UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

~~FORM10-Q~~


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2018~~

2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number:~~333-222986~~ 000-56162

CNL STRATEGIC CAPITAL, LLC

(Exact name of registrant as specified in its charter)

__________________________________________________________________________________________________________________________________


Delaware		32-0503849
~~Delaware~~	~~32-0503849~~
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)


CNL Center at City Commons
450 South Orange Avenue ~~Orlando, Florida~~
Orlando,	Florida	32801
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (407)650-1000

Securities registered pursuant to Section 12(b) of the Exchange Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
N/A	N/A	N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐☒ No ☒

☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒ ~~Do not check if smaller reporting company~~

Smaller reporting company

☐☒

Emerging growth company

☒☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). Yes ☐ No ☒

As of May ~~10, 2018,~~8, 2024, the Company had ~~3,266,260~~4,106,671 Class FA shares, ~~299~~6,044,026 Class A shares, ~~and 17,948~~2,565,283 Class T shares, 2,795,142 Class D shares, 12,974,666 Class I shares and 1,746,383 Class S shares outstanding.

~~CNL STRATEGIC CAPITAL, LLC~~

Table of Contents

INDEX


									PAGE
						~~PAGE~~
PART I. FINANCIAL INFORMATION

Item 1.		Financial Statements (unaudited):				2

~~Item 1.~~			~~Financial Statements:~~			2

	Condensed Consolidated Statements of Assets and Liabilities ~~as of March 31, 2018 (unaudited) and December 31, 2017~~			2

			Condensed Consolidated ~~Statement~~Statements of Operations ~~for the period from February 7, 2018 (commencement of operations) through March 31, 2018 (unaudited)~~					3

			Condensed Consolidated ~~Statement~~Statements of Changes in Net Assets ~~for the period from February 7, 2018 (commencement of operations) through March 31, 2018 (unaudited)~~					4	5

			Condensed Consolidated ~~Statement~~Statements of Cash Flows ~~for the period from February 7, 2018 (commencement of operations) through March 31, 2018 (unaudited)~~					5	6

			Condensed Consolidated ~~Schedule~~Schedules of Investments ~~as of March 31, 2018 (unaudited)~~					6	7

			Notes to Condensed Consolidated Financial Statements					7	11

Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations					20	34

Item 3.			Quantitative and Qualitative Disclosures about Market Risk					34	54

Item 4.			Controls and Procedures					34	55

PART II. OTHER INFORMATION

Item 1.			Legal Proceedings					35	56

Item 1A.			Risk Factors					35	56

Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds					35	56

Item 3.			Defaults Upon Senior Securities					36	56

Item 4.			Mine Safety Disclosures					36	56

Item 5.			Other Information					36	56

Item 6.		Exhibits	57
~~Item 6.~~						~~Exhibits~~			36

Exhibit Index				37	57

Signatures							39	58

Table of Contents

PART I. FINANCIAL INFORMATION

~~Item 1.~~

~~Financial Statements~~

Item 1. Financial Statements

CNL ~~Strategic Capital,~~STRATEGIC CAPITAL, LLC

~~Condensed Consolidated Statements of Assets and Liabilities~~

   March 31, 2018
(unaudited)    December 31,
2017
Assets

Investments, at fair value (amortized cost $76,931,763 and $— as of March 31, 2018 and December 31, 2017, respectively)
   $ 77,456,212    $ —
Cash and cash equivalents
   5,633,760    199,683
Deferred offering expenses
   485,482    317




Total assets
   83,575,454    200,000




Liabilities

Due to related parties (Note 5)
   $ 772,290    $ —
Distributions payable
   302,841    —
Payable for investments purchased
   181,126    —
Accounts payable and other accrued expenses
   115,345    —
Accrued directors’ fees
   22,903    —




Total liabilities
   1,394,505    —




Commitments and contingencies (Note 8)

Members’ Equity (Net Assets)

Preferred shares, $0.001 par value 50,000,000 shares authorized and unissued
   $ —      $ —
Common shares, $0.001 par value 94,660,000 Class A shares authorized and unissued
   —      —
Common shares, $0.001 par value 3,400,000 Class FA shares authorized; 3,266,260 and 8,000 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively
   3,266    8
Common shares, $0.001 par value 662,620,000 Class T shares authorized and unissued
   —      —
Common shares, $0.001 par value 94,660,000 Class D shares authorized and unissued
   —      —
Common shares, $0.001 par value 94,660,000 Class I shares authorized and unissued
   —      —
Capital in excess of par value
   81,653,234    199,992
Accumulated net unrealized appreciation on investments
   524,449    —




Total Members’ Equity
   $ 82,180,949    $ 200,000





Net assets, Class FA shares
   $ 82,180,949    $ 200,000




Total Members’ Equity
   $ 82,180,949    $ 200,000

CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(in thousands, except per share data)

March 31, 2024 (Unaudited) December 31, 2023
Assets
Portfolio company investments at fair value (amortized cost of $729,266 and $719,976, respectively) $ 903,133 $ 876,843
Cash and cash equivalents 159,876 134,453
Receivable for shares sold — 1,411
Prepaid expenses and other assets 537 440
Total assets 1,063,546 1,013,147
Liabilities
Due to related parties, net (Note 5) 5,844 15,787
Payable for shares repurchased 13,780 8,224
Deferred tax liabilities, net 8,233 7,462
Accounts payable and other accrued expenses 1,456 2,325
Total liabilities 29,313 33,798
Commitments and contingencies (Note 11)
Members’ Equity (Net Assets)
Preferred shares, $0.001 par value, 50,000 shares authorized and unissued — —
Class FA Common shares, $0.001 par value, 7,400 shares authorized; 4,844 shares issued; 4,107 and 4,179 shares outstanding, respectively 4 4
Class A Common shares, $0.001 par value, 94,660 shares authorized; 6,045 and 5,328 shares issued, respectively; 5,832 and 5,152 shares outstanding, respectively 6 5
Class T Common shares, $0.001 par value, 558,620 shares authorized; 3,284 and 3,179 shares issued, respectively; 2,552 and 2,629 shares outstanding, respectively 3 3
Class D Common shares, $0.001 par value, 94,660 shares authorized; 2,834 and 2,714 shares issued, respectively; 2,733 and 2,632 shares outstanding, respectively 3 3
Class I Common shares, $0.001 par value, 94,660 shares authorized; 13,661 and 12,846 shares issued, respectively; 12,737 and 12,095 shares outstanding, respectively 13 12
Class S Common shares, $0.001 par value, 100,000 shares authorized; 1,770 shares issued; 1,746 and 1,748 shares outstanding, respectively 2 2
Capital in excess of par value 894,267 851,529
Distributable earnings 139,935 127,791
Total Members’ Equity $ 1,034,233 $ 979,349
Net asset value per share:
Class FA $ 37.20 $ 36.67
Class A $ 33.94 $ 33.57
Class T $ 33.99 $ 33.64
Class D $ 33.68 $ 33.31
Class I $ 34.44 $ 34.06
Class S $ 37.80 $ 37.25

See notes to condensed consolidated financial statements.

Table of Contents

CNL ~~Strategic Capital,~~STRATEGIC CAPITAL, LLC

~~Condensed Consolidated Statement of Operations~~

~~(unaudited)~~

   For the Period
from
February 7, 2018
(Commencement
of Operations) to
March 31, 2018
Investment Income

Interest income
   $ 728,216


Total investment income
   728,216


Operating Expenses

Organization and offering expenses
   221,564
Base management fees
   88,562
Professional services
   73,581
Director fees and expenses
   37,070
Administrative services
   32,493
Custodian and accounting fees
   15,000
Other
   317


Total operating expenses
   468,587
Expense support
   (43,212 )


Net expenses
   425,375


Net investment income
   302,841
Net change in unrealized appreciation on investments
   524,449


Net increase in net assets resulting from operations
   $ 827,290



Class FA common stock:

Net investment income per share
   $ 0.09


Diluted and basic earnings per share
   $ 0.25


Weighted average number of common shares outstanding (basic and diluted)
   3,266,430


Distributions declared per share
   $ 0.09

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share data)

Three Months Ended March 31,
2024 2023
Investment income
From portfolio company investments:
Interest income $ 9,927 $ 6,848
Dividend income 3,673 5,237
From U.S. Treasury bills and cash accounts
Interest and dividend income 1,320 1,233
Total investment income 14,920 13,318
Operating expenses
Total return incentive fees 4,485 3,635
Base management fees 4,018 2,663
Offering expenses 256 904
Professional services 587 500
Pursuit costs 505 185
Distribution and shareholder servicing fees 318 269
Custodian and accounting fees 133 138
Insurance expense 50 54
Director fees and expenses 53 51
General and administrative expenses 89 148
Total operating expenses 10,494 8,547
Expense support (295) (355)
Reimbursement of expense support — 242
Net operating expenses 10,199 8,434
Net investment income before taxes 4,721 4,884
Income tax expense — 27
Net investment income 4,721 4,911
Realized and unrealized gain (loss) on investments
Net realized gain on investments:
U.S. Treasury bills — 4
Total net realized gain on investments — 4
Net change in unrealized appreciation on investments:
Portfolio company investments 17,001 14,636
U.S. Treasury bills — (24)
Provision for deferred taxes on investments (771) (1,524)
Total net change in unrealized appreciation on investments 16,230 13,088
Net increase in net assets resulting from operations $ 20,951 $ 18,003
Net increase in net assets resulting from operations per share
Class FA $ 0.84 $ 0.91
Class A $ 0.68 $ 0.78
Class T $ 0.60 $ 0.70
Class D $ 0.65 $ 0.74
Class I $ 0.69 $ 0.79
Class S $ 0.86 $ 0.95

See notes to condensed consolidated financial statements.

Table of Contents

CNL ~~Strategic Capital,~~STRATEGIC CAPITAL, LLC

~~Condensed Consolidated Statement of Changes~~

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in ~~Net Assets~~

~~(unaudited)~~

   For the Period
from February 7, 2018
(Commencement
of Operations) to
March 31, 2018
Operations:

Net investment income
   $ 302,841
Net change in unrealized appreciation on investments
   524,449


Net increase in net assets resulting from operations
   827,290


Distributions to shareholders from:

Net investment income
   (302,841 )


Net decrease in net assets resulting from distributions to shareholders
   (302,841 )


Capital share transactions:

Issuance of Class FA shares
   81,456,500


Net increase in net assets resulting from capital share transactions
   81,456,500


Total increase in net assets
   81,980,949
Net assets at beginning of period
   200,000


Net assets at end of period
   $ 82,180,949


Capital share activity:

Issuance of Class FA shares
   3,258,260


Net increase in shares outstanding
   3,258,260

thousands, except per share data)

Three Months Ended March 31,
2024 2023
Weighted average shares
Class FA 4,179 4,244
Class A 5,401 2,265
Class T 2,648 2,458
Class D 2,666 2,016
Class I 12,373 9,091
Class S 1,748 1,765

See notes to condensed consolidated financial statements.

Table of Contents

CNL ~~Strategic Capital,~~STRATEGIC CAPITAL, LLC

~~Condensed Consolidated Statement of Cash Flows~~

~~(unaudited)~~

   For the Period from
February 7, 2018
(Commencement of
Operations) to March 31,
2018
Operating Activities:

Net increase in net assets resulting from operations
   $ 827,290
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:

Purchases of investments, net
   (74,531,763 )
Net change in unrealized appreciation on investments
   (524,449 )
Amortization of deferred offering expenses
   196,041
Increase in payable to related parties
   772,290
Increase in payable for investments purchased
   181,126
Increase in accrued directors’ fees
   22,903
Increase in accounts payable and other accrued expenses
   115,345
Increase in deferred offering expenses
   (681,206 )


Net cash used in operating activities
   (73,622,423 )


Financing Activities:

Proceeds from issuance of common shares
   79,056,500


Net cash provided by financing activities
   79,056,500


Net increase in cash
   5,434,077
Cash and cash equivalents, beginning of period
   199,683


Cash and cash equivalents, end of period
   $ 5,633,760


Supplemental disclosure of cash flow information andnon-cash financing activities:

Amounts incurred but not paid (including amounts due to related parties):

Distributions payable
   $ 302,841
Offering costs
   $ 681,523
Non-cash contribution fromSub-Manager
   $ 2,400,000
Non-cash purchase of investments
   $ (2,400,000 )

~~As described further~~

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(in Note 3. “Investments” and Note 5. “Related Party Transactions” to the condensed consolidated financial statements, the approximate $77 million purchase price to acquire the investment in the portfolio companies was partially also funded using the $2.4 million~~non-cash~~ ~~contribution from theSub-Manager.~~

thousands)

Common Shares Capital in Excess of Par Value Distributable Earnings Total Net Assets
Number of Shares Par Value
Balance as of December 31, 2023 28,435 $ 29 $ 851,529 $ 127,791 $ 979,349
Net investment income — — — 4,721 4,721
Net change in unrealized appreciation on investments — — — 16,230 16,230
Distributions to shareholders — — — (8,807) (8,807)
Issuance of common shares through the Public Offerings 1,552 2 52,462 — 52,464
Issuance of common shares through distribution reinvestment plan 120 — 4,056 — 4,056
Repurchase of common shares pursuant to share repurchase program (400) — (13,780) — (13,780)
Balance as of March 31, 2024 29,707 $ 31 $ 894,267 $ 139,935 $ 1,034,233

Common Shares Capital in Excess of Par Value Distributable Earnings Total Net Assets
Number of Shares Par Value
Balance as of December 31, 2022 21,276 $ 21 $ 615,383 $ 93,695 $ 709,099
Net investment income — — — 4,911 4,911
Net realized loss on investments — — — 4 4
Net change in unrealized appreciation on investments — — — 13,088 13,088
Distributions to shareholders — — — (6,601) (6,601)
Issuance of common shares through the Public Offerings 1,806 2 59,358 — 59,360
Issuance of common shares through distribution reinvestment plan 79 — 2,590 — 2,590
Repurchase of common shares pursuant to share repurchase program (74) — (2,491) — (2,491)
Balance as of March 31, 2023 23,087 $ 23 $ 674,840 $ 105,097 $ 779,960

See notes to condensed consolidated financial statements.

Table of Contents

CNL ~~Strategic Capital,~~STRATEGIC CAPITAL, LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

Three Months Ended March 31,
2024 2023
Operating Activities:
Net increase in net assets resulting from operations $ 20,951 $ 18,003
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:
Purchases of portfolio company investments (9,938) (106,000)
Proceeds from return of capital on portfolio company investments 649 165
Purchases of investments in U.S. Treasury bills — (358,988)
Proceeds from redemptions/sales of U.S. Treasury bills — 412,225
Net realized gain on investments — (4)
Net change in unrealized appreciation on investments, excluding deferred taxes (17,001) (14,612)
Accretion of discounts — (1,022)
Decrease in due to related parties (9,943) (10,622)
(Decrease) increase in accounts payable and other accrued expenses (869) 496
Increase in deferred tax liabilities, net 771 1,524
Increase (decrease) in prepaid expenses and other assets 46 (60)
Other operating activities 20 82
Net cash used in operating activities (15,314) (58,813)
Financing Activities:
Proceeds from issuance of common shares 53,875 34,415
Payment on repurchases of common shares (8,224) (2,368)
Distributions paid, net of distributions reinvested (4,751) (4,011)
Deferred financing costs (163) (125)
Net cash provided by financing activities 40,737 27,911
Net increase (decrease) in cash and cash equivalents 25,423 (30,902)
Cash and cash equivalents, beginning of period 134,453 36,837
Cash and cash equivalents, end of period $ 159,876 $ 5,935
Supplemental disclosure of cash flow information and non-cash financing activities:
Distributions reinvested $ 4,056 $ 2,590
Amounts incurred but not paid (including amounts due to related parties):
Offering costs $ 134 $ 380
Payable for shares repurchased $ 13,780 $ 2,491

See notes to condensed consolidated financial statements.

~~Condensed Consolidated Schedule~~Table of ~~Investments~~

~~(unaudited)~~

Company^(a)

Industry
   Interest
Rate Base
Floor    Maturity
Date    No. Shares/
Principal
Amount    Cost    Fair Value
Senior Secured Loan – First Lien–19.1%

Polyform Products, Co.

Modeling Clay
   16.0 % N/A    8/7/2023    $ 15,700,000    $ 15,700,000    $ 15,700,000
Senior Secured Loan – Second Lien–18.3%

Lawn Doctor
   Commercial and Professional Services    16.0 % N/A    8/7/2023    15,000,000    15,000,000    15,000,000




Total Senior Secured Loans
            $ 30,700,000    $ 30,700,000




Equity–56.9%

Polyform Products, Co.
   Modeling Clay          10,820    $ 15,756,212    $ 15,756,212
Lawn Doctor
   Commercial and Professional Services          7,746    30,475,551    31,000,000




Total Equity
               $ 46,231,763    $ 46,756,212




TOTAL INVESTMENTS–94.3%
            $ 76,931,763    $ 77,456,212




OTHER ASSETS IN EXCESS OF LIABILITIES–5.7%

         4,724,737


NET ASSETS–100.0%

         $ 82,180,949

~~(a)~~Contents


CNL STRATEGIC CAPITAL, LLC CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS (UNAUDITED) AS OF MARCH 31, 2024
(in thousands except share data)
Company (1)(2)	Industry	Interest Rate	Maturity Date	Principal Amount / No. Shares		Amortized Cost		Fair Value
Senior Secured Note – First Lien – 5.0%
Clarion Safety Systems, LLC	Visual Safety Solutions	15.0%	12/9/2028	22,500		$	22,500	$	22,500
Lawn Doctor, Inc.	Commercial and Professional Services	(3)	8/6/2029	29,490		29,490		29,490
Total Senior Secured Notes – First Lien						51,990		51,990
Senior Secured Note –14.4%
ATA Holding Company, LLC(4)	Real Estate Services	15.0%	4/1/2027	$	37000	$	37,000	$	37,000
Auriemma Consulting Group, Inc.(4)	Information Services and Advisory Solutions	8.0%	8/1/2024	2,000		2,000		2,000
Healthcare Safety Holdings, LLC(4)	Healthcare Supplies	15.0%	7/16/2027	24,400		24,400		24,400
Polyform Products, Co.(4)	Hobby Goods and Supplies	16.0%	2/7/2026	15,700		15,700		15,700
Sill Holdings, LLC(4)	Business Services	14.0%	10/20/2030	15,851		15,851		15,851
Tacmed Holdings, LLC(4)	Healthcare Supplies	16.0%	3/24/2030	29,000		29,000		29,000
Vektek Holdings, LLC(4)	Engineered Products	(3)	5/6/2029	24,813		24,813		24,813
Total Senior Secured Note						148,764		148,764
Senior Secured Notes – Second Lien – 7.4%
Auriemma U.S. Roundtables	Information Services and Advisory Solutions	16.0%	8/1/2025	12,114		$	12,114	$	12,114
Blue Ridge ESOP Associates	Business Services	15.0%	12/28/2028	2,641		2,641		2,641
Douglas Machines Corp.	Sanitation Products	16.0%	10/7/2028	15,000		15,000		15,000
Lawn Doctor, Inc.	Commercial and Professional Services	16.0%	2/7/2030	15,000		15,000		15,000
Milton Industries Inc.	Engineered Products	15.0%	12/19/2027	3,353		3,353		3,353
Resolution Economics, LLC	Business Services	15.0%	1/2/2026	2,834		2,834		2,834
USA Water Intermediate Holdings, LLC	Commercial and Professional Services	16.0%	8/20/2031	1,376		1,376		1,376
Vektek Holdings, LLC	Engineered Products	15.0%	11/6/2029	24,400		24,400		24,400
Total Senior Secured Notes – Second Lien						76,718		76,718
Total Senior Secured Notes						$	277,472	$	277,472

See notes to condensed consolidated financial statements.

Table of Contents


CNL STRATEGIC CAPITAL, LLC CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS (UNAUDITED) AS OF MARCH 31, 2024 (CONTINUED)
(in thousands except share data)
Company (1)(2)	Industry	Interest Rate	Maturity Date	Principal Amount / No. Shares	Amortized Cost		Fair Value
Equity – 60.5%
ATA Holding Company, LLC(5)	Real Estate Services			37,985	$	37,125	$	32,809
Auriemma U.S. Roundtables(5)	Information Services and Advisory Solutions			33,094	33,476		59,170
Blue Ridge ESOP Associates	Business Services			11,489	12,793		26,247
Clarion Safety Systems, LLC(5)	Visual Safety Solutions			57,368	56,816		62,632
Douglas Machines Corp.(5)	Sanitation Products			35,500	35,500		42,982
Healthcare Safety Holdings, LLC(5)	Healthcare Supplies			17,320	17,320		45,927
Lawn Doctor, Inc.(5)	Commercial and Professional Services			7,746	27,555		80,466
Milton Industries Inc.	Engineered Products			6,647	6,647		19,639
Polyform Products, Co.(5)	Hobby Goods and Supplies			10,820	15,599		14,532
Resolution Economics, LLC	Business Services			7,666	8,118		15,683
Sill Holdings, LLC(5)	Business Services			58,549	58,549		58,549
Tacmed Holdings, LLC(5)	Healthcare Supplies			77,000	76,744		81,631
USA Water Intermediate Holdings, LLC	Commercial and Professional Services			86,245	8,624		8,624
Vektek Holdings, LLC(5)	Engineered Products			56,928	56,928		76,770
Total Equity					451,794		625,661
TOTAL INVESTMENTS – 87.3%					$	729,266	$	903,133
OTHER ASSETS IN EXCESS OF LIABILITIES – 12.7%							131,100
NET ASSETS – 100.0%							$	1,034,233

FOOTNOTES:

(1) Security may be an obligation of one or more entities affiliated with the named company.

(2) Percentages represent fair value as a percentage of net assets for each investment category.

(3) As of March 31, 2024, the senior debt investments in Lawn Doctor and Vektek accrue interest at a per annum rate of SOFR + 4.60% and SOFR + 4.35%, respectively. SOFR at March 31, 2024 was 5.32%.

(4) The Company has a first lien on this portfolio company’s assets, except in cases when the portfolio company has a revolving line of credit provided by a third party lender. In some instances the revolving lender has a first priority lien on all assets, whereas, in others, the revolving lender has a first priority lien on only accounts receivable and inventory, if applicable, and a second lien on all other assets.

(5) As of March 31, 2024, the Company owned a controlling interest in this portfolio company.

See notes to condensed consolidated financial statements.

Table of Contents


CNL STRATEGIC CAPITAL, LLC CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2023
(in thousands except share data)
Company (1)(2)	Industry	Interest Rate	Maturity Date	Principal Amount / No. Shares	Amortized Cost		Fair Value
Senior Secured Note – First Lien – 20.5%
ATA Holding Company, LLC	Real Estate Services	15.0%	4/1/2027	37,000	$	37,000	$	37,000
Auriemma U.S. Roundtables	Information Services and Advisory Solutions	8.0%	8/1/2024	2,000	2,000		2,000
Clarion Safety Systems, LLC	Visual Safety Solutions	15.0%	12/9/2028	22,500	22,500		22,500
Healthcare Safety Holdings, LLC	Healthcare Supplies	15.0%	7/16/2027	24,400	24,400		24,400
Lawn Doctor, Inc.	Commercial and Professional Services	(3)	2/7/2025	29,490	29,490		29,490
Polyform Products, Co.	Hobby Goods and Supplies	16.0%	2/7/2026	15,700	15,700		15,700
Sill Holdings, LLC	Business Services	14.0%	10/20/2030	15,851	15,851		15,851
Tacmed Holdings, LLC	Healthcare Supplies	16.0%	3/24/2030	29,000	29,000		29,000
Vektek Holdings, LLC	Engineered Products	(3)	5/6/2029	24,875	24,875		24,875
Total Senior Secured Notes – First Lien					200,816		200,816
Senior Secured Note – Second Lien – 7.7%
Auriemma U.S. Roundtables	Information Services and Advisory Solutions	16.0%	8/1/2025	12,114	$	12,114	$	12,114
Blue Ridge ESOP Associates	Business Services	15.0%	12/28/2028	2,641	2,641		2,641
Douglas Machines Corp.	Sanitation Products	16.0%	10/7/2028	15,000	15,000		15,000
Lawn Doctor, Inc.	Commercial and Professional Services	16.0%	7/7/2026	15,000	15,000		15,000
Milton Industries Inc.	Engineered Products	15.0%	12/19/2027	3,353	3,353		3,353
Resolution Economics, LLC	Business Services	15.0%	1/2/2026	2,834	2,834		2,834
Vektek Holdings, LLC	Engineered Products	15.0%	11/6/2029	24,400	24,400		24,400
Total Senior Secured Notes – Second Lien					75,342		75,342
Total Senior Secured Notes					$	276,158	$	276,158

See notes to condensed consolidated financial statements.

Table of Contents


CNL STRATEGIC CAPITAL, LLC CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2023 (CONTINUED)
(in thousands except share data)
Company (1)(2)	Industry	Interest Rate	Maturity Date	Principal Amount / No. Shares	Amortized Cost		Fair Value
Equity – 61.3%
ATA Holding Company, LLC(4)	Real Estate Services			37,985	$	37,125	$	32,376
Auriemma U.S. Roundtables(4)	Information Services and Advisory Solutions			33,094	33,476		58,964
Blue Ridge ESOP Associates	Business Services			11,489	12,793		22,926
Clarion Safety Systems, LLC(4)	Visual Safety Solutions			57,368	57,189		60,451
Douglas Machines Corp.(4)	Sanitation Products			35,500	35,500		43,379
Healthcare Safety Holdings, LLC(4)	Healthcare Supplies			17,320	17,320		44,988
Lawn Doctor, Inc.(4)	Commercial and Professional Services			7,746	27,611		75,165
Milton Industries, Inc.	Engineered Products			6,647	6,647		20,982
Polyform Products, Co.(4)	Hobby Goods and Supplies			10,820	15,599		15,964
Resolution Economics, LLC	Business Services			7,666	8,081		15,189
Sill Holdings, LLC (4)	Business Services			58,549	58,549		58,549
Tacmed Holdings, LLC (4)	Healthcare Supplies			77,000	77,000		77,000
Vektek Holdings, LLC (4)	Engineered Products			56,928	56,928		74,752
Total Equity					443,818		600,685
TOTAL INVESTMENTS – 89.5%					$	719,976	$	876,843
OTHER ASSETS IN EXCESS OF LIABILITIES – 10.5%							102,506
NET ASSETS – 100.0%							$	979,349

FOOTNOTES:

(1) Security may be an obligation of one or more entities affiliated with the named company.

(2) Percentages represent fair value as a percentage of net assets for each investment category.

(3) As of December 31, 2023, the senior debt investments in Lawn Doctor and Vektek accrue interest at a per annum rate of SOFR + 4.60% and SOFR + 4.35%, respectively. SOFR at December 31, 2023 was 5.34%.

(4) As of December 31, 2023, the Company owned a controlling interest in this portfolio company.

See notes to condensed consolidated financial statements.

CNL ~~Strategic Capital,~~STRATEGIC CAPITAL, LLC

~~Notes to Financial Statements (Unaudited)~~

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

1. Principal Business and Organization

CNL Strategic Capital, LLC (the “Company”) is a limited liability company that primarily seeks to acquire and grow durable, middle-market U.S. businesses. The Company is externally managed by CNL Strategic Capital Management, LLC (the “Manager”)~~, an entity that~~ and sub-managed by Levine Leichtman Strategic Capital, LLC (the “Sub-Manager”). The Manager is responsible for the overall management of the Company’s activities and the Sub-Manager is responsible for the day-to-day management of the Company’s assets. The Manager and the Sub-Manager are each registered as an investment adviser under the Investment Advisers Act of 1940, as amended. The ~~Manager is controlled by CNL Financial Group, LLC, a private investment management firm specializing in alternative investment products.~~ Company conducts and intends to continue its operations so that the Company and each of its subsidiaries do not fall within, or are excluded from, the definition of an “investment company” under the Investment Company Act of 1940, as amended (the “Investment Company Act”).

The Company ~~has engaged the Manager under a management agreement (the “Management Agreement”) pursuant~~intends to ~~which the Manager is responsible for the overall management of the Company’s activities. The Manager has engaged Levine Leichtman Strategic Capital, LLC (the“Sub-Manager”),~~ ~~a registered investment advisor, under asub-management~~ ~~agreement (the“Sub-Management~~ ~~Agreement”) pursuant to which theSub-Manager~~ ~~is responsible for theday-to-day~~ ~~management of the Company’s assets. TheSub-Manager~~ ~~is an affiliate of Levine Leichtman Capital Partners, Inc.~~

~~The Company targets, for acquisition,~~target businesses that are highly cash flow generative, with annual revenues of primarily between ~~$25~~$15 million and ~~$500 million.~~$250 million and whose management teams seek an ownership stake in the company. The Company’s business strategy is to acquire controlling equity ~~stakes~~interests in combination with ~~loan~~debt positions and in ~~middle-market businesses. The Company’s business strategy seeks to~~doing so, provide long-term capital appreciation and current income while protecting invested capital. The Company seeks to structure its investments with limited, if any, third-party senior leverage.

The Company intends for a significant majority of its total assets to be comprised of long-term controlling equity interests and debt positions in the businesses it acquires. In addition, and to a lesser extent, the Company ~~intends to~~may acquire other debt and minority equity ~~positions, which~~positions. The Company intends to acquire, directly or through syndication, various types of debt including secured and senior unsecured debt, notes and other instruments. The Company may ~~include acquiring debt in the secondary market as well as~~also acquire minority equity ~~stakes~~interests as a standalone investment and ~~loan positions viaco-investments~~as a co-investment in combination with other funds and partnerships managed by ~~affiliates of theSub-Manager.~~LLCP or its affiliates. The Company expects that these positions will comprise a minority of its total assets.

The Company ~~was formed as a Delaware limited liability company on August 9, 2016 and intends to operate~~commenced its ~~business in a manner that will permit it to avoid registration under the Investment Company Act~~initial public offering of ~~1940, as amended (the “Investment Company Act”). The Company did not commence operations until February 7, 2018, as described below.~~

~~The Company offered through a private placement (the “Private Placement”)~~ up to ~~$85 million~~$1.1 billion of ~~Class FA~~its limited liability company interests ~~(the “Class FA” shares, or the “founder~~ (“shares”) ~~and~~on March 7, 2018 (the “Initial Public Offering”), which included up to ~~$115~~$100.0 million of ~~Class A limited liability company interests (the “Class A” shares) (one of the classes of~~ shares ~~that constitutenon-founder~~ shares). On February 7, 2018, the Company met the minimum offering requirement of $80 million in Class FA shares under the Private Placement, at which point the Company commenced operations, and it issued approximately 3.3 million Class FA shares at $25.00 per Class FA share resulting in gross proceeds of approximately $81.7 million. No Class A shares were sold under the Private Placement.

~~In October 2016, the Company confidentially submitted~~being offered through its distribution reinvestment plan, pursuant to a registration statement on FormS-1, as amended (the “Initial Registration Statement”). On November 1, 2021, the Company commenced a follow-on public offering of up to $1.1 billion of shares (the “Follow-On Public Offering” and together with the Initial Public Offering, the “Public Offerings”), which included up to $100.0 million of shares being offered through its distribution reinvestment plan, pursuant to a registration statement on Form S-1 (the “Registration Statement”) filed with the Securities and Exchange Commission (the “SEC”). On February 15, 2024, the Company filed a registration statement on Form S-1 (the “Second Follow-On Registration Statement”) with the SEC in connection with the proposed offering of shares of ~~its~~our limited liability company ~~interests~~interest (the ~~“Public~~“Second Follow-On Public Offering” ~~and together with~~) which share amounts may be adjusted. As permitted under applicable securities laws, the ~~Private Placement,~~Company will continue to offer its common shares in the ~~“Offerings”). The~~Follow-On Public Offering until the effective date of the Second Follow-On Registration Statement, ~~for~~upon which the ~~Public Offering was declared effective by~~current Registration Statement will be deemed terminated.

Through the ~~SEC on March 7, 2018. Through its~~Follow-On Public Offering, the Company is offering, in any combination, four classes of shares: Class A shares, Class T shares, Class D shares and Class I shares (collectively, the~~“non-founder~~ “Non-founder shares”). There are differing selling fees and ~~together with~~commissions and dealer manager fees for each share class. The Company also pays distribution and shareholder servicing fees, subject to certain limits, on the ~~Founder Shares,~~Class T and Class D shares sold in the ~~“Shares”)~~Follow-On Public Offering (excluding sales pursuant to its distribution reinvestment plan). See Note 7. “Capital Transactions” and Note 13. “Subsequent Events” for additional information related to the Public Offerings.

2. Significant Accounting Policies

Basis of Presentation

The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) as contained in the Financial Accounting Standards Board Accounting Standards Codification (the “Codification” or “ASC”), which requires the use of estimates, assumptions and the exercise of subjective judgment as to future uncertainties.

In the opinion of management, the condensed consolidated financial statements reflect all adjustments that are of a normal recurring nature and necessary for the fair presentation of financial results as of and for the periods presented.

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

Although the Company is organized and intends to conduct its business in a manner so that it is not required to register as an investment company under the Investment Company Act, its financial statements are prepared using the specialized accounting principles of ASC Topic 946, “Financial Services—Investment Companies” (“ASC Topic 946”) to utilize investment company accounting. The Company obtains funds through the issuance of equity interests to multiple unrelated investors, and provides such investors with investment management services. Further, the Company’s business strategy is to acquire interests in middle-market U.S. businesses to provide current income and long term capital appreciation, while protecting invested capital.

Overall, the Company believes that the use of investment company accounting on a fair value basis is consistent with the management of its assets on a fair value basis, and makes the Company’s financial statements more useful to investors and other financial statement users in facilitating the evaluation of an investment in the Company as compared to other investment products in the marketplace.

Principles of Consolidation

Under ASC Topic 946 ~~“Financial Services—Investment Companies” (“ASC Topic 946”)~~ the Company is precluded from consolidating any entity other than ~~another~~an investment company or an operating company which provides substantially all of its services to benefit the Company. In accordance therewith, the Company has consolidated the results of its wholly owned subsidiaries which provide services to the Company in its condensed consolidated financial statements. However, the Company has not consolidated the results of its subsidiaries in which the Company holds debt and equity investments. All intercompany account balances and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

Cash ~~consists~~and cash equivalents consist of demand deposits and money market funds at commercial ~~banks~~banks. Demand deposits are carried at cost plus accrued interest, which approximates fair value. The Company deposits its cash with ~~original maturities~~highly-rated banking corporations and, at times, cash deposits may exceed the insured limits under applicable law.

As of ~~three months or less from~~March 31, 2024, the Company held no cash equivalents. As of December 31, 2023, the Company held cash equivalents in the form of money market fund shares held in Fidelity Government Money Market with a fair value of approximately $73.1 million which represented 7.2% of total assets. Cash equivalents in the form of money market fund shares are valued at their reported net asset value on the measurement date, and are categorized within Level 1 of ~~purchase.~~

the fair value hierarchy under ASC Topic 820, as inputs in the valuation are observable.

Use of Estimates

Management makes estimates and assumptions related to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare the financial ~~statement~~statements in conformity with ~~generally accepted accounting principles. Actual~~GAAP. The uncertainty of future events may materially impact the accuracy of the estimates and assumptions used in the financial statements and related footnotes and actual results could differ from those estimates.

Valuation of Investments

ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC Topic 820”) clarifies that ~~the~~ fair value is the price in an orderly transaction between market participants to sell an asset or transfer a liability in the market in which the reporting entity would transact for the asset or liability, that is, the principal or most advantageous market for the asset or liability. The transaction to sell the asset or transfer the liability is a hypothetical transaction at the measurement date, considered from the perspective of a market participant that holds the asset or owes the liability. ASC Topic 820 provides a consistent definition of fair value which focuses on exit price and prioritizes, within a measurement of fair value, the use of market-based inputs over entity-specific inputs.

In addition, ASC Topic 820 provides a framework for measuring fair value and establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels of valuation hierarchy established by ASC Topic 820 are defined as follows:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets. An active market is defined as a market in which transactions for the asset or liability occur with sufficient pricing information on an ongoing basis. Publicly listed equity and debt securities and listed derivatives that are traded on major securities exchanges and publicly traded equity options are generally valued using Level 1 inputs. If a price for ~~a Level 1~~an asset cannot be determined based upon this established process, it shall then be valued as a Level 2 or Level 3 asset.

CNL STRATEGIC CAPITAL, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2024

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include the following: (i) quoted prices for similar assets in active markets; (ii) quoted prices for identical or similar assets in markets that are not active; (iii) inputs that are derived principally from or corroborated by observable market data by correlation or other means; and (iv) inputs other than quoted prices that are observable for the assets. Fixed income and derivative assets, where there is an observable secondary trading market and through which pricing inputs are available through pricing services or broker quotes, are generally valued using Level 2 inputs. If a price for ~~a Level 2~~an asset cannot be determined based upon this established process, it shall then be valued as a Level 3 asset.

Level 3 – Unobservable inputs for the asset or liability being valued. Unobservable inputs will be used to measure fair value to the extent that observable inputs are not available and such inputs will be based on the best information available in the circumstances, which under certain circumstances might include the Manager’s or theSub-Manager’s own data. Level 3 inputs may include, but are not limited to, capitalization and discount rates and earnings before interest, taxes, depreciation and amortization (“EBITDA”) multiples. The information may also include pricing information or broker quotes which include a disclaimer that the broker would not be held to such a price in an actual transaction. Certain assets may be valued based upon estimated value of underlying collateral and include adjustments deemed necessary for estimates of costs to obtain control and liquidate available collateral. Thenon-binding nature of consensus pricing and/or quotes accompanied by disclaimer would result in classification as Level 3 information, assuming no additional corroborating evidence. Debt and equity investments in private companies or assets valued using the market or income approach are generally valued using Level 3 inputs.

In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls will be determined based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each asset.

U.S. Treasury securities are classified as Level 1 assets and are recorded at fair value based on the average of the bid and ask quotes for identical instruments.

The Company’s board of directors is responsible for determining in good faith the fair value of the Company’s Level 3 investments in accordance with the Company’s valuation policy and procedures approved by the board of directors, based on, among other ~~things,~~factors, the input of the Manager, theSub-Manager, ~~management,~~ its audit committee, and the independent third-party valuation firm. The determination of the fair value of the Company’s Level 3 assets requires judgment, ~~especially with respect to~~which include assets for which market prices are not available. For most of the Company’s assets, market prices will not be available. Due to the inherent uncertainty of determining the fair value of assets that do not have a readily available market value, the fair value of the assets may differ significantly from the values that would have been used had a readily available market value existed for such assets, and the differences could be material. Because the calculation of the Company’s net asset value is based, in part, on the fair value of its assets, the Company’s calculation of net asset value is subjective and could be adversely affected if the determinations regarding the fair value of its assets were materially higher than the values that the Company ultimately realizes upon the disposal of such assets. Furthermore, through the valuation process, the Company’s board of directors may determine that the fair value of the Company’s Level 3 assets differs materially from the values that were provided by the independent valuation firm.

The Company may also look to private merger and acquisition statistics, public trading multiples adjusted for illiquidity and other factors, valuations implied by third-party investments in the businesses or industry practices in determining fair value. The Company may also consider the size and scope of a business and its specific strengths and weaknesses, as well as any other factors it deems relevant in assessing the value.

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation on Investments

The Company will measure realized gains or losses as the difference between the net proceeds from the sale, repayment, or disposal of an asset and the ~~adjusted~~amortized cost basis of the asset, without regard to unrealized appreciation or depreciation previously recognized. Net change in unrealized appreciation or depreciation on investments will reflect the change in asset values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.

CNL STRATEGIC CAPITAL, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2024

Income Recognition

Interest Income– Interest income from loans and debt securities is recorded on an accrual basis to the extent that the Company expects to collect such amounts. The Company does not accrue as a receivable interest on loans and debt securities for accounting purposes if it has reason to doubt its ability to collect such interest.

The Company places loans onnon-accrual status when principal and interest are past due 90 days or more or when there is a reasonable doubt that the Company will collect principal or interest. Accrued interest is generally reversed when a loan is placed onnon-accrual. Interest payments received onnon-accrual loans may be recognized as income or applied to principal depending upon management’s judgment.Non-accrual loans are generally restored to accrual status when past due ~~and~~ principal and interest isamounts are paid and, in management’s judgment, isare likely to remain current.

Since inception, the Company has not experienced any past due payments on any of its loan investments.

Original issue discounts (“OID”) on U.S. Treasury securities are reflected in the initial cost basis and the Company accretes such amounts as interest income over the term of the respective security using the effective interest method. The amortized cost of investments represents the original cost adjusted for the accretion of discounts.

Dividend Income – Dividend income is recorded ~~(1) on theex-dividend~~ ~~date for publicly issued securities and (2)~~ on the record date for privately issued ~~securities.~~

securities, but excludes any portion of distributions that are treated as a return of capital. Each distribution received from an equity investment is evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, the Company will not record distributions from equity investments as dividend income unless there are sufficient current or accumulated earnings prior to the distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment.

Paid in Capital –

The Company records the proceeds from the sale of its common shares on a net basis to (i) capital ~~stock~~shares at par value and (ii) paid in capital in excess of par value, excluding upfront selling commissions and dealer manager fees.

~~Organization and Offering Expenses~~

~~Organization expenses are expensed on~~

Share Repurchases

Under the Company’s ~~statement~~share repurchase program (the “Share Repurchase Program”), shares are redeemed as of ~~operations as incurred.~~ the repurchase date, which will generally be the last business day of the month of a calendar quarter. Shares redeemed are retired and not available for reissue. See Note 7. “Capital Transactions” for additional information.

Offering Expenses

Offering expenses, which consist of amounts incurred for items such as legal, accounting, regulatory and printing work incurred related to the Public Offerings, are capitalized on the Company’s condensed consolidated statements of assets and liabilities as deferred offering expenses and expensed to the Company’s condensed consolidated statements of operations over the lesser of the offering period or 12 months; however, the end of the deferral period will not exceed 12 months from the date the offering expense is incurred by the Manager and theSub-Manager.

~~Earnings~~

Distribution and Shareholder Servicing Fees

The Company pays distribution and shareholder servicing fees with respect to its Class T and Class D shares, as described further below in Note 5. “Related Party Transactions.” The Company records the distribution and shareholder servicing fees, which accrue daily, in the Company’s condensed consolidated statements of operations as they are incurred.

Deferred Financing Costs

Financing costs, including upfront fees, commitment fees and legal fees related to borrowings (as further described in Note 8. “Borrowings”) are deferred and amortized over the life of the related financing instrument using the effective yield method. The amortization of deferred financing costs is included in general and administrative expense in the Company’s condensed consolidated statements of operations.

CNL STRATEGIC CAPITAL, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2024
Allocation of Profit and Loss
Class-specific expenses, including base management fees, total return incentive fees, offering expenses, expense support (reimbursement), distribution and shareholder servicing fees and certain transfer agent fees, are allocated to each share class of common shares in accordance with how such expenses are attributable to the particular share classes, as determined by the Company’s board of directors, the Company’s governing agreements and, in certain cases, expenses which are specifically identifiable to a share class.
The following table reflects class-specific expenses by share class during the three months ended March 31, 2024 and 2023 (in thousands):
Three Months Ended March 31, 2024
Class FA
Shares Class A
Shares Class T
Shares Class D
Shares Class I
Shares Class S
Shares
Base management fees $ 265 $ 850 $ 405 $ 414 $ 1,957 $ 127
Total return incentive fees 394 958 395 439 2,130 169
Offering expenses — 99 16 17 124 —
Expense support — — — — (257) (38)
Other class-specific expenses (1)
9 34 227 117 53 6

Three Months Ended March 31, 2023
Class FA
Shares Class A
Shares Class T
Shares Class D
Shares Class I
Shares Class S
Shares
Base management fees $ 255 $ 317 $ 353 $ 289 $ 1,328 $ 121
Total return incentive fees 418 442 437 378 1,773 187
Offering expenses — 184 143 82 495 —
Expense reimbursement (support) 242 (38) — — (317) —
Other class-specific expenses (1)
11 25 208 92 60 6

(1) Other class-specific expenses consist of distribution and shareholder servicing fees and certain transfer agent fees.
Income and expenses which are not class-specific are allocated monthly pro rata among the share classes based on shares outstanding as of the end of the month.

Net Investment Income per Share

~~Earnings~~ and Net Increase in Net Assets Resulting from Operations per Share

Net investment income per share isand net increase in net assets resulting from operations per share are calculated for each share class of common shares based upon the weighted average number of common shares outstanding during the reporting period.

Distributions

~~In March 2018, the~~

The Company’s board of directors ~~began~~has declared and intends to continue to declare ~~cash~~ distributions ~~to shareholders~~ based on ~~weekly~~monthly record ~~dates and such~~dates. The Company’s distributions are ~~expected to be~~ paid ~~on a monthly basis.~~in the same month as the declared record date. Distributions are made on all classes of the Company’s shares at the same time.

~~U.S. Federal Income Taxes~~

The Company has adopted a distribution reinvestment plan that provides for reinvestment of distributions on behalf of shareholders. Non-founder shareholders participating in the distribution reinvestment plan will have their cash distribution automatically reinvested in additional shares having the same class designation as the class of shares to which such distributions are attributable at a price per share equivalent to the then current public offering price, net of up-front selling commissions and dealer manager fees. Cash distributions paid on Class FA shares participating in the distribution reinvestment plan are reinvested in additional Class A shares. Class S shares do not participate in the distribution reinvestment plan.

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

Income Taxes

Under GAAP, the Company is subject to the provisions of ASC 740, “Income Taxes.” The Company follows the authoritative guidance on accounting for uncertainty in income taxes and concluded it has no material uncertain tax positions to be recognized at this time. If applicable, the Company will recognize interest and penalties related to unrecognized tax benefits as income tax expense in the Company’s condensed consolidated statements of operations.

The Company has operated and expects ~~that it will~~to continue to operate so that it will qualify to be treated for U.S. federal income tax purposes as a partnership, and not as an association or a publicly traded partnership taxable as a corporation. Generally, if the Company ~~will~~were otherwise treated as a publicly traded partnership, the Company would not be taxable as a corporation if 90% or more of its gross income for each taxable year consists of “qualifying income” (generally, interest (other than interest generated from a financial business), dividends, real property rents, gain from the sale of assets that produce qualifying income and certain other items) and the Company is not required to register under the Investment Company Act (the “qualifying income exception”).

~~3. Investments~~

~~In October 2017,~~ As a partnership, the individual shareholders are responsible for their proportionate share of the Company’s taxable income.

The Company holds certain equity investments in taxable subsidiaries (the “Taxable Subsidiaries”). The Taxable Subsidiaries permit the Company ~~entered into~~to hold equity investments in portfolio companies which are “pass through” entities for tax purposes. The Taxable Subsidiaries are not consolidated with the Company for income tax purposes and may generate income tax expense, benefit, and the related tax assets and liabilities, as a ~~merger agreement with LD Merger Sub, Inc., a wholly owned subsidiary~~result of the ~~Company,~~Taxable Subsidiaries’ ownership of certain portfolio investments. The income tax expense, or benefit, and ~~LD Parent, Inc.,~~related tax assets and liabilities are reflected in the ~~parent company of Lawn Doctor, Inc. (“Lawn Doctor”). The merger agreement was amended on February 6, 2018. On February 7, 2018, pursuant to~~Company’s condensed consolidated financial statements. See Note 9. “Income Taxes” for additional information.

During the ~~terms of the merger agreement~~three months ended March 31, 2024 and ~~an exchange agreement between~~2023, the Company did not incur any material interest or penalties. Tax years ending December 31, 2020 and forward remain subject to examination by taxing authorities.

Recently Issued Accounting Standards Updates

In November 2023, the ~~Leichtman-Levine Living Trust, an affiliate~~FASB issued ASU 2023-07 "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" ("ASU 2023-07"). ASU 2023-07 intends to improve reportable segment disclosure requirements, enhance interim disclosure requirements and provide new segment disclosure requirements for entities with a single reportable segment. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods with fiscal years beginning after December 15, 2024. ASU 2023-07 is to be adopted retrospectively to all prior periods presented. We are currently assessing the impact this guidance will have on our consolidated financial statements; however, we do not expect a material impact to our consolidated financials statements as ASU 2023-07 results in additional disclosure only.

In December 2023, the FASB issued ASU 2023-09 "Improvements to Income Tax Disclosures" ("ASU 2023-09"). ASU 2023-09 intends to improve the transparency of income tax disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 and is to be adopted on a prospective basis with the~~Sub-Manager~~ ~~(the “Exchange Agreement”),~~ option to apply retrospectively. We are currently assessing the impact of this guidance; however, we do not expect a material impact to our consolidated financial statements.

3. Investments

In February 2024, the Company, ~~acquired an~~through its wholly-owned subsidiaries, USAW Strategic Capital EquityCo, LLC and USAW Strategic Capital DebtCo, LLC, made a co-investment in USA Water Intermediate Holdings, LLC (“USAW”) of approximately ~~63.9% equity interest in Lawn Doctor from an affiliate~~$10.0 million. The Company’s co-investment is comprised of ~~theSub-Manager,~~ ~~through an investment consisting of~~a minority common equity position of approximately $8.6 million and ~~a debt~~$1.4 million of senior secured subordinated notes.

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

The Company’s investment in the form of a secured second lien loan to Lawn Doctor. After the closing of the merger, the consummation of the equity contribution pursuant to the Exchange Agreement and subsequent purchases of common equity in Lawn Doctor by certain members of Lawn Doctor’s senior management team, the Company owns approximately 62.9% of the outstanding equity in Lawn Doctor. Asportfolio is summarized as follows as of March 31, ~~2018, the cost basis of~~2024 and December 31, 2023 (in thousands):


	As of March 31, 2024
Asset Category	Cost		Fair Value		Fair Value Percentage of Investment Portfolio		Fair Value Percentage of Net Assets
Senior secured debt
First lien	$	51,990	$	51,990	5.8	%	5.0	%
Secured	148,764		148,764		16.5		14.4
Second lien	76,718		76,718		8.4		7.4
Total senior secured debt	277,472		277,472		30.7		26.8
Equity	451,794		625,661		69.3		60.5
Total investments	$	729,266	$	903,133	100.0	%	87.3	%


	As of December 31, 2023
Asset Category	Cost		Fair Value		Fair Value Percentage of Investment Portfolio		Fair Value Percentage of Net Assets
Senior secured debt
First lien	$	200,816	$	200,816	22.9	%	20.5	%
Second lien	75,342		75,342		8.6		7.7
Total senior secured debt	276,158		276,158		31.5		28.2
Equity	443,818		600,685		68.5		61.3
Total investments	$	719,976	$	876,843	100.0	%	89.5	%

Collectively, the Company’s investments in Lawn Doctor was approximately $30.5 million of common equity and $15.0 million of a debt investment. The purchase price is subject to adjustment based on, among other factors, Lawn Doctor’s working capital and indebtedness at the closing with a~~true-up~~ ~~adjustment.~~

In October 2017, the Company entered into a merger agreement with PFHI Merger Sub, Inc., a wholly owned subsidiary of the Company, and Polyform Holdings, Inc. (“Polyform”). The merger agreement was amended on February 6, 2018. On February 7, 2018, pursuant to the terms of the merger agreement, the Company acquired an approximately 87.1% equity interest in Polyform from an affiliate of the~~Sub-Manager,~~ through an investment consisting of common equity and a debt investment in the form of a first lien secured term loan to Polyform. As of March 31, 2018, the cost basis of the Company’s investments in Polyform was approximately $15.8 million of common equity and $15.7 million of a debt investment. The purchase price is subject to adjustment based on, among other factors, Polyform’s working capital and indebtedness at the closing with a~~true-up~~ ~~adjustment.~~

~~The~~ debt investments ~~in the form of a secured second lien loan to Lawn Doctor and in the form of a first lien secured term loan to Polyform, as described above,~~ accrue interest at a weighted average per annum rate of ~~16%. Each loan will mature in August 2023.~~14.2% and have weighted average remaining years to maturity of 4.5 years as of March 31, 2024. The note purchase agreements contain customary covenants and events of default.

As of March 31, ~~2018,~~2024, all of the Company’s ~~investment~~ portfolio ~~consisted of four distinct positions, summarized as follows:~~

   As of March 31, 2018
Asset Category    Cost    Fair Value    Fair Value
Percentage of
Investment
Portfolio Fair Value
Percentage of
Net Assets
Senior debt

Senior secured debt - first lien
   $ 15,700,000    $ 15,700,000    20.3 % 19.1 %
Senior secured debt - second lien
   15,000,000    15,000,000    19.4 18.3






Total senior debt
   $ 30,700,000    $ 30,700,000    39.7 37.4
Equity
   46,231,763    46,756,212    60.3 56.9






Total investments
   $ 76,931,763    $ 77,456,212    100.0 % 94.3 %

companies were in compliance with their respective debt covenants. As of March 31, ~~2018,~~2024 and December 31, 2023, none of the Company’s debt investments were onnon-accrual status.

The industry ~~and geographic~~ dispersion of the Company’s ~~investment~~ portfolio ~~as a percentage of total~~company investments, based on fair value, ~~of the Company’s investments~~ as of March 31, ~~2018~~2024 and December 31, 2023 were as follows:


~~Industry~~	~~As of~~ ~~March 31, 2018~~
~~Modeling Clay~~		~~40.6~~	%
~~Commercial and Professional Services~~		~~59.4~~

~~Total~~		~~100.0~~	%


~~Geographic Dispersion~~⁽¹⁾	~~As of~~ ~~March 31, 2018~~
~~United States~~		~~100.0~~	%

~~Total~~		~~100.0~~	%

⁽¹⁾	~~The geographic dispersion is determined by the portfolio company’s country of domicile or the jurisdiction of the security’s issuer.~~


Industry	March 31, 2024		December 31, 2023
Healthcare Supplies	20.0	%	20.0	%
Engineered Products	16.5		16.9
Commercial and Professional Services	15.0		13.6
Business Services	13.5		13.5
Visual Safety Solutions	9.4		9.5
Information Services and Advisory Solutions	8.1		8.3
Real Estate Services	7.8		7.9
Sanitation Products	6.4		6.7
Hobby Goods and Supplies	3.3		3.6
Total	100.0	%	100.0	%

All ~~portfolio companies~~investment positions held at March 31, ~~2018~~2024 and December 31, 2023 were denominated in U.S. ~~dollars.~~

dollars and located in the United States based on their country of domicile.

CNL STRATEGIC CAPITAL, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2024

Summarized ~~Operating Data~~

Portfolio Company Financial Information

The Company had five significant portfolio companies in which it owned a controlling equity interest during the three months ended March 31, 2024 and 2023. The following tables present unaudited summarized operating data for ~~Lawn Doctor and Polyform (the “initial businesses”) for~~ the ~~period February 7, 2018 (the date we acquired the initial businesses) through~~three months ended March 31, ~~2018~~2024 and ~~unaudited~~2023, and summarized balance sheet data as of March 31, ~~2018:~~

2024 (unaudited) and December 31, 2023 for these portfolio companies (in thousands):

Lawn Doctor

~~Summarized Operating Data (Unaudited)~~

   Period February 7,
2018⁽¹⁾ through
March 31, 2018
Revenues
   $ 3,118,748
Expenses
   (3,087,288 )


Income before taxes
   31,460
Income tax expense
   (7,825 )


Net Income
   $ 23,635

~~Summarized Balance Sheet Data (Unaudited)~~

   As of
March 31, 2018
Current assets
   $ 7,016,164
Non-current assets
   $ 28,927,037
Current liabilities
   $ 4,081,423
Non-current liabilities
   $ 38,785,943
Stockholders’ Equity
   $ (6,924,165 )

~~Polyform~~

~~Summarized Operating Data (Unaudited)~~

   Period February 7,
2018⁽¹⁾ through
March 31, 2018
Revenues
   $ 2,417,593
Expenses
   (2,897,329 )


Net loss before taxes
   (479,736 )
Income tax benefit
   48,000


Net loss
   $ (431,736 )

~~Summarized Balance Sheet Data~~ ~~(Unaudited)~~

   As of
March 31, 2018
Current assets
   $ 5,771,064
Non-current assets
   $ 22,436,533
Current liabilities
   $ 1,167,304
Non-current liabilities
   $ 20,567,473
Stockholders’ Equity
   $ 6,472,820

⁽¹⁾	~~February 7, 2018 is the date the Company acquired the portfolio companies.~~

Three Months Ended
March 31,
2024 2023
Revenues $ 9,792 $ 9,128
Expenses (9,589) (8,938)
Income before taxes 203 190
Income tax expense (169) (80)
Consolidated net income 34 110
Net loss attributable to non-controlling interests 182 147
Net income $ 216 $ 257


	As of March 31, 2024			As of December 31, 2023
Current assets	$	12,592		$	10,359
Non-current assets	88,425			89,666
Current liabilities	9,538			7,484
Non-current liabilities	62,182			62,530
Non-controlling interests	65			246
Stockholders’ equity	29,232			29,765
Ownership percentage(1)	61		%	61		%

FOOTNOTE:

(1)Represents the Company’s undiluted ownership percentage as of the end of the period presented, rounded to the nearest percent.

Roundtables


	Three Months Ended March 31,
		2024		2023
Revenues		$	4,311	$	4,079
Expenses		(4,498)		(4,013)
(Loss) income before taxes		(187)		66
Income tax benefit (expense)		44		(7)
Net (loss) income		$	(143)	$	59


	As of March 31, 2024			As of December 31, 2023
Current assets	$	12,346		$	2,376
Non-current assets	58,694			59,192
Current liabilities	13,376			5,071
Non-current liabilities	21,398			19,399

Stockholders’ equity	36,266			37,098
Ownership percentage(1)	81		%	81		%

FOOTNOTE:

(1)Represents the Company’s undiluted ownership percentage as of the end of the period presented, rounded to the nearest percent.

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

Douglas


	Three Months Ended March 31,
		2024		2023
Revenues		$	6,552	$	8,431
Expenses		(6,348)		(7,844)
Income before taxes		204		587
Income tax expense		(14)		(138)
Net income		$	190	$	449


	As of March 31, 2024			As of December 31, 2023
Current assets	$	10,350		$	10,750
Non-current assets	46,672			46,850
Current liabilities	3,784			4,458
Non-current liabilities	16,188			16,271

Stockholders’ equity	37,050			36,871
Ownership percentage(1)	90		%	90		%

FOOTNOTE:

(1)Represents the Company’s undiluted ownership percentage as of the end of the period presented, rounded to the nearest percent.

Vektek


	Three Months Ended March 31,
		2024		2023
Revenues		$	9,072	$	10,421
Expenses		(8,796)		(9,656)
Income before taxes		276		765
Income tax expense		—		(13)
Net income		$	276	$	752


	As of March 31, 2024			As of December 31, 2023
Current assets	$	14,542		$	14,846
Non-current assets	98,614			99,254
Current liabilities	2,054			2,182
Non-current liabilities	49,563			49,625
Stockholders’ equity	61,539			62,293
Ownership percentage(1)	84		%	84		%

FOOTNOTE:

(1)Represents the Company’s undiluted ownership percentage as of the end of the period presented, rounded to the nearest percent.

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

TacMed

The Company acquired its investments in TacMed in March 2023.


	Three Months Ended March 31,
		2024		2023
Revenues		$	8,428	$	786
Expenses		(10,763)		(2,854)
Loss before taxes		(2,335)		(2,068)
Income tax benefit (expense)		228		(20)
Net loss		$	(2,107)	$	(2,088)


	As of March 31, 2024			As of December 31, 2023
Current assets	$	20,449		$	22,128
Non-current assets	91,103			92,209
Current liabilities	4,108			4,206
Non-current liabilities	35,015			35,345
Stockholders’ equity	72,429			74,786
Ownership percentage(1)	95		%	95		%

FOOTNOTE:

(1)Represents the Company’s undiluted ownership percentage as of the end of the period presented, rounded to the nearest percent.

4. Fair Value of Financial Instruments

The Company’s investments were categorized in the fair value hierarchy described in Note 2. “Significant Accounting ~~Policies”,~~Policies,” as follows as of March 31, ~~2018:~~

   As of March 31, 2018
Description
   Level 1    Level 2    Level 3    Total
Senior debt
   $ —      $ —      $ 30,700,000    $ 30,700,000
Equity
   —      —      46,756,212    46,756,212








Total investments
   $ —      $ —      $ 77,456,212    $ 77,456,212

~~There were no transfers between Level 1~~2024 and ~~Level 2 during the period from February 7, 2018 (commencement of operations) through March~~December 31, 2018. The carrying value of cash is classified as Level 1 with respect to the fair value hierarchy. For the period from February 7, 2018 (commencement of operations) through March 31, 2018, the Company held four distinct investment positions classified as Level 3, representing an aggregate fair value of $77.5 million or 100.0% of the total investment portfolio. 2023 (in thousands):


	As of March 31, 2024								As of December 31, 2023
Description	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Senior Debt	$	—	$	—	$	277,472	$	277,472	$	—	$	—	$	276,158	$	276,158
Equity	—		—		625,661		625,661		—		—		600,685		600,685
Total Investments	$	—	$	—	$	903,133	$	903,133	$	—	$	—	$	876,843	$	876,843

The ranges of unobservable inputs used in the fair value measurement of the Company’s Level 3 investments as of March 31, ~~2018~~2024 and December 31, 2023 were as ~~follows:~~

As of March 31, 2018
Asset Group
   Fair Value⁽¹⁾
Valuation Techniques

Unobservable Inputs

Range
(Weighted Average) ⁽²⁾

Impact to Valuation
from an Increase in
Input ⁽³⁾
Senior Debt
   $ 30,700,000
Discounted Cash Flow
Market Comparables
Transaction Method

Discount Rate
EBITDA Multiple
EBITDA Multiple

10.5% - 13.5% (11.5%)
7.5x – 12.1x (10.5x)
8.0x – 12.0x (10.7x)

Decrease
Increase
Increase
Equity
   46,756,212
Discounted Cash Flow
Market Comparables
Transaction Method

Discount Rate
EBITDA Multiple
EBITDA Multiple

10.5% - 13.5% (11.5%)
7.5x – 12.1x (10.5x)
8.0x – 12.0x (10.7x)

Decrease
Increase
Increase



Total
   $ 77,456,212

follows (in thousands):

⁽¹⁾

As of March 31, 2024

Asset Group

~~Certain investments may be valued at cost for a period of time after an acquisition as the best indicator of fair value.~~

⁽²⁾Fair Value

Valuation Techniques

Unobservable Inputs

Range

(Weighted ~~average amounts are based on the estimated fair values.~~

⁽³⁾Average)(1)

~~This column represents the directional change in the fair value of the Level 3 investments that would result~~

Impact to Valuation from an ~~increase~~Increase in

Input(2)

Senior Debt

276,096

Discounted Cash Flow
Market Comparables
Transaction Method

Discount Rate
EBITDA Multiple

10.8% – 14.5% (12.7%)

6.3x – 15.1x (11.7x)

Decrease
Increase

1,376

Transaction Precedent

Transaction Price

N/A

Equity

617,037

Discounted Cash Flow
Market Comparables
Transaction Method

Discount Rate
EBITDA Multiple

10.8% – 14.5% (12.7%)

6.3x – 15.1x (11.7x)

Decrease
Increase

8,624

Transaction Precedent

Transaction Price

N/A

Total

903,133

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

As of December 31, 2023

Asset Group

Fair Value

Valuation Techniques

Unobservable Inputs

Range

(Weighted Average)(1)

Impact to ~~the corresponding unobservable input. A decrease to the input would have the opposite effect. Significant changes~~Valuation from an Increase in ~~these inputs in isolation could result in significantly higher or lower fair value measurements.~~

Input(2)

Senior Debt

276,158

Discounted Cash Flow
Market Comparables
Transaction Method

Discount Rate
EBITDA Multiple
EBITDA Multiple

10.5% – 14.5% (12.5%)

6.9x – 15.1x (10.8x)

6.3x – 16.0x (11.9x)

Decrease
Increase
Increase

Equity

600,685

Discounted Cash Flow
Market Comparables
Transaction Method

Discount Rate
EBITDA Multiple
EBITDA Multiple

10.5% – 14.5% (12.5%)

6.9x – 15.1x (10.8x)

6.3x – 16.0x (11.9x)

Decrease
Increase
Increase

Total

876,843

FOOTNOTES:

(1) Discount rates are relative to the enterprise value of the portfolio companies and are not the market yields on the associated debt investments. Unobservable inputs were weighted by the relative fair value of the investments.

(2) This column represents the directional change in the fair value of the Level 3 investments that would result from an increase to the corresponding unobservable input. A decrease to the input would have the opposite effect. Significant changes in these inputs in isolation could result in significantly higher or lower fair value measurements.

The preceding tables ~~represent~~include the significant unobservable inputs as they relate to the Company’s determination of fair values for its investments categorized within Level 3 as of March 31, ~~2018.~~2024 and December 31, 2023. In addition to the techniques and inputs noted in the ~~table~~tables above, according to the Company’s valuation policy, the Company may also use other valuation techniques and methodologies when determining the fair value estimates for the Company’s investments. Any significant increases or decreases in the unobservable inputs would result in significant increases or decreases in the fair value of the Company’s investments.

Investments that do not have a readily available market value are valued utilizing a market approach, an income approach (i.e. discounted cash flow approach), a transaction approach, or a combination of such approaches, as appropriate. The market ~~comparables~~ approach uses prices, including third party indicative broker quotes, and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The transaction approach uses pricing indications derived from recent precedent merger and acquisition transactions involving comparable target companies. The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) that are discounted based on a required or expected discount rate to derive a ~~single~~ present value ~~amount.~~amount range. The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors the Company may take into account to determine the fair value of its investments include, as relevant: available current market data, including an assessment of the credit quality of the security’s issuer, relevant and applicable market trading and transaction comparables, applicable market yields and multiples, illiquidity discounts, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, data derived from merger and acquisition activities for comparable companies, and enterprise values, among other factors.

The following tables provide ~~reconciliations for the period from February 7, 2018 (commencement of operations) through March 31, 2018~~a reconciliation of investments for which Level 3 inputs were used in determining fair ~~value:~~

   Period from February 7, 2018
(commencement of operations) through March 31, 2018
   Senior Debt    Equity    Total
Fair value balance as of February 7, 2018
   $ —      $ —      $ —
Additions
   30,700,000    46,231,763    76,931,763
Net change in unrealized appreciation⁽¹⁾
   —      524,449    524,449






Fair value balance as of March 31, 2018
   $ 30,700,000    $ 46,756,212    $ 77,456,212






Change in net unrealized appreciation in investments held as of March 31, 2018⁽¹⁾
   $ —      $ 524,449    $ 524,449

⁽¹⁾	~~Included in net change in unrealized appreciation in the consolidated statement of operations.~~

~~No securities were transferred into or out of~~value for the ~~Level 3 hierarchy during the period from February 7, 2018 (commencement of operations) through~~three months ended March 31, ~~2018. All realized~~2024 and 2023 (in thousands):


	Three Months Ended March 31, 2024
	Senior Debt		Equity		Total
Fair value balance as of January 1, 2024	$	276,158	$	600,685	$	876,843
Additions	1,376		8,624		10,000
Principal repayment	(62)		—		(62)
Return of capital(1)	—		(649)		(649)
Net change in unrealized appreciation(2)	—		17,001		17,001
Fair value balance as of March 31, 2024	$	277,472	$	625,661	$	903,133
Change in net unrealized appreciation on investments held as of March 31, 2024(2)	$	—	$	17,001	$	17,001

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024


	Three Months Ended March 31, 2023
	Senior Debt		Equity		Total
Fair value balance as of January 1, 2023	$	176,942	$	411,895	$	588,837
Additions	29,000		77,000		106,000
Return of capital(1)	—		(165)		(165)
Net change in unrealized appreciation(2)	—		14,636		14,636
Fair value balance as of March 31, 2023	$	205,942	$	503,366	$	709,308
Change in net unrealized appreciation on investments held as of March 31, 2023(2)	$	—	$	14,636	$	14,636

FOOTNOTES:

(1) Represents portion of distributions received which were accounted for as a return of capital. See Note 2. “Significant Accounting Policies” for information on the accounting treatment of distributions from portfolio companies.

(2) Included in net change in unrealized ~~gains and losses are included~~appreciation on investments in ~~earnings and are reported as separate line items within~~ the ~~Company’s statement~~condensed consolidated statements of operations.

5. Related Party Transactions

~~As of December 31, 2017, the Company had issued 4,000 shares of the Company’s Class FA shares, to each of the Manager andSub-Manager,~~ ~~for an aggregate purchase price of $0.2 million (total of 8,000 Class FA shares). No selling commissions or dealer manager fees were paid in connection with the issuances.~~

On February 7, 2018, the Company commenced operations when it met the minimum offering requirement of $80 million in Class FA shares under its Private Placement. The $81.7 million in gross proceeds included a cash capital contribution of $2.4 million from the Manager in exchange for 96,000 Class FA shares and a cash capital contribution of $9.5 million from CNL Strategic Capital Investment, LLC, which is indirectly controlled by James M. Seneff, Jr., the chairman of the Company, in exchange for 380,000 Class FA shares. The $81.7 million also included 96,000 Class FA shares received in exchange for $2.4 million of~~non-cash~~ ~~consideration in the form of equity interests in Lawn Doctor received from an affiliate of theSub-Manager~~ pursuant to the Exchange Agreement. The $81.7 million in gross proceeds also included a cash capital contribution of approximately $0.4 million in exchange for 15,000 Class FA shares, from other individuals affiliated with the Manager.

The Manager andSub-Manager, along with certain affiliates of the Manager orSub-Manager, ~~will~~ receive fees and compensation in connection with the ~~Private Placement and~~ Public ~~Offering~~Offerings, as well as the acquisition, management and sale of the assets of the Company, as follows:

~~Placement Agent/~~

Managing Dealer ~~Manager~~

Commissions — ~~Under the Private Placement, there was no selling commission for the sale of Class FA shares. Under the Public Offering, the~~The Company ~~will pay~~pays CNL Securities Corp. (the “Managing Dealer” ~~in connection with~~), an affiliate of the ~~Public Offering and the “Placement Agent” in connection with the Private Placement)~~Manager, a selling commission up to 6.00% of the sale price for each Class A share and 3.00% of the sale price for each Class T share sold in the Follow-On Public Offering (excluding sales pursuant to the Company’s distribution reinvestment plan). The Managing Dealer may reallow all or a portion of the selling commissions to participating broker-dealers.

~~Placement Agent/~~

Dealer Manager Fee— ~~Under the Private Placement, there was no placement agent fee for the sale of Class FA shares. Under the Public Offering, the~~The Company ~~will pay~~pays the Managing Dealer a dealer manager fee of up to 2.50% of the price of each Class A share and 1.75% of the price of each Class T share sold in the Follow-On Public Offering (excluding sales pursuant to the Company’s distribution reinvestment plan). The Managing Dealer may reallow all or a portion of such dealer manager fees to participating broker-dealers.

~~Annual~~

Distribution and Shareholder Servicing Fee— ~~Under the Public Offering, beginning no later than the end of June 2018, the~~The Company ~~will also pay~~pays the Managing Dealer ~~an annual~~a distribution and shareholder servicing fee, subject to certain limits, with respect to its Class T and Class D shares sold in the Public Offerings (excluding Class T ~~Shares~~shares and Class D shares sold through the distribution reinvestment plan and those received as share distributions) in an annual amount equal to 1.00% and 0.50%, respectively, of its current net asset value per share, as disclosed in its periodic or current reports, payable on a monthly basis. The ~~annual~~ distribution and shareholder servicing fee ~~will accrue~~accrues daily and beis paid monthly in arrears. The Managing Dealer may reallow all or a portion of the ~~annual~~ distribution and shareholder servicing fee to the broker-dealer who sold the Class T or Class D shares or, if applicable, to a servicing broker-dealer of the Class T or Class D shares or a fund supermarket platform featuring Class D shares, so long as the broker-dealer or financial intermediary has entered into a contractual agreement with the Managing Dealer that provides for such reallowance. The ~~annual~~ distribution and shareholder servicing ~~fees~~fee is an ongoing fee, subject to certain limits, that ~~will be~~is allocated among all Class T and Class D shares, respectively, and ~~will~~is not be paid at the time of purchase.

Manager and/orSub-Manager

~~Organization and~~

Offering Costs — ~~Under each of the Private Placement and Public Offering, the~~The Company ~~will reimburse~~reimburses the Manager and ~~its~~the Sub-Manager, along with their respective affiliates, for the ~~organization and~~ offering costs (other than selling commissions and ~~placement agent~~dealer manager fees) they have incurred on the Company’s behalf only to the extent that such expenses do not exceed ~~(A) 1.0% of the cumulative gross proceeds from the Private Placement and (B)~~ 1.5% of the cumulative gross proceeds from the Public ~~Offering. As of March 31, 2018, the Manager andSub-Manager,~~ ~~along with their respective affiliates, have incurred organization and offering costs of approximately $3.6 million. As of March 31, 2018, the~~Offerings. The Company ~~had~~ incurred an obligation to reimburse the Manager andSub-Manager for ~~approximately $0.7 million in organization and~~ offering costs based on actual amounts raised through the Public Offerings of ~~Class FA shares under its Private Placement, all of which was outstanding as of~~approximately $0.3 million and $0.9 million during the three months ended March 31, ~~2018.~~

2024 and 2023, respectively.

CNL STRATEGIC CAPITAL, LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2024

Base Management Fee to Manager andSub-Manager— The Company ~~will pay~~pays each of the Manager and theSub-Manager 50% of the total base management fee for their services under the Management Agreement and theSub-Management Agreement, subject to any reduction or deferral of any such fees pursuant to the terms of the Expense Support and Conditional Reimbursement Agreement described below. The Company incurred base management fees of approximately $4.0 million and $2.7 million during the three months ended March 31, 2024 and 2023, respectively.

The base management fee ~~will be~~is calculated for each share class at an annual rate of (i) for the~~non-founder~~ Non-founder shares of a particular class, 2% of the product of (x) the Company’s average gross assets and (y) the ratio of~~non-founder~~ ~~share~~ Non-founder shares Average Adjusted Capital (as defined below), for a particular class to total Average Adjusted Capital and (ii) for the ~~founder~~Founder shares of a particular class, 1% of the product of (x) the Company’s average gross assets and (y) the ratio of outstanding ~~founder share~~Founder shares Average Adjusted Capital for a particular class to total Average Adjusted Capital, in each case excluding cash, and ~~will be~~is payable monthly in arrears. The management fee for a certain month is calculated based on the average value of the Company’s gross assets at the end of that month and the immediately preceding calendar month. The determination of gross assets ~~will reflect~~reflects changes in the fair market value of the Company’s assets, which ~~will~~does not necessarily equal their notional value, reflecting both realized and unrealized capital ~~appreciation. Average Adjusted Capital of an applicable class is computed on the daily Adjusted Capital for such class for the actual number of days in such applicable month.~~appreciation or depreciation. The base management fee may be reduced or deferred by the Manager and theSub-Manager under the Management Agreement and the Expense Support and Conditional Reimbursement Agreement described below. For purposes of this calculation, “Average Adjusted Capital” for an applicable class is computed on the daily Adjusted Capital for such class for the actual number of days in such applicable quarter. The annual preference return of 7% and the relevant breakpoints of 8.75% and 7.777%, respectively, are also adjusted for the actual number of days in each calendar year, measured as of each calendar quarter end.month. “Adjusted Capital” is defined as cumulative proceeds generated from sales of ~~our~~the Company’s shares of a particular share class (including proceeds from the sale of shares pursuant to the distribution reinvestment plan, if any), net of ~~sales load (upfront~~upfront selling commissions and dealer manager ~~fees)~~fees (“sales load”), if any, reduced for the full amounts paid for share repurchases pursuant to any share repurchase program, if any, and adjusted for share conversions, if any, for such class.

Total Return Incentive Fee on Income to the Manager andSub-Manager — The Company ~~will~~ also ~~pay~~pays each of the Manager and theSub-Manager 50% of the total return incentive fee for their services under the Management Agreement and theSub-Management Agreement. The Company recorded total return incentive fees of approximately $4.5 million and $3.6 million during the three months ended March 31, 2024 and 2023, respectively.

The total return incentive fee ~~will be~~is based on the Total Return to Shareholders (as defined below) for each share class in any calendar year, payable annually in arrears. The Company ~~will accrue~~accrues (but does not pay) the total return incentive fee on a quarterly basis, to the extent that it is earned, and ~~will perform~~performs a final reconciliation and makes required payments at completion of each calendar year. The total return incentive fee may be reduced or deferred by the Manager and theSub-Manager under the Management Agreement and the Expense Support and Conditional Reimbursement Agreement described below. For purposes of this calculation, “Total Return to Shareholders” for any calendar quarter is calculated for each share class as the change in the net asset value for such share class plus total distributions for such share class calculated based on the Average Adjusted Capital for such class as of such calendar quarter end. The terms “Total Return toNon-founder Shareholders” and “Total Return to Founder Shareholders” means the Total Return to Shareholders specifically attributable to each particular share class of~~non-founder~~ Non-founder shares or ~~founder~~Founder shares, as applicable.

The total return incentive fee for each share class ~~will be~~is calculated as follows:

•No total return incentive fee will be payable in any calendar year in which the annual Total Return to Shareholders of a particular share class does not exceed 7% (the “Annual Preferred Return”).

•As it relates to the~~non-founder~~ Non-founder shares, all of the Total Return to Shareholders with respect to each particular share class of~~non-founder~~ Non-founder shares, if any, that exceeds the annual preferred return, but is less than or equal to 8.75%, or the~~“non-founder~~ “Non-founder breakpoint,” in any calendar year, will be payable to the Manager(“ (“Non-founder Catch Up”). TheNon-Founder Catch Up is intended to provide an incentive fee of 20% of the Total Return toNon-founder Shareholders of a particular share class once the Total Return toNon-founder Shareholders of a particular class exceeds 8.75% in any calendar year.

•As it relates to ~~founder~~Founder shares, all of the Total Return to Founder Shareholders with respect to each particular share class of Founder shares, if any, that exceeds the annual preferred return, but is less than or equal to 7.777%, or the “founder breakpoint,” in any calendar year, will be payable to the Manager (“Founder Catch Up”). The Founder Catch Up is intended to provide an incentive fee of 10% of the Total Return to Founder Shareholders of a particular share class once the Total Return to Founder Shareholders of a particular class exceeds 7.777% in any calendar year.

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

•For any quarter in which the Total Return to Shareholders of a particular share class exceeds the relevant breakpoint, the total return incentive fee of a particular share class shall equal, for~~non-founder~~ Non-founder shares, 20% of the Total Return toNon-founder Shareholders of a particular class, and for ~~founder~~Founder shares, 10% of the Total Return to Founder Shareholders of a particular class, in each case because the annual preferred and relevant catch ups will have been achieved.

•For purposes of calculating the Total Return to Shareholders, the change in the Company’s net asset value is subject to a High Water Mark. The “High Water Mark” is equal to the highestyear-end net asset value, for each share class of the Company since inception, adjusted for any special distributions resulting from the sale of the Company’s assets, provided such adjustment is approved by the Company’s board of directors. If, as of each calendar year end, the Company’s net asset value for the applicable share class is (A) above the High Water Mark, then, for such calendar year, the Total Return to Shareholders calculation will include the increase in the Company’s net asset value for such share class in excess of the High Water Mark, and (B) if the Company’s net asset value for the applicable share class is below the High Water Mark, for such calendar year, (i) any increase in the Company’s per share net asset value will be disregarded in the calculation of Total Return to Shareholders for such share class while (ii) any decrease in the Company’s per share net asset value will be included in the calculation of Total Return to Shareholders for such share class. ~~For~~With respect to the ~~year ending~~calculation of Total Return to Shareholders, the following tables provides the applicable High Water Marks for the years ended December 31, ~~2018,~~2024 and 2023:


For the year ended:	Class FA		Class A		Class T		Class D		Class I		Class S
December 31, 2024	$	36.67	$	33.57	$	33.64	$	33.31	$	34.06	$	37.25
December 31, 2023	34.90		32.45		32.46		32.11		32.88		35.39

For purposes of this calculation, “Average Adjusted Capital” for an applicable class is computed on the ~~High Water Mark will be $24.75.~~

daily Adjusted Capital for such class for the actual number of days in such applicable quarter. The ~~Company did not incur any incentive fees during~~annual preferred return of 7% and the ~~period from February 7, 2018 (commencement~~relevant breakpoints of ~~operations) through March 31, 2018.~~

8.75% and 7.777%, respectively, are also adjusted for the actual number of days in each calendar year, measured as of each calendar quarter end.

Reimbursement to Manager andSub-Manager for Operating Expenses and Pursuit Costs — The Company ~~will reimburse~~reimburses the Manager and theSub-Manager and their respective affiliates for certain third party operating ~~costs~~expenses and ~~expenses of third parties~~pursuit costs incurred in connection with their provision of services to the Company, including fees, costs, expenses, liabilities and obligations relating to the Company’s activities, acquisitions, dispositions, financings and business, subject to the terms of the Company’s limited liability company agreement, the Management Agreement, theSub-Management Agreement and the Expense Support and Conditional Reimbursement Agreement (as defined below). The Company ~~will~~does not reimburse the Manager andSub-Manager for administrative services performed by the Manager orSub-Manager for the benefit of the Company.

Expense Support and Conditional Reimbursement Agreement— The Company entered into an expense support and conditional reimbursement agreement with the Manager and theSub-Manager, as amended, (the “Expense Support and Conditional Reimbursement Agreement”), which became effective on February 7, 2018, pursuant to which each of the Manager and theSub-Manager agrees to reduce the payment of base management fees, total return incentive fees and the reimbursements of reimbursable expenses due to the Manager and theSub-Manager under the Management Agreement and theSub-Management Agreement, as applicable, to the extent that the Company’s annual regular cash distributions exceed its annual net income (with certain adjustments). The amount of such expense support is equal to the annual (calendar year) excess, if any, of (a) the distributions (as defined in the Expense Support and Conditional Reimbursement Agreement) declared and paid (net of the Company’s distribution reinvestment plan) to shareholders minus (b) the available operating funds, as defined in the Expense Support and Conditional Reimbursement Agreement (the “Expense Support”).

The Expense Support amount ~~will be~~is borne equally by the Manager and theSub-Manager and ~~will be~~is calculated as of the last business day of the calendar year. ~~Beginning on February 7, 2018 and continuing until~~Until the Expense Support and Conditional Reimbursement Agreement is terminated, the Manager andSub-Manager shall equally conditionally reduce the payment of fees and reimbursements of reimbursable expenses in an amount equal to the conditional waiver amount (as defined in and subject to limitations described in the Expense Support and Conditional Reimbursement Agreement). The term of the Expense Support and Conditional Reimbursement Agreement has the same initial term and renewal terms as the Management Agreement or theSub-Management Agreement, as applicable, to the Manager or theSub-Manager.

Expense support is paid by the Manager and Sub-Manager annually in arrears.

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

If, on the last business day of the calendar year, the annual (calendar year)year-to-date available operating funds exceeds the sum of the annual (calendar year)year-to-date distributions paid per share class (the “Excess Operating Funds”), the Company ~~will use~~uses such Excess Operating Funds to pay the Manager and theSub-Manager all or a portion of the outstanding unreimbursed Expense Support amounts for each share class, as applicable, subject to certain conditions (the “Conditional Reimbursements”) as described further in the Expense Support and Conditional Reimbursement Agreement. The Company’s obligation to make Conditional Reimbursements shall automatically terminate and be of no further effect three years following the date which the Expense Support amount was provided and to which such Conditional Reimbursement relates, as described further in the Expense Support and Conditional Reimbursement Agreement.

Since inception, the Company has received cumulative Expense Support of approximately $5.1 million. Of the Expense Support received as of March 31, 2024, approximately $4.9 million had been reimbursed and approximately $0.2 million was no longer eligible for reimbursement. As of March 31, 2024, there was no remaining amount of Expense Support collected from the Manager and Sub-Manager subject to reimbursement. Additionally, the Company accrued expense support due from the Manager and Sub-Manager of approximately $0.3 million and $0.4 million during the three months ended March 31, 2024 and 2023, respectively.

Distributions

Individuals and entities affiliated with the Manager and Sub-Manager owned approximately 0.4 million shares as of March 31, 2024 and 2023. These individuals and entities received distributions from the Company of approximately $0.1 million during the three months ended March 31, 2024 and 2023, respectively.

Related party fees and expenses incurred ~~during~~for the ~~period February 7, 2018 (commencement of operations) through~~three months ended March 31, ~~2018~~2024 and 2023 are summarized ~~below:~~


~~Related Party~~	~~Source Agreement & Description~~	~~Period from February 7,~~ ~~2018 (commencement of~~ ~~operations) through~~ ~~March 31, 2018~~
~~Manager and Sub-Manager~~	~~Management Agreement andSub-Management~~ ~~Agreement:~~ ~~Organization and offering reimbursement~~⁽¹⁾ ~~Base management fees~~⁽¹⁾	$	~~707,046~~ ~~88,562~~
~~Manager andSub-Manager~~	~~Expense Support and Conditional Reimbursement Agreement:~~ ~~Expense Support Provided~~		~~(43,212~~	)
~~Manager~~	~~Administrative Services Agreement:~~ ~~Operating, administrative and compliance services~~⁽¹⁾		~~19,894~~

⁽¹⁾	~~Expenses subject to Expense Support.~~

below (in thousands):


		Three Months Ended March 31,
Related Party	Source Agreement & Description		2024		2023
Managing Dealer	Managing Dealer Agreement: Commissions		$	508	$	642
	Dealer manager fees		84		264
	Distribution and shareholder servicing fees		318		269
Manager and Sub-Manager	Management Agreement and Sub-Management Agreement: Offering expense reimbursement(1)(2)		256		904
	Base management fees(1)		4,018		2,663
	Total return incentive fees(1)		4,485		3,635
Manager and Sub-Manager	Expense Support and Conditional Reimbursement Agreement: Expense Support		(295)		(355)

	Expense Support and Condition Reimbursement Agreement: Reimbursement of Expense Support		—		242
Manager	Administrative Services Agreement: Reimbursement of third-party operating expenses(1)		28		25
Sub-Manager	Sub-Management Agreement: Reimbursement of third-party pursuit costs(1)(3)		505		185

FOOTNOTES:

(1)Expenses subject to Expense Support, if applicable.

(2)Offering expense reimbursements are capitalized on the Company’s condensed consolidated statements of assets and liabilities as deferred offering expenses and expensed to the Company’s condensed consolidated statements of operations over the lesser of the offering period or 12 months.

(3)Includes reimbursement of third-party fees incurred for investments that did not close, including fees and expenses associated with performing due diligence reviews.

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

The following table presents amounts due ~~from (to)~~to related parties net as of March 31, ~~2018:~~

Due from related parties:

Expense Support
   $ 43,212


Total due from related parties
   43,212
Due to related parties:

Organization and offering expenses
   707,046
Base management fees
   88,562
Operating, administrative and compliance expense reimbursement
   19,894


Total due to related parties
   815,502


Net due to related parties
   $ (772,290 )

~~There were no amounts due to related parties as of~~2024 and December 31, ~~2017.~~

~~Other Related Party Transactions~~

~~Prior to~~2023 (in thousands):


	March 31, 2024		December 31, 2023
Due from related parties:
Expense Support	$	295	$	—
Total due from related parties	295		—
Due to related parties:
Total return incentive fees	$	(4,485)	$	(13,506)
Reimbursement of Expense Support	—		(644)
Base management fees	(1,390)		(1,338)
Offering expenses	(134)		(92)
Distribution and shareholder servicing fees	(110)		(106)
Reimbursement of third-party operating expenses and pursuit costs	(20)		(101)
Total due to related parties	$	(6,139)	$	(15,787)

6. Distributions

The Company’s board of directors declared distributions on a monthly basis in each of the three months ended March 31, 2024 and 2023 (three record dates). The Company’s ~~acquisition~~distributions are paid in the same month as the declared record date. The following table reflects the total distributions declared during the three months ended March 31, 2024 and 2023 (in thousands except per share data):


	Three Months Ended March 31,
	2024						2023
Distribution Period	Distributions Declared(1)		Distributions Reinvested(2)		Cash Distributions Net of Distributions Reinvested(2)		Distributions Declared(1)(2)		Distributions Reinvested(2)		Cash Distributions Net of Distributions Reinvested(2)
First Quarter	$	8,807	$	4,056	$	4,751	$	6,601	$	2,590	$	4,011

FOOTNOTES:

(1) The Company’s board of ~~Lawn Doctor and Polyform~~directors declared distributions per share on a monthly basis. See Note 12. “Financial Highlights” for distributions declared by share class. Monthly distributions declared per share for each share class were as ~~described in Note 3. “Investments,” Lawn Doctor and Polyform were majority owned by an affiliate of theSub-Manager.~~

~~6. Distributions~~

follows:


Record Date Period	Class FA		Class A		Class T		Class D		Class I		Class S
January 1, 2024 - March 31, 2024	$	0.104167	$	0.104167	$	0.083333	$	0.093750	$	0.104167	$	0.104167
January 1, 2023 - March 31, 2023	0.104167		0.104167		0.083333		0.093750		0.104167		0.104167

(2) Amounts based on distribution record date.

The ~~total and the~~ sources of declared distributions on a GAAP basis ~~for the period from February 7, 2018 (commencement of operations) through March 31, 2018 are presented in the tables below.~~

   Period from February 7, 2018 (commencement of operations)
through March 31, 2018
   Class FA
   Per Share    Amount    Allocation
Total Declared Distributions
   $ 0.09    $ 302,841    100.0 %
From net investment income
   $ 0.09    $ 302,841    100.0 %

were as follows (in thousands):


	Three Months Ended March 31,
	2024				2023
	Amount		% of Distributions Declared		Amount		% of Distributions Declared
Net investment income(1)	$	4,721	53.6	%	$	4,911	74.4	%
Distributions in excess of net investment income(2)	4,086		46.4		1,690		25.6
Total distributions declared	$	8,807	100.0	%	$	6,601	100.0	%

FOOTNOTES:

(1) Net investment income includes Expense Support, net of ~~$43,212 which supported distributions of $302,841 during~~$295 and $113 for the ~~period from February 7, 2018 (commencement of operations) through~~three months ended March 31, ~~2018.~~

~~7. Capital Transactions~~

~~As of December 31, 2017, the Company had issued 4,000 shares of the Company’s Class FA shares, to each of the Manager~~2024 and~~Sub-Manager,~~ ~~for an aggregate purchase price of $200,000 (total of 8,000 Class FA shares). No selling commissions or dealer manager fees were paid in connection with the issuances.~~

On February 7, 2018, the Company commenced operations when it met the minimum offering requirement of $80 million in Class FA shares under its Private Placement and issued approximately 3.3 million shares of Class FA shares for aggregate gross proceeds of $81.7 million. The Company did not incur any selling commissions or placement agent fees from the sale of the approximately 3.3 million Class FA shares sold under the terms of the Private Placement. 2023, respectively. See Note 5. “Related Party Transactions” for additional ~~information~~information.

(2) Consists of distributions made from offering proceeds for the periods presented.

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

In March 2024, the Company’s board of directors declared a monthly cash distribution on the outstanding shares ~~issued to the Manager,Sub-Manager~~ ~~and their affiliates.~~

~~Private Placement~~

~~The Company offered through the Private Placement up to $85 million~~ of all classes of common shares of record on April 26, 2024 of $0.104167 per share for Class FA shares, ~~and up to $115 million of~~$0.104167 per share for Class A shares, ~~on a best efforts basis, which meant that~~$0.083333 per share for Class T shares, $0.093750 per share for Class D shares, $0.104167 per share for Class I shares and $0.104167 per share for Class S shares.

7. Capital Transactions

Public Offerings

Under the ~~Placement Agent, used its best efforts but was not required to sell any specific amount of shares. On February 7, 2018,~~Follow-On Public Offering, the Company ~~met the minimum offering requirement of $80 million in Class FA shares under the Private Placement~~has offered and the Company issued approximately 3.3 million Class FA shares at $25.00 per Class FA share resulting in gross proceeds of approximately $81.7 million. No Class A shares were sold under the Private Placement. There was no selling commission or Placement Agent fee for the sale of Class FA shares. The Class FA shares and Class A shares in the Private Placement were offered for sale onlycontinues to ~~persons that were “accredited investors,” as that term is defined under the Securities Act of 1933, as amended (the “Securities Act”), and Regulation D promulgated thereunder.~~

~~Public Offering~~

~~Once the Registration Statement became effective on March 7, 2018, the Company began offering~~offer up to ~~$1,000,000,000~~$1.0 billion of ~~Shares,~~shares, on a best efforts basis, which means that CNL Securities Corp., as the Managing Dealer of the Follow-On Public Offering, ~~will use~~uses its best ~~efforts~~effort but is not required to sell any specific amount of ~~Shares.~~shares. The Company is offering, in any combination, four classes of ~~Shares~~shares in the Follow-On Public Offering: Class A shares, Class T shares, Class D shares and Class I shares. The initial minimum permitted purchase amount is $5,000 in ~~Shares. The initial per share Public Offering price was $27.32 per Class A share, $26.25 per Class T share, $25.00 per Class D share and $25.00 per Class I share.~~shares. There are differing selling fees and commissions for each share class. The Company ~~will~~ also ~~pay annual~~pays distribution and shareholder servicing fees, subject to certain limits, on the Class T and Class D shares sold in the Public ~~Offering~~Offerings (excluding sales pursuant to the Company’s distribution reinvestment plan). ~~See Note 10. “Subsequent Events” for information on changes to the Public Offering~~The public offering price, selling commissions and dealer manager fees per share ~~class.~~

class are determined monthly as approved by the Company’s board of directors. As of March 28, 2024, the public offering price was $36.78 per Class A share, $35.38 per Class T share, $33.38 per Class D share and $34.13 per Class I share.

The Company is also offering, in any combination, up to ~~$100,000,000~~$100.0 million of Class A shares, Class T shares, Class D shares and Class I shares to be issued pursuant to its distribution reinvestment plan. The Public Offering has a minimum offering requirement of $2 million in Shares under the Private Placement or the Public Offering. As of February 7, 2018, the Company had met the minimum offering requirement of $80 million in Class FA shares under the Private Placement.

See Note ~~10.~~13. “Subsequent Events” for additional information related to the Follow-On Public Offering.

The following ~~table summarizes~~tables summarize the total shares issued and proceeds received by share class in connection with the ~~Private Placement~~Public Offerings, excluding shares repurchased through the Share Repurchase Program described further below, for the ~~period~~three months ended March 31, ~~2018.~~

   Period from February 7, 2018
(commencement of operations)
through March 31, 2018
   Class FA
   Shares    Amount
Gross proceeds
   3,258,260    $ 81,456,500
Up-front selling commissions and dealer manager fees⁽¹⁾
   —      —




Net proceeds to Company
   3,258,260    $ 81,456,500




Average net proceeds per share
   $25.00

⁽¹⁾	~~The Company did not incur any selling commissions or placement agent fees from the sale of the approximately 3.3 million Class FA shares sold under the terms of the Private Placement.~~

~~8. Commitment & Contingences~~

2024 and 2023 (in thousands except per share data):


	Three Months Ended March 31, 2024
	Proceeds from Public Offerings							Distributions Reinvested			Total
Share Class	Shares Issued	Gross Proceeds		Sales Load(1)		Net Proceeds to Company		Shares Issued	Proceeds to Company		Shares Issued	Net Proceeds to Company		Average Net Proceeds per Share

Class A	598	$	20,524	$	(442)	$	20,082	34	$	1,132	632	$	21,214	$	33.59
Class T	92	3,231		(150)		3,081		13	452		105	3,533		33.63
Class D	107	3,563		—		3,563		13	447		120	4,010		33.32
Class I	755	25,738		—		25,738		60	2,025		815	27,763		34.07

	1,552	$	53,056	$	(592)	$	52,464	120	$	4,056	1,672	$	56,520	$	33.81


	Three Months Ended March 31, 2023
	Proceeds from Public Offerings							Distributions Reinvested			Total
Share Class	Shares Issued	Gross Proceeds		Sales Load(1)		Net Proceeds to Company		Shares Issued	Proceeds to Company		Shares Issued	Net Proceeds to Company(2)		Average Net Proceeds per Share

Class A	360	$	12,248	$	(464)	$	11,784	16	$	505	376	$	12,289	$	32.70
Class T	278	9,511		(442)		9,069		12	403		290	9,472		32.62
Class D	169	5,446		—		5,446		10	329		179	5,775		32.32
Class I	999	33,061		—		33,061		41	1,353		1,040	34,414		33.10

	1,806	$	60,266	$	(906)	$	59,360	79	$	2,590	1,885	$	61,950	$	32.87

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

FOOTNOTES:

(1)The Company incurs selling commissions and dealer manager fees on the sale of Class A and Class T shares sold through the Public Offerings. See Note 5. “Related Party Transactions” for additional information regarding up-front selling commissions and dealer manager fees.

(2)Approximately $24.9 million of net proceeds for shares sold and issued on March 31, 2023 were received in cash in April 2023.

Share Repurchase Program

In accordance with the Share Repurchase Program, the total amount of aggregate repurchases of Class FA, Class A, Class T, Class D, Class I and Class S shares is limited to up to 2.5% of the aggregate net asset value per calendar quarter (based on the aggregate net asset value as of the last date of the month immediately prior to the repurchase date) and up to 10% of the aggregate net asset value per year (based on the average aggregate net asset value as of the end of each of the Company’s trailing four quarters). At the sole discretion of the Company’s board of directors, the Company may use sources, including, but not limited to, offering proceeds and borrowings to repurchase shares.

During the three months ended March 31, 2024 and 2023, the Company received requests for the repurchase of approximately $13.8 million and $2.5 million, respectively, of the Company’s common shares. The Company’s board of directors approved the repurchase requests.

The following table summarizes the shares repurchased during the three months ended March 31, 2024 and 2023 (in thousands except per share data):


	Shares Repurchased	Total Consideration		Average Price Paid per Share
Class FA	72	$	2,675	$	36.82
Class A	37	1,252		33.65
Class T	97	3,242		33.70
Class D	19	645		33.38
Class I	173	5,900		34.13
Class S	2	66		37.41
Three Months Ended March 31, 2024	400	$	13,780	$	34.45


	Shares Repurchased	Total Consideration		Average Price Paid per Share
Class FA	16	$	578	$	35.26
Class A	10	335		32.72
Class T	3	105		32.69
Class D	6	180		32.36
Class I	38	1,257		33.16
Class S	1	36		35.77
Three Months Ended March 31, 2023	74	$	2,491	$	33.52

As of March 31, 2024 and December 31, 2023, the Company had a payable for shares repurchased of approximately $13.8 million and $8.2 million, respectively, which were paid in April and January 2024, respectively.

Share Conversions

Class T and Class D shares are converted into Class A shares once the maximum amount of distribution and shareholder servicing fees for those particular shares has been met. The shares to be converted are multiplied by the applicable conversion rate, the numerator of which is the net asset value per share of the share class being converted and the denominator of which is the net asset value per Class A share.

During the three months ended March 31, 2024, approximately 85,000 Class T shares were converted to approximately 85,000 Class A shares at an average conversion rate of 1.00. During the three months ended March 31, 2023, approximately 24,000 Class T shares were converted to approximately 24,000 Class A shares at an average conversion rate of 1.00.

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

8. Borrowings

In August 2022, the Company entered into a loan agreement (the “2022 Loan Agreement”) and related promissory note with First Horizon Bank for a $50.0 million revolving line of credit (the “2022 Line of Credit”). In connection with the 2022 Loan Agreement, the Company was required to pay a total commitment fee to First Horizon Bank of $0.25 million, of which $0.13 million was paid during the three months ended March 31, 2023.

The Company is required to pay a fee to First Horizon with each advance under the 2022 Line of Credit in the amount equal to 0.05% of the amount of each borrowing. The Company is also required to pay interest on the borrowed amount at a rate per year equal to the 30-day Secured Overnight Financing Rate (“SOFR”) plus 2.75%. Interest payments are due monthly in arrears. Furthermore, the Company is required to pay a quarterly unused line fee when the average outstanding balance of the 2022 Line of Credit is less than $25.0 million. Unused line fees are due quarterly in arrears.

The Company may prepay, without penalty, all or any part of the borrowings under the 2022 Loan Agreement at any time and such borrowings are required to be repaid within 180 days of the borrowing date. Under the 2022 Loan Agreement, the Company is required to comply with certain covenants including the provision of financial statements on a quarterly basis, a restriction from incurring any debt, and restrictions on the transfer and sale of assets held by certain subsidiaries. Additionally, the Company has a covenant related to its fair market value of investments as a multiple of borrowings outstanding.

In connection with the 2022 Loan Agreement, the Company entered into a pledge and security agreement (“Pledge Agreement”) in favor of the lender under the 2022 Line of Credit. Under the Pledge Agreement, the Company is required to contribute proceeds from the Follow-On Public Offering to pay down the outstanding debt to the extent there are any borrowings outstanding under the 2022 Loan Agreement.

The 2022 Line of Credit was available for advances through August 2023 and the Company extended the 2022 Line of Credit through December 2023. The 2022 Line of Credit was expired as of December 31, 2023.

In February 2024, CNL Strategic Capital B, Inc. (“Borrower”), a wholly-owned subsidiary of the Company and Valley National Bank, entered into a Revolving Loan Agreement (the “2024 Loan Agreement”) for a $50.0 million revolving line of credit (the “2024 Line of Credit”). Unless extended, the Line of Credit has a maturity date of February 15, 2025. In connection with the 2024 Line of Credit, the Borrower paid a total commitment fee and Valley National Bank expenses of $0.16 million. The Borrower is required to pay interest on any borrowed amounts under the 2024 Line of Credit at a rate per year equal to the 1-Month Term SOFR plus 2.75%. Interest payments are due on the first calendar day of the month in arrears. Furthermore, the Borrower is required to pay a quarterly unused borrowing fee at an annual rate of 0.15% on the difference between (i) total 2024 Line of Credit amount and (ii) the aggregate average daily balance of outstanding borrowings under the 2024 Line of Credit during such quarter. The Borrower may prepay, without penalty, all or any part of the borrowings under the 2024 Loan Agreement at any time and such borrowings are required to be repaid within 180 days of the borrowing date. Under the 2024 Loan Agreement, the Company is required to comply with certain covenants including the requirement to provide certain financial and compliance reports to Valley National Bank and restrictions on incurring certain levels of additional debt by the Company.

In February 2024, the Company entered into a Guaranty agreement to act as a guarantor of the Borrower’s outstanding borrowings under the 2024 Loan Agreement (the “Guaranty Agreement”). On February 15, 2024, the Borrower and the Company also entered into a pledge and assignment of bank and deposit accounts (“2024 Pledge Agreement”) in favor of Valley National Bank. Under the 2024 Pledge Agreement, the Company is required to maintain accounts with Valley National Bank, including to contribute proceeds from the Company’s offering, as a pledge of collateral to pay down the outstanding debt to the extent there are any borrowings outstanding under the 2024 Loan Agreement.

The Company had not borrowed any amounts under the 2024 Line of Credit as of March 31, 2024.

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

9. Income Taxes

The Company incurs income tax expense (benefit) related to its Taxable Subsidiaries. The components of income tax expense (benefit) were as follows during the three months ended March 31, 2024 and 2023 (in thousands):


	Three Months Ended March 31,
		2024		2023
Current tax expense		$	—	$	(27)
Deferred tax expense (benefit)		771		1,524
Total income tax expense (benefit)		$	771	$	1,497

The effective tax rate for the three months ended March 31, 2024 and 2023 was 3.5% and 7.7%, respectively. The primary items giving rise to the difference between the 21.0% federal statutory rate applicable to corporations and the effective tax rates are due to state taxes and the benefits of the partnership structure.

Significant components of the Company’s deferred tax assets and liabilities as of March 31, 2024 and December 31, 2023 were as follows (in thousands):


	March 31, 2024		December 31, 2023
Deferred tax assets:
Carryforwards for net operating loss	$	1,155	$	1,249
Unrealized depreciation on investments	861		913
Other	7		—
Valuation allowance	(1,282)		(1,324)
Total deferred tax assets	741		838
Deferred tax liabilities:

Unrealized appreciation on investments	(8,974)		(8,300)
Total deferred tax liabilities	(8,974)		(8,300)
Deferred tax liabilities, net	$	(8,233)	$	(7,462)

10. Concentrations of Risk

The Company had five portfolio companies which met at least one of the significance tests under Rule 10-01(b) of Regulation S-X for at least one of the periods presented in the condensed consolidated financial statements.

The portfolio companies are required to make monthly interest payments on their debt, with the debt principal due upon maturity. Failure of any of these portfolio companies to pay contractual interest payments could have a material adverse effect on the Company’s results of operations and cash flows from operations, which would impact its ability to make distributions to shareholders.

11. Commitments & Contingencies

See Note 5. “Related Party Transactions” for information on contingent amounts due to the Manager andSub-Manager for the reimbursement of ~~organization and~~ offering costs under the Public ~~Offering.~~

9.Offerings and for the reimbursement of Expense Support.

From time to time, the Company and officers or directors of the Company may be party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of the Company’s rights under contracts with its businesses. As of March 31, 2024, the Company was not involved in any legal proceedings.

In addition, in the normal course of business, the Company enters into contracts with its vendors and others that provide for general indemnifications. The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company. However, based on experience, the Company expects that risk of loss to be remote.

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

12. Financial Highlights

The following ~~is a schedule~~are schedules of financial highlights of the Company attributed to ~~Class FA~~each class of shares for the ~~period from February 7, 2018 (commencement of operations) through~~three months ended March 31, ~~2018.~~

   Period ended
March 31, 2018⁽¹⁾
   Class FA Shares⁽²⁾
OPERATING PERFORMANCE PER SHARE

Net Asset Value, Beginning of Period
   $ 25.00


Net investment income, before expense support⁽³⁾
   0.08
Expense support⁽³⁾
   0.01


Net investment income⁽³⁾
   0.09
Net realized and unrealized gains⁽³⁾⁽⁴⁾
   0.16


Net increase resulting from investment operations
   0.25


Distributions from net investment income⁽⁵⁾
   (0.09 )


Net Asset Value, End of Period
   $ 25.16


Net assets, end of period
   $ 82,180,949
Average net assets⁽⁶⁾
   $ 81,716,492
Shares outstanding, end of period
   3,266,260
Weighted average shares outstanding
   3,266,430
Total investment return based on net asset value⁽⁷⁾
   1.01 %
RATIOS/SUPPLEMENTAL DATA (annualized):

Ratios to average net assets:⁽⁶⁾⁽⁸⁾

Total operating expenses before expense support
   3.95 %
Total operating expenses after expense support
   3.58 %
Net investment income
   2.55 %
Portfolio turnover rate
   —   %

⁽¹⁾	~~Operations commenced on February 7, 2018.~~

⁽²⁾	~~As of March 31, 2018, the Company had not sold any Class A, Class T, Class D or Class I shares.~~

⁽³⁾	~~The per share data was derived by using the weighted average shares outstanding during the period.~~

⁽⁴⁾

The amount shown at this caption is the balancing figure derived from the other figures in the schedule. The amount shown at this caption for a share outstanding throughout the period may not agree with the change in the aggregate gains and losses in portfolio securities for the period because of the timing of sales of the Company’s shares in relation to fluctuating market values for the portfolio.

⁽⁵⁾	The per share data for distributions is the actual amount of distributions paid or payable per common share outstanding during the entire period; distributions per share are rounded to the nearest $0.01.

⁽⁶⁾	~~The computation of average net assets during the period is based on the monthly value of net assets.~~

⁽⁷⁾

Total investment return based on asset value is a measure of the change in total value for shareholders who held the Company’s common shares at the beginning and end of the period, including distributions declared during the period. Total investment return based on net asset value is based on (i) net asset value per share on the first day of the period, (ii) the net asset value per share on the last day of the period, of (A) one share plus (B) any fractional shares issued in connection with the reinvestment of monthly distributions, and (iii) distributions payable relating to one share, if any, on the last day of the period. The total investment return based on net asset value calculation assumes that (i) monthly cash distributions are reinvested in accordance with the Company’s distribution reinvestment plan and (ii) the fractional shares issued pursuant to the distribution reinvestment plan are issued at the then current public offering price, net of sales load, on each monthly distribution payment date. Since there is no public market for the Company’s shares, terminal market value per share is assumed to be equal to net asset value per share on the last day of the period presented. The Company’s performance changes over time and currently may be different than that shown above. Past performance is no guarantee of future results. Investment performance is presented without regard to sales load that may be incurred by shareholders in the purchase of the Company’s shares.

⁽⁸⁾	~~Annualized assuming consistent results over a full fiscal year consisting of 365 days; however, this may not be indicative of actual results over a full fiscal year.~~

~~10.~~2024 and 2023 (in thousands except per share data):


	Three Months Ended March 31, 2024
	Class FA Shares			Class A Shares			Class T Shares			Class D Shares			Class I Shares			Class S Shares
OPERATING PERFORMANCE PER SHARE
Net Asset Value, Beginning of Period	$	36.67		$	33.57		$	33.64		$	33.31		$	34.06		$	37.25
Net investment income, before Expense Support (reimbursement)(1)	0.30			0.13			0.06			0.10			0.13			0.29
Expense Support (reimbursement)(1)(2)	—			—			—			—			0.02			0.02
Net investment income(1)	0.30			0.13			0.06			0.10			0.15			0.31
Net realized and unrealized gains, net of taxes(1)(3)	0.54			0.55			0.54			0.55			0.54			0.55
Net increase resulting from investment operations	0.84			0.68			0.60			0.65			0.69			0.86
Distributions to shareholders(4)	(0.31)			(0.31)			(0.25)			(0.28)			(0.31)			(0.31)

Net decrease resulting from distributions to shareholders	(0.31)			(0.31)			(0.25)			(0.28)			(0.31)			(0.31)
Net Asset Value, End of Period	$	37.20		$	33.94		$	33.99		$	33.68		$	34.44		$	37.80

Net assets, end of period	$	152,782		$	197,940		$	86,765		$	92,046		$	438,695		$	66,005
Average net assets(5)	$	153,445		$	181,432		$	89,105		$	88,861		$	421,591		$	65,221
Shares outstanding, end of period	4,107			5,832			2,552			2,733			12,737			1,746
Distributions declared	$	1,306		$	1,683		$	662		$	749		$	3,861		$	546
Total investment return based on net asset value before total return incentive fee(6)	2.56		%	2.54		%	2.25		%	2.45		%	2.54		%	2.59		%
Total investment return based on net asset value after total return incentive fee(6)	2.25		%	2.05		%	1.79		%	1.97		%	2.05		%	2.33		%
RATIOS/SUPPLEMENTAL DATA (not annualized):
Ratios to average net assets:(5)(7)
Total operating expenses before total return incentive fee	0.30		%	0.68		%	0.86		%	0.75		%	0.64		%	0.32		%
Total operating expenses before Expense Support (reimbursement)	0.55		%	1.21		%	1.30		%	1.24		%	1.14		%	0.58		%
Total operating expenses after Expense Support (reimbursement)	0.55		%	1.21		%	1.30		%	1.24		%	1.08		%	0.52		%
Net investment income before total return incentive fee(8)	1.07		%	0.90		%	0.62		%	0.79		%	0.94		%	1.09		%
Net investment income	0.81		%	0.37		%	0.18		%	0.30		%	0.43		%	0.83		%

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024


	Three Months Ended March 31, 2023
	Class FA Shares			Class A Shares			Class T Shares			Class D Shares			Class I Shares			Class S Shares
OPERATING PERFORMANCE PER SHARE
Net Asset Value, Beginning of Period	$	34.90		$	32.45		$	32.46		$	32.11		$	32.88		$	35.39
Net investment income before Expense Support (reimbursement)(1)	0.38			0.17			0.11			0.15			0.17			0.37
Expense Support (reimbursement)(1)(2)	(0.05)			0.02			—			—			0.04			—
Net investment income(1)	0.33			0.19			0.11			0.15			0.21			0.37
Net realized and unrealized gains, net of taxes(1)(3)	0.58			0.59			0.59			0.59			0.58			0.58
Net increase resulting from investment operations	0.91			0.78			0.70			0.74			0.79			0.95
Distributions to shareholders(4)	(0.31)			(0.31)			(0.25)			(0.28)			(0.31)			(0.31)

Net decrease resulting from distributions to shareholders	(0.31)			(0.31)			(0.25)			(0.28)			(0.31)			(0.31)

Net Asset Value, End of Period	$	35.50		$	32.92		$	32.91		$	32.57		$	33.36		$	36.03

Net assets, end of period	$	150,083		$	85,090		$	85,762		$	69,384		$	326,074		$	63,567
Average net assets(5)	$	149,170		$	73,964		$	80,239		$	65,138		$	300,817		$	62,927
Shares outstanding, end of period	4,228			2,585			2,606			2,130			9,774			1,764
Distributions declared	$	1,326		$	706		$	614		$	566		$	2,837		$	552
Total investment return based on net asset value before total return incentive fee(6)	2.90		%	2.91		%	2.68		%	2.88		%	2.88		%	3.01		%
Total investment return based on net asset value after total return incentive fee(6)	2.58		%	2.42		%	2.17		%	2.32		%	2.42		%	2.71		%
RATIOS/SUPPLEMENTAL DATA (not annualized):
Ratios to average net assets:(5)(7)
Total operating expenses before total return incentive fee	0.30		%	0.85		%	1.01		%	0.84		%	0.76		%	0.32		%
Total operating expenses before Expense Support (reimbursement)	0.58		%	1.44		%	1.55		%	1.42		%	1.35		%	0.62		%
Total operating expenses after Expense Support (reimbursement)	0.74		%	1.39		%	1.55		%	1.42		%	1.24		%	0.62		%
Net investment income before total return incentive fee(8)	1.21		%	1.17		%	0.87		%	1.05		%	1.22		%	1.33		%
Net investment income	0.93		%	0.57		%	0.33		%	0.47		%	0.63		%	1.03		%

FOOTNOTES:

(1)The per share amounts presented are based on weighted average shares outstanding.

(2)Expense Support (reimbursement) is accrued throughout the year and is subject to a final calculation as of the last business day of the calendar year.

(3)The amount shown at this caption is the balancing figure derived from the other figures in the schedule. The amount shown at this caption for a share outstanding throughout the period may not agree with the change in the aggregate gains and losses in portfolio investments for the period because of the timing of sales and repurchases of the Company’s shares in relation to fluctuating fair values for the portfolio investments.

(4)The per share data for distributions is the actual amount of distributions paid or payable per common share outstanding during the entire period; distributions per share are rounded to the nearest $0.01.

(5)The computation of average net assets during the period is based on net assets measured at each month end, adjusted for capital contributions or withdrawals during the month.

(6)Total investment return is calculated for each share class as the change in the net asset value for such share class during the period and assuming all distributions are reinvested. Class FA assumes distributions are reinvested in Class A shares and all other share classes assume distributions are reinvested in the same share class, including Class S shares which do not participate in the distribution reinvestment plan. Amounts are not annualized and are not representative of total return as calculated for purposes of the total return incentive fee described in Note 5. “Related Party Transactions.” See footnote (8) below for information regarding the percentage of total incentive fees covered by expense support by share class for all periods presented. Since there is no public market for the Company’s shares, terminal market value per share is assumed to be equal to net asset value per share on the last day of the period presented. The Company’s performance changes over time and currently may be different than that shown above. Past performance is no guarantee of future results. Investment performance is presented without regard to sales load that may be incurred by shareholders in the purchase of the Company’s shares.

(7)Actual results may not be indicative of future results. Additionally, an individual investor’s ratios may vary from the ratios presented for a share class as a whole.

(8)Amounts represent net investment income before total return incentive fee and related expense support as a percentage of average net assets. For the three months ended March 31, 2024, approximately 12% and 23% of total return incentive fees for Class I and Class S, respectively, were covered by Expense Support and none of the total return incentive fees for Class FA, Class A, Class T or Class D were covered by Expense Support. For the three months ended March 31, 2023, approximately 8% and 18% of total return incentive fees for Class A and Class I, respectively, were covered by Expense Support and none of the total return incentive fees for Class FA, Class T, Class D or Class S were covered by Expense Support.

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

13. Subsequent Events

~~The~~

Distributions

In April 2024, the Company’s board of directors declared a monthly cash ~~distributions~~distribution on the outstanding shares of all classes of ~~the Company’s~~ common shares ~~based~~of record on ~~weekly record dates~~May 28, 2024 of $0.104167 per share for ~~the time period beginning on April 3, 2018 through~~Class FA shares, $0.104167 per share for Class A shares, $0.083333 per share for Class T shares, $0.093750 per share for Class D shares, $0.104167 per share for Class I shares and ~~including May 29, 2018, as set forth below:~~

Distribution
Record Date

Distribution
Payment Date
   Declared Distribution Per Share for Each Share Class

   Class FA    Class A    Class T    Class D    Class I
April 3, 2018
   May 10, 2018    $ 0.024038    $ 0.024038    $ 0.019231    $ 0.021635    $ 0.024038
April 10, 2018
   May 10, 2018    $ 0.024038    $ 0.024038    $ 0.019231    $ 0.021635    $ 0.024038
April 17, 2018
   May 10, 2018    $ 0.024038    $ 0.024038    $ 0.019231    $ 0.021635    $ 0.024038
April 24, 2018
   May 10, 2018    $ 0.024038    $ 0.024038    $ 0.019231    $ 0.021635    $ 0.024038
May 1, 2018
   June 11, 2018    $ 0.024038    $ 0.024038    $ 0.019231    $ 0.021635    $ 0.024038
May 8, 2018
   June 11, 2018    $ 0.024038    $ 0.024038    $ 0.019231    $ 0.021635    $ 0.024038
May 15, 2018
   June 11, 2018    $ 0.024038    $ 0.024038    $ 0.019231    $ 0.021635    $ 0.024038
May 22, 2018
   June 11, 2018    $ 0.024038    $ 0.024038    $ 0.019231    $ 0.021635    $ 0.024038
May 29, 2018
   June 11, 2018    $ 0.024038    $ 0.024038    $ 0.019231    $ 0.021635    $ 0.024038

$0.104167 per share for Class S shares.

Offerings

In April ~~2018,~~2024, the Company’s board of directors ~~also~~ approved new per share ~~public~~ offering prices for each share class in the Follow-On Public Offering. The new ~~public~~ offering prices ~~became~~are effective onas of April ~~27, 2018.~~30, 2024. The following table provides the new ~~public~~ offering prices and applicable upfront selling commissions and dealer manager fees for each share class available in the Follow-On Public Offering:

   Class A    Class T    Class D    Class I
Public Offering Price, Per Share
   $ 27.46    $ 26.38    $ 25.13    $ 25.13
Selling Commissions, Per Share
   $ 1.65    $ 0.79    $ —      $ —
Dealer Manager Fees, Per Share
   $ 0.68    $ 0.46    $ —      $ —


	Class A		Class T		Class D		Class I
Effective April 30, 2024:
Offering Price, Per Share	$	37.09	$	35.69	$	33.68	$	34.44
Selling Commissions, Per Share	2.23		1.07		—		—
Dealer Manager Fees, Per Share	0.92		0.63		—		—

Capital Transactions

During the period April 1, ~~2018~~2024 through May ~~10, 2018,~~8, 2024, the Company received additional net proceeds ~~of $450,000~~ from the ~~sale of 17,948 Class I shares from its~~Follow-On Public Offering and ~~net proceeds of $7,500 from the issuance of 299 Class A shares through its~~ distribution reinvestment ~~plan.~~

plan of the following (in thousands except per share data):


	Proceeds from Follow-On Public Offering							Distribution Reinvestment Plan			Total
Share Class	Shares	Gross Proceeds		Sales Load		Net Proceeds to Company		Shares	Gross Proceeds		Shares	Net Proceeds to Company		Average Net Proceeds per Share

Class A	187	$	6,491	$	(138)	$	6,353	12	$	413	199	$	6,766	$	34.00
Class T	22	773		(37)		736		4	147		26	883		33.96
Class D	57	1,941		—		1,941		5	152		62	2,093		33.76
Class I	217	7,471		—		7,471		21	707		238	8,178		34.36

	483	$	16,676	$	(175)	$	16,501	42	$	1,419	525	$	17,920	$	34.13

Table of Contents

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion is based on the unaudited condensed consolidated financial statements as of March 31, ~~2018~~2024 and December 31, 2023, and for the ~~period February 7, 2018 (commencement of operations) through~~three months ended March 31, ~~2018.~~2024 and 2023. Amounts as of December 31, 2023 included in the unaudited condensed consolidated statements of assets and liabilities have been derived from the audited consolidated financial statements as of that date. This information should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and the notes ~~thereto.~~thereto, as well as the audited consolidated financial statements, notes and management’s discussion and analysis included in our Annual Report on Form 10-K for the year ended December 31, 2023 (our “Form 10-K”). Capitalized terms used in this Item 2 have the same meaning as in the accompanying unaudited condensed financial statements ~~in Item 1~~ unless otherwise defined herein.

Statement Regarding Forward-Looking Information

Certain statements in this quarterly report on Form10-Q for the quarterly period ~~February 7, 2018 (commencement of operations) through~~ended March 31, ~~2018 (“Quarterly~~2024 (this “Quarterly Report”) constitute~~“forward-looking~~ “forward-looking statements.”Forward-looking statements are statements that do not relate strictly to historical or current facts, but reflect management’s current understandings, intentions, beliefs, plans, expectations, assumptions and/or predictions regarding the future of our business and its performance, the economy and other future conditions and forecasts of future events and circumstances.Forward-looking statements are typically identified by words such as “believes,” “expects,” “anticipates,” “intends,” “estimates,” “plans,” “continues,” “pro forma,” “may,” “will,” “seeks,” “should” and “could,” and words and terms of similar substance, although not all forward-looking statements include these words. The forward-looking statements contained in this Quarterly Report involve risks and uncertainties, including statements as to:

•our future operating results;

•our business prospects and the prospects of our businesses and other assets;

•unanticipated costs, delays and other difficulties in executing our business strategy;

•performance of our businesses and other assets relative to our expectations and the impact on our actual return on invested equity, as well as the cash provided by these assets;

•our contractual arrangements and relationships with third parties;

•actual and potential conflicts of interest with the Manager, theSub-Manager and their respective affiliates;

•the dependence of our future success on the general economy and its effect on the industries in which we ~~target;~~target, including rising interest rates, inflationary pressures, recessionary concerns or global supply chain issues;

•events or circumstances which undermine confidence in the financial markets or otherwise have a broad impact on financial markets, such as the sudden instability or collapse of large depository institutions or other significant corporations, terrorist attacks, natural orman-made disasters, pandemics or threatened or actual armed conflicts;

•the use, adequacy and availability of proceeds from ~~this~~our current public offering (“Follow-On Public Offering”), financing sources, working capital or borrowed money to finance a portion of our business strategy and to service our outstanding indebtedness;

•the timing of cash flows, if any, from our businesses and other assets;

•the ability of the Manager and theSub-Manager to locate suitable acquisition opportunities for us and to manage and operate our businesses and other assets;

•the ability of the Manager, theSub-Manager and their respective affiliates to attract and retain highly talented professionals;

•the ability to operate our business efficiently, manage costs (including general and administrative expenses) effectively and generate cash flow;

•the lack of a public trading market for our shares;

•the ability to make and the amount and timing of anticipated future distributions;

•estimated net asset value per share of our shares;

•the loss of our exemption from the definition of an “investment company” under the Investment Company ~~Act;~~Act of 1940, as amended (the “Investment Company Act”);

Table of Contents

•fiscal policies or inaction at the U.S. federal government level, which may lead to federal government shutdowns or negative impacts on the U.S economy;

•the degree and nature of our competition; or

•the effect of changes to government regulations, accounting rules or tax legislation.

Ourforward-looking statements are not guarantees of our future performance and shareholders are cautioned not to place undue reliance on anyforward-looking statements. While we believe ourforward-looking statements are reasonable, such statements are inherently susceptible to uncertainty and changes in circumstances. As with any projection or forecast,forward-looking statements are necessarily dependent on assumptions, data and/or methods that may be incorrect or imprecise, and may not be realized. Ourforward-looking statements are based on our current expectations and a variety of risks, uncertainties and other factors, many of which are beyond our ability to control or accurately predict.

Important factors that could cause our actual results to vary materially from those expressed or implied in ourforward-looking statements include, but are not limited to, the factors listed and described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the “Risk Factors” insections of the Company’s ~~prospectus~~documents filed from time to time with the ~~SEC pursuant~~U.S. Securities and Exchange Commission, including, but not limited to, ~~Rule 424(b)(3)~~our Form 10-K and ~~dated March 7, 2018 (our “Prospectus”) and Item 1A in Part II of~~ this Quarterly Report.

All written and oralforward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by these cautionary statements.Forward-looking statements speak only as of the date on which they are made; we undertake no obligation to, and expressly disclaim any obligation to, update or reviseforward-looking statements to reflect new information, changed assumptions, the occurrence of subsequent events, or changes to future operating results over time unless otherwise required by law.

Overview

CNL Strategic Capital, LLC is a limited liability company that primarily seeks to acquire and grow durable, middle-market U.S. businesses. We are externally managed by the Manager, CNL Strategic Capital Management, LLC, an entity that is registered as an investment adviser under the ~~Investment~~ Advisers ~~Act of 1940, as amended.~~Act. The Manager is controlled by CNL Financial Group, LLC, a private investment management firm specializing in alternative investment products. We have engaged the Manager under ~~a management agreement~~the Management Agreement pursuant to which the Manager is responsible for the overall management of our ~~activities. The Manager has engaged~~activities and sub-managed by the Sub-Manager, Levine Leichtman Strategic Capital, LLC, a registered investment ~~advisor,~~adviser, under a~~sub-management~~ ~~agreement~~the Sub-Management Agreement pursuant to which theSub-Manager is responsible for theday-to-day management of our assets. TheSub-Manager is an affiliate of Levine Leichtman Capital Partners, ~~Inc.~~

LLC.

The Manager and theSub-Manager are collectively responsible for sourcing potential ~~acquisition~~acquisitions and debt financing opportunities, subject to approval by the Manager’s management committee that such opportunity meets our investment objectives and final approval of such opportunity by our board of directors, and monitoring and managing the businesses we acquire and/or finance on an ongoing basis. TheSub-Manager is primarily responsible for analyzing and conducting due diligence on prospective acquisitions and debt financings, as well as the overall structuring of transactions.

~~We target, for acquisition,~~

Since we commenced operations on February 7, 2018, we have acquired equity and debt investments in 14 middle market U.S. businesses. Our businesses ~~that~~generally have a track record of stable and predictable operating performance, are highly cash flow generative ~~with annual revenues~~and have management teams who have a meaningful ownership stake in their respective company. As of ~~primarily between $25 million and $500 million. Our business strategy is to acquire~~March 31, 2024, we had ten investments structured as controlling equity ~~stakes~~interests in combination with ~~loan~~debt positions ~~in middle-market businesses. Our business strategy seeks to provide long-term capital appreciation~~ and current income, while protecting invested capital. In addition and to a lesser extent, we intend to acquire other debt and minority equity positions, which may include acquiring debt in the secondary market as wellfour investments structured as minority equity ~~stakes and loan positions via co-investments~~interests in combination with ~~other funds managed by theSub-Manager~~ ~~or their affiliates. We expect that these positions will comprise a minority~~debt positions. All of ~~its total assets.~~

our debt investments were current as of March 31, 2024.

We were formed as a Delaware limited liability company on August 9, 2016 and we operate and intend to continue to operate our business in a manner that will permit us to avoid registration under the Investment Company Act. We are not a “blank check” company within the meaning of Rule 419 of the Securities Act. We ~~did not commence~~commenced operations ~~until~~on February 7, 2018.

Table of Contents

Our Common Shares Offerings

Public Offerings

On March 7, 2018, ~~as described below.~~

Wewe commenced the Initial Public Offering of up to $1.1 billion of shares, which included up to $100.0 million of shares being offered through ~~a private placement~~our distribution reinvestment plan, pursuant to the Initial Registration Statement. On November 1, 2021, we commenced the Follow-On Public Offering of up to ~~$85~~$1.1 billion of shares, which includes up to $100.0 million of shares being offered through our distribution reinvestment plan, of our shares, upon which the Initial Registration Statement was deemed terminated.

Through March 31, 2024, we had received net proceeds from the Public Offerings of approximately $790.6 million, including approximately $32.3 million received through our distribution reinvestment plan. As of March 31, 2024, the public offering price was $36.78 per Class ~~FA limited liability company interests~~A share, $35.38 per Class T share, $33.38 per Class D share and ~~up to $115~~$34.13 per Class I share. See Note 7. “Capital Transactions” and Note 13. “Subsequent Events” in Item 1. “Financial Statements” for additional information regarding the Initial Public Offering.

Through March 31, 2024, we had incurred selling commissions and dealer manager fees of approximately $12.1 million from the sale of Class A ~~limited liability company interests (one~~shares and Class T shares in the Public Offerings. The Class D shares and Class I shares sold through March 31, 2024, were not subject to selling commissions and dealer manager fees. We also incurred obligations to reimburse the Manager and Sub-Manager for offering costs of approximately $10.7 million based on actual amounts raised through the ~~classes~~Public Offerings through March 31, 2024. These offering costs related to the Public Offerings were advanced by the Manager and Sub-Manager, as described further in Note 5. “Related Party Transactions” of ~~Shares that constitutenon-founder~~ ~~shares).~~

~~In October 2016, we confidentially submitted a registration statement on FormS-1~~ with the SEC in connection with the proposed offering of shares of our limited liability company interests (the “Public Offering” and together with the Private Placement, the “Offerings”). Through our Public Offering, weItem 1. “Financial Statements.”

We are currently offering, in any combination, four classes of shares: Class A shares, Class T shares, Class D shares and Class I ~~shares. See Note 7. “Capital Transactions” of Item 1. “Financial Statements” for additional information related to our Offerings.~~

~~On February 7, 2018, we commenced operations when we met the minimum offering requirement of $80 million in Class FA~~ shares under the Private Placement and issued approximately 3.3 million shares of Class FA shares for aggregate gross proceeds of $81.7 million, as described below under “Our Common Shares Offering.” On February 7, 2018, we acquired the initial businesses using a substantial portion of the net proceeds from the Private Placement. For a discussion of the initial businesses, see “Portfolio and Investment Activity” below.

On March 7, 2018, our Registration Statement was declared effective by the SEC and we began offering $1,000,000,000 of Shares under the Public Offering, as further described below under “Our Common Shares Offering–Public Offering.”

~~Our Common Shares Offering~~

~~As of December 31, 2017, we had issued 4,000 shares of the Company’s Class FA shares, to each of the Manager andSub-Manager,~~ ~~for an aggregate purchase price of $200,000 (total of 8,000 Class FA shares). No selling commissions or dealer manager fees were paid in connection with the issuances.~~

~~Private Placement~~

~~We offered~~(collectively, “Non-founder shares”) through the ~~Private Placement up to $85 million of Class FA shares and up to $115 million of Class A shares (one of the classes of Shares that constitutenon-founder~~ shares) on a best efforts basis, which meant that the Placement Agent in connection with the Private Placement used its best efforts but was not required to sell any specific amount of shares. On February 7, 2018, we commenced operations when we met our minimum offering requirement of $80 million in Class FA shares under the Private Placement and we issued approximately 3.3 million Class FA shares at $25.00 per Class FA share resulting in gross proceeds of approximately $81.7 million. The $81.7 million in gross proceeds included a cash capital contribution of $2.4 million from the Manager in exchange for 96,000 Class FA shares and a cash capital contribution of $9.5 million from CNL Strategic Capital Investment, LLC, which is indirectly controlled by James M. Seneff, Jr., the chairman of the Company, in exchange for 380,000 Class FA shares. The $81.7 million also included 96,000 Class FA shares received in exchange for $2.4 million of~~non-cash~~ ~~consideration in the form of equity interests in Lawn Doctor received from an affiliate of theSub-Manager~~ pursuant to the Exchange Agreement. The $81.7 million in gross proceeds also included a cash capital contribution of approximately $0.4 million in exchange for 15,000 Class FA shares, from other individuals affiliated with the Manager. The Class FA shares and Class A shares in the Private Placement were offered for sale only to persons that were “accredited investors,” as that term is defined under the Securities Act, and Regulation D promulgated thereunder. No Class A shares were sold under the Private Placement.

We did not incur any selling commissions or placement agent fees from the sale of the approximately 3.3 million Class FA shares sold under the terms of the Private Placement. We did incur obligations to reimburse the Manager and~~Sub-Manager~~ ~~for organization and offering costs based on actual amounts raised. These organization and offering costs related to the Private Placement had been previously advanced by the Manager andSub-Manager,~~ as described further in Note 5. “Related Party Transactions” of “Item 1. “Financial Statements.” Through March 31, 2018, we incurred approximately $0.7 million of organization and offering costs.

Follow-On Public ~~Offering~~

Once the Registration Statement became effective on March 7, 2018, we began offering up to $1,000,000,000 of Shares, on a best efforts basis, which means that CNL Securities Corp., as the Managing Dealer of the Public Offering, will use its best efforts, but is not required to sell any specific amount of Shares. We are offering, in any combination, four classes of Shares in the Public Offering: Class A shares, Class T shares, Class D shares and Class I shares. The initial minimum permitted purchase amount is $5,000 in Shares. The initial per share Public Offering price was $27.32 per Class A share, $26.25 per Class T share, $25.00 per Class D share and $25.00 per Class I share.Offering. There are differing selling fees and commissions for each share class. We ~~will~~ also pay ~~annual~~ distribution and shareholder servicing fees, subject to certain limits, on the Class T and Class D shares sold in the Public ~~Offering~~Offerings (excluding ~~sales~~shares sold pursuant to ~~the Company’s~~our distribution reinvestment plan).

In April ~~2018,~~2024, our board of directors approved new per share public offering prices for each share class in the Follow-On Public Offering. The new public offering prices ~~became~~are effective onas of April ~~27, 2018.~~30, 2024. The following table provides the new public offering prices and applicable upfront selling commissions and dealer manager fees for each share class available in the Follow-On Public Offering:

~~In May~~


	Class A		Class T		Class D		Class I
Effective April 30, 2024:
Public Offering Price, Per Share	$	37.09	$	35.69	$	33.68	$	34.44
Selling Commissions, Per Share	2.23		1.07		—		—
Dealer Manager Fees, Per Share	0.92		0.63		—		—

Since we commenced operations on February 7, 2018, ~~after taking in consideration the effect~~we have raised total net offering proceeds (including amounts raised from our private offerings and Public Offerings) of ~~subsequent post-closing adjustments during the true up period relating to the working capital and tax indebtedness of~~approximately $966.0 million, including approximately $32.3 million received through our ~~portfolio companies, our net asset value per Class FA share was adjusted to $25.16~~distribution reinvestment plan as of March 31, ~~2018. See Note 9. “Financial Highlights” for information on the end~~2024.

Table of ~~period net asset value for Class FA shares.~~

We are also offering, in any combination, up to $100,000,000 of Class A shares, Class T shares, Class D shares and Class I shares to be issued pursuant to our distribution reinvestment plan. The Public Offering had a minimum offering requirement of $2 million in Shares under the Private Placement or the Public Offering. As of February 2018, we had met the minimum offering requirement of $2 million of the Public Offering through the sale of more than $80 million in Class FA shares under the Private Placement.

Contents

Portfolio and Investment Activity

In October 2017, we entered into a merger agreement with LD Merger Sub, Inc., a wholly owned subsidiary of the Company, and LD Parent, Inc., the parent company of Lawn Doctor. The merger agreement was amended on February 6, 2018. On February 7, 2018, pursuant to the terms of the merger agreement and the Exchange Agreement, we acquired an approximately 63.9% equity interest in Lawn Doctor from an affiliate of the~~Sub-Manager,~~ through an investment consisting of common equity and a debt investment in the form of a secured second lien loan to Lawn Doctor. After the closing of the merger, the consummation of the equity contribution pursuant to the Exchange Agreement and subsequent purchases of common equity in Lawn Doctor by certain members of Lawn Doctor’s senior management team, we own approximately 62.9% of the outstanding equity in Lawn Doctor.

As of March 31, ~~2018, the cost basis of our investments~~2024, we had invested in Lawn Doctor was approximately $30.5 million of common equity and $15.0 million of a debt investment. The purchase price is subject to adjustment based on, among other factors, Lawn Doctor’s working capital and indebtedness at closing.

In October 2017, we entered into a merger agreement with PFHI Merger Sub, Inc., a wholly owned subsidiary of the Company, and Polyform. The merger agreement was amended on February 6, 2018. On February 7, 2018, pursuant to the terms of the merger agreement, we acquired an approximately 87.1% equity interest in Polyform from an affiliate of the~~Sub-Manager,~~ ~~through an investment~~14 portfolio companies, consisting of ~~common~~ equity ~~and a debt investment in the form of a first lien secured term loan to Polyform. As of March 31, 2018, the cost basis of our~~ investments ~~in Polyform was approximately $15.8 million of common equity~~ and ~~$15.7 million of a debt investment. The purchase price is subject to adjustment based on, among other factors, Polyform’s working capital and indebtedness at closing.~~

~~The~~ debt investments in the form of a secured second lien loan to Lawn Doctor and in the form of a first lien secured term loan to Polyform as described above accrue interest at a per annum rate of 16%. Each loan will mature in August 2023.each portfolio company. The table below presents our portfolio company investments (in millions):


		As of March 31, 2024
		Equity Investments				Debt Investments(1)
Portfolio Company	Initial Investment Date	Ownership %		Cost Basis		Senior Secured Debt	Interest Rate		Maturity Date	Cost Basis		Total Cost Basis(2)
Lawn Doctor	2/7/2018	61	%	$	27.6	Second Lien	16.0	%	2/7/2030	$	15.0	$	42.6
Lawn Doctor	6/30/2023	—		—		First Lien	(3)		8/6/2029	29.5		29.5
Polyform	2/7/2018	87		15.6		Secured	16.0		2/7/2026	15.7		31.3
Roundtables	8/1/2019	81		33.5		Second Lien	16.0		8/1/2025	12.1		45.6
Roundtables	11/13/2019	—		—		Secured	8.0		8/1/2024	2.0		2.0
Milton Industries Inc.	11/21/2019	13		6.6		Second Lien	15.0		12/19/2027	3.4		10.0
Resolution Economics, LLC	1/2/2020	8		8.1		Second Lien	15.0		1/2/2026	2.8		10.9
Blue Ridge ESOP Associates	3/24/2020	16		12.9		Second Lien	15.0		12/28/2028	2.6		15.5
HSH	7/16/2020	75		17.3		Secured	15.0		7/16/2027	24.4		41.7
ATA	4/1/2021	75		37.1		Secured	15.0		4/1/2027	37.0		74.1
Douglas	10/7/2021	90		35.5		Second Lien	16.0		10/7/2028	15.0		50.5
Clarion	12/9/2021	96		56.8		First Lien	15.0		12/9/2028	22.5		79.3
Vektek	5/6/2022	84		56.9		Second Lien	15.0		11/6/2029	24.4		81.3
Vektek	6/30/2023	—		—		Secured	(3)		5/6/2029	24.8		24.8
TacMed	3/24/2023	95		76.7		Secured	16.0		3/24/2030	29.0		105.7
Sill	10/20/2023	99		58.5		Secured	14.0		10/20/2030	15.9		74.4
USAW	2/21/2024	5		8.6		Second Lien	16.0		8/20/2031	1.4		10.0
				$	451.7					$	277.5	$	729.2

FOOTNOTES:

(1) The note purchase agreements contain customary covenants and events of default.

As of March 31, ~~2018, our investment portfolio included four distinct investment positions and the fair value~~2024, all of our portfolio ~~was comprised~~companies were in compliance with their respective debt covenants.

(2) See the Schedule of ~~the following:~~

   As of March 31, 2018
Asset Category    Cost    Fair Value    Fair Value
Percentage of
Investment
Portfolio
Senior debt

Senior secured debt - first lien
   $ 15,700,000    $ 15,700,000    20.3 %
Senior secured debt - second lien
   15,000,000    15,000,000    19.4






Total senior debt
   $ 30,700,000    $ 30,700,000    39.7
Equity
   46,231,763    46,756,212    60.3






Total investments
   $ 76,931,763    $ 77,456,212    100.0 %

~~As of March 31, 2018, the weighted average yield on our debt portfolio was 16.0%.~~

~~Lawn Doctor~~

~~Lawn Doctor is a leading franchisor of residential lawn care programs~~Investments and services. Lawn Doctor’s core service offerings provide residential homeowners with year-round monitoring and treatment by focusing on weed and insect control, seeding, and professionally and consistently-administered fertilization, using its proprietary line of equipment. Lawn Doctor is not involved in other lawn maintenance services, such as mowing, edging, and leaf blowing.

Lawn Doctor’s franchised business model has repeatedly received recognition as a leading franchisor of lawn care services by industry associations and trade magazines, and has a customer retention rate of more than 80% over the past three years, which reflects the high level of quality and customer service that Lawn Doctor has been able to sustain over the years. Lawn Doctor’s efforts on behalf of its franchisees (which include shared marketing programs and infrastructure, an extensive online presence, and comprehensive training) have attracted a strong core of dedicated franchise owners who, in turn, contribute to the continued growth and success of the Lawn Doctor brand.

~~Polyform~~

~~Polyform is a leading developer, manufacturer and marketer of polymer clay products worldwide. Through its two primary brands, Sculpey~~^® ~~and Premo!~~^®~~, Polyform sells a comprehensive line of premium craft products to a diverse mix of customers including specialty and big box retailers, distributors ande-tailers.~~ ~~We believe Polyform is well regarded for its high quality, comprehensive line of polymer clays, clay molds, children kits,wax-base~~ ~~clays,non-dry~~ clays, clay tools and accessories. Polyform’s strong brand recognition, unique product attributes and strong customer network have earned it one of the leading market share positions in the polymer clay segment within the United States. Polyform estimates that its products are available in approximately 8,900 retail locations through its major customers, plus many other locations through independent retailers. Products are shipped directly to 48 countries worldwide.

~~See~~ Note 3. “Investments” of Item 1. “Financial Statements” for additional information related to our ~~investments.~~

investments, including fair values as of March 31, 2024.

(3) As of March 31, 2024, the senior debt investments in Lawn Doctor and Vektek accrue interest at a per annum rate of SOFR + 4.60% and SOFR + 4.35%, respectively. SOFR at March 31, 2024 was 5.32%.

The portfolio companies are required to make monthly interest payments on their debt, with the debt principal due upon maturity. Failure of any of these portfolio companies to pay contractual interest payments could have a material adverse effect on our results of operations and cash flows from operations, which would impact our ability to make distributions to shareholders. See our Form 10-K for the year ended December 31, 2023 for additional information regarding our portfolio companies and their related business activities.

Our Portfolio Companies

The below information regarding our portfolio companies contain a financial measure, Adjusted EBITDA,

utilized by management to evaluate the operating performance and liquidity of our portfolio companies that is not calculated in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Adjusted EBITDA should not be considered in isolation from or as superior to or as a substitute for net income (loss), income (loss) from operations, or other financial measures determined in accordance with GAAP. We use this non-GAAP financial measure to supplement our GAAP results in order to provide a more complete understanding of the factors and trends affecting our portfolio companies. We present this non-GAAP measure quarterly for our portfolio companies in which we own a controlling equity interest and annually for all of our portfolio companies.

Table of Contents

You are encouraged to evaluate the adjustments to Adjusted EBITDA, including the reasons we consider this measure appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future our portfolio companies may incur expenses that are the same as or similar to some of the adjustments in this presentation. The presentation of Adjusted EBITDA should not be construed as an inference that the future results of our portfolio companies will be unaffected by unusual or non-recurring items.

We caution investors that amounts presented in accordance with our definition of Adjusted EBITDA may not be comparable to similar measures disclosed by other companies, because not all companies calculate this non-GAAP measure in the same manner. Because of these limitations and additional limitations described below, Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on the GAAP results and using Adjusted EBITDA only as a supplemental measure.

Additionally, we provide our proportionate share of each non-GAAP measure because our ownership percentage of each portfolio company varies. We urge investors to consider our ownership percentage of each portfolio company when evaluating the results of each of our portfolio companies.

Adjusted EBITDA

When evaluating the performance of our portfolio, we monitor ~~adjusted~~Adjusted EBITDA to measure the financial and operational performance of our portfolio companies and their ability to pay contractually obligated debt payments to us. In connection with this evaluation, the Manager andSub-Manager review monthly portfolio company operating performance versus budgeted expectations and conduct regular operational review calls with the management teams of the portfolio companies.

We present Adjusted EBITDA as a supplemental measure of the performance of our initial businesses. We define Adjusted EBITDA as net income (loss), plus (i) interest expense, net, and loan cost amortization, (ii) taxes and (iii) depreciation and amortization, as further adjusted for certain other~~non-recurring~~ items that we do not consider indicative of the ongoing operating performance of our initial businesses. These further adjustments are itemized below. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future our initial businesses may incur expenses that are the same as or similar to some of the adjustments in this presentation. This presentation of Adjusted EBITDA should not be construed as an inference that the future results of our initial businesses will be unaffected by unusual or~~non-recurring~~ ~~items.~~

~~We present Adjusted EBITDA~~portfolio companies because we believe it assists investors in comparing the performance of such businesses across reporting periods on a consistent basis by excluding items that we do not believe are indicative of their core operating performance.

We define Adjusted EBITDA as net income (loss), plus (i) interest expense, net, and loan cost amortization, (ii) taxes and (iii) depreciation and amortization, as further adjusted for certain other non-recurring items that we do not consider indicative of the ongoing operating performance of our portfolio companies. These further adjustments are itemized below. Our proportionate share of Adjusted EBITDA is calculated based on our equity ownership percentage at period end.

Adjusted EBITDA has limitations as an analytical tool. Some of these limitations are: (i) Adjusted EBITDA does not reflect cash expenditures, or future requirements, for capital expenditures or contractual commitments; (ii) Adjusted EBITDA does not reflect changes in, or cash requirements for, working capital needs; (iii) Adjusted EBITDA does not reflect ~~the significant~~ interest expense, or the cash requirements necessary to service interest or principal payments, on indebtedness; (iv) although depreciation and amortization arenon-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and Adjusted EBITDA does not reflect any cash requirements for such replacements; (v) Adjusted EBITDA does not reflect the impact of certain cash charges resulting from matters we do not consider to be indicative of the~~on-going~~ ongoing operations of our ~~initial businesses;~~portfolio companies; and (vi) other companies in similar industries as our ~~initial businesses~~portfolio companies may calculate Adjusted EBITDA differently, limiting its usefulness as a comparative measure.

~~Because~~

Table of ~~these limitations,~~Contents

Lawn Doctor

As of March 31, 2024 and December 31, 2023, Lawn Doctor, Inc. (“Lawn Doctor”) had total assets of approximately $101.0 million and $100.0 million, respectively.

The following table reconciles our proportionate share of Adjusted EBITDA ~~should not be considered in isolation or~~from net income of Lawn Doctor for the three months ended March 31, 2024 and 2023 (in thousands):


	Three Months Ended March 31,
		2024		2023
Revenues		$	9,792	$	9,128

Net income (GAAP)		$	216	$	257
Interest and debt related expenses		1,475		1,441
Depreciation and amortization		639		646
Income tax expense		169		100
Adjusted EBITDA (non-GAAP)		$	2,499	$	2,444

Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)		$	1,513	$	1,480

FOOTNOTE:

(1)Amounts based on our ownership percentage as ~~a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on~~of the ~~GAAP results~~end of the periods presented. As of March 31, 2024 and ~~using~~2023, we owned approximately 61% of Lawn Doctor.

Polyform

As of March 31, 2024 and December 31, 2023, Polyform Products, Co. (“Polyform”) had total assets of approximately $32.3 million and $33.1 million, respectively. The following table reconciles our proportionate share of Adjusted EBITDA ~~only supplementally.~~

~~Summarized Net Income~~from net loss of Polyform for the three months ended March 31, 2024 and 2023 (in thousands):


	Three Months Ended March 31,
		2024		2023
Revenues		$	3,721	$	4,103

Net loss (GAAP)		$	(443)	$	(193)
Interest and debt related expenses		723		716
Depreciation and amortization		465		465
Income tax benefit		(175)		(77)
Adjusted EBITDA (non-GAAP)		$	570	$	911

Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)		$	497	$	794

FOOTNOTE:

(1)Amounts based on our ownership percentage as of the end of the periods presented. As of March 31, 2024 and 2023, we owned approximately 87% of Polyform.

Table of Contents

Roundtables

As of March 31, 2024 and December 31, 2023, Auriemma U.S. Roundtables (“Roundtables”) had total assets of approximately $71.0 million and $61.6 million, respectively. In August 2023, Roundtables acquired insideARM, a U.S.-based company providing services to the third-party debt collection industry.

The following table reconciles our proportionate share of Adjusted EBITDA ~~Reconciliations (Unaudited)~~

~~Lawn Doctor~~

   Period February 7,
2018⁽¹⁾ through
March 31, 2018
Net Income (GAAP)
   $ 23,635
Interest and Debt Related Expenses
   606,186
Depreciation and Amortization
   127,088
Income Tax Expense
   7,825
Transaction Costs
   313,895


Adjusted EBITDA(non-GAAP)
   $ 1,078,629

~~Polyform~~

   Period February 7,
2018⁽¹⁾ through
March 31, 2018
Net Loss (GAAP)
   $ (431,736 )
Interest and Debt Related Expenses
   428,946
Depreciation and Amortization
   291,465
Income Tax Benefit
   (48,000 )
Transaction Costs
   313,895


Adjusted EBITDA(non-GAAP)
   $ 554,570

from net (loss) income of Roundtables for the three months ended March 31, 2024 and 2023 (in thousands):


	Three Months Ended March 31,
		2024		2023
Revenues		$	4,311	$	4,079

Net (loss) income (GAAP)		$	(143)	$	59
Interest and debt related expenses		651		644
Depreciation and amortization		522		512
Income tax (benefit) expense		(44)		7
Adjusted EBITDA (non-GAAP)		$	986	$	1,222

Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)		$	796	$	987

FOOTNOTE:

(1)Amounts based on our ownership percentage as of the end of the periods presented. As of March 31, 2024 and 2023, we owned approximately 81% of Roundtables.

HSH

As of March 31, 2024 and December 31, 2023, Healthcare Safety Holdings, LLC (“HSH”) had total assets of approximately $44.1 million and $45.0 million, respectively. The following table reconciles our proportionate share of Adjusted EBITDA from net income of HSH for the three months ended March 31, 2024 and 2023 (in thousands):


	Three Months Ended March 31,
		2024		2023
Revenues		$	8,331	$	8,717

Net income (GAAP)		$	597	$	660
Interest and debt related expenses		911		917
Depreciation and amortization		747		751
Income tax expense		210		257
Adjusted EBITDA (non-GAAP)		$	2,465	$	2,585

Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)		$	1,837	$	1,926

FOOTNOTE:

(1)Amounts based on our ownership percentage as of the end of the periods presented. As of March 31, 2024 and 2023, we owned approximately 75% of HSH.

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ATA

As of March 31, 2024 and December 31, 2023, ATA Holding Company, LLC (“ATA”) had total assets of approximately $85.8 million and $89.2 million, respectively. The following table reconciles our proportionate share of Adjusted EBITDA from net loss of ATA for the three months ended March 31, 2024 and 2023 (in thousands):


	Three Months Ended March 31,
		2024		2023
Revenues		$	10,197	$	9,372

Net loss (GAAP)		$	(2,389)	$	(2,931)
Interest and debt related expenses		1,460		1,500
Depreciation and amortization		1,101		1,096
Adjusted EBITDA (non-GAAP)		$	172	$	(335)

Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)		$	129	$	(251)

FOOTNOTE:

(1)Amounts based on our ownership percentage as of the end of the periods presented. As of March 31, 2024 and 2023, we owned approximately 75% of ATA.

Douglas

As of March 31, 2024 and December 31, 2023, Douglas Machines Corp. (“Douglas”) had total assets of approximately $57.0 million and $57.6 million, respectively. The following table reconciles our proportionate share of Adjusted EBITDA from net income of Douglas for the three months ended March 31, 2024 and 2023 (in thousands):


	Three Months Ended March 31,
		2024		2023
Revenues		$	6,552	$	8,431

Net income (GAAP)		$	190	$	449
Interest and debt related expenses		650		621
Depreciation and amortization		353		425
Income tax expense		14		138
Adjusted EBITDA (non-GAAP)		$	1,207	$	1,633

Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)		$	1,089	$	1,473

FOOTNOTE:

(1)Amounts based on our ownership percentage as of the end of the periods presented. As of March 31, 2024 and 2023, we owned approximately 90% of Douglas.

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Clarion

As of March 31, 2024 and December 31, 2023, Clarion Safety Systems, LLC (“Clarion”) had total assets of approximately $80.0 million and $80.4 million, respectively. The following table reconciles our proportionate share of Adjusted EBITDA from net income of Clarion for the three months ended March 31, 2024 and 2023 (in thousands):


	Three Months Ended March 31,
		2024		2023
Revenues		$	4,393	$	3,327

Net income (GAAP)		$	542	$	87
Interest and debt related expenses		841		843
Depreciation and amortization		256		247
Income tax expense		208		34
Adjusted EBITDA (non-GAAP)		$	1,847	$	1,211

Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)		$	1,779	$	1,186

FOOTNOTE:

(1)Amounts based on our ownership percentage as of the end of the periods presented. As of March 31, 2024 and 2023, we owned approximately 96% and 98%, respectively, of Clarion.

Vektek

As of March 31, 2024 and December 31, 2023, Vektek Holdings, LLC (“Vektek”) had total assets of approximately $113.2 million and $114.1 million, respectively. The following table reconciles our proportionate share of Adjusted EBITDA from net income of Vektek for the three months ended March 31, 2024 (in thousands):


	Three Months Ended March 31,
		2024		2023
Revenues		$	9,072	$	10,421

Net income (GAAP)		$	276	$	752
Interest and debt related expenses		1,557		1,523
Depreciation and amortization		922		902
Income tax expense		—		13

Adjusted EBITDA (non-GAAP)		$	2,755	$	3,190

Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)		$	2,306	$	2,671

FOOTNOTE:

(1)Amounts based on our ownership percentage as of the end of the periods presented. As of March 31, 2024 and 2023, we owned approximately 84% of Vektek.

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TacMed

As of March 31, 2024 and December 31, 2023, Tacmed Holdings, LLC (“TacMed”) had total assets of approximately $111.6 million and $114.3 million, respectively.

The following table reconciles our proportionate share of Adjusted EBITDA from net loss of TacMed for the three months ended March 31, 2024 and the period from March 24, 2023 (the date we acquired our investments in TacMed) to March 31, 2023 (in thousands):


	Three Months Ended March 31, 2024		For the Period Ended March 24, 2023 through March 31, 2023
Revenues	$	8,428	$	786

Net loss (GAAP)	$	(2,107)	$	(2,088)
Interest and debt related expenses	1,173		106
Depreciation and amortization	1,260		97
Income tax (benefit) expense	(228)		20
Transaction related expenses(1)	11		1,835

Adjusted EBITDA (non-GAAP)	$	109	$	(30)

Our Proportionate Share of Adjusted EBITDA (non-GAAP)(2)	$	104	$	(29)

FOOTNOTES:

(1)Initial buyer transaction costs paid by TacMed included in the purchase price. Transaction related expenses are non-recurring.

(2)Amounts based on our ownership percentage as of the end of the periods presented. As of March 31, 2024 and 2023, we owned approximately 95% of TacMed.

Sill

As of March 31, 2024 and December 31, 2023, Sill Holdings, LLC (“Sill”) had total assets of approximately $77.2 million and $76.9 million, respectively. The Company acquired its investments in Sill in October 2023.

The following table reconciles our proportionate share of Adjusted EBITDA from net income of Sill for the three months ended March 31, 2024 (in thousands):

~~(1)~~
	Three Months Ended March 31, 2024		~~February 7, 2018 is the date we acquired the portfolio companies.~~
Revenues	$	3,673

Net income (GAAP)	$	383
Interest and debt related expenses	569
Depreciation and amortization	550
Income tax benefit	(933)

Adjusted EBITDA (non-GAAP)	$	569

Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)	$	564

FOOTNOTE:

(1)Amounts based on our ownership percentage as of the end of the periods presented. As of March 31, 2024, we owned approximately 99% of Sill.

Factors Impacting Our Operating Results

We expect that the results of our operations will be affected by a number of factors. Many of the factors that will affect our operating results are beyond our control.

We will be dependent upon the earnings of and cash flow from the businesses that we acquire to meet our ~~corporate overhead~~operating and management fee expenses and to make distributions. These earnings and cash flows, net of any minority interests in these businesses, will be available:

•

~~first~~~~, to meet management fees and corporate overhead expenses of the company; and~~

•

~~second~~~~, to fund business operations and distributions by the company to shareholders.~~

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•first, to meet our management fees and corporate overhead expenses; and
•second, to fund business operations and to make distributions to our shareholders.

Size of assets

If we are unable to raise substantial funds, we will be limited in the number and type of acquisitions we may make. The size of our assets will be a key revenue driver. Generally, as the size of our assets grows, the amount of income we receive will increase. In addition, our assets may grow at an uneven pace as opportunities to acquire assets may be irregularly timed, and the timing and extent of the Manager’s and theSub-Manager’s success in identifying such opportunities, and our success in making acquisitions, cannot be predicted.

Market conditions

From time to time, the global capital markets may experience periods of disruption and instability, as we have seen and continue to see with the recent public health crises, natural disasters and geopolitical events, which could materially and adversely impact the broader financial and credit markets and reduce the availability ~~to us~~ of debt and equity capital. Furthermore, economic growth remains affected by inflationary pressure and supply chain related disruptions and could be slowed or halted by significant external events. Some of our portfolio companies have experienced supply chain related disruptions from time to time. In some instances, strategic decisions to hold more inventory have been made as a result of ongoing supply chain related disruptions. Significant changes or volatility in the capital markets have and may ~~also~~continue to have a negative effect on the valuations of our businesses and other assets. While all of our assets are likely to not be publicly traded, applicable accounting standards require us to assume as part of our valuation process that our assets are sold in a principal market to market participants (even if we plan on holding an asset long term or through its maturity) and impairments of the market values or fair market values of our assets, even if unrealized, must be reflected in our financial statements for the applicable period, which could result in significant reductions to our net asset value for the period. Significant changes in the capital markets may also affect the pace of our activity and the potential for liquidity events involving our assets. Thus, the illiquidity of our assets may make it difficult for us to sell such assets to access capital if required, and as a result, we could realize significantly less than the value at which we have recorded our assets if we were required to sell them for liquidity purposes.

~~Results of Operations~~

~~From the time~~

Liquidity and Capital Resources

General

Liquidity is a measure of our ~~formation on August 9, 2016 through February 6, 2018,~~ability to meet potential cash requirements, including ongoing commitments, fund and maintain our assets and operations, repay borrowings, make distributions to our shareholders and other general business needs. We will use significant cash to fund acquisitions, make additional investments in our portfolio companies, make distributions to our shareholders and fund our operations. Additionally, to the extent we ~~had not commenced operations. Operations commenced on February 7, 2018, when aggregate subscription proceeds~~have available cash we may make investments in ~~excess~~short-term U.S. Treasury bills. Our primary sources of ~~the minimum offering amount of $80 million were received in the Private Placement. We acquired our initial businesses on February 7, 2018 using a substantial portion of~~ cash will generally consist of:

•the net proceeds from the ~~Private Placement. See “Overview – Our Common Shares Offering”~~Public Offerings;

•distributions and ~~“Overview – Portfolio~~interest earned from our assets; and ~~Investment Activity” above~~

•proceeds from sales of assets and principal repayments from our assets.

We expect we will have sufficient cash from current sources to meet our liquidity needs for ~~additional information.~~

the next twelve months. However, we may opt to supplement our equity capital and increase potential returns to our shareholders through the use of prudent levels of borrowings. We may use debt when the available terms and conditions are favorable to long-term investing and well-aligned with our business strategy. In light of the current economic environment, impacted by rising interest rates, record inflationary pressures due to global supply chain issues, a rise in energy prices, and the impact of the recent public health crises, natural disasters and geopolitical events on the global economy, we are closely monitoring overall liquidity levels and changes in the business performance of our portfolio companies to be in a position to enact changes to ensure adequate liquidity going forward.

While we generally intend to hold our assets for the long term, certain assets may be sold in order to manage our liquidity needs, meet other operating objectives and adapt to market conditions. The timing and impact of future sales of our assets, if any, cannot be predicted with any certainty.

As of March 31, ~~2018,~~2024 and December 31, 2023, we had cash and cash equivalents of approximately $159.9 million and $134.5 million, respectively.

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Sources of Liquidity and Capital Resources

Offerings. We received approximately $53.9 million and $34.4 million in net proceeds during the three months ended March 31, 2024 and 2023, respectively, from the Public Offerings, which excludes approximately $4.1 million and $2.6 million raised through our distribution reinvestment plan, respectively. As of March 31, 2024, we had approximately 817 million authorized common shares remaining for sale.

Investments. We received a return of capital from portfolio company investments of approximately $0.6 million and $0.2 million during each of the three months ended March 31, 2024 and 2023, respectively. During the three months ended March 31, 2023, we received proceeds from sales and redemptions of U.S. Treasury bills of approximately $412.2 million which were reinvested in new U.S. Treasury bills. We did not have any sale or redemptions of U.S. Treasury bills for the three months ended March 31, 2024.

Borrowings. We did not borrow any amounts during the three months ended March 31, 2024 or 2023. See Note 8. “Borrowings” of Item 1. “Financial Statements” for additional information regarding our the 2022 Line of Credit and 2024 Line of Credit.

Uses of Liquidity and Capital Resources

Investments.We used approximately $10.0 million and $106.0 million of cash to purchase portfolio company investments during the three months ended March 31, 2024 and 2023, respectively.

Operating Activities. We used operating cash flows (excluding amounts related to investment activity) of approximately $6.0 million and $6.2 million during the three months ended March 31, 2024 and 2023, respectively.

Distributions.We paid distributions to our shareholders of approximately $4.8 million and $4.0 million (which excludes distributions reinvested of approximately $4.1 million and $2.6 million, respectively) during the three months ended March 31, 2024 and 2023, respectively. See “Distributions Declared” below for additional information.

Share Repurchases. We paid approximately $8.2 million and $2.4 million during the three months ended March 31, 2024 and 2023, respectively, to repurchase shares in accordance with our Share Repurchase Program.

Deferred Financing Costs. We paid approximately $0.2 million and $0.1 million in deferred financing costs during the three months ended March 31, 2024 and 2023.

Reimbursement of Expense Support. During the three months ended March 31, 2024 and 2023, we reimbursed the Manager and Sub-Manager approximately $0.6 million and $2.4 million, respectively, for Expense Support received in previous years. Expense Support is received or Expense Support reimbursement is paid annually. As of March 31, 2024, there is no remaining unreimbursed Expense Support under the terms of the Expense Support and Conditional Reimbursement Agreement. Our obligation to make Conditional Reimbursements will automatically terminate and be of no further effect three years following the date which the Expense Support amount was provided and to which such Conditional Reimbursement relates, as described further in the Expense Support and Conditional Reimbursement Agreement. Additionally, the Company accrued expense support due from the Manager and Sub-Manager of approximately $0.3 million and $0.4 million during the three months ended March 31, 2024 and 2023, respectively. See Note 5. “Related Party Transactions” of Item 1. “Financial Statements” for additional information.

Distributions Declared

The Company’s board of directors declared distributions on a monthly basis during the three months ended March 31, 2024 and 2023 (three record dates). The following table reflects the total distributions declared during the three months ended March 31, 2024 and 2023 (in thousands except per share data):


	Three Months Ended March 31,
	2024						2023
Distribution Period	Distributions Declared(1)		Distributions Reinvested(2)		Cash Distributions Net of Distributions Reinvested (2)		Distributions Declared(1)(2)		Distributions Reinvested (2)		Cash Distributions Net of Distributions Reinvested (2)
First Quarter	$	8,807	$	4,056	$	4,751	$	6,601	$	2,590	$	4,011

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FOOTNOTES:

(1) Monthly distributions declared per share for each share class were as follows:


Record Date Period	Class FA		Class A		Class T		Class D		Class I		Class S
January 1, 2024 – March 31, 2024	$	0.104167	$	0.104167	$	0.083333	$	0.093750	$	0.104167	$	0.104167
January 1, 2023 – March 31, 2023	0.104167		0.104167		0.083333		0.093750		0.104167		0.104167

(2) Amounts based on distribution record date.

Cash distributions declared net of distributions reinvested were funded from the following sources noted below (in thousands):


	Three Months Ended March 31,
	2024				2023
	Amount		Percentage(1)		Amount		Percentage(1)
Net investment income before Expense Support (reimbursement)	$	4,426	93.2	%	$	4,798	119.6	%
Expense Support (reimbursement)	295		6.2		113		2.8
Net investment income	$	4,721	99.4	%	$	4,911	122.4	%
Cash distributions net of distributions reinvested in excess of net investment income	30		0.6		—		—
Cash distributions declared, net of distributions reinvested(2)	$	4,751	100.0	%	$	4,011	100.0	%

FOOTNOTES:

(1) Represents percentage of cash distributions declared, net of distribution reinvested for the period presented.

(2)Excludes $4,056 and $2,590 of distributions reinvested pursuant to our distribution reinvestment plan during the three months ended March 31, 2024 and 2023, respectively.

Distribution amounts and sources of distributions declared vary among share classes. We calculate each shareholder’s specific distribution amount for the period using record and declaration dates. Distributions are declared on all classes of our shares at the same time. Amounts distributed to each class are allocated among the holders of our shares in such class in proportion to their shares. Distributions on the Non-founder shares may be lower than distributions on Founder shares because we are required to pay higher management and total return incentive fees to the Manager and the Sub-Manager with respect to the Non-founder shares. Additionally, distributions on Class T and Class D shares are lower than distributions on Class FA, Class A, Class I and Class S shares because we are required to pay ongoing distribution and shareholder servicing fees with respect to Class T and Class D shares. There is no assurance that we will pay distributions in any particular amount, if at all.

See Note 6. “Distributions” in Item 1. “Financial Statements” for additional disclosures regarding distributions.

Distribution Reinvestment Plan

We have adopted a distribution reinvestment plan pursuant to which shareholders who purchase shares in the Public Offerings have their cash distributions automatically reinvested in additional shares having the same class designation as the class of shares to which such distributions are attributable, unless such shareholders elect to receive distributions in cash, are residents of Opt-In States, or are clients of certain participating broker-dealers that do not permit automatic enrollment in our distribution reinvestment plan. Opt-In States include Alabama, Arkansas, Idaho, Kansas, Kentucky, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Nebraska, New Hampshire, New Jersey, North Carolina, Ohio, Oklahoma, Oregon, Vermont and Washington. Shareholders who are residents of Opt-In States, holders of Class FA shares and clients of certain participating broker-dealers that do not permit automatic enrollment in our distribution reinvestment plan automatically receive their distributions in cash unless they elect to have their cash distributions reinvested in additional shares. Cash distributions paid on Class FA shares are reinvested in additional Class A shares. Class S shares do not participate in the distribution reinvestment plan.

The purchase price for shares purchased under our distribution reinvestment plan is equal to the most recently determined and published net asset value per share of the applicable class of shares. Because the distribution and shareholder servicing fee is calculated based on net asset value, it reduces net asset value and/or distributions with respect to Class T shares and Class D shares, including shares issued under the distribution reinvestment plan with respect to such share classes. To the extent newly issued shares are purchased from us under the distribution reinvestment plan or shareholders elect to reinvest their cash distribution in our shares, we retain and/or receive additional funds for acquisitions and general purposes including the repurchase of shares under the Share Repurchase Program.

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We do not pay selling commissions or dealer manager fees on shares sold pursuant to our distribution reinvestment plan. However, the amount of the distribution and shareholder servicing fee payable with respect to Class T or Class D shares, respectively, sold in the Public Offerings is allocated among all Class T or Class D shares, respectively, including those sold under our distribution reinvestment plan and those received as distributions.

Our shareholders will be taxed on their allocable share of income, even if their distributions are reinvested in additional shares of our common shares and even if no distributions are made.

Share Repurchase Program

We adopted the Share Repurchase Program effective March 2019, as amended, pursuant to which we conduct quarterly share repurchases to allow our shareholders to sell all or a portion of their shares (at least 5% of his or her shares) back to us at a price equal to the net asset value per share of the month immediately prior to the repurchase date. The repurchase date is generally the last business day of the month of a calendar quarter end. We are not obligated to repurchase shares under the Share Repurchase Program. If we determine to repurchase shares, the Share Repurchase Program also limits the total amount of aggregate repurchases of Class FA, Class A, Class T, Class D, Class I and Class S shares to up to 2.5% of our aggregate net asset value per calendar quarter (based on the aggregate net asset value as of the last date of the month immediately prior to the repurchase date) and up to 10% of our aggregate net asset value per year (based on the average aggregate net asset value as of the end of each of our trailing four quarters). The Share Repurchase Program also includes certain restrictions on the timing, amount and terms of our repurchases intended to ensure our ability to qualify as a partnership for U.S. federal income tax purposes.

Our board of directors has the right to amend or suspend the Share Repurchase Program to the extent it determines that it is in our best interest to do so, such as when repurchase requests would place an undue burden on our liquidity, adversely affect our operations, risk having an adverse impact on us that would outweigh the benefit of repurchasing our shares or risk our ability to qualify as a partnership for U.S. federal income tax purposes, upon 30 days’ prior notice to our shareholders. Once the Share Repurchase Program is suspended, the Share Repurchase Program requires that we consider the recommencement of the plan at least quarterly. Continued suspension of the Share Repurchase Program would only be permitted under the plan if our board of directors determines that the continued suspension of the Share Repurchase Program is in our best interest and the best interest of our shareholders. Our board of directors must affirmatively authorize the recommencement of the plan before shareholder requests will be considered again. Our board of directors cannot terminate the Share Repurchase Program absent a liquidity event or where otherwise required by law. We may provide notice by including such information in a current report on Form 8-K or in our annual or quarterly reports, each of which are publicly filed with the SEC followed by a separate mailing to our investors. Moreover, the Share Repurchase Program will terminate, and we no longer will accept shares for repurchase, if and when our shares are listed on a national securities exchange, are included for quotation in a national securities market or, in the sole determination of our board of directors, a secondary trading market for the shares otherwise develops. All shares to be repurchased under the Share Repurchase Program must be (i) fully transferable and not be subject to any liens or other encumbrances and (ii) free from any restrictions on transfer. If we determine that a lien or other encumbrance or restriction exists against the shares requested to be repurchased, we will not repurchase any such shares.

The aggregate amount of funds under the Share Repurchase Program is determined on a quarterly basis at the sole discretion of our board of directors. At the sole discretion of our board of directors, we may use sources, including, but not limited to, offering proceeds and borrowings to repurchase shares.

To the extent that the number of shares submitted to us for repurchase exceeds the number of shares that we are able to purchase, we will repurchase shares on a pro rata basis, from among the requests for repurchase received by us based upon the total number of shares for which repurchase was requested and the order of priority described in the Share Repurchase Program. We may repurchase shares including fractional shares, computed to three decimal places. We have had no unfufilled share repurchase requests under the Share Repurchase Program since inception.

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Under the Share Repurchase Program, our ability to make new acquisitions of businesses or increase the current distribution rate may become limited if, over any two-year period, we experience repurchase demand in excess of capacity. If, during any consecutive two year period, we do not have at least one quarter in which we fully satisfy 100% of properly submitted repurchase requests, we will not make any new acquisitions of businesses (excluding short-term cash management investments under 90 days in duration) and we will use all available investable assets (as defined below) to satisfy repurchase requests (subject to the limitations under the Share Repurchase Program) until all Unfulfilled Repurchase Requests have been satisfied. Additionally, during such time as there remains any Unfulfilled Repurchase Requests outstanding from such period, the Manager and the Sub-Manager will defer their total return incentive fee until all such Unfulfilled Repurchase Requests have been satisfied. “Investable assets” includes net proceeds from new subscription agreements, unrestricted cash, proceeds from marketable securities, proceeds from the distribution reinvestment plan, and net cash flows after any payment, accrual, allocation, or liquidity reserves or other business costs in the normal course of owning, operating or selling our acquired businesses, debt service, repayment of debt, debt financing costs, current or anticipated debt covenants, funding commitments related to our businesses, customary general and administrative expenses, customary organizational and offering costs, asset management and advisory fees, performance or actions under existing contracts, obligations under our organizational documents or those of our subsidiaries, obligations imposed by law, regulations, courts or arbitration, or distributions or establishment of an adequate liquidity reserve as determined by our board of directors.

During the three months ended March 31, 2024 and 2023, we received requests for the repurchase of approximately $13.8 million and $2.5 million, respectively, of our common shares. Our board of directors approved the repurchase requests received.

The following tables summarizes the shares repurchased during the three months ended March 31, 2024 and 2023 (in thousands except per share data):


	Shares Repurchased	Total Consideration		Average Price Paid per Share
Class FA shares	72	$	2,675	$	36.82
Class A shares	37	1,252		33.65
Class T shares	97	3,242		33.70
Class D shares	19	645		33.38
Class I shares	173	5,900		34.13
Class S shares	2	66		37.41
Three Months Ended March 31, 2024	400	$	13,780	$	34.45

Class FA shares	16	$	578	$	35.26
Class A shares	10	335		32.72
Class T shares	3	105		32.69
Class D shares	6	180		32.36
Class I shares	38	1,257		33.16
Class S shares	1	36		35.77
Three Months Ended March 31, 2023	74	$	2,491	$	33.52

Results of Operations

The following discussion and analysis should be read in conjunction with the accompanying condensed consolidated financial statements and notes thereto.

Through March 31, 2024, we had acquired equity and debt investments in 14 portfolio companies. As of March 31, 2024 and 2023, the fair value of our ~~investment~~ portfolio company investments totaled approximately ~~$77.5~~$903.1 million and $709.3 million, respectively. Additionally, as of March 31, 2023, we had invested in U.S. Treasury bills with a fair value of $54.0 million. ~~Our investments~~We did not have any U.S. Treasury bills at March 31, ~~2018 consisted of two debt investments and two equity investments.~~2024. See ~~section entitled “Overview – Portfolio~~“Portfolio and Investment Activity” above for discussion of the general terms and characteristics of our investments, and for information regarding ~~investment activities during the period from February 7, 2018 (commencement~~our portfolio companies.

Table of ~~operations) through March 31, 2018.~~

Contents

The following ~~is a summary of~~table summarizes our operating results for the ~~period from February 7, 2018 (commencement of operations) through~~three months ended March 31, ~~2018:~~

Total investment income
   $ 728,216
Net operating expense
   425,375


Net investment income
   302,841
Net change in unrealized appreciation
   524,449


Net increase in net assets resulting from operations
   $ 827,290

2024 and 2023 (in thousands):

Three Months Ended
March 31,
2024 2023
Total investment income $ 14,920 $ 13,318
Total operating expenses (10,494) (8,547)
Expense support (reimbursement), net 295 113
Net investment income before taxes 4,721 4,884
Income tax expense — 27
Net investment income 4,721 4,911
Total net realized gain on investments — 4
Total net change in unrealized appreciation on investments 16,230 13,088
Net increase in net assets resulting from operations $ 20,951 $ 18,003

Investment Income

Investment income consisted of the following for the ~~period from February 7, 2018 (commencement of operations) through~~three months ended March 31, ~~2018:~~

Interest income
   $ 728,216


Total investment income
   $ 728,216

2024 and 2023 (in thousands):


	Three Months Ended March 31,
		2024		2023
From portfolio company investments:
Interest income		$	9,927	$	6,848
Dividend income		3,673		5,237
From U.S. Treasury bills and cash accounts
Interest and dividend income		1,320		1,233
Total investment income		$	14,920	$	13,318

Interest income from portfolio company investments is generated from our senior secured note investments, the majority of which had fixed rate interest as of March 31, 2024 and 2023. As of March 31, ~~2018,~~2024 and 2023, our weighted average annual yield on our accruing debt investments was ~~16.0%~~14.2% and 15.4%, respectively, based on amortized cost as defined above in ~~“Overview – Portfolio~~“Portfolio and Investment Activity.” ~~As of March 31, 2018, all of~~Interest income from our debt investments ~~had fixed rate interest. Interest~~was approximately $9.9 million and $6.8 million during the three months ended March 31, 2024 and 2023. The increase in interest income from portfolio company investments during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, is primarily attributable to additional debt investments made during the twelve months ended March 31, 2024 of approximately $71.7 million and three months of interest income from TacMed during the three months ended March 31, 2024 compared to approximately one week during the three months ended March 31, 2023.

Dividend income from portfolio company investments is recorded on the record date for privately issued securities, but excludes any portion of distributions that are treated as a return of capital. Dividend income was approximately $3.7 million and $5.2 million during the three months ended March 31, 2024 and 2023. During each of the three months ended March 31, 2024 and 2023, we received dividend income from eight and seven of our portfolio companies, respectively.

Our total investment income for the three months ended March 31, 2024, resulted in annualized cash yields ranging from 2.2% to 19.6% based on our investment cost, as compared to 2.6% to 21.4% for the three months ended March 31, 2023.

We stopped investing in U.S. Treasury bills by the end of the fourth quarter of 2023. During the three months ended March 31, 2023, our effective yield on U.S. Treasury bills ranged from 4.0% to 4.3%. We currently invest in an IntraFi Cash Service account with an effective yield of 5.0%.

We do not believe that our interest income, dividend income and total investment income ~~for the period February 7, 2018 (commencement of operations) through March 31, 2018 was $728,216. We believe that our interest income and total investment income is not~~

are representative of either our stabilized performance or our future performance. We expect aninvestment income to increase ~~in interest income and dividend income~~ in future periods ~~due to an increasing~~as we increase our base of ~~investments~~assets that we expect to ~~result~~acquire from ~~the~~existing cash, borrowings and an expected increase in capital available for investment ~~as related to our~~using proceeds from the Public ~~Offering.~~

Offerings.

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Operating Expenses

Our operating expenses for the ~~period from February 7, 2018 (commencement of operations) through~~three months ended March 31, ~~2018~~2024 and 2023 were as ~~follows:~~

Organization and offering expenses
   $ 221,564
Base management fees
   88,562
Professional services
   73,581
Director fees and expenses
   37,070
Administrative services
   32,493
Custodian and accounting fees
   15,000
Other
   317


Total operating expenses
   468,587
Expense support
   (43,212 )


Net expenses
   $ 425,375

~~Operating expenses were partially offset by expense support of $43,212 for the period from February 7, 2018 (commencement of operations) through March 31, 2018.~~ follows (in thousands):


	Three Months Ended March 31,
		2024		2023
Total return incentive fees		$	4,485	$	3,635
Base management fees		4,018		2,663
Offering expenses		256		904
Professional services		587		500
Pursuit costs		505		185
Distribution and shareholder servicing fees		318		269
Custodian and accounting fees		133		138
Insurance expense		50		54
Director fees and expenses		53		51
General and administrative expenses		89		148


Total operating expenses		10,494		8,547
Expense support		(295)		(355)
Reimbursement of expense support		—		242
Net expenses		$	10,199	$	8,434

We consider the following expense categories to be relatively fixed in the near term: ~~administrative services,~~insurance expenses and director fees and ~~expenses, and custodian and accounting fees.~~expenses. Variable operating expenses include ~~professional services,~~total return incentive fees, base management fees, ~~performance–based incentive fees,~~offering expenses, professional services, distribution and shareholder servicing fees, custodian and ~~a component of other operating~~accounting fees, general and administrative expenses, ~~related to transfer agency services~~ and ~~shareholder services.~~pursuit costs. We expect these variable operating expenses to increase ~~either~~ in connection with the growth in ~~the~~our asset base ~~(investment advisory~~(base management fees, ~~and~~ total return incentive ~~fees)~~fees, accounting fees and general and administrative expenses), the number of shareholders and open accounts ~~(transfer agency services and shareholder~~(professional services, distribution and shareholder servicing fees and custodian and accounting fees) ~~and~~, and/or the complexity of our investment processes and capital structure (professional services).

~~Organization~~

Total Return Incentive Fee

The Manager and Sub-Manager are eligible to receive incentive fees based on the Total Return to Shareholders, as defined in the Management Agreement and Sub-Management Agreement, for each share class in any calendar year, payable annually in arrears. We accrue (but do not pay) the total return incentive fee on a quarterly basis, to the extent that it is earned, and perform a final reconciliation at completion of each calendar year. The total return incentive fee is due and payable to the Manager and Sub-Manager no later than ninety (90) calendar days following the end of the applicable calendar year. The total return incentive fee may be reduced or deferred by the Manager and the Sub-Manager under the Management Agreement and the Expense Support and Conditional Reimbursement Agreement.

We recorded total return incentive fees of approximately $4.5 million and $3.6 million during the three months ended March 31, 2024 and 2023, respectively. The increase in total return incentive fees during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, is primarily due to an increase in net investment income and an increase in the net change in unrealized appreciation on investments.

Base Management Fee

Our base management fee is calculated for each share class at an annual rate of (i) for the Non-founder shares, 2% of the product of (x) our average gross assets and (y) the ratio of Non-founder share Average Adjusted Capital for a particular class to total Average Adjusted Capital and (ii) for the Founder shares, 1% of the product of (x) our average gross assets and (y) the ratio of outstanding Founder share Average Adjusted Capital to total Average Adjusted Capital, in each case excluding cash, and is payable monthly in arrears.

We incurred base management fees of approximately $4.0 million and $2.7 million during the three months ended March 31, 2024 and 2023, respectively. The increase in base management fees is primarily attributable to the increase in our average gross assets (excluding cash and U.S. Treasury bills) which were approximately $886.7 million and $615.5 million during the three months ended March 31, 2024 and 2023, respectively.

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Offering Expenses

~~Organization expenses are expensed on our statement of operations as incurred.~~

Offering expenses, which consist of amounts incurred for items such as legal, accounting, regulatory and printing work incurred related to ~~our~~the Public Offerings, are capitalized on our ~~statement~~condensed consolidated statements of assets and liabilities as deferred offering expenses and expensed to our ~~statement~~condensed consolidated statements of operations over the lesser of the offering period or 12 months; however, the end of the deferral period will not exceed 12 months from the date the offering expense is incurred by the Manager and theSub-Manager.

~~Base Management Fee~~

~~Our base management fee~~

We expensed offering expenses of approximately $0.3 million and $0.9 million during the three months ended March 31, 2024 and 2023, respectively. The decrease is ~~calculated for each share class at an annual rate~~due to lower incurred offering expenses by the Manager during the three months ended March 31, 2024.

Pursuit Costs

Pursuit costs relate to transactional expenses incurred to identify, evaluate and negotiate acquisitions that ultimately were not consummated. We incurred pursuit costs of ~~(i) for~~approximately $0.5 million and $0.2 million during the~~non-founder~~ ~~shares, 2% of the product of (x) our average gross assets~~ three months ended March 31, 2024 and ~~(y) the ratio ofnon-founder~~ ~~share Average Adjusted Capital for a particular class to total Average Adjusted Capital~~2023, respectively.

Distribution and (ii) for the founder shares, 1% of the product of (x) our average gross assets and (y) the ratio of outstanding founder share Average Adjusted Capital to total Average Adjusted Capital, in each case excluding cash, andShareholder Servicing Fee

The Managing Dealer is ~~payable monthly in arrears.~~

~~Total Return Incentive Fee~~

~~The Manager andSub-Manager~~ ~~are also~~ eligible to receive ~~incentive fees based on the Total Return~~a distribution and shareholder servicing fee, subject to ~~Shareholders, as defined~~certain limits, with respect to our Class T and Class D shares sold in the ~~Management Agreement~~Public Offerings (excluding Class T shares and~~Sub-Management~~ ~~Agreement, for each~~ Class D shares sold through our distribution reinvestment plan and those received as share ~~class~~distributions) in ~~any calendar year, payable annually in arrears. We will accrue (but not pay) the total return incentive fee on a quarterly basis,~~an amount equal to ~~the extent that it is earned,~~1.00% and will perform a final reconciliation at completion of each calendar year and the total return incentive fee shall be due and payable to the Manager no later than ninety (90) calendar days following the end0.50%, respectively, of the ~~applicable calendar year. The total return incentive fee may be reduced or deferred by~~current net asset value per share.

We incurred distribution and shareholder servicing fees of approximately $0.3 million during each of the ~~Manager~~three months ended March 31, 2024 and ~~theSub-Manager~~ ~~under~~2023.

Other Operating Expenses

Other operating expenses (consisting of professional services, insurance expense, custodian and accounting fees, director fees and expenses, and general and administrative expenses) were approximately $0.9 million during each of the ~~Management Agreement~~three months ended March 31, 2024 and ~~the~~ 2023.

Expense Support ~~and Conditional Reimbursement Agreement. We did not incur any total return incentive fees during the period February 7, 2018 (commencement of operations) through March 31, 2018.~~

~~Expense Support and Conditional Reimbursement Agreement~~

(Reimbursement)

We have entered into an Expense Support and Conditional Reimbursement Agreement with the Manager and theSub-Manager, pursuant to which each of the Manager and theSub-Manager agrees to reduce the payment of base management fees, total return incentive fees and the reimbursements of reimbursable expenses due to the Manager and theSub-Manager under the Management Agreement and theSub-Management Agreement, as applicable, to the extent that our annual regular cash distributions exceed our annual net income (with certain adjustments). Expense Support is equal to the annual (calendar year) excess, if any, of (a) the distributions (as defined in the Expense Support and Conditional Reimbursement Agreement) declared and paid (net of our distribution reinvestment plan) to shareholders minus (b) the available operating ~~funds.~~funds (the “Expense Support”). The Expense Support amount ~~will be~~is borne equally by the Manager and theSub-Manager and ~~will be~~is calculated as of the last business day of the calendar year. ~~Beginning on February 7, 2018~~The Manager and ~~continuing until the Expense Support and Conditional Reimbursement Agreement is terminated, the Manager and~~Sub-Manager ~~shall~~ equally conditionally reduce the payment of fees and reimbursements of reimbursable expenses in an amount equal to the conditional waiver amount (as defined in and subject to limitations described in the Expense Support and Conditional Reimbursement Agreement). The term of the Expense Support and Conditional Reimbursement Agreement has the same initial term and renewal terms as the Management Agreement or theSub-Management Agreement, as applicable to the Manager or theSub-Manager.

If, on the last business day of the calendar year, ~~there are Excess~~the annual (calendar year) year-to-date available operating funds exceeds the sum of the annual (calendar year) year-to-date distributions paid per share class (the “Excess Operating ~~Funds,~~Funds”), we will use such Excess Operating Funds to pay the Manager and theSub-Manager all or a portion of the outstanding unreimbursed Expense Support amounts for each share class, as applicable, subject to the Conditional Reimbursements as described further in the Expense Support and Conditional Reimbursement Agreement. Our obligation to make Conditional Reimbursements shall automatically terminate and be of no further effect three years following the date which the Expense Support amount was provided and to which such Conditional Reimbursement relates, as described further in the Expense Support and Conditional Reimbursement Agreement.

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Since inception, we have received cumulative Expense Support of approximately $5.1 million. During the three months ended March 31, 2023, we recorded reimbursement of Expense Support of approximately $0.2 million. We reimbursed approximately $0.6 million and $2.4 million of Expense Support to the Manager and Sub-Manager for the years ended December 31, 2023 and 2022, respectively. As of March 31, 2024, there is no remaining amount of Expense Support to be collected from the Manager and Sub-Manager subject to reimbursement. Additionally, the Company accrued expense support due from the Manager and Sub-Manager of approximately $0.3 million and $0.4 million during the three months ended March 31, 2024 and 2023, respectively.
The actual amount of Expense Support or Expense Support Reimbursement is determined as of the last business day of each calendar year and is paid within 90 days after each year end per the terms of the Expense Support and Conditional Reimbursement Agreement described above. See Note 5. “Related Party Transactions” of Item 1. “Financial Statements” for additional information.
Other Expenses and Changes in Net Assets

Net Change in Unrealized Appreciation

~~For~~ on Portfolio Company Investments

Unrealized appreciation on portfolio company investments is based on the ~~period February 7, 2018 (commencement~~current fair value of ~~operations) through~~our investments as determined by our board of directors based on inputs from the Sub-Manager and our independent valuation firm and consistent with our valuation policy, which take into consideration, among other factors, actual results of our portfolio companies in comparison to budgeted results for the year, future growth prospects, and the valuations of publicly traded and private comparable companies as determined by our independent valuation firm.

During the three months ended March 31, ~~2018,~~2024, we recognized a net change in unrealized appreciation on our portfolio company investments of approximately $17.0 million. The net change in unrealized appreciation on portfolio company investments included gross unrealized appreciation on nine portfolio companies of approximately $20.2 million, offset partially by gross unrealized depreciation on three portfolio companies of approximately $3.2 million during the three months ended March 31, 2024. Two portfolio company investments have remained flat. Gross unrealized appreciation was due to EBITDA growth, accretive add-on acquisitions and multiple expansion in certain of our portfolio companies. Gross unrealized depreciation was primarily driven by EBITDA declines. Additionally, deferred taxes on unrealized appreciation of portfolio company investments offset unrealized appreciation on portfolio company investments by approximately $0.8 million during the three months ended March 31, 2024.

During the three months ended March 31, 2023, we recognized a net change in unrealized appreciation on portfolio company investments of approximately $14.6 million. The net change in unrealized appreciation on portfolio company investments included gross unrealized appreciation on seven portfolio companies of approximately $23.4 million, offset partially by gross unrealized depreciation on four portfolio company of approximately $8.8 million during the three months ended March 31, 2023. One portfolio company investment has remained flat. Gross unrealized appreciation was primarily due to EBITDA growth and accretive add-on acquisitions. Gross unrealized depreciation was primarily driven by EBITDA declines. Additionally, deferred taxes on unrealized appreciation of portfolio company investments offset unrealized appreciation on portfolio company investments by approximately $1.5 million during the three months ended March 31, 2023.

Net Assets

During the three months ended March 31, 2024 and 2023, the net increase in net assets consisted of the following (in thousands):


	Three Months Ended March 31,
		2024		2023
Operations		$	20,951	$	18,003
Distributions to shareholders		(8,807)		(6,601)
Capital transactions		42,740		59,459
Net increase in net assets		$	54,884	$	70,861

Operations increased by approximately $2.9 million during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. The increase in operations for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, is primarily due to an increase in the net change in unrealized appreciation on investments ~~consisted~~ of approximately $3.1 million and a decrease in net investment income of approximately $0.2 million.

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Distributions increased approximately $2.2 million during the ~~following:~~

Unrealized appreciation
   $ 524,449
Unrealized depreciation
   —


Total net unrealized appreciation
   $ 524,449

~~The unrealized appreciation of $524,449 pertains solely~~three months ended March 31, 2024, as compared to ~~our investment in~~ the ~~equity of Lawn Doctor,~~three months ended March 31, 2023, primarily as a result of ~~among~~an increase in shares outstanding.

Capital transactions decreased by approximately $16.7 million during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. The decrease in capital transactions for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, is primarily due to an increase in share repurchases of approximately $11.3 million and a decrease in net proceeds received through the Follow-On Public Offering (including proceeds received through our distribution reinvestment plan) of approximately $5.4 million.

Total Returns

The following table illustrates year-to-date (“YTD”), trailing 12 months (“One Year”), trailing 36 months (“Three Year”), Average Annual Return (“AAR”), trailing 60 months (“Five Year”), Average Annual Return (“AAR”) and cumulative total returns with and without upfront selling commissions and dealer manager fees (“sales load”), as applicable. All total returns with sales load assume full upfront selling commissions and dealer manager fees. Total returns are calculated for each share class as the change in the net asset value for such share class during the period and assuming all distributions are reinvested. Class FA assumes distributions are reinvested in Class A shares and all other ~~things, strong~~share classes assume distributions are reinvested in the same share class. Management believes total return is a useful measure of the overall investment performance ~~above expectations~~of our shares.


	YTD Total Return		One Year Total Return(1)		Three Year Total Return(2)		Five Year Total Return(3)		AAR Since Inception(4)		Cumulative Total Return(4)		Cumulative Total Return Period(4)
Class FA (no sales load)	2.3	%	8.2	%	32.0	%	68.7	%	14.5	%	89.0	%	Feb. 7, 2018 - Mar. 31, 2024
Class FA (with sales load)	(4.4)	%	1.2	%	23.4	%	57.7	%	12.5	%	76.7	%	Feb. 7, 2018 - Mar. 31, 2024
Class A (no sales load)	2.0	%	7.1	%	27.7	%	58.5	%	12.6	%	75.4	%	Apr. 10, 2018 - Mar. 31, 2024
Class A (with sales load)	(6.6)	%	(2.0)	%	16.9	%	45.0	%	10.1	%	60.5	%	Apr. 10, 2018 - Mar. 31, 2024
Class I	2.0	%	7.1	%	28.0	%	59.6	%	12.9	%	77.4	%	Apr. 10, 2018 - Mar. 31, 2024
Class T (no sales load)	1.8	%	6.4	%	25.6	%	51.6	%	11.1	%	65.0	%	May 25, 2018 - Mar. 31, 2024
Class T (with sales load)	(3.0)	%	1.4	%	19.6	%	44.4	%	9.8	%	57.1	%	May 25, 2018 - Mar. 31, 2024
Class D	2.0	%	7.0	%	27.8	%	55.7	%	11.6	%	66.8	%	June 26, 2018 - Mar. 31, 2024
Class S (no sales load)	2.3	%	8.6	%	34.4	%	N/A		14.9	%	59.6	%	Mar. 31, 2020 - Mar. 31, 2024
Class S (with sales load)	(1.3)	%	4.8	%	29.7	%	N/A		13.5	%	54.1	%	Mar. 31, 2020 - Mar. 31, 2024

FOOTNOTES:

(1) For the period from April 1, 2023 to March 31, 2024.

(2) For the period from April 1, 2021 to March 31, 2024.

(3) For the period from April 1, 2019 to March 31, 2024.

(4) For the period from the date the first share was issued for each respective share class to March 31, 2024. The AAR since inception is calculated by taking the Cumulative Total Return and dividing it by the ~~future growth opportunities of Lawn Doctor.~~

cumulative total return period.

We are not aware of any material trends or uncertainties, favorable or unfavorable, that may be reasonably anticipated to have a material impact on either capital resources or the revenues or income to be derived from our investments, other than those described above and the risk factors ~~if any,~~ identified in ~~Part II,~~ Item 1A ~~of this report, and the “Risk Factors”~~in Part I of our ~~Prospectus.~~

~~Net Assets~~

~~Net assets increased approximately $82.0 million during~~Form 10-K for the ~~period February 7, 2018 (commencement of operations) through March~~year ended December 31, ~~2018. The most significant increase in net assets during the quarter ended March 31, 2018 was attributable to capital transactions~~2023 and this Quarterly Report, including the issuance of Class FA shares resulting in net proceeds of approximately $81.5 million. Additionally, during the quarter ended March 31, 2018, our operations resulted in an increase in net assets of approximately $0.8 million. These increases in net assets were partially offset by distributions to shareholders of approximately $0.3 million during the quarter ended March 31, 2018.

negative impacts from recent geopolitical events.

Our shares are illiquid investments for which there currently is ~~currently not a~~no secondary market. ~~You~~Investors should not expect to be able to resell ~~your~~their shares regardless of how we perform. If ~~you~~investors are able to sell ~~your~~their shares, ~~you~~they will likely receive less than ~~your~~their purchase price. Our net asset value and ~~annualized~~total returns — which are based in part upon determinations of fair value of Level 3 investments by our board of directors, not active market quotations — are inherently uncertain. Past performance is not a guarantee of future results.

~~Liquidity and Capital Resources~~

Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments, fund and maintain our assets and operations, repay borrowings, make distributions to our shareholders and other general business needs. We will use significant cash to fund acquisitions, repay principal and interest on our borrowings, make distributions to our shareholders and fund our operations. Our primary sources of cash will generally consist of:

~~the net proceeds of the Public Offering;~~

~~distributions, interest earned and fees from our assets;~~

~~proceeds from sales of assets and principal repayments from our assets; and~~

~~unused borrowing capacity under our financing sources.~~

We expect we will have sufficient cash from current sources to meet our liquidity needs for the next twelve months. However, we may opt to supplement our equity capital and increase potential returns to our shareholders through the use of prudent levels of borrowings. We may use debt when the available terms and conditions are favorable to long-term investing and well-aligned with our business strategy. In determining whether to borrow money, we seek to optimize maturity, covenant packages and rate structures. Most importantly, the risks of borrowing within the context of our business outlook and the impact on our businesses are extensively analyzed by the Manager and our board of directors in making this determination.

~~While we generally intend to hold our assets for the long term, certain assets~~ Current performance may be ~~sold in order to manage our liquidity needs, meet other operating objectives and adapt to market conditions. The timing and impact~~higher or lower than the performance data reported above.

Table of ~~future sales of our assets, if any, cannot be predicted with any certainty.~~

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Hedging Activities

As of March 31, ~~2018 and December 31, 2017,~~2024, we had ~~approximately $5.6 million and $0.2 million of cash and cash equivalents, respectively.~~

We raised approximately $81.5 million in net proceeds (3.3 million shares of Class FA shares) during the period February 7, 2018 (commencement of operations) through March 31, 2018 under the Private Placement, which included a $2.4 million~~non-cash~~ ~~contribution by ourSub-Manager,~~ ~~as described above under “Overview – Our Common Shares Offering.” As of March 31, 2018 we had approximately 947 million common shares available for sale through our Public Offering.~~

During the period February 7, 2018 (commencement of operations) through March 31, 2018, we generated cash flows primarily from interest earned on our debt investments. We used approximately $74.4 million of the cash proceeds from our Private Placement to purchase our initial businesses. We also declared four weekly distributions in March 2018 totaling approximately $0.3 million, which were paid to shareholders in April 2018. See “Distributions” below for information regarding our distribution policy.

~~Hedging Activities~~

~~In an effort to stabilize our revenue and input costs where applicable, we may enter~~not entered into any derivatives or other financial ~~instruments in an attempt to hedge our commodity risk.~~instruments. With respect to any potential financings, general increases in interest rates over time may cause the interest expense associated with our borrowings to increase, and the value of our debt investments to decline. We may seek to stabilize our financing costs as well as any potential decline in our assets by entering into derivatives, swaps or other financial products in an attempt to hedge our interest rate risk. In the event we pursue any assets outside of the United States we may have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the U.S. dollar. We may in the future, enter into derivatives or other financial instruments in an attempt to hedge any such foreign currency exchange risk. It is difficult to predict the impact hedging activities may have on our results of operations.

~~Distributions~~

Subject to our board of directors’ discretion and applicable legal restrictions, our board of directors intends to declare cash distributions to shareholders based on weekly record dates and we intend to pay such distributions on a monthly basis. Shareholders may elect to reinvest their distributions as additional common shares under our distribution reinvestment plan. Distributions are taxable to our shareholders even if they are reinvested in additional shares of our common shares. The following table reflects, by share class, the cash distributions per share and the total amount of distributions that we have declared on our common shares during the period February 7, 2018 (commencement of operations) through March 31, 2018:

   Quarter Ended
March 31, 2018
   Per Share    Amount
March 31, 2018 (4 record dates)

Class FA shares
   $ 0.092718    $ 302,841
Class A shares
   0.092718    —
Class T shares
   0.074177    —
Class D shares
   0.083449    —
Class I shares
   0.092718    —

Our board of directors also declared cash distributions on the outstanding shares of all classes of our common shares based on weekly record dates for the time period beginning on April 3, 2018 through and including May 29, 2018, as set forth below:

We calculate each shareholder’s specific distribution amount for the period using record and declaration dates. Distributions are made on all classes of our shares at the same time. Amounts distributed are allocated among each class in proportion to the number of shares of each class outstanding. Amounts distributed to each class are allocated among the holders of our shares in such class in proportion to their shares. The per share amount of distributions on Class A, Class T, Class D and Class I shares will differ because of different allocations of certain class-specific expenses. Specifically, distributions on Class T shares and Class D shares will be lower than distributions on Class A, Class FA and Class I shares because the company is required to pay ongoing annual distribution and shareholder servicing fees with respect to the Class T shares and Class D shares sold in the primary offering. Additionally, distributions on the~~non-founder~~ ~~shares will likely be lower than distributions on Class FA shares because we are required to pay higher management and incentive fees to the Manager and theSub-Manager~~ ~~with respect to thenon-founder~~ shares. There is no assurance that we will pay distributions in any particular amount, if at all. See Note 6. “Distributions” in Item 1. “Financial Statements” for additional disclosures regarding distributions.

We do not expect to use equity capital or borrowed funds to pay distributions to shareholders nor do we expect any portion of our distributions paid in 2018 to be treated as a return of capital for tax purposes. See Note 6. “Distributions” in Item 1. “Financial Statements” for a discussion of the sources of funds used to pay distributions on a GAAP basis for the periods presented.

~~Distribution Reinvestment Plan~~

We have adopted a distribution reinvestment plan pursuant to which shareholders who purchase shares in our Public Offering (other than shareholders who are residents of Alabama, Idaho, Kansas, Kentucky, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Nebraska, New Hampshire, New Jersey, North Carolina, Ohio, Oregon, Washington (collectively the “Opt-in-States”) and clients of certain participating broker-dealers that do not permit automatic enrollment in our distribution reinvestment plan) will have their cash distributions automatically reinvested in additional shares having the same class designation as the class of shares to which such distributions are attributable, unless such shareholders elect to receive distributions in cash. Shareholders who are residents of~~Opt-in~~ States, holders of Class FA shares and clients of certain participating broker-dealers that do not permit automatic enrollment in our distribution reinvestment plan will automatically receive their distributions in cash unless they elect to have their cash distributions reinvested in additional shares. Cash distributions paid on Class FA shares will be reinvested in additional shares of Class A shares. The following discussion summarizes the principal terms of this plan.

The purchase price for shares purchased under our distribution reinvestment plan will be equal to the most recently determined and published net asset value per share of the applicable class of shares. Because the annual distribution and shareholder servicing fee is calculated based on net asset value, it reduces net asset value and/or distributions with respect to Class T shares and Class D shares, including shares issued under the distribution reinvestment plan with respect to such share classes. To the extent newly issued shares are purchased from us under the distribution reinvestment plan or shareholders elect to reinvest their cash distribution in our shares, we will retain and/or receive additional funds for acquisitions and general purposes including the repurchase of shares under our share repurchase program.

We will not pay selling commissions or dealer manager fees on shares sold pursuant to our distribution reinvestment plan. However, the amount of the annual distribution and shareholder servicing fee payable with respect to Class T or Class D shares, respectively, sold in this offering will be allocated among all Class T or Class D shares, respectively, including those sold under our distribution reinvestment plan and those received as distributions.

~~Contractual Obligations~~

~~We have entered into the Management Agreement with the Manager and theSub-Management~~ ~~Agreement with the Manager and theSub-Manager~~ ~~pursuant to which the Manager and theSub-Manager~~ ~~are entitled to receive a base management fee and the reimbursement of certain expenses. Certain incentive fees based on our performance are payable to the Manager and theSub-Manager~~ ~~after our performance thresholds are met. Each of the Manager and theSub-Manager~~ is entitled to 50% of the base management fee and incentive fees, subject to any reduction or deferral of any such fees pursuant to the terms of the Expense Support and Conditional Reimbursement Agreement. We have also entered into the Administrative Services Agreement with the Administrator and the~~Sub-Administration~~ ~~Agreement with the Administrator and theSub-Administrator~~ ~~pursuant to which the Administrator and theSub-Administrator~~ will provide us with administrative services and are entitled to reimbursement of expenses for such services. For a discussion of the compensation we pay in connection with the management of our business, see Note 5. “Related Party Transactions” of Item 1. “Financial Statements.”

~~Off-Balance~~ ~~Sheet Arrangements~~

~~We currently have nooff-balance~~ ~~sheet arrangements, including any risk management of commodity pricing or other hedging practices.~~

~~Inflation~~

We do not anticipate that inflation will have a significant effect on our results of operations. However, in the event of a significant increase in inflation, interest rates could rise and our assets may be materially adversely affected.

Seasonality

We do not anticipate that seasonality will have a significant effect on our results of operations.

Critical Accounting Policies and Use of Estimates

~~Our most critical accounting policies will involve decisions~~

See our Form 10-K for the year ended December 31, 2023 and assessments that could affect our reported assets and liabilities, as well as our reported revenues and expenses. We believe that all of the decisions and assessments upon which our financial statements are based are reasonable at the time made and based upon information available to us at that time. Our critical accounting policies and accounting estimates will be expanded over time as we continue to implement our business and operating strategy. Our significant accounting policies are described in Note 2. “Significant Accounting Policies” of ~~Item 1. “Financial Statements.” Those material accounting policies and estimates that we initially expect to be most critical to an investor’s understanding~~Part I of this Quarterly Report for a summary of our ~~financial results and condition, as well as those that require complex judgment decisions by our management, are discussed below.~~

~~Basis of Presentation~~

~~Our financial statements are prepared in accordance with GAAP, which requires the use of estimates, assumptions and the exercise of subjective judgment as to future uncertainties.~~

Although we are organized and intend to conduct our business in a manner so that we are not required to register as an investment company under the Investment Company Act, our financial statements are prepared using the specializedcritical accounting principles of ASC Topic 946 to utilize investment company accounting. We obtain funds through the issuance of equity interests to multiple unrelated investors, and provide such investors with investment management services. Further, our business strategy is to acquire interests in middle-market businesses to provide current income and long term capital appreciation, while protecting invested capital. Overall, we believe that the use of investment company accounting on a fair value basis is consistent with the management of our assets on a fair value basis, and make our financial statements more useful to investors and other financial statement users in facilitating the evaluation of an investment in us as compared to other investment products in the marketplace.

~~Valuation of Investments~~

We have adopted, and our valuation policy is performed in accordance with, ASC Topic 820, as described in Note 2. “Significant Accounting Policies” of Item 1. “Financial Statements”. As of March 31, 2018, all of our investments were categorized as Level 3. Our investments are valued utilizing a market approach, an income approach (i.e. discounted cash flow approach), a transaction approach, or a combination of such approaches, as appropriate. The market comparables approach uses prices, including third party indicative broker quotes, and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The transaction approach uses pricing indications derived from recent precedent merger and acquisition transactions involving comparable target companies. The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) that are discounted based on a required or expected discount rate to derive a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors we may take into account to determine the fair value of our investments include, as relevant: available current market data, including an assessment of the credit quality of the security’s issuer, relevant and applicable market trading and transaction comparables, applicable market yields and multiples, illiquidity discounts, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, data derived from merger and acquisition activities for comparable companies, and enterprise values, among other factors.

Our board of directors is ultimately responsible for determining in good faith the fair value of our investments in accordance with the valuation policy and procedures approved by the board of directors, based on, among other things, the input of the Manager, the~~Sub-Manager,~~ management, our audit committee, and independent third-party valuation firm. The determination of the fair value of our assets requires judgment, especially with respect to assets for which market prices are not available. For most of our assets, market prices will not be available. Due to the inherent uncertainty of determining the fair value of assets that do not have a readily available market value, the fair value of the assets may differ significantly from the values that would have been used had a readily available market value existed for such assets, and the differences could be material. Because the calculation of our net asset value is based, in part, on the fair value of our assets, our calculation of net asset value is subjective and could be adversely affected if the determinations regarding the fair value of its assets were materially higher than the values that we ultimately realize upon the disposal of such assets. Furthermore, through the valuation process, our board of directors may determine that the fair value of our assets differs materially from the values that were provided by the independent valuation firm.

~~U.S. Federal Income Taxes~~

We believe that we are properly characterized as a partnership for U.S. Federal income tax purposes and expect to continue to qualify as a partnership (and not be treated as a publicly traded partnership or otherwise be treated as a taxable corporation) for such purposes. As a partnership, we are generally not subject to U.S Federal income tax at the entity level.

~~Recently Issued Accounting Pronouncements~~

~~We will adopt all authoritative accounting standards relevant to our financial statements as required.~~

~~JOBS Act~~

We qualify as an “emerging growth company” pursuant to the provisions of the JOBS Act, enacted on April 5, 2012. For as long as we are an “emerging growth company,” we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding advisory~~“say-on-pay”~~ votes on executive compensation and shareholder advisory votes on golden parachute compensation. Although these exemptions will be available to us, we do not expect these exemptions to have a material impact on our public reporting and disclosure. Because we are not a “large accelerated filer” or an “accelerated filer” under the Exchange Act, and will not be so long as our shares are not traded on a securities exchange, we are not subject to the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act. In addition, because we have no employees, we do not have any executive compensation or golden parachute payments to report in our periodic reports and proxy statements.

~~Under the JOBS Act, we will remain an “emerging growth company” until the earliest of:~~

policies.

~~the last day of the fiscal year during which we have total annual gross revenues of $1.07 billion or more;~~

~~the last day of the fiscal year following the fifth anniversary of the completion of this offering;~~

~~the date on which we have, during the previous three-year period, issued more than $1 billion innon-convertible~~ ~~debt; and~~

the date on which we are deemed to be a “large accelerated filer” under the Exchange Act. We will qualify as a large accelerated filer as of the first day of the first fiscal year after we have (i) more than $700 million in outstanding common equity held by our~~non-affiliates~~ as of the last day of our most recently completed second fiscal quarter, (ii) been a public company for at least 12 months and (iii) filed at least one annual report with the SEC. The value of our outstanding common equity will be measured each year on the last day of our second fiscal quarter.

The JOBS Act also provides that an “emerging growth company” can utilize the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. However, we are choosing to opt out of that extended transition period, and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for companies that are not “emerging growth companies.” Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

~~Item 3.~~

~~Quantitative and Qualitative Disclosures About Market Risk~~

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We anticipate that our primary market risks will be related to the credit quality of our counterparties, market interest rates and ~~foreign currency changes.~~changes in exchange rates. We will seek to manage these risks while, at the same time, seeking to provide an opportunity to shareholders to realize attractive returns through ownership of our shares.

Many of these risks have been magnified due to the continuing uncertainties caused by the recent geopolitical events; however, while we continue to monitor the geopolitical events, its impact on such risks remains uncertain and difficult to predict.

Credit Risk

We expect to encounter credit risk relating to (i) the businesses and other assets we acquire and (ii) ~~any potential~~our ability to access the debt ~~financing we may obtain.~~markets on favorable terms. We will seek to mitigate this risk by deploying a comprehensive review and asset selection process, including ~~worst case~~scenario analysis, and careful ongoing monitoring of our acquired businesses and other assets as well as mitigation of negative credit effects through back up planning. Nevertheless, unanticipated credit losses could occur, which could adversely impact our operating results.

Changes in Market Interest Rates

We are subject to financial market risks, including changes in interest rates. Our debt investments are currently structured with fixed interest rates. Returns on investments that carry fixed rates are not subject to fluctuations in ~~interest rates,~~payments we receive from our borrowers, and will not adjust should rates move up or down. However, wethe fair value of our debt investments may be negatively impacted by rising interest rates. We may also invest in floating interest rate debt investments in the future.

We had not borrowed any money as of March 31, 2024. However, to the extent that we borrow money to make investments, our net investment income will be dependent upon the difference between the rate at which we borrow funds and the rate at which we invest these funds. In periods of rising interest rates, our cost of funds ~~would~~may increase, which may reduce our net investment income. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.

~~Foreign Currency Risk~~

~~All of our investments are currently denominated in U.S. Dollars. Therefore, the current portfolio does~~

Exchange Rate Sensitivity

At March 31, 2024, we were not ~~present currency risk~~exposed to ~~U.S. shareholders. In the future, we may hedge against~~any foreign currency exchange rate risks that could have a material effect on our financial condition or results of operations. Although we do not have any foreign operations, some of the portfolio companies we invest in conduct business in foreign jurisdictions and ~~interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts. While hedging activities may insulate us from adverse~~therefore our investments have an indirect exposure to risks associated with changes in ~~currency~~foreign exchange ~~rates and interest rates, they may also limit our ability to participate in benefits~~rates.

Table of ~~lower interest rates with respect to our portfolio of investments with fixed interest rates or favorable changes in currency exchange rates.~~

Contents

~~Item 4.~~

~~Controls and Procedures~~

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, including our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our management, including our principal executive officer and principal financial officer, concluded that our disclosure controls and procedures are effective at the reasonable assurance level as of the end of the period covered by this report to provide reasonable assurance that information required to be disclosed by us in the reports we filed under the Securities Exchange Act of 1934, as amended (“Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the relevant SEC rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file and submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

During the most recent fiscal quarter, there were no changes in internal control over financial reporting (as defined under Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Table of Contents

PART II. OTHER INFORMATION

~~Item 1.~~

~~Legal Proceedings~~

Item 1. Legal Proceedings

From time to time, we and individuals employed by us may be party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our businesses. In addition, our business and the businesses of the Manager, the Sub-Manager and the Managing Dealer are subject to extensive regulation, which may result in regulatory proceedings. Legal proceedings, lawsuits, claims and regulatory proceedings are subject to many uncertainties and their ultimate outcomes are not predictable with assurance.

As of March 31, ~~2018,~~2024, we were not involved in any legal proceedings.

Additionally, there is no action, suit or proceeding pending before any court, or, to our knowledge, threatened by any regulatory agency or other third party, against the Manager, the Sub-Manager or the Managing Dealer that would have a material adverse effect on us.

~~Item 1A.~~

~~Risk Factors~~

Item 1A. Risk Factors

We have disclosed under the heading “Risk Factors” in our ~~Prospectus,~~Form 10-K for the year ended December 31, 2023, risk factors which materially affect our business, financial condition or results of operations. ~~The following risk factors replace and/or supplement the similar risk factors set forth in our Prospectus.~~ You should carefully consider the risk factors set forth in our ~~Prospectus and Item 1A in Part II of this Quarterly Report.~~Form 10-K. You should be aware that these risk factors and other information may not describe every risk facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

The U.S. Department of Labor, or the Department of Labor, has issued regulations that revise the definition of an ERISA fiduciary, and these regulations could have a significant effect on an investment in our shares.

The U.S. Department of Labor issued in 2016 its final regulation redefining “investment advice fiduciary” under ERISA and the Code. The final regulation significantly expanded the class of advisers and the scope of investment advice that are subject to fiduciary standards, imposing the same fiduciary standards on advisers to IRAs that have historically only applied to plans covered by ERISA. The Department of Labor also finalized certain prohibited transaction exemptions that allow investment advisers to receive compensation for providing investment advice under arrangements that would otherwise be prohibited due to conflicts of interest. Financial institutions that had been relying on the “Best Interest Contract Exemption” were permitted to comply with only a limited set of requirements through July 1, 2019. The United States Court of Appeals for the Fifth Circuit is currently expected to issue an order vacating the entire final regulation, the two special prohibited transaction exemptions that had come with the new rule, including the Best Interest Contract Exemption, and amendments to other long-standing prohibited transaction exemptions. The Department of Labor has announced that it intends to issue appropriate guidance in the future that will address the consequences of the disposition of the final regulation. Because the status of the final regulation is still developing and the application of the final regulation remains uncertain, plan fiduciaries and the beneficial owners of IRAs are urged to consult with their own advisors regarding this development.

Our business could be adversely affected if we fail to maintain our qualification as a venture capital operating company, or VCOC, under the “plan assets” regulation under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

We sold and issued our Class FA shares in the private offering and used a substantial portion of the net proceeds from the private offering to acquire our initial businesses. We currently qualify as a VCOC, as defined in the regulations governing plan assets, or the Plan Asset Regulations, promulgated under ERISA by the Department of Labor, and therefore are not subject to the ERISA fiduciary requirements with respect to our assets. However, if we fail to satisfy the requirements to qualify as a VCOC for any reason and no other exception under the Plan Asset Regulations applies, such failure could materially interfere with our activities or expose us to risks related to our failure to comply with the requirements. If no exception under the Plan Asset Regulations applied, the fiduciary responsibility standards of ERISA would apply to us, including the requirement of investment prudence and diversification, and certain transactions that we enter into, or may have entered into, in the ordinary course of business, might constitute or result in non-exempt prohibited transactions under Section 406 of ERISA or Section 4975 of the Code. A non-exempt prohibited transaction, in addition to imposing potential liability upon fiduciaries of a plan subject to Title I of ERISA or Section 4975 of the Code, may also result in the imposition of an excise tax under the Code upon a “party in interest” (as defined in ERISA) or “disqualified person” (as defined in the Code) with whom we engaged in the transaction. Therefore, our business could be adversely affected if we fail to quality as a VCOC under the Plan Asset Regulations.

~~Item 2.~~

~~Unregistered Sales of Equity Securities and Use of Proceeds~~

Item 2. Unregistered Sales of Equity Securities

~~We were capitalized through the purchase by CNL Strategic Capital Management, LLC~~ and ~~Levine Leichtman Strategic Capital, LLC~~Use of ~~4,000 shares~~Proceeds

Repurchase of Shares

In March 2019, our board of directors approved and adopted a share repurchase program, as amended (the “Share Repurchase Program”). The total amount of aggregate repurchases of Class FA, Class A, Class T, Class D, Class I and Class S shares ~~each for~~will be limited to up to 2.5% of the aggregate ~~consideration~~net asset value per calendar quarter (based on the aggregate net asset value as of ~~$200,000 in June 2017.~~

~~From April 2017~~the last date of the month immediately prior to ~~February 2018, we conducted~~ the ~~Private Placement of~~repurchase date) and up to $200 million in shares of our Class FA and Class A shares. We offered the shares in the Private Placement only to persons that were “accredited investors,” as that term is defined under the Securities Act and Regulation D promulgated thereunder. As of February 8, 2018, the date we terminated the Private Placement, we received aggregate gross proceeds of approximately $81.7 million from the sale of approximately 3.3 million shares of our Class FA shares in the Private Placement. The $81.7 million in gross proceeds included a cash capital contribution of $2.4 million from the Manager in exchange for 96,000 Class FA shares and a cash capital contribution of $9.5 million from CNL Strategic Capital Investment, LLC, which is indirectly controlled by James M. Seneff, Jr., the chairman10% of the ~~Company, in exchange for 380,000 Class FA shares. The $81.7 million also included 96,000 Class FA shares received in exchange for $2.4 million ofnon-cash~~ ~~consideration in~~aggregate net asset value per year (based on the ~~form of equity interests in Lawn Doctor received from an affiliate~~average aggregate net asset value as of the~~Sub-Manager~~ ~~pursuant to Exchange Agreement. The $81.7 million in gross proceeds also included a cash capital contribution~~ end of approximately $0.4 million in exchange for 15,000 Class FA shares, from other individuals affiliated with the Manager. No selling commissions or dealer manager fees were charged in connection with the sales of Class FA shares.

~~Each~~each of the ~~recipients~~Company’s trailing four quarters). Notwithstanding the foregoing, at the sole discretion of our shares has represented to us that they are an accredited investor. Based upon these representations, we believe that the issuances of our shares were exempt from the registration requirements of the Securities Act, pursuant to Section 4(2) thereof and Regulation D promulgated thereunder.

~~Use of Proceeds~~

On March 7, 2018, the Registration Statement covering the Public Offering, of up to $1,100,000,000 Shares, was declared effective under the Securities Act. The Public Offering commenced on March 7, 2018, and is currently expected to terminate on or before Mach 7, 2020, unless extended by our board of ~~directors.~~

~~Through CNL Securities Corp.,~~directors, we may also use other sources, including, but not limited to, offering proceeds and borrowings to repurchase shares. Our board of directors, in its sole discretion, may amend, suspend or terminate the ~~Managing Dealer~~Share Repurchase Program or waive any of its specific conditions to the extent it is in our best interest, including to ensure our ability to qualify as a partnership for U.S. federal income tax purposes.

During the quarter ended March 31, 2024, we repurchased the following shares (in thousands except per share data):


Period	Total Number of Shares Repurchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan	Maximum Value of Shares That May Yet Be Purchased Under the Plan (1)
January 1, 2024 to January 31, 2024	—	$	—	—	$	25,487
February 1, 2024 to February 29, 2024	—	—		—	25,487
March 1, 2024 to March 31, 2024	400	$	34.45	400	11,707

FOOTNOTE:

(1) Repurchases are limited under the Share Repurchase Program as described above. During the quarter ended March 31, 2024, we received requests for the ~~Public Offering, we~~repurchase of approximately $13,780 of our common shares. Our board of directors approved the repurchases.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Table of Contents

Item 6. Exhibits

The exhibits required by this item are ~~offering to~~set forth in the ~~public on a best efforts basis up to $1,000,000,000 Shares consisting~~Exhibit Index attached hereto and are file or incorporated as part of ~~Class A shares, Class T shares, Class D shares and Class I shares.~~

We are also offering up to $100,000,000 Shares to be issued pursuant to our distribution reinvestment plan. The Shares being offered can be reallocated among the different classes and between the primary Public Offering and the distribution reinvestment plan.

As of March 31, 2018, we had not yet raised any proceeds from the Public Offering so there are not yet any expenses in connection with the issuance and distribution of securities for which we are responsible.

~~Item 3.~~ ~~Defaults Upon Senior Securities~~ –~~None~~

~~Item 4.~~

~~Mine Safety Disclosures~~ –~~Not applicable~~

~~Item 5.~~

~~Other Information~~ –~~None~~

~~Item 6.~~

~~Exhibits~~ –~~The exhibits required by this item are set forth in the Exhibit Index attached hereto and are filed or incorporated as part of this report.~~

this report.

EXHIBIT INDEX

The following exhibits are filed or incorporated as part of this ~~report~~

report.


3.1
1.1*		~~Managing Dealer Agreement dated as of March 7, 2018 between CNL Strategic Capital, LLC and CNL Securities Corp.~~

~~2.1~~	Agreement and Plan of Merger dated as of October 20, 2017 by and among CNL Strategic Capital, LLC, LD Merger Sub, Inc. and LD Parent, Inc. (incorporated by reference to Exhibit 2.1 to the Registration Statement on Form~~S-1~~ ~~(FileNo. 333-222986)~~ ~~filed with the SEC on February 12, 2018).~~

~~2.2~~	Agreement and Plan of Merger dated as of October 20, 2017 by and among CNL Strategic Capital, LLC, PFHI Merger Sub, Inc. and Polyform Holdings, Inc. (incorporated by reference to Exhibit 2.2 to the Registration Statement on Form~~S-1~~ ~~(FileNo. 333-222986)~~ ~~filed with the SEC on February 12, 2018).~~

~~2.3~~	First Amendment to Agreement and Plan of Merger dated as of February 6, 2018 by and among CNL Strategic Capital, LLC, LD Merger Sub, Inc. and LD Parent, Inc. (incorporated by reference to Exhibit 2.3 to the Registration Statement on Form~~S-1~~ ~~(FileNo. 333-222986)~~ ~~filed with the SEC on February 12, 2018).~~

~~2.4~~	First Amendment to Agreement and Plan of Merger dated as of February 6, 2018 by and among CNL Strategic Capital, LLC, PFHI Merger Sub, Inc. and Polyform Holdings, Inc. (incorporated by reference to Exhibit 2.4 to the Registration Statement on Form~~S-1~~ ~~(FileNo. 333-222986)~~ ~~filed with the SEC on February 12, 2018).~~

~~3.1~~	Certificate of Formation of CNL Strategic Capital, LLC dated August 8, 2016 (incorporated by reference to Exhibit 3.1 to the Registration Statement on FormS-1 (FileNo. 333-222986) filed with the SEC on February 12, 2018).

3.2			~~Third~~Sixth Amended and Restated Limited Liability Company Operating Agreement of CNL Strategic Capital, LLC (incorporated by reference to Exhibit 3.2 to the~~Pre-Effective~~ ~~Amendment No. 1 to the Registration Statement~~ Company’s Annual Report on Form~~S-1~~ ~~(FileNo. 333-222986)~~ 10-K filed with the SEC on March ~~1, 2018)~~29, 2023).

4.1			Distribution Reinvestment Plan (incorporated by reference to Exhibit 4.1 to the Registration Statement on FormS-1 (FileNo. 333-222986) filed with the SEC on February 12, 2018).

4.2			Form of Subscription Agreement (incorporated by reference to Appendix B to the Prospectus filed pursuant to Rule 424(b)(3) with the SEC on ~~March 7, 2018)~~April 24, 2023).

4.3			Fourth Amended and Restated Share Repurchase Program (incorporated by reference to Exhibit ~~4.3~~4.1 to the ~~Registration Statement~~Company’s Current Report on Form~~S-1~~ ~~(FileNo. 333-222986)~~ 8-K filed with the SEC on February ~~12, 2018)~~24, 2023).

~~10.1~~ 31.1*			Second Amended and Restated Management Agreement dated as of February 28, 2018 by and between the Registrant and CNL Strategic Capital Management, LLC (incorporated by reference to Exhibit 10.1 to the~~Pre-Effective~~ ~~Amendment No. 1 to the Registration Statement on FormS-1~~ ~~(FileNo. 333-222986)~~ ~~filed with the SEC on March 1, 2018).~~

~~10.2~~	~~Second Amended and RestatedSub-Management~~ Agreement dated as of February 28, 2018 by and among the Registrant, CNL Strategic Capital Management, LLC and Levine Leichtman Strategic Capital, LLC (incorporated by reference to Exhibit 10.2 to the~~Pre-Effective~~ ~~Amendment No. 1 to the Registration Statement on FormS-1~~ ~~(FileNo. 333-222986)~~ ~~filed with the SEC on March 1, 2018).~~

10.3*	~~Escrow Agreement dated as of February 14, 2018 by and between CNL Strategic Capital, LLC, UMB Bank, N.A. and CNL Securities Corp.~~

~~10.4~~	Amended and Restated Administrative Services Agreement dated as of February 7, 2018 by and between the Registrant and CNL Strategic Capital Management, LLC (incorporated by reference to Exhibit 10.4 to the Registration Statement on Form~~S-1~~ ~~(FileNo. 333-222986)~~ ~~filed with the SEC on February 12, 2018).~~

  ~~10.5~~
~~Amended and RestatedSub-Administration~~ Agreement dated as of February 7, 2018 by and among the Registrant, CNL Strategic Capital Management, LLC and Levine Leichtman Strategic Capital, LLC (incorporated by reference to Exhibit 10.5 to the Registration Statement on Form~~S-1~~ ~~(FileNo. 333-222986)~~ ~~filed with the SEC on February 12, 2018).~~
  ~~10.6~~
Amended and Restated Expense Support and Conditional Reimbursement Agreement dated as of February 7, 2018 by and among the Registrant, CNL Strategic Capital Management, LLC and Levine Leichtman Strategic Capital, LLC (incorporated by reference to Exhibit 10.6 to the Registration Statement on Form~~S-1~~ ~~(FileNo. 333-222986)~~ ~~filed with the SEC on February 12, 2018).~~
  ~~10.7~~
~~Form of Indemnification Agreement (incorporated by reference to Exhibit 10.7 to the Registration Statement on FormS-1~~ ~~(FileNo. 333-222986)~~ ~~filed with the SEC on February 12, 2018).~~
  ~~10.8~~
Note Purchase Agreement dated as of February 7, 2018 by and among Lawn Doctor, Inc., LD Strategic Capital Debtco, LLC and Aspire Capital Group, LLC (incorporated by reference to Exhibit 10.8 to the Registration Statement on Form~~S-1~~ ~~(FileNo. 333-222986)~~ ~~filed with the SEC on February 12, 2018).~~
  ~~10.9~~
Note Purchase Agreement dated as of February 7, 2018 by and among Polyform Products Company, Inc. and Polyform Strategic Capital Debtco, LLC (incorporated by reference to Exhibit 10.9 to the Registration Statement on Form~~S-1~~ ~~(FileNo. 333-222986)~~ ~~filed with the SEC on February 12, 2018).~~
  ~~10.10~~
Service Agreement dated as of February 7, 2018 by and between CNL Capital Markets Corp. and CNL Strategic Capital Management, LLC (incorporated by reference to Exhibit 10.10 to the Registration Statement on Form~~S-1~~ ~~(FileNo. 333-222986)~~ ~~filed with the SEC on February 12, 2018).~~
  31.1*
Certification of Chief Executive Officer of CNL Strategic Capital, LLC, Pursuant to Rule13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*
Certification of Chief Financial Officer of CNL Strategic Capital, LLC, Pursuant to Rule13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*
Certification of Chief Executive Officer and Chief Financial Officer of CNL Strategic Capital, LLC, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*
The following materials from CNL Strategic Capital, LLC Quarterly Report on Form10-Q for the ~~quarter~~three months ended March 31, ~~2018,~~2024, formatted in ~~XBRL (Extensible~~iXBRL (Inline eXtensible Business Reporting Language); (i) Condensed Consolidated ~~Statement~~Statements of Assets and Liabilities, (ii) Condensed Consolidated ~~Statement~~Statements of Operations, (iii) Condensed Consolidated ~~Statement~~Statements of Changes in Net Assets, (iv) Condensed Consolidated ~~Statement~~Statements of Cash Flows, (v) ~~Condensed~~ Consolidated ~~Schedule~~Schedules of Investments, and (vi) Notes to the Condensed Consolidated Financial Statements.
104 Cover Page Interactive Data File included as Exhibit 101 (embedded within the Inline XBRL document)


*			Filed herewith

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the ~~15th~~9th day of May, ~~2018.~~

2024.

CNL STRATEGIC CAPITAL, LLC

By:

/s/ Chirag J. Bhavsar

CHIRAG J. BHAVSAR

Chief Executive Officer

(Principal Executive Officer)

By:

/s/ Tammy J. Tipton

TAMMY J. TIPTON

Chief Financial Officer

(Principal Financial and Accounting Officer)


	March 31, 2018 (unaudited)		December 31, 2017
Assets
Investments, at fair value (amortized cost $76,931,763 and $— as of March 31, 2018 and December 31, 2017, respectively)	$	77,456,212	$	—
Cash and cash equivalents		5,633,760		199,683
Deferred offering expenses		485,482		317

Total assets		83,575,454		200,000

Liabilities
Due to related parties (Note 5)	$	772,290	$	—
Distributions payable		302,841		—
Payable for investments purchased		181,126		—
Accounts payable and other accrued expenses		115,345		—
Accrued directors’ fees		22,903		—

Total liabilities		1,394,505		—

Commitments and contingencies (Note 8)
Members’ Equity (Net Assets)
Preferred shares, $0.001 par value 50,000,000 shares authorized and unissued	$	—	$	—
Common shares, $0.001 par value 94,660,000 Class A shares authorized and unissued		—		—
Common shares, $0.001 par value 3,400,000 Class FA shares authorized; 3,266,260 and 8,000 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively		3,266		8
Common shares, $0.001 par value 662,620,000 Class T shares authorized and unissued		—		—
Common shares, $0.001 par value 94,660,000 Class D shares authorized and unissued		—		—
Common shares, $0.001 par value 94,660,000 Class I shares authorized and unissued		—		—
Capital in excess of par value		81,653,234		199,992
Accumulated net unrealized appreciation on investments		524,449		—

Total Members’ Equity	$	82,180,949	$	200,000


Net assets, Class FA shares	$	82,180,949	$	200,000

Total Members’ Equity	$	82,180,949	$	200,000


	March 31, 2024 (Unaudited)		December 31, 2023
Assets
Portfolio company investments at fair value (amortized cost of $729,266 and $719,976, respectively)	$	903,133	$	876,843
Cash and cash equivalents	159,876		134,453

Receivable for shares sold	—		1,411


Prepaid expenses and other assets	537		440
Total assets	1,063,546		1,013,147
Liabilities

Due to related parties, net (Note 5)	5,844		15,787
Payable for shares repurchased	13,780		8,224
Deferred tax liabilities, net	8,233		7,462


Accounts payable and other accrued expenses	1,456		2,325


Total liabilities	29,313		33,798
Commitments and contingencies (Note 11)
Members’ Equity (Net Assets)
Preferred shares, $0.001 par value, 50,000 shares authorized and unissued	—		—
Class FA Common shares, $0.001 par value, 7,400 shares authorized; 4,844 shares issued; 4,107 and 4,179 shares outstanding, respectively	4		4
Class A Common shares, $0.001 par value, 94,660 shares authorized; 6,045 and 5,328 shares issued, respectively; 5,832 and 5,152 shares outstanding, respectively	6		5
Class T Common shares, $0.001 par value, 558,620 shares authorized; 3,284 and 3,179 shares issued, respectively; 2,552 and 2,629 shares outstanding, respectively	3		3
Class D Common shares, $0.001 par value, 94,660 shares authorized; 2,834 and 2,714 shares issued, respectively; 2,733 and 2,632 shares outstanding, respectively	3		3
Class I Common shares, $0.001 par value, 94,660 shares authorized; 13,661 and 12,846 shares issued, respectively; 12,737 and 12,095 shares outstanding, respectively	13		12
Class S Common shares, $0.001 par value, 100,000 shares authorized; 1,770 shares issued; 1,746 and 1,748 shares outstanding, respectively	2		2
Capital in excess of par value	894,267		851,529
Distributable earnings	139,935		127,791
Total Members’ Equity	$	1,034,233	$	979,349

Net asset value per share:
Class FA	$	37.20	$	36.67
Class A	$	33.94	$	33.57
Class T	$	33.99	$	33.64
Class D	$	33.68	$	33.31
Class I	$	34.44	$	34.06
Class S	$	37.80	$	37.25


	For the Period from February 7, 2018 (Commencement of Operations) to March 31, 2018
Investment Income
Interest income	$	728,216

Total investment income		728,216

Operating Expenses
Organization and offering expenses		221,564
Base management fees		88,562
Professional services		73,581
Director fees and expenses		37,070
Administrative services		32,493
Custodian and accounting fees		15,000
Other		317

Total operating expenses		468,587
Expense support		(43,212	)

Net expenses		425,375

Net investment income		302,841
Net change in unrealized appreciation on investments		524,449

Net increase in net assets resulting from operations	$	827,290


Class FA common stock:
Net investment income per share	$	0.09

Diluted and basic earnings per share	$	0.25

Weighted average number of common shares outstanding (basic and diluted)		3,266,430

Distributions declared per share	$	0.09


	For the Period from February 7, 2018 (Commencement of Operations) to March 31, 2018
Operations:
Net investment income	$	302,841
Net change in unrealized appreciation on investments		524,449

Net increase in net assets resulting from operations		827,290

Distributions to shareholders from:
Net investment income		(302,841	)

Net decrease in net assets resulting from distributions to shareholders		(302,841	)

Capital share transactions:
Issuance of Class FA shares		81,456,500

Net increase in net assets resulting from capital share transactions		81,456,500

Total increase in net assets		81,980,949
Net assets at beginning of period		200,000

Net assets at end of period	$	82,180,949

Capital share activity:
Issuance of Class FA shares		3,258,260

Net increase in shares outstanding		3,258,260


	For the Period from February 7, 2018 (Commencement of Operations) to March 31, 2018
Operating Activities:
Net increase in net assets resulting from operations	$	827,290
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:
Purchases of investments, net		(74,531,763	)
Net change in unrealized appreciation on investments		(524,449	)
Amortization of deferred offering expenses		196,041
Increase in payable to related parties		772,290
Increase in payable for investments purchased		181,126
Increase in accrued directors’ fees		22,903
Increase in accounts payable and other accrued expenses		115,345
Increase in deferred offering expenses		(681,206	)

Net cash used in operating activities		(73,622,423	)

Financing Activities:
Proceeds from issuance of common shares		79,056,500

Net cash provided by financing activities		79,056,500

Net increase in cash		5,434,077
Cash and cash equivalents, beginning of period		199,683

Cash and cash equivalents, end of period	$	5,633,760

Supplemental disclosure of cash flow information andnon-cash financing activities:
Amounts incurred but not paid (including amounts due to related parties):
Distributions payable	$	302,841
Offering costs	$	681,523
Non-cash contribution fromSub-Manager	$	2,400,000
Non-cash purchase of investments	$	(2,400,000	)


	Common Shares			Capital in Excess of Par Value		Distributable Earnings		Total Net Assets
	Number of Shares	Par Value
Balance as of December 31, 2023	28,435	$	29	$	851,529	$	127,791	$	979,349
Net investment income	—	—		—		4,721		4,721

Net change in unrealized appreciation on investments	—	—		—		16,230		16,230
Distributions to shareholders	—	—		—		(8,807)		(8,807)
Issuance of common shares through the Public Offerings	1,552	2		52,462		—		52,464
Issuance of common shares through distribution reinvestment plan	120	—		4,056		—		4,056
Repurchase of common shares pursuant to share repurchase program	(400)	—		(13,780)		—		(13,780)
Balance as of March 31, 2024	29,707	$	31	$	894,267	$	139,935	$	1,034,233


Company^(a)	Industry	Interest Rate			Base Floor		Maturity Date		No. Shares/ Principal Amount		Cost		Fair Value
Senior Secured Loan – First Lien–19.1%
Polyform Products, Co.	Modeling Clay		16.0	%		N/A		8/7/2023	$	15,700,000	$	15,700,000	$	15,700,000
Senior Secured Loan – Second Lien–18.3%
Lawn Doctor	Commercial and Professional Services		16.0	%		N/A		8/7/2023		15,000,000		15,000,000		15,000,000

Total Senior Secured Loans											$	30,700,000	$	30,700,000

Equity–56.9%
Polyform Products, Co.	Modeling Clay									10,820	$	15,756,212	$	15,756,212
Lawn Doctor	Commercial and Professional Services									7,746		30,475,551		31,000,000

Total Equity											$	46,231,763	$	46,756,212

TOTAL INVESTMENTS–94.3%											$	76,931,763	$	77,456,212

OTHER ASSETS IN EXCESS OF LIABILITIES–5.7%														4,724,737

NET ASSETS–100.0%													$	82,180,949


	As of March 31, 2018
Asset Category	Cost		Fair Value		Fair Value Percentage of Investment Portfolio			Fair Value Percentage of Net Assets
Senior debt
Senior secured debt - first lien	$	15,700,000	$	15,700,000		20.3	%		19.1	%
Senior secured debt - second lien		15,000,000		15,000,000		19.4			18.3

Total senior debt	$	30,700,000	$	30,700,000		39.7			37.4
Equity		46,231,763		46,756,212		60.3			56.9

Total investments	$	76,931,763	$	77,456,212		100.0	%		94.3	%


	Period February 7, 2018⁽¹⁾ through March 31, 2018
Revenues	$	3,118,748
Expenses		(3,087,288	)

Income before taxes		31,460
Income tax expense		(7,825	)

Net Income	$	23,635


	As of March 31, 2018
Current assets	$	7,016,164
Non-current assets	$	28,927,037
Current liabilities	$	4,081,423
Non-current liabilities	$	38,785,943
Stockholders’ Equity	$	(6,924,165	)


	Period February 7, 2018⁽¹⁾ through March 31, 2018
Revenues	$	2,417,593
Expenses		(2,897,329	)

Net loss before taxes		(479,736	)
Income tax benefit		48,000

Net loss	$	(431,736	)


	As of March 31, 2018
Current assets	$	5,771,064
Non-current assets	$	22,436,533
Current liabilities	$	1,167,304
Non-current liabilities	$	20,567,473
Stockholders’ Equity	$	6,472,820


Due from related parties:
Expense Support	$	43,212

Total due from related parties		43,212
Due to related parties:
Organization and offering expenses		707,046
Base management fees		88,562
Operating, administrative and compliance expense reimbursement		19,894

Total due to related parties		815,502

Net due to related parties	$	(772,290	)


	Period from February 7, 2018 (commencement of operations) through March 31, 2018
	Class FA
	Per Share		Amount		Allocation
Total Declared Distributions	$	0.09	$	302,841		100.0	%
From net investment income	$	0.09	$	302,841		100.0	%


	Period ended March 31, 2018⁽¹⁾
	Class FA Shares⁽²⁾
OPERATING PERFORMANCE PER SHARE
Net Asset Value, Beginning of Period	$	25.00

Net investment income, before expense support⁽³⁾		0.08
Expense support⁽³⁾		0.01

Net investment income⁽³⁾		0.09
Net realized and unrealized gains⁽³⁾⁽⁴⁾		0.16

Net increase resulting from investment operations		0.25

Distributions from net investment income⁽⁵⁾		(0.09	)

Net Asset Value, End of Period	$	25.16

Net assets, end of period	$	82,180,949
Average net assets⁽⁶⁾	$	81,716,492
Shares outstanding, end of period		3,266,260
Weighted average shares outstanding		3,266,430
Total investment return based on net asset value⁽⁷⁾		1.01	%
RATIOS/SUPPLEMENTAL DATA (annualized):
Ratios to average net assets:⁽⁶⁾⁽⁸⁾
Total operating expenses before expense support		3.95	%
Total operating expenses after expense support		3.58	%
Net investment income		2.55	%
Portfolio turnover rate		—	%


Distribution Record Date	Distribution Payment Date	Declared Distribution Per Share for Each Share Class
		Class FA		Class A		Class T		Class D		Class I
April 3, 2018	May 10, 2018	$	0.024038	$	0.024038	$	0.019231	$	0.021635	$	0.024038
April 10, 2018	May 10, 2018	$	0.024038	$	0.024038	$	0.019231	$	0.021635	$	0.024038
April 17, 2018	May 10, 2018	$	0.024038	$	0.024038	$	0.019231	$	0.021635	$	0.024038
April 24, 2018	May 10, 2018	$	0.024038	$	0.024038	$	0.019231	$	0.021635	$	0.024038
May 1, 2018	June 11, 2018	$	0.024038	$	0.024038	$	0.019231	$	0.021635	$	0.024038
May 8, 2018	June 11, 2018	$	0.024038	$	0.024038	$	0.019231	$	0.021635	$	0.024038
May 15, 2018	June 11, 2018	$	0.024038	$	0.024038	$	0.019231	$	0.021635	$	0.024038
May 22, 2018	June 11, 2018	$	0.024038	$	0.024038	$	0.019231	$	0.021635	$	0.024038
May 29, 2018	June 11, 2018	$	0.024038	$	0.024038	$	0.019231	$	0.021635	$	0.024038


Total investment income	$	728,216
Net operating expense		425,375

Net investment income		302,841
Net change in unrealized appreciation		524,449

Net increase in net assets resulting from operations	$	827,290


Unrealized appreciation	$	524,449
Unrealized depreciation		—

Total net unrealized appreciation	$	524,449


	Quarter Ended March 31, 2018
	Per Share		Amount
March 31, 2018 (4 record dates)
Class FA shares	$	0.092718	$	302,841
Class A shares		0.092718		—
Class T shares		0.074177		—
Class D shares		0.083449		—
Class I shares		0.092718		—



~~10.5~~	~~Amended and RestatedSub-Administration~~ Agreement dated as of February 7, 2018 by and among the Registrant, CNL Strategic Capital Management, LLC and Levine Leichtman Strategic Capital, LLC (incorporated by reference to Exhibit 10.5 to the Registration Statement on Form~~S-1~~ ~~(FileNo. 333-222986)~~ ~~filed with the SEC on February 12, 2018).~~

~~10.6~~	Amended and Restated Expense Support and Conditional Reimbursement Agreement dated as of February 7, 2018 by and among the Registrant, CNL Strategic Capital Management, LLC and Levine Leichtman Strategic Capital, LLC (incorporated by reference to Exhibit 10.6 to the Registration Statement on Form~~S-1~~ ~~(FileNo. 333-222986)~~ ~~filed with the SEC on February 12, 2018).~~

~~10.7~~	~~Form of Indemnification Agreement (incorporated by reference to Exhibit 10.7 to the Registration Statement on FormS-1~~ ~~(FileNo. 333-222986)~~ ~~filed with the SEC on February 12, 2018).~~

~~10.8~~	Note Purchase Agreement dated as of February 7, 2018 by and among Lawn Doctor, Inc., LD Strategic Capital Debtco, LLC and Aspire Capital Group, LLC (incorporated by reference to Exhibit 10.8 to the Registration Statement on Form~~S-1~~ ~~(FileNo. 333-222986)~~ ~~filed with the SEC on February 12, 2018).~~

~~10.9~~	Note Purchase Agreement dated as of February 7, 2018 by and among Polyform Products Company, Inc. and Polyform Strategic Capital Debtco, LLC (incorporated by reference to Exhibit 10.9 to the Registration Statement on Form~~S-1~~ ~~(FileNo. 333-222986)~~ ~~filed with the SEC on February 12, 2018).~~

~~10.10~~	Service Agreement dated as of February 7, 2018 by and between CNL Capital Markets Corp. and CNL Strategic Capital Management, LLC (incorporated by reference to Exhibit 10.10 to the Registration Statement on Form~~S-1~~ ~~(FileNo. 333-222986)~~ ~~filed with the SEC on February 12, 2018).~~

31.1*	Certification of Chief Executive Officer of CNL Strategic Capital, LLC, Pursuant to Rule13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Chief Financial Officer of CNL Strategic Capital, LLC, Pursuant to Rule13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of Chief Executive Officer and Chief Financial Officer of CNL Strategic Capital, LLC, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101*		The following materials from CNL Strategic Capital, LLC Quarterly Report on Form10-Q for the ~~quarter~~three months ended March 31, ~~2018,~~2024, formatted in ~~XBRL (Extensible~~iXBRL (Inline eXtensible Business Reporting Language); (i) Condensed Consolidated ~~Statement~~Statements of Assets and Liabilities, (ii) Condensed Consolidated ~~Statement~~Statements of Operations, (iii) Condensed Consolidated ~~Statement~~Statements of Changes in Net Assets, (iv) Condensed Consolidated ~~Statement~~Statements of Cash Flows, (v) ~~Condensed~~ Consolidated ~~Schedule~~Schedules of Investments, and (vi) Notes to the Condensed Consolidated Financial Statements.

104		Cover Page Interactive Data File included as Exhibit 101 (embedded within the Inline XBRL document)