PHENIXFIN CORPORATION 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
Forward-Looking Statements Some of the statements in this quarterly 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 quarterly 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 rateenvironment 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 andregulatory, 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
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; theability 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 ourexisting 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" and elsewhere in
this quarterly report on Form 10-Q.
52
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
Securities and Exchange Commission ("SEC"), including annual reports on Form
10-K, registration statements on Form N-2, quarterly reports on Form 10-Q and
current reports on Form 8-K.
COVID-19 Developments and War in
COVID-19 and variants thereof have severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. The global impact of COVID-19 continues to evolve and many countries, includingthe 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 have created disruption in global supply chains and adversely impacted a number of industries. The outbreak has had and could continue to have an adverse impact on economic and market conditions and trigger a period of global economic slowdown. We continue to closely monitor 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 continuing 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 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 government Paycheck Protection Program. The Company's performance has been 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 predict, 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 actions taken by authorities and other entities to mitigate COVID-19 and its economic impact. 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. 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 regulatory policy. InFebruary 2022 ,Russia launched a large-scale invasion ofUkraine . The extent and duration of Russian military action in theUkraine , resulting sanctions and resulting future market disruptions, including declines in stock markets inRussia and elsewhere and the value of the ruble against theU.S. dollar, are impossible to predict, but have been and could continue to be significant. Any such disruptions caused by Russian military or other actions (including cyberattacks and espionage) or resulting from actual or threatened responses to such actions have caused and could continue to cause disruptions to portfolio companies located inEurope or that have substantial business relationships with European or Russian companies. The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but have been and could continue to be substantial. Any such market disruptions could affect our portfolio companies' operations and, as a result, could have a material adverse effect on our business, financial condition and results of operations. We have evaluated subsequent events fromDecember 31, 2022 through the filing date of this quarterly report on Form 10-Q. However, as the discussion in this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations relates to the Company's financial statements for the quarterly period endedDecember 31, 2022 , the analysis contained herein may not fully account for market event impacts. As ofDecember 31, 2022 , the Company valued its portfolio investments in conformity withU.S. generally accepted accounting principles ("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 market events may have caused during the months following our most recent valuation (as ofDecember 31, 2022 ), any valuations conducted now or in the future in conformity withU.S. GAAP could result in a lower fair value of our portfolio. The longer-term impact of COVID-19 and other market events on the operations and the performance of the Company (including certain portfolio companies) is difficult to predict, but may also be adverse. Further, the potential exists for additional variants of COVID-19 to adversely effect the global economy. 53 Overview We are an internally-managed 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 forU.S. federal income tax purposes as a RIC under Subchapter M of the Code. ThroughDecember 31, 2020 , we were an externally managed company. OnNovember 18, 2020 , the board of directors of the Company approved the adoption of an internalized management structure, effectiveJanuary 1, 2021 . SinceJanuary 1, 2021 , we have operated under such internalized management structure. We commenced operations and completed our initial public offering onJanuary 20, 2011 . Under our internalized management structure, our activities are managed by our senior professionals and are supervised by our board of directors, of which a majority of the members are independent of us. The Company's investment objective is to generate current income and capital appreciation. The management team seeks to achieve this objective primarily through making loans, private equity 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 achieve our investment objective (such as our asset-based lending business). The portfolio generally consists of senior secured first lien term loans, senior secured second lien term loans, senior secured bonds, preferred equity and common equity. Occasionally, we will receive warrants or other equity participation features which we believe will have the potential to increase total investment returns. Our loan and other debt investments are primarily rated below investment grade or are unrated. Investments in below investment grade securities are considered predominantly speculative with respect to the issuer's capacity to pay interest and repay principal when due. 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 publicU.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.
Reverse Stock Split; Authorized Share Reduction
At the Company's 2020 Annual Meeting of Stockholders held onJune 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, onJuly 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, onJuly 13, 2020 , the Company filed a Certificate of Amendment (the "Certificate of Amendment") to the Certificate of Incorporation with the Secretary of State of theState of Delaware to effect the Reverse Stock Split and the Authorized Share Reduction. Pursuant to the Certificate of Amendment, effective as of5:00 p.m., Eastern Time , onJuly 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). OnDecember 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 onDecember 31, 2020 . SinceJanuary 4, 2021 , the common stock trades on the NASDAQ Global Market under the trading symbol "PFX." 54 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 generally 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 recognized as earned. Expenses In periods prior toDecember 31, 2020 , our primary operating expenses included management and incentive fees pursuant to the investment management agreement we had withMCC Advisors and overhead expenses, including our allocable portion of our administrator's overhead under the administration agreement, which were paid during the quarter endedMarch 31, 2021 . Our management and incentive fees compensatedMCC Advisors for its work in identifying, evaluating, negotiating, closing and monitoring our investments. OnNovember 18, 2020 , the board of directors adopted an internally managed structure, effectiveJanuary 1, 2021 , under which we bear all 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);
? expenses incurred in monitoring our financial and legal affairs and inmonitoring 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;
? operating costs associated with employing investment professionals and other
staff;
? distributions on our shares;
? administration fees payable under our administration agreement;
? Custodial fees related to our assets
? amounts payable to third parties relating to, or associated with, making
investments;
? transfer agent and custodial fees;
? 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;
? the operating lease of our office space;
? indemnification payments; and
? direct costs and expenses of administration, including audit and legal costs.
55
2022 Long-Term Cash Incentive Plan
OnMay 9, 2022 , the board of directors of the Company adopted thePhenixFIN 2022 Long-Term Cash Incentive Plan (the "CIP") pursuant to the recommendation by the Compensation Committee of the board of directors. The CIP provides for performance-based cash awards to key employees of the Company, as approved by the Compensation Committee, based on the achievement of pre-established financial goals for the approved performance period. The performance goals may be expressed as one or a combination of net asset value of the Company, net asset value per share of the Company's common stock, changes in the market price of shares of the Company's common stock, individual performance metrics and/or such other goals and objectives the Committee considers relevant in connection with accomplishing the purposes of the CIP. A form of Award Agreement to be used under the CIP was also approved. In connection with the approval of the CIP, the Compensation Committee inApril 2022 approved awards for the executive officers named in the table below for the three year performance period commencing onJanuary 1, 2022 and ending onDecember 31, 2024 . Each participant is eligible to receive an amount of cash equal to 0%-200% of the target award set forth in the table below ("Target Performance Award"), based on the achievement of net asset value ("NAV") and NAV per share goals (weighted at 30% and 70%, respectively) as of the end of the performance period (the "Performance Goals"). Performance is evaluated separately for each Performance Goal. No payment is made with respect to a Performance Goal if a threshold level of performance is not achieved. Each Performance Goal is subject to (i) a threshold level of performance at which a percentage of the Target Performance Award attributable to that Performance Goal may be paid and below which no payment is made pursuant to an Award, (ii) a target level of performance at which 100% of the Target Performance Award attributable to that Performance Goal may be paid and (iii) a maximum level of performance, at which 200% of the Target Performance Award attributable to that Performance Goal may be paid, in each case subject to such other terms and conditions of an Award. Between threshold, target and maximum performance levels for each Performance Goal, the portion of that Award attributed to the Performance Goal shall be interpolated in a linear progression. During the three months endedDecember 31, 2022 , no accrual was recorded for these awards. 56 The Target Performance Award for each executive officer is set forth in the table below: Dollar Value of TargetName and Title Award
380,000
InDecember 2022 , pursuant to the CIP, the Compensation Committee approved awards forMr. Lorber andMs. McMillan for the three-year performance period commencing onJanuary 1, 2023 and ending onDecember 31, 2025 . Each participant is eligible to receive an amount of cash equal to a percentage of the target award amount set forth above based on the factors described above. The Compensation Committee, in approving the awards, evaluated each Performance
Goal separately.
Portfolio and Investment Activity
As of
During the three months ended
During the three months endedDecember 31, 2021 , we received proceeds from sale and settlements of investments of$77.6 million , including principal and dividend proceeds, realized net gain (losses) on investments of$15.2 million , and invested$96.2 million , of which$37.7 million was invested in nine new portfolio companies during the quarter. The following table summarizes the amortized cost and the fair value of our average portfolio company: December 31, 2022 September 30, 2022 Amortized Cost Fair Value Amortized Cost Fair Value Average portfolio company $ 3,398$ 2,411 $ 3,560$ 2,608 Largest portfolio company 36,669 36,671 47,136 47,136 57
The following table summarizes the amortized cost and the fair value of
investments as of
Amortized Cost Percentage Fair Value Percentage
Senior Secured First Lien Term Loans $ 129,910 51.6 % $ 88,691 48.4 %
Equity/Warrants 119,127 47.4 92,963 50.7
Senior Secured Notes 2,252 0.9 1,617 0.9
Unsecured Debt 182 0.1 - -
Total Investments $ 251,471 100.0 % $ 183,271 100.0 %
The following table summarizes the amortized cost and the fair value of
investments as of
Amortized Cost Percentage Fair Value Percentage
Senior Secured First Lien Term Loans $ 128,482 48.7 % $ 88,248 45.6 %
Senior Secured Second Lien Term Loans 2,603 1.0 2,607 1.4
Senior Secured Notes 2,252 0.9 1,659 0.9
Unsecured Debt 182 0.1 - -
Equity/Warrants 129,929 49.3 100,443 52.1
Total Investments $ 263,448 100.0 % $ 192,957 100.0 %
As ofDecember 31, 2022 , our income-bearing investment portfolio based upon cost represented 62.5% of our total portfolio of which 81.6% bore interest based on floating rates, such as the London Interbank Offering Rate ("LIBOR") or the Secured Overnight Financing Rate ("SOFR"), while 18.4% bore interest at fixed rates. As ofDecember 31, 2022 , the Company had a weighted average yield of 11.3% on debt and other income producing investments. This yield does not represent the total return to our stockholders.
We rate the risk profile of each of our investments based on the following categories:
Credit Rating Definition 1 Investments that are performing above expectations. 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 Investments that are performing below expectations and that requirecloser 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.
58
The following table shows the distribution of our investments on the 1 to 5
investment performance rating scale at fair value as of
December 31, 2022 September 30, 2022
Fair Value Percentage Fair Value Percentage
1 $ - 0.0 % $ - 0.0 %
2 151,040 82.5 % 159,279 82.6 %
3 14,889 8.1 % 22,183 11.5 %
4 11,979 6.5 % 6,250 3.2 %
5 5,363 2.9 % 5,245 2.7 %
Total $ 183,271 100.0 % $ 192,957 100.0 %
Results of Operations
Operating results for three months ended
For the Three Months Ended
December 31,
2022 2021
Total investment income $ 4,703 $ 3,133
Less: Net expenses 3,054 2,933
Net investment income/(loss) 1,649 200Net realized gains (losses) on investments 13 15,223 Net change in unrealized gains (losses) on investments 2,290 (10,324 ) Loss on extinguishment of debt - (296 )
Net increase (decrease) in net assets resulting from operations
Investment Income For the three months endedDecember 31, 2022 , investment income totaled$4.7 million , of which$2.6 million was attributable to portfolio interest, approximately$2.0 million was attributable to dividend income, and$0.1 million was attributable to fee and other income. Dividend income was received from 10 investments during the three months endedDecember 31, 2022 .
For the three months ended
59
Operating Expenses
Operating expenses for the three months ended
For the Three Months Ended
December 31,
2022 2021
Interest and financing expenses $ 1,233 $ 1,488
Professional fees, net 348 307
Salaries and benefits 857 506
General and administrative 220 196
Directors fees 194 208
Insurance 124 159
Administrator expenses 78 69
Total Expenses $ 3,054 $ 2,933 For the three months ended
Interest and Financing Expenses
Interest and financing expenses for the three months endedDecember 31, 2022 decreased by$0.3 million , or 17.1%, compared to the three months endedDecember 31, 2021 . The decrease in interest and financing expenses was primarily due to the partial repayment of the 2023 Notes onDecember 16, 2021 and the lower interest rate from the issuance of the 2028 Notes which became effective on
November 16, 2021 . 60
Professional Fees and General and Administrative Expenses
Professional fees and general and administrative expenses for the three months endedDecember 31, 2022 were comparable to the three months ended December
31, 2021.
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
During the three months endedDecember 31, 2021 , we recognized$15.2 million of realized gains on our portfolio investments. The realized gains were primarily due to the restructuring of three investments.
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.
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 endedDecember 31, 2022 , we had$2.3 million of net unrealized appreciation on investments. The net unrealized appreciation was comprised of$2.9 million of net unrealized depreciation on investments and$5.2 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 endedDecember 31, 2021 , we had$10.3 million of net unrealized depreciation on investments. The net unrealized depreciation was comprised of$10.4 million of net unrealized depreciation on investments and$0.1 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.
Provision for Deferred Taxes on Unrealized Depreciation on Investments
Certain consolidated subsidiaries of ours are subject toU.S. federal and state income taxes. These taxable subsidiaries are not consolidated with the Company for income tax purposes, but are consolidated for GAAP purposes, and may generate income tax liabilities or assets from temporary differences in the recognition of items for financial reporting and income tax purposes at the subsidiaries. For the three months endedDecember 31, 2022 and 2021, 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
For the three months endedDecember 31, 2022 , we recorded a net increase in net assets resulting from operations of$4.0 million compared to a net increase in net assets resulting from operations of$4.8 million for the three months endedDecember 31, 2021 . This increase takes into account increased net income and net capital appreciation for the period, each as described above. Based on 2,100,876 and 2,517,221 weighted average common shares outstanding for the three months endedDecember 31, 2022 and 2021, respectively, our per share net increase in net assets resulting from operations was$1.88 for the three months endedDecember 31, 2022 and$1.91 for the three months endedDecember 31, 2021 . 61
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 historically have been generated primarily from the net proceeds of public offerings of common stock, advances from the Revolving Credit Facility (which the Company voluntarily satisfied and terminated) 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 inU.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 ofDecember 31, 2022 , we had$17.7 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, for each taxable year 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. OnJanuary 11, 2021 , the Company announced that its board of directors approved a share repurchase program. OnFebruary 9, 2022 , the Board of Directors approved the expansion of the amount authorized for repurchase under the Company's share repurchase program from$15 million to$25 million . Under the share repurchase program, the Company repurchased an aggregate of 624,885 shares of common stock throughDecember 31, 2022 , or 22.9% of shares outstanding as of the program's inception, with a total cost of$24.8 million . Taking into account such prior repurchases, the total remaining amount authorized under the expanded share repurchase program atDecember 31, 2022 was approximately$0.2 million . Credit Facility OnDecember 15, 2022 , the Company and its wholly-owned subsidiaries executed a three-year,$50 million revolving credit facility (the "Credit Facility") withWoodForest Bank, N.A. ("WoodForest"),Valley National Bank , andAxiom Bank , (collectively, the "Lenders"). WoodForest is the administrative agent, sole bookrunner and sole lead arranger. As ofDecember 31, 2022 , there were no outstanding borrowings by the Company under the Credit Facility. Outstanding loans under the Credit Facility will bear a monthly interest rate at Term SOFR + 2.90%. The Company is also subject to a commitment fee of 0.25%, which shall accrue on the actual daily amount of the undrawn portion of the revolving credit. The Credit Facility contains customary representations and warranties and affirmative and negative covenants. The Credit Facility contains customary events of default for credit facilities of this type, including (without limitation): nonpayment of principal, interest, fees or other amounts after a stated grace period; inaccuracy of material representations and warranties; change of control; violations of covenants, subject in certain cases to stated cure periods; and certain bankruptcies and liquidations. If an event of default occurs and is continuing, the Company may be required to repay all amounts outstanding under the Credit Facility. 62 Unsecured Notes 2023 Notes
OnMarch 18, 2013 , the Company issued$60.0 million in aggregate principal amount of 2023 Notes. As ofMarch 30, 2016 , the 2023 Notes may be redeemed in whole or in part at any time or from time to time at the Company's option. OnMarch 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 onMarch 30 ,June 30 ,September 30 andDecember 30 of each year, beginningJune 30, 2013 . OnDecember 12, 2016 , the Company entered into an "At-The-Market" ("ATM") debt distribution agreement withFBR 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. OnMarch 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. OnDecember 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. OnDecember 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 onDecember 31, 2020 . EffectiveJanuary 4, 2021 , the 2023 Notes trade on the NASDAQ Global Market under the trading symbol "PFXNL." OnNovember 15, 2021 , the Company caused notices to be issued to the holders of the 2023 Notes regarding the Company's exercise of its option to redeem$55,325,000 in aggregate principal amount of the issued and outstanding 2023 Notes onDecember 16, 2021 . 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. OnDecember 15, 2022 , the Company caused notices to be issued to the holders of its 2023 Notes regarding the Company's exercise of its option to redeem$22,521,800 in aggregate principal amount of issued and outstanding 2023 Notes, comprising all issued and outstanding 2023 Notes, at a price equal to 100% of the principal amount of the 2023 Notes, plus accrued and unpaid interest thereon fromSeptember 30, 2022 , through, but excluding,January 17, 2023 in accordance with the terms of the indenture governing the 2023 Notes. The Company expects the redemption to be completed onJanuary 17, 2023 . The Company intends to fund the redemption of the 2023 Notes with loans obtained under the Credit Facility, as described earlier in this section. See also "Subsequent Events." 63 2028 Notes
OnNovember 9, 2021 , the Company entered into an underwriting agreement, by and between the Company andOppenheimer & Co. Inc. , as representative of the several underwriters named in Exhibit A thereto, in connection with the issuance and sale (the "Offering") of$57,500,000 (including the underwriters' option to purchase up to$7,500,000 aggregate principal amount) in aggregate principal amount of its 5.25% Notes due 2028 (the "2028 Notes"). The Offering occurred onNovember 15, 2021 , pursuant to the Company's effective shelf registration statement on Form N-2 previously filed with theSEC , as supplemented by a preliminary prospectus supplement datedNovember 8, 2021 , the pricing term sheet datedNovember 9, 2021 and a final prospectus supplement datedNovember 9, 2021 . EffectiveNovember 16, 2021 , the 2028 Notes began trading on the NASDAQ Global Market under the trading symbol "PFXNZ." OnNovember 15, 2021 , the Company andU.S. Bank National Association , as trustee entered into a Fourth Supplemental Indenture to its base Indenture, datedFebruary 7, 2012 , between the Company and the Trustee. The Fourth Supplemental Indenture relates to the Offering of the 2028 Notes.
Contractual Obligations and Off-Balance Sheet Arrangements
As ofDecember 31, 2022 andSeptember 30, 2022 , we had commitments under loan and financing agreements to fund up to$2.2 million to four portfolio companies and$6.0 million to six 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 ofDecember 31, 2022 andSeptember 30, 2022 is shown in the table below (dollars in thousands):December 31 ,September 30, 2022 2022
$
1,333 $ 4,000
- 908
517 517
NVTN LLC - Senior Secured First Lien Delayed Draw Term Loan 220 220
167 167
1888 Industrial Services, LLC - Revolving Credit Facility - 216 Total unfunded commitments$ 2,237 $ 6,028
The following table shows our payment obligations for repayment of debt and
other contractual obligations at
Payments Due by Period
2023 2024 2025 2026 2027 Thereafter Total
2023 Notes $ (22,521,800 ) $ - $ - $ - $ - $ - $ (22,521,800 )
2028 Notes - - - - - (57,500,000 ) (57,500,000 )Operating Lease Obligation (1) (111,240 ) (152,399 ) (156,971 ) (161,680 ) (27,417 )
- (609,707 )
Total contractual obligations
(1) Operating Lease Obligation means a rent payment obligation under a lease
classified as an operating lease and disclosed pursuant to ASC 842, as may be
modified or supplemented.
64
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 or 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.
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.
65
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 distribution payments during the three months ended
Related Party Transactions
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
expired
Officer through
Mr.
MCC Advisors and Medley.
? Through
and administrative services necessary to conduct day-to-day operations
pursuant to our administration agreement. We reimbursed
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.
66
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 was 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.
In addition, we have adopted a formal business code of conduct and ethics that
governs the conduct of our CEO, CFO, chief accounting officer (which role is
currently fulfilled by our CFO) and controller (Covered Officers). Our officers
and directors also remain subject to the duties imposed by both the 1940 Act and
the Delaware General Corporation Law. Our Code of Business Conduct and Ethics
requires that all Covered Officers promote honest and ethical conduct, including
the ethical handling of actual or apparent conflicts of interest between an
individual's personal and professional relationships. Pursuant to our Code of
Business Conduct and Ethics, each Covered Officer must disclose to the Company's
CCO any conflicts of interest, or actions or relationships that might give rise
to a conflict. Any approvals or waivers under our Code of Business Conduct and
Ethics must be considered by the disinterested directors.
Pledge and Security Agreement
In connection with the Credit Facility discussed in Note 5, the Company has entered into a Pledge and Security Agreement with the Lenders pursuant to which the Company and its wholly owned subsidiaries have pledged all their assets, including the cash and securities held in the Company's custodial account withComputershare Trust Company, N.A. , as collateral for any borrowings made by the Company pursuant to the Credit Agreement. The Lenders have the typical rights and remedies of a secured lender under the Uniform Commercial Code, including the right to foreclose on the collateral pledged by the Company.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity withU.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 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. 67
Valuation of Portfolio Investments
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 indirectlyobservable 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.
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.
68
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.
In December 2020 , the SEC adopted Rule 2a-5 under the 1940 Act, which permits a
BDC's board of directors to designate its executive officer(s) as a valuation
designee to determine the fair value of its investment portfolio, subject to the
oversight of the board. The Board has approved policies and procedures pursuant
to Rule 2a-5 and has designated Ellida McMillan , the Company's CFO, to serve as
the Board's valuation designee ("Valuation Designee"), subject to the Board's
oversight, effective September 8, 2022 .
With respect to investments for which market quotations are not readily available, our board oversees and our Valuation Designee undertakes a multi-step valuation process each quarter, as described below:
? Our quarterly valuation process generally begins with each investment being
initially valued by a Valuation Firm.
? Available third-party market data will be reviewed by company personnel
designated by the Valuation Designee ("Fair Value Personnel") and the Valuation
Firm.
? Available portfolio company data and general industry data is then reviewed by
the Fair Value Personnel.
? Preliminary valuation conclusions will then be documented and discussed with
the Fair Value Personnel.
? The Valuation Designee then determines the fair value of each investment in
the Company's portfolio in good faith based on such discussions, the Company's
Valuation Policy and the Valuation Firms' final estimated valuations
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.
69
Revenue Recognition
Our revenue recognition policies are as follows:
Investments and Related Investment Income: We 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-accrual: We place loans on non-accrual status when principal and interest payments are past due by 90 days or more, or when there is reasonable doubt that we will collect principal or interest. Accrued interest is generally reversed when a loan is placed on non-accrual. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management's judgment. Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in our management's judgment, are likely to remain current. AtDecember 31, 2022 , certain investments in five portfolio companies held by the Company were on non-accrual status with a combined fair value of approximately$5.4 million , or 2.9% of the fair value of our portfolio. AtSeptember 30, 2022 , certain investments in five portfolio companies held by the Company were on non-accrual status with a combined fair value of approximately$5.2 million , or 2.7% of the fair value of our portfolio. Federal Income Taxes
The Company has elected, and intends to qualify annually, to be treated forU.S. federal income tax purposes as a RIC under Subchapter M of the Code and it intends to operate in a manner so as to maintain its RIC tax treatment. To do so, among other things, the Company is required to meet certain source of income and asset diversification requirements and 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, 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. The Company will be subject to a nondeductibleU.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 onOctober 31 of such calendar year and any income realized, but not distributed, in preceding years and on which it 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. 70
Because federal income tax requirements differ from GAAP, distributions in accordance with tax requirements 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 OnJanuary 17, 2023 , the Company borrowed$23.2 million under the Credit Facility. Also on that date (the " Full Redemption Date") and using the proceeds of such borrowings, the Company redeemed$22,521,800 in aggregate principal amount of the issued and outstanding 2023 Notes, comprising all issued and outstanding 2023 Notes. The 2023 Notes were redeemed at 100% of their principal amount, plus accrued and unpaid interest thereon fromSeptember 30, 2022 , through, but excluding, the Full Redemption Date. The redemption will be accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments. OnFebruary 8, 2023 , the Board of Directors approved the expansion of the amount authorized for repurchase under the Company's share repurchase program from$25 million to$35 million . Since announcing this share repurchase program onJanuary 11, 2021 , the Company has repurchased an aggregate of 627,137 shares of common stock throughFebruary 8, 2023 with a total cost of approximately$24.9 million , or 23.0% of shares outstanding as of the program's inception. Taking into account such prior repurchases, the total remaining amount authorized under the expanded share repurchase program is approximately$10.1 million .
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