v3.25.2
Fair Value Measurements Investments
 6 Months Ended
Jun. 30, 2025
Fair Value Measurements Investments [Abstract]  
Fair Value Measurements Investments
Note 4. Fair Value Measurements Investments

ASC Topic 820 clarifies the definition of fair value as the amount that would be received in the sale of an asset or paid in the transfer of a liability in an orderly transaction between market participants at the measurement date. Where available, the Company uses quoted market prices based on the last sales price on the measurement date.
 
In accordance with ASC Topic 820, 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 valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). To the extent that fair value is based on inputs that are less observable, the determination of fair value requires a significant amount of management judgment. Investments which are valued using NAV as a practical expedient are excluded from this hierarchy.
 
The three-tier hierarchy of inputs is summarized below.

•
Level 1 - Quoted prices are available in active markets/exchanges for identical investments as of the reporting date.
 
•
Level 2 - Pricing inputs are observable inputs including, but not limited to, prices quoted for similar assets or liabilities in active markets/exchanges or prices quoted for identical or similar assets or liabilities in markets that are not active, and fair value is determined through the use of models or other valuation methodologies.
 
•
Level 3 - Pricing inputs are unobservable for the investment and include activities where there is little, if any, market activity for the investment. The inputs into determination of fair value require significant management judgment and estimation.

The inputs used by management in estimating the fair value of Level 3 investments may include valuations and other reporting provided by representatives of the portfolio companies, original transaction prices, recent transactions for identical or similar instruments, and comparisons to fair values of comparable investments, and may include adjustments to reflect illiquidity or non-transferability. The Company has policies with respect to its investments, which may assist the Advisor in assessing the quality of information provided by, or on behalf of, each portfolio investment and in determining whether such information continues to be provided by a reliable source or whether further investigation is necessary. Any such investigation, as applicable, may or may not require the Advisor to forego its normal reliance on the value supplied by, or on behalf of, such portfolio investment and to independently recommend the fair value of the Company’s interest in such portfolio investments for approval by the Board, consistent with the Company’s valuation procedures.

The Company has engaged an independent third-party valuation provider, which performs valuation procedures to arrive at estimated valuation ranges of the investments on a quarterly basis. Investments that have been completed within the past three months will be fair valued at cost unless there has been a material event. If there has been a material event or material information that was not known as of the close of the transaction, the independent third-party valuation provider will provide an independent valuation range. The types of valuation methodologies employed by the third-party valuation provider include discounted cash flow, recent financing and enterprise value valuation methodologies. The Company’s Board will discuss valuations and determine the fair value of each investment in the Company’s portfolio in good faith, based on the input of the Advisor, the respective independent valuation firms and the audit committee.

The Company’s investments and borrowings are subject to market risk. Market risk is the potential for changes in the value due to market changes. Market risk is directly impacted by the volatility and liquidity in the markets in which the investments and borrowings are traded.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. The availability of valuation techniques and observable inputs can vary from security to security and is affected by a wide variety of factors including the type of security, whether the security is new and not yet established in the marketplace, and other characteristics particular to the transaction. Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics and other factors.

The use of these valuation models requires significant estimation and judgment by the Advisor. While the Company believes its valuation methods are appropriate, other market participants may value identical assets differently than the Company at the measurement date. The methods used by the Company may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. The Company may also have risk associated with its concentration of investments in certain geographic regions and industries.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Those estimated values do not necessarily represent the amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for securities categorized in Level 3.

The determination of what constitutes “observable” requires significant judgment by the Company. The Company considers observable data to be market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, which may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement. The categorization of an investment within the hierarchy is based upon the pricing transparency of the investment and observability of prices and inputs may be reduced for many investments. This condition could cause the investment to be reclassified to a lower level within the fair value hierarchy.

The consolidated financial statements include portfolio investments at fair value of $356,307,066 and $377,640,318 as of June 30, 2025 and December 31, 2024, respectively.

The Company valued its investments in underlying funds based on its proportionate interest in net asset value (“NAV”) of the underlying funds. For the purpose of classifying the investments in underlying funds within the fair value hierarchy, the Company makes use of the practical expedient under ASU 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or its Equivalent). As of June 30, 2025 and December 31, 2024, the Company’s investments in underlying funds amounted to $2,165,570 and $2,688,619, respectively.
 
U.S. GAAP requires that the Company disclose the Company’s pro-rata portion of individual securities, if available, that are reported to the Company by the underlying portfolio funds that exceed 5% of the Company’s capital balance.

The following tables present fair value measurements of investments, by major class according to the fair value hierarchy.

   
Fair Value Measurements
  
June 30, 2025
  
Level 1
    
Level 2
    
Level 3
    
Total
  
First Lien Senior Secured Loan
  
$
-
    
$
-
    
$
289,806,939
    
$
289,806,939
  
Senior Unsecured Notes
    
-
      
-
      
3,733,001
      
3,733,001
  
Preferred Equity Securities
    
-
      
-
      
54,383,715
      
54,383,715
  
Warrants and Other Equity Securities
    
-
      
-
      
6,217,841
      
6,217,841
  
Total
   $ -     $ -     $ 354,141,496     $ 354,141,496  
Fund Investments
                    
     
2,165,570
  
Total Investments
                          
$
356,307,066
  

   
Fair Value Measurements
  
December 31, 2024
  
Level 1
    
Level 2
    
Level 3
    
Total
  
First Lien Senior Secured Loan
  
$
-
    
$
-
    
$
304,120,042
    
$
304,120,042
  
 Senior Secured Notes
     -       -       341,103       341,103  
Second Lien Senior Secured Loan
    
-
      
-
      
6,034,048
      
6,034,048
  
Senior Unsecured Notes
     -       -       3,427,073       3,427,073  
Preferred Equity Securities
    
-
      
-
      
53,603,056
      
53,603,056
  
Warrants and Other Equity Securities
    
-
      
-
      
7,426,377
      
7,426,377
  
Total
   $ -     $ -     $ 374,951,699     $ 374,951,699  
Fund Investments
                    
     
2,688,619
  
Total Investments
                          
$
377,640,318
  

First Lien Senior Secured Loans and Second Lien Senior Secured Loans are collateralized by tangible and intangible assets of the borrowers. These investments include loans to entities that have some level of challenge in obtaining financing from other, more conventional institutions, such as a bank. Interest rates on these loans are either fixed or floating and are based on current market conditions.

The following tables provide a reconciliation of the beginning and ending balances for investments at fair value that use Level 3 inputs for the three and six months ended June 30, 2025 and 2024:

   
Investments
  
   
First Lien Senior
Secured Loan
    
Second Lien Senior
Secured Loan
    
Senior Secured
Notes
    
Senior Unsecured
Notes
    
Preferred Equity
Securities
    
Warrants and Other
Equity Securities
    
Fund Investments
    
Total Investments
  
Balance as of March 31, 2025
  
$
302,968,264
    
$
6,044,612
     $ 417,402    
$
3,699,200
    
$
50,798,894
    
$
9,021,488
    
$
2,873,702
    
$
375,823,562
  
Net realized gain on investments
     -       -       -       -       -       2,488,217       -       2,488,217  
Net change in unrealized gain (loss) on investments
     (5,133,000 )     31,325       12,378       31,917       1,636,698       (1,863,699 )     (339,394 )     (5,623,775 )
Purchases of investments and other adjustments to cost (1)
    
6,895,122
      
1,410,595
       -      
1,884
      
454,276
       -      
-
      
8,761,877
  
 Proceeds from sales of investments     -       -       -       -       -       (3,428,165 )     -       (3,428,165 )
Proceeds from principal repayments (2)
    
(21,295,014
)
    
(50,898
)
     -      
-
      
-
      
-
      
(368,738
)
    
(21,714,650
)
Lien status change (3)
    6,371,567
       (7,435,634 )     (429,780 )     -       1,493,847       -       -       -  
Balance as of June 30, 2025
  
$
289,806,939
    
$
-
     $
 -    
$
3,733,001
    
$
54,383,715
    
$
6,217,841
    
$
2,165,570
    
$
356,307,066
  


(1)
Includes purchases of new investments, premium and discount accretion and amortization and PIK interest.

(2)
Includes paydowns receivable from the Consolidated Statements of Assets and Liabilities.

(3)
Lien conversions are fair valued at beginning of period.
 

   
Investments
        
   
First Lien Senior
Secured Loan
    
Second Lien Senior
Secured Loan
    
Senior Secured
Notes
    
Senior Unsecured
Notes
    
Preferred Equity
Securities
    
Warrants and Other
Equity Securities
     Fund Investments    
Total Investments
  
Balance as of December 31, 2024
  
$
304,120,042
    
$
6,034,048
     $ 341,103     $ 3,427,073    
$
53,603,055
    
$
7,426,377
    
$
2,688,619
    
$
377,640,317
  
Net realized gain on investments
     -       -       -       -       1,863,881       2,488,217       -       4,352,098  
Net change in unrealized gain (loss) on investments
     (10,646,081 )     114,013       -       41,370       409,233       (268,584 )     (154,311 )     (10,504,360 )
Purchases of investments and other adjustments to cost (1)
    
26,021,932
      
1,388,643
       88,677       264,558      
1,347,119
      
-
      
-
      
29,110,929
  
Proceeds from sales of investments
     -       -       -       -       (4,333,420 )     (3,428,169 )     -       (7,761,589 )
Proceeds from principal repayments (2)
    
(36,060,521
)
    
(101,070
)
     -      
-
      
-
      
-
      
(368,738
)
    
(36,530,329
)
Lien status change(3)     6,371,567       (7,435,634 )     (429,780 )     -       1,493,847       -       -       -  
Balance as of June 30, 2025
  
$
289,806,939
    
$
-
     $
-     $
3,733,001    
$
54,383,715
    
$
6,217,841
    
$
2,165,570
    
$
356,307,066
  


(1) Includes purchases of new investments, premium and discount accretion and amortization and PIK interest.

(2) Includes paydowns receivable from the Consolidated Statements of Assets and Liabilities.

(3) Lien conversions are fair valued at beginning of period.

    Investments  
   
First Lien Senior
Secured Loan
    
Second Lien Senior
Secured Loan
    
Senior Secured
Notes
    
Senior Unsecured
Notes
    
Preferred Equity
Securities
    
Warrants and Other
Equity Securities
   
Fund Investments
    
Total Investments
  
Balance as of March 31, 2024
  
$
294,455,581
    
$
6,067,024
     $ -     $ 1,265,130    
$
43,031,287
    
$
6,039,575
    
$
2,818,111
    
$
353,676,708
  
Net realized gain on investments
    -       -       -       -       2,034,517       -       -       2,034,517  
Net change in unrealized gain (loss) on investments
    
802,250
      
49,593
       -       (1,265,130 )    
(6,120,457
)
    
(784,427
)
    
-
      
(7,318,171
)
Purchases of investments and other adjustments to cost (1)
    
2,590,720
      
7,925
       -       8,874      
210,033
      
-
      
-
      
2,817,552
  
Proceeds from sales of investments
    (116,674 )     -       -       -       (2,632,407 )     -       -       (2,749,081 )
Proceeds from principal repayments (2)
    
(22,638,473
)
    
(50,898
)
     -      
-
      
-
      
-
      
-
      
(22,689,371
)
Lien status change(3)
    (8,105,699 )     -       -       3,418,199       3,957,229       730,271       -       -  
Balance as of June 30, 2024
  
$
266,987,705
    
$
6,073,644
     $
-     $ 3,427,073    
$
40,480,202
    
$
5,985,419
    
$
2,818,111
    
$
325,772,154
  


(1)
Includes purchases of new investments, premium and discount accretion and amortization and PIK interest.

(2)
Includes paydowns receivable from the Consolidated Statements of Assets and Liabilities.

(3) Lien conversions are fair valued at beginning of period.

    Investments  
   
First Lien Senior
Secured Loan
    
Second Lien Senior
Secured Loan
    
Senior Secured
Notes
    
Senior Unsecured
Notes
    
Preferred Equity
Securities
    
Warrants and Other
Equity Securities
    Fund Investments
   
Total Investments
  
Balance as of December 31, 2023
  
$
319,229,009
    
$
6,059,372
     $ -     $ 1,384,446    
$
41,804,395
    
$
5,706,423
     $ 2,809,327    
$
376,992,972
  
Net realized gain (loss) on investments
    -       -       -       -       2,034,517       -       -       2,034,517  
Net change in unrealized gain (loss) on investments
    
(2,808,050
)
    
114,382
       -       (1,384,446 )    
(6,115,291
)
    
(451,275
)
     8,784      
(10,635,896
)
Purchases of investments and other adjustments to cost (1)
    
5,412,284
      
7,925
       -       8,874      
210,033
      
-
       -      
5,639,116
  
Proceeds from sales of investments     (116,674 )     -       -       -       (2,632,407 )     -       -       (2,749,081 )
Proceeds from principal repayments (2)
    
(45,384,400
)
    
(108,035
)
     -      
-
      
(17,039
)
    
-
       -      
(45,509,474
)
Lien status change(3)     (9,344,464 )     -       -       3,418,199       5,195,994       730,271       -       -  
Balance as of June 30, 2024
  
$
266,987,705
    
$
6,073,644
     $
-     $ 3,427,073    
$
40,480,202
    
$
5,985,419
       2,818,111    
$
325,772,154
  


(1)
Includes purchases of new investments, premium and discount accretion and amortization and PIK interest.

(2)
Includes paydowns receivable from the Consolidated Statements of Assets and Liabilities.

(3) Lien conversions are fair valued at beginning of period.

The net change in unrealized gain (loss) on investments included on the Consolidated Statements of Operations for the three and six months ended June 30, 2025, attributable to Level 3 investments still held as of June 30, 2025 was $(2,858,317) and $(4,629,186), respectively. The net change in unrealized gain (loss) on investments included on the Consolidated Statements of Operations for the three and six months ended June 30, 2024, attributable to Level 3 investments still held as of June 30, 2024 was $(7,318,171) and $(10,635,896), respectively.

Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in or out of Level 3 as of the beginning of the period which the reclassifications occur. There were no transfers among Levels 1, 2 and 3 for the three and six months ended June 30, 2025 and 2024.

Purchases (including accretion, amortization, PIK interest) for the three and six months ended June 30, 2025 amounted to $8,761,877 and $29,110,929, respectively. Purchases (including accretion, amortization, PIK interest) for the three and six months ended June 30, 2024 amounted to $2,817,552 and $5,639,116, respectively.

For the six months ended June 30, 2025, the Company invested (net of original issue discount) $12,312,500 in one new portfolio company and invested $15,353,701 in 17 existing portfolio companies as reflected in the Consolidated Schedule of Investments.

For the six months ended June 30, 2024, the Company did not invest in any new portfolio companies and invested $2,134,380 in three existing portfolio companies as reflected in the Consolidated Schedule of Investments.

Significant Unobservable Inputs

ASC Topic 820 requires disclosure of quantitative information about the significant unobservable inputs used in the valuation of assets and liabilities classified as Level 3 within the fair value hierarchy. The tables below are not intended to be all-inclusive, but rather to provide information on significant unobservable inputs and valuation techniques used by the Company.

The table below summarizes the quantitative inputs and assumptions used for items categorized in Level 3 of the fair value hierarchy as of June 30, 2025.

                       
Range
   

Fair Value
  

Valuation Technique
  
Unobservable
Input
    
Weighted
Average Mean
    

Minimum
    

Maximum
Assets:
                              
First Lien Senior Secured Loans
  
$
268,248,543
  
Discounted Cash Flow
  
Discount Rate
      
14.4%

   
6.6%

   
30.0%
First Lien Senior Secured Loans
    
14,122,762
  
Guideline Public Company Method
  
Revenue Multiple
      
0.52
x
   
0.22
x
   
0.80
 
        
Guideline Public Company Method
  
EBITDA Multiple
      
10.50
x
   
10.00
x
   
11.00
First Lien Senior Secured Loans
    
-
  
Other
    
N/A
      
N/A
      
N/A
      
N/A
First Lien Senior Secured Loans
    
7,435,634
  
Discounted Cash Flow
  
Discount Rate
      
18.7%

   
16.9%

   
20.6%
Senior Secured Notes
    
-
   Other  
N/A
      
N/A

   
N/A

   
N/A
Senior Unsecured Notes
    
3,733,001
  
Discounted Cash Flow
  
Discount Rate
      
13.7%

   
12.5%

   
15.0%
Preferred Equity Securities
    
18,706,599
  
Discounted Cash Flow
  
Discount Rate
      
23.5%

   
15.0%

   
37.0%
Preferred Equity Securities
    
26,019,167
  
Guideline Public Company Method
  
Revenue Multiple
      
1.32
x
   
0.40
x
   
4.80
 
        
Guideline Public Company Method
  
EBITDA Multiple
      
9.13
x
   
4.00
x
   
15.25
Preferred Equity Securities
    
9,657,949
  
Guideline Merged & Acquired Company Method
  
Revenue Multiple
      
1.66
x
   
0.50
x
   
2.50
 
        
Guideline Merged & Acquired Company Method
  
EBITDA Multiple
      
9.79
x
   
7.50
x
   
12.50
Warrants and Other Equity Securities
    
206,906
  
Discounted Cash Flow
  
Discount Rate
      
19.3%

   
17.5%

   
32.00%
Warrants and Other Equity Securities
    
4,890,155
  
Guideline Public Company Method
  
Revenue Multiple
      
1.64
x
   
0.22
x
   
2.95

       
Guideline Public Company Method
  
EBITDA Multiple
      
7.98
x
   
5.50
x
   
24.00
Warrants and Other Equity Securities
    
1,120,780
  
Other
    
N/A
      
N/A
      
N/A
      
N/A
Partnership Interests
    
2,165,570
  
Other
    
N/A
      
N/A
      
N/A
      
N/A
Total Level 3 Assets
  
$
356,307,066
                                  

The table below summarizes the quantitative inputs and assumptions used for items categorized in Level 3 of the fair value hierarchy as of December 31, 2024.

                       
Range
  
   

Fair Value
  

Valuation Technique
  
Unobservable
Input
    
Weighted
Average Mean
    

Minimum
    

Maximum
  
Assets:
                                
First Lien Senior Secured Loan
  
$
265,968,375
  
Discounted Cash Flow
  
Discount Rate
      
15.1%

   
7.7%

   
27.5%

First Lien Senior Secured Loan
    
14,268,323
  
 Guideline Public Company Method
  
Revenue Multiple
      
0.91
 x
   
0.65
 x
   
1.17
 x
 
                           
EBITDA Multiple
      
8.74
 x
   
0.53
 x
   
11.24
 x
First Lien Senior Secured Loan
    
23,883,344
  
Other
  
N/A
      
N/A
      
N/A
      
N/A
  
Second Lien Senior Secured Loan
    
6,034,048
  
Discounted Cash Flow
  
Discount Rate
      
16.7%

   
15.4%

   
18.0%

Senior Secured Note
    
341,103
  
Other
  
N/A
      
N/A
      
N/A
      
N/A
  
Senior Unsecured Note
    
3,427,073
  
Discounted Cash Flow
  
Discount Rate
      
13.8%

   
12.5%

   
15.0%

Preferred Equity Securities
    
16,391,316
  
Discounted Cash Flow
  
Discount Rate
      
23.9%

   
15.0%

   
44.5%

Preferred Equity Securities
    
26,931,469
  
 Guideline Public Company Method
  
Revenue Multiple
      
1.42
 x
   
0.40
 x
   
4.60
 x
 
                           
EBITDA Multiple
      
10.12
 x
   
6.25
 x
   
16.00
 x
 
                           
Gross Profit Multiple
      
2.76
 x
   
2.38
 x
   
3.14
 x
Preferred Equity Securities
    
8,741,809
  
Guideline Merged & Acquired Company Method
  
Revenue Multiple
      
1.69
 x
   
0.50
 x
   
2.50
 x
 
                           
EBITDA Multiple
      
9.46
 x
   
7.50
 x
   
12.50
 x
Preferred Equity Securities
    
1,538,462
  
Other
  
N/A
      
N/A
      
N/A
      
N/A
  
Warrants and Other Equity Securities
    
214,733
  
Discounted Cash Flow
  
Discount Rate
      
22.9%

   
20.0%

   
32.5%

Warrants and Other Equity Securities
    
7,211,644
  
 Guideline Public Company Method
  
Revenue Multiple
      
1.05
 x
   
0.65
 x
   
3.01
 x
Warrants and Other Equity Securities
        
 Guideline Public Company Method
  
EBITDA Multiple
      
10.20
 x
   
5.16
 x
   
55.75
 x
Warrants and Other Equity Securities
        
Other
  
N/A
      
N/A
      
N/A
      
N/A
  
Fund Investments
    
2,688,619
  
Other
  
N/A
      
N/A
      
N/A
      
N/A
  
Total Level 3 Assets
  
$
377,640,318
                                  
 
An increase or decrease in any of the significant unobservable inputs used in the fair value measurement of the investments would result in a higher or lower fair value measurement, respectively.

The significant unobservable input used in the income approach of fair value measurement of the Company’s investments is the discount rate (derived from market yields, EBITDA Multiple and Revenue Multiple) used to discount the estimated future cash flows expected to be received from the underlying investment, which include both future principal and interest payments. Increases (decreases) in the discount rate would result in a decrease (increase) in the fair value estimate of the investment. Included in the consideration and selection of discount rates are the following factors: risk of default, rating of the investment and comparable investments, and call provisions.

The significant unobservable inputs used in the market approach of fair value measurement of the Company’s investments are the market multiples of EBITDA or revenue of the comparable guideline public companies. The Company selects a population of public companies for each investment with similar operations and attributes of the portfolio company. Using these guideline public companies’ data, a range of multiples of enterprise value to EBITDA or revenue is calculated. The Company selects percentages from the range of multiples for purposes of determining the portfolio company’s estimated enterprise value based on said multiple and generally the latest twelve months EBITDA or revenue of the portfolio company (or other meaningful measure). Increases (decreases) in the multiple will result in an increase (decrease) in enterprise value, resulting in an increase (decrease) in the fair value estimate of the investment.