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Summary of Significant Accounting Policies (Policies)
 12 Months Ended
Dec. 31, 2022
Accounting Policies [Abstract]  
Basis of Accounting
Basis of Accounting
The accompanying financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Additionally, the accompanying financial statements of the Company and related financial information have been prepared pursuant to the requirements for reporting on Form 10-K and Article 6 of Regulation
S-X.
Use of Estimates
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.
Statements of Cash Flows
Statements of Cash Flows
Information on financial transactions which have been settled through the receipt or disbursement of cash is presented in the Statements of Cash Flows. The cash amount shown in the Statements of Cash Flows is the amount included within the Company’s Statements of Assets and Liabilities and includes cash on hand at its custodian bank.
Cash and Cash Equivalents
Cash and Cash Equivalents
The Company considers liquid assets deposited with a bank, money market funds, and certain short-term debt instruments with original maturities of three months or less to be cash equivalents. These investments represent amounts held with financial institutions that are readily accessible to pay Company expenses or purchase investments. Cash and cash equivalents are valued at cost plus accrued interest, which approximates fair value. The value of cash equivalents denominated in foreign currencies, if any, is determined by converting to U.S. dollars on the date of the Statements of Assets and Liabilities. As of December 31, 2022 and 2021, the Company had cash and cash equivalents of $1,629,846 and $2,811,171, respectively. As of December 31, 2022 and 2021, $1,420,428 and $2,704,193 was held in the State Street U.S. Government Money Market Fund, and $209,418 and $106,978 was held in a custodial account with State Street Bank and Trust Company, respectively.
Securities Sold Short and Restricted Cash
Securities Sold Short and Restricted Cash
The Company may sell securities short. A security sold short is a transaction in which the Company sells a security it does not own in anticipation that the market price of that security will decline. When the Company sells a security short, it must borrow the security sold short from a broker-dealer and deliver it to the buyer upon conclusion of the transaction. The Company may have to pay a fee to borrow particular securities and is often obligated to pay over any dividends or other payments received on such borrowed securities. Cash held as collateral for securities sold short is classified as restricted cash on the Statements of Assets and Liabilities, when applicable. Securities held as collateral for securities sold short are shown on the Schedules of Investments for the Company, as applicable. As of December 31, 2022 and 2021, the Company did not have any securities sold short.
When securities are sold short, the Company intends to limit exposure to a possible market decline in the value of its portfolio companies through short sales of securities that the Adviser believes possess volatility characteristics similar to those being hedged. In addition, the Company may use short sales for
non-hedging
purposes to pursue its investment objective. Subject to the requirements of the 1940 Act and the Code, the Company will not make a short sale if, after giving effect to such sale, the market value of all securities sold short by the Company exceeds 25% of the value of its total assets.
Other Fee Income
Other Fee Income
Fee income may consist of origination/closing fees, amendment fees, administrative agent fees, transaction
break-up
fees and other miscellaneous fees. Origination fees, amendment fees, and other similar fees are
non-recurring
fee sources. Such fees are received on a transaction by transaction basis and do not constitute a regular stream of income. For the years ended December 31, 2022, 2021 and 2020 the Company recognized $0, $4,651 and $108,535 of fee income, respectively.
Fair Value of Financial Instruments
Fair Value of Financial Instruments
It is the Company’s policy to hold the investments at fair value. Accounting Standards Codification Topic 820,
Fair Value Measurements and Disclosure
(“ASC Topic 820”) defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, which includes inputs such as quoted prices for similar securities in active markets and quoted prices for identical securities where there is little or no activity in the market; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.
Pursuant to Rule
2a-5
under the 1940 Act, the Board has designated the Adviser as the Company’s valuation designee to perform the fair valuation determination for securities and other assets held by the Company. The Company determines the net asset value of its investment portfolio each quarter, or more frequently as needed. Securities that are publicly-traded are valued at the reported closing price on the valuation date. Securities that are not publicly-traded are valued at fair value as determined in good faith by the Adviser as valuation designee, pursuant to board-approved policies and procedures. In connection with that determination, the Adviser will consider portfolio company valuations based on relevant inputs, including indicative dealer quotes, values of like securities, recent portfolio company financial statements and forecasts, and valuations prepared by third-party valuation services. Rule
2a-5
states that a market quotation is readily available only when that quotation is a quoted price (unadjusted) in active markets for identical investments that the Company can access at the measurement date, provided that a quotation will not be readily available if it is not reliable. Market quotations may also not be “readily available” if a significant event occurs that causes the Adviser to believe that the market price of a security no longer represents the security’s current value at the time of the Company’s NAV determination.
 
With respect to investments for which market quotations are not readily available, the Adviser undertakes a multi-step valuation process each quarter, as described below:
 
  •  
The valuation process begins with each portfolio company or investment being initially valued by investment professionals of the Adviser responsible for credit monitoring or independent third party valuation firms.
 
  •  
Preliminary valuation conclusions are then documented and discussed with the Valuation Committee.
 
  •  
At least once each quarter, the valuations for approximately one quarter of the portfolio investments that have been fair valued are reviewed by an independent valuation firm such that, over the course of a year, each material portfolio investment that has been fair valued shall have been reviewed by an independent valuation firm at least once.
 
  •  
Based on this information, the Adviser discusses valuations and determines the fair value of each investment in the portfolio in good faith pursuant to board-approved policies and procedures.
As of December 31, 2022, the Company held the following investments for which a sufficient level of current, reliable market quotations were not available:
 
Instrument
   
Type
   
Fair value
  
Grayson Investor Corp.
    Asset-Backed Securities    $  7,023  
PAMCO CLO
1997-1A
B
    Asset-Backed Securities      13  
American Banknote Corp.
    Common Stocks      1,732,500  
IQHQ, Inc.
    Common Stocks      2,359,000  
TerreStar Corp.
    Common Stocks      5,114,214  
Wayne Services Legacy, Inc.
    Common Stocks      2,269  
NexPoint Capital REIT, LLC
    LLC Interests      1,176,024  
SFR WLIF III, LLC
    LLC Interests      424,468  
US Gaming, LLC
    LLC Interests      3,088,750  
Apnimed, Inc.
    Preferred Stocks      1,499,989  
Apnimed, Inc.
    Preferred Stocks      799,994  
Sapience Therapeutics, Inc.
    Preferred Stocks      4,549,525  
Sapience Therapeutics, Inc.
    Preferred Stocks      3,677,777  
CCS Medical, Inc.
    Senior Secured Loans      3,000,000  
TerreStar Corp.
    Senior Secured Loans      810,953  
TerreStar Corp.
    Senior Secured Loans      191,988  
TerreStar Corp.
    Senior Secured Loans      34,300  
TerreStar Corp.
    Senior Secured Loans      32,002  
As of December 31, 2021, the Company held the following investments for which a sufficient level of current, reliable market quotations were not available:
 
Instrument
   
Type
   
Fair value
  
Grayson Investor Corp.
    Asset-Backed Securities    $  304,000  
PAMCO CLO
1997-1A
B
    Asset-Backed Securities      101,040  
 
American Banknote Corp.
    Common Stocks      2,208,750  
IQHQ, Inc.
    Common Stocks      1,823,000  
TerreStar Corp.
    Common Stocks      4,706,357  
Wayne Services Legacy Inc.
    Common Stocks      5,172  
SFR WLIF III, LLC
    LLC Interests      1,563,916  
SFR WLIF II, LLC
    LLC Interests      3,196,246  
US Gaming, LLC
    LLC Interests      2,812,212  
Sapience Therapeutics, Inc
    Senior Secured Loans      4,000,000  
TerreStar Corp.
    Senior Secured Loans      729,979  
TerreStar Corp.
    Senior Secured Loans      172,817  
TerreStar Corp.
    Senior Secured Loans      30,875  
TerreStar Corp.
    Senior Secured Loans      28,807  
Gemphire Therapeutics, Inc.
    Warrants      —    
Determination of fair value involves subjective judgments and estimates. Accordingly, the notes to the Company’s financial statements will refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, in the Company’s financial statements. Below is a description of factors that the Adviser and the Valuation Committee may consider when valuing the Company’s debt and equity investments.
Valuation of fixed income investments, such as loans and debt securities, depends upon a number of factors, including prevailing interest rates for like securities, expected volatility in future interest rates, call features, put features and other relevant terms of the debt. For investments without readily available market prices, the Company may incorporate these factors into discounted cash flow models to arrive at fair value. Other factors that the Adviser and the Valuation Committee may consider include the borrower’s ability to adequately service its debt, the fair market value of the portfolio company in relation to the face amount of its outstanding debt and the quality of collateral securing the Company’s debt investments.
The Company’s equity investments in portfolio companies for which there is no liquid public market will be valued at fair value. The Adviser and the Valuation Committee, in its analysis of fair value, may consider various factors, such as multiples of earnings before interest, taxes, depreciation and amortization (“EBITDA”), cash flows, net income, revenues or, in limited instances, book value or liquidation value. All of these factors may be subject to adjustments based upon the particular circumstances of a portfolio company or the Company’s actual investment position. For example, adjustments to EBITDA may take into account compensation to previous owners or acquisition, recapitalization, restructuring or other related items.
The Adviser and the Valuation Committee may also look to private merger and acquisition statistics, public trading multiples discounted for illiquidity and other factors, valuations implied by third-party investments in the portfolio companies or industry practices in determining fair value. The Adviser and the Valuation Committee may also consider the size and scope of a portfolio company and its specific strengths and weaknesses, as well as any other factors it deems relevant in assessing the value. Generally, the value of the Company’s equity interests in public companies for which market quotations are readily available will be based upon the most recent closing public market price.
If the Company receives warrants or other equity-linked securities at nominal or no additional cost in connection with an investment in a debt security, the Company will allocate the cost basis in the investment between the debt securities and any such warrants or other equity-linked securities received at the time of origination. The Adviser and the Valuation Committee will subsequently value these warrants or other equity-linked securities received at fair value.
As applicable, the Company values its Level 2 assets by using the midpoint of the prevailing bid and ask prices from dealers on the date of the relevant period end, which is provided by an independent third-party pricing service and screened for validity by such service. For investments for which the third-party pricing service is unable to obtain quoted prices, the Company obtains bid and ask prices directly from dealers who make a market in such investments.
To the extent that the Company holds investments for which no active secondary market exists and, therefore, no bid and ask prices can be readily obtained, the Adviser and the Valuation Committee utilize an independent third-party valuation service to value such investments in a manner consistent with the Company’s multistep valuation process previously described.
The Company periodically benchmarks the bid and ask prices received from the third-party pricing service and/or dealers, as applicable, and valuations received from the third-party valuation service against the actual prices at which it purchases and sells its investments. The Company believes that these prices are reliable indicators of fair value. The Adviser and the Valuation Committee review and approve the valuation determinations made with respect to these investments in a manner consistent with the Company’s valuation procedures.
As of December 31, 2022, the Company’s investments consisted of senior secured loans, asset-backed securities, common stocks, LLC interests, preferred stocks, corporate bonds, and warrants, which may be purchased for a fraction of the price of the underlying securities. The fair value of the Company’s loans, bonds and asset-backed securities are generally based on quotes received from brokers or independent pricing services. Loans, bonds and asset-backed securities with quotes that are based on actual trades with a sufficient level of activity on or near the measurement date are classified as Level 2 assets. Loans, bonds and asset-backed securities that are priced using quotes derived from implied values, indicative bids or a limited number of actual trades are classified as Level 3 assets because the inputs used by the brokers and pricing services to derive the values are not readily observable.
The fair value of the Company’s common stocks and options that are not actively traded on national exchanges are generally priced using quotes derived from implied values, indicative bids, or a limited amount of actual trades and are classified as Level 3 assets because the inputs used by the brokers and pricing services to derive the values are not readily observable. Exchange traded options are valued based on the last trade price on the primary exchange on which they trade. If an option does not trade, the
mid-price
is utilized to value the option.
At the end of each calendar quarter, the Adviser evaluates the Level 2 and 3 investments for changes in liquidity, including: whether a broker is willing to execute at the quoted price, the depth and consistency of prices from third party services, and the existence of contemporaneous, observable trades in the market. Additionally, management evaluates the Level 1 and 2 assets and liabilities on a quarterly basis for changes in listings or delistings on national exchanges.
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market price, the fair value of the Company’s investments may fluctuate from period to period. Additionally, the fair value of investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values the Company may ultimately realize. Further, such investments may be subject to legal and other restrictions on resale or otherwise less liquid than publicly traded securities.
Investments:
   
Balance as of
December 31,
2021
     
Transfers
into
Level 3
     
Transfers
out of
Level 3
     
Net
amortization
(accretion) of
premium/
(discount)
     
Distribution
to Return
Capital
     
Net
realized
gains/
(losses)
    
Net change in
unrealized
gains/
(losses)
    
Purchases/
PIK
     
(Sales
and
redemptions)
    
Balance as of
December

31, 2022
     
Change in
unrealized
gain/(loss)
on Level 3
securities still
held at period
end
  
Assets
                                                                                                
Senior Secured Loans
                                                                                                
Telecommunication Services
    $ 962,478      $ —        $ —        $ —        $ —        $ —       $ (6,238 )    $ 113,003      $ —       $ 1,069,243      $ (6,238 ) 
Healthcare
      4,000,000        —          —          16,520        —          —         73,480       2,990,000        (4,080,000 )      3,000,000        73,480  
Asset-Backed Securities
                                                                                                
Financials
      405,040        —          —          —          —          24,930       (364,273 )      —          (58,661 )      7,036        (364,273 ) 
Common Stocks
                                                                                                
Financials
      2,208,750        —          —          —          —          —         (476,250 )      —          —         1,732,500        (476,250 ) 
Real Estate
      1,823,000        —          —          —          —          (1,440 )      536,000       1,501,440        (1,500,000 )      2,359,000        536,000  
Service
      5,172        —          —          —          —          —         (2,903 )      —          —         2,269        (2,903 ) 
Telecommunication Services
      4,706,357        —          —          —          —          —         407,857       —          —         5,114,214        407,857  
LLC Interests
                                                                                                
Consumer Products
      2,812,212        —          —          —          —          —         276,538       —          —         3,088,750        276,538  
Real Estate
      4,760,162        —          —          —          —          (74,604 )      174,219       1,215,000        (4,474,285 )      1,600,492        174,219  
Preferred Stocks
                                                                                                
Healthcare
      —          —          —          —          —          —         447,299       10,079,986        —         10,527,285        447,299  
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
    
 
 
    
 
 
     
 
 
    
 
 
     
 
 
  
Total
    $ 21,683,171      $ —        $ —        $ 16,520      $ —        $ (51,114 )    $ 1,065,729     $ 15,899,429      $ (10,112,946 )    $ 28,500,789      $ 1,065,729  
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
    
 
 
    
 
 
     
 
 
    
 
 
     
 
 
  
The table below sets forth a summary of changes in the Company’s Level 3 investments (measured at fair value using significant unobservable inputs) for the year ended December 31, 2021.
 
Investments:
   
Balance as of
December 31,
2020
     
Transfers
into
Level 3
     
Transfer
out of
Level 3
    
Net
amortization
(accretion) of
premium/
(discount)
     
Distribution
to Return
Capital
    
Net
realized
gains/
(losses)
    
Net change in
unrealized
gains/
(losses)
    
Purchases/
PIK
     
(Sales
and
redemptions)
    
Balance as of
December 31,
2021
     
Change in
unrealized
gain/(loss)
on Level 3
securities still
held at period
end
  
Assets
                                                                                              
Senior Secured Loans
                                                                                              
Telecommunication Services
    $ 861,570      $ —        $ —       $ —        $ —       $ —       $ —       $ 100,908      $ —       $ 962,478      $ —    
Healthcare
      —          —          —         —          —         —         —         4,000,000        —         4,000,000        —    
Asset-Backed Securities
                                                                                              
Financials
      363,767        —          —         —          (237,335 )      8,561       290,189       —          (20,142 )      405,040        290,189  
Common Stocks
                                                                                              
Chemical
      —          42,000        (42,000 )      —          —         —         —         —          —         —          —    
Financials
      1,125,000        —          —         —          —         —         1,083,750       —          —         2,208,750        1,083,750  
Healthcare
      40,405        —          —         —          —         (14,509 )      (25,896 )      —          —         —          —    
Real Estate
      1,661,000        —          —         —          —         —         162,000       —          —         1,823,000        162,000  
Retail
      532,642        —          —         —          —         (515,500 )      586,525       —          (603,667 )      —          —    
Service
      59,183        —          —         —          —         —         (54,011 )      —          —         5,172        (54,011 ) 
Telecommunication Services
      4,630,427        —          —         —          —         —         75,930       —          —         4,706,357        75,930  
LLC Interests
                                                                                              
Consumer Products
      2,070,427        —          —         —          —         —         741,785       —          —         2,812,212        741,785  
Real Estate
      4,236,603        —          —         —          —         —         523,559       —          —         4,760,162        523,559  
Real Estate Investment Trusts (REITs)
      228,215        —          —         —          (200,000 )      200,000       (228,215 )      —          —         —          —    
Warrants
                                                                                              
Healthcare
      1        —          —         —          —         —         (1 )      —          —         —          (1 ) 
    
 
 
     
 
 
     
 
 
    
 
 
     
 
 
    
 
 
    
 
 
    
 
 
     
 
 
    
 
 
     
 
 
  
Total
    $ 15,809,240      $ 42,000      $ (42,000 )   $ —        $ (437,335 )    $ (321,448 )    $ 3,155,615     $ 4,100,908      $ (623,809 )    $ 21,683,171      $ 2,823,201  
    
 
 
     
 
 
     
 
 
    
 
 
     
 
 
    
 
 
    
 
 
    
 
 
     
 
 
    
 
 
     
 
 
  
Investments designated as Level 3 may include investments valued using quotes or indications furnished by brokers which are based on models or estimates and may not be executable prices. In light of the developing market conditions, the Adviser continues to search for observable data points and evaluate broker quotes and indications received for investments. Determination of fair values is uncertain because it involves subjective judgments and estimates that are unobservable. Transfers from Level 2 to Level 3 are due to a decrease in market activity (e.g. frequency of trades), which resulted in a decrease of available market inputs to determine price. For the year ended December 31, 2022, there were 0 transfers from Level 2 to Level 3. For the year ended December 31, 2021, there were no transfers from Level 2 to Level 3. Transfers from Level 3 to Level 2 and from Level 2 to Level 1 are due to an increase in market activity (e.g. frequency of trades), which resulted in an increase of available market inputs to determine price.
 
The following are summaries of significant unobservable inputs used in the fair valuations of investments categorized within Level 3 of the fair value hierarchy as of December 31, 2022 and 2021:
 
Investment
   
Fair value at

December 31, 2022
     
Valuation
technique
   
Unobservable
inputs
   
Range of input value(s)
(weighted average)
LLC Interest
    $ 4,689,242     
Discounted Cash Flow
Multiples Analysis
   
Discount Rate
Multiple of EBITDA
   
4.73
% - 
8.93
% 
(6.83
%)
5.55
x -
9.85
x 
(7.70
x)
Preferred Stock
      10,527,285     
Option Pricing Model
Transaction Indication of Value
   
Volatility
Recap Price
   
40% - 60% (50%)
$11.10
Common Stock
      9,207,983     
Discounted Cash Flow
Multiples Analysis
Transaction Indication of Value
Liquidation Analysis
Net Asset Value
   
Discount Rate
Multiple of EBITDA
Unadjusted
Price/MHz-PoP
 Enterprise Value ($mm)
Recovery Rate
N/A
   
13.50% - 15.50% 
(14.50
%)
3.25x - 4.25x 
(3.75
x)
$0.09 - $0.95 ($
0.52)
$872 - $969 ($920.5)
40% - 100% (70%)
$28
Senior Secured Loans
      4,069,243      Discounted Cash Flow    Discount Rate    10.25% - 13.08% (11.67%)
Asset-Backed Securities
      7,036      NAV Approach    Discount Rate    70.00%
    
 
 
                 
Total
   
$
28,500,789
 
               
    
 
 
                 
 
Investment
   
Fair value at

December 31, 2021
     
Valuation
technique
   
Unobservable
inputs
   
Range of input value(s)
(weighted average)
LLC Interest
    $ 7,572,374     
Discounted Cash Flow
Net Asset Value
Multiples Analysis
   
Discount Rate
N/A
Multiple of EBITDA
   
1.49% - 5.43% (3.46%)
N/A
6.3x - 8.2x (7.25x)
Common Stock
      8,743,279     
Discounted Cash Flow
Multiples Analysis
 
Transaction Indication of Value
Liquidation Analysis
   
Discount Rate
Multiple of EBITDA
Unadjusted Price/MHz-PoP
NAV / sh multiple
Enterprise Value ($mm)
Recovery Rate
   
14.5% -16.5% (15.5%)
2.75x - 3.75x (3.25x)
$0.09 - $0.95 ($0.52)
0.75x - 1.00x (0.875x)
$841
75% - 100% (94%)
Senior Secured Loans
      4,962,478     
Discounted Cash Flow
Transaction Indication of Value
   
Discount Rate
Cost Price
   
11.00%
N/A
Asset-Backed Securities
      405,040     
Discounted Cash Flow
Third Party Indication of Value
   
Discount Rate
Broker Quote
   
21.00%
Various
Warrants
      —        Black-Scholes Model    Volatility Assumption    181.3%
    
 
 
                 
Total
   
$
21,683,171
 
               
    
 
 
                 
The significant unobservable inputs used in the fair value measurement of the Company’s LLC interests are: discount rate and multiples of EBITDA. Significant increases (decreases) in those inputs in isolation could result in a significantly lower (higher) fair value measurement. The significant unobservable inputs used in the fair value measurement of the Company’s common equity securities are: multiple of EBITDA,
price/MHz-PoP
multiple, liquidity discount, discount rate, enterprise value, and transaction price. Significant increases (decreases) in any of those inputs in isolation could result in a significantly lower (higher) fair value measurement. The significant unobservable inputs used in the fair value measurement of the Company’s bank loan securities are: discount rate and spread adjustment. Significant increases (decreases) in either of those inputs in isolation could result in a significantly lower (higher) fair value measurement.
The significant unobservable inputs used in the fair value measurement of the Company’s asset-backed securities are: discount rate and broker quote indication of value. Significant increases (decreases) in either of those inputs in isolation could result in a significantly lower (higher) fair value measurement. The significant unobservable input used in the fair value measurement of the Company’s warrant securities is: volatility assumption. Significant increases (decreases) in this input in isolation could result in a significantly lower (higher) fair value measurement.
The inputs or methodology used for valuing investments are not necessarily an indication of the risk associated with investing in those investments. The following are summaries of the Company’s investments categorized within the fair value hierarchy as of December 31, 2022 and December 31, 2021:
 
    
December 31, 2022
  
Investments
   
Level 1
     
Level 2
     
Level 3
     
Total
  
Assets
 
Senior Secured Loans
 
Healthcare
    $ —        $ 10,158,950      $ 3,000,000      $ 13,158,950  
Telecommunication Services
      —          —          1,069,243        1,069,243  
Asset-Backed Securities
 
Financials
      —          —          7,036        7,036  
Corporate Bonds
 
Healthcare
      —          2,414,839        —          2,414,839  
Media/Telecommunications
      —          290,078        —          290,078  
Common Stocks
 
Chemicals
      —          42,500        —          42,500  
Energy
      —          1,591,692        —          1,591,692  
Financials
      —          —          1,732,500        1,732,500  
Real Estate
      7,653,730        —          2,359,000        10,012,730  
Real Estate Investment Trusts (REITs)
      1,018,779        —          —          1,018,779  
Service
      —          —          2,269        2,269  
Telecommunication Services
      —          —          5,114,214        5,114,214  
LLC Interests
 
Consumer Products
      —          —          3,088,750        3,088,750  
Real Estate
      —          —          1,600,492        1,600,492  
Preferred Stocks
 
Financials
      —          1,440,625        —          1,440,625  
Healthcare
      —          —          10,527,285        10,527,285  
Warrants
 
Energy
      —          161,249        —          161,249  
Media/Telecommunications
      —          20,484        —          20,484  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total Assets
   
$
8,672,509
 
   
$
16,120,417
 
   
$
28,500,789
 
   
$
53,293,715
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Total Investments
   
$
8,672,509
 
   
$
16,120,417
 
   
$
28,500,789
 
   
$
53,293,715
 
    
 
 
     
 
 
     
 
 
     
 
 
  
 
    
December 31, 2021
  
Investments
   
Level 1
     
Level 2
     
Level 3
     
Total
  
Assets
 
Senior Secured Loans
 
Healthcare
    $ —        $ 20,254,978      $ 4,000,000      $ 24,254,978  
Telecommunication Services
      —          —          962,478        962,478  
Asset-Backed Securities
 
Financials
      —          —          405,040        405,040  
Corporate Bonds
 
Healthcare
      —          6,480,320        —          6,480,320  
Media/Telecommunications
      —          345,946        —          345,946  
Common Stocks
 
Chemicals
      —          42,500        —          42,500  
Energy
      —          1,092,846        —          1,092,846  
Financials
      —          —          2,208,750        2,208,750  
Healthcare
      432,000        —          —          432,000  
Real Estate
      6,075,895        —          1,823,000        7,898,895  
Real Estate Investment Trusts (REITs)
      1,942,593        —          —          1,942,593  
Service
      —          —          5,172        5,172  
Telecommunication Services
      —          —          4,706,357        4,706,357  
LLC Interests
 
Consumer Products
      —          —          2,812,212        2,812,212  
Real Estate
      —          —          4,760,162        4,760,162  
Preferred Stocks
 
Financials
      —          1,725,000        —          1,725,000  
Warrants
 
Energy
      —          112,058                 112,058  
Healthcare
(1)
      —          —          —          —    
Media/Telecommunications
      —          49,004        —          49,004  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total Assets
   
$
8,450,488
 
   
$
30,102,652
 
   
$
21,683,171
 
   
$
60,236,311
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Total Investments
   
$
8,450,488
 
   
$
30,102,652
 
   
$
21,683,171
 
   
$
60,236,311
 
    
 
 
     
 
 
     
 
 
     
 
 
  
 
(1)
Gemphire Therapeutics, Inc. Warrants at zero value.
The table below sets forth a summary of changes in the Company’s Level 3 investments (measured at fair value using significant unobservable inputs) for the year ended December 31, 2022.
Derivative Transactions
Derivative Transactions
The Company is subject to equity price risk, interest rate risk and foreign currency exchange rate risk in the normal course of pursuing its investment objective. The Company may invest without limitation in warrants and may also use derivatives, primarily swaps (including equity, variance and volatility swaps), options and futures contracts on securities, interest rates, commodities and/or currencies, as substitutes for direct investments the Company can make. The Company may also use derivatives such as swaps, options (including options on futures), futures, and foreign currency transactions (e.g., foreign currency swaps, futures and forwards) to any extent deemed by the Adviser to be in the best interest of the Company, and to the extent permitted by the 1940 Act, to hedge various investments for risk management and speculative purposes.
Options
Options
The Company purchases options, subject to certain limitations. The Company may invest in options contracts to manage its exposure to the stock and bond markets and fluctuations in foreign currency values. Writing puts and buying calls tend to increase the Company’s exposure to the underlying instrument while buying puts and writing calls tend to decrease the Company’s exposure to the underlying instrument, or economically hedge other Company investments. The Company’s risks in using these contracts include changes in the value of the underlying instruments, nonperformance of the counterparties under the contracts’ terms and changes in the liquidity of the secondary market for the contracts. Options are valued at the last sale price, or if no sales occurred on that day, at the last quoted bid price. As of and during the year ended December 31, 2022 and 2021, the Company did not hold options.
Investment Transactions
Investment Transactions
Investment transactions are accounted for on trade date. Realized gains (losses) on investments sold are recorded on the basis of specific identification method for both financial statement and U.S. federal income tax purposes. Payable for investments purchased and receivable for investments sold on the Statements of Assets and Liabilities, if any, represents the cost of purchases and proceeds from sales of investment securities, respectively, for trades that have been executed but not yet settled.
Income Recognition
Income Recognition
Corporate actions (including cash dividends from common stock and equity tranches of asset-backed securities) are recorded on the
ex-dividend
date, net of applicable withholding taxes, except for certain foreign corporate actions, which are recorded as soon after the
ex-dividend
date as such information becomes available. Interest income is recorded on the accrual basis. The Company does not accrue as a receivable for interest or dividends on loans, asset-backed securities and other securities if there is a reason to doubt the Company’s ability to collect such income. For loans with contractual PIK
(payment-in-kind)
interest income, which represents contractual interest accrued and added to the loan balance that generally becomes due at maturity, we will not accrue PIK interest if we believe that the PIK interest is no longer collectible. Loan origination fees, original issue discount and market discount are capitalized and such amounts are amortized as interest income over the respective term of the loan or security. Upon the prepayment of a loan or security, any unamortized loan origination fees and original issue discount are recorded as interest income.
Accretion of discounts and amortization of premiums on taxable bonds, loans and asset-backed securities are computed to the call or maturity date, whichever is shorter, using the effective yield method. Withholding taxes on foreign dividends have been provided for in accordance with the Company’s understanding of the applicable country’s tax rules and rates.
Organization and Offering Costs
Organization and Offering Costs
Organization costs are paid by the Adviser and include the cost of incorporating, such as the cost of legal services and other fees pertaining to our organization. Offering costs include legal fees, promotional costs and other costs pertaining to the public offering of our shares of common stock and are also paid by the Adviser. Prior to the termination of the offering, as we raised proceeds, these organization and offering costs were expensed and became payable to the Adviser. Organization and offering costs are limited to 1% of total gross proceeds raised and are not due and payable to the Adviser to the extent they exceed that amount. Please refer to Note 4 for additional information on Organization and Offering Costs.
Paid-in Capital
Paid-in
Capital
The proceeds from the issuance of common stock as presented on the Company’s Statements of Changes in Net Assets is presented net of selling commissions and fees for the years ended December 31, 2022, 2021 and 2020. Selling commissions and fees of $0, $0, and $0 were paid for the years ended December 31, 2022, 2021 and 2020, respectively.
Earnings Per Share
Earnings Per Share
In accordance with the provisions of ASC Topic 260—
Earnings per Share
(“ASC Topic 260”), basic earnings per share is computed by dividing earnings available to common stockholders by the weighted average number of shares outstanding during the period. Other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis.
 
The following table sets forth the computation of the weighted average basic and diluted net increase in net assets per share from operations:
 
    
For the year ended
December 31,
  
    
2022
     
2021
     
2020
  
Net increase (decrease) in net assets resulting from operations
    $ (4,065,174 )    $ 5,706,143      $ (20,899,278 ) 
Weighted average common shares outstanding
      9,893,732        10,254,666        10,525,271  
Earnings (loss) per common share-basic and diluted
    $ (0.41 )     $ 0.56      $ (1.98 ) 
Distributions
Distributions
Distributions to the Company’s stockholders will be recorded as of the record date. Subject to the discretion of the Board and applicable legal restrictions, the Company intends to authorize and declare ordinary cash distributions on a weekly basis and pay such distributions on a quarterly basis. Net realized capital gains, if any, will generally be distributed or deemed distributed at least every
12-month
period.
On June 24, 2020, the Board approved a change in its dividend and capital gains distribution schedule from monthly distributions to quarterly distributions, effective immediately. The first quarterly distribution was paid on October 12, 2020 to shareholders of record as of September 30, 2020. The dividends are expected to be declared in the amount of $0.09 per share of the Company’s common stock to the stockholders of record at each quarter end.
Recent Accounting Pronouncements
Recent Accounting Pronouncements
In March 2020, the FASB issued Accounting Standards Update (“ASU”)
No. 2020-04,
“Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” which provides optional exceptions for applying GAAP to contract modifications, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. ASU
No. 2020-04
is elective and effective for all entities as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the impact of ASU
No. 2020-04.
Please refer to Note 8 for additional information.