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Commitments

3 Months Ended

Dec. 31, 2023

Commitments [Abstract]

Note 8. Commitments

Unfunded commitments

As of December 31, 2023 and September 30, 2023, we had commitments under loan and financing agreements to fund up to $2.6 million to two portfolio companies and $3.4 million to four portfolio companies, respectively. These commitments are primarily composed of senior secured delayed draw term loans and revolvers, and the determination of their fair value is included in the Consolidated Schedules of Investments. The commitments are generally subject to the borrowers meeting certain criteria such as compliance with covenants and certain operational metrics. The terms of the borrowings and financings subject to commitment are comparable to the terms of other loan and equity securities in our portfolio. A summary of the composition of the unfunded commitments as of December 31, 2023 and September 30, 2023 is shown in the table below (dollars in thousands):

		December 31, 2023				September 30, 2023
Secure Acquisition Inc. (dba Paragon Films) - Senior Secured First Lien Delayed Draw Term Loan		$	-			$	517
NVTN LLC - Senior Secured First Lien Delayed Draw Term Loan			-				220
Deer Management Systems LLC - Senior Secured First Lien Delayed Draw Term Loan			600				600
Tamarix Capital Partners II, L.P. - Fund Investment			2,038				2,038
Total unfunded commitments		$	2,638			$	3,375

Contingencies

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

In December 2023, one of the Company’s portfolio companies entered into a sale agreement. In the event the sale agreement does not close, the Company will acquire all loan and other obligations from other lenders for a purchase price of approximately $4.6 million.

Lease obligations

The Company evaluates its leases to determine whether they should be classified as operating or financing leases. PhenixFIN identified one operating lease for its office space. The lease commenced September 1, 2021 and expires November 30, 2026.

Upon entering into the lease on September 1, 2021, PhenixFIN recorded a right-of-use asset and a lease liability as of that date.

As of December 31, 2023 and September 30, 2023, the asset related to the operating lease was $417,189 and $449,815, respectively, and is included in the Other assets balance on the Consolidated Balance Sheet. As of December 31, 2023 and September 30, 2023, the lease liability was $394,364 and $432,698, respectively, and is included in the Other liabilities balance on the Consolidated Statements of Assets and Liabilities. As of December 31, 2023 and September 30, 2023, the remaining lease term was approximately three years for each of the respective periods and the implied borrowing rate was 5.25% for each of the respective periods.

The following table shows future minimum payments under PhenixFIN’s operating lease as of December 31, 2023:

For the Years Ended September 30,		Amount
2024		$	115,319
2025			156,971
2026			161,680
2027			27,417
Thereafter			-
			461,387
Difference between undiscounted and discounted cash flows			(67,023	)
		$	394,364