aggregated into a single investment segment. All applicable segment disclosures are included in or can be derived from the Company’s financial statements. See Note 3 for further information.


Company Investment Risk, Concentration of Credit Risk, and Liquidity Risk

MCC Advisors

The Company has broad discretion in making investments for the Company.investments. Investments will generally consist of debt instruments that may be affected by business, financial market or legal uncertainties. Prices of investments may be volatile, and a variety of factors that are inherently difficult to predict, such as domestic or international economic and political developments, may significantly affect the results of the Company’s activities and the value of its investments. In addition, the value of the Company’s portfolio may fluctuate as the general level of interest rates fluctuate.


The value of the Company’s investments in loans may be detrimentally affected to the extent, among other things, that a borrower defaults on its obligations, there is insufficient collateral and/or there are extensive legal and other costs incurred in collecting on a defaulted loan, observable secondary or primary market yields for similar instruments issued by comparable companies increase materially or risk premiums required in the market between smaller companies, such as our borrowers, and those for which market yields are observable increase materially. MCC Advisors may attempt to minimize this risk by maintaining low loan-to-liquidation values with each loan and the collateral underlying the loan.


The Company’s assets may, at any time, include securities and other financial instruments or obligations that are illiquid or thinly traded, making purchase or sale of such securities and financial instruments at desired prices or in desired quantities difficult. Furthermore, the sale of any such investments may be possible only at substantial discounts, and it may be extremely difficult to value any such investments accurately.


Company performance (including that of certain of its portfolio companies) has been and may continue to be negatively impacted by the COVID-19 pandemic’s effects. The COVID-19 pandemic has adversely impacted economies and capital markets around the world in ways that may continue and may change in unforeseen ways for an indeterminate period. The pandemic has also adversely affected various businesses, including some in which we are invested. The COVID-19 pandemic may exacerbate pre-existing business performance, political, social and economic risks affecting certain companies and countries generally. The impacts, as well as the uncertainty over impacts to come, of COVID-19 have adversely affected the performance of the Company (including certain portfolio companies) and may continue to do so in the future. Further, the potential exists for variants of COVID-19, including the Delta variant, to impede the global economic recovery and exacerbate geographic differences in the spread of, and response to, COVID-19.

Note 3. Investments

The composition of our investments as of June 30, 2021 as a percentage of our total portfolio, at amortized cost and fair value were as follows (dollars in thousands):

  Amortized
Cost		  Percentage  Fair Value  Percentage 
Senior Secured First Lien Term Loans $165,696   73.4% $90,280   49.6%
Senior Secured Second Lien Term Loans  2,600   1.2   2,483   1.4 
Senior Secured Notes  3,757   1.7   3,726   2.1 
Unsecured Debt  3,846   1.7   2,110   1.2 
Equity/Warrants  49,631   22.0   83,020   45.7 
Total Investments $225,530   100.0% $181,619   100.0%

The composition of our investments as of September 30, 2020 as a percentage of our total portfolio, at amortized cost and fair value were as follows (dollars in thousands):

  Amortized
Cost		  Percentage  Fair Value  Percentage 
Senior Secured First Lien Term Loans $178,843   54.5% $106,463   43.2%
Senior Secured Second Lien Term Loans  15,476   4.7   13,927   5.6 
Unsecured Debt  4,601   1.4   2,669   1.1 
MCC Senior Loan Strategy JV I LLC  79,888   24.4   41,019   16.6 
Equity/Warrants  49,327   15.0   82,666   33.5 
Total $328,135   100.0% $246,744   100.0%


 Amortized CostPercentageFair ValuePercentage
Senior Secured First Lien Term Loans$188,698  54.8 %$107,338  42.8 %
Senior Secured Second Lien Term Loans18,260  5.3  13,239  5.3  
Unsecured Debt4,489  1.3  3,238  1.3  
MCC Senior Loan Strategy JV I LLC79,888  23.2  47,135  18.8  
Equity/Warrants52,969  15.4  79,669  31.8  
Total$344,304  100.0 %$250,619  100.0 %
The composition of our investments as of September

PHENIXFIN CORPORATION

Notes to Consolidated Financial Statements (continued)

June 30, 2019 as a percentage of our total portfolio, at amortized cost and fair value were as follows (dollars in thousands):

 Amortized CostPercentageFair ValuePercentage
Senior Secured First Lien Term Loans$243,342  52.0 %$192,770  48.6 %
Senior Secured Second Lien Term Loans39,089  8.4  36,508  9.2  
Unsecured Debt2,653  0.6  2,653  0.7  
MCC Senior Loan Strategy JV I LLC78,575  16.8  69,949  17.6  
Equity/Warrants103,989  22.2  95,009  23.9  
Total$467,648  100.0 %$396,889  100.0 %
2021


(unaudited)

Note 3. Investments (continued)

In connection with certain of the Company’s investments, the Company receives warrants that are obtained for the objective of increasing the total investment returns and are not held for hedging purposes. At June 30, 20202021 and September 30, 2019,2020, the total fair value of warrants was $0$1.1 million and $24,983,$15.3 thousand, respectively, and were included in investments at fair value on the Consolidated StatementStatements of Assets and Liabilities. During the three months ended June 30, 2021, the Company did not acquire warrants in existing portfolio companies, and during the nine months ended June 30, 2021, the Company acquired warrants in 1 existing portfolio company. During the three and nine months ended June 30, 2020, the Company had no warrant activity. During the three months ended June 30, 2019, the Company did not acquire

F-24

any warrant positions. During the nine months ended June 30, 2019, the Company acquired additional warrants in one of its existing portfolio investments.

For the three and nine months ended June 30, 2020,2021, there was $0$1.1 million and $24,983,$1.1 million, respectively, of unrealized depreciationappreciation related to warrants, which was recorded on the Consolidated Statements of Operations as net unrealized appreciation/(depreciation) on investments. For the three and nine months ended June 30, 2019,2020, there was $0.4 million$0 and $0.2 million,$25.0 thousand, respectively, of unrealized depreciation related to warrants, which was recorded on the Consolidated Statements of Operations as net unrealized appreciation/(depreciation) on investments. The warrants are received in connection with individual investments and are not subject to master netting arrangements.

F-25

The following table shows the portfolio composition by industry grouping at fair value at June 30, 20202021 (dollars in thousands):

 Fair ValuePercentage
Construction & Building$51,456  20.5 %
Multisector Holdings47,135  18.8  
High Tech Industries25,781  10.3  
Healthcare & Pharmaceuticals22,817  9.1  
Services:  Business21,432  8.6  
Hotel, Gaming & Leisure13,752  5.5  
Wholesale12,459  5.0  
Containers, Packaging & Glass11,998  4.8  
Banking, Finance, Insurance & Real Estate7,289  2.9  
Consumer goods:  Durable7,003  2.8  
Energy:  Oil & Gas6,628  2.6  
Consumer goods:  Non-durable6,013  2.4  
Environmental Industries4,680  1.9  
Metals & Mining3,435  1.4  
Forest Products & Paper3,045  1.2  
Aerospace & Defense2,888  1.1  
Media:  Broadcasting & Subscription1,523  0.6  
Automotive738  0.3  
Retail343  0.1  
Media: Advertising, Printing & Publishing204  0.1  
Total$250,619  100.0 %

  Fair Value  Percentage 
       
Construction & Building $38,001   20.7%
Services: Business  31,707   17.5 
Banking, Finance, Insurance & Real Estate  21,194   11.7 
High Tech Industries  17,059   9.4 
Automotive  13,005   7.2 
Hotel, Gaming & Leisure  11,884   6.5 
Containers, Packaging & Glass  11,536   6.4 
Environmental Industries  10,070   5.5 
Consumer goods: Durable  7,538   4.2 
Energy: Oil & Gas  3,751   2.1 
Forest Products & Paper  3,767   2.1 
Manufacturing  3,726   2.1 
Healthcare & Pharmaceuticals  2,911   1.6 
Aerospace & Defense  2,611   1.4 
Metals & Mining  2,859   1.6 
Total $181,619   100.0%

The following table shows the portfolio composition by industry grouping at fair value at September 30, 20192020 (dollars in thousands):

  Fair Value  Percentage 
       
Construction & Building $51,964   21.1%
Multisector Holdings  41,019   16.6 
High Tech Industries  26,165   10.6 
Healthcare & Pharmaceuticals  23,481   9.5 
Services: Business  21,841   8.9 
Hotel, Gaming & Leisure  12,337   5.0 
Wholesale  12,278   5.0 
Containers, Packaging & Glass  11,987   4.8 
Consumer goods: Durable  9,520   3.8 
Banking, Finance, Insurance & Real Estate  6,557   2.7 
Consumer goods: Non-durable  6,164   2.5 
Environmental Industries  5,846   2.4 
Energy: Oil & Gas  5,626   2.3 
Metals & Mining  3,530   1.4 
Forest Products & Paper  2,991   1.2 
Aerospace & Defense  2,942   1.2 
Media: Broadcasting & Subscription  1,110   0.5 
Automotive  1,043   0.4 
Retail  343   0.1 
Total $246,744   100.0%


 Fair ValuePercentage
Multisector Holdings$69,949  17.6 %
Construction & Building59,608  15.0  
Services:  Business49,512  12.5  
High Tech Industries38,254  9.6  
Healthcare & Pharmaceuticals25,698  6.5  
Energy:  Oil & Gas23,632  6.0  
Hotel, Gaming & Leisure21,127  5.3  
Wholesale13,850  3.5  
Services:  Consumer13,278  3.3  
Containers, Packaging & Glass12,637  3.2  
Capital Equipment10,680  2.7  
Automotive10,375  2.6  
Banking, Finance, Insurance & Real Estate10,000  2.5  
Aerospace & Defense8,604  2.2  
Consumer goods:  Non-durable6,326  1.6  
Consumer goods:  Durable6,170  1.6  
Environmental Industries3,991  1.0  
Metals & Mining3,436  0.9  
Forest Products & Paper2,830  0.7  
Media:  Broadcasting & Subscription2,408  0.6  
Chemicals, Plastics & Rubber2,277  0.6  
Media: Advertising, Printing & Publishing1,715  0.4  
Retail532  0.1  
Total$396,889  100.0 %


PHENIXFIN CORPORATION

Notes to Consolidated Financial Statements (continued)

June 30, 2021

(unaudited)

Note 3. Investments (continued)

The Company invests in portfolio companies principally located in North America. The geographic composition is determined by the location of the corporate headquarters of the portfolio company, which may not be indicative of the primary source of the portfolio company’s business.

F-26

The following table shows the portfolio composition by geographic location at fair value at June 30, 20202021 (dollars in thousands):

 Fair ValuePercentage
Northeast$104,684  41.8 %
West53,960  21.5  
Southeast41,894  16.7  
Midwest27,417  10.9  
Mid-Atlantic13,483  5.4  
Southwest9,181  3.7  
Total$250,619  100.0 %

  Fair Value  Percentage 
       
West $54,617   30.1%
Northeast  54,374   29.9 
Southeast  35,418   19.5 
Southwest  20,085   11.1 
Midwest  16,920   9.3 
Mid-Atlantic  205   0.1 
Total $181,619   100.0%

The following table shows the portfolio composition by geographic location at fair value at September 30, 20192020 (dollars in thousands):

  Fair Value  Percentage 
       
Northeast $98,555   39.9%
West  55,400   22.5 
Southeast  42,321   17.1 
Midwest  27,574   11.2 
Mid-Atlantic  13,334   5.4 
Southwest  9,560   3.9 
Total $246,744   100.0%


 Fair ValuePercentage
Northeast$143,795  36.2 %
West88,412  22.3  
Midwest76,001  19.2  
Southeast48,089  12.1  
Southwest24,658  6.2  
Mid-Atlantic15,934  4.0  
Total$396,889  100.0 %
F-27


PHENIXFIN CORPORATION

Notes to Consolidated Financial Statements (continued)

June 30, 2021

(unaudited)

Note 3. Investments (continued)

Transactions With Affiliated/Controlled Companies

The Company had investments in portfolio companies designated as Affiliated Investments and Controlled Investments under the 1940 Act. Transactions with Affiliated Investments and Controlled Investments during the nine months ended June 30, 20202021 and 20192020 were as follows:

Name of Investment(3)(4) Type of Investment Fair Value at
September 30,
2020		  Purchases/
(Sales) of or
Advances/
(Distributions)		  Transfers
In/(Out) of
Affiliates		  Unrealized
Gain/(Loss)		  Realized
Gain/(Loss)		  Fair Value at June 30,
2021		  Income Earned 
                        
Affiliated Investments                     
                      
1888 Industrial Services, LLC Senior Secured First Lien Term Loan C $1,166,763  $-  $-  $(969,654) $-  $197,109  $75,148 
  Revolving Credit Facility  3,554,069   -   -   -   -   3,554,069   164,420 
                               
Access Media Holdings, LLC Senior Secured First Lien Term Loan  1,110,563   (1,239,336)  -   7,335,822   (7,207,049)  -   - 
  Preferred Equity Series A  -   -   -   1,600,000   (1,600,000)  -   - 
  Preferred Equity Series AA  -   -   -   800,000   (800,000)  -   - 
  Preferred Equity Series AAA  -   -   -   971,200   (971,200)  -   - 
                               
Black Angus Steakhouses,LLC Senior Secured First Lien Delayed Draw Term Loan  758,929   -   -   -   -   758,929   57,552 
  Senior Secured First Lien Term Loan  5,047,557   -   -   (2,910,758)  -   2,136,799   - 
  Senior Secured First Lien Super Priority DDTL  -   1,500,000   -   -   -   1,500,000   86,929 
                               
Caddo Investors Holdings 1 LLC Equity  2,990,776   -   -   776,046   -   3,766,822   - 
                               
Dynamic Energy Services International LLC Senior Secured First Lien Term Loan  905,116   -   -   (905,116)  -   -   - 
                               
JFL-NGS Partners, LLC Preferred Equity A-2  1,795,034   (2,110,987)  -   -   315,953   -   (16,377)
  Preferred Equity A-1  232,292   -   -   -   (232,292)  -   (2,119)
  Equity  38,780,067   -   -   (5,396,855)  -   33,383,212   - 
                               
JFL-WCS Partners, LLC Preferred Equity Class A  1,310,649   (1,330,460)  -   -   19,811   -   (53,623)
  Equity  4,535,580   -   -   5,534,874   -   10,070,454   - 


Name of Investment(3)
Type of InvestmentFair Value at September 30, 2019Purchases/(Sales) of or Advances/(Distributions)Transfers In/(Out) of AffiliatesUnrealized Gain/(Loss)Realized Gain/(Loss)Fair Value at June 30, 2020Income Earned
Affiliated Investments
1888 Industrial Services, LLCSenior Secured First Lien Term Loan A$9,304,145  $168,923  $—  $(9,473,068) $—  $—  $167,086  
Senior Secured First Lien Term Loan B5,886,892  —  —  (5,886,892) —  —  —  
Senior Secured First Lien Term Loan C1,170,014  21,243  —  (24,494) —  1,166,763  21,011  
Senior Secured First Lien Term Loan D224,456  11,878  —  —  —  236,334  11,874  
Senior Secured First Lien Term Loan E—  851,840  —  —  —  851,840  41,700  
Revolving Credit Facility4,387,025  (887,985) —  —  —  3,499,040  189,855  
Equity—  —  —  —  —  —  —  
Access Media Holdings, LLCSenior Secured First Lien Term Loan2,509,089  —  —  (885,101) —  1,623,988  —  
Preferred Equity Series A—  —  —  —  —  —  —  
Preferred Equity Series AA—  —  —  —  —  —  —  
Preferred Equity Series AAA(100,800) —  —  —  —  (100,800) —  
Equity—  —  —  —  —  —  —  
Caddo Investors Holdings 1 LLCEquity2,830,051  2,452  —  212,812  —  3,045,315  —  
Dynamic Energy Services International LLCSenior Secured First Lien Term Loan1,264,841  —  —  (390,933) —  873,908  —  
Revolving Credit Facility545,103  (545,103) —  —  —  —  6,692  
Equity—  —  —  —  —  —  —  
JFL-NGS Partners, LLCPreferred Equity A-220,150,684  (18,355,650) —  —  —  1,795,034  338,741  
Preferred Equity A-12,607,661  (2,375,369) —  —  —  232,292  43,836  
Equity19,096,371  —  —  19,683,696  —  38,780,067  —  
JFL-WCS Partners, LLCPreferred Equity Class A1,236,269  74,380  —  —  —  1,310,649  57,590  
Equity2,755,041  —  —  614,247  —  3,369,288  —  
Kemmerer Operations, LLCSenior Secured First Lien Term Loan1,766,511  209,449  —  —  —  1,975,960  209,536  
Senior Secured First Lien Delayed Draw Term Loan706,604  (209,944) —  —  —  496,660  61,155  
Equity962,717  —  —  —  —  962,717  —  
F-28


PHENIXFIN CORPORATION

Path Medical, LLCSenior Secured First Lien Term Loan8,845,167  826,133  —  (114,496) —  9,556,804  913,579  
Senior Secured First Lien Term Loan A3,047,473  257,147  —  (11,963) —  3,292,657  287,276  
Senior Secured First Lien Term Loan C344,291  (344,463) —  172  —  —  17,776  
Equity—  —  —  —  —  —  —  
US Multifamily, LLCSenior Secured First Lien Term Loan6,670,000  (1,546,087) —  —  —  5,123,913  464,630  
Equity3,330,000  —  —  (1,165,500) —  2,164,500  —  
Total Affiliated Investments$99,539,605  $(21,841,156) $—  $2,558,480  $—  $80,256,929  $2,832,337  
Controlled Investments
MCC Senior Loan Strategy JV I LLC(1)(2)
Equity69,948,970  1,312,500  —  (24,126,289) —  47,135,181  4,725,000  
NVTN LLCSenior Secured First Lien Term Loan4,255,990  2,309,884  —  (2,035,796) —  4,530,078  62,840  
Super Priority Senior Secured First Lien Term Loan—  1,995,374  —  4,626  —  2,000,000  1,983  
Senior Secured First Lien Term Loan B7,152,352  —  —  (7,152,352) —  —  —  
Senior Secured First Lien Term Loan C—  —  —  —  —  —  —  
Equity—  —  —  —  —  —  —  
TPG Plastics LLCSenior Secured Second Lien Term Loan352,984  (352,984) —  —  —  —  12,806  
Unsecured Debt278,810  (278,810) —  —  —  —  6,876  
Unsecured Debt1,644,751  (1,630,312) —  1,672,398  (1,686,837) —  —  
URT Acquisition Holdings CorporationSenior Secured Second Lien Term Loan18,905,403  1,594,416  —  —  (20,499,819) —  500,767  
Preferred Equity4,914,667  (2,533,622) —  1,638,223  (4,019,268) —  —  
Equity—  (66,378) —  12,936,879  (12,870,501) —  —  
Total Controlled Investments$107,453,927  $2,350,068  $—  $(17,062,311) $(39,076,425) $53,665,259  $5,310,272  
F-29


Name of Investment(3)
Type of InvestmentFair Value at September 30, 2018Purchases/(Sales) of or Advances/(Distributions)Transfers In/(Out) of AffiliatesUnrealized Gain/(Loss)Realized Gain/(Loss)Fair Value at June 30, 2019Income Earned
Affiliated Investments
1888 Industrial Services, LLCSenior Secured First Lien Term Loan A$8,984,232  $—  $—  $—  $—  $8,984,232  $344,796  
Senior Secured First Lien Term Loan B19,725,217  734,779  —  (7,334,001) —  13,125,995  759,184  
Revolving Credit Facility3,593,693  (539,054) —  —  —  3,054,639  112,249  
Equity—  —  —  —  —  —  —  
Access Media Holdings, LLCSenior Secured First Lien Term Loan5,876,279  —  —  (510,963) —  5,365,316  —  
Preferred Equity Series A—  —  —  —  —  —  —  
Preferred Equity Series AA—  —  —  —  —  —  —  
Preferred Equity Series AAA(172,800) 72,000  —  —  —  (100,800) —  
Equity—  —  —  —  —  —  —  
Brantley Transportation LLCSenior Secured First Lien Term Loan2,882,800  —  —  (1,248,260) —  1,634,540  —  
Senior Secured First Lien Delayed Draw Term Loan503,105  —  —  —  —  503,105  18,817  
Equity—  —  —  —  —  —  —  
Caddo Investors Holdings 1 LLCEquity2,500,000  20,842  —  194,105  —  2,714,947  (61,927) 
Dynamic Energy Services International LLCSenior Secured First Lien Term Loan—  —  7,824,975  (6,636,810) —  1,188,165  —  
Revolving Credit Facility—  585,858  1,322,001  —  —  1,907,859  7,542  
Equity—  —  —  —  —  —  —  
JFL-NGS Partners, LLCPreferred Equity A-231,468,755  —  —  —  —  31,468,755  470,738  
Preferred Equity A-14,072,311  —  —  —  —  4,072,311  60,917  
Equity9,825,804  —  —  8,367,519  —  18,193,323  —  
JFL-WCS Partners, LLCPreferred Equity Class A1,166,292  69,978  —  —  —  1,236,270  35,641  
Equity215,116  —  —  2,539,925  —  2,755,041  —  
Path Medical, LLCSenior Secured First Lien Term Loan—  856,808  7,821,824  (182,471) —  8,496,161  538,508  
Senior Secured First Lien Term Loan A—  281,574  2,808,500  (162,846) —  2,927,228  171,909  
Senior Secured First Lien Term Loan C—  688,926  —  —  —  688,926  36,208  
Equity—  —  499,751  (499,751) —  —  —  
US Multifamily, LLCSenior Secured First Lien Term Loan6,670,000  —  —  —  —  6,670,000  333,500  
Equity3,330,000  —  —  —  —  3,330,000  —  
Total Affiliated Investments$100,640,804  $2,771,711  $20,277,051  $(5,473,553) $—  $118,216,013  $2,828,082  
F-30

Controlled Investments
Capstone NutritionSenior Secured First Lien Term Loan$12,657,663  $—  $—  $(2,916,918) $—  $9,740,745  $—  
Senior Secured First Lien Delayed Draw Term Loan5,692,096  —  —  (1,311,725) —  4,380,371  —  
Senior Secured First Lien Incremental Delayed Draw2,242,721  1,484,319  —  —  —  3,727,040  204,361  
Equity - Class B and C Units—  —  —  —  —  —  —  
Equity - Common Units—  —  —  —  —  —  —  
MCC Senior Loan Strategy JV I LLC(1)(2)
Equity78,370,891  —  —  (2,961,191) —  75,409,700  4,025,000  
NVTN LLCSenior Secured First Lien Term Loan4,005,990  250,000  —  —  —  4,255,990  132,703  
Senior Secured First Lien Term Loan B11,837,367  467,729  —  (2,912,368) —  9,392,728  356,304  
Senior Secured First Lien Term Loan C7,479,397  90,657  —  (7,570,054) —  —  —  
Equity—  —  —  —  —  —  —  
OmniVere, LLCSenior Secured First Lien Term Loan—  —  —  22,880,599  (22,880,599) —  (2,822) 
Senior Secured First Lien Term Loan1,374,048  661,225  —  2,963,001  (4,998,274) —  —  
Unsecured Debt—  —  —  22,727,575  (22,727,575) —  (2,205) 
Equity—  —  —  872,698  (872,698) —  —  
TPG Plastics LLCSenior Secured Second Lien Term Loan401,346  (28,295) —  —  —  373,051  14,925  
Unsecured Debt360,000  (12,780) —  —  (59,410) 287,810  13,667  
Unsecured Debt646,996  (646,996) —  —  —  —  2,163  
Equity2,670,154  646,996  —  (1,672,398) —  1,644,752  —  
URT Acquisition Holdings CorporationSenior Secured Second Lien Term Loan15,112,754  2,318,082  —  —  —  17,430,836  862,128  
Preferred Equity5,850,795  702,095  —  —  —  6,552,890  371,091  
Equity12,937,518  —  —  (3,179,728) —  9,757,790  —  
Total Controlled Investments$161,639,736  $5,933,032  $—  $26,919,491  $(51,538,556) $142,953,703  $5,977,315  

(1)The Company and Great American Life Insurance Company (“GALIC”) are the members of MCC Senior Loan Strategy JV I LLC (“MCC JV”), a joint venture formed as a Delaware limited liability company that is not consolidated by either member for financial reporting purposes. The members of MCC JV make capital contributions as investments by MCC JV are completed, and all portfolio and other material decisions regarding MCC JV must be submittedNotes to MCC JV’s board of managers, which is comprised of an equal number of members appointed by each of the Company and GALIC. Approval of MCC JV’s board of managers requires the unanimous approval of a quorum of the board of managers, with a quorum consisting of equal representation of members appointed by each of the Company and GALIC. Because management of MCC JV is shared equally between the Company and GALIC, the Company does not have operational control over the MCC JV for purposes of the 1940 Act or otherwise.Consolidated Financial Statements (continued)

June 30, 2021

(unaudited)

Note 3. Investments (continued)

Transactions With Affiliated/Controlled Companies (continued)

 
Name of Investment(3)(4) Type of
Investment		 Fair Value at
September 30,
2020		 Purchases/
(Sales) of or
Advances/
(Distributions)		 Transfers
In/(Out) of
Affiliates		 Unrealized
Gain/(Loss)		 Realized
Gain/(Loss)		 Fair Value at June 30,
2021		 Income Earned 
                               
Kemmerer Operations, LLC Senior Secured First Lien Term Loan  2,051,705   242,342           -   -   -   2,294,047   242,443 
  Senior Secured First Lien Delayed Draw Term Loan  515,699   (227,085)  -   -   -   288,614   44,007 
  Equity  962,717   -   -   (686,639)  -   276,078   - 
                               
Path Medical, LLC Senior Secured First Lien Term Loan A  5,905,080   -   -   (2,993,876)  -   2,911,204   105,061 
  Senior Secured First Lien Term Loan B  6,794,514   -   -   (6,794,514)  -   -   3,027 
                               
URT Acquisition Holdings Corporation Unsecured Debt  2,567,929   (500,000)  -   -   41,660   2,109,589   120,092 
  Warrants  -   -   -   1,070,000   -   1,070,000   - 
                               
US Multifamily, LLC Senior Secured First Lien Term Loan  5,123,913   (2,546,495)  -   -   -   2,577,418   257,660 
  Equity  1,332,000   -   -   496,639   -   1,828,639   - 
                               
Total Affiliated Investments   $87,440,952  $(6,212,021) $-  $(2,072,831) $(10,433,117) $68,722,983  $1,084,220 
                               
Controlled Investments              
               
MCC Senior Loan Strategy JV I  LLC(1)(2) Equity  41,018,500   (39,739,929)       -   38,868,999   (40,147,570)       -        - 
NVTN LLC Senior Secured First Lien Term Loan  4,530,078   -   -   1,497,395   -   6,027,473   - 
  Super Priority Senior Secured First Lien Term Loan  2,000,000   (500,000)  -   (40,850)  1,850   1,461,000   - 
Total Controlled Investments   $47,548,578  $(40,239,929) $-  $40,325,544  $(40,145,720) $7,488,473  $- 



PHENIXFIN CORPORATION

(2)Amount of income earned represents distributions from MCC JVNotes to the Company and is a component of dividend income, net of provisional taxes in the Consolidated Financial Statements of Operations.(continued)

June 30, 2021

(unaudited)

Name of Investment(3) Type of
Investment		 Fair Value at
September 30,
2019		  Purchases/
(Sales) of or
Advances/
(Distributions)		  Transfers
In/(Out) of
Affiliates		  Unrealized
Gain/(Loss)		  Realized
Gain/(Loss)		  Fair Value at June 30,
2020		  Income Earned 
                        
Affiliated Investments                              
1888 Industrial Services, LLC Senior Secured First Lien Term Loan A $9,304,145  $168,923  $-    $(9,473,068) $-    $-    $167,086 
  Senior Secured First Lien Term Loan B  5,886,892   -     -     (5,886,892)  -     -     -   
  Senior Secured First Lien Term Loan C  1,170,014   21,243   -     (24,494)  -     1,166,763   21,011 
  Senior Secured First Lien Term Loan D  224,456   11,878   -     -     -     236,334   11,874 
  Senior Secured First Lien Term Loan E  -     851,840   -     -     -     851,840   41,700 
  Revolving Credit Facility  4,387,025   (887,985)  -     -     -     3,499,040   189,855 
  Equity  -     -     -     -     -     -     -   
Access Media Holdings, LLC Senior Secured First Lien Term Loan  2,509,089   -     -     (885,101)  -     1,623,988   -   
  Preferred Equity Series A  -     -     -     -     -     -     -   
  Preferred Equity Series AA  -     -     -     -     -     -     -   
  Preferred Equity Series AAA  (100,800)  -     -     -     -     (100,800)  -   
  Equity  -     -     -     -     -     -     -   
Caddo Investors Holdings 1 LLC Equity  2,830,051   2,452   -     212,812   -     3,045,315   -   
Dynamic Energy Services International LLC Senior Secured First Lien Term Loan  1,264,841   -     -     (390,933)  -     873,908   -   
  Revolving Credit Facility  545,103   (545,103)  -     -     -     -     6,692 
  Equity  -     -     -     -     -     -     -   
JFL-NGS Partners, LLC Preferred Equity A-2  20,150,684   (18,355,650)  -     -     -     1,795,034   338,741 
  Preferred Equity A-1  2,607,661   (2,375,369)  -     -     -     232,292   43,836 
  Equity  19,096,371   -     -     19,683,696   -     38,780,067   -   
JFL-WCS Partners, LLC Preferred Equity Class A  1,236,269   74,380   -     -     -     1,310,649   57,590 
  Equity  2,755,041   -     -     614,247   -     3,369,288   -   
Kemmerer Operations, LLC Senior Secured First Lien Term Loan  1,766,511   209,449   -     -     -     1,975,960   209,536 
  Senior Secured First Lien Delayed Draw Term Loan  706,604   (209,944)  -     -     -     496,660   61,155 
  Equity  962,717   -     -     -     -     962,717   -   
Path Medical, LLC Senior Secured First Lien Term Loan  8,845,167   826,133   -     (114,496)  -     9,556,804   913,579 
  Senior Secured First Lien Term Loan A  3,047,473   257,147   -     (11,963)  -     3,292,657   287,276 
  Senior Secured First Lien Term Loan C  344,291   (344,463)  -     172   -     -     17,776 
  Equity  -     -     -     -     -     -     -   
US Multifamily, LLC Senior Secured First Lien Term Loan  6,670,000   (1,546,087)  -     -     -     5,123,913   464,630 
  Equity  3,330,000   -     -     (1,165,500)  -     2,164,500   -   
Total Affiliated Investments   $99,539,605  $(21,841,156) $-    $2,558,480  $-    $80,256,929  $2,832,337 



PHENIXFIN CORPORATION

(3)Notes to Consolidated Financial Statements (continued)

The par amount and additional detail are shown in the consolidated schedule of investments.June 30, 2021


(unaudited)

Name of Investment(3) Type of
Investment		 Fair Value at
September 30,
2019		  Purchases/
(Sales) of or
Advances/
(Distributions)		  Transfers
In/(Out) of Affiliates		  Unrealized
Gain/(Loss)		  Realized
Gain/(Loss)		  Fair Value
at June 30,
2020		  Income Earned 
Controlled Investments                              
MCC Senior Loan Strategy JV I LLC(1)(2) Equity $69,948,970  $1,312,500  $-    $24,126,289  $-    $47,135,181  $4,725,000 
NVTN LLC Senior Secured First Lien Term Loan  4,255,990   2,309,884   -     2,035,796   -     4,530,078   62,840 
  Super Priority Senior Secured First Lien Term Loan  -     1,995,374   -     4,626   -     2,000,000   1,983 
  Senior Secured First Lien Term Loan B  7,152,352   -     -     7,152,352   -     -     -   
  Senior Secured First Lien Term Loan C  -     -     -     -     -     -     -   
  Equity  -     -     -     -     -     -     -   
TPG Plastics LLC Senior Secured Second Lien Term Loan  352,984   352,984   -     -     -     -     12,806 
  Unsecured Debt  278,810   278,810   -     -     -     -     6,876 
  Unsecured Debt  1,644,751   1,630,312   -     1,672,398   1,686,837   -     -   
URT Acquisition Holdings Corporation Senior Secured Second Lien Term Loan  18,905,403   1,594,416   -     -     20,499,819   -     500,767 
  Preferred Equity  4,914,667   2,533,622   -     1,638,223   4,019,268   -     -   
  Equity  -     66,378   -     12,936,879   12,870,501   -     -   
Total Controlled Investments   $107,453,927  $12,074,280  $-    $49,566,563  $39,076,425  $53,665,259  $5,310,272 

(1)The Company and GALIC were the members of MCC JV, a joint venture formed as a Delaware limited liability company that was not consolidated by either member for financial reporting purposes. The members of MCC JV made capital contributions as investments by MCC JV were completed, and all portfolio and other material decisions regarding MCC JV were submitted to MCC JV’s board of managers, which was comprised of an equal number of members appointed by each of the Company and GALIC. Approval of MCC JV’s board of managers required the unanimous approval of a quorum of the board of managers, with a quorum consisting of equal representation of members appointed by each of the Company and GALIC. Because management of MCC JV was shared equally between the Company and GALIC, the Company did not have operational control over MCC JV for purposes of the 1940 Act or otherwise. On October 8, 2020, the Company, GALIC, MCC JV, and an affiliate of Golub entered into a Membership Interest Purchase Agreement pursuant to which a fund affiliated with and managed by Golub concurrently purchased all of the Company’s interest in MCC JV and all of GALIC’s interest in MCC JV.

(2)Amount of income earned represented distributions from MCC JV to the Company and is a component of dividend income, net of provisional taxes in the Consolidated Statements of Operations.

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

(4)Securities with a zero value at the beginning and end of the period, and those that had no transaction activity were excluded from the roll forward.

Purchases/(sales) of or advances to/(distributions) from Affiliated Investments and Controlled Investments represent the proceeds from sales and settlements of investments, purchases, originations and participations, investment increases due to PIK interest as well as net amortization of premium/(discount) on investments and are included in the purchases and sales presented on the Consolidated Statements of Cash Flows for the nine months ended June 30, 20202021 and 2019.2020. Transfers in/(out) of Affiliated Investments and Controlled Investments represent the fair value for the month an investment became or was removed as an Affiliated Investment or a Controlled Investment.Investment, as applicable. Income received from Affiliated Investments and

F-31

Controlled Investments is included in total investment income on the Consolidated Statements of Operations for the three and nine months ended June 30, 20202021 and 2019.2020.



PHENIXFIN CORPORATION

Notes to Consolidated Financial Statements (continued)

June 30, 2021

(unaudited)

Note 3. Investments (continued)

Loan Participation Sales


The Company may sell portions of its investments via participation agreements to a managed account, managed by an affiliate andor non-affiliate of the Company. At June 30, 2021, there were no participation agreements outstanding. At September 30, 2020, there were two participation agreements outstanding with an aggregate fair value of $6.7 million. At September 30, 2019, there were two participation agreements outstanding with an aggregate fair value of $6.5$6.8 million. The transfer of the participated portion of the investments met the criteria set forth in ASC 860, Transfers and Servicing for treatment as a sale. In each case, the Company’s loan participation agreements satisfy the following conditions:


•transferred investments have been isolated from the Company, and put presumptively beyond the reach of the Company and its creditors, even in bankruptcy or other receivership,

•each participant has the right to pledge or exchange the transferred investments it received, and no condition both constrains the participant from taking advantage of its right to pledge or exchange and provides more than a trivial benefit to the Company; and

•the Company, its consolidated affiliates or its agents do not maintain effective control over the transferred investments through either: (i) an agreement that entitles and/or obligates the Company to repurchase or redeem the assets before maturity, or (ii) the ability to unilaterally cause the holder to return specific assets, other than through a cleanup call.

●transferred investments have been isolated from the Company, and put presumptively beyond the reach of the Company and its creditors, even in bankruptcy or other receivership,

●each participant has the right to pledge or exchange the transferred investments it received, and no condition both constrains the participant from taking advantage of its right to pledge or exchange and provides more than a trivial benefit to the Company; and

●the Company, its consolidated affiliates or its agents do not maintain effective control over the transferred investments through either: (i) an agreement that entitles and/or obligates the Company to repurchase or redeem the assets before maturity, or (ii) the ability to unilaterally cause the holder to return specific assets, other than through a cleanup call.

Such investments where the Company has retained proportionate interests are included in the consolidated schedule of investments. All of these investments are classified within Level 3 of the fair value hierarchy, as defined in Note 4.


During the three and nine months ended June 30, 2021, the Company did not collect interest and principal payments on behalf of any participant, since there were no participation agreements outstanding. During the three and nine months ended June 30, 2020, the Company collected interest and principal payments on behalf of the participantparticipants in aggregate amounts of $0.7 million and $2.0 million, respectively. During the three and nine months ended June 30, 2019, the Company collected interest and principal payments on behalf of the participant in aggregate amounts of $1.0 million and $3.0 million, respectively. Under the terms of the participation agreements, the Company will collectcollected and remitremitted periodic payments to the participantparticipants equal to the participant'sparticipant’s proportionate share of any principal and interest payments received by the Company from the underlying investee companies.


MCC Senior Loan Strategy JV I LLC


On March 27, 2015, the Company and GALIC entered into a limited liability company operating agreement to co-manage MCC JV. All portfolio and other material decisions regarding MCC JV must bewere submitted to MCC JV’s board of managers, which iswas comprised of four members, two of whom arewere selected by the Company and the other two of whom arewere selected by GALIC. The Company has concluded that it doesdid not operationally control MCC JV. As the Company doesdid not operationally control MCC JV, it doesdid not consolidate the operations of MCC JV within the consolidated financial statements. As a practical expedient, the Company uses NAV to determine the value of its investment in MCC JV; therefore, this investment has been presented as a reconciling item within the fair value hierarchy (see Note 4). Investments held by MCC JV are measured at fair value using the same valuation methodologies as described in Note 2.


As of June 30, 2020, MCC JV had total capital commitments of $100.0 million, with the Company providing $87.5 million and GALIC providing $12.5 million. Approximately $89.8 million was funded as of June 30, 2020 relating to these commitments, of which $78.6 million was from the Company. As of June 30, 2020, MCC JV’s board of managers had approved advances of capital of up to $0.3 million of the remaining capital commitments, of which $0.2 million is from the Company.

On August 4, 2015, MCC JV entered into a senior secured revolving credit facility (the “JV Facility”) led by Credit Suisse AG, Cayman Islands Branch (“CS”) with commitments of $100 million subject to leverage and borrowing base restrictions. On March 30, 2017, the Company amended the JV Facility previously administered by CS and facilitated the assignment of all rights and obligations of CS under the JV Facility to Deutsche Bank AG, New York Branch (“DB”) and increased the total loan commitments to $200 million. On March 29, 2019, the JV Facility reinvestment period was extended from March 30, 2019 to June 28, 2019. On June 28, 2019, the JV Facility reinvestment period was further extended from June 28, 2019 to October 28, 2019. On October 28, 2019, the JV Facility reinvestment period was further extended from October 28, 2019 to March 31, 2020 and the interest rate was modified from bearing an interest rate of LIBOR (with a 0.00% floor) + 2.50% per annum to LIBOR (with a 0.00% floor) + 2.75% per annum. Effective as of March 31, 2020, the maturity date of the JV Facility was extended to March 31, 2023. As of JuneSeptember 30, 2020, and September 30, 2019, there was approximately $133.5 million and $179.3$111.3 million outstanding under the JV Facility, respectively.


Facility.

On March 31, 2020, the JV Facility ended its reinvestment period and entered its amortization period, during which time the interest rate iswas increased to LIBOR (with a 0.00% floor) + 3.00% per annum.


On April 20, 2020, the JV Facility was amended to (i) during each 12-month period during the amortization period permit the sale of investments below a price of 97% as long as the sale iswas approved by DB and the balance of all such investments sold is not greater than 30% of the adjusted balance of all loans as of the first date of each 12-month period and (ii) establish a target effective advance rate at various measurement dates during the amortization period. All principal collections willwere to be swept to amortize the amount outstanding under the JV Facility and interest collections willwere to be swept, as applicable, in order to meet the target effective advance rate for the applicable period.

On October 8, 2020, the Company, GALIC, MCC JV, and an affiliate of Golub entered into a Membership Interest Purchase Agreement pursuant to which a fund affiliated with and managed by Golub concurrently purchased all of the Company’s interest in MCC JV and all of GALIC’s interest in MCC JV for a pre-adjusted gross purchase price of $156.4 million and an adjusted gross purchase price (which constitutes the aggregate consideration for the membership interests) of $145.3 million (giving effect to adjustments primarily for principal and interest payments from portfolio companies of MCC JV from July 1, 2020 through October 7, 2020), resulting in net proceeds (before transaction expenses) of $41.0 million and $6.6 million for the Company and GALIC, respectively, on the terms and subject to the conditions set forth in the Membership Interest Purchase Agreement, including the representations, warranties, covenants and indemnities contained therein. In connection with the closing of the transaction on October 8, 2020, MCC JV repaid in full all outstanding borrowings under, and terminated, its senior secured revolving credit facility, dated as of August 4, 2015, as amended, administered by Deutsche Bank AG, New York Branch.



At

PHENIXFIN CORPORATION

Notes to Consolidated Financial Statements (continued)

June 30, 2021

(unaudited)

Note 3. Investments (continued)

MCC Senior Loan Strategy JV I LLC (continued)

Due to the sale transaction on October 8, 2020, andthe Company no longer held an investment in MCC JV at June 30, 2021. At September 30, 2019,2020, MCC JV had total investments at fair value of $160.3 million and $249.3 million, respectively.$163.1 million. As of JuneSeptember 30, 2020, and September 30, 2019, MCC JV’s portfolio was comprised of senior secured first lien term loans to 48 and 61 borrowers, respectively.of 45 borrowers. As of JuneSeptember 30, 2020, and September 30, 2019, certain investments in one portfolio company held by MCC JV were on non-accrual status.

F-32

Below is a summary of MCC JV’s portfolio, excluding equity investments, as of September 30, 2020, followed by a listing of the individual investments in MCC JV’s portfolio as of June 30, 2020 and September 30, 2019:

 June 30, 2020September 30, 2019
Senior secured loans(1)
$186,310,279  $261,170,438  
Weighted average current interest rate on senior secured loans(2)
6.08 %7.17 %
Number of borrowers in MCC JV48  61  
Largest loan to a single borrower(1)
$10,711,287  $10,884,644  
Total of five largest loans to borrowers(1)
$39,301,606  $43,626,877  
(1)At par value.
(2)Computed as the (a) annual stated interest rate on accruing senior secured loans, divided by (b) total senior secured loans at par.

MCC JV Loan Portfolio as of June 30, 2020
(unaudited)
CompanyIndustryType of InvestmentMaturityPar
Amount		Cost
Fair
Value(2)
% of
Net Assets(3)
4Over International, LLCMedia: Advertising, Printing & Publishing
Senior Secured First Lien Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor)(1)
6/7/202210,711,287  10,711,287  10,120,024  18.8 %
10,711,287  10,711,287  10,120,024  
Cambrex CorporationHealthcare & Pharmaceuticals
Senior Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor)(1)
12/4/20262,982,506  2,927,646  2,881,996  5.4 %
2,982,506  2,927,646  2,881,996  
Cardenas Markets LLCRetail
Senior Secured First Lien Term Loan (LIBOR + 5.75%, 1.00% LIBOR Floor)(1)
11/29/20235,307,500  5,281,606  5,019,834  9.3 %
5,307,500  5,281,606  5,019,834  
CHA Consulting, Inc.Construction & Building
Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1)
4/10/20251,343,816  1,339,220  1,272,594  2.4 %
Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1)
4/10/2025594,000  594,000  562,518  1.0 %
1,937,816  1,933,220  1,835,112  
Covenant Surgical Partners, Inc.Healthcare & Pharmaceuticals
Senior Secured First Lien Term Loan (LIBOR + 4.00%)(1)
7/1/20264,962,594  4,919,885  4,137,669  7.7 %
4,962,594  4,919,885  4,137,669  
CT Technologies Intermediate Holdings, Inc.Healthcare & Pharmaceuticals
Senior Secured First Lien Term Loan (LIBOR + 4.25%, 1.00% LIBOR Floor)(1)
12/1/20214,099,536  4,058,030  3,848,029  7.1 %
4,099,536  4,058,030  3,848,029  
Envision Healthcare CorporationHealthcare & Pharmaceuticals
Senior Secured First Lien Term Loan (LIBOR + 3.75%, 1.00% LIBOR Floor)(1)
10/10/20251,945,375  1,890,728  1,294,939  2.4 %
1,945,375  1,890,728  1,294,939  
GC EOS Buyer, Inc.Automotive
Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1)
8/1/20251,424,063  1,407,582  1,213,159  2.3 %
1,424,063  1,407,582  1,213,159  
GK Holdings, Inc.Services: Business
Senior Secured First Lien Term Loan (LIBOR + 8.00%, 1.00% LIBOR Floor)(1)
1/20/20212,885,496  2,883,561  1,875,573  3.5 %
2,885,496  2,883,561  1,875,573  
Glass Mountain Pipeline Holdings, LLCEnergy: Oil & Gas
Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1)
12/23/20244,863,063  4,851,337  2,177,679  4.0 %
4,863,063  4,851,337  2,177,679  
F-33

CompanyIndustryType of InvestmentMaturityPar
Amount		Cost
Fair
Value(2)
% of
Net Assets(3)
Golden West Packaging Group LLCForest Products & Paper
Senior Secured First Lien Term Loan (LIBOR + 5.75%, 1.00% LIBOR Floor)(1)
6/20/20234,080,982  4,080,982  3,867,955  7.2 %
4,080,982  4,080,982  3,867,955  
High Ridge Brands Co.Consumer Goods: Non-Durable
Senior Secured First Lien Term Loan (LIBOR + 7.00%, 1.00% LIBOR Floor)(1)(4)
6/30/20221,732,439  1,723,435  598,211  1.1 %
1,732,439  1,723,435  598,211  
Highline Aftermarket Acquisitions, LLCAutomotive
Senior Secured First Lien Term Loan (LIBOR + 3.50%, 1.00% LIBOR Floor)(1)
4/26/20254,035,294  4,026,077  3,594,035  6.7 %
4,035,294  4,026,077  3,594,035  
Infogroup, Inc.High Tech Industries
Senior Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor)(1)
4/3/20234,837,500  4,815,165  3,942,563  7.3 %
4,837,500  4,815,165  3,942,563  
Intermediate LLCHigh Tech Industries
Senior Secured First Lien Term Loan (LIBOR + 3.50%, 1.00% LIBOR Floor)(1)
7/1/20262,729,375  2,714,295  2,441,699  4.5 %
2,729,375  2,714,295  2,441,699  
Isagenix International, LLCWholesale
Senior Secured First Lien Term Loan (LIBOR + 5.75%, 1.00% LIBOR Floor)(1)
6/16/20252,673,655  2,663,023  1,028,689  1.9 %
2,673,655  2,663,023  1,028,689  
IXS Holdings, Inc.Automotive
Senior Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor)(1)
3/5/2027997,437  987,893  933,551  1.7 %
997,437  987,893  933,551  
Keystone Acquisition Corp.Healthcare & Pharmaceuticals
Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor)(1)
5/1/20246,115,536  6,052,164  5,797,528  10.8 %
6,115,536  6,052,164  5,797,528  
KNB Holdings CorporationConsumer Goods: Durable
Senior Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor)(1)
4/26/20244,775,218  4,722,924  2,142,879  4.0 %
4,775,218  4,722,924  2,142,879  
Liaison Acquisition, LLCHigh Tech Industries
Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1)
12/20/20263,475,019  3,466,978  3,318,643  6.2 %
3,475,019  3,466,978  3,318,643  
LifeMiles Ltd.Services: Consumer
Senior Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor)(1)
8/18/20224,380,308  4,370,103  3,345,461  6.2 %
4,380,308  4,370,103  3,345,461  
Manna Pro Products, LLCConsumer Goods: Non-Durable
Senior Secured First Lien Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor)(1)
12/8/20233,006,250  3,006,250  2,804,531  5.2 %
Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor)(1)
12/8/2023610,500  610,500  569,535  1.1 %
3,616,750  3,616,750  3,374,066  
NGS US Finco, LLCCapital Equipment
Senior Secured First Lien Term Loan (LIBOR + 4.25%, 1.00% LIBOR Floor)(1)
10/1/20252,950,723  2,939,642  2,580,112  4.8 %
2,950,723  2,939,642  2,580,112  
F-34

CompanyIndustryType of InvestmentMaturityPar
Amount		Cost
Fair
Value(2)
% of
Net Assets(3)
Northern Star Industries, Inc.Capital Equipment
Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1)
3/28/20254,154,375  4,140,233  3,491,752  6.5 %
4,154,375  4,140,233  3,491,752  
Offen, Inc.Transportation: Cargo
Senior Secured First Lien Term Loan (LIBOR + 5.00%)(1)
6/22/20263,635,841  3,604,678  3,423,909  6.4 %
3,635,841  3,604,678  3,423,909  
Patriot Rail Company LLC Transportation: Cargo
Senior Secured First Lien Term Loan (LIBOR + 5.25%)(1)
10/19/20261,745,625  1,714,145  1,649,616  3.1 %
1,745,625  1,714,145  1,649,616  
PetroChoice Holdings, Inc.Chemicals, Plastics and Rubber
Senior Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor)(1)
8/19/20226,296,327  6,285,905  5,199,696  9.7 %
6,296,327  6,285,905  5,199,696  
Port Townsend Holdings Company, Inc.Forest Products & Paper
Senior Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor)(1)
4/3/20242,953,281  2,934,626  2,693,688  5.0 %
2,953,281  2,934,626  2,693,688  
PT Network, LLCHealthcare & Pharmaceuticals
Senior Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor, 2% PIK)(1)(5)
11/30/20234,942,776  4,625,386  4,448,498  8.3 %
Class C Common Stock1  —  —  
4,942,777  4,625,386  4,448,498  
PVHC Holding CorpContainers, Packaging and Glass
Senior Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor)(1)
8/5/20241,957,408  1,950,656  1,717,234  3.2 %
1,957,408  1,950,656  1,717,234  
Quartz Holding CompanyHigh Tech Industries
Senior Secured First Lien Term Loan (LIBOR + 4.00%, 1.00% LIBOR Floor)(1)
4/2/20263,946,322  3,933,768  3,749,006  7.0 %
3,946,322  3,933,768  3,749,006  
RB Media, Inc.Media: Diversified & Production
Senior Secured First Lien Term Loan (LIBOR + 4.25%, 1.00% LIBOR Floor)(1)
8/29/20255,974,771  5,940,551  5,754,601  10.7 %
5,974,771  5,940,551  5,754,601  
Safe Fleet Holdings LLCAutomotive
Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 3.75%, 1.00% LIBOR Floor)(1)
2/3/20251,316,785  1,290,920  1,222,964  2.3 %
1,316,785  1,290,920  1,222,964  
Salient CRGT Inc.High Tech Industries
Senior Secured First Lien Term Loan (LIBOR + 6.50%, 1.00% LIBOR Floor)(1)
2/28/20222,570,536  2,553,276  2,303,843  4.3 %
2,570,536  2,553,276  2,303,843  
SFP Holding, Inc.Construction & Building
Senior Secured First Lien Term Loan (LIBOR + 6.25%, 1.00% LIBOR Floor)(1)
9/1/20224,787,866  4,744,850  4,680,139  8.7 %
Senior Secured First Lien Term Loan (LIBOR + 6.25%, 1.00% LIBOR Floor)(1)
9/1/20221,857,199  1,857,199  1,815,412  3.4 %
6,645,065  6,602,049  6,495,551  
Shift4 Payments, LLCBanking, Finance, Insurance & Real Estate
Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1)
11/29/20247,304,819  7,281,725  7,108,684  13.2 %
7,304,819  7,281,725  7,108,684  
F-35

CompanyIndustryType of InvestmentMaturityPar
Amount		Cost
Fair
Value(2)
% of
Net Assets(3)
Simplified Logistics, LLCServices: Business
Senior Secured First Lien Term Loan (LIBOR + 6.50%, 1.00% LIBOR Floor)(1)
2/27/20223,456,250  3,456,250  3,320,419  6.2 %
3,456,250  3,456,250  3,320,419  
Syniverse Holdings, Inc.High Tech Industries
Senior Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor)(1)
3/9/20232,912,702  2,896,943  2,082,873  3.9 %
2,912,702  2,896,943  2,082,873  
The Octave Music Group, Inc.Media: Diversified & Production
Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor)(1)
5/29/20255,948,276  5,892,464  5,056,034  9.4 %
5,948,276  5,892,464  5,056,034  
ThoughtWorks, Inc.High Tech Industries
Senior Secured First Lien Term Loan (LIBOR + 3.75%, 1.00% LIBOR Floor)(1)
10/11/20242,634,426  2,627,159  2,514,296  4.7 %
2,634,426  2,627,159  2,514,296  
Tortoise Borrower LLCBanking, Finance, Insurance & Real Estate
Senior Secured First Lien Term Loan (LIBOR + 3.50%, 1.00% LIBOR Floor)(1)
1/31/20252,419,313  2,411,365  2,056,416  3.8 %
2,419,313  2,411,365  2,056,416  
Vero Parent, Inc.High Tech Industries
Senior Secured First Lien Term Loan (LIBOR + 6.25%, 1.00% LIBOR Floor)(1)
8/16/20243,885,812  3,865,588  3,570,867  6.6 %
3,885,812  3,865,588  3,570,867  
Wawona Delaware Holdings, LLCBeverage & Food
Senior Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor)(1)
9/11/2026947,738  939,320  861,968  1.6 %
947,738  939,320  861,968  
Wheels Up Partners LLCAerospace & Defense
Senior Secured First Lien Term Loan (LIBOR + 8.55%, 1.00% LIBOR Floor)(1)
10/15/20212,977,791  2,948,013  2,933,720  5.4 %
2,977,791  2,948,013  2,933,720  
Wok Holdings Inc.Retail
Senior Secured First Lien Term Loan (LIBOR + 6.25%, 1.00% LIBOR Floor)(1)
3/1/20266,566,875  6,520,249  4,289,154  8.0 %
6,566,875  6,520,249  4,289,154  
Wrench Group LLCServices: Consumer
Senior Secured First Lien Term Loan (LIBOR + 4.00%, 1.00% LIBOR Floor)(1)
4/30/20262,208,938  2,192,080  2,098,491  3.9 %
Senior Secured First Lien Term Loan (LIBOR + 4.00%, 1.00% LIBOR Floor)(1)
4/30/2026741,320  734,055  704,254  1.3 %
2,950,258  2,926,135  2,802,745  
Xebec Global Holdings, LLCHigh Tech Industries
Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor)(1)
2/12/20248,073,559  8,073,559  7,732,855  14.4 %
8,073,559  8,073,559  7,732,855  
Z Medica, LLCHealthcare & Pharmaceuticals
Senior Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor)(1)
9/29/20222,573,875  2,573,875  2,451,101  4.6 %
2,573,875  2,573,875  2,451,101  
Total Investments, June 30, 2020$186,310,279  $185,033,151  $160,300,896  298.2 %

(1)Represents the annual current interest rate as of June 30, 2020. All interest rates are payable in cash, unless otherwise noted.
(2)Represents the fair value in accordance with ASC 820 as reported by MCC JV. The determination of such fair value is not included in the Company’s board of directors’ valuation process described elsewhere herein.
(3)Percentage is based on MCC JV's net assets of $53,868,779 as of June 30, 2020.
F-36

(4)This investment was on non-accrual status as of June 30, 2020.
(5)Par amount includes accumulated PIK interest and is net of repayments.

F-37

2020:

  September 30,
2020
Senior secured loans(1) $182,514,110 
Weighted average current interest rate on senior secured loans(2)  6.02%
Number of borrowers in MCC JV  45 
Largest loan to a single borrower(1) $10,653,501 
Total of five largest loans to borrowers(1) $39,191,213 

(1)At par value.
(2)Computed as the (a) annual stated interest rate on accruing senior secured loans, divided by (b) total senior secured loans at par.

MCC JV Loan Portfolio as of September 30, 20192020

Company Industry Type of Investment Maturity Par
Amount		 Cost Fair
Value(2)		 % of Net
Assets(3)
               
4Over International, LLC Media: Advertising, Printing & Publishing Senior Secured First Lien Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor)(1)  6/7/2022  $10,653,501  $10,653,501  $9,995,115   16.8%
           10,653,501   10,653,501   9,995,115     
                         
Cardenas Markets LLC Retail Senior Secured First Lien Term Loan (LIBOR + 5.75%, 1.00% LIBOR Floor)(1)  11/29/2023   5,293,750   5,269,829   5,287,398   8.9%
           5,293,750   5,269,829   5,287,398     
                         
CHA Consulting, Inc. Construction & Building Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1)  4/10/2025   1,340,389   1,336,046   1,274,308   2.1%
    Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1)  4/10/2025   592,500   592,500   563,290   0.9%
           1,932,889   1,928,546   1,837,598     
                         
Covenant Surgical Partners, Inc. Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 4.00%)(1)  7/1/2026   4,950,187   4,909,373   4,435,496   7.4%
           4,950,187   4,909,373   4,435,496     
                         
CT Technologies Intermediate Holdings, Inc. Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 4.25%, 1.00% LIBOR Floor)(1)  12/1/2021   5,086,116   5,005,862   4,875,042   8.2%
           5,086,116   5,005,862   4,875,042     


PHENIXFIN CORPORATION

CompanyIndustryType of InvestmentMaturityPar
Amount		Cost
Fair
Value(2)
% of
Net Assets(3)
4Over International, LLCMedia: Advertising, Printing & Publishing
Senior Secured First Lien Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor)(1)
6/7/2022$10,884,644  $10,884,644  $10,635,385  13.3 %
10,884,644  10,884,644  10,635,385  
Acrisure, LLCBanking, Finance, Insurance & Real Estate
Senior Secured First Lien Term Loan (LIBOR + 4.25%, 1.00% LIBOR Floor)(1)
11/22/2023724,217  722,980  720,162  0.9 %
724,217  722,980  720,162  
AL Midcoast Holdings, LLCEnergy: Oil & Gas
Senior Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor)(1)
8/1/20254,330,542  4,297,473  4,246,963  5.3 %
4,330,542  4,297,473  4,246,963  
Brightspring Health ServicesHealthcare & Pharmaceuticals
Senior Secured First Lien Term Loan (LIBOR + 4.50%)(1)
3/5/20263,990,000  3,941,288  3,990,000  5.0 %
3,990,000  3,941,288  3,990,000  
Callaway Golf CompanyConsumer Goods: Durable
Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1)
1/4/20262,774,187  2,724,326  2,801,929  3.5 %
2,774,187  2,724,326  2,801,929  
Cardenas Markets LLCRetail
Senior Secured First Lien Term Loan (LIBOR + 5.75%, 1.00% LIBOR Floor)(1)
11/29/20235,348,750  5,316,921  5,172,776  6.5 %
5,348,750  5,316,921  5,172,776  
CHA Consulting, Inc.Construction & Building
Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1)
4/10/20251,354,100  1,348,742  1,324,581  1.7 %
Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1)
4/10/2025598,500  598,500  584,908  0.7 %
1,952,600  1,947,242  1,909,489  
Covenant Surgical Partners, Inc.Healthcare & Pharmaceuticals
Senior Secured First Lien Term Loan (LIBOR + 4.00%)(1)
7/1/20265,000,000  4,951,590  4,940,000  6.2 %
5,000,000  4,951,590  4,940,000  
CT Technologies Intermediate Holdings, Inc.Healthcare & Pharmaceuticals
Senior Secured First Lien Term Loan (LIBOR + 4.25%, 1.00% LIBOR Floor)(1)
12/1/20214,131,900  4,067,981  3,770,359  4.7 %
4,131,900  4,067,981  3,770,359  
Envision Healthcare CorporationHealthcare & Pharmaceuticals
Senior Secured First Lien Term Loan (LIBOR + 3.75%, 1.00% LIBOR Floor)(1)
10/10/20251,960,188  1,897,299  1,594,220  2.0 %
1,960,188  1,897,299  1,594,220  
GC EOS Buyer, Inc.Automotive
Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1)
8/1/20253,445,086  3,399,335  3,400,989  4.3 %
3,445,086  3,399,335  3,400,989  
GK Holdings, Inc.Services: Business
Senior Secured First Lien Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor)(1)
1/20/20212,908,397  2,903,827  2,641,697  3.3 %
2,908,397  2,903,827  2,641,697  
Glass Mountain Pipeline Holdings, LLCEnergy: Oil & Gas
Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1)
12/23/20244,900,375  4,886,582  4,618,604  5.8 %
4,900,375  4,886,582  4,618,604  
F-38


Notes to Consolidated Financial Statements (continued)

CompanyIndustryType of InvestmentMaturityPar
Amount		Cost
Fair
Value(2)
% of
Net Assets(3)
Golden West Packaging Group LLCForest Products & Paper
Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor)(1)
6/20/20234,188,348  4,188,348  4,163,637  5.2 %
4,188,348  4,188,348  4,163,637  
High Ridge Brands Co.Consumer Goods: Non-Durable
Senior Secured First Lien Term Loan (LIBOR + 7.00%, 1.00% LIBOR Floor)(1)(4)
6/30/20221,818,750  1,805,750  1,421,353  1.8 %
1,818,750  1,805,750  1,421,353  
Highline Aftermarket Acquisitions, LLCAutomotive
Senior Secured First Lien Term Loan (LIBOR + 3.50%, 1.00% LIBOR Floor)(1)
4/26/20254,066,176  4,055,443  3,601,412  4.5 %
4,066,176  4,055,443  3,601,412  
The Imagine Group, LLCMedia: Advertising, Printing & Publishing
Senior Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor)(1)
6/21/20227,800,000  7,757,145  5,187,780  6.5 %
7,800,000  7,757,145  5,187,780  
Infogroup, Inc.High Tech Industries
Senior Secured First Lien Term Loan (LIBOR + 6.50%, 1.00% LIBOR Floor)(1)
4/3/20234,875,000  4,846,330  4,748,738  5.9 %
4,875,000  4,846,330  4,748,738  
Intermedia Holdings, Inc.High Tech Industries
Senior Secured First Lien Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor)(1)
7/21/20252,977,500  2,952,588  2,973,034  3.7 %
2,977,500  2,952,588  2,973,034  
Intermediate LLCHigh Tech Industries
Senior Secured First Lien Term Loan (LIBOR + 4.00%, 1.00% LIBOR Floor)(1)
7/1/20262,750,000  2,732,906  2,732,400  3.4 %
2,750,000  2,732,906  2,732,400  
Isagenix International, LLCWholesale
Senior Secured First Lien Term Loan (LIBOR + 5.75%, 1.00% LIBOR Floor)(1)
6/16/20252,788,268  2,775,502  2,115,738  2.6 %
2,788,268  2,775,502  2,115,738  
Jackson Hewitt Tax Service Inc.Services: Consumer
Senior Secured First Lien Term Loan (LIBOR + 6.25%)(1)
5/31/20235,850,000  5,850,000  5,811,390  7.3 %
5,850,000  5,850,000  5,811,390  
Jordan Health Products I, Inc.Healthcare & Pharmaceuticals
Senior Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor)(1)
5/15/20255,181,776  5,118,971  4,378,601  5.5 %
5,181,776  5,118,971  4,378,601  
Keystone Acquisition Corp.Healthcare & Pharmaceuticals
Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor)(1)
5/1/20246,162,699  6,086,349  5,972,888  7.5 %
6,162,699  6,086,349  5,972,888  
KNB Holdings CorporationConsumer Goods: Durable
Senior Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor)(1)
4/26/20244,871,364  4,807,569  3,975,033  5.0 %
4,871,364  4,807,569  3,975,033  
LifeMiles Ltd.Services: Consumer
Senior Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor)(1)
8/18/20224,836,393  4,821,161  4,759,978  6.0 %
4,836,393  4,821,161  4,759,978  
F-39


CompanyIndustryType of InvestmentMaturityPar
Amount		Cost
Fair
Value(2)
% of
Net Assets(3)
Manna Pro Products, LLCConsumer Goods: Non-Durable
Senior Secured First Lien Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor)(1)
12/8/20233,029,375  3,029,375  2,880,027  3.6 %
Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor)(1)
12/8/2023615,125  615,125  584,799  0.7 %
3,644,500  3,644,500  3,464,826  
New Media Holdings II LLCMedia: Advertising, Printing & Publishing
Senior Secured First Lien Term Loan (LIBOR + 6.25%, 1.00% LIBOR Floor)(1)
7/14/20222,446,853  2,443,556  2,442,205  3.1 %
2,446,853  2,443,556  2,442,205  
NGS US Finco, LLCCapital Equipment
Senior Secured First Lien Term Loan (LIBOR + 4.25%, 1.00% LIBOR Floor)(1)
10/1/20252,977,500  2,964,722  2,903,360  3.6 %
2,977,500  2,964,722  2,903,360  
Northern Star Industries, Inc.Capital Equipment
Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1)
3/28/20254,186,250  4,169,745  3,984,054  5.0 %
4,186,250  4,169,745  3,984,054  
Nuvei Technologies Corp.Banking, Finance, Insurance & Real Estate
Senior Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor)(1)
9/29/20253,543,616  3,512,593  3,477,350  4.3 %
Senior Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor)(1)
9/29/2025519,107  519,107  509,399  0.6 %
Senior Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor)(1)
9/29/2025716,005  716,005  702,616  0.9 %
4,778,728  4,747,705  4,689,365  
Offen, Inc.Transportation: Cargo
Senior Secured First Lien Term Loan (LIBOR + 5.00%)(1)
6/22/20263,663,385  3,628,046  3,613,477  4.5 %
3,663,385  3,628,046  3,613,477  
Peraton Corp.Aerospace and Defense
Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor)(1)
4/29/20243,406,439  3,395,256  3,384,979  4.2 %
3,406,439  3,395,256  3,384,979  
PetroChoice Holdings, Inc.Chemicals, Plastics and Rubber
Senior Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor)(1)
8/19/20226,345,900  6,333,392  6,092,064  7.6 %
6,345,900  6,333,392  6,092,064  
Port Townsend Holdings Company, Inc.Forest Products & Paper
Senior Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor)(1)
4/3/20243,041,842  3,018,790  2,992,564  3.7 %
3,041,842  3,018,790  2,992,564  
PT Network, LLCHealthcare & Pharmaceuticals
Senior Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor, 2% PIK)(1)(5)
11/30/20234,880,028  4,562,638  4,562,338  5.7 %
Class C Common Stock1  —  —  
4,880,029  4,562,638  4,562,338  
PVHC Holding CorpContainers, Packaging and Glass
Senior Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor)(1)
8/5/20241,972,350  1,964,300  1,912,137  2.4 %
1,972,350  1,964,300  1,912,137  
Quantum Spatial, Inc.Aerospace & Defense
Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor)(1)
9/5/20245,000,000  5,000,000  5,000,000  6.3 %
5,000,000  5,000,000  5,000,000  
F-40

CompanyIndustryType of InvestmentMaturityPar
Amount		Cost
Fair
Value(2)
% of
Net Assets(3)
Quartz Holding CompanyHigh Tech Industries
Senior Secured First Lien Term Loan (LIBOR + 4.00%, 1.00% LIBOR Floor)(1)
4/2/20266,982,500  6,957,391  6,885,443  8.6 %
6,982,500  6,957,391  6,885,443  
RB Media, Inc.Media: Diversified & Production
Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1)
8/29/20253,960,000  3,926,377  3,960,000  5.0 %
3,960,000  3,926,377  3,960,000  
Rough Country, LLCAutomotive
Senior Secured First Lien Term Loan (LIBOR + 3.75%, 1.00% LIBOR Floor)(1)
5/25/20234,080,727  4,063,983  4,014,619  5.0 %
4,080,727  4,063,983  4,014,619  
Safe Fleet Holdings LLCAutomotive
Senior Secured First Lien Term Loan (LIBOR + 3.00%, 1.00% LIBOR Floor)(1)
2/3/20253,422,875  3,417,582  3,297,255  4.1 %
Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 3.75%, 1.00% LIBOR Floor)(1)
2/3/20251,335,880  1,288,373  1,288,055  1.6 %
4,758,755  4,705,955  4,585,310  
Salient CRGT Inc.High Tech Industries
Senior Secured First Lien Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor)(1)
2/28/20222,645,536  2,619,767  2,503,471  3.1 %
2,645,536  2,619,767  2,503,471  
SCS Holdings I Inc.Wholesale
Senior Secured First Lien Term Loan (LIBOR + 4.25%, 1.00% LIBOR Floor)(1)
7/1/20262,244,375  2,238,962  2,249,986  2.8 %
2,244,375  2,238,962  2,249,986  
SFP Holding, Inc.Construction & Building
Senior Secured First Lien Term Loan (LIBOR + 6.25%, 1.00% LIBOR Floor)(1)
9/1/20224,820,605  4,762,317  4,775,291  6.0 %
Senior Secured First Lien Term Loan (LIBOR + 6.25%, 1.00% LIBOR Floor)(1)
9/1/20221,871,234  1,871,234  1,853,644  2.3 %
6,691,839  6,633,551  6,628,935  
Shift4 Payments, LLCBanking, Finance, Insurance & Real Estate
Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1)
11/29/20249,825,000  9,788,662  9,825,000  12.3 %
9,825,000  9,788,662  9,825,000  
Sierra Enterprises, LLCBeverage & Food
Senior Secured First Lien Term Loan (LIBOR + 4.00%, 1.00% LIBOR Floor)(1)
11/11/20243,918,993  3,909,644  3,821,018  4.8 %
3,918,993  3,909,644  3,821,018  
Simplified Logistics, LLCServices: Business
Senior Secured First Lien Term Loan (LIBOR + 6.50%, 1.00% LIBOR Floor)(1)
2/27/20223,482,500  3,482,500  3,482,500  4.4 %
3,482,500  3,482,500  3,482,500  
SMB Shipping Logistics, LLCTransportation: Cargo
Senior Secured First Lien Term Loan (LIBOR + 4.00%, 1.00% LIBOR Floor)(1)
2/5/20242,465,807  2,446,381  2,453,478  3.1 %
2,465,807  2,446,381  2,453,478  
Syniverse Holdings, Inc.High Tech Industries
Senior Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor)(1)
3/9/20233,935,050  3,907,819  3,695,799  4.6 %
3,935,050  3,907,819  3,695,799  
The Octave Music Group, Inc.Media: Diversified & Production
Senior Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor)(1)
5/28/20214,348,644  4,348,644  4,325,596  5.4 %
4,348,644  4,348,644  4,325,596  
F-41

CompanyIndustryType of InvestmentMaturityPar
Amount		Cost
Fair
Value(2)
% of
Net Assets(3)
ThoughtWorks, Inc.High Tech Industries
Senior Secured First Lien Term Loan (LIBOR + 4.00%, 1.00% LIBOR Floor)(1)
10/11/20246,674,943  6,659,353  6,674,943  8.3 %
6,674,943  6,659,353  6,674,943  
Tortoise Borrower LLCBanking, Finance, Insurance & Real Estate
Senior Secured First Lien Term Loan (LIBOR + 3.50%, 1.00% LIBOR Floor)(1)
1/31/20252,437,875  2,428,557  2,392,287  3.0 %
2,437,875  2,428,557  2,392,287  
United Road Services, Inc.Transportation: Cargo
Senior Secured First Lien Term Loan (LIBOR + 5.75%, 1.00% LIBOR Floor)(1)
9/2/20243,759,999  3,746,467  3,699,087  4.6 %
3,759,999  3,746,467  3,699,087  
Vero Parent, Inc.High Tech Industries
Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1)
8/16/20243,915,475  3,891,393  3,886,109  4.9 %
3,915,475  3,891,393  3,886,109  
Wawona Delaware Holdings, LLCBeverage & Food
Senior Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor)(1)
9/11/20264,975,000  4,925,465  4,925,250  6.2 %
4,975,000  4,925,465  4,925,250  
Wheels Up Partners LLCAerospace & Defense
Senior Secured First Lien Term Loan (LIBOR + 8.55%, 1.00% LIBOR Floor)(1)
10/15/20213,633,328  3,575,903  3,569,381  4.5 %
3,633,328  3,575,903  3,569,381  
Wok Holdings Inc.Retail
Senior Secured First Lien Term Loan (LIBOR + 6.50%, 1.00% LIBOR Floor)(1)
3/1/20266,616,750  6,563,551  5,599,756  7.0 %
6,616,750  6,563,551  5,599,756  
Wrench Group LLCServices: Consumer
Senior Secured First Lien Term Loan (LIBOR + 4.25%, 1.00% LIBOR Floor)(1)
4/30/20262,225,672  2,208,221  2,225,672  2.8 %
2,225,672  2,208,221  2,225,672  
Xebec Global Holdings, LLCHigh Tech Industries
Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor)(1)
2/12/20248,134,734  8,134,734  8,114,397  10.1 %
8,134,734  8,134,734  8,114,397  
Z Medica, LLCHealthcare & Pharmaceuticals
Senior Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor)(1)
9/29/20222,596,000  2,596,000  2,498,910  3.1 %
2,596,000  2,596,000  2,498,910  
Total Investments, September 30, 2019$261,170,438  $259,371,480  $249,342,871  311.9 %

(1)Represents the annual current interest rate as of SeptemberJune 30, 2019. All interest rates are payable in cash, unless otherwise noted.2021

(2)(unaudited)

Represents the fair value in accordance with ASC 820 as reported by Note 3. Investments (continued)

MCC JV. The determination of such fair value is not included in the Company’s board of directors’ valuation process described elsewhere herein.Senior Loan Strategy JV I LLC (continued)

Company Industry Type of Investment Maturity Par
Amount		 Cost Fair
Value(2)		 % of Net
Assets(3)
               
Envision Healthcare Corporation Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 3.75%, 1.00% LIBOR Floor)(1)  10/10/2025   1,940,438   1,888,530   1,397,503   2.3%
           1,940,438   1,888,530   1,397,503     
                         
GC EOS Buyer, Inc. Automotive Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1)  8/1/2025   1,420,440   1,404,814   1,304,532   2.2%
           1,420,440   1,404,814   1,304,532     
                         
GK Holdings, Inc. Services: Business Senior Secured First Lien Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor)(1)  1/20/2021   2,877,863   2,876,803   2,142,856   3.6%
           2,877,863   2,876,803   2,142,856     
                         
Glass Mountain Pipeline Holdings, LLC Energy: Oil & Gas Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1)  12/23/2024   4,850,625   4,839,587   2,601,390   4.4%
           4,850,625   4,839,587   2,601,390     
                         
Golden West Packaging Group LLC Forest Products & Paper Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor)(1)  6/20/2023   4,069,771   4,069,771   3,968,027   6.7%
           4,069,771   4,069,771   3,968,027     
                         
High Ridge Brands Co. Consumer Goods: Non-Durable Senior Secured First Lien Term Loan (LIBOR + 7.00%, 1.00% LIBOR Floor)(1)(4)  6/30/2022   1,732,439   1,724,570   593,187   1.0%
           1,732,439   1,724,570   593,187     
                         
Highline Aftermarket Acquisitions, LLC Automotive Senior Secured First Lien Term Loan (LIBOR + 3.50%, 1.00% LIBOR Floor)(1)  4/26/2025   4,025,000   4,016,286   3,597,545   6.0%
           4,025,000   4,016,286   3,597,545     
                         
Infogroup, Inc. High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 6.50%, 1.00% LIBOR Floor)(1)  4/3/2023   4,825,000   4,804,770   4,224,770   7.1%
           4,825,000   4,804,770   4,224,770     
                         
Intermediate LLC High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 4.00%, 1.00% LIBOR Floor)(1)  7/1/2026   2,722,500   2,708,089   2,513,684   4.2%
           2,722,500   2,708,089   2,513,684     


(3)Percentage is based on

PHENIXFIN CORPORATION

Notes to Consolidated Financial Statements (continued)

June 30, 2021

(unaudited)

Note 3. Investments (continued)

MCC JV's net assets of $79,941,680 as of SeptemberSenior Loan Strategy JV I LLC (continued)

Company Industry Type of Investment Maturity Par
Amount		 Cost Fair
Value(2)		 % of Net
Assets(3)
               
Isagenix International, LLC Wholesale Senior Secured First Lien Term Loan (LIBOR + 5.75%, 1.00% LIBOR Floor)(1)  6/16/2025   2,626,629   2,616,715   1,337,742   2.2%
           2,626,629   2,616,715   1,337,742     
                         
IXS Holdings, Inc. Automotive Senior Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor)(1)  3/5/2027   994,874   985,714   981,543   1.6%
           994,874   985,714   981,543     
                         
Keystone Acquisition Corp. Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor)(1)  5/1/2024   6,099,815   6,040,757   5,505,083   9.2%
           6,099,815   6,040,757   5,505,083     
                         
KNB Holdings Corporation Consumer Goods: Durable Senior Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor)(1)  4/26/2024   4,743,170   4,694,643   1,992,131   3.3%
           4,743,170   4,694,643   1,992,131     
                         
Liason Acquisition, LLC High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1)  12/20/2026   3,466,288   3,458,579   3,372,351   5.7%
           3,466,288   3,458,579   3,372,351     
                         
LifeMiles Ltd. Services: Consumer Senior Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor)(1)  8/18/2022   4,229,263   4,220,573   3,880,349   6.5%
           4,229,263   4,220,573   3,880,349     


PHENIXFIN CORPORATION

Notes to Consolidated Financial Statements (continued)

June 30, 2019.2021

(unaudited)

Note 3. Investments (continued)

MCC Senior Loan Strategy JV I LLC (continued)

Company Industry Type of Investment Maturity Par
Amount		  Cost  Fair
Value(2)		  % of Net
Assets(3)		 
                   
Manna Pro Products, LLC Consumer Goods: Non-Durable Senior Secured First Lien Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor)(1) 12/8/2023  2,998,542   2,998,542   2,875,002   4.8%
    Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor)(1) 12/8/2023  608,958   608,958   583,869   1.0%
         3,607,500   3,607,500   3,458,871     
                       
Mileage Plus Holdings, LLC Transportation: Consumer Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor)(1) 6/21/2027  4,401,819   4,407,746   4,475,769   7.5%
         4,401,819   4,407,746   4,475,769     
                       
NGS US Finco, LLC Capital Equipment Senior Secured First Lien Term Loan (LIBOR + 4.25%, 1.00% LIBOR Floor)(1) 10/1/2025  2,943,223   2,932,700   2,755,445   4.6%
         2,943,223   2,932,700   2,755,445     
                       
Northern Star Industries, Inc. Capital Equipment Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1) 3/28/2025  4,143,750   4,130,394   3,630,754   6.1%
         4,143,750   4,130,394   3,630,754     
                       
Offen, Inc. Transportation: Cargo Senior Secured First Lien Term Loan (LIBOR + 5.00%)(1) 6/22/2026  3,626,659   3,596,886   3,494,880   5.9%
         3,626,659   3,596,886   3,494,880     
                       
Patriot Rail Company LLC Transportation: Cargo Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor)(1) 10/19/2026  1,741,250   1,711,104   1,730,454   2.9%
         1,741,250   1,711,104   1,730,454     
                       
PetroChoice Holdings, Inc. Chemicals, Plastics and Rubber Senior Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor)(1) 8/19/2022  6,279,803   6,270,073   5,418,842   9.1%
         6,279,803   6,270,073   5,418,842     
                       
Port Townsend Holdings Company, Inc. Forest Products & Paper Senior Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor)(1) 4/3/2024  2,945,600   2,928,240   2,632,777   4.4%
         2,945,600   2,928,240   2,632,777     
                       
PT Network, LLC Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor, 2% PIK)(1)(5) 11/30/2023  4,955,627   4,638,237   4,460,064   7.5%
    Class C Common Stock    1   —   —     
         4,955,628   4,638,237   4,460,064     


(4)This investment was on non-accrual status as of September

PHENIXFIN CORPORATION

Notes to Consolidated Financial Statements (continued)

June 30, 2019.2021

(unaudited)

Note 3. Investments (continued)

MCC Senior Loan Strategy JV I LLC (continued)

Company Industry Type of Investment Maturity Par
Amount		  Cost  Fair
Value(2)		  % of Net
Assets(3)		 
                   
PVHC Holding Corp Containers, Packaging and Glass Senior Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor)(1) 8/5/2024  1,952,427   1,946,107   1,850,511   3.1%
         1,952,427   1,946,107   1,850,511     
                       
Quartz Holding Company High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 4.00%, 1.00% LIBOR Floor)(1) 4/2/2026  3,936,357   3,924,382   3,847,789   6.5%
         3,936,357   3,924,382   3,847,789     
                       
RB Media, Inc. Media: Diversified & Production Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1) 8/29/2025  5,651,270   5,620,482   5,605,495   9.4%
         5,651,270   5,620,482   5,605,495     
                       
Salient CRGT Inc. High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor)(1) 2/28/2022  2,533,036   2,518,601   2,343,058   3.9%
         2,533,036   2,518,601   2,343,058     
                       
SFP Holding, Inc. Construction & Building Senior Secured First Lien Term Loan (LIBOR + 6.25%, 1.00% LIBOR Floor)(1) 9/1/2022  4,776,954   4,739,017   4,733,961   7.9%
                       
    Senior Secured First Lien Term Loan (LIBOR + 6.25%, 1.00% LIBOR Floor)(1) 9/1/2022  1,852,521   1,852,521   1,835,849   3.1%
         6,629,475   6,591,538   6,569,810     
                       
Shift4 Payments, LLC Banking, Finance, Insurance & Real Estate Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1) 11/29/2024  7,304,819   7,283,042   7,255,877   12.2%
         7,304,819   7,283,042   7,255,877     
                       
Simplified Logistics, LLC Services: Business Senior Secured First Lien Term Loan (LIBOR + 6.50%, 1.00% LIBOR Floor)(1) 2/27/2022  3,447,500   3,447,500   3,358,899   5.6%
         3,447,500   3,447,500   3,358,899     
                       
Syniverse Holdings, Inc. High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor)(1) 3/9/2023  2,905,253   2,891,007   2,229,200   3.7%
         2,905,253   2,891,007   2,229,200     
                       
The Octave Music Group, Inc. Media: Diversified & Production Senior Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor)(1) 5/29/2025  5,896,552   5,844,063   5,071,034   8.5%
         5,896,552   5,844,063   5,071,034     


PHENIXFIN CORPORATION

Notes to Consolidated Financial Statements (continued)

June 30, 2021

(unaudited)

Note 3. Investments (continued)

MCC Senior Loan Strategy JV I LLC (continued)

Company Industry Type of Investment Maturity Par
Amount		  Cost  Fair
Value(2)		  % of Net
Assets(3)		 
                   
ThoughtWorks, Inc. High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 3.75%, 1.00% LIBOR Floor)(1) 10/11/2024  2,627,704   2,620,849   2,585,136   4.3%
         2,627,704   2,620,849   2,585,136     
                       
Vero Parent, Inc. High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1) 8/16/2024  3,875,924   3,856,982   3,813,522   6.4%
         3,875,924   3,856,982   3,813,522     
                       
Wawona Delaware Holdings, LLC Beverage & Food Senior Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor)(1) 9/11/2026  945,350   937,295   912,358   1.5%
         945,350   937,295   912,358     
                       
Wheels Up Partners LLC Aerospace & Defense Senior Secured First Lien Term Loan (LIBOR + 8.55%, 1.00% LIBOR Floor)(1) 10/15/2021  1,509,917   1,497,761   1,509,917   2.5%
         1,509,917   1,497,761   1,509,917     
                       
Wok Holdings Inc. Retail Senior Secured First Lien Term Loan (LIBOR + 6.50%, 1.00% LIBOR Floor)(1) 3/1/2026  6,550,249   6,505,809   4,864,216   8.2%
         6,550,249   6,505,809   4,864,216     
                       
Wrench Group LLC Services: Consumer Senior Secured First Lien Term Loan (LIBOR + 4.25%, 1.00% LIBOR Floor)(1) 4/30/2026  2,942,820   2,920,082   2,834,231   4.8%
         2,942,820   2,920,082   2,834,231     
                       
Xebec Global Holdings, LLC High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor)(1) 2/12/2024  8,053,168   8,053,168   8,053,168   13.5%
         8,053,168   8,053,168   8,053,168     
                       
Z Medica, LLC Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor)(1) 9/29/2022  2,566,500   2,566,500   2,528,002   4.3%
         2,566,500   2,566,500   2,528,002     
                       
Total Investments, September 30, 2020   $182,514,111  $181,365,360  $163,133,421   273.5%
(5)Par amount includes accumulated PIK interest and is net of repayments.

F-42

PHENIXFIN CORPORATION

Notes to Consolidated Financial Statements (continued)

June 30, 2021

(unaudited)

Note 3. Investments (continued)

MCC Senior Loan Strategy JV I LLC (continued)

(1)Represents the annual current interest rate as of September 30, 2020. All interest rates are payable in cash, unless otherwise noted.
(2)Represents the fair value in accordance with ASC 820 as reported by MCC JV. The determination of such fair value is not included in the Company’s board of directors’ valuation process described elsewhere herein.
(3)Percentage is based on MCC JV’s net assets of $59,617,800 as of September 30, 2020.
(4)This investment was on non-accrual status as of September 30, 2020.
(5)Par amount includes accumulated PIK interest and is net of repayments.

Below is certain summarized financial Information for MCC JV as of JuneSeptember 30, 2020, and September 30, 2019, and for the three and nine months ended June 30, 2020 and 2019:

June 30, 2020September 30, 2019
(unaudited)
Selected Consolidated Statement of Assets and Liabilities Information: 
Investments in loans at fair value (amortized cost of $185,033,151 and $259,371,480, respectively)$160,300,896  $249,342,871  
Cash25,140,969  8,007,466  
Other assets1,029,224  1,466,352  
Total assets$186,471,089  $258,816,689  
Line of credit (net of debt issuance costs of $1,738,758 and $1,552,067, respectively)$131,808,386  $177,694,223  
Other liabilities352,068  472,737  
Interest payable441,856  708,049  
Total liabilities132,602,310  178,875,009  
Members' capital53,868,779  79,941,680  
Total liabilities and members' capital$186,471,089  $258,816,689  
For the three months ended June 30For the nine months ended June 30
2020201920202019
(unaudited)(unaudited)(unaudited)(unaudited)
Selected Consolidated Statement of Operations Information:
Total revenues$3,580,358  $5,093,570  $12,763,742  $15,213,994  
Total expenses(2,291,528) (2,789,653) (7,612,876) (8,221,213) 
Net unrealized appreciation/(depreciation)17,149,719  (2,838,654) (14,703,646) (5,562,929) 
Net realized gain/(loss)(12,586,171) (141,971) (12,620,121) (884,084) 
Net income/(loss)$5,852,378  $(676,708) $(22,172,901) $545,768  

2020:

  September 30,
2020		 
    
Selected Consolidated Statement of Assets and Liabilities Information:   
Investments in loans at fair value (amortized cost of $181,365,360) $163,133,421 
Cash  6,055,178 
Other assets  1,148,102 
Total assets $170,336,701 
     
Line of credit (net of debt issuance costs of $1,574,115) $109,745,367 
Other liabilities  424,095 
Interest payable  549,439 
Total liabilities  110,718,901 
Members’ capital  59,617,800 
Total liabilities and members’ capital $170,336,701 

  For the
three months
ended
June 30,		  For the
nine months
ended
June 30,		 
  2020  2020 
  (unaudited)  (unaudited) 
Selected Consolidated Statement of Operations Information:        
Total revenues $3,580,358  $12,763,742 
Total expenses  (2,291,528)  (7,612,876)
Net unrealized appreciation/(depreciation)  17,149,719   (14,703,646)
Net realized gain/(loss)  (12,586,171)  (12,620,121)
Net income/(loss) $5,852,378  $(22,172,901)

Unconsolidated Significant Subsidiaries


In accordance with Rules 3-09

The Company evaluated and 4-08(g)determined that it had no significant subsidiaries as of Regulation S-X, the Company must determine if any of its portfolio companies is considered a “significant subsidiary.” Pursuant to the SEC’s recently adopted amendments to Rule 1-02(w) of Regulation S-X, in evaluating these portfolio companies, there are two tests utilized to determine if any a portfolio company is considered a significant subsidiary: the investment test and the income test. Rule 3-09 of Regulation S-X requires the Company to include separate audited financial statements of any unconsolidated majority-owned subsidiary (portfolio company in which the Company owns greater than 50% of the voting securities) in the Company's annual report on Form 10-K if any of the three tests exceed 20%. Rule 4-08(g) of Regulation S-X requires summarized financial information of any portfolio company in the Company's annual report on Form 10-K or the Company’s quarterly report on Form 10-Q, as applicable, if any of the conditions under the two tests are met pursuant to Rule 10-01(b)(1) of Regulation S-X.


After performing the income analysis for the nine months ended June 30, 2020, excluding MCC JV, the Company determined that no portfolio company would be deemed2021.


PHENIXFIN CORPORATION

Notes to be a significant subsidiary pursuant to Rule 10-01(b)(1) of Regulation S-X.


The Company also determined that the assets of MCC JV generated more than 20% of the Company’s total income and its fair value exceeded 5% of the Company's total portfolio. Accordingly, the related summary financial information is presented in the “MCC Senior Loan Strategy JV I LLC” heading above.

Consolidated Financial Statements (continued)

June 30, 2021

(unaudited)

Note 4. Fair Value Measurements

The Company follows ASC 820 for measuring the fair value of portfolio investments. Fair value is the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters, or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation models involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity. The Company’s fair value analysis includes an analysis of the value of any unfunded loan commitments. Financial investments recorded at fair value in the consolidated financial statements are categorized for disclosure purposes based upon the level of judgment associated with the inputs used to measure their value. The valuation hierarchical levels are based upon the transparency of the inputs to the valuation of the investment as of the measurement date. Investments which are valued using NAV as a practical expedient are excluded from this hierarchy, and certain prior period amounts have been reclassified to conform to the current period presentation. The three levels are defined below:


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

•Level 2 - Valuations based on inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable at the measurement date. This category includes quoted prices for similar assets or liabilities in active markets, quoted prices for
F-43

identical or similar assets or liabilities in non-active markets including actionable bids from third parties for privately held assets or liabilities, and observable inputs other than quoted prices such as yield curves and forward currency rates that are entered directly into valuation models to determine the value of derivatives or other assets or liabilities.

•Level 3 - Valuations based on inputs that are unobservable and where there is little, if any, market activity at the measurement date. The inputs for the determination of fair value may require significant management judgment or estimation and are based upon management’s assessment of the assumptions that market participants would use in pricing the assets or liabilities. These investments include debt and equity investments in private companies or assets valued using the Market or Income Approach and may involve pricing models whose inputs require significant judgment or estimation because of the absence of any meaningful current market data for identical or similar investments. The inputs in these valuations may include, but are not limited to, capitalization and discount rates, beta and EBITDA multiples. The information may also include pricing information or broker quotes which include a disclaimer that the broker would not be held to such a price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimer would result in classification as Level 3 information, assuming no additional corroborating evidence.

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

●Level 2 - Valuations based on inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable at the measurement date. This category includes quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in non-active markets including actionable bids from third parties for privately held assets or liabilities, and observable inputs other than quoted prices such as yield curves and forward currency rates that are entered directly into valuation models to determine the value of derivatives or other assets or liabilities.

●Level 3 - Valuations based on inputs that are unobservable and where there is little, if any, market activity at the measurement date. The inputs for the determination of fair value may require significant management judgment or estimation and are based upon management’s assessment of the assumptions that market participants would use in pricing the assets or liabilities. These investments include debt and equity investments in private companies or assets valued using the Market or Income Approach and may involve pricing models whose inputs require significant judgment or estimation because of the absence of any meaningful current market data for identical or similar investments. The inputs in these valuations may include, but are not limited to, capitalization and discount rates, beta and EBITDA multiples. The information may also include pricing information or broker quotes which include a disclaimer that the broker would not be held to such a price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimer would result in classification as Level 3 information, assuming no additional corroborating evidence.

In addition to using the above inputs in investment valuations, the Company continues to employ thea valuation policy approved by the board of directors that is consistent with ASC 820 (see Note 2). Consistent with our valuation policy, we evaluate the source of inputs, including any markets in which our investments are trading, in determining fair value. During the three months ended June 30, 2020, none of our investments transferred in or out of Level 3.


The following table presents the fair value measurements of our investments, by major class according to the fair value hierarchy, as of June 30, 20202021 (dollars in thousands):

  Fair Value Hierarchy as of June 30, 2021 
  1  2  3    
Investments: Level 1  Level 2  Level 3  Total 
Senior Secured First Lien Term Loans $—  $6,120  $84,160  $90,280 
Senior Secured Second Lien Term Loans  —   —   2,483   2,483 
Senior Secured Notes  —   3,726   —   3,726 
Unsecured Debt  —   —   2,110   2,110 
Equity/Warrants  16,788   —   62,465   79,253 
Total $16,788  $9,846  $151,218  $177,852 
Investments measured at net asset value(1)              3,767 
Total Investments, at fair value             $181,619 

(1)Certain investments that are measured at fair value using NAV have not been categorized in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amount presented in the Consolidated Statements of Assets and Liabilities.


 Level 1Level 2Level 3Total
Senior Secured First Lien Term Loans$—  $—  $107,338  $107,338  
Senior Secured Second Lien Term Loans—  —  13,239  13,239  
Unsecured Debt—  —  3,238  3,238  
Equity/Warrants12,458  —  64,166  76,624  
Total$12,458  $—  $187,981  $200,439  
Investments measured at net asset value(1)
   50,180  
Total Investments, at fair value   $250,619  

PHENIXFIN CORPORATION

Notes to Consolidated Financial Statements (continued)

June 30, 2021

(unaudited)

Note 4. Fair Value Measurements (continued)

The following table presents the fair value measurements of our investments, by major class according to the fair value hierarchy, as of September 30, 20192020 (dollars in thousands):

 Level 1Level 2Level 3Total
Senior Secured First Lien Term Loans$—  $—  $192,770  $192,770  
Senior Secured Second Lien Term Loans—  —  36,508  36,508  
Unsecured Debt—  —  2,653  2,653  
Equity/Warrants13,850  —  78,329  92,179  
Total$13,850  $—  $310,260  $324,110  
Investments measured at net asset value(1)
   72,779  
Total Investments, at fair value   $396,889  

(1)

  Level 1  Level 2  Level 3  Total 
Senior Secured First Lien Term Loans $—  $—  $106,463  $106,463 
Senior Secured Second Lien Term Loans  —   —   13,927   13,927 
Unsecured Debt  —   —   2,669   2,669 
MCC Senior Loan Strategy JV I LLC(1)  —   —   41,019   41,019 
Equity/Warrants  12,278   —   67,397   79,675 
Total $12,278  $—  $231,475  $243,753 
Investments measured at net asset value(2)              2,991 
Total Investments, at fair value             $246,744 

(1)MCC Senior Loan Strategy JV I LLC was sold on October 8, 2020 and as such fair value was measured as a Level 3 investment as of September 30, 2020. Previously, fair value had been measured using NAV.

(2)Certain investments that are measured at fair value using NAV have not been categorized in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amount presented in the Consolidated Statements of Assets and Liabilities.

The following table provides a reconciliation of the fair value hierarchy tobeginning and ending balances for investments that use Level 3 inputs for the amount presentednine months ended June 30, 2021 (dollars in the Consolidated Statements of Assets and Liabilities.

thousands):

  Senior Secured First Lien Term Loans  Senior Secured Second Lien Term Loans  Unsecured Debt  MCC Senior Loan Strategy JV I LLC  Equities/ Warrants  Total 
Balance as of September 30, 2020 $106,463  $13,927  $2,669  $41,019  $67,397  $231,475 
Purchases and other adjustments to cost  4,258   —   —   —   —   4,258 
Sales  1,887   (11,892)  (782)  (39,739)  (3,085)  (53,611)
Net realized gains/(losses) from investments  (25,263)  4   27   (40,148)  (3,268)  (68,648)
Net unrealized gains/(losses)  (3,185)  444   196   38,868   1,421   37,744 
Balance as of June 30, 2021 $84,160  $2,483  $2,110  $—  $62,465  $151,218 

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the nine months ended June 30, 2020 (dollars in thousands):

 Senior
Secured
First Lien
Term
Loans		Senior
Secured
Second
Lien Term
Loans		Senior
Secured
First Lien
Notes		Unsecured
Debt		Equities/WarrantsTotal
Balance as of September 30, 2019$192,770  $36,508  $—  $2,653  $78,329  $310,260  
Purchases and other adjustments to cost1,519  654  —  5  1,083  3,261  
Originations14,629  944  —  2,500  182  18,255  
Sales(186) (1,160) —  —  (5,714) (7,060) 
Settlements(70,541) (537) —  (549) (25,430) (97,057) 
Net realized gains/(losses) from investments—  (20,729) —  —  (18,577) (39,306) 
Net transfers in and/or out of Level 3—  —  —  —  —  —  
Net unrealized gains/(losses)(30,853) (2,441) —  (1,371) 34,293  (372) 
Balance as of June 30, 2020$107,338  $13,239  $—  $3,238  $64,166  $187,981  
F-44

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

  Senior Secured First Lien Term Loans  Senior Secured Second Lien Term Loans  Unsecured Debt  Equities/ Warrants  Total 
Balance as of September 30, 2019 $192,770  $36,508  $2,653  $78,329  $310,260 
Purchases and other adjustments to cost  1,519   654   5   1,083   3,261 
Originations  14,629   944   2,500   182   18,255 
Sales  (186)  (1,160)  —   (5,714)  (7,060)
Settlements  (70,541)  (537)  (549)  (25,430)  (97,057)
Net realized gains/(losses) from investments  —   (20,729)  —   (18,577)  (39,306)
Net unrealized gains/(losses)  (30,853)  (2,441)  (1,371)  34,293   (372)
Balance as of June 30, 2020 $107,338  $13,239  $3,238  $64,166  $187,981 

Net change in unrealized gain (loss) for the nine months ended June 30, 2019 (dollars in thousands):

 Senior
Secured
First Lien
Term
Loans		Senior
Secured
Second
Lien Term
Loans		Senior
Secured
First Lien
Notes		Unsecured
Debt		Equities/WarrantsTotal
Balance as of September 30, 2018$395,015  $48,890  $19,268  $3,381  $107,955  $574,509  
Purchases and other adjustments to cost2,353  1,315  —  (648) (11,661) (8,641) 
Originations56,549  1,500  —  —  387  58,436  
Sales(136,840) (11,828) —  —  —  (148,668) 
Settlements(32,681) (2,151) —  (17) (11,396) (46,245) 
Net realized gains/(losses) from investments(62,062) 114  —  (22,787) 7,733  (77,002) 
Net transfers in and/or out of Level 3—  —  —  —  —  —  
Net unrealized gains/(losses)6,604  (2,392) 216  22,728  2,667  29,823  
Balance as of June 30, 2019$228,938  $35,448  $19,484  $2,657  $95,685  $382,212  

Net change in unrealized loss for the nine months ended June 30,2021 and 2020 and 2019 included in earnings related to investments still held as of June 30, 20202021 and 2019,2020, was approximately $(10.9) million and $34.4 million, and $40.6 million, respectively.


PHENIXFIN CORPORATION

Notes to Consolidated Financial Statements (continued)

June 30, 2021

(unaudited)

Note 4. Fair Value Measurements (continued)

Purchases and other adjustments to cost include purchases of new investments at cost, effects of refinancing/restructuring, accretion/amortization of income from discount/premium on debt securities, and PIK.

Sales represent net proceeds received from investments sold.

Settlements represent principal paydowns received.


A review of the fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets or liabilities. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in/out of the Level 3 category as of the beginning of the quarter in which the reclassifications occur. During the nine months ended June 30, 2021 and 2020, none of our investments transferred in or out of Level 3. During the nine months ended June 30, 2019, none of our investments transferred in or out of Level 3.


The following table presents the quantitative information about Level 3 fair value measurements of our investments, as of June 30, 20202021 (dollars in thousands):

  Fair Value Valuation Technique Unobservable Input(1) Range (Weighted Average)
Senior Secured First Lien Term Loans $3,753  Market Approach LTM Revenue Multiple 0.25x - 0.55x (0.50x)
Senior Secured First Lien Term Loans  2,577  Enterprise Value Analysis / Market Approach Expected Proceeds / Capitalization Rate $4.50 - $5.50 ($5.00)
Senior Secured First Lien Term Loans  6,518  Income Approach (DCF) Market Yield 8.50% - 9.50% (9.00%)
Senior Secured First Lien Term Loans  29,824  Market Approach Market Yield 5.50% - 20.00% (12.98%)
Senior Secured First Lien Term Loans  6,978  Market Approach EBITDA Multiple 2.00x - 5.00x (3.76x)
Senior Secured First Lien Term Loans  11,639  Market Approach (DCF) Market Yield 6.75% - 7.25% (7.00%)
Senior Secured First Lien Term Loans  19,960  Market Approach (Guideline Comparable) Market Yield 5.00% - 10.00% (7.99%)
Senior Secured First Lien Term Loans  2,911  Market Approach NFY Revenue Multiple 0.30x - 0.40x (0.35x)
           
Senior Secured Second Lien Term Loans  2,483  Market Approach LTM EBITDA multiple 0.10x - 0.11x (0.10x)
           
Unsecured Debt  2,110  Market Approach Market Yield 9.50% - 10.50% (10.00%)
           
Equity/Warrants  1,830  Enterprise Value Analysis / Market Approach Expected Proceeds / Capitalization Rate $4.50 - $5.50 ($5.00)
Equity/Warrants  1,070  Market Approach EV/EBITDA Multiple 4.00x - 4.50x (4.25x)
Equity/Warrants  43,454  Market Approach LTM EBITDA multiple 8.50x - 9.50x (9.00x)
Equity/Warrants  2,349  Market Approach LTM Revenue Multiple 0.15x - 0.55x (0.20x)
Equity/Warrants  7,665  Market Approach EBITDA Multiple / Revenue Multiple 6.88x - 15.00x (13.39x)
Equity/Warrants  864  Market Approach (Guideline Comparable) EBITDA Multiple / Revenue Multiple 2.00x - 6.50x (6.50x)
Equity/Warrants  4,616  Market Approach Market Yield 10.50% - 12.00% (11.25%)
Equity/Warrants  205  Market Approach (Guideline Comparable) EBITDA Multiple 2.25x - 4.50x (4.50x)
Equity/Warrants  276  Market Approach EBITDA Multiple 1.75x - 2.75x (2.25x)
Equity/Warrants  62  Market Approach EV/CFY Multiple 5.92x - 6.99x (6.46x)
Equity/Warrants  74  Market Approach Fully Diluted $0.01 - $0.01 ($0.01)
Total $151,218       

(1)Represents inputs used when the Company has determined that market participants would use such multiples when measuring the fair value of these investments.


 Fair ValueValuation TechniqueUnobservable InputRange (Weighted Average)
Senior Secured First Lien Term Loans$50,450  Income Approach (DCF)Market Yield6.91% - 13.57% (10.81%)
Senior Secured First Lien Term Loans47,881  Market Approach (Guideline Comparable)/Income Approach (DCF)/ Enterprise Value AnalysisRevenue Multiple(1)
EBITDA Multiple(1)
Discount Rate
Expected Proceeds		0.25x - 0.50x (0.49x)
2.50x - 6.00x (5.20x)
17.90% - 21.00% (18.09%)
$10.0M - $42.8M ($34.9M)
Senior Secured First Lien Term Loans9,007  Recent Arms-Length TransactionRecent Arms-Length TransactionN/A
Senior Secured Second Lien Term Loan9,744  Income Approach (DCF)Market Yield12.62% - 15.46% (14.61%)
Senior Secured Second Lien Term Loans3,495  Market Approach (Guideline Comparable)/Black-Scholes Option ModelEBITDA Multiple(1)
Volatility		5.50x - 5.50x (5.50x)
60.00% - 60.00% (60.00%)
Unsecured Debt733  Market Approach (Guideline Comparable)EBITDA Multiple(1)4.50x - 4.50x (4.50x)
Unsecured Debt2,505  Recent Arms-Length TransactionRecent Arms-Length TransactionN/A
Equity3,496  Income Approach (DCF)Market Yield19.00%
Equity60,670  Market Approach (Guideline Comparable)/Income Approach (DCF)/Enterprise Value AnalysisRevenue Multiple(1)
EBITDA Multiple(1)
Discount Rate
Expected Proceeds		0.50x - 0.50x (0.50x)
2.50x - 8.50x (8.10x)
17.80% - 18.30% (18.30%)
$10.0M - $42.8M ($44.4M)
Equity—  Recent Arms-Length TransactionRecent Arms-Length TransactionN/A
Total$187,981     

PHENIXFIN CORPORATION

Notes to Consolidated Financial Statements (continued)

June 30, 2021

(unaudited)

Note 4. Fair Value Measurements (continued)

The following table has been modified to conform to the current year presentation, and presents the quantitative information about Level 3 fair value measurements of our investments, as of September 30, 20192020 (dollars in thousands):

F-45

 Fair ValueValuation TechniqueUnobservable InputRange (Weighted Average)
Senior Secured First Lien Term Loans$141,337  Income Approach (DCF)Market yield6.38% - 16.98% (10.49%)
Senior Secured First Lien Term Loans43,960  Market Approach (Guideline Comparable)/Market Approach (Comparable Transactions)/Income Approach (DCF)/ Enterprise Value Analysis
Revenue Multiple(1)
EBITDA Multiple(1)
Discount rate
Expected Proceeds
0.25x - 0.25x (0.25x)
3.50x - 6.00x (4.95x)
9.00% - 18.70% (16.53%)
$9.0M - $16.2M ($9.0M)
Senior Secured First Lien Term Loans7,473  Recent Arms-Length TransactionRecent Arms Length TransactionN/A
Senior Secured Second Lien Term Loan17,250  Income Approach (DCF)Market yield9.78% - 29.76% (14.66%)
Senior Secured Second Lien Term Loans19,258  Market Approach (Guideline Comparable)/Income Approach (DCF)
EBITDA Multiple(1)
Discount Rate
4.50x - 6.00x (5.97x)
16.40% - 16.40% (16.40%)
Unsecured Debt850  Income Approach (DCF)Market yield7.43%
Unsecured Debt1,803  Market Approach (Guideline Comparable)
EBITDA Multiple(1)
4.00x - 7.00x (6.54x)
Equity75,983  Market Approach (Guideline Comparable)/Market Approach (Comparable Transactions)/Income Approach (DCF)/Enterprise Value Analysis
Revenue Multiple(1)
EBITDA Multiple(1)
Discount rate
Expected Proceeds
0.88x - 0.88x (0.69x)
3.50x - 9.50x (8.72x)
9.00% - 22.50% (14.68%)
$16.2M - $47.5M ($53.1M)
Equity2,346  Recent Arms-Length TransactionRecent Arms Length TransactionN/A
Total$310,260     


(1)Represents inputs used when the Company has determined that market participants would use such multiples when measuring the fair value of these investments.

  

Fair Value

  Valuation Technique Unobservable Input Range
(Weighted Average)
Senior Secured First Lien Term Loans $50,135  Income Approach (DCF) Market yield 7.52% - 15.27% (10.34%)
Senior Secured First Lien Term Loans  55,856  Market Approach (Guideline Comparable)/Income Approach (DCF)/ Enterprise Value Analysis Revenue Multiple(1) 0.25x – 0.50x (0.49x)
       EBITDA Multiple(1) 2.50x - 8.50x (5.73x)
       Capitalization rate 5.50x - 5.50x (5.50x)
        Discount rate 17.90% - 17.90% (17.90%)
        Expected Proceeds $8.25 - $52.00 ($45.65)
Senior Secured First Lien Term Loans  472  Recent Arms-Length Transaction Recent Arms Length Transaction N/A
Senior Secured Second Lien Term Loan  9,978  Income Approach (DCF) Market yield 12.01% - 14.82% (14.01%)
Senior Secured Second Lien Term Loans  3,949  Market Approach (Guideline Comparable)/Income Approach (DCF) EBITDA Multiple(1) 8.00x - 8.00x (8.00x)
       Discount Rate 21.00% - 21.00% (21.00%)
          
Unsecured Debt  -  Market Approach (Guideline Comparable) EBITDA Multiple(1) 2.50x - 4.50x (3.50x)
Unsecured Debt  2,669  Recent Arms-Length Transaction Recent Arms Length Transaction N/A
MCC Senior Loan Strategy JV I LLC  41,019  Recent Arms-Length Transaction Recent Arms Length Transaction N/A
Equity  63,468  Market Approach (Guideline Comparable)/ Income Approach (DCF)/Enterprise Value Analysis Revenue Multiple(1) 0.50x - 0.88x (0.69x)
       EBITDA Multiple(1) 2.50x - 9.50x (8.25x)
       Capitalization rate 5.50% - 5.50% (5.50%)
       Discount rate 14.50% - 14.50% (14.50%)
        Expected Proceeds $8.25 - $52.00 ($38.00)
Equity  3,929  Income Approach (DCF) Market Yield 15.40% - 15.40% (15.40%)
Total $231,475       

(1)Represents inputs used when the Company has determined that market participants would use such multiples when measuring the fair value of these investments.

The significant unobservable inputs used in the fair value measurement of the Company’s debt and derivative investments are market yields. Increases in market yields would result in lower fair value measurements.


The significant unobservable inputs used in the fair value measurement of the Company’s equity/warrants investments are comparable company multiples of revenue or EBITDA for the latest twelve months (“LTM”), next twelve months (“NTM”) or a reasonable period a market participant would consider. Increases in EBITDA multiples in isolation would result in higher fair value measurement.


In September 2017, the Company entered into an agreement with Global Accessories Group, LLC (“Global Accessories”), in which the Company exchanged its full position in Lydell Jewelry Design Studio, LLC for a 3.8% membership interest in Global Accessories, which is included in the Consolidated Schedule of Investments. As part of the agreement, the Company is entitled to contingent consideration in the form of cash payments (“Earnout”), as well as up to an additional 5% membership interest (“AMI”), provided Global Accessories achieves certain financial benchmarks through calendar year ended 2022. The Earnout and AMI were initially recorded with an aggregate fair value of $2.4 million on the transaction date using the Income Approach and were included on the Consolidated Statements of Assets and Liabilities in other assets. The contingent consideration is remeasured to fair value at each reporting date until the contingency is resolved. Any changes in fair value will be recognized in earnings. As of June 30, 2021 and September 30, 2020, the Company deemed the contingent consideration to be uncollectible, and, as such, placed a full reserve against its fair value. As of Septemberuncollectible.


PHENIXFIN CORPORATION

Notes to Consolidated Financial Statements (continued)

June 30, 2019, the fair value of the contingent consideration was $1.8 million.



2021

(unaudited)

Note 5. Borrowings


As a BDC, we are generally only allowed to employ leverage to the extent that our asset coverage, as defined in the 1940 Act, equals at least 200% after giving effect to such leverage. The amount of leverage that we employ at any time depends on our assessment of the market and other factors at the time of any proposed borrowing.


However, in March 2018, the Small Business Credit Availability Act modified the 1940 Act by allowing a BDC to increase the maximum amount of leverage it may incur from 200% to 150%, if certain requirements under the 1940 Act are met. Under the 1940 Act, we are allowed to increase our leverage capacity if stockholders representing at least a majority of the votes cast, when a quorum is present, approve a proposal to do so. If we receive stockholder approval, we would be allowed to increase our leverage capacity on the first day after such approval. Alternatively, the 1940 Act allows the majority of our independent directors to approve an increase in our leverage capacity, and such approval would become effective after the one-year anniversary of such approval. In either case, we would be required to make certain disclosures on our website and in SEC filings regarding, among other things, the receipt of approval to increase our leverage, our leverage capacity and usage, and risks related to leverage.


As of June 30, 2020,2021, the Company’s asset coverage was 198.3%302.5% after giving effect to leverage and therefore the Company’s asset coverage was belowgreater than 200%, the minimum asset coverage requirement applicable presently to the Company under the 1940 Act. As a result, the Company is prohibited from making distributions to

F-46

stockholders, including the payment of any dividend, and may not employ further leverage until the Company’s asset coverage is at least 200% after giving effect to such leverage.

As of September 30, 2019,2020, the Company’s asset coverage was 184.2%199.2% after giving effect to leverage and therefore the Company’s asset coverage was below 200%, the minimum asset coverage requirement under the 1940 Act. As a result, the Company was prohibited from making distributions to stockholders, including the payment of any dividend, and could not employ further leverage until the Company’s asset coverage was at least 200% after giving effect to such leverage.


The Company’s outstanding debt as of June 30, 20202021 and September 30, 20192020 was as follows (dollars in thousands):

 June 30, 2020September 30, 2019
 Aggregate
Principal
Amount
Available		Principal
Amount
Outstanding		Carrying
Value		Fair
Value		Aggregate
Principal
Amount
Available		Principal
Amount
Outstanding
Carrying
Value(1)
Fair
Value
2021 Notes$74,013  $74,013  $73,644  $69,572  $74,013  $74,013  $73,172  $72,473  
2023 Notes77,847  77,847  77,089  68,817  77,847  77,847  76,881  74,453  
Israeli Notes—  —  —  —  105,137  105,137  101,679  104,604  
Total$151,860  $151,860  $150,733  $138,389  $256,997  $256,997  $251,732  $251,530  

(1)Modified to conform to the current year presentation.

  June 30, 2021  September 30, 2020 
  Aggregate Principal Available  Principal Amount Outstanding  Carrying Value  Fair Value  Aggregate Principal Available  Principal Amount Outstanding  Carrying Value  Fair Value 
2021 Notes $—  $—  $—  $—  $74,013  $74,013  $73,803  $73,095 
2023 Notes $77,847  $77,847  $77,364  $78,937  $77,847  $77,847  $77,158  $72,460 
Total debt $77,847  $77,847  $77,364  $78,937  $151,860  $151,860  $150,961  $145,555 

Unsecured Notes


2021 Notes


On December 17, 2015, the Company issued $70.8 million in aggregate principal amount of 6.50% unsecured notes that mature on January 30, 2021 (the “2021 Notes”). On January 14, 2016, the Company closed an additional $3.25 million in aggregate principal amount of the 2021 Notes, pursuant to the partial exercise of the underwriters’ option to purchase additional notes. The 2021 Notes may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after January 30, 2019. The 2021 Notes bearbore interest at a rate of 6.50% per year, payable quarterly on January 30, April 30, July 30 and October 30 of each year, beginning January 30, 2016.

On October 21, 2020, the Company caused notices to be issued to the holders of the 2021 Notes regarding the Company’s exercise of its option to redeem, in whole, the issued and outstanding 2021 Notes, pursuant to Section 1104 of the Indenture dated as of February 7, 2012, between the Company and U.S. Bank National Association, as trustee, and Section 101(h) of the Third Supplemental Indenture dated as of December 17, 2015. The Company redeemed $74,012,825 in aggregate principal amount of the issued and outstanding 2021 Notes on November 20, 2020 (the “Redemption Date”). The 2021 Notes are listedwere redeemed at 100% of their principal amount ($25 per 2021 Note), plus the accrued and unpaid interest thereon from October 31, 2020, through, but excluding, the Redemption Date. The Company funded the redemption of the 2021 Notes with cash on the NYSE and trade thereon under the trading symbol “MCX”.


hand.

2023 Notes


On March 18, 2013, the Company issued $60.0 million in aggregate principal amount of 6.125% unsecured notes that mature on March 30, 2023 (the “2023 Notes,” and together with the 2021 Notes, the "U.S. Notes”). On March 26, 2013, the Company closed an additional $3.5 million in aggregate principal amount of the 2023 Notes, pursuant to the partial exercise of the underwriters’ option to purchase additional notes. As of March 30, 2016, the 2023 Notes may be redeemed in whole or in part at any time or from time to time at the Company'sCompany’s option. The 2023 Notes bear interest at a rate of 6.125% per year, payable quarterly on March 30, June 30, September 30 and December 30 of each year, beginning June 30, 2013. The 2023


PHENIXFIN CORPORATION

Notes are listed on the NYSE and trade thereon under the trading symbol “MCV”.


to Consolidated Financial Statements (continued)

June 30, 2021

(unaudited)

Note 5. Borrowings (continued)

Unsecured Notes (continued)

On December 12, 2016, the Company entered into an “At-The-Market” (“ATM”) debt distribution agreement with FBR Capital Markets & Co., through which the Company could offer for sale, from time to time, up to $40.0 million in aggregate principal amount of the 2023 Notes. The Company sold 1,573,872 of the 2023 Notes at an average price of $25.03 per note, and raised $38.6 million in net proceeds, through the ATM debt distribution agreement.


On March 10, 2018, the Company redeemed $13.0 million in aggregate principal amount of the 2023 Notes. The redemption was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.3 million and was recorded on the Consolidated Statements of Operations as a loss on extinguishment of debt.


On December 31, 2018, the Company redeemed $12.0 million in aggregate principal amount of the 2023 Notes. The redemption was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.2 million and was recorded on the Consolidated Statements of Operations as a loss on extinguishment of debt.

On December 21, 2020, the Company announced that it completed the application process for and was authorized to transfer the listing of the 2023 Notes to the NASDAQ Global Market. The listing and trading of the 2023 Notes on the NYSE ceased at the close of trading on December 31, 2020. Effective January 4, 2021, the 2023 Notes began trading on the NASDAQ Global Market under the trading symbol “PFXNL.”

Secured Notes


Israeli Notes


On January 26, 2018, the Company priced a debt offering in Israel of $121.3 million of Israeli Notes and collectively with the U.S. Notes, the "Notes")(as defined below). The Israeli Notes arewere listed on the TASE and denominated in New Israeli Shekels, but linked to the US Dollar at a fixed exchange rate which mitigates any currency exposure to the Company. The Israeli


PHENIXFIN CORPORATION

Notes have not been and will not be registered under the Securities Act of 1933, and may not be offered or sold in the United States absent registration under the Securities Act or in transactions exempt from, or not subject to such registration requirements. In connection with this offering, we have dual listed our common stock on the TASE.


On August 12, 2019, the Company and its wholly owned subsidiaries, Medley Small Business Fund, LP (formerly known as Medley SBIC, LP) and Medley SLF, on the one hand, and the Trustee, on the other hand, entered into an amendment to the deed of trust (the “Deed”) governing the IsraeliConsolidated Financial Statements (continued)

June 30, 2021

(unaudited)

Note 5. Borrowings (continued)

Secured Notes (the “Amendment” together with the Deed, the “Deed of Trust”). The Amendment amends the Deed by, among other things: (a) modifying

F-47

Section 2.2 of the Deed to provide for full repayment of the Israeli Notes in eight (8) equal installments, each comprising twelve and one-half percent (12.5%) of the principal amount of the Israeli Notes, beginning on August 12, 2019 (the “Effective Date”) and ending on January 31, 2021, rather than four (4) equal annual installments, each comprising twenty five percent (25%) of the principal amount of the Israeli Notes, that were payable on February 27 of each of the years 2021-2024 (inclusive); (b) changing the interest payment dates for the Israeli Notes from semi-annual to quarterly except for the initial interest payment, which was paid on the Effective Date, and the final interest payment, which will be paid on January 31, 2021; (c) decreasing the annual interest rate on the Israeli Notes by 0.25% per annum on the Effective Date and further decreasing the annual interest rate on the Israeli Notes by 0.50% per annum if the mergers of the Company, Sierra Income Corporation (“Sierra”), and MDLY (the “Mergers”) close, which further decrease will be effective upon the closing of the Mergers; (d) decreasing the minimum Total Net Asset covenant in Section 6.1.1 of the Deed from $275 million to $215 million; (e) modifying the acceleration event in Section 10.1.25 of the Deed to provide that it will occur if the credit rating on the Israeli Notes drops below (i) il/B of Maalot before November 30, 2019, (ii) il/BB- of Maalot during the period between December 1, 2019 and April 1, 2020, and (iii) il/BBB- of Maalot on or after April 1, 2020; (f) waiving the make-whole and market value payment requirements of Section 9.1.7 of the Deed for all early redemption payments on the Israeli Notes within eighteen (18) months following the Effective Date; (g) requiring each of Medley Small Business Fund and Medley SLF to guarantee all of the Company’s obligations under the Deed (including the Amendment) and the Israeli Notes and to grant security interests on all of their assets (the “Collateral”) to secure such guaranties and providing for the termination of the Medley SLF guaranty and release of the security interests in Medley SLF’s assets upon the closing of the Mergers, subject to certain limitations; (h) that the Company use principal collections from the Collateral to make early redemption payments on the Israeli Notes, which payments will be applied in inverse order of the maturity of the required principal installment payments on the Israeli Notes; (i) providing for a waiver by the Trustee and the holders of the Israeli Notes of any right to accelerate the full balance of the amount due to the holders of the Israeli Notes based on any claims, allegations, actions, and/or rights that were raised, and/or resulting or deriving from certain claims or allegations as set forth in Section 19.1 of the Amendment; (j) providing for a waiver by the Trustee and the holders of the Israeli Notes of certain claims, demands, rights, and/or actions against and/or relating to the Company, its subsidiaries and/or affiliates and their respective employees (including their respective directors, officers, members of the Company’s board of directors, employees, stockholders, stakeholders and advisors); and (k) adding other definitions, representations and covenants to the Deed and making related conforming changes to the Deed. Pursuant to the Amendment, no prepayment penalties were due or payable in connection with the payment of principal made by the Company on the Effective Date.

The Deed (including the Amendment) includes certain customary covenants, including minimum net assets of $215 million and a maximum debt to total assets ratio of 70%. The date for determining compliance with these financial covenants is the date that the Company publishes its financial statements (i.e., in a quarterly report on Form 10-Q or an annual report on Form 10-K) with the SEC. If the Company does not satisfy these financial covenants for two consecutive quarters, it is an event of default under the Deed. If this event of default is expected to occur, the Company has the right to request the trustee for the Israeli Notes (the “Trustee”) to appoint an emergency committee of the three largest noteholders for the purpose of obtaining a one-quarter extension of time to satisfy the financial covenants. If the Company does not make this request and the breach occurs, or if the emergency committee does not grant the extension, then the Trustee is required to convene a meeting of the noteholders as described below.

In addition to not complying with the financial covenants as described above, the events of default include: (i) a change of control of the Company (defined in the Deed as MCC Advisors’ ceasing to provide investment management or advisory services to the Company); (ii) the Company not publishing a tender offer for the purchase of all of the Israeli Notes within 45 days; (iii) the Company not paying any amount due and payable to the holders of the Israeli Notes within seven business days after the payment due date; (iv) certain insolvency and receivership events with respect to the Company or with respect to all or substantially all of its assets, and (v) the Israeli Notes being delisted from the TASE or the TASE’s suspension of trading of the Israeli Notes for more than 60 days.

If an event of default occurs under the Deed, there is no automatic acceleration or mandatory redemption of the Israeli Notes. Rather, the Trustee is required to convene a meeting of the noteholders for a vote on whether to accelerate the Israeli Notes. Noteholders holding at least 50% of the principal amount of the Israeli Notes must be present at the meeting for a quorum to exist, and if a quorum exists, then the vote of a majority of the noteholders present at the meeting controls.

The foregoing description of the terms of Israeli Notes, the Deed, and the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of each of the Deed and the Amendment incorporated by reference as an exhibit to this quarterly report on Form 10-Q.

(continued)

On June 5, 2018, the Company announced that on June 1, 2018, its board of directors authorized the Company to repurchase and retire up to $20 million of the Company’s outstanding Israeli Notes on the TASE. Execution of the repurchase plan is subject to an open trading window for the Company and continued liquidity at that time and is expected to continue until the full authorized amount is purchased or market conditions change. The repurchase of the Israeli Notes is not expected to result in any material tax consequences to the Company or its note holders.


During the quarter ended December 31, 2018, the Company exchanged $1.0 million United States Dollars to New Israeli Shekels at a rate of 3.73 USD/NIS in order to repurchase the Israeli Notes on the TASE. As the Israeli Notes were trading below par at the time of the repurchase, and the USD/NIS (foreign currency) spot rate was higher than the fixed exchange rate agreed upon in the deed of trust, the Company was able to repurchase and retire 3,812,000 units, which resulted in $1,119,201 aggregate principal amount of the Israeli Notes being retired. The redemption was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized gain of $0.1 million and was recorded on the Consolidated Statements of Operations as a gain on extinguishment of debt.


On December 31, 2019, in addition to the scheduled 12.5% quarterly amortization payment, the Company used proceeds from its principal repayments in assets held by MedleyPhenixFIN SLF and MedleyPhenixFIN Small Business Fund to pre-pay an additional $19.1 million of the Israeli Notes. The pre-payment was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.9 million and was recorded on the Consolidated Statements of Operations as a net loss on extinguishment of debt.

On March 31, 2020, in addition to the scheduled 12.5% quarterly amortization payment, the Company used proceeds from its principal repayments in assets held by MedleyPhenixFIN SLF and MedleyPhenixFIN Small Business Fund to pre-pay an additional $19.8 million of the Israeli Notes. The pre-payment was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.9 million and was recorded on the Consolidated Statements of Operations as a loss on extinguishment of debt.

F-48


On April 14, 2020, the Company repaid the remaining $21.1 million of Israeli Notes outstanding, and as such is no longer subject to any covenants relating thereto. The Israeli Notes were redeemed at 100% of their principal amount, plus the accrued interest thereon, through April 14, 2020.


Fair Value of Debt Obligations

The fair values of our debt obligations are determined in accordance with ASC 820, which defines fair value in terms of the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. The fair value of the Notes, which are publicly traded, is based upon closing market quotes as of the measurement date. As of June 30, 20202021 and September 30, 2019,2020, the Notes would be deemed to be Level 1 in the fair value hierarchy, as defined in Note 4.

In accordance with ASU 2015-03, the debt issuance costs related to the Notes are reported on the Consolidated Statements of Assets and Liabilities as a direct deduction from the face amount of the Notes. As of June 30, 20202021 and September 30, 2019,2020, debt issuance costs related to the Notes were as follows (dollars in thousands):

 June 30, 2020September 30, 2019
 2021
Notes		2023
Notes		Israeli
Notes		Total2021
Notes		2023
Notes		Israeli NotesTotal
Total Debt Issuance Costs$3,226  $3,102  $6,287  $12,615  $3,226  $3,102  $6,287  $12,615  
Amortized Debt Issuance Costs2,857  2,336  6,287  11,480  2,385  2,127  2,829  7,341  
Unamortized Debt Issuance Costs$369  $766  $—  $1,135  $841  $975  $3,458  $5,274  

  June 30, 2021  September 30, 2020 
  2023 Notes  Total  2021 Notes  2023 Notes  Total 
Total debt issuance costs $3,102  $3,102  $3,226  $3,102  $6,328 
Amortized debt issuance costs  2,620   2,620   3,016   2,406  $5,422 
Unamortized debt issuance costs $482  $482  $210  $696  $906 

For the three and nine months ended June 30, 20202021 and 2019,2020, the components of interest expense, amortized debt issuance costs, weighted average stated interest rate and weighted average outstanding debt balance for the Notes were as follows (dollars in thousands):

  For the Three Months Ended June 30  For the Nine Months Ended June 30 
  2021  2020  2021  2020 
2021 Notes Interest $—  $1,203  $668  $3,608 
2023 Notes Interest  1,192   1,192   3,576   3,576 
2023 Notes Premium  —   (1)  —   (2)
Israeli Notes Interest  —   58   —   2,486 
Amortization of debt issuance costs  69   284   294   2,644 
Total $1,261  $2,736  $4,538  $12,312 
Weighted average stated interest rate  2.2%  6.4%  7.2%  6.4%
Weighted average outstanding balance $77,847  $154,881  $84,649  $201,523 


For the three months ended June 30For the nine months ended June 30
 2020201920202019
2021 Notes interest1,203  1,203  3,608  3,608  
2023 Notes interest1,192  1,192  3,576  3,762  
2023 Notes premium(1) (1) (2) (2) 
Israeli Notes interest58  1,771  2,486  4,937  
Amortization of debt issuance costs284  563  2,644  1,701  
Total$2,736  $4,728  $12,312  $14,006  
Weighted average stated interest rate6.4 %6.1 %6.4 %6.0 %
Weighted average outstanding balance$154,881  $272,016  $201,523  $276,365  

SBA Debentures

On March 26, 2013, SBIC LP received a SBIC license from the SBA. The SBIC license allowed SBIC LP

PHENIXFIN CORPORATION

Notes to obtain leverage by issuing SBA Debentures, subject to the issuance of a capital commitment by the SBA and other customary procedures. SBA Debentures were non-recourse, interest only debentures with interest payable semi-annually and had a ten year maturity. The principal amount of SBA Debentures were not required to be paid prior to maturity but may be prepaid at any time without penalty. The interest rate of SBA Debentures were fixed on a semi-annual basis at a market-driven spread over U.S. Treasury Notes with 10-year maturities. The SBA, as a creditor, had a superior claim to the SBIC LP’s assets over our stockholders in the event we liquidated the SBIC LP or the SBA exercised its remedies under the SBA Debentures issued by the SBIC LP upon an event of default.


On September 1, 2018, the Company repaid $15.0 million in aggregate principal amount of the SBA Debentures. The repayment was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.2 million and was recorded on the Consolidated Financial Statements of Operations as a loss on extinguishment of debt.

SBIC LP received a letter from the SBA (the “SBA Letter”), dated March 14, 2019, informing SBIC LP of certain alleged regulatory issues constituting a default under the terms of the SBIC LP’s outstanding SBA Debentures. The SBA Letter stated that SBIC LP had until March 29, 2019, fifteen (15) days from the date of the SBA Letter, to provide the SBA with certain additional information regarding the alleged regulatory issues, unless extended by the SBA. SBIC LP’s management submitted an orderly wind-down plan to the SBA to prepay the remaining $135.0 million of outstanding SBA Debentures using available cash at SBIC LP as well as the sale of assets to third parties or affiliates of SBIC LP. On March 28, 2019, SBIC LP agreed and made a repayment of $50.0 million of outstanding SBA Debentures by April 3, 2019 using available cash at SBIC LP and the cure period was extended to April 19, 2019. On April 18, 2019, SBIC LP agreed and made a repayment of $20.0 million of outstanding SBA Debentures on April 23, 2019 and an additional $30.0 million of outstanding SBA Debentures on April 30, 2019 using proceeds from the sale of certain assets and the cure period was extended to May 10, 2019. On May 10, 2019, SBIC LP made the final repayment of the remaining $35.0 million of outstanding SBA Debentures using proceeds from the sale of certain assets. In connection therewith, effective July 1, 2019, SBIC LP surrendered its SBIC license and operates as Medley Small Business Fund.

The $135.0 million in aggregate repayments made in connection with the orderly wind-down plan was accounted for as debt extinguishments in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a cumulative realized loss of $1.8 million and was recorded on the Consolidated Statements of Operations as a loss on extinguishment of debt.

As of (continued)

June 30, 2020 and September 30, 2019, Medley Small Business Fund did not have any SBA Debentures outstanding.


F-49

For the three and nine months ended June 30, 2020 and 2019, the components of interest, amortized debt issuance costs, weighted average stated interest rate and weighted average outstanding debt balance for the SBA Debentures were as follows (dollars in thousands):
For the three months ended June 30For the nine months ended June 30
 2020201920202019
SBA Debentures interest$—  $2,030  $—  $4,445  
Amortization of debt issuance costs—  76  —  290  
Total$—  $2,106  $—  $4,735  
Weighted average stated interest rate— %54.4 %— %11.9 %
Weighted average outstanding balance$—  $14,973  $—  $49,991  

2021

(unaudited)

Note 6. Agreements


Investment Management Agreement


We had entered into an investment management agreement with MCC Advisors (the “Investment Management Agreement”)., which expired on December 31, 2020. Mr. Brook Taube, our Chairman and Chief Executive Officer is a managing partnerthrough December 31, 2020 and senior portfolio managerone of MCC Advisors,our directors through January 21, 2021 and Mr. Seth Taube, one of our directors is a managing partner ofthrough January 21, 2021 are both affiliated with MCC Advisors.


Advisors and Medley.

Under the terms of the Investment Management Agreement, MCC Advisors:


•determines the composition of our portfolio, the nature and timing of the changes to our portfolio and the manner of implementing such changes;

•identifies, evaluates and negotiates the structure of the investments we make (including performing due diligence on our prospective portfolio companies); and

•executes, closes, monitors and administers the investments we make, including the exercise of any voting or consent rights.

●determined the composition of our portfolio, the nature and timing of the changes to our portfolio and the manner of implementing such changes;

●identified, evaluated and negotiated the structure of the investments we made (including performing due diligence on our prospective portfolio companies); and

●executed, closed, monitored and administered the investments we made, including the exercise of any voting or consent rights.

MCC Advisors’ services under the Investment Management Agreement arewere not exclusive, and it iswas free to furnish similar services to other entities so long as its services to us arewere not impaired.


Pursuant to the Investment Management Agreement, we paypaid MCC Advisors a fee for investment advisory and management services consisting of a base management fee and a two-part incentive fee.


On December 3, 2015, MCC Advisors recommended and, in consultation with the Board, agreed to reduce fees under the Investment Management Agreement. Beginning January 1, 2016, the base management fee was reduced to 1.50% on gross assets above $1 billion. In addition, MCC Advisors reduced its incentive fee from 20% on pre-incentive fee net investment income over an 8% hurdle, to 17.5% on pre-incentive fee net investment income over a 6% hurdle. Moreover, the revised incentive fee includes a netting mechanism and is subject to a rolling three-year look back from January 1, 2016 forward. Under no circumstances willwould the new fee structure result in higher fees to MCC Advisors than fees under the prior investment management agreement.


The following discussion of our base management fee and two-part incentive fee reflect the terms of the fee waiver agreement executed by MCC Advisors on February 8, 2016 (the “Fee Waiver Agreement”). The terms of the Fee Waiver Agreement arewere effective as of January 1, 2016 and arewere a permanent reduction in the base management fee and incentive fee on net investment income payable to MCC Advisors for the investment advisory and management services it providesprovided under the Investment Management Agreement. The Fee Waiver Agreement doesdid not change the second component of the incentive fee, which iswas the incentive fee on capital gains.


On January 15, 2020, the Company’s board of directors, including all of the independent directors, approved the renewal of the Investment Management Agreement through the later of April 1, 2020 or so long as the Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019 (the “Amended MCC Merger Agreement”), by and between the Company and Sierra (the “Amended MCC Merger Agreement”) was in effect, but no longer than a year; provided that, if the Amended MCC Merger Agreement iswas terminated by Sierra, then the termination of the Investment Management Agreement would be effective on the 30th day following receipt of Sierra’s notice of termination to the Company. On May 1, 2020, the Company received a notice of termination of the Amended MCC Merger Agreement from Sierra. Under the Amended MCC Merger Agreement, either party was permitted, subject to certain conditions, to terminate the Amended MCC Merger Agreement if the merger was not consummated by March 31, 2020. Sierra elected to do so on May 1, 2020. As result of the termination by Sierra of the Amended MCC Merger Agreement on May 1, 2020, the Investment Management Agreement would have been terminated effective as of May 31, 2020. On May 21, 2020, the Board, including all of the independent directors, extended the term of the Investment Management Agreement through the end of the currentthen-current quarter, June 30, 2020. On June 15, 2020, the Board, including all of the independent directors, extended the term of the Investment Management Agreement through the end of the currentthen-current quarter, September 30, 2020.


On September 29, 2020, the Board, including all of the independent directors, extended the term of the Investment Management Agreement through December 31, 2020.

On November 18, 2020, the Board approved the adoption of an internalized management structure effective January 1, 2021. The new management structure replaces the current Investment Management and Administration Agreements with MCC Advisors LLC, which expired on December 31, 2020. 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 interim Chief Executive Officer, and Ellida McMillan as Chief Financial Officer of the Company, each effective January 1, 2021. In connection with his appointment, Mr. Lorber stepped down from the Compensation Committee of the Board, the Nominating and Corporate Governance Committee of the Board, and the Special Committee of the Board.

Base Management Fee


For

Through December 31, 2020, for providing investment advisory and management services to us, MCC Advisors receivesreceived a base management fee. The base management fee iswas calculated at an annual rate of 1.75% (0.4375% per quarter) of up to $1.0 billion of the Company’s gross assets and 1.50% (0.375% per quarter) of any amounts over $1.0 billion of the Company’s gross assets and iswas payable quarterly in arrears. The base management fee will bewas calculated based on the average value of the Company’s gross assets at the end of the two most recently completed calendar quartersquarters.


PHENIXFIN CORPORATION

Notes to Consolidated Financial Statements (continued)

June 30, 2021

(unaudited)

Note 6. Agreements (continued)

Base Management Fee (continued)

For the three and will be appropriately pro-rated for any partial quarter.

F-50
nine months ended June 30, 2021, the Company incurred base management fees to MCC Advisors of $0 and $1.1 million, respectively. For the three and nine months ended June 30, 2020, the Company incurred base management fees to MCC Advisors of $1.3 million and $5.0 million, respectively.



Incentive Fee

The

Through December 31, 2020, the incentive fee hashad two components, as follows:


Incentive Fee Based on Income


The first component of the incentive fee iswas payable quarterly in arrears and iswas based on our pre-incentive fee net investment income earned during the calendar quarter for which the incentive fee iswas being calculated. MCC Advisors iswas entitled to receive the incentive fee on net investment income from us if our Ordinary Income (as defined below) exceedsexceeded a quarterly “hurdle rate” of 1.5%. The hurdle amount iswas calculated after making appropriate adjustments to the Company’s net assets, as determined as of the beginning of each applicable calendar quarter, in order to account for any capital raising or other capital actions as a result of any issuances by the Company of its common stock (including issuances pursuant to our dividend reinvestment plan), any repurchase by the Company of its own common stock, and any dividends paid by the Company, each as may have occurred during the relevant quarter.


Beginning with the calendar quarter that commenced on January 1, 2016, the incentive fee on net investment income iswas determined and paid quarterly in arrears at the end of each calendar quarter by reference to our aggregate net investment income, as adjusted as described below, from the calendar quarter then ending and the eleven preceding calendar quarters (or if shorter, the number of quarters that have occurred since January 1, 2016). We refer to such period as the “Trailing Twelve Quarters.”


The hurdle amount for the incentive fee on net investment income iswas determined on a quarterly basis and iswas equal to 1.5% multiplied by the Company’s net asset value at the beginning of each applicable calendar quarter comprising the relevant Trailing Twelve Quarters. The hurdle amount iswas calculated after making appropriate adjustments to the Company’s net assets, as determined as of the beginning of each applicable calendar quarter, in order to account for any capital raising or other capital actions as a result of any issuances by the Company of its common stock (including issuances pursuant to our dividend reinvestment plan), any repurchase by the Company of its own common stock, and any dividends paid by the Company, each as may have occurred during the relevant quarter. The incentive fee for any partial period willwas to be appropriately pro-rated. Any incentive fee on net investment income willwas to be paid to MCC Advisors on a quarterly basis and willwas to be based on the amount by which (A) aggregate net investment income (“Ordinary Income”) in respect of the relevant Trailing Twelve Quarters exceedsexceeded (B) the hurdle amount for such Trailing Twelve Quarters. The amount of the excess of (A) over (B) described in this paragraph for such Trailing Twelve Quarters is referred to as the “Excess Income Amount.” For the avoidance of doubt, Ordinary Income iswas net of all fees and expenses, including the reduced base management fee but excluding any incentive fee on Pre-Incentive Fee net investment income or on the Company’s capital gains.


Determination of Quarterly Incentive Fee Based on Income


The incentive fee on net investment income for each quarter iswas determined as follows:


•No incentive fee on net investment income is payable to MCC Advisors for any calendar quarter for which there is no Excess Income Amount;

•100% of the Ordinary Income, if any, that exceeds the hurdle amount, but is less than or equal to an amount, which we refer to as the “Catch-up Amount,” determined as the sum of 1.8182% multiplied by the Company’s net assets at the beginning of each applicable calendar quarter, as adjusted as noted above, comprising the relevant Trailing Twelve Quarters is included in the calculation of the incentive fee on net investment income; and

•17.5% of the Ordinary Income that exceeds the Catch-up Amount is included in the calculation of the incentive fee on net investment income.

●No incentive fee on net investment income was payable to MCC Advisors for any calendar quarter for which there was no Excess Income Amount;

●100% of the Ordinary Income, if any, that exceeded the hurdle amount, but was less than or equal to an amount, which we refer to as the “Catch-up Amount,” determined as the sum of 1.8182% multiplied by the Company’s net assets at the beginning of each applicable calendar quarter, as adjusted as noted above, comprising the relevant Trailing Twelve Quarters was included in the calculation of the incentive fee on net investment income; and

●17.5% of the Ordinary Income that exceeds the Catch-up Amount was included in the calculation of the incentive fee on net investment income.

The amount of the incentive fee on net investment income that willwas to be paid to MCC Advisors for a particular quarter willwould equal the excess of the incentive fee so calculated minus the aggregate incentive fees on net investment income that were paid in respect of the first eleven calendar quarters (or the portion thereof) included in the relevant Trailing Twelve Quarters but not in excess of the Incentive Fee Cap (as described below).


The incentive fee on net investment income that iswas paid to MCC Advisors for a particular quarter iswas subject to a cap (the “Incentive Fee Cap”). The Incentive Fee Cap for any quarter iswas an amount equal to (a) 17.5% of the Cumulative Net Return (as defined below) during the relevant Trailing Twelve Quarters minus (b) the aggregate incentive fees on net investment income that were paid in respect of the first eleven calendar quarters (or the portion thereof) included in the relevant Trailing Twelve Quarters.



PHENIXFIN CORPORATION

Notes to Consolidated Financial Statements (continued)

June 30, 2021

(unaudited)

Note 6. Agreements (continued)

Incentive Fee (continued)

“Cumulative Net Return” means (x) the Ordinary Income in respect of the relevant Trailing Twelve Quarters minus (y) any Net Capital Loss (as described below), if any, in respect of the relevant Trailing Twelve Quarters. If, in any quarter, the Incentive Fee Cap iswas zero or a negative value, the Company willwould pay no incentive fee on net investment income to MCC Advisors for such quarter. If, in any quarter, the Incentive Fee Cap for such quarter iswas a positive value but iswas less than the incentive fee on net investment income that iswas payable to MCC Advisors for such quarter (before giving effect to the Incentive Fee Cap) calculated as described above, the Company willwould pay an incentive fee on net investment income to MCC Advisors equal to the Incentive Fee Cap for such quarter. If, in any quarter, the Incentive Fee Cap for such quarter iswas equal to or greater than the incentive fee on net investment income that iswas payable to MCC Advisors for such quarter (before giving effect to the Incentive Fee Cap) calculated as described above, the Company willwould pay an incentive fee on net investment income to MCC Advisors, calculated as described above, for such quarter without regard to the Incentive Fee Cap.


“Net Capital Loss” in respect of a particular period means the difference, if positive, between (i) aggregate capital losses, whether realized or unrealized, and dilution to the Company’s net assets due to capital raising or capital actions, in such period and (ii) aggregate capital gains, whether realized or unrealized and accretion to the Company’s net assets due to capital raising or capital action, in such period.

F-51


Dilution to the Company’s net assets due to capital raising iswas calculated, in the case of issuances of common stock, as the amount by which the net asset value per share was adjusted over the transaction price per share, multiplied by the number of shares issued. Accretion to the Company’s net assets due to capital raising iswas calculated, in the case of issuances of common stock (including issuances pursuant to our dividend reinvestment plan), as the excess of the transaction price per share over the amount by which the net asset value per share was adjusted, multiplied by the number of shares issued. Accretion to the Company’s net assets due to other capital action iswas calculated, in the case of repurchases by the Company of its own common stock, as the excess of the amount by which the net asset value per share was adjusted over the transaction price per share multiplied by the number of shares repurchased by the Company.


Incentive Fee Based on Capital Gains


The second component of the incentive fee iswas determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Management Agreement as of the termination date) and equalsequaled 20.0% of our cumulative aggregate realized capital gains less cumulative realized capital losses, unrealized capital depreciation (unrealized depreciation on a gross investment-by-investment basis at the end of each calendar year) and all capital gains upon which prior performance-based capital gains incentive fee payments were previously made to the investment adviser.


Under GAAP, the Company calculatescalculated the second component of the incentive fee as if the Company had realized all assets at their fair values as of the reporting date. Accordingly, when applicable, the Company accruesaccrued a provisional capital gains incentive fee taking into account any unrealized gains or losses. As the provisional capital gains incentive fee iswas subject to the performance of investments until there iswas a realization event, the amount of the provisional capital gains incentive fee accrued at a reporting date may varyhave varied from the capital gains incentive that iswas ultimately realized and the differences could behave been material.


Base Management Fee - Prior to Fee Waiver Agreement

Prior to January 1, 2016, the base management fee was calculated at an annual rate of 1.75% of our gross assets (which is defined as all the assets of the Company, including those acquired using borrowings for investment purposes), and was payable quarterly in arrears. The base management fee was based on the average value of our gross assets at the end of the two most recently completed calendar quarters.

Incentive Fee - Prior to Fee Waiver Agreement

Prior to January 1, 2016, the incentive fee based on net investment income was calculated as 20.0% of the amount, if any, by which our pre-incentive fee net investment income, expressed as a rate of return on the value of our net assets calculated as of the end of the calendar quarter immediately preceding the calendar quarter for which the incentive fee is being calculated, exceeds a 2.0% (which is 8.0% annualized) hurdle rate but also includes a “catch-up” provision. Under this provision, in any calendar quarter, our investment adviser receives no incentive fee until our net investment income equals the hurdle rate of 2.0%, but then receives, as a “catch-up”, 100% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.5%. The effect of this provision is that, if pre-incentive fee net investment income exceeds 2.5% in any calendar quarter, our investment adviser will receive 20% of our pre-incentive fee net investment income as if the hurdle rate did not apply. For this purpose, pre-incentive fee net investment income means interest income, dividend income and any other income including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies accrued during the calendar quarter, minus our operating expenses for the quarter including the base management fee, expenses payable under the administration agreement, and any interest expense and any dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee. Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with PIK interest and zero coupon securities), accrued income that we have not yet received in cash.

For the avoidance of doubt, the purpose of the new incentive fee calculation under the Fee Waiver Agreement is to permanently reduce aggregate fees payable to MCC Advisors by the Company, effective as of January 1, 2016. In order to ensure that the Company will pay MCC Advisors lesser aggregate fees on a cumulative basis, as calculated beginning January 1, 2016, we will, at the end of each quarter, also calculate the base management fee and incentive fee on net investment income owed by the Company to MCC Advisors based on the formula in place prior to January 1, 2016. If, at any time beginning January 1, 2016, the aggregate fees on a cumulative basis, as calculated based on the formula in place after January 1, 2016, would be greater than the aggregate fees on a cumulative basis, as calculated based on the formula in place prior to January 1, 2016, MCC Advisors shall only be entitled to the lesser of those two amounts.

For the three and nine months ended June 30, 2020, the Company incurred base management fees to MCC Advisors of $1.3 million and $5.0 million, respectively. For the three and nine months ended June 30, 2019, the Company incurred base management fees to MCC Advisors of $2.7 million and $9.0 million, respectively. The Company did not waive management fees under the Fee Waiver Agreement during the three and nine months ended June 30, 2020 and 2019.

The incentive fees shown in the Consolidated Statements of Operations arewere calculated using the fee structure set forth in the Investment Management Agreement, and then adjusted to reflect the terms of the Fee Waiver Agreement. Pursuant to the Investment Management Agreement, pre-incentive fee net investment income iswas compared to a hurdle rate of 2.0% of the net asset value at the beginning of the period and iswas calculated as follows:


1)No incentive fee is recorded during the quarter in which our pre-incentive fee net investment income does not exceed the hurdle rate;

2)100% of pre-incentive fee net investment income that exceeds the hurdle rate but is less than 2.5% in the quarter; and

3)20.0% of the amount of pre-incentive fee net investment income, if any, that exceeds 2.5% of the hurdle rate.

F-52

1)No incentive fee was recorded during the quarter in which our pre-incentive fee net investment income did not exceed the hurdle rate;

2)100% of pre-incentive fee net investment income that exceeded the hurdle rate but was less than 2.5% in the quarter; and

3)20.0% of the amount of pre-incentive fee net investment income, if any, that exceeded 2.5% of the hurdle rate.

For purposes of implementing the fee waiver under the Fee Waiver Agreement, we calculatecalculated the incentive fee based upon the formula that existsexisted under the Investment Management Agreement, and then applyapplied the terms of waiver set forth in the Fee Waiver Agreement, if applicable.



PHENIXFIN CORPORATION

Notes to Consolidated Financial Statements (continued)

June 30, 2021

(unaudited)

Note 6. Agreements (continued)

Incentive Fee (continued)

For the three and nine months ended June 30, 20202021 and 2019,2020, the Company did not incur any incentive fees on net investment income because pre-incentive fee net investment income did not exceed the hurdle amount under the formula set forth in the Investment Management Agreement.


The Investment Management Agreement terminated as of December 31, 2020, and the Company no longer incurs incentive fees under the Investment Management Agreement as a result.

As of June 30, 20202021 and September 30, 2019, $1.3 million2020, $0 and $2.2$1.4 million, respectively, were included in “management and incentive fees payable” in the accompanying Consolidated Statements of Assets and Liabilities.


Administration Agreement


On January 19, 2011, the Company entered into an administration agreement with MCC Advisors. Pursuant to the administration agreement, MCC Advisors furnishesfurnished us with office facilities and equipment, clerical, bookkeeping, recordkeeping and other administrative services related to the operations of the Company. We reimbursereimbursed MCC Advisors for our allocable portion of overhead and other expenses incurred by it performing its obligations under the administration agreement, including rent and our allocable portion of the cost of our Chief Financial Officer and Chief Compliance Officer and their respective staffs. From time to time, our administrator maywas able to pay amounts owed by us to third-party service providers and we willwould subsequently reimburse our administrator for such amounts paid on our behalf. 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 (“U.S. Bancorp”). The administration agreement with MCC Advisors terminated by its terms on December 31, 2020. For the three and nine months ended June 30, 2021, we recorded $0.1 million and $0.5 million, respectively, in administrator expenses. For the three and nine months ended June 30, 2020, we incurred $0.6 million and $1.7 million in administrator expenses, respectively. For the three and nine months ended June 30, 2019, we incurred $0.8 million and $2.5 million in administrator expenses, respectively.


As of June 30, 20202021 and September 30, 2019, $0.32020, $0.1 million and $0.9$0.2 million, respectively, were included in “administrator expenses payable” in the accompanying Consolidated Statements of Assets and Liabilities.


Expense Support Agreement


On June 12, 2020, the Company entered into an expense support agreement (the “Expense Support Agreement”) with MCC Advisors and Medley LLC, pursuant to which MCC Advisors and Medley LLC agreed (jointly and severally) to cap the management fee and all of the Company’s other operating expenses (except interest expenses, certain extraordinary strategic transaction expenses and other expenses approved by the Special Committee (as defined in Note 10)) at $667,000 per month (the “Cap”). Under the Expense Support Agreement, the Cap became effective on June 1, 2020 and expires on September 30, 2020. For the one month ended June 30,On September 29, 2020, the totalboard of directors, including all of the independent directors, extended the term of the Expense Support Agreement through the end of quarter ending December 31, 2020. The Expense Support Agreement expired by its terms at the close of business on December 31, 2020, in connection with the adoption of the internalized management fee andstructure by the other operating expenses subject to the Cap (as described above) were $1.0 million, which resulted in $0.3 millionboard of expense support due from MCC Advisors. The $0.3 million of expense support due has been netted against Administrator expenses payable in the accompanying Consolidated Statements of Assets and Liabilities.


directors.

Note 7. Related Party Transactions


Due to Affiliate


Due to affiliate consists of certain general and administrative expenses paid by an affiliate on behalf of the Company.


Other Related Party Transactions


Opportunities for co-investments may arise when MCC Advisors or an affiliated investment adviser becomes aware of investment opportunities that may be appropriate for the Company, other clients, or affiliated funds. On November 25, 2013, the Company obtained an exemptive order from the SEC that permits us to participate in negotiated co-investment transactions with certain affiliates, each of whose investment adviser is Medley, LLC or an investment adviser controlled by Medley, LLC in a manner consistent with our investment objective, strategies and restrictions, as well as regulatory requirements and other pertinent factors (the “Prior Exemptive Order”). On March 29, 2017, the Company, MCC Advisors and certain other affiliated funds and investment advisers received an exemptive order (the “Exemptive Order”) that supersedes the Prior Exemptive Order and allows affiliated registered investment companies to participate in co-investment transactions with us that would otherwise have been prohibited under Section 17(d) and 57(a)(4) of the 1940 Act and Rule 17d-1 thereunder. On October 4, 2017, the Company, MCC Advisors and certain of our affiliates received an exemptive order that supersedes the Exemptive Order (the “Current Exemptive Order”) and allows, in addition to the entities already covered by the Exemptive Order, Medley LLC and its subsidiary, Medley Capital LLC, to the extent they hold financial assets in a principal capacity, and any direct or indirect, wholly or majority owned subsidiary of Medley LLC that is formed in the future, to participate in co-investment transactions with us that would otherwise be prohibited by either or both of Sections 17(d) and 57(a)(4) of the 1940 Act. Co-investment under the Current Exemptive Order is subject to certain conditions therein, including the condition that, in the case of each co-investment transaction, the board of directors determines that it would be in the Company’s best interest to participate in the transaction. However, neither we nor the affiliated funds are obligated to invest or co-invest when investment opportunities are referred to us or them. The Company does not expect to avail itself of the current exemptive order, given the internalization and termination of the Investment Management Agreement.


F-53


PHENIXFIN CORPORATION

Notes to Consolidated Financial Statements (continued)

June 30, 2021

(unaudited)

Note 8. Commitments


Guarantees

The Company has a guarantee to issue up to $5.7 million in standby letters of credit through a financial intermediary on behalf of a certain portfolio company. Under this arrangement, if the standby letters of credit were to be issued, the Company would be required to make payments to third parties if the portfolio company was to default on its related payment obligations. The guarantee will renew annually until cancellation. As of June 30, 2020 and September 30, 2019, the Company had not issued any standby letters of credit under the commitment on behalf of the portfolio company.

Insurance Reimbursements Related to Professional Fees

The Company has received insurance proceeds during fiscal year 20202021 under its insurance policy primarily relating to the legal expenses associated with the dismissed stockholder class action, captioned as FrontFour Capital Group LLC, et al. v Brook Taube et al. During the three and nine months ended June 30, 2021, the Company received $1.0 million and $2.1 million, respectively, of insurance proceeds. During the three and nine months ended June 30, 2020, the Company received $1.0 million and $5.8 million of insurance proceeds, respectively. The reimbursements have been recorded as an offset or reduction in professional fees and expenses on the Consolidated Statements of Operations.


Unfunded commitments


As of June 30, 20202021 and September 30, 2019,2020, we had commitments under loan and financing agreements to fund up to $3.7$5.1 million to sixseven portfolio companies and $8.9$3.9 million to sevenfive 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, 20202021 and September 30, 20192020 is shown in the table below (dollars in thousands):

 June 30, 2020September 30, 2019
1888 Industrial Services, LLC - Revolver$1,078  $—  
Kemmerer Operations, LLC - Delayed Draw Term Loan908  908  
Redwood Services Group, LLC - Revolver525  875  
NVTN LLC - Super Priority DDTL500  —  
NVTN LLC - DDTL220  —  
1888 Industrial Services, LLC - Term Loan E219  —  
DataOnline Corp. - Revolver179  1,890  
Access Media Holdings, LLC - Series AAA Preferred Equity101  101  
Dynamic Energy Services International LLC - Revolver—  3,255  
Alpine SG, LLC - Revolver—  1,000  
Black Angus Steakhouses, LLC - Delayed Draw Term Loan—  893  
Total$3,730  $8,922  


  June 30,
2021		  September 30,
2020		 
Redwood Services Group, LLC - Revolver $1,575  $1,050 
1888 Industrial Services, LLC - Revolver  1,078   1,078 
Alpine SG - Revolver  1,000   — 
Kemmerer Operations, LLC - Delayed Draw Term Loan  908   908 
NVTN LLC - DDTL  220   220 
Black Angus Steakhouses, LLC - Super Priority DDTL  167   — 
DataOnline Corp. - Revolver  107   179 
NVTN LLC - Super Priority DDTL  —   500 
Total unfunded commitments $5,055  $3,935 

Note 9. Fee Income


Fee income consists of origination/closing fees, amendment fees, prepayment penalty and other miscellaneous fees which are non-recurring in nature, as well as administrative agent fees, which are recurring in nature. The following table summarizesummarizes the Company'sCompany’s fee income for the three and nine months ended June 30, 20202021 and 20192020 (dollars in thousands):

  For the Three Months
Ended June 30		  For the Nine Months
Ended June 30		 
  2021  2020  2021  2020 
Administrative agent fee $54  $44  $381  $163 
Prepayment fee  —   —   —   139 
Amendment fee  5   124   94   138 
Other fees  12   34   175   91 
Origination fee  —   —   —   87 
Fee income $71  $202  $650  $618 


 For the three months ended June 30For the nine months ended June 30
 2020201920202019
Administrative agent fee$44  $92  $163  $252  
Prepayment fee—  1,074  139  1,220  
Amendment fee124  37  138  238  
Other fees34  —  91  —  
Origination fee—  —  87  271  
Fee income$202  $1,203  $618  $1,981  

PHENIXFIN CORPORATION

Notes to Consolidated Financial Statements (continued)

June 30, 2021

(unaudited)

Note 10. Directors Fees


The Company's

During calendar year 2021, the Company’s independent directors each receive an annual fee of $100,000. In addition, the lead independent director receives an annual retainer of $30,000; the chair of the Audit Committee receives an annual retainer of $25,000, and each of its other members receives an annual retainer of $12,500; and the chairs of the Nominating and Corporate Governance Committee and of the Compensation Committee each receive an annual retainer of $15,000 and each of the other members of these committees receive annual retainers of $8,000. The Company’s independent directors also receive a fee of $3,000 for each board meeting and $2,500 for each committee meeting that they attend. Prior to calendar year 2021, the Company’s independent directors each received an annual fee of $90,000. They also receivereceived $3,000, plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each board meeting, and $2,500, plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each Audit Committee, Nominating and Corporate Governance Committee, Transition Committee and Compensation Committee meeting. The chair of the Audit Committee receivesreceived an annual fee of $25,000 and the chair of the Nominating and Corporate Governance Committee and the Compensation Committee receivesreceived an annual fee of $10,000 for their additional services in these capacities. In addition, other members of the Audit Committee receivereceived an annual fee of $12,500, and other members of the Nominating and Corporate Governance Committee and the Compensation Committee receivereceived an annual fee of $6,000.

F-54


On January 26, 2018, the board of directors established the special committee of the Board, comprised solely of directors who are not “interested persons” of the Company as such term is defined in Section 2(a)(19) of the 1940 Act (the “Special Committee”), for the purpose of assessing the merits of various proposed strategic transactions. As compensation for serving on the Special Committee, each independent director received a one-time retainer of $25,000 plus reimbursement of out-of-pocket expenses, consistent with the Company’s policies for reimbursement of members of the board of directors. In addition, the chairman of the Special Committee receivesreceived a monthly fee of $15,000 and other members receivereceived a monthly fee of $10,000.


Pursuant to the Settlement Term Sheet, on April 15, 2019, the board of directors appointed David A. Lorber and Lowell W. Robinson to the Board to fill the vacancies on the Board created by the resignations of Mark Lerdal and John E. Mack, respectively. In addition, the board of directors added: (i) Messrs. Lorber and Robinson to the The Special Committee with Mr. Lorber servingis no longer active. The Special Committee as Chair ofwell as the Special Committee; (ii) Mr. Lorber to the Nominating and Corporate GovernanceTransition Committee and the Compensation Committee; and Mr. Robinson to the Audit Committee. In addition to the compensation described above,are each of Mr. Lorber and Mr. Robinson received the one-time retainer of $25,000 plus reimbursement of out-of-pocket expenses, consistent with the Company's policies for reimbursement of members of theno longer in operation.

No board of directors.


Noservice compensation is paid to directors who are ‘‘interested persons’’“interested persons” of the Company (as such term is defined in the 1940 Act). For the three and nine months ended June 30, 2020,2021, we accrued $0.3$0.2 million and $1.0$0.9 million for directors’ fees expense, respectively. For the three and nine months ended June 30, 2019,2020, we accrued $0.4$0.3 million and $1.1$1.0 million for directors’ fees expense, respectively.

Note 11. Earnings Per Share


In accordance with the provisions of ASC Topic 260 - Earnings per Share, basic earnings per share is computed by dividing earnings available to common stockholders by the weighted average number of shares outstanding during the period. Other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. The Company does not have any potentially dilutive common shares as of June 30, 2020.


2021.

The following information sets forth the computation of the weighted average basic and diluted net increase/(decrease) in net assets per share from operations for the three and nine months ended June 30, 20202021 and 20192020 (dollars in thousands, except share and per share amounts):

  For the Three Months
Ended June 30		  For the Nine Months
Ended June 30		 
  2021  2020  2021  2020 
Basic and diluted:            
Net increase (decrease) in net assets resulting from operations $6,969  $7,604  $8,318  $(67,086)
Weighted average shares of common stock                
outstanding - basic and diluted  2,683,093   2,723,711   2,707,794   2,723,711 
Earnings (loss) per share of common stock - basic and diluted  $2.60  $2.79  $3.07  $(24.63)


 For the three months ended June 30For the nine months ended June 30
 2020201920202019
Basic and diluted:    
Net increase/(decrease) in net assets from operations$7,604  $(30,241) $(67,086) $(64,927) 
Weighted average common shares outstanding2,723,711  2,723,711  2,723,711  2,723,711  
Earnings per common share-basic and diluted(1)
$2.79  $(11.10) $(24.63) $(23.84) 
(1)Basic and diluted shares has been adjusted for the periods shown

PHENIXFIN CORPORATION

Notes to reflect the one-for-twenty reverse stock split effected on July 24, 2020 on a retroactive basis, as described in Note 1.


F-55

Consolidated Financial Statements (continued)

June 30, 2021

(unaudited)

Note 12. Financial Highlights

The following is a schedule of financial highlights for the nine months ended June 30, 20202021 and 2019:

 For the nine months ended June 30
20202019
Per share data(1)(13):
Net asset value per share at beginning of period$79.46  $117.92  
Net investment income/(loss)(2)
(0.68) (4.65) 
Net realized gains/(losses) on investments(14.60) (28.01) 
Net unrealized appreciation/(depreciation) on investments(8.42) 9.53  
Change in provision for deferred taxes on unrealized appreciation/(depreciation) on investments(0.02) —  
Loss on extinguishment of debt(0.91) (0.71) 
Net increase/(decrease) in net assets(24.63) (23.84) 
Distributions from net investment income—  (3.00) 
Net asset value per share at end of period$54.83  $91.08  
Net assets at end of period$149,346,046  $248,080,128  
Shares outstanding at end of period2,723,711  2,723,711  
Per share market value at end of period$15.40  $46.80  
Total return based on market value(3)
(70.27)%(36.67)%
Total return based on net asset value(4)
(30.99)%(19.10)%
Portfolio turnover rate(5)
7.20 %13.24 %

2020:

  For the Nine Months Ended
June 30		 
  2021  2020 
Per share data      
Net Asset Value per share at Beginning of Period $55.30  $79.46 
         
Results of Operations:        
Net Investment Income/(Loss)(1)  6.44   (0.68)
Net Realized Gain/(Loss) on Investments  (17.17)  (14.60)
Net Unrealized Gain/(Loss) on Investments  13.85   (8.42)
Change in provision for deferred taxes on unrealized appreciation/(depreciation) on investments  —   (0.02)
Net loss on extinguishment of debt  (0.05)  (0.91)
Net Increase (Decrease) in Net Assets Resulting from Operations  3.07   (24.63)
         
Capital Share Transactions        
Repurchase of common stock under stock repurchase program  0.12   — 
Net Increase (Decrease) Resulting from Capital Share Transactions  0.12   — 
Net Asset Value per share at End of Period $58.49  $54.83 
         
Net Assets at End of Period $156,678,576  $149,346,046 
Shares Outstanding at End of Period  2,678,921   2,723,711 
         
Per share market value at end of period $40.80  $15.40 
Total return based on market value(2)  128.83%  (70.27%)
Total return based on net asset value(3)  4.02%  (30.99%)
Portfolio turnover rate(4)  21.93%  7.20%

The following is a schedule of ratios and supplemental data for the nine months ended June 30, 20202021 and 2019:2020:

Ratios:      
Ratio of net investment income/(loss) to average net assets after waivers, discounts and reimbursements(4)(5)  15.41%  (1.43%)
Ratio of total expenses to average net assets after waivers, discounts and reimbursements(4)(5)  9.31%  13.98%
Ratio of incentive fees to average net assets after waivers(5)  0.00%  0.00%
         
Supplemental Data:        
Ratio of net operating expenses and credit facility related expenses to average net assets(4)(5)(9)  9.31%  14.17%
Percentage of non-recurring fee income(6)  2.33%  2.66%
Average debt outstanding(7)  84,649,449   201,704,498 
Average debt outstanding per common share  31.26   74.06 
Asset coverage ratio per unit(8)  3,025   1,983 
Total Debt Outstanding(10)        
2021 Notes  —   73,644,036 
2023 Notes  77,364,454   77,088,530 
         
Average market value per unit:        
2021 Notes   N/A   22.19 
2023 Notes  24.80   19.84 

 For the nine months ended June 30
 20202019
Ratios:  
Ratio of net investment/(loss) income to average net assets after waivers, discounts and reimbursements(5)(6)
(1.43)%(5.87)%
Ratio of total expenses to average net assets after waivers, discounts and reimbursements(5)(6)
13.98 %23.58 %
Ratio of incentive fees to average net assets after waivers(6)
— %— %
Supplemental Data:
Ratio of net operating expenses and credit facility related expenses to average net assets(5)(6)(11)
14.17 %23.58 %
Percentage of non-recurring fee income(7)
2.66 %4.53 %
Average debt outstanding(8)
$201,704,498  $376,346,268  
Average debt outstanding per common share$74.06  $138.17  
Asset coverage ratio per unit(9)
1,983  1,912  
Total Debt Outstanding(12)
2021 Notes$73,644,036  $73,013,302  
2023 Notes$77,088,530  $76,811,836  
Israeli Notes$—  $115,893,495  
SBA Debentures$—  $—  
Average market value per unit:
SBA debentures(10)
N/AN/A
2021 Notes$22.19  $25.00  
2023 Notes$19.84  $24.67  
Israeli NotesN/A$244.09  
(1)Table may not foot due

PHENIXFIN CORPORATION

Notes to rounding.

F-56

(2)Net investment income/(loss) excluding management and incentive fee waivers, discounts and reimbursements based on total weighted average common stock outstanding equals $(2.73) and $(4.65) per share for the nine months ended Consolidated Financial Statements (continued)

June 30, 2020 and 2019, respectively.

(3)Total return is historical and assumes changes in share price, reinvestments of all dividends and distributions at prices obtained under the Company’s dividend reinvestment plan, and no sales charge for the period. Calculation is not annualized.
(4)Total return is historical and assumes changes in NAV, reinvestments of all dividends and distributions at prices obtained under the Company’s dividend reinvestment plan, and no sales charge for the period. Calculation is not annualized.
(5)Ratios are annualized during interim periods.
(6)2021

(unaudited)

Note 12. Financial Highlights (continued)

(1)Net investment income/(loss) excluding management and incentive fee waivers, discounts and reimbursements based on total weighted average common stock outstanding equals $6.51 and $(2.73) per share for the three months ended June 30, 2021 and 2020 respectively.

(2)Total return is historical and assumes changes in share price, reinvestments of all dividends and distributions at prices obtained under the Company’s dividend reinvestment plan, and no sales charge for the period. Calculation is not annualized.

(3)Total return is historical and assumes changes in NAV, reinvestments of all dividends and distributions at prices obtained under the Company’s dividend reinvestment plan, and no sales charge for the period. Calculation is not annualized.

(4)Ratios are annualized during interim periods.

(5)For the nine months ended June 30, 2021, prior to the effect of Expense Support Agreement, the ratio of net investment income/(loss), total expenses, incentive fees, and operating expenses and credit facility related expenses to average net assets is 15.41%, 9.31%, 0.00%, and 9.31%, respectively  For the nine months ended June 30, 2020, excluding management and incentive fee waivers, discounts and reimbursements, the ratio of net investment income/(loss), total expenses, incentive fees, and operating expenses and credit facility related expenses to average net assets is (5.72)%, 18.27%, 0.00%, and 18.27%, respectively.

(6)Represents the impact of the non-recurring fees as a percentage of total investment income.

(7)Based on daily weighted average carrying value of debt outstanding during the period.

(8)

Asset coverage per unit is the ratio of the carrying value of our total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness. Asset coverage per unit is expressed in terms of dollar amounts per $1,000 of indebtedness. As of June 30, 2021, the Company’s asset coverage was 302.5% after giving effect to leverage and therefore the Company’s asset coverage was above 200%, the minimum asset coverage requirement under the 1940 Act.

(9)Excludes incentive fees.

(10)Total amount of each class of senior securities outstanding at the end of the period excluding debt issuance costs.

58

PHENIXFIN CORPORATION

Notes to Consolidated Financial Statements (continued)

June 30, 2020, prior to the effect of Expense Support Agreement, the ratio of net investment income/(loss), total expenses, incentive fees, and operating expenses and credit facility related expenses to average net assets is (5.72)%, 18.27%, 0.00%, and 18.27%, respectively. For the nine months ended June 30, 2019, excluding management and incentive fee waivers, discounts and reimbursements, the ratio of net investment income/(loss), total expenses, incentive fees, and operating expenses and credit facility related expenses to average net assets is (4.65)%, 23.58%, 0.00%, and 23.58%, respectively.

(7)Represents the impact of the non-recurring fees as a percentage of total investment income.
(8)Based on daily weighted average carrying value of debt outstanding during the period.
(9)Asset coverage per unit is the ratio of the carrying value of our total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness. Asset coverage per unit is expressed in terms of dollar amounts per $1,000 of indebtedness. As of June 30, 2020, the Company’s asset coverage was 198.3% after giving effect to leverage and therefore the Company’s asset coverage was below 200%, the minimum asset coverage requirement under the 1940 Act. As a result, the Company is prohibited from making distributions to stockholders, including the payment of any dividend, and may not employ further leverage until the Company’s asset coverage is at least 200% after giving effect to such leverage.
(10)The SBA Debentures were not registered for public trading.
(11)Excludes incentive fees.
(12)Total amount of each class of senior securities outstanding at the end of the period excluding debt issuance costs.
(13)Per share data has been adjusted for the periods shown to reflect the one-for-twenty reverse stock split effected on July 24, 2020 on a retroactive basis, as described in Note 1.

2021

(unaudited)

Note 13. Dividends


Dividends and distributions to common stockholders are recorded on the ex-dividend date. The amount to be paid out as a dividend is determined by our board of directors.


We have adopted an “opt out” dividend reinvestment plan for our common stockholders. As a result, if we declare a cash dividend or other distribution, each stockholder that has not “opted out” of our dividend reinvestment plan will have its dividends automatically reinvested in additional shares of our common stock rather than receiving cash dividends. Stockholders who receive distributions in the form of shares of common stock will be subject to the same federal, state and local tax consequences as if they received cash distributions.


The Company did not make any distributions during the nine months ended June 30, 2021 and 2020.


Note 14. Share Transactions

On January 11, 2021, the Company announced that its board of directors approved a share repurchase program.

The following table summarizessets forth the Company’s distributions duringnumber of shares of common stock repurchased by the nine months endedCompany at an average price of $33.42 per share under its share repurchase program from February 10, 2021 through June 30, 2019.

Date DeclaredRecord DatePayment Date
Amount Per Share(1)
During the nine months ended June 30, 2019
11/16/201812/5/201812/20/2018$2.00 
2/10/192/22/193/12/191.00 
$3.00 
(1)Amount2021: 

Month Ended Shares Repurchased  Repurchase
Price Per Share		 Aggregate Consideration for Repurchased Shares 
January 2021  —  — $— 
February 2021  13,082  $30.25 - $30.96  396,961 
March 2021  12,241  $30.25 - $34.42  393,504 
April 2021  14,390  $33.11 - $34.89  490,885 
May 2021  5,075  $34.56 - $35.98  177,688 
June 2021  —  —  — 
Total  44,788    $1,459,038 

The Company’s net asset value per share has been adjusted forwas increased by approximately $0.12 as a result of the periods shown to reflect the one-for-twenty reverse stock split effectedshare repurchases.

The Company funded additional share repurchases of 20,000 shares with a total cost of approximately $0.8 million on July 24, 2020 on a retroactive basis,May 28, 2021 which had not settled as described in Note 1.


of June 30, 2021.

Note 14.15. Subsequent Events


Management has evaluated subsequent events through the date of issuance of the consolidated financial statements included herein. Other than the items disclosed below,herein, there have been no subsequent events that occurred during such period that would require disclosure in this Form 10-Q or would be required to be recognized in the Consolidated Financial Statements as of and for the nine months ended June 30, 2020.2021.



Subsequent to quarter ended June 30, 2020, the global outbreak of the coronavirus (“COVID-19”) pandemic continues to have adverse consequences on the U.S. and global economies. The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual portfolio companies, remains uncertain. As of August 7, 2020, there is no indication of a reportable subsequent event impacting the Company’s financial statements for the quarter ended June 30, 2020. The Company cannot predict the extent to which its financial condition and results of operations will be affected at this time. The potential impact to our results will depend to a large extent on future developments and new information that may emerge regarding the duration and severity of COVID-19. The Company continues to observe and respond to the evolving COVID-19 environment and its potential impact on areas across its business.
F-57

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations


The following discussion and analysis should be read in conjunction with our financial statements and related notes and other financial information appearing elsewhere in this quarterly report on Form 10-Q.


Except as otherwise specified, references to “we,” “us,” “our,” or the “Company,” refer to Medley CapitalPhenixFIN Corporation.


Forward-Looking Statements


Some of the statements in this annualquarterly report on Form 10-Q constitute forward-looking statements, which relate to future events or our performance or financial condition. The forward-looking statements contained in this annualquarterly report on Form 10-Q involve risks and uncertainties, including statements as to:


•the introduction, withdrawal, success and timing of business initiatives and strategies;

•changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets, which could result in changes in the value of our assets;

•the relative and absolute investment performance and operations of MCC Advisors;

•the impact of increased competition;

•the impact of future acquisitions and divestitures;

•our business prospects and the prospects of our portfolio companies;

•the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government agencies relating to us or MCC Advisors;

•our contractual arrangements and relationships with third parties;

•any future financings by us;

•the ability of MCC Advisors to attract and retain highly talented professionals;

•fluctuations in foreign currency exchange rates;

•the impact of changes to tax legislation and, generally, our tax position;

•the unfavorable resolution of legal proceedings;

•uncertainties associated with the impact from the COVID-19 pandemic: including its impact on the global and U.S. capital markets and the global and U.S. economy; the length and duration of the COVID-19 outbreak in the United States as well as worldwide and the magnitude of the economic impact of that outbreak; the effect of the COVID-19 pandemic on our business prospects and the operational and financial performance of our portfolio companies, including our and their ability to achieve their respective objectives; and the effect of the disruptions caused by the COVID-19 pandemic on our ability to continue to effectively manage our business; and

•risks and uncertainties relating to the possibility that the Company may explore strategic alternatives, including, but are not limited to: the timing, benefits and outcome of any exploration of strategic alternatives by the Company; potential disruptions in the Company’s business and stock price as a result of our exploration of any strategic alternatives; the ability to realize anticipated efficiencies, or strategic or financial benefits; potential transaction costs and risks; and the risk that any exploration of strategic alternatives may have an adverse effect on our existing business arrangements or relationships, including our ability to retain or hire key personnel. There is no assurance that any exploration of strategic alternatives will result in a transaction or other strategic change or outcome.

●the introduction, withdrawal, success and timing of business initiatives and strategies;

●changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets, which could result in changes in the value of our assets;

●the impact of increased competition;

●the impact of future acquisitions and divestitures;

●our business prospects and the prospects of our portfolio companies;

●the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government agencies relating to us;

●our contractual arrangements and relationships with third parties;

●any future financings by us;

●fluctuations in foreign currency exchange rates;

●the impact of changes to tax legislation and, generally, our tax position;

●our ability to locate suitable investments for us and to monitor and administer our investments;

●our ability to attract and retain highly talented professionals;

●market conditions and our ability to access alternative debt markets and additional debt and equity capital;

●the unfavorable resolution of legal proceedings;

●uncertainties associated with the impact from the COVID-19 pandemic: including its impact on the global and U.S. capital markets and the global and U.S. economy; the length and duration of the COVID-19 outbreak in the United States as well as worldwide and the magnitude of the economic impact of that outbreak; the effect of the COVID-19 pandemic on our business prospects and the operational and financial performance of our portfolio companies, including our and their ability to achieve their respective objectives; and the effect of the disruptions caused by the COVID-19 pandemic on our ability to continue to effectively manage our business; and

●risks and uncertainties relating to the possibility that the Company may explore strategic alternatives, including, but are not limited to: the timing, benefits and outcome of any exploration of strategic alternatives by the Company; potential disruptions in the Company’s business and stock price as a result of our exploration of any strategic alternatives; the ability to realize anticipated efficiencies, or strategic or financial benefits; potential transaction costs and risks; and the risk that any exploration of strategic alternatives may have an adverse effect on our existing business arrangements or relationships, including our ability to retain or hire key personnel. There is no assurance that any exploration of strategic alternatives will result in a transaction or other strategic change or outcome.

Such forward-looking statements may include statements preceded by, followed by or that otherwise include the words “trend,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “potential,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may,” or similar expressions. The forward looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth as “Risk Factors” in this quarterly report on Form 10-Q.


We have based the forward-looking statements included in this report on information available to us on the date of this report, and we assume no obligation to update any such forward-looking statements. Actual results could differ materially from those anticipated in our forward-looking statements, and future results could differ materially from historical performance. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the SEC, including quarterly reports on Form 10-Q, registration statements on Form N-2, annual reports on Form 10-K, and current reports on Form 8-K.



1

COVID-19 Developments


On March 11, 2020, the World Health Organization declared the novel coronavirus (“COVID-19”) as a pandemic, and, on March 13, 2020, the United States declared a national emergency with respect to COVID-19. The outbreak of

COVID-19 has severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. The global impact of the outbreak has been rapidly evolvingCOVID-19 continues to evolve and many countries, including the United States, have reacted at various stages of the pandemic by instituting quarantines, restricting travel, and temporarily closing or limiting capacity at many corporate offices, retail stores, restaurants, fitness clubs and manufacturing facilities and factories in affected jurisdictions. Such actions are creating have created disruption in global supply chains and adversely impactingimpacted a number of industries. The outbreak has had and could continue to have a continuedan adverse impact on economic and market conditions and trigger a period of global economic slowdown.


We are closely monitoring the impact of the outbreak of COVID-19 on all aspects of our business, including how it will impact our portfolio companies, employees, due diligence and underwriting processes, and financial markets. Given the rapidcontinuing development and fluidity of this situation, we cannot estimate the long-term impact of COVID-19 on our business, future results of operations, financial position or cash flows at this time. Further, the operational and financial performance of the portfolio companies in which we make investments may be significantly impacted by COVID-19, which may in turn impact the valuation of our investments. We believe our portfolio companies have taken immediate actions to effectively and efficiently respond to the challenges posed by COVID-19 and related orders imposed by state and local governments, including developing liquidity plans supported by internal cash reserves, shareholder support, and, as appropriate, accessing their ability to participate in the recently enacted government Paycheck Protection Program. The extentCompany’s performance was negatively impacted during the pandemic. The longer-term impact of COVID-19 on the operations and the performance of the Company (including certain portfolio companies) is difficult to which ourpredict, but may also be adverse. The longer-term potential impact on such operations may be impacted by the COVID-19 pandemic willand performance could depend largelyto a large extent on future developments which are highly uncertain and cannot be accurately predicted, including new information which may emerge concerningactions taken by authorities and other entities to mitigate COVID-19 and its economic impact. The impacts, as well as the severityuncertainty over impacts to come, of COVID-19 have adversely affected the performance of the outbreakCompany (including certain portfolio companies) and actions by government authoritiesmay continue to containdo so in the outbreak or treat its impact.future. Furthermore, the impacts of a potential worsening of global economic conditions and the continued disruptions to and volatility in the financial markets remain unknown. COVID-19 presents material uncertainty and risks with respect to the underlying value of the Company’s portfolio companies, the Company’s business, financial condition, results of operations and cash flows, such as the potential negative impact to financing arrangements, increased costs of operations, changes in law and/or regulation, and uncertainty regarding government and regulatoryregulatory policy.


We have evaluated subsequent events from June 30, 20202021 through August 7, 2020, the filing date of this quarterly report on Form 10-Q. However, as the discussion in this Item 7.2. Management’s Discussion and Analysis of Financial Condition and Results of Operations relates to the Company’s financial statements for the quarterly period endended June 30, 2020,2021, the analysis contained herein may not fully account for impacts relating to the COVID-19 pandemic. In that regard, for example, as of June 30, 2020,2021, the Company valued its portfolio investments in conformity with U.S. GAAP based on the facts and circumstances known by the Company at that time, or reasonably expected to be known at that time. Due to the overall volatility that the COVID-19 pandemic hasmay have caused during the months that followedfollowing our most recent valuation (as of June 30, 2020 valuation,2021), any valuations conducted now or in the future in conformity with U.S. GAAP could result in a lower fair value of our portfolio. The longer-term impact of COVID-19 on the operations and the performance of the Company (including certain portfolio companies) is difficult to our results going forward willpredict, but may also be adverse. The longer-term potential impact on such operations and performance could depend to a large extent on future developments and new information that may emerge regarding the duration and severity of COVID-19 and the actions taken by authorities and other entities to contain COVID-19 and its economic impact. The impacts, as well as the coronavirus or treat its impact, alluncertainty over impacts to come, of which are beyond our control. Accordingly,COVID-19 have adversely affected the performance of the Company cannot predictand may continue to do so in the extentfuture. Further, the potential exists for variants of COVID-19, including the Delta variant, to which its financial conditionimpede the global economic recovery and resultsexacerbate geographic differences in the spread of, operations will be affected at this time.


and response to, COVID-19.

Overview


We are an externally-managed,a non-diversified closed-end management investment company that has elected to be regulated as a BDC under the 1940 Act. In addition, we have elected, and intend to qualify annually, to be treated for U.S. federal income tax purposes as a RIC under Subchapter M of the Code.


Through December 31, 2020, we were an externally managed company. On November 18, 2020, the board of directors of the Company approved the adoption of an internalized management structure, effective January 1, 2021. Since January 1, 2021, we have operated under such internalized management structure.

We commenced operations and completed our initial public offering on January 20, 2011. Our investmentUnder our internalized management structure, our activities are managed by MCC Advisorsour senior professionals and are supervised by our board of directors, of which a majority of the members are independent of us.


Our

The Company’s investment objective is to generate current income and capital appreciation by lendingappreciation. The management team seeks to privately-held middle market companies,achieve this objective primarily through directly originated transactions,making loans, private equity or other investments in privately-held companies. The Company may also make debt, equity or other investments in publicly-traded companies. (These investments may also include investments in other BDCs, closed-end funds or REITS.) We may also pursue other strategic opportunities and invest in other assets or operate other businesses to help these companies fund acquisitions, growth or refinancing. Ourachieve our investment objective. The portfolio generally consists of senior secured first lien term loans, and senior secured second lien term loans.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 the 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.

As a BDC, we are required to comply with certain regulatory requirements. For instance, we generally have to invest at least 70% of our total assets in “qualifying assets,” including securities of private or thinly traded public U.S. companies, cash, cash equivalents, U.S. government securities and high-quality debt investments that mature in one year or less. In addition, we are only allowed to borrow money such that our asset coverage, as defined in the 1940 Act, equals at least 200% (or 150% if, pursuant to the 1940 Act, certain requirements are met) after such borrowing, with certain limited exceptions. To maintain our RIC tax treatment, we must meet specified source-of-income and asset diversification requirements. In addition, to maintain our RIC tax treatment, we must timely distribute at least 90% of our net ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, for the taxable year.



NYSE Continued Listing Status


On April 10, 2020, the Company received written notification, from the NYSE that it was not in compliance with an NYSE continued listing standard in Section 802.01C of the NYSE Listed Company Manual (“Section 802.01C”) because the average closing price of the Company’s common stock over a period of 30 consecutive trading days was below $1.00 per share. The Company cancould regain compliance with Section 802.01C at any time during the six-month cure period if, on the last trading day of any calendar month during the cure period, it hashad (i) a closing share price of at least $1.00 per share and (ii) an average closing price of at least $1.00 per share over the 30 trading-day period ending on the last trading day of that month. As described in detail below, the Company effected the Reverse Stock Split (as defined below), effective as of July 24, 2020, which is intended to bringbrought the Company into compliance with Section 802.01C.


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On December 21, 2020, the Company announced that it completed the application process for and was authorized to transfer the listing of its shares of common stock to the NASDAQ Global Market. The listing and trading of the common stock on the NYSE ceased at the close of trading on December 31, 2020. Since January 4, 2021, the common stock trades on the NASDAQ Global Market under the trading symbol “PFX.”

Reverse Stock Split; Authorized Share Reduction


At the Company’s 2020 Annual Meeting of Stockholders held on June 30, 2020 (the “Annual Meeting”), stockholders approved a proposal to grant discretionary authority to the Company’s board of directors to amend the Company’s Certificate of Incorporation (the “Certificate of Incorporation”) to effect a reverse stock split of its common stock, of 1-20 (the “Reverse Stock Split”) and with the Reverse Stock Split to be effective at such time and date, if at all, as determined by the board of directors, but not later than 60 days after stockholder approval thereof and, if and when the reverse stock split is effected, reduce the number of authorized shares of common stock by the approved reverse stock split ratio (the “Authorized Share Reduction”).


Following the Annual Meeting, on July 7, 2020, the board of directors determined that it was in the best interests of the Company and its stockholders to implement the Reverse Stock Split and the Authorized Share Reduction. Accordingly, on July 13, 2020, the Company filed a Certificate of Amendment (the “Certificate of Amendment”) to the Certificate of Incorporation with the Secretary of State of the State of Delaware to effect the Reverse Stock Split and the Authorized Share Reduction.


Pursuant to the Certificate of Amendment, effective as of 5:00 p.m., Eastern Time, on July 24, 2020 (the “Effective Time”), each twenty (20) shares of common stock issued and outstanding, immediately prior to the Effective Time, automatically and without any action on the part of the respective holders thereof, were combined and converted into one (1) share of common stock. In connection with the Reverse Stock Split, the Certificate of Amendment provided for a reduction in the number of authorized shares of common stock from 100,000,000 to 5,000,000 shares of common stock. No fractional shares were issued as a result of the Reverse Stock Split. Instead, any stockholder who would have been entitled to receive a fractional share as a result of the Reverse Stock Split received cash payments in lieu of such fractional shares (without interest and subject to backup withholding and applicable withholding taxes).


The common stock began trading on a split-adjusted basis on the NYSE at the market open on July 27, 2020. The trading symbol for the common stock remains “MCC.”

The Reverse Stock Split was intended to bring the Company into compliance with the $1.00 minimum average closing share price requirement (the “Minimum Share Price Requirement”) for continued listing on the NYSE. On August 3, 2020, the Company received written notice from the NYSE that the Company has regained compliance with the Minimum Share Price Requirement after the Company’s average closing price over the 30 consecutive trading day period ending on July 31, 2020 was above $1.00 per share as required under Section 802.01C.

Revenues


We generate revenue in the form of interest income on the debt that we hold and capital gains, if any, on warrants or other equity interests that we may acquire in portfolio companies. We invest our assets primarily in privately held companies with enterprise or asset values between $25 million and $250 million and focus on investment sizes of $10 million to $50 million. We believe that pursuing opportunities of this size offers several benefits including reduced competition, a larger investment opportunity set and the ability to minimize the impact of financial intermediaries. We expect our debt investments to bear interest at either a fixed or floating rate. Interest on debt will be payable generally either monthly or quarterly. In some cases our debt investments may provide for a portion of the interest to be PIK. To the extent interest is PIK, it will be payable through the increase of the principal amount of the obligation by the amount of interest due on the then-outstanding aggregate principal amount of such obligation. The principal amount of the debt and any accrued but unpaid interest will generally become due at the maturity date. In addition, we may generate revenue in the form of commitment, origination, structuring or diligence fees, fees for providing managerial assistance or investment management services and possibly consulting fees. Any such fees will be generated in connection with our investments and recognized as earned.


Expenses


Our

In periods prior to December 31, 2020, our primary operating expenses include the payment ofincluded management and incentive fees pursuant to the investment management agreement we havehad with MCC Advisors and overhead expenses, including our allocable portion of our administrator’s overhead under the administration agreement.agreement, which were paid during the quarter ended March 31, 2021. Our management and incentive fees compensatecompensated MCC Advisors for its work in identifying, evaluating, negotiating, closing and monitoring our investments. WeOn November 18, 2020, the board of directors adopted an internally managed structure, effective January 1, 2021, under which we bear all other costs and expenses of our operations and transactions, including those relating to:

●our organization and continued corporate existence;

●calculating our NAV (including the cost and expenses of any independent valuation firms);

●salaries, compensation and benefits for our employees and any consultants, including investment professionals;

●interest payable on debt, if any, incurred to finance our investments;

●the costs of all offerings of common stock and other securities, if any;

●distributions on our shares;



•our organization and continued corporate existence;

•calculating our NAV (including the cost and expenses of any independent valuation firms);

•expenses incurred by MCC Advisors payable to third parties, including agents, consultants or other advisers, in monitoring our financial and legal affairs and in monitoring our investments and performing due diligence on our prospective portfolio companies;

•interest payable on debt, if any, incurred to finance our investments;

•the costs of all offerings of common stock and other securities, if any;

•the base management fee and any incentive fee;

•distributions on our shares;

•administration fees payable under our administration agreement;

•the allocated costs incurred by MCC Advisors in providing managerial assistance to those portfolio companies that request it;

3

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

•transfer agent and custodial fees;

•registration fees and listing fees;

•U.S. federal, state and local taxes;

•independent director 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;

•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; and

•all other expenses reasonably incurred by us or MCC Advisors in connection with administering our business, such as the allocable portion of overhead under our administration agreement, including rent and other allocable portions of the cost of our Chief Financial Officer and Chief Compliance Officer and their respective staffs (including travel expenses).

●administration fees payable under our administration agreement with U.S. Bancorp;

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

●transfer agent and custodial fees;

●registration fees and listing fees;

●U.S. federal, state and local taxes;

●independent director 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;

●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; and

●all other expenses reasonably incurred by us in connection with administering our business, such as rent for our office space.

Expense Support Agreement


On June 12, 2020, the Company entered into an expense support agreement (the “Expense Support Agreement”) with MCC Advisors and Medley LLC, pursuant to which MCC Advisors and Medley LLC agreed (jointly and severally) to cap the management fee and all of the Company’s other operating expenses (except interest expenses, certain extraordinary strategic transaction expenses, and other expenses approved by the special committeeSpecial Committee of the Board comprised solely of directors who are not “interested persons” of the Company as such term is defined in Section 2(a)(19) of the 1940 Act (the “Special Committee”) (as described in Note 10)), at $667,000 per month (the “Cap”). Under the Expense Support Agreement, the Cap became effective on June 1, 2020 and expireswas to expire on September 30, 2020. On September 29, 2020, the board of directors, including all of the independent directors, extended the term of the Expense Support Agreement through the end of quarter ending December 31, 2020. The Expense Support Agreement expired by its terms at the close of business on December 31, 2020, in connection with the adoption of the internalized management structure by the board of directors.

For the one monththree months ended June 30,December 31, 2020, the total management fee and the other operating expenses subject to the Cap (as described above) were $1.0$2.5 million, which resulted in $0.3 million of expense support incurred during the quarter ended December 31, 2020 and due from MCC Advisors. The $0.3 million of expense support due has beenwas netted against Administrator expenses payable in the accompanying Consolidated Statements of Assets and Liabilities.

Liabilities and paid during the quarter ended March 31, 2021. See “Note 6” for more information.

Portfolio and Investment Activity


As of June 30, 20202021 and September 30, 2019,2020, our portfolio had a fair market value of approximately $250.6$181.6 million and $396.9$246.7 million, respectively. The following table summarizes our

During the nine months ended June 30, 2021, we received proceeds from sale and settlements of investments of $87.8 million, including principal and dividend proceeds, realized net losses on investments of $46.5 million, and invested $31.0 million, of which $8.6 million was invested in seven new portfolio companies and investment activityone new security in an existing portfolio company during the three andquarter.

For the nine months ended June 30, 2020, we received proceeds from sale and 2019 (dollars in thousands):

 For the three months ended June 30For the nine months ended June 30
 2020201920202019
Investments made in new portfolio companies$—  $678  $5,000  $1,326  
Investments made in existing portfolio companies2,940  6,018  11,177  57,759  
Aggregate amount in exits and repayments(17,321) (120,150) (102,647) (194,914) 
Net investment activity$(14,381) $(113,454) $(86,470) $(135,829) 
Portfolio Companies, at beginning of period44  60  51  67  
Number of new portfolio companies—  1  1  3  
Number of exited portfolio companies(1) (7) (9) (16) 
Portfolio companies, at end of period43  54  43  54  
Number of investments in existing portfolio companies5  7  21  21  

settlements of investments of $103.4 million, realized net losses on investments of $39.8 million, and invested $16.2 million.

The following table summarizes the amortized cost and the fair value of our average portfolio company, including until its sale on October 8, 2020, the equity investment in the MCC Senior Loan Strategy JV I LLC (“MCC JV”), andwhich had been our largest portfolio company, excluding the equity investment in the MCC JV, as of June 30, 2020 and September 30, 2019 (dollars in thousands):company:

  June 30, 2021  September 30, 2020 
  Amortized Cost  Fair Value  Amortized Cost  Fair Value 
Average portfolio company $3,366  $3,707  $7,813  $5,875 
Largest portfolio company  19,469   33,383   37,987   40,807 


June 30, 2020
September 30, 2019(1)
 Amortized CostFair ValueAmortized CostFair Value
Average portfolio company$8,007  $5,828  $9,170  $7,782  
Largest portfolio company37,987  40,807  38,395  41,855  
(1)The September 30, 2019 presentation has been revised to conform to the current year presentation.
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The following table summarizes the amortized cost and the fair value of investments as of June 30, 20202021 (dollars in thousands):

 Amortized CostPercentageFair ValuePercentage
Senior Secured First Lien Term Loans$188,698  54.8 %$107,338  42.8 %
Senior Secured Second Lien Term Loans18,260  5.3  13,239  5.3  
Unsecured Debt4,489  1.3  3,238  1.3  
MCC Senior Loan Strategy JV I LLC79,888  23.2  47,135  18.8  
Equity/Warrants52,969  15.4  79,669  31.8  
Total$344,304  100.0 %$250,619  100.0 %

  Amortized Cost  Percentage  Fair Value  Percentage 
Senior Secured First Lien Term Loans $165,696   73.4% $90,280   49.6%
Senior Secured Second Lien Term Loans  2,600   1.2   2,483   1.4 
Senior Secured Notes  3,757   1.7   3,726   2.1 
Unsecured Debt  3,846   1.7   2,110   1.2 
Equity/Warrants  49,631   22.0   83,020   45.7 
Total Investments $225,530   100.0% $181,619   100.0%

The following table summarizes the amortized cost and the fair value of investments as of September 30, 20192020 (dollars in thousands):

 Amortized CostPercentageFair ValuePercentage
Senior Secured First Lien Term Loans$243,342  52.0 %$192,770  48.6 %
Senior Secured Second Lien Term Loans39,089  8.4  36,508  9.2  
Unsecured Debt2,653  0.6  2,653  0.7  
MCC Senior Loan Strategy JV I LLC78,575  16.8  69,949  17.6  
Equity/Warrants103,989  22.2  95,009  23.9  
Total$467,648  100.0 %$396,889  100.0 %

  Amortized Cost  Percentage  Fair Value  Percentage 
Senior Secured First Lien Term Loans $178,843   54.5% $106,463   43.2%
Senior Secured Second Lien Term Loans  15,476   4.7   13,927   5.6 
Unsecured Debt  4,601   1.4   2,669   1.1 
MCC Senior Loan Strategy JV I LLC  79,888   24.4   41,019   16.6 
Equity/Warrants  49,327   15.0   82,666   33.5 
Total $328,135   100.0% $246,744   100.0%

As of June 30, 2020,2021, our income-bearing investment portfolio which represented 64.4%67.7% of our total portfolio had a weighted average yield based upon cost of our portfolio investments of approximately 8.8%, and 88.7% of our income-bearing investment portfoliowhich 71.2% bore interest based on floating rates, such as the London Interbank Offering Rate (“LIBOR”), while 11.3% of our income-bearing investment portfolio28.8% bore interest at fixed rates. As of June 30, 2020,2021, the weighted average yield based upon cost of our total portfolio was approximately 3.2%8.7%.  The weighted average yield of our total portfolio does not represent the total return to our stockholders.


MCC Advisors, regularly assesseswhile serving as our investment adviser, rated the risk profile of each of our investments and rates each of them based on the following categories, which we referwas referred to as MCC Advisors’ investment credit rating:

rating. The Company’s new internal management team will reassess the investments and rating system utilized.

Credit
Rating		Definition
  
1 Rating Definition
1 Investments that are performing above expectations.
2  
2 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’.
3  
3 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.
4 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).
5 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.
Some loss of principal is expected.

The COVID-19 pandemic has impacted our investment ratings, as of June 30, 2020, causing downgrades of certain portfolio companies. As the COVID-19 situation continues to evolve, we are maintainingcontinue to maintain close communications with our portfolio companies to proactively assess and manage potential risks across our investment portfolio. We have also increased oversight and analysis of credits in vulnerable industries in an attempt to improve loan performance and reduce credit risk.


The following table shows the distribution of our investments on the 1 to 5 investment performance rating scale at fair value as of June 30, 20202021 and September 30, 20192020 (dollars in thousands):

  June 30, 2021  September 30, 2020 
  Fair Value  Percentage  Fair Value  Percentage 
1 $7,538   4.1% $54,256   22.0%
2  132,733   73.1%  130,742   53.0%
3  25,622   14.1%  40,645   16.5%
4  8,652   4.8%  11,325   4.6%
5  7,074   3.9%  9,776   3.9%
Total $181,619   100.0% $246,744   100.0%


 June 30, 2020September 30, 2019
Investment Performance RatingFair ValuePercentageFair ValuePercentage
1$51,306  20.4 %$105,231  26.5 %
2117,232  46.8  146,053  36.8  
365,573  26.2  123,253  31.1  
44,530  1.8  4,915  1.2  
511,978  4.8  17,437  4.4  
Total$250,619  100.0 %$396,889  100.0 %
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Results of Operations


Operating results for the three and nine months ended June 30, 2021 and 2020 are as follows (dollars in thousands):

  For the Three Months Ended
June 30		  For the Nine Months Ended
June 30		 
  2021  2020  2021  2020 
Total investment income $8,684  $4,309  $27,939  $17,102 
Less: Net expenses  3,254   5,028   10,493   18,964 
Net investment income/(loss)  5,430   (719)  17,446   (1,862)
Net realized gains (losses) on investments  61   (37,922)  (46,485)  (39,766)
Net change in unrealized gains (losses) on investments  1,478   46,906   37,479   (22,927)
Change in provision for deferred taxes on unrealized (appreciation)/depreciation on investments  —   36   —   (50)
Loss on extinguishment of debt  —   (697)  (122)  (2,481)
  Net increase (decrease) in net assets resulting                
  from operations $6,969  $7,604  $8,318  $(67,086)

Investment Income

For the three months ended June 30, 20202021, investment income totaled $8.7 million, of which $8.6 million was attributable to portfolio interest and 2019 are as follows (dollars in thousands):

For the three months ended June 30For the nine months ended June 30
2020201920202019
Total investment income$4,309  $11,394  $17,102  $38,183  
Total expenses, net5,028  15,217  18,964  50,841  
Net investment income before excise taxes(719) (3,823) (1,862) (12,658) 
Excise tax expense—  —  —  —  
Net investment income/(loss)(719) (3,823) (1,862) (12,658) 
Net realized gains/(losses) from investments(37,922) (8,963) (39,766) (76,301) 
Net unrealized appreciation/(depreciation) on investments46,906  (15,649) (22,927) 25,961  
Change in provision for deferred taxes on unrealized (appreciation)/depreciation on investments36  —  (50) —  
Loss on extinguishment of debt(697) (1,806) (2,481) (1,929) 
Net increase/(decrease) in net assets resulting from operations$7,604  $(30,241) $(67,086) $(64,927) 

Investment Income

dividend income, and $0.1 million was attributable to fee income. For the nine months ended June 30, 2021, investment income totaled $27.9 million, of which $27.2 million was attributable to portfolio interest and dividend income, $0.6 million was attributable to fee income, and $0.1 million was attributable to other income. Dividend income was received from six investments.

For the three months ended June 30, 2020, investment income totaled $4.3 million, of which $4.1 million was attributable to portfolio interest and dividend income, and $0.2 million was attributable to fee income. For the nine months ended June 30, 2020, investment income totaled $17.1 million, of which $16.5 million was attributable to portfolio interest and dividend income, and $0.6 million to fee income.


For the three months ended June 30, 2019, investment income totaled $11.4 million, of which $10.2 million was attributable to portfolio interest and dividend income, and $1.2 million to fee income. For the nine months ended June 30, 2019, investment income totaled $38.2 million, of which $36.2 million was attributable to portfolio interest and dividend income, and $2.0 million to fee income.

Operating Expenses

Operating expenses for the three and nine months ended June 30, 20202021 and 20192020 are as follows (dollars in thousands):

 For the three months ended June 30For the nine months ended June 30
 2020201920202019
Base management fees$1,317  $2,689  $4,967  $8,958  
Incentive fees—  —  —  —  
Interest and financing expenses2,736  6,834  12,312  18,741  
General and administrative540  1,162  3,140  4,647  
Administrator expenses615  762  1,743  2,462  
Insurance334  127  988  364  
Directors fees347  420  960  1,089  
Professional fees, net(512) 3,223  (4,797) 14,580  
Expenses before waivers and reimbursements5,377  15,217  19,313  50,841  
Expense support reimbursement(349) —  (349) —  
Management fee waiver—  —  —  —  
Incentive fee waiver—  —  —  —  
Expenses, net of waivers and reimbursements$5,028  $15,217  $18,964  $50,841  

  For the Three Months Ended
June 30		  For the Nine Months Ended
June 30		 
  2021  2020  2021  2020 
Base management fees $—  $1,317  $1,146  $4,967 
Interest and financing expenses  1,261   2,736   4,539   12,312 
General and administrative  294   540   856   3,140 
Salary and Benefit  679   —   1,012   — 
Administrator expenses  107   615   546   1,743 
Insurance  445   334   1,404   988 
Directors fees  179   347   875   960 
Professional fees, net  289   (512)  114   (4,797)
Expenses before waivers and reimbursements  3,254   5,377   10,492   19,313 
Expense support reimbursement  —   (349)  —   (349)
Expenses, net of waivers and reimbursements  3,254   5,028   10,492   18,964 

For the three months ended June 30, 2020,2021, total operating expenses before management and incentive fee waivers and expense support reimbursements decreased by $9.8$2.1 million, or 64.7%39.5%, compared to the three months ended June 30, 2019.2020. For the nine months ended June 30, 2020,2021, total operating expenses before management and incentive fee waivers and expense support reimbursements decreased by $31.5$8.8 million, or 62.0%45.7%, compared to the nine months ended June 30, 2019.


2020.

For the three months ended June 30, 2020, operating expenses, net of2021, the Company did not incur any management andor incentive fees, nor was it subject to expense support arrangements due to its transition to an internal management structure. As a result, there were no management or incentive fee waivers andor expense support reimbursements for such period. For the three months ended June 30, 2021, operating expenses decreased by $10.1$0.8 million or 67.0%19.9%, compared to the three months ended June 30, 2019. For the nine months ended June 30, 2020, operating expenses, net of management and incentive fee waivers and reimbursementsexpense support reimbursements. For the nine months ended June 30, 2021, operating expenses decreased by $31.9$5.0 million or 62.7%34.9%, compared to the nine months ended June 30, 2019. Under the Expense Support Agreement, the Cap became effective on June 1, 2020, net of management and therefore the impact of the Expense Support Agreement was limited to a one month period during the threeincentive fee waivers and nine months ended June 30, 2020. For the one month ended June 30, 2020, the total management fee and the other operating expenses subject to the Cap (as described above) were $1.0 million, which resulted in $0.3 million of expense support due from MCC Advisors.reimbursements.



6

Interest and Financing Expenses


Interest and financing expenses for the three months ended June 30, 20202021 decreased by $4.1$1.5 million, or 60.0%53.9%, compared to the three months ended June 30, 2019.2020. The decrease in interest and financing expenses was primarily due to the Company’s $74.0 million repayment of the 2021 Notes on November 20, 2020 and the full repayment of $120.2 million Series A Israeli Notes offered in Israel (the “Israeli Notes”) between August 12, 2019 and April 14, 2020 and the voluntary repayment of $135.0 million SBA-guaranteed debentures (the “SBA Debentures”), which the Company repaid between April 2, 2019 and May 10, 2019.


2020.  

Interest and financing expenses for the nine months ended June 30, 20202021 decreased by $6.4$7.8 million, or 34.3%63.1%, compared to the nine months ended June 30, 2019.2020. The decrease in interest and financing expenses was primarily due to the redemptionCompany’s $74.0 million repayment of $12.0 million of 6.125% unsecured notes that maturethe 2021 Notes on March 30, 2023 (the “2023 Notes”),November 20, 2020 and the full repayment of $120.2 million of theSeries A Israeli Notes offered in Israel (the “Israeli Notes”) between August 12, 2019 and April 14, 2020 and the voluntary repayment of $135.0 million of the SBA Debentures, which the Company repaid between April 2, 2019 and May 10, 2019.


2020.

Base Management Fees and Incentive Fees


Base management fees for the three months ended June 30, 20202021 decreased by $1.4$1.3 million, or 51.0%100%, compared to the three months ended June 30, 2019 due to2020 as, since January 1, 2021, the decline in our gross assets during the period.


Company no longer incurs management fees under its current internalized structure.

Base management fees for the nine months ended June 30, 20202021 decreased by $4.0$3.8 million, or 44.6%76.9%, compared to the nine months ended June 30, 2019 due to2020 as, since January 1, 2021, the decline in our gross assets duringCompany no longer incurs management fees under its current internalized structure.

No incentive fees were paid for the period.


three and nine months ended June 30, 2021 or the three and nine months ended June 30, 2020. Since January 1, 2021, the Company no longer incurs incentive fees under its current internalized structure.

Professional Fees and Other General and Administrative Expenses


Professional fees and general and administrative expenses for the three months ended June 30, 2020 decreased2021 increased by $4.4$0.6 million or 76.7%, compared to the three months ended June 30, 20192020 primarily due to a decrease in the insurance proceeds received related toin 2021 which offset legal expenses relating to the Delaware Action, as well as a decrease in legal expenses, administrative expenses and valuation expenses, partially offset by an increase in insurance expenses.


Professional fees and general and administrative expenses for the nine months ended June 30, 2020 decreased2021 increased by $21.1$2.6 million, or 91.2%158.6%, compared to the nine months ended June 30, 20192020 primarily due to a decrease in the insurance proceeds received related toin 2021 which offset legal expenses relating to the Delaware Action and the Therapeutic Fee Award of approximately $3.5 million as well as a decrease in legal expenses, administrative expenses and valuation expenses, partially offset by an increase in insurance expenses.


Net Realized Gains/Losses from Investments


We measure realized gains or losses by the difference between the net proceeds from the disposition and the amortized cost basis of an investment, without regard to unrealized gains or losses previously recognized.


During the three months ended June 30, 2021, we recognized $0.1 million of realized gains on our portfolio investments. The realized gains were primarily due to the sale of one investment. During the nine months ended June 30, 2021, we recognized $46.5 million of realized losses on our portfolio investments. The realized losses were primarily due to the sale of one investment.

During the three months ended June 30, 2020, we recognized $37.9 million of realized losses on our portfolio investments. The realized losses were primarily due to the sale of two investments and the partial sale of two investments. During the nine months ended June 30, 2020, we recognized $39.8 million of realized losses on our portfolio investments. The realized losses were primarily due to the sale of three investments.


During the three months ended June 30, 2019, we recognized $8.9 million of net realized losses on our portfolio investments. The realized losses were
primarily attributable to the non-cash restructuring of one of our portfolio investments, partially offset by a realized gain resulting from exercising warrants and converting junior preferred equity in one portfolio company into common shares of a new portfolio company. During the nine months ended June 30, 2019, we recognized $76.3 million of realized losses on our portfolio investments. The realized losses were primarily due to the non-cash restructuring of two of our investments as well as the write-off of certain investments in two portfolio companies, offset by the conversion of the warrants and junior preferred equity, as described above.

Realized loss on extinguishment of debt


In the event that we modify or extinguish our debt prior to maturity, we account for it in accordance with ASC 470-50, Modifications and Extinguishments, in which we measure the difference between the reacquisition price of the debt and the net carrying amount of the debt, which includes any unamortized debt issuance costs.


During the three months ended June 30, 2021, the Company did not recognize a net loss on extinguishment of debt.

During the nine months ended June 30, 2021, the Company recognized a net loss on extinguishment of debt of $0.1 million, which was due to the Company’s $74.0 million repayment of the 2021 Notes on November 20, 2020.

During the three months ended June 30, 2020, the Company recognized a net loss on extinguishment of debt of $0.7 million, which was due to the Company’s $21.1 million repayment of the Israeli Notes on April 14, 2020.


During the nine months ended June 30, 2020, the Company recognized a net loss on extinguishment of debt of $2.5 million, which was due to the Company’s $34.1 million repayment of the Israeli Notes on March 31, 2020 and $21.1 million repayment of the Israeli Notes on April 14, 2020.



During the three months ended June 30, 2019, the Company recognized a loss on extinguishment of debt of $1.8 million from the pre-payment of $135.0 million of SBA Debentures in connection with SBIC LP's surrender of its SBIC license.

During the nine months ended June 30, 2019, the Company recognized a net loss on extinguishment of debt of $1.9 million, which is comprised of a loss on extinguishment of debt of $1.8 million from the pre-payment of $135.0 million of SBA Debentures in connection with SBIC LP's surrender of
its SBIC license and a $0.2 million loss on extinguishment of debt from the $13.0 million partial redemption of the 2023 Notes, offset by a $0.1 million net gain on extinguishment of debt from the repurchase and retirement of $1.1 million of the 2024 Notes.

7

Net Unrealized Appreciation/Depreciation on Investments

Net change in unrealized appreciation or depreciation on investments reflects the net change in the fair value of our investment portfolio.


For the three months ended June 30, 2020,2021, we had $46.9$1.5 million of net unrealized appreciation on investments. The net unrealized appreciation was comprised of $18.2of $7.9 million of net unrealized appreciationdepreciation on investments and $28.7$9.4 million of net unrealized appreciation that resulted from the reversal of previously recorded unrealized depreciation on investments that were realized, partially sold, or written-off during the year.


For the nine months ended June 30, 2020,2021, we had $22.9$37.4 million of net unrealized depreciationappreciation on investments. The net unrealized depreciationappreciation was comprised of $53.7of $39.4 million of net unrealized depreciation on investments offset by $30.8and $76.8 million of net unrealized appreciation that resulted from the reversal of previously recorded unrealized depreciation on investments that were realized, partially sold, or written-off during the year.


For the three months ended June 30, 2019,2020, we had $15.6$46.9 million of net unrealized depreciationappreciation on investments. The net unrealized depreciationappreciation was comprised of $23.1$18.2 million of net unrealized depreciationappreciation on investments offset by $7.5and $28.7 million of net unrealized appreciation that resulted from the reversal of previously recorded unrealized depreciation on investments that were realized, partially sold, or written-off during the period.


year. 

For the nine months ended June 30, 2019,2020, we had $26.0$22.9 million of net unrealized appreciationdepreciation on investments. The net unrealized appreciationdepreciation was comprised of $42.7$53.7 million of net unrealized depreciation on investments offset by $68.7$30.8 million of net unrealized appreciation that resulted from the reversal of previously recorded unrealized depreciation on investments that were realized, partially sold, or written-off during the period.

Provision for Deferred Taxes on Unrealized Depreciation on Investments

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 assetsyear. 

Changes in Net Assets from temporary differences in the recognition of items for financial reporting and income tax purposes at the subsidiaries.Operations

For the three months ended June 30, 2020, the Company recorded a change in provision for deferred taxes on the unrealized depreciation on investments of $35,970. For the nine months ended June 30, 2020, the Company recorded a change in provision for deferred taxes on the unrealized appreciation on investments of $49,694. For the three and nine months ended June 30, 2019, the Company did not record a change in provision for deferred taxes on the unrealized (appreciation)/depreciation on investments.


Changes in Net Assets from Operations(1)

For the three months ended June 30, 2020,2021, we recorded a net increase in net assets resulting from operations of $7.0 million compared to a net increase in net assets resulting from operations of $7.6 million for the three months ended June 30, 2020. This increase takes into account increased net income and net capital appreciation for the period, each as described above. Based on 2,683,093 and 2,723,711 weighted average common shares outstanding for the three months ended June 30, 2021 and 2020, respectively, our per share net increase in net assets resulting from operations was $2.60 for the three months ended June 30, 2021 and an increase of $2.79 for the three months ended June 30, 2020.

For the nine months ended June 30, 2021, we recorded a net increase in net assets resulting from operations of $8.3 million compared to a net decrease in net assets resulting from operations of $30.2 million for the three months ended June 30, 2019 as a result of the factors discussed above. Based on 2,723,711 weighted average common shares outstanding for the three months ended June 30, 2020 and 2019, our per share net increase in net assets resulting from operations was $2.79 for the three months ended June 30, 2020 and a decrease of $11.10 for the three months ended June 30, 2019.


For the nine months ended June 30, 2020, we recorded a net decrease in net assets resulting from operations of $67.1 million compared to a net decrease in net assets resulting from operations of $64.9 million for the nine months ended June 30, 20192020. This increase takes into account increased net income and net capital appreciation for the period, each as a result of the factors discusseddescribed above. Based on 2,707,794 and 2,723,711 weighted average common shares outstanding for the nine months ended June 30, 2021 and 2020, and 2019,respectively, our per share net decreaseincrease in net assets resulting from operations was $3.07 for the nine months ended June 30, 2021 and a decrease of $24.63 for the nine months ended June 30, 2020 and a decrease of $23.84 for the nine months ended June 30, 2019.

(1)Per share data has been adjusted for the periods shown to reflect the one-for-twenty reverse stock split effected on July 24, 2020 on a retroactive basis.

2020.

Financial Condition, Liquidity and Capital Resources


As a RIC, we distribute substantially all of our net income to our stockholders and have an ongoing need to raise additional capital for investment purposes. To fund growth, we have a number of alternatives available to increase capital, including raising equity, increasing debt, and funding from operational cash flow.


Our liquidity and capital resources have been generated primarily from the net proceeds of public offerings of common stock, advances from the Revolving Credit Facility and net proceeds from the issuance of notes as well as cash flows from operations. In the future, we may generate cash from future offerings of securities, future borrowings and cash flows from operations, including interest earned from the temporary investment of cash in U.S. government securities and other high-quality debt investments that mature in one year or less. Our primary use of funds is investments in our targeted asset classes, cash distributions to our stockholders, and other general corporate purposes.


As of June 30, 2020,2021, we had $52.2$52.9 million in cash and cash equivalents.


In order to maintain our RIC tax treatment under the Code, we intend to distribute to our stockholders substantially all of our taxable income, but we may also elect to periodically spill over certain excess undistributed taxable income from one tax year into the next tax year. In addition, as a BDC, we generally are required to meet a coverage ratio of total assets to total senior securities, which include borrowings and any preferred stock we may issue in the future, of at least 200% (or 150% if, pursuant to the 1940 Act, certain requirements are met). This requirement limits the amount that we may borrow.



8

Unsecured Notes


2021 Notes


On December 17, 2015, the Company issued $70.8 million in aggregate principal amount of 6.50% unsecured notes that mature on January 30, 2021 (the "2021 Notes" and together with the 2023 Notes, the "U.S. Notes"“2021 Notes”). On January 14, 2016, the Company closed an additional $3.25 million in aggregate principal amount of the 2021 Notes, pursuant to the partial exercise of the underwriters’ option to purchase additional notes. The 2021 Notes may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after January 30, 2019. The 2021 Notes bearbore interest at a rate of 6.50% per year, payable quarterly on January 30, April 30, July 30 and October 30 of each year, beginning January 30, 2016.

On October 21, 2020, the Company caused notices to be issued to the holders of the 2021 Notes regarding the Company’s exercise of its option to redeem, in whole, the issued and outstanding 2021 Notes, pursuant to Section 1104 of the Indenture dated as of February 7, 2012, between the Company and U.S. Bank National Association, as trustee, and Section 101(h) of the Third Supplemental Indenture dated as of December 17, 2015. The Company redeemed $74,012,825 in aggregate principal amount of the issued and outstanding 2021 Notes on November 20, 2020 (the “Redemption Date”). The 2021 Notes are listedwere redeemed at 100% of their principal amount ($25 per 2021 Note), plus the accrued and unpaid interest thereon from October 31, 2020, through, but excluding, the Redemption Date. The Company funded the redemption of the 2021 Notes with cash on the NYSE and trade thereon under the trading symbol ‘‘MCX’’.


hand.

2023 Notes


On March 18, 2013, the Company issued $60.0 million in aggregate principal amount of 2023 Notes. As of March 30, 2016, the 2023 Notes may be redeemed in whole or in part at any time or from time to time at the Company'sCompany’s option. On March 26, 2013, the Company closed an additional $3.5 million in aggregate principal amount of 2023 Notes, pursuant to the partial exercise of the underwriters’ option to purchase additional notes. The 2023 Notes bear interest at a rate of 6.125% per year, payable quarterly on March 30, June 30, September 30 and December 30 of each year, beginning June 30, 2013. The 2023 Notes are listed on the NYSE and trade thereon under the trading symbol “MCV”.


On December 12, 2016, the Company entered into an “At-The-Market” (“ATM”) debt distribution agreement with FBR Capital Markets & Co., through which the Company could offer for sale, from time to time, up to $40.0 million in aggregate principal amount of the 2023 Notes. The Company sold 1,573,872 of the 2023 Notes at an average price of $25.03 per note, and raised $38.6 million in net proceeds, through the ATM debt distribution agreement.


On March 10, 2018, the Company redeemed $13.0 million in aggregate principal amount of the 2023 Notes. The redemption was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.4 million and was recorded on the Consolidated Statements of Operations as a loss on extinguishment of debt.


On December 31, 2018, the Company redeemed $12.0 million in aggregate principal amount of the 2023 Notes. The redemption was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.2 million and was recorded on the Consolidated Statements of Operations as a loss on extinguishment of debt.


On December 21, 2020, the Company announced that it completed the application process for and was authorized to transfer the listing of the 2023 Notes to the NASDAQ Global Market. The listing and trading of the 2023 Notes on the NYSE ceased at the close of trading on December 31, 2020. Effective January 4, 2021, the 2023 Notes trade on the NASDAQ Global Market under the trading symbol “PFXNL.”

Secured Notes


Israeli Notes


On January 26, 2018, the Company priced a debt offering in Israel of $121.3 million of Israeli Notes and collectively with the U.S. Notes, the "Notes").Notes. The Israeli Notes arewere listed on the TASE and denominated in New Israeli Shekels, but linked to the US Dollar at a fixed exchange rate which mitigates any currency exposure to the Company. The Israeli Notes have not been and will not be registered under the Securities Act of 1933, and may not be offered or sold in the United States absent registration under the Securities Act or in transactions exempt from, or not subject to, such registration requirements. In connection with this offering, we have dual listed our common stock on the TASE.



On August 12, 2019, the Company and its wholly owned subsidiaries, Medley Small Business Fund, LP (formerly known as Medley SBIC, LP) and Medley SLF, on the one hand, and the Trustee, on the other hand, entered into an amendment to the deed of trust (the “Deed”) governing the Israeli Notes (the “Amendment” together with the Deed, the "Deed of Trust"). The Amendment amends the Deed by, among other things: (a) modifying Section 2.2 of the Deed to provide for full repayment of the Israeli Notes in eight (8) equal installments, each comprising twelve and one-half percent (12.5%) of the principal amount of the Israeli Notes, beginning on August 12, 2019 (the “Effective Date”) and ending on January 31, 2021, rather than four (4) equal annual installments, each comprising twenty five percent (25%) of the principal amount of the Israeli Notes, that were payable on February 27 of each of the years 2021-2024 (inclusive); (b) changing the interest payment dates for the Israeli Notes from semi-annual to quarterly except for the initial interest payment, which was paid on the Effective Date, and the final interest payment, which will be paid on January 31, 2021; (c) decreasing the annual interest rate on the Israeli Notes by 0.25% per annum on the Effective Date and further decreasing the annual interest rate on the Israeli Notes by 0.50% per annum if  the mergers of the Company, Sierra Income Corporation (“Sierra”), and MDLY (the “Mergers”) close, which further decrease will be effective upon the closing of the Mergers; (d) decreasing the minimum Total Net Asset covenant in Section 6.1.1 of the Deed from $275 million to $215 million; (e) modifying the acceleration event in Section 10.1.25 of the Deed to provide that it will occur if the credit rating on the Israeli Notes drops below (i) il/B of Maalot before November 30, 2019, (ii) il/BB- of Maalot during the period between December 1, 2019 and April 1, 2020, and (iii) il/BBB- of Maalot on or after April 1, 2020; (f) waiving the make-whole and market value payment requirements of Section 9.1.7 of the Deed for all early redemption payments on the Israeli Notes within eighteen (18) months following the Effective Date; (g) requiring each of Medley Small Business Fund and Medley SLF to guarantee all of the Company’s obligations under the Deed (including the Amendment) and the Israeli Notes and to grant security interests on all of their assets (the “Collateral”) to secure such guaranties and providing for the termination of the Medley SLF guaranty and release of the security interests in Medley SLF’s assets upon the closing of the Mergers, subject to certain limitations; (h) that the Company use principal collections from the Collateral to make early redemption payments on the Israeli Notes, which payments will be applied in inverse order of the maturity of the required principal installment payments on the Israeli Notes; (i) providing for a waiver by the Trustee and the holders of the Israeli Notes of any right to accelerate the full balance of the amount due to the holders of the Israeli Notes based on any claims, allegations, actions, and/or rights that were raised, and/or resulting or deriving from certain claims or allegations as set forth in Section 19.1 of the Amendment; (j) providing for a waiver by the Trustee and the holders of the Israeli Notes of certain claims, demands, rights, and/or actions against and/or relating to the Company, its subsidiaries and/or affiliates and their respective employees (including their respective directors, officers, members of the Company’s board of directors, employees, stockholders, stakeholders and advisors); and (k) adding other definitions, representations and covenants to the Deed and making related conforming changes to the Deed. Pursuant to the Amendment, no prepayment penalties were due or payable in connection with the payment of principal made by the Company on the Effective Date.

9

The Deed (including the Amendment) includes certain customary covenants, including minimum net assets of $215 million and a maximum debt to total assets ratio of 70%. The date for determining compliance with these financial covenants is the date that the Company publishes its financial statements (i.e., in a quarterly report on Form 10-Q or an annual report on Form 10-K) with the SEC. If the Company does not satisfy these financial covenants for two consecutive quarters, it is an event of default under the Deed. If this event of default is expected to occur, the Company has the right to request the trustee for the Israeli Notes (the “Trustee”) to appoint an emergency committee of the three largest noteholders for the purpose of obtaining a one-quarter extension of time to satisfy the financial covenants. If the Company does not make this request and the breach occurs, or if the emergency committee does not grant the extension, then the Trustee is required to convene a meeting of the noteholders as described below.

In addition to not complying with the financial covenants as described above, the events of default include: (i) a change of control of the Company (defined in the Deed as MCC Advisors’ ceasing to provide investment management or advisory services to the Company); (ii) the Company not publishing a tender offer for the purchase of all of the Israeli Notes within 45 days; (iii) the Company not paying any amount due and payable to the holders of the Israeli Notes within seven business days after the payment due date; (iv) certain insolvency and receivership events with respect to the Company or with respect to all or substantially all of its assets, and (v) the Israeli Notes being delisted from the TASE or the TASE’s suspension of trading of the Israeli Notes for more than 60 days.

If an event of default occurs under the Deed, there is no automatic acceleration or mandatory redemption of the Israeli Notes. Rather, the Trustee is required to convene a meeting of the noteholders for a vote on whether to accelerate the Israeli Notes. Noteholders holding at least 50% of the principal amount of the Israeli Notes must be present at the meeting for a quorum to exist, and if a quorum exists, then the vote of a majority of the noteholders present at the meeting controls.

The foregoing description of the terms of Israeli Notes, the Deed, and the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of each of the Deed and the Amendment incorporated by reference as an exhibit to this quarterly report on Form 10-Q.

On June 5, 2018, the Company announced that on June 1, 2018, its board of directors authorized the Company to repurchase and retire up to $20 million of the Company’s outstanding Israeli Notes on the TASE. Execution of the repurchase plan is subject to an open trading window for the Company and continued liquidity at that time and is expected to continue until the full authorized amount is purchased or market conditions change. The repurchase of the Israeli Notes is not expected to result in any material tax consequences to the Company or the holders of the Israeli Notes.


During the quarter ended December 31, 2018, the Company exchanged $1.0 million United States Dollars to New Israeli Shekels at a rate of 3.73 USD/NIS in order to repurchase the Israeli Notes on the TASE. As the Israeli Notes were trading below par at the time of the repurchase, and the USD/NIS (foreign currency) spot rate was higher than the fixed exchange rate agreed upon in the deed of trust, the Company was able to repurchase and retire 3,812,000 units, which resulted in $1,119,201 aggregate principal amount of the Israeli Notes being retired. The redemption was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized gain of $0.1 million and was recorded on the Consolidated Statements of Operations as a gain on extinguishment of debt.


On December 31, 2019 in addition to the scheduled 12.5% quarterly amortization payment, the Company used proceeds from its principal collections in MedleyPhenixFIN SLF and MedleyPhenixFIN Small Business Fund to pre-pay an additional $19.1 million of the Israeli Notes. The pre-payment was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.9 million and was recorded on the Consolidated Statements of Operations as a net loss on extinguishment of debt.

On March 31, 2020, in addition to the scheduled 12.5% quarterly amortization payment, the Company used proceeds from its principal repayments in assets held by MedleyPhenixFIN SLF and MedleyPhenixFIN Small Business Fund to pre-pay an additional $19.8 million of the Israeli Notes. The pre-payment was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.9 million and was recorded on the Consolidated Statements of Operations as a net loss on extinguishment of debt.


On April 14, 2020, the Company repaid the remaining $21.1 million of Israeli Notes outstanding, and as such is no longer subject to any covenants relating thereto. The Israeli Notes were redeemed at 100% of their principal amount, plus the accrued interest thereon, through April 14, 2020.



SBA Debentures

On March 26, 2013, SBIC LP received a SBIC license from the SBA. The SBIC license allowed SBIC LP to obtain leverage by issuing SBA-guaranteed debentures (“SBA Debentures”), subject to the issuance of a capital commitment by the SBA and other customary procedures. SBA Debentures were non-recourse, interest only debentures with interest payable semi-annually and had a ten year maturity. The principal amount of SBA Debentures were not required to be paid prior to maturity but may be prepaid at any time without penalty. The interest rate of SBA Debentures were fixed on a semi-annual basis at a market-driven spread over U.S. Treasury Notes with 10-year maturities. The SBA, as a creditor, had a superior claim to the SBIC LP’s assets over our stockholders in the event we liquidated the SBIC LP or the SBA exercised its remedies under the SBA Debentures issued by the SBIC LP upon an event of default.

On September 1, 2018, the Company repaid $15.0 million in aggregate principal amount of the SBA Debentures. The repayment was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.2 million and was recorded on the Consolidated Statements of Operations as a loss on extinguishment of debt.

SBIC LP received a letter from the SBA (the “SBA Letter”), dated March 14, 2019, informing SBIC LP of certain alleged regulatory issues constituting a default under the terms of the SBIC LP’s outstanding SBA Debentures. The SBA Letter stated that SBIC LP had until March 29, 2019, fifteen (15) days from the date of the SBA Letter, to provide the SBA with certain additional information regarding the alleged regulatory issues, unless extended by the SBA. SBIC LP’s management submitted an orderly wind-down plan to the SBA to prepay the remaining $135.0 million of outstanding SBA Debentures using available cash at SBIC LP as well as the sale of assets to third parties or affiliates of SBIC LP. On March 28, 2019, SBIC LP agreed and made a repayment of $50.0 million of outstanding SBA Debentures by April 3, 2019 using available cash at SBIC LP and the cure period was extended to April 19, 2019. On April 18, 2019, SBIC LP agreed and made a repayment of $20.0 million of outstanding SBA
10

Debentures on April 23, 2019 and an additional $30.0 million of outstanding SBA Debentures on April 30, 2019 using proceeds from the sale of certain assets and the cure period was extended to May 10, 2019. On May 10, 2019, SBIC LP made the final repayment of the remaining $35.0 million of outstanding SBA Debentures using proceeds from the sale of certain assets. In connection therewith, effective July 1, 2019, SBIC LP surrendered its SBIC license and operates as Medley Small Business Fund.

The $135.0 million in aggregate repayments made in connection with the orderly wind-down plan was accounted for as debt extinguishments in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a cumulative realized loss of $1.8 million and was recorded on the Consolidated Statements of Operations as a loss on extinguishment of debt.

Contractual Obligations and Off-Balance Sheet Arrangements


The Company has a guarantee to issue up to $5.7 million in standby letters of credit through a financial intermediary on behalf of a certain portfolio company. Under this arrangement, if the standby letters of credit were to be issued, the Company would be required to make payments to third parties if the portfolio company was to default on its related payment obligations. The guarantee will renew annually until cancellation.

As of June 30, 20202021 and September 30, 2019, the Company had not issued any standby letters of credit under the commitment on behalf of the portfolio company.


As of June 30, 2020, and September 30, 2019, we had commitments under loan and financing agreements to fund up to $3.7$5.1 million to seven portfolio companies and $8.9$3.9 million to sevenfive 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, 20202021 and September 30, 20192020 is shown in the table below (dollars in thousands):
 June 30, 2020September 30, 2019
1888 Industrial Services, LLC - Revolver$1,078  $—  
Kemmerer Operations, LLC - Delayed Draw Term Loan908  908  
Redwood Services Group, LLC - Revolver525  875  
NVTN LLC - Super Priority DDTL500  —  
NVTN LLC - DDTL220  —  
1888 Industrial Services, LLC - Term Loan E219  —  
DataOnline Corp. - Revolver179  1,890  
Access Media Holdings, LLC - Series AAA Preferred Equity101  101  
Dynamic Energy Services International LLC - Revolver—  3,255  
Alpine SG, LLC - Revolver—  1,000  
Black Angus Steakhouses, LLC - Delayed Draw Term Loan—  893  
Total$3,730  $8,922  

  June 30,
2021		  September 30,
2020		 
Redwood Services Group, LLC - Revolver $1,575  $1,050 
1888 Industrial Services, LLC - Revolver  1,078   1,078 
Alpine SG - Revolver  1,000   - 
Kemmerer Operations, LLC - Delayed Draw Term Loan  908   908 
NVTN LLC - DDTL  220   220 
Black Angus Steakhouses, LLC - Super Priority DDTL  167   - 
DataOnline Corp. - Revolver  107   179 
NVTN LLC - Super Priority DDTL  -   500 
Total unfunded commitments $5,055  $3,935 

We have certain contracts under which we have material future commitments. We have entered into an investment management agreement with MCC Advisors (the “Investment Management Agreement”) in accordance with the 1940 Act. The Investment Management Agreement became effective upon the pricing of our initial public offering. Under the Investment Management Agreement, MCC Advisors has agreed to provide us with investment advisory and management services. For these services, we have agreed to pay a base management fee equal to a percentage of our gross assets and an incentive fee based on our performance.


We have also entered into an administration agreement with MCC Advisors as our administrator. The administration agreement became effective upon the pricing of our initial public offering. Under the administration agreement, MCC Advisors has agreed to furnish us with office facilities and equipment, provide us clerical, bookkeeping and record keeping services at such facilities and provide us with other administrative services necessary to conduct our day-to-day operations. MCC Advisors will also provideprovided on our behalf significant managerial assistance to those portfolio companies to which we are required to provide such assistance.


The Investment Management Agreement and administration agreement expired at the close of business on December 31, 2020, in connection with the Company’s adoption of an internalized management structure.

The following table shows our payment obligations for repayment of debt and other contractual obligations at June 30, 20202021 (dollars in thousands):

 Payment Due by Period
 TotalLess than 1 year1 - 3 years3 - 5 yearsMore than 5
years
2021 Notes$74,013  $74,013  $—  $—  $—  
2023 Notes77,847  —  77,847  —  —  
Israeli Notes—  —  —  —  —  
Total contractual obligations$151,860  $74,013  $77,847  $—  $—  

If any of the contractual obligations discussed above are terminated, our costs under any new agreements that we enter into may increase. In addition, we would likely incur significant time and expense in locating alternative parties to provide the services we expect to receive under the Investment Management Agreement and our administration agreement. Any new investment management agreement would also be subject to approval by our stockholders.

  Payments Due by Period 
  Total  Less than
1 year		  1-3 years  3-5 years  More than
5 years		 
2023 Notes $(77,846,800) $    -  $(77,846,800) $    -  $    - 
Total contractual obligations $(77,846,800) $-  $(77,846,800) $-  $- 

On March 27, 2015, the Company and Great American Life Insurance Company (“GALIC”) entered into a limited liability company operating agreement to co-manage MCC Senior Loan Strategy JV I LLC (“MCC JV”). The Company and GALIC havehad committed to provide $100 million of

11

equity to MCC JV, with the Company providing $87.5 million and GALIC providing $12.5 million. Approximately $89.8 million was funded as of June 30, 2020 relating to these commitments, of which $78.6 million was from the Company. As of June 30, 2020, MCC JV’s board of managers had approved advances of capital of up to $0.3 million of the remaining capital commitments, of which $0.2 million is from the Company.



MCC JV commenced operations on July 15, 2015. On August 4, 2015, MCC JV entered into a senior secured revolving credit facility (the “JV Facility”) led by Credit Suisse, AG with commitments of $100 million. On March 30, 2017, the Company amended the JV Facility previously administered by CS and facilitated the assignment of all rights and obligations of CS under the JV Facility to Deutsche Bank AG, New York Branch, (“DB”) and increased the total loan commitments to $200 million. The JV Facility bears interest at a rate of LIBOR (with no minimum + 2.75% per annum. On March 29, 2019, the JV Facility reinvestment period was extended to June 28, 2019 from March 30, 2019. On June 28, 2019, the JV Facility reinvestment period was extended to October 28, 2019. On October 28, 2019, the JV Facility reinvestment period was further extended from October 28, 2019 to March 31, 2020, the maturity date was extended to March 31, 2023 and the interest rate was modified from bearing an interest rate of LIBOR (with no minimum) + 2.50% per annum to LIBOR (with no minimum) + 2.75% per annum. As of June 30, 2020, MCC JV has drawn approximately $133.5 million on the JV Facility.


As of June 30, 2020, MCC JV had total investments at fair value of $160.3 million. As of June 30, 2020, MCC JV’s portfolio was comprised of senior secured first lien term loans to 48 different borrowers. As of June 30, 2020, certain investments in one portfolio company were on non-accrual status.

The Company has determined that MCC JV is an investment company under ASC 946, however in accordance with such guidance, the Company will generally not consolidate its investment in a company other than a wholly owned investment company subsidiary or a controlled operating company whose business consists of providing services to the Company. Accordingly, the Company does not consolidate its interest in MCC JV.

On October 8, 2020, the Company, GALIC, MCC JV, and an affiliate of Golub entered into a Membership Interest Purchase Agreement pursuant to which a fund affiliated with and managed by Golub concurrently purchased all of the Company’s interest in the MCC JV and all of GALIC’s interest in the MCC JV for a pre-adjusted gross purchase price of $156.4 million and an adjusted gross purchase price (which constitutes the aggregate consideration for the membership interests) of $145.3 million (giving effect to adjustments primarily for principal and interest payments from portfolio companies of MCC JV from July 1, 2020 through October 7, 2020), resulting in net proceeds (before transaction expenses) of $41.0 million and $6.6 million for MCC and GALIC, respectively, on the terms and subject to the conditions set forth in the Membership Interest Purchase Agreement, including the representations, warranties, covenants and indemnities contained therein. In connection with the closing of the transaction on October 8, 2020, MCC JV repaid in full all outstanding borrowings under, and terminated, its senior secured revolving credit facility, dated as of August 4, 2015, as amended, administered by Deutsche Bank AG, New York Branch.

Distributions


We have elected, and intend to qualify annually, to be treated for U.S. federal income tax purposes as a RIC under Subchapter M of the Code. As a RIC, in any taxable year with respect to which we timely distribute at least 90 percent of the sum of our (i) investment company taxable income (which is generally our net ordinary income plus the excess of realized net short-term capital gains over realized net long-term capital losses) determined without regard to the deduction for dividends paid and (ii) net tax exempt interest income (which is the excess of our gross tax exempt interest income over certain disallowed deductions), we (but not our stockholders) generally will not be subject to U.S. federal income tax on investment company taxable income and net capital gains that we distribute to our stockholders. We intend to distribute annually all or substantially all of such income, but we may also elect to periodically spill over certain excess undistributed taxable income from one tax year to the next tax year. To the extent that we retain our net capital gains or any investment company taxable income, we will be subject to U.S. federal income tax. We may choose to retain our net capital gains or any investment company taxable income, and pay the associated federal corporate income tax, including the federal excise tax described below.


Amounts not distributed on a timely basis in accordance with a calendar year distribution requirement are subject to a nondeductible 4% U.S. federal excise tax payable by us. To avoid this tax, we must distribute (or be deemed to have distributed) during each calendar year an amount equal to the sum of:


1)at least 98.0% of our ordinary income (not taking into account any capital gains or losses) for the calendar year;

2)at least 98.2% of the amount by which our capital gains exceed our capital losses (adjusted for certain ordinary losses) for a one-year period ending  on October 31st of the calendar year; and

3)income realized, but not distributed, in preceding years and on which we did not pay federal income tax.

1)at least 98.0% of our ordinary income (not taking into account any capital gains or losses) for the calendar year;

2)at least 98.2% of the amount by which our capital gains exceed our capital losses (adjusted for certain ordinary losses) for a one-year period ending on October 31st of the calendar year; and

3)income realized, but not distributed, in preceding years and on which we did not pay federal income tax.

While we intend to distribute any income and capital gains in the manner necessary to minimize imposition of the 4% U.S. federal excise tax, sufficient amounts of our taxable income and capital gains may not be distributed to avoid entirely the imposition of the tax. In that event, we will be liable for the tax only on the amount by which we do not meet the foregoing distribution requirement.


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.

To the extent our taxable earnings fall below the total amount of our distributions for a taxable year, a portion of those distributions may be deemed a return of capital to our stockholders for U.S. federal income tax purposes. Stockholders should read any written disclosure accompanying a distribution carefully and should not assume that the source of any distribution is our ordinary income or gains.

We have adopted an “opt out” dividend reinvestment plan for our common stockholders. As a result, if we declare a cash dividend or other distribution, each stockholder that has not “opted out” of our dividend reinvestment plan will have their dividends automatically reinvested in additional shares of our common stock rather than receiving cash dividends. Stockholders who receive distributions in the form of shares of common stock will be subject to the same federal, state and local tax consequences as if they received cash distributions.


There were no dividend distributions during the nine months ended June 30, 2020.


2021.  

Related Party Transactions


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Concurrent with the pricing of our IPO, we entered into a number of business relationships with affiliated or related parties, including the following:


•We entered into the Investment Management Agreement with MCC Advisors. Mr. Brook Taube, our Chairman and Chief Executive Officer, is a managing partner and senior portfolio manager of MCC Advisors, and Mr. Seth Taube, one of our directors, is a managing partner of MCC Advisors.

•MCC Advisors provides us with the office facilities and administrative services necessary to conduct day-to-day operations pursuant to our administration agreement. We reimburse MCC Advisors for the allocable portion (subject to the review and approval of our board of directors) of overhead and other expenses incurred by it in performing its obligations under the administration agreement, including rent, the fees and expenses associated with performing compliance functions, and our allocable portion of the cost of our Chief Financial Officer and Chief Compliance Officer and their respective staffs.

•We have entered into a license agreement with Medley Capital LLC, pursuant to which Medley Capital LLC has granted us a non-exclusive, royalty-free license to use the name “Medley.”

•Certain affiliates of MCC Advisors, Medley Capital LLC, their respective affiliates and some of their employees purchased in the IPO an aggregate of 833,333 shares of common stock at the IPO price per share of $12.00. We received the full proceeds from the sale of these shares, and no underwriting discounts or commissions were paid in respect of these shares.

●We entered into the Investment Management Agreement with MCC Advisors, which expired December 31, 2020. Mr. Brook Taube, Chairman and Chief Executive Officer through December 31, 2020 and director through January 21, 2021 and Mr. Seth Taube, director through January 21, 2021, are both affiliated with MCC Advisors and Medley.

●Through December 31, 2020, MCC Advisors provided us with the office facilities and administrative services necessary to conduct day-to-day operations pursuant to our administration agreement. We reimbursed MCC Advisors for the allocable portion (subject to the review and approval of our board of directors) of overhead and other expenses incurred by it in performing its obligations under the administration agreement, including rent, the fees and expenses associated with performing compliance functions, and our allocable portion of the cost of our Chief Financial Officer and Chief Compliance Officer and their respective staffs.

On June 12, 2020, the Company entered into the Expense Support Agreement with MCC Advisors and Medley LLC, pursuant to which MCC Advisors and Medley LLC agreed (jointly and severally) to cap the management fee and all of the Company’s other operating expenses (except interest expenses, certain extraordinary strategic transaction and expenses, and other expenses approved by the Special Committee) at $667,000 per month (the “Cap”). Under the Expense Support Agreement, the Cap became effective on June 1, 2020 and expireswas to expire on September 30, 2020.


MCC Advisors and its affiliates may in On September 29, 2020, the future manage other accounts that have investment mandates that are similar, in whole and in part, with ours. MCC Advisors and its affiliates may determine that an investment is appropriate for us and for one or moreboard of those other accounts. In such event, depending on the availability of such investment and other appropriate factors, and pursuant to MCC Advisors’ allocation policy, MCC Advisors or its affiliates may determine that we should invest side-by-side with one or more other accounts. We will not make any investments if they are not permitted by applicable law and interpretive positionsdirectors, including all of the SEC andindependent directors, extended the term of the Expense Support Agreement through the end of quarter ending December 31, 2020. The Expense Support Agreement expired by its staff,terms at the exemptive order grantedclose of business on December 31, 2020, in connection with the adoption of the internalized management structure by the SEC, or if they are inconsistent with MCC Advisors’ allocation procedures. Further, any investments made by related parties will be made in accordance with MCC Advisors’ related party transaction procedures.

board of directors.

On November 25, 2013, the Company obtained an exemptive order from the SEC that permits us to participate in negotiated co-investment transactions with certain affiliates, each of whose investment adviser is Medley, LLC or an investment adviser controlled by Medley, LLC in a manner consistent with our investment objective, strategies and restrictions, as well as regulatory requirements and other pertinent factors (the “Prior Exemptive Order”). On March 29, 2017, the Company, MCC Advisors and certain other affiliated funds and investment advisers received an exemptive order (the “Exemptive Order”) that supersedes the Prior Exemptive Order and allows affiliated registered investment companies to participate in co-investment transactions with us that would otherwise have been prohibited under Section 17(d) and 57(a)(4) of the 1940 Act and Rule 17d-1 thereunder. On October 4, 2017, the Company, MCC Advisors and certain of our affiliates received an exemptive order that supersedes the Exemptive Order (the “Current Exemptive Order”) and allows, in addition to the entities already covered by the Exemptive Order, Medley LLC and its subsidiary, Medley Capital LLC, to the extent they hold financial assets in a principal capacity, and any direct or indirect, wholly or majority owned subsidiary of Medley LLC that is formed in the future, to participate in co-investment transactions with us that would otherwise be prohibited by either or both of Sections 17(d) and 57(a)(4) of the 1940 Act. However, neither we nor the affiliated funds are obligated to invest or co-invest when investment opportunities are referred to us or them.


The Company does not expect to avail itself of the current exemptive order, given the internalization and termination of the Investment Management Agreement.

In addition, we have adopted a formal code of ethics that governs the conduct of our and MCC Advisors’ officers, directors, employees and employees.certain other individuals. Our officers and directors also remain subject to the duties imposed by both the 1940 Act and the Delaware General Corporation Law.


Investment Management Agreement


We entered into an investment management agreement with MCC Advisors (the “Investment Management Agreement”), which expired December 31, 2020. Mr. Brook Taube, Chairman and Chief Executive Officer through December 31, 2020 and director through January 21, 2021 and Mr. Seth Taube, director through January 21, 2021 are affiliated with MCC Advisors and Medley.

Under the terms of the Investment Management Agreement, MCC Advisors:


•determines the composition of our portfolio, the nature and timing of the changes to our portfolio and the manner of implementing such changes;

•identifies, evaluates and negotiates the structure of the investments we make (including performing due diligence on our prospective portfolio companies); and

•executes, closes, monitors and administers the investments we make, including the exercise of any voting or consent rights.

●determined the composition of our portfolio, the nature and timing of the changes to our portfolio and the manner of implementing such changes;

●identified, evaluated and negotiated the structure of the investments we made (including performing due diligence on our prospective portfolio companies); and

●executed, closed, monitored and administered the investments we made, including the exercise of any voting or consent rights.

MCC Advisors’ services under the Investment Management Agreement arewere not exclusive, and it iswas free to furnish similar services to other entities so long as its services to us arewere not impaired.


Pursuant to the Investment Management Agreement, we paypaid MCC Advisors a fee for investment advisory and management services consisting of a base management fee and a two-part incentive fee.


On December 3, 2015, MCC Advisors recommended and, in consultation with the Board, agreed to reduce fees under the Investment Management Agreement. Beginning January 1, 2016, the base management fee was reduced to 1.50% on gross assets above $1 billion. In addition, MCC Advisors reduced its incentive fee from 20% on pre-incentive fee net investment income over an 8% hurdle, to 17.5% on pre-incentive fee net investment

13

income over a 6% hurdle. Moreover, the revised incentive fee includes a netting mechanism and is subject to a rolling three-year look back from January 1, 2016 forward. Under no circumstances willwould the new fee structure result in higher fees to MCC Advisors than fees under the prior investment management agreement.



The following discussion of our base management fee and two-part incentive fee reflectsreflect the terms of the fee waiver agreement executed by MCC Advisors on February 8, 2016 (the “Fee Waiver Agreement”). The terms of the Fee Waiver Agreement arewere effective as of January 1, 2016, and arewere a permanent reduction in the base management fee and incentive fee on net investment income payable to MCC Advisors for the investment advisory and management services it providesprovided under the Investment Management Agreement. The Fee Waiver Agreement doesdid not change the second component of the incentive fee, which iswas the incentive fee on capital gains.


On January 15, 2020, the Company’s board of directors, including all of the independent directors, approved the renewal of the Investment Management Agreement through the later of April 1, 2020 or so long as the Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019 (the “Amended MCC Merger Agreement”), by and between the Company and Sierra (the “Amended MCC Merger Agreement”) was in effect, but no longer than a year; provided that, if the Amended MCC Merger Agreement is terminated by Sierra, then the termination of the Investment Management Agreement would be effective on the 30th day following receipt of Sierra’s notice of termination to the Company. On May 1, 2020, the Company received a notice of termination of the Amended MCC Merger Agreement from Sierra. Under the Amended MCC Merger Agreement, either party was permitted, subject to certain conditions, to terminate the Amended MCC Merger Agreement if the merger was not consummated by March 31, 2020. Sierra elected to do so on May 1, 2020. As result of the termination by Sierra of the Amended MCC Merger Agreement on May 1, 2020, the Investment Management Agreement would have been terminated effective as of May 31, 2020. On May 21, 2020, the Board, including all of the independent directors, extended the term of the Investment Management Agreement through the end of the currentthen-current quarter, June 30, 2020. On June 15, 2020, the Board, including all of the independent directors, extended the term of the Investment Management Agreement through the end of the currentthen-current quarter, September 30, 2020.


On September 29, the Board, including all of the independent directors, extended the term of the Investment Management Agreement through December 31, 2020.

On November 18, 2020, the Board approved the adoption of an internalized management structure effective January 1, 2021. The new management structure replaces the current Investment Management and Administration Agreements with MCC Advisors LLC, which expired on December 31, 2020. To lead the internalized management team, the Board approved the appointment of David Lorber, who has served as an independent director of the Company since April 2019, as interim Chief Executive Officer, and Ellida McMillan as Chief Financial Officer of the Company, each effective January 1, 2021. In connection with his appointment, Mr. Lorber stepped down from the Compensation Committee of the Board, the Nominating and Corporate Governance Committee of the Board, and the Special Committee of the Board.

Base Management Fee


For

Through December 31, 2020, for providing investment advisory and management services to us, MCC Advisors receivesreceived a base management fee. The base management fee iswas calculated at an annual rate of 1.75% (0.4375% per quarter) of up to $1.0 billion of the Company’s gross assets and 1.50% (0.375% per quarter) of any amounts over $1.0 billion of the Company’s gross assets and iswas payable quarterly in arrears. The base management fee willwas to be calculated based on the average value of the Company’s gross assets at the end of the two most recently completed calendar quarters and willwas to be appropriately pro-rated for any partial quarter.


Incentive Fee


The

Through December 31, 2020, the incentive fee hashad two components, as follows:


Incentive Fee Based on Income


The first component of the incentive fee iswas payable quarterly in arrears and iswas based on our pre-incentive fee net investment income earned during the calendar quarter for which the incentive fee iswas being calculated. MCC Advisors iswas entitled to receive the incentive fee on net investment income from us if our Ordinary Income (as defined below) exceedsexceeded a quarterly “hurdle rate” of 1.5%. The hurdle amount iswas calculated after making appropriate adjustments to the Company’s net assets, as determined as of the beginning of each applicable calendar quarter, in order to account for any capital raising or other capital actions as a result of any issuances by the Company of its common stock (including issuances pursuant to our dividend reinvestment plan), any repurchase by the Company of its own common stock, and any dividends paid by the Company, each as may have occurred during the relevant quarter.


Beginning with the calendar quarter that commenced on January 1, 2016, the incentive fee on net investment income iswas determined and paid quarterly in arrears at the end of each calendar quarter by reference to our aggregate net investment income, as adjusted as described below, from the calendar quarter then ending and the eleven preceding calendar quarters (or if shorter, the number of quarters that have occurred since January 1, 2016). We refer to such period as the “Trailing Twelve Quarters.”


The hurdle amount for the incentive fee on net investment income iswas determined on a quarterly basis and iswas equal to 1.5% multiplied by the Company’s net asset value at the beginning of each applicable calendar quarter comprising the relevant Trailing Twelve Quarters. The hurdle amount iswas calculated after making appropriate adjustments to the Company’s net assets, as determined as of the beginning of each applicable calendar quarter, in order to account for any capital raising or other capital actions as a result of any issuances by the Company of its common stock (including issuances pursuant to our dividend reinvestment plan), any repurchase by the Company of its own common stock, and any dividends paid by the Company, each as may have occurred during the relevant quarter. The incentive fee for any partial period willwas to be appropriately prorated.pro-rated. Any incentive fee on net investment income willwas to be paid to MCC Advisors on a quarterly basis and willwas to be based on the amount by which (A) aggregate net investment income (“Ordinary Income”) in respect of the relevant Trailing Twelve Quarters exceedsexceeded (B) the hurdle amount for such Trailing Twelve Quarters. The amount of the excess of (A) over (B) described in this paragraph for such Trailing Twelve Quarters is referred to as the “Excess Income Amount.” For the avoidance of doubt, Ordinary Income iswas net of all fees and expenses, including the reduced base management fee but excluding any incentive fee on Pre-Incentive Fee net investment income or on the Company’s capital gains.



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Determination of Quarterly Incentive Fee Based on Income


The incentive fee on net investment income for each quarter iswas determined as follows:


•No incentive fee on net investment income is payable to MCC Advisors for any calendar quarter for which there is no Excess Income Amount;

•100% of the Ordinary Income, if any, that exceeds the hurdle amount, but is less than or equal to an amount, which we refer to as the “Catch-up Amount,” determined as the sum of 1.8182% multiplied by the Company’s net assets at the beginning of each applicable calendar quarter, as adjusted as noted above, comprising the relevant Trailing Twelve Quarters is included in the calculation of the incentive fee on net investment income; and

•17.5% of the Ordinary Income that exceeds the Catch-up Amount is included in the calculation of the incentive fee on net investment income.

●No incentive fee on net investment income was payable to MCC Advisors for any calendar quarter for which there was no Excess Income Amount;

●100% of the Ordinary Income, if any, that exceeded the hurdle amount, but was less than or equal to an amount, which we refer to as the “Catch-up Amount,” determined as the sum of 1.8182% multiplied by the Company’s net assets at the beginning of each applicable calendar quarter, as adjusted as noted above, comprising the relevant Trailing Twelve Quarters was included in the calculation of the incentive fee on net investment income; and

●17.5% of the Ordinary Income that exceeds the Catch-up Amount was included in the calculation of the incentive fee on net investment income.

The amount of the incentive fee on net investment income that willwas to be paid to MCC Advisors for a particular quarter willwould equal the excess of the incentive fee so calculated minus the aggregate incentive fees on net investment income that were paid in respect of the first eleven calendar quarters (or the portion thereof) included in the relevant Trailing Twelve Quarters but not in excess of the Incentive Fee Cap (as described below).


��

The incentive fee on net investment income that iswas paid to MCC Advisors for a particular quarter iswas subject to a cap (the “Incentive Fee Cap”). The Incentive Fee Cap for any quarter iswas an amount equal to (a) 17.5% of the Cumulative Net Return (as defined below) during the relevant Trailing Twelve Quarters minus (b) the aggregate incentive fees on net investment income that were paid in respect of the first eleven calendar quarters (or the portion thereof) included in the relevant Trailing Twelve Quarters.


“Cumulative Net Return” means (x) the Ordinary Income in respect of the relevant Trailing Twelve Quarters minus (y) any Net Capital Loss (as described below), if any, in respect of the relevant Trailing Twelve Quarters. If, in any quarter, the Incentive Fee Cap iswas zero or a negative value, the Company willwould pay no incentive fee on net investment income to MCC Advisors for such quarter. If, in any quarter, the Incentive Fee Cap for such quarter iswas a positive value but is less than the incentive fee on net investment income that iswas payable to MCC Advisors for such quarter (before giving effect to the Incentive Fee Cap) calculated as described above, the Company willwould pay an incentive fee on net investment income to MCC Advisors equal to the Incentive Fee Cap for such quarter. If, in any quarter, the Incentive Fee Cap for such quarter iswas equal to or greater than the incentive fee on net investment income that iswas payable to MCC Advisors for such quarter (before giving effect to the Incentive Fee Cap) calculated as described above, the Company willwould pay an incentive fee on net investment income to MCC Advisors, calculated as described above, for such quarter without regard to the Incentive Fee Cap.


“Net Capital Loss” in respect of a particular period means the difference, if positive, between (i) aggregate capital losses, whether realized or unrealized, and dilution to the Company’s net assets due to capital raising or capital actions, in such period and (ii) aggregate capital gains, whether realized or unrealized and accretion to the Company’s net assets due to capital raising or capital action, in such period.


Dilution to the Company’s net assets due to capital raising iswas calculated, in the case of issuances of common stock, as the amount by which the net asset value per share was adjusted over the transaction price per share, multiplied by the number of shares issued. Accretion to the Company’s net assets due to capital raising iswas calculated, in the case of issuances of common stock (including issuances pursuant to our dividend reinvestment plan), as the excess of the transaction price per share over the amount by which the net asset value per share was adjusted, multiplied by the number of shares issued. Accretion to the Company’s net assets due to other capital action iswas calculated, in the case of repurchases by the Company of its own common stock, as the excess of the amount by which the net asset value per share was adjusted over the transaction price per share multiplied by the number of shares repurchased by the Company.


For the avoidance of doubt, the purpose of the new incentive fee calculation under the Fee Waiver Agreement iswas to permanently reduce aggregate fees payable to MCC Advisors by the Company, effective as of January 1, 2016. In order to ensure that the Company willwould pay MCC Advisors lesser aggregate fees on a cumulative basis, as calculated beginning January 1, 2016, we will,had, at the end of each quarter, also calculatecalculated the base management fee and incentive fee on net investment income owed by the Company to MCC Advisors based on the formula in place prior to January 1, 2016. If, at any time beginning January 1, 2016, the aggregate fees on a cumulative basis, as calculated based on the formula in place after January 1, 2016, would bewere greater than the aggregate fees on a cumulative basis, as calculated based on the formula in place prior to January 1, 2016, MCC Advisors shallwere only be entitled to the lesser of those two amounts.


The second component of the incentive fee iswas determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Management Agreement as of the termination date) and equalsequaled 20.0% of our cumulative aggregate realized capital gains less cumulative realized capital losses, unrealized capital depreciation (unrealized depreciation on a gross investment-by-investment basis at the end of each calendar year) and all capital gains upon which prior performance-based capital gains incentive fee payments were previously made to the investment adviser.


Under GAAP, the Company calculatescalculated the second component of the incentive fee as if the Company had realized all assets at their fair values as of the reporting date. Accordingly, when applicable, the Company accruesaccrued a provisional capital gains incentive fee taking into account any unrealized gains or losses. As the provisional capital gains incentive fee iswas subject to the performance of investments until there iswas a realization event, the amount of the provisional capital gains incentive fee accrued at a reporting date may varyhave varied from the capital gains incentive that iswas ultimately realized and the differences could behave been material.


Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of

15

the financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following items as critical accounting policies.

Valuation of Portfolio Investments


We value investments for which market quotations are readily available at their market quotations, which are generally obtained from an independent pricing service or multiple broker-dealers or market makers. We weight the use of third-party broker quotes, if any, in determining fair value based on our understanding of the level of actual transactions used by the broker to develop the quote and whether the quote was an indicative price or binding offer. However, a readily available market value is not expected to exist for many of the investments in our portfolio, and we value these portfolio investments at fair value as determined in good faith by our board of directors under our valuation policy and process. We may seek pricing information with respect to certain of our investments from pricing services or brokers or dealers in order to value such investments.


Valuation methods may include comparisons of financial ratios of the portfolio companies that issued such private equity securities to peer companies that are public, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flows, the markets in which the portfolio company does business, and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we will consider the pricing indicated by the external event to corroborate the private equity valuation. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.


Our board of directors is ultimately and solely responsible for determining the fair value of the investments in our portfolio that are not publicly traded, whose market prices are not readily available on a quarterly basis or any other situation where portfolio investments require a fair value determination.


With respect to investments for which market quotations are not readily available, our board of directors will undertake a multi-step valuation process each quarter, as described below:


•Our quarterly valuation process begins with each investment being initially valued by the valuation professionals responsible for monitoring the portfolio investment.

•Preliminary valuation conclusions are then documented and discussed with senior management.

•Independent third-party valuation firms are also employed for all of our investments for which there is not a readily available market value. At least twice annually, including at year end, the valuation for each portfolio investment is reviewed by an independent valuation firm.

•The audit committee of our board of directors reviews the preliminary valuations of the valuation professionals, senior management and independent valuation firms.

•Our audit committee reviews and the board of directors approves the valuations and determines the fair value of each investment in our portfolio in good faith based on the input of MCC Advisors, the respective independent valuation firms and the audit committee.

●our quarterly valuation process begins with each portfolio investment being initially valued by one or more Valuation Firms;

●preliminary valuation conclusions will then be documented and discussed with senior management;

●the audit committee of the board of directors reviews the preliminary valuations with management and the Valuation Firms; and

●the board of directors discusses the valuations and determines the fair value of each investment in the Company’s portfolio in good faith based on the input of management, the respective Valuation Firms and the audit committee.

In following these approaches, the types of factors that are taken into account in fair value pricing investments include available current market data, including relevant and applicable market trading and transaction comparables; applicable market yields and multiples; security covenants; call protection provisions; information rights; the nature and realizable value of any collateral; the portfolio company’s ability to make payments; the portfolio company’s earnings and discounted cash flows; the markets in which the portfolio company does business; comparisons of financial ratios of peer companies that are public; comparable merger and acquisition transactions; and the principal market and enterprise values.


Determination of fair values involves subjective judgments and estimates made by management. The notes to our financial statements refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our consolidated financial statements.


Revenue Recognition


Our revenue recognition policies are as follows:

Investments and Related Investment IncomeWe account for investment transactions on a trade-date basis and interest income, adjusted for amortization of premiums and accretion of discounts, is recorded on an accrual basis. For investments with contractual PIK interest, which represents contractual interest accrued and added to the principal balance that generally becomes due at maturity, we will not accrue PIK interest if the portfolio company valuation indicates that the PIK interest is not collectible. Origination, closing and/or commitment fees associated with investments in portfolio companies are recognized as income when the investment transaction closes. Other fees are capitalized as deferred revenue and recorded into income over the respective period. Prepayment penalties received by the Company for debt instruments paid back to the Company prior to the maturity date are recorded as income upon receipt. Realized gains or losses on investments are measured by the difference between the net proceeds from the disposition and the amortized cost basis of investment, without regard to unrealized gains or losses previously recognized. We report changes in the fair value of investments that are measured at fair value as a component of the net change in unrealized appreciation/(depreciation) on investments in our Consolidated Statements of Operations.


Non-accrualWe 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, 2020,2021, certain

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investments in nineten portfolio companies held by the Company were on non-accrual status with a combined fair value of approximately $16.4$13.6 million, or 6.6% of the fair value of our portfolio. At June 30, 2020, certain investments in one portfolio company held by the Company was on partial non-accrual status with a fair value of approximately $0.7 million, or 0.3%7.5% of the fair value of our portfolio. At September 30, 2019,2020, certain investments in seveneight portfolio companies held by the Company were on non-accrual status with a combined fair value of approximately $22.3$21.7 million, or 5.6%8.8% of the fair value of our portfolio.

Federal Income Taxes


The Company has elected, and intends to qualify annually, to be treated for U.S. federal income tax purposes as a RIC under Subchapter M of the Code, commencing with its first taxable year as a corporation, and it intends to operate in a manner so as to maintain its RIC tax treatment. As a RIC, among other things, the Company is required to meet certain source of income and asset diversification requirements. Once qualified as a RIC, the Company must timely distribute to its stockholders at least 90% of the sum of investment company taxable income (“ICTI”) including PIK,, as defined by the Code, including PIK interest, and net tax exempttax-exempt interest income (which is the excess of our gross tax exempt interest income over certain disallowed deductions) for each taxable year in order to be eligible for tax treatment under Subchapter M of the Code. The Company will be subject to a nondeductible U.S. federal excise tax of 4% on undistributed income if it does not distribute at least 98% of its net ordinary income for any calendar year and 98.2% of its capital gain net income for each one-year period ending on October 31 of such calendar year and any income realized, but not distributed, in preceding years and on which we did not pay federal income tax. Depending on the level of ICTI earned in a tax year, the Company may choose to carry forward ICTI in excess of current year dividend distributions into the next tax year and pay a 4% excise tax on such income, as required. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year dividend distributions for excise tax purposes, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned. Any such carryover ICTI must be distributed before the end of that next tax year through a dividend declared prior to filing the final tax return related to the year which generated such ICTI.


Because federal income tax regulations differ from GAAP, distributions in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the consolidated financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.


Recent Developments


Subsequent to quarter ended June 30, 2020, the global outbreak of2021, the COVID-19 pandemic continues and may further continue to have adverse consequences on the U.S. and global economies. The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual portfolio companies, remains uncertain. As of August 7, 2020, there is no indication of a reportable subsequent event impacting the Company’s financial statements for the quarter ended June 30, 2020. The Company cannot predict the extent to which its financial condition and results of operations will be affected at this time.affected. The potential impact to our results will depend to a largean extent on future developments and new information that may emerge regarding the duration and lasting severity of COVID-19. The Company continues to observe and respond to the evolving COVID-19 environment and its potential impact on areas across its business. Further, the potential exists for variants of COVID-19, including the Delta variant, to impede the global economic recovery and exacerbate geographic differences in the spread of, and response to, COVID-19.


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Item 3. Quantitative and Qualitative Disclosures About Market Risk


We are subject to financial market risks, including changes in interest rates. Changes in interest rates may affect both our cost of funding and our interest income from portfolio investments and cash and cash equivalents. Our investment income will be affected by changes in various interest rates, including LIBOR, to the extent our debt investments include floating interest rates. In the future, we expect other loans in our portfolio will have floating interest rates. In addition, U.S. and global capital markets and credit markets have experienced a higher level of stress due to the global COVID-19 pandemic, which has resulted in an increase in the level of volatility across such markets. We may hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts subject to the requirements of the 1940 Act. For the threenine months ended June 30, 2020,2021, we did not engage in hedging activities.


As of June 30, 2020, 88.7%2021, 71.2% of our income-bearing investment portfolio bore interest based on floating rates. The composition of our floating rate debt investments by cash interest rate LIBOR floor as of June 30, 20202021 was as follows (dollars in thousands):

 June 30, 2020
LIBOR FloorFair Value% of Floating
Rate Portfolio
Under 1%$—  — %
1% to under 2%95,797  100.0  
2% to under 3%—  —  
Total$95,797  100.0 %

  June 30, 2021 
LIBOR Floor Fair Value  % of Floating
Rate Portfolio		 
Under 1% $-   -%
1% to under 2%  87,603   100.0 
2% to under 3%  -   - 
No Floor  -   - 
Total $87,603   100.0%

Based on our Consolidated Statements of Assets and Liabilities as of June 30, 2020,2021, the following table (dollars in thousands) shows the approximate increase/(decrease) in components of net assets resulting from operations of hypothetical LIBOR base rate changes in interest rates, assuming no changes in our investment and capital structure.

Basis point increase/(decrease)
Interest Income(1)
Interest ExpenseNet Increase/
(Decrease)
300$2,400  $—  $2,400  
2001,400  —  1,400  
100300  —  300  
(100)—  —  —  
(200)—  —  —  
(300)—  —  —  

(1)Assumes no defaults or prepayments by portfolio companies over the next twelve months.
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Change in Interest Rates Interest
Income(1)		  Interest
Expense		  Net Increase/
(Decrease)		 
Up 300 basis points $7,200  $(2,300) $4,900 
Up 200 basis points  4,800   (1,600)  3,200 
Up 100 basis points  2,400   (800)  1,600 
Down 100 basis points  (2,400)  800   (1,600)
Down 200 basis points  (4,800)  1,600   (3,200)
Down 300 basis points  (7,200)  2,300   (4,900)

(1)Assumes no defaults or prepayments by portfolio companies over the next twelve months.

Item 4. Controls and Procedures


Evaluation of Disclosure Controls and Procedures


Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2020.2021. The term “disclosure controls and procedures” is defined under Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), as amended. Based on the evaluation of our disclosure controls and procedures as of June 30, 2020,2021, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective.


Change in Internal Control Over Financial Reporting


There has not been any changewere no changes in our internal controls over financial reporting (as defined in Rule 13a-15 (f)13a-15(f) under the Exchange Act) that occurred during the periodquarter covered by this report that hashave materially affected, or isare reasonably likely to materially affect, our internal controls over financial reporting.


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PART II


Item 1.Legal Proceedings

From time to time, we are involved in various legal proceedings, lawsuits and claims incidental to the conduct of our business. Our businesses are also subject to extensive regulation, which may result in regulatory proceedings against us. Except as described below, we are not currently party to any material legal proceedings.


On May 11, 2020, the court approved a settlement and dismissed two purported class actions that had been commenced in the Supreme Court of the State of New York, County of New York, by alleged stockholders of Medley Capital Corporation, captioned, respectively, Helene Lax v. Brook Taube, et al., Index No. 650503/2019, and Richard Dicristino, et al. v. Brook Taube, et al., Index No. 650510/2019 (together with the Lax Action, the “New York Actions”). Named as defendants in each complaint were Brook Taube, Seth Taube, Jeffrey Tonkel, Arthur S. Ainsberg, Karin Hirtler-Garvey, John E. Mack, Mark Lerdal, Richard T. Allorto, Jr., the Company, Medley Management Inc., Sierra Income Corporation (“Sierra”), and Sierra Management, Inc. The complaints in each of the New York Actions alleged that the individuals named as defendants breached their fiduciary duties in connection with the proposed merger of the Company with and into Sierra, and that the other defendants aided and abetted those alleged breaches of fiduciary duties. Compensatory damages in unspecified amounts were sought. The defendants vigorously denied any wrongdoing or liability with respect to the facts and claims that were asserted, or which could have been asserted, in the New York Actions. None of the Defendants paid any consideration to the plaintiffs in connection with the dismissal. The plaintiffs agreed to dismiss the New York Actions in exchange for the Company’s agreement to pay $50,000 in attorneys’ fees and expenses to plaintiffs’ counsel.

The Company was named as a defendant in a lawsuit on May 29, 2015, by Moshe Barkat and Modern VideoFilm Holdings, LLC (“MVF Holdings”) against the Company, MOF II, MCC Advisors LLC, Deloitte Transactions and Business Analytics LLP A/K/A Deloitte ERG (“Deloitte”), Scott Avila (“Avila”), Charles Sweet, and Modern VideoFilm, Inc. (“MVF”). The lawsuit is pending in the California Superior Court, Los Angeles County, Central District, as Case No. BC 583437. The lawsuit was filed after the Company, as agent for the lender group, exercised remedies following a series of defaults by MVF and MVF Holdings on a secured loan with an outstanding balance at the time in excess of $65 million. The lawsuit sought damages in excess of $100 million. Deloitte and Avila have settled the claims against them in exchange for payment of $1.5 million. On June 6, 2016, the court granted the Medley defendants’ demurrers on several counts and dismissed Mr. Barkat’s claims with prejudice except with respect to his claim for intentional interference with contract. On March 18, 2018, the court granted the Medley defendants’ motion for summary adjudication with respect to Mr. Barkat’s sole remaining claim against the Medley Defendants for intentional interference. Now that the trial court has ruled in favor of the Medley defendants on all counts, the only remaining claims in the Barkat litigation are the Company and MOF II’s affirmative counterclaims against Mr. Barkat and MVF Holdings, which the Company and MOF II are diligently prosecuting.

On August 29, 2016, MVF Holdings filed another lawsuit in the California Superior Court, Los Angeles County, Central District, as Case No. BC 631888 (the “Derivative Action”), naming MCC Advisors LLC and certain of Medley’s employees as defendants, among others. The plaintiff in the Derivative Action, asserts claims against the defendants for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, unfair competition, breach of the implied covenant of good faith and fair dealing, interference with prospective economic advantage, fraud, and declaratory relief. MCC Advisors LLC and the other defendants believe the causes of action asserted in the Derivative Action are without merit and all defendants intend to continue to assert a vigorous defense. The trial date has been rescheduled for October 5, 2020.

Medley LLC, Medley Capital Corporation,the Company, Medley Opportunity Fund II LP, Medley Management, Inc., Medley Group, LLC, Brook Taube, and Seth Taube were named as defendants, along with other various parties, in a putative class action lawsuit captioned as Royce Solomon, Jodi Belleci, Michael Littlejohn, and Giulianna Lomaglio v. American Web Loan, Inc., AWL, Inc., Mark Curry, MacFarlane Group, Inc., Sol Partners, Medley Opportunity Fund, II, LP, Medley LLC, Medley Capital Corporation, Medley Management, Inc., Medley Group, LLC, Brook Taube, Seth Taube, DHI Computing Service, Inc., Middlemarch Partners, and John Does 1-100, filed on December 15, 2017, amended on March 9, 2018, and amended a second time on February 15, 2019, in the United States District Court for the Eastern District of Virginia, Newport News Division, as Case No. 4:17-cv-145 (hereinafter, “Class Action 1”). Medley Opportunity Fund II LP and Medley Capital Corporationthe Company were also named as defendants, along with various other parties, in a putative class action lawsuit captioned George Hengle and Lula Williams v. Mark Curry, American Web Loan, Inc., AWL, Inc., Red Stone, Inc., Medley Opportunity Fund II LP, and Medley Capital Corporation, filed February 13, 2018, in the United States District Court, Eastern District of Virginia, Richmond Division, as Case No. 3:18-cv-100 (“Class Action 2”). Medley Opportunity Fund II LP and Medley Capital Corporationthe Company were also named as defendants, along with various other parties, in a putative class action lawsuit captioned John Glatt, Sonji Grandy, Heather Ball, Dashawn Hunter, and Michael Corona v. Mark Curry, American Web Loan, Inc., AWL, Inc., Red Stone, Inc., Medley Opportunity Fund II LP, and Medley Capital Corporation, filed August 9, 2018 in the United States District Court, Eastern District of Virginia, Newport News Division, as Case No. 4:18-cv-101 (“Class Action 3”) (together with Class Action 1 and Class Action 2, the “Virginia Class Actions”). Medley Opportunity Fund II LP was also named as a defendant, along with various other parties, in a putative class action lawsuit captioned Christina Williams and Michael Stermel v. Red Stone, Inc. (as successor in interest to MacFarlane Group, Inc.), Medley Opportunity Fund II LP, Mark Curry, Brian McGowan, Vincent Ney, and John Doe entities and individuals, filed June 29, 2018 and amended July 26, 2018, in the United States District Court for the Eastern District of Pennsylvania, as Case No. 2:18-cv-2747 (the “Pennsylvania Class Action”) (together. The Company and Medley Opportunity Fund II, LP were also named as defendants, along with various other parties, in a putative class action lawsuit captioned Charles McDaniel v. American Web Loan, Inc., AWL, Inc., Mark Curry, Medley Capital Corporation, Medley Opportunity Fund II, LP, and Red Stone, Inc., filed on August 7, 2020 and amended on October 22, 2020 in the First Judicial Circuit of Ohio County, West Virginia, Case No. 20-C-169, which case was then removed to the United States District Court for the Northern District of West Virginia on December 15, 2020 (the “West Virginia Class Action” and together with the Virginia Class Actions and the Pennsylvania Class Action, the “Class Action Complaints”). The plaintiffs in the Class Action Complaints filed their putative class actions alleging claims under the Racketeer Influenced and Corrupt Organizations Act, and various other claims arising out of the alleged payday lending activities of American Web Loan. The claims against Medley Opportunity Fund II LP, Medley LLC, Medley Capital Corporation,the Company, Medley Management, Inc., Medley Group, LLC, Brook Taube, and Seth Taube (in Class Action 1, as amended); Medley Opportunity Fund II LP and Medley Capital Corporation (in Class Action 2 and Class Action 3); and Medley Opportunity Fund II LP (in the Pennsylvania Class Action); and Medley Opportunity Fund II LP and the Company (in the West Virginia Class Action), allege that those defendants in each respective action exercised control over, or improperly derived income from, and/or obtained an improper interest in, American Web Loan’s payday lending activities as a result of a loan to American Web Loan. The loan was made by Medley Opportunity Fund II LP in 2011. American Web Loan repaid the loan from Medley Opportunity Fund II LP in full in February of 2015, more than 1 year and 10 months prior to any of the loans allegedly made by American Web Loan to the alleged class plaintiff representatives in Class Action 1. In Class Action 2, the alleged class plaintiff representatives had

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not alleged when they received any loans from American Web Loan. In Class Action 3, the alleged class plaintiff representatives claim to have received loans from American Web Loan at various times from February 2015 through April 2018. In the Pennsylvania Class Action, the alleged class plaintiff representatives claim to have received loans from American Web Loan in 2017.

By orders dated August 7, 2018 and September 17, 2018, the Court presiding over the Virginia Class Actions consolidated those cases for all purposes. On October 12, 2018, Plaintiffs in Class Action 3 filed a notice of voluntary dismissal of all claims, and on October 29, 2018, Plaintiffs in Class Action 2 filed a notice of voluntary dismissal of all claims. On October 30, 2020, Plaintiffs in the Pennsylvania Class Action filed a Stipulation of Dismissal of all claims against all defendants with prejudice, and on November 2, 2020, the Court presiding over the Pennsylvania Class Action ordered Plaintiffs’ claims dismissed with prejudice. On January 29, 2021, Plaintiff in the West Virginia Class Action filed a motion to stay proceedings to permit revision and final approval of a revised settlement agreement in Class Action 1, and also on January 29, 2021, the Court presiding over the West Virginia Class Action granted that motion and stayed the West Virginia Class Action.



On April 16, 2020, the parties to Class Action 1 reached a settlement reflected in a Settlement Agreement (the “Settlement Agreement”) that has been publicly filed in Class Action 1 (ECF No. 414-1). Among other things, upon satisfaction of the conditions specified in the Settlement Agreement and upon the Effective Date, the Settlement Agreement (capitalized terms not otherwise defined have the meaning set forth in the Settlement Agreement): (1) requires Plaintiffs to seek certification of a nationwide settlement class of all persons in the United States to whom American Web Loan lent money from February 10, 2010 through a future date on which the Court may enter a Preliminary Approval Order as to the Settlement Agreement (which certification Defendants have agreed not to oppose); (2) requires American Web Loan, and only American Web Loan, to pay Monetary Consideration of $65,000,000 (none of Medley Opportunity Fund II LP, Medley LLC, Medley Capital Corporation, Medley Management, Inc., Medley Group, LLC, Brook Taube, or Seth Taube are paying any Monetary Consideration pursuant to the Settlement Agreement); (3) requires American Web Loan, and only American Web Loan, to cancel (as a disputed debt) and release all claims that relate to or arise out of the loans in its Collection Portfolio, which is valued at Seventy-Six Million Dollars ($76,000,000) and comprised of loans to more than 39,000 borrowers (none of Medley Opportunity Fund II LP, Medley LLC, Medley Capital Corporation, Medley Management, Inc., Medley Group, LLC, Brook Taube, or Seth Taube have any interest in any of the loans that are being cancelled); (4) requires American Web Loan and Curry to provide certain Non-Monetary Benefits (none of Medley Opportunity Fund II LP, Medley LLC, Medley Capital Corporation, Medley Management, Inc., Medley Group, LLC, Brook Taube, or Seth Taube are conferring any Non-Monetary Benefits pursuant to the Settlement Agreement); (5) fully, finally, and forever releases Medley Opportunity Fund II LP, Medley LLC, Medley Capital Corporation, Medley Management, Inc., Medley Group, LLC, Brook Taube, and Seth Taube from any and all claims, causes of action, suits, obligations, debts, demands, agreements, promises, liabilities, damages, losses, controversies, costs, expenses and attorneys’ fees of any nature whatsoever, whether arising under federal law, state law, common law or equity, tribal law, foreign law, territorial law, contract, rule, regulation, any regulatory promulgation (including, but not limited to, any opinion or declaratory ruling), or any other law, including Unknown Claims, whether suspected or unsuspected, asserted or unasserted, foreseen or unforeseen, actual or contingent, liquidated or unliquidated, punitive or compensatory, as of the date of the Final Fairness Approval Order and Judgment, that relate to or arise out of loans made by and/or in the name of AWL (including loans issued in the name of American Web Loan, Inc. or Clear Creek Lending) as of the date of entry of the Preliminary Approval Order (with the exception of claims to enforce the Settlement or the Judgment); (6) provides for a mutual general release between Medley Opportunity Fund II LP, Medley LLC, Medley Capital Corporation, Medley Management, Inc., Medley Group, LLC, Brook Taube, and Seth Taube on the one hand, and American Web Loan and Curry on the other hand; and (7) provides that, as of the future Effective Date, none of Medley Opportunity Fund II LP, Medley LLC, Medley Capital Corporation, Medley Management, Inc., Medley Group, LLC, Brook Taube, and Seth Taube shall (i) be entitled to indemnification from AWL Defendants (as defined in the Settlement Agreement) or (ii) bring any claim against any Released Parties, including American Web Loan and Curry, that relate to or arise out of loans made by and/or in the name of AWL (including loans issued in the name of American Web Loan, Inc. or Clear Creek Lending) as of the date of entry of the Preliminary Approval Order (with the exception of claims to enforce the Settlement or the Judgment). The

On March 31, 2021, the parties to Class Action 1 and the Objectors filed a revised settlement agreement publicly in Class Action 1 (ECF No. 483-1) (the “Revised Settlement Agreement”). As relevant to Medley LLC, the Company, Medley Opportunity Fund II LP, Medley Management, Inc., Medley Group, LLC, Brook Taube, and Seth Taube, the terms of the Revised Settlement Agreement is subject to various conditions before it will become effective ondo not differ from the Effective Date, including paymentterms of the Monetary Consideration,original Settlement Agreement. On April 7, 2021, the Court presiding over Class Action 1 held a hearing on Plaintiffs’ motion for preliminary approval of the Revised Settlement Agreement, and entered an order granting preliminary approval of the revised settlement (the “Preliminary Approval Order”). Pursuant to the Preliminary Approval Order, the Court held a Final Approval Hearing relating to the Revised Settlement Agreement on July 9, 2021, and following the hearing, granted Final Approval of the Revised Settlement Agreement and entered the Final Judgment. It is anticipated that the effective date of the Revised Settlement Agreement will occur by August 31, 2021.

On or about January 28, 2021, a purported class action lawsuit, captioned Kahn v. PhenixFIN Corporation, et al., was filed against the Company and its directors in the Court of Chancery of the State of Delaware. Plaintiffs allege that a provision in the Company’s bylaws, which provides that directors may be removed from office for cause by the affirmative vote of 75% of capital stock entitled to vote, is inconsistent with provisions of the Delaware General Corporate Law, which plaintiffs allege would permit removal for cause by a simple majority of capital stock entitled to vote. The plaintiffs seek a declaration that the bylaw provision is invalid and to enjoin the defendants from enforcing it, as well as a reasonable allowance of attorneys’ fee. On February 10, 2021, the Board of the Company approved an amendment to the Company’s Bylaws, which, among other things, allows for the removal of directors for cause by affirmative vote of the holders of a majority of the capital stock entitled to vote at an election of directors.

On May 5, 2021, plaintiffs filed a notice and proposed order voluntarily dismissing the Action as moot and providing that jurisdiction would be retained solely to resolve an anticipated application for attorneys’ fees and expenses, which proposed order was granted by the Court of the Settlement following NoticeChancery on May 5, 2021. The parties to the Settlement ClassAction subsequently agreed to a payment by PhenixFIN to plaintiffs’ counsel of $25,000, in full satisfaction of their claim for attorneys’ fees, expenses and a Final Approval Hearing; entrycosts in connection with the Action. The Court of Judgment dismissing Class Action 1 with prejudice;Chancery has not been asked to review or approve, and expirationwill pass no judgment on, this payment.  The Court of Chancery granted the time during which Plaintiffs and American Web Loan may exercise specified termination rights. A hearingproposed order on the Plaintiffs' motion in Class Action 1 for final approval of the settlement is scheduled for October 21, 2020.July 28, 2021.



Item 1A.Risk Factors


In addition to other information set forth in this report, you should carefully consider the “Risk Factors” discussed in our annual report on Form 10-K for the fiscal year ended September 30, 2019,2020, filed with the SEC on December 16, 2019,11, 2020, which could materially affect our business, financial condition and/or operating results. Other than the items disclosed below, there have been no material changes during the nine months ended June 30, 20202021 to the risk factors discussed in “Item 1A. Risk Factors” of our annual report on Form 10-K. Additional risks or uncertainties not currently known to us or that we currently deem to be immaterial also may materially affect our business, financial condition and/or operating results.


Risks Related to our Business


We may not be able to pay you distributions and our distributions may not grow over time.


When possible, we intend to pay quarterly distributions 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 cash distributions or year-to-year increases in cash distributions. Our ability to pay distributions might be adversely affected by, among other things, the impact of one or more of the risk factors described herein. In addition, the inability to satisfy the asset coverage test applicable to us as a BDC could limit our ability to pay distributions. As of June 30, 2020,2021, the Company’s asset coverage was 198.3%302.5% after giving effect to leverage and therefore the Company’s asset coverage is belowabove 200%, the minimum asset coverage requirement under the 1940 Act. As a result, the Company is prohibited from making distributions to stockholders. All distributions 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 distributions to our stockholders in the future.


Risks Related to our Operations as a BDC and RIC


Regulations governing our operation as a BDC affect our ability to, and the way in which we, raise additional capital.


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We may only issue senior securities up to the maximum amount permitted by the 1940 Act. The 1940 Act permits us to issue senior securities only in amounts such that our asset coverage, as defined in the 1940 Act, equals at least 200% (or 150% if, pursuant to the 1940 Act, certain requirements are met) after such issuance or incurrence.


As of June 30, 2020,2021, the Company’s asset coverage was 198.3%302.5% after giving effect to leverage and therefore the Company’s asset coverage is belowabove 200%, the minimum asset coverage requirement under the 1940 Act. As a result, the Company is prohibited from making distributions to stockholders, including the payment of any dividend, and may not employ further leverage until the Company’s asset coverage is at least 200% after giving effect to such leverage.

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Risks Relating to an Investment in our Securities


The indenture under which the 2023 Notes and the 2021 Notes are issued place restrictions on our and/or our subsidiaries’ activities.


The terms of the indenture under which the 2023 Notes and the 2021 Notes (collectively, “U.S. Notes”) were issued place restrictions on our and/or our subsidiaries’ ability to, among other things:


•things issue securities or otherwise incur additional indebtedness or other obligations, including (1) any indebtedness or other obligations that would be equal in right of payment to the U.S.2023 Notes, (2) any indebtedness or other obligations that would be secured and therefore rank effectively senior in right of payment to the U.S.2023 Notes to the extent of the values of the assets securing such debt, (3) indebtedness of ours that is guaranteed by one or more of our subsidiaries and which therefore is structurally senior to the U.S.2023 Notes and (4) securities, indebtedness or obligations issued or incurred by our subsidiaries that would be senior to our equity interests in our subsidiaries and therefore rank structurally senior to the U.S.2023 Notes with respect to the assets of our subsidiaries, in each case other than an incurrence of indebtedness or other obligation that would cause a violation of Section 18(a)(1)(A) of the 1940 Act, as modified by Section 61(a)(1) of the 1940 Act, or any successor provisions. These provisions generally prohibit us from making additional borrowings, including through the issuance of additional debt or the sale of additional debt securities, unless our asset coverage, as defined in the 1940 Act, equals at least 200% after such borrowings. As of June 30, 2020,2021, the Company’s asset coverage was 198.3%302.5% after giving effect to leverage and therefore the Company is prohibited from making additional borrowings, including through the issuance of additional debt or the sale of additional debt securities; or

•pay dividends on, or purchase or redeem or make any payments in respect of, capital stock or other securities ranking junior in right of payment to the U.S. Notes, in each case other than dividends, purchases, redemptions or payments that would cause a violation of Section 18(a)(1)(B) of the 1940 Act, as modified by Section 61(a)(1) of the 1940 Act, or any successor provisions.leverage. These provisions generally prohibit us from declaring any cash dividend or distribution upon any class of our capital stock or purchasing any such capital stock if our asset coverage, as defined in the 1940 Act, is below 200% at the time of the declaration of the dividend or distribution or the purchase and after deducting the amount of such dividend, distribution or purchase. As of June 30, 2020, the Company’s asset coverage was 198.3% after giving effect to leverage and therefore the Company is prohibited from declaring any cash dividend or distribution upon any class of our capital stock, or purchasing any such capital stock.

Certain Risks in the Current Environment


We are currently operating in a period of capital markets disruptions and economic uncertainty. Such market conditions may materially and adversely affect debt and equity capital markets, which may have a negative impact on our business, financial condition and operations.


From time to time, capital markets may experience periods of disruption and instability. For example, between 2008 and 2009, the U.S. and global capital markets were unstable as evidenced by periodic disruptions in liquidity in the debt capital markets, significant write-offs in the financial services sector, the re-pricing of credit risk in the broadly syndicated credit market and the failure of major financial institutions. Despite actions of the U.S. federal government and foreign governments, these events contributed to worsening general economic conditions that materially and adversely impacted the broader financial and credit markets and reduced the availability of debt and equity capital for the market as a whole and financial services firms in particular.


The U.S. capital markets have experienced extreme volatility and disruption following the global outbreak of coronavirus (“COVID-19”) that began in December 2019. Some economists and major investment banks have expressed concern that the continued spread of the COVID-19 globally could lead to a world-wide economic downturn. Even after the COVID-19 pandemic subsides, the U.S. economy, as well as most other major economies, may continue to experience a recession, and we anticipate our businesses would be materially and adversely affected by a prolonged recession in the U.S. and other major markets. Disruptions in the capital markets have increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets. The COVID-19 outbreak continues to have, and any future outbreaks could have, an adverse impact on the ability of lenders to originate loans, the volume and type of loans originated, the ability of borrowers to make payments and the volume and type of amendments and waivers granted to borrowers and remedial actions taken in the event of a borrower default, each of which could negatively impact the amount and quality of loans available for investment by the Company and returns to the Company, among other things. With respect to the U.S. credit markets (in particular for middle market loans), the COVID-19 outbreak has resulted in, and until fully resolved is likely to continue to result in, the following among other things: (i) increased draws by borrowers on revolving lines of credit and other financing instruments; (ii) increased requests by borrowers for amendments and waivers of their credit agreements to avoid default, increased defaults by such borrowers and/or increased difficulty in obtaining refinancing at the maturity dates of their loans; (iii) greater volatility in pricing and spreads and difficulty in valuing loans during periods of increased volatility; and (iv) rapidly evolving proposals and/or actions by state and federal governments to address problems being experienced by the markets and by businesses and the economy in general which will not necessarily adequately address the problems facing the loan market and middle-market businesses. These and future market disruptions and/or illiquidity could have an adverse effect on our business, financial condition, results of operations and cash flows. Unfavorable economic conditions also could increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events could limit our investment originations, limit our ability to grow and have a material negative impact on our operating results and the fair values of our debt and equity investments. We may have to access, if available, alternative markets for debt and equity capital, and a severe disruption in the global financial markets, deterioration in credit and financing conditions or uncertainty regarding U.S. government spending and deficit levels or other global economic conditions could have a material adverse effect on our business, financial condition and results of operations.


For example, between 2008 The Company’s performance (including that of certain of its portfolio companies) was negatively impacted during the pandemic. The longer-term impact of COVID-19 on the operations and 2009, the U.S.performance of the Company is difficult to predict, but may also be adverse. The longer-term potential impact on such operations and global capital markets were unstableperformance could depend to a large extent on future developments and actions taken by authorities and other entities to contain COVID-19 and its economic impact. The impacts, as evidenced by periodic disruptions in liquiditywell as the uncertainty over impacts to come, of COVID-19 have adversely affected the performance of the Company and may continue to do so in the debt capital markets, significant write-offs in the financial services sector, the re-pricing of credit risk in the broadly syndicated credit market and the failure of major financial institutions.  Despite actions of the U.S. federal government and foreign governments, these events contributed to worsening general economic conditions that materially and adversely impacted the broader financial and credit markets and reduced the availability of debt and equity capital for the market as a whole and financial services firms in particular.  

future.

Equity capital may be difficult to raise during periods of adverse or volatile market conditions because, subject to some limited exceptions, as a BDC, we are generally not able to issue additional shares of our common stock at a price less than NAV without first obtaining approval for such issuance from our shareholders and our independent directors. Volatility and dislocation in the capital markets can also create a challenging environment in which to raise or access debt capital. The current market and future market conditions similar to those experienced from 2008 through 2009 for any substantial length of time could make it difficult to extend the maturity of or refinance our existing indebtedness or obtain new indebtedness with

23

similar terms and any failure to do so could have a material adverse effect on our business. The debt capital that will be available to us in the future, if at all, may be at a higher cost and on less favorable terms and conditions than what we currently experience, including being at a higher cost in a rising interest rate environment. If any of these conditions appear, they may have an adverse effect on our business, financial condition, and results of operations. These events could limit our investment originations, limit our ability to increase returns to equity holders through the effective use of leverage, and negatively impact our operating results.

In addition, significant changes or volatility in the capital markets may also have a negative effect on the valuations of our investments. While most of our investments are not publicly traded, applicable accounting standards require us to assume as part of our valuation process that our investments are sold in a principal market to market participants (even if we plan on holding an investment through its maturity). Significant changes in the capital markets may also affect the pace of our investment activity and the potential for liquidity events involving our investments. Thus, the illiquidity of our investments may make it difficult for us to sell our investments to access capital if required, and as a result, we could realize significantly less than the value at which we have recorded our investments if we were required to sell them for liquidity purposes. An inability to raise or access capital could have a material adverse effect on our business, financial condition or results of operations.


Governmental authorities worldwide have taken increased measures to stabilize the markets and support economic growth. The success of these measures is unknown and they may not be sufficient to address the market dislocations or avert severe and prolonged reductions in economic activity.


We also face an increased risk of investor, creditor or portfolio company disputes, litigation and governmental and regulatory scrutiny as a result of the effects of COVID-19 on economic and market conditions.



Events outside of our control, including public health crises, could negatively affect our portfolio companies and our results of our operations.


Periods of market volatility have occurred and could continue to occur in response to pandemics or other events outside of our control. These types of events have adversely affected and could continue to adversely affect operating results for us and for our portfolio companies. In December 2019, COVID-19 surfaced in China and has since spread and continues to spread to other countries, including the United States. COVID-19 spread quickly and has been identified as a global pandemic by the World Health Organization The COVID-19 pandemic continues to adversely impact global commercial activity and has contributed to significant volatility in financial markets. In response, beginning in March 2020, in affected jurisdictionjurisdictions including the United States, unprecedented actions were and continue to be taken by governmental authorities and businesses, including quarantines, “stay at home” orders, travel restrictions and bans, and the temporary closure and limited operations of many businesses (including corporate offices, retail stores, restaurants, fitness clubs, manufacturing facilities and factories, and other businesses). The actions to contain the COVID-19 pandemic varied by country and by state in the United States. While state and local governments across the United States have taken steps to re-open their economies by lifting “stay at home” orders and re-opening businesses, a number of states and local governments have needed to pause or slow the re-opening or impose new shut-down orders as the number of cases of COVID-19 has continued to rise. COVID-19 and the resulting economic dislocations have had and continue to have adverse consequences for the business operations and financial performance of some of our portfolio companies, which may, in turn impact the valuation of our investments and have adversely affected, and threaten to continue to adversely affect, our operations. Local, state and federal and numerous non-U.S. governmental authorities have imposed travel restrictions and bans, business closures or limited business operations and other quarantine measures on businesses and individuals that remain in effect on the date of this Quarterly Report on Form 10-Q. COVID-19 has caused the effective cessation of all business activity deemed non-essential by such governmental authorities. We cannot predict the full impact of COVID-19, including the duration of the closures and restrictions described above. As a result, we are unable to predict the duration of these business and supply-chain disruptions, the extent to which COVID-19 will negatively affect our portfolio companies’ operating results or the impact that such disruptions may have on our results of operations and financial condition. With respect to loans to portfolio companies, the Company will be impacted if, among other things, (i) amendments and waivers are granted (or are required to be granted) to borrowers permitting deferral of loan payments or allowing for PIK interest payments, (ii) borrowers default on their loans, are unable to refinance their loans at maturity, or go out of business, or (iii) the value of loans held by the Company decreases as a result of such events and the uncertainty they cause. Portfolio companies may also be more likely to seek to draw on unfunded commitments we have made, and the risk of being unable to fund such commitments is heightened during such periods. Depending on the duration and extent of the disruption to the business operations of our portfolio companies, we expect some portfolio companies, particularly those in vulnerable industries, such as travel, to experience financial distress and possibly to default on their financial obligations to us and/or their other capital providers. In addition, if such portfolio companies are subjected to prolonged and severe financial distress, we expect some of them to substantially curtail their operations, defer capital expenditures and lay off workers. These developments would be likely to permanently impair their businesses and result in a reduction in the value of our investments in them.


The Company will also be negatively affected if the operations and effectiveness of MCC Advisors or our portfolio companies (or any of the key personnel or service providers of the foregoing) are compromised or if necessary or beneficial systems and processes are disrupted as a result of stay-at-home orders or other related interruptions to business operations.

Company performance (including the performance of certain of its portfolio companies) has been and may continue to be negatively impacted by the COVID-19 pandemic’s effects. The COVID-19 pandemic has adversely impacted economies and capital markets around the world in ways that may continue and may change in unforeseen ways for an indeterminate period. The pandemic has also adversely affected various businesses, including some in which we are invested. The COVID-19 pandemic may exacerbate pre-existing business performance, political, social and economic risks affecting certain companies and countries generally. The impacts, as well as the uncertainty over impacts to come, of COVID-19 have adversely affected the performance of the Company (including certain portfolio companies) and may continue to do so in the future. Further, the potential exists for variants of COVID-19, including the Delta variant, to impede the global economic recovery and exacerbate geographic differences in the spread of, and response to, COVID-19.

We may be subject to risks associated with significant investments in one or more economic sectors, including the construction and building sector.

At times, the Company may have a significant portion of its assets invested in securities of companies conducting business within one or more economic sectors, including the construction and building sector. Companies in the same sector may be similarly affected by economic, regulatory, political or market events or conditions, which may make the Company more vulnerable to unfavorable developments in that sector than companies that invest more broadly. Generally, the more broadly the Company invests, the more it spreads risk and potentially reduces the risks of loss and volatility.

The Company presently has significant exposure to the construction and building sector (its investments in such sector comprise 16.1% of gross assets as of June 30, 2021), which subjects the Company to the particular risks of such sector to a greater degree than others not similarly concentrated. These risks include that the construction and building sector is cyclical and is affected by a number of factors, including the general condition of the economy, market demand and changes in interest rates. Construction activity is affected by the ability to finance projects, which may be reduced due to a widespread outbreak of contagious disease, including an epidemic or pandemic such as the current COVID-19 pandemic. Residential, commercial and industrial construction could decline if companies and consumers are unable to finance construction projects or if the economy precipitously declines or stalls, which could result in delays or cancellations of capital projects. A downturn in the residential, commercial or industrial construction industries and general economic conditions may have an adverse effect on the portfolio companies in which the Company invests.



The interest rates of some of our loans to our portfolio companies may be priced using a spread over LIBOR, which is scheduled to be phased out.

On July 27, 2017, the Financial Conduct Authority (“FCA”) announced that it would phase out LIBOR as a benchmark by the end of 2021. It is unclear whether new methods of calculating LIBOR will be established such that it continues to exist after 2021 and the FCA has indicated that market participants should not rely on LIBOR being available after 2021. The FCA and the ICE Benchmark Administration have since announced that most LIBOR settings will no longer be published after December 31, 2021 and a majority of U.S. dollar LIBOR settings will cease publication after June 30, 2023. Regulators continue to emphasize the importance of LIBOR transition planning. As an alternative to LIBOR, for example, the U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, is considering replacing U.S.-dollar LIBOR with the Secured Overnight Financing Rate ("SOFR"), a new index calculated by short-term repurchase agreements, backed by Treasury securities. Abandonment of or modifications to LIBOR could have adverse impacts on newly issued financial instruments and our existing financial instruments which reference LIBOR. While some instruments may contemplate a scenario where LIBOR is no longer available by providing for an alternative rate setting methodology, not all instruments may have such provisions and there is significant uncertainty regarding the effectiveness of any such alternative methodologies. Abandonment of or modifications to LIBOR could lead to significant short-term and long-term uncertainty and market instability. In the event of changes to or cessation of LIBOR, we and our portfolio companies may need to amend or restructure our existing LIBOR-based debt instruments and any related hedging arrangements that extend beyond 2021, which may be difficult, costly and time consuming. In addition, from time to time we invest in floating rate loans and investment securities whose interest rates are indexed to LIBOR. Uncertainty as to the nature of alternative reference rates and as to potential changes or other reforms to LIBOR, or any changes announced with respect to such reforms, may result in a sudden or prolonged increase or decrease in the reported LIBOR rates and the value of LIBOR-based loans and securities, including those of other issuers we or our funds currently own or may in the future own. It remains uncertain how such changes would be implemented and the effects such changes would have on us, issuers of instruments in which we invest and financial markets generally.

The expected discontinuation of LIBOR could have an impact on our business. We may experience operational challenges for the transition away from LIBOR including, but not limited to, amending existing loan agreements with borrowers on investments that may have not been modified with fallback language and adding effective fallback language to new agreements in the event that LIBOR is discontinued before maturity. There may be additional risks to our current processes and information systems that will need to be identified and evaluated by us. Due to the uncertainty of the replacement for LIBOR, the potential effect of any such event on our cost of capital and net investment income cannot yet be determined. In addition, the cessation of LIBOR could:

●Adversely impact the pricing, liquidity, value of, return on and trading for a broad array of financial products, including any LIBOR-linked securities, loans and derivatives that are included in our assets and liabilities;

●Require changes to documentation that governs or references LIBOR or LIBOR-based products, including, for example, pursuant to renegotiations of existing documentation to modify the terms of outstanding investments;

●Result in inquiries or other actions from regulators in respect of our preparation and readiness for the replacement of LIBOR with one or more alternative reference rates;

●Result in disputes, litigation or other actions with portfolio companies, or other counterparties, regarding the interpretation and enforceability of provisions in our LIBOR-based investments, such as fallback language or other related provisions, including, in the case of fallbacks to the alternative reference rates, any economic, legal, operational or other impact resulting from the fundamental differences between LIBOR and the various alternative reference rates;

●Require the transition and/or development of appropriate systems and analytics to effectively transition our risk management processes from LIBOR-based products to those based on one or more alternative reference rates, which may prove challenging given the limited history of the proposed alternative reference rates; and

●Cause us to incur additional costs in relation to any of the above factors.

There is no guarantee that a transition from LIBOR to an alternative will not result in financial market disruptions, significant increases in benchmark rates, or borrowing costs to borrowers, any of which could have an adverse effect on our business, result of operations, financial condition, and unit price.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.Defaults Upon Senior Securities

None.

Item 4.Mine Safety Disclosures

None.

Item 5. Other Information

None.


24

None.

71

Item 6. Exhibits

3.1
Certificate of Incorporation (Incorporated by reference to Exhibit 99.A.3 to the Registrant’s Pre-effective Amendment No. 3 to the Registration Statement on Form N-2 (File No. 333-166491), filed on November 23, 2010).
3.2
Certificate of Amendment to Certificate of Incorporation (Incorporated by reference to the Current Report on Form 8-K filed December 28, 2020).
3.3Form of Bylaws (Incorporated by reference to Exhibit 99.B.3 to the Registrant’s Pre-effective Amendment No. 3 to the Registration Statement on Form N-2 (File No. 333-166491), filed on November 23, 2010).
3.33.4
Amendment No. 1 to Bylaws (Incorporated by reference to the Current Report on Form 8-K filed February 7, 2019).
3.5Amendment No. 2 to Bylaws (Incorporated by reference to the Current Report on Form 8-K filed December 28, 2020).
4.1
Form of Stock Certificate (Incorporated by reference to Exhibit 99.D to the Registrant’s Pre-effective Amendment No. 3 to the Registration Statement on Form N-2 (File No. 333-166491), filed on November 23, 2010).
4.2
Indenture, dated February 7, 2012, between Medley Capital Corporation and U.S. Bank National Association, as Trustee (Incorporated by reference to Exhibit 99.D.2 to the Registrant’s Pre-Effective Amendment No. 1 to the Registration Statement on Form N-2 (File No. 333-179237), filed on February 13, 2012).
4.3
First Supplemental Indenture, dated March 21, 2012, between Medley Capital Corporation and U.S. Bank National Association, as Trustee (Incorporated by reference to Exhibit 99.D.4 to the Registrant’s Post-Effective Amendment No. 2 to the Registration Statement on Form N-2 (File No. 333-179237), filed on March 21, 2012).
4.4
Second Supplemental Indenture, dated March 18, 2013, between Medley Capital Corporation and U.S. Bank National Association, as Trustee (Incorporated by reference to Exhibit 99.D.4 to the Registrant’s Post-Effective Amendment No. 7 to the Registration Statement on Form N-2 (File No. 333-179237), filed on March 15, 2013).
4.5
Third Supplemental Indenture, dated December 17, 2015, between Medley Capital Corporation and U.S. Bank National Association, as Trustee (Incorporated by reference to Exhibit 99.D.6 to the Registrant’s Post-Effective Amendment No. 11 to the Registration Statement on Form N-2 (File No. 333-187324), filed December 17, 2015).
4.6
Deed of Trust, dated January 23, 2018, between Medley Capital Corporation and Mishmeret Trust Company, Ltd. (Incorporated by reference to the Registrant'sRegistrant’s Registration Statement on Form N-2 (File No. 333-230790), filed on April 10, 2019).
4.7
Amendment to Deed of Trust, dated August 12, 2019, between Medley Capital Corporation and Mishmeret Trust Company, Ltd. (Incorporated by reference by the Current Report on Form 8-K filed on August 16, 2019).
4.8
Statement of Eligibility of Trustee on Form T-1 (Incorporated by reference to Exhibit d.5 to the Registrant’s Registration Statement on Form N-2 (File No. 333-179237), filed on March 15, 2013).
10.1
Form of Amended and Restated Investment Management Agreement between Registrant and MCC Advisors LLC (Incorporated by reference to Exhibit 99.G to Registrant’s Post-Effective Amendment No. 3 to the Registration Statement on N-2 (File No. 333-187324), filed on December 10, 2013).
10.2
Letter from MCC Advisors LLC re: Waiver of Base Management Fee and Incentive Fee on Net Investment Income, dated February 8, 2016 (Incorporated by reference to Exhibit 99.K.5 to Registrant’s Pre-Effective Amendment No. 1 to the Registration Statement on Form N-2 (File No. 333-208746), filed on March 25, 2016).
10.3
Form of Custody Agreement (Incorporated by reference to Exhibit 99.J.1 to the Registrant’s Pre-effective Amendment No. 3 to the Registration Statement on Form N-2 (File No. 333-166491), filed on November 23, 2010).
10.4
Form of Administration Agreement (Incorporated by reference to Exhibit 99.K.2 to the Registrant’s Pre-effective Amendment No. 1 to the Registration Statement on Form N-2 (File No. 333-166491), filed on June 9, 2010).
10.5
Form of Sub-Administration Agreement (Incorporated by reference to Exhibit 99.K.4 to the Registrant’s Pre-effective Amendment No. 3 to the Registration Statement on Form N-2 (File No. 333-166491), filed on November 23, 2010).
10.6
Trademark License Agreement (Incorporated by reference to Exhibit 99.K.3 to the Registrant’s Pre-effective Amendment No. 1 to the Registration Statement on Form N-2 (File No. 333-166491), filed on June 9, 2010).
10.7
Form of Dividend Reinvestment Plan (Incorporated by reference to Exhibit 99.E to the Registrant’s Pre-effective Amendment No. 3 to the Registration Statement on Form N-2 (File No. 333-166491), filed on November 23, 2010).


10.8
Senior Secured Revolving Credit Agreement among Medley Capital Corporation as borrower, the Lenders party thereto, and ING Capital LLC, as Administrative Agent, dated August 4, 2011 (Incorporated by reference to the Current Report on Form 8-K filed on August 9, 2011).
10.9
Guarantee, Pledge and Security Agreement among the Company, the Subsidiary Guarantors party thereto, ING Capital LLC, as Administrative Agent, each Financial Agent and Designated Indebtedness Holder party thereto and ING Capital LLC, as Collateral Agent, dated August 4, 2011 (Incorporated by reference to the Current Report on Form 8-K filed on August 9, 2011).
10.10
Amendment No. 1, dated as of August 31, 2012, to the Senior Secured Revolving Credit Agreement dated as of August 4, 2011, among Medley Capital Corporation as borrower, the Lenders party thereto, and ING Capital LLC, as Administrative Agent (Incorporated by reference to the Current Report on Form 8-K filed on September 6, 2012).
72

10.11
Amendment No. 2, dated as of December 7, 2012, to the Senior Secured Revolving Credit Agreement dated as of August 4, 2011, among Medley Capital Corporation as borrower, the Lenders party thereto, and ING Capital LLC, as Administrative Agent, as amended by Amendment No. 1 to the Senior Secured Revolving Credit Agreement, dated as of August 31, 2012 (Incorporated by reference to the Current Report on Form 8-K filed on December 13, 2012).
10.12
Amendment No. 3, dated as of March 28, 2013, to the Senior Secured Revolving Credit Agreement dated as of August 4, 2011, among Medley Capital Corporation as borrower, the Lenders party thereto, and ING Capital LLC, as Administrative Agent, as amended by Amendment Nos. 1 and 2 to the Senior Secured Revolving Credit Agreement, dated as of August 31, 2012 and December 7, 2012, respectively (Incorporated by reference to the Current Report on Form 8-K filed on April 2, 2013).
10.13
Senior Secured Term Loan Credit Agreement, dated as of August 31, 2012, among Medley Capital Corporation as borrower, the Lenders party thereto, and ING Capital LLC, as Administrative Agent (Incorporated by reference to the Current Report on Form 8-K filed on September 6, 2012).
10.14
Amendment No. 1, dated as of December 7, 2012, to the Senior Secured Term Loan Credit Agreement dated as of August 31, 2012, among Medley Capital Corporation as borrower, the Lenders party thereto, and ING Capital LLC, as Administrative Agent (Incorporated by reference to the Current Report on Form 8-K filed on December 13, 2012).
10.15
Amendment No. 2, dated as of January 23, 2013, to the Senior Secured Term Loan Credit Agreement dated as of August 31, 2012, among Medley Capital Corporation as borrower, the Lenders party thereto, and ING Capital LLC, as Administrative Agent, as amended by Amendment No. 1 to the Senior Secured Term Loan Credit Agreement, dated as of January 23, 2013 (Incorporated by reference to the Current Report on Form 8-K filed on January 29, 2013).
10.16
Amendment No. 3, dated as of March 28, 2013, to the Senior Secured Term Loan Credit Agreement, dated as of August 31, 2012, among Medley Capital Corporation as borrower, the Lenders party thereto, and ING Capital LLC, as Administrative Agent, as amended by Amendment Nos. 1 and 2 to the Senior Secured Term Loan Credit Agreement, dated as of December 7, 2012 and January 23, 2013, respectively (Incorporated by reference to the Current Report on Form 8-K filed on April 2, 2013).
10.17
Amendment No. 4, dated as of May 1, 2013, to the Senior Secured Revolving Credit Agreement, dated as of August 4, 2011, among Medley Capital Corporation as borrower, the Lenders party thereto, and ING Capital LLC, as Administrative Agent, as amended by Amendment Nos. 1, 2 and 3 to the Senior Secured Revolving Credit Agreement, dated as of August 31, 2012, December 7, 2012 and March 28, 2013, respectively (Incorporated by reference to the Current Report on Form 8-K filed on May 7, 2013).
10.18
Amendment No. 4, dated as of May 1, 2013, to the Senior Secured Term Loan Credit Agreement, dated as of August 31, 2012, among Medley Capital Corporation as borrower, the Lenders party thereto, and ING Capital LLC, as Administrative Agent, as amended by Amendment Nos. 1, 2 and 3 to the Senior Secured Term Loan Credit Agreement, dated as of December 7, 2012, January 23, 2013 and March 28, 2013, respectively (Incorporated by reference to the Current Report on Form 8-K filed on May 7, 2013).
10.19
Amendment No. 5, dated as of June 2, 2014, to the Senior Secured Revolving Credit Agreement, dated as of August 4, 2011, among Medley Capital Corporation as borrower, the Lenders party thereto, and ING Capital LLC, as Administrative Agent, as amended by Amendment Nos. 1, 2, 3 and 4 to the Senior Secured Revolving Credit Agreement, dated as of August 31, 2012, December 7, 2012, March 28, 2013 and May 1, 2013, respectively (Incorporated by reference to the Current Report on Form 8-K filed on June 3, 2014).
10.20
Amendment No. 5, dated as of June 2, 2014, to the Senior Secured Term Loan Credit Agreement, dated as of August 31, 2012, among Medley Capital Corporation as borrower, the Lenders party thereto, and ING Capital LLC, as Administrative Agent, as amended by Amendment Nos. 1, 2, 3 and 4 to the Senior Secured Term Loan Credit Agreement, dated as of December 7, 2012, January 23, 2013, March 28, 2013 and May 1, 2013, respectively (Incorporated by reference to the Current Report on Form 8-K filed on June 3, 2014).


10.21
Amendment No. 6, dated as of February 2, 2015, to the Senior Secured Revolving Credit Agreement, dated as of August 4, 2011, among Medley Capital Corporation as borrower, the Lenders party thereto, and ING Capital LLC, as Administrative Agent, as amended by Amendment Nos. 1, 2, 3, 4 and 5 to the Senior Secured Revolving Credit Agreement, dated as of August 31, 2012, December 7, 2012, March 28, 2013, May 1, 2013 and June 2, 2014, respectively (Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on February 9, 2015).
10.22
Amendment No. 6 to the Senior Secured Term Loan Credit Agreement, dated as of August 31, 2012, among Medley Capital Corporation as borrower, the Lenders party thereto, and ING Capital LLC, as Administrative Agent, as amended by Amendment Nos. 1, 2, 3, 4 and 5 to the Senior Secured Term Loan Credit Agreement, dated as of December 7, 2012, January 23, 2013, March 28, 2013, May 1, 2013 and June 2, 2014, respectively (Incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on February 9, 2015).
10.23
Amended and Restated Senior Secured Revolving Credit Agreement, dated as of July 28, 2015, by and among the Company as borrower, each of the subsidiary guarantors party thereto, the Lenders party thereto and ING Capital LLC, as Administrative Agent (Incorporated by reference to the Current Report on Form 8-K filed on July 30, 2015).
10.24
Amendment No. 1 to Amended and Restated Senior Secured Revolving Credit Agreement, dated as of September 16, 2016, by and among the Company as borrower, MCC Investment Holdings LLC, MCC Investment Holdings Sendero LLC, MCC Investment Holdings RT1 LLC, MCC Investment Holdings Omnivere LLC, MCC Investment Holdings Amvestar, LLC, and MCC Investment Holdings AAR, LLC, as subsidiary guarantors, the Lenders party thereto and ING Capital LLC, as Administrative Agent (Incorporated by reference to the Current Report on Form 8-K filed on September 22, 2016).
10.25
Amendment No. 2 to Amended and Restated Senior Secured Revolving Credit Agreement, dated as of February 8, 2017, by and among the Company as borrower, MCC Investment Holdings LLC, MCC Investment Holdings Sendero LLC, MCC Investment Holdings RT1 LLC, MCC Investment Holdings Omnivere LLC, MCC Investment Holdings Amvestar, LLC, and MCC Investment Holdings AAR, LLC, as subsidiary guarantors, the Lenders party thereto and ING Capital LLC, as Administrative Agent (Incorporated by reference to the Current Report on Form 8-K filed on February 10, 2017).
73

10.26
Amendment No. 3 to Amended and Restated Senior Secured Revolving Credit Agreement, dated as of September 1, 2017, by and among the Company as borrower, MCC Investment Holdings LLC, MCC Investment Holdings Sendero LLC, MCC Investment Holdings RT1 LLC, MCC Investment Holdings Omnivere LLC, MCC Investment Holdings Amvestar, LLC, and MCC Investment Holdings AAR, LLC, as subsidiary guarantors, the Lenders party thereto and ING Capital LLC, as Administrative Agent (Incorporated by reference to the Current Report on Form 8-K filed on September 8, 2017).
10.27
Amendment No. 4 to Amended and Restated Senior Secured Revolving Credit Agreement, dated as of February 12, 2018, by and among the Company as borrower, MCC Investment Holdings LLC, MCC Investment Holdings Sendero LLC, MCC Investment Holdings RT1 LLC, MCC Investment Holdings Omnivere LLC, MCC Investment Holdings Amvestar, LLC, and MCC Investment Holdings AAR, LLC, as subsidiary guarantors, the Lenders party thereto and ING Capital LLC, as Administrative Agent (Incorporated by reference to the Current Report on Form 8-K filed on February 16, 2018).
10.28
Amended and Restated Senior Secured Term Loan Credit Agreement dated as of July 28, 2015, by and among the Company as borrower, each of the subsidiary guarantors party thereto, the Lenders party thereto and ING Capital LLC, as Administrative Agent (Incorporated by reference to the Current Report on Form 8-K filed on July 30, 2015).
10.29
Amendment No. 1 to Amended and Restated Senior Secured Term Loan Credit Agreement dated as of September 16, 2016, by and among the Company as borrower, MCC Investment Holdings LLC, MCC Investment Holdings Sendero LLC, MCC Investment Holdings RT1 LLC, MCC Investment Holdings Omnivere LLC, MCC Investment Holdings Amvestar, LLC, and MCC Investment Holdings AAR, LLC, as subsidiary guarantors, the Lenders party thereto and ING Capital LLC, as Administrative Agent (Incorporated by reference to the Current Report on Form 8-K filed on September 22, 2016).
10.30
Amendment No. 2 to Amended and Restated Senior Secured Term Loan Credit Agreement dated as of February 8, 2017, by and among the Company as borrower, MCC Investment Holdings LLC, MCC Investment Holdings Sendero LLC, MCC Investment Holdings RT1 LLC, MCC Investment Holdings Omnivere LLC, MCC Investment Holdings Amvestar, LLC, and MCC Investment Holdings AAR, LLC, as subsidiary guarantors, the Lenders party thereto and ING Capital LLC, as Administrative Agent (Incorporated by reference to the Current Report on Form 8-K filed on February 10, 2017).
10.31
Amendment No. 3 to Amended and Restated Senior Secured Term Loan Credit Agreement dated as of September 1, 2017, by and among the Company as borrower, MCC Investment Holdings LLC, MCC Investment Holdings Sendero LLC, MCC Investment Holdings RT1 LLC, MCC Investment Holdings Omnivere LLC, MCC Investment Holdings Amvestar, LLC, and MCC Investment Holdings AAR, LLC, as subsidiary guarantors, the Lenders party thereto and ING Capital LLC, as Administrative Agent (Incorporated by reference to the Current Report on Form 8-K filed on September 8, 2017).


10.32
Incremental Assumption Agreement, dated as of February 10, 2012, made by Credit Suisse AG, Cayman Islands Branch, as Assuming Lender, relating to the Senior Secured Revolving Credit Agreement dated as of August 4, 2011, among Medley Capital Corporation, as Borrower, the Several Lenders and Agents from Time to Time Parties Thereto, and ING Capital LLC, as Administrative Agent and Collateral Agent (Incorporated by reference to the Current Report on Form 8-K filed on February 10, 2012).
10.33
Incremental Assumption Agreement dated as of March 30, 2012, made by Onewest Bank, FSB, as Assuming Lender, relating to the Senior Secured Revolving Credit Agreement dated as of August 4, 2011, among Medley Capital Corporation, as Borrower, the Several Lenders and Agents from Time to Time Parties Thereto, and ING Capital LLC, as Administrative Agent and Collateral Agent (Incorporated by reference to the Current Report on Form 8-K filed on April 4, 2012).
10.34
Incremental Assumption Agreement dated as of May 3, 2012, made by Doral Bank, as Assuming Lender, relating to the Senior Secured Revolving Credit Agreement dated as of August 4, 2011, among Medley Capital Corporation, as Borrower, the Several Lenders and Agents from Time to Time Parties Thereto, and ING Capital LLC, as Administrative Agent and Collateral Agent (Incorporated by reference to the Current Report on Form 8-K filed on May 3, 2012).
10.35
Incremental Assumption Agreement dated as of September 25, 2012, made by Stamford First Bank, a division of the Bank of New Canaan, as Assuming Lender, relating to the Senior Secured Revolving Credit Agreement dated as of August 4, 2011, as amended by Amendment No. 1, dated as of August 31, 2012, among Medley Capital Corporation, as Borrower, the Several Lenders and Agents from Time to Time Parties Thereto, and ING Capital LLC, as Administrative Agent and Collateral Agent (Incorporated by reference to the Current Report on Form 8-K filed on September 28, 2012).
10.36
Limited Liability Company Operating Agreement of MCC Senior Loan Strategy JV I LLC, a Delaware Limited Liability Company, dated as of March 27, 2015 (Incorporated by reference to the Current Report on Form 8-K filed on March 30, 2015).
10.37
Settlement Term Sheet, dated April 15, 2019 (Incorporated by reference to the Current Report on Form 8-K, filed on April 17, 2019).
10.38
Stipulation of Settlement, dated July 29, 2019, by and among Medley Capital Corporation, Brook Taube, Seth Taube, Jeff Tonkel, Mark Lerdal, Karin Hirtler-Garvey, John E. Mack, Arthur S. Ainsberg, Medley Management Inc., MCC Advisors LLC, Medley LLC and Medley Group LLC, on the one hand, and FrontFour Capital Group LLC and FrontFour Master Fund, Ltd., on behalf of themselves and a class of similarly situated stockholders of Medley Capital Corporation, on the other hand, in connection with the action styled In re Medley Capital Corporation Stockholder Litigation, Cons. C.A. No. 2019-0100-KSJM (Incorporated by reference to the Current Report on Form 8-K, filed on August 2, 2019).
10.39
Governance Agreement, dated July 29, 2019, by and among, Medley Capital Corporation, on the one hand, and FrontFour Capital Group LLC, FrontFour Master Fund, Ltd., FrontFour Capital Corp., FrontFour Opportunity Fund, David A. Lorber, Stephen E. Loukas and Zachary R. George, on the other hand (Incorporated by reference to the Current Report on Form 8-K, filed on August 2, 2019).
10.40
Order and Final Judgment, dated December 20, 2019 (Incorporated by reference to the Amendment No. 1 to the Current Report on the Form 8-K, filed on December 30, 2019).
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14.110.41
CodeMembership Interest Purchase Agreement, dated as of Business ConductOctober 8, 2020, by and Ethics of the Registrantamong Medley Capital Corporation, Great American Life Insurance Company, MCC Senior Loan Strategy JV I LLC and GEMS Fund 5, L.P. (Incorporated by reference to Exhibit 14.110.1 to the Current Report on Form 8-K, filed on October 13, 2020)
10.42Fund Accounting Servicing Agreement (Incorporated by reference to Exhibit 10.16 to the Registrant’s Annual Report on Form 10-K filed on December 11, 2020).
10.43Administration Servicing Agreement (Incorporated by reference to Exhibit 10.17 to the Registrant’s Annual Report on Form 10-K filed on December 11, 2020).
21.1List of Subsidiaries (Incorporated by reference to Exhibit 21.1 to the Registrants Quarterly Report on Form 10-Q for the period ended June 30, 2011,December 31, 2020, filed on August 4, 2011)February 16, 2021).
14.2
Code of Business Ethics of MCC Advisors (Incorporated by reference to Exhibit 99.R.2 to the Registrant’s Pre-effective Amendment No. 1 to the Registration Statement on Form N-2 (File No. 333-166491), filed on June 9, 2010).
21.1
List of Subsidiaries*
24.0Power of attorney (included on the signature page hereto).
31.1
31.2
Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.**
32.1

*Filed herewith.


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SIGNATURES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: August 11, 2021
Dated:
August 7, 2020		Medley CapitalPhenixFIN Corporation
   
 By/s/ Brook TaubeDavid Lorber
  Brook TaubeDavid Lorber
  Chief Executive Officer
  (Principal Executive Officer)
   
 By/s/ Richard T. Allorto, Jr.Ellida McMillan
  Richard T. Allorto, Jr.Ellida McMillan
  Chief Financial Officer
  (Principal Accounting and Financial Officer)



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