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FAIR VALUE OF FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2023

FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract]

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, 2023 and December 31, 2022, the Company’s portfolio investments consisted 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 investments may vary and may include debt investments’ yield (i.e. discount rate) and volatility assumptions.

The Company’s investments measured at fair value by investment type on a recurring basis as of December 31, 2023 and December 31, 2022 were as follows:

	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 Unobservable Inputs (Level 3)		Total
Senior Secured First Lien Term Loans	$	-	$	-	$	46,006,000	$	46,006,000
Senior Secured Notes		-		-		8,114,000		8,114,000
Total	$	-	$	-	$	54,120,000	$	54,120,000

	Fair Value Measurements at December 31, 2022 Using
Assets	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Senior Secured First Lien Term Loans	$	-	$	-	$	40,660,633	$	40,660,633
Senior Secured Notes		-		-		9,593,917		9,593,917
Total	$	-	$	-	$	50,254,550	$	50,254,550

The following tables provide a summary of the significant unobservable inputs used to fair value the Level 3 portfolio investments as of December 31, 2023 and December 31, 2022. 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 and Treasuries, respectively, for Senior Secured First Lien Term Loans, as of December 31, 2023 and December 31, 2022.

Investment Type	Fair Value as of December 31, 2023		Valuation Techniques/ Methodologies	Unobservable Input	Range			Weighted Average ⁽¹⁾

Senior Secured First Lien Term Loans	$	46,006,000	Discounted Cash Flow	Discount Rate		10.4% - 14.0	%		12.2	%
Senior Secured Notes		8,114,000	Discounted Cash Flow	Discount Rate		7.4% - 13.7	%		10.5	%
Total	$	54,120,000

Investment Type	Fair Value as of December 31, 2022		Valuation Techniques/ Methodologies	Unobservable Input	Range			Weighted Average ⁽¹⁾

Senior Secured First Lien Term Loans	$	40,660,633	Discounted Cash Flow	Discount Rate Volatility		7.2% - 9.6 20.0% - 20.0	% %		8.4 20.0	% %
Senior Secured Notes		9,593,917	Discounted Cash Flow	Discount Rate Volatility		11.6% - 18.7 7.0% - 20.0	% %		14.3 12.4	% %
Total	$	50,254,550

(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 year ended December 31, 2023 and the period from April 1, 2022 through December 31, 2022:

	Senior Secured First Lien Term Loans			Senior Secured Notes			Total Investments
Fair Value as of December 31, 2022	$	40,660,633		$	9,593,917		$	50,254,550
Purchases		8,442,000			-			8,442,000
Accretion of discount and fees (amortization of premium), net		557,079			253,475			810,554
PIK interest		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) from 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

	Senior Secured First Lien Term Loans			Senior Secured Notes			Total Investments
Fair Value as of March 31, 2022	$	-		$	-		$	-
Purchases		40,792,500			9,570,000			50,362,500
Accretion of discount and fees (amortization of premium), net		79,414			85,984			165,398
PIK interest		-			-			-
Proceeds from sales of investments and principal repayments		-			-			-
Net realized gain (loss) on investments		-			-			-
Net change in unrealized appreciation (depreciation) from investments		(211,281	)		(62,067	)		(273,348	)
Balance as of December 31, 2022	$	40,660,633		$	9,593,917		$	50,254,550

Net change in unrealized appreciation/depreciation on Level 3 investments still held as of December 31, 2022	$	(211,281	)	$	(62,067	)	$	(273,348	)

- 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.

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