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FAIR VALUE OF FINANCIAL INSTRUMENTS | 12 Months Ended
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Dec. 31, 2024
FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract] |
FAIR VALUE OF FINANCIAL INSTRUMENTS | NOTE 4 — FAIR VALUE OF FINANCIAL INSTRUMENTS ASC 820 defines fair value, establishes a framework for measuring fair value, and establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. The Company accounts for its investments at fair value. As of December 31, 2024 and December 31, 2023, the Company’s portfolio investments consisted primarily of investments in secured loans and secured notes. The fair value amounts have been measured as of the reporting date and have not been reevaluated or updated for purposes of these financial statements subsequent to that date. As such, the fair values of these financial instruments subsequent to the reporting date may be different than amounts reported. The fair value determination of each portfolio investment categorized as Level 3 required one or more unobservable inputs. The use of significant unobservable inputs creates uncertainty in the measurement of fair value as of the reporting date. The significant unobservable inputs used in the fair value measurement of the Company’s debt investments may vary and may include debt investments’ yield (i.e. discount rate) and volatility assumptions. The significant unobservable inputs used in the fair value measurement of the Company’s equity and warrant investments may vary and may include EBITDA multiples, revenue multiples and asset multiples. The Company’s investments measured at fair value by investment type on a recurring basis as of December 31, 2024 and December 31, 2023 were as follows:
|  | Fair Value Measurements at December 31, 2024 Using |
Assets |  | Quoted prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Other Unobservable Inputs (Level 3) |  |  | Total |
First Lien Senior Secured Loans |  | $ | - |  |  | $ | - |  |  | $ | 239,860,206 |  |  | $ | 239,860,206 |
Senior Secured Notes |  |  | - |  |  |  | - |  |  |  | 34,656,192 |  |  |  | 34,656,192 |
Preferred Stock |  |  | - |  |  |  | - |  |  |  | 500,000 |  |  |  | 500,000 |
Warrants |  |  | - |  |  |  | - |  |  |  | 225,000 |  |  |  | 225,000 |
Total |  | $ | - |  |  | $ | - |  |  | $ | 275,241,398 |  |  | $ | 275,241,398 |
|  | Fair Value Measurements at December 31, 2023 Using |
Assets |  | Quoted prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Other Unobservable Inputs (Level 3) |  |  | Total |
First Lien Senior Secured Loans |  | $ | - |  |  | $ | - |  |  | $ | 46,006,000 |  |  | $ | 46,006,000 |
Senior Secured Notes |  |  | - |  |  |  | - |  |  |  | 8,114,000 |  |  |  | 8,114,000 |
Total |  | $ | - |  |  | $ | - |  |  | $ | 54,120,000 |  |  | $ | 54,120,000 |
The following tables provide a summary of the significant unobservable inputs used to fair value the Level 3 portfolio investments as of December 31, 2024 and December 31, 2023. The methodology for the determination of the fair value of the Company’s investments is discussed in “Note 2 – Significant Accounting Policies”. Discount rate ranges are shown as spread over PRIME, SOFR and/or Treasuries, as applicable, for senior secured first lien term loans, as of December 31, 2024 and December 31, 2023.
Investment Type |  | Fair Value as of 12/31/2024 |  | Valuation Techniques/Methodologies |  | Unobservable Input |  | Range |  |  | Weighted Average (1) |
First Lien Senior Secured Loans |  | $ | 239,860,206 |  | Discounted Cash Flow |  | Discount Rate |  |  | 9.1% - 28.6 | % |  |  | 13.4 | %
Senior Secured Notes |  |  | 34,656,192 |  | Discounted Cash Flow |  | Discount Rate |  |  | 7.4% - 17.2 | % |  |  | 11.5 | %
Preferred stock |  |  | 500,000 |  | Market Approach |  | Current Value |  |  | 2.50 | x |  |  | 2.50 | x
Warrants |  |  | 225,000 |  | Option Pricing Model |  | Volatility Factor |  |  | 47.2 | % |  |  | 47.2 | %
Total |  | $ | 275,241,398 |  |  |  |  |  |  |  |  |  |  |  |
(1) | The weighted average is calculated based on the fair value of each investment.
Investment Type |  | Fair Value as of 12/31/2023 |  | Valuation Techniques/Methodologies |  | Unobservable Input |  | Range |  |  | Weighted Average (1) |
First Lien Senior Secured Loans |  | $ | 46,006,000 |  | Discounted Cash Flow |  | Discount Rate |  |  | 10.4% - 14.0 | % |  |  | 12.20 | %
Senior Secured Notes |  |  | 8,114,000 |  | Discounted Cash Flow |  | Discount Rate |  |  | 7.4% - 13.7 | % |  |  | 10.50 | %
Total |  | $ | 54,120,000 |  |  |  |  |  |  |  |  |  |  |  |
(1) | The weighted average is calculated based on the fair value of each investment.
Significant increases (decreases) in discount rate in isolation would result in a significantly lower (higher) fair value assessment. Significant increases (decreases) in volatility in isolation would result in a significantly lower (higher) fair value assessment. The following tables provide a summary of changes in the fair value of the Company’s Level 3 portfolio investments for the years ended December 31, 2024 and December 31, 2023:
|  | First Lien Senior Secured Debt |  |  | Senior Secured Notes |  |  | Preferred Stock |  |  | Warrants |  |  | Total |
Balance as of December 31, 2023 |  | $ | 46,006,000 |  |  | $ | 8,114,000 |  |  | $ | - |  |  | $ | - |  |  | $ | 54,120,000 |
Purchase of investments |  |  | 209,436,202 |  |  |  | 30,336,610 |  |  |  | 500,000 |  |  |  | 242,826 |  |  |  | 240,515,638 |
Net (accretion of discounts) and amortization of premiums |  |  | 836,005 |  |  |  | 265,290 |  |  |  | - |  |  |  | - |  |  |  | 1,101,295 |
PIK interest capitalized |  |  | 679,962 |  |  |  | 63,813 |  |  |  | - |  |  |  | - |  |  |  | 743,775 |
Proceeds from sales of investments and principal repayments |  |  | (17,288,331 | ) |  |  | (4,122,500 | ) |  |  | - |  |  |  | - |  |  |  | (21,410,831 | )
Net realized gain (loss) on investments |  |  | - |  |  |  | (74,483 | ) |  |  | - |  |  |  | - |  |  |  | (74,483 | )
Net change in unrealized appreciation (depreciation) on investments |  |  | 190,368 |  |  |  | 73,462 |  |  |  | - |  |  |  | (17,826 | ) |  |  | 246,004 |
Balance as of December 31, 2024 |  | $ | 239,860,206 |  |  | $ | 34,656,192 |  |  | $ | 500,000 |  |  | $ | 225,000 |  |  | $ | 275,241,398 |
Net change in unrealized appreciation/depreciation on Level 3 investments still held as of December 31, 2024 |  | $ | 190,368 |  |  | $ | 73,462 |  |  | $ | - |  |  | $ | (17,826 | ) |  | $ | 246,004 |
|  | First Lien Senior Secured Debt |  |  | Senior Secured Notes |  |  | Total |
Balance as of December 31, 2022 |  | $ | 40,660,633 |  |  | $ | 9,593,917 |  |  | $ | 50,254,550 |
Purchase of investments |  |  | 8,442,000 |  |  |  | - |  |  |  | 8,442,000 |
Net (accretion of discounts) and amortization of premiums |  |  | 557,079 |  |  |  | 253,475 |  |  |  | 810,554 |
PIK interest capitalized |  |  | 115,725 |  |  |  | - |  |  |  | 115,725 |
Proceeds from sales of investments and principal repayments |  |  | (4,614,093 | ) |  |  | (1,600,000 | ) |  |  | (6,214,093 | )
Net realized gain (loss) on investments |  |  | - |  |  |  | (210,767 | ) |  |  | (210,767 | )
Net change in unrealized appreciation (depreciation) on investments |  |  | 844,656 |  |  |  | 77,375 |  |  |  | 922,031 |
Balance as of December 31, 2023 |  | $ | 46,006,000 |  |  | $ | 8,114,000 |  |  | $ | 54,120,000 |
Net change in unrealized appreciation/depreciation on Level 3 investments still held as of December 31, 2023 |  | $ | 844,656 |  |  | $ | 77,375 |  |  | $ | 922,031 |

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 107 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-107 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 100 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-100 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (c)(3) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2E -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2E Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (g) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 940 -SubTopic 820 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147478119/940-820-50-1 + Details
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