10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

__________________________________________________________________________________________________________________________________________________________________________________________________________

FORM 10-K

__________________________________________________________________________________________________________________________________________________________________________________________________________

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

For the fiscal year ended December 31, 2021

OR

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

Commission file number: 333-222986

_________________________________________________________

CNL STRATEGIC CAPITAL, LLC

(Exact name of registrant as specified in its charter)

_________________________________________________________

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)

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

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

Title of Each Class

Class A Shares of Limited Liability Company Interests, $0.001 par value per share

Class FA Shares of Limited Liability Company Interests, $0.001 par value per share

Class T Shares of Limited Liability Company Interests, $0.001 par value per share

Class D Shares of Limited Liability Company Interests, $0.001 par value per share

Class I Shares of Limited Liability Company Interests, $0.001 par value per share

Class S Shares of Limited Liability Company Interests, $0.001 par value per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  ☐    No   ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  ☐    No   ☒

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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ☐    No   ☒

There is no established market for the Registrant’s common shares. The Registrant is currently conducting an ongoing public offering of its common shares pursuant to a Registration Statement on Form S-1, which were offered and sold at $33.55, $32.05, $30.13 and $31.06 per Class A, Class T, Class D, and Class I shares as of June 30, 2021 (the last business day of the registrant’s most recently completed second fiscal quarter), respectively, with discounts available for certain categories of purchasers, or at a price necessary to ensure that shares are not sold at a price, net of sales load, below net asset value per share. The number of shares held by non-affiliates as of June 30, 2021 was 12,157,964.

As of March 28, 2022, the Company had 4,558,900 Class FA shares, 1,575,181 Class A shares, 1,656,119 Class T shares, 1,084,169 Class D shares, 5,928,188 Class I shares and 1,766,079 Class S shares outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Registrant incorporates by reference portions of the CNL Strategic Capital, LLC definitive proxy statement for the 2022 Annual Meeting of Shareholders (Items 10, 11, 12, 13 and 14 of Part III) to be filed no later than April 30, 2022. Certain exhibits previously filed with the Securities and Exchange Commission are incorporated by reference into Part IV of this report.

CONTENTS

		Page
PART I.
Statement Regarding Forward-Looking Information		2
Item 1.	Business	4
Item 1A.	Risk Factors	7
Item 1B.	Unresolved Staff Comments	37
Item 2.	Properties	37
Item 3.	Legal Proceedings	37
Item 4.	Mine Safety Disclosures	37
PART II.
Item 5.	Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	38
Item 6.	[Reserved]	40
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	40
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	58
Item 8.	Financial Statements and Supplementary Data	60
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosures	92
Item 9A.	Controls and Procedures	92
Item 9B.	Other Information	92
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	92
Part III.
Item 10.	Directors, Executive Officers and Corporate Governance	93
Item 11.	Executive Compensation	93
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	93
Item 13.	Certain Relationships and Related Transactions and Director Independence	93
Item 14.	Principal Accountant Fees and Services	93
PART IV.
Item 15.	Exhibits and Financial Statement Schedules	94
Item 16.	Form 10-K Summary	120
Signatures		121

1

PART I

Statement Regarding Forward-Looking Information

Certain statements in this annual report on Form 10-K (this “Annual Report”) constitute “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 Annual 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, the Sub-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;

•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 or man-made disasters, pandemics such as the novel coronavirus (“COVID-19”) pandemic or threatened or actual armed conflicts;

•the use, adequacy and availability of proceeds from our current public offering (“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 the Sub-Manager to locate suitable acquisition opportunities for us and to manage and operate our businesses and other assets;

•the ability of the Manager, the Sub-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 limited liability company interests (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 of 1940, as amended (the “Investment Company Act”);

•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.

Our forward-looking statements are not guarantees of our future performance and shareholders are cautioned not to place undue reliance on any forward-looking statements. While we believe our forward-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. Our forward-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.

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Important factors that could cause our actual results to vary materially from those expressed or implied in our forward-looking statements include, but are not limited to, the factors listed and described under “Risk Factors” in the Company’s prospectus filed with the SEC pursuant to Rule 424(b)(3) and dated November 1, 2021 (as supplemented to date, our “prospectus”) and Item 1A. “Risk Factors” of this Annual Report. In addition, these forward-looking statements are subject to risks related to the COVID-19 pandemic, many of which are unknown, including the duration of the pandemic, the extent of the adverse health impact on the general population and on our customers, and in particular our personnel, its impact on the employment rate and the economy, the extent and impact of governmental responses, and the impact of operational changes we or our businesses may implement in response to the pandemic.

All written and oral forward-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 revise forward-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.

Risk Factor Summary

An investment in our shares involves a high degree of risk. You should carefully consider the risks summarized in Item 1A. “Risk Factors” included in this report. These risks include, but are not limited to, the following:

•We may be unable to successfully implement our business and acquisition strategies or generate sufficient cash flow to make distributions to our shareholders.

•Our success will be dependent on the performance of the Manager and the Sub-Manager, but investors should not rely on the past performance of the Manager, the Sub-Manager and their respective affiliates as an indication of future success. Prior to the Initial Public Offering, affiliates of CNL have only sponsored real estate and credit investment programs.

•We pay substantial fees and expenses to the Manager, the Sub-Manager, the Managing Dealer or their respective affiliates. These payments increase the risk that investors will not earn a profit on their investment.

•We have held our current businesses for only a short period of time and investors will not have the opportunity to evaluate the assets we acquire before we make them, which makes an investment in us more speculative. We face risks with respect to the evaluation and management of future acquisitions.

•The shares sold in the Public Offering will not be listed on an exchange or quoted through a national quotation system for the foreseeable future, if ever. Therefore, investors will have limited liquidity and may not receive a full return of their invested capital if investors sell their shares.

•The purchase price for the shares in the Public Offering is based on our most recently determined net asset value and is not based on any public trading market. While our board of directors has engaged an independent valuation firm to assist with the valuation of our businesses, the valuation of our assets is inherently subjective, and our net asset value may not accurately reflect the actual price at which our assets could be liquidated on any given day.

•The amount of any distributions we may pay is uncertain. We may not be able to pay you distributions and our distributions may not grow over time. We may pay distributions from any source, including from cash resulting from expense support and fee deferrals and/or waivers from the Manager and the Sub-Manager as needed, and there are no limits on the amount of offering proceeds we may use to fund distributions. If we pay distributions from sources other than cash flow from operations, we will have less funds available for investments, and your overall return may be reduced. We believe the likelihood that we will pay distributions from sources other than cash flow from operations will be higher in the early stages of the Public Offering.

•The Manager, the Sub-Manager and their respective affiliates, including our officers and some of our directors, will face conflicts of interest including conflicts that may result from compensation arrangements with us and our affiliates, which could result in actions that are not in the best interests of our shareholders.

•If we were to become taxable as a corporation for U.S. federal income tax purposes, we would be required to pay income tax at corporate rates on our net income and would reduce the amount of cash available for distribution to our shareholders. Such distributions, if any, by us to shareholders would constitute dividend income taxable to such shareholders, to the extent of our earnings and profits.

•Our board of directors may change our business and acquisition policies and strategies without prior notice or shareholder approval, the effects of which may be adverse to you.

3

Item 1.     Business

General

CNL Strategic Capital, LLC (which is referred to in this report as “we,” “our,” “us,” “our company” or the “Company”) is a limited liability company that primarily seeks to acquire and grow durable, middle-market U.S. businesses. We commenced operations on February 7, 2018.

We are externally managed by CNL Strategic Capital Management, LLC (the “Manager”), an entity that is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers 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, as currently amended and as may be amended in the future (the “Management Agreement”) pursuant to which the Manager is responsible for the overall management of our activities. The Manager has engaged Levine Leichtman Strategic Capital, LLC (the “Sub-Manager”), a registered investment adviser, under a sub-management agreement, as currently amended and as may be amended in the future (the “Sub-Management Agreement”), pursuant to which the Sub-Manager is responsible for the day-to-day management of our assets. The Sub-Manager is an affiliate of Levine Leichtman Capital Partners, LLC. The Manager also provides us with certain administrative services (in such capacity, the “Administrator”) under an administrative services agreement, as currently amended and as may be amended in the future (the “Administrative Services Agreement”), with us. The Sub-Manager also provides certain other administrative services to us (in such capacity, the “Sub-Administrator”) under a sub-administration agreement, as currently amended and as may be amended in the future (the “Sub-Administration Agreement”), with the Manager.

The Manager and the Sub-Manager are collectively responsible for sourcing potential 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. The Sub-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 refer to the strategy of owning both the debt and equity of our target private companies as a “private capital” strategy. We intend to target businesses that are highly cash flow generative, with annual revenues primarily between $15 million and $250 million and whose management teams seek an ownership stake in the company. Our business strategy is to acquire controlling equity interests in combination with debt positions and in doing so, provide long-term capital appreciation and current income while protecting invested capital. We seek to structure our investments with limited, if any, third-party senior leverage.

We intend for a significant majority of our total assets to be comprised of long-term controlling equity interests and debt positions in the businesses we acquire. In addition and to a lesser extent, we may acquire other debt and minority equity positions, which may include acquiring debt in the secondary market and minority equity interests in combination with other funds managed by the Sub-Manager from co-investments with other partnerships managed by the Sub-Manager or their affiliates. We expect that these positions will comprise a minority of our total assets.

Our target businesses are expected to fall within the following industries (without limitation): business services, consumer products, education, franchising, light manufacturing / specialty engineering, non-FDA regulated healthcare and safety companies. We do not intend to acquire businesses in industries that we believe are not stable or predictable, including oil and gas, commodities, high technology, internet and e-commerce. We also do not intend to acquire businesses that at the time of our acquisition are distressed or in the midst of a turnaround.

We intend to operate these businesses over a long-term basis with minimum holding period of four to six years. Actual holding periods for many of our businesses are expected to exceed this minimum holding period, but each business will be acquired with the expectation of an eventual exit transaction after a reasonable time frame to allow for the realization of shareholder appreciation. In limited circumstances in order to manage liquidity needs, meet other operating objectives or adapt to changing market conditions, we may also exit businesses prior to the expected minimum holding period. Exit decisions in relation to our businesses after the expiration of the minimum holding period will be made with the objective of maximizing shareholder value and allowing us to realize capital appreciation to the extent available from individual businesses. We will also assess the impact that any exit decision may have on our exclusion from registration as an investment company under the Investment Company Act. Potential exit transactions that we may pursue for our businesses include recapitalizations, public offerings, asset sales, mergers and other business combinations. In each case, in selecting the form of exit transaction we expect to assess prevailing market conditions, the timing and cost of implementation, whether we will be required to assume any post-transaction liabilities and other factors determined by the Manager and the Sub-Manager. No assurance can be given relating to the actual timing or impact of any exit transaction on our business.

We were formed as a Delaware limited liability company on August 9, 2016 and we intend to operate our business in a manner that will permit us to avoid registration under the Investment Company Act.

4

Our Common Shares Offerings

Public Offerings

We commenced our initial public offering of up to $1.1 billion of shares on March 7, 2018 (the “Initial Public Offering”), which included up to $100.0 million of shares being offered through our distribution reinvestment plan, pursuant to a registration statement on Form S-1, as amended (the “Initial Registration Statement”).

On November 1, 2021, we commenced a follow-on public offering of up to $1.1 billion of shares of our shares (the “Public Offering” and together with the Initial Public Offering, the “Public Offerings”), which includes up to $100.0 million of shares being offered through our distribution reinvestment plan, pursuant to a registration statement on Form S-1 (the “Registration Statement”) filed with the Securities and Exchange Commission (the “SEC”). Upon commencement of the Public Offering, the Initial Registration Statement was deemed terminated. Through the Public Offering, we are offering, in any combination, four classes of shares: Class A shares, Class T shares, Class D shares and Class I shares (collectively, “Non-founder shares”). There are differing selling fees and commissions for each share class. We also pay distribution and shareholder servicing fees, subject to certain limits, on the Class T and Class D shares sold in the Public Offerings (excluding sales pursuant to our distribution reinvestment plan).

As of March 28, 2022, we had raised aggregate gross offering proceeds of approximately $310.1 million from the sale of common shares in the Public Offerings, including $8.7 million received through our distribution reinvestment plan.

Private Offerings

During the period from commencement of operations on February 7, 2018 to December 31, 2020, we offered Class FA (“Class FA”) and Class S (“Class S”) shares (collectively, the “Founder shares”) through a combination of four private offerings (the “Private Offerings” and, together with the Public Offerings, the “Offerings”) only to persons that were “accredited investors,” as that person is defined under the Securities Act and Regulation D promulgated under the Securities Act, and raised aggregate gross offering proceeds of approximately $177 million. We conducted each of the Private Offerings pursuant to the applicable exemption under Section 4(a)(2) of the Securities Act and Rule 506(c) of Regulation D promulgated under the Securities Act. All of the Private Offerings were terminated on or before December 31, 2020. See our Form 10-K for the year ended December 31, 2020 for additional information related to our Private Offerings.

For additional information on our Offerings, see Note 7. “Capital Transactions” in Item 8. “Financial Statements and Supplementary Data.”

Portfolio and Investment Activity

Since we commenced operations in February 2018, we have acquired controlling equity interests in combination with debt positions in seven middle-market U.S. businesses. We have also acquired non-controlling equity interests in combination with debt positions in three additional middle-market U.S. businesses.

As of December 31, 2021 and 2020, our investment portfolio had a total fair value of $456.0 million (ten portfolio companies) and $231.2 million (seven portfolio companies), respectively. Our investment portfolio was diversified across nine industries and all of our debt investments featured fixed interest rates as of December 31, 2021. See Item 7. “Management’s Discussion and Analysis – Portfolio and Investment Activity” and Note 3. “Investments” in Item 8. “Financial Statements and Supplementary Data” for additional information related to our investment portfolio.

As of December 31, 2021 and for the year then ended, we had one portfolio company which exceeded 20% of at least one of the significance tests under Rule 3-09 of Regulation S-X (“Rule 3-09”). See Item 15. “Exhibits and Financial Statement Schedules” for financial statements of our significant portfolio company, as defined by Rule 3-09.

Our 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.

Borrowings

As of December 31, 2021, we had the ability to borrow up to $25.0 million under a line of credit. We had not borrowed any amounts under the line of credit during the year ended or as of December 31, 2021. See Note 8. “Borrowings” in Item 8. “Financial Statements and Supplementary Data” for additional information related to our borrowings.

5

We will not use leverage in excess of 35% of our gross assets (for which calculation borrowings of our businesses are not included) unless a majority of our independent directors approves any excess above such limit and determines that such borrowing is in the best interests of our company. Any excess in leverage over such 35% limit shall be disclosed to shareholders in our next quarterly or annual report, along with the reason for such excess. In any event, we expect that the amount of our aggregate borrowings will be reasonable in relation to the value of our assets and will be reviewed by our board of directors at least quarterly.

Financing a portion of the acquisition price of our assets will allow us to broaden our business by increasing the funds available for acquisition. Financing a portion of our acquisitions is not free from risk. Using borrowings requires us to pay interest and principal, referred to as “debt service,” all of which decrease the amount of cash available for distribution to our shareholders or other purposes. We may also be unable to refinance the borrowings at maturity on favorable or equivalent terms, if at all, exposing us to the potential risk of loss with respect to assets pledged as collateral for loans. Certain of our borrowings may be floating rate and the effective interest rates on such borrowings will increase when the relevant interest benchmark increases.

Competition

We compete for acquisitions with strategic buyers, private equity funds and diversified holding companies. Additionally, we may compete for loans with traditional financial services companies such as commercial banks. Certain competitors are substantially larger and have greater financial, technical and marketing resources than we do. For example, some competitors may have access to funding sources that are not available to us, and others may have higher risk tolerances or different risk assessments.

However, we believe we provide a unique capital solution to sellers and operating management teams that is not widely available in the market, if at all. We believe we are able to be competitive with these entities primarily due to our focus on established middle-market U.S. companies, the ability of the Manager and the Sub-Manager to source proprietary transactions, and our unique business strategy that offers business owners a flexible capital structure and is a more attractive alternative when they require investment capital to meet their ongoing business needs. Further, we believe regulatory changes, including the adoption of the Dodd-Frank Act and the introduction of the international capital and liquidity requirements under the Basel III Accords (“Basel III”) have caused some of our potential competitors to curtail their lending to middle-market U.S. companies as a result of the greater regulatory risk and expense involved in lending to the sector.

Human Capital Resources

We are externally managed and as such we do not have any employees. All of our executive officers are employees of the Manager or one or more of its affiliates. The Manager has reported to us that it generally strives to have a diverse group of candidates to consider for roles. In addition, the Manager has reported that it maintains a variety of development, health and wellness and charitable programs for its personnel, including those who provide services to us.

Tax Status

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 and state income tax at the entity level. However, the Company holds certain equity investments in taxable subsidiaries (the “Taxable Subsidiaries”). The Taxable Subsidiaries permit the Company 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 result of the Taxable Subsidiaries’ ownership of certain investments. The income tax expense, or benefit, if any, and related tax assets and liabilities are reflected in the Company’s consolidated financial statements.

Corporate Information

Our executive offices are located at 450 South Orange Avenue, Orlando, Florida 32801, and our telephone number is 407-650-1000.

6

Available Information

We maintain a web site at www.cnlstrategiccapital.com containing additional information about our business, and a link to the SEC web site (www.sec.gov). We make available free of charge on our web site our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and, if applicable, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practical after we file such material, or furnish it to, the SEC. The contents of our website are not incorporated by reference in or are otherwise a part of this Annual Report. The SEC also maintains a web site (www.sec.gov) where you can search for annual, quarterly and current reports, proxy and information statements, and other information regarding us and other public companies.

Item 1A.     Risk Factors

Investing in our shares involves a number of significant risks. In addition to the other information contained in this Annual Report, investors should consider carefully the following information before making an investment in our shares. If any of the following events occur, our business, financial condition and results of operations could be materially and adversely affected. In such case, the value of our shares could decline, and investors may lose part or all of their investment.

Risks Related to Our Shares

The offering prices may change on a monthly basis and investors may not know the offering price when they submit their subscription agreements.

The offering prices for our classes of shares may change on a monthly basis and investors will need to determine the price by checking our website at www.cnlstrategiccapital.com or reading a supplement to our prospectus. A subscriber may also obtain our current offering price by calling us by telephone at (866) 650-0650. In addition, if there are issues processing an investor’s subscription, the offering price may change prior to the acceptance of such subscription. In the event we adjust the offering price after an investor submits their subscription agreement and before the date we accept such subscription, such investor will not be provided with direct notice by us of the adjusted offering price but will need to check our website or our filings with the SEC prior to the closing date of their subscription. In this case, an investor will have at least five business days after we publish the adjusted offering price to consider whether to withdraw their subscription request before they are committed to purchase shares upon our acceptance.

We have held our current businesses for only a short period of time and investors will not have the opportunity to evaluate the assets we acquire before we make them, which makes an investment in us more speculative.

We have held our current businesses for only a short period of time and we are not able to provide investors with information to evaluate the economic merit of the acquisitions we intend to make prior to our making them and investors will be relying entirely on the ability of the Manager, the Sub-Manager and our board of directors to select or approve, as the case may be, such acquisitions. Future opportunities may include the acquisition of businesses that are currently owned and/or controlled by the Sub-Manager or its affiliates. In connection with any acquisition of a business that involves the Sub-Manager or its affiliates (excluding co-investment opportunities acquired directly from third parties other than the Sub-Manager or its affiliates), we would seek a valuation from a third-party valuation firm, and such acquisition would be subject to approval of a majority of our independent directors.

Additionally, the Manager and the Sub-Manager, subject to oversight by our board of directors, have broad discretion to review, approve, and oversee our business and acquisition policies, to evaluate our acquisition opportunities and to structure the terms of such acquisitions and investors will not be able to evaluate the transaction terms or other financial or operational data concerning such acquisitions. Because of these factors, the Public Offering may entail more risk than other types of offerings. Our board of directors has also delegated broad discretion to both of the Manager and Sub-Manager to implement our business and acquisitions strategies, which includes delegation of the duty to approve certain decisions consistent with the business and acquisition policies approved by our board, our board’s fiduciary duties and securities laws. This additional risk may hinder investors’ ability to achieve their own personal investment objectives related to portfolio diversification, risk-adjusted returns and other objectives.

7

The Public Offering is a “best efforts” offering and if we are unable to raise substantial funds, we will be limited in the number and type of acquisitions we may make, and the value of an investment in us will fluctuate with the performance of the assets we acquire.

The Public Offering is a “best efforts,” as opposed to a “firm commitment” offering. This means that the Managing Dealer is not obligated to purchase any shares, but has only agreed to use its “best efforts” to sell the shares to investors. As a result, if we are unable to raise substantial funds, we will make fewer acquisitions resulting in less diversification in terms of the number of assets owned and the types of assets that we acquire.

Effective June 30, 2020, participating broker-dealers in the Public Offering are required to comply with Regulation Best Interest, which enhances the broker-dealer standard of conduct beyond current suitability obligations and requires participating broker-dealers in the Public Offering to act in the best interest of each investor when making a recommendation to purchase shares in the Public Offering, without placing their financial or other interest ahead of the investor’s interests. The application of this enhanced standard of conduct may impact whether a broker-dealer recommends our shares for investment and consequently may adversely affect our ability to raise substantial funds in the Public Offering. In particular, under SEC guidance concerning Regulation Best Interest, a broker-dealer recommending an investment in our shares should consider a number of factors under the care obligation of Regulation Best Interest, including but not limited to cost and complexity of the investment and reasonably available alternatives, which alternatives are likely to exist, in determining whether there is a reasonable basis for the recommendation. As a result, high cost, high risk and complex products may be subject to greater scrutiny by broker-dealers. Broker-dealers may recommend a more costly or complex product as long as they have a reasonable basis to believe is in the best interest of a particular retail customer. However, if broker-dealers choose alternatives to our shares, as listed entities, which may be a reasonable alternative to an investment in us as such investments may feature characteristics like lower cost, nominal commissions at the time of initial purchase, less complexity and lesser or different risks, our ability to raise capital will be adversely affected. If Regulation Best Interest reduces our ability to raise capital in the Public Offering, it would also harm our ability to create a diversified portfolio of investments and ability to achieve our objectives.

In such event, the likelihood of our profitability being affected by the performance of any one of our assets will increase. An investment in our shares will be subject to greater risk to the extent that we lack asset diversification. In addition, our inability to raise substantial funds would increase our fixed operating expenses as a percentage of gross income, and our financial condition and ability to pay distributions could be adversely affected.

Investors should not assume that we will sell the maximum offering amount of the Public Offering, or any other particular offering amount in the Public Offering.

The shares sold in the Public Offering will not be listed on an exchange or quoted through a national quotation system for the foreseeable future, if ever. Therefore, investors in the Public Offering will have limited liquidity and may not receive a full return of their invested capital if investors sell their shares.

The shares offered by us are illiquid assets for which there is not expected to be any secondary market nor is it expected that any will develop in the future. The ability to transfer shares is limited. Pursuant to our fifth amended and restated limited liability company agreement, as currently amended and as may be amended in the future (our “LLC Agreement”), we have the discretion under certain circumstances to prohibit transfers of shares, or to refuse to consent to the admission of a transferee as a shareholder. We have adopted a share repurchase program to conduct quarterly share repurchases but only a limited number of shares are eligible for repurchase. Moreover, investors should not rely on our share repurchase program as a method to sell shares promptly because our share repurchase program includes numerous restrictions that limit their ability to sell their shares to us, and our board of directors may amend, or suspend our share repurchase program upon 30 days’ prior notice to our shareholders if in its reasonable judgment it deems such action to be in our best interest and the best interest of our shareholders, 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 suspension of our share repurchase program, our share repurchase program requires our board of directors to consider at least quarterly whether the continued suspension of the plan is in our best interest and the best interest of our shareholders; however, we are not required to authorize the recommencement of the share repurchase program within any specified period of time. Our board of directors cannot terminate our share repurchase program absent a liquidity event or where otherwise required by law. In such an event, we will notify our shareholders of such developments in a current report on Form 8-K or in our annual or quarterly reports, which will be posted on our website, and will also provide a separate communication to our shareholders.

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The aggregate amount of funds under our share repurchase program will be determined on a quarterly basis in the sole discretion of our board of directors. During any calendar quarter, the total amount of aggregate repurchases will be limited to the aggregate proceeds from our distribution reinvestment plan during the previous quarter, unless our board of directors determines otherwise. At the discretion of our board of directors, we may also use cash on hand, cash available from borrowings, and cash from the sale of assets as of the end of the applicable period to repurchase shares. Our share repurchase program also limits the total amount of aggregate repurchases of Class A, Class FA, 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 timing, amount and terms of our share repurchase program will include certain restrictions intended to maintain our ability to qualify as a partnership for U.S. federal income tax purposes. Therefore, it will be difficult for investors to sell their shares promptly or at all. If investors are able to sell their shares, investors may only be able to sell them at a substantial discount for the price they paid. Investor suitability standards imposed by certain states may also make it more difficult to sell their shares to someone in those states. The shares should be purchased as a long-term investment only.

Our board of directors intends to contemplate a liquidity event for our shareholders on or before November 1, 2027 (which is within six years from the date we terminated the Initial Public Offering); however, our board of directors is under no obligation to pursue or complete any particular liquidity event during this timeframe or otherwise. We expect that our board of directors, in the exercise of its fiduciary duty to our shareholders, will decide to pursue a liquidity event when it believes that then-current market conditions are favorable for a liquidity event, and that such an event is in the best interests of our shareholders. There can be no assurance that a suitable transaction will be available or that market conditions for a transaction will be favorable during that timeframe. A liquidity event could include, among other transactions: (i) a sale of all or substantially all of our assets, either on a complete portfolio basis or individually, followed by a liquidation; (ii) subject to an affirmative vote of a two-thirds (2/3) super-majority of our outstanding shares, a decision to continue as a perpetual-life company with a self-tender offer for a minimum of twenty-five percent (25%) of our outstanding shares; (iii) a merger or other transaction approved by our board of directors in which our shareholders will receive cash or shares of another publicly traded company; or (iv) a listing of our shares on a national securities exchange or a quotation through a national quotation system. However, there can be no assurance that we will complete a liquidity event within such time or at all.

If a liquidity event does not occur, shareholders may have to hold their shares for an extended period of time, or indefinitely. In making a determination of what type of liquidity event is in the best interest of our shareholders, our board of directors, including our independent directors, may consider a variety of criteria, including, but not limited to, asset diversification and performance, our financial condition, potential access to capital as a listed company, market conditions for the sale of our assets or listing of our shares, internal management requirements to become a perpetual life company and the potential for investor liquidity. Notwithstanding the shareholder approval requirement in connection with a determination to continue as a perpetual-life company as discussed above in (ii), nothing shall prevent our board of directors from exercising its fiduciary duty on behalf of our company and our shareholders, including any limitation on our board of directors to conduct self-tender offers or seek shareholder approval through multiple proxy attempts.

Under our share repurchase program, our ability to make new acquisitions of businesses or increase the current distribution rate may become limited 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, which may adversely affect our flexibility and our ability to achieve our investment objectives.

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 our share repurchase program) until all outstanding repurchase requests (“Unfulfilled Repurchase Requests”) have been satisfied. Additionally, during such time as there remains any requests under our share repurchase plan 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. If triggered, this requirement may prevent us from pursuing potentially accretive investment opportunities and may keep us from fully realizing our investment objectives. In addition, this requirement may limit our ability to pay distributions to our shareholders. “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.

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The ongoing offering price may not accurately reflect the value of our assets.

Our board of directors determines our net asset value for each class of our shares on a monthly basis. If our net asset value per share on such valuation date increases above or decreases below our net proceeds per share as stated in our prospectus, we will adjust the offering price of any of the classes of our shares, effective five business days after such determination is published, to ensure that no share is sold at a price, after deduction of upfront selling commissions and dealer manager fees, that is above or below our net asset value per share on such valuation date. Ongoing offering prices for the shares in the Public Offering will take into consideration other factors such as selling commissions, dealer manager fees, distribution and shareholder servicing fees and organization and offering expenses so the offering price will not be the equivalent of the value of our assets.

Valuations and appraisals of our assets are estimates of fair value and may not necessarily correspond to realizable value.

Our board of directors, with assistance from the Manager and the Sub-Manager, is ultimately responsible for determining in good faith the fair value of our assets for which market prices are not readily available. Our board of directors, including a majority of our independent directors and our audit committee, has adopted a valuation policy that provides for methodologies to be used to determine the fair value of our assets for purposes of our net asset value calculation. Our board of directors makes this determination on a monthly basis, and any other time when a decision is required regarding the fair value of our assets. Our board of directors has retained an independent valuation firm to assist the Manager and the Sub-Manager in preparing their recommendations with respect to our board of directors’ determination of the fair values of assets for which market prices are not readily available. However, it may be difficult to reflect fully and accurately rapidly changing market conditions or material events that may impact the value of assets or liabilities between valuations, or to obtain quickly complete information regarding any such events. As a result, the net asset value per share may not reflect a material event until such time as sufficient information is available and analyzed, and the financial impact is fully evaluated, such that our net asset value may be appropriately adjusted in accordance with our valuation procedures.

Within the parameters of our valuation procedures, the valuation methodologies used to value our assets involves subjective judgments and projections and may not be accurate. Valuation methodologies also involve assumptions and opinions about future events, which may or may not turn out to be correct. Valuations of our assets are only estimates of fair value. Ultimate realization of the value of an asset depends to a great extent on economic, market and other conditions beyond our control and the control of the Manager, the Sub-Manager and the independent valuation firm. Further, valuations do not necessarily represent the price at which an asset would sell, since market prices of assets can only be determined by negotiation between a willing buyer and seller. As such, the carrying value of an asset may not reflect the price at which the asset could be sold in the market, and the difference between carrying value and the ultimate sales price could be material. In addition, accurate valuations are more difficult to obtain in times of low transaction volume because there are fewer market transactions that can be considered in the context of the valuation. The determinations of fair value by our board of directors may differ materially from the values that would have been used if an active market and market prices existed for these assets. Furthermore, through the valuation process, our board of directors may determine that the fair value of our assets that differs materially from the values that were provided by the independent valuation firm. There will be no retroactive adjustment in the valuation of such assets, the offering price of our shares, the price we paid to repurchase shares or net asset value-based fees we paid to the Manager, the Sub-Manager or the Managing Dealer to the extent such valuations prove to not accurately reflect the realizable value of our assets. Because the price investors will pay for our shares in the Public Offering, and the price at which their shares may be repurchased by us pursuant to our share repurchase program are generally based on our most recently determined net asset value per share, they may pay more than realizable value or receive less than realizable value for their investment.

Our net asset value per share may change materially if the valuations of our assets materially change from prior valuations or the actual operating results for a particular month differ from what we originally budgeted for that month.

When the valuations of our assets are reflected in our net asset value calculations, there may be a material change in our net asset value per share for each class of our shares from those previously reported. In addition, actual operating results for a given month may differ from what we originally budgeted for that month, which may cause a material increase or decrease in the net asset value per share. We will not retroactively adjust the net asset value per share of each class of shares reported for the previous month. Therefore, because a new monthly valuation may differ materially from the prior valuation or the actual results from operations may be better or worse than what we previously budgeted, the adjustment to reflect the new valuation or actual operating results may cause the net asset value per share for each class of our shares to increase or decrease, and such increase or decrease will occur on the day the adjustment is made.

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The amount of any distributions we may pay is uncertain. We may not be able to pay investors distributions and our distributions may not grow over time.

Subject to our board of directors’ discretion and applicable legal restrictions, our board of directors has declared, and intends to continue to declare cash distributions to shareholders. We intend to pay these distributions to our shareholders out of assets legally available for distribution. We cannot assure investors that we will achieve operating results that will allow us to make a targeted level of cash distributions or year-to-year increases in cash distributions. Our ability to pay distributions might be adversely affected by, among other things, the impact of the risks described in our prospectus. All distributions will be paid at the discretion of our board of directors and will depend on our earnings, our financial condition, compliance with applicable regulations and such other factors as our board of directors may deem relevant from time to time. We cannot assure investors that we will pay distributions to our shareholders in the future. We may pay all or a substantial portion of our distributions from various sources of funds available to us, including from expense support from the Manager and the Sub-Manager, borrowings, the offering proceeds and other sources, without limitation. In the early stages of our company, we are likely to pay some, if not all, of our distributions from offering proceeds, borrowings, or from other sources, including cash resulting from expense support from the Manager and the Sub-Manager pursuant to an expense support and conditional reimbursement agreement (the “Expense Support and Conditional Reimbursement Agreement”), which became effective on February 7, 2018. If we fund distributions from financings, then such financings will need to be repaid, and if we fund distributions from offering proceeds, then we will have fewer funds available for business opportunities, which may affect our ability to generate future cash flows from operations and, therefore, reduce their overall return. In addition, if we fund distributions from borrowings, or other sources like expense support from the Manager and Sub-Manager, such sources may result in a liability to us which would cause our net asset value to decline more sharply than it otherwise would if we had not borrowed or used expense support to fund our distributions, which would negatively affect the price per share of our shares. We cannot predict when distribution payments sourced from debt and from proceeds will occur, and an extended period of such payments would likely be unsustainable. 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 the Sub-Manager with respect to the Non-founder shares. Additionally, distributions paid to our shareholders of share classes with ongoing distribution and shareholder servicing fees may be lower than distributions on certain other of our classes without such ongoing distributions and shareholder servicing fees that we are required to pay. We also believe the likelihood that distributions will be paid from sources other than cash flow from operations may be higher in the early stages of the offering. These risks will be greater for persons who acquire our shares relatively early in the Public Offering, before a significant portion of the offering proceeds have been deployed. Accordingly, shareholders who receive the payment of a distribution from us should not assume that such distribution is the result of a net profit earned by us.

Because the Managing Dealer is an affiliate of the Manager, investors will not have the benefit of an independent review of the Public Offering or us customarily performed in underwritten offerings.

The Managing Dealer, CNL Securities Corp., is an affiliate of the Manager, and will not make an independent review of us or the Public Offering. Accordingly, investors will have to rely on their own broker-dealer or distribution intermediary to make an independent review of the terms of the Public Offering. If an investor’s broker-dealer or distribution intermediary does not conduct such a review, they will not have the benefit of an independent review of the terms of the Public Offering. Further, the due diligence investigation of us by the Managing Dealer cannot be considered to be an independent review and, therefore, may not be as meaningful as a review conducted by an unaffiliated broker-dealer or investment banker. In addition, we do not, and do not expect to, have research analysts reviewing our performance or our securities on an ongoing basis. Therefore, investors will not have an independent review of our performance and the value of our shares relative to publicly traded companies.

We may be unable to use a significant portion of the net proceeds of the Public Offering on acceptable terms in the timeframe contemplated by the prospectus relating to the Public Offering.

Delays in using the net proceeds of the Public Offering may impair our performance. We cannot assure an investor that we will be able to identify any acquisition opportunities in a manner consistent with our business strategy or that any acquisition that we make will produce a positive return. We may be unable to use the net proceeds of the Public Offering on acceptable terms within the time period that we anticipate or at all, which could harm our financial condition and operating results.

Before we have raised sufficient funds to deploy the proceeds of the Public Offering in acquisitions that are consistent with our business strategy, we will deploy the net proceeds of the Public Offering primarily in cash, cash equivalents, U.S. government securities, repurchase agreements, certain leveraged loans and high-quality debt instruments maturing in one year or less from the time of acquisition, which may produce returns that are significantly lower than the returns which we expect to achieve in relation to the businesses and other assets we will seek to acquire. As a result, any distributions that we pay during this period may be substantially lower than the distributions that we may be able to pay in a manner consistent with our business strategy.

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Investors’ interest in us will be diluted if we issue additional shares, which could reduce the overall value of the investment.

Potential investors in the Public Offering do not have pre-emptive rights to any shares we issue in the future. Our LLC Agreement authorizes us to issue 1,000,000,000 shares. Pursuant to our LLC Agreement, a majority of our entire board of directors may amend our LLC Agreement from time to time to increase or decrease the aggregate number of authorized shares or the number of authorized shares of any class or series without shareholder approval. After an investor’s purchase in the Public Offering, our board of directors may elect to sell additional shares in this or future public offerings, issue equity interests in private offerings or issue share-based awards to our independent directors, the Manager, the Sub-Manager and/or employees of the Manager or the Sub-Manager. To the extent we issue additional equity interests after an investor’s purchase in the Public Offering, their percentage ownership interest in us will be diluted. In addition, depending upon the terms and pricing of any additional offerings and the value of our assets, an investor may also experience dilution in the net asset value and fair value of their shares.

Investors will experience substantial dilution in the net tangible book value of their shares equal to the offering costs and sales load associated with their shares and will encounter substantial on-going fees and expenses.

If investors purchase our shares in the Public Offering, there are substantial fees and expenses which will be borne by the investor initially and ongoing as an investor. Also, investors will incur immediate dilution in the net tangible book value of their shares equal to the offering costs and the sales load associated with their shares. There are also certain offering costs associated with the shares in the Public Offering, which will be reimbursed to the Manager and the Sub-Manager. This means that the investors who purchase shares will pay a price per share that substantially exceeds the per share value of our assets after subtracting our liabilities.

We are an “emerging growth company” under the federal securities laws and will be subject to reduced public company reporting requirements.

We are an “emerging growth company,” as defined in the JOBS Act, and therefore are eligible to take advantage of certain exemptions from, or reduced disclosure obligations relating to, various reporting requirements that normally are applicable to public companies. For so long as we remain an emerging growth company, we will not be required to (i) comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, (ii) submit certain executive compensation matters to stockholder advisory votes pursuant to the “say on frequency” and “say on pay” provisions of Section 14A(a) of the Exchange Act (requiring a non-binding stockholder vote to approve compensation of certain executive officers) and the “say on golden parachute” provisions of Section 14A(b) of the Exchange Act (requiring a non-binding stockholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations), (iii) disclose more than two years of audited financial statements in a registration statement filed with the SEC, (iv) disclose selected financial data pursuant to the rules and regulations of the Securities Act (requiring selected financial data for the past five years or for the life of the issuer, if less than five years) in our periodic reports filed with the SEC for any period prior to the earliest audited period presented in this registration statement, and (v) disclose certain executive compensation related items, such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Once we are no longer an “emerging growth company,” 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. We cannot predict if investors will find our shares less attractive because we choose to rely on any of the exemptions discussed above.

Additionally, under Section 107 of the JOBS Act, an “emerging growth company” may take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. This means an “emerging growth company” can delay adopting certain accounting standards until such standards are otherwise applicable to private companies. However, we are electing to “opt out” of such extended transition period, and therefore will comply with new or revised accounting standards on the applicable dates on which the adoption of such standards is required for non-emerging growth companies. This election is irrevocable.

We will remain an “emerging growth company” for up to five years, although we will lose that status sooner if our annual gross revenues exceed $1.07 billion, if we issue more than $1 billion in non-convertible debt in a three year period, or if the market value of our shares that is held by non-affiliates equals or exceeds $700 million after we have been publicly reporting for at least 12 months and have filed at least one annual report on Form 10-K with the SEC.

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Our business could be adversely affected if we fail to maintain our qualification as a venture capital operating company, or VCOC, under the Plan Asset Regulation.

We used a substantial portion of the net proceeds from the Private Offerings to acquire our businesses and we currently operate our business in a manner so that it is intended to qualify as a “venture capital operating company” (“VCOC”) under the U.S. Department of Labor regulation at 29 C.F.R. § 2510.3-101, as modified by Section 3(42) of U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”) (the “Plan Asset Regulation”), and therefore are not subject to the 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 Regulation applies, such failure could materially interfere with our activities or expose us to risks related to our failure to comply with the requirements and 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 U.S. Internal Revenue Code of 1986, as amended (the “Code”). A non-exempt prohibited transaction, in addition to imposing potential fiduciary liabilities may also result in the imposition of an excise tax under the Code upon a “party in interest” (as defined in Section 3(14) of ERISA) or “disqualified person” (as defined in Section 4975 of 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 Regulation.

Risks Related to Our Organization and Structure

We may be unable to successfully implement our business and acquisition strategies or generate sufficient cash flow to make distributions to our shareholders.

We are subject to all of the business risks and uncertainties associated with any new business, including the risk that we will be unable to implement and execute our business strategy as described in our prospectus and that the value of our shares could decline substantially and, as a result, investors may lose part or all of their investment. Our financial condition and results of operations will depend on many factors including the availability of acquisition opportunities, readily accessible short and long-term financing, financial markets and economic conditions generally and the performance of the Manager and the Sub-Manager. There can be no assurance that we will be able to generate sufficient cash flow over time to pay our operating expenses and make distributions to shareholders.

Our ability to implement and execute our business strategy depends on the Manager’s and the Sub-Manager’s ability to manage and support our business operations. If the Manager or the Sub-Manager were to lose any members of their respective senior management teams, our ability to implement and execute our business strategy could be significantly harmed.

We have no internal management capacity or employees other than our appointed executive officers and will be dependent on the diligence, skill and network of business contacts of the Manager’s and the Sub-Manager’s senior management teams to implement and execute our business strategy. We also depend, to a significant extent, on the Manager’s and the Sub-Manager’s access to its investment professionals and the information and deal flow generated by these professionals. The Manager’s and the Sub-Manager’s senior management teams will evaluate, negotiate, structure, close, and monitor the assets we acquire. The departure of any of the Manager’s or the Sub-Manager’s senior management teams could have a material adverse effect on our ability to implement and execute our business strategy. We do not anticipate maintaining any key person insurance on any of the Manager’s or the Sub-Manager’s senior management teams.

Our board of directors may change our business and acquisition policies and strategies without prior notice or shareholder approval, the effects of which may be adverse to investors.

Our board of directors has the authority to modify or waive our current business and acquisition policies, criteria and strategies without prior notice and without shareholder approval. In such event, we will promptly file a prospectus supplement and a current report on Form 8-K, disclosing any such modification or waiver. We cannot predict the effect any changes to our current business and acquisition policies, criteria and strategies would have on our business, operating results and value of our shares. However, the effects might be adverse, which could negatively impact our ability to pay investors distributions and cause investors to lose all or part of their investment. Moreover, we will have significant flexibility in deploying the net proceeds of the Public Offering and may use the net proceeds from the Public Offering in ways with which investors may not agree or for purposes other than those contemplated at the time of the Public Offering.

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If we internalize our management functions, investors’ interest in us could be diluted, and we could incur other significant costs and face other significant risks associated with being self-managed.

Our board of directors may decide in the future to internalize our management functions. If we do so, we may elect to negotiate to acquire the Manager’s or the Sub-Manager’s assets and personnel. At this time, we cannot anticipate the form or amount of consideration or other terms relating to any such internalization transaction. Such consideration could take many forms, including cash payments, promissory notes and shares. The payment of such consideration could result in dilution of an investor’s interests as a shareholder and could reduce the earnings per share attributable to their investment.

In addition, while we would no longer bear the costs of the various fees and expenses we expect to pay to the Manager under the Management Agreement (50% of which is paid to the Sub-Manager under the Sub-Management Agreement), we would incur the compensation and benefits as well as the costs of our officers and other employees and consultants that we now expect will be paid by the Manager, the Sub-Manager or their respective affiliates. In addition, we may issue equity awards to officers, employees and consultants, which awards would decrease net income and may further dilute an investor’s investment. We cannot reasonably estimate the amount of fees we would save or the costs we would incur if we became self-managed. If the expenses we assume as a result of internalization are higher than the expenses we avoid paying to the Manager and the Sub-Manager, our earnings per share would be lower as a result of the internalization than they otherwise would have been, potentially decreasing the amount of funds available to distribute to our shareholders and the value of our shares. As currently organized, we do not expect to have any employees. If we elect to internalize our operations, we would employ personnel and would be subject to potential liabilities commonly faced by employers, such as workers disability and compensation claims, potential labor disputes and other employee-related liabilities and grievances.

If we internalize our management functions, we could have difficulty integrating these functions as a stand-alone entity. In addition, we could have difficulty retaining such personnel employed by us. We expect individuals employed by the Manager and the Sub-Manager to perform asset management and general and administrative functions, including accounting and financial reporting for us. These personnel have a great deal of know-how and experience. We may fail to properly identify the appropriate mix of personnel and capital needs to operate as a stand-alone entity. An inability to manage an internalization transaction effectively could result in our incurring excess costs and/or suffering deficiencies in our disclosure controls and procedures or our internal control over financial reporting. Such deficiencies could cause us to incur additional costs, and our management’s attention could be diverted from most effectively managing our assets.

In some cases, internalization transactions involving the acquisition of a manager have resulted in litigation. If we were to become involved in such litigation in connection with an internalization of our management functions, we could be forced to spend significant amounts of money defending ourselves in such litigation, regardless of the merit of the claims against us, which would reduce the amount of funds available to acquire additional assets or make distributions to our shareholders.

Anti-takeover provisions in our LLC Agreement could inhibit a change in control.

Provisions in our LLC Agreement may make it more difficult and expensive for a third party to acquire control of us, even if a change of control would be beneficial to our shares. Under our LLC Agreement, our shares have only limited voting rights on matters affecting our business and therefore have limited ability to influence management’s decisions regarding our business. In addition, our LLC Agreement contains a number of provisions that could make it more difficult for a third party to acquire, or may discourage a third party from acquiring control of the company. These provisions include:

•restrictions on our ability to enter into certain transactions with major holders of our shares modeled on the limitation contained in Section 203 of the Delaware General Corporation Law, or the DGCL;

•allowing only the company’s board of directors to fill vacancies, including newly created directorships;

•requiring that directors may be removed, with or without cause, only by a vote of a majority of the issued and outstanding shares;

•requiring advance notice for nominations of candidates for election to our board of directors or for proposing matters that can be acted upon by holders of our shares at a meeting of shareholders;

•permitting each of the Manager and Sub-Manager, respectively, to initially appoint a non-independent director and, thereafter, to nominate such non-independent director’s replacement upon such non-independent director’s failure to stand for re-election, resignation, removal from office, death or incapacity;

•our ability to issue additional securities, including securities that may have preferences or are otherwise senior in priority to our shares; and

•limitations on the ability of our shareholders to call special meetings of the shareholders.

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We may have conflicts of interest with the noncontrolling shareholders of our businesses.

The boards of directors of the businesses we acquire controlling interests in will have fiduciary duties to all their shareholders, including the company and noncontrolling shareholders. As a result, they may make decisions that are in the best interests of their shareholders generally but which are not necessarily in the best interest of the company or our shareholders. In dealings with the company, the directors of these businesses may have conflicts of interest and decisions may have to be made without the participation of directors appointed by us, and such decisions may be different from those that we would make.

An investor’s investment return may be reduced if we are required to register as an investment company under the Investment Company Act.

We are organized as a holding company that conducts its business primarily through its wholly- and majority-owned subsidiaries. We conduct and intend to continue to conduct our 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. Under Section 3(a)(1)(A) of the Investment Company Act, a company is deemed to be an “investment company” if it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities. We believe that we are not to be considered an investment company under Section 3(a)(1)(A) of the Investment Company Act because we do not and will not engage primarily or hold ourselves out as being engaged primarily in the business of investing, reinvesting or trading in securities. Rather, we have and continue to intend to acquire stable and growing middle-market U.S. businesses with a focus on business services, consumer products, education, franchising, light manufacturing / specialty engineering, non-FDA regulated healthcare and safety companies. In addition, through the Manager and the Sub-Manager, we have been and intend to continue to be engaged with the acquired businesses in several areas, including (i) strategic direction and planning, (ii) supporting add-on acquisitions and introducing senior management to new business contacts, (iii) balance sheet management, (iv) capital markets strategies, and (v) optimization of working capital. We monitor the critical success factors of our acquired businesses on a daily/weekly basis and meet monthly with senior management of the companies we acquire in an operating committee environment to discuss their respective strategic, financial and operating performance. As a consequence, we primarily engage and hold ourselves out as being primarily engaged in the non-investment company businesses of these companies, which are or will become our wholly- or majority-owned subsidiaries.

Under Section 3(a)(1)(C) of the Investment Company Act, a company is deemed to be an “investment company” if it is engaged, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire “investment securities” having a value exceeding 40% of the value of its total assets (exclusive of U.S. Government securities and cash items) on an unconsolidated basis, which we refer to as the “40% test.” Excluded from the term “investment securities,” among other instruments, are U.S. Government securities and securities issued by majority-owned subsidiaries that are not themselves investment companies and are not relying on the exceptions under Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act.

We conduct operations, and intend to continue to conduct our operations, so that on an unconsolidated basis we and most of our subsidiaries will comply with the 40% test and no more than 40% of the assets of those subsidiaries will consist of investment securities. We expect that most, if not all, of our wholly- and majority-owned subsidiaries will fall outside the definitions of investment company under Section 3(a)(1)(A) and Section 3(a)(1)(C) or rely on an exception or exemption from the definition of investment company other than the exceptions under Section 3(c)(1) and Section 3(c)(7) of the Investment Company Act. Consequently, interests in these subsidiaries (which currently constitute and are expected to continue to constitute most, if not all, of our assets) generally will not constitute “investment securities” for purposes of Section 3(a)(1)(C) of the Investment Company Act. Accordingly, we believe that we are not considered and will not be considered an investment company under Section 3(a)(1)(C) of the Investment Company Act. We monitor our holdings on an ongoing basis and in connection with each of our business acquisitions to determine compliance with the 40% test.

The determination of whether an entity is our majority-owned subsidiary is made by us. Under the Investment Company Act, a majority-owned subsidiary of a person means a company 50% or more of the outstanding voting securities of which are owned by such person, or by another company which is a majority-owned subsidiary of such person. The Investment Company Act further defines voting securities as any security presently entitling the owner or holder thereof to vote for the election of directors of a company. We treat companies in which we own at least a majority of the outstanding voting securities as majority-owned subsidiaries for purposes of the 40% test. We have not requested the SEC to approve our treatment of any company as a majority-owned subsidiary and the SEC has not done so. If the SEC, or its staff, were to disagree with our treatment of one of more companies as majority-owned subsidiaries, we would need to adjust our strategy and our assets in order to continue to pass the 40% test. Any such adjustment in our strategy could have a material adverse effect on us.

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Additionally, we conduct and intend to continue to conduct operations so that we are not treated as a “special situation investment company” as such term has been interpreted by the SEC and its staff and by courts in judicial proceedings under the Investment Company Act. Special situation investment companies generally are companies which secure control of other companies primarily for the purpose of making a profit in the sale of the controlled company’s securities. The types of companies that have been characterized by the SEC in SEC releases, the SEC staff or by courts in judicial proceedings under the Investment Company Act as “special situation investment companies” are those that, as part of their history and their stated business purpose, engage in a pattern of acquiring large or controlling blocks of securities in companies, attempting to control or to exert a controlling influence over these companies, improving their performance and then disposing of acquired share positions after a short-term holding period at a profit once the acquired shares increase in value. Special situation investment companies also follow a policy of shifting from one investment to another because greater profits seem apparent elsewhere. We monitor our business activities, including our acquisitions and divestments, on an ongoing basis to avoid being deemed a special situation investment company. One of the factors that distinguishes us from a “special situation investment company” is our policy of acquiring middle-market U.S. businesses with the expectation of operating these businesses over a long-term basis that for us will involve a minimum holding period of four to six years.

A change in the value of our assets could cause us or one or more of our wholly- or majority-owned subsidiaries to fall within the definition of “investment company” and negatively affect our ability to maintain our exclusion from registration under the Investment Company Act. To avoid being required to register the company or any of its subsidiaries as an investment company under the Investment Company Act, we may be unable to acquire businesses with an intention of disposing of them on a short-term basis. In addition, we may in other circumstances be unable to sell assets we would otherwise want to sell and may need to sell assets we would otherwise wish to retain. We also may have to acquire additional income- or loss-generating assets that we might not otherwise have acquired or may have to forgo opportunities to acquire interests in companies that we would otherwise want to acquire and would be important to our business strategy.

If we become obligated to register the company or any of its subsidiaries as an investment company pursuant to the Investment Company Act, the registered entity would have to comply with a variety of substantive requirements under the Investment Company Act imposing, among other things:

•limitations on capital structure;

•restrictions on specified investments;

•prohibitions on transactions with affiliates; and

•compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly change our operations.

If we were required to register the company as an investment company pursuant to the Investment Company Act but failed to do so, we would be prohibited from engaging in our business, and criminal and civil actions could be brought against us. In addition, our contracts would be unenforceable unless a court required enforcement, and a court could appoint a receiver to take control of us and liquidate our business, all of which would have a material adverse effect on us and the returns generated for shareholders.

If, in the future, we cease to control and operate our businesses, we may be deemed to be an investment company under the Investment Company Act.

Under the terms of our LLC Agreement, we have the latitude to acquire equity interests in businesses that we will not operate or control. If we make significant acquisitions of equity interests in businesses that we do not operate or control or cease to operate and control such businesses, we may be deemed to be an investment company under the Investment Company Act. If we were deemed to be an investment company under the Investment Company Act, we would either have to register as an investment company under the Investment Company Act, obtain exemptive relief from the SEC or modify our equity interests and debt positions or organizational structure or our contract rights to fall outside the definition of an investment company under the Investment Company Act. Registering as an investment company pursuant to the Investment Company Act could, among other things, materially adversely affect our financial condition, business and results of operations, materially limit our ability to borrow funds or engage in other transactions involving leverage and require us to add directors who are independent of us, the Manager and the Sub-Manager and otherwise will subject us to additional regulation that will be costly and time-consuming.

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Risks Related to the Manager, the Sub-Manager and Their Respective Affiliates

Our success will be dependent on the performance of the Manager and the Sub-Manager and their respective affiliates, but investors should not rely on the past performance of the Manager, the Sub-Manager and their respective affiliates as an indication of future success. Prior to the Public Offering, affiliates of CNL have only sponsored real estate and credit investment programs.

The Manager was formed in August 2016 and has a limited operating history. The Sub-Manager was formed in September 2016 and has limited experience managing a business under guidelines designed to allow us to avoid registration as an investment company under the Investment Company Act, which may hinder our ability to take advantage of attractive acquisition opportunities and, as a result, implement and execute our business strategy. In addition, the Sub-Manager has limited experience complying with regulatory requirements applicable to public companies. We cannot guarantee that we will be able to find suitable acquisition opportunities and our ability to implement and execute our business strategy and to pay distributions will be dependent upon the performance of the Manager and the Sub-Manager in the identification and acquisition of such opportunities and the management of our businesses and other assets. Additionally, investors should not rely on the past performance of investments by other CNL- or LLCP-affiliated entities to predict our future results. Our business strategy and key employees differ from the business strategies and key employees of certain other CNL- or LLCP-affiliated programs in the past, present and future. Prior to the Public Offering, affiliates of CNL have only sponsored real estate and credit investment programs. If either the Manager or the Sub-Manager fails to perform according to our expectations, we could be materially adversely affected.

The Manager, the Sub-Manager and their respective affiliates, including our officers and some of our directors will face conflicts of interest including conflicts that may result from compensation arrangements with us and our affiliates, which could result in actions that are not in the best interests of our shareholders.

The Manager, the Sub-Manager and their respective affiliates will receive substantial fees from us (directly or indirectly) in return for their services, and these fees could influence the advice provided to us. Among other matters, the compensation arrangements could affect their judgment with respect to public and private offerings of equity by us, which allow the Managing Dealer to earn additional dealer manager fees and the Manager and the Sub-Manager to earn increased management fees. The Administrator and the Sub-Administrator will also face conflicts of interests with respect to their performance of various administrative services that we require, including but not limited to conflicts that may arise from the Administrator’s and the Sub-Administrator’s decisions with respect to the allocation of their time and resources as they relate to their recommendations and oversight of the personnel, facilities and services provided to us, and the quality of professional and administrative services rendered by their respective affiliates to us. The Manager, the Sub-Manager and their respective affiliates, including certain of our officers and some of our directors will face conflicts of interest including conflicts that may result from compensation arrangements. The Manager compensates the members of its management committee with incentive-based compensation, asset-based compensation and/or bonuses and awards which will vary based on the Manager’s performance.

The incentive fees that we may pay to the Manager (50% of which would be paid to the Sub-Manager) may create an incentive for the Manager and the Sub-Manager to make acquisitions on our behalf that are risky or more speculative than would be the case in the absence of such compensation arrangement. The way in which the incentive fee is determined may encourage the Manager and the Sub-Manager to use leverage to increase the return on our assets. In addition, the fact that our base management fee for a certain month is calculated based on the average value of our gross assets at the end of that month and the immediately preceding calendar month, which would include any borrowings for investment purposes, may encourage the Manager and the Sub-Manager to use leverage or to acquire additional assets. The use of leverage increases the volatility of assets by magnifying the potential for gain or loss on invested equity capital. In addition, we and our shareholders will bear the burden of any increase in our expenses as a result of our use of leverage, including interest expenses and any increase in the management fees payable to the Manager. Our businesses may pay fees to the Sub-Manager for services it provides to them and therefore our shareholders may be indirectly subject to such fees. These fees may be paid before we realize any income or gain. The Manager and the Sub-Manager may face conflicts of interest with respect to services performed for our businesses, on the one hand, and opportunities recommended to us, on the other hand. Furthermore, our board of directors is responsible for determining the net asset value of our assets (with the assistance from the Manager, the Sub-Manager and the independent valuation firm) and, because the base management fee is payable monthly and for a certain month is calculated based on the average value of our gross assets at the end of that month and the immediately preceding calendar month, a higher net asset value of our assets would result in a higher base management fee to the Manager and the Sub-Manager.

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We pay substantial fees and expenses to the Manager, the Sub-Manager, the Managing Dealer or their respective affiliates. These payments increase the risk that investors will not earn a profit on their investment.

The Manager and the Sub-Manager perform services for us in connection with the identification, selection and acquisition of our assets, and the monitoring and administration of our assets. We pay the Manager and the Sub-Manager certain fees for management services, including a base management fee that is not tied to the performance of our assets. We pay fees and commissions to the Managing Dealer in connection with the offer and sale of the shares. We may pay third parties directly or reimburse the costs or expenses of third parties paid by the Administrator and the Sub-Administrator for providing us with certain administrative services. Since the Administrator and the Sub-Administrator are affiliates of the Manager and the Sub-Manager, respectively, they may experience conflicts of interests when seeking expense reimbursement from us. Similarly, our businesses may pay fees to the Sub-Manager for services it provides to them and therefore our shareholders may be indirectly subject to such fees. These fees reduce the amount of cash available for acquisitions or distribution to our shareholders. These fees also increase the risk that the amount available for distribution to shareholders upon a liquidation of our assets would be less than the purchase price of the shares in the Public Offering and that investors may not earn a profit on their investment.

The time and resources that individuals associated with the Manager and the Sub-Manager devote to us may be diverted.

We currently expect the Manager, the Sub-Manager and their respective officers and employees to devote such time as shall be necessary to conduct our business affairs in an appropriate manner. However, the Manager, the Sub-Manager and their respective officers and employees are not required to do so. Moreover, neither the Manager, the Sub-Manager nor their affiliates are prohibited from raising money for and managing another entity that competes with us or our businesses, except as agreed to by the Manager and the Sub-Manager. Accordingly, the respective management teams of the Manager and the Sub-Manager may have obligations to investors in entities they work at or manage in the future, the fulfillment of which might not be in the best interests of us or our shareholders or that may require them to devote time to services for other entities, which could interfere with the time available to provide services to us. In addition, we may compete with any such investment entity for the same investors and acquisition opportunities.

We do not have a policy that expressly prohibits our directors, officers, or affiliates from engaging for their own account in business activities of the types conducted by us.

We do not have a policy that expressly prohibits our directors, officers, or affiliates from engaging for their own account in business activities of the types conducted by us. However, our code of business conduct contains a conflicts of interest policy that prohibits our directors and executive officers, as well as personnel of the Manager and the Sub-Manager who provide services to us, from engaging in any transaction that involves an actual conflict of interest with us without the approval of a majority of our independent directors. In addition, the Management Agreement and the Sub-Management Agreement do not prevent the Manager, the Sub-Manager and their respective affiliates from engaging in additional business opportunities, some of which could compete with us, except as agreed to by the Manager and the Sub-Manager.

The Manager and the Sub-Manager will experience conflicts of interest in connection with the management of our business affairs, our businesses and their respective other accounts and clients.

The Manager and the Sub-Manager will experience conflicts of interest in connection with the management of our business affairs relating to the allocation of business opportunities by the Manager, the Sub-Manager and their respective affiliates to us and other clients; compensation to the Manager, the Sub-Manager and their respective affiliates; services that may be provided by the Manager, the Sub-Manager and their respective affiliates to our businesses; co-investment opportunities for us and the allocation of such opportunities to us and other clients of the Manager and the Sub-Manager; the formation of investment vehicles by the Manager or the Sub-Manager; differing recommendations given by the Manager and the Sub-Manager to us versus other clients; the Manager’s and the Sub-Manager’s use of information gained from our businesses for investments by other clients, subject to applicable law; and restrictions on the Manager’s and the Sub-Manager’s use of “inside information” with respect to potential acquisitions by us.

In connection with the services that the Sub-Manager or its affiliates may provide to the businesses we acquire, the Sub-Manager may be paid transaction fees in connection with services customarily performed in connection with the management of such businesses (except that no such transaction fees were charged on our acquisition of the initial businesses). Any transaction fees received by the Sub-Manager up to $1.5 million to $3.5 million annually (dependent on our total assets at the time of receipt of such transaction fees) will not be shared with us. Any transaction fees charged to businesses in excess of $3.5 million will be paid to us. Additionally, these fees may be paid before we realize any income or gain. We may also reimburse the Sub-Manager for certain transactional expenses (e.g. research costs, due diligence costs, professional fees, legal fees and other related items) related to businesses that we acquire as well as transactional expenses related to deals that do not close, often referred to as “broken deal costs.” The Manager and the Sub-Manager may face conflicts of interest with respect to services performed for our businesses, on the one hand, and opportunities recommended to us, on the other hand.

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The Sub-Manager may experience conflicts of interests in their management of other clients that may have a similar business strategy as us.

The Sub-Manager and its affiliates currently manage other clients and may in the future manage new clients that may have a similar business strategy as us. The Sub-Manager will determine which opportunities it presents to us or another client with a similar business objective. The Sub-Manager may determine it is more appropriate for one or more other clients managed by the Sub-Manager or any of its affiliates than it is for us and present such opportunity to the other client. These co-investment opportunities may give rise to conflicts of interest or perceived conflicts of interest among us and the other participating accounts, including the amount of such co-investment opportunity allocated to us.

The Sub-Manager and its affiliates may (i) give advice and take action with respect to any of its other clients that may differ from advice given or the timing or nature of action taken with respect to us, so long as it is consistent with the provisions of the Sub-Manager’s allocation policy and its obligations under the Sub-Management Agreement, and (ii) subject to the Exclusivity Agreement and its obligations thereunder, engage in activities that overlap with or compete with those in which the company and its subsidiaries, directly or indirectly, may engage. The company, on its own behalf and on behalf of its subsidiaries, has renounced any interest or expectancy in, or right to be offered an opportunity to participate in, any business opportunity which may be a corporate opportunity for another client of the Sub-Manager or its affiliates to the extent such opportunity has been determined in good faith by the Sub-Manager not to be allocated to the company, all in accordance with the company’s and the Sub-Manager’s allocation policy. Furthermore, subject to the company’s investment policy and its obligations under the Sub-Management Agreement, the Sub-Manager shall not have any obligation to recommend for purchase or sale any securities or loans which its principals, affiliates or employees may purchase or sell for its or their own accounts or for any other client or account if, in the opinion of the Sub-Manager, such transaction or investment appears unsuitable, impractical or undesirable for the Manager (on behalf of the company).

Consistent with our allocation policy, in the event that a co-investment opportunity that the Manager has approved for potential participation does not close and the Sub-Manager and its affiliates accumulate broken deal costs in connection with the co-investment opportunity, the Sub-Manager and its affiliates will be required to allocate such broken deal costs among us and the other participating accounts. Broken deal costs will generally be allocated to us by the Sub-Manager pro rata based on our allocation in a proposed co-investment opportunity if our allocation in such co-investment opportunity has been determined; however, in the event that we expect to participate in a co-investment opportunity with Levine Leichtman Capital Partners VI, L.P. (“LLCP VI”), or LLCP Lower Middle Market Fund III, L.P. (“LMM III Fund”) which accumulates broken deal costs and our allocation in such co-investment opportunity has not been determined, we will be allocated 5% of the broken deal costs with respect to a co-investment with LLCP VI, or 10% of the broken deal costs with respect to a co-investment with the LMM III Fund, subject to annual review by the Sub-Manager. We may similarly act as a dedicated co-investor for other private acquisition funds advised by affiliates of the Sub-Manager that are formed in the future, with our allocation percentage being determined at or prior to the time we begin pursuing co-investment opportunities with such vehicles and subject to annual review by the Sub-Manager. Additionally, on a quarterly basis, the Sub-Manager will identify third party broken deal costs for opportunities that were not presented to the Manager for prior approval but which are determined in the Sub-Manager’s reasonable judgment and in a manner consistent with the Sub-Manager’s fiduciary obligations to have qualified as a potential investment opportunity for us on a direct or co-investment basis (such opportunity, a “lookback broken deal”). Subject to approval by the Manager, we will reimburse the Sub-Manager for our allocable portion of third party broken deal expenses incurred in connection with a lookback broken deal. In the case of a lookback broken deal identified as an opportunity on a co-investment basis with LLCP VI, or LMM III Fund, our allocable portion of such third party broken deal expenses will be 5%, or 10%, respectively. Unless our board of directors approves otherwise, in no event will our portion of the aggregate lookback broken deal expenses exceed $75,000 on a calendar year basis.

The Manager and its respective affiliates may have an incentive to delay a liquidity event, which may result in actions that are not in the best interest of our shareholders.

We pay certain amounts to the Managing Dealer and participating broker-dealers in connection with the distribution of certain classes of shares for the ongoing marketing, sale and distribution of such shares, including an ongoing distribution and shareholder servicing fee. The ongoing distribution and shareholder servicing fee for these classes of shares will terminate for all shareholders upon a liquidity event. As such, the Manager may have an incentive to delay a liquidity event or making such recommendation to our board of directors if such amounts receivable by the Managing Dealer have not been fully paid. A delay in a liquidity event may not be in the best interests of our shareholders.

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Our access to confidential information may restrict our ability to take action with respect to our businesses, which, in turn, may negatively affect our results of operations.

We, directly or through the Manager or the Sub-Manager, may obtain confidential information about our businesses. If we possess confidential information about such businesses, there may be restrictions on our ability to make, dispose of, increase the amount of, or otherwise take action with respect to, those businesses. The impact of these restrictions on our ability to take action with respect to such businesses could have an adverse effect on our results of operations.

We may be obligated to pay the Manager and the Sub-Manager incentive fees even if there is a decline in the value of our assets for that calendar year and even if our earned interest income is not payable in cash.

The Management Agreement and the Sub-Management Agreement entitle the Manager and the Sub-Manager to receive an incentive fee based on the total return of each class of our shares regardless of any capital losses. In such case, we may be required to pay the Manager and the Sub-Manager an incentive fee for a calendar year even if there is a decline in the value of our assets for that calendar year or if our net asset value is less than the purchase price of an investor’s shares.

Any incentive fee payable by us that relates to the total return of each class of our shares may be computed and paid on income that may include interest that has been accrued but not yet received or interest in the form of securities received rather than cash (“payment-in-kind” or “PIK” income) or based on unrealized gains. If one of our businesses defaults on a loan that is structured to provide accrued interest income, it is possible that accrued interest income previously included in the calculation of the incentive fee will become uncollectible. The Manager and the Sub-Manager are not obligated to reimburse us for any part of the incentive fee they received that was based on accrued interest income that we never received as a result of a subsequent default or an unrealized gain. Although we do not expect our debt assets to include a PIK feature, to the extent we do so, PIK income will be included in the total return of each class of our shares used to calculate the incentive fee to the Manager and the Sub-Manager even though we do not receive the income in the form of cash.

The Manager’s and the Sub-Manager’s liability is limited under the Management Agreement, the Sub-Management Agreement, the Administrative Services Agreement and the Sub-Administration Agreement, as applicable, and we are required to indemnify the Manager and the Sub-Manager against certain liabilities, which may lead them to act in a riskier manner on our behalf than it would when acting for their own account.

The Manager and the Sub-Manager have not assumed any responsibility to us other than to render the services described in the Management Agreement, the Sub-Management Agreement, the Administrative Services Agreement and the Sub-Administration Agreement, as applicable. Pursuant to the Management Agreement, the Sub-Management Agreement, the Administrative Services Agreement and the Sub-Administration Agreement, as applicable, the Manager, the Sub-Manager and their respective officers, managers, partners, members, agents, employees, controlling persons, shareholders, and any other person or entity affiliated with the Manager and the Sub-Manager will not be liable to us or any of our subsidiaries’ members, stockholders or partners in connection with the performance of any duties or obligations under the Management Agreement, the Sub-Management Agreement, the Administrative Services Agreement and the Sub-Administration Agreement, absent negligence or misconduct in the performance of the Manager’s or the Sub-Manager’s duties, as applicable. We have also agreed to indemnify, defend and protect the Manager, the Sub-Manager and their respective officers, managers, partners, members, agents, employees, controlling persons and any other person or entity affiliated with the Manager and the Sub-Manager with respect to all damages, liabilities, costs and expenses incurred in or by reason of any pending, threatened or completed, action suit investigation or other proceeding resulting from acts of the Manager and the Sub-Manager not arising out of negligence or misconduct in the performance of the Manager’s or the Sub-Manager’s duties, as applicable, under such agreements. These protections may lead the Manager and the Sub-Manager to act in a riskier manner when acting on our behalf than it would when acting for its own account.

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Each of the Manager and the Sub-Manager can resign on 120 days notice and, pursuant to the Sub-Management Agreement, the Manager and the Sub-Manager have agreed to resign if the other is terminated for anything other than cause and we may not be able to find suitable replacement(s) within that time, resulting in a disruption in our operations that could adversely affect our financial condition, business and results of operations.

The Manager has the right, under the Management Agreement, to resign at any time on 120 days written notice, whether we have found a replacement or not. If the Manager resigns, we may not be able to contract with a new manager or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 120 days, or at all, in which case our operations are likely to experience a disruption, our financial condition, business and results of operations as well as our ability to pay distributions are likely to be adversely affected. In addition, the coordination of our internal management, business activities and supervision of our businesses is likely to suffer if we are unable to identify and reach an agreement with a single institution or group of executives having the expertise possessed by the Manager and its affiliates. Even if we are able to retain comparable management, whether internal or external, the integration of such management and their lack of familiarity with our businesses may result in additional costs and time delays that may adversely affect our financial condition, business and results of operations.

The Sub-Manager also has the right, under the Sub-Management Agreement, to resign at any time on 120 days written notice, whether the Manager or the company has found a replacement or not. If the Sub-Manager resigns, the Manager and the company may not be able to contract with a new sub-manager. The Sub-Management Agreement provides that, in the event the Manager or the Sub-Manager is terminated or not renewed as a manager or sub-manager, other than for cause, the other will also terminate its Management Agreement or Sub-Management Agreement, as applicable. In such case, our operations are likely to experience a disruption, our financial condition, business and results of operations as well as our ability to pay distributions are likely to be adversely affected.

Risks Related to Our Business

A business strategy focused primarily on privately held companies presents certain challenges, including the lack of available information about these companies.

We intend to acquire controlling interests in privately held, middle-market U.S. businesses which by their nature pose certain incremental risks as compared to public companies including that they:

•have reduced access to the capital markets, resulting in diminished capital resources and ability to withstand financial distress;

•may have limited financial resources and may be unable to meet their obligations under their debt securities that we may hold, which may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of our realizing any guarantees we may have obtained in connection with our acquisition;

•may have shorter operating histories, narrower product lines and smaller market shares than larger businesses, which tend to render them more vulnerable to competitors’ actions and changing market conditions, as well as general economic downturns;

•are more likely to depend on the management talents and efforts of a small group of persons; therefore, the death, disability, resignation or termination of one or more of these persons could have a material adverse impact on our privately held company and, in turn, on us; and

•generally have less predictable operating results, may from time to time be parties to litigation, may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence, and may require substantial additional capital to support their operations, finance expansion or maintain their competitive position. In addition, our executive officers, directors and members of the Manager’s and the Sub-Manager’s management may, in the ordinary course of business, be named as defendants in litigation arising from our ownership of these companies.

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In addition, interests in private companies tend to be less liquid. The securities of private companies are not publicly traded or actively traded on the secondary market and are, instead, traded on a privately negotiated over-the-counter secondary market for institutional investors. These over-the-counter secondary markets may be inactive during an economic downturn or a credit crisis. In addition, the securities in these companies will be subject to legal and other restrictions on resale or will otherwise be less liquid than publicly traded securities. If there is no readily available market for these assets, we are required to carry these assets at fair value as determined by our board of directors. As a result, if we are required to liquidate all or a portion of our assets quickly, we may realize significantly less than the value at which we had previously recorded these assets. We may also face other restrictions on our ability to liquidate our ownership of a business to the extent that we, the Manager, the Sub-Manager or any of their respective affiliates have material nonpublic information regarding such business or where the sale would be an impermissible joint transaction. The reduced liquidity of these assets may make it difficult for us to dispose of them at a favorable price, and, as a result, we may suffer losses.

Finally, little public information generally exists about private companies and these companies may not have third-party credit ratings or audited financial statements. We must therefore rely on the ability of the Manager and the Sub-Manager to obtain adequate information through due diligence to evaluate the creditworthiness and potential returns from these business opportunities. Additionally, these companies and their financial information will not generally be subject to the Sarbanes-Oxley Act and other rules that govern public companies. If we are unable to uncover all material information about these companies, we may not make a fully informed business decision, and we may lose money on our assets.

We face risks with respect to the evaluation and management of future acquisitions.

A significant component of our business strategy is to acquire controlling equity interests in businesses. We intend to focus on middle-market U.S. businesses in various industries. Generally, because such businesses are held privately, we may experience difficulty in evaluating potential target businesses as the information concerning these businesses is not publicly available. Therefore, our estimates and assumptions used to evaluate the operations, management and market risks with respect to potential target businesses may be subject to various risks. Further, the time and costs associated with identifying and evaluating potential target businesses and their industries may cause a substantial drain on our resources and may divert our management team’s attention away from operations for significant periods of time. In addition, we may incur substantial broken deal costs in connection with acquisition opportunities that are not consummated.

In addition, we may have difficulty effectively managing the businesses we acquire. The management or improvement of businesses we acquire may be hindered by a number of factors including limitations in the standards, controls, procedures and policies of such acquisitions. Further, the management of an acquired business may involve a substantial reorganization resulting in the loss of employees and customers or the disruption of our ongoing businesses. Some of the businesses we acquire may have significant exposure to certain key customers, the loss of which could negatively impact our financial condition, business and results of operations. We may experience greater than expected costs or difficulties relating to such acquisition, in which case, we might not achieve the anticipated returns from any particular acquisition, which may have a material adverse effect on our financial condition, business and results of operations.

In addition, certain members of the management teams of our businesses have, and may have in the future, the opportunity to participate in equity incentive programs which are expected to be based on the satisfaction of certain performance criteria and metrics and may include receipt of options. Although we believe such awards are important incentives for the management teams of our businesses, such awards could decrease our percentage ownership in a business to the extent such award vests and is exercised in the future.

If we cannot obtain debt financing or equity capital on acceptable terms, our ability to finance future acquisitions of businesses and expand our operations will be adversely affected.

The net proceeds from the sale of our shares in the Public Offering will be used to finance the acquisition of businesses, and, if necessary, the payment of operating expenses and the payment of various fees and expenses such as management fees, incentive fees, other fees and distributions. Any working capital reserves we maintain may not be sufficient for business purposes, and we may require additional debt financing or equity capital to operate. These sources of funding may not be available to us due to unfavorable economic conditions, which could increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. Consequently, if we cannot obtain further debt or equity financing on acceptable terms, our ability to fund the acquisition of businesses and to expand our operations will be adversely affected. As a result, we would be less able to execute our business strategy, which may negatively impact our results of operations and reduce our ability to make distributions to our shareholders.

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We may face increasing competition for acquisition opportunities, which could delay deployment of our capital, reduce returns and result in losses.

We compete for acquisitions with strategic buyers, private equity funds and diversified holding companies. Additionally, we may compete for loans with traditional financial services companies such as commercial banks. Certain competitors are substantially larger and have greater financial, technical and marketing resources than we do. For example, some competitors may have access to funding sources that are not available to us, and others may have higher risk tolerances or different risk assessments. These characteristics could allow our competitors to consider a wider variety of acquisition opportunities, establish more relationships and offer better pricing and more flexible structuring than we are able to do. We may lose acquisition opportunities if we do not match our competitors’ pricing, terms or structure. If we are forced to match our competitors’ pricing, terms and structure, we may not be able to achieve acceptable risk-adjusted returns on our businesses or may bear risk of loss, which may have a material adverse effect on our business, financial condition and results of operations. In addition, if we lose an acquisition opportunity, we may still incur broken deal costs related to the review of an opportunity that is not consummated, which could be substantial.

We rely on receipts from our businesses to make distributions to our shareholders.

We are dependent upon the ability of our businesses to generate earnings and cash flow and distribute them to us in the form of interest and principal payments of indebtedness and, from time to time, distributions on equity to enable us, first, to satisfy our financial obligations and, second to make distributions to our shareholders. This ability may be subject to limitations under laws of the jurisdictions in which they are incorporated or organized. As a consequence of these various restrictions, we may be unable to generate sufficient receipts from our businesses, and therefore, we may not be able to declare, or may have to delay or cancel payment of, distributions to our shareholders.

We do not intend to own 100% of our businesses. While we receive cash payments from our businesses which are in the form of interest payments, debt repayment and distributions, if any distributions were to be paid by our businesses, they would be shared pro rata with the minority shareholders of our businesses and the amounts of distributions made to minority shareholders would not be available to us for any purpose, including debt service or distributions to our shareholders. Any proceeds from the sale of a business will be allocated among us and the non-controlling shareholders of the business that is sold.

We anticipate acquiring controlling interests in a limited number of businesses and these businesses may be subject to unplanned business interruptions.

We anticipate acquiring controlling interests in a limited number of companies. As a result, the performance of our business may be substantially adversely affected by the unfavorable performance of even a single business. Further, operational interruptions and unplanned events at one or more of our production facilities of these businesses, such as explosions, fires, inclement weather, natural disasters, pandemics, accidents, transportation interruptions and supply could cause substantial losses in our production capacity. Furthermore, because customers may be dependent on planned deliveries from us, customers that have to reschedule their own operations due to our delivery delays may be able to pursue financial claims against us, and we may incur costs to correct such problems in addition to any liability resulting from such claims. Such interruptions may also harm our reputation among actual and potential customers, potentially resulting in a loss of business. To the extent these losses are not covered by insurance, our financial position, results of operations and cash flows may be adversely affected by such events.

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The outbreak of highly infectious or contagious diseases, including the ongoing novel coronavirus ("COVID-19") pandemic or the emergence of variant strains of COVID-19, could materially and adversely impact our business, our operating businesses, our financial condition, results of operations and cash flows. Further, the spread of COVID-19 pandemic has caused severe disruptions in the U.S. and global economy and financial markets and could potentially create widespread business continuity issues of an as yet unknown magnitude and duration.

In December 2019, COVID-19 was reported to have surfaced in Wuhan, China. COVID-19 has since spread globally, including every state in the United States. In March 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020 the United States declared a national emergency with respect to COVID-19. Since March 13, 2020, there have been a number of federal, state and local government initiatives to manage the spread of the virus and its impact on the economy, financial markets and continuity of businesses of all sizes and industries. For example, in March 2020, Congress approved, and former President Trump signed into law, the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), which provided approximately $2 trillion in financial assistance to individuals and businesses resulting from the COVID-19 pandemic. The CARES Act, among other things, provided certain measures to support individuals and businesses in maintaining solvency through monetary relief, including in the form of financing and loan forgiveness/forbearance. The Federal Reserve implemented asset purchase and lending programs, including purchases of residential and commercial-mortgage backed securities and the establishment of lending facilities to support loans to small- and mid-size businesses. However, the Federal Reserve has tapered its asset purchase program and expects to implement short-term interest-rate raises in 2022, the ultimate effects of which cannot be predicted at this time. To further address the continued economic impact of the COVID-19 pandemic, the U.S. Congress passed, and former President Trump signed into law, a second COVID-19 relief bill in December 2020, which provided approximately $900 billion in financial assistance to individuals and businesses, including funds for rental assistance to be distributed by state and local governments and a revival of the forgivable small business loan program (the “Paycheck Protection Program”) originally provided for under the CARES Act. Most recently, in March 2021, Congress passed, and President Biden signed into law, a $1.9 trillion COVID-19 relief bill which provides additional financial assistance to individuals and businesses (including new funds for rental assistance and Paycheck Protection Program loans), as well as aid to state and local governments. While the Biden Administration has proposed other measures as part of its Build Back Better plan, including substantial funding for infrastructure and social services, it is unclear whether and to what extent such measures will be enacted into law. As of December 31, 2021, some of our portfolio companies have taken advantage of certain provisions under the CARES Act but we and our portfolio companies have not borrowed under the Paycheck Protection Program. We continue to analyze the relevant legislative and regulatory developments and the potential impact they may have on our business (including our portfolio companies), results of operations, financial condition and liquidity. The COVID-19 pandemic has severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. Although more normalized activities have resumed, at this time we cannot predict the full extent of the impacts of the COVID-19 pandemic on us and our portfolio companies and the COVID-19 pandemic could have a delayed adverse impact on our financial results. We will continue to monitor the pandemic's effects on a regular basis and will adjust our operations as necessary.

Outbreaks of pandemic or contagious diseases, such as the COVID-19 pandemic or the emergence of variant strains of COVID-19, could materially and adversely affect our business, our operating businesses, our financial condition, results of operations and cash flows. The Manager and the Sub-Manager have not been prevented and do not expect to be prevented from conducting business activities as a result of the COVID-19 pandemic. However, our portfolio companies could be prevented from conducting business activities for an indefinite period of time. Since certain aspects of the services provided by our businesses involve face to face interaction, any future COVID-19 quarantines and work and travel restrictions may reduce participation or result in a loss of business. Additionally, since certain of the products offered by our businesses are manufactured in a facility or distributed through retail stores, a closure of such facility, loss in business for such retail store, or our businesses’ inability to obtain raw materials and to ship products in a timely and cost-effective manner due to COVID-19 would have an adverse impact on production schedules and product sales. As of December 31, 2021, all of the facilities were open and safety procedures have been implemented across our portfolio companies; however, there is a continued risk of temporary business interruptions resulting from employees contracting COVID-19 or from the reinstitution of business closures or work and travel restrictions. Further, if the U.S. and global economy slow down or consumer behavior shifts due to the COVID-19 pandemic (including the continued threat or perceived threat of such pandemic), the demand for the products or services offered by our operating businesses may be reduced. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19. Nevertheless, COVID-19 could present material uncertainty and risk with respect to our business, our operating businesses, our financial condition, results of operations and cash flows.

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In certain circumstances, certain business analyses and decisions by the Manager and the Sub-Manager may be required to be undertaken on an expedited basis.

While we generally will not seek to make an acquisition until the Sub-Manager has conducted sufficient due diligence to make a determination whether to pursue an acquisition opportunity, in such cases, the information available to the Manager and the Sub-Manager at the time of making an acquisition decision may be limited. In certain circumstances, the business analyses and decisions by the Manager and the Sub-Manager may be required to be undertaken on an expedited basis to take advantage of acquisition opportunities. Therefore, no assurance can be given that the Manager and the Sub-Manager will have knowledge of all circumstances that may adversely affect such decision. In addition, the Manager and the Sub-Manager expect often to rely upon independent consultants in connection with its evaluation of proposed acquisitions. No assurance can be given as to the accuracy or completeness of the information provided by such independent consultants and we may incur liability as a result of such consultants’ actions.

Our success is dependent on general economic, political and market conditions.

Our portfolio companies and the success of our investment activities in particular will both be affected by global and national economic, political and market conditions generally and also by the local economic conditions where our portfolio companies are located and operate. These factors may affect the businesses our portfolio companies operate, which could impair the profitability or result in losses. In addition, general fluctuations in the market prices of securities and interest rates may affect our investment opportunities and the value of our investments.

Based on expected moderate, but improved, future economic growth, and historically low levels of interest rates, the valuations and pricing of durable/high-quality private companies continued to increase in the last couple years. Nevertheless, the ongoing competition for high quality private companies and resulting upward pressure on pricing may reduce anticipated returns in the future. Furthermore, economic growth remains affected by inflationary pressure and supply chain related disruptions and could be slowed or halted by significant external events. A negative shock to the economy could result in reduced valuations and multiples for the acquisitions. There can be no assurance that our investments will not be adversely affected by a severe slowing of the economy or renewed recession. Fluctuations in interest rates, inflationary pressure, supply chain issues and limited availability of capital and other economic conditions beyond our control could negatively affect our portfolio and decrease the value of our investments.

Any of the following events could result in substantial impact to our portfolio companies and to the value of our investments in these portfolio companies:

•changes in global, national, regional or local economic, demographic or capital market conditions;

•a recession, slowdown or sustained downturn in the U.S. market, and to a lesser extent, the global economy (or any particular segment thereof);

•overall weakening of, or disruptions in, the financial markets;

•future adverse acquisitions trends, including increasing multiplies and pricing of private companies, declining yield on investments;

•future adverse valuation trends, including the compression of the multiples used for valuations;

•changes in supply of or demand for products/services offered by our portfolio companies;

•increased competition for businesses/portfolio companies targeted by our investment strategy;

•increases in interest rates and inflationary pressures on labor rates and input costs, which may impact the margins of our portfolio companies;

•any supply chain related disruptions exacerbated by the ongoing COVID-19 pandemic which may have a pronounced impact on the profitability of our portfolio companies;

•geopolitical challenges and uncertainties (including wars and other forms of conflict, terrorist acts and security operations), such as the escalating conflict between Russia and Ukraine and the severe economic sanctions and export controls imposed by the U.S. and other governments against Russia and Russian interests; and

•changes in government rules, regulations and fiscal policies, including increases in taxes, changes in zoning laws and increasing costs to comply with environmental laws.

All of these factors are beyond our control. Any negative changes in these factors could affect our performance and our ability to meet our obligations and make distributions to stockholders.

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We will be exposed to risks associated with changes to overall pricing and valuation multiples of durable and high-quality private companies.

Based on expected moderate, but improved, future economic growth, and historically low levels of interest rates, the valuations and pricing of durable and high-quality private companies continued to increase in the last couple years. Furthermore, the ongoing competition for high quality private companies and resulting upward pressure on pricing may increase the acquisition cost of our assets and, as a result, could reduce anticipated returns in the future. Furthermore, economic growth remains affected by inflationary pressure and supply chain related disruptions and could be slowed or halted by significant external events. A negative shock to the economy could result in reduced valuations and multiples for our existing businesses. There can be no assurance that our businesses will not be adversely affected by a severe slowing of the economy or renewed recession. Fluctuations in interest rates, inflationary pressure, supply chain issues and limited availability of capital and other economic conditions beyond our control could negatively affect our portfolio and decrease the value of our assets.

Financial results of certain of our businesses may be affected by the operating results of and actions taken by their franchisees.

Certain of our businesses may receive a substantial portion of their revenues in the form of royalties, which are generally based on a percentage of gross sales from franchisees. Accordingly, financial results of such businesses are to a large extent dependent upon the operational and financial success of their franchisees. If sales trends or economic conditions deteriorate for franchisees, their financial results may also deteriorate and the royalties paid to such businesses may decline and the accounts receivable and related allowance for doubtful accounts may increase. In addition, if the franchisees fail to renew their franchise agreements, royalty revenues of these businesses may decrease which in turn may materially and adversely affect business and operating results of these businesses. For example, Lawn Doctor, Inc. (“Lawn Doctor”) one of our initial businesses, relies primarily on broker referrals for new franchise development and has two main broker relationships that are key to driving new franchisee growth, in addition to its corporate employees generating opportunities. Any disputes with brokers could negatively affect Lawn Doctor’s ability to attract new franchisees and adversely affect its business and operating results.

Additionally, although franchisees are contractually obligated to operate their businesses in accordance with the operations, safety, and health standards set forth in agreements between our businesses and their franchisees, such franchisees are independent third parties whom we or our businesses do not control. The franchisees own, operate, and oversee the daily operations of their business and have sole control over all employee and other workforce decisions. As a result, the ultimate success and quality of any franchisee’s business rests with the franchisee. If franchisees do not successfully operate their business in a manner consistent with required standards, royalty income paid to our businesses may be adversely affected and brand image and reputation could be harmed, which in turn could materially and adversely affect business and operating results of our businesses.

For certain of our businesses, a limited number of customers may account for a large portion of their net sales, so that if one or more of the major customers were to experience difficulties in fulfilling their obligations to such businesses, cease doing business with such businesses, significantly reduce the amount of their purchases from such businesses or return substantial amounts of such businesses’ products, it could have a material adverse effect on our business, financial condition and results of operations.

For certain of our businesses, a limited number of customers may account for a large portion of their gross sales, so that if one or more of the major customers of such businesses were to experience difficulties in fulfilling their obligations to such businesses, cease doing business with such businesses, significantly reduce the amount of their purchases from such businesses or return substantial amounts of such businesses’ products, it could have a material adverse effect on our business, financial condition and results of operations. Except for outstanding purchase orders for specific products, certain of our businesses may not have written contracts with or commitments from any of their customers and pursuant to the terms of certain of their vendor agreements, even some purchase orders may be cancelled without penalty until delivery. A substantial reduction in or termination of orders from any of their largest customers could adversely affect their business, financial condition and results of operations. In addition, pressure by large customers seeking price reductions, financial incentives, and changes in other terms of sale or for these businesses to bear the risks and the cost of carrying inventory could also adversely affect business, financial condition and results of operations of our businesses. In addition, the bankruptcy or other lack of success of one or more of the significant customers could negatively impact such businesses’ revenues and bad debt expense.

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Some of our businesses are or may be dependent upon the financial and operating conditions of their customers and clients. If the demand for their customers’ and clients’ products and services declines, demand for their products and services will be similarly affected and could have a material adverse effect on their financial condition, business and results of operations.

The success of our businesses’ customers’ and clients’ products and services in the market and the strength of the markets in which these customers and clients operate affect our businesses. Our businesses’ customers and clients are subject to their own business cycles, thus posing risks to these businesses that are beyond our control. These cycles are unpredictable in commencement, severity and duration. Due to the uncertainty in the markets served by most of our businesses’ customers and clients, our businesses cannot accurately predict the continued demand for their customers’ and clients’ products and services and the demands of their customers and clients for their products and services. As a result of this uncertainty, past operating results, earnings and cash flows may not be indicative of our future operating results, earnings and cash flows. If the demand for their customers’ and clients’ products and services declines, demand for their products and services will be similarly affected and could have a material adverse effect on their financial condition, business and results of operations.

Certain of our businesses compete in highly competitive markets which are subject to the risk of market disruption including from the development and advancement of new technologies and there can be no assurance that our businesses will be able to compete successfully. For example, Healthcare Safety Holdings’ (“HSH”) business competes in the highly competitive medical supply market. HSH’s daily use insulin pen needles, syringes and complementary offerings for the diabetes care markets compete with other needle-syringes manufacturers and other alternative drug delivery systems. The lack of product differentiation among manufacturers of traditional needles and syringes may subject HSH to downward product pricing pressures in the market. Other companies may develop new products that compete directly or indirectly with HSH’s products. A variety of new technologies, including other delivery methods such as microneedles on dissolvable patches and transdermal patches are being marketed as alternatives to injection for drug delivery. HSH’s narrow focus as a manufacturer of traditional needles and syringes products increases the risk that HSH loses market share to competing products and alternative drug delivery systems. While we currently do not believe such technologies have significantly affected the use of injection for drug delivery to date, there can be no assurance that they will not do so in the future or have an adverse impact on the value of HSH.

Some of our businesses are and may be subject to a variety of federal, state and foreign laws and regulations concerning employment, health, safety and products liability. Failure to comply with governmental laws and regulations could subject them to, among other things, potential financial liability, penalties and legal expenses which could have a material adverse effect on our financial condition, business and results of operations.

Some of our businesses are and may be subject to various federal, state and foreign government employment, health, safety and products liability regulations. Compliance with these laws and regulations, which may be more stringent in some jurisdictions, is a major consideration for our businesses. Government regulators generally have considerable discretion to change or increase regulation of our operations, or implement additional laws or regulations that could materially adversely affect our businesses. For example, as a manufacturer and seller of pen needle and syringes, one of our portfolio companies, HSH, is subject to significant regulatory oversight from governmental authorities such as the Food and Drug Administration as well as inherent products liability risk in the event of a product failure or a personal injury caused by HSH’s products. Noncompliance with applicable regulations and requirements could subject our businesses to investigations, sanctions, product recalls, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties or injunctions. Suffering any of these consequences could materially adversely affect our financial condition, business and results of operations. In addition, responding to any action may result in a diversion of the Manager’s, the Sub-Manager’s and our executive officers’ attention and resources from our operations.

Some of our businesses are and may be subject to federal, state and foreign environmental laws and regulations that expose them to potential financial liability. Complying with applicable environmental laws requires significant resources, and if our businesses fail to comply, they could be subject to substantial liability.

Some of the facilities and operations of our businesses are and may be subject to a variety of federal, state and foreign environmental laws and regulations including laws and regulations pertaining to the handling, storage and transportation of raw materials, products and wastes, which require and will continue to require significant expenditures to remain in compliance with such laws and regulations currently in place and in the future. Compliance with current and future environmental laws is a major consideration for certain of our businesses as any material violations of these laws can lead to substantial liability, revocations of discharge permits, fines or penalties. Because some of our businesses may use hazardous materials in their operations, they may be subject to potential financial liability for costs associated with the investigation and remediation of their own sites if such sites become contaminated. Even if they fully comply with applicable environmental laws and are not directly at fault for the contamination, such businesses may still be liable.

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The identification of presently unidentified environmental conditions, more vigorous enforcement by regulatory agencies, enactment of more stringent laws and regulations, or other unanticipated events may arise in the future and give rise to material environmental liabilities, higher than anticipated levels of operating expenses and capital investment or, depending on the severity of the impact of the foregoing factors, costly plant relocation, all of which could have a material adverse effect on our financial condition, business and results of operations.

Some of our businesses are subject to certain risks associated with business they conduct in foreign jurisdictions.

Some of our businesses conduct business in foreign jurisdictions. Certain risks are inherent in conducting business in foreign jurisdictions, including:

•exposure to local economic conditions;

•difficulties in enforcing agreements and collecting receivables through certain foreign legal systems;

•longer payment cycles for foreign customers;

•adverse currency exchange controls;

•exposure to risks associated with changes in foreign exchange rates;

•potential adverse changes in the political environment of the foreign jurisdictions or diplomatic relations of foreign countries with the United States;

•withholding taxes and restrictions on the withdrawal of foreign investments and earnings;

•export and import restrictions;

•labor relations in the foreign jurisdictions;

•difficulties in enforcing intellectual property rights; and

•required compliance with a variety of foreign laws and regulations.

Some of the businesses we acquire may rely on their intellectual property and licenses to use others’ intellectual property, for competitive advantage. If they are unable to protect their intellectual property, are unable to obtain or retain licenses to use others’ intellectual property, or if they infringe upon or are alleged to have infringed upon others’ intellectual property, it could have a material adverse effect on their financial condition, business and results of operations.

Each business’ success depends in part on their, or licenses to use others’ brand names, proprietary technology and manufacturing techniques. Such businesses may rely on a combination of patents, trademarks, copyrights, trade secrets, confidentiality procedures and contractual provisions to protect their intellectual property rights. The steps they have taken to protect their intellectual property rights may not prevent third parties from using their intellectual property and other proprietary information without their authorization or independently developing intellectual property and other proprietary information that is similar. In addition, the laws of foreign countries may not protect the intellectual property rights of these companies effectively or to the same extent as the laws of the United States.

Stopping unauthorized use of their proprietary information and intellectual property, and defending against claims that they have made unauthorized use of others’ proprietary information or intellectual property, may be difficult, time-consuming and costly. The use of their intellectual property and other proprietary information by others, and the use by others of their intellectual property and proprietary information, could reduce or eliminate any competitive advantage they have developed, cause them to lose sales or otherwise harm their business.

Some of the businesses we acquire may become involved in legal proceedings and claims in the future either to protect their intellectual property or to defend allegations that they have infringed upon others’ intellectual property rights. These claims and any resulting litigation could subject them to significant liability for damages and invalidate their property rights. In addition, these lawsuits, regardless of their merits, could be time consuming and expensive to resolve and could divert management’s time and attention. The costs associated with any of these actions could be substantial and could have a material adverse effect on their financial condition, business and results of operations.

Some of the businesses we acquire may be subject to certain risks associated with the movement of businesses offshore.

Some of the businesses we acquire may be potentially at risk of losing business to competitors operating in lower cost countries. An additional risk is the movement offshore of some customers of these businesses we control, leading them to procure products or services from more closely located companies. Either of these factors could negatively impact our financial condition, business and results of operations.

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Defaults by our businesses will harm our operating results.

A business’s failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, termination of its debt financing and foreclosure on its secured assets, which could trigger cross-defaults under other agreements and jeopardize such business’s ability to meet its obligations under the debt or equity securities that we hold. We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms, which may include the waiver of certain financial covenants, with a defaulting business. Further, there may not be any prepayment penalty for our borrowers who prepay their loans. If borrowers choose to prepay their loans, we may not receive the full amount of interest payments otherwise to be received by us.

Our businesses may incur debt that ranks equally with, or senior to, our debt in such businesses.

Our businesses may have, or may be permitted to incur, other debt that ranks equally with, or senior to, our debt in such businesses. By their terms, such debt may entitle the holders to receive payment of interest or principal on or before the dates on which we are entitled to receive payments with respect to our debt in such business. Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of our business, holders of debt instruments ranking senior to our debt in that business would typically be entitled to receive payment in full before we receive any distribution. After repaying such senior creditors, such business may not have any remaining assets to use for repaying its obligation to us. In the case of debt ranking equally with our debt in the business, we would have to share on an equal basis any distributions with other creditors holding such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant business.

We may not have the funds or ability to make additional capital contributions or loans to our businesses.

After our initial acquisition of an equity stake in a business or loans to such business, we may be called upon from time to time to provide additional funds to such business or have the opportunity to increase our capital contributions. There is no assurance that we will make, or will have sufficient funds to make, follow-on contributions. Even if we do have sufficient capital to make a desired follow-on contribution, we may elect not to make a follow-on contribution because we may not want to increase our level of risk or we prefer other opportunities. Our ability to make follow-on contributions may also be limited by the Manager’s and the Sub-Manager’s allocation policies. Any decisions not to make a follow-on contribution or any inability on our part to make such a contribution may have a negative impact on such business, may result in a missed opportunity for us to increase our participation in a successful operation or may reduce our expected return with respect to the business.

The debt positions we will typically acquire in connection with our acquisition of controlling equity interests in businesses may be risky, and we could lose all or part of our assets.

When we acquire a controlling equity interest in a business, we also will typically acquire a debt position in such business, which may be in the form of senior or subordinated securities.

When we acquire senior debt, we will generally seek to take a security interest in the available assets of a business, including equity interests in any of its subsidiaries. There is a risk that the collateral securing our loans may decrease in value over time or lose its entire value, may be difficult to sell in a timely manner, may be difficult to appraise and may fluctuate in value based upon the success of the business and market conditions, including as a result of the inability of the business to raise additional capital. Also, in some circumstances, our lien could be subordinated to claims of other creditors. In addition, deterioration in such business’s financial condition and prospects, including its inability to raise additional capital, may be accompanied by deterioration in the value of the collateral for the loan. Consequently, the fact that a loan is secured does not guarantee that we will receive principal and interest payments according to the loan’s terms, or at all, or that we will be able to collect on the loan should we be forced to enforce our remedies.

Our acquisitions of subordinated debt will generally be subordinated to senior debt and will generally be unsecured, which may result in a heightened level of risk and volatility or a loss of principal, which could lead to the loss of the entire investment. These acquisitions may involve additional risks that could adversely affect our returns as compared to our acquisition of senior debt. To the extent interest payments associated with such debt are deferred, such debt may be subject to greater fluctuations in valuations, and such debt could subject us and our shareholders to non-cash income. We will not receive any principal repayments prior to the maturity of most of our subordinated debt, which may be of greater risk than amortizing loans.

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We may acquire debt and minority interests in businesses and, if we do so, we may not be in a position to control such businesses, and their respective management team may make decisions that could decrease the value of our assets.

We anticipate that most of our net assets will be used for acquisitions which will involve controlling equity interests in businesses, but we may acquire only debt and/or minority interests in certain businesses. If we do so, we will be subject to risk that such businesses may make business decisions with which we disagree, and the management of such businesses may take risks or otherwise act in ways that do not serve our best interests. As a result, such businesses may make decisions that could decrease the value of our assets. In addition, we will generally not be in a position to control any business by acquiring its debt securities.

We may also participate in co-investment opportunities with affiliates of the Sub-Manager or with other third parties through partnerships, joint ventures or other entities, thereby acquiring jointly-controlled or non-controlling interests in businesses in conjunction with participation by one or more parties in such opportunity. As participants in such co-investment opportunities, we may have economic or other business interests or objectives that are inconsistent with those of our third-party partners or co-venturers. We may not have a right to participate in the operation, management, direction or control of such businesses, and our ability to redeem or sell all or a portion of our investment may be subject to significant restrictions. Furthermore, such co-investment opportunities may involve risks not present in acquisitions where a third party is not involved, including the possibility that we may incur liabilities as the result of actions taken by the controlling party and that a third-party partner or co-venturer may have financial difficulties and may have different liquidity objectives.

The credit ratings of certain of our assets may not be indicative of the actual credit risk of such rated instruments.

Rating agencies rate certain debt securities based upon their assessment of the likelihood of the receipt of principal and interest payments. Rating agencies do not consider the risks of fluctuations in market value or other factors that may influence the value of debt securities. Therefore, the credit rating assigned to a particular instrument may not fully reflect the true risks of an investment in such instrument. Credit rating agencies may change their methods of evaluating credit risk and determining ratings. These changes may occur quickly and often. While we may give some consideration to ratings, ratings may not be indicative of the actual credit risk of our assets that are in rated instruments. In fact, most debt securities that we intend to acquire will not be rated by any rating agency and, if they were rated, they would most likely be rated as below investment grade quality. Debt securities rated below investment grade quality are generally regarded as having predominantly speculative characteristics and may carry a greater risk with respect to a borrower’s capacity to pay interest and repay principal.

Subordinated liens on collateral securing debt that we may acquire in businesses may be subject to control by senior creditors with first priority liens. If there is a default, the value of the collateral may not be sufficient to repay in full both the first priority creditors and us.

Certain debt that we will acquire in businesses may be secured on a second priority basis by the same collateral securing senior debt of such businesses. The first priority liens on the collateral will secure the business’s obligations under any outstanding senior debt and may secure certain other future debt that may be permitted to be incurred by such business under the agreements governing the debt. In the event of a default, the holders of obligations secured by the first priority liens on the collateral will generally control the liquidation of and be entitled to receive proceeds from any realization of the collateral to repay their obligations in full before us. In addition, the value of the collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. There can be no assurance that the proceeds, if any, from the sale or sales of all of the collateral would be sufficient to satisfy the debt obligations secured by the second priority liens after payment in full of all obligations secured by the first priority liens on the collateral. If such proceeds are not sufficient to repay amounts outstanding under the debt obligations secured by the second priority liens, then we, to the extent not repaid from the proceeds of the sale of the collateral, will only have an unsecured claim against the business’s remaining assets, if any.

We may also acquire unsecured debt in businesses, meaning that such acquisitions will not benefit from any interest in collateral of such businesses. Liens on any such business’s collateral, if any, will secure such business’s obligations under its outstanding secured debt and may secure certain future debt that is permitted to be incurred by such business under its secured debt agreements. The holders of obligations secured by such liens will generally control the liquidation of, and be entitled to receive proceeds from, any realization of such collateral to repay their obligations in full before us. In addition, the value of such collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. There can be no assurance that the proceeds, if any, from sales of such collateral would be sufficient to satisfy our unsecured debt obligations after payment in full of all secured debt obligations. If such proceeds were not sufficient to repay the outstanding secured debt obligations, then our unsecured claims would rank equally with the unpaid portion of such secured creditors’ claims against the business’s remaining assets, if any.

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The rights we may have with respect to the collateral securing the debt we acquire in businesses with senior debt outstanding may also be limited pursuant to the terms of one or more intercreditor agreements that we enter into with the holders of senior debt. Under such an intercreditor agreement, at any time obligations that have the benefit of the first priority liens are outstanding, any of the following actions that may be taken in respect of the collateral will be at the direction of the holders of the obligations secured by the first priority liens: the ability to cause the commencement of enforcement proceedings against the collateral; the ability to control the conduct of such proceedings; the approval of amendments to collateral documents; releases of liens on the collateral; and waivers of past defaults under collateral documents. We may not have the ability to control or direct such actions, even if our rights are adversely affected.

There may be circumstances where the loans we make to businesses could be subordinated to claims of other creditors or we could be subject to lender liability claims.

Although we intend to generally structure certain of our acquisitions as secured debt, if one of our businesses were to go bankrupt, depending on the facts and circumstances, including the extent to which we provided managerial assistance to such company or a representative of us or the Manager and the Sub-Manager sat on the board of directors of such company, a bankruptcy court might re-characterize our debt in a business and subordinate all or a portion of our claim to that of other creditors. In situations where a bankruptcy carries a high degree of political significance, our legal rights may be subordinated to other creditors.

In addition a number of U.S. judicial decisions have upheld judgments obtained by borrowers against lending institutions on the basis of various evolving legal theories, collectively termed “lender liability.” Generally, lender liability is founded on the premise that a lender has violated a duty (whether implied or contractual) of good faith, commercial reasonableness and fair dealing, or a similar duty owed to the borrower or has assumed an excessive degree of control over the borrower resulting in the creation of a fiduciary duty owed to the borrower or its other creditors or members. Because of the nature of our assets in businesses, we may be subject to allegations of lender liability.

Certain of our assets may be adversely affected by laws relating to fraudulent conveyance or voidable preferences.

Certain of our assets could be subject to federal bankruptcy law and state fraudulent transfer laws, which vary from state to state, if the debt obligations relating to such assets were issued with the intent of hindering, delaying or defrauding creditors or, in certain circumstances, if the issuer receives less than reasonably equivalent value or fair consideration in return for issuing such debt obligations. If the debt is used for a buyout of shareholders, this risk is greater than if the debt proceeds are used for day-to-day operations or organic growth. If a court were to find that the issuance of the debt obligations was a fraudulent transfer or conveyance, the court could void or otherwise refuse to recognize the payment obligations under the debt obligations or the collateral supporting such obligations, further subordinate the debt obligations or the liens supporting such obligations to other existing and future indebtedness of the issuer or require us to repay any amounts received by us with respect to the debt obligations or collateral. In the event of a finding that a fraudulent transfer or conveyance occurred, we may not receive any repayment on the debt obligations.

Under certain circumstances, payments to us and distributions by us to our shareholders may be reclaimed if any such payment or distribution is later determined to have been a fraudulent conveyance, preferential payment or similar transaction under applicable bankruptcy and insolvency laws. Furthermore, assets involving restructurings may be adversely affected by statutes relating to, among other things, fraudulent conveyances, voidable preferences, lender liability and the court’s discretionary power to disallow, subordinate or disenfranchise particular claims or re-characterize investments made in the form of debt as equity contributions.

We may acquire various structured financial instruments for purposes of “hedging” or reducing our risks, which may be costly and ineffective and could reduce the cash available to service our debt or for distribution to our shareholders.

We may seek to hedge against interest rate and currency exchange rate fluctuations and credit risk by using structured financial instruments such as futures, options, swaps and forward contracts. Use of structured financial instruments for hedging purposes may present significant risks, including the risk of loss of the amounts invested. Defaults by the other party to a hedging transaction can result in losses in the hedging transaction. Hedging activities also involve the risk of an imperfect correlation between the hedging instrument and the asset being hedged, which could result in losses both on the hedging transaction and on the instrument being hedged. Use of hedging activities may not prevent significant losses and could increase our losses. Further, hedging transactions may reduce cash available to service our debt or pay distributions to our shareholders.

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The downgrade of the U.S. credit rating could negatively impact our business, financial condition and results of operations.

U.S. debt ceiling and budget deficit concerns continue to present the possibility of a credit-rating downgrade, economic slowdowns, or a recession for the United States. The impact of any downgrades to the U.S. government’s sovereign credit rating could adversely affect the U.S. and global financial markets and economic conditions. These developments could cause interest rates and borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable terms. Continued adverse economic conditions could have a material adverse effect on our business, financial condition and results of operations. Further, if key economic indicators, such as the unemployment rate or inflation, progress at a rate consistent with the Federal Reserve’s objectives, the target range for the federal funds rate may increase and cause interest rates and borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable terms.

To the extent that we borrow money, the potential for gain or loss on amounts invested in us will be magnified and may increase the risk of investing in us. Borrowed money may also adversely affect the return on our assets, reduce cash available to service our debt or for distribution to our shareholders, and result in losses.

The use of borrowings, also known as leverage, increases the volatility of investments by magnifying the potential for gain or loss on invested equity capital. If we use leverage to partially finance our acquisitions, through borrowing from banks and other lenders an investor will experience increased risks of investing in our securities. If the value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would if we had not borrowed and employed leverage. Similarly, any decrease in our income would cause net income to decline more sharply than it would have if we had not borrowed and employed leverage. Such a decline could negatively affect our ability to service our debt or make distributions to our shareholders. In addition, our shareholders will bear the burden of any increase in our expenses as a result of our use of leverage, including interest expenses and any increase in the management or incentive fees payable to the Manager and the Sub-Manager. Additionally, to the extent we use borrowings to finance a portion of the acquisition price of assets, we would make such acquisitions through corporate subsidiaries taxed at U.S. federal corporate tax rates, which may increase tax expenses.

The amount of leverage that we employ will depend on the Manager’s and our board of directors’ assessment of market and other factors at the time of any proposed borrowing. There can be no assurance that leveraged financing will be available to us on favorable terms or at all. However, to the extent that we use leverage to finance our assets, our financing costs will be borne solely by our shareholders and will reduce cash available for distributions to our shareholders. Moreover, we may not be able to meet our financing obligations and, to the extent that we cannot, we risk the loss of some or all of our assets to liquidation or sale to satisfy the obligations. In such an event, we may be forced to sell assets at significantly depressed prices due to market conditions or otherwise, which may result in losses.

Uncertainty regarding LIBOR may adversely impact our borrowings.

In July 2017, the U.K. Financial Conduct Authority (“FCA”), which regulates the LIBOR administrator, ICE Benchmark Administration Limited (“IBA”), announced that it would cease to compel banks to participate in setting the LIBOR as a benchmark by the end of 2021. On March 5, 2021, the FCA and the IBA announced that the IBA will cease publication in the current form for 1-week and 2-month U.S. dollar LIBOR rates immediately following the publication on December 31, 2021 and for overnight, 1-month, 3-month, 6-month and 12-month U.S. dollar LIBOR rates immediately following the publication on June 30, 2023. The FCA and U.S. bank regulators welcomed the IBA’s plans to continue publishing certain tenors for U.S. dollar LIBOR through June 30, 2023 because it will allow many legacy U.S. dollar LIBOR contracts that lack effective fallback provisions and are difficult to amend to mature before such LIBOR rates experience disruptions. U.S. bank regulators have, however, encouraged banks to cease entering into new financial contracts that use LIBOR as a reference rate as soon as practicable and in any event by December 31, 2021. Given consumer protection, litigation, and reputation risks, U.S. bank regulators believe entering into new financial contracts that use LIBOR as a reference rate after December 31, 2021 would create safety and soundness risks. In addition, they expect new financial contracts to either utilize a reference rate other than LIBOR or have robust fallback language that includes a clearly defined alternative reference rate after LIBOR’s discontinuation. It is not possible to predict all consequences of the IBA’s plans to cease publishing LIBOR, any related regulatory actions and the expected discontinuance of the use of LIBOR as a reference rate for financial contracts.

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The Alternative Reference Rates Committee (the “ARRC”), a steering committee comprised of large U.S. financial institutions convened by the U.S. Federal Reserve, has recommended the Secured Overnight Financing Rate (“SOFR”) as a more robust reference rate alternative to U.S. dollar LIBOR. SOFR is calculated based on overnight transactions under repurchase agreements, backed by Treasury securities. SOFR is observed and backward looking, which stands in contrast with U.S. dollar LIBOR under the current methodology, which is an estimated forward-looking rate and relies, to some degree, on the expert judgment of submitting panel members. Given that SOFR is a secured rate backed by government securities, it will be a rate that does not take into account bank credit risk (as is the case with LIBOR). SOFR is therefore likely to be lower than U.S. dollar LIBOR and is less likely to correlate with the funding costs of financial institutions. To approximate economic equivalence to U.S. dollar LIBOR, SOFR can be compounded over a relevant term and a spread adjustment may be added. In July 2021, the ARRC also recommended forward-looking term rates based on SOFR published quoted for 1-, 3- and 6-month tenors by CME Group to support the transition away from U.S. dollar LIBOR. Market practices related to SOFR calculation conventions continue to develop and may vary, and inconsistent calculation conventions may develop among financial products. Inconsistent use of replacement rates or calculation conventions among financial products could expose us to additional financial risks and increase the cost of any related hedging transactions.

Our current line of credit (the "2021 Line of Credit") with United Community Bank (d/b/a Seaside Bank & Trust and referred to as “Seaside”) is linked to 1-month U.S. dollar LIBOR but allows for a substitute index in the event LIBOR is unavailable during the term of the 2021 Line of Credit. Our other future financings may be linked to 1-month U.S. dollar LIBOR. We anticipate that the 2021 Line of Credit will be refinanced or amended on or before June 30, 2023 to allow for interest to be calculated using an alternative reference rate. Before June 30, 2023, depending on the currency and tenor, we may need to amend the 2020 Line of Credit or other future financings that utilize U.S. dollar LIBOR as a factor in determining the interest rate based on a new standard that is established, if any. However, these efforts may not be successful in mitigating the legal and financial risk from changing the reference rate in our legacy agreements. In addition, any resulting differences in interest rate standards among our assets and our financing arrangements may result in interest rate mismatches between our assets and the borrowings used to fund such assets. There is no guarantee that a transition from U.S dollar LIBOR to an alternative will not result in financial market disruptions, significant increases in benchmark rates, or borrowing costs to borrowers, any of which could have an adverse effect on our business, results of operations, financial condition, and the market price of our common stock.

Future litigation or administrative proceedings could have a material adverse effect on our business, financial condition and results of operations.

We may become involved in legal proceedings, administrative proceedings, claims and other litigation that arise in the ordinary course of business. In defending ourselves in these proceedings, we may incur significant expenses in legal fees and other related expenses, regardless of the outcome of such proceedings. Unfavorable outcomes or developments relating to these proceedings, such as judgments for monetary damages, injunctions or denial or revocation of permits, could have a material adverse effect on our business, financial condition and results of operations. In addition, settlement of claims could adversely affect our financial condition and results of operations.

We could be negatively impacted by cybersecurity attacks.

We, and our businesses, as well as the Manager and the Sub-Manager, may use a variety of information technology systems in the ordinary course of business, which are potentially vulnerable to unauthorized access, computer viruses and cyber attacks, including cyber attacks to our information technology infrastructure and attempts by others to gain access to our propriety or sensitive information, and ranging from individual attempts to advanced persistent threats. The risk of such a security breach or disruption has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. The procedures and controls we use to monitor these threats and mitigate our exposure may not be sufficient to prevent cyber security incidents. The results of these incidents could include disrupted operations, misstated or unreliable financial data, theft of trade secrets or other intellectual property, liability for disclosure of confidential customer, supplier or employee information, increased costs arising from the implementation of additional security protective measures, regulatory enforcement litigation and reputational damage, which could materially adversely affect our financial condition, business and results of operations. These risks require continuous and likely increasing attention and other resources from us to, among other actions, identify and quantify these risks, upgrade and expand our technologies, systems and processes to adequately address them and provide periodic training for the Manager’s employees to assist them in detecting phishing, malware and other schemes. Such attention diverts time and other resources from other activities and there is no assurance that our efforts will be effective. Potential sources for disruption, damage or failure of our information technology systems include, without limitation, computer viruses, security breaches, human error, cyber-attacks, natural disasters and defects in design. Additionally, due to the size and nature of our company, we rely on third-party service providers for many aspects of our business. We can provide no assurance that the networks and systems that our third-party vendors have established or use will be effective.

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We, and our businesses, are subject to a variety of federal, state and international laws and other obligations regarding data protection.

We, and our businesses, are subject to a variety of federal, state and international laws and other obligations regarding data protection. Several jurisdictions have passed laws in this area, and other jurisdictions are considering imposing additional restrictions. These laws continue to develop and may be inconsistent from jurisdiction to jurisdiction. Complying with emerging and changing domestic and international requirements may cause us or our businesses to incur substantial costs or require us or one of our businesses to change its business practices. Any failure by us or one of our businesses to comply with its own privacy policy, applicable association rules, or with other federal, state or international privacy-related or data protection laws and regulations could result in proceedings against us or one of our businesses by governmental entities or others. Additionally, given the data collection and distribution focus of our Auriemma U.S. Roundtables’ (“Roundtables”) business, any failure could have a material impact on the use of its services by its customers.

We may acquire interests in joint ventures, which creates additional risk because, among other things, we cannot exercise sole decision making power and our partners may have different economic interests than we have.

We may acquire interests in joint ventures with third parties. There are additional risks involved in joint venture transactions. As a co-investor in a joint venture, we may not be in a position to exercise sole decision-making authority relating to the joint venture or other entity. As a result, the operations of the joint venture may be subject to the risk that third parties may make business, financial or management decisions with which we do not agree or the management of the joint venture may take risks or otherwise act in a manner that does not serve our interests. Further, there may be a potential risk of impasse in some business decisions because we may not be in a position to exercise sole decision-making authority. In such situations, it is possible that we may not be able to exit the relationship because we may not have the funds necessary to complete a buy-out of the other partner or it may be difficult to locate a third-party purchaser for our interest. Because we may not have the ability to exercise control over such operations, we may not be able to realize some or all of the benefits that we believe will be created from our involvement. In addition, there is the potential of our joint venture partner becoming bankrupt and the possibility of diverging or inconsistent economic or business interests of us and our partner. These diverging interests could result in, among other things, exposing us to liabilities of the joint venture in excess of our proportionate share of these liabilities. If any of the foregoing were to occur, our business, financial condition and results of operations could suffer as a result.

A significant portion of our assets are recorded at fair value as determined in good faith by our board of directors, with assistance from the Manager and the Sub-Manager and, as a result, there will be uncertainty as to the value of our assets.

Our financial statements are prepared using the specialized accounting principles of Accounting Standards Codification Topic 946, Financial Services-Investment Companies, or ASC Topic 946, which requires us to carry our assets at fair value or, if fair value is not determinable based on transactions observable in the market, at fair value as determined by our board of directors. For most of our assets, market prices are not readily available. As a result, we value these assets monthly at fair value as determined in good faith by our board of directors based on input from the Manager, the Sub-Manager and the independent valuation firm.

Our board of directors is ultimately responsible for the determination, in good faith, of the fair value of our assets. The determination of fair value is subjective, and the Manager and the Sub-Manager have a conflict of interest in assisting our board of directors in making this determination. Our board of directors, including a majority of our independent directors and our audit committee, has adopted a valuation policy that provides for the methodologies to be used to estimate the fair value of our assets for purposes of our net asset value calculation. Our board of directors makes this determination on a monthly basis and any other time when a decision is required regarding the fair value of our assets. Our board of directors has retained an independent valuation firm to assist the Manager and the Sub-Manager in preparing their recommendations with respect to our board of directors’ determination of the fair values of assets for which market prices are not readily available. The types of factors that may be considered in determining the fair values of our assets include available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the business’s ability to make payments, its earnings and discounted cash flows, the markets in which the company does business, comparisons of financial ratios of peer business entities that are public, mergers and acquisitions comparables, the principal market and enterprise values, among other factors. Because such valuations, and particularly valuations of private companies, are inherently uncertain, the valuations may fluctuate significantly over short periods of time due to changes in current market conditions. The determinations of fair value by our board of directors may differ materially from the values that would have been used if an active market and market prices existed for these assets. Our net asset value could be adversely affected if the determinations regarding the fair value of our assets were materially higher than the values that we ultimately realize upon the disposal of such assets.

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We may experience fluctuations in our quarterly results.

We could experience fluctuations in our quarterly operating results due to a number of factors, including, but not limited to, our ability to consummate transactions, the terms of any transactions that we complete, variations in the earnings and/or distributions paid by the businesses we make capital contributions and loans to, variations in the interest rates on loans we make, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions. As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods.

We may experience fluctuations in our operating expenses.

We could experience fluctuations in our operating expenses due to a number of factors, including, but not limited to, changes in inflation and the flow on effects on prices generally, the terms of any transactions that we complete, changes in operating conditions, changes to our operating environment, changes in the perception of risk associated with operating these assets. As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods.

We will be exposed to risks associated with changes in interest rates.

To the extent we borrow to finance our assets, we will be subject to financial market risks, including changes in interest rates. As of this Annual Report, interest rates in the U.S. remain near historic lows, which may increase our exposure to risks associated with rising interest rates. An anticipated increase in interest rates, however, would make it more expensive to use debt for our financing needs.

When we borrow, our net income will depend, in part, upon the difference between the rate at which we borrow funds and the rate at which we employ those funds. As a result, we can offer no assurance that a significant change in market interest rates will not have a material adverse effect on our net income. In periods of rising interest rates when we have floating-rate debt outstanding, our cost of funds may increase, which could reduce our net income. We expect that our long-term fixed-rate investments will be financed primarily with equity and long-term debt. We may use interest rate risk management techniques in an effort to limit our exposure to interest rate fluctuations. These techniques may include borrowing at fixed rates or various interest rate hedging activities. These activities may limit our ability to participate in the benefits of lower interest rates with respect to the hedged portfolio. Adverse developments resulting from changes in interest rates or hedging transactions could have a material adverse effect on our business, financial condition and results of operations.

Risks Related to Tax

Shareholders may realize taxable income without cash distributions, and may have to use funds from other sources to fund tax liabilities.

Because we intend to continue to be taxed as a partnership for U.S. federal income tax purposes, shareholders may realize taxable income in excess of cash distributions by us. There can be no assurance that we will pay distributions at a specific rate or at all. As a result, shareholders may have to use funds from other sources to pay their tax liability.

In addition, the payment of the distribution and shareholder servicing fees over time with respect to the Class T and Class D shares will be paid from cash distributions that would otherwise be distributable to the shareholders of Class T and Class D shares. Accordingly, the Class T and Class D shareholders will receive a lower cash distribution than the Class FA, Class A, Class I and Class S shareholders as a result of economically bearing our obligation to pay such fees. Additionally, since the management and incentive fees for the Non-founder shares are higher than the management and incentive fees for the Class FA shares, the non-founder shareholders will receive a lower cash distribution than the Class FA shareholders as a result of economically bearing a greater proportionate share of our obligation to pay such fees. The payment of such fees will be specially allocated to the class of shares that are bearing these fees. Some shareholders will not be able to deduct these fees for tax purposes, which may result in shareholders’ taxable income from the Company exceeding the amount of cash distributions made to such shareholders.

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If we were to become taxable as a corporation for U.S. federal income tax purposes, we would be required to pay income tax at corporate rates on our net income and would reduce the amount of cash available for distributions to our shareholders. Such distributions, if any, by us to shareholders would constitute dividend income taxable to such shareholders, to the extent of our earnings and profits.

Under Section 7704 of the Code, unless certain exceptions apply, a publicly traded partnership is generally treated and taxed as a corporation, and not as a partnership, for U.S. federal income tax purposes. A partnership is a publicly traded partnership if (i) interests in the partnership are traded on an established securities market or (ii) interests in the partnership are readily tradable on a secondary market or the substantial equivalent thereof. Applicable Treasury regulations (the “Section 7704 Regulations”) provide guidance with respect to such classification standards, and create certain safe harbor standards which, if satisfied, generally preclude classification as a publicly traded partnership. Failure to satisfy a safe harbor provision under the Section 7704 Regulations will not cause an entity to be treated as a publicly traded partnership if, taking into account all facts and circumstances, the partners are not readily able to buy, sell or exchange their interests in a manner that is comparable, economically, to trading on an established securities market.

While it is expected that we will operate so that we 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, given the highly complex nature of the rules governing partnerships, the ongoing importance of factual determinations, the lack of direct guidance with respect to the application of tax laws to the activities we are undertaking and the possibility of future changes in our circumstances, it is possible that we will not qualify to be taxable as a partnership for any particular year. Our shares will not be listed on an exchange or quoted through a national quotation system for the foreseeable future, if ever. Our LLC Agreement provides for certain restrictions on transferability and on our ability to repurchase shares intended to ensure that we qualify as a partnership for U.S. federal income tax purposes and that we are not taxable as a publicly traded partnership. Under our LLC Agreement, prior to a listing of our shares on a national securities exchange, no transfer (including any share repurchase) of an interest may be made if it would result in our being treated as a publicly traded partnership. In addition, we may, without the consent of any shareholder, amend our LLC Agreement in order to improve, upon advice of counsel, our position in avoiding such publicly traded partnership status (and we may impose time-delay and other restrictions on recognizing transfers (including any share repurchases) as necessary to do so).

If we were treated as a publicly traded partnership for U.S. federal income tax purposes, we would nonetheless remain taxable as a partnership if 90% or more of our income for each taxable year in which we were a publicly traded partnership consisted of “qualifying income” and we were not required to register under the Investment Company Act (the “qualifying income exception”). Qualifying income generally includes 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. Although there is no direct authority regarding whether activities similar to those conducted by us could be treated as a financial business for this purpose, the Internal Revenue Service, or the IRS, has issued private letter rulings to the effect that interest income on loans not made to customers in connection with a banking or other financing business is qualifying income for purposes of the publicly traded partnership rules. These private letter rulings are binding on the IRS only with respect to the particular taxpayers who requested and received those rulings and address only the specific facts presented by the requesting taxpayer; however, such authority nonetheless provides valuable indications of the IRS’s views on specific issues. In addition, to the extent that we invest in levered loans through “controlled foreign corporations” (each, a “CFC”), we intend to currently distribute any Subpart F inclusions and treat such Subpart F inclusions as qualifying income for purposes of the qualifying income exception. Since our gross income will largely consist of dividend and interest income from our subsidiaries and other portfolio companies, we expect to satisfy the qualifying income exception. However, no assurance can be given that the actual results of our operations for any taxable year will satisfy the qualifying income exception.

If, for any reason, we become taxable as a corporation for U.S. federal income tax purposes, our items of income and deduction would not pass through to our shareholders and our shareholders would be treated for U.S. federal income tax purposes as shareholders in a corporation. We would be required to pay income tax at corporate rates on our net income. Distributions by us to shareholders would constitute dividend income taxable to such shareholders, to the extent of our earnings and profits, and the payment of these distributions would not be deductible by us. Our failure to qualify as a partnership for U.S. federal income tax purposes could have a material adverse effect on us, our shareholders and the value of the shares.

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The IRS could adjust or reallocate items of income, gain, deduction, loss and credit with respect to the shares if the IRS does not accept the assumptions or conventions utilized by us.

Although we are not a publicly traded partnership, given the large number of investors we anticipate will invest in us, we expect to apply conventions relevant to publicly traded partnerships. U.S. federal income tax rules applicable to partnerships are complex and their application is not always clear. We apply certain assumptions and conventions intended to comply with the intent of the rules and report income, gain, deduction, loss and credit to shareholders in a manner that reflects each shareholder’s economic gains and losses, but these assumptions and conventions may not comply with all aspects of the applicable rules. It is possible therefore that the IRS will successfully assert that these assumptions or conventions do not satisfy the technical requirements of the Code or the Treasury regulations promulgated thereunder and will require that items of income, gain, deduction, loss and credit be adjusted or reallocated in a manner that could be adverse to shareholders.

Changes in tax laws and regulations may have a materially adverse effect on our business, financial condition and result of operations and have a negative impact on our shareholders.

The present U.S. federal income tax treatment of an investment in our shares may be modified by administrative, legislative or judicial interpretation at any time, and any such action may affect investments and commitments previously made. No assurance can be given as to whether, when, or in what form, the U.S. federal and state income tax laws applicable to us and our shareholders may be enacted. Prospective investors should consult their tax advisors regarding the potential changes in tax laws.

Interest deductions on loans made to our subsidiaries and other portfolio companies may be limited, which could result in adverse tax consequences.

Our debt investments in our subsidiaries and other portfolio companies are intended to be treated as indebtedness for U.S. federal income tax purposes. If the IRS successfully recharacterized any of such debt investments as equity for U.S. federal income tax purposes, payments of interest with respect to such debt investment may be recharacterized as a dividend and would not be deductible by our subsidiary in computing its taxable income, resulting in the subsidiary potentially being subject to additional U.S. federal income tax.  Even to the extent the debt investments are respected as indebtedness for U.S. federal income tax purposes, the deduction for interest payments by each of our subsidiaries with respect to such debt investments for any taxable year is generally limited to the sum of (i) such subsidiary's business interest income and (ii) 30% of the subsidiary's "adjusted taxable income", unless the subsidiary is an electing real property trade or business. To the extent interest deductions by our subsidiaries are limited, it could increase the U.S. federal income tax liability of our subsidiaries, reducing the amount of cash available for distribution to us, and, as a result, to our shareholders.

Item 1B.     Unresolved Staff Comments

None.

Item 2.         Properties

We do not own any real estate or other physical properties materially important to our operation. We believe that the office facilities of the Manager and Sub-Manager are suitable and adequate for our business as it is contemplated to be conducted.

Item 3.         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 December 31, 2021, 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 4.         Mine Safety Disclosures

Not applicable.

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PART II

Item 5.     Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

Market Information

There is no established public trading market for our common shares, therefore, there is a risk that a shareholder may not be able to sell our shares at a time or price acceptable to the shareholder, or at all. Unless and until our shares are listed on a national securities exchange, it is not expected that a public market for the shares will develop.

Since March 2018 and through December 31, 2021, we sold shares on a continuous basis at the following prices through the Initial Public Offering and Public Offering:

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

(1)    Subscriptions are held in escrow until accepted by us.

Unregistered Sales of Equity Securities

None.

Repurchase of Shares and Issuer Purchases of Equity Securities

In March 2019, our board of directors approved and adopted a share repurchase program, as further amended in January 2020 and June 2021 (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 will be 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). Unless our board of directors determines otherwise, we will limit the number of shares to be repurchased during any calendar quarter to the number of shares we can repurchase with the proceeds received from the sale of shares under our distribution reinvestment plan in the previous quarter. Notwithstanding the foregoing, at the sole discretion of our board of 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 or suspend the 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.

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During the quarter ended December 31, 2021, we repurchased the following shares:

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	—

Holders

As of December 31, 2021, we had the following number of record holders of our common shares:

Share Class	Number of Shareholders
FA	757
A	973
T	759
D	476
I	1,876
S	716

Distribution Reinvestment Plan

We have adopted a distribution reinvestment plan pursuant to which shareholders who purchase shares in the Public Offering 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.

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.

Performance Graph

Not applicable.

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Use of Proceeds

We are currently offering and selling shares under the Public Offering pursuant to the Registration Statement, which became effective on November 1, 2021. As permitted under applicable securities laws, we continued to offer our common shares in the Initial Public Offering until November 1, 2021, upon which the Initial Registration Statement was deemed terminated. We intend to offer our common shares in the Public Offering until November 2023, unless extended by our board of directors.

Through CNL Securities Corp., the Managing Dealer for the Public Offering, we are offering to the public on a best efforts basis up to $1.0 billion shares consisting of Class A shares, Class T shares, Class D shares and Class I shares. We are also offering up to $100.0 million shares to be issued pursuant to our distribution reinvestment plan.

The following table presents the net offering proceeds received from the Public Offerings through December 31, 2021:

	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

FOOTNOTES:

(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.

Item 6.     [Reserved]

Item 7.         Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information contained in this section should be read in conjunction with our financial statements and related notes thereto appearing elsewhere in this annual report on Form 10-K (this “Annual Report”). In this Annual Report “we,” “our,” “us,” and “our company” refer to CNL Strategic Capital, LLC. Capitalized terms used in this Item 7. have the same meaning as in Item 1. “Business” unless otherwise defined herein. The discussion of our financial condition and results of operations for the year ended December 31, 2019 included in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2020 as filed on March 30, 2021 is incorporated by reference herein.

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Overview

Since we commenced operations on February 7, 2018, we have acquired equity and debt investments in middle market U.S. businesses with annual revenues primarily between $15 million and $250 million. Our businesses have a track record of stable and predictable operating performance, are highly cash flow generative and have management teams who have a meaningful ownership stake in their respective company. As of December 31, 2021, we had seven investments structured as controlling equity interests in combination with debt positions and three investments structured as minority equity interests in combination with debt positions. All of our debt investments were current as of December 31, 2021. See “Factors Impacting Our Operating Results” below for additional discussion of the impact of the COVID-19 pandemic.

See Item 1. Business for additional information regarding our Manager, Sub-Manager and business objectives.

Our Common Shares Offerings

Public Offerings

On March 7, 2018, we 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 our distribution reinvestment plan, pursuant to the Initial Registration Statement. On November 1, 2021, we commenced the Public Offering of up to $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.

We received net proceeds from the Initial Public Offering of approximately $259.5 million, including approximately $6.2 million received through our distribution reinvestment plan. We incurred selling commissions and dealer manager fees of approximately $5.2 million from the sale of Class A shares and Class T shares sold in the Initial Public Offering. The Class D shares and Class I shares sold through the Initial Public Offering were not subject to selling commissions and dealer manager fees. We also incurred obligations to reimburse the Manager and Sub-Manager for organization and offering costs of approximately $3.9 million based on actual amounts raised through the Initial Public Offering.

Through the Public Offering, we are offering, in any combination, four classes of shares: Class A shares, Class T shares, Class D shares and Class I shares (collectively, “Non-founder shares”). There are differing selling fees and commissions for each class. We also pay distribution and shareholder servicing fees, subject to certain limits, on the Class T and Class D shares sold in the Public Offerings (excluding sales pursuant to our distribution reinvestment plan).

From commencement of the Public Offering to December 31, 2021, we have received net proceeds of approximately $21.4 million, including $1.0 million received through our distribution reinvestment plan. We have incurred selling commissions and dealer manager fees of approximately $0.1 million from the sale of Class A shares and Class T shares sold in the Public Offering. The Class D shares and Class I shares sold through the Public Offering are not subject to selling commissions and dealer manager fees. We have also incurred obligations to reimburse the Manager and Sub-Manager for organization and offering costs of approximately $0.3 million based on actual amounts raised through the Public Offering.

Organization and offering costs related to the Public Offerings had been previously advanced by the Manager and Sub-Manager, as described further in Note 5. “Related Party Transactions” of Item 8. “Financial Statements and Supplementary Data.”

As of December 31, 2021, the public offering price was $33.83 per Class A share, $32.20 per Class T share, $30.34 per Class D share and $31.34 per Class I share.

In January, February and March 2022, our board of directors approved new per share public offering prices for each share class in the Public Offering. The new public offering prices are effective as of January 28, 2022, February 25, 2022 and March 24, 2022, respectively. 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 Public Offering:

	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		—		—

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	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		—		—

See Note 7. “Capital Transactions” and Note 13. “Subsequent Events” in Item 8. “Financial Statements and Supplementary Data” for additional information regarding the Public Offerings.

Private Offerings

See Item 1. “Business” and our Form 10-K for the year ended December 31, 2020 for information related to our Class FA and Class S Private Offerings.

Portfolio and Investment Activity

As of December 31, 2021, we had invested in ten portfolio companies, consisting of equity investments and debt investments in each portfolio company. The table below presents our investments by portfolio company (in millions):

		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

FOOTNOTES:

(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.

We made an additional equity investment in ATA of $1.1 million in February 2022.

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Our Portfolio Companies

Lawn Doctor, Inc. (“Lawn Doctor”) is a leading franchisor of residential lawn care programs 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. In May 2018, Lawn Doctor acquired a majority equity interest in Mosquito Hunters, a franchisor of mosquito and pest control services. Mosquito Hunters was founded in 2013, is based in Northbrook, Illinois and specializes in the eradication of mosquitos through regular spraying applications and follow-up maintenance. In May 2019, Lawn Doctor acquired a majority equity interest in Ecomaids, a franchisor of residential cleaning services. Ecomaids was founded in 2012. Ecomaids specializes in home cleaning services utilizing environmentally-friendly cleaning products and solutions. These acquisitions further Lawn Doctor’s strategy of both growing organically and also via acquisition of additional home service brands.

Polyform Products Company, Inc. (“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 and e-tailers.

Auriemma Consulting Group, Inc. (“Roundtables”) is an information services and advisory solutions business to the consumer finance industry. Prior to this transaction, Roundtables operated as a division of Auriemma Consulting Group, Inc. Roundtables offers membership in any of 30+ topic-specific roundtables across five verticals (credit cards, auto finance, banking, wealth management and other lending) that includes participation in hosted executive meetings, proprietary benchmarking studies, and custom surveys. The subscription-based model provides executives with key operational data to optimize business practices and address current issues within the consumer finance industry. In April 2021, Roundtables acquired Edgar Dunn’s U.S. roundtables business, which added 6 roundtables to Auriemma’s services offering. This acquisition furthers Roundtables’ strategy of both growing organically and through mergers and acquisitions (“M&A”).

Milton Industries, Inc. (“Milton”) is a leading provider of highly-engineered tools and accessories for pneumatic applications across a variety of end markets including vehicle service; industrial maintenance, repair and operating supplies; aerospace and defense; and agriculture. The company has more than 1,300 active customers and over 1,600 SKUs with products including couplers, gauges, chucks, blow guns, filters, regulators and lubricators. Milton’s high-quality products, engineering expertise and partnership approach creates long-term relationships, with an average tenure of over 30 years among its top ten customers. Milton completed four add-on acquisitions during 2021 and 2020, including GH Meiser & Co., Milton’s Bells, Zeeline, and Global-Flex. We believe these add-on acquisitions bolster Milton’s tire gauge, grease and fluid handling, hose assemblies, rubber expansion and metal expansion joints, “PTFE” products and pump connectors product lines. These acquisitions further Milton’s strategy of both growing organically and through M&A.

Resolution Economics, LLC (“Resolution Economics”) is a leading specialty consulting firm that provides services to law firms and corporations in labor and employment and commercial litigation matters.

Blue Ridge ESOP Associates (“Blue Ridge”) is an independent, third-party employee stock ownership plans (“ESOP”) and 401(k) administrator. For over 30 years, Blue Ridge has developed proprietary and comprehensive solutions to address the unique and complex administrative needs of companies operating as ESOPs and managing 401(k) plans. Blue Ridge's services and solutions include recordkeeping, compliance, reporting, distribution and processing, administrative services and plan management and analysis software. In July 2020, Blue Ridge acquired Benefit Concepts Systems, Inc., a full service benefit consulting firm with expertise in the design, implementation, and administration of ESOPs. In April 2021, Blue Ridge acquired Coastal Pension Services, a leading provider of outsourced 401(k) administration services in the greater Washington, D.C. area. In December 2021, Blue Ridge acquired a California based provider of outsourced 401(k), defined benefit and cash balance plan administration services. These acquisitions further Blue Ridge’s strategy of both growing organically and through M&A.

UltiMed, Inc. (“HSH”) is a leading producer of daily use insulin pen needles, syringes and complementary offerings for the human and animal diabetes care markets. HSH specializes in providing “dispense and dispose” sharps solutions, which allow users to more easily and safely dispose of sharps.

ATA National Title Group, LLC (“ATA”) is a leading national independent title agency and settlement service provider for the residential resale, residential refinance, commercial and default markets in the Great Lakes Region. Its brands include ATA National Title Group, Greco Title Agency, Midstate Title Agency, Seaver Title Agency and Talon Title Agency. In February 2022, ATA acquired Absolute Title, Inc. This acquisition furthers ATA’s strategy of both growing organically and through M&A.

Douglas Machines Corp. (“Douglas”) is a leading manufacturer of innovative and customizable commercial cleaning and sanitizing equipment to the food, pet food, nutraceutical and industrial end-markets in the United States. Many of these end-markets, and in particular, food safety, are subject to increasingly stringent regulations, further accelerated by the COVID-19 pandemic.

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Clarion Safety Systems, LLC (“Clarion”) is a provider of standards-based visual safety labels and signs that support original equipment manufacturers, facility owners, and employers in reducing risk and protecting workers. Clarion serves thousands of customers across the world in a large and diverse set of industries. Customers rely on Clarion’s expertise to help them navigate applicable regulatory and safety standards related to risk communication, resulting in the implementation of tailored systems of risk reduction.

Non-GAAP Financial Measures

This Annual Report contains financial measures utilized by management to evaluate the operating performance and liquidity of our portfolio companies that are not calculated in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Each of these measures, Adjusted EBITDA and Adjusted Free Cash Flow (“FCF”), should not be considered in isolation from or as superior to or as a substitute for net income (loss), income (loss) from operations, net cash provided by (used in) operating activities, or other financial measures determined in accordance with GAAP. We use these non-GAAP financial measures to supplement our GAAP results in order to provide a more complete understanding of the factors and trends affecting our portfolio companies.

You are encouraged to evaluate the adjustments to Adjusted EBITDA and Adjusted FCF, including the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA and Adjusted FCF, 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 presentations of Adjusted EBITDA and Adjusted FCF 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 definitions of Adjusted EBITDA and Adjusted Free Cash Flow may not be comparable to similar measures disclosures by other companies, because not all companies calculate these non-GAAP measures in the same manner. Because of these limitations and additional limitations described below, Adjusted EBITDA and Adjusted FCF 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 and Adjusted FCF only as supplemental measures.

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 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 and Sub-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 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 interest expense, or the cash requirements necessary to service interest or principal payments, on indebtedness; (iv) although depreciation and amortization are non-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 operations of our portfolio companies; and (vi) other companies in similar industries as our portfolio companies may calculate Adjusted EBITDA differently, limiting its usefulness as a comparative measure.

The tables below reconcile our proportionate share of Adjusted EBITDA of our portfolio companies from net income (loss) of

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such portfolio companies for the years ended December 31, 2021 and 2020 (in thousands):

	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

 

FOOTNOTES:

(1)Excludes amounts attributable to non-controlling interests.

(2)Results for ATA are for the period from April 1, 2021 (the date we acquired our investments in ATA) to December 31, 2021.

(3)Results for Douglas are for the period from October 7, 2021 (the date we acquired our investments in Douglas) to December 31, 2021.

(4)Results for Clarion are for the period from December 9, 2021 (the date we acquired our investments in Clarion) to December 31, 2021.

(5)Includes results for our co-investments in which we own a minority equity interest (Milton, Resolution Economics and Blue Ridge) for the period presented unless otherwise noted. December 31, 2021 and 2020 results for Resolution Economics are for the period from December 1, 2020 to November 30, 2021 and from January 2, 2020 (the date we acquired our investments in Resolution Economics) to November 30, 2020 (reported on a one-month lag basis), respectively. December 31, 2020 results for Blue Ridge are for the period from March 24, 2020 (the date we acquired our investments in Blue Ridge) to December 31, 2020.

(6)Transaction related expenses are non-recurring.

(7)Represents our ownership percentage as of the end of the period, rounded to the nearest percent.

(8)As of December 31, 2021 and 2020, we owned approximately 13% of Milton and 8% of Resolution Economics. As of December 31, 2021 and 2020, we owned approximately 16% and 17%, respectively, of Blue Ridge.

(9)Results for HSH are for the period from July 16, 2020 (the date we acquired our investments in HSH) to December 31, 2020.

Adjusted Free Cash Flow

We monitor Adjusted FCF to measure the liquidity of our portfolio companies. We present Adjusted FCF as a supplemental measure of the performance of our portfolio companies since such measure reflects the cash generated by the operating activities of our portfolio companies and to the extent such cash is not distributed to us, it generally represents cash used by the portfolio companies for the repayment of debt, investing in expansions or acquisitions, reserve requirements or other corporate uses by such portfolio companies, and such uses reduce our potential need to make capital contributions to the portfolio companies for our proportionate share of cash needed for such items. We use Adjusted FCF as a key factor in our planning for, and consideration of, acquisitions, the payment of distributions and share repurchases.

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We define Adjusted FCF as cash from operating activities less capital expenditures, net of proceeds from the sale of property and equipment, of our portfolio companies, as further adjusted for certain non-recurring items. These further adjustments are itemized below. Our proportionate share of Adjusted FCF is calculated based on our equity ownership percentage at period end. Adjusted FCF does not represent cash available to our business except to the extent it is distributed to us, and to the extent actually distributed to us, we may not have control in determining the timing and amount of distributions from our portfolio companies, and therefore, we may not receive such cash.

Adjusted FCF has limitations as an analytical tool. Some of these limitations are: (i) Adjusted FCF does not account for future contractual commitments; (ii) Adjusted FCF excludes required debt service payments; (iii) Adjusted FCF does not reflect the impact of certain cash charges resulting from matters we do not consider to be indicative of the on-going operations of our portfolio companies; and (iv) other companies in similar industries as our portfolio companies may calculate Adjusted FCF differently, limiting its usefulness as a comparative measure. This non-GAAP measure should not be considered in isolation, as a measure of residual cash flow available for discretionary purposes or as an alternative to operating cash flows presented in accordance with GAAP.

The tables below reconcile our proportionate share of Adjusted FCF of our portfolio companies from cash provided by (used in) operating activities of such portfolio companies for the years ended December 31, 2021 and 2020 (in thousands):

	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

 FOOTNOTES:

(1)Results for ATA are for the period from April 1, 2021 (the date we acquired our investments in ATA) to December 31, 2021.

(2)Results for Douglas are for the period from October 7, 2021 (the date we acquired our investments in Douglas) to December 31, 2021.

(3)Results for Clarion are for the period from December 9, 2021 (the date we acquired our investments in Clarion) to December 31, 2021.

(4)Includes results for our co-investments in which we own a minority equity interest (Milton, Resolution Economics and Blue Ridge) for the periods presented unless otherwise noted. December 31, 2021 and 2020 data for Resolution Economics is for the period from December 1, 2020 to November 30, 2021 and from January 2, 2020 (the date the Company acquired its investments in Resolution Economics) to November 30, 2020 (reported on a one-month lag basis), respectively. December 31, 2020 data for Blue Ridge is for the period from March 24, 2020 (the date the Company acquired its investments in Blue Ridge) to December 31, 2020. Our ownership percentage represents the average ownership percentage of our co-investments.

(5)Capital expenditures relate to the purchase of property, plant and equipment.

(6)Represents our ownership percentage as of the end of the period, rounded to the nearest percent.

(7)As of December 31, 2021 and 2020, we owned approximately 13% of Milton and 8% of Resolution Economics. As of December 31, 2021 and 2020, we owned approximately 16% and 17%, respectively, of Blue Ridge.

(8)Results for HSH are for the period from July 16, 2020 (the date we acquired our investments in HSH) to December 31, 2020.

Our aggregate proportionate share of Adjusted FCF was approximately $11.7 million and $8.9 million for the years ended December 31, 2021 and 2020, respectively. As discussed above, cash not distributed to us is used by our portfolio companies for various reasons, including, but not limited to, repayment of debt, investing in acquisitions and general cash reserves.

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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 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 our management fees and corporate overhead expenses; and

•second, to fund business operations and to make distributions to our shareholders.

COVID-19

The Company and the operations of its portfolio companies have not been materially adversely affected as a result of the COVID-19 pandemic. Certain business operations have been modified to operate in the current environment. For example, some of our portfolio companies have reduced travel and increased use of videoconferencing instead of in person meetings. We continue to monitor federal, state and local government initiatives to manage the spread of COVID-19 and its variants as well as the efficacy of the vaccines or other remedies. As of December 31, 2021, all of our portfolio companies’ manufacturing facilities were open and safety procedures have been implemented across our portfolio companies; however, there is a continued risk of temporary business interruptions resulting from employees contracting COVID-19 or from the reinstitution of business closures or work and travel restrictions. See Item 1A. “Risk Factors” for additional information regarding the risks of COVID-19.

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 the Sub-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 COVID-19 pandemic, which could materially and adversely impact the broader financial and credit markets and reduce the availability 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 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.

Liquidity and Capital Resources

General

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, make additional investments in our portfolio companies, make distributions to our shareholders and fund our operations. Our primary sources of cash will generally consist of:

•the net proceeds from the Offerings;

•distributions and interest earned from our assets; and

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

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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 light of the current COVID-19 pandemic and its impact 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 December 31, 2021 and 2020, we had approximately $58.7 million and $82.7 million, respectively, of cash. Information related to the year ended December 31, 2019 is included in our Form 10-K filed with the SEC on March 30, 2021.

Sources of Liquidity and Capital Resources

Offerings. We received approximately $163.0 million and $122.1 million in net proceeds during the years ended December 31, 2021 and 2020, respectively, from our Offerings, which excludes approximately $4.2 million and $2.1 million raised through our distribution reinvestment plan during the years ended December 31, 2021 and 2020, respectively. As of December 31, 2021, we had approximately 933 million authorized common shares remaining for sale.

Operating Activities. During the years ended December 31, 2021 and 2020, we generated operating cash flows (excluding amounts related to purchases of investments) of approximately $21.3 million and $9.3 million, respectively.

The increase in operating cash flows (excluding amounts related to purchases of investments) during the year ended December 31, 2021, as compared to the year ended December 31, 2020, was primarily attributable to (i) an increase in distributions from portfolio companies of approximately $12.5 million and (ii) an increase in interest income of approximately $7.0 million, offset partially by (iii) an increase in amounts paid to related parties of approximately $5.4 million, (iv) an increase in taxes paid of approximately $1.5 million, and (v) an increase in third-party operating expenses, net of changes in liabilities, of approximately $0.6 million.

Borrowings. We had not borrowed any amounts under our $25.0 million Line of Credit as of December 31, 2021. The purpose of the Line of Credit is for general Company working capital and acquisition financing purposes. See Note 8. “Borrowings” of Item 8. “Financial Statements” for additional information regarding the Line of Credit.

Uses of Liquidity and Capital Resources

Investments. We used approximately $192.8 million and $64.3 million of cash proceeds from our Offerings to purchase investments during the years ended December 31, 2021 and 2020, respectively.

Distributions. We paid distributions to our shareholders of approximately $10.8 million and $7.4 million (which excludes distributions reinvested of approximately $4.2 million and $2.1 million, respectively) during the years ended December 31, 2021 and 2020, respectively. See “Distributions Declared” below for additional information.

Share Repurchases. We received requests for the repurchase of shares in accordance with our Share Repurchase Program of approximately $3.3 million and $9.6 million during the years ended December 31, 2021 and 2020, respectively, of which approximately $4.8 million and $7.9 million was paid during the years ended December 31, 2021 and 2020, respectively.

Reimbursement of Expense Support. We accrued a reimbursement of Expense Support due to the Manager and Sub-Manager of approximately $1.8 million during the year ended December 31, 2021, all of which was paid in January 2022. As of December 31, 2021, there was approximately $3.2 million of Expense Support that may become subject to reimbursement in the future. However, as of December 31, 2021, management believes that reimbursement payments by the Company to the Manager and Sub-Manager for unreimbursed Expense Support are not probable 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. See Note 5. “Related Party Transactions” of Item 8. “Financial Statements and Supplementary Data” for additional information.

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Distributions Declared

The Company’s board of directors declared distributions on a monthly basis (12 record dates) in each of the years ended December 31, 2021 and 2020. Declared distributions are paid monthly in arrears. The following table reflects the total distributions declared during the years ended December 31, 2021 and 2020:

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%

FOOTNOTES:

(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.

Cash distributions declared net of distributions reinvested were funded from the following sources noted below:

	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	%

 FOOTNOTES:

(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.

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. 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 paid to our shareholders of share classes with ongoing distribution and shareholder servicing fees may be lower than distributions on certain other of our classes without such ongoing distribution and shareholder servicing fees that we are required to pay. Additionally, 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. There is no assurance that we will pay distributions in any particular amount, if at all.

See Note 6. “Distributions” in Item 8. “Financial Statements and Supplementary Data” for additional disclosures regarding distributions, including per share amounts declared for each share class and sources of total distributions for the periods presented.

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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.

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.

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. During any calendar quarter, the total amount of aggregate repurchases is limited to the aggregate proceeds from our distribution reinvestment plan during the previous quarter unless our board of directors determines otherwise. At the sole discretion of our board of directors, we may also use other 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.

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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 year ended December 31, 2021, we received requests for the repurchase of approximately $3.3 million of our common shares, which did not exceed amounts raised in our distribution reinvestment plan. During the year ended December 31, 2020, we received requests for the repurchase of approximately $9.6 million of our common shares, which exceeded proceeds received from our distribution reinvestment plan for the applicable period by approximately $7.8 million. Our board of directors approved the use of other sources to satisfy repurchase requests received in excess of proceeds received from the distribution reinvestment plan for the year ended December 31, 2020.

The following table summarizes the shares repurchased during the years ended December 31, 2021 and 2020:

	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

Results of Operations

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

Through December 31, 2021, we had acquired equity and debt investments in ten portfolio companies using the net proceeds from our Offerings. As of December 31, 2021 and 2020, the fair value of our portfolio totaled approximately $456.0 million and $231.2 million, respectively. See “Portfolio and Investment Activity” above for discussion of the general terms and characteristics of our assets and for information regarding our portfolio companies.

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The following table summarizes our operating results for the years ended December 31, 2021 and 2020:

	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

Investment Income

Investment income consisted of the following for the years ended December 31, 2021 and 2020:

	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

The majority of our interest income is generated from our debt investments, all of which had fixed rate interest as of December 31, 2021 and 2020. As of December 31, 2021 and 2020, our weighted average annual yield on our accruing debt investments was 15.3% and 15.4%, respectively, based on amortized cost as defined above in “Portfolio and Investment Activity.” Interest income from our debt investments was approximately $17.2 million and $10.1 million for the years ended December 31, 2021 and 2020, respectively. The increase in interest income during the year ended December 31, 2021, as compared to the year ended December 31, 2020, was primarily attributable to additional debt investments during the year ended December 31, 2021 of approximately $74.5 million. Additionally, we earn a nominal amount of interest income on our cash accounts.

Dividend income 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 increased approximately $10.1 million during the year ended December 31, 2021, as compared to year ended December 31, 2020 primarily due to (i) a recapitalization of one portfolio company, (ii) release of excess cash reserves previously retained by some of our portfolio companies during 2020 due to a focus on maintaining liquidity and financial flexibility given the uncertainty relating to the COVID-19 pandemic, and (iii) distributions from a portfolio company acquired in 2021.

Our total investment income for the year ended December 31, 2021, resulted in cash yields ranging from 0.3% to 16.0% based on our investment cost, as compared to 2.5% to 10.9% for the year ended December 31, 2020.

We do not believe that our interest income, dividend income and total investment income are representative of either our stabilized performance or our future performance. We expect investment income to increase in future periods as we increase our base of assets that we expect to acquire from existing cash, borrowings and an expected increase in capital available for investment using proceeds from our Offerings.

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Operating Expenses

Our operating expenses for the years ended December 31, 2021 and 2020 were as follows:

	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

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

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 incurred total return incentive fees of approximately $7.3 million and $4.2 million during the years ended December 31, 2021 and 2020, respectively. The increase in total return incentive fees during the year ended December 31, 2021, as compared to the year ended December 31, 2020, was primarily attributable to an increase in dividend income of approximately $10.1 million and the net change in unrealized appreciation on investments, net of taxes of approximately $10.3 million.

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 $4.8 million and $2.6 million during the years ended December 31, 2021 and 2020, respectively. The increase in base management fees is primarily attributable to the increase in our average gross assets which were approximately $318.7 million and $189.0 million during the years ended December 31, 2021 and 2020, respectively.

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Organization and Offering Expenses

Organization expenses are expensed on our consolidated statements of operations as incurred. Offering expenses, which consist of amounts incurred for items such as legal, accounting, regulatory and printing work incurred related to the Offerings, are capitalized on our consolidated statements of assets and liabilities as deferred offering expenses and expensed to our 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 the Sub-Manager.

We expensed organization and offering expenses of approximately $2.6 million and $1.1 million during the years ended December 31, 2021 and 2020, respectively. The increase in organization and offering expenses is attributable to the increase in gross offering proceeds received from our Offerings of approximately $165.3 million and $125.3 million during the years ended December 31, 2021 and 2020, respectively.

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 approximately $0.7 million and $0.2 million during the years ended December 31, 2021 and 2020, respectively. The increase in pursuit costs during the year ended December 31, 2021 as compared to the year December 31, 2020, is primarily attributable to an acquisition which progressed to advanced stages of due diligence and negotiation but did not close due to circumstances outside of our control.

Distribution and Shareholder Servicing Fee

The Managing Dealer is eligible to receive a distribution and shareholder servicing fee, subject to certain limits, with respect to our Class T and Class D shares sold in the Public Offerings (excluding Class T shares and Class D shares sold through our distribution reinvestment plan and those received as share distributions) in an amount equal to 1.00% and 0.50%, respectively, of the current net asset value per share.

We incurred distribution and shareholder servicing fees of $0.4 million and $0.2 million during the years ended December 31, 2021 and 2020, respectively. The increase in distribution and shareholder servicing fees during the years ended December 31, 2021 and 2020 as compared to the preceding years is attributable to an increase in Class T and Class D shareholders.

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 $2.2 million and $2.1 million during the years ended December 31, 2021 and 2020, respectively.

Expense Support and Conditional Reimbursement Agreement

We have entered into an Expense Support and Conditional Reimbursement Agreement with the Manager and the Sub-Manager, pursuant to which each of the Manager and the Sub-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 the Sub-Manager under the Management Agreement and the Sub-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 (the “Expense Support”). The Expense Support amount is borne equally by the Manager and the Sub-Manager and is calculated as of the last business day of the calendar year. The Manager and Sub-Manager 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 the Sub-Management Agreement, as applicable to the Manager or the Sub-Manager.

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”), we will use such Excess Operating Funds to pay the Manager and the Sub-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.

54

Expense Support (reimbursement) totaled approximately ($1.8 million) and $3.3 million during the years ended December 31, 2021 and 2020, 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 8. “Financial Statements and Supplementary Data” for details regarding total Expense Support received since inception, Expense Support reimbursement and unreimbursed expense support as of December 31, 2021.

Other Expenses and Changes in Net Assets

Income Tax Expense

We incur income tax expense to the extent we have or expect to have taxable income for the current year related to our Taxable Subsidiaries. During the year ended December 31, 2021, we recorded current income tax expense of approximately $1.6 million, in the consolidated statements of operations, which primarily relates to our controlling equity investment in ATA acquired in April 2021. We did not record current income tax expense during the year ended December 31, 2020.

Additionally, we recorded deferred income tax expense of approximately $1.6 million and $0.3 million during the years ended December 31, 2021 and 2020, respectively, primarily related to unrealized appreciation on investments held by our Taxable Subsidiaries. As of December 31, 2021, two of our equity investments were held in Taxable Subsidiaries, as compared to one equity investment held in Taxable Subsidiaries as of December 31, 2020.

The table below presents a reconciliation of tax expense the Company would be subject to if it were taxed as a corporation to the Company’s actual income tax expense incurred by its Taxable Subsidiaries for the years ended December 31, 2021 and 2020:

	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	%

The increase in the effective tax rate during the year ended December 31, 2021, is primarily driven by the addition of taxable income related to our equity investment in ATA and an increase in unrealized appreciation on our equity investments held in Taxable Subsidiaries of approximately $8.7 million.

Net Change in Unrealized Appreciation on Investments

Unrealized appreciation is based on the current fair value of 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 comparable companies as determined by our independent valuation firm.

During the years ended December 31, 2021 and 2020, we recognized a net change in unrealized appreciation of approximately $34.5 million and $22.8 million, respectively, primarily due to EBITDA growth in a substantial portion of our portfolio companies. EBITDA growth is partially attributable to accretive add-on acquisitions made by our portfolio companies, described above under “Portfolio and Investment Activity – Our Portfolio Companies.”

Net Assets

During the years ended December 31, 2021 and 2020, the net increase in net assets consisted of the following:

	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

55

Operations increased by approximately $12.9 million during the year ended December 31, 2021, as compared to the year ended December 31, 2020. The increase in operations was primarily due to an increase of approximately $10.3 million in the net change in unrealized appreciation on investments, net of taxes, and an increase of approximately $2.6 million in net investment income during the year ended December 31, 2021 as compared to the year ended December 31, 2020.

Distributions increased approximately $5.6 million during the year ended December 31, 2021, as compared to the year ended December 31, 2020, primarily as a result of an increase in shares outstanding.

Capital share transactions increased approximately $49.3 million during the year ended December 31, 2021, as compared to the year ended December 31, 2020. The increase was primarily due an increase in net proceeds received through our Offerings of approximately $40.9 million, an increase of approximately $2.1 million in amounts received through our distribution reinvestment plan, and a decrease in share repurchases of approximately $6.3 million under the Share Repurchase Program.

Total Returns

The following table illustrates year-to-date, trailing 36 months (“Three Year”), Three Year annual average and cumulative total returns with and without upfront selling commissions and placement agent / dealer manager fees (“sales load”), as applicable. All total returns with sales load assume full upfront selling commissions and placement agent / 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 share classes assume distributions are reinvested in the same share class. Management believes total return is a useful measure of the overall investment performance of our shares.

	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

 FOOTNOTES:

(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.

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 identified in Item 1A in Part I of this Annual Report, including the negative impacts from the spread of COVID-19 or variants thereof.

Our shares are illiquid investments for which there currently is no secondary market. Investors should not expect to be able to resell their shares regardless of how we perform. If investors are able to sell their shares, they will likely receive less than their purchase price. Our net asset value and annualized 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.

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Hedging Activities

As of December 31, 2021, we had not entered into any derivatives or other financial 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.

Off-Balance Sheet Arrangements

We currently have no off-balance sheet arrangements, including any risk management of commodity pricing or other hedging practices.

Inflation

Inflation may affect the fair value of our investments or affect the performance of our portfolio companies. As inflation increases, the fair value of our portfolio companies could decline. Rising inflation has impacted labor rates and input costs at some of our portfolio companies, which may impact margins. We anticipate further cost increases in 2022. Some of our portfolio companies have implemented or will be implementing price increases to minimize the impact of inflationary cost increases on their margins. However, any increases in price may not be sufficient to cover increases in expenses of our portfolio companies. Margin reductions could impact the cash our portfolio companies have available for distributions, which may reduce our dividend income.

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 involve decisions 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 8. “Financial Statements and Supplementary Data.” Those material accounting policies and estimates that we initially expect to be most critical to an investor’s understanding 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. In the opinion of management, the consolidated financial statements reflect all adjustments that are necessary for the fair presentation of financial results as of and for the periods presented.

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 specialized 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.

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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” in Item 8. “Financial Statements and Supplementary Data.” As of December 31, 2021, 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 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 factors, the input of the Manager, the Sub-Manager, our audit committee, and the 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 and State 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 and state income tax at the entity level. However, the Company holds certain equity investments in Taxable Subsidiaries. The Taxable Subsidiaries permit the Company 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 result of the Taxable Subsidiaries’ ownership of certain portfolio investments. The income tax expense, or benefit, if any, and related tax assets and liabilities are reflected in the Company’s consolidated financial statements.

Item 7A.     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 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 economic disruptions caused by the COVID-19 pandemic; however, while we continue to monitor the pandemic, 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) our ability to access the debt markets on favorable terms. We will seek to mitigate this risk by deploying a comprehensive review and asset selection process, including 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.

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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 payments we receive from our borrowers, and will not adjust should rates move up or down. However, the 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 December 31, 2021. However, to the extent that we borrow money to make acquisitions, our net investment income will be partially 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 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.

Exchange Rate Sensitivity

At December 31, 2021, we were not exposed to 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 our portfolio companies conduct business in foreign jurisdictions and therefore we have an indirect exposure to risks associated with changes in foreign exchange rates.

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Item 8.         Financial Statements and Supplementary Data

CNL STRATEGIC CAPITAL, LLC

TABLE OF CONTENTS

		Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)		61
Financial Statements
	Consolidated Statements of Assets and Liabilities	62
	Consolidated Statements of Operations	63
	Consolidated Statements of Changes in Net Assets	64
	Consolidated Statements of Cash Flows	65
	Consolidated Schedules of Investments	66
	Notes to Consolidated Financial Statements	68

60

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of CNL Strategic Capital, LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of assets and liabilities of CNL Strategic Capital, LLC (the Company), including the consolidated schedules of investments, as of December 31, 2021 and 2020, the related consolidated statements of operations, changes in net assets, and cash flows for each of the two years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations, changes in its net assets, and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2017.

Orlando, Florida

March 31, 2022    

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CNL STRATEGIC CAPITAL, LLC

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

	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

See notes to consolidated financial statements.

62

CNL STRATEGIC CAPITAL, LLC

CONSOLIDATED STATEMENTS OF OPERATIONS

	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

See notes to consolidated financial statements.

63

CNL STRATEGIC CAPITAL, LLC

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

	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

See notes to consolidated financial statements.

64

CNL STRATEGIC CAPITAL, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

	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

See notes to consolidated financial statements.

65

CNL STRATEGIC CAPITAL, LLC

CONSOLIDATED SCHEDULE OF INVESTMENTS

AS OF DECEMBER 31, 2021

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

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, 2021, the Company owned a controlling interest in this portfolio company.

See notes to consolidated financial statements.

66

CNL STRATEGIC CAPITAL, LLC

CONSOLIDATED SCHEDULE OF INVESTMENTS

AS OF DECEMBER 31, 2020

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

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.

(2)    As of December 31, 2020, the Company owned a controlling interest in this portfolio company.

See notes to consolidated financial statements.

67

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2021

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”) 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. Each of the Manager and the Sub-Manager are registered as an investment adviser under the Investment Advisers Act of 1940, as amended. The 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 intends to target businesses that are highly cash flow generative, with annual revenues primarily between $15 million and $250 million and whose management teams seek an ownership stake in the company. The Company’s business strategy is to acquire controlling equity interests in combination with debt positions and in 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 may acquire other debt and minority equity positions, which may include acquiring debt in the secondary market and minority equity interests in combination with other funds managed by the Sub-Manager from co-investments with other partnerships managed by the Sub-Manager or their affiliates. The Company expects that these positions will comprise a minority of its total assets.

During the period from commencement of operations on February 7, 2018 to December 31, 2020, the Company offered Class FA (“Class FA”) and Class S (“Class S”) limited liability company interests (collectively, the “Founder shares”) through a combination of four private offerings (the “Private Offerings”) only to persons that were “accredited investors,” as that person is defined under the Securities Act and Regulation D promulgated under the Securities Act. The Company conducted each of the Private Offerings pursuant to the applicable exemption under Section 4(a)(2) of the Securities Act and Rule 506(c) of Regulation D promulgated under the Securities Act. All of the Private Offerings were terminated on or before December 31, 2020.

The Company commenced its initial public offering of up to $1.1 billion of its limited liability company interest (“shares”) on March 7, 2018 (the “Initial Public Offering”), 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, 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 of its shares (the “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”). Upon commencement of the Public Offering, the Initial Registration Statement was deemed terminated.

Through the 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, “Non-founder shares”). There are differing selling fees and commissions for each share class. The Company also pays distribution and shareholder servicing fees, subject to certain limits, on the Class T and Class D shares sold in the Public Offerings (excluding sales pursuant to its distribution reinvestment plan). See Note 7. “Capital Transactions” and Note 13. “Subsequent Events” for additional information related to the Company’s 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 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.

68

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2021

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 the Company is precluded from consolidating any entity other than 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 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.

Risks and Uncertainties

The novel coronavirus (“COVID-19”) pandemic has continued to impact the U.S. and global economies. The U.S. financial markets have experienced disruption and constrained credit conditions within certain sectors. Although more normalized activities have resumed, at this time the Company cannot predict the full extent of the impacts of the COVID-19 pandemic on the Company and its portfolio companies and the COVID-19 pandemic could have a delayed adverse impact on the Company's financial results. The Company will continue to monitor the pandemic's effects on a daily basis and will adjust its operations as necessary.

The full impact of COVID-19 on the financial and credit markets and consequently on the Company’s financial condition and results of operations is uncertain and cannot be predicted at the current time as it depends on several factors beyond the control of the Company including, but not limited to (i) the uncertainty around the severity and duration of the pandemic and the emergence and severity of COVID-19 variants, (ii) the effectiveness of the United States public health response, including the efficacy of the vaccines or other remedies and the speed of their distribution and administration, (iii) the pandemic’s impact on the U.S. and global economies, (iv) the timing, scope and effectiveness of additional governmental responses to the pandemic, (v) the timing and speed of economic recovery, and (vi) the negative impact on its portfolio companies.

Cash

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

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 statements in conformity with generally accepted accounting principles. The uncertainty of future events, including the impact of the COVID-19 pandemic, 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.

69

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2021

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 an asset cannot be determined based upon this established process, it shall then be valued as a Level 2 or Level 3 asset.

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 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 the Sub-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. The non-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.

The Company’s board of directors is responsible for determining in good faith the fair value of the Company’s investments in accordance with the valuation policy and procedures approved by the board of directors, based on, among other factors, the input of the Manager, the Sub-Manager, its audit committee, and the independent third-party valuation firm. The determination of the fair value of the Company’s assets requires judgment, especially with respect to 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 assets differs materially from the values that were provided by the independent valuation firm.

70

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2021

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 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.

Income Recognition

Interest Income – Interest income 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 on non-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 on non-accrual. Interest payments received on non-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 principal and interest amounts are paid and, in management’s judgment, are likely to remain current. Since inception, the Company has not experienced any past due payments on any of its loan investments.

Dividend Income – Dividend income is recorded on the record date for privately issued 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 and (ii) paid in capital in excess of par value, excluding upfront selling commissions and placement agent/dealer manager fees.

Share Repurchases

Under the Company’s share repurchase program (the “Share Repurchase Program”), a shareholder’s shares are deemed to have been redeemed as of 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.

Organization and Offering Expenses

Organization expenses are expensed on the Company’s consolidated statements of operations as incurred. Offering expenses, which consist of amounts incurred for items such as legal, accounting, regulatory and printing work incurred related to the Offerings, are capitalized on the Company’s consolidated statements of assets and liabilities as deferred offering expenses and expensed to the Company’s 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 the Sub-Manager.

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 consolidated statements of operations as they are incurred.

71

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2021

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 consolidated statements of operations.

Allocation of Profit and Loss

Class-specific expenses, including base management fees, total return incentive fees, organization and offering expenses, distribution and shareholder servicing fees, Expense Support and certain transfer agent fees, are allocated to each share class of common shares in accordance with how such fees 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 specific share class.

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.

Earnings per Share and Net Investment Income per Share

Earnings per share and net investment income 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

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

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.

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 consolidated statements of operations. 

The Company has operated and expects 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, the Company will 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”). 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 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 result of the Taxable Subsidiaries’ ownership of certain portfolio investments. The income tax expense, or benefit, if any, and related tax assets and liabilities are reflected in the Company’s condensed consolidated financial statements. See Note 9. “Income Taxes” for additional information.

During the years ended December 31, 2021 and 2020, the Company did not incur any material interest or penalties.

72

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2021

3. Investments

During the year ended December 31, 2021, the Company invested in three portfolio companies, ATA National Title Group, LLC (“ATA”), Douglas Machines, Inc. (“Douglas”) and Clarion Safety Systems, LLC (“Clarion”), for approximately $192.8 million in aggregate.

During the year ended December 31, 2020, the Company invested in three portfolio companies, Resolution Economics, LLC (“Resolution Economics”), Blue Ridge ESOP Associates (“Blue Ridge”) and Healthcare Safety Holdings LLC (“HSH”), for approximately $64.2 million in aggregate.

The Company’s investment portfolio is summarized as follows:

	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	%

Collectively, the Company’s debt investments accrue interest at a weighted average per annum rate of 15.3% and have weighted average remaining years to maturity of 5.1 years as of December 31, 2021. The note purchase agreements contain customary covenants and events of default. As of December 31, 2021, all of the Company’s portfolio companies were in compliance with their respective debt covenants.

As of December 31, 2021 and 2020, none of the Company’s debt investments were on non-accrual status.

73

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2021

The industry dispersion of the Company’s investment portfolio as a percentage of total fair value of the Company’s investments as of December 31, 2021 and 2020 were as follows:

	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	%

All investment positions held at December 31, 2021 and 2020 were denominated in U.S. dollars and located in the United States based on their country of domicile.

Summarized Portfolio Company Financial Statement Information

The following tables present audited summarized operating data and summarized cash flow data for the years ended December 31, 2021 and 2020, and summarized balance sheet data as of December 31, 2021 and December 31, 2020 for the Company’s portfolio companies (in thousands):

Summarized Operating Data

	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)

74

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2021

Summarized Balance Sheet Data

	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)

 FOOTNOTES:

(1)Summarized operating data presented for ATA is for the period from April 1, 2021 (the date the Company acquired its investments in ATA) to December 31, 2021.

(2)Summarized operating data presented for Douglas are for the period from October 7, 2021 (the date the Company acquired its investments in Douglas) to December 31, 2021.

(3)Summarized operating data presented for Clarion are for the period from December 9, 2021 (the date the Company acquired its investments in Clarion) to December 31, 2021.

(4)Includes aggregate summarized operating data for the Company’s co-investments in which the Company owns a minority equity interest (Milton, Resolution Economics and Blue Ridge) for the periods presented unless otherwise noted. December 31, 2021 and 2020 summarized operating data for Resolution Economics is for the period from December 1, 2020 to November 30, 2021 and from January 2, 2020 (the date the Company acquired its investments in Resolution Economics) to November 30, 2020 (reported on a one-month lag basis), respectively. December 31, 2020 summarized operating data for Blue Ridge is for the period from March 24, 2020 (the date the Company acquired its investments in Blue Ridge) to December 31, 2020.

(5)Summarized operating data presented for HSH is for the period from July 16, 2020 (the date the Company acquired its investments in HSH) to December 31, 2020.

(6)Represents the Company’s undiluted ownership percentage as of the end of the period presented.

(7)As of December 31, 2021 and 2020, the Company owned approximately 13% of Milton and 8% of Resolution Economics. As of December 31, 2021 and 2020, the Company owned approximately 16% and 17%, respectively, of Blue Ridge.

4. Fair Value of Financial Instruments

The Company’s investments were categorized in the fair value hierarchy described in Note 2. “Significant Accounting Policies,” as follows as of December 31, 2021 and 2020:

	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

75

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2021

The ranges of unobservable inputs used in the fair value measurement of the Company’s Level 3 investments as of December 31, 2021 and 2020 were as follows:

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

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 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 December 31, 2021 and 2020. In addition to the techniques and inputs noted in the 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 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 present value 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.

76

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2021

The following tables provide a reconciliation of investments for which Level 3 inputs were used in determining fair value for the years ended December 31, 2021 and 2020:

	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

 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 appreciation on investments in the consolidated statements of operations.

5. Related Party Transactions

The Manager and Sub-Manager, along with certain affiliates of the Manager or Sub-Manager, receive fees and compensation in connection with the Company’s Offerings, as well as the acquisition, management and sale of the assets of the Company, as follows:

Placement Agent/Dealer Manager

Commissions — The Company pays CNL Securities Corp. (the “Managing Dealer” in connection with the Public Offerings and the “Placement Agent” in connection with the Private Offerings), an affiliate of the 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 Public Offerings (excluding sales pursuant to the Company’s distribution reinvestment plan). The Company paid the Placement Agent a selling commission of up to 5.50% and up to 2.00% of the sale price for each Class FA and Class S share sold in the Follow-On Class FA Private Offering and Class S Private Offering (defined in Note 7. “Capital Transactions” below), respectively. There was no selling commission for the sale of Class FA shares in the Class FA Private Offering. The Managing Dealer may reallow all or a portion of the selling commissions to participating broker-dealers.

Placement Agent/Dealer Manager Fee — The Company 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 Public Offerings (excluding sales pursuant to the Company’s distribution reinvestment plan). Under the Follow-On Class FA Private Offering, the Company paid the Placement Agent a placement agent fee of 3.00% and 1.50% of the price of each Class FA and Class S share sold in the Follow-On Class FA Private Offering and Class S Private Offering, respectively. There was no placement agent fee for the sale of Class FA shares sold in the Class FA Private Offering. The Managing Dealer may reallow all or a portion of such placement agent / dealer manager fees to participating broker-dealers.

77

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2021

Distribution and Shareholder Servicing Fee — The Company pays the Managing Dealer 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 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 distribution and shareholder servicing fee accrues daily and is paid monthly in arrears. The Managing Dealer may reallow all or a portion of the 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 distribution and shareholder servicing fee is an ongoing fee that is allocated among all Class T and Class D shares, respectively, and is not paid at the time of purchase.

Manager and/or Sub-Manager

Organization and Offering Costs — The Company reimburses the Manager and 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 Offerings (defined in Note 7. “Capital Transactions” below), and (B) 1.5% of the cumulative gross proceeds from the Public Offerings. The Company incurred an obligation to reimburse the Manager and Sub-Manager for approximately $2.5 million and $1.1 million in organization and offering costs based on actual amounts raised through the Offerings during the years ended December 31, 2021 and 2020, respectively. The Manager and the Sub-Manager have incurred additional organization and offering costs of approximately $4.2 million on behalf of the Company in connection with the Public Offerings (exceeding the respective limitations) as of December 31, 2021. These costs will be recognized by the Company in future periods as the Company receives future offering proceeds from its Public Offering to the extent such costs are within the 1.5% limitation.

Base Management Fee to Manager and Sub-Manager — The Company pays each of the Manager and the Sub-Manager 50% of the total base management fee for their services under the Management Agreement and the Sub-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 $4.8 million and $2.6 million during the years ended December 31, 2021 and 2020, respectively.

The base management fee is calculated for each share class at an annual rate of (i) for the 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 Average Adjusted Capital (as defined below), for a particular class to total Average Adjusted Capital and (ii) for the 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 Average Adjusted Capital for a particular class to total Average Adjusted Capital, in each case excluding cash, and 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 reflects changes in the fair market value of the Company’s assets, which does not necessarily equal their notional value, reflecting both realized and unrealized capital appreciation or depreciation. The base management 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 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 month. “Adjusted Capital” is defined as cumulative proceeds generated from sales of 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 upfront selling commissions and dealer manager fees (“sales load”), if any, reduced for the full amounts paid for share repurchases pursuant to any share repurchase program, if any, for such class.

Total Return Incentive Fee on Income to the Manager and Sub-Manager — The Company also pays each of the Manager and the Sub-Manager 50% of the total return incentive fee for their services under the Management Agreement and the Sub-Management Agreement. The Company recorded total return incentive fees of approximately $7.3 million and $4.2 million during the years ended December 31, 2021 and 2020, respectively.

78

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2021

The total return incentive fee 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 accrues (but does not pay) the total return incentive fee on a quarterly basis, to the extent that it is earned, and 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 the Sub-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 to Non-founder Shareholders” and “Total Return to Founder Shareholders” means the Total Return to Shareholders specifically attributable to each particular share class of Non-founder shares or Founder shares, as applicable.

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

•As it relates to 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.

•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 shares, 20% of the Total Return to Non-founder Shareholders of a particular class, and for 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 highest year-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 the calculation of Total Return to Shareholders for such share class. For the years ended December 31, 2021 and 2020, the High Water Marks were as follows:

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 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 preferred 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.

79

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2021

Reimbursement to Manager and Sub-Manager for Operating Expenses and Pursuit Costs — The Company reimburses the Manager and the Sub-Manager and their respective affiliates for certain third party operating expenses and 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, the Sub-Management Agreement and the Expense Support and Conditional Reimbursement Agreement (as defined below). The Company does not reimburse the Manager and Sub-Manager for administrative services performed by the Manager or Sub-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 the Sub-Manager (the “Expense Support and Conditional Reimbursement Agreement”), which became effective on February 7, 2018, pursuant to which each of the Manager and the Sub-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 the Sub-Manager under the Management Agreement and the Sub-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 is borne equally by the Manager and the Sub-Manager and is calculated as of the last business day of the calendar year. 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 the Sub-Management Agreement, as applicable, to the Manager or the Sub-Manager. Expense Support is paid by the Manager and Sub-Manager annually in arrears.

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 uses such Excess Operating Funds to pay the Manager and the Sub-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.

The Company recorded Expense Support due from the Manager and Sub-Manager of approximately $3.3 million during the year ended December 31, 2020. As of December 31, 2021, the amount of Expense Support collected from the Manager and Sub-Manager since inception was approximately $5.1 million.

As of December 31, 2021, management estimated that approximately $1.8 million would be reimbursable to the Manager and Sub-Manager under the terms of the Expense Support and Conditional Reimbursement Agreement. Therefore, the Company recorded reimbursement of Expense Support of approximately $1.8 million in the consolidated statement of operations for the year ended December 31, 2021. Expense support (reimbursement) is paid by (to) the Manager and Sub-Manager annually in arrears.

The following table summarizes annual Expense Support received, estimate of Expense Support to be reimbursed, and the remaining Expense Support that may become reimbursable, subject to the conditions of reimbursement defined in the Expense Support and Conditional Reimbursement Agreement, as of December 31, 2021:

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

80

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2021

 FOOTNOTES:

(1)     Represents amount accrued as of December 31, 2021 and paid to the Manager and Sub-Manager in March 2022. Expense support reimbursement is calculated by share class and subject to limitations as defined in the Expense Support and Conditional Reimbursement Agreement.

(2)    Unreimbursed amounts of $37,121 related to the year ended December 31, 2018 will not be reimbursed in future periods. As of December 31, 2021, management believes that additional reimbursement payments by the Company to the Manager and Sub-Manager related to the years ended December 31, 2019 and 2020 are not probable under the terms of the Expense Support and Conditional Reimbursement Agreement.

Distributions

Individuals and entities affiliated with the Manager and Sub-Manager owned approximately 0.4 million and 0.6 million shares as of December 31, 2021 and 2020, and received distributions from the Company of approximately $0.7 million during each of the years ended December 31, 2021 and 2020.

Summary of Related Party Fees and Expenses

Related party fees and expenses incurred for the years ended December 31, 2021 and 2020 are summarized below:

		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

 FOOTNOTES:

(1)Expenses subject to Expense Support.

(2)Organization reimbursements are expensed on the Company’s statements of operations as incurred. Offering reimbursements are capitalized on the Company’s statements of assets and liabilities as deferred offering expenses and expensed to the Company’s 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 the due diligence reviews.

81

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2021

The following table presents amounts due from (to) related parties as of December 31, 2021 and 2020:

	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)

6. Distributions

The Company’s board of directors declared distributions on a monthly basis (12 record dates) in each of the years ended December 31, 2021 and 2020. Declared distributions are paid monthly in arrears. The following table reflects the total distributions declared during the years ended December 31, 2021 and 2020:

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

FOOTNOTES:

(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.

The sources of declared distributions on a GAAP basis were as follows:

	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	%

FOOTNOTES:

(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.

82

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2021

In December 2021, the Company’s board of directors declared a monthly cash distribution on the outstanding shares of all classes of common shares of record on January 28, 2022 of $0.104167 per share for 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 $0.104167 per share for Class S shares.

7. Capital Transactions

Public Offerings

Under the Public Offerings, the Company has offered and continues to offer up to $1.0 billion of shares, on a best efforts basis, which means that CNL Securities Corp., as the Managing Dealer of the Public Offerings, uses its best effort but is not required to sell any specific amount of shares. The Company is 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. There are differing selling fees and commissions for each share class. The Company also pays distribution and shareholder servicing fees, subject to certain limits, on the Class T and Class D shares sold in the Public Offerings (excluding sales pursuant to the Company’s distribution reinvestment plan). The public offering price, selling commissions and dealer manager fees per share class are determined monthly as approved by the Company’s board of directors. As of December 31, 2021, the public offering price was $33.83 per Class A share, $32.20 per Class T share, $30.34 per Class D share and $31.34 per Class I share. See Note 13. “Subsequent Events” for information on changes to the public offering price, selling commissions and dealer manager fees by share class.

The Company is also offering, in any combination, up to $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. See Note 13. “Subsequent Events” for additional information related to the Public Offering.

Class FA Private Offerings

During the period from commencement of operations on February 7, 2018 to December 31, 2020, the Company offered Class FA and Class S limited liability company interests (collectively, the “Founder shares”) through four private offerings (the “Private Offerings” and, together with the Public Offerings, the “Offerings”) only to persons that were “accredited investors,” as that term is defined under the Securities Act and Regulation D promulgated under the Securities Act, and raised aggregate gross offering proceeds of approximately $177 million. The Company conducted the Private Offerings pursuant to the applicable exemption under Section 4(a)(2) of the Securities Act and Rule 506(c) of Regulation D promulgated under the Securities Act. All of the Private Offerings were terminated on or before December 31, 2020. The Private Offerings that were conducted during 2019 and 2020 are described below in more detail.

In April and June 2019, the Company commenced separate private offerings of up to $50 million each of Class FA Shares (the “Class FA Private Offering” and the “Follow-On Class FA Private Offering,” respectively). Under the Follow-On Class FA Private Offering the Company paid the Placement Agent a selling commission of up to 5.5% and placement agent fee of up to 3.0% of the sale price for each Class FA share sold in the Follow-On Class FA Private Offering, except as a reduction or sales load waiver may have applied. There was no selling commission or placement fee on the sale of Class FA shares sold in the Class FA Private Offering. The Class FA Private Offering was terminated in December 2019, after having raised gross proceeds of approximately $35 million (approximately 1.3 million shares) and the Follow-On Class FA Private Offering was terminated in March 2020, after having raised gross proceeds of approximately $8 million (approximately 0.3 million shares).

In January 2020, the Company commenced a private offering of up to $50 million of Class S shares (the “Class S Private Offering”). The Company paid the Placement Agent a selling commission of up to 2.0% and a placement agent fee of up to 1.5% of the sale price for each Class S share sold in the Class S Private Offering, except as a reduction or sales load waiver that may have applied. The Class S Private Offering was terminated in December 2020 after having raised gross proceeds of approximately $52 million (approximately 1.8 million shares).

The following table summarizes the total shares issued and proceeds received by share class in connection with the Offerings, excluding shares repurchased through the Share Repurchase Program described further below, for the years ended December 31, 2021 and 2020:

83

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2021

	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

FOOTNOTES:

(1)Amounts are based on distribution reinvestment date. Distributions are declared monthly and paid or reinvested one month in arrears.

(2)The Company incurred selling commissions and placement agent fees on the sale of Class FA shares sold in the Follow-On Class FA Private Offering and on the sale of Class S shares sold in the Class S Private Offering. The Company also 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/placement agent fees.

(3)The Company did not incur any selling commissions or placement agent fees from the sale of approximately 0.3 million Class FA shares sold under the terms of the Class FA Private Offering during the year ended December 31, 2020.

Share Repurchase Program

In March 2019, the Company’s board of directors approved and adopted 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 will be 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). Unless the Company’s board of directors determines otherwise, the Company will limit the number of shares to be repurchased during any calendar quarter to the number of shares the Company can repurchase with the proceeds received from the sale of shares under its distribution reinvestment plan in the previous quarter. Notwithstanding the foregoing, at the sole discretion of the Company’s board of directors, the Company may also use other sources, including, but not limited to, offering proceeds and borrowings to repurchase shares. 

84

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2021

During the year ended December 31, 2021, the Company received requests for the repurchase of approximately $3.3 million of the Company’s common shares, which did not exceed amounts raised in the Company’s distribution reinvestment plan. During the year ended December 31, 2020, the Company received requests for the repurchase of approximately $9.6 million of the Company’s common shares, which exceeded proceeds received from its distribution reinvestment plan for the applicable period by approximately $7.8 million. The Company’s board of directors approved the use of other sources to satisfy repurchase requests received in excess of proceeds received from the distribution reinvestment plan for the year ended December 31, 2020.

The following table summarizes the shares repurchased during the years ended December 31, 2021 and 2020:

	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

As of December 31, 2021 and 2020, the Company had a payable for shares repurchased of approximately $0.5 million and $2.0 million, respectively.

8. Borrowings

In September 2021, the Company entered into a second amended and restated loan agreement (the “Loan Agreement”) and related promissory notes with United Community Bank (d/b/a Seaside Bank & Trust and referred to as “Seaside”) for a total line of credit of up to $25.0 million (the “Line of Credit”). The Loan Agreement amended and replaced the previous loan agreements between the Company and Seaside dated June 2019, as amended. The Line of Credit is available for advances through August 16, 2022.

During the years ended December 31, 2021 and 2020, the Company paid commitment fees to Seaside in connection with the execution of the Loan Agreement and previous loan agreement of $15,000 and $60,000, respectively. The Company is required to pay an additional fee to Seaside with each advance under the Loan Agreement in an amount equal to 0.05% of the amount of each borrowing with a maximum fee of $20,000 over a 364-day period. Under the Loan Agreement, the Company is required to pay interest on the borrowed amount at a rate per year equal to the greater of (a) the 30-day LIBOR plus 2.75% and (b) 3.00%. Interest payments are due monthly in arrears. The Company may prepay, without penalty, all or any part of the borrowings under the Loan Agreement at any time and such borrowings are required to be repaid within 180 days or 60 days (depending on the facility drawn upon) of the borrowing date. Under the 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 Loan Agreement, the Company entered into an amended assignment and pledge of deposit account agreement (“Deposit Agreement”) in favor of the lender under the Line of Credit. Under the Deposit Agreement, the Company is required to contribute proceeds from the Offerings to pay down the outstanding debt to the extent there are any borrowings outstanding under the 2021 Loan Agreement above the minimum cash balance of $2.5 million.

The Company had not borrowed any amounts under the Line of Credit as of December 31, 2021.

85

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2021

9. Income Taxes

The components of income tax expense and deferred taxes on investments related to the Company’s Taxable Subsidiaries during the years ended December 31, 2021 and 2020 were as follows:

	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

Significant components of the Company’s deferred tax assets as of December 31, 2021 and 2020 were as follows:

	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)

The table below presents a reconciliation of tax expense the Company would be subject to if it were taxed as a corporation to the Company’s actual income tax expense incurred by its Taxable Subsidiaries for the years ended December 31, 2021 and 2020:

	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	%

The Company’s taxable subsidiary entities had net operating loss carryforwards for federal purposes of approximately $0.9 million as of December 2021 and 2020, to offset future taxable income. The federal net operating loss carryforwards do not expire.

86

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2021

10. Concentrations of Risk

The Company had six portfolio companies which met at least one of the significance tests under Rule 4-08(g) of Regulation S-X (the “Significance Tests”) as of December 31, 2021.

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 and Sub-Manager for the reimbursement of organization and offering costs under the Public Offerings.

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 December 31, 2021, 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.

87

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2021

12. Financial Highlights

The following are schedules of financial highlights of the Company attributed to each class of shares for the years ended December 31, 2021 and 2020 (in thousands except per share data):

	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		%

88

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2021

	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		%

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.

89

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2021

(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 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.” Total returns before total return incentive fees also exclude related expense support. See footnote (9) 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)The net asset value as of the beginning of the period is as of January 1, 2020 for all share classes except Class S shares. The net asset value as of the beginning of the period for Class S shares is based on the price of shares sold, net of any sales load, to the initial Class S investors. The initial investors for Class S shares purchased their shares on March 31, 2020.

(9)Amounts represent net investment income before total return incentive fee and related expense support as a percentage of average net assets. For the year ended December 31, 2021, total return incentive fees were not covered by expense support as the Company recorded expense support reimbursement during this period. For the year ended December 31, 2020, the percentage of total return incentive fees covered by expense support was approximately 97%, 75%, 64%, 38%, 88% and 20% for Class FA, Class A, Class T, Class D, Class I and Class S, respectively.

90

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2021

13. Subsequent Events

Investment Activity

In February 2022, the Company made an additional equity investment in ATA of $1.1 million.

Distributions

In January, February and March 2022, the Company’s board of directors declared a monthly cash distribution on the outstanding shares of all classes of common shares of record on February 25, 2022, March 30, 2022 and April 28, 2022, respectively, of $0.104167 per share for 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 $0.104167 per share for Class S shares.

Offerings

In January, February and March 2022, the Company’s board of directors approved new per share offering prices for each share class in the Public Offering. The new offering prices are effective as of January 28, 2022, February 25, 2022 and March 24, 2022, respectively. The following table provides the new offering prices and applicable upfront selling commissions and placement agent / dealer manager fees for each share class available in the Public Offering:

	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		—		—

Capital Transactions

During the period January 1, 2022 through March 28, 2022, the Company received additional net proceeds from the Public Offering and its distribution reinvestment plan of the following:

	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

91

Item 9.         Changes in and Disagreement with Accountants on Accounting and Financial Disclosures

None.

Item 9A.     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.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act.

In connection with the preparation this Annual Report, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2021. In making that assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework (2013).

Based on its assessment, our management believes that, as of December 31, 2021, our internal control over financial reporting was effective based on those criteria.

Item 9B.     Other Information

Not applicable.

Item 9C.     Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

92

PART III

Item 10.     Directors, Executive Officers and Corporate Governance

The information required by this Item is incorporated by reference to our Definitive Proxy Statement to be filed with the Commission no later than April 30, 2022.

Item 11.     Executive Compensation

The information required by this Item is incorporated by reference to our Definitive Proxy Statement to be filed with the Commission no later than April 30, 2022.

Item 12.     Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

The information required by this Item is incorporated by reference to our Definitive Proxy Statement to be filed with the Commission no later than April 30, 2022.

Item 13.     Certain Relationships and Related Transactions and Director Independence

The information required by this Item is incorporated by reference to our Definitive Proxy Statement to be filed with the Commission no later than April 30, 2022.

Item 14.     Principal Accountant Fees and Services

The information required by this Item is incorporated by reference to our Definitive Proxy Statement to be filed with the Commission no later than April 30, 2022.

93

PART IV

Item 15.     Exhibits and Financial Statement Schedules

(a)    Financial Statements

1.    The Company is required to file the following separate audited financial statements of its unconsolidated subsidiaries which are filed as part of this report:

(i)    LD Parent, Inc.

Independent Auditor’s Report

Consolidated Balance Sheets as of December 31, 2021 and 2020

Consolidated Statements of Operations for the Year Ended December 31, 2021 and 2020

Consolidated Statements of Changes in Stockholders’ Equity for the Year Ended December 31, 2021 and 2020

Consolidated Statements of Cash Flows for the Year Ended December 31, 2021 and 2020

Notes to Consolidated Financial Statements

(b)     Exhibits

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

1.1*	Managing Dealer Agreement dated as of October 21, 2021 between CNL Strategic Capital, LLC and CNL Securities Corp.
1.2	Form of Participating Broker Agreement (incorporated by reference to Exhibit 1.2 to the Registration Statement on Form S-1/A (File No. 333-253295) filed with the SEC on September 17, 2021).
1.3	Form of Distribution and Shareholder Servicing Plan of CNL Strategic Capital, LLC (incorporated by reference to Exhibit 1.3 to the Registration Statement on Form S-1 (File No. 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 Form S-1 (File No. 333-222986) filed with the SEC on February 12, 2018).
3.2	Fifth Amended and Restated Limited Liability Company Operating Agreement of CNL Strategic Capital, LLC (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 5, 2020).
4.1	Distribution Reinvestment Plan (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-1 (File No. 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 November 1, 2021).
4.3	Third Amended and Restated Share Repurchase Agreement (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 16, 2021).
4.4	Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4.4 to the Company’s Annual Report on Form 10-K filed with the SEC on March 30, 2021).
10.1	Third Amended and Restated Management Agreement dated as of January 31, 2020 by and between CNL Strategic Capital and CNL Strategic Capital Management, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 5, 2020).
10.2	Second Amended and Restated Sub-Management Agreement dated as of February 28, 2018 by and among CNL Strategic Capital, LLC, 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 Form S-1 (File No. 333-222986) filed with the SEC on March 1, 2018).
10.3	Escrow Agreement dated February 14, 2018 by and among CNL Strategic Capital, LLC and CNL Securities Corp. (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 15, 2018).

94

10.4	First Amendment to Escrow Agreement by and among CNL Strategic Capital, LLC and CNL Securities Corp. (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on April 18, 2019).
10.5	Second Amendment to Escrow Agreement by and among CNL Strategic Capital, LLC and CNL Securities Corp. (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on July 16, 2019).
10.6	Third Amendment to Escrow Agreement by and among CNL Strategic Capital, LLC and CNL Securities Corp. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on February 5, 2020).
10.7	Escrow Letter Agreement relating to the Escrow Agreement dated February 14, 2018, as supplemented and amended, by and among CNL Strategic Capital, LLC and CNL Securities Corp. (incorporated by reference to Exhibit 10.7 to the Pre-Effective Amendment No. 3 to the Registration Statement on Form s-1 (File No. 333-253295) filed with the SEC on October 22, 2021).
10.8	Amended and Restated Administrative Services Agreement dated as of February 7, 2018 by and between CNL Strategic Capital, LLC and CNL Strategic Capital Management, LLC (incorporated by reference to Exhibit 10.4 to the Registration Statement on Form S-1 (File No. 333-222986) filed with the SEC on February 12, 2018).
10.9	Amended and Restated Sub-Administration Agreement dated as of February 7, 2018 by and among CNL Strategic Capital, LLC, 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 (File No. 333-222986) filed with the SEC on February 12, 2018).
10.10	Amended and Restated Expense Support and Conditional Reimbursement Agreement dated as of February 7, 2018 by and among CNL Strategic Capital, LLC, 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 (File No. 333-222986) filed with the SEC on February 12, 2018).
10.11	Form of Indemnification Agreement (incorporated by reference to Exhibit 10.7 to the Registration Statement on Form S-1 (File No. 333-222986) filed with the SEC on February 12, 2018).
10.12	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 (File No. 333-222986) filed with the SEC on February 12, 2018).
10.13	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 (File No. 333-222986) filed with the SEC on February 12, 2018).
10.14	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 (File No. 333-222986) filed with the SEC on February 12, 2018).
10.15	Stock Contribution and Purchase Agreement dated June 26, 2019 by and between Michael Auriemma and Roundtable Acquisition, LLC. (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on 10-Q filed with the SEC on August 8, 2019).
10.16	Second Amended and Restated Loan Agreement dated September 16, 2021 by and between CNL Strategic Capital B, Inc. and United Community Bank (d/b/a Seaside Bank and Trust) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 16, 2021).
10.17	Second Amended and Restated Promissory Note dated September 16, 2021 by and between CNL Strategic Capital B, Inc. and United Community Bank (d/b/a Seaside Bank and Trust) (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on September 16, 2021).
10.18	Second Amended and Restated Assignment and Pledge of Deposit Account Agreement dated September 16, 2021 by and between CNL Strategic Capital, LLC and United Community Bank (d/b/a Seaside Bank and Trust) (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the SEC on September 16, 2021).
10.19	Second Amended and Restated Guaranty dated September 16, 2021 by and between CNL Strategic Capital, LLC and United Community Bank (d/b/a Seaside Bank and Trust) (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed with the SEC on September 16, 2021).
10.20	Second Amended and Restated Pledge and Security Agreement dated September 16, 2021 by and between CNL Strategic Capital, LLC and United Community Bank (d/b/a Seaside Bank and Trust) (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed with the SEC on September 16, 2021).

95

10.21	LOC Increase Promissory Note dated September 16, 2021 by and between CNL Strategic Capital B, Inc. and United Community Bank (d/b/a Seaside Bank and Trust) (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on September 16, 2021).
10.22	Purchase Agreement dated April 1, 2021 by and among Huron Title Buyer, LLC and certain sellers of the ATA Holding Company, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 5, 2021).
10.23	Stock Purchase Agreement dated October 7, 2021, by and among Douglas Machines Buyer, Inc., Douglas Machines Corp., and Douglas Acquisition Company, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 8, 2021).
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*	List of Subsidiaries.
24.1	Power of Attorney (included on the signature page).
31.1*	Certification of Chief Executive Officer of CNL Strategic Capital, LLC, Pursuant to Rule 13a-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 Rule 13a-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 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

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.

96

LD Parent, Inc.

Consolidated Financial Statements

As of and for the Years Ended December 31, 2021 and 2020

97

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

98

Independent Auditor’s Report

Board of Directors

LD Parent, Inc.

Holmdel, NJ

Opinion

We have audited the consolidated financial statements of LD Parent, Inc. and its Subsidiaries (the Company), which comprise the consolidated balance sheets as of December 31, 2021 and 2020, and the related consolidated statements of operations, changes in stockholder’s equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued or available to be issued.

99

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.

In performing an audit in accordance with GAAS, we:

•Exercise professional judgment and maintain professional skepticism throughout the audit.

•Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

•Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed.

•Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.

•Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

/s/ BDO USA, LLP

Woodbridge, NJ

March 15, 2022

100

Consolidated Financial Statements

101

LD Parent, Inc.

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

See accompanying notes to the consolidated financial statements.

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LD Parent, Inc.

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

See accompanying notes to the consolidated financial statements.

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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

See accompanying notes to the consolidated financial statements.

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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

See accompanying notes to the consolidated financial statements.

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LD Parent, Inc.

Notes to Consolidated Financial Statements

1.Nature of the Business

LD Parent, Inc. (the “Company” or “LD Parent”) through its wholly-owned subsidiary Lawn Doctor, Inc., grants franchises to conduct lawn care/conditioning, tree/shrub care and pest control businesses throughout the United States, consisting of the sale of services and products authorized by the Company.

On April 20, 2018, the Company acquired a controlling interest in Mosquito Hunters, LLC (“Mosquito Hunters”). The Company has been able to expand their services in the pest industry as a result of this acquisition. As the Company has effective control in significant decision-making areas, the Company includes Mosquito Hunters in its consolidated financial statements.

On May 24, 2019, the Company acquired a controlling interest in Ecomaids LLC (“Ecomaids”), a franchisor of residential cleaning services. Ecomaids specializes as an innovator of environmentally responsible, non-toxic residential cleaning services for families throughout the United States. The Company believes this acquisition furthers its strategy of both growing organically and also through the acquisition of additional home service brands. The Company has been able to expand their services in the home cleaning as a result of this acquisition. As the Company has effective control in significant decision-making areas, the Company includes Ecomaids in its consolidated financial statements.

2.COVID-19 Pandemic

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The Company is continuously monitoring the impact the pandemic has on nearly all aspects of the Company’s business and markets, including the workforce and the operations of customers, suppliers, and business partners. To date, there has been limited business interruption or financial impact.

On March 27, 2020, the “Coronavirus Aid, Relief and Economic Security (CARES) Act” was signed into law. The CARES Act, among other things, is a support package that includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, increased limitations on qualified charitable contributions and technical corrections to tax depreciation methods for qualified improvement property.

The full extent to which the pandemic will directly or indirectly impact the Company's business, results of operations and financial condition, including sales, expenses, manufacturing, operating and training, and selling, general and administrative costs, reserves and allowances, fair value measurements, asset impairment charges, will depend on future developments that are highly uncertain and difficult to predict. These developments include, but are not limited to, the duration and spread of the outbreak (including new variants of COVID-19), its severity, the actions to contain the virus or address its impact, the timing, distribution, and efficacy of vaccines and other treatments, U.S. and foreign government actions to respond to the reduction in global economic activity, and how quickly and to what extent normal economic and operating conditions can resume.

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Notes to Consolidated Financial Statements

Management is actively monitoring the global situation on its financial condition, liquidity, operations, suppliers, material sourcing, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company is not able to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition, or liquidity for fiscal year 2021.

3.Basis of Presentation and Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements of LD Parent, Inc. & Subsidiaries include the accounts of Lawn Doctor, Inc. and its wholly-owned subsidiaries, Mosquito Hunters, LLC & Ecomaids, LLC (collectively the “Company”). The consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany transactions and accounts have been eliminated in consolidation.

Non-controlling Interests

Non-controlling interests in consolidated subsidiaries are required to be classified as a separate component of equity in the Consolidated Balance Sheets and the amounts of net income and comprehensive income attributable to the non-controlling interests are included in consolidated net income on the face of the Consolidated Statements of Operations.

The accounts of Mosquito Hunters, LLC have been included in the Company’s consolidated financial statements and the affiliates’ proportionate share of the net assets have been reflected in the accompanying Consolidated Balance Sheets as non-controlling interest in the amount of $(298,563) and $(283,006) at December 31, 2021 and 2020, respectively. Included in the years ended December 31, 2021 and 2020 Consolidated Statements of Operations is $(15,557) and $(61,557), of the non-controlling interest loss allocation due to the related partial ownership of Mosquito Hunters.

The accounts of Ecomaids, LLC have been included in the Company’s consolidated financial statements and the affiliates’ proportionate share of the net assets have been reflected in the accompanying consolidated financial statements as non-controlling interest in the amount of $(201,169) and $(109,785) at December 31, 2021 and 2020, respectively. Included in the years ended December 31, 2021 and 2020 Consolidated Statements of Operations is $(91,384) and $(152,109), of the non-controlling interest loss allocation due to the related partial ownership of Ecomaids.

Revenue Recognition

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09 that introduced a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. Numerous updates were issued in 2016 that provide clarification on a number of specific issues as well as requiring additional disclosures. The new standard was effective for the Company on January 1, 2019.

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LD Parent, Inc.

Notes to Consolidated Financial Statements

On January 1, 2019, the Company adopted the new accounting standard for all contracts not completed as of the adoption date using the modified retrospective method. The Company has identified and implemented appropriate changes to the business policies, processes, and controls to support the adoption, recognition and disclosures under the new standard. As part of this evaluation, the Company has identified the following revenue streams; initial franchise fees, operating revenues which consist of: service/royalty fees from franchises, sales of parts and equipment, revenues from sales type leases, advertising revenue, and interest income related to notes receivable and loans receivables. Additionally, the Company reviewed the related critical customer contract terms and provisions. The Company has concluded that the most significant impact of the standard relates to the timing of the recognition of revenue for initial franchise fees, that were previously recognized at the point in time which the Company had performed all significant services and satisfied all conditions of sale, will be recognized over the life of the contract. Commissions relating to such contracts that were previously charged to expense upon recognition of the initial fee will now be recorded as a prepaid asset and amortized over the life of the contract. Advertising funds will now be presented as a gross up of revenue and related cost.

In accordance with ASC 606, the Company disaggregates its revenue from customers with contracts by revenue streams. The Company’s revenue streams are presented in the following table:

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

Service/royalty fees derived from franchises (“Service Fees”) are recognized as revenue when earned. Revenue from sales of parts and equipment are recognized, at the point in time which control is transferred, upon shipment. Interest income related to notes receivable and loans receivable is recorded as revenue when earned (and collection is reasonably assured) in accordance with the interest method.

Initial franchise fees are deferred and recognized over the life of the contract. Commissions paid on initial franchise fees are deferred and charged to expense upon recognition of the initial fee.

Advertising fund revenue is deferred upon sale of the initial franchise. Revenue and the related advertising expense is recognized as incurred by the Company.

Receivables from Franchisees, net

Receivables from franchises are recorded at net realizable value. The Company provides an allowance for doubtful accounts for franchisees based on the aging of each franchisee's total receivables, unless, in the opinion of management, estimated net realizable value requires a further allowance. The Company monitors the business operations of new and existing franchises to ascertain that its policies continue to provide an appropriate allowance for receivables and financed franchise fees.

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Notes to Consolidated Financial Statements

The Company provides franchisees with an option to finance initial franchise fees over a period of up to 96 months with interest at 12% per annum. Additionally, the Company has converted accounts receivable from certain franchisees to notes receivable. These financing arrangements entered into during the years ended December 31, 2021 and 2020 were $1,347,400 and $2,433,339, respectively. These financing arrangements are recorded as notes receivable in receivables from franchisees in the accompanying Consolidated Balance Sheets. As of December 31, 2021 and 2020, $3,159,942 and $4,364,798 was outstanding of which $906,133 and $981,171 was classified as a current asset, which represents the principal amounts due on the aggregate notes receivable, respectively. These financing arrangements are recorded as notes receivable in receivables from franchisees in the accompanying Consolidated Balance Sheets.

The Company provides an estimated allowance for doubtful receivables on any notes and related interest with delinquent installments of more than six months. The Company ceases accrual of interest when the Company can no longer assert that the likelihood of collection is probable.

The Company leases equipment to its franchisees with an option to pay in full upon execution of the lease or finance over 60, 72 or 84 months depending on the type of equipment. Interest is not to exceed 1.5% per month and the Company recognizes the imputed interest over the term of the lease. The Company records these leases as a sales-type lease in accordance with ASC 840. Leased equipment is recorded in receivables from franchisees in the accompanying Consolidated Balance Sheets.

As of December 31, 2021, $1,605,023 was outstanding of which $357,777 was classified as a current asset. As of December 31, 2021, the Company recorded $406,475 as unearned interest of which $129,680 was classified within other current liabilities.

As of December 31, 2020, $1,666,877 was outstanding of which $358,623 was classified as a current asset. As of December 31, 2020, the Company recorded $436,434 as unearned interest of which $132,026 was classified within other current liabilities.

Unearned interest beyond one year is recorded in long-term other liabilities.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results, as determined at a later date, could differ from those estimates.

Shipping Costs

Costs to ship products to franchisees are expensed to manufacturing expenses as incurred. The Company recorded shipping costs of $211,803 and $129,121 for the years ended December 31, 2021 and 2020, respectively.

Cash and Equivalents

The Company considers money market funds and all other highly liquid debt instruments purchased with original maturity of three months or less to be cash equivalents.

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Notes to Consolidated Financial Statements

Concentration of Credit Risk

The Company maintains its cash balances in a financial institution that is insured by the Federal Deposit Insurance Corporation up to $250,000 each. At times, such balances may be in excess of the FDIC insurance limit.

No one franchise or vendor exceeded 10% of the Company’s sales or purchases for the years ended December 31, 2021 and 2020.

No one franchise or vendor exceeded 10% of the Company’s accounts receivable or payables at December 31, 2021 and 2020.

Inventories, net

Inventories are stated at the lower of cost and net realizable value. Parts and materials, included as inventory, are evaluated annually by management for net realizable value and obsolescence. At December 31, 2021 and 2020, the reserve for inventory was $64,970 and $65,858, respectively.

Property, Plant and Equipment, net

Property and equipment acquired in connection with the acquisition are stated at fair value, at the date of acquisition, less accumulated depreciation. Other property, plant and equipment are stated at cost less accumulated depreciation. Depreciation of property and equipment is computed by the straight-line method over the estimated useful lives, which approximate 39 years for building, 5 to 7 years for furniture, fixtures and other equipment and 3 to 5 years for software and transportation equipment. Improvements to leasehold property are amortized on the straight-line method over the shorter of the asset life and remaining lease term.

Goodwill and Intangible Assets

As required by ASC 350, Goodwill and Other Intangible Assets, the Company tests goodwill for impairment. Goodwill is not amortized, but instead tested for impairment at the reporting unit level at least annually and more frequently upon the occurrence of certain events. The Company has one reporting unit. The annual goodwill impairment test is a two-step process. First, the Company determines if the carrying value of its related reporting unit exceeds fair value, which would indicate that goodwill may be impaired. If the Company then determines that goodwill may be impaired, it compares the implied fair value of the goodwill to its carrying amount to determine if there is an impairment loss. In September 2011, the FASB issued ASU 2011-08 which amends ASC 350 for testing goodwill for impairment. The guidance provides an entity the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not (more than 50%) that the estimated fair value of a reporting unit is less than its carrying amount. If an entity elects to perform a qualitative assessment and determines that an impairment is more likely than not, the entity is then required to perform the existing two-step quantitative impairment test, otherwise no further analysis is required. An entity also may elect not to perform the qualitative assessment and, instead, proceed directly to the two-step quantitative impairment test. The ultimate outcome of the goodwill impairment review for a reporting unit should be the same whether an entity chooses to perform the qualitative assessment or proceeds directly to the two-step quantitative impairment test. In conjunction with management’s annual review of goodwill, the Company adopted the new guidance and concluded it is more likely than not that the fair value of the reporting unit exceeds its carrying amount. There were no impairment indicators for the years ended December 31, 2021 and 2020.

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LD Parent, Inc.

Notes to Consolidated Financial Statements

Indefinite and Finite Lived Intangibles

In accordance with ASC 350, Intangibles – Goodwill and Other (“ASC 350”), indefinite lived intangible assets are recorded at cost and are reviewed for impairment on an annual basis and whenever events or circumstances indicate that their carrying values may not be recoverable. Impairment is recorded if the carrying amount exceeds fair value. Intangible assets which have finite useful lives are amortized using the straight-line method over their useful lives and consist of customer relationships, developed technology, know-how, and a non-compete. Finite lived intangible asset amortization expense was $2,308,416 and $2,308,416 for the years ended December 31, 2021 and 2020, respectively.

Future adverse changes in market conditions or poor operating results could result in losses or an inability to recover the carrying value of the goodwill and other intangible assets thereby possibly requiring an impairment charge in the future.

Long-lived Assets

The Company accounts for the impairment of long-lived assets in accordance with ASC 360, Accounting for the Impairment or Disposal of Long-Lived Assets. In accordance with ASC 360, the Company evaluates long-lived assets, including intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable based on expected undiscounted cash flows attributable to that asset or group of assets. The amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. The Company did not have any long-lived assets impairment indicators during the years ended December 31, 2021 and 2020.

Debt Issuance Costs

Costs related to financing are being capitalized and amortized straight line, which approximates the effective interest method, over the term of the related debt facilities. Debt issuance costs were $303,307 and $111,875 as of December 31, 2021 and 2020, respectively, and are presented as a reduction to long-term debt in the Consolidated Balance Sheets. Amortization of deferred financing costs for the years ended December 31, 2021 and 2020 was $75,568 and $53,700, respectively, and is recorded in interest expense in the Consolidated Statements of Operations.

Income Taxes

The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities.

The Company recognizes a tax benefit from an uncertain position only if it is more likely than not the position is sustainable, based solely on its technical merits and consideration of the relevant taxing authority’s widely understood administrative practices and precedents. If this threshold is met, the Company measures the tax benefit as the largest amount of benefit that is greater than fifty percent likely being realized upon ultimate settlement. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. As of December 31, 2021 and 2020, there was no impact to the consolidated financial statements relating to accounting for uncertainty in income taxes.

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LD Parent, Inc.

Notes to Consolidated Financial Statements

On March 27, 2020, the CARES Act was enacted into law. Included in the CARES Act (the “Act”) were changes in the tax law with respect to net operating loss carrybacks, bonus depreciation applicability to qualified investment property, changes to IRC Section 163j interest expense limits, AMT credit carryforward refundability, impairment of assets due to COVID-19, and other non-income tax considerations. As a result of the Act, the Company was able to defer certain payroll taxes. However, the Act had no material impact to the consolidated financial statements.

Fair Value Measurements

Fair value is a market-based measurement, which is defined as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques for fair value measurements include the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost), which are each based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. The Company utilizes a fair value hierarchy that prioritizes inputs to fair value measurement techniques into three broad levels:

•Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets.

•Level 2: Observable inputs other than quoted prices that are directly or indirectly observable for the asset or liability, including quoted prices for similar asset or liabilities in active markets; quoted prices for similar or identical assets or liabilities in markets that are not active; and mode-derived valuations whose inputs are observable or whose significant value drivers are observable.

•Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

The Company’s material financial instruments at December 31, 2021 and 2020, for which disclosure of estimated value is required by certain accounting standards, consisted primarily of receivables from franchisees, accounts payable, accrued expenses, and debt. The carrying value of the term loan approximates fair value due to the variable interest rate associated with this financial instrument.

Business Acquisitions

The Company accounts for business combinations in accordance with ASC 805 Business Combinations. ASC 805 requires business combinations to be accounted for using the purchase method of accounting and includes specific criteria for recording intangible assets separate from goodwill. Results of operations of acquired businesses are included in the financial statements of the acquiring company from the date of acquisition. Assets acquired and liabilities assumed of the acquired company are recorded at their fair value at the date of acquisitions.

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LD Parent, Inc.

Notes to Consolidated Financial Statements

Advertising Expenses

The Company expenses its advertising costs the first time the advertising takes place. All advertising costs are expensed as incurred. Total advertising expense recorded in selling, general, and administrative expense within the Consolidated Statements of Operations was $826,125 and $673,434 for the years ended December 31, 2021 and 2020, respectively.

The Company incurs regional advertising costs, which are repaid weekly by franchisees based upon their cash receipts. The balances are reported as prepaid or accrued expenses at year-end.

4.Receivables from Franchisees, net

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

The Company wrote off uncollectible accounts totaling $196,115 and $401,392 for the years ended December 31, 2021 and 2020, respectively.

5.Property, Plant and Equipment, net

Property, plant and equipment consist of the following:

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

Depreciation expense totaled $198,944 and $192,192 for the years ended December 31, 2021 and 2020, respectively.

6.Other Assets

Other assets are summarized as follows:

December 31,		2021	2020
Security Deposits	$	14,422	$	14,422

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LD Parent, Inc.

Notes to Consolidated Financial Statements

7.Intangibles, net

Intangibles are summarized as follows:

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

Estimated future amortization expense of franchise relationships and leasehold interest at December 31, 2021 is as follows:

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

8.Borrowing Arrangements

Credit Agreements

On February 7, 2018, in conjunction with the acquisition by CNLSC, the Company entered into an amendment to their Credit Agreement dated December 12, 2014. The amendment permitted the repayment of all of the outstanding principal amount of Subordinated Debt as of the date of the agreement, issuances up to $18,000,000 of subordinated second lien indebtedness, increase in the Term Loan by $6,000,000 and extended the maturity date to February 7, 2023. The amendment also contains revisions to the restrictive covenants inclusive of senior debt to adjusted EBITDA ratio, total debt to adjusted EBITDA ratio, fixed charge ratio, and excess cash flow. The Revolving Loan Commitment remained unchanged. The Revolving Loan Commitment was payable upon maturity on December 11, 2019. This was later amended in March 2019 to extend the maturity date to February 7, 2023 and clarify certain definitions in the prior amendment. The Credit Agreement was payable in quarterly principal installments of $50,000, commencing on March 31, 2018 until the maturity date on February 7, 2023, at which time the outstanding balance was to be due and payable.

On August 11, 2021, the Company entered into a new amendment to their Credit Agreement dated December 12, 2014. The amendment increased the Term Loan by $10,700,000 and extended the maturity date for the Term Loan as well as the Revolving Loan Commitment to February 7, 2025. The amendment was treated as a debt modification. The amendment also contained revisions to the restrictive covenants inclusive of senior debt to adjusted EBITDA ratio, total debt to adjusted EBITDA ratio, fixed charge coverage ratio and excess cash flow. The Revolving Loan Commitment remained unchanged. There were no outstanding borrowings under the revolving loan commitment at December 31, 2021 or 2020. The Revolving Loan Commitment bears interest of 0.50% of the unfunded portion.

114

LD Parent, Inc.

Notes to Consolidated Financial Statements

As a result of the amendment to the Credit Agreement in 2021, the quarterly principal installment increased to $76,750 from $50,000, commencing on December 31, 2021 until the maturity date on February 7, 2025, at which time the outstanding is to be due and payable. The Credit Agreement also provides for an annual mandatory prepayment of principal based on excess cash flow (as defined in the Credit Agreement). During the year ended December 31, 2021 and 2020, the Company did not make a prepayment based on excess cash flow. The Credit Agreement also provides for the maintenance of certain financial ratios, including leverage and fixed charge ratios. At December 31, 2021 and 2020, the Company was in compliance with all of its covenant requirements. At December 31, 2021 and 2020, $29,873,250 and $19,400,000 was outstanding on the Credit Agreement.

The interest rate on the Credit Agreement varies depending if the Term Loan is a Base Rate Loan or a LIBOR Loan. At December 31, 2021, the Company elected to treat the Credit Agreement as a LIBOR Loan, which carried an effective interest rate of 5.50%.

Repayment of the Credit Agreement is as follows:

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

Note Purchase Agreement

On February 7, 2018, in conjunction with the acquisition, the Company entered into a Note Purchase Agreement for an $18,000,000 aggregate principal amount of senior secured notes with related parties. The notes are subordinate to the Credit Agreement noted above. The notes contain an annual interest rate of 16% and mature on August 7, 2023. Payment of the notes is due in full on the maturity date. The Company may prepay the notes at a premium based upon the schedule set forth in the note purchase agreement. The note purchase agreement is collateralized by substantially all assets of Lawn Doctor, Inc. and was guaranteed by the Company. The note purchase agreement contains certain restrictive covenants inclusive of senior debt to adjusted EBITDA ratio, total debt to adjusted EBITDA ratio, fixed charge ratio, and excess cash flow. At December 31, 2021 and 2020, the Company was in compliance with all of its covenant requirements. At December 31, 2021 and 2020, $18,000,000 was outstanding on the Note Purchase Agreement with related parties.

115

LD Parent, Inc.

Notes to Consolidated Financial Statements

9.Commitments and Contingencies

Operating Leases

The Company leases its manufacturing facility and certain automobiles from unrelated parties under non-cancellable operating leases which expire on various dates through 2025. Future minimum rental payments under these leases are as follows:

Years ending December 31,
2022	$	278,697
2023		169,576
2024		28,948
2025		12,655
	$	489,876

Total rent paid for facilities and equipment was $282,570 and $253,748 for the years ended December 31, 2021 and 2020, respectively.

Employment Agreement

The Company has an employment agreement with a key executive which provides for an annual base salary plus an incentive bonus which is payable upon the achievement of certain defined financial benchmarks. The agreement expired in December 2018 and was automatically renewed for an additional one-year term. The agreement will continue to renew automatically for an additional one-year term unless the agreement is earlier terminated by either party. The agreement also includes a non-compete clause should the employee be terminated under specific terms of the agreement.

Employee Benefit Plan

The Company has a 401(k) savings retirement plan for all eligible employees. The plan allows for employee contributions to be matched by the Company on a pro rata basis. Contributions made to the plan by the Company, including fees, were $148,094 and $132,192 for the years ended December 31, 2021 and 2020, respectively.

Litigation

The Company is party to various legal proceedings that arise in the normal course of business. In the present opinion of management, none of these proceedings, individually or in the aggregate, are likely to have a material adverse effect on the consolidated financial position or consolidated results of operations or cash flows of the Company. However, management cannot provide assurance that any adverse outcome would not be material to the Company’s consolidated financial position or consolidated results of operations or cash flows.

10.Related Party Transactions

See Note 8 for note purchase agreement with the stockholders of LD Parent.

116

LD Parent, Inc.

Notes to Consolidated Financial Statements

11.Income Taxes

Deferred income taxes result from timing differences in the recognition of income and expenses for income tax and financial reporting purposes.

Net deferred tax assets and liabilities are summarized as follows:

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)

A summary of current and deferred income taxes included in the Consolidated Statements of Operations is as follows:

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

The Company’s effective income tax rate reconciles with the federal statutory rate as follows:

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	%

117

LD Parent, Inc.

Notes to Consolidated Financial Statements

The Company may be subject to examination by the Internal Revenue Service (IRS) as well as states for calendar year 2018 through 2021. The Company has not been notified of any federal income tax examinations.

12.Stock-Based Compensation

Share Options

Stock Options are issued by LD Parent pursuant to its 2018 Stock Incentive Plan (“the Plan”). The related stock-based compensation is pushed down to its subsidiary and recorded by the Company. The Company follows ASC 718, Share-Based Payment, for recording stock-based compensation. The fair value of each time-based and performance-based option award is estimated on the date of grant using a Black-Scholes option pricing model. These options, along with performance-based options, will be expensed when such events are deemed probable. Expected volatilities are based on historical volatility of an appropriate industry sector index and other factors. The expected term of options with fixed exercise prices is derived by using the midpoint between vesting and expiration as the expected term of the option grant which is permitted under the guidance. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. No stock options were granted during the years ended December 31, 2021 and 2020.

A summary of assumptions is presented below in connection with 2018 grants:

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

The Company has time-based share-based compensation arrangements under the Plan, which vest over 5 years. In addition to time-based awards, the Company has performance-based awards which vest upon meeting certain financial metrics.

118

LD Parent, Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020, the Company recorded expense of $349,113 and $258,602, respectively, in selling, general, and administrative expenses for stock-based compensation. Unamortized stock-based compensation at December 31, 2021 and 2020 was $167,391 and $516,504, respectively

13.Subsequent Events

Management has reviewed and evaluated all events and transactions as of March 15, 2022, the date that the consolidated financial statements were available for issuance.

119

Item 16.     Form 10-K Summary

None.

120

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 31st day of March, 2022.

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)

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Chirag J. Bhavsar and Tammy J. Tipton, and each of them, with full power to act without the other, such person’s true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this Form 10-K and any and all amendments thereto, and to file the same, with exhibits and schedules thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing necessary or desirable to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned and in the capacities and on the dates indicated.

121

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

122

EX-1.1

EXHIBIT 1.1

MANAGING DEALER AGREEMENT

CNL STRATEGIC CAPITAL, LLC

MANAGING DEALER AGREEMENT (this “Agreement”) is made and entered into as of the 21st day of October, 2021, between CNL STRATEGIC CAPITAL, LLC, a Delaware limited liability company (the “Company”) and CNL SECURITIES CORP., a Florida corporation (the “Managing Dealer”).

WHEREAS, the Company has prepared and filed with the U.S. Securities and Exchange Commission (the “SEC”) a registration statement on Form S-1 (Registration No. 333-253295) with respect to the continuous public offer and sale (the “Offering”) of an aggregate of up to $1,100,000,000 in shares in any combination of the Class A shares (“Class A Shares”), Class T shares (“Class T Shares”), Class D shares (“Class D Shares”) and Class I shares (“Class I Shares”) of the Company’s common stock (collectively, the “Shares”), of which up to $1,000,000,000 is intended to be offered in the Company’s primary offering (the “Primary Offering”) and up to $100,000,000 is intended to be offered pursuant to the Company’s distribution reinvestment plan (the “Distribution Reinvestment Plan”), pursuant to the Securities Act of 1933, as amended (the “1933 Act”), and the applicable rules and regulations of the SEC promulgated thereunder (the “Regulations”); provided, that the Company reserves the right to reallocate the Shares offered between the Distribution Reinvestment Plan and the Primary Offering; and

WHEREAS, the Company’s registration statement on Form S-1 and the prospectus contained therein, as finally amended or supplemented on the date the registration statement is declared effective by the SEC (including financial statements, exhibits and all other documents related thereto filed as a part thereof), and any registration statement filed under the Regulations, are respectively hereinafter referred to as the “Registration Statement” and the “Prospectus,” except that (i) if the Company files a post-effective amendment to such registration statement, then the term “Registration Statement” shall, from and after the declaration of the effectiveness of such post-effective amendment by the SEC, refer to such registration statement as amended by such post-effective amendment, and the term “Prospectus” shall refer to the amended or supplemented prospectus then on file with the SEC, and (ii) if the Prospectus filed by the Company pursuant to Rule 424(b) or 424(c) of the Regulations shall differ from the prospectus on file at the time the Registration Statement or the most recent post-effective amendment thereto, if any, shall have become effective, then the term “Prospectus” shall refer to such prospectus filed pursuant to Rule 424(b) or 424(c) from and after the date on which it shall have been filed with the SEC; and

WHEREAS, the Managing Dealer is a corporation incorporated and presently in good standing in the State of Florida, and is presently (a) registered as a broker-dealer with the SEC; (b) a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”); and (c) licensed or registered with the authorities administering the securities laws in all fifty (50) states in the United States, the District of Columbia, the Virgin Islands, and the Commonwealth of Puerto Rico as a securities broker-dealer authorized to offer and sell to members of the public securities of the type represented by the Shares; and

WHEREAS, the Offering shall be made pursuant to the terms and conditions of this Agreement, the Registration Statement and the Prospectus and, further, pursuant to the terms and conditions of all applicable federal securities laws and applicable securities laws of all jurisdictions in which the Shares are offered and sold; and

WHEREAS, the Company desires to retain the Managing Dealer to use its best efforts to offer and sell the Shares on behalf of the Company and to manage offers and sales by others, and the Managing Dealer is willing and desires to accept such retention and serve as the Managing Dealer for the Company for the sale of Shares, all upon the terms and conditions set forth in this Agreement and the Prospectus.

NOW, THEREFORE, in consideration of the terms and conditions hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is agreed between the Company and the Managing Dealer as follows:

Article 1

Appointment

Subject to and in accordance with the terms and conditions set forth in this Agreement, the Company hereby appoints the Managing Dealer as the dealer manager of the Offering to use its best efforts to effect offers and sales of the Shares pursuant to the Offering on behalf of the Company and to manage Share offers and sales by Distribution Participants (as defined below) whom the Managing Dealer may retain (“Share Offers and Sales”). The Managing Dealer hereby accepts such appointment as defined below.

Article 2

Sale of Shares

2.1Best Efforts. The Managing Dealer shall use its best efforts to conduct Share Offers and Sales in such quantities and to such persons as shall be in accordance with the terms and conditions set forth in this Agreement, the Registration Statement and the Prospectus. The Managing Dealer shall perform services hereunder during the period (the “Offering Period”) commencing on the initial effective date of the Registration Statement and ending on the earliest of the following: (a) the later of (i) three years after such effective date, or (ii) if deemed necessary by the Company, and at the Company’s election, at such later date to which the Company is permitted to extend the Offering in accordance with all applicable federal and state securities laws; (b) the acceptance by the Company of subscriptions in the Offering and pursuant to the Distribution Reinvestment Plan in an amount equal to the maximum aggregate value of the Offering as set forth in the Registration Statement and Prospectus; (c) the termination of the Offering by the Company; (d) the termination of the effectiveness of the Registration Statement; or (e) the liquidation or dissolution of the Company. Notwithstanding anything herein to the contrary, the Managing Dealer shall have no obligation under this Agreement to purchase any of the Shares for its own account.

2.2Engagement of Other Broker-Dealers. The Company hereby acknowledges and agrees that the Managing Dealer, in its sole discretion, may engage other broker-dealers who are members of FINRA (“Participating Brokers”) or investment advisers registered under the Investment Advisers Act of 1940 or under applicable state law or is a financial intermediary otherwise exempt from broker-dealer licensing or registration (“Participating Advisors” and together, with Participating Brokers, the “Distribution Participants” and each a “Distribution Participant”) to assist in the efforts to make Share Offers and Sales. Before Managing Dealer obtains such assistance from any Participating Broker, the Managing Dealer will cause such Participating Broker to execute a Participating Broker Agreement substantially in such form as is attached hereto as Exhibit A-1. Before the Managing Dealer obtains such assistance from any Participating Advisor, the Managing Dealer will cause such Participating Advisor to execute a Participating Advisor Agreement substantially in such form as is attached hereto as Exhibit A-2. (and together, with Participating Broker Agreement, “Distribution Agreements” and each a “Distribution Agreement”), provided that (a) each Distribution Participant is duly licensed or registered (or exempt from such licensing or registration) as a broker-dealer by the regulatory authorities in the jurisdictions in which such Distribution Participant will conduct Share Offers and Sales. The Managing Dealer is authorized to reallow so much of the commissions, dealer manager fees and distribution and shareholder servicing fees which it receives pursuant to Article 3 herein to Distribution Participants as the Managing Dealer deems appropriate; provided, however, that the Managing Dealer shall not reallow any such commissions, dealer manager fees or distribution and shareholder servicing fees to a Distribution Participant to the extent prohibited by applicable law. If a Participating Broker determines to directly engage certain third parties to act as a finder or a marketing consultant on their behalf, such third party must be approved in writing by the Managing Dealer (upon such approval, such an “Approved Finder/Consultant”). The Managing Dealer is authorized to reimburse Distribution Participants for due diligence expenses as the Managing Dealer deems appropriate and as provided herein.

2.3Suitability and Minimum Purchase Requirements.

(a)With respect to Share Offers and Sales, the Managing Dealer shall, and by virtue of entering into the Distribution Agreements, each Distribution Participant shall agree to and affirm that it will use every reasonable effort to assure that Shares are offered and sold (including Shares made available for purchase pursuant to the Distribution Reinvestment Plan) only to prospective investors who, in each case:

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(i)meet the investor suitability standards for the purchase of Shares, including the minimum income and net worth standards and the minimum purchase requirements set forth in the Prospectus (the “Investor Standards and Requirements”);

(ii)can reasonably benefit from an investment in the Shares based on such prospective investor’s overall investment objectives and portfolio structure;

(iii)are able to bear the economic risk of the investment based on such prospective investor’s overall financial situation; and

(iv)have an apparent understanding of (A) the fundamental risks of the investment; (B) the risk that such prospective investor may lose its entire investment; (C) the lack of liquidity of the Shares; (D) the restrictions on transferability of the Shares; (E) the background and qualifications of the managers to the Company; and (F) the tax and other legal and financial consequences of an investment in the Shares.

(b)Pursuant to the terms of the Distribution Agreements, the Managing Dealer shall require Distribution Participants to make the determinations required pursuant to Section 2.3(a) based on information they have obtained from each prospective investor, including but not limited to such prospective investor’s age, investment objectives, investment experience, income, net worth, financial situation, other investments of the prospective investor and any other pertinent factors deemed by the Managing Dealer to be relevant. The Managing Dealer will rely upon each Distribution Participant to gather such information and make such suitability determinations with respect to investors solicited by such Distribution Participant.

(c)The Managing Dealer shall require each Distribution Participant to maintain such records evidencing compliance with the determination of the Investor Standards and Requirements, as required by Sections 2.3(a) and 2.3(b) herein for a period not less than that required in order to comply with all applicable federal, state and other statutory and regulatory requirements, including, without limitation the Omnibus Guidelines of the North American Securities Administrators Association, Inc., as amended (the “NASAA Guidelines”).

(d)In connection with Share Offers and Sales conducted by the Managing Dealer, the Managing Dealer shall use reasonable efforts to ensure that each investor who elects to participate in the Distribution Reinvestment Plan meets the Investor Standards and Requirements.

(e)The Managing Dealer shall comply fully with all the applicable provisions of FINRA’s rules (the “FINRA Rules”).

(f)The Managing Dealer agrees to comply with the applicable provisions of Article III.C of the NASAA Guidelines.

(g)The Managing Dealer shall communicate to each of its sales agents, registered representatives and other appropriate persons associated with it the Investor Standards and Requirements, and shall require each Distribution Participant to acknowledge compliance with the NASAA Guidelines and the FINRA Rules.

2.4Approved Sales Literature. The Managing Dealer shall use and distribute in conjunction with Share Offers and Sales only the Prospectus, the Subscription Agreement (as defined below), and such sales literature, advertising and other material as shall have been previously approved by the Company or an authorized agent of the Company in writing and all appropriate regulatory agencies (collectively, the “Approved Sales Literature”), and hereby agrees that it shall not, and shall instruct Distribution Participants not to, use or distribute in conjunction with Share Offers and Sales any information other than Approved Sales Literature.

2.5Jurisdictions. The Managing Dealer shall conduct (and cause the Distribution Participants to conduct) Share Offers and Sales only in those jurisdictions specified in writing by the Company. The Company shall specify only such jurisdictions where the offer and sale of its Shares have been authorized by appropriate

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regulatory authorities or where it has determined such authorization is not required. No Share Offers or Sales shall be made in any other jurisdictions.

Article 3

Subscription Payment Procedures

3.1In order to purchase Shares, subscriber must complete and execute a subscription agreement in substantially the most recent form thereof attached as an exhibit or appendix to the Registration Statement (a “Subscription Agreement”). Checks for subscriptions shall be made payable in the amount per Share as described in the Prospectus, subject to certain discounts as set forth in the Prospectus. The Managing Dealer shall, and shall cause each Distribution Participant to, instruct subscribers to make checks for subscriptions payable to the order of “UMB Bank, N.A., as EA for CNL Strategic Capital, LLC” and shall promptly return any check made payable to another party to the Distribution Participants or subscriber who submitted such check no later than the end of the next business day following its receipt. The Managing Dealer shall, and shall cause Distribution Participants to, instruct subscribers to wire funds directly to UMB Bank, N.A. (the “Escrow Agent”) as set forth in the Subscription Agreement and shall, and shall cause Distribution Participants, to promptly return any wires received that do not conform to the foregoing instructions. Checks received that conform to the foregoing instructions shall be transmitted under one of the transmittal procedures described below.

3.2Where, pursuant to a Participating Broker’s internal supervisory procedures, internal supervisory review is conducted at the same location at which subscription documents and checks are received from subscribers, checks will be transmitted by the end of the next business day following receipt by the Participating Broker for deposit to DST Systems, Inc., as the processing agent for the Escrow Agent (the “Processing Agent”) or, after the Minimum Offering has been achieved, to the Company or its agent.

3.3Where, pursuant to a Participating Broker’s internal supervisory procedures, final internal supervisory review is conducted at a different location, checks will be transmitted by the end of the next business day following receipt by the Participating Broker to the office of the Participating Broker conducting such final internal supervisory review (the “Final Review Office”). The Final Review Office will in turn by the end of the next business day following receipt by the Final Review Office, transmit such checks for deposit to the Processing Agent or, after the Minimum Offering has been achieved, to the Company or its agent.

3.4Where the Managing Dealer (or its agent) receives investor proceeds, checks will be transmitted by the Managing Dealer (or its agent) for deposit to the Processing Agent or, after the Minimum Offering has been achieved, to the Company or its agent as soon as practicable but in any event by the end of the second business day following receipt by the Managing Dealer (or its agent). Checks related to rejected subscription agreements of subscribers will be promptly returned to such potential investors.

Article 4

Compensation

4.1Commissions, Managing Dealer Fees and Distribution and Shareholder Servicing Fee.

(a)Except as may be provided in the “Plan of Distribution” section of the Prospectus, the Company shall pay to the Managing Dealer, as compensation for all services to be rendered by the Managing Dealer pursuant to this Agreement, a commission of six percent (6.0%) of the gross proceeds from the completed sales of Class A Shares in the Primary Offering, and three percent (3.0%) of the gross proceeds from the completed sales of Class T Shares in the Primary Offering, regardless of whether such Shares are sold by the Managing Dealer or a Participating Broker. The Company will not pay commissions for sales of Class A or Class T Shares pursuant to the Distribution Reinvestment Plan, and will not pay commissions for sales of any Class D or Class I Shares in the Primary Offering or pursuant to the Distribution Reinvestment Plan. The Company may pay reduced commissions or eliminate commissions on certain sales of Shares in accordance with, and on the terms set forth in, the Prospectus and Section 4.2(a) and 4.2(b) herein, which reduction or elimination of commissions will not change the net proceeds to the Company. Such commission rate shall remain in effect during the full term of this Agreement unless

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otherwise changed by a written agreement between the parties hereto. The Managing Dealer may reallow all or any portion of such selling commissions to Distribution Participants in its sole discretion in compliance with applicable law.

(b)Except as may be provided in the “Plan of Distribution” section of the Prospectus, which may be amended and supplemented from time to time, the Company shall pay to the Managing Dealer a dealer manager fee for assistance in selling and marketing the Shares of two and one-half percent (2.5%) of the gross proceeds from the completed sales of Class A Shares in the Primary Offering and a dealer manager fee for assistance in selling and marketing the Shares of one and three-fourths percent (1.75%) of the gross proceeds from the completed sales of Class T Shares in the Primary Offering. The Company will not pay a dealer manager fee for sales of Class A or Class T Shares pursuant to the Distribution Reinvestment Plan, and will not pay a dealer manager fee for sales of any Class D or Class I Shares in the Primary Offering or pursuant to the Distribution Reinvestment Plan. The Managing Dealer may reallow all or any portion of this dealer manager fee for each Share sold by a Distribution Participant that agrees to comply with one or more of the following conditions:

(i)have and use internal marketing support personnel (such as telemarketers or a marketing director) to assist the Managing Dealer’s marketing team;

(ii)have and use internal marketing communications vehicles, including, but not limited to, newsletters, conference calls, interactive technology and internal mail to promote the Company and this Offering;

(iii)answer investors’ inquiries concerning monthly statements, valuations, distribution rates, tax information, annual reports, reinvestment and redemption rights and procedures, the Company’s financial status and the businesses in which the Company has invested;

(iv)assist investors with reinvestments and redemptions;

(v)maintain the technology necessary to adequately service investors as otherwise associated with the Offering; and

(vi)provide other services as requested by investors from time to time.

(c)Except as may be provided in the “Plan of Distribution” section of the Prospectus, the Company will pay to the Managing Dealer an annual distribution and shareholder servicing fee in connection with sales of Class T Shares and Class D Shares in this Offering during the term of this Agreement, subject to the limitations set forth below. The annual distribution and shareholder servicing fee of 1.0% per annum and 0.50% per annum of the then-current Primary Offering price (or, once reported, the amount of the estimated net asset value per Share) per Class T Share and Class D Share, respectively, will accrue daily and be paid to the Managing Dealer monthly in arrears, as provided in the “Plan of Distribution” section of the Prospectus. For Class T Shares and Class D Shares, the Managing Dealer agrees to provide oversight services related to administration of the annual distribution and shareholder servicing fee, which may include oversight of the Company’s Transfer Agent, tracking underwriting compensation consistent with applicable regulatory limits, and assistance with shareholder share conversions. The Managing Dealer may reallow all or a portion of the distribution and shareholder servicing fee to one or more Distribution Participants or broker-dealers providing services with respect to the Class T Shares or Class D Shares, in its sole discretion, to the extent a Distribution Agreement or other Servicing Agreement with such Distribution Participant or servicing broker-dealer provides for such a reallowance. All determinations regarding reallowance of the annual distribution and shareholder servicing fee will be made in good faith. Additionally, for Class T Shares and Class D Shares, the Managing Dealer also agrees to use commercially reasonable efforts to cause a Participating Broker to make available on-going shareholder and account maintenance services with respect to the Company’s Shares.

(d)The Company will cease paying the annual distribution and shareholder servicing fee with respect to Class T Shares held in any particular account, upon the conversion of those Class T Shares into a

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number of Class A Shares in accordance with the provisions of the Company’s Amended and Restated Limited Liability Company Agreement. If the Company redeems a portion, but not all of the Class T Shares held in a shareholder’s account, the total underwriting compensation limit and amount of underwriting compensation previously paid will be prorated between the Class T Shares that were redeemed and those Class T Shares that were retained in the account. Likewise, if a portion of the Class T Shares in a shareholder’s account is sold or otherwise transferred in a secondary transaction, the total underwriting compensation limit and amount of underwriting compensation previously paid will be prorated between the Class T Shares that were transferred and the Class T Shares that were retained in the account.

(e)The Company will cease paying the annual distribution and shareholder servicing fee with respect to Class D Shares held in any particular account, upon the conversion of the Class D Shares into a number of Class A Shares in accordance with the provisions of the Company’s Amended and Restated Limited Liability Company Agreement. If the Company redeems a portion, but not all of the Class D Shares held in a shareholder’s account, the total underwriting compensation limit and amount of underwriting compensation previously paid will be prorated between the Class D Shares that were redeemed and those Class D Shares that were retained in the account. Likewise, if a portion of the Class D Shares in a shareholder’s account is sold or otherwise transferred in a secondary transaction, the total underwriting compensation limit and amount of underwriting compensation previously paid will be prorated between the Class D Shares that were transferred and the Class D Shares that were retained in the account.

(f)The Company will further cease paying the annual distribution and shareholder servicing fee on any Class T or Class D Share that is redeemed or repurchased, as well as upon the Company’s dissolution, liquidation or the winding up of the Company’s affairs, or a merger or other extraordinary transaction in which the Company is a party and, with respect to Class T Shares, in which the Class T Shares as a class are exchanged for cash or other securities, or, with respect to Class D Shares, in which the Class D Shares as a class are exchanged for cash or other securities. If the Company liquidates (voluntarily or otherwise), dissolves or winds up its affairs, then, immediately before such liquidation, dissolution or winding up, the Class T Shares, Class D Shares, and Class I Shares will automatically convert to Class A Shares in accordance with the provisions of the Company’s Amended and Restated Limited Liability Company Agreement and the Company’s net assets, or the proceeds therefrom, will be distributed to the holders of Class A Shares, which will include all converted Class T Shares, Class D Shares, and Class I Shares, in accordance with their proportionate interests. A distribution and shareholder servicing fee will not be paid on any Class A Shares sold in the Primary Offering or pursuant to the Distribution Reinvestment Plan.

(g)The Managing Dealer may reimburse Distribution Participants for (i) technology costs and (ii) other costs and expenses associated with the Offering, the facilitation of the marketing of the Shares and the ownership of such Shares by the customers of Distribution Participants from the portion of the selling commissions and the dealer manager fee retained by the Managing Dealer.

4.2Reduced Fees and Other Fee Matters.

(a)Notwithstanding Section 4.1 herein, in accordance with and provided by the terms of the Prospectus, which may be amended and supplemented from time to time, discounts may be offered for the Company’s Shares. The amount of net proceeds to the Company will not be affected by reducing or eliminating commissions and dealer manager fees payable in connection with sales to investors described in this paragraph.

(b)In accordance with the volume discounts schedule set forth in the “Plan of Distribution” section of the Prospectus, the amount of selling commissions otherwise payable shall be reduced with respect to sales to a subscriber or group of subscribers based upon the aggregate number of Class A Shares purchased by such subscriber or group through the same Distribution Participant. Distribution Participants and/or subscribers are responsible for requesting that subscriptions be combined, if applicable, for the purpose of determining whether such subscriptions qualify for volume discounts.

(c)No selling commissions or dealer manager fees will be paid in connection with Shares purchased through the Distribution Reinvestment Plan.

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(d)A Participating Broker may withhold the selling commissions and dealer manager fees to which it is entitled from the purchase price for the Shares in the Offering and forward the balance of the subscription proceeds to the Company if (i) the Participating Broker is legally permitted to do so and (ii) (A) the Participating Broker meets all applicable net capital requirements under the rules of FINRA or other applicable rules regarding such an arrangement; (B) the Participating Broker forwards the subscription agreement to the Company and receives the Company’s written acceptance of the subscription prior to forwarding the purchase price for the Shares, net of the selling commissions and dealer manager fees to which the Participating Broker is entitled, to the Company or an agent designated by the Company; and (C) the Participating Broker verifies that there are sufficient funds in the investor’s account with the Participating Broker to cover the entire cost of the subscription.

4.3Due Diligence.

(a)The Company shall reimburse the Managing Dealer for detailed and itemized bona fide third-party due diligence expenses incurred by the Managing Dealer or reimbursed by the Managing Dealer to the Distribution Participants or their agents in connection with the Offering. All third-party due diligence expense reimbursements paid by the Managing Dealer to Distribution Participants or their agents shall be reimbursed by the Company to the Managing Dealer, subject to such Distribution Participants providing detailed and itemized invoices supporting such expenses and having received prior approval thereof from the Managing Dealer and the Company.

(b)The Managing Dealer shall keep strictly confidential all materials sent to it in connection with due diligence conducted on the Offering, including but not limited to all materials labeled “for due diligence use only” unless such material is required to be disclosed pursuant to any applicable law, regulation, judicial or administrative order, decree or subpoena, or request by a regulatory organization having authority pursuant to applicable law.

4.4Completed Sale.

(a)The Company shall accept or reject each subscription within thirty (30) days of receipt thereof. If a subscription is rejected, all related subscription funds, without deduction for any expenses, shall be returned to the subscriber within ten (10) business days following the date such subscription is rejected. A sale of a Share shall be deemed by the Company to be completed for purposes of Section 4.1 herein if and only if (i) the Company has received a properly completed and executed Subscription Agreement, together with payment of the full applicable purchase price of each purchased Share, from an investor who satisfies the applicable suitability standards and minimum purchase requirements set forth in the Prospectus as determined by the Distribution Participant (or Managing Dealer if applicable) in accordance with Section 2.3 of this Agreement; (ii) the Company has accepted such subscription; (iii) the Minimum Offering has been reached, and (iv) such investor has been admitted as a shareholder of the Company. In addition, no sale of Shares shall be completed until at least five (5) business days after the date on which the subscriber receives a copy of the Prospectus.

(b)The Managing Dealer hereby acknowledges and agrees that the Company, in its sole and absolute discretion, may accept or reject any subscription, in whole or in part, for any reason whatsoever, and no commission, dealer manager fee or annual distribution and shareholder servicing fee will be paid to the Managing Dealer with respect to that portion of any subscription which is rejected.

4.5Payment. Except as otherwise provided herein, the commissions and dealer manager fees specified in Section 4.1 herein for the sale of any Shares shall be payable in cash by the Company no later than seven (7) days after the investor subscribing for the Shares is admitted as a shareholder of the Company. Investors whose subscriptions for Shares are accepted shall be admitted no later than the end of the calendar month following the month in which such subscriptions are accepted. Notwithstanding anything to the contrary contained herein, in the event that the Company pays any commission or fees to the Managing Dealer for a sale by it or a Distribution Participant of one or more Shares and the subscription is subsequently rescinded as to one or more of the Shares covered by such subscription, the Company shall decrease the next payment of commissions or other compensation otherwise payable to the Managing Dealer by the Company under this Agreement by an amount equal to the applicable rate established in Section 4.1 of this Agreement, multiplied by the price of the Shares as to which the subscription is rescinded. In the event that no payment of commissions or other compensation is due to the

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Managing Dealer after such rescinded subscription occurs, the Managing Dealer shall pay the amount specified in the preceding sentence to the Company within seven (7) days following receipt of notice by the Managing Dealer from the Company stating the amount owed as a result of rescinded subscriptions. Notwithstanding the foregoing, no commissions, payments or amounts whatsoever will be paid to the Managing Dealer under this Article 4 unless or until the Minimum Offering has been reached. Until the Minimum Offering is reached, investments will be held in escrow. If the Minimum Offering is not reached within the time period specified in the Prospectus, investments will be promptly returned to investors in accordance with the Prospectus.

4.6The Company will not be liable or responsible to any Distribution Participant for direct payment of commissions, dealer manager fees or distribution and shareholder servicing fees to such Distribution Participant; it is the sole and exclusive responsibility of the Managing Dealer for payment of commissions, reallowance of dealer manager fees and distribution and shareholder servicing fees to Distribution Participants.

4.7Non-Cash Compensation and Sales Incentives. The Company or its affiliates may provide certain non-cash compensation for registered representatives of the Managing Dealer and the Distribution Participants or other compensation as described in the Prospectus. In accordance with FINRA regulations, these items may not in any event exceed an aggregate of $100 per annum per participating registered representative and they may not be preconditioned on the achievement of a sales target. In the event any other sales incentives are provided to registered representatives of the Managing Dealer or the Participating Brokers, they shall be paid only in cash, and such payments shall be made only to the Managing Dealer or the Participating Brokers rather than to their registered representatives. Sales incentive programs offered to the Managing Dealer or to Participating Brokers must first have been submitted for review by FINRA, and must comply with FINRA Rule 5110 or 2310, as applicable. Costs incurred in connection with such sales incentive programs, if any, shall be considered underwriting compensation.

4.8FINRA Rules. Notwithstanding the foregoing or anything contained herein to the contrary, in no event shall the Company pay or give or cause to be paid or given any compensation or incentives in excess of amounts permitted under applicable FINRA rules or published guidance. The Managing Dealer agrees that all payments to a Participating Broker-Dealer (or a designated Approved Finder/Consultant) shall be made in compliance with applicable law.

Article 5

Term of Agreement

5.1Commencement and Expiration. This Agreement shall commence as of the effective date first above written and, unless sooner terminated pursuant to Section 5.2 herein or by operation of law, shall automatically terminate at the end of the Offering Period.

5.2Termination. After this Agreement becomes effective, either party may terminate it at any time for any reason by giving thirty (30) days’ written notice to the other party; provided, however, that this Agreement shall in any event automatically terminate at the first occurrence of any of the following events: (a) the Registration Statement for offer and sale of the Shares shall cease to be effective; (b) the Company shall be dissolved or liquidated; or (c) the Managing Dealer’s license or registration to act as a broker-dealer shall be revoked or suspended by any federal, self-regulatory or state agency and such revocation or suspension is not cured within ten (10) days after the date of such occurrence. In any event, this Agreement shall be deemed suspended during any period for which such license is revoked or suspended. Either party may terminate this Agreement with respect to any class of Shares at any time for any reason by giving two (2) days’ written notice to the other party. The termination of this Agreement with respect to a specific class of Shares will not cause the Agreement to terminate with respect to any other class of Shares.

5.3Obligations Surviving Expiration or Termination.

(a)In addition to any other obligations of the Managing Dealer that survive the expiration or termination of this Agreement, the Managing Dealer, upon the expiration or termination of this Agreement, shall: (i) promptly forward to the Company any and all funds in its possession which were received from investors for the

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sale of Shares; and (ii) promptly deliver to the Company all records and documents in its possession which relate to the Offering and are not designated as dealer copies. The Managing Dealer, at its sole expense, may make and retain copies of all such records and documents, but shall keep all such information confidential. The Managing Dealer shall use its best efforts to cooperate with the Company to accomplish an orderly transfer of management of the Offering, if any, to a party designated by the Company.

(b)In addition to any other obligations of the Company that survive the expiration or termination of this Agreement, the Company, upon expiration or termination of this Agreement, shall pay to the Managing Dealer all upfront sales commissions and dealer manager fees to which the Managing Dealer is entitled under Article 4 at such time as such become payable pursuant to Article 4 herein.

Article 6

Representations, Warrants and Covenants of the Managing Dealer

6.1Representations, Warranties and Covenants. The Managing Dealer represents, warrants and covenants to the Company during the full term of this Agreement, as follows:

(a)At all times during the Offering Period, it is and shall be: (i) a corporation duly organized and validly existing under the laws of the State of Florida with full power and authority to conduct its business; (ii) a member in good standing of FINRA; and (iii) a broker-dealer registered with the SEC under the Securities Exchange Act of 1934, as amended (the “1934 Act”) and under the securities laws of all fifty (50) states, the District of Columbia, the Virgin Islands, and the Commonwealth of Puerto Rico with the authority to engage in the public offer and sale of securities of the type represented by the Shares.

(b)The Managing Dealer shall, and, by virtue of entering into the Distribution Agreement, each Distribution Participant shall agree to assure that all Share Offers and Sales are made in compliance with: (i) the terms of the Registration Statement, the Prospectus and this Agreement; (ii) the requirements of applicable federal and state securities laws and regulations; and (iii) the applicable rules of FINRA. The Managing Dealer shall not permit a Participating Broker to engage an Approved Finder/Consultant who either (i) is not a registered broker/dealer but is required to register in the U.S. as a broker/dealer or is subject to a disqualification as defined in the Exchange Act, or (ii) serves the Broker as a “foreign finder” but does not meet the qualifications of an unregistered foreign finder under applicable FINRA rules or has entered into a compensation arrangement which violates applicable foreign law.

(c)In each jurisdiction, the Managing Dealer shall, and by virtue of entering into the Distribution Agreement, each Distribution Participant shall agree to, assure that only Distribution Participants and those of the Managing Dealer’s agents, employees or representatives who have effective licenses or registrations in such jurisdiction, as and if required by the securities or “blue sky” laws of such jurisdiction, review the suitability of Shares for, offer Shares for sale to, solicit offers to buy Shares from, otherwise negotiate with respect to, discuss the terms or merits of an investment in the Shares with, or provide any documents relating to the Shares to, any investors resident in such jurisdiction.

(d)The Managing Dealer shall offer and sell, and, by virtue of entering into a Distribution Agreement, each Distribution Participant shall agree to offer and sell, the Shares only in those jurisdictions specified in writing by the Company. In effecting offers or sales in a jurisdiction, the Managing Dealer shall comply with all special conditions and limitations imposed on the Managing Dealer by such jurisdiction, as set forth in the blue sky survey (indicating the jurisdictions where it is believed offers and sales of the Shares may be made under applicable securities laws), which survey shall be made available by the Company to the Managing Dealer as soon as it is received by the Company.

(e)The Managing Dealer will not purchase Shares for its own account.

(f)The Managing Dealer has the power and authority to enter into and perform this Agreement; and the execution and delivery of this Agreement by the Managing Dealer has been duly and validly authorized by all

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necessary action. This Agreement constitutes the valid and binding agreement of the Managing Dealer, enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar state or federal debtor relief laws from time to time in effect which affect the enforcement of creditors’ rights generally and by general equitable principles. The Managing Dealer is not in violation of its articles of incorporation or bylaws or in default under any agreement, indenture or instrument the effect of which violation or default would be material to the Managing Dealer. None of: (i) the execution and delivery by the Managing Dealer of this Agreement; (ii) the consummation by the Managing Dealer of any of the transactions herein contemplated; and (iii) the compliance by the Managing Dealer with the provisions hereof, does or will in any material respect conflict with or result in a breach of any term or provision of the articles of incorporation or bylaws of the Managing Dealer or conflict with, result in a breach, violation or acceleration of, or constitute a default under, the terms of any indenture or other agreement or instrument to which the Managing Dealer is a party or by which it is bound or any material statute, order or regulation applicable to the Managing Dealer of any court, regulatory body, administrative agency or governmental body having jurisdiction over the Managing Dealer. The Managing Dealer is not a party to, bound by or in breach or violation of any indenture or other agreement or instrument or subject to or in violation of any statute, order or regulation of any court, regulatory body, administrative agency or governmental body having jurisdiction over it that adversely affects: (A) the ability of the Managing Dealer to perform its obligations under this Agreement; or (B) the business, operations, financial condition, properties or assets of the Managing Dealer, except, with respect to any indenture, agreement or other instrument, such breach that would not reasonably be expected to have a material adverse effect.

(g)The Managing Dealer, by virtue of entering into a Distribution Agreement, shall require Distribution Participants to verify the identity of each investor, if any, to whom it directly offers and sells Shares and to maintain a “customer identification program” to verify the source of the investor’s funds as required by the anti-money laundering rules of FINRA, the SEC and the Department of Treasury, and shall screen such investors against current lists of individuals and organizations available from the Office of Foreign Asset Control (“OFAC”). The Managing Dealer shall not accept subscriptions from any person, entity or organization in a blocked jurisdiction. The Managing Dealer shall file any necessary or appropriate suspicious activity reports and currency transaction reports and other required reports under applicable “know your customer” and “anti-money laundering” laws and regulations in respect of investors or potential investors. The Managing Dealer has in place and adheres to a comprehensive anti-money laundering program that meets the requirements of FINRA Rule 3310, Department of Treasury regulations issued pursuant to Title III of the USA PATRIOT Act and other applicable laws and regulations. The Managing Dealer agrees to cooperate with the Company in gathering additional information in respect of an investor or the source of the investor’s funds as reasonably requested by the Company, and agrees to cooperate with the Company in connection with anti-money laundering laws and regulations. By forwarding an investor’s subscription information to the Company, the Managing Dealer represents and warrants that it has verified the identity of the investor and the source of the investor’s funds, that the investor is not listed on the OFAC list, and that the Managing Dealer, after conducting commercially reasonable diligence, is not aware of any suspicious or illegal activity associated with the investor or the source of the investor’s funds. The Managing Dealer is not responsible for customer identification issues regarding investors identified by Distribution Participants but shall maintain a customer identification program with respect to any subscribers that the Managing Dealer offers and sells shares directly to through its accommodation accounts. With respect to a potential subscriber for Shares, who, as to the United States, is a non-resident alien individual, a foreign trust or estate, or a foreign corporation or other entity ("Foreign Investor"), the Managing Dealer shall require the Participating Broker acting on behalf of such Foreign Investor, prior to submitting a Subscription Agreement for a Foreign Investor, to have have conducted reasonable diligence to confirm (and shall have confirmed) that neither the Foreign Investor nor, as applicable, the beneficial owners of such Foreign Investor, appear on the Specially Designated Nationals and Blocked Persons List of OFAC, nor are they otherwise a party with which the Company is prohibited to deal under the laws of the United States.

(h)With respect to a potential subscriber for Shares who is a Foreign Investor, the Managing Dealer shall require the Participating Broker acting on behalf of such Foreign Investor, prior to submitting a Subscription Agreement for a Foreign Investor, to have confirmed that the Foreign Investor’s monies used to fund the purchase of the Shares are not derived from, invested for the benefit of, or related in any way to, the governments of, or persons within, any country (i) under a United States embargo enforced by OFAC, (ii) that has been designated as a “non-cooperative country or territory” by the Financial Action Task Force on Money Laundering, (iii) that has been

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designated by the United States Secretary of the Treasury as a “primary money laundering concern,” or (iv) that based on reasonable diligence, such Participating Broker does not know or have any reason to suspect that the monies used to fund the Foreign Investor’s investment in the Shares have been or will be derived from or related to any illegal activities, including but not limited to, money laundering activities, or that the proceeds from the Foreign Investor’s investment in the Shares will be used to finance any illegal activities.

(i) With respect to a potential subscriber for Shares who is a Foreign Investor, the Managing Dealer shall require the Participating Broker acting on behalf of such Foreign Investor, prior to submitting a Subscription Agreement for a Foreign Investor, to inform such Foreign Investors (or, as applicable, the beneficial owners of such Foreign Investor) in writing that (i) the Shares have been registered only with the United States Securities and Exchange Commission and in certain states and territories of the United States, (ii) that these registrations and their related protections do not apply to non-resident investors, (iii) that the Shares will not be registered under the securities laws of any foreign country, including the country where the Foreign Investor or, as applicable, the beneficial owners of the Foreign Investor are citizens, (iv) that the Prospectus is made available only in the English Language and will not be translated into other languages, and that any Foreign Investor who does not read or understand English should retain a qualified advisor or purchaser representative who can read and understand English and advise such Foreign Investor on an investment in the Shares (v) that the Company may be required to withhold U.S. federal income tax from distributions or liquidation proceeds that are otherwise exempt from withholding tax (or taxable at a reduced treaty rate), (vi) that the Prospectus discusses only the taxation of “non-U.S. shareholders” generally, such that the tax consequences to a Foreign Investor entitled to claim the benefits of an applicable tax treaty may differ from those described in the Prospectus and (vii) that Foreign Investors are advised to consult their own tax advisors with respect to the particular tax consequences to them of an investment in Shares.

(j)There are no actions or proceedings against, or investigations of, the Managing Dealer pending or, to the knowledge of the Managing Dealer, threatened, before any court, arbitrator, administrative agency or other tribunal: (i) asserting the invalidity of this Agreement; (ii) seeking to prevent the consummation of any of the transactions contemplated by this Agreement; or (iii) that might materially and adversely affect the performance by the Managing Dealer of its obligations under, or the validity or enforceability of, this Agreement.

(k)Solicitation and other activities by the Managing Dealer hereunder shall be undertaken only in accordance with this Agreement, the Prospectus, the 1933 Act, the 1934 Act, and the applicable rules and regulations of the SEC, FINRA and any other applicable securities or blue sky laws and regulations. The Managing Dealer agrees that it shall not, and by virtue of entering into a Distribution Agreement, each Distribution Participant shall agree not to, use or authorize the use of any solicitation material other than the Prospectus and Approved Sales Literature, which, in all cases, shall be accompanied or preceded by delivery of the Prospectus.

(l)The Managing Dealer agrees to be bound by the terms of the Escrow Agreement among UMB Bank, N.A., as escrow agent, the Managing Dealer and the Company, a copy of which is available upon request, and the Managing Dealer further agrees that it will not represent or imply that UMB Bank, N.A., as the escrow agent identified in the Prospectus, has investigated the desirability or advisability of an investment in the Company or has approved, endorsed or passed upon the merits of the Shares or the Company, nor will the Managing Dealer use the name of said escrow agent in any manner whatsoever in connection with the offer or sale of the Shares other than by acknowledgment that it has agreed to serve as escrow agent.

Article 7

Representations, Warrants and Covenants of the Company

7.1Representations, Warranties and Covenants. The Company represents, warrants and covenants to the Managing Dealer, during the full term of this Agreement, that:

(a)The Company has filed the Registration Statement and related Prospectus under the 1933 Act with the SEC, and has filed such amendments thereto and such amended or supplemented Prospectuses as may have been required as of the date hereof. The SEC has not issued any order preventing or suspending the use of any preliminary prospectus or the Prospectus.

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(b)At the time the Registration Statement becomes effective, including at the time that any post-effective amendment thereto becomes effective, the Registration Statement and the Prospectus contained therein shall comply with the provisions of the 1933 Act and the Regulations; at the time the Registration Statement becomes effective, including at the time that any post-effective amendment thereto becomes effective, the Registration Statement shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading; and the Registration Statement or an amendment thereto at the time it becomes effective, and the Prospectus during the Offering Period, will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading; provided, however, that the representations and warranties in this Article 7 shall not apply to statements in or omissions from the Registration Statement or the Prospectus made in reliance upon and in conformity with information furnished to the Company in writing by the Managing Dealer expressly for use in the Registration Statement or the Prospectus. Every contract or other document required by the 1933 Act or the Regulations to be filed as an exhibit to the Registration Statement has been so filed.

(c)The Company shall use its best efforts to: (i) prevent the issuance of any order by the SEC, any state regulatory authority or any other regulatory authority which suspends the effectiveness of the Registration Statement, prevents the use of the Prospectus, or otherwise prevents or suspends the Offering; and (ii) obtain the lifting of any such order if issued. The Company shall not accept any subscriptions for Shares during the effectiveness of any stop order if the Registration Statement becomes unavailable for use in connection with the Offering for any reason.

(d)The Company shall give the Managing Dealer written notice when the Registration Statement becomes effective and shall deliver to the Managing Dealer a conformed copy of the Registration Statement, including its exhibits, and such number of copies of the Registration Statement, without exhibits, and the Prospectus, and any supplements and amendments thereto which are filed with the SEC, as the Managing Dealer may reasonably request for Share Offers and Sales.

(e)To the extent required by the SEC, FINRA or state securities agencies or bodies, the Company will disclose an estimated value of the Company’s common shares, on a per Share basis, and related information, in accordance with the requirements of such agencies or bodies.

(f)In the event the Company learns of any circumstances or facts, the existence of which causes the Company to believe that such circumstances or facts: (i) render the Registration Statement or Prospectus inaccurate or misleading as to any material facts; or (ii) should under applicable law otherwise be disclosed in a supplement or amendment to the Registration Statement, Prospectus or any Approved Sales Literature, it shall file an amendment or supplement to the Registration Statement, Prospectus or to any Approved Sales Literature as soon as practicable. The Company shall promptly notify the Managing Dealer of any post-effective amendments or supplements to the Registration Statement or Prospectus and shall make available to the Managing Dealer sufficient copies thereof for its own use or distribution to the Distribution Participants for Share Offers and Sales.

(g)The Company at all times during the Offering Period is and will be duly organized and legally existing as a limited liability company pursuant to the laws of the State of Delaware with full power and authority to conduct business as described in the Prospectus; the Company has the power and authority to enter into and perform this Agreement; and the execution and delivery of this Agreement by the Company has been duly and validly authorized by all necessary corporate action. This Agreement constitutes the valid and binding agreement of the Company, enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar state or federal debtor relief laws from time to time in effect which affect the enforcement of creditors’ rights generally and by general equitable principles. The Company is not in violation of its articles of incorporation or bylaws or in default under any agreement, indenture or instrument the effect of which violation or default would be material to the Company. None of: (i) the issuance and sale of the Shares; (ii) the execution and delivery by the Company of this Agreement; (iii) the consummation by the Company of any of the transactions herein contemplated; and (iv) the compliance by the Company with the provisions hereof, does or will in any material respect (A) conflict with or result in a breach of any term or provision

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of the articles of incorporation or bylaws of the Company or (B) conflict with, result in a breach, violation or acceleration of, or constitute a default under, the terms of any indenture or other agreement or instrument to which the Company is a party or by which it is bound or any material statute, order or regulation applicable to the Company of any court, regulatory body, administrative agency or governmental body having jurisdiction over the Company. The Company is not a party to, bound by or in breach or violation of any indenture or other agreement or instrument, or subject to or in violation of any statute, order or regulation of any court, regulatory body, administrative agency or governmental body having jurisdiction over it that adversely affects: (A) the ability of the Company to perform its obligations under this Agreement; or (B) the business, operations, financial condition, properties or assets of the Company, except, with respect to any indenture, agreement or other instrument, such breach that would not reasonably be expected to have a material adverse effect.

(h)There are no actions or proceedings against, or investigations of, the Company pending or, to the knowledge of the Company, threatened, before any court, arbitrator, administrative agency or other tribunal: (i) asserting the invalidity of this Agreement; (ii) seeking to prevent the issuance of the Shares or the consummation of any of the transactions contemplated by this Agreement; (iii) that might materially and adversely affect the performance by the Company of its obligations under, or the validity or enforceability of, this Agreement, or the Shares; or (iv) seeking to affect materially and adversely the federal income tax attributes of the Shares as described in the Prospectus. As of the date hereof, as of the date on which the Registration Statement (or any amendment thereto) becomes effective, and as of the date on which the Prospectus (or any supplement thereto) is filed with the SEC, there has not been and shall not have been: (A) any request by the SEC for any further amendment to the Registration Statement or the Prospectus or for any additional information; (B) any issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or, to the knowledge of the Company, the institution or threat of any proceeding for that purpose; or (C) any notification with respect to the suspension of the qualification of the Shares for sale in any jurisdiction or, to the knowledge of the Company, any initiation or threat of any proceeding for such purpose. No consent, approval, authorization or order of, or filing or registration with, any state or federal court or governmental agency or body other than FINRA approval or as otherwise expressly noted in this Agreement for the effectiveness of the Registration Statement, and blue sky filings is required for the consummation by the Company of the transactions contemplated by the terms of the Agreement.

(i)Any taxes, fees and other governmental charges in connection with the execution and delivery of this Agreement or the execution, delivery and sale of the Shares have been or will be paid on or prior to the date first above written.

(j)The Company is not, will not become by virtue of the transactions contemplated by the Prospectus and the application of the net proceeds therefrom as contemplated in the Prospectus, and does not intend to conduct its business so as to be, an “investment company” as that term is defined in the Investment Company Act of 1940, as amended and the rules and regulations thereunder, and it will exercise reasonable diligence to ensure that it does not become an “investment company” within the meaning of the Investment Company Act of 1940.

(k)The Company has complied and will comply with all applicable federal and state laws in connection with the offer and sale of the Shares as well as the laws of any other applicable jurisdiction.

(l)The Company shall, during the full term of this Agreement, abide by all applicable provisions of its governing instruments, as the same may be amended.

(m)The Company shall use its best efforts to cause, at or prior to the time the Registration Statement becomes effective, the qualification or registration of the Shares for offering and sale under the securities laws of such jurisdictions as shall be determined by the Company, in consultation with the Managing Dealer.

(n)The Company has not, prior to the date of this Agreement, engaged in any activities with respect to the interests of this Agreement that would be inconsistent with any of the provisions of this Agreement, except for any activities that would not have a material adverse effect on the Company.

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(o)The Shares have been duly authorized, and, when issued, delivered and paid for in accordance with the terms of the Agreement and as described in the Prospectus and the Company’s charter, shall be duly and validly issued, fully paid and non-assessable and shall conform, in all material respects, to the description thereof contained in the Prospectus; no holder thereof shall be subject to personal liability for the obligations of the Company solely by reason of being such a holder; such Shares are not subject to any statutory preemptive rights of any shareholder of the Company; and all corporate action required to be taken for the authorization, issue and sale of such Shares has been validly and sufficiently taken.

(p)The financial statements of the Company included or incorporated by reference in the Prospectus fairly present in all material respects the financial position of the Company as of the date indicated and have been prepared in conformity with generally accepted accounting principles as in effect in the United States of America from time to time or such other accounting basis mandated by the SEC.

(q)The Company has filed all material federal, state and foreign income tax returns required to be filed by or on behalf of the Company on or before the due dates therefore (taking into account all extensions of time to file) and has paid or provided for the payment of all such material taxes indicated by such tax returns and all assessments received by the Company to the extent that such taxes or assessments have become due.

Article 8

Payment of Costs and Expenses

8.1Managing Dealer. The Managing Dealer shall pay all of its own costs and expenses, including the fees and expenses of counsel, incident to the performance of its obligations under this Agreement which are not expressly assumed by the Company in Section 4.3, the indemnification provisions of Article 9 and hereunder in Section 8.2.

8.2Company. The Company shall pay all third-party costs and expenses related to:

(a)the registration of the Offering with the SEC, including the cost of preparation, printing, filing and delivery of the Registration Statement and all copies of the Prospectus used in the Offering, and any amendments or supplements to such documents;

(b)the preparation and printing of the form of Subscription Agreement to be used in the sale of the Shares;

(c)the preparation and printing of the blue sky memorandum or survey and the qualification or registration of the Shares under the securities or “blue sky” laws of the jurisdictions where the Shares are to be offered or sold;

(d)the filing of the Registration Statement and any related documents, including any amendments or supplements to such documents with FINRA;

(e)the preparation, printing and filing of all advertising and Approved Sales Literature relating to the Company or the sale of Shares; and

(f)any filing fees, and fees and disbursements to its counsel, accountants, transfer agents, escrow agents and other agents which are in any way related to any of the above items.

- 14 -

Article 9

Indemnification

9.1Indemnification.

(a)The Company agrees, to the extent permitted by applicable federal and state law (including, but not limited to federal and state securities law), to indemnify, defend and hold harmless the Managing Dealer and each Distribution Participant and their respective officers, directors, partners, employees, associated persons, agents and control persons, (collectively, the “Distribution Participant Indemnified Persons”) from and against any and all losses, claims, damages, liabilities and expenses, including reasonable legal and other expenses incurred in defense of any thereof, whether joint or several, under the 1933 Act or otherwise (collectively, “Losses”), to which the Managing Dealer or a Distribution Participant may (or may be threatened to) become subject, insofar as such Losses or any Proceeding (as defined below) in respect thereof arise out of or are based upon: (i) a breach or alleged breach by the Company of any of its representations, warranties or covenants in this Agreement, or (ii) an untrue statement or alleged untrue statement of a material fact (or any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading) contained in the Approved Sales Literature, the Registration Statement or the Prospectus, or any amendment or supplement thereto (except to the extent any such actual or alleged statement or omission is based on information supplied by or on behalf of the Managing Dealer or such Distribution Participant); and the Company shall reimburse each Distribution Participant Indemnified Person for any legal or other expenses (including, but not limited to, reasonable attorneys’ fees) reasonably incurred by such Distribution Participant Indemnified Person in connection with investigating or defending any actual or threatened claim, action, suit or other proceeding in respect of any Loss (a “Proceeding”) instituted against or faced by the Managing Dealer or a Distribution Participant, whether or not resulting in any liability. For purposes of this Article 9, “control person” means, with respect to any particular person, any other person who possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of such particular person, whether through the ownership of voting securities, by contract, or otherwise. For purposes of this Article 9, “associated persons” shall be as defined under FINRA laws and regulations.

(b)The Company shall not be required to indemnify or hold harmless any Distribution Participant Indemnified Person from or against any Loss suffered by the Managing Dealer, or a Distribution Participant unless: (i) such Distribution Participant Indemnified Person has determined, in good faith, that its course of conduct was in the best interests of the Company; (ii) such Distribution Participant Indemnified Person was acting on behalf of or performing services on behalf of the Company; (iii) such Loss was not the result of negligence or misconduct on the part of such Distribution Participant Indemnified Person or any other Distribution Participant Indemnified Person; and (iv) such Loss is recoverable only out of the net assets of the Company and not from the personal assets of its shareholders.

(c)Notwithstanding anything to the contrary in Section 9.1(a), a Distribution Participant Indemnified Person shall not be indemnified by the Company for any Loss arising from or out of an alleged violation of federal or state securities laws by such Distribution Participant Indemnified Person unless one or more of the following conditions are met: (i) there has been a successful adjudication on the merits of each count involving alleged securities laws violations as to such Distribution Participant Indemnified Person; (ii) such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to such Distribution Participant Indemnified Person; or (iii) a court of competent jurisdiction approves a settlement of the claims against such Distribution Participant Indemnified Person and finds that indemnification of the settlement and related costs should be made, and the court considering the request for indemnification has been advised of the position of the SEC and of the published position of any state securities regulatory authority in which securities of the Company were offered or sold as to indemnification for violations of securities laws.

(d)The Managing Dealer shall indemnify, defend and hold harmless the Company and its officers, directors, partners, employees, associated persons, agents and control persons (collectively, the “Company Indemnified Persons”), from and against any and all Losses to which the Company may become subject, insofar as such Losses (or actions in respect thereof) arise out of or are based upon: (i) a breach or alleged breach by the Managing Dealer of any of its representations, warranties or covenants in this Agreement, (ii) any untrue statement

- 15 -

or alleged untrue statement of any material fact made by the Managing Dealer or any of its officers, directors, partners, employees, associated persons, agents and control persons, to any offeree or purchaser of any Shares (other than any statement contained in the Prospectus or any Approved Sales Literature, or any amendment or supplement thereto, unless such statement was based on information supplied by the Managing Dealer), or (iii) any omission or alleged omission by the Managing Dealer or any of its officers, directors, partners, employees, associated persons, agents and control persons, to state to any offeree or purchaser of any Shares a material fact necessary in order to make the statements made to such offeree or purchaser not misleading in light of the circumstances under which they were made (other than any such material fact omitted from Approved Sales Literature, the Prospectus, or any amendment or supplement thereto, unless such omission was based on information supplied by the Managing Dealer); and shall reimburse each Company Indemnified Person for any legal or other expenses (including, but not limited to, reasonable attorneys’ fees) reasonably incurred by such Company Indemnified Person in connection with investigating or defending any Proceeding, whether or not resulting in any liability.

(e)The Distribution Agreements shall contain a provision by which each Distribution Participant agrees to indemnify and hold harmless the Company from and against certain Losses resulting from specified acts or omissions of such Distribution Participant, and designates the Company as a third-party beneficiary empowered to enforce such provision.

9.2Contribution and Notices.

(a)If the rights to indemnification provided for in Section 9.1 would by their terms be available to a person hereunder (collectively, the “Indemnified Parties” and individually, an “Indemnified Party”), but is held to be unavailable by a court of competent jurisdiction for any reason, then the Company, the Managing Dealer and the Distribution Participants, to the extent an indemnifying party with respect to an Indemnified Party (each to such extent, an “Indemnifying Party”), shall contribute to the aggregate of such losses, claims, damages and liabilities as are contemplated in those paragraphs (including, but not limited to, any investigation, legal and other expenses incurred in connection with, and any amount paid in settlement of, any claim, action, suit or proceeding) in the ratio in which the net proceeds of the Offering of Shares have been actually received and retained by such Indemnifying Party. However, the right of contribution described in the preceding sentences is subject to the following limitation: No person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the 1933 Act shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

(b)Any Indemnified Party entitled to contribution or indemnification under this Article 8 shall, promptly after receipt of such notice of commencement of any action, suit, proceeding or claim against him or it in respect of which a claim for contribution or indemnification may be made against another Indemnifying Party or Indemnifying Parties, notify such other Indemnifying Party or Indemnifying Parties. Failure to so notify such other Indemnifying Party or Indemnifying Parties shall not relieve such other Indemnifying Party or Indemnifying Parties from any other obligation it or they may have hereunder or otherwise, unless the Indemnifying Party has been materially prejudiced in its ability to defend the action as a result of such delay. If such other Indemnifying Party or Indemnifying Parties are so notified, such other Indemnifying Party or Indemnifying Parties shall be entitled to participate in the defense of such action, suit, proceeding or claim at its or their own expense or in accordance with arrangements satisfactory to all parties who may be required to contribute. After notice from such other Indemnifying Party or Indemnifying Parties to the Indemnified Party entitled to contribution or indemnification of its or their acknowledgement of its or their obligations hereunder and its or their election to assume its or their own defense, the Indemnifying Party or Indemnifying Parties so electing shall not be liable for any legal or other expenses of litigation subsequently incurred by the Indemnified Party entitled to indemnification or contribution in connection with the defense thereof, other than the reasonable costs of investigation. No party shall be required to contribute or provide indemnification with respect to the settlement amount of any action or claim settled without its consent.

Article 10

Miscellaneous

- 16 -

10.1Notices. Any notice, approval, request, authorization, direction or other communication under this Agreement shall be given in writing and shall be deemed to be delivered when delivered in person or deposited in the United States mail, properly addressed and stamped with the required postage, registered or certified mail, return receipt requested, to the intended recipient as set forth below.

If to the Company:	CNL Strategic Capital, LLC CNL Center at City Commons 450 South Orange Avenue Orlando, Florida 32801
If to the Managing Dealer:	CNL Securities Corp. CNL Center at City Commons 450 South Orange Avenue Orlando, Florida 32801

Any party may change its address specified above by giving each other party notice of such change in accordance with this Section 10.1.

10.2Invalid Provision. The invalidity or unenforceability of any provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision were omitted.

10.3No Partnership. Nothing in this Agreement shall be construed or interpreted to constitute the Managing Dealer or the Distribution Participants as being in association with or in partnership with the Company or one another, and instead, this Agreement only shall constitute the Managing Dealer as a broker authorized by the Company to sell and to manage the sale by others of the Shares according to the terms set forth in the Registration Statement, the Prospectus and this Agreement. Nothing herein contained shall render the Managing Dealer or the Company liable for the obligations of any of the Distribution Participants or one another.

10.4Third-Party Beneficiaries. The Distribution Participants shall be third-party beneficiaries of Article 9 of this Agreement; otherwise, there shall be no third-party beneficiaries of this Agreement, and other than the Distribution Participants with respect to Article 9, no provision of this Agreement is intended for the benefit of any person or entity not a party to this Agreement, and no third party shall be deemed to be a beneficiary of any provision of this Agreement. Further, no other third party shall by virtue of any provision of this Agreement have a right of action or an enforceable remedy against either party to this Agreement.

10.5Survival. The following provisions of the Agreement shall survive the expiration or termination of this Agreement: Section 4.1 (including permissible ongoing payments of the Distribution Fee) and 4.5 (for sales occurring prior to termination), Article 8, Article 9, and this Article 10.

10.6Entire Agreement. This Agreement constitutes the complete understanding among the parties hereto, and no variation, modification or amendment to this Agreement shall be deemed valid or effective unless and until it is signed by all parties hereto.

10.7Definitions. Any terms used but not defined herein shall have the meanings given to them in the Prospectus.

10.8Successors and Assigns. No party shall assign (voluntarily, by operation of law or otherwise) this Agreement or any right, interest or benefit under this Agreement without the prior written consent of the other party. Subject to the foregoing, this Agreement shall be fully binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors and assigns.

- 17 -

10.9Nonwaiver. The failure of any party to insist upon or enforce strict performance by the other party of any provision of this Agreement or to exercise any right under this Agreement shall not be construed as a waiver or relinquishment to any extent of such party’s right to assert or rely upon any such provision or right in that or any other instance; rather, such provision or right shall be and remain in full force and effect.

10.10Applicable Law. This Agreement shall be interpreted, construed and enforced in all respects in accordance with the laws of the State of Florida without reference to conflict of laws principles.

10.11Access to Information. In connection with the Managing Dealer’s engagement hereunder, the Company shall make available to the Managing Dealer any information concerning the Offering as the Managing Dealer reasonably requests. The Company shall use commercially reasonable efforts to assure the accuracy and completeness of all of such information at the time it is furnished to Managing Dealer. The Managing Dealer shall treat all information provided by the Company as confidential per the provisions contained in Section 4.3(b) herein.

10.12Transfer Agent. The Company may authorize the Transfer Agent to provide information to a Distribution Participant regarding record holder information about the clients of such Distribution Participant who have invested with the Company on an on-going basis for so long as such Distribution Participant has a relationship with such client. The Managing Dealer shall require that Distribution Participants not disclose any password for a restricted website or portion of website provided to such Distribution Participant in connection with the Offering and not disclose to any person, other than an officer, director, employee or agent of such Distribution Participants with a need to know, any material downloaded from such a restricted website or portion of a restricted website.

10.13Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument comprising this Agreement. Facsimile signatures on counterparts of this Agreement are hereby authorized and shall be acknowledged as if such facsimile signatures were an original execution.

(signature page follows)

- 18 -

IN WITNESS WHEREOF, the parties hereto have each duly executed this Managing Dealer Agreement as of the day and year set forth in the preamble to this Agreement.

COMPANY:
By:	/s/ Tammy Tipton
Name:	Tammy J. Tipton
Title:	Chief Financial Officer
MANAGING DEALER:
By:	/s/ Erin Gray
Name:	Erin M. Gray
Title:	Group General Counsel

- 19 -

Exhibit A-1

Participating Broker Agreement

- 20 -

Exhibit A-2

Participating Advisor Agreement

- 21 -

EX-21.1

EXHIBIT 21.1

LIST OF SUBSIDIARIES

Name of Subsidiary	Jurisdiction
Absolute Title, Inc.	Michigan
ATA Holding Company LLC	Delaware
ATA National Title Group, LLC	Michigan
ATA Strategic Capital DebtCo, LLC	Delaware
ATA Strategic Capital EquityCo, LLC	Delaware
Auriemma Consulting Group, Inc.	New York
Benefit Concepts Systems, Inc.	Delaware
Blue Ridge TopCo, LLC	Delaware
Blue Ridge MidCo, LLC	Delaware
BR Strategic Capital DebtCo, LLC	Delaware
BR Strategic Capital EquityCo, LLC	Delaware
Coastal Pension Services, LLC	Delaware
Clarion Safety Buyer, LLC	Delaware
Clarion Safety Holdings, LLC	Delaware
Clarion Safety Systems, LLC	Pennsylvania
Clarion Strategic Capital DebtCo, LLC	Delaware
Clarion Strategic Capital EquityCo, LLC	Delaware
CNL Strategic Capital B, Inc.	Delaware
CNL Strategic Capital InvestCo, Inc.	Delaware
DM Strategic Capital DebtCo, LLC	Delaware
DM Strategic Capital EquityCo, LLC	Delaware
Douglas Machines Holdings, LLC	Delaware
Douglas Machines Corp.	Delaware
Ecomaids, LLC	Delaware
Edgar, Dunn & Company	Delaware
Global-Flex Mfg.	California
International Benefit Planners, LLC	California
Huron Title Buyer, LLC	Delaware
Lado Agency, Inc.	New Jersey
Healthcare Safety Holdings, LLC	Delaware
Lawn Doctor, Inc.	New Jersey
LD Parent, Inc.	Delaware
LD Strategic Capital DebtCo, LLC	Delaware
LD Strategic Capital EquityCo, LLC	Delaware
M&F Properties, Inc.	New Jersey
Milton Industries, Inc.	Delaware
Milton MidCo, LLC	Delaware
Milton Strategic Capital DebtCo, LLC	Delaware
Milton Strategic Capital EquityCo, LLC	Delaware
Milton TopCo, LLC	Delaware

1

Mosquito Hunters, LLC	New Jersey
Polyform Holdings, Inc.	Delaware
Polyform Products Company, Inc.	Delaware
Polyform Strategic Capital DebtCo, LLC	Delaware
Polyform Strategic Capital EquityCo, LLC	Delaware
RE Strategic Capital B, Inc.	Delaware
RE Strategic Capital DebtCo, LLC	Delaware
RE Strategic Capital EquityCo, LLC	Delaware
REG Buyer, LLC	Delaware
REG Holdings, LLC	Delaware
REG Parent, LLC	Delaware
Resolution Economics, LLC	Delaware
Roundtable Equity Holdings, LLC	Delaware
Shina Corporation	South Korea
Talon Title Agency LLC	Ohio
Thunder Technologies, LLC	Michigan
Tool Group Holdings Corp.	Delaware
Transition Finance Strategies, LLC	Virginia
Ultimed, Inc.	Minnesota
UM Holding Corp.	Indiana
UM Strategic Capital DebtCo, LLC	Delaware
UM Strategic Capital EquityCo, LLC	Delaware
USR Strategic Capital DebtCo, LLC	Delaware
USR Strategic Capital EquityCo, LLC	Delaware

2

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Chirag J. Bhavsar, certify that:

1.    I have reviewed this annual report on Form 10-K of CNL Strategic Capital, LLC (the “Registrant”);

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4.    The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a)    designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)    evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.    The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a)    all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b)    any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: March 31, 2022	By:	/s/ Chirag J. Bhavsar
		Chirag J. Bhavsar
		Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Tammy J. Tipton, certify that:

1.    I have reviewed this annual report on Form 10-K of CNL Strategic Capital, LLC (the “Registrant”);

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4.    The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a)    designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)    evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.    The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a)    all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b)    any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: March 31, 2022	By:	/s/ Tammy J. Tipton
		Tammy J. Tipton
		Chief Financial Officer (Principal Financial and Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of CNL Strategic Capital, LLC (the “Company”) on Form 10-K for the year ended December 31, 2021, as filed with the United States Securities and Exchange Commission on the date hereof (the “Report”), I, Chirag J. Bhavsar, Chief Executive Officer and Tammy J. Tipton, Chief Financial Officer of the Company, each certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of the operations of the Company.

Date: March 31, 2022	/s/ Chirag J. Bhavsar
	Chirag J. Bhavsar
	Chief Executive Officer (Principal Executive Officer)
Date: March 31, 2022	/s/ Tammy J. Tipton
	Tammy J. Tipton
	Chief Financial Officer (Principal Financial and Accounting Officer)

XML

Cover Page - USD ($)	12 Months Ended
	Dec. 31, 2021	Mar. 28, 2022	Jun. 30, 2021
Document Information [Line Items]
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2021
Document Transition Report	false
Entity File Number	333-222986
Entity Registrant Name	CNL STRATEGIC CAPITAL, LLC
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	32-0503849
Entity Address, Address Line One	CNL Center at City Commons
Entity Address, Address Line Two	450 South Orange Avenue
Entity Address, State or Province	FL
Entity Address, City or Town	Orlando,
Entity Address, Postal Zip Code	32801
City Area Code	407
Local Phone Number	650-1000
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
ICFR Auditor Attestation Flag	false
Entity Shell Company	false
Documents Incorporated by Reference	Registrant incorporates by reference portions of the CNL Strategic Capital, LLC definitive proxy statement for the 2022 Annual Meeting of Shareholders (Items 10, 11, 12, 13 and 14 of Part III) to be filed no later than April 30, 2022. Certain exhibits previously filed with the Securities and Exchange Commission are incorporated by reference into Part IV of this report.
Amendment Flag	false
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	FY
Entity Central Index Key	0001684682
Current Fiscal Year End Date	--12-31
Entity Public Float			$ 0
Class A
Document Information [Line Items]
Title of 12(g) Security	Class A Shares of Limited Liability Company Interests, $0.001 par value per share
Entity Common Stock, Shares Outstanding		1,575,181
Class FA
Document Information [Line Items]
Title of 12(g) Security	Class FA Shares of Limited Liability Company Interests, $0.001 par value per share
Entity Common Stock, Shares Outstanding		4,558,900
Class T
Document Information [Line Items]
Title of 12(g) Security	Class T Shares of Limited Liability Company Interests, $0.001 par value per share
Entity Common Stock, Shares Outstanding		1,656,119
Class D
Document Information [Line Items]
Title of 12(g) Security	Class D Shares of Limited Liability Company Interests, $0.001 par value per share
Entity Common Stock, Shares Outstanding		1,084,169
Class I
Document Information [Line Items]
Title of 12(g) Security	Class I Shares of Limited Liability Company Interests, $0.001 par value per share
Entity Common Stock, Shares Outstanding		5,928,188
Class S
Document Information [Line Items]
Title of 12(g) Security	Class S Shares of Limited Liability Company Interests, $0.001 par value per share
Entity Common Stock, Shares Outstanding		1,766,079

XML

Audit Information	12 Months Ended
	Dec. 31, 2021
Audit Information [Abstract]
Auditor Firm ID	42
Auditor Name	Ernst & Young LLP
Auditor Location	Orlando, Florida

XML

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES - USD ($)	Dec. 31, 2021		Dec. 31, 2020
Assets
Investments at fair value (amortized cost of $387,753,685 and $197,457,113, respectively)	$ 455,996,741	[1],[2]	$ 231,197,454	[3],[4]
Cash	58,704,208		82,688,211
Deferred offering expenses	0		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	0		0
Common shares	15,813		10,459
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, Total Members’ Equity	500,308,997	[1],[2]	308,962,908	[3],[4]
Class FA
Members’ Equity (Net Assets)
Common shares	4,559		4,579
Net assets, Total Members’ Equity	148,716,308		137,237,594
Class A
Members’ Equity (Net Assets)
Common shares	1,461		1,034
Net assets, Total Members’ Equity	44,957,765		29,747,587
Class T
Members’ Equity (Net Assets)
Common shares	1,609		655
Net assets, Total Members’ Equity	49,328,483		18,771,713
Class D
Members’ Equity (Net Assets)
Common shares	1,008		454
Net assets, Total Members’ Equity	30,606,947		12,813,290
Class I
Members’ Equity (Net Assets)
Common shares	5,410		1,967
Net assets, Total Members’ Equity	168,704,080		57,147,617
Class S
Members’ Equity (Net Assets)
Common shares	1,766		1,770
Net assets, Total Members’ Equity	$ 57,995,414		$ 53,245,107

[1] Percentages represent fair value as a percentage of net assets for each investment category.

[2] Security may be an obligation of one or more entities affiliated with the named company.

[3] Percentages represent fair value as a percentage of net assets for each investment category.

[4] Security may be an obligation of one or more entities affiliated with the named company.

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CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 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	0	(3,301,473)
Reimbursement of expense support	1,830,920	0
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	0
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 (usd per share)	$ 0.79	$ 0.93
Net increase in net assets resulting from operations (usd per share)	$ 3.39	$ 3.72
Weighted average number of common shares outstanding (in shares)	12,696,345	8,084,469

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CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS - USD ($)	12 Months Ended
	Dec. 31, 2021		Dec. 31, 2020
Changes In Net Assets, Common Shares, Number Of Shares [Roll Forward]
Beginning balance (in shares)	10,458,248		6,354,831
Repurchase of common shares pursuant to share repurchase program (in shares)	(107,038)		(341,225)
Ending balance (in shares)	15,813,031		10,458,248
Investment Company, Net Assets [Roll Forward]
Par value, beginning balance	$ 10,459		$ 6,355
Capital in excess of par value, beginning balance	278,908,028		164,349,125
Distributable earnings, beginning balance	30,044,421		9,927,411
Total net assets, beginning balance	308,962,908	[1],[2]	174,282,891
Net investment income	10,092,849		7,493,472
Net change in unrealized appreciation on investments, net of tax	32,892,641		22,552,891
Distributions to shareholders	(15,489,084)		(9,929,353)
Issuance of common shares through the Offerings	162,966,169		122,100,131
Issuance of common shares through distribution reinvestment plan	4,174,382		2,109,793
Repurchase of common shares pursuant to share repurchase program	(3,290,868)		(9,646,917)
Par value, ending balance	15,813		10,459
Capital in excess of par value, ending balance	442,752,357		278,908,028
Distributable earnings, ending balance	57,540,827		30,044,421
Total net assets, ending balance	$ 500,308,997	[3],[4]	$ 308,962,908	[1],[2]
Public Offering
Changes In Net Assets, Common Shares, Number Of Shares [Roll Forward]
Issuance of common shares through the Offerings (in shares)	5,324,390		4,367,120
Investment Company, Net Assets [Roll Forward]
Issuance of common shares through the Offerings			$ 4,367
Distribution Reinvestment Plan
Changes In Net Assets, Common Shares, Number Of Shares [Roll Forward]
Issuance of common shares through distribution reinvestment plan (in shares)	137,431		77,522
Investment Company, Net Assets [Roll Forward]
Issuance of common shares through distribution reinvestment plan	$ 4,174,382		$ 2,109,793
Capital in Excess of Par Value
Investment Company, Net Assets [Roll Forward]
Issuance of common shares through the Offerings	162,960,845		122,095,764
Issuance of common shares through distribution reinvestment plan	4,174,245		2,109,715
Repurchase of common shares pursuant to share repurchase program	$ (3,290,761)		$ (9,646,576)
Share Repurchase Program
Changes In Net Assets, Common Shares, Number Of Shares [Roll Forward]
Repurchase of common shares pursuant to share repurchase program (in shares)	(107,038)		(341,225)
Investment Company, Net Assets [Roll Forward]
Repurchase of common shares pursuant to share repurchase program	$ (107)		$ (341)
Common Shares | Public Offering
Investment Company, Net Assets [Roll Forward]
Issuance of common shares through the Offerings	5,324
Common Shares | Distribution Reinvestment Plan
Investment Company, Net Assets [Roll Forward]
Issuance of common shares through distribution reinvestment plan	$ 137		$ 78

[1] Percentages represent fair value as a percentage of net assets for each investment category.

[2] Security may be an obligation of one or more entities affiliated with the named company.

[3] Percentages represent fair value as a percentage of net assets for each investment category.

[4] Security may be an obligation of one or more entities affiliated with the named company.

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 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	0
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	0	(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	0
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

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CONSOLIDATED SCHEDULE OF INVESTMENTS		12 Months Ended
		Dec. 31, 2021 USD ($)		Dec. 31, 2020 USD ($)
Cost		$ 387,753,685	[1],[2]	$ 197,457,113	[3],[4]
Fair Value		455,996,741	[1],[2]	231,197,454	[3],[4]
OTHER ASSETS IN EXCESS OF LIABILITIES–8.8%		44,312,256	[1],[2]	77,765,454	[3],[4]
NET ASSETS–100.0%		500,308,997	[1],[2]	308,962,908	[3],[4]
Total Senior Secured Notes
Cost		152,542,454	[1],[2]	78,042,454	[3],[4]
Fair Value		152,542,454	[1],[2]	78,042,454	[3],[4]
Senior Secured Note – First Lien–23.3%
Cost		116,600,000	[1],[2]	42,100,000	[3],[4]
Fair Value		$ 116,600,000	[1],[2]	$ 42,100,000	[3],[4]
Senior Secured Note – First Lien–23.3% | ATA
Interest Rate	[1],[2]	0.150
Senior Secured Note – First Lien–23.3% | ATA | Real Estate Services
Principal Amount / No. Shares	[1],[2]	$ 37,000,000
Cost	[1],[2]	37,000,000
Fair Value	[1],[2]	$ 37,000,000
Senior Secured Note – First Lien–23.3% | Auriemma U.S. Roundtables
Interest Rate	[1],[2]	0.080
Senior Secured Note – First Lien–23.3% | Auriemma U.S. Roundtables | Information Services and Advisory Solutions
Principal Amount / No. Shares	[1],[2]	$ 2,000,000
Cost	[1],[2]	2,000,000
Fair Value	[1],[2]	$ 2,000,000
Senior Secured Note – First Lien–23.3% | Clarion Safety Systems
Interest Rate	[1],[2]	0.150
Senior Secured Note – First Lien–23.3% | Clarion Safety Systems | Visual Safety Solutions
Principal Amount / No. Shares	[1],[2]	$ 22,500,000
Cost	[1],[2]	22,500,000
Fair Value	[1],[2]	$ 22,500,000
Senior Secured Note – First Lien–23.3% | Douglas Machines Corp.
Interest Rate	[1],[2]	0.160
Senior Secured Note – First Lien–23.3% | Douglas Machines Corp. | Sanitation Products
Principal Amount / No. Shares	[1],[2]	$ 15,000,000
Cost	[1],[2]	15,000,000
Fair Value	[1],[2]	$ 15,000,000
Senior Secured Note – First Lien–23.3% | HSH
Interest Rate		0.150	[1],[2]	0.150	[3],[4]
Senior Secured Note – First Lien–23.3% | HSH | Healthcare Supplies
Principal Amount / No. Shares		$ 24,400,000	[1],[2]	$ 24,400,000	[3],[4]
Cost		24,400,000	[1],[2]	24,400,000	[3],[4]
Fair Value		$ 24,400,000	[1],[2]	$ 24,400,000	[3],[4]
Senior Secured Note – First Lien–23.3% | Polyform Products, Co.
Interest Rate		0.160	[1],[2]	0.160	[3],[4]
Senior Secured Note – First Lien–23.3% | Polyform Products, Co. | Hobby Goods and Supplies
Principal Amount / No. Shares		$ 15,700,000	[1],[2]	$ 15,700,000	[3],[4]
Cost		15,700,000	[1],[2]	15,700,000	[3],[4]
Fair Value		15,700,000	[1],[2]	$ 15,700,000	[3],[4]
Senior Secured Note – First Lien–23.3% | Auriemma U.S. Roundtables
Interest Rate	[3],[4]			0.080
Senior Secured Note – First Lien–23.3% | Auriemma U.S. Roundtables | Information Services and Advisory Solutions
Principal Amount / No. Shares	[3],[4]			$ 2,000,000
Cost	[3],[4]			2,000,000
Fair Value	[3],[4]			2,000,000
Senior Secured Note – Second Lien–7.2%
Cost		35,942,454	[1],[2]	35,942,454	[3],[4]
Fair Value		$ 35,942,454	[1],[2]	$ 35,942,454	[3],[4]
Senior Secured Note – Second Lien–7.2% | Auriemma U.S. Roundtables
Interest Rate	[1],[2]	0.160
Senior Secured Note – Second Lien–7.2% | Auriemma U.S. Roundtables | Information Services and Advisory Solutions
Principal Amount / No. Shares	[1],[2]	$ 12,114,338
Cost	[1],[2]	12,114,338
Fair Value	[1],[2]	$ 12,114,338
Senior Secured Note – Second Lien–7.2% | Blue Ridge ESOP Associates
Interest Rate		0.150	[1],[2]	0.150	[3],[4]
Senior Secured Note – Second Lien–7.2% | Blue Ridge ESOP Associates | Business Services
Principal Amount / No. Shares		$ 2,640,844	[1],[2]	$ 2,640,844	[3],[4]
Cost		2,640,844	[1],[2]	2,640,844	[3],[4]
Fair Value		$ 2,640,844	[1],[2]	$ 2,640,844	[3],[4]
Senior Secured Note – Second Lien–7.2% | Lawn Doctor, Inc.
Interest Rate		0.160	[1],[2]	0.160	[3],[4]
Senior Secured Note – Second Lien–7.2% | Lawn Doctor, Inc. | Commercial and Professional Services
Principal Amount / No. Shares		$ 15,000,000	[1],[2]	$ 15,000,000	[3],[4]
Cost		15,000,000	[1],[2]	15,000,000	[3],[4]
Fair Value		$ 15,000,000	[1],[2]	$ 15,000,000	[3],[4]
Senior Secured Note – Second Lien–7.2% | Milton Industries, Inc.
Interest Rate		0.150	[1],[2]	0.150	[3],[4]
Senior Secured Note – Second Lien–7.2% | Milton Industries, Inc. | Engineered Products
Principal Amount / No. Shares		$ 3,353,265	[1],[2]	$ 3,353,265	[3],[4]
Cost		3,353,265	[1],[2]	3,353,265	[3],[4]
Fair Value		$ 3,353,265	[1],[2]	$ 3,353,265	[3],[4]
Senior Secured Note – Second Lien–7.2% | Auriemma U.S. Roundtables
Interest Rate	[3],[4]			0.160
Senior Secured Note – Second Lien–7.2% | Auriemma U.S. Roundtables | Information Services and Advisory Solutions
Principal Amount / No. Shares	[3],[4]			$ 12,114,338
Cost	[3],[4]			12,114,338
Fair Value	[3],[4]			$ 12,114,338
Senior Secured Note – Second Lien–7.2% | Resolution Economics
Interest Rate		0.150	[1],[2]	0.150	[3],[4]
Senior Secured Note – Second Lien–7.2% | Resolution Economics | Business Services
Principal Amount / No. Shares		$ 2,834,007	[1],[2]	$ 2,834,007	[3],[4]
Cost		2,834,007	[1],[2]	2,834,007	[3],[4]
Fair Value		2,834,007	[1],[2]	2,834,007	[3],[4]
Equity–60.7%
Cost		235,211,231	[1],[2]	119,414,659	[3],[4]
Fair Value		303,454,287	[1],[2]	153,155,000	[3],[4]
Equity–60.7% | ATA | Real Estate Services
Principal Amount / No. Shares	[1],[2],[5]	36,980
Cost	[1],[2],[5]	36,000,000
Fair Value	[1],[2],[5]	41,612,000
Equity–60.7% | Clarion Safety Systems | Visual Safety Solutions
Principal Amount / No. Shares	[1],[2]	46,759
Cost	[1],[2]	46,759,287
Fair Value	[1],[2]	46,759,287
Equity–60.7% | Douglas Machines Corp. | Sanitation Products
Principal Amount / No. Shares	[1],[2],[5]	35,500
Cost	[1],[2],[5]	35,500,000
Fair Value	[1],[2],[5]	35,500,000
Equity–60.7% | HSH | Healthcare Supplies
Principal Amount / No. Shares		17,320	[1],[2],[5]	17,320	[3],[4],[6]
Cost		17,320,000	[1],[2],[5]	17,320,000	[3],[4],[6]
Fair Value		24,117,000	[1],[2],[5]	18,186,000	[3],[4],[6]
Equity–60.7% | Polyform Products, Co. | Hobby Goods and Supplies
Principal Amount / No. Shares		10,820	[1],[2],[5]	10,820	[3],[4],[6]
Cost		15,598,788	[1],[2],[5]	15,598,788	[3],[4],[6]
Fair Value		24,116,000	[1],[2],[5]	19,502,000	[3],[4],[6]
Equity–60.7% | Blue Ridge ESOP Associates | Business Services
Principal Amount / No. Shares		9,859	[1],[2]	9,859	[3],[4]
Cost		9,859,156	[1],[2]	9,859,156	[3],[4]
Fair Value		12,731,000	[1],[2]	10,877,000	[3],[4]
Equity–60.7% | Lawn Doctor, Inc. | Commercial and Professional Services
Principal Amount / No. Shares		7,746	[1],[2],[5]	7,746	[3],[4],[6]
Cost		28,012,836	[1],[2],[5]	30,475,551	[3],[4],[6]
Fair Value		56,806,000	[1],[2],[5]	48,685,000	[3],[4],[6]
Equity–60.7% | Milton Industries, Inc. | Engineered Products
Principal Amount / No. Shares		6,647	[1],[2]	6,647	[3],[4]
Cost		6,646,735	[1],[2]	6,646,735	[3],[4]
Fair Value		9,286,000	[1],[2]	10,090,000	[3],[4]
Equity–60.7% | Auriemma U.S. Roundtables | Information Services and Advisory Solutions
Principal Amount / No. Shares		32,386	[1],[2],[5]	32,386	[3],[4],[6]
Cost		32,385,662	[1],[2],[5]	32,385,662	[3],[4],[6]
Fair Value		40,902,000	[1],[2],[5]	37,272,000	[3],[4],[6]
Equity–60.7% | Resolution Economics | Business Services
Principal Amount / No. Shares		7,166	[1],[2]	7,166	[3],[4]
Cost		7,128,767	[1],[2]	7,128,767	[3],[4]
Fair Value		$ 11,625,000	[1],[2]	$ 8,543,000	[3],[4]

[1] Percentages represent fair value as a percentage of net assets for each investment category.

[2] Security may be an obligation of one or more entities affiliated with the named company.

[3] Percentages represent fair value as a percentage of net assets for each investment category.

[4] Security may be an obligation of one or more entities affiliated with the named company.

[5] As of December 31, 2021, the Company owned a controlling interest in this portfolio company.

[6] As of December 31, 2020, the Company owned a controlling interest in this portfolio company.

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CONSOLIDATED SCHEDULE OF INVESTMENTS (Parenthetical)	Dec. 31, 2021	[1],[2]	Dec. 31, 2020	[3],[4]
Fair value percentage of Net Assets	91.20%		74.80%
Other Assets in Excess of Liabilities, Percent	8.80%		25.20%
Net Assets, Percent	100.00%		100.00%
First lien
Fair value percentage of Net Assets	23.30%		13.60%
Second lien
Fair value percentage of Net Assets	7.20%		11.60%
Equity
Fair value percentage of Net Assets	60.70%		49.60%

[1] Percentages represent fair value as a percentage of net assets for each investment category.

[2] Security may be an obligation of one or more entities affiliated with the named company.

[3] Percentages represent fair value as a percentage of net assets for each investment category.

[4] Security may be an obligation of one or more entities affiliated with the named company.

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CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (Parenthetical) - USD ($)	Dec. 31, 2021		Dec. 31, 2020
Investment at amortized cost	$ 387,753,685	[1],[2]	$ 197,457,113	[3],[4]
Preferred stock, par value (in dollars per share)	$ 0.001		$ 0.001
Preferred stock, shares authorized (in shares)	50,000,000		50,000,000
Common stock, shares outstanding (in shares)	15,813,031		10,458,248
Class FA
Common stock, par value (in dollars per share)	$ 0.001		$ 0.001
Common stock, shares authorized (in shares)	7,400,000		7,400,000
Common stock, shares issued (in shares)	4,844,390		4,844,390
Common stock, shares outstanding (in shares)	4,558,900		4,578,537
Class A
Common stock, par value (in dollars per share)	$ 0.001		$ 0.001
Common stock, shares authorized (in shares)	94,660,000		94,660,000
Common stock, shares issued (in shares)	1,486,268		1,039,257
Common stock, shares outstanding (in shares)	1,460,512		1,034,377
Class T
Common stock, par value (in dollars per share)	$ 0.001		$ 0.001
Common stock, shares authorized (in shares)	558,620,000		558,620,000
Common stock, shares issued (in shares)	1,654,020		680,446
Common stock, shares outstanding (in shares)	1,609,088		654,672
Class D
Common stock, par value (in dollars per share)	$ 0.001		$ 0.001
Common stock, shares authorized (in shares)	94,660,000		94,660,000
Common stock, shares issued (in shares)	1,019,671		458,065
Common stock, shares outstanding (in shares)	1,008,619		453,724
Class I
Common stock, par value (in dollars per share)	$ 0.001		$ 0.001
Common stock, shares authorized (in shares)	94,660,000		94,660,000
Common stock, shares issued (in shares)	5,518,691		2,039,062
Common stock, shares outstanding (in shares)	5,409,833		1,966,552
Class S
Common stock, par value (in dollars per share)	$ 0.001		$ 0.001
Common stock, shares authorized (in shares)	100,000,000		100,000,000
Common stock, shares issued (in shares)	1,770,386		1,770,386
Common stock, shares outstanding (in shares)	1,766,079		1,770,386

[1] Percentages represent fair value as a percentage of net assets for each investment category.

[2] Security may be an obligation of one or more entities affiliated with the named company.

[3] Percentages represent fair value as a percentage of net assets for each investment category.

[4] Security may be an obligation of one or more entities affiliated with the named company.

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Principal Business and Organization

12 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Principal Business and Organization

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”) 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. Each of the Manager and the Sub-Manager are registered as an investment adviser under the Investment Advisers Act of 1940, as amended. The 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 intends to target businesses that are highly cash flow generative, with annual revenues primarily between $15 million and $250 million and whose management teams seek an ownership stake in the company. The Company’s business strategy is to acquire controlling equity interests in combination with debt positions and in 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 may acquire other debt and minority equity positions, which may include acquiring debt in the secondary market and minority equity interests in combination with other funds managed by the Sub-Manager from co-investments with other partnerships managed by the Sub-Manager or their affiliates. The Company expects that these positions will comprise a minority of its total assets.

During the period from commencement of operations on February 7, 2018 to December 31, 2020, the Company offered Class FA (“Class FA”) and Class S (“Class S”) limited liability company interests (collectively, the “Founder shares”) through a combination of four private offerings (the “Private Offerings”) only to persons that were “accredited investors,” as that person is defined under the Securities Act and Regulation D promulgated under the Securities Act. The Company conducted each of the Private Offerings pursuant to the applicable exemption under Section 4(a)(2) of the Securities Act and Rule 506(c) of Regulation D promulgated under the Securities Act. All of the Private Offerings were terminated on or before December 31, 2020.

The Company commenced its initial public offering of up to $1.1 billion of its limited liability company interest (“shares”) on March 7, 2018 (the “Initial Public Offering”), 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, 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 of its shares (the “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”). Upon commencement of the Public Offering, the Initial Registration Statement was deemed terminated.

Through the 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, “Non-founder shares”). There are differing selling fees and commissions for each share class. The Company also pays distribution and shareholder servicing fees, subject to certain limits, on the Class T and Class D shares sold in the Public Offerings (excluding sales pursuant to its distribution reinvestment plan). See Note 7. “Capital Transactions” and Note 13. “Subsequent Events” for additional information related to the Company’s Offerings.

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Significant Accounting Policies

12 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

Significant Accounting Policies

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 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.

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 the Company is precluded from consolidating any entity other than 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 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.

Risks and Uncertainties

The novel coronavirus (“COVID-19”) pandemic has continued to impact the U.S. and global economies. The U.S. financial markets have experienced disruption and constrained credit conditions within certain sectors. Although more normalized activities have resumed, at this time the Company cannot predict the full extent of the impacts of the COVID-19 pandemic on the Company and its portfolio companies and the COVID-19 pandemic could have a delayed adverse impact on the Company's financial results. The Company will continue to monitor the pandemic's effects on a daily basis and will adjust its operations as necessary.

The full impact of COVID-19 on the financial and credit markets and consequently on the Company’s financial condition and results of operations is uncertain and cannot be predicted at the current time as it depends on several factors beyond the control of the Company including, but not limited to (i) the uncertainty around the severity and duration of the pandemic and the emergence and severity of COVID-19 variants, (ii) the effectiveness of the United States public health response, including the efficacy of the vaccines or other remedies and the speed of their distribution and administration, (iii) the pandemic’s impact on the U.S. and global economies, (iv) the timing, scope and effectiveness of additional governmental responses to the pandemic, (v) the timing and speed of economic recovery, and (vi) the negative impact on its portfolio companies.

Cash

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

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 statements in conformity with generally accepted accounting principles. The uncertainty of future events, including the impact of the COVID-19 pandemic, 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 an asset cannot be determined based upon this established process, it shall then be valued as a Level 2 or Level 3 asset.

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 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 the Sub-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. The non-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.

The Company’s board of directors is responsible for determining in good faith the fair value of the Company’s investments in accordance with the valuation policy and procedures approved by the board of directors, based on, among other factors, the input of the Manager, the Sub-Manager, its audit committee, and the independent third-party valuation firm. The determination of the fair value of the Company’s assets requires judgment, especially with respect to 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 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 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.

Income Recognition

Interest Income – Interest income 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 on non-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 on non-accrual. Interest payments received on non-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 principal and interest amounts are paid and, in management’s judgment, are likely to remain current. Since inception, the Company has not experienced any past due payments on any of its loan investments.

Dividend Income – Dividend income is recorded on the record date for privately issued 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 and (ii) paid in capital in excess of par value, excluding upfront selling commissions and placement agent/dealer manager fees.

Share Repurchases

Under the Company’s share repurchase program (the “Share Repurchase Program”), a shareholder’s shares are deemed to have been redeemed as of 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.

Organization and Offering Expenses

Organization expenses are expensed on the Company’s consolidated statements of operations as incurred. Offering expenses, which consist of amounts incurred for items such as legal, accounting, regulatory and printing work incurred related to the Offerings, are capitalized on the Company’s consolidated statements of assets and liabilities as deferred offering expenses and expensed to the Company’s 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 the Sub-Manager.

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 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 consolidated statements of operations.

Allocation of Profit and Loss

Class-specific expenses, including base management fees, total return incentive fees, organization and offering expenses, distribution and shareholder servicing fees, Expense Support and certain transfer agent fees, are allocated to each share class of common shares in accordance with how such fees 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 specific share class.

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.

Earnings per Share and Net Investment Income per Share

Earnings per share and net investment income 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

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

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.

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 consolidated statements of operations. 

The Company has operated and expects 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, the Company will 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”). 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 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 result of the Taxable Subsidiaries’ ownership of certain portfolio investments. The income tax expense, or benefit, if any, and related tax assets and liabilities are reflected in the Company’s condensed consolidated financial statements. See Note 9. “Income Taxes” for additional information.

During the years ended December 31, 2021 and 2020, the Company did not incur any material interest or penalties.

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Investments

12 Months Ended

Dec. 31, 2021

Investments, Debt and Equity Securities [Abstract]

Investments

Investments

During the year ended December 31, 2021, the Company invested in three portfolio companies, ATA National Title Group, LLC (“ATA”), Douglas Machines, Inc. (“Douglas”) and Clarion Safety Systems, LLC (“Clarion”), for approximately $192.8 million in aggregate.

During the year ended December 31, 2020, the Company invested in three portfolio companies, Resolution Economics, LLC (“Resolution Economics”), Blue Ridge ESOP Associates (“Blue Ridge”) and Healthcare Safety Holdings LLC (“HSH”), for approximately $64.2 million in aggregate.

The Company’s investment portfolio is summarized as follows:

	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	%

Collectively, the Company’s debt investments accrue interest at a weighted average per annum rate of 15.3% and have weighted average remaining years to maturity of 5.1 years as of December 31, 2021. The note purchase agreements contain customary covenants and events of default. As of December 31, 2021, all of the Company’s portfolio companies were in compliance with their respective debt covenants.

As of December 31, 2021 and 2020, none of the Company’s debt investments were on non-accrual status.

The industry dispersion of the Company’s investment portfolio as a percentage of total fair value of the Company’s investments as of December 31, 2021 and 2020 were as follows:

	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	%

All investment positions held at December 31, 2021 and 2020 were denominated in U.S. dollars and located in the United States based on their country of domicile.

Summarized Portfolio Company Financial Statement Information

The following tables present audited summarized operating data and summarized cash flow data for the years ended December 31, 2021 and 2020, and summarized balance sheet data as of December 31, 2021 and December 31, 2020 for the Company’s portfolio companies (in thousands):

Summarized Operating Data

	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)

Summarized Balance Sheet Data

	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)

 FOOTNOTES:

(1)Summarized operating data presented for ATA is for the period from April 1, 2021 (the date the Company acquired its investments in ATA) to December 31, 2021.

(2)Summarized operating data presented for Douglas are for the period from October 7, 2021 (the date the Company acquired its investments in Douglas) to December 31, 2021.

(3)Summarized operating data presented for Clarion are for the period from December 9, 2021 (the date the Company acquired its investments in Clarion) to December 31, 2021.

(4)Includes aggregate summarized operating data for the Company’s co-investments in which the Company owns a minority equity interest (Milton, Resolution Economics and Blue Ridge) for the periods presented unless otherwise noted. December 31, 2021 and 2020 summarized operating data for Resolution Economics is for the period from December 1, 2020 to November 30, 2021 and from January 2, 2020 (the date the Company acquired its investments in Resolution Economics) to November 30, 2020 (reported on a one-month lag basis), respectively. December 31, 2020 summarized operating data for Blue Ridge is for the period from March 24, 2020 (the date the Company acquired its investments in Blue Ridge) to December 31, 2020.

(5)Summarized operating data presented for HSH is for the period from July 16, 2020 (the date the Company acquired its investments in HSH) to December 31, 2020.

(6)Represents the Company’s undiluted ownership percentage as of the end of the period presented.

(7)As of December 31, 2021 and 2020, the Company owned approximately 13% of Milton and 8% of Resolution Economics. As of December 31, 2021 and 2020, the Company owned approximately 16% and 17%, respectively, of Blue Ridge.

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Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2021

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company’s investments were categorized in the fair value hierarchy described in Note 2. “Significant Accounting Policies,” as follows as of December 31, 2021 and 2020:

	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

The ranges of unobservable inputs used in the fair value measurement of the Company’s Level 3 investments as of December 31, 2021 and 2020 were as follows:

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

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 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 December 31, 2021 and 2020. In addition to the techniques and inputs noted in the 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 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 present value 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 a reconciliation of investments for which Level 3 inputs were used in determining fair value for the years ended December 31, 2021 and 2020:

	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

 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 appreciation on investments in the consolidated statements of operations.

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Related Party Transactions

12 Months Ended

Dec. 31, 2021

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

The Manager and Sub-Manager, along with certain affiliates of the Manager or Sub-Manager, receive fees and compensation in connection with the Company’s Offerings, as well as the acquisition, management and sale of the assets of the Company, as follows:

Placement Agent/Dealer Manager

Commissions — The Company pays CNL Securities Corp. (the “Managing Dealer” in connection with the Public Offerings and the “Placement Agent” in connection with the Private Offerings), an affiliate of the 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 Public Offerings (excluding sales pursuant to the Company’s distribution reinvestment plan). The Company paid the Placement Agent a selling commission of up to 5.50% and up to 2.00% of the sale price for each Class FA and Class S share sold in the Follow-On Class FA Private Offering and Class S Private Offering (defined in Note 7. “Capital Transactions” below), respectively. There was no selling commission for the sale of Class FA shares in the Class FA Private Offering. The Managing Dealer may reallow all or a portion of the selling commissions to participating broker-dealers.

Placement Agent/Dealer Manager Fee — The Company 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 Public Offerings (excluding sales pursuant to the Company’s distribution reinvestment plan). Under the Follow-On Class FA Private Offering, the Company paid the Placement Agent a placement agent fee of 3.00% and 1.50% of the price of each Class FA and Class S share sold in the Follow-On Class FA Private Offering and Class S Private Offering, respectively. There was no placement agent fee for the sale of Class FA shares sold in the Class FA Private Offering. The Managing Dealer may reallow all or a portion of such placement agent / dealer manager fees to participating broker-dealers.

Distribution and Shareholder Servicing Fee — The Company pays the Managing Dealer 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 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 distribution and shareholder servicing fee accrues daily and is paid monthly in arrears. The Managing Dealer may reallow all or a portion of the 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 distribution and shareholder servicing fee is an ongoing fee that is allocated among all Class T and Class D shares, respectively, and is not paid at the time of purchase.

Manager and/or Sub-Manager

Organization and Offering Costs — The Company reimburses the Manager and 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 Offerings (defined in Note 7. “Capital Transactions” below), and (B) 1.5% of the cumulative gross proceeds from the Public Offerings. The Company incurred an obligation to reimburse the Manager and Sub-Manager for approximately $2.5 million and $1.1 million in organization and offering costs based on actual amounts raised through the Offerings during the years ended December 31, 2021 and 2020, respectively. The Manager and the Sub-Manager have incurred additional organization and offering costs of approximately $4.2 million on behalf of the Company in connection with the Public Offerings (exceeding the respective limitations) as of December 31, 2021. These costs will be recognized by the Company in future periods as the Company receives future offering proceeds from its Public Offering to the extent such costs are within the 1.5% limitation.

Base Management Fee to Manager and Sub-Manager — The Company pays each of the Manager and the Sub-Manager 50% of the total base management fee for their services under the Management Agreement and the Sub-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 $4.8 million and $2.6 million during the years ended December 31, 2021 and 2020, respectively.

The base management fee is calculated for each share class at an annual rate of (i) for the 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 Average Adjusted Capital (as defined below), for a particular class to total Average Adjusted Capital and (ii) for the 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 Average Adjusted Capital for a particular class to total Average Adjusted Capital, in each case excluding cash, and 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 reflects changes in the fair market value of the Company’s assets, which does not necessarily equal their notional value, reflecting both realized and unrealized capital appreciation or depreciation. The base management 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 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 month. “Adjusted Capital” is defined as cumulative proceeds generated from sales of 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 upfront selling commissions and dealer manager fees (“sales load”), if any, reduced for the full amounts paid for share repurchases pursuant to any share repurchase program, if any, for such class.

Total Return Incentive Fee on Income to the Manager and Sub-Manager — The Company also pays each of the Manager and the Sub-Manager 50% of the total return incentive fee for their services under the Management Agreement and the Sub-Management Agreement. The Company recorded total return incentive fees of approximately $7.3 million and $4.2 million during the years ended December 31, 2021 and 2020, respectively.

The total return incentive fee 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 accrues (but does not pay) the total return incentive fee on a quarterly basis, to the extent that it is earned, and 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 the Sub-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 to Non-founder Shareholders” and “Total Return to Founder Shareholders” means the Total Return to Shareholders specifically attributable to each particular share class of Non-founder shares or Founder shares, as applicable.

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

•As it relates to 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.

•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 shares, 20% of the Total Return to Non-founder Shareholders of a particular class, and for 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 highest year-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 the calculation of Total Return to Shareholders for such share class. For the years ended December 31, 2021 and 2020, the High Water Marks were as follows:

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 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 preferred 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.

Reimbursement to Manager and Sub-Manager for Operating Expenses and Pursuit Costs — The Company reimburses the Manager and the Sub-Manager and their respective affiliates for certain third party operating expenses and 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, the Sub-Management Agreement and the Expense Support and Conditional Reimbursement Agreement (as defined below). The Company does not reimburse the Manager and Sub-Manager for administrative services performed by the Manager or Sub-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 the Sub-Manager (the “Expense Support and Conditional Reimbursement Agreement”), which became effective on February 7, 2018, pursuant to which each of the Manager and the Sub-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 the Sub-Manager under the Management Agreement and the Sub-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 is borne equally by the Manager and the Sub-Manager and is calculated as of the last business day of the calendar year. 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 the Sub-Management Agreement, as applicable, to the Manager or the Sub-Manager. Expense Support is paid by the Manager and Sub-Manager annually in arrears.

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 uses such Excess Operating Funds to pay the Manager and the Sub-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.

The Company recorded Expense Support due from the Manager and Sub-Manager of approximately $3.3 million during the year ended December 31, 2020. As of December 31, 2021, the amount of Expense Support collected from the Manager and Sub-Manager since inception was approximately $5.1 million.

As of December 31, 2021, management estimated that approximately $1.8 million would be reimbursable to the Manager and Sub-Manager under the terms of the Expense Support and Conditional Reimbursement Agreement. Therefore, the Company recorded reimbursement of Expense Support of approximately $1.8 million in the consolidated statement of operations for the year ended December 31, 2021. Expense support (reimbursement) is paid by (to) the Manager and Sub-Manager annually in arrears.

The following table summarizes annual Expense Support received, estimate of Expense Support to be reimbursed, and the remaining Expense Support that may become reimbursable, subject to the conditions of reimbursement defined in the Expense Support and Conditional Reimbursement Agreement, as of December 31, 2021:

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

 FOOTNOTES:

(1)     Represents amount accrued as of December 31, 2021 and paid to the Manager and Sub-Manager in March 2022. Expense support reimbursement is calculated by share class and subject to limitations as defined in the Expense Support and Conditional Reimbursement Agreement.

(2)    Unreimbursed amounts of $37,121 related to the year ended December 31, 2018 will not be reimbursed in future periods. As of December 31, 2021, management believes that additional reimbursement payments by the Company to the Manager and Sub-Manager related to the years ended December 31, 2019 and 2020 are not probable under the terms of the Expense Support and Conditional Reimbursement Agreement.

Distributions

Individuals and entities affiliated with the Manager and Sub-Manager owned approximately 0.4 million and 0.6 million shares as of December 31, 2021 and 2020, and received distributions from the Company of approximately $0.7 million during each of the years ended December 31, 2021 and 2020.

Summary of Related Party Fees and Expenses

Related party fees and expenses incurred for the years ended December 31, 2021 and 2020 are summarized below:

		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

 FOOTNOTES:

(1)Expenses subject to Expense Support.

(2)Organization reimbursements are expensed on the Company’s statements of operations as incurred. Offering reimbursements are capitalized on the Company’s statements of assets and liabilities as deferred offering expenses and expensed to the Company’s 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 the due diligence reviews.

The following table presents amounts due from (to) related parties as of December 31, 2021 and 2020:

	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)

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Distributions

12 Months Ended

Dec. 31, 2021

Distributions Made to Members or Limited Partners [Abstract]

Distributions

Distributions

The Company’s board of directors declared distributions on a monthly basis (12 record dates) in each of the years ended December 31, 2021 and 2020. Declared distributions are paid monthly in arrears. The following table reflects the total distributions declared during the years ended December 31, 2021 and 2020:

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

FOOTNOTES:

(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.

The sources of declared distributions on a GAAP basis were as follows:

	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	%

FOOTNOTES:

(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.

In December 2021, the Company’s board of directors declared a monthly cash distribution on the outstanding shares of all classes of common shares of record on January 28, 2022 of $0.104167 per share for 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 $0.104167 per share for Class S shares.

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Capital Transactions

12 Months Ended

Dec. 31, 2021

Equity [Abstract]

Capital Transactions

Capital Transactions

Public Offerings

Under the Public Offerings, the Company has offered and continues to offer up to $1.0 billion of shares, on a best efforts basis, which means that CNL Securities Corp., as the Managing Dealer of the Public Offerings, uses its best effort but is not required to sell any specific amount of shares. The Company is 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. There are differing selling fees and commissions for each share class. The Company also pays distribution and shareholder servicing fees, subject to certain limits, on the Class T and Class D shares sold in the Public Offerings (excluding sales pursuant to the Company’s distribution reinvestment plan). The public offering price, selling commissions and dealer manager fees per share class are determined monthly as approved by the Company’s board of directors. As of December 31, 2021, the public offering price was $33.83 per Class A share, $32.20 per Class T share, $30.34 per Class D share and $31.34 per Class I share. See Note 13. “Subsequent Events” for information on changes to the public offering price, selling commissions and dealer manager fees by share class.

The Company is also offering, in any combination, up to $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. See Note 13. “Subsequent Events” for additional information related to the Public Offering.

Class FA Private Offerings

During the period from commencement of operations on February 7, 2018 to December 31, 2020, the Company offered Class FA and Class S limited liability company interests (collectively, the “Founder shares”) through four private offerings (the “Private Offerings” and, together with the Public Offerings, the “Offerings”) only to persons that were “accredited investors,” as that term is defined under the Securities Act and Regulation D promulgated under the Securities Act, and raised aggregate gross offering proceeds of approximately $177 million. The Company conducted the Private Offerings pursuant to the applicable exemption under Section 4(a)(2) of the Securities Act and Rule 506(c) of Regulation D promulgated under the Securities Act. All of the Private Offerings were terminated on or before December 31, 2020. The Private Offerings that were conducted during 2019 and 2020 are described below in more detail.

In April and June 2019, the Company commenced separate private offerings of up to $50 million each of Class FA Shares (the “Class FA Private Offering” and the “Follow-On Class FA Private Offering,” respectively). Under the Follow-On Class FA Private Offering the Company paid the Placement Agent a selling commission of up to 5.5% and placement agent fee of up to 3.0% of the sale price for each Class FA share sold in the Follow-On Class FA Private Offering, except as a reduction or sales load waiver may have applied. There was no selling commission or placement fee on the sale of Class FA shares sold in the Class FA Private Offering. The Class FA Private Offering was terminated in December 2019, after having raised gross proceeds of approximately $35 million (approximately 1.3 million shares) and the Follow-On Class FA Private Offering was terminated in March 2020, after having raised gross proceeds of approximately $8 million (approximately 0.3 million shares).

In January 2020, the Company commenced a private offering of up to $50 million of Class S shares (the “Class S Private Offering”). The Company paid the Placement Agent a selling commission of up to 2.0% and a placement agent fee of up to 1.5% of the sale price for each Class S share sold in the Class S Private Offering, except as a reduction or sales load waiver that may have applied. The Class S Private Offering was terminated in December 2020 after having raised gross proceeds of approximately $52 million (approximately 1.8 million shares).

The following table summarizes the total shares issued and proceeds received by share class in connection with the Offerings, excluding shares repurchased through the Share Repurchase Program described further below, for the years ended December 31, 2021 and 2020:

	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

FOOTNOTES:

(1)Amounts are based on distribution reinvestment date. Distributions are declared monthly and paid or reinvested one month in arrears.

(2)The Company incurred selling commissions and placement agent fees on the sale of Class FA shares sold in the Follow-On Class FA Private Offering and on the sale of Class S shares sold in the Class S Private Offering. The Company also 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/placement agent fees.

(3)The Company did not incur any selling commissions or placement agent fees from the sale of approximately 0.3 million Class FA shares sold under the terms of the Class FA Private Offering during the year ended December 31, 2020.

Share Repurchase Program

In March 2019, the Company’s board of directors approved and adopted 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 will be 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). Unless the Company’s board of directors determines otherwise, the Company will limit the number of shares to be repurchased during any calendar quarter to the number of shares the Company can repurchase with the proceeds received from the sale of shares under its distribution reinvestment plan in the previous quarter. Notwithstanding the foregoing, at the sole discretion of the Company’s board of directors, the Company may also use other sources, including, but not limited to, offering proceeds and borrowings to repurchase shares. 

During the year ended December 31, 2021, the Company received requests for the repurchase of approximately $3.3 million of the Company’s common shares, which did not exceed amounts raised in the Company’s distribution reinvestment plan. During the year ended December 31, 2020, the Company received requests for the repurchase of approximately $9.6 million of the Company’s common shares, which exceeded proceeds received from its distribution reinvestment plan for the applicable period by approximately $7.8 million. The Company’s board of directors approved the use of other sources to satisfy repurchase requests received in excess of proceeds received from the distribution reinvestment plan for the year ended December 31, 2020.

The following table summarizes the shares repurchased during the years ended December 31, 2021 and 2020:

	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

As of December 31, 2021 and 2020, the Company had a payable for shares repurchased of approximately $0.5 million and $2.0 million, respectively.

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Borrowings (Notes)

12 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

Borrowings

Borrowings

In September 2021, the Company entered into a second amended and restated loan agreement (the “Loan Agreement”) and related promissory notes with United Community Bank (d/b/a Seaside Bank & Trust and referred to as “Seaside”) for a total line of credit of up to $25.0 million (the “Line of Credit”). The Loan Agreement amended and replaced the previous loan agreements between the Company and Seaside dated June 2019, as amended. The Line of Credit is available for advances through August 16, 2022.

During the years ended December 31, 2021 and 2020, the Company paid commitment fees to Seaside in connection with the execution of the Loan Agreement and previous loan agreement of $15,000 and $60,000, respectively. The Company is required to pay an additional fee to Seaside with each advance under the Loan Agreement in an amount equal to 0.05% of the amount of each borrowing with a maximum fee of $20,000 over a 364-day period. Under the Loan Agreement, the Company is required to pay interest on the borrowed amount at a rate per year equal to the greater of (a) the 30-day LIBOR plus 2.75% and (b) 3.00%. Interest payments are due monthly in arrears. The Company may prepay, without penalty, all or any part of the borrowings under the Loan Agreement at any time and such borrowings are required to be repaid within 180 days or 60 days (depending on the facility drawn upon) of the borrowing date. Under the 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 Loan Agreement, the Company entered into an amended assignment and pledge of deposit account agreement (“Deposit Agreement”) in favor of the lender under the Line of Credit. Under the Deposit Agreement, the Company is required to contribute proceeds from the Offerings to pay down the outstanding debt to the extent there are any borrowings outstanding under the 2021 Loan Agreement above the minimum cash balance of $2.5 million.

The Company had not borrowed any amounts under the Line of Credit as of December 31, 2021.

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Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The components of income tax expense and deferred taxes on investments related to the Company’s Taxable Subsidiaries during the years ended December 31, 2021 and 2020 were as follows:

	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

Significant components of the Company’s deferred tax assets as of December 31, 2021 and 2020 were as follows:

	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)

The table below presents a reconciliation of tax expense the Company would be subject to if it were taxed as a corporation to the Company’s actual income tax expense incurred by its Taxable Subsidiaries for the years ended December 31, 2021 and 2020:

	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	%

The Company’s taxable subsidiary entities had net operating loss carryforwards for federal purposes of approximately $0.9 million as of December 2021 and 2020, to offset future taxable income. The federal net operating loss carryforwards do not expire.

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Concentrations of Risk	12 Months Ended
	Dec. 31, 2021
Risks and Uncertainties [Abstract]
Concentrations of Risk	Concentrations of RiskThe Company had six portfolio companies which met at least one of the significance tests under Rule 4-08(g) of Regulation S-X (the “Significance Tests”) as of December 31, 2021. 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.

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Commitment & Contingences

12 Months Ended

Dec. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitment & Contingences

Commitments & Contingencies

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

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 December 31, 2021, 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.

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Financial Highlights

12 Months Ended

Dec. 31, 2021

Investment Company [Abstract]

Financial Highlights

Financial Highlights

The following are schedules of financial highlights of the Company attributed to each class of shares for the years ended December 31, 2021 and 2020 (in thousands except per share data):

	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		%

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 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.” Total returns before total return incentive fees also exclude related expense support. See footnote (9) 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)The net asset value as of the beginning of the period is as of January 1, 2020 for all share classes except Class S shares. The net asset value as of the beginning of the period for Class S shares is based on the price of shares sold, net of any sales load, to the initial Class S investors. The initial investors for Class S shares purchased their shares on March 31, 2020.

(9)Amounts represent net investment income before total return incentive fee and related expense support as a percentage of average net assets. For the year ended December 31, 2021, total return incentive fees were not covered by expense support as the Company recorded expense support reimbursement during this period. For the year ended December 31, 2020, the percentage of total return incentive fees covered by expense support was approximately 97%, 75%, 64%, 38%, 88% and 20% for Class FA, Class A, Class T, Class D, Class I and Class S, respectively.

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Subsequent Events

12 Months Ended

Dec. 31, 2021

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Investment Activity

In February 2022, the Company made an additional equity investment in ATA of $1.1 million.

Distributions

In January, February and March 2022, the Company’s board of directors declared a monthly cash distribution on the outstanding shares of all classes of common shares of record on February 25, 2022, March 30, 2022 and April 28, 2022, respectively, of $0.104167 per share for 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 $0.104167 per share for Class S shares.

Offerings

In January, February and March 2022, the Company’s board of directors approved new per share offering prices for each share class in the Public Offering. The new offering prices are effective as of January 28, 2022, February 25, 2022 and March 24, 2022, respectively. The following table provides the new offering prices and applicable upfront selling commissions and placement agent / dealer manager fees for each share class available in the Public Offering:

	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		—		—

Capital Transactions

During the period January 1, 2022 through March 28, 2022, the Company received additional net proceeds from the Public Offering and its distribution reinvestment plan of the following:

	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

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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

Basis of Presentation

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 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.

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

Principles of Consolidation

Under ASC Topic 946 the Company is precluded from consolidating any entity other than 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 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.

Risks and Uncertainties

Risks and Uncertainties

The novel coronavirus (“COVID-19”) pandemic has continued to impact the U.S. and global economies. The U.S. financial markets have experienced disruption and constrained credit conditions within certain sectors. Although more normalized activities have resumed, at this time the Company cannot predict the full extent of the impacts of the COVID-19 pandemic on the Company and its portfolio companies and the COVID-19 pandemic could have a delayed adverse impact on the Company's financial results. The Company will continue to monitor the pandemic's effects on a daily basis and will adjust its operations as necessary.

The full impact of COVID-19 on the financial and credit markets and consequently on the Company’s financial condition and results of operations is uncertain and cannot be predicted at the current time as it depends on several factors beyond the control of the Company including, but not limited to (i) the uncertainty around the severity and duration of the pandemic and the emergence and severity of COVID-19 variants, (ii) the effectiveness of the United States public health response, including the efficacy of the vaccines or other remedies and the speed of their distribution and administration, (iii) the pandemic’s impact on the U.S. and global economies, (iv) the timing, scope and effectiveness of additional governmental responses to the pandemic, (v) the timing and speed of economic recovery, and (vi) the negative impact on its portfolio companies.

Cash

Cash

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

Use of Estimates

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 statements in conformity with generally accepted accounting principles. The uncertainty of future events, including the impact of the COVID-19 pandemic, 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

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 an asset cannot be determined based upon this established process, it shall then be valued as a Level 2 or Level 3 asset.

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 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 the Sub-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. The non-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.

The Company’s board of directors is responsible for determining in good faith the fair value of the Company’s investments in accordance with the valuation policy and procedures approved by the board of directors, based on, among other factors, the input of the Manager, the Sub-Manager, its audit committee, and the independent third-party valuation firm. The determination of the fair value of the Company’s assets requires judgment, especially with respect to 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 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

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 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.

Income Recognition

Income Recognition

Interest Income – Interest income 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 on non-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 on non-accrual. Interest payments received on non-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 principal and interest amounts are paid and, in management’s judgment, are likely to remain current. Since inception, the Company has not experienced any past due payments on any of its loan investments.

Dividend Income – Dividend income is recorded on the record date for privately issued 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

Paid in Capital

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

Share Repurchases

Share RepurchasesUnder the Company’s share repurchase program (the “Share Repurchase Program”), a shareholder’s shares are deemed to have been redeemed as of 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.

Organization and Offering Expenses

Organization and Offering Expenses

Organization expenses are expensed on the Company’s consolidated statements of operations as incurred. Offering expenses, which consist of amounts incurred for items such as legal, accounting, regulatory and printing work incurred related to the Offerings, are capitalized on the Company’s consolidated statements of assets and liabilities as deferred offering expenses and expensed to the Company’s 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 the Sub-Manager.

Distribution and Shareholder Servicing Fees

Distribution and Shareholder Servicing FeesThe 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 consolidated statements of operations as they are incurred.

Deferred Financing Costs

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 consolidated statements of operations.

Allocation of Profit and Loss

Allocation of Profit and Loss

Class-specific expenses, including base management fees, total return incentive fees, organization and offering expenses, distribution and shareholder servicing fees, Expense Support and certain transfer agent fees, are allocated to each share class of common shares in accordance with how such fees 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 specific share class.

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.

Earnings per Share and Net Investment Income per Share

Earnings per Share and Net Investment Income per Share

Earnings per share and net investment income 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

Distributions

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

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.

Income Taxes

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 consolidated statements of operations. 

The Company has operated and expects 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, the Company will 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”). 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 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 result of the Taxable Subsidiaries’ ownership of certain portfolio investments. The income tax expense, or benefit, if any, and related tax assets and liabilities are reflected in the Company’s condensed consolidated financial statements. See Note 9. “Income Taxes” for additional information.

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Investments (Tables)

12 Months Ended

Dec. 31, 2021

Investments, Debt and Equity Securities [Abstract]

Summary of Investment Portfolio

The Company’s investment portfolio is summarized as follows:

	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	%

Industry Dispersion of Investment Portfolio as Percentage of Total Fair Value of Investments

The industry dispersion of the Company’s investment portfolio as a percentage of total fair value of the Company’s investments as of December 31, 2021 and 2020 were as follows:

	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	%

Summary of Operating and Balance Sheet Data

The following tables present audited summarized operating data and summarized cash flow data for the years ended December 31, 2021 and 2020, and summarized balance sheet data as of December 31, 2021 and December 31, 2020 for the Company’s portfolio companies (in thousands):

Summarized Operating Data

	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)

Summarized Balance Sheet Data

	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)

 FOOTNOTES:

(1)Summarized operating data presented for ATA is for the period from April 1, 2021 (the date the Company acquired its investments in ATA) to December 31, 2021.

(2)Summarized operating data presented for Douglas are for the period from October 7, 2021 (the date the Company acquired its investments in Douglas) to December 31, 2021.

(3)Summarized operating data presented for Clarion are for the period from December 9, 2021 (the date the Company acquired its investments in Clarion) to December 31, 2021.

(4)Includes aggregate summarized operating data for the Company’s co-investments in which the Company owns a minority equity interest (Milton, Resolution Economics and Blue Ridge) for the periods presented unless otherwise noted. December 31, 2021 and 2020 summarized operating data for Resolution Economics is for the period from December 1, 2020 to November 30, 2021 and from January 2, 2020 (the date the Company acquired its investments in Resolution Economics) to November 30, 2020 (reported on a one-month lag basis), respectively. December 31, 2020 summarized operating data for Blue Ridge is for the period from March 24, 2020 (the date the Company acquired its investments in Blue Ridge) to December 31, 2020.

(5)Summarized operating data presented for HSH is for the period from July 16, 2020 (the date the Company acquired its investments in HSH) to December 31, 2020.

(6)Represents the Company’s undiluted ownership percentage as of the end of the period presented.

(7)As of December 31, 2021 and 2020, the Company owned approximately 13% of Milton and 8% of Resolution Economics. As of December 31, 2021 and 2020, the Company owned approximately 16% and 17%, respectively, of Blue Ridge.

Summarized Cash Flow Information

FOOTNOTES:

(1)Summarized operating data presented for ATA is for the period from April 1, 2021 (the date the Company acquired its investments in ATA) to December 31, 2021.

(2)Summarized operating data presented for Douglas are for the period from October 7, 2021 (the date the Company acquired its investments in Douglas) to December 31, 2021.

(3)Summarized operating data presented for Clarion are for the period from December 9, 2021 (the date the Company acquired its investments in Clarion) to December 31, 2021.

(4)Includes aggregate summarized operating data for the Company’s co-investments in which the Company owns a minority equity interest (Milton, Resolution Economics and Blue Ridge) for the periods presented unless otherwise noted. December 31, 2021 and 2020 summarized operating data for Resolution Economics is for the period from December 1, 2020 to November 30, 2021 and from January 2, 2020 (the date the Company acquired its investments in Resolution Economics) to November 30, 2020 (reported on a one-month lag basis), respectively. December 31, 2020 summarized operating data for Blue Ridge is for the period from March 24, 2020 (the date the Company acquired its investments in Blue Ridge) to December 31, 2020.

(5)Summarized operating data presented for HSH is for the period from July 16, 2020 (the date the Company acquired its investments in HSH) to December 31, 2020.

(6)Represents the Company’s undiluted ownership percentage as of the end of the period presented.

(7)As of December 31, 2021 and 2020, the Company owned approximately 13% of Milton and 8% of Resolution Economics. As of December 31, 2021 and 2020, the Company owned approximately 16% and 17%, respectively, of Blue Ridge.

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Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2021

Fair Value Disclosures [Abstract]

Investments Categorization in Fair Value Hierarchy

The Company’s investments were categorized in the fair value hierarchy described in Note 2. “Significant Accounting Policies,” as follows as of December 31, 2021 and 2020:

	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

Unobservable Inputs Used in Fair Value Measurement of Investments

The ranges of unobservable inputs used in the fair value measurement of the Company’s Level 3 investments as of December 31, 2021 and 2020 were as follows:

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

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.

Reconciliations of Investments of Level 3 Inputs

The following tables provide a reconciliation of investments for which Level 3 inputs were used in determining fair value for the years ended December 31, 2021 and 2020:

	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

 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 appreciation on investments in the consolidated statements of operations.

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Related Party Transactions (Tables)

12 Months Ended

Dec. 31, 2021

Related Party Transactions [Abstract]

High Water Marks

For the years ended December 31, 2021 and 2020, the High Water Marks were as follows:

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

Related party fees and expenses incurred for the years ended December 31, 2021 and 2020 are summarized below:

		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

 FOOTNOTES:

(1)Expenses subject to Expense Support.

(2)Organization reimbursements are expensed on the Company’s statements of operations as incurred. Offering reimbursements are capitalized on the Company’s statements of assets and liabilities as deferred offering expenses and expensed to the Company’s 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 the due diligence reviews.

The following table presents amounts due from (to) related parties as of December 31, 2021 and 2020:

	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)

Schedule of Expense Support

The following table summarizes annual Expense Support received, estimate of Expense Support to be reimbursed, and the remaining Expense Support that may become reimbursable, subject to the conditions of reimbursement defined in the Expense Support and Conditional Reimbursement Agreement, as of December 31, 2021:

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

 FOOTNOTES:

(1)     Represents amount accrued as of December 31, 2021 and paid to the Manager and Sub-Manager in March 2022. Expense support reimbursement is calculated by share class and subject to limitations as defined in the Expense Support and Conditional Reimbursement Agreement.

(2)    Unreimbursed amounts of $37,121 related to the year ended December 31, 2018 will not be reimbursed in future periods. As of December 31, 2021, management believes that additional reimbursement payments by the Company to the Manager and Sub-Manager related to the years ended December 31, 2019 and 2020 are not probable under the terms of the Expense Support and Conditional Reimbursement Agreement.

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Distributions (Tables)

12 Months Ended

Dec. 31, 2021

Distributions Made to Members or Limited Partners [Abstract]

Distributions Declared

The following table reflects the total distributions declared during the years ended December 31, 2021 and 2020:

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

FOOTNOTES:

(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.

The sources of declared distributions on a GAAP basis were as follows:

	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	%

FOOTNOTES:

(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.

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Capital Transactions (Tables)

12 Months Ended

Dec. 31, 2021

Equity [Abstract]

Summary of Shares Issued and Proceeds Received in Connection with Private Placement

The following table summarizes the total shares issued and proceeds received by share class in connection with the Offerings, excluding shares repurchased through the Share Repurchase Program described further below, for the years ended December 31, 2021 and 2020:

	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

FOOTNOTES:

(1)Amounts are based on distribution reinvestment date. Distributions are declared monthly and paid or reinvested one month in arrears.

(2)The Company incurred selling commissions and placement agent fees on the sale of Class FA shares sold in the Follow-On Class FA Private Offering and on the sale of Class S shares sold in the Class S Private Offering. The Company also 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/placement agent fees.

(3)The Company did not incur any selling commissions or placement agent fees from the sale of approximately 0.3 million Class FA shares sold under the terms of the Class FA Private Offering during the year ended December 31, 2020.

Summary of Shares Repurchased

	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

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense and Deferred Taxes

The components of income tax expense and deferred taxes on investments related to the Company’s Taxable Subsidiaries during the years ended December 31, 2021 and 2020 were as follows:

	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

Significant Components of Deferred Tax Assets

Significant components of the Company’s deferred tax assets as of December 31, 2021 and 2020 were as follows:

	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)

Reconciliation of Income Tax Expense to Statutory Rate

The table below presents a reconciliation of tax expense the Company would be subject to if it were taxed as a corporation to the Company’s actual income tax expense incurred by its Taxable Subsidiaries for the years ended December 31, 2021 and 2020:

	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	%

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Financial Highlights (Tables)

12 Months Ended

Dec. 31, 2021

Investment Company [Abstract]

Schedule of Financial Highlights

The following are schedules of financial highlights of the Company attributed to each class of shares for the years ended December 31, 2021 and 2020 (in thousands except per share data):

	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		%

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 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.” Total returns before total return incentive fees also exclude related expense support. See footnote (9) 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)The net asset value as of the beginning of the period is as of January 1, 2020 for all share classes except Class S shares. The net asset value as of the beginning of the period for Class S shares is based on the price of shares sold, net of any sales load, to the initial Class S investors. The initial investors for Class S shares purchased their shares on March 31, 2020.

(9)Amounts represent net investment income before total return incentive fee and related expense support as a percentage of average net assets. For the year ended December 31, 2021, total return incentive fees were not covered by expense support as the Company recorded expense support reimbursement during this period. For the year ended December 31, 2020, the percentage of total return incentive fees covered by expense support was approximately 97%, 75%, 64%, 38%, 88% and 20% for Class FA, Class A, Class T, Class D, Class I and Class S, respectively.

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Subsequent Events (Tables)

12 Months Ended

Dec. 31, 2021

Subsequent Events [Abstract]

Summary of New Public Offering Prices and Applicable Upfront Selling Commissions and Dealer Manager Fees

The following table provides the new offering prices and applicable upfront selling commissions and placement agent / dealer manager fees for each share class available in the Public Offering:

	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		—		—

Schedule of Gross Proceeds

During the period January 1, 2022 through March 28, 2022, the Company received additional net proceeds from the Public Offering and its distribution reinvestment plan of the following:

	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

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Principal Business and Organization - Additional Information (Detail)			12 Months Ended	35 Months Ended
	Nov. 01, 2021 USD ($)	Mar. 07, 2018 USD ($)	Dec. 31, 2021 USD ($) portfolioCompany	Dec. 31, 2020 offering
Organization And Business Activities [Line Items]
Number classes of shares | portfolioCompany			4
Private Placement
Organization And Business Activities [Line Items]
Number of Offerings | offering				4
Initial Public Offering, Including Distribution Reinvestment Plan
Organization And Business Activities [Line Items]
Shares authorized for sale		$ 1,100,000,000
Distribution Reinvestment Plan
Organization And Business Activities [Line Items]
Shares authorized for sale	$ 100,000,000	$ 100,000,000
Follow On Public Offering, Including Distribution Reinvestment Plan
Organization And Business Activities [Line Items]
Shares authorized for sale	$ 1,100,000,000
Minimum
Organization And Business Activities [Line Items]
Targeted business annual revenues for acquisition			$ 15,000,000
Maximum
Organization And Business Activities [Line Items]
Targeted business annual revenues for acquisition			$ 250,000,000

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Investments - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2021 USD ($) Investment portfolioCompany	Dec. 31, 2020 USD ($) portfolioCompany Investment
Schedule of Investments [Line Items]
Number of portfolio companies invested in during the year | portfolioCompany	3	3
Purchases of investments | $	$ 192,759,287	$ 64,182,774
Number of debt investments on non accrual status | Investment	0	0
Total Senior Secured Notes
Schedule of Investments [Line Items]
Weighted average yield on debt investments (in percent)	15.30%
Weighted average years to maturity	5.1

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Investments - Summary of Investment Portfolio (Detail) - USD ($)	Dec. 31, 2021		Dec. 31, 2020
Investment Holdings [Line Items]
Cost	$ 387,753,685	[1],[2]	$ 197,457,113	[3],[4]
Fair Value	$ 455,996,741	[1],[2]	$ 231,197,454	[3],[4]
Fair Value Percentage of Investment Portfolio	100.00%		100.00%
Fair Value Percentage of Net Assets	91.20%	[1],[2]	74.80%	[3],[4]
Total Senior Secured Notes
Investment Holdings [Line Items]
Cost	$ 152,542,454	[1],[2]	$ 78,042,454	[3],[4]
Fair Value	$ 152,542,454	[1],[2]	$ 78,042,454	[3],[4]
Fair Value Percentage of Investment Portfolio	33.50%		33.80%
Fair Value Percentage of Net Assets	30.50%		25.20%
First lien
Investment Holdings [Line Items]
Cost	$ 116,600,000	[1],[2]	$ 42,100,000	[3],[4]
Fair Value	$ 116,600,000	[1],[2]	$ 42,100,000	[3],[4]
Fair Value Percentage of Investment Portfolio	25.60%		18.20%
Fair Value Percentage of Net Assets	23.30%	[1],[2]	13.60%	[3],[4]
Second lien
Investment Holdings [Line Items]
Cost	$ 35,942,454	[1],[2]	$ 35,942,454	[3],[4]
Fair Value	$ 35,942,454	[1],[2]	$ 35,942,454	[3],[4]
Fair Value Percentage of Investment Portfolio	7.90%		15.60%
Fair Value Percentage of Net Assets	7.20%	[1],[2]	11.60%	[3],[4]
Equity
Investment Holdings [Line Items]
Cost	$ 235,211,231	[1],[2]	$ 119,414,659	[3],[4]
Fair Value	$ 303,454,287	[1],[2]	$ 153,155,000	[3],[4]
Fair Value Percentage of Investment Portfolio	66.50%		66.20%
Fair Value Percentage of Net Assets	60.70%	[1],[2]	49.60%	[3],[4]

[1] Percentages represent fair value as a percentage of net assets for each investment category.

[2] Security may be an obligation of one or more entities affiliated with the named company.

[3] Percentages represent fair value as a percentage of net assets for each investment category.

[4] Security may be an obligation of one or more entities affiliated with the named company.

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Investments - Industry and Geographic Dispersion of Investment Portfolio as Percentage of Total Fair Value of Investments (Detail)	Dec. 31, 2021	Dec. 31, 2020
Investment Holdings [Line Items]
Percentage of total fair value of investment	100.00%	100.00%
Real Estate Services
Investment Holdings [Line Items]
Percentage of total fair value of investment	17.20%	0.00%
Commercial and Professional Services
Investment Holdings [Line Items]
Percentage of total fair value of investment	15.80%	27.50%
Visual Safety Solutions
Investment Holdings [Line Items]
Percentage of total fair value of investment	15.20%	0.00%
Information Services and Advisory Solutions
Investment Holdings [Line Items]
Percentage of total fair value of investment	12.10%	22.30%
Sanitation Products
Investment Holdings [Line Items]
Percentage of total fair value of investment	11.10%	0.00%
Healthcare Supplies
Investment Holdings [Line Items]
Percentage of total fair value of investment	10.60%	18.40%
Hobby Goods and Supplies
Investment Holdings [Line Items]
Percentage of total fair value of investment	8.70%	15.20%
Engineered Products
Investment Holdings [Line Items]
Percentage of total fair value of investment	2.80%	10.80%
Business Services
Investment Holdings [Line Items]
Percentage of total fair value of investment	6.50%	5.80%

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Investments - Summary of Operating and Balance Sheet Data (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Investment Company, Financial Highlights [Line Items]
Expenses	$ (17,916,954)	$ (10,261,852)
Income tax expense	(3,240,304)	(266,789)
Net increase in net assets resulting from operations	42,985,490	30,046,363
Lawn Doctor
Investment Company, Financial Highlights [Line Items]
Revenues	35,018,000	28,677,000
Expenses	(31,749,000)	(27,232,000)
Income (loss) before taxes	3,269,000	1,445,000
Income tax expense	(832,000)	(371,000)
Consolidated net income (loss)	2,437,000	1,074,000
Net loss attributable to non-controlling interests	107,000	213,000
Net increase in net assets resulting from operations	2,544,000	1,287,000
Current assets	13,926,000	8,386,000
Non-current assets	92,309,000	94,601,000
Current liabilities	7,961,000	7,670,000
Non-current liabilities	63,576,000	53,386,000
Non-controlling interest	(500,000)	(393,000)
Stockholders’ equity	$ 35,198,000	$ 42,324,000
Ownership percentage	61.00%	61.00%
Polyform
Investment Company, Financial Highlights [Line Items]
Revenues	$ 22,297,000	$ 18,981,000
Expenses	(20,097,000)	(17,372,000)
Income (loss) before taxes	2,200,000	1,609,000
Income tax expense	(574,000)	(469,000)
Consolidated net income (loss)	1,626,000	1,140,000
Net loss attributable to non-controlling interests	0	0
Net increase in net assets resulting from operations	1,626,000	1,140,000
Current assets	9,940,000	9,692,000
Non-current assets	28,948,000	30,033,000
Current liabilities	2,290,000	2,461,000
Non-current liabilities	21,557,000	21,563,000
Non-controlling interest	0	0
Stockholders’ equity	$ 15,041,000	$ 15,701,000
Ownership percentage	87.00%	87.00%
Roundtables
Investment Company, Financial Highlights [Line Items]
Revenues	$ 13,128,000	$ 10,942,000
Expenses	(13,276,000)	(11,692,000)
Income (loss) before taxes	(148,000)	(750,000)
Income tax expense	(469,000)	1,443,000
Consolidated net income (loss)	(617,000)	693,000
Net loss attributable to non-controlling interests	0	0
Net increase in net assets resulting from operations	(617,000)	693,000
Current assets	2,043,000	4,167,000
Non-current assets	61,955,000	59,582,000
Current liabilities	4,738,000	4,407,000
Non-current liabilities	19,771,000	19,553,000
Non-controlling interest	0	0
Stockholders’ equity	$ 39,489,000	$ 39,789,000
Ownership percentage	81.00%	81.00%
HSH
Investment Company, Financial Highlights [Line Items]
Revenues	$ 32,918,000	$ 13,940,000
Expenses	(30,769,000)	(15,633,000)
Income (loss) before taxes	2,149,000	(1,693,000)
Income tax expense	(456,000)	109,000
Consolidated net income (loss)	1,693,000	(1,584,000)
Net loss attributable to non-controlling interests	0	0
Net increase in net assets resulting from operations	1,693,000	(1,584,000)
Current assets	14,260,000	12,684,000
Non-current assets	39,653,000	42,701,000
Current liabilities	7,341,000	5,733,000
Non-current liabilities	28,536,000	29,297,000
Non-controlling interest	0	0
Stockholders’ equity	$ 18,036,000	$ 20,355,000
Ownership percentage	75.00%	75.00%
ATA
Investment Company, Financial Highlights [Line Items]
Revenues	$ 59,021,000
Expenses	(52,494,000)
Income (loss) before taxes	6,527,000
Income tax expense	0
Consolidated net income (loss)	6,527,000
Net loss attributable to non-controlling interests	0
Net increase in net assets resulting from operations	6,527,000
Current assets	10,029,000
Non-current assets	90,510,000
Current liabilities	9,002,000
Non-current liabilities	43,458,000
Non-controlling interest	0
Stockholders’ equity	$ 48,079,000
Ownership percentage	75.00%
Douglas
Investment Company, Financial Highlights [Line Items]
Revenues	$ 6,099,000
Expenses	(19,146,000)
Income (loss) before taxes	(13,047,000)
Income tax expense	2,608,000
Consolidated net income (loss)	(10,439,000)
Net loss attributable to non-controlling interests	0
Net increase in net assets resulting from operations	(10,439,000)
Current assets	13,177,000
Non-current assets	40,311,000
Current liabilities	4,159,000
Non-current liabilities	15,711,000
Non-controlling interest	0
Stockholders’ equity	$ 33,618,000
Ownership percentage	90.00%
Clarion
Investment Company, Financial Highlights [Line Items]
Revenues	$ 676,000
Expenses	(1,857,000)
Income (loss) before taxes	(1,181,000)
Income tax expense	341,000
Consolidated net income (loss)	(840,000)
Net loss attributable to non-controlling interests	0
Net increase in net assets resulting from operations	(840,000)
Current assets	3,084,000
Non-current assets	66,182,000
Current liabilities	420,000
Non-current liabilities	22,500,000
Non-controlling interest	0
Stockholders’ equity	$ 46,346,000
Ownership percentage	99.00%
Other
Investment Company, Financial Highlights [Line Items]
Revenues	$ 118,256,000	$ 87,740,000
Expenses	(127,990,000)	(98,687,000)
Income (loss) before taxes	(9,734,000)	(10,947,000)
Income tax expense	875,000	3,117,000
Consolidated net income (loss)	(8,859,000)	(7,830,000)
Net loss attributable to non-controlling interests	0	0
Net increase in net assets resulting from operations	(8,859,000)	(7,830,000)
Current assets	64,792,000	51,902,000
Non-current assets	322,397,000	311,985,000
Current liabilities	41,781,000	35,927,000
Non-current liabilities	168,726,000	146,901,000
Non-controlling interest	0	0
Stockholders’ equity	$ 176,682,000	$ 181,059,000
Milton Industries, Inc.
Investment Company, Financial Highlights [Line Items]
Ownership percentage	13.00%	13.00%
Resolution Economics
Investment Company, Financial Highlights [Line Items]
Ownership percentage	8.00%	8.00%
Blue Ridge ESOP Associates
Investment Company, Financial Highlights [Line Items]
Ownership percentage	16.00%	17.00%

XML

Fair Value of Financial Instruments - Investments Categorization in Fair Value Hierarchy (Detail) - USD ($)	Dec. 31, 2021		Dec. 31, 2020
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair Value	$ 455,996,741	[1],[2]	$ 231,197,454	[3],[4]
Level 1
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair Value	0		0
Level 2
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair Value	0		0
Level 3
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair Value	455,996,741		231,197,454
Total Senior Secured Notes
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair Value	152,542,454	[1],[2]	78,042,454	[3],[4]
Total Senior Secured Notes | Level 1
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair Value	0		0
Total Senior Secured Notes | Level 2
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair Value	0		0
Total Senior Secured Notes | Level 3
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair Value	152,542,454		78,042,454
Equity
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair Value	303,454,287	[1],[2]	153,155,000	[3],[4]
Equity | Level 1
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair Value	0		0
Equity | Level 2
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair Value	0		0
Equity | Level 3
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair Value	$ 303,454,287		$ 153,155,000

[1] Percentages represent fair value as a percentage of net assets for each investment category.

[2] Security may be an obligation of one or more entities affiliated with the named company.

[3] Percentages represent fair value as a percentage of net assets for each investment category.

[4] Security may be an obligation of one or more entities affiliated with the named company.

XML

Fair Value of Financial Instruments - Unobservable Inputs Used in Fair Value Measurement of Investments (Detail)	Dec. 31, 2021 USD ($)		Dec. 31, 2020 USD ($)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Investments, at fair value	$ 455,996,741	[1],[2]	$ 231,197,454	[3],[4]
Total Senior Secured Notes | Discounted Cash Flow
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Investments, at fair value	130,042,454		$ 78,042,454
Total Senior Secured Notes | Transaction Precedent
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Investments, at fair value	$ 22,500,000
Total Senior Secured Notes | Discount Rate | Discounted Cash Flow | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input, Debt securities	0.085		0.080
Total Senior Secured Notes | Discount Rate | Discounted Cash Flow | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input, Debt securities	0.130		0.130
Total Senior Secured Notes | Discount Rate | Discounted Cash Flow | Weighted Average
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input, Debt securities	0.114		0.107
Total Senior Secured Notes | EBITDA Multiple | Market Comparables | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input, Debt securities	4.1		6.4
Total Senior Secured Notes | EBITDA Multiple | Market Comparables | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input, Debt securities	15.2		15.2
Total Senior Secured Notes | EBITDA Multiple | Market Comparables | Weighted Average
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input, Debt securities	8.9		11.6
Total Senior Secured Notes | EBITDA Multiple | Transaction Method | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input, Debt securities	6.0		6.8
Total Senior Secured Notes | EBITDA Multiple | Transaction Method | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input, Debt securities	12.5		14.5
Total Senior Secured Notes | EBITDA Multiple | Transaction Method | Weighted Average
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input, Debt securities	9.6		11.3
Equity | Discounted Cash Flow
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Investments, at fair value	$ 256,695,000		$ 153,155,000
Equity | Transaction Precedent
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Investments, at fair value	$ 46,759,287
Equity | Discount Rate | Discounted Cash Flow | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input, Debt securities	0.085		0.080
Equity | Discount Rate | Discounted Cash Flow | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input, Debt securities	0.130		0.130
Equity | Discount Rate | Discounted Cash Flow | Weighted Average
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input, Debt securities	0.114		0.107
Equity | EBITDA Multiple | Market Comparables | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input, Debt securities	4.1		6.4
Equity | EBITDA Multiple | Market Comparables | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input, Debt securities	15.2		15.2
Equity | EBITDA Multiple | Market Comparables | Weighted Average
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input, Debt securities	8.9		11.6
Equity | EBITDA Multiple | Transaction Method | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input, Debt securities	6.0		6.8
Equity | EBITDA Multiple | Transaction Method | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input, Debt securities	12.5		14.5
Equity | EBITDA Multiple | Transaction Method | Weighted Average
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input, Debt securities	9.6		11.3

[1] Percentages represent fair value as a percentage of net assets for each investment category.

[2] Security may be an obligation of one or more entities affiliated with the named company.

[3] Percentages represent fair value as a percentage of net assets for each investment category.

[4] Security may be an obligation of one or more entities affiliated with the named company.

XML

Fair Value of Financial Instruments - Reconciliations of Investments of Level 3 Inputs (Detail) - Level 3 - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value balance, beginning	$ 231,197,454	$ 144,195,000
Additions	192,759,287	64,182,774
Return of capital	(2,462,715)
Net change in unrealized appreciation	34,502,715	22,819,680
Fair value balance, ending	455,996,741	231,197,454
Change in net unrealized appreciation on investments held	34,502,715	22,819,680
Total Senior Secured Notes
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value balance, beginning	78,042,454	48,167,603
Additions	74,500,000	29,874,851
Return of capital	0
Net change in unrealized appreciation	0	0
Fair value balance, ending	152,542,454	78,042,454
Change in net unrealized appreciation on investments held	0	0
Equity
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value balance, beginning	153,155,000	96,027,397
Additions	118,259,287	34,307,923
Return of capital	(2,462,715)
Net change in unrealized appreciation	34,502,715	22,819,680
Fair value balance, ending	303,454,287	153,155,000
Change in net unrealized appreciation on investments held	$ 34,502,715	$ 22,819,680

XML

Related Party Transactions - Additional Information (Detail) - USD ($)	12 Months Ended				48 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2021
Related Party Transaction [Line Items]
Expiration period	3 years
Expense support	$ 0	$ (3,301,473)
Expense support reimbursable	(1,800,000)				$ (1,800,000)
Reimbursement of expense support	1,830,920	0			1,830,920
Distributions paid	10,765,618	7,395,691
Manager and Sub-Manager
Related Party Transaction [Line Items]
Organization and offering costs incurred	$ 4,200,000
Annual preference return relates to non-founder shares	8.75%
Annual preference return relates to founder shares	7.777%
Distributions paid	$ 700,000	700,000
Organization and offering reimbursement | Manager and Sub-Manager
Related Party Transaction [Line Items]
Related party fees and expenses	$ 2,490,377	1,142,237
Manager Sub Manager
Related Party Transaction [Line Items]
Percentage of return incentive fees payable	50.00%
Base management fees multiplier for non founder shares	2.00%
Base management fees multiplier for founder shares	1.00%
Annual preference return	7.00%
Annual preference return relates to non-founder shares	8.75%
Annual preference return relates to founder shares	7.777%
Expense support	$ (3,301,473)		$ (1,372,020)	$ (389,774)	$ (5,063,267)
Base management fees | Manager and Sub-Manager
Related Party Transaction [Line Items]
Related party fees and expenses	4,845,052	2,596,842
Return incentive fees | Manager and Sub-Manager
Related Party Transaction [Line Items]
Related party fees and expenses	7,282,840	4,150,562
Expense Support and Conditional Reimbursement Agreement: Expense support
Related Party Transaction [Line Items]
Reimbursement of expense support	1,830,920	0
Expense Support and Conditional Reimbursement Agreement: Expense support | Manager and Sub-Manager
Related Party Transaction [Line Items]
Related party fees and expenses	$ 0	$ (3,301,473)
Manager and Sub-Manager
Related Party Transaction [Line Items]
Shares outstanding end of period (in shares)	400,000	600,000			400,000
Minimum | Manager and Sub-Manager
Related Party Transaction [Line Items]
Annual preference return	7.00%
Proceeds from Public Offering | Manager and Sub-Manager
Related Party Transaction [Line Items]
Maximum percentage of reimbursement from private placement	1.50%
Private Placement | Manager and Sub-Manager
Related Party Transaction [Line Items]
Maximum percentage of reimbursement from private placement	1.00%
Class A
Related Party Transaction [Line Items]
Shares outstanding end of period (in shares)	1,461,000	1,034,000			1,461,000
Class A | Managing Dealer /Placement Agent
Related Party Transaction [Line Items]
Selling commission on share sold percentage	6.00%				6.00%
Class A | Proceeds from Public Offering
Related Party Transaction [Line Items]
Dealer manager fee	2.50%				2.50%
Class T
Related Party Transaction [Line Items]
Shares outstanding end of period (in shares)	1,609,000	655,000			1,609,000
Class T | Managing Dealer /Placement Agent
Related Party Transaction [Line Items]
Selling commission on share sold percentage	3.00%				3.00%
Class T | Proceeds from Public Offering
Related Party Transaction [Line Items]
Dealer manager fee	1.75%				1.75%
Annual distribution and fee, percentage	1.00%				1.00%
Class FA
Related Party Transaction [Line Items]
Shares outstanding end of period (in shares)	4,559,000	4,579,000			4,559,000
Class FA | Follow On Private Placement
Related Party Transaction [Line Items]
Selling commission on share sold percentage	5.50%		5.50%		5.50%
Placement agent fee on share sold percentage	3.00%		3.00%
Class D
Related Party Transaction [Line Items]
Shares outstanding end of period (in shares)	1,009,000	454,000			1,009,000
Class D | Proceeds from Public Offering
Related Party Transaction [Line Items]
Annual distribution and fee, percentage	0.50%				0.50%
Class S
Related Party Transaction [Line Items]
Shares outstanding end of period (in shares)	1,766,000	1,770,000			1,766,000
Class S | Class S Private Offering
Related Party Transaction [Line Items]
Selling commission on share sold percentage	2.00%	2.00%			2.00%
Placement agent fee on share sold percentage	1.50%	1.50%
Annual Preference Return Less than or Equal to 8.75% or the Non-founder breakpoint | Manager Sub Manager
Related Party Transaction [Line Items]
Percentage of return incentive fees payable	20.00%
Annual Preference Return Less Than 7.777% or Founder breakpoint | Manager Sub Manager
Related Party Transaction [Line Items]
Percentage of return incentive fees payable	10.00%

XML

Related Party Transactions - High Water Marks (Details) - $ / shares	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Class FA
Related Party Transaction [Line Items]
High water mark (in dollars per share)	$ 29.97	$ 27.64
Class A
Related Party Transaction [Line Items]
High water mark (in dollars per share)	28.76	26.91
Class T
Related Party Transaction [Line Items]
High water mark (in dollars per share)	28.67	27.01
Class D
Related Party Transaction [Line Items]
High water mark (in dollars per share)	28.24	26.61
Class I
Related Party Transaction [Line Items]
High water mark (in dollars per share)	29.06	27.15
Class S
Related Party Transaction [Line Items]
High water mark (in dollars per share)	$ 30.08	$ 27.64

XML

Related Party Transactions - Expense Support (Details) - USD ($)	12 Months Ended				48 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2021
Schedule of Expense Support (Reimbursement) [Line Items]
Amount of Expense Support Received	$ 0	$ 3,301,473
Reimbursement of Expense Support	(1,830,920)	$ 0			$ (1,830,920)
Expense Support, Not Reimbursed					3,232,347
2018
Schedule of Expense Support (Reimbursement) [Line Items]
Reimbursement of Expense Support				$ (352,653)
Expense Support, Not Reimbursed				37,121
2019
Schedule of Expense Support (Reimbursement) [Line Items]
Reimbursement of Expense Support			$ (969,591)
Expense Support, Not Reimbursed			402,429
2020
Schedule of Expense Support (Reimbursement) [Line Items]
Reimbursement of Expense Support	(508,676)
Expense Support, Not Reimbursed	2,792,797
Manager Sub Manager
Schedule of Expense Support (Reimbursement) [Line Items]
Amount of Expense Support Received	$ 3,301,473		$ 1,372,020	$ 389,774	$ 5,063,267

XML

Related Party Transactions - Schedule of Related Party Transactions (Detail) - USD ($)	12 Months Ended				48 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2021
Related Party Transaction [Line Items]
Reimbursement of expense support	$ 1,830,920	$ 0			$ 1,830,920
2018
Related Party Transaction [Line Items]
Reimbursement of expense support				$ 352,653
2019
Related Party Transaction [Line Items]
Reimbursement of expense support			$ 969,591
2020
Related Party Transaction [Line Items]
Reimbursement of expense support	508,676
Commissions | Managing Dealer /Placement Agent
Related Party Transaction [Line Items]
Related party fees and expenses	1,524,232	1,918,852
Dealer Manager Fees | Managing Dealer /Placement Agent
Related Party Transaction [Line Items]
Related party fees and expenses	820,985	1,256,229
Distribution and shareholder servicing fees | Managing Dealer /Placement Agent
Related Party Transaction [Line Items]
Related party fees and expenses	396,774	165,012
Organization and offering reimbursement | Manager and Sub-Manager
Related Party Transaction [Line Items]
Related party fees and expenses	2,490,377	1,142,237
Base management fees | Manager and Sub-Manager
Related Party Transaction [Line Items]
Related party fees and expenses	4,845,052	2,596,842
Return incentive fees | Manager and Sub-Manager
Related Party Transaction [Line Items]
Related party fees and expenses	7,282,840	4,150,562
Expense Support and Conditional Reimbursement Agreement: Expense support
Related Party Transaction [Line Items]
Reimbursement of expense support	1,830,920	0
Expense Support and Conditional Reimbursement Agreement: Expense support | Manager and Sub-Manager
Related Party Transaction [Line Items]
Related party fees and expenses	0	(3,301,473)
Reimbursement of third party operating expenses | Manager
Related Party Transaction [Line Items]
Related party fees and expenses	104,195	191,070
Reimbursement of third party pursuit costs | Sub-Manager
Related Party Transaction [Line Items]
Related party fees and expenses	$ 651,362	$ 154,727

XML

Related Party Transactions - Amounts Due from (to) Related Parties (Detail) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Related Party Transaction [Line Items]
Due from related parties	$ 0	$ 3,301,473
Due to related parties	(9,921,526)	(4,777,931)
Net due to related parties	(9,921,526)	(1,476,458)
Expense Support
Related Party Transaction [Line Items]
Due from related parties	0	3,301,473
Total return incentive fees
Related Party Transaction [Line Items]
Due to related parties	(7,282,840)	(4,150,562)
Reimbursement of expense support
Related Party Transaction [Line Items]
Due to related parties	(1,830,920)	0
Base management fees
Related Party Transaction [Line Items]
Due to related parties	(577,538)	(271,983)
Organization and offering expenses
Related Party Transaction [Line Items]
Due to related parties	(175,749)	(122,779)
Distribution and shareholder servicing fees
Related Party Transaction [Line Items]
Due to related parties	(53,149)	(19,814)
Reimbursement of third-party operating expenses and pursuit costs
Related Party Transaction [Line Items]
Due to related parties	$ (1,330)	$ (212,793)

XML

Distributions - Declared (Details) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Distributions Made to Members or Limited Partners [Abstract]
Distributions Declared	$ 15,489,084	$ 9,929,353
Distributions Reinvested	4,428,799	2,240,547
Cash Distributions Net of Distributions Reinvested	$ 11,060,285	$ 7,688,806

XML

Distributions - Distribution Per Class (Details) - $ / shares	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Class FA
Distribution Made to Limited Liability Company (LLC) Member [Line Items]
Declared distribution (in dollars per share)	$ 0.104167	$ 0.104167
Class A
Distribution Made to Limited Liability Company (LLC) Member [Line Items]
Declared distribution (in dollars per share)	0.104167	0.104167
Class T
Distribution Made to Limited Liability Company (LLC) Member [Line Items]
Declared distribution (in dollars per share)	0.083333	0.083333
Class D
Distribution Made to Limited Liability Company (LLC) Member [Line Items]
Declared distribution (in dollars per share)	0.093750	0.093750
Class I
Distribution Made to Limited Liability Company (LLC) Member [Line Items]
Declared distribution (in dollars per share)	$ 0.104167	0.104167
Class S
Distribution Made to Limited Liability Company (LLC) Member [Line Items]
Declared distribution (in dollars per share)		$ 0.104167

XML

Distributions - Declared on GAAP Basis (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Distribution Made to Limited Liability Company (LLC) Member [Line Items]
Amount	$ 15,489,084	$ 9,929,353
% of Cash Distributions Declared	100.00%	100.00%
Expense support received	$ 0	$ 3,301,473
Net Investment Income
Distribution Made to Limited Liability Company (LLC) Member [Line Items]
Amount	$ 10,092,849	$ 7,493,472
% of Cash Distributions Declared	65.20%	75.50%
Expense support received	$ (1,830,920)	$ 3,301,473
Distributions in excess of net investment income
Distribution Made to Limited Liability Company (LLC) Member [Line Items]
Amount	$ 5,396,235	$ 2,435,881
% of Cash Distributions Declared	34.80%	24.50%

XML

Distributions - Additional Information (Detail) - $ / shares					12 Months Ended
	Apr. 28, 2022	Mar. 30, 2022	Feb. 25, 2022	Jan. 28, 2022	Dec. 31, 2021	Dec. 31, 2020
Class FA
Distribution Made to Limited Liability Company (LLC) Member [Line Items]
Declared distribution (in dollars per share)					$ 0.104167	$ 0.104167
Class FA | Subsequent Event
Distribution Made to Limited Liability Company (LLC) Member [Line Items]
Declared distribution (in dollars per share)	$ 0.104167	$ 0.104167	$ 0.104167	$ 0.104167
Class A
Distribution Made to Limited Liability Company (LLC) Member [Line Items]
Declared distribution (in dollars per share)					0.104167	0.104167
Class A | Subsequent Event
Distribution Made to Limited Liability Company (LLC) Member [Line Items]
Declared distribution (in dollars per share)	0.104167	0.104167	0.104167	0.104167
Class T
Distribution Made to Limited Liability Company (LLC) Member [Line Items]
Declared distribution (in dollars per share)					0.083333	0.083333
Class T | Subsequent Event
Distribution Made to Limited Liability Company (LLC) Member [Line Items]
Declared distribution (in dollars per share)	0.083333	0.083333	0.083333	0.083333
Class D
Distribution Made to Limited Liability Company (LLC) Member [Line Items]
Declared distribution (in dollars per share)					0.093750	0.093750
Class D | Subsequent Event
Distribution Made to Limited Liability Company (LLC) Member [Line Items]
Declared distribution (in dollars per share)	0.093750	0.093750	0.093750	0.093750
Class I
Distribution Made to Limited Liability Company (LLC) Member [Line Items]
Declared distribution (in dollars per share)					$ 0.104167	0.104167
Class I | Subsequent Event
Distribution Made to Limited Liability Company (LLC) Member [Line Items]
Declared distribution (in dollars per share)	0.104167	0.104167	0.104167	0.104167
Class S
Distribution Made to Limited Liability Company (LLC) Member [Line Items]
Declared distribution (in dollars per share)						$ 0.104167
Class S | Subsequent Event
Distribution Made to Limited Liability Company (LLC) Member [Line Items]
Declared distribution (in dollars per share)	$ 0.104167	$ 0.104167	$ 0.104167	$ 0.104167

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Capital Transactions -Additional Information (Detail)		1 Months Ended				9 Months Ended	12 Months Ended			19 Months Ended	35 Months Ended
	Mar. 07, 2018 USD ($)	Dec. 31, 2020 USD ($) shares	Jan. 31, 2020 USD ($)	Jun. 30, 2019 USD ($)	Apr. 30, 2019 USD ($)	Dec. 31, 2019 USD ($) shares	Dec. 31, 2021 USD ($) class portfolioCompany $ / shares shares	Dec. 31, 2020 USD ($) shares	Dec. 31, 2019	Dec. 31, 2020 USD ($) shares	Dec. 31, 2020 USD ($) offering
Investment Company, Capital Share Transactions [Line Items]
Number classes of shares | portfolioCompany							4
Authorized amount per quarter (in percent)							2.50%
Authorized amount per year (in percent)							10.00%
Repurchase of common shares pursuant to share repurchase program							$ 3,290,868	$ 9,646,917
Amount of share requested to be repurchased in excess of proceeds received from its distribution reinvestment plan								7,800,000
Payable for shares repurchased		$ 1,968,732					$ 508,770	$ 1,968,732		$ 1,968,732	$ 1,968,732
Proceeds from Public Offering
Investment Company, Capital Share Transactions [Line Items]
Shares offered	$ 1,000,000,000
Number classes of shares | class							4
Sale of stock offering, minimum requirement	$ 5,000
Shares Issued | shares							5,324,390	4,367,120
2019 Private Placement and Follow On Private Placement
Investment Company, Capital Share Transactions [Line Items]
Shares offered				$ 50,000,000	$ 50,000,000
Distribution Reinvestment Plan
Investment Company, Capital Share Transactions [Line Items]
Shares offered							$ 100,000,000
Follow On Private Placement
Investment Company, Capital Share Transactions [Line Items]
Gross Proceeds										$ 8,000,000
Shares Issued | shares										300,000
Class S Private Offering
Investment Company, Capital Share Transactions [Line Items]
Shares offered			$ 50,000,000
Gross Proceeds		$ 52,000,000
Shares Issued | shares		1,800,000
Private Placements
Investment Company, Capital Share Transactions [Line Items]
Number Of Private Offerings | offering											4
Gross Proceeds											$ 177,000,000
2019 Private Offering
Investment Company, Capital Share Transactions [Line Items]
Gross Proceeds						$ 35,000,000
Shares Issued | shares						1,300,000
Class FA
Investment Company, Capital Share Transactions [Line Items]
Repurchase of common shares pursuant to share repurchase program							$ 630,608	$ 7,037,470
Class FA | Follow On Private Placement
Investment Company, Capital Share Transactions [Line Items]
Placement agent fee on share sold percentage							3.00%		3.00%
Selling commission on share sold percentage						5.50%	5.50%		5.50%
Class FA | 2019 Private Offering
Investment Company, Capital Share Transactions [Line Items]
Shares Issued | shares								300,000
Class A
Investment Company, Capital Share Transactions [Line Items]
Repurchase of common shares pursuant to share repurchase program							$ 627,150	$ 123,038
Class A | Proceeds from Public Offering
Investment Company, Capital Share Transactions [Line Items]
Share price (usd per share) | $ / shares							$ 33.83
Class T
Investment Company, Capital Share Transactions [Line Items]
Repurchase of common shares pursuant to share repurchase program							$ 574,225	721,226
Class T | Proceeds from Public Offering
Investment Company, Capital Share Transactions [Line Items]
Share price (usd per share) | $ / shares							$ 32.20
Class D
Investment Company, Capital Share Transactions [Line Items]
Repurchase of common shares pursuant to share repurchase program							$ 198,484	32,212
Class D | Proceeds from Public Offering
Investment Company, Capital Share Transactions [Line Items]
Share price (usd per share) | $ / shares							$ 30.34
Class I
Investment Company, Capital Share Transactions [Line Items]
Repurchase of common shares pursuant to share repurchase program							$ 1,118,904	1,732,971
Class I | Proceeds from Public Offering
Investment Company, Capital Share Transactions [Line Items]
Share price (usd per share) | $ / shares							$ 31.34
Class S
Investment Company, Capital Share Transactions [Line Items]
Repurchase of common shares pursuant to share repurchase program							$ 141,497	$ 0
Class S | Class S Private Offering
Investment Company, Capital Share Transactions [Line Items]
Placement agent fee on share sold percentage							1.50%	1.50%
Selling commission on share sold percentage		2.00%					2.00%	2.00%		2.00%	2.00%

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Capital Transactions - Summary of Shares Issued and Proceeds Received in Connection with Private Placement (Detail) - USD ($)	9 Months Ended	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2021	Dec. 31, 2020
Investment Company, Capital Share Transactions [Line Items]
Proceeds to Company		$ 4,174,382	$ 2,109,793
Shares		5,461,821	4,444,642
Net Proceeds to Company		$ 167,140,551
Average Net Proceeds per Share		$ 30.60	$ 27.95
Public Offering and Private Placement
Investment Company, Capital Share Transactions [Line Items]
Shares Issued			4,367,120
Gross Proceeds			$ 125,275,212
Sales Load			(3,175,081)
Net Proceeds to Company			122,100,131
Net Proceeds to Company			$ 124,209,924
Distribution Reinvestment Plan
Investment Company, Capital Share Transactions [Line Items]
Shares		137,431	77,522
Proceeds to Company		$ 4,174,382	$ 2,109,793
Initial Public Offering
Investment Company, Capital Share Transactions [Line Items]
Shares Issued		5,324,390
Gross Proceeds		$ 165,311,386
Sales Load		(2,345,217)
Net Proceeds to Company		$ 162,966,169
2019 Private Offering
Investment Company, Capital Share Transactions [Line Items]
Shares Issued	1,300,000
Gross Proceeds	$ 35,000,000
Class FA
Investment Company, Capital Share Transactions [Line Items]
Shares			569,642
Net Proceeds to Company			$ 15,685,040
Average Net Proceeds per Share			$ 27.53
Class FA | Private Placement
Investment Company, Capital Share Transactions [Line Items]
Shares Issued			569,642
Gross Proceeds			$ 15,853,000
Sales Load			(167,960)
Net Proceeds to Company			$ 15,685,040
Class FA | Distribution Reinvestment Plan
Investment Company, Capital Share Transactions [Line Items]
Shares			0
Proceeds to Company			$ 0
Class FA | 2019 Private Offering
Investment Company, Capital Share Transactions [Line Items]
Shares Issued			300,000
Class A
Investment Company, Capital Share Transactions [Line Items]
Shares		447,011	369,816
Net Proceeds to Company		$ 13,559,354	$ 10,091,122
Average Net Proceeds per Share		$ 30.33	$ 27.29
Class A | Distribution Reinvestment Plan
Investment Company, Capital Share Transactions [Line Items]
Shares		43,744	35,376
Proceeds to Company		$ 1,322,539	$ 961,623
Class A | Initial Public Offering
Investment Company, Capital Share Transactions [Line Items]
Shares Issued		403,267	334,440
Gross Proceeds		$ 13,195,644	$ 9,808,964
Sales Load		(958,829)	(679,465)
Net Proceeds to Company		$ 12,236,815	$ 9,129,499
Class T
Investment Company, Capital Share Transactions [Line Items]
Shares		973,574	481,784
Net Proceeds to Company		$ 29,610,528	$ 13,075,429
Average Net Proceeds per Share		$ 30.41	$ 27.14
Class T | Distribution Reinvestment Plan
Investment Company, Capital Share Transactions [Line Items]
Shares		19,417	8,440
Proceeds to Company		$ 585,294	$ 229,816
Class T | Initial Public Offering
Investment Company, Capital Share Transactions [Line Items]
Shares Issued		954,157	473,344
Gross Proceeds		$ 30,411,622	$ 13,486,208
Sales Load		(1,386,388)	(640,595)
Net Proceeds to Company		$ 29,025,234	$ 12,845,613
Class D
Investment Company, Capital Share Transactions [Line Items]
Shares		561,606	152,248
Net Proceeds to Company		$ 16,883,239	$ 4,118,666
Average Net Proceeds per Share		$ 30.06	$ 27.05
Class D | Distribution Reinvestment Plan
Investment Company, Capital Share Transactions [Line Items]
Shares		13,798	9,174
Proceeds to Company		$ 409,939	$ 245,006
Class D | Initial Public Offering
Investment Company, Capital Share Transactions [Line Items]
Shares Issued		547,808	143,074
Gross Proceeds		$ 16,473,300	$ 3,873,660
Sales Load		0	0
Net Proceeds to Company		$ 16,473,300	$ 3,873,660
Class I
Investment Company, Capital Share Transactions [Line Items]
Shares		3,479,630	1,100,766
Net Proceeds to Company		$ 107,087,430	$ 30,567,081
Average Net Proceeds per Share		$ 30.78	$ 27.77
Class I | Distribution Reinvestment Plan
Investment Company, Capital Share Transactions [Line Items]
Shares		60,472	24,532
Proceeds to Company		$ 1,856,610	$ 673,348
Class I | Initial Public Offering
Investment Company, Capital Share Transactions [Line Items]
Shares Issued		3,419,158	1,076,234
Gross Proceeds		$ 105,230,820	$ 29,893,733
Sales Load		0	0
Net Proceeds to Company		$ 105,230,820	$ 29,893,733
Class S
Investment Company, Capital Share Transactions [Line Items]
Shares			1,770,386
Net Proceeds to Company			$ 50,672,586
Average Net Proceeds per Share			$ 28.62
Class S | Private Placement
Investment Company, Capital Share Transactions [Line Items]
Shares Issued			1,770,386
Gross Proceeds			$ 52,359,647
Sales Load			(1,687,061)
Net Proceeds to Company			$ 50,672,586
Class S | Distribution Reinvestment Plan
Investment Company, Capital Share Transactions [Line Items]
Shares			0
Proceeds to Company			$ 0

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Capital Transactions Capital Transactions - Summary of Shares Repurchased (Details) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Equity, Class of Treasury Stock [Line Items]
Number of Shares	107,038	341,225
Total Consideration	$ 3,290,868	$ 9,646,917
Average Price Paid per Share	$ 30.74	$ 28.27
Class FA
Equity, Class of Treasury Stock [Line Items]
Number of Shares	19,637	246,653
Total Consideration	$ 630,608	$ 7,037,470
Average Price Paid per Share	$ 32.11	$ 28.53
Class A
Equity, Class of Treasury Stock [Line Items]
Number of Shares	20,876	4,580
Total Consideration	$ 627,150	$ 123,038
Average Price Paid per Share	$ 30.04	$ 26.86
Class T
Equity, Class of Treasury Stock [Line Items]
Number of Shares	19,158	25,774
Total Consideration	$ 574,225	$ 721,226
Average Price Paid per Share	$ 29.97	$ 27.98
Class D
Equity, Class of Treasury Stock [Line Items]
Number of Shares	6,711	1,156
Total Consideration	$ 198,484	$ 32,212
Average Price Paid per Share	$ 29.58	$ 27.85
Class I
Equity, Class of Treasury Stock [Line Items]
Number of Shares	36,349	63,062
Total Consideration	$ 1,118,904	$ 1,732,971
Average Price Paid per Share	$ 30.78	$ 27.48
Class S
Equity, Class of Treasury Stock [Line Items]
Number of Shares	4,307	0
Total Consideration	$ 141,497	$ 0
Average Price Paid per Share	$ 32.85	$ 0

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Borrowings (Details) - Line of Credit - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Sep. 30, 2021
Line of Credit Facility [Line Items]
Line of credit amount			$ 25,000,000
Commitment fee	$ 15,000	$ 60,000
Fee required on each borrowing	0.05%
Maximum fee	$ 20,000
Maximum fee term limitation	364 days
Line of Credit Minimum Interest Rate	3.00%
Compensating Balance, Amount	$ 2,500,000
Minimum
Line of Credit Facility [Line Items]
Debt Instrument, Term	60 days
Maximum
Line of Credit Facility [Line Items]
Debt Instrument, Term	180 days
LIBOR
Line of Credit Facility [Line Items]
Basis spread on variable rate	2.75%

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Income Taxes - Components of Income Tax Expense (Benefit) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Current:
Federal	$ 1,315,437	$ 0
State	314,793	0
Total current tax expense	1,630,230	0
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

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Income Taxes - Deferred Tax Assets (Details) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Deferred tax assets:
Carryforwards for net operating loss	$ 532,822	$ 248,641
Other	18,120	0
Valuation Allowance	(21,899)	0
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)

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Income Taxes - Reconciliation to Statutory Rate (Details) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Income Tax Disclosure [Abstract]
Tax expense computed at the federal statutory rate	$ 9,707,417	$ 6,365,762
Tax expense computed at federal statutory rate (in percent)	21.00%	21.00%
State income tax expense net of federal benefit	$ 789,404	$ 73,491
State income tax expense net of federal benefit (in percent)	1.70%	0.20%
Benefit of partnership structure	$ 7,256,517	$ 6,172,464
Benefit of partnership structure (in percent)	15.70%	20.30%
Income tax expense	$ 3,240,304	$ 266,789
Income tax expense (in percent)	7.00%	0.90%

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Income Taxes - Additional Information (Details) - USD ($) $ in Millions	Dec. 31, 2021	Dec. 31, 2020
Domestic Tax Authority
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	$ 0.9	$ 0.9

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Financial Highlights - Schedule of Financial Highlights (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2021		Dec. 31, 2020		Dec. 31, 2019
Investment Company, Financial Highlights [Roll Forward]
Net investment income (usd per share)	$ 0.79		$ 0.93
Net assets at end of period	$ 500,308,997	[1],[2]	$ 308,962,908	[3],[4]	$ 174,282,891
Distributions declared	$ 15,489,084		$ 9,929,353
Class FA
Investment Company, Financial Highlights [Roll Forward]
Net Asset Value, Beginning of Period (usd per shares)	$ 29.97		$ 27.64
Net investment income, before expense support (usd per shares)	1.33		0.79
Reimbursements of expense support (usd per share)	(0.21)		0.35
Net investment income (usd per share)	1.12		1.14
Net realized and unrealized gains (usd per shares)	2.78		2.44
Net increase resulting from investment operations (usd per shares)	3.90		3.58
Distributions to shareholders (usd per share)	(1.25)		(1.25)
Net decrease resulting from distributions to shareholders (usd per shares)	(1.25)		(1.25)
Net Asset Value, End of Period (usd per shares)	$ 32.62		$ 29.97
Net assets at end of period	$ 148,716,308		$ 137,237,594
Average net assets	$ 145,353,000		$ 130,940,000
Shares outstanding end of period (in shares)	4,559,000		4,579,000
Distributions declared	$ 5,714,000		$ 5,812,000
Total investment return based on net asset value before total return incentive fee	14.55%		13.27%
Total investment return based on net asset value after total return incentive fee	12.92%		13.16%
Ratios to average net assets:
Total operating expenses before total return incentive fee and expense support	1.41%		1.81%
Total operating expenses before expense support	2.77%		3.10%
Total operating expenses after expense support	3.44%		1.85%
Net investment income before total return incentive fee	4.88%		4.09%
Net investment income	3.52%		4.05%
Total investment return based on net asset value after total return incentive fee			97.00%
Class A
Investment Company, Financial Highlights [Roll Forward]
Net Asset Value, Beginning of Period (usd per shares)	$ 28.76		$ 26.91
Net investment income, before expense support (usd per shares)	0.65		0.10
Reimbursements of expense support (usd per share)	(0.19)		0.53
Net investment income (usd per share)	0.46		0.63
Net realized and unrealized gains (usd per shares)	2.81		2.47
Net increase resulting from investment operations (usd per shares)	3.27		3.10
Distributions to shareholders (usd per share)	(1.25)		(1.25)
Net decrease resulting from distributions to shareholders (usd per shares)	(1.25)		(1.25)
Net Asset Value, End of Period (usd per shares)	$ 30.78		$ 28.76
Net assets at end of period	$ 44,957,765		$ 29,747,587
Average net assets	$ 37,354,000		$ 22,984,000
Shares outstanding end of period (in shares)	1,461,000		1,034,000
Distributions declared	$ 1,531,000		$ 1,052,000
Total investment return based on net asset value before total return incentive fee	13.88%		12.43%
Total investment return based on net asset value after total return incentive fee	11.53%		11.89%
Ratios to average net assets:
Total operating expenses before total return incentive fee and expense support	2.97%		3.51%
Total operating expenses before expense support	5.52%		6.09%
Total operating expenses after expense support	6.13%		4.14%
Net investment income before total return incentive fee	4.06%		2.96%
Net investment income	1.52%		2.32%
Total investment return based on net asset value after total return incentive fee			75.00%
Class T
Investment Company, Financial Highlights [Roll Forward]
Net Asset Value, Beginning of Period (usd per shares)	$ 28.67		$ 27.01
Net investment income, before expense support (usd per shares)	0.39		(0.33)
Reimbursements of expense support (usd per share)	(0.21)		0.47
Net investment income (usd per share)	0.18		0.14
Net realized and unrealized gains (usd per shares)	2.81		2.52
Net increase resulting from investment operations (usd per shares)	2.99		2.66
Distributions to shareholders (usd per share)	(1.00)		(1.00)
Net decrease resulting from distributions to shareholders (usd per shares)	(1.00)		(1.00)
Net Asset Value, End of Period (usd per shares)	$ 30.66		$ 28.67
Net assets at end of period	$ 49,328,483		$ 18,771,713
Average net assets	$ 30,486,000		$ 11,991,000
Shares outstanding end of period (in shares)	1,609,000		655,000
Distributions declared	$ 1,000,000		$ 436,000
Total investment return based on net asset value before total return incentive fee	11.96%		10.79%
Total investment return based on net asset value after total return incentive fee	10.55%		10.11%
Ratios to average net assets:
Total operating expenses before total return incentive fee and expense support	4.93%		5.54%
Total operating expenses before expense support	6.99%		8.21%
Total operating expenses after expense support	7.70%		6.49%
Net investment income before total return incentive fee	2.65%		1.46%
Net investment income	0.59%		0.51%
Total investment return based on net asset value after total return incentive fee			64.00%
Class D
Investment Company, Financial Highlights [Roll Forward]
Net Asset Value, Beginning of Period (usd per shares)	$ 28.24		$ 26.61
Net investment income, before expense support (usd per shares)	0.58		0.03
Reimbursements of expense support (usd per share)	(0.14)		0.26
Net investment income (usd per share)	0.44		0.29
Net realized and unrealized gains (usd per shares)	2.80		2.47
Net increase resulting from investment operations (usd per shares)	3.24		2.76
Distributions to shareholders (usd per share)	(1.13)		(1.13)
Net decrease resulting from distributions to shareholders (usd per shares)	(1.13)		(1.13)
Net Asset Value, End of Period (usd per shares)	$ 30.35		$ 28.24
Net assets at end of period	$ 30,606,947		$ 12,813,290
Average net assets	$ 20,335,000		$ 9,675,000
Shares outstanding end of period (in shares)	1,009,000		454,000
Distributions declared	$ 760,000		$ 405,000
Total investment return based on net asset value before total return incentive fee	13.31%		11.99%
Total investment return based on net asset value after total return incentive fee	11.61%		10.67%
Ratios to average net assets:
Total operating expenses before total return incentive fee and expense support	4.16%		3.93%
Total operating expenses before expense support	6.45%		6.48%
Total operating expenses after expense support	6.91%		5.52%
Net investment income before total return incentive fee	3.77%		2.67%
Net investment income	1.48%		1.08%
Total investment return based on net asset value after total return incentive fee			38.00%
Class I
Investment Company, Financial Highlights [Roll Forward]
Net Asset Value, Beginning of Period (usd per shares)	$ 29.06		$ 27.15
Net investment income, before expense support (usd per shares)	0.60		0.02
Reimbursements of expense support (usd per share)	(0.09)		0.66
Net investment income (usd per share)	0.51		0.68
Net realized and unrealized gains (usd per shares)	2.86		2.48
Net increase resulting from investment operations (usd per shares)	3.37		3.16
Distributions to shareholders (usd per share)	(1.25)		(1.25)
Net decrease resulting from distributions to shareholders (usd per shares)	(1.25)		(1.25)
Net Asset Value, End of Period (usd per shares)	$ 31.18		$ 29.06
Net assets at end of period	$ 168,704,080		$ 57,147,617
Average net assets	$ 106,275,000		$ 35,672,000
Shares outstanding end of period (in shares)	5,410,000		1,967,000
Distributions declared	$ 4,271,000		$ 1,610,000
Total investment return based on net asset value before total return incentive fee	13.39%		12.23%
Total investment return based on net asset value after total return incentive fee	11.76%		12.01%
Ratios to average net assets:
Total operating expenses before total return incentive fee and expense support	3.93%		4.02%
Total operating expenses before expense support	6.25%		6.72%
Total operating expenses after expense support	6.55%		4.34%
Net investment income before total return incentive fee	3.97%		2.78%
Net investment income	1.65%		2.46%
Total investment return based on net asset value after total return incentive fee			88.00%
Class S
Investment Company, Financial Highlights [Roll Forward]
Net Asset Value, Beginning of Period (usd per shares)	$ 30.08		$ 27.56
Net investment income, before expense support (usd per shares)	1.23		0.82
Reimbursements of expense support (usd per share)	0		0.10
Net investment income (usd per share)	1.23		0.92
Net realized and unrealized gains (usd per shares)	2.78		2.64
Net increase resulting from investment operations (usd per shares)	4.01		3.56
Distributions to shareholders (usd per share)	(1.25)		(1.04)
Net decrease resulting from distributions to shareholders (usd per shares)	(1.25)		(1.04)
Net Asset Value, End of Period (usd per shares)	$ 32.84		$ 30.08
Net assets at end of period	$ 57,995,414		$ 53,245,107
Average net assets	$ 56,575,000		$ 19,257,000
Shares outstanding end of period (in shares)	1,766,000		1,770,000
Distributions declared	$ 2,213,000		$ 615,000
Total investment return based on net asset value before total return incentive fee	15.07%		13.36%
Total investment return based on net asset value after total return incentive fee	13.54%		12.80%
Ratios to average net assets:
Total operating expenses before total return incentive fee and expense support	1.67%		2.35%
Total operating expenses before expense support	3.07%		4.15%
Total operating expenses after expense support	3.07%		3.79%
Net investment income before total return incentive fee	5.26%		4.66%
Net investment income	3.86%		3.17%
Total investment return based on net asset value after total return incentive fee			20.00%

[1] Percentages represent fair value as a percentage of net assets for each investment category.

[2] Security may be an obligation of one or more entities affiliated with the named company.

[3] Percentages represent fair value as a percentage of net assets for each investment category.

[4] Security may be an obligation of one or more entities affiliated with the named company.

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Subsequent Events - Additional Information (Details) - USD ($)					1 Months Ended	12 Months Ended
	Apr. 28, 2022	Mar. 30, 2022	Feb. 25, 2022	Jan. 28, 2022	Feb. 28, 2022	Dec. 31, 2021	Dec. 31, 2020
Subsequent Event [Line Items]
Purchases of investments						$ 192,759,287	$ 64,182,774
Class FA
Subsequent Event [Line Items]
Declared distribution (in dollars per share)						$ 0.104167	$ 0.104167
Class A
Subsequent Event [Line Items]
Declared distribution (in dollars per share)						0.104167	0.104167
Class T
Subsequent Event [Line Items]
Declared distribution (in dollars per share)						0.083333	0.083333
Class D
Subsequent Event [Line Items]
Declared distribution (in dollars per share)						0.093750	0.093750
Class I
Subsequent Event [Line Items]
Declared distribution (in dollars per share)						$ 0.104167	0.104167
Class S
Subsequent Event [Line Items]
Declared distribution (in dollars per share)							$ 0.104167
Subsequent Event | ATA
Subsequent Event [Line Items]
Payments to Acquire Equity Method Investments					$ 1,100,000
Subsequent Event | Class FA
Subsequent Event [Line Items]
Declared distribution (in dollars per share)	$ 0.104167	$ 0.104167	$ 0.104167	$ 0.104167
Subsequent Event | Class A
Subsequent Event [Line Items]
Declared distribution (in dollars per share)	0.104167	0.104167	0.104167	0.104167
Subsequent Event | Class T
Subsequent Event [Line Items]
Declared distribution (in dollars per share)	0.083333	0.083333	0.083333	0.083333
Subsequent Event | Class D
Subsequent Event [Line Items]
Declared distribution (in dollars per share)	0.093750	0.093750	0.093750	0.093750
Subsequent Event | Class I
Subsequent Event [Line Items]
Declared distribution (in dollars per share)	0.104167	0.104167	0.104167	0.104167
Subsequent Event | Class S
Subsequent Event [Line Items]
Declared distribution (in dollars per share)	$ 0.104167	$ 0.104167	$ 0.104167	$ 0.104167

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Subsequent Events - Summary of New Public Offering Prices and Applicable Upfront Selling Commissions and Dealer Manager Fees (Detail) - $ / shares	Mar. 24, 2022	Feb. 25, 2022	Jan. 28, 2022	Mar. 28, 2022	Dec. 31, 2021	Dec. 31, 2020
Subsequent Event [Line Items]
Public Offering Price, Per Share (in dollars per share)					$ 30.60	$ 27.95
Class A
Subsequent Event [Line Items]
Public Offering Price, Per Share (in dollars per share)					30.33	27.29
Class T
Subsequent Event [Line Items]
Public Offering Price, Per Share (in dollars per share)					30.41	27.14
Class D
Subsequent Event [Line Items]
Public Offering Price, Per Share (in dollars per share)					30.06	27.05
Class I
Subsequent Event [Line Items]
Public Offering Price, Per Share (in dollars per share)					$ 30.78	$ 27.77
Subsequent Event
Subsequent Event [Line Items]
Public Offering Price, Per Share (in dollars per share)				$ 31.15
Subsequent Event | Class A
Subsequent Event [Line Items]
Public Offering Price, Per Share (in dollars per share)	$ 33.97	$ 33.98	$ 33.64	30.99
Selling Commissions, Per Share (in dollars per share)	2.04	2.04	2.02
Dealer Manager Fees, Per Share (in dollars per share)	0.85	0.85	0.84
Subsequent Event | Class T
Subsequent Event [Line Items]
Public Offering Price, Per Share (in dollars per share)	32.44	32.48	32.19	30.80
Selling Commissions, Per Share (in dollars per share)	0.97	0.97	0.97
Dealer Manager Fees, Per Share (in dollars per share)	0.57	0.57	0.56
Subsequent Event | Class D
Subsequent Event [Line Items]
Public Offering Price, Per Share (in dollars per share)	30.62	30.65	30.35	30.54
Selling Commissions, Per Share (in dollars per share)	0	0	0
Dealer Manager Fees, Per Share (in dollars per share)	0	0	0
Subsequent Event | Class I
Subsequent Event [Line Items]
Public Offering Price, Per Share (in dollars per share)	31.49	31.50	31.18	$ 31.31
Selling Commissions, Per Share (in dollars per share)	0	0	0
Dealer Manager Fees, Per Share (in dollars per share)	$ 0	$ 0	$ 0

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Subsequent Events - Gross Proceeds (Detail) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 28, 2022	Dec. 31, 2021	Dec. 31, 2020	Mar. 24, 2022	Feb. 25, 2022	Jan. 28, 2022
Subsequent Event [Line Items]
Shares (in shares)		5,461,821	4,444,642
Net Proceeds to Company		$ 167,140,551
Average Net Proceeds Per Share (in dollars per share)		$ 30.60	$ 27.95
Proceeds from Public Offering
Subsequent Event [Line Items]
Shares (in shares)		5,324,390	4,367,120
Class A
Subsequent Event [Line Items]
Shares (in shares)		447,011	369,816
Net Proceeds to Company		$ 13,559,354	$ 10,091,122
Average Net Proceeds Per Share (in dollars per share)		$ 30.33	$ 27.29
Class T
Subsequent Event [Line Items]
Shares (in shares)		973,574	481,784
Net Proceeds to Company		$ 29,610,528	$ 13,075,429
Average Net Proceeds Per Share (in dollars per share)		$ 30.41	$ 27.14
Class D
Subsequent Event [Line Items]
Shares (in shares)		561,606	152,248
Net Proceeds to Company		$ 16,883,239	$ 4,118,666
Average Net Proceeds Per Share (in dollars per share)		$ 30.06	$ 27.05
Class I
Subsequent Event [Line Items]
Shares (in shares)		3,479,630	1,100,766
Net Proceeds to Company		$ 107,087,430	$ 30,567,081
Average Net Proceeds Per Share (in dollars per share)		$ 30.78	$ 27.77
Subsequent Event
Subsequent Event [Line Items]
Shares (in shares)	755,621
Net Proceeds to Company	$ 23,540,985
Average Net Proceeds Per Share (in dollars per share)	$ 31.15
Subsequent Event | Proceeds from Public Offering
Subsequent Event [Line Items]
Shares (in shares)	706,633
Gross Proceeds	$ 22,313,999
Sales Load	(294,467)
Net Proceeds to Company	$ 22,019,532
Subsequent Event | Distribution Reinvestment Plan
Subsequent Event [Line Items]
Shares (in shares)	48,988
Gross Proceeds	$ 1,521,453
Subsequent Event | Class A
Subsequent Event [Line Items]
Shares (in shares)	112,981
Net Proceeds to Company	$ 3,501,314
Average Net Proceeds Per Share (in dollars per share)	$ 30.99			$ 33.97	$ 33.98	$ 33.64
Subsequent Event | Class A | Proceeds from Public Offering
Subsequent Event [Line Items]
Shares (in shares)	102,283
Gross Proceeds	$ 3,404,361
Sales Load	(234,035)
Net Proceeds to Company	$ 3,170,326
Subsequent Event | Class A | Distribution Reinvestment Plan
Subsequent Event [Line Items]
Shares (in shares)	10,698
Gross Proceeds	$ 330,988
Subsequent Event | Class T
Subsequent Event [Line Items]
Shares (in shares)	48,735
Net Proceeds to Company	$ 1,500,972
Average Net Proceeds Per Share (in dollars per share)	$ 30.80			32.44	32.48	32.19
Subsequent Event | Class T | Proceeds from Public Offering
Subsequent Event [Line Items]
Shares (in shares)	40,504
Gross Proceeds	$ 1,308,250
Sales Load	(60,432)
Net Proceeds to Company	$ 1,247,818
Subsequent Event | Class T | Distribution Reinvestment Plan
Subsequent Event [Line Items]
Shares (in shares)	8,231
Gross Proceeds	$ 253,154
Subsequent Event | Class D
Subsequent Event [Line Items]
Shares (in shares)	75,550
Net Proceeds to Company	$ 2,307,194
Average Net Proceeds Per Share (in dollars per share)	$ 30.54			30.62	30.65	30.35
Subsequent Event | Class D | Proceeds from Public Offering
Subsequent Event [Line Items]
Shares (in shares)	70,157
Gross Proceeds	$ 2,143,000
Sales Load	0
Net Proceeds to Company	$ 2,143,000
Subsequent Event | Class D | Distribution Reinvestment Plan
Subsequent Event [Line Items]
Shares (in shares)	5,393
Gross Proceeds	$ 164,194
Subsequent Event | Class I
Subsequent Event [Line Items]
Shares (in shares)	518,355
Net Proceeds to Company	$ 16,231,505
Average Net Proceeds Per Share (in dollars per share)	$ 31.31			$ 31.49	$ 31.50	$ 31.18
Subsequent Event | Class I | Proceeds from Public Offering
Subsequent Event [Line Items]
Shares (in shares)	493,689
Gross Proceeds	$ 15,458,388
Sales Load	0
Net Proceeds to Company	$ 15,458,388
Subsequent Event | Class I | Distribution Reinvestment Plan
Subsequent Event [Line Items]
Shares (in shares)	24,666
Gross Proceeds	$ 773,117