v3.25.4
Fair Value Measurements
 12 Months Ended
Dec. 31, 2025
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS

14. FAIR VALUE MEASUREMENTS

 

GAAP requires disclosure of fair value information about financial and non-financial assets and liabilities, whether or not recognized in the financial statements, for which it is practical to estimate the value. In cases where quoted market prices are not available, fair values are based upon the application of discount rates to estimated future cash flows using market yields, or other valuation methodologies. Any changes to the valuation methodology will be reviewed by the Company’s management to ensure the changes are appropriate. The methods used may produce a fair value calculation that is not indicative of net realizable value or reflective of future fair values. Furthermore, while the Company anticipates that the valuation methods are appropriate and consistent with other market participants, the use of different methodologies, or assumptions, to determine the fair value of certain financial and non-financial assets and liabilities could result in a different estimate of fair value at the reporting date. The Company uses inputs that are current as of the measurement date, which may fall within periods of market dislocation, during which price transparency may be reduced.

Recurring Fair Value Measurements

The table presented below summarizes the Company’s financial assets and liabilities measured at fair value as of December 31, 2025 and 2024. There were no financial assets and liabilities measured at fair value as of December 31, 2025.

 

 

As of December 31, 2024

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

Loans, at fair value - related party

 

$

-

 

 

$

-

 

 

$

5,335,000

 

 

$

5,335,000

 

 

The following table presents changes in loans at fair value that use Level 3 inputs for the year ended December 31, 2025:

 

 

For the year
ended December 31, 2025

 

 

 

Loans, at fair value - related party

 

Balance at December 31, 2024

 

$

5,500,000

 

Transfers out of Level 3

 

 

(5,500,000

)

Balance at December 31, 2025

 

$

-

 

 

The following tables summarize the significant unobservable inputs the Company used to value the loans categorized within Level 3 as of December 31, 2024. The tables are not intended to be all-inclusive, but instead capture the significant unobservable inputs relevant to the Company’s determination of fair values.

As of December 31, 2024

 

 

 

 

 

Unobservable Input

 

Fair Value

 

Primary Valuation Technique

Input

Value

 

Loans, at fair value - related party

$

5,335,000

 

Yield Analysis

Discount rate

 

13.65

%

Total loans, at fair value

$

5,335,000

 

 

 

 

 

 

For the year ended December 31, 2024, our loan held at fair value using the fair value option included an insignificant amount of unrealized losses in net income before income taxes, that are attributable to changes in instrument-specific credit risk. The portion of the fair value adjustments related to credit risk was determined based on a discounted cash flow analysis and discount rate applied to the subject loan. Interest income on the loan measured at fair value is calculated based on the interest rate of the loan and is recorded in the interest income on the consolidated statement of operations.

Financial Assets and Liabilities Not Measured at Fair Value

As of December 31, 2025 and 2024, the carrying values and fair values of the Company’s financial assets and liabilities recorded at amortized cost are as follows:

 

 

 

 

 

As of
December 31,

 

 

As of
December 31,

 

 

 

 

 

2025

 

 

2024

 

 

Level

 

 

Carrying
 Value

 

 

Fair Value

 

 

Carrying
Value

 

 

Fair Value

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for investment

 

 

3

 

 

$

408,955,567

 

 

$

407,364,639

 

 

$

402,477,046

 

 

$

399,771,293

 

Cash and cash equivalents

 

 

1

 

 

 

14,948,884

 

 

 

14,948,884

 

 

 

26,400,448

 

 

 

26,400,448

 

Interest receivable

 

 

2

 

 

 

4,009,800

 

 

 

4,009,800

 

 

 

1,453,823

 

 

 

1,453,823

 

Other receivables and assets, net

 

 

2

 

 

 

874,245

 

 

 

874,245

 

 

 

459,187

 

 

 

459,187

 

Related party receivables

 

 

2

 

 

 

1,189,937

 

 

 

1,189,937

 

 

 

3,370,339

 

 

 

3,370,339

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revolving loan

 

 

2

 

 

 

49,100,000

 

 

 

48,853,380

 

 

 

55,000,000

 

 

 

54,694,925

 

Notes payable, net

 

 

2

 

 

 

49,334,459

 

 

 

49,383,677

 

 

 

49,096,250

 

 

 

49,306,996

 

Dividend payable

 

 

2

 

 

 

11,157,220

 

 

 

11,157,220

 

 

 

13,605,153

 

 

 

13,605,153

 

Related party payables

 

 

2

 

 

 

2,214,920

 

 

 

2,214,920

 

 

 

2,043,403

 

 

 

2,043,403

 

Management and incentive fees payable

 

 

2

 

 

 

3,098,576

 

 

 

3,098,576

 

 

 

2,863,158

 

 

 

2,863,158

 

Interest payable

 

 

2

 

 

 

1,348,334

 

 

 

1,348,334

 

 

 

1,149,021

 

 

 

1,149,021

 

Accounts payable and other liabilities

 

 

2

 

 

 

834,977

 

 

 

834,977

 

 

 

1,136,014

 

 

 

1,136,014

 

Interest reserve

 

 

2

 

 

 

12,686

 

 

 

12,686

 

 

 

1,297,878

 

 

 

1,297,878

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Our loans are generally held for investment and are substantially secured by real estate, equipment, licenses and other assets of the borrowers to the extent permitted by the applicable laws and the regulations governing such borrowers. The aggregate fair value of the Company’s loans held for investment was $407,364,639 and $399,771,293, with gross unrecognized holding losses of $1.6 million and $2.7 million as of December 31, 2025 and 2024, respectively. The fair values, which are classified as Level 3 in the fair value hierarchy, are estimated using discounted cash flow models based on current market inputs for similar types of arrangements. The primary sensitivity in these models is based on the selection of appropriate discount rates. Fluctuations in these assumptions could result in different estimates of fair value.