Filed Pursuant to Rule 424(b)(3)
Registration No. 333-253295
CNL STRATEGIC CAPITAL, LLC
SUPPLEMENT NO. 8 DATED APRIL 4, 2022
TO THE PROSPECTUS DATED NOVEMBER 1, 2021
We are providing this Supplement No. 8 to you in order to supplement our prospectus dated November 1, 2021 (as supplemented to date, the “Prospectus”). This supplement provides information that shall be deemed part of, and must be read in conjunction with, the Prospectus. Capitalized terms used in this supplement have the same meanings in the Prospectus unless otherwise stated herein. The terms “we,” “our,” “us” and “Company” refer to CNL Strategic Capital, LLC.
Before investing in our shares, you should read the entire Prospectus and this supplement, and consider carefully our investment objectives, risks, fees and expenses. You should also carefully consider the information disclosed in the section of the Prospectus captioned “Risk Factors” before you decide to invest in our shares.
The purpose of this supplement is to disclose the following:
· | to make updates to the Experts section; and |
· | to include our Annual Report on Form 10-K for the year ended December 31, 2021. |
Updates to the Experts Section
The following amends, restates, and supplements the “Experts” section, which appears on page 202 of the Prospectus.
The consolidated financial statements of CNL Strategic Capital, LLC and subsidiaries included in this supplement have been audited by Ernst Young LLP, an independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance on such report given on the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of LD Parent, Inc. and its subsidiaries included in this supplement have been audited by BDO USA, LLP, an independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance on such report given on the authority of such firm as experts in accounting and auditing.
Annual Report on Form 10-K for the Year Ended December 31, 2021
On March 31, 2022, we filed our Annual Report on Form 10-K for the year ended December 31, 2021 with the Securities and Exchange Commission. The Annual Report on Form 10-K (without exhibits) is attached to this supplement.
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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, | FL | 32801 | |||||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
N/A | N/A | N/A |
Large accelerated filer | ☐ | Accelerated filer | ☐ | ||||||||||||||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | ||||||||||||||
Emerging growth company | ☒ |
Page | ||||||||
PART I. | ||||||||
Item 1. | ||||||||
Item 1A. | ||||||||
Item 1B. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
PART II. | ||||||||
Item 5. | ||||||||
Item 6. | ||||||||
Item 7. | ||||||||
Item 7A. | ||||||||
Item 8. | ||||||||
Item 9. | ||||||||
Item 9A. | ||||||||
Item 9B. | ||||||||
Item 9C. | ||||||||
Part III. | ||||||||
Item 10. | ||||||||
Item 11. | ||||||||
Item 12. | ||||||||
Item 13. | ||||||||
Item 14. | ||||||||
PART IV. | ||||||||
Item 15. | ||||||||
Item 16. | ||||||||
Effective Date (1) | Public Offering Price per Share | Effective Date (1) | Public Offering Price per Share | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Class A | Class T | Class D | Class I | Class A | Class T | Class D | Class I | |||||||||||||||||||||||||||||||||||||||||||||||||
3/7/2018 | $ | 27.32 | $ | 26.25 | $ | 25.00 | $ | 25.00 | 2/28/2020 | $ | 29.25 | $ | 28.19 | $ | 26.44 | $ | 27.00 | |||||||||||||||||||||||||||||||||||||||
4/27/2018 | 27.46 | 26.38 | 25.13 | 25.13 | 3/23/2020 | 29.23 | 28.16 | 26.40 | 26.99 | |||||||||||||||||||||||||||||||||||||||||||||||
5/25/2018 | 27.50 | 26.41 | 25.16 | 25.23 | 4/28/2020 | 28.74 | 27.67 | 25.94 | 26.55 | |||||||||||||||||||||||||||||||||||||||||||||||
6/26/2018 | 27.41 | 26.43 | 25.26 | 25.23 | 5/29/2020 | 28.68 | 27.61 | 25.86 | 26.50 | |||||||||||||||||||||||||||||||||||||||||||||||
7/27/2018 | 27.73 | 26.69 | 25.41 | 25.40 | 6/22/2020 | 29.08 | 27.98 | 26.21 | 26.88 | |||||||||||||||||||||||||||||||||||||||||||||||
8/24/2018 | 28.51 | 27.46 | 26.12 | 26.13 | 7/27/2020 | 29.49 | 28.36 | 26.58 | 27.25 | |||||||||||||||||||||||||||||||||||||||||||||||
9/27/2018 | 28.74 | 27.70 | 26.28 | 26.35 | 8/27/2020 | 30.15 | 28.98 | 27.15 | 27.87 | |||||||||||||||||||||||||||||||||||||||||||||||
10/25/2018 | 28.72 | 27.67 | 26.20 | 26.34 | 9/22/2020 | 30.38 | 29.18 | 27.34 | 28.08 | |||||||||||||||||||||||||||||||||||||||||||||||
11/23/2018 | 28.69 | 27.64 | 26.11 | 26.33 | 10/28/2020 | 30.55 | 29.31 | 27.48 | 28.24 | |||||||||||||||||||||||||||||||||||||||||||||||
12/26/2018 | 28.87 | 27.84 | 26.23 | 26.52 | 11/27/2020 | 30.74 | 29.48 | 27.64 | 28.42 | |||||||||||||||||||||||||||||||||||||||||||||||
1/29/2019 | 28.90 | 27.86 | 26.23 | 26.55 | 12/22/2020 | 30.99 | 29.70 | 27.85 | 28.65 | |||||||||||||||||||||||||||||||||||||||||||||||
2/28/2019 | 28.78 | 27.75 | 26.07 | 26.44 | 1/27/2021 | 31.43 | 30.10 | 28.24 | 29.06 | |||||||||||||||||||||||||||||||||||||||||||||||
3/22/2019 | 28.89 | 27.86 | 26.15 | 26.57 | 2/25/2021 | 32.01 | 30.64 | 28.75 | 29.60 | |||||||||||||||||||||||||||||||||||||||||||||||
4/26/2019 | 28.84 | 27.82 | 26.17 | 26.54 | 3/22/2021 | 32.40 | 31.00 | 29.11 | 29.97 | |||||||||||||||||||||||||||||||||||||||||||||||
5/28/2019 | 28.97 | 27.95 | 26.24 | 26.67 | 4/27/2021 | 32.66 | 31.22 | 29.33 | 30.21 | |||||||||||||||||||||||||||||||||||||||||||||||
6/21/2019 | 29.23 | 28.20 | 26.45 | 26.91 | 5/27/2021 | 33.18 | 31.72 | 29.80 | 30.70 | |||||||||||||||||||||||||||||||||||||||||||||||
7/26/2019 | 29.22 | 28.18 | 26.46 | 26.91 | 6/22/2021 | 33.55 | 32.05 | 30.13 | 31.06 | |||||||||||||||||||||||||||||||||||||||||||||||
8/27/2019 | 29.17 | 28.13 | 26.35 | 26.87 | 7/27/2021 | 33.79 | 32.26 | 30.35 | 31.28 | |||||||||||||||||||||||||||||||||||||||||||||||
9/23/2019 | 29.11 | 28.07 | 26.27 | 26.83 | 8/26/2021 | 33.96 | 32.39 | 30.49 | 31.44 | |||||||||||||||||||||||||||||||||||||||||||||||
10/28/2019 | 29.22 | 28.18 | 26.43 | 26.95 | 9/22/2021 | 33.55 | 31.98 | 30.11 | 31.07 | |||||||||||||||||||||||||||||||||||||||||||||||
11/26/2019 | 29.22 | 28.19 | 26.40 | 26.96 | 10/27/2021 | 33.66 | 32.18 | 30.27 | 31.18 | |||||||||||||||||||||||||||||||||||||||||||||||
12/23/2019 | 29.28 | 28.23 | 26.43 | 27.02 | 11/26/2021 | 33.75 | 32.16 | 30.30 | 31.27 | |||||||||||||||||||||||||||||||||||||||||||||||
1/28/2020 | 29.41 | 28.36 | 26.61 | 27.15 | 12/22/2021 | 33.83 | 32.20 | 30.34 | 31.34 | |||||||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||
October 1, 2021 to October 31, 2021 | — | $ | — | — | $ | 1,223,253 | ||||||||||||||||||||
November 1, 2021 to November 30, 2021 | — | — | — | 1,223,253 | ||||||||||||||||||||||
December 1, 2021 to December 31, 2021 | 16,095 | 31.61 | 16,095 | — |
Share Class | Number of Shareholders | |||||||
FA | 757 | |||||||
A | 973 | |||||||
T | 759 | |||||||
D | 476 | |||||||
I | 1,876 | |||||||
S | 716 |
Total | Payments to Affiliates (1) | Payments to Others | |||||||||||||||
Aggregate price of offering amount registered (2) | $ | 1,000,000,000 | |||||||||||||||
Shares sold (3) | 9,429,831 | ||||||||||||||||
Aggregate amount sold (3) | $ | 279,120,999 | |||||||||||||||
Payment of underwriting compensation (4) | (5,329,803) | (5,329,803) | — | ||||||||||||||
Net offering proceeds to the issuer | 273,791,196 | ||||||||||||||||
Investments in portfolio companies (5) | (223,851,961) | — | (223,851,961) | ||||||||||||||
Distributions to shareholders (6) | (7,491,250) | (1,322) | (7,489,928) | ||||||||||||||
Remaining proceeds from the Public Offerings | $ | 42,447,985 |
(1) | Represents direct or indirect payments to our directors or officers, the Manager, the Sub-Manager and their respective affiliates; to persons owning 10% or more of any class of our shares; and to our affiliates. |
(2) | We are also offering up to $100.0 million of shares to be issued pursuant to our distribution reinvestment plan. The shares being offered can be reallocated among the different classes and between the Public Offering and the distribution reinvestment plan. |
(3) | Excludes approximately $7.2 million (0.2 million shares) issued pursuant to our distribution reinvestment plan, approximately $0.2 million (8,000 shares) of shares issued to the Manager, and the Sub-Manager in a private transaction exempt from the registration requirements pursuant to section 4(a)(2) of the Securities Act, approximately $81.5 million (3.3 million shares) of Class FA shares sold in the 2018 Private Offering, approximately $43.3 million (1.6 million shares) of Class FA shares sold in the Class FA Private Offering and Follow-on Class FA Private Offering and approximately $52.4 million (1.8 million shares) of Class S shares sold in the Class S Private Offering. |
(4) | Underwriting compensation includes selling commissions and dealer manager fees paid to the Managing Dealer; all or a portion of which may be reallowed to participating broker-dealers. Excludes selling commissions and placement agent fees paid to the Managing Dealer for shares sold in the Follow-On Class FA Private Offering and Class S Private Offering. |
(5) | Excludes approximately $166.4 million funded using proceeds from the 2018 Private Offering, Class FA Private Offering, Follow-On Class FA Private Offering, Class S Private Offering and a non-cash contribution from the Sub-Manager. |
(6) | Until such time as we have sufficient operating cash flows from our assets, we will pay cash distributions, debt service and/or operating expenses from net proceeds of the Public Offerings. The amounts presented above represent the net proceeds used for such purposes. |
Class A | Class T | Class D | Class I | |||||||||||||||||||||||
Effective January 28, 2022: | ||||||||||||||||||||||||||
Public Offering Price, Per Share | $ | 33.64 | $ | 32.19 | $ | 30.35 | $ | 31.18 | ||||||||||||||||||
Selling Commissions, Per Share | 2.02 | 0.97 | — | — | ||||||||||||||||||||||
Dealer Manager Fees, Per Share | 0.84 | 0.56 | — | — |
Class A | Class T | Class D | Class I | |||||||||||||||||||||||
Effective February 25, 2022: | ||||||||||||||||||||||||||
Public Offering Price, Per Share | $ | 33.98 | $ | 32.48 | $ | 30.65 | $ | 31.50 | ||||||||||||||||||
Selling Commissions, Per Share | 2.04 | 0.97 | — | — | ||||||||||||||||||||||
Dealer Manager Fees, Per Share | 0.85 | 0.57 | — | — | ||||||||||||||||||||||
Effective March 24, 2022: | ||||||||||||||||||||||||||
Public Offering Price, Per Share | $ | 33.97 | $ | 32.44 | $ | 30.62 | $ | 31.49 | ||||||||||||||||||
Selling Commissions, Per Share | 2.04 | 0.97 | — | — | ||||||||||||||||||||||
Dealer Manager Fees, Per Share | 0.85 | 0.57 | — | — |
As of December 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Investments | Debt Investments(1) | |||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio Company | Investment Date | Ownership % | Cost Basis | Senior Secured Debt | Interest Rate | Maturity Date | Cost Basis | Total Cost Basis (2) | ||||||||||||||||||||||||||||||||||||||||||
Lawn Doctor | 2/7/2018 | 61 | % | $ | 28.0 | Second Lien | 16.0 | % | 7/7/2026 | $ | 15.0 | $ | 43.0 | |||||||||||||||||||||||||||||||||||||
Polyform | 2/7/2018 | 87 | 15.6 | First Lien | 16.0 | 8/7/2023 | 15.7 | 31.3 | ||||||||||||||||||||||||||||||||||||||||||
Roundtables | 8/1/2019 | 81 | 32.4 | Second Lien | 16.0 | 8/1/2025 | 12.1 | 44.5 | ||||||||||||||||||||||||||||||||||||||||||
Roundtables | 11/13/2019 | — | — | First Lien | 8.0 | 11/13/2022 | 2.0 | 2.0 | ||||||||||||||||||||||||||||||||||||||||||
Milton | 11/21/2019 | 13 | 6.6 | Second Lien | 15.0 | 12/19/2027 | 3.4 | 10.0 | ||||||||||||||||||||||||||||||||||||||||||
Resolution Economics | 1/2/2020 | 8 | 7.1 | Second Lien | 15.0 | 1/2/2026 | 2.8 | 9.9 | ||||||||||||||||||||||||||||||||||||||||||
Blue Ridge | 3/24/2020 | 16 | 9.9 | Second Lien | 15.0 | 12/28/2028 | 2.6 | 12.5 | ||||||||||||||||||||||||||||||||||||||||||
HSH | 7/16/2020 | 75 | 17.3 | First Lien | 15.0 | 7/16/2027 | 24.4 | 41.7 | ||||||||||||||||||||||||||||||||||||||||||
ATA | 4/1/2021 | 75 | 36.0 | First Lien | 15.0 | 4/1/2027 | 37.0 | 73.0 | ||||||||||||||||||||||||||||||||||||||||||
Douglas | 10/7/2021 | 90 | 35.5 | First Lien | 16.0 | 10/7/2028 | 15.0 | 50.5 | ||||||||||||||||||||||||||||||||||||||||||
Clarion | 12/9/2021 | 99 | 46.8 | First Lien | 15.0 | 12/9/2028 | 22.5 | 69.3 | ||||||||||||||||||||||||||||||||||||||||||
$ | 235.2 | $ | 152.5 | $ | 387.7 |
(1) | The note purchase agreements contain customary covenants and events of default. As of December 31, 2021, all of our portfolio companies were in compliance with their respective debt covenants. |
(2) | See the Consolidated Schedules of Investments and Note 3. “Investments” of Item 8. “Financial Statements and Supplementary Data” for additional information related to our investments, including fair values as of December 31, 2021. |
Year Ended December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Lawn Doctor (1) | Polyform | Round-tables | HSH | ATA(2) | Douglas(3) | Clarion(4) | Other(5) | ||||||||||||||||||||||||||||||||||||||||
Net income (loss) (GAAP) | $ | 2,544 | $ | 1,626 | $ | (617) | $ | 1,693 | $ | 6,527 | $ | (10,439) | $ | (840) | $ | (8,859) | |||||||||||||||||||||||||||||||
Interest and debt related expenses | 4,710 | 2,921 | 2,589 | 3,793 | 4,583 | 552 | 216 | 17,309 | |||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 2,505 | 1,929 | 1,849 | 3,722 | 3,458 | 125 | 62 | 12,481 | |||||||||||||||||||||||||||||||||||||||
Income tax expense (benefit) | 831 | 574 | 469 | 456 | — | (2,608) | (341) | (875) | |||||||||||||||||||||||||||||||||||||||
Transaction related expenses(6) | — | — | — | — | 1,399 | 13,342 | 1,110 | — | |||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA (non-GAAP) | $ | 10,590 | $ | 7,050 | $ | 4,290 | $ | 9,664 | $ | 15,967 | $ | 972 | $ | 207 | $ | 20,056 | |||||||||||||||||||||||||||||||
Our Ownership Percentage(7) | 61% | 87% | 81% | 75% | 75% | 90% | 99% | (8) | |||||||||||||||||||||||||||||||||||||||
Our Proportionate Share of Adjusted EBITDA (non-GAAP) | $ | 6,411 | $ | 6,143 | $ | 3,465 | $ | 7,200 | $ | 11,975 | $ | 877 | $ | 205 | $ | 2,108 |
Year Ended December 31, 2020 | |||||||||||||||||||||||||||||
Lawn Doctor | Polyform | Roundtables | HSH(9) | Other(5) | |||||||||||||||||||||||||
Net income (loss) (GAAP) | $ | 1,287 | $ | 1,139 | $ | 693 | $ | (1,584) | $ | (7,830) | |||||||||||||||||||
Interest and debt related expenses | 4,169 | 2,945 | 2,599 | 1,721 | 15,656 | ||||||||||||||||||||||||
Depreciation and amortization | 2,501 | 1,692 | 1,507 | 1,856 | 8,354 | ||||||||||||||||||||||||
Income tax benefit | 371 | 469 | (1,443) | (109) | (3,117) | ||||||||||||||||||||||||
Transaction related expenses(6) | — | — | — | 1,241 | 5,780 | ||||||||||||||||||||||||
Adjusted EBITDA (non-GAAP) | $ | 8,328 | $ | 6,245 | $ | 3,356 | $ | 3,125 | $ | 18,843 | |||||||||||||||||||
Our Ownership Percentage(7) | 61% | 87% | 81% | 75% | (8) | ||||||||||||||||||||||||
Our Proportionate Share of Adjusted EBITDA (non-GAAP) | $ | 5,119 | $ | 5,441 | $ | 2,710 | $ | 2,328 | $ | 1,977 |
Year Ended December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Lawn Doctor | Polyform | Round-tables | HSH | ATA(1) | Douglas(2) | Clarion(3) | Other(4) | ||||||||||||||||||||||||||||||||||||||||||||||
Cash provided by (used in) operating activities (GAAP) | $ | 4,646 | $ | 1,270 | $ | 2,342 | $ | 2,889 | $ | 9,478 | $ | (476) | $ | (1,615) | $ | 3,754 | |||||||||||||||||||||||||||||||||||||
Capital expenditures(5) | (211) | (845) | (382) | (136) | (191) | (33) | — | (2,351) | |||||||||||||||||||||||||||||||||||||||||||||
Adjusted FCF (non-GAAP) | $ | 4,435 | $ | 425 | $ | 1,960 | $ | 2,753 | $ | 9,287 | $ | (509) | $ | (1,615) | $ | 1,403 | |||||||||||||||||||||||||||||||||||||
Our Ownership Percentage(6) | 61% | 87% | 81% | 75% | 75% | 90% | 99% | (7) | |||||||||||||||||||||||||||||||||||||||||||||
Our Proportionate Share of Adjusted FCF (non-GAAP) | $ | 2,685 | $ | 370 | $ | 1,583 | $ | 2,051 | $ | 6,965 | $ | (459) | $ | (1,601) | $ | 114 |
Year Ended December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||
Lawn Doctor | Polyform | Roundtables | HSH(8) | Other(4) | |||||||||||||||||||||||||||||||||||||
Cash provided by operating activities (GAAP) | $ | 6,925 | $ | 2,107 | $ | 2,152 | $ | 1,604 | $ | 1,507 | |||||||||||||||||||||||||||||||
Capital expenditures(5) | (41) | (425) | (80) | (113) | (485) | ||||||||||||||||||||||||||||||||||||
Adjusted FCF (non-GAAP) | $ | 6,884 | $ | 1,682 | $ | 2,072 | $ | 1,491 | $ | 1,022 | |||||||||||||||||||||||||||||||
Our Ownership Percentage(6) | 61% | 87% | 81% | 75% | (7) | ||||||||||||||||||||||||||||||||||||
Our Proportionate Share of Adjusted FCF (non-GAAP) | $ | 4,165 | $ | 1,465 | $ | 1,674 | $ | 1,111 | $ | 454 |
Distribution Period | Distributions Declared(1)(2) | Distributions Reinvested(3) | Cash Distributions Net of Distributions Reinvested | Range of Distribution Rates | ||||||||||||||||||||||
Year ended December 31, 2021 | $ | 15,489,084 | $ | 4,428,799 | $ | 11,060,285 | 3.1% – 4.2% | |||||||||||||||||||
Year ended December 31, 2020 | 9,929,353 | 2,240,547 | 7,688,806 | 3.3% – 4.7% |
Record Date Period | Class FA | Class A | Class T | Class D | Class I | Class S | ||||||||||||||||||||||||||||||||
January 1, 2021 - December 31, 2021 | $ | 0.104167 | $ | 0.104167 | $ | 0.083333 | $ | 0.093750 | $ | 0.104167 | $ | 0.104167 | ||||||||||||||||||||||||||
January 1, 2020 - December 31, 2020 | 0.104167 | 0.104167 | 0.083333 | 0.093750 | 0.104167 | 0.104167 |
Years Ended December 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Amount | % of Cash Distributions Net of Distributions Reinvested | Amount | % of Cash Distributions Net of Distributions Reinvested | ||||||||||||||||||||
Net investment income before expense support (reimbursement) | $ | 11,923,769 | 107.8 | % | $ | 4,191,999 | 54.5 | % | |||||||||||||||
Expense support (reimbursement) | (1,830,920) | (16.5) | % | 3,301,473 | 43.0 | % | |||||||||||||||||
Net investment income | 10,092,849 | 91.3 | % | 7,493,472 | 97.5 | % | |||||||||||||||||
Cash distributions net of distributions reinvested in excess of net investment income(1) | 967,436 | 8.7 | % | 195,334 | 2.5 | % | |||||||||||||||||
Cash distributions net of distributions reinvested(2) | $ | 11,060,285 | 100.0 | % | $ | 7,688,806 | 100.0 | % |
(1) | Consists of offering proceeds for the years ended December 31, 2021 and 2020. For the year ended December 31, 2019, net investment income was sufficient to cover cash distributions net of distributions reinvested. |
(2) | Excludes distributions reinvested of $4,428,799 and $2,240,547 during the years ended December 31, 2021 and 2020, respectively. |
Years Ended December 31, | ||||||||||||||||||||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||||||||||||||||||||
Share Class | Number of Shares | Total Consideration | Average Price Paid per Share | Number of Shares | Total Consideration | Average Price Paid per Share | ||||||||||||||||||||||||||||||||
Class FA | 19,637 | $ | 630,608 | $ | 32.11 | 246,653 | $ | 7,037,470 | $ | 28.53 | ||||||||||||||||||||||||||||
Class A | 20,876 | 627,150 | 30.04 | 4,580 | 123,038 | 26.86 | ||||||||||||||||||||||||||||||||
Class T | 19,158 | 574,225 | 29.97 | 25,774 | 721,226 | 27.98 | ||||||||||||||||||||||||||||||||
Class D | 6,711 | 198,484 | 29.58 | 1,156 | 32,212 | 27.85 | ||||||||||||||||||||||||||||||||
Class I | 36,349 | 1,118,904 | 30.78 | 63,062 | 1,732,971 | 27.48 | ||||||||||||||||||||||||||||||||
Class S | 4,307 | 141,497 | 32.85 | — | — | — | ||||||||||||||||||||||||||||||||
Total | 107,038 | $ | 3,290,868 | $ | 30.74 | 341,225 | $ | 9,646,917 | $ | 28.27 |
Year Ended December 31, | |||||||||||
2021 | 2020 | ||||||||||
Total investment income | $ | 31,470,953 | $ | 14,453,851 | |||||||
Total operating expenses | (17,916,954) | (10,261,852) | |||||||||
Expense support (reimbursement) | (1,830,920) | 3,301,473 | |||||||||
Net investment income before taxes | 11,723,079 | 7,493,472 | |||||||||
Income tax expense | (1,630,230) | — | |||||||||
Net investment income | 10,092,849 | 7,493,472 | |||||||||
Net change in unrealized appreciation on investments | 34,502,715 | 22,819,680 | |||||||||
Net change in deferred taxes on investments | (1,610,074) | (266,789) | |||||||||
Net increase in net assets resulting from operations | $ | 42,985,490 | $ | 30,046,363 |
Year Ended December 31, | |||||||||||
2021 | 2020 | ||||||||||
Interest income | $ | 17,298,721 | $ | 10,341,158 | |||||||
Dividend income | 14,172,232 | 4,112,693 | |||||||||
Total investment income | $ | 31,470,953 | $ | 14,453,851 |
Year Ended December 31, | |||||||||||
2021 | 2020 | ||||||||||
Total return incentive fees | $ | 7,282,840 | $ | 4,150,562 | |||||||
Base management fees | 4,845,052 | 2,596,842 | |||||||||
Organization and offering expenses | 2,551,926 | 1,106,111 | |||||||||
Professional services | 1,343,654 | 1,397,606 | |||||||||
Pursuit costs | 651,362 | 154,727 | |||||||||
Distribution and shareholder servicing fees | 396,774 | 165,012 | |||||||||
Insurance expense | 233,073 | 212,321 | |||||||||
Director fees and expenses | 203,000 | 201,671 | |||||||||
Custodian and accounting fees | 234,951 | 170,298 | |||||||||
General and administrative expenses | 174,322 | 106,702 | |||||||||
Total operating expenses | 17,916,954 | 10,261,852 | |||||||||
Expense support | — | (3,301,473) | |||||||||
Reimbursement of expense support | 1,830,920 | — | |||||||||
Net expenses | $ | 19,747,874 | $ | 6,960,379 |
Years Ended December 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Tax expense computed at the federal statutory rate | $ | 9,707,417 | 21.0 | % | $ | 6,365,762 | 21.0 | % | |||||||||||||||
State income tax expense net of federal benefit | 789,404 | 1.7 | 73,491 | 0.2 | |||||||||||||||||||
Benefit of partnership structure | (7,256,517) | (15.7) | (6,172,464) | (20.3) | |||||||||||||||||||
Income tax expense | $ | 3,240,304 | 7.0 | % | $ | 266,789 | 0.9 | % |
Year Ended December 31, | |||||||||||
2021 | 2020 | ||||||||||
Operations | $ | 42,985,490 | $ | 30,046,363 | |||||||
Distributions to shareholders | (15,489,084) | (9,929,353) | |||||||||
Capital transactions | 163,849,683 | 114,563,007 | |||||||||
Net increase in net assets | $ | 191,346,089 | $ | 134,680,017 |
Year-To-Date Total Return | Three Year Total Return(1) | Three Year Annual Average Total Return(1) | Cumulative Total Return(2) | Cumulative Total Return Period(2) | |||||||||||||||||||||||||
Class FA (no sales load) | 12.9 | % | 38.6 | % | 12.9 | % | 53.7 | % | Feb. 7, 2018 – Dec. 31, 2021 | ||||||||||||||||||||
Class FA (with sales load) | 5.6 | % | 29.6 | % | 9.9 | % | 43.7 | % | Feb. 7, 2018 – Dec. 31, 2021 | ||||||||||||||||||||
Class A (no sales load) | 11.5 | % | 33.1 | % | 11.0 | % | 45.8 | % | Apr. 10, 2018 – Dec. 31, 2021 | ||||||||||||||||||||
Class A (with sales load) | 2.1 | % | 21.8 | % | 7.3 | % | 33.4 | % | Apr. 10, 2018 – Dec. 31, 2021 | ||||||||||||||||||||
Class I | 11.8 | % | 34.1 | % | 11.4 | % | 47.4 | % | Apr. 10, 2018 – Dec. 31, 2021 | ||||||||||||||||||||
Class T (no sales load) | 10.6 | % | 28.6 | % | 9.5 | % | 38.8 | % | May. 25, 2018 – Dec. 31, 2021 | ||||||||||||||||||||
Class T (with sales load) | 5.3 | % | 22.5 | % | 7.5 | % | 32.2 | % | May. 25, 2018 – Dec. 31, 2021 | ||||||||||||||||||||
Class D | 11.6 | % | 30.8 | % | 10.3 | % | 38.9 | % | Jun. 26, 2018 – Dec. 31, 2021 | ||||||||||||||||||||
Class S (no sales load) | 13.5 | % | N/A | N/A | 28.1 | % | Mar. 31, 2020 – Dec. 31, 2021 | ||||||||||||||||||||||
Class S (with sales load) | 9.6 | % | N/A | N/A | 23.6 | % | Mar. 31, 2020 – Dec. 31, 2021 |
(1) | For the period from January 1, 2019 to December 31, 2021. The Three Year annual average total return is calculated as a simple average of the Three Year total return. |
(2) | For the period from the date the first share was issued for each respective share class to December 31, 2021. |
Page | ||||||||
Financial Statements | ||||||||
December 31, | |||||||||||
2021 | 2020 | ||||||||||
Assets | |||||||||||
Investments at fair value (amortized cost of $387,753,685 and $197,457,113, respectively) | $ | 455,996,741 | $ | 231,197,454 | |||||||
Cash | 58,704,208 | 82,688,211 | |||||||||
Deferred offering expenses | — | 61,549 | |||||||||
Prepaid expenses and other assets | 142,625 | 130,161 | |||||||||
Total assets | 514,843,574 | 314,077,375 | |||||||||
Liabilities | |||||||||||
Net due to related parties (Note 5) | 9,921,526 | 1,476,458 | |||||||||
Deferred tax liability, net | 1,876,863 | 266,789 | |||||||||
Distributions payable | 1,566,489 | 1,017,405 | |||||||||
Accounts payable and other accrued expenses | 660,929 | 385,083 | |||||||||
Payable for shares repurchased | 508,770 | 1,968,732 | |||||||||
Total liabilities | 14,534,577 | 5,114,467 | |||||||||
Commitments and contingencies (Note 11) | |||||||||||
Members’ Equity (Net Assets) | |||||||||||
Preferred shares, $0.001 par value, 50,000,000 shares authorized and unissued | — | — | |||||||||
Class FA Common shares, $0.001 par value, 7,400,000 shares authorized; 4,844,390 shares issued; 4,558,900 and 4,578,537 shares outstanding, respectively | 4,559 | 4,579 | |||||||||
Class A Common shares, $0.001 par value, 94,660,000 shares authorized; 1,486,268 and 1,039,257 shares issued, respectively; 1,460,512 and 1,034,377 shares outstanding, respectively | 1,461 | 1,034 | |||||||||
Class T Common shares, $0.001 par value, 558,620,000 shares authorized; 1,654,020 and 680,446 shares issued, respectively; 1,609,088 and 654,672 shares outstanding, respectively | 1,609 | 655 | |||||||||
Class D Common shares, $0.001 par value, 94,660,000 shares authorized; 1,019,671 and 458,065 shares issued, respectively; 1,008,619 and 453,724 shares outstanding, respectively | 1,008 | 454 | |||||||||
Class I Common shares, $0.001 par value, 94,660,000 shares authorized; 5,518,691 and 2,039,062 shares issued, respectively; 5,409,833 and 1,966,552 shares outstanding, respectively | 5,410 | 1,967 | |||||||||
Class S Common shares, $0.001 par value, 100,000,000 shares authorized; 1,770,386 shares issued; 1,766,079 and 1,770,386 outstanding, respectively | 1,766 | 1,770 | |||||||||
Capital in excess of par value | 442,752,357 | 278,908,028 | |||||||||
Distributable earnings | 57,540,827 | 30,044,421 | |||||||||
Total Members’ Equity | $ | 500,308,997 | $ | 308,962,908 | |||||||
Net assets, Class FA shares | $ | 148,716,308 | $ | 137,237,594 | |||||||
Net assets, Class A shares | 44,957,765 | 29,747,587 | |||||||||
Net assets, Class T shares | 49,328,483 | 18,771,713 | |||||||||
Net assets, Class D shares | 30,606,947 | 12,813,290 | |||||||||
Net assets, Class I shares | 168,704,080 | 57,147,617 | |||||||||
Net assets, Class S shares | 57,995,414 | 53,245,107 | |||||||||
Total Members’ Equity | $ | 500,308,997 | $ | 308,962,908 |
Years Ended December 31, | |||||||||||||||||
2021 | 2020 | ||||||||||||||||
Investment Income | |||||||||||||||||
Interest income | $ | 17,298,721 | $ | 10,341,158 | |||||||||||||
Dividend income | 14,172,232 | 4,112,693 | |||||||||||||||
Total investment income | 31,470,953 | 14,453,851 | |||||||||||||||
Operating Expenses | |||||||||||||||||
Total return incentive fees | 7,282,840 | 4,150,562 | |||||||||||||||
Base management fees | 4,845,052 | 2,596,842 | |||||||||||||||
Organization and offering expenses | 2,551,926 | 1,106,111 | |||||||||||||||
Professional services | 1,343,654 | 1,397,606 | |||||||||||||||
Pursuit costs | 651,362 | 154,727 | |||||||||||||||
Distribution and shareholder servicing fees | 396,774 | 165,012 | |||||||||||||||
Insurance expense | 233,073 | 212,321 | |||||||||||||||
Custodian and accounting fees | 234,951 | 170,298 | |||||||||||||||
Director fees and expenses | 203,000 | 201,671 | |||||||||||||||
General and administrative expenses | 174,322 | 106,702 | |||||||||||||||
Total operating expenses | 17,916,954 | 10,261,852 | |||||||||||||||
Expense support | — | (3,301,473) | |||||||||||||||
Reimbursement of expense support | 1,830,920 | — | |||||||||||||||
Net operating expenses | 19,747,874 | 6,960,379 | |||||||||||||||
Net investment income before taxes | 11,723,079 | 7,493,472 | |||||||||||||||
Income tax expense | (1,630,230) | — | |||||||||||||||
Net investment income | 10,092,849 | 7,493,472 | |||||||||||||||
Net unrealized appreciation on investments: | |||||||||||||||||
Net change in unrealized appreciation on investments | 34,502,715 | 22,819,680 | |||||||||||||||
Net change in deferred taxes on investments | (1,610,074) | (266,789) | |||||||||||||||
Net increase in net assets resulting from operations | $ | 42,985,490 | $ | 30,046,363 | |||||||||||||
Common shares per share information: | |||||||||||||||||
Net investment income | $ | 0.79 | $ | 0.93 | |||||||||||||
Net increase in net assets resulting from operations | $ | 3.39 | $ | 3.72 | |||||||||||||
Weighted average number of common shares outstanding | 12,696,345 | 8,084,469 |
Common Shares | Capital in Excess of Par Value | Distributable Earnings | Total Net Assets | ||||||||||||||||||||||||||
Number of Shares | Par Value | ||||||||||||||||||||||||||||
Balance as of December 31, 2019 | 6,354,831 | $ | 6,355 | $ | 164,349,125 | $ | 9,927,411 | $ | 174,282,891 | ||||||||||||||||||||
Net investment income | — | — | — | 7,493,472 | 7,493,472 | ||||||||||||||||||||||||
Net change in unrealized appreciation on investments, net of tax | — | — | — | 22,552,891 | 22,552,891 | ||||||||||||||||||||||||
Distributions to shareholders | — | — | — | (9,929,353) | (9,929,353) | ||||||||||||||||||||||||
Issuance of common shares through the Offerings | 4,367,120 | 4,367 | 122,095,764 | — | 122,100,131 | ||||||||||||||||||||||||
Issuance of common shares through distribution reinvestment plan | 77,522 | 78 | 2,109,715 | — | 2,109,793 | ||||||||||||||||||||||||
Repurchase of common shares pursuant to share repurchase program | (341,225) | (341) | (9,646,576) | — | (9,646,917) | ||||||||||||||||||||||||
Balance as of December 31, 2020 | 10,458,248 | $ | 10,459 | $ | 278,908,028 | $ | 30,044,421 | $ | 308,962,908 | ||||||||||||||||||||
Net investment income | — | — | — | 10,092,849 | 10,092,849 | ||||||||||||||||||||||||
Net change in unrealized appreciation on investments, net of tax | — | — | — | 32,892,641 | 32,892,641 | ||||||||||||||||||||||||
Distributions to shareholders | — | — | — | (15,489,084) | (15,489,084) | ||||||||||||||||||||||||
Issuance of common shares through the Offerings | 5,324,390 | 5,324 | 162,960,845 | — | 162,966,169 | ||||||||||||||||||||||||
Issuance of common shares through distribution reinvestment plan | 137,431 | 137 | 4,174,245 | — | 4,174,382 | ||||||||||||||||||||||||
Repurchase of common shares pursuant to share repurchase program | (107,038) | (107) | (3,290,761) | — | (3,290,868) | ||||||||||||||||||||||||
Balance as of December 31, 2021 | 15,813,031 | $ | 15,813 | $ | 442,752,357 | $ | 57,540,827 | $ | 500,308,997 |
Years Ended December 31, | |||||||||||||||||
2021 | 2020 | ||||||||||||||||
Operating Activities: | |||||||||||||||||
Net increase in net assets resulting from operations | $ | 42,985,490 | $ | 30,046,363 | |||||||||||||
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities: | |||||||||||||||||
Purchases of investments | (192,759,287) | (64,182,774) | |||||||||||||||
Proceeds from return of capital on investments | 2,462,715 | — | |||||||||||||||
Net change in unrealized appreciation on investments | (34,502,715) | (22,819,680) | |||||||||||||||
Amortization of deferred offering expenses | 69,135 | 250,174 | |||||||||||||||
Amortization of deferred financing costs | 40,862 | 37,328 | |||||||||||||||
Increase (decrease) in net due to (from) related parties | 8,445,068 | 1,755,022 | |||||||||||||||
(Decrease) increase in payable for investments purchased | — | (118,009) | |||||||||||||||
Increase in accounts payable and other accrued expenses | 275,846 | 59,634 | |||||||||||||||
Increase in deferred offering expenses | (7,586) | (286,300) | |||||||||||||||
Increase in deferred tax liabilities, net | 1,610,074 | 266,789 | |||||||||||||||
Increase in prepaid expenses and other assets | (32,576) | (11,758) | |||||||||||||||
Net cash used in operating activities | (171,412,974) | (55,003,211) | |||||||||||||||
Financing Activities: | |||||||||||||||||
Proceeds from issuance of common shares | 162,966,169 | 122,100,131 | |||||||||||||||
Payment on repurchases of common shares | (4,750,830) | (7,901,923) | |||||||||||||||
Distributions paid, net of distributions reinvested | (10,765,618) | (7,395,691) | |||||||||||||||
Deferred financing costs | (20,750) | (65,100) | |||||||||||||||
Net cash provided by financing activities | 147,428,971 | 106,737,417 | |||||||||||||||
Net (decrease) increase in cash and restricted cash | (23,984,003) | 51,734,206 | |||||||||||||||
Cash and restricted cash, beginning of period | 82,688,211 | 30,954,005 | |||||||||||||||
Cash and restricted cash, end of period | $ | 58,704,208 | $ | 82,688,211 | |||||||||||||
Supplemental disclosure of cash flow information: | |||||||||||||||||
Cash paid for income taxes | $ | 1,529,500 | $ | — | |||||||||||||
Supplemental disclosure of non-cash financing activities: | |||||||||||||||||
Distributions reinvested | $ | 4,174,382 | $ | 2,109,793 | |||||||||||||
Amounts incurred but not paid (including amounts due to related parties): | |||||||||||||||||
Distributions payable | $ | 1,566,489 | $ | 1,017,405 | |||||||||||||
Offering costs | $ | 175,749 | $ | 122,779 | |||||||||||||
Payable for shares repurchased | $ | 508,770 | $ | 1,968,732 |
Company(1)(2) | Industry | Interest Rate | Maturity Date | Principal Amount / No. Shares | Cost | Fair Value | ||||||||||||||||||||||||||||||||||||||
Senior Secured Note – First Lien–23.3% | ||||||||||||||||||||||||||||||||||||||||||||
ATA Holding Company, LLC | Real Estate Services | 15.0% | 4/1/2027 | $ | 37,000,000 | $ | 37,000,000 | $ | 37,000,000 | |||||||||||||||||||||||||||||||||||
Auriemma U.S. Roundtables | Information Services and Advisory Solutions | 8.0% | 11/13/2022 | 2,000,000 | 2,000,000 | 2,000,000 | ||||||||||||||||||||||||||||||||||||||
Clarion Safety Systems, LLC | Visual Safety Solutions | 15.0% | 12/9/2028 | 22,500,000 | 22,500,000 | 22,500,000 | ||||||||||||||||||||||||||||||||||||||
Douglas Machines Corp. | Sanitation Products | 16.0% | 10/7/2028 | 15,000,000 | 15,000,000 | 15,000,000 | ||||||||||||||||||||||||||||||||||||||
Healthcare Safety Holdings, LLC | Healthcare Supplies | 15.0% | 7/16/2027 | 24,400,000 | 24,400,000 | 24,400,000 | ||||||||||||||||||||||||||||||||||||||
Polyform Products, Co. | Hobby Goods and Supplies | 16.0% | 8/7/2023 | 15,700,000 | 15,700,000 | 15,700,000 | ||||||||||||||||||||||||||||||||||||||
Total Senior Secured Note – First Lien | 116,600,000 | 116,600,000 | ||||||||||||||||||||||||||||||||||||||||||
Senior Secured Note – Second Lien–7.2% | ||||||||||||||||||||||||||||||||||||||||||||
Auriemma U.S. Roundtables | Information Services and Advisory Solutions | 16.0% | 8/1/2025 | $ | 12,114,338 | $ | 12,114,338 | $ | 12,114,338 | |||||||||||||||||||||||||||||||||||
Blue Ridge ESOP Associates | Business Services | 15.0% | 12/28/2028 | 2,640,844 | 2,640,844 | 2,640,844 | ||||||||||||||||||||||||||||||||||||||
Lawn Doctor, Inc. | Commercial and Professional Services | 16.0% | 7/7/2026 | 15,000,000 | 15,000,000 | 15,000,000 | ||||||||||||||||||||||||||||||||||||||
Milton Industries, Inc. | Engineered Products | 15.0% | 12/19/2027 | 3,353,265 | 3,353,265 | 3,353,265 | ||||||||||||||||||||||||||||||||||||||
Resolution Economics, LLC | Business Services | 15.0% | 1/2/2026 | 2,834,007 | 2,834,007 | 2,834,007 | ||||||||||||||||||||||||||||||||||||||
Total Senior Secured Note – Second Lien | 35,942,454 | 35,942,454 | ||||||||||||||||||||||||||||||||||||||||||
Total Senior Secured Notes | 152,542,454 | 152,542,454 | ||||||||||||||||||||||||||||||||||||||||||
Equity–60.7% | ||||||||||||||||||||||||||||||||||||||||||||
ATA Holding Company, LLC(3) | Real Estate Services | 36,980 | $ | 36,000,000 | $ | 41,612,000 | ||||||||||||||||||||||||||||||||||||||
Auriemma U.S. Roundtables(3) | Information Services and Advisory Solutions | 32,386 | 32,385,662 | 40,902,000 | ||||||||||||||||||||||||||||||||||||||||
Blue Ridge ESOP Associates | Business Services | 9,859 | 9,859,156 | 12,731,000 | ||||||||||||||||||||||||||||||||||||||||
Clarion Safety Systems, LLC(3) | Visual Safety Solutions | 46,759 | 46,759,287 | 46,759,287 | ||||||||||||||||||||||||||||||||||||||||
Douglas Machines Corp.(3) | Sanitation Products | 35,500 | 35,500,000 | 35,500,000 | ||||||||||||||||||||||||||||||||||||||||
Healthcare Safety Holdings, LLC(3) | Healthcare Supplies | 17,320 | 17,320,000 | 24,117,000 | ||||||||||||||||||||||||||||||||||||||||
Lawn Doctor, Inc.(3) | Commercial and Professional Services | 7,746 | 28,012,836 | 56,806,000 | ||||||||||||||||||||||||||||||||||||||||
Milton Industries, Inc. | Engineered Products | 6,647 | 6,646,735 | 9,286,000 | ||||||||||||||||||||||||||||||||||||||||
Polyform Products, Co.(3) | Hobby Goods and Supplies | 10,820 | 15,598,788 | 24,116,000 | ||||||||||||||||||||||||||||||||||||||||
Resolution Economics, LLC | Business Services | 7,166 | 7,128,767 | 11,625,000 | ||||||||||||||||||||||||||||||||||||||||
Total Equity | 235,211,231 | 303,454,287 | ||||||||||||||||||||||||||||||||||||||||||
TOTAL INVESTMENTS–91.2% | $ | 387,753,685 | $ | 455,996,741 | ||||||||||||||||||||||||||||||||||||||||
OTHER ASSETS IN EXCESS OF LIABILITIES–8.8% | 44,312,256 | |||||||||||||||||||||||||||||||||||||||||||
NET ASSETS–100.0% | $ | 500,308,997 |
Company(1)(2) | Industry | Interest Rate | Maturity Date | Principal Amount / No. Shares | Cost | Fair Value | ||||||||||||||||||||||||||||||||||||||
Senior Secured Note – First Lien–13.6% | ||||||||||||||||||||||||||||||||||||||||||||
Auriemma U.S Roundtables | Information Services and Advisory Solutions | 8.0% | 11/13/2021 | $ | 2,000,000 | $ | 2,000,000 | $ | 2,000,000 | |||||||||||||||||||||||||||||||||||
Healthcare Safety Holdings, LLC | Healthcare Supplies | 15.0% | 7/16/2027 | 24,400,000 | 24,400,000 | 24,400,000 | ||||||||||||||||||||||||||||||||||||||
Polyform Products, Co. | Hobby Goods and Supplies | 16.0% | 8/7/2023 | 15,700,000 | 15,700,000 | 15,700,000 | ||||||||||||||||||||||||||||||||||||||
Total Senior Secured Note - First Lien | 42,100,000 | 42,100,000 | ||||||||||||||||||||||||||||||||||||||||||
Senior Secured Note – Second Lien–11.6% | ||||||||||||||||||||||||||||||||||||||||||||
Auriemma U.S. Roundtables | Information Services and Advisory Solutions | 16.0% | 8/1/2025 | $ | 12,114,338 | $ | 12,114,338 | $ | 12,114,338 | |||||||||||||||||||||||||||||||||||
Blue Ridge ESOP Associates | Business Services | 15.0% | 3/24/2026 | 2,640,844 | 2,640,844 | 2,640,844 | ||||||||||||||||||||||||||||||||||||||
Lawn Doctor, Inc. | Commercial and Professional Services | 16.0% | 8/7/2023 | 15,000,000 | 15,000,000 | 15,000,000 | ||||||||||||||||||||||||||||||||||||||
Milton Industries, Inc. | Engineered Products | 15.0% | 11/21/2025 | 3,353,265 | 3,353,265 | 3,353,265 | ||||||||||||||||||||||||||||||||||||||
Resolution Economics, LLC | Business Services | 15.0% | 1/2/2026 | 2,834,007 | 2,834,007 | 2,834,007 | ||||||||||||||||||||||||||||||||||||||
Total Senior Secured Note - Second Lien | 35,942,454 | 35,942,454 | ||||||||||||||||||||||||||||||||||||||||||
Total Senior Secured Notes | 78,042,454 | 78,042,454 | ||||||||||||||||||||||||||||||||||||||||||
Equity–49.6% | ||||||||||||||||||||||||||||||||||||||||||||
Auriemma U.S Roundtables(3) | Information Services and Advisory Solutions | 32,386 | $ | 32,385,662 | $ | 37,272,000 | ||||||||||||||||||||||||||||||||||||||
Blue Ridge ESOP Associates | Business Services | 9,859 | 9,859,156 | 10,877,000 | ||||||||||||||||||||||||||||||||||||||||
Healthcare Safety Holdings, Inc.(3) | Healthcare Supplies | 17,320 | 17,320,000 | 18,186,000 | ||||||||||||||||||||||||||||||||||||||||
Lawn Doctor, Inc.(3) | Commercial and Professional Services | 7,746 | 30,475,551 | 48,685,000 | ||||||||||||||||||||||||||||||||||||||||
Milton Industries, Inc. | Engineered Products | 6,647 | 6,646,735 | 10,090,000 | ||||||||||||||||||||||||||||||||||||||||
Polyform Products, Co.(3) | Hobby Goods and Supplies | 10,820 | 15,598,788 | 19,502,000 | ||||||||||||||||||||||||||||||||||||||||
Resolution Economics, LLC | Business Services | 7,166 | 7,128,767 | 8,543,000 | ||||||||||||||||||||||||||||||||||||||||
Total Equity | 119,414,659 | 153,155,000 | ||||||||||||||||||||||||||||||||||||||||||
TOTAL INVESTMENTS–74.8% | $ | 197,457,113 | $ | 231,197,454 | ||||||||||||||||||||||||||||||||||||||||
OTHER ASSETS IN EXCESS OF LIABILITIES–25.2% | 77,765,454 | |||||||||||||||||||||||||||||||||||||||||||
NET ASSETS–100.0% | $ | 308,962,908 |
As of December 31, 2021 | |||||||||||||||||||||||
Asset Category | Cost | Fair Value | Fair Value Percentage of Investment Portfolio | Fair Value Percentage of Net Assets | |||||||||||||||||||
Senior secured debt | |||||||||||||||||||||||
First lien | $ | 116,600,000 | $ | 116,600,000 | 25.6 | % | 23.3 | % | |||||||||||||||
Second lien | 35,942,454 | 35,942,454 | 7.9 | 7.2 | |||||||||||||||||||
Total senior secured debt | 152,542,454 | 152,542,454 | 33.5 | 30.5 | |||||||||||||||||||
Equity | 235,211,231 | 303,454,287 | 66.5 | 60.7 | |||||||||||||||||||
Total investments | $ | 387,753,685 | $ | 455,996,741 | 100.0 | % | 91.2 | % |
As of December 31, 2020 | ||||||||||||||||||||||||||
Asset Category | Cost | Fair Value | Fair Value Percentage of Investment Portfolio | Fair Value Percentage of Net Assets | ||||||||||||||||||||||
Senior secured debt | ||||||||||||||||||||||||||
First lien | $ | 42,100,000 | $ | 42,100,000 | 18.2 | % | 13.6 | % | ||||||||||||||||||
Second lien | 35,942,454 | 35,942,454 | 15.6 | 11.6 | ||||||||||||||||||||||
Total senior secured debt | 78,042,454 | 78,042,454 | 33.8 | 25.2 | ||||||||||||||||||||||
Equity | 119,414,659 | 153,155,000 | 66.2 | 49.6 | ||||||||||||||||||||||
Total investments | $ | 197,457,113 | $ | 231,197,454 | 100.0 | % | 74.8 | % |
As of December 31, | ||||||||||||||
Industry | 2021 | 2020 | ||||||||||||
Real Estate Services | 17.2 | % | — | % | ||||||||||
Commercial and Professional Services | 15.8 | 27.5 | ||||||||||||
Visual Safety Solutions | 15.2 | — | ||||||||||||
Information Services and Advisory Solutions | 12.1 | 22.3 | ||||||||||||
Sanitation Products | 11.1 | — | ||||||||||||
Healthcare Supplies | 10.6 | 18.4 | ||||||||||||
Hobby Goods and Supplies | 8.7 | 15.2 | ||||||||||||
Engineered Products | 2.8 | 10.8 | ||||||||||||
Business Services | 6.5 | 5.8 | ||||||||||||
Total | 100.0 | % | 100.0 | % |
As of December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Lawn Doctor | Polyform | Round-tables | HSH | ATA(1) | Douglas(2) | Clarion(3) | Other(4) | ||||||||||||||||||||||||||||||||||||||||
Revenues | $ | 35,018 | $ | 22,297 | $ | 13,128 | $ | 32,918 | $ | 59,021 | $ | 6,099 | $ | 676 | $ | 118,256 | |||||||||||||||||||||||||||||||
Expenses | (31,749) | (20,097) | (13,276) | (30,769) | (52,494) | (19,146) | (1,857) | (127,990) | |||||||||||||||||||||||||||||||||||||||
Income (loss) before taxes | 3,269 | 2,200 | (148) | 2,149 | 6,527 | (13,047) | (1,181) | (9,734) | |||||||||||||||||||||||||||||||||||||||
Income tax (expense) benefit | (832) | (574) | (469) | (456) | — | 2,608 | 341 | 875 | |||||||||||||||||||||||||||||||||||||||
Consolidated net income (loss) | 2,437 | 1,626 | (617) | 1,693 | 6,527 | (10,439) | (840) | (8,859) | |||||||||||||||||||||||||||||||||||||||
Net loss attributable to non-controlling interests | 107 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | 2,544 | $ | 1,626 | $ | (617) | $ | 1,693 | $ | 6,527 | $ | (10,439) | $ | (840) | $ | (8,859) |
Year Ended December 31, 2020 | |||||||||||||||||||||||||||||||||||
Lawn Doctor | Polyform | Roundtables | HSH(5) | Other(4) | |||||||||||||||||||||||||||||||
Revenues | $ | 28,677 | $ | 18,981 | $ | 10,942 | $ | 13,940 | $ | 87,740 | |||||||||||||||||||||||||
Expenses | (27,232) | (17,372) | (11,692) | (15,633) | (98,687) | ||||||||||||||||||||||||||||||
Income (loss) before taxes | 1,445 | 1,609 | (750) | (1,693) | (10,947) | ||||||||||||||||||||||||||||||
Income tax benefit | (371) | (469) | 1,443 | 109 | 3,117 | ||||||||||||||||||||||||||||||
Consolidated net income (loss) | 1,074 | 1,140 | 693 | (1,584) | (7,830) | ||||||||||||||||||||||||||||||
Net loss attributable to non-controlling interests | 213 | — | — | — | — | ||||||||||||||||||||||||||||||
Net income (loss) | $ | 1,287 | $ | 1,140 | $ | 693 | $ | (1,584) | $ | (7,830) |
As of December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Lawn Doctor | Polyform | Round-tables | HSH | ATA | Douglas | Clarion | Other(4) | ||||||||||||||||||||||||||||||||||||||||
Current assets | $ | 13,926 | $ | 9,940 | $ | 2,043 | $ | 14,260 | $ | 10,029 | $ | 13,177 | $ | 3,084 | $ | 64,792 | |||||||||||||||||||||||||||||||
Non-current assets | 92,309 | 28,948 | 61,955 | 39,653 | 90,510 | 40,311 | 66,182 | 322,397 | |||||||||||||||||||||||||||||||||||||||
Current liabilities | 7,961 | 2,290 | 4,738 | 7,341 | 9,002 | 4,159 | 420 | 41,781 | |||||||||||||||||||||||||||||||||||||||
Non-current liabilities | 63,576 | 21,557 | 19,771 | 28,536 | 43,458 | 15,711 | 22,500 | 168,726 | |||||||||||||||||||||||||||||||||||||||
Non-controlling interest | (500) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Stockholders’ equity | 35,198 | 15,041 | 39,489 | 18,036 | 48,079 | 33,618 | 46,346 | 176,682 | |||||||||||||||||||||||||||||||||||||||
Ownership Percentage(6) | 61% | 87% | 81% | 75% | 75% | 90% | 99% | (7) |
As of December 31, 2020 | |||||||||||||||||||||||||||||||||||
Lawn Doctor | Polyform | Roundtables | HSH | Other(4) | |||||||||||||||||||||||||||||||
Current assets | $ | 8,386 | $ | 9,692 | $ | 4,167 | $ | 12,684 | $ | 51,902 | |||||||||||||||||||||||||
Non-current assets | 94,601 | 30,033 | 59,582 | 42,701 | 311,985 | ||||||||||||||||||||||||||||||
Current liabilities | 7,670 | 2,461 | 4,407 | 5,733 | 35,927 | ||||||||||||||||||||||||||||||
Non-current liabilities | 53,386 | 21,563 | 19,553 | 29,297 | 146,901 | ||||||||||||||||||||||||||||||
Non-controlling interest | (393) | — | — | — | — | ||||||||||||||||||||||||||||||
Stockholders’ equity | 42,324 | 15,701 | 39,789 | 20,355 | 181,059 | ||||||||||||||||||||||||||||||
Ownership Percentage(6) | 61% | 87% | 81% | 75% | (7) |
As of December 31, 2021 | As of December 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||||||||||||
Senior Debt | $ | — | $ | — | $ | 152,542,454 | $ | 152,542,454 | $ | — | $ | — | $ | 78,042,454 | $ | 78,042,454 | |||||||||||||||||||||||||||||||
Equity | — | — | 303,454,287 | 303,454,287 | — | — | 153,155,000 | 153,155,000 | |||||||||||||||||||||||||||||||||||||||
Total investments | $ | — | $ | — | $ | 455,996,741 | $ | 455,996,741 | $ | — | $ | — | $ | 231,197,454 | $ | 231,197,454 |
As of December 31, 2021 | ||||||||||||||||||||||||||||||||
Asset Group | Fair Value | Valuation Techniques | Unobservable Inputs | Range (Weighted Average)(1) | Impact to Valuation from an Increase in Input (2) | |||||||||||||||||||||||||||
Senior Debt | $ | 130,042,454 | Discounted Cash Flow Market Comparables Transaction Method | Discount Rate EBITDA Multiple EBITDA Multiple | 8.5% – 13.0% (11.4%) 4.1x – 15.2x (8.9x) 6.0x – 12.5x (9.6x) | Decrease Increase Increase | ||||||||||||||||||||||||||
22,500,000 | Transaction Precedent | Transaction Price | N/A | N/A | ||||||||||||||||||||||||||||
Equity | 256,695,000 | Discounted Cash Flow Market Comparables Transaction Method | Discount Rate EBITDA Multiple EBITDA Multiple | 8.5% – 13.0% (11.4%) 4.1x – 15.2x (8.9x) 6.0x – 12.5x (9.6x) | Decrease Increase Increase | |||||||||||||||||||||||||||
46,759,287 | Transaction Precedent | Transaction Price | N/A | N/A | ||||||||||||||||||||||||||||
Total | $ | 455,996,741 |
As of December 31, 2020 | ||||||||||||||||||||||||||||||||
Asset Group | Fair Value | Valuation Techniques | Unobservable Inputs | Range (Weighted Average)(1) | Impact to Valuation from an Increase in Input (2) | |||||||||||||||||||||||||||
Senior Debt | $ | 78,042,454 | Discounted Cash Flow Market Comparables Transaction Method | Discount Rate EBITDA Multiple EBITDA Multiple | 8.0% – 13.0% (10.7%) 6.4x – 15.2x (11.6x) 6.8x – 14.5x (11.3x) | Decrease Increase Increase | ||||||||||||||||||||||||||
Equity | 153,155,000 | Discounted Cash Flow Market Comparables Transaction Method | Discount Rate EBITDA Multiple EBITDA Multiple | 8.0% – 13.0% (10.7%) 6.4x – 15.2x (11.6x) 6.8x – 14.5x (11.3x) | Decrease Increase Increase | |||||||||||||||||||||||||||
Total | $ | 231,197,454 |
Year Ended December 31, 2021 | |||||||||||||||||
Senior Debt | Equity | Total | |||||||||||||||
Fair value balance as of January 1, 2021 | $ | 78,042,454 | $ | 153,155,000 | $ | 231,197,454 | |||||||||||
Additions | 74,500,000 | 118,259,287 | 192,759,287 | ||||||||||||||
Return of capital(1) | — | (2,462,715) | (2,462,715) | ||||||||||||||
Net change in unrealized appreciation(2) | — | 34,502,715 | 34,502,715 | ||||||||||||||
Fair value balance as of December 31, 2021 | $ | 152,542,454 | $ | 303,454,287 | $ | 455,996,741 | |||||||||||
Change in net unrealized appreciation on investments held as of December 31, 2021(2) | $ | — | $ | 34,502,715 | $ | 34,502,715 |
Year Ended December 31, 2020 | |||||||||||||||||
Senior Debt | Equity | Total | |||||||||||||||
Fair value balance as of January 1, 2020 | $ | 48,167,603 | $ | 96,027,397 | $ | 144,195,000 | |||||||||||
Additions | 29,874,851 | 34,307,923 | 64,182,774 | ||||||||||||||
Net change in unrealized appreciation(2) | — | 22,819,680 | 22,819,680 | ||||||||||||||
Fair value balance as of December 31, 2020 | $ | 78,042,454 | $ | 153,155,000 | $ | 231,197,454 | |||||||||||
Change in net unrealized appreciation on investments held as of December 31, 2020(2) | $ | — | $ | 22,819,680 | $ | 22,819,680 |
For the year ended: | Class FA | Class A | Class T | Class D | Class I | Class S | ||||||||||||||||||||||||||||||||
December 31, 2020 | $ | 27.64 | $ | 26.91 | $ | 27.01 | $ | 26.61 | $ | 27.15 | $ | 27.64 | ||||||||||||||||||||||||||
December 31, 2021 | 29.97 | 28.76 | 28.67 | 28.24 | 29.06 | 30.08 |
For the Year Ended | Amount of Expense Support Received | Expense Support Reimbursed(1) | Unreimbursed Expense Support(2) | Expiration | ||||||||||||||||||||||
December 31, 2018 | $ | 389,774 | $ | (352,653) | $ | 37,121 | March 31, 2022 | |||||||||||||||||||
December 31, 2019 | 1,372,020 | (969,591) | 402,429 | March 31, 2023 | ||||||||||||||||||||||
December 31, 2020 | 3,301,473 | (508,676) | 2,792,797 | March 31, 2024 | ||||||||||||||||||||||
$ | 5,063,267 | $ | (1,830,920) | $ | 3,232,347 |
Years Ended December 31, | ||||||||||||||||||||||||||
Related Party | Source Agreement & Description | 2021 | 2020 | |||||||||||||||||||||||
Managing Dealer /Placement Agent | Managing Dealer / Placement Agent Agreements: Commissions | $ | 1,524,232 | $ | 1,918,852 | |||||||||||||||||||||
Dealer Manager / Placement Agent Fees | 820,985 | 1,256,229 | ||||||||||||||||||||||||
Distribution and shareholder servicing fees | 396,774 | 165,012 | ||||||||||||||||||||||||
Manager and Sub-Manager | Management Agreement and Sub-Management Agreement: Organization and offering reimbursement(1)(2) | 2,490,377 | 1,142,237 | |||||||||||||||||||||||
Base management fees(1) | 4,845,052 | 2,596,842 | ||||||||||||||||||||||||
Total return incentive fees(1) | 7,282,840 | 4,150,562 | ||||||||||||||||||||||||
Manager and Sub-Manager | Expense Support and Conditional Reimbursement Agreement: Expense support | — | (3,301,473) | |||||||||||||||||||||||
Reimbursement of expense support | 1,830,920 | — | ||||||||||||||||||||||||
Manager | Administrative Services Agreement: Reimbursement of third-party operating expenses(1) | 104,195 | 191,070 | |||||||||||||||||||||||
Sub-Manager | Sub-Management Agreement: Reimbursement of third-party pursuit costs(1)(3) | 651,362 | 154,727 |
December 31, | |||||||||||
2021 | 2020 | ||||||||||
Due from related parties: | |||||||||||
Expense Support | $ | — | $ | 3,301,473 | |||||||
Total due from related parties | — | 3,301,473 | |||||||||
Due to related parties: | |||||||||||
Total return incentive fees | (7,282,840) | (4,150,562) | |||||||||
Reimbursement of expense support | (1,830,920) | — | |||||||||
Base management fees | (577,538) | (271,983) | |||||||||
Organization and offering expenses | (175,749) | (122,779) | |||||||||
Distribution and shareholder servicing fees | (53,149) | (19,814) | |||||||||
Reimbursement of third-party operating expenses and pursuit costs | (1,330) | (212,793) | |||||||||
Total due to related parties | (9,921,526) | (4,777,931) | |||||||||
Net due to related parties | $ | (9,921,526) | $ | (1,476,458) |
Distribution Period | Distributions Declared(1)(2) | Distributions Reinvested(3) | Cash Distributions Net of Distributions Reinvested | |||||||||||||||||
Year ended December 31, 2021 | $ | 15,489,084 | $ | 4,428,799 | $ | 11,060,285 | ||||||||||||||
Year ended December 31, 2020 | 9,929,353 | 2,240,547 | 7,688,806 | |||||||||||||||||
(1) | 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, 2021 - December 31, 2021 | $ | 0.104167 | $ | 0.104167 | $ | 0.083333 | $ | 0.093750 | $ | 0.104167 | $ | 0.104167 | ||||||||||||||||||||||||||
January 1, 2020 - December 31, 2020 | 0.104167 | 0.104167 | 0.083333 | 0.093750 | 0.104167 | 0.104167 | ||||||||||||||||||||||||||||||||
(2) | The Company’s board of directors began declaring monthly distributions per Class S share for record date March 30, 2020. The Class S shares were first sold on March 31, 2020. |
(3) | Amounts based on distribution record date. |
Years Ended December 31, | |||||||||||||||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||||||||||||||
Amount | % of Cash Distributions Declared | Amount | % of Cash Distributions Declared | ||||||||||||||||||||||||||||||||
Net investment income(1) | $ | 10,092,849 | 65.2 | % | $ | 7,493,472 | 75.5 | % | |||||||||||||||||||||||||||
Distributions in excess of net investment income(2) | 5,396,235 | 34.8 | 2,435,881 | 24.5 | |||||||||||||||||||||||||||||||
Total distributions declared | $ | 15,489,084 | 100.0 | % | $ | 9,929,353 | 100.0 | % |
(1) | Net investment income includes expense support (reimbursement) of $(1,830,920) and $3,301,473 for the years ended December 31, 2021 and 2020, respectively. See Note 5. “Related Party Transactions” for additional information. |
(2) | Consists of distributions made from offering proceeds for the periods presented. |
Year Ended December 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from Offerings | Distributions Reinvested(1) | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share Class | Shares Issued | Gross Proceeds | Sales Load(2) | Net Proceeds to Company | Shares | Proceeds to Company | Shares | Net Proceeds to Company | Average Net Proceeds per Share | |||||||||||||||||||||||||||||||||||||||||||||||
Class A | 403,267 | $ | 13,195,644 | $ | (958,829) | $ | 12,236,815 | 43,744 | $ | 1,322,539 | 447,011 | $ | 13,559,354 | $ | 30.33 | |||||||||||||||||||||||||||||||||||||||||
Class T | 954,157 | 30,411,622 | (1,386,388) | 29,025,234 | 19,417 | 585,294 | 973,574 | 29,610,528 | 30.41 | |||||||||||||||||||||||||||||||||||||||||||||||
Class D | 547,808 | 16,473,300 | — | 16,473,300 | 13,798 | 409,939 | 561,606 | 16,883,239 | 30.06 | |||||||||||||||||||||||||||||||||||||||||||||||
Class I | 3,419,158 | 105,230,820 | — | 105,230,820 | 60,472 | 1,856,610 | 3,479,630 | 107,087,430 | 30.78 | |||||||||||||||||||||||||||||||||||||||||||||||
5,324,390 | $ | 165,311,386 | $ | (2,345,217) | $ | 162,966,169 | 137,431 | $ | 4,174,382 | 5,461,821 | $ | 167,140,551 | $ | 30.60 |
Year Ended December 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from Offerings | Distributions Reinvested(1) | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share Class | Shares Issued | Gross Proceeds | Sales Load(2)(3) | Net Proceeds to Company | Shares | Proceeds to Company | Shares | Net Proceeds to Company | Average Net Proceeds per Share | |||||||||||||||||||||||||||||||||||||||||||||||
Class FA | 569,642 | $ | 15,853,000 | $ | (167,960) | $ | 15,685,040 | — | $ | — | 569,642 | $ | 15,685,040 | $ | 27.53 | |||||||||||||||||||||||||||||||||||||||||
Class A | 334,440 | 9,808,964 | (679,465) | 9,129,499 | 35,376 | 961,623 | 369,816 | 10,091,122 | 27.29 | |||||||||||||||||||||||||||||||||||||||||||||||
Class T | 473,344 | 13,486,208 | (640,595) | 12,845,613 | 8,440 | 229,816 | 481,784 | 13,075,429 | 27.14 | |||||||||||||||||||||||||||||||||||||||||||||||
Class D | 143,074 | 3,873,660 | — | 3,873,660 | 9,174 | 245,006 | 152,248 | 4,118,666 | 27.05 | |||||||||||||||||||||||||||||||||||||||||||||||
Class I | 1,076,234 | 29,893,733 | — | 29,893,733 | 24,532 | 673,348 | 1,100,766 | 30,567,081 | 27.77 | |||||||||||||||||||||||||||||||||||||||||||||||
Class S | 1,770,386 | 52,359,647 | (1,687,061) | 50,672,586 | — | — | 1,770,386 | 50,672,586 | 28.62 | |||||||||||||||||||||||||||||||||||||||||||||||
4,367,120 | $ | 125,275,212 | $ | (3,175,081) | $ | 122,100,131 | 77,522 | $ | 2,109,793 | 4,444,642 | $ | 124,209,924 | $ | 27.95 |
Years Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share Class | Number of Shares | Total Consideration | Average Price Paid per Share | Number of Shares | Total Consideration | Average Price Paid per Share | ||||||||||||||||||||||||||||||||||||||||||||||||||
Class FA | 19,637 | $ | 630,608 | $ | 32.11 | 246,653 | $ | 7,037,470 | $ | 28.53 | ||||||||||||||||||||||||||||||||||||||||||||||
Class A | 20,876 | 627,150 | 30.04 | 4,580 | 123,038 | 26.86 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Class T | 19,158 | 574,225 | 29.97 | 25,774 | 721,226 | 27.98 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Class D | 6,711 | 198,484 | 29.58 | 1,156 | 32,212 | 27.85 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Class I | 36,349 | 1,118,904 | 30.78 | 63,062 | 1,732,971 | 27.48 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Class S | 4,307 | 141,497 | 32.85 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 107,038 | $ | 3,290,868 | $ | 30.74 | 341,225 | $ | 9,646,917 | $ | 28.27 |
Years Ended December 31, | |||||||||||||||||
2021 | 2020 | ||||||||||||||||
Current: | |||||||||||||||||
Federal | $ | 1,315,437 | $ | — | |||||||||||||
State | 314,793 | — | |||||||||||||||
Total current tax expense | 1,630,230 | — | |||||||||||||||
Deferred: | |||||||||||||||||
Federal | 1,135,464 | 220,097 | |||||||||||||||
State | 474,610 | 46,692 | |||||||||||||||
Total deferred tax expense | 1,610,074 | 266,789 | |||||||||||||||
Income tax expense | $ | 3,240,304 | $ | 266,789 |
December 31, | |||||||||||
2021 | 2020 | ||||||||||
Deferred tax assets: | |||||||||||
Carryforwards for net operating loss | $ | 532,822 | $ | 248,641 | |||||||
Other | 18,120 | — | |||||||||
Valuation Allowance | (21,899) | — | |||||||||
Total deferred tax assets | 529,043 | 248,641 | |||||||||
Deferred tax liabilities: | |||||||||||
Unrealized appreciation on investments | (2,405,906) | (515,430) | |||||||||
Total deferred tax liabilities | (2,405,906) | (515,430) | |||||||||
Deferred tax liabilities, net | $ | (1,876,863) | $ | (266,789) |
Years Ended December 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Tax expense computed at the federal statutory rate | $ | 9,707,417 | 21.0 | % | $ | 6,365,762 | 21.0 | % | |||||||||||||||
State income tax expense net of federal benefit | 789,404 | 1.7 | 73,491 | 0.2 | |||||||||||||||||||
Benefit of partnership structure | (7,256,517) | (15.7) | (6,172,464) | (20.3) | |||||||||||||||||||
Income tax expense | $ | 3,240,304 | 7.0 | % | $ | 266,789 | 0.9 | % |
Year Ended December 31, 2021 | |||||||||||||||||||||||||||||||||||
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 Year | $ | 29.97 | $ | 28.76 | $ | 28.67 | $ | 28.24 | $ | 29.06 | $ | 30.08 | |||||||||||||||||||||||
Net investment income (loss), before reimbursement of expense support(1) | 1.33 | 0.65 | 0.39 | 0.58 | 0.60 | 1.23 | |||||||||||||||||||||||||||||
Reimbursement of expense support(1)(2) | (0.21) | (0.19) | (0.21) | (0.14) | (0.09) | — | |||||||||||||||||||||||||||||
Net investment income(1) | 1.12 | 0.46 | 0.18 | 0.44 | 0.51 | 1.23 | |||||||||||||||||||||||||||||
Net realized and unrealized gains, net of taxes(1)(3) | 2.78 | 2.81 | 2.81 | 2.80 | 2.86 | 2.78 | |||||||||||||||||||||||||||||
Net increase resulting from investment operations | 3.90 | 3.27 | 2.99 | 3.24 | 3.37 | 4.01 | |||||||||||||||||||||||||||||
Distributions to shareholders(4) | (1.25) | (1.25) | (1.00) | (1.13) | (1.25) | (1.25) | |||||||||||||||||||||||||||||
Net decrease resulting from distributions to shareholders | (1.25) | (1.25) | (1.00) | (1.13) | (1.25) | (1.25) | |||||||||||||||||||||||||||||
Net Asset Value, End of Year | $ | 32.62 | $ | 30.78 | $ | 30.66 | $ | 30.35 | $ | 31.18 | $ | 32.84 | |||||||||||||||||||||||
Net assets, end of period | $ | 148,716 | $ | 44,958 | $ | 49,328 | $ | 30,607 | $ | 168,704 | $ | 57,995 | |||||||||||||||||||||||
Average net assets(5) | $ | 145,353 | $ | 37,354 | $ | 30,486 | $ | 20,335 | $ | 106,275 | $ | 56,575 | |||||||||||||||||||||||
Shares outstanding, end of period | 4,559 | 1,461 | 1,609 | 1,009 | 5,410 | 1,766 | |||||||||||||||||||||||||||||
Distributions declared | $ | 5,714 | $ | 1,531 | $ | 1,000 | $ | 760 | $ | 4,271 | $ | 2,213 | |||||||||||||||||||||||
Total investment return based on net asset value before total return incentive fee(6) | 14.55 | % | 13.88 | % | 11.96 | % | 13.31 | % | 13.39 | % | 15.07 | % | |||||||||||||||||||||||
Total investment return based on net asset value after total return incentive fee(6) | 12.92 | % | 11.53 | % | 10.55 | % | 11.61 | % | 11.76 | % | 13.54 | % | |||||||||||||||||||||||
RATIOS/SUPPLEMENTAL DATA: | |||||||||||||||||||||||||||||||||||
Ratios to average net assets:(5)(7) | |||||||||||||||||||||||||||||||||||
Total operating expenses before total return incentive fee and reimbursement of expense support | 1.41 | % | 2.97 | % | 4.93 | % | 4.16 | % | 3.93 | % | 1.67 | % | |||||||||||||||||||||||
Total operating expenses before reimbursement of expense support | 2.77 | % | 5.52 | % | 6.99 | % | 6.45 | % | 6.25 | % | 3.07 | % | |||||||||||||||||||||||
Total operating expenses after reimbursement of expense support | 3.44 | % | 6.13 | % | 7.70 | % | 6.91 | % | 6.55 | % | 3.07 | % | |||||||||||||||||||||||
Net investment income before total return incentive fee(9) | 4.88 | % | 4.06 | % | 2.65 | % | 3.77 | % | 3.97 | % | 5.26 | % | |||||||||||||||||||||||
Net investment income | 3.52 | % | 1.52 | % | 0.59 | % | 1.48 | % | 1.65 | % | 3.86 | % |
Year Ended December 31, 2020 | |||||||||||||||||||||||||||||||||||
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 Year(8) | $ | 27.64 | $ | 26.91 | $ | 27.01 | $ | 26.61 | $ | 27.15 | $ | 27.56 | |||||||||||||||||||||||
Net investment income before expense support(1) | 0.79 | 0.10 | (0.33) | 0.03 | 0.02 | 0.82 | |||||||||||||||||||||||||||||
Expense support(1)(2) | 0.35 | 0.53 | 0.47 | 0.26 | 0.66 | 0.10 | |||||||||||||||||||||||||||||
Net investment income(1) | 1.14 | 0.63 | 0.14 | 0.29 | 0.68 | 0.92 | |||||||||||||||||||||||||||||
Net realized and unrealized gains(1)(3) | 2.44 | 2.47 | 2.52 | 2.47 | 2.48 | 2.64 | |||||||||||||||||||||||||||||
Net increase resulting from investment operations | 3.58 | 3.10 | 2.66 | 2.76 | 3.16 | 3.56 | |||||||||||||||||||||||||||||
Distributions to shareholders(4) | (1.25) | (1.25) | (1.00) | (1.13) | (1.25) | (1.04) | |||||||||||||||||||||||||||||
Net decrease resulting from distributions to shareholders | (1.25) | (1.25) | (1.00) | (1.13) | (1.25) | (1.04) | |||||||||||||||||||||||||||||
Net Asset Value, End of Year | $ | 29.97 | $ | 28.76 | $ | 28.67 | $ | 28.24 | $ | 29.06 | $ | 30.08 | |||||||||||||||||||||||
Net assets, end of period | $ | 137,238 | $ | 29,748 | $ | 18,772 | $ | 12,813 | $ | 57,148 | $ | 53,245 | |||||||||||||||||||||||
Average net assets(5) | $ | 130,940 | $ | 22,984 | $ | 11,991 | $ | 9,675 | $ | 35,672 | $ | 19,257 | |||||||||||||||||||||||
Shares outstanding, end of period | 4,579 | 1,034 | 655 | 454 | 1,967 | 1,770 | |||||||||||||||||||||||||||||
Distributions declared | $ | 5,812 | $ | 1,052 | $ | 436 | $ | 405 | $ | 1,610 | $ | 615 | |||||||||||||||||||||||
Total investment return based on net asset value before total return incentive fee(6) | 13.27 | % | 12.43 | % | 10.79 | % | 11.99 | % | 12.23 | % | 13.36 | % | |||||||||||||||||||||||
Total investment return based on net asset value after total return incentive fee(6) | 13.16 | % | 11.89 | % | 10.11 | % | 10.67 | % | 12.01 | % | 12.80 | % | |||||||||||||||||||||||
RATIOS/SUPPLEMENTAL DATA: | |||||||||||||||||||||||||||||||||||
Ratios to average net assets:(5)(7) | |||||||||||||||||||||||||||||||||||
Total operating expenses before total return incentive fee and expense support | 1.81 | % | 3.51 | % | 5.54 | % | 3.93 | % | 4.02 | % | 2.35 | % | |||||||||||||||||||||||
Total operating expenses before expense support | 3.10 | % | 6.09 | % | 8.21 | % | 6.48 | % | 6.72 | % | 4.15 | % | |||||||||||||||||||||||
Total operating expenses after expense support | 1.85 | % | 4.14 | % | 6.49 | % | 5.52 | % | 4.34 | % | 3.79 | % | |||||||||||||||||||||||
Net investment income before total return incentive fee(9) | 4.09 | % | 2.96 | % | 1.46 | % | 2.67 | % | 2.78 | % | 4.66 | % | |||||||||||||||||||||||
Net investment income | 4.05 | % | 2.32 | % | 0.51 | % | 1.08 | % | 2.46 | % | 3.17 | % |
Class A | Class T | Class D | Class I | ||||||||||||||||||||
Effective January 28, 2022: | |||||||||||||||||||||||
Offering Price, Per Share | $ | 33.64 | $ | 32.19 | $ | 30.35 | $ | 31.18 | |||||||||||||||
Selling Commissions, Per Share | 2.02 | 0.97 | — | — | |||||||||||||||||||
Placement Agent / Dealer Manager Fees, Per Share | 0.84 | 0.56 | — | — | |||||||||||||||||||
Effective February 25, 2022: | |||||||||||||||||||||||
Offering Price, Per Share | $ | 33.98 | $ | 32.48 | $ | 30.65 | $ | 31.50 | |||||||||||||||
Selling Commissions, Per Share | 2.04 | 0.97 | — | — | |||||||||||||||||||
Dealer Manager Fees, Per Share | 0.85 | 0.57 | — | — | |||||||||||||||||||
Effective March 24, 2022: | |||||||||||||||||||||||
Offering Price, Per Share | $ | 33.97 | $ | 32.44 | $ | 30.62 | $ | 31.49 | |||||||||||||||
Selling Commissions, Per Share | 2.04 | 0.97 | — | — | |||||||||||||||||||
Dealer Manager Fees, Per Share | 0.85 | 0.57 | — | — |
Proceeds from Public Offering | Distribution Reinvestment Plan | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share Class | Shares Issued | Gross Proceeds | Sales Load | Net Proceeds to Company | Shares | Proceeds to Company | Shares | Net Proceeds to Company | Average Net Proceeds per Share | |||||||||||||||||||||||||||||||||||||||||||||||
Class A | 102,283 | $ | 3,404,361 | $ | (234,035) | $ | 3,170,326 | 10,698 | $ | 330,988 | 112,981 | $ | 3,501,314 | $ | 30.99 | |||||||||||||||||||||||||||||||||||||||||
Class T | 40,504 | 1,308,250 | (60,432) | 1,247,818 | 8,231 | 253,154 | 48,735 | 1,500,972 | 30.80 | |||||||||||||||||||||||||||||||||||||||||||||||
Class D | 70,157 | 2,143,000 | — | 2,143,000 | 5,393 | 164,194 | 75,550 | 2,307,194 | 30.54 | |||||||||||||||||||||||||||||||||||||||||||||||
Class I | 493,689 | 15,458,388 | — | 15,458,388 | 24,666 | 773,117 | 518,355 | 16,231,505 | 31.31 | |||||||||||||||||||||||||||||||||||||||||||||||
706,633 | $ | 22,313,999 | $ | (294,467) | $ | 22,019,532 | 48,988 | $ | 1,521,453 | 755,621 | $ | 23,540,985 | $ | 31.15 |
1.1* | Managing Dealer Agreement dated as of October 21, 2021 between CNL Strategic Capital, LLC and CNL Securities Corp. | |||||||
1.2 | ||||||||
1.3 | ||||||||
3.1 | ||||||||
3.2 | ||||||||
4.1 | ||||||||
4.2 | ||||||||
4.3 | ||||||||
4.4 | ||||||||
10.1 | ||||||||
10.2 | ||||||||
10.3 | ||||||||
10.4 | ||||||||
10.5 | ||||||||
10.6 | ||||||||
10.7 | ||||||||
10.8 | ||||||||
10.9 | ||||||||
10.10 | ||||||||
10.11 | ||||||||
10.12 | ||||||||
10.13 | ||||||||
10.14 | ||||||||
10.15 | ||||||||
10.16 | ||||||||
10.17 | ||||||||
10.18 | ||||||||
10.19 | ||||||||
10.20 | ||||||||
10.21 | ||||||||
10.22 | ||||||||
10.23 | ||||||||
10.24 | Note Purchase Agreement dated October 7, 2021, by and among Douglas Machines Buyer, Inc., Douglas Machines Corp., Douglas Machines Holdings, LLC, and DM Strategic Capital DebtCo, LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on October 8, 2021). | |||||||
21.1* | ||||||||
24.1 | Power of Attorney (included on the signature page). | |||||||
31.1* | ||||||||
31.2* | ||||||||
32.1* | ||||||||
101* | The following materials from CNL Strategic Capital, LLC Annual Report on Form 10-K for the year ended December 31, 2021, formatted in iXBRL (Inline eXtensible Business Reporting Language); (i) Consolidated Statements of Assets and Liabilities, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Changes in Net Assets, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Schedules of Investments, and (vi) Notes to the Consolidated Financial Statements. |
* | Filed herewith |
LD Parent, Inc. |
Contents |
Independent Auditor’s Report | 99-100 | ||||
Consolidated Financial Statements | |||||
Balance Sheets as of December 31, 2021 and 2020 | 102 | ||||
Statements of Operations for the Years Ended December 31, 2021 and 2020 | 103 | ||||
Statements of Changes in Stockholder’s Equity for the Years Ended December 31, 2021 and 2020 | 104 | ||||
Statements of Cash Flows for the Years Ended December 31, 2021 and 2020 | 105 | ||||
Notes to Consolidated Financial Statements | 106-119 |
Consolidated Financial Statements |
Consolidated Balance Sheets |
December 31, | 2021 | 2020 | ||||||||||||
Assets | ||||||||||||||
Current assets: | ||||||||||||||
Cash and equivalents | $ | 8,732,708 | $ | 4,110,402 | ||||||||||
Receivables from franchisees, net | 2,372,353 | 2,274,041 | ||||||||||||
Inventories, net | 2,089,690 | 1,380,315 | ||||||||||||
Income tax receivable | 82,526 | 127,731 | ||||||||||||
Prepaid expenses and other current assets | 648,577 | 493,754 | ||||||||||||
Total current assets | 13,925,854 | 8,386,243 | ||||||||||||
Non-current assets: | ||||||||||||||
Property, plant and equipment, net | 2,203,168 | 2,191,612 | ||||||||||||
Intangible assets, net | 44,179,821 | 46,488,237 | ||||||||||||
Goodwill | 37,507,174 | 37,507,174 | ||||||||||||
Receivables from franchisees, net of current portion | 3,501,057 | 4,691,881 | ||||||||||||
Prepaid commissions | 4,903,326 | 3,707,228 | ||||||||||||
Other assets | 14,422 | 14,422 | ||||||||||||
Total non-current assets | 92,308,968 | 94,600,554 | ||||||||||||
Total assets | $ | 106,234,822 | $ | 102,986,797 | ||||||||||
Liabilities and Stockholder’s Equity | ||||||||||||||
Current liabilities: | ||||||||||||||
Current portion of long-term debt | $ | 307,000 | $ | 200,000 | ||||||||||
Accounts payable and accrued expenses | 3,449,294 | 3,473,562 | ||||||||||||
Deferred revenue | 1,002,536 | 737,227 | ||||||||||||
Advertising funds | 1,194,151 | 1,370,601 | ||||||||||||
Franchisee deposits | 1,726,700 | 1,559,319 | ||||||||||||
Other current liabilities | 281,215 | 329,185 | ||||||||||||
Total current liabilities | 7,960,896 | 7,669,894 | ||||||||||||
Non-current liabilities: | ||||||||||||||
Long-term debt, net of current portion | 29,262,943 | 19,088,125 | ||||||||||||
Related party notes | 18,000,000 | 18,000,000 | ||||||||||||
Deferred income taxes | 9,424,034 | 10,743,239 | ||||||||||||
Deferred revenue, net of current portion | 6,612,161 | 5,249,943 | ||||||||||||
Other non-current liabilities | 276,792 | 304,408 | ||||||||||||
Total non-current liabilities | 63,575,930 | 53,385,715 | ||||||||||||
Total liabilities | 71,536,826 | 61,055,609 | ||||||||||||
Commitments and contingencies | ||||||||||||||
Stockholder’s equity: | ||||||||||||||
Parent Contribution | $ | 35,197,728 | $ | 42,323,979 | ||||||||||
Total LD Parent, Inc. stockholder’s equity | 35,197,728 | 42,323,979 | ||||||||||||
Non-controlling interest | (499,732) | (392,791) | ||||||||||||
Total stockholder’s equity | 34,697,996 | 41,931,188 | ||||||||||||
Total liabilities and stockholder’s equity | $ | 106,234,822 | $ | 102,986,797 |
Consolidated Statements of Operations |
Years Ended December 31, | 2021 | 2020 | ||||||||||||
Revenues: | ||||||||||||||
Operating revenues | $ | 29,472,426 | $ | 24,873,100 | ||||||||||
Initial franchise fees | 4,558,458 | 2,961,274 | ||||||||||||
Interest, service charges and other income | 987,206 | 842,416 | ||||||||||||
Net revenues | 35,018,090 | 28,676,790 | ||||||||||||
Costs and expenses: | ||||||||||||||
Operating and training | 2,542,400 | 2,226,186 | ||||||||||||
Manufacturing | 3,027,378 | 2,758,728 | ||||||||||||
Selling, general and administrative | 21,469,099 | 18,077,653 | ||||||||||||
Total expenses | 27,038,877 | 23,062,567 | ||||||||||||
Income from operations | 7,979,213 | 5,614,223 | ||||||||||||
Other expense: | ||||||||||||||
Interest expense, net | 4,710,194 | 4,169,309 | ||||||||||||
Income before income taxes | 3,269,019 | 1,444,914 | ||||||||||||
Income taxes: | ||||||||||||||
Income tax expense | (831,897) | (371,274) | ||||||||||||
Consolidated net income | 2,437,122 | 1,073,640 | ||||||||||||
Less: Net loss attributable to the non-controlling interest | (106,941) | (213,666) | ||||||||||||
Net income attributable to LD Parent, Inc. | $ | 2,544,063 | $ | 1,287,306 |
Consolidated Statements of Changes in Stockholder’s Equity |
LD Parent, Inc. | Non-controlling interest | Total Stockholder’s Equity | ||||||||||||||||||
Balance, December 31, 2019 | $ | 44,123,317 | $ | (179,125) | $ | 43,944,192 | ||||||||||||||
Parent contribution | 754,754 | — | 754,754 | |||||||||||||||||
Parent distributions | (4,100,000) | — | (4,100,000) | |||||||||||||||||
Stock-based compensation expense | 258,602 | — | 258,602 | |||||||||||||||||
Net income (loss) | 1,287,306 | (213,666) | 1,073,640 | |||||||||||||||||
Balance, December 31, 2020 | $ | 42,323,979 | $ | (392,791) | $ | 41,931,188 | ||||||||||||||
Parent contribution | 750,823 | — | 750,823 | |||||||||||||||||
Parent distributions | (10,770,250) | — | (10,770,250) | |||||||||||||||||
Stock-based compensation expense | 349,113 | — | 349,113 | |||||||||||||||||
Net income (loss) | 2,544,063 | (106,941) | 2,437,122 | |||||||||||||||||
Balance, December 31, 2021 | $ | 35,197,728 | $ | (499,732) | $ | 34,697,996 |
Consolidated Statements of Cash Flows |
Years Ended December 31, | 2021 | 2020 | ||||||||||||
Cash flows from operating activities: | ||||||||||||||
Consolidated net income | $ | 2,437,122 | $ | 1,073,640 | ||||||||||
Adjustments to reconcile consolidated net income to net cash flows provided by operating activities: | ||||||||||||||
Bad debt expense | 196,115 | 401,392 | ||||||||||||
Depreciation | 198,944 | 192,192 | ||||||||||||
Amortization | 2,308,416 | 2,308,416 | ||||||||||||
Deferred income taxes | (1,319,205) | (1,031,067) | ||||||||||||
Stock-based compensation expense | 349,113 | 258,602 | ||||||||||||
Amortization of debt issuance costs | 75,568 | 53,700 | ||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||
Receivables from franchisees | 896,397 | 957,103 | ||||||||||||
Inventories | (709,375) | 258,062 | ||||||||||||
Income tax receivable | 45,204 | 51,311 | ||||||||||||
Prepaid commission | (154,823) | (1,709,436) | ||||||||||||
Prepaid expenses and other current assets | (1,196,098) | (58,979) | ||||||||||||
Accounts payable and accrued expenses | (24,268) | 850,962 | ||||||||||||
Deferred revenue | 1,627,526 | 1,998,112 | ||||||||||||
Advertising funds | (176,450) | 280,928 | ||||||||||||
Franchisee deposits | 167,381 | 894,144 | ||||||||||||
Other current liabilities | (47,970) | 167,940 | ||||||||||||
Other liabilities | (27,614) | (22,059) | ||||||||||||
Net cash flows provided by operating activities | 4,645,983 | 6,924,963 | ||||||||||||
Cash flows from investing activity: | ||||||||||||||
Purchases of property, plant and equipment | (210,500) | (41,153) | ||||||||||||
Net cash flows used in investing activity | (210,500) | (41,153) | ||||||||||||
Cash flows from financing activities: | ||||||||||||||
Parent contribution | 750,823 | 754,754 | ||||||||||||
Proceeds from long-term debt | 10,700,000 | — | ||||||||||||
Repayment for long-term debt | (226,750) | (200,000) | ||||||||||||
Parent distributions | (10,770,250) | (4,100,000) | ||||||||||||
Payment of debt issuance costs | (267,000) | — | ||||||||||||
Net cash flows provided by (used in) financing activities | 186,823 | (3,545,246) | ||||||||||||
Net increase in cash and equivalents | 4,622,306 | 3,338,564 | ||||||||||||
Cash and equivalents, beginning of period | 4,110,402 | 771,838 | ||||||||||||
Cash and equivalents, end of period | $ | 8,732,708 | $ | 4,110,402 | ||||||||||
Supplemental cash flow information: | ||||||||||||||
Interest paid | $ | 4,493,143 | $ | 4,023,729 | ||||||||||
Income taxes paid | 2,105,858 | 1,346,628 |
Notes to Consolidated Financial Statements |
Notes to Consolidated Financial Statements |
Notes to Consolidated Financial Statements |
Years Ended December 31, | 2021 | 2020 | ||||||||||||
Operating Revenues: | ||||||||||||||
Service/royalty fees | $ | 19,789,537 | $ | 16,596,110 | ||||||||||
Part and equipment sales | 2,788,043 | 2,478,087 | ||||||||||||
Advertising revenue | 6,894,846 | 5,798,903 | ||||||||||||
Initial franchise fees | 4,558,458 | 2,961,274 | ||||||||||||
Interest, service charges, and other | 987,206 | 842,416 | ||||||||||||
Net Revenues | $ | 35,018,090 | $ | 28,676,790 |
Notes to Consolidated Financial Statements |
Notes to Consolidated Financial Statements |
Notes to Consolidated Financial Statements |
Notes to Consolidated Financial Statements |
Notes to Consolidated Financial Statements |
December 31, | 2021 | 2020 | ||||||||||||
Amounts billed and currently receivable from franchisees | $ | 1,752,855 | $ | 1,650,586 | ||||||||||
Notes receivable from franchisees | 906,133 | 981,171 | ||||||||||||
Net investment in sales type leases | 357,777 | 358,623 | ||||||||||||
Less: Allowance for doubtful accounts | (644,412) | (716,339) | ||||||||||||
Current portion | 2,372,353 | 2,274,041 | ||||||||||||
Notes receivable from franchisees | 2,253,811 | 3,383,627 | ||||||||||||
Net investment in sales type leases | 1,247,246 | 1,308,254 | ||||||||||||
Noncurrent portion | 3,501,057 | 4,691,881 | ||||||||||||
Receivables from Franchisees, net | $ | 5,873,410 | $ | 6,965,922 |
December 31, | 2021 | 2020 | ||||||||||||
Land | $ | 440,304 | $ | 440,304 | ||||||||||
Building | 1,126,624 | 1,126,624 | ||||||||||||
Furniture, fixtures and other equipment | 873,850 | 695,982 | ||||||||||||
Leasehold improvements | 484,020 | 451,388 | ||||||||||||
2,924,798 | 2,714,298 | |||||||||||||
Less: accumulated depreciation | (721,630) | (522,686) | ||||||||||||
Property, plant and equipment, net | $ | 2,203,168 | $ | 2,191,612 |
December 31, | 2021 | 2020 | ||||||||||||
Security Deposits | $ | 14,422 | $ | 14,422 |
Notes to Consolidated Financial Statements |
December 31, | 2021 | 2020 | Useful Life | |||||||||||||||||
Franchisee relationships | $ | 34,100,000 | $ | 34,100,000 | 15 years | |||||||||||||||
Trade name | 12,094,580 | 12,094,580 | Indefinite | |||||||||||||||||
Systems-in-place | 6,800,000 | 6,800,000 | Indefinite | |||||||||||||||||
Leasehold interest | 193,000 | 193,000 | 5.5 years | |||||||||||||||||
53,187,580 | 53,187,580 | |||||||||||||||||||
Less: accumulated amortization | (9,007,759) | (6,699,343) | ||||||||||||||||||
Intangibles, net | $ | 44,179,821 | $ | 46,488,237 |
Years ending December 31, | ||||||||
2022 | $ | 2,308,416 | ||||||
2023 | 2,294,532 | |||||||
2024 | 2,273,333 | |||||||
2025 | 2,273,333 | |||||||
2026 | 2,273,333 | |||||||
2027 and thereafter | 13,862,294 | |||||||
$ | 25,285,241 |
Notes to Consolidated Financial Statements |
Years ending December 31, | ||||||||
2022 | $ | 307,000 | ||||||
2023 | 18,307,000 | |||||||
2024 | 307,000 | |||||||
2025 | 28,952,250 | |||||||
$ | 47,873,250 |
2021 | 2020 | |||||||||||||
Long-term debt | $ | 29,873,250 | $ | 19,400,000 | ||||||||||
Less: Current portion | (307,000) | (200,000) | ||||||||||||
Less: Deferred financing costs | (303,307) | (111,875) | ||||||||||||
Long-term debt, net | $ | 29,262,943 | $ | 19,088,125 |
Notes to Consolidated Financial Statements |
Years ending December 31, | ||||||||
2022 | $ | 278,697 | ||||||
2023 | 169,576 | |||||||
2024 | 28,948 | |||||||
2025 | 12,655 | |||||||
$ | 489,876 |
Notes to Consolidated Financial Statements |
December 31, | 2021 | 2020 | ||||||||||||
Employee compensation | $ | 348,096 | $ | 273,215 | ||||||||||
Accounts receivable | 126,675 | 155,182 | ||||||||||||
Inventory | 16,158 | 16,379 | ||||||||||||
Partnership interest | 666,907 | 365,529 | ||||||||||||
Deferred revenue | 682,942 | 280,546 | ||||||||||||
Deferred tax assets | 1,840,778 | 1,090,851 | ||||||||||||
Property and equipment | (327,611) | (316,798) | ||||||||||||
Intangible assets | (10,910,230) | (11,480,837) | ||||||||||||
Other | (26,971) | (36,455) | ||||||||||||
Deferred tax liabilities | (11,264,812) | (11,834,090) | ||||||||||||
Net deferred income tax liabilities | $ | (9,424,034) | $ | (10,743,239) |
Year Ended December 31, | 2021 | 2020 | ||||||||||||
Current: | ||||||||||||||
Federal | $ | 1,640,600 | $ | 1,114,816 | ||||||||||
State | 510,502 | 287,525 | ||||||||||||
Current tax expense | 2,151,102 | 1,402,341 | ||||||||||||
Deferred: | ||||||||||||||
Federal | (1,113,880) | (870,588) | ||||||||||||
State | (205,325) | (160,479) | ||||||||||||
Deferred benefit | (1,319,205) | (1,031,067) | ||||||||||||
Total tax expense (benefit) | $ | 831,897 | $ | 371,274 |
Years Ended December 31, | 2021 | 2020 | ||||||||||||
Federal statutory rate | 21.0 | % | 21.0 | % | ||||||||||
State income taxes, net of federal tax benefit | 3.3 | 4.4 | ||||||||||||
Non-deductible expenses | 0.1 | 0.1 | ||||||||||||
Non-controlling interest | 0.7 | 3.1 | ||||||||||||
Return to provision adjustment | 2.9 | 0.1 | ||||||||||||
Stock-based compensation | (2.4) | (3.1) | ||||||||||||
Effective income tax rate on income before taxes | 25.6 | % | 25.6 | % |
Notes to Consolidated Financial Statements |
Expected volatility | 23 | % | ||||||||||||
Expected term (years) | 5 | |||||||||||||
Expected dividend yield | — | |||||||||||||
Risk-free interest rate | 1.81 | % |
Stock Options | ||||||||||||||||||||
Number of stock option shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (in years) | Non-Exercisable | Exercisable | ||||||||||||||||
Outstanding at December 31, 2019 | 1,274 | $ | 3,931 | 8.30 | 821 | 453 | ||||||||||||||
Granted | — | — | — | — | — | |||||||||||||||
Exercised | (192) | — | — | — | — | |||||||||||||||
Forfeited or expired | — | — | — | — | — | |||||||||||||||
Outstanding at December 31, 2020 | 1,082 | $ | 3,931 | 7.30 | 547 | 535 | ||||||||||||||
Granted | — | — | — | — | — | |||||||||||||||
Exercised | (191) | — | — | — | — | |||||||||||||||
Forfeited or expired | — | — | — | — | — | |||||||||||||||
Outstanding at December 31, 2021 | 891 | $ | 3,931 | 6.30 | 177 | 714 |
Notes to Consolidated Financial Statements |
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) |
Signature | Title | Date | ||||||
/s/ James M. Seneff, Jr. | Chairman of the Board | March 31, 2022 | ||||||
JAMES M. SENEFF, JR. | ||||||||
/s/ Chirag J. Bhavsar | Chief Executive Officer and President (Principal Executive Officer) | March 31, 2022 | ||||||
CHIRAG J. BHAVSAR | ||||||||
/s/ Tammy J. Tipton | Chief Financial Officer (Principal Financial and Accounting Officer) | March 31, 2022 | ||||||
TAMMY J. TIPTON | ||||||||
/s/ Arthur E. Levine | Director | March 31, 2022 | ||||||
ARTHUR E. LEVINE | ||||||||
/s/ Mark D. Linsz | Director | March 31, 2022 | ||||||
MARK D. LINSZ | ||||||||
/s/ Benjamin A. Posen | Director | March 31, 2022 | ||||||
BENJAMIN A. POSEN | ||||||||
/s/ Robert J. Woody | Director | March 31, 2022 | ||||||
ROBERT J. WOODY |