| PORTFOLIO INVESTMENTS AND FAIR VALUE |
NOTE 6 — PORTFOLIO INVESTMENTS AND FAIR VALUE In accordance with the authoritative guidance on fair value measurements and disclosures under U.S. GAAP, the Company discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The guidance establishes three levels of the fair value hierarchy as follows: Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2 — Quoted prices in markets that are not considered to be active or financial instruments for which significant inputs are observable, either directly or indirectly; Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. The level of an asset or liability within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by management. The Company considers whether the volume and level of activity for the asset or liability have significantly decreased and identifies transactions that are not orderly in determining fair value. Accordingly, if the Company determines that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value. Valuation techniques such as an income approach might be appropriate to supplement or replace a market approach in those circumstances. At June 30, 2025, the Company had investments in 67 portfolio companies. The composition of our investments as of June 30, 2025 is as follows: | | | | | | | | | Cost | | Fair Value | Senior Secured – First Lien(1) | | $ | 320,027,550 | | $ | 319,911,373 | Unsecured Debt | | | 65,868 | | | 70,127 | Equity | | | 15,082,120 | | | 20,375,903 | Total Investments | | $ | 335,175,538 | | $ | 340,357,403 |
| (1) | Includes unitranche investments, which accounted for 3.7% of the Company’s portfolio at fair value. Unitranche structures may combine characteristics of first lien senior secured, as well as second lien and/or subordinated loans. The Company’s unitranche loans will expose it to certain risk associated with second lien and subordinated loans to the extent it invests in the “last-out” tranche. |
At December 31, 2024, the Company had investments in 59 portfolio companies. The composition of our investments as of December 31, 2024 was as follows: | | | | | | | | | Cost | | Fair Value | Senior Secured – First Lien(1) | | $ | 284,068,534 | | $ | 283,482,729 | Unsecured Debt | | | 96,106 | | | 90,413 | Equity | | | 13,626,629 | | | 17,158,923 | Total Investments | | $ | 297,791,269 | | $ | 300,732,065 |
| (1) | Includes unitranche investments, which accounted for 3.1% of the Company’s portfolio at fair value. Unitranche structures may combine characteristics of first lien senior secured, as well as second lien and/or subordinated loans. The Company’s unitranche loans will expose it to certain risk associated with second lien and subordinated loans to the extent it invests in the “last-out” tranche. |
The Company’s investment portfolio may contain loans that are in the form of lines of credit or revolving credit facilities, which require the Company to provide funding when requested by portfolio companies in accordance with the terms of the underlying loan agreements. As of June 30, 2025 and December 31, 2024, the Company had 51 and 46 of such investments with aggregate unfunded commitments of $82,747,766 and $56,936,322, respectively. The Company maintains sufficient liquidity (through cash on hand, its ability to drawdown capital from investors, and/or available borrowings under the Credit Facilities) to fund such unfunded commitments should the need arise. The aggregate gross unrealized appreciation (depreciation) and the aggregate cost and fair value of the Company’s portfolio company securities as June 30, 2025 and December 31, 2024 was as follows: | | | | | | | | | June 30, 2025 | | December 31, 2024 | Aggregate cost of portfolio company securities | | $ | 335,175,538 | | $ | 297,791,269 | Gross unrealized appreciation of portfolio company securities | | | 9,572,666 | | | 6,531,245 | Gross unrealized depreciation of portfolio company securities | | | (4,433,456) | | | (3,597,372) | Gross unrealized appreciation on foreign currency translation | | | 42,655 | | | 11,656 | Gross unrealized depreciation on foreign currency translation | | | — | | | (4,733) | Aggregate fair value of portfolio company securities | | $ | 340,357,403 | | $ | 300,732,065 |
The fair values of our investments disaggregated into the three levels of the fair value hierarchy based upon the lowest level of significant input used in the valuation as of June 30, 2025 are as follows: | | | | | | | | | | | | | | | Quoted Prices | | | | | | | | | in Active | | | | | | | | | Markets | | Significant Other | | Significant | | | | | for Identical | | Observable | | Unobservable | | | | | Securities | | Inputs | | Inputs | | | | | (Level 1) | | (Level 2) | | (Level 3) | | Total | Senior Secured – First Lien | | $ | — | | $ | — | | $ | 319,911,373 | | $ | 319,911,373 | Unsecured Debt | | | — | | | — | | | 70,127 | | | 70,127 | Equity | | | — | | | — | | | 20,375,903 | | | 20,375,903 | Total Investments | | $ | — | | $ | — | | $ | 340,357,403 | | $ | 340,357,403 |
The fair values of our investments disaggregated into the three levels of the fair value hierarchy based upon the lowest level of significant input used in the valuation as of December 31, 2024 are as follows: | | | | | | | | | | | | | | | Quoted Prices | | | | | | | | | in Active | | | | | | | | | Markets | | Significant Other | | Significant | | | | | for Identical | | Observable | | Unobservable | | | | | Securities | | Inputs | | Inputs | | | | | (Level 1) | | (Level 2) | | (Level 3) | | Total | Senior Secured – First Lien | | $ | — | | $ | — | | $ | 283,482,729 | | $ | 283,482,729 | Unsecured Debt | | | — | | | — | | | 90,413 | | | 90,413 | Equity | | | — | | | — | | | 17,158,923 | | | 17,158,923 | Total Investments | | $ | — | | $ | — | | $ | 300,732,065 | | $ | 300,732,065 |
The changes in aggregate values of Level 3 portfolio investments during the six months ended June 30, 2025 are as follows: | | | | | | | | | | | | | | | Senior Secured | | | | | | | | | Loans-First | | Unsecured | | | | Total | | | Lien | | Debt | | Equity | | Investments | Fair value at December 31, 2024 | | $ | 283,482,729 | | $ | 90,413 | | $ | 17,158,923 | | $ | 300,732,065 | Purchases of investments | | | 48,871,231 | | | 27,731 | | | 2,239,855 | | | 51,138,817 | Payment-in-kind interest | | | 193,152 | | | 4,580 | | | — | | | 197,732 | Sales and Redemptions | | | (13,578,734) | | | (62,551) | | | (851,858) | | | (14,493,143) | Change in unrealized appreciation on investments included in earnings | | | 469,627 | | | 303 | | | 1,735,407 | | | 2,205,337 | Change in unrealized appreciation on foreign currency translation included in earnings | | | — | | | 9,651 | | | 26,081 | | | 35,732 | Amortization of premium and accretion of discount, net | | | 473,368 | | | — | | | — | | | 473,368 | Fair value at June 30, 2025 | | $ | 319,911,373 | | $ | 70,127 | | $ | 20,375,903 | | $ | 340,357,403 |
There were no Level 3 transfers during the six months ended June 30, 2025. The changes in aggregate values of Level 3 portfolio investments during the year ended December 31, 2024 are as follows: | | | | | | | | | | | | | | | Senior Secured | | | | | | | | | Loans-First | | Unsecured | | | | Total | | | Lien | | Debt | | Equity | | Investments | Fair value at December 31, 2023 | | $ | 197,292,058 | | $ | 17,730 | | $ | 11,264,290 | | $ | 208,574,078 | Purchases of investments | | | 115,327,846 | | | 77,120 | | | 4,400,217 | | | 119,805,183 | Payment-in-kind interest | | | 1,058,247 | | | 1,569 | | | — | | | 1,059,816 | Sales and Redemptions | | | (30,024,338) | | | — | | | (241,720) | | | (30,266,058) | Realized gain on investment | | | — | | | — | | | — | | | — | Change in unrealized depreciation on investments included in earnings | | | (849,653) | | | (787) | | | 1,756,674 | | | 906,234 | Change in unrealized depreciation on foreign currency translation included in earnings | | | — | | | (5,219) | | | (20,538) | | | (25,757) | Amortization of premium and accretion of discount, net | | | 678,569 | | | — | | | — | | | 678,569 | Fair value at December 31, 2024 | | $ | 283,482,729 | | $ | 90,413 | | $ | 17,158,923 | | $ | 300,732,065 |
There were no Level 3 transfers during the year ended December 31, 2024. The following is a summary of geographical concentration of our investment portfolio as of June 30, 2025: | | | | | | | | | | | | | | | | % of Total | | | | | | | | | | Investments at | | | | Cost | | Fair Value | | Fair Value | | Florida | | $ | 57,141,831 | | $ | 55,822,396 | | 16.39 | % | Texas | | | 40,063,794 | | | 42,333,289 | | 12.44 | % | New York | | | 33,627,440 | | | 35,002,708 | | 10.28 | % | California | | | 27,466,633 | | | 27,672,666 | | 8.13 | % | Illinois | | | 16,273,957 | | | 15,998,554 | | 4.70 | % | Colorado | | | 15,922,193 | | | 15,921,855 | | 4.68 | % | Pennsylvania | | | 14,008,644 | | | 15,359,350 | | 4.51 | % | Canada | | | 12,113,407 | | | 12,104,455 | | 3.56 | % | United Kingdom | | | 12,147,371 | | | 12,096,664 | | 3.55 | % | Tennessee | | | 9,998,053 | | | 9,732,842 | | 2.86 | % | Maryland | | | 9,570,342 | | | 9,388,830 | | 2.76 | % | Arizona | | | 8,829,055 | | | 9,277,908 | | 2.73 | % | Ohio | | | 9,708,272 | | | 10,405,798 | | 3.06 | % | Iowa | | | 8,445,800 | | | 8,458,067 | | 2.49 | % | Oregon | | | 7,305,193 | | | 7,482,538 | | 2.20 | % | Wisconsin | | | 6,415,314 | | | 6,794,892 | | 2.00 | % | Michigan | | | 6,070,297 | | | 6,141,324 | | 1.80 | % | Massachusetts | | | 7,725,858 | | | 7,618,918 | | 2.24 | % | Idaho | | | 4,863,880 | | | 4,887,604 | | 1.44 | % | Missouri | | | 4,804,928 | | | 4,933,789 | | 1.45 | % | Louisiana | | | 4,504,000 | | | 4,516,819 | | 1.33 | % | District of Columbia | | | 4,164,671 | | | 4,256,074 | | 1.25 | % | Virginia | | | 3,854,839 | | | 3,734,446 | | 1.10 | % | North Carolina | | | 5,727,133 | | | 5,759,213 | | 1.69 | % | South Carolina | | | 2,219,905 | | | 2,293,017 | | 0.67 | % | Georgia | | | 1,871,750 | | | 1,920,185 | | 0.56 | % | Indiana | | | 330,978 | | | 443,202 | | 0.13 | % | Total Investments | | $ | 335,175,538 | | $ | 340,357,403 | | 100.00 | % |
The following is a summary of geographical concentration of our investment portfolio as of December 31, 2024: | | | | | | | | | | | | | | | | % of Total | | | | | | | | | | Investments at | | | | Cost | | Fair Value | | Fair Value | | Florida | | $ | 57,653,478 | | $ | 55,449,024 | | 18.44 | % | Texas | | | 39,654,155 | | | 41,816,027 | | 13.90 | % | New York | | | 32,574,086 | | | 33,418,762 | | 11.11 | % | Illinois | | | 16,351,628 | | | 16,234,004 | | 5.40 | % | California | | | 14,388,867 | | | 14,576,642 | | 4.85 | % | Pennsylvania | | | 13,383,388 | | | 14,037,912 | | 4.67 | % | Canada | | | 12,303,300 | | | 12,339,763 | | 4.10 | % | United Kingdom | | | 12,153,794 | | | 12,093,869 | | 4.02 | % | Tennessee | | | 9,981,310 | | | 10,070,962 | | 3.35 | % | Colorado | | | 9,759,942 | | | 9,834,101 | | 3.27 | % | Arizona | | | 8,870,299 | | | 9,287,842 | | 3.09 | % | Maryland | | | 9,297,302 | | | 9,134,501 | | 3.04 | % | Ohio | | | 8,373,385 | | | 8,775,516 | | 2.92 | % | Wisconsin | | | 6,453,254 | | | 6,734,750 | | 2.24 | % | Iowa | | | 6,282,877 | | | 6,282,877 | | 2.09 | % | Massachusetts | | | 5,954,032 | | | 5,927,889 | | 1.97 | % | Michigan | | | 5,255,092 | | | 5,295,406 | | 1.76 | % | Idaho | | | 5,234,830 | | | 5,264,442 | | 1.75 | % | Louisiana | | | 4,520,330 | | | 4,590,651 | | 1.53 | % | District of Columbia | | | 4,177,673 | | | 4,177,673 | | 1.39 | % | Missouri | | | 4,058,101 | | | 4,101,329 | | 1.36 | % | Virginia | | | 3,718,318 | | | 3,738,884 | | 1.24 | % | North Carolina | | | 3,307,812 | | | 3,307,813 | | 1.10 | % | South Carolina | | | 2,219,069 | | | 2,292,030 | | 0.76 | % | Georgia | | | 1,533,969 | | | 1,539,843 | | 0.51 | % | Indiana | | | 330,978 | | | 409,553 | | 0.14 | % | Total Investments | | $ | 297,791,269 | | $ | 300,732,065 | | 100.00 | % |
The following is a summary of industry concentration of our investment portfolio as of June 30, 2025: | | | | | | | | | | | | | | | | % of Total | | | | | | | | | | Investments at | | | | Cost | | Fair Value | | Fair Value | | Services: Business | | $ | 71,215,277 | | $ | 73,192,327 | | 21.51 | % | High Tech Industries | | | 38,485,784 | | | 39,257,580 | | 11.53 | % | Healthcare & Pharmaceuticals | | | 33,940,110 | | | 34,283,132 | | 10.07 | % | Capital Equipment | | | 32,192,046 | | | 33,038,075 | | 9.71 | % | Media: Advertising, Printing & Publishing | | | 25,545,625 | | | 24,928,468 | | 7.32 | % | Consumer Goods: Non-Durable | | | 18,504,782 | | | 19,892,643 | | 5.84 | % | Services: Consumer | | | 19,588,196 | | | 18,559,975 | | 5.45 | % | Beverage & Food | | | 16,342,295 | | | 16,464,253 | | 4.84 | % | Construction & Building | | | 14,603,059 | | | 15,003,370 | | 4.41 | % | Chemicals, Plastics, & Rubber | | | 14,267,157 | | | 14,135,812 | | 4.15 | % | Media: Diversified & Production | | | 12,147,371 | | | 12,096,664 | | 3.55 | % | Consumer Goods: Durable | | | 9,598,872 | | | 9,854,897 | | 2.90 | % | Environmental Industries | | | 8,558,713 | | | 9,040,553 | | 2.66 | % | Energy: Oil & Gas | | | 8,108,302 | | | 8,468,223 | | 2.49 | % | Retail | | | 6,184,658 | | | 6,194,858 | | 1.82 | % | Hotel, Gaming, & Leisure | | | 3,710,573 | | | 3,767,254 | | 1.11 | % | Wholesale | | | 2,182,718 | | | 2,179,319 | | 0.64 | % | Total Investments | | $ | 335,175,538 | | $ | 340,357,403 | | 100.00 | % |
The following is a summary of industry concentration of our investment portfolio as of December 31, 2024: | | | | | | | | | | | | | | | | % of Total | | | | | | | | | | Investments at | | | | Cost | | Fair Value | | Fair Value | | Services: Business | | $ | 50,117,721 | | $ | 51,333,196 | | 17.06 | % | High Tech Industries | | | 37,580,707 | | | 38,418,760 | | 12.78 | % | Healthcare & Pharmaceuticals | | | 33,078,396 | | | 33,123,393 | | 11.01 | % | Capital Equipment | | | 26,634,637 | | | 27,544,790 | | 9.16 | % | Consumer Goods: Non-Durable | | | 19,459,391 | | | 20,424,922 | | 6.79 | % | Media: Advertising, Printing & Publishing | | | 19,321,733 | | | 19,051,900 | | 6.34 | % | Services: Consumer | | | 19,416,695 | | | 17,380,571 | | 5.78 | % | Chemicals, Plastics, & Rubber | | | 17,043,322 | | | 17,041,973 | | 5.67 | % | Beverage & Food | | | 13,801,250 | | | 13,952,930 | | 4.64 | % | Construction & Building | | | 13,290,426 | | | 13,638,879 | | 4.54 | % | Media: Diversified & Production | | | 12,153,794 | | | 12,093,869 | | 4.02 | % | Environmental Industries | | | 9,482,195 | | | 9,782,473 | | 3.25 | % | Consumer Goods: Durable | | | 8,562,343 | | | 8,638,156 | | 2.87 | % | Energy: Oil & Gas | | | 7,800,160 | | | 8,232,957 | | 2.74 | % | Retail | | | 6,293,227 | | | 6,252,832 | | 2.08 | % | Hotel, Gaming, & Leisure | | | 3,755,272 | | | 3,820,464 | | 1.27 | % | Total Investments | | $ | 297,791,269 | | $ | 300,732,065 | | 100.00 | % |
The following provides quantitative information about Level 3 fair value measurements as of June 30, 2025: | | | | | | | | | | Description: | | Fair Value | | Valuation Technique | | Unobservable Inputs | | Range (Average)(1)(3) | First lien debt | | $ | 313,015,160 | | Income approach(2) | | HY credit spreads | | -2.51% to 8.31% (-0.23%) | | | | | | | | Risk free rates | | -1.00% to 1.94% (-0.32%) | | | | | | Market approach(2) | | Market multiples | | 3.4x to 21.1x (12.5x)(4) | | | $ | 6,896,213 | | Transaction value | | Transaction price | | N/A | | | | | | | | | | | Unsecured debt | | $ | 70,127 | | Income approach | | HY credit spreads | | -0.42% to -0.42% (-0.42%) | | | | | | | | Risk free rates | | -0.16% to -0.16% (-0.16%) | | | | | | | | | | | Equity investments | | $ | 19,500,056 | | Market approach(5) | | EBITDA multiple | | 3.3x to 18.2x (11.0x) | | | | | | | | Revenue multiple | | 7.8x to 7.8x (7.8x) | | | $ | 875,847 | | Transaction value | | Transaction price | | N/A | | | | | | | | | | | Total Long Term Level 3 Investments | | $ | 340,357,403 | | | | | | |
| (1) | Weighted average based on fair value as of June 30, 2025. |
| (2) | Income approach is based on discounting future cash flows using an appropriate market yield. |
| (3) | The Company calculates the price of the loan by discounting future cash flows, which include forecasted future rates based on the published forward curve at the valuation date, using an appropriate yield calculated as of the valuation date. This yield is calculated based on the loan’s yield at the original investment and is adjusted as of the valuation date based on: changes in comparable credit spreads, changes in risk free interest rates (per swap rates), and changes in credit quality (via an estimated shadow rating). Significant movements in any of these factors could result in a significantly lower or higher fair value measurement. As an example, the “Range (Average)” for first lien debt instruments in the table above indicates that the change in the HY spreads between the date a loan closed and the valuation date ranged from (2.51)% ( (251) basis points) to 8.31% (831 basis points). The average of all changes was (0.23)% ( (23) basis points). |
| (4) | Median of LTM (last twelve months) EBITDA multiples of comparable companies. |
| (5) | The primary significant unobservable input used in the fair value measurement of the Company’s equity investments is the EBITDA multiple (the “Multiple”). Significant increases (decreases) in the Multiple in isolation could result in a significantly higher (lower) fair value measurement. To determine the Multiple for the market approach, the Company considers current market trading and/or transaction multiple, portfolio company performance (financial ratios) relative to public and private peer companies and leverage levels, among other factors. Changes in one or more of these factors can have a similar directional change on other factors in determining the appropriate Multiple to use in the market approach. |
The following provides quantitative information about Level 3 fair value measurements as of December 31, 2024: | | | | | | | | | | Description: | | Fair Value | | Valuation Technique | | Unobservable Inputs | | Range (Average)(1)(3) | First lien debt | | $ | 247,874,246 | | Income approach(2) | | HY credit spreads | | -2.58% to 7.72% (-0.66%) | | | | | | | | Risk free rates | | -0.41% to 2.38% (0.36%) | | | | | | Market approach(2) | | Market multiples | | 4.6x to 23.4x (13.4x)(4) | | | $ | 35,608,483 | | Transaction value | | Transaction price | | N/A | | | | | | | | | | | Unsecured debt | | $ | 90,413 | | Transaction value | | Transaction price | | N/A | | | | | | | | | | | Equity investments | | $ | 14,923,447 | | Market approach(5) | | EBITDA multiple | | 5.2x to 18.3x (11.1x) | | | $ | 2,235,476 | | Transaction value | | Transaction price | | N/A | | | | | | | | | | | Total Long Term Level 3 Investments | | $ | 300,732,065 | | | | | | |
| (1) | Weighted average based on fair value as of December 31, 2024. |
| (2) | Income approach is based on discounting future cash flows using an appropriate market yield. |
| (3) | The Company calculates the price of the loan by discounting future cash flows, which include forecasted future rates based on the published forward curve at the valuation date, using an appropriate yield calculated as of the valuation date. This yield is calculated based on the loan’s yield at the original investment and is adjusted as of the valuation date based on: changes in comparable credit spreads, changes in risk free interest rates (per swap rates), and changes in credit quality (via an estimated shadow rating). Significant movements in any of these factors could result in a significantly lower or higher fair value measurement. As an example, the “Range (Average)” for first lien debt instruments in the table above indicates that the change in the HY spreads between the date a loan closed and the valuation date ranged from (2.58)% ( (258) basis points) to 7.72% (772 basis points). The average of all changes was (0.66)% ( (66) basis points). |
| (4) | Median of LTM (last twelve months) EBITDA multiples of comparable companies. |
| (5) | The primary significant unobservable input used in the fair value measurement of the Company’s equity investments is the EBITDA multiple (the “Multiple”). Significant increases (decreases) in the Multiple in isolation could result in a significantly higher (lower) fair value measurement. To determine the Multiple for the market approach, the Company considers current market trading and/or transaction multiple, portfolio company performance (financial ratios) relative to public and private peer companies and leverage levels, among other factors. Changes in one or more of these factors can have a similar directional change on other factors in determining the appropriate Multiple to use in the market approach. |
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