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FAIR VALUE OF FINANCIAL INSTRUMENTS
 12 Months Ended
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