Filed Pursuant to Rule 424(b)(3)

Registration No. 333-253295

CNL STRATEGIC CAPITAL, LLC

SUPPLEMENT NO. 2 DATED MAY 10, 2024

TO THE PROSPECTUS DATED APRIL 22, 2024

We are providing this Supplement No. 2 to you in order to supplement our prospectus dated April 22, 2024 (as supplemented to date, the “Prospectus”). This supplement provides information that shall be deemed part of, and must be read in conjunction with, the Prospectus. Capitalized terms used in this supplement have the same meanings in the Prospectus unless otherwise stated herein. The terms “we,” “our,” “us” and “Company” refer to CNL Strategic Capital, LLC.

Before investing in our shares, you should read the entire Prospectus and this supplement, and consider carefully our investment objectives, risks, fees and expenses. You should also carefully consider the information disclosed in the section of the Prospectus captioned “Risk Factors” before you decide to invest in our shares.

The purpose of this supplement is to disclose the following:

● an updated “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section substantially the same as that which was included in our Quarterly Report on Form 10-Q, filed on May 9, 2024;

● an updated “Our Portfolio” section; and

● our condensed consolidated unaudited financial statements and the notes thereto as of and for the period ended March 31, 2024, as included in our Quarterly Report on Form 10-Q, filed on May 9, 2024.

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

The Prospectus is hereby supplemented with the following “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is substantially the same as that which was included in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024. Unless otherwise defined in this supplement, capitalized terms are defined in such Quarterly Report on Form 10-Q.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

Overview

CNL Strategic Capital, LLC is a limited liability company that primarily seeks to acquire and grow durable, middle-market U.S. businesses. We are externally managed by the Manager, CNL Strategic Capital Management, LLC, an entity that is registered as an investment adviser under the 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 the Management Agreement pursuant to which the Manager is responsible for the overall management of our activities and sub-managed by the Sub-Manager, Levine Leichtman Strategic Capital, LLC, a registered investment adviser, under 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 (“LLCP”). LLCP is an independent private investment firm that has made private capital investments in middle-market companies located primarily in the United States for over 40 years.

1

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.

Since we commenced operations on February 7, 2018, we have acquired equity and debt investments in 14 middle market U.S. businesses. Our businesses generally 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 March 31, 2024, we had ten investments structured as controlling equity interests in combination with debt positions and four investments structured as minority equity interests in combination with debt positions. All of our debt investments were current as of March 31, 2024.

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

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 Follow-On 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.

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

Through March 31, 2024, we had incurred selling commissions and dealer manager fees of approximately $12.1 million from the sale of Class A shares and Class T shares in the Public Offerings. The Class D shares and Class I shares sold through March 31, 2024, were not subject to selling commissions and dealer manager fees. We also incurred obligations to reimburse the Manager and Sub-Manager for offering costs of approximately $11.6 million based on actual amounts raised through the Public Offerings through March 31, 2024. These offering costs related to the Public Offerings were advanced by the Manager and Sub-Manager, as described further in Note 5. “Related Party Transactions” included in this supplement for additional information.

2

We are currently 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”) through the Follow-On Public Offering. 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 shares sold pursuant to our distribution reinvestment plan).

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

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

Since we commenced operations on February 7, 2018, we have raised total net offering proceeds (including amounts raised from our private offerings and Public Offerings) of approximately $966.0 million, including approximately $32.3 million received through our distribution reinvestment plan as of March 31, 2024.

3

Portfolio and Investment Activity

As of March 31, 2024, we had invested in 14 portfolio companies, consisting of equity investments and debt investments in each portfolio company. The table below presents our portfolio company investments (in millions):

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

FOOTNOTES:

(1)       The note purchase agreements contain customary covenants and events of default. As of March 31, 2024, all of our portfolio companies were in compliance with their respective debt covenants.

(2)       See the Schedule of Investments and Note 3. “Investments” of the “Financial Statements” included in this supplement for additional information related to our investments, including fair values as of March 31, 2024.

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

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

4

Our Portfolio Companies

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

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

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

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

Adjusted EBITDA

When evaluating the performance of our portfolio, we monitor Adjusted 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 ongoing 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.

5

Lawn Doctor

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

The following table reconciles our proportionate share of Adjusted EBITDA from net income of Lawn Doctor for the three months ended March 31, 2024 and 2023 (in thousands):

	Three Months Ended March 31,
	2024		2023
Revenues	$	9,792	$	9,128
Net income (GAAP)	$	216	$	257
Interest and debt related expenses		1,475		1,441
Depreciation and amortization		639		646
Income tax expense		169		100
Adjusted EBITDA (non-GAAP)	$	2,499	$	2,444
Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)	$	1,513	$	1,480

FOOTNOTE:

(1) Amounts based on our ownership percentage as of the end of the periods presented. As of March 31, 2024 and 2023, we owned approximately 61% of Lawn Doctor.

Polyform

As of March 31, 2024 and December 31, 2023, Polyform Products, Co. (“Polyform”) had total assets of approximately $32.3 million and $33.1 million, respectively. The following table reconciles our proportionate share of Adjusted EBITDA from net loss of Polyform for the three months ended March 31, 2024 and 2023 (in thousands):

	Three Months Ended March 31,
	2024			2023
Revenues	$	3,721		$	4,103
Net loss (GAAP)	$	(443	)	$	(193	)
Interest and debt related expenses		723			716
Depreciation and amortization		465			465
Income tax benefit		(175	)		(77	)
Adjusted EBITDA (non-GAAP)	$	570		$	911
Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)	$	497		$	794

FOOTNOTE:

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

6

Roundtables

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

The following table reconciles our proportionate share of Adjusted EBITDA from net (loss) income of Roundtables for the three months ended March 31, 2024 and 2023 (in thousands):

	Three Months Ended March 31,
	2024			2023
Revenues	$	4,311		$	4,079
Net (loss) income (GAAP)	$	(143	)	$	59
Interest and debt related expenses		651			644
Depreciation and amortization		522			512
Income tax (benefit) expense		44			7
Adjusted EBITDA (non-GAAP)	$	986		$	1,222
Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)	$	796		$	987

FOOTNOTE:

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

HSH

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

	Three Months Ended March 31,
	2024		2023
Revenues	$	8,331	$	8,717
Net income (GAAP)	$	597	$	660
Interest and debt related expenses		911		917
Depreciation and amortization		747		751
Income tax expense		210		257
Adjusted EBITDA (non-GAAP)	$	2,465	$	2,585
Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)	$	1,837	$	1,926

FOOTNOTE: 

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

7

ATA

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

	Three Months Ended March 31,
	2024			2023
Revenues	$	10,197		$	9,372
Net loss (GAAP)	$	(2,389	)	$	(2,931	)
Interest and debt related expenses		1,460			1,500
Depreciation and amortization		1,101			1,096
Adjusted EBITDA (non-GAAP)	$	172		$	(335	)
Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)	$	129		$	(251	)

FOOTNOTE:

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

Douglas

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

	Three Months Ended March 31,
	2024		2023
Revenues	$	6,552	$	8,431
Net income (GAAP)	$	190	$	449
Interest and debt related expenses		650		621
Depreciation and amortization		353		425
Income tax expense		14		138
Adjusted EBITDA (non-GAAP)	$	1,207	$	1,633
Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)	$	1,089	$	1,473

FOOTNOTE:

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

8

Clarion

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

	Three Months Ended March 31,
	2024		2023
Revenues	$	4,393	$	3,327
Net income (GAAP)	$	542	$	87
Interest and debt related expenses		841		843
Depreciation and amortization		256		247
Income tax expense		208		34
Adjusted EBITDA (non-GAAP)	$	1,847	$	1,211
Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)	$	1,779	$	1,186

FOOTNOTE:

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

Vektek

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

	Three Months Ended March 31,
	2024		2023
Revenues	$	9,072	$	10,421
Net income (GAAP)	$	276	$	752
Interest and debt related expenses		1,557		1,523
Depreciation and amortization		922		902
Income tax expense		—		13
Adjusted EBITDA (non-GAAP)	$	2,755	$	3,190
Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)	$	2,306	$	2,671

FOOTNOTE: 

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

9

TacMed

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

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

	Three Months Ended March 31, 2024			For the Period Ended March 24, 2023 through March 31, 2023
Revenues	$	8,428		$	786
Net loss (GAAP)	$	(2,107	)	$	(2,088	)
Interest and debt related expenses		1,173			106
Depreciation and amortization		1,260			97
Income tax (benefit) expense		(228	)		20
Transaction related expenses(1)		11			1,835
Adjusted EBITDA (non-GAAP)	$	109		$	(30	)
Our Proportionate Share of Adjusted EBITDA (non-GAAP)(2)	$	104		$	(29	)

FOOTNOTES:

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

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

Sill

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

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

	Three Months Ended March 31, 2024
Revenues	$	3,673
Net income (GAAP)	$	383
Interest and debt related expenses		569
Depreciation and amortization		550
Income tax benefit		(933	)
Adjusted EBITDA (non-GAAP)	$	569
Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)	$	564

FOOTNOTE:

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

10

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.

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 recent public health crises, natural disasters and geopolitical events, which could materially and adversely impact the broader financial and credit markets and reduce the availability 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. Additionally, to the extent we have available cash we may make investments in short-term U.S. Treasury bills. Our primary sources of cash will generally consist of:

• the net proceeds from the Public Offerings;

• distributions and interest earned from our assets; and

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

11

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 economic environment, impacted by rising interest rates, record inflationary pressures due to global supply chain issues, a rise in energy prices, and the impact of the recent public health crises, natural disasters and geopolitical events on the global economy, we are closely monitoring overall liquidity levels and changes in the business performance of our portfolio companies to be in a position to enact changes to ensure adequate liquidity going forward.

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

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

Sources of Liquidity and Capital Resources

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

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

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

Uses of Liquidity and Capital Resources

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

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

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

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

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

12

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

Distributions Declared

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

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

FOOTNOTES:

(1)

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

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

(2)       

Amounts based on distribution record date.

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

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

FOOTNOTES:

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

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

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

See Note 6. “Distributions” to our “Financial Statements” included in this supplement for additional disclosures regarding distributions.

Distribution Reinvestment Plan

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

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

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.

14

Share Repurchase Program

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

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

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

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

15

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

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

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

	Shares Repurchased		Total Consideration		Average Price Paid per Share
Class FA shares		72	$	2,675	$	36.82
Class A shares		37		1,252		33.65
Class T shares		97		3,242		33.70
Class D shares		19		645		33.38
Class I shares		173		5,900		34.13
Class S shares		2		66		37.41
Three Months Ended March 31, 2024		400	$	13,780	$	34.45
Class FA shares		16	$	578	$	35.26
Class A shares		10		335		32.72
Class T shares		3		105		32.69
Class D shares		6		180		32.36
Class I shares		38		1,257		33.16
Class S shares		1		36		35.77
Three Months Ended March 31, 2023		74	$	2,491	$	33.52

16

Results of Operations

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

Through March 31, 2024, we had acquired equity and debt investments in 14 portfolio companies. As of March 31, 2024 and 2023, the fair value of our portfolio company investments totaled approximately $903.1 million and $709.3 million, respectively. Additionally, as of March 31, 2023, we had invested in U.S. Treasury bills with a fair value of $54.0 million. We did not have any U.S. Treasury bills at March 31, 2024. See “Portfolio and Investment Activity” above for discussion of the general terms and characteristics of our investments, and for information regarding our portfolio companies.

The following table summarizes our operating results for the three months ended March 31, 2024 and 2023 (in thousands):

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

Investment Income

Investment income consisted of the following for the three months ended March 31, 2024 and 2023 (in thousands):

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

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

17

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

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

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

We do not believe that our interest income, dividend income and total investment income 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 the Public Offerings.

Operating Expenses

Our operating expenses for the three months ended March 31, 2024 and 2023 were as follows (in thousands):

	Three Months Ended March 31,
	2024			2023
Total return incentive fees	$	4,485		$	3,635
Base management fees		4,018			2,663
Offering expenses		256			904
Professional services		587			500
Pursuit costs		505			185
Distribution and shareholder servicing fees		318			269
Custodian and accounting fees		133			138
Insurance expense		50			54
Director fees and expenses		53			51
General and administrative expenses		89			148
Total operating expenses		10,494			8,547
Expense support		(295	)		(355	)
Reimbursement of expense support		—			242
Net expenses	$	10,199		$	8,434

We consider the following expense categories to be relatively fixed in the near term: insurance expenses and director fees and expenses. Variable operating expenses include total return incentive fees, base management fees, offering expenses, professional services, distribution and shareholder servicing fees, custodian and accounting fees, general and administrative expenses, 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 and accounting fees), and/or the complexity of our investment processes and capital structure (professional services).

18

Total Return Incentive Fee

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

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

Base Management Fee

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

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

Offering Expenses

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

We expensed offering expenses of approximately $0.3 million and $0.9 million during the three months ended March 31, 2024 and 2023, respectively. The decrease is due to lower incurred offering expenses by the Manager during the three months ended March 31, 2024.

Pursuit Costs

Pursuit costs relate to transactional expenses incurred to identify, evaluate and negotiate acquisitions that ultimately were not consummated. We incurred pursuit costs of approximately $0.5 million and $0.2 million during the three months ended March 31, 2024 and 2023, respectively.

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 approximately $0.3 million during each of the three months ended March 31, 2024 and 2023.

19

Other Operating Expenses

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

Expense Support (Reimbursement)

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.

Since inception, we have received cumulative Expense Support of approximately $5.1 million. During the three months ended March 31, 2023, we recorded reimbursement of Expense Support of approximately $0.2 million. We reimbursed approximately $0.6 million and $2.4 million of Expense Support to the Manager and Sub-Manager for the years ended December 31, 2023 and 2022, respectively. As of March 31, 2024, there is no remaining amount of Expense Support to be collected from the Manager and Sub-Manager subject to reimbursement. Additionally, the Company accrued expense support due from the Manager and Sub-Manager of approximately $0.3 million and $0.4 million during the three months ended March 31, 2024 and 2023, respectively.

The actual amount of Expense Support or Expense Support Reimbursement is determined as of the last business day of each calendar year and is paid within 90 days after each year end per the terms of the Expense Support and Conditional Reimbursement Agreement described above. See Note 5. “Related Party Transactions” to our “Financial Statements” included in this supplement for additional information.

Other Expenses and Changes in Net Assets

Net Change in Unrealized Appreciation on Portfolio Company Investments

Unrealized appreciation on portfolio company investments 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 and private comparable companies as determined by our independent valuation firm. 

20

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

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

Net Assets

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

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

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

Distributions increased approximately $2.2 million during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, primarily as a result of an increase in shares outstanding.

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

21

Total Returns

The following table illustrates year-to-date (“YTD”), trailing 12 months (“One Year”), trailing 36 months (“Three Year”), Average Annual Return (“AAR”), trailing 60 months (“Five Year”), Average Annual Return (“AAR”) and cumulative total returns with and without upfront selling commissions and dealer manager fees (“sales load”), as applicable. All total returns with sales load assume full upfront selling commissions and dealer manager fees. Total returns are calculated for each share class as the change in the net asset value for such share class during the period and assuming all distributions are reinvested. Class FA assumes distributions are reinvested in Class A shares and all other 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.

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

FOOTNOTES: 

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

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

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

(4) For the period from the date the first share was issued for each respective share class to March 31, 2024. The AAR since inception is calculated by taking the Cumulative Total Return and dividing it by the cumulative total return period.

We are not aware of any material trends or uncertainties, favorable or unfavorable, that may be reasonably anticipated to have a material impact on either capital resources or the revenues or income to be derived from our investments, other than those described above and the risk factors identified in this supplement and our recent Quarterly Report, including the negative impacts from recent and geopolitical events.

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 total returns — which are based in part upon determinations of fair value of Level 3 investments by our board of directors, not active market quotations — are inherently uncertain. Past performance is not a guarantee of future results. Current performance may be higher or lower than the performance data reported above.

Hedging Activities

As of March 31, 2024, 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.

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Seasonality

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

Critical Accounting Policies and Use of Estimates

See our Form 10-K for the year ended December 31, 2023 and Note 2. “Significant Accounting Policies” to our “Financial Statements” included in this supplement fora summary of our critical accounting policies.

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Our Portfolio

The following disclosure supersedes and replaces the sections “Our Portfolio— Lawn Doctor,” “Our Portfolio— Polyform,” “Our Portfolio— Auriemma U.S. Roundtables,” “Our Portfolio— Milton Industries,” “Our Portfolio— Resolution Economics,” “Our Portfolio— Blue Ridge ESOP Associates,” “Our Portfolio— Healthcare Safety Holdings LLC,” “Our Portfolio— ATA Title Company,” “Our Portfolio—Douglas Machine Corp.,” “Our Portfolio —Clarion Safety Systems,” “Our Portfolio—Vektek Holdings,” “Our Portfolio—TacMed Solutions,” “Our Portfolio—Sill Public Adjusters” and “Our Portfolio—USA Water” respectively, which first appear on page 100 of the Prospectus.

Lawn Doctor

Overview. On October 20, 2017, we entered into a merger agreement with LD Merger Sub, Inc., our wholly owned subsidiary, and LD Parent, Inc., the parent company of Lawn Doctor. The merger agreement was amended on February 6, 2018. On February 7, 2018, pursuant to the terms of the merger agreement, we acquired a controlling interest in Lawn Doctor through an approximately $45.5 million investment consisting of approximately $30.5 million of common equity and an approximately $15.0 million debt investment in the form of a secured second lien note that we made to Lawn Doctor. After the closing of the merger, the consummation of the equity contribution pursuant to the exchange agreement described under “Conflicts of Interest and Certain Relationships and Related Party Transactions” and subsequent purchases of common equity in Lawn Doctor by certain members of Lawn Doctor’s senior management team, we own approximately 61% of the outstanding equity in Lawn Doctor, with the remaining equity owned primarily by Lawn Doctor’s senior management team. On June 30, 2023, we made an additional senior debt investment in Lawn Doctor of approximately $29.5 million. The senior debt accrues interest at a variable rate and will mature on February 7, 2025.

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.

Lawn Doctor’s franchised business model has consistently been ranked as a Top 500 Franchise Opportunity by Entrepreneur Magazine for 40 years. We believe this accomplishment ranks Lawn Doctor alongside the top franchise businesses and brands in the world. Lawn Doctor’s efforts on behalf of its franchisees (which include shared marketing programs and infrastructure, an extensive online presence, and comprehensive training) have attracted a strong core of dedicated franchise owners who, in turn, contribute to the continued growth and success of the Lawn Doctor brand. None of Lawn Doctor’s employees are subject to collective bargaining agreements. Lawn Doctor’s corporate headquarters (which it owns) are in Holmdel, New Jersey, and it leases a manufacturing site in Marlboro, New Jersey. In August 2021, Lawn Doctor was recapitalized with an additional term loan of $10.7 million. Proceeds from the recapitalization were primarily used to pay special distributions to Lawn Doctor’s shareholders, of which we received approximately $6.0 million.

History. Lawn Doctor was founded in 1967 by Robert Magda and Tony Giordano and the business was originally named Auto Lawn of America, Inc. In 1983, Russell Frith, who had served as Lawn Doctor’s Director of Franchise Development, Vice President of Marketing, and Executive Vice President, was promoted to President and Chief Executive Officer. In 2011, Scott Frith became President and Chief Executive Officer of Lawn Doctor after serving as marketing director from 1999 to 2005 and Vice President of Marketing and Franchise Development from 2005 to 2011. Lawn Doctor was purchased on December 22, 2011 by Levine Leichtman Capital Partners SBIC Fund, L.P. (the “SBIC Fund”), which is managed by an affiliate of the Sub-Manager.

Industry. In 2023, the lawn services market in the United States was an estimated over $99 billion industry. It is also a highly fragmented industry with two nationwide competitors (one of which is Lawn Doctor), dozens of regional competitors, and thousands of local competitors. We believe that most companies in the industry are small, private operations and do not offer proprietary processes and equipment, cost effectiveness, breadth of experience, and strong brand recognition that Lawn Doctor provides. Lawn Doctor believes that a franchised based business model tends to be more competitive and profitable, due to superior brand awareness, improved customer service and economies of scale.

Investment Highlights. Lawn Doctor operates a nationwide network of independently owned franchise units in 40 states as of March 31, 2024. The Lawn Doctor franchisee unit base has grown from 452 in 2012 to 629 as of March 31, 2024, with strong average annual openings of approximately 20 units and an average annual closure rate of approximately 1.7%. Lawn Doctor benefits from a scalable business model, which does not require significant capital expenditures or additional fixed costs to support future growth. As noted below, Lawn Doctor acquired brands Mosquito Hunters and Ecomaids in May 2018 and May 2019, respectively. The company has grown the two brands from 8 and 2 units at entry to 128 and 55 units as of March 31, 2024, respectively. Lawn Doctor earns revenue from franchisee royalty fees, equipment lease fees, initial franchisee fees, equipment parts sales, vendor rebates, and interest on franchise loans. The primary source of revenue is the franchisee royalty fee. The total revenue for the trailing twelve months ended March 31, 2024 was approximately $41.7 million, of which approximately $24.0 million was the franchisee royalty fees for Lawn Doctor. From 2009 to the trailing twelve months ended March 31, 2024, Lawn Doctor’s total revenue and franchisee royalty fees have grown at compound annual growth rates of approximately 10.6% and 7.8%, respectively. Total Lawn Doctor system wide sales for the trailing twelve months ended March 31, 2024 was approximately $220 million.

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Growth Opportunities. The acquisition of Mosquito Hunters and Ecomaids furthered Lawn Doctor’s strategy of growing both organically and also through the acquisition of additional home service brands. We believe the following are key growth opportunities in addition to Lawn Doctor’s continued organic growth: (i) the potential to expand Mosquito Hunters’ business nationally, (ii) the potential to expand Ecomaids’ business nationally, and (iii) the potential to acquire additional home service franchisors through LLCP’s platform and Lawn Doctor’s relationships.

In May 2018, Lawn Doctor acquired an 80% 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. This acquisition furthers Lawn Doctor’s strategy of both growing organically and also via acquisition of additional home service brands.

In May 2019, Lawn Doctor acquired a 71% 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.

In October 2022, Lawn Doctor acquired a 62% equity interest in Elite Window Cleaning Inc., a Canadian-based franchisor offering window cleaning, gutter cleaning and power washing services to residential and commercial customers. Elite currently supports six franchised locations and operates one corporate owned location, and Lawn Doctor’s management team expects to leverage its core competencies to further expand Elite’s franchise operations into the United States. We believe this acquisition contributes to Lawn Doctor’s diversified, multi-brand home service franchisor platform. 

Polyform

Overview. On October 20, 2017, we entered into a merger agreement with PFHI Merger Sub, Inc., our wholly owned subsidiary, and Polyform. The merger agreement was amended on February 6, 2018. On February 7, 2018, pursuant to the terms of the merger agreement, we acquired a controlling interest in Polyform through an approximately $31.3 million investment consisting of approximately $15.6 million of common equity and an approximately $15.7 million debt investment in the form of a first lien secured note that we made to Polyform. After the closing of the merger and the consummation of the equity contribution pursuant to the exchange agreement described under “Conflicts of Interest and Certain Relationships and Related Party Transactions,” we own approximately 87% of the outstanding equity in Polyform, with the remaining equity owned by Denice Steinmann, a current board member and the former Chief Executive Officer of Polyform.

Polyform is a leading developer, manufacturer and marketer of polymer clay products worldwide. Through its two primary brands, Sculpey® and Premo!®, Polyform sells a comprehensive line of premium craft products to a diverse mix of customers including specialty and big box retailers, distributors and e-tailers. We believe Polyform is well regarded for its high quality, comprehensive line of polymer clays, clay molds, children kits, wax-base clays, non-dry clays, clay tools and accessories. Polyform’s strong brand recognition, unique product attributes and strong customer network have earned it one of the leading market share positions in the polymer clay segment within the United States. None of Polyform’s employees are subject to collective bargaining agreements. Polyform’s corporate headquarters are in Elk Grove Village, Illinois.

History. The chemical formulation that makes up the polymer clay was originally designed to serve as a thermal transfer compound; and after several years, it was determined that this compound may have better use as a molding and sculpting clay. The formulation’s pliability characteristics at room temperature and solidification without shrinkage upon low temperature baking, exhibited the necessary traits of high quality clay. Polyform was incorporated in 1967, with Zenith Products Company, Inc. (“Zenith”) as the parent company. Polyform performed all non-manufacturing functions related to this product, while the manufacturing was performed by Zenith. In 1993, Zenith was merged into Polyform. In 1995, Polyform was sold to Charles and Denice Steinmann. In July 2018, Mr. Steve Seppala, formerly Chief Financial Officer of Polyform, succeeded Ms. Denice Steinmann as Chief Executive Officer of Polyform. Ms. Steinmann is expected to continue with Polyform in an advisory role and remains as one of the members of the board of directors of Polyform.

Industry. The arts and crafts industry is highly fragmented across products, market niches, and consumer types. Polyform has been competing in the arts and crafts market for over 40 years. This industry is primarily driven by large national retail chains and other mass market retail stores, and has more recently expanded into the e-commerce sales channel. Polyform estimates that its products are available in approximately 16,000 retail locations through its major customers, plus many other locations through independent retailers. Polyform’s management believes that there is also a significant number of potential new retail distribution opportunities. Polyform has long-standing relationships with its customers as the top five have been customers for at least 15 years. We believe that Polyform is one of the market leaders in the polymer clay category in the United States with significantly more sales than its closest competitors, and as a result they have a competitive advantage based on price, product variety, quality, innovation and overall distribution.

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Investment Highlights. Polyform has grown its signature product lines, Sculpey® and Premo!®, into global names with a strong retail presence in the United States and growing presences abroad. The clay products are clean, economical, easy to work with and only require oven baking at 275 degrees Fahrenheit. Polyform’s success in the arts and crafts market is a result of its unique product formulations that offer superior molding and color profiles, and Polyform believes the proprietary product formulas and manufacturing methodologies create significant barriers to entry or duplication. The primary source of Polyform’s revenue is the sale of its products. Net sales for Polyform for the year ended December 31, 2022 were approximately $23.1 million. Net sales for Polyform for the trailing twelve months ended March 31, 2024 were approximately $15.7 million. Net sales for Polyform have grown at a compound annual growth rate of approximately 2.3% from 2009 to the trailing twelve months ended March 31, 2024.

Growth Opportunities. We believe the following are key growth opportunities for Polyform: (i) the potential growth through new customer acquisitions, new product introductions, international expansion, and potential price increases, (ii) the potential to improve overall margins through automation, vendor cost reductions, and reformulations, and (iii) potential growth in the e-commerce channel through strategic digital and social media marketing initiatives. 

Auriemma U.S. Roundtables 

Overview. On August 1, 2019, we, through our wholly-owned subsidiary, acquired a controlling interest in Roundtables through an approximately $44.5 million investment consisting of approximately $32.4 million of common equity and an approximately $12.1 million debt investment in the form of senior secured notes. Prior to this transaction, Roundtables operated as a division of Auriemma Consulting Group, Inc. (“Auriemma Group”). We own approximately 81% of the outstanding equity of Roundtables, with the remaining equity owned by Michael Auriemma. Mr. Auriemma is the previous owner of Roundtables and will continue to serve as a member of Roundtables’ board of directors. On November 13, 2019, we made an additional debt investment in Roundtables in the form of a $2.0 million senior secured bridge note. The senior secured bridge note accrues interest at a per annum rate of 8.0% and will mature in August 2024. We made an additional equity investment in Roundtables of approximately $1.1 million in August 2023. 

Roundtables is an information services and advisory solutions business to the consumer finance industry. Roundtables offers membership in any of its over 38 topic-specific roundtables across five verticals (credit cards, automotive finance, retail banking, wealth management, and fintech) 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. Auriemma Group, headquartered in New York, NY, was founded in 1984 and the U.S. Roundtables business was subsequently launched in 1992. 

Industry.  We believe Roundtables’ valuable industry insights and data on niche topic areas result in limited direct competition. We also believe that Roundtables’ “give-to-get” data model creates a significant barrier to entry and that the business has low concentration risk with no client comprising more than 4.0% of revenue as of March 31, 2024. 

Investment Highlights. Roundtables serves approximately 100 of the largest, most respected forward-thinking organizations in its verticals: credit cards, automotive finance, retail banking, wealth management, fintech and insurance.  Members rely on this intelligence to manage their operations and view participation as business-critical, as evidenced by approximately 90%+ client retention and high levels of engagement with core value drivers. Roundtables’ customers typically pay upfront for a membership to a specific roundtable (e.g., card collections) and most customers subscribe to multiple roundtables. From 2011 to March 31, 2024, membership has experienced strong and steady growth over the last decade at a compound annual growth rate of approximately 9.2%.

The total revenue for Roundtables for the trailing twelve months ended March 31, 2024 was approximately $18.0 million, of which, the majority represented membership fees. Total revenue for Roundtables for the year ended December 31, 2022 was approximately $15.4 million. From 2005 to the trailing twelve months ended March 31, 2024, Roundtables’ total revenue has grown at a compound annual growth rate of approximately 14.6%. Given its current market position, access to data and brand identity, we believe Roundtables is uniquely positioned to expand its existing products and services to become the premier provider of operational data, diagnostics and analysis.

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Growth Opportunities. We believe the following are key growth opportunities for Roundtables: (i) the potential to continue to add top-tier clients and new roundtable topics, (ii) the ability to expand into new industries, (iii) the monetization of Roundtables’ unique repository of data with existing clients, and (iv) the ability to pursue future strategic partnerships and acquisitions. In April 2021, Roundtables acquired Edgar Dunn’s U.S. roundtables business, which added six roundtables to Auriemma’s services offering. This acquisition furthered Roundtables’ strategy of both growing organically and through M&A. In August 2023, Roundtables acquired insideARM, LLC. Founded in 1998, insideARM is a multi-faceted provider of news, education, community, resources, and events for debt collection professionals, including agencies, debt buyers and lenders/creditors. We believe insideARM will further expand Auriemma Roundtables’ presence in the collections segment of the consumer financial services industry to provide value for third-party accounts receivable management executives.

Milton Industries

Overview. On November 21, 2019, we, through our wholly-owned subsidiaries, Milton Strategic Capital EquityCo, LLC and Milton Strategic Capital DebtCo, LLC, acquired a minority interest in Milton Industries of $10.0 million. Our co-investment is comprised of an approximately $6.6 million common equity investment and a debt investment of approximately $3.4 million in senior secured subordinated notes. Our equity investment represents approximately 13% of the total ownership of Milton. The co-investment is alongside a debt and equity investment from the LMM II Fund, an institutional fund and affiliate of the Sub-Manager. The remainder of the common equity of Milton is owned by members of the Milton executive management team and capital providers. Milton was founded in 1943 and is based in Chicago, IL. 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. Milton has over 6,000 active customers and 3,000 SKUs with products including couplers, gauges, chucks, blow guns, filters, regulators, lubricators, hoses and fittings, specialty tools and fluid management equipment. Milton serves multiple channels including distributors, wholesalers and retailers, and is the #1 supplier to many leading customers. 

Investment Highlights. We believe that Milton is a more resilient business given the consumable nature of its products and the diversity of its customer, product and end market mix. We also believe that Milton’s high product quality, engineering expertise and long-term partnership approach create sticky relationships, with strong revenue retention across its customer base. Milton’s net revenue has grown at a compound annual growth rate of approximately 7.8% from 2010 to the trailing twelve months ended March 31, 2024. Net revenue for the year ended December 31, 2022 was approximately $69.6 million. Net revenue for the year ended December 31, 2023 was approximately $84.3 million. Milton had net revenue for the trailing twelve months ended March 31, 2024, of approximately $81.3 million. We believe that Milton has an attractive financial profile, with strong margins, limited capital expenditure requirements and low working capital needs. 

Growth Opportunities. We believe the following are key growth opportunities for Milton: (i) additional growth in existing markets, (ii) new product development, (iii) e-commerce and digital marketing initiatives and (iv) strategic acquisitions. 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. In March 2022, Milton acquired Thunder Technologies which specializes in critical and demanding hose, rubber and expansion joint applications. Additionally, in July 2022, Milton acquired Lock Technology which provides specialty tools to the automotive end market. Additionally, in December 2022, Milton acquired ProMaxx Tool which designs and manufactures proprietary on-the-vehicle exhaust manifold repair kits and other specialty tools. These acquisitions further Milton’s strategy of both growing organically and through M&A. In March 2023, Milton acquired Steck Manufacturing. Steck expands Milton’s product suite and end-market reach to offer specialty tools to automotive repair, body shop, heavy-duty truck, lockout and towing markets across the globe.

Resolution Economics

Overview. On January 2, 2020, we, through our wholly-owned subsidiaries, RE Strategic Capital EquityCo, LLC and RE Strategic Capital DebtCo, LLC, acquired a minority interest in ResEcon of $10.0 million. Our co-investment in ResEcon is comprised of an approximately $7.1 million common equity investment and a debt investment of approximately $2.8 million in senior secured subordinated notes. Our equity investment represents approximately 8% of the total ownership of ResEcon. The co-investment is alongside a debt and equity investment from the LMM II Fund. The remainder of the common equity of ResEcon is owned by members of the ResEcon executive management team. 

Company Overview. Established in 1998, ResEcon is a leading specialty consulting firm that provides services to leading law firms and corporations in labor & employment and commercial litigation matters. ResEcon provides economic and statistical analysis as well as expert testimony services in class action, multi-plaintiff and single-plaintiff matters alleging wrongful employment practices and focuses on discrimination in the recruitment and hiring, promotion, pay, termination and other employment practices on the basis of age, race, gender, national origin, ethnicity and other protected classes. ResEcon also focuses on providing consulting and expert testimony services in matters alleging wage and hour employment law violations. ResEcon has offices in Los Angeles, New York, Chicago and Washington, D.C. 

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In providing its services, ResEcon relies upon client data, complex proprietary statistical modeling, and over 20 years of experience with labor & employment law and commercial litigation. ResEcon employs a highly technical workforce of approximately 250 employees as of March 31, 2024 and includes professionals with PhDs, professionals with master’s degrees, software for statistical analysis (SAS) programmers, and professionals who have served as expert witnesses. ResEcon’s clients include a large number of the top 100 law firms and Fortune 500 companies, as well as government entities. ResEcon also serves a variety of industries, with the consumer and retail, hospitality, transportation, and technology industries constituting the largest. 

We believe that the U.S. market for consulting services for labor and employment law litigation has potential for continued growth due to an increase in labor & employment filings, increased adoption of economic consultants, and the increasing complexity of cases due to the proliferation of data and technology. Accordingly, we believe these trends, coupled with recent social movements (e.g., equal pay for equal work, #MeToo), will continue to support the increasing demand for the types of services ResEcon provides. 

Investment Highlights. ResEcon’s total revenue has grown at a compound annual growth rate of 15.2% from 2007 to the trailing twelve months March 31, 2024. We note that ResEcon has been involved with or cited in several landmark cases and believe that ResEcon has created a sought-after brand supporting a favorable outlook for potential continued growth. We also believe ResEcon’s focus on labor & employment litigation consulting services positions its business to be less correlated to overall economic cycles. We believe that ResEcon’s ability to attract and retain its clients is a key factor for ResEcon’s success. 

We believe that ResEcon has an attractive financial profile, with strong margins, limited capital expenditure requirements and modest working capital needs. 

Growth Opportunities. We believe that the following are key growth opportunities for ResEcon: (i) geographic expansion to new U.S. metropolitan areas and internationally, (ii) expansion of consulting and advisory services to new areas of expertise beyond labor & employment, (iii) expansion of advisory and consulting services to new and existing clients, (iv) recruitment of senior lateral hires, and (v) strategic acquisitions.

In October 2022, Resolution Economics acquired Berkshire Associates, Inc. (“Berkshire”). Headquartered in Columbia, Maryland, Berkshire is a leading provider of outsourced affirmative action plan (“AAP”) consulting and software services, compensation analysis and other human resource compliance-related services. Founded in 1983, Berkshire began as one of the first companies to establish an automated way to prepare AAPs, revolutionizing the AAP process for HR professionals nationwide. Over the years, Berkshire has expanded its scope of services beyond AAPs to meet the evolving needs of HR professionals with a range of services, training, and technology and software. The acquisition adds EEO compliance and AAP services to Resolution Economics’ existing labor and employment consulting services.

In November 2023, Resolution Economics acquired a division of Biddle Consulting Group, Inc. headquartered in Folsom, CA. The acquired division is a provider of outsourced affirmative action plan services and other compliance related services.

Blue Ridge ESOP Associates 

Overview. On March 24, 2020, we, through our wholly-owned subsidiaries, BR Strategic Capital EquityCo, LLC and BR Strategic Capital DebtCo, LLC, acquired a minority interest in Blue Ridge of $12.5 million. Our co-investment in Blue Ridge is comprised of an approximately $9.9 million common equity investment and a debt investment of approximately $2.6 million in senior secured subordinated notes. In August of 2022, we made an additional equity investment of approximately $2.9 million into Blue Ridge. Our equity investment represents approximately 16% of the total equity ownership of Blue Ridge. Our co-investment is alongside investments from the LMM II Fund, Blue Ridge’s previous owners, and members of its executive management team. 

Company Overview. Established in 1988, 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. Blue Ridge is led by a long-tenured and experienced executive management team.  

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Investment Highlights. We believe that Blue Ridge’s business model and diversified client base position it to be more resilient in economic recessions and have less correlation to the overall economic cycles. From 2005 to the trailing twelve months ended March 31, 2024, Blue Ridge’s total revenue has grown at a compound annual growth rate of approximately 19.0% and grew each year through the financial crisis. Blue Ridge provides services for over 1,500 ESOP plans with approximately 500,000 plan participants and over 6,700 401(k), defined benefit, and other type plans with over 230,000 plan participants. From 2016 through March 31, 2024, approximately 75% of Blue Ridge’s clients were obtained through referrals. With approximately 6,100 ESOP plans in the United States as of December 31, 2023, we believe that Blue Ridge’s approximately 28% market share demonstrates its strong market positioning, but with plenty of whitespace for further growth. 

Growth Opportunities. We believe that the following are key growth opportunities for Blue Ridge: (i) the growth of participants in the ESOP’s at existing clients, (ii) the acquisition of new clients, supported through new client referrals and ESOP market growth, (iii) cross-selling of additional services, (iv) M&A, and (v) the expansion of service offerings into adjacent markets.

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. In 2022, Blue Ridge acquired Nicholas and Associates, specializing in the design and administration of retirement plans. These acquisitions further Blue Ridge’s strategy of both growing organically and through M&A. Additionally, in August 2022, Blue Ridge acquired Crowe BPS which specializes in ESOP administration as well as retirement plan and consulting services. Blue Ridge ESOP Associates made a majority investment into Workplace Development Inc. in February of 2023. Workplace Development provides innovative ESOP communication, training, and ownership culture services which we believe complement the services Blue Ridge offers its customers. 

Healthcare Safety Holdings LLC 

Overview. On July 16, 2020, we, through our wholly-owned subsidiary, UM Strategic Capital EquityCo, LLC, acquired an approximately 75% interest in the common equity of HSH for $17.3 million. Additionally, we, through our wholly-owned subsidiary, UM Strategic Capital DebtCo, LLC, made a $24.4 million debt investment in HSH in the form of senior secured notes. The remaining HSH equity is owned by members of the HSH executive management team, the former controlling interest holder and TM SPV III, LLC. Members of the HSH executive management team may participate in an options incentive plan. 

Company Overview. Founded in 1988 and headquartered in Excelsior, MN, HSH is a leading producer of daily use insulin pen needles, syringes and related product offerings for the human and animal diabetes care markets. HSH operates its business through Ultimed, Inc. and its products reflect the Ultimed related brands. HSH specializes in providing “dispense and dispose” sharps solutions, which allow users to more easily and safely dispose of sharps. HSH produces branded and private label products sold primarily through distributors to retail pharmacies, veterinary clinics and dialysis centers, as well as via e-commerce channels. HSH’s manufacturing facility in South Dakota is well equipped to capture the growing demand for single use sharps by human and animal diabetics. 

Investment Highlights. We believe HSH’s innovative offerings, brand positioning, proprietary “dispense and dispose” solution and value proposition make the company a strong competitor in its core consumer and animal diabetes categories. HSH’s core pen needle offers a one-time use, disposable product for consumers who need multiple daily injections, which we believe creates the potential for recurring revenue. The total revenue for HSH for the year ended December 31, 2023 was approximately $35.6 million. From 2005 to the trailing twelve months ended March 31, 2024, HSH’s net revenue has grown at a compound annual growth rate of approximately 10.8%.

Industry. We believe that insulin pens are an essential product to the health and wellness for individuals living with diabetes. We believe that this will result in a durable business model for HSH that is resilient to changes in market and economic cycles. We also believe there are differentiated elements of HSH’s platform, including UltiGuard, a propriety solution for the safe dispensing and disposal of sharps.

As of March 31, 2024, HSH has an estimated 50% of the market share of the pet diabetes syringe category. As the incidence of pet diabetes grows and consumers increasingly demand the highest quality care for their pets, the market for animal syringes is currently expected to grow at a compound annual growth rate of approximately 12% per year.

Growth Opportunities. We believe the following are key growth opportunities for HSH: (i) invest in sales/marketing to grow presence in new and existing channels, (ii) develop data driven and targeted marketing programs for each customer channel, and (iii) pursue strategic acquisitions.

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ATA Title Company 

Overview. On April 1, 2021, we, through our wholly-owned subsidiary, Huron Title Buyer, LLC, entered into a Membership Interest Purchase Agreement pursuant to which we acquired an approximately 75% interest in the common equity membership interest units of ATA Holding Company, LLC (“ATA”) for consideration of approximately $36 million, subject to certain post-closing adjustments (the “ATA Acquisition”). Additionally, on the closing date of the ATA Acquisition, we, through our wholly-owned subsidiary, ATA Strategic Capital DebtCo, LLC, made an approximately $37 million debt investment in subsidiaries of ATA in the form of senior secured notes. In February of 2022, we made an additional equity investment of approximately $1.1 million into ATA. The remaining ATA units of equity membership interest are owned by members of the ATA executive management team and former controlling interest owners.

 Company Overview. Founded in 1999 and headquartered in Farmington Hills, MI, ATA is a leading national independent title insurance agency and settlement service provider for the residential resale, residential refinance, commercial and default markets. Its brands include ATA National Title Group, Greco Title Agency, Midstate Title Agency, Seaver Title Agency and Talon Title Agency. ATA has over 300 employees across 60+ offices in the Great Lakes Region (Michigan, Indiana, Ohio and Illinois). 

Investment Highlights. ATA’s scale and broad service offering allow it to process closings with minimal outsourcing resulting in higher quality, consistent transaction execution. Further, we believe ATA’s higher touch service is a key distinguishing element for its customers. Although the residential resale and refinance business is driven in part by residential housing market and interest rates, we believe that ATA’s diversified business model positions it well for various market cycles. The total revenue for ATA for the trailing twelve months ended March 31, 2024 was approximately $49.3 million. The total revenue for ATA for the year ended December 31, 2022 was approximately $61 million. From 2011 to the trailing twelve months ended March 31, 2024, ATA’s total revenue has grown at a compound annual growth rate of approximately 1.5%. 

Industry. ATA’s business has nationwide reach through key underwriter relationships and is in the top one percent (1%) of U.S. independent title insurance agencies by volume completing over 25,000 transactions in 2023. ATA is the largest independent agency in the Great Lakes Region with the second largest independent competitor only two-thirds the size. 

Growth Opportunities. We believe the following are key growth opportunities for ATA: (i) geographic expansion, (ii) further building the company’s sales function to accelerate organic growth and (iii) accretive acquisitions. In February 2022, ATA acquired Absolute Title, Inc., which is a title services business providing services to the residential and commercial markets, in Ann Arbor, Michigan. This acquisition furthers ATA’s strategy of both growing organically and through M&A.

Douglas Machines Corp.

Overview. On October 7, 2021, we, through our wholly-owned subsidiary, DM Strategic Capital EquityCo, LLC, acquired an approximately 90% indirect equity ownership interest in the capital stock of Douglas Machines Corp. (“Douglas”). The remaining Douglas capital stock is owned by members of the Douglas executive management team and existing pre-closing owners. In connection with the transaction, our indirect wholly-owned subsidiary, Douglas Machines Buyer, Inc., entered into a Stock Purchase Agreement with Douglas and Douglas Acquisition Company, LLC (the “Douglas Seller”) pursuant to which the Douglas Seller received aggregate consideration of approximately $40.7 million which included rollover investment from existing pre-closing owners and is subject to certain customary escrow related and post-closing adjustments (“Douglas Acquisition”). Additionally, through a Note Purchase Agreement dated October 7, 2021, we, through our wholly-owned subsidiary, DM Strategic Capital DebtCo, LLC, made an approximately $15.0 million debt investment in Douglas in the form of senior secured notes. Subject to such adjustments, we paid approximately $35.5 million at closing for our portion of our equity ownership interest in the capital stock of Douglas.

Company Overview. Founded in 1979 and headquartered in Clearwater, FL, 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. As a “one stop solution” for many of its customers, Douglas is a market leader in a niche industry with approximately 20% market share in the “clean-out-of-place” core segment as of December 31, 2023. The clean-out-of-place core segment generally refers to machinery where equipment and parts are removed from their operational area for cleaning.

Investment Highlights. We believe Douglas is well positioned for steady growth in an industry that is estimated to grow approximately 5%+ per year. We believe this potential growth is supported by increased food safety requirements and greater adoption of automated sanitation systems. We also believe that Douglas’ product offering offers a potentially high return on investment for its customers, typically generating significant savings in labor and water costs. The total revenue for Douglas for the trailing twelve months ended March 31, 2023 was approximately $29.5 million. The total revenue for Douglas for the year ended December 31, 2022 was approximately $27.4 million. From fiscal year 2004 to the trailing twelve months ended March 31, 2024, Douglas’ total revenue has grown at a compound annual growth rate of approximately 7.9%.

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Growth Opportunities. We believe the following are key growth opportunities for Douglas: (i) market growth, (ii) new customer wins and wallet share expansion driven by sales and marketing expansion, (iii) operational efficiencies, (iv) accretive acquisitions and (v) international expansion.

Clarion Safety Systems

 Overview. On December 9, 2021, we, through our wholly-owned subsidiary, Clarion Strategic Capital EquityCo, LLC, acquired an indirect equity ownership interest in Clarion Safety Systems, LLC (“Clarion”). We own approximately 96% of the outstanding equity in Clarion. The remaining indirect equity ownership in Clarion is held by members of the Clarion executive management team. In connection with the transaction, our indirect subsidiary, Clarion Safety Buyer, LLC (the “Clarion Buyer”) entered into a Unit Purchase Agreement (the “Clarion Purchase Agreement”) with the pre-closing members of Clarion (the “Clarion Sellers”) and Clarion Investment Holdings, LLC, as the seller representative, pursuant to which the Clarion Buyer paid aggregate consideration of approximately $67.5 million less approximately $0.5 million related to Clarion management’s rollover amount, subject to certain net working capital, transaction expenses, and other customary post-closing purchase price adjustments (the “Clarion Acquisition”). The Clarion Purchase Agreement contains customary representations, warranties, and covenants by the Clarion Buyer and the Clarion Sellers. Our investment in Clarion is comprised of an indirect common equity interest investment of approximately $50.8 million (which reflects our additional equity investment of $4.0 million in June 2022) and a concurrent debt investment of approximately $22.5 million made through our wholly-owned subsidiary, Clarion Strategic Capital DebtCo, LLC, in the form of a senior secured note issued jointly and severally by the Clarion Buyer and Clarion.

Company Overview. Founded in 1990 and headquartered in Milford, PA, Clarion is a provider of standards-based visual safety labels and signs that support original equipment manufacturers (“OEMs”), 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 upon 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.

Investment Highlights. We believe that Clarion’s revenue streams tend to be recurring and stable as they are tied to the manufacture and sale of a broad, diversified range of global capital equipment. We also believe that Clarion’s products are a cost-effective and necessary method for protecting users from potential liability as adequate warning labels and signs are required by OSHA and other industry bodies, providing for a durable business model. The total revenue for Clarion for the year ended December 31, 2023 was approximately $13.1 million. Revenue for Clarion has grown at an approximately 7.6% compound annual growth rate from the year ended December 31, 2010 to the trailing twelve months ended March 31, 2024.

Growth Opportunities. We believe the following are key growth opportunities for Clarion: (i) market growth, (ii) new customer wins and wallet share expansion driven by sales and marketing expansion, (iii) accretive acquisitions and (iv) service offering expansion. In June 2022, Clarion acquired Machine Safety Specialists. Founded in 1977, Machine Safety Specialists’ engineering consulting services include machine safety audits and risk assessments, machine safeguarding plans, verification and validation services and other workstreams that contribute to clients’ compliance with applicable machine safety standards. We believe that Machine Safety Specialists’ services are non-discretionary and will assist clients to comply with increasing industrial safety regulations. We also believe that this acquisition will provide an opportunity for Machine Safety Specialists to sell consulting services to Clarion’s existing customer base, and to market Clarion’s facility safety signage in connection with its facility audit and safety assessments. Additionally, we believe the acquisition will bring additional technical expertise to Clarion to assist with development of safety products and resources.

We made an additional equity investment in Clarion of approximately $6.4 million on December 15, 2023. The additional investment financed Clarion’s acquisition of Arrow Industrial Solutions, LLC (“Arrow”) headquartered in Ravenna, Ohio.  Arrow designs, engineers, manufactures, and installs machine safeguarding solutions serving manufacturing facilities.

Vektek Holdings

Overview. On May 6, 2022, we, through our wholly-owned subsidiary, Vektek Strategic Capital EquityCo, LLC acquired an approximately 84% indirect equity ownership interest in Vektek Holdings, LLC (“Vektek”). Our total investment of $81.3 million in Vektek is comprised of an indirect common equity interest investment of approximately $56.9 million and a concurrent debt investment of approximately $24.4 million made through our wholly-owned subsidiary, Vektek Strategic Capital DebtCo, LLC, in the form of a senior secured note issued by Vektek. After the closing of the transaction, substantially all of the remaining Vektek equity was owned by certain of the pre-closing members of Vektek. On June 30, 2023, we made an additional senior debt investment in Vektek of approximately $25.0 million. The senior debt accrues interest at a variable rate and will mature on May 6, 2029.

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Company Overview. Founded in 1974 and headquartered in St. Joseph, MO, Vektek designs, engineers and manufactures automated workholding solutions for CNC (Computer Numerical Control) machining. A market leader in high-pressure hydraulic clamps, Vektek products are essential to machine automation, tight tolerance machining and user production throughput. Vektek serves domestic and international machining customers in end markets including general industrial, automotive, agriculture, medical devices, technology and aerospace.

Investment Highlights. Vektek is a leading hydraulic clamp manufacturer. Vektek’s innovative and durable hydraulic clamping solutions, technical expertise, and domestic production differentiate the business from its competitors. Additionally, Vektek sells highly customized products directly to end customers as well as through multi-step channel partners. Vektek’s products serve a large installed base, are low cost and a minimal component of the customers’ engineering spend and we believe have potential to result in meaningful return on investment for customers and strong performance for Vektek. We also believe that Vektek has an established and diversified supply chain infrastructure. Based on our due diligence and industry analysis, we believe the increased demand for industrial automation in CNC machining provide strong secular tailwinds for Vektek’s growth. The total revenue for Vektek for the year ended December 31, 2023 was approximately $38.6 million. Vektek’s revenue has grown at an approximately 4.4% compound annual growth rate from the year ended December 31, 2006 to the trailing twelve months ended March 31, 2024.

Growth Opportunities. We believe the following are key growth opportunities for Vektek: (i) further existing customer penetration driven by product adoption/automation, new customer wins and Vektek’s sales and marketing expansion initiatives, (ii) further end-market diversification, (iii) accretive acquisitions and (iv) new product development.

TacMed Solutions

Overview. On March 24, 2023, we, through our wholly-owned subsidiary, TM Strategic Capital EquityCo, LLC acquired an approximately 95.5% indirect equity ownership interest in Tacmed Holdings, LLC (“TacMed Solutions”). Our total investment of $106.0 million in TacMed Solutions is comprised of an indirect common equity interest investment of approximately $77.0 million and a concurrent debt investment of approximately $29.0 million made through our wholly-owned subsidiary, TM Strategic Capital DebtCo, LLC, to subsidiaries of TacMed Solutions in the form of senior secured debt. Following the closing of the transaction, in addition to our ownership, the remaining TacMed Solutions equity is owned by certain members of the current TacMed Solutions executive management team as well as TacMed Solutions’ founder, Ross Johnson.

Company Overview. Founded in 2003 and headquartered in Anderson, SC, TacMed Solutions designs, develops and manufactures medical products that equip, train and protect professionals in pre-hospital, emergency trauma situations.

Investment Highlights. TacMed Solutions’ suite of traumatic injury products, hemorrhage control tourniquets, immobilization tools and critical care kits serve first responders, military, law enforcement and civilian public safety operations. TacMed Solutions’ medical simulation training solutions combine advanced technology and durable materials to offer customers the highest fidelity training simulators. These human body simulators, isolated wound area task trainers and K-9 animal simulators provide realistic replicas for emergency medical personnel training exercises. We believe that TacMed Solutions has established durable competitive advantages and barriers to entry through its in-house R&D and manufacturing capabilities and patent protected products. Many of these products are regulated by entities such as the Food and Drug Administration (FDA) or are subject to stringent specifications such as the American National Standards Institute (ANSI). TacMed Solutions reaches end customers directly through its sales force and through strategic partner distributors across the United States and internationally. The total revenue for Tacmed for the year ended December 31, 2023 was approximately $32.3 million. TacMed Solutions revenue has grown at an approximately 7.3% compound annual growth rate from the year ended December 31, 2010 to the trailing twelve months ended March 31, 2024.

Growth Opportunities. We believe the following are key growth opportunities for TacMed Solutions: (i) further new customer acquisition and existing customer wallet share gains driven by product innovation and expansion of the serviceable market, (ii) potential to accelerate growth in civilian/public access channels given favorable public safety awareness trends and (iii) strategic acquisitions to further expand product offering and sales channels.

Sill Public Adjusters

Overview. On October 20, 2023, we, through our wholly-owned subsidiary, Sill Strategic Capital EquityCo, LLC acquired an approximately 99.1% indirect equity ownership interest in WCG Sill Adjusting LLC, an Ohio limited liability company (“Sill”). Our total investment of approximately $74.4 million in Sill is comprised of an indirect common equity interest investment of approximately $58.5 million and a concurrent senior secured debt investment of approximately $15.9 million made through our wholly-owned subsidiary, Sill Strategic Capital DebtCo, LLC. Following the closing of the transaction, in addition to our ownership, certain members of the current Sill executive management team will participate in the equity and debt ownership with us.

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Company Overview. Founded in 1928, and headquartered in Cleveland, Ohio. Sill is among the leading specialty insurance consulting firms exclusively representing business and property owners in connection with their property insurance claims.

Investment Highlights. As a leading specialty insurance consulting firm for nearly 100 years, Sill focuses on providing expert claim preparation, management, and resolution services across North America and the Caribbean. Through its wide range of services (including end-to-end property loss adjusting, forensic accounting, and business interruption analysis), Sill seeks to deliver expert representation and support for claims stemming from fire, catastrophic, and other related events. Historically, only a small fraction of all insurance claims utilizes a licensed public adjuster despite evidence that use of a public adjuster typically results in increased settlements from insurance carriers for policyholders. Consistent with this outlook, we believe that Sill has a continued opportunity to grow through both market size increases and market share gains.

Sill features one of the largest and most experienced teams in the public adjusting industry. Currently, Sill’s business is focused on addressing the perils of everyday fire incidents and has potential for outsized performance from the increasing frequency and severity of insurance claim-triggering events. The total revenue for Sill for the year ended December 31, 2023 was approximately $3.8 million. Sill’s revenue has grown at an approximately 11.2% compound annual growth rate from the year ended December 31, 2010 to the trailing twelve months ended March 31, 2024.

Growth Opportunities. We believe the following are key growth opportunities for Sill: (i) accelerate marketing and business development initiatives for national brand awareness, (ii) increased market penetration and use of public adjusters by policyholders, (iii) expand geographic footprint with new offices, (iv) broaden the suite of services provided and (v) strategic acquisitions for consolidation within the fragmented industry.

USA Water

Overview. On February 21, 2024, we, through our wholly-owned subsidiaries, USAW Strategic Capital EquityCo, LLC and USAW Strategic Capital DebtCo, LLC, made a co-investment in USA Water Intermediate Holdings, LLC (“USA Water”) of approximately $10.0 million. Our co-investment is comprised of a combination of a minority common share equity position of approximately $8.6 million and $1.4 million of senior secured subordinated notes. Our equity investment represents approximately 5.0% of the total equity ownership of USA Water. The co-investment is alongside an LLCP institutional fund and affiliate of the Sub-Manager.

Company Overview. Headquartered in Rosenberg, Texas, USA Water is a leading provider of operations and maintenance (“O&M”) services for water and wastewater systems across the Southeast, United States. USA Water’s non-discretionary services enable municipalities and utility districts to entrust their water infrastructure maintenance, asset management, and regulatory compliance needs to a professional partner of scale. USA Water’s industry-leading technical expertise and comprehensive service offerings play a critical role in ensuring the integrity, safety, and reliability of clean, high-quality water access. USA Water provides customers with wastewater facility operations, pipe repair and maintenance, meter reading, new water tap installations, regulatory & compliance, and billing and administrative services.

Investment Highlights. We believe USA Water represents a stable, cycle-resilient business given the installed and aging U.S. water infrastructure grid and continued population growth in the geographies that USA Water serves. From 2014 to 2023, USA Water achieved a compound annual revenue growth rate of approximately 17%. We believe that continued growth in the overall outsourced U.S. water and wastewater treatment market is supported by increased adoption of O&M outsourcing and aging municipal infrastructure that requires more maintenance and repair.

Growth Opportunities. The following are key growth opportunities for USA Water: (i) broadening USA Water’s service capabilities, (ii) expanding USA Water’s geographic footprint, and (iii) accelerating strategic M&A to further bolster USA Water’s scale and presence.

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Financial Statements

The Prospectus is hereby supplemented with the following financial information, which is excerpted from Part I—Item 1. “Financial Statements” in our Quarterly Report on Form 10-Q for the quarterly period ended on March 31, 2024.

CNL STRATEGIC CAPITAL, LLC 

CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(in thousands, except per share data)

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

See notes to condensed consolidated financial statements.

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CNL STRATEGIC CAPITAL, LLC 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) 

(in thousands, except per share data)

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

See notes to condensed consolidated financial statements.

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CNL STRATEGIC CAPITAL, LLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share data)

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

See notes to condensed consolidated financial statements.

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CNL STRATEGIC CAPITAL, LLC

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) 

THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(in thousands)

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

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

See notes to condensed consolidated financial statements.

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CNL STRATEGIC CAPITAL, LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) 

(in thousands)

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

See notes to condensed consolidated financial statements.

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CNL STRATEGIC CAPITAL, LLC CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS (UNAUDITED) AS OF MARCH 31, 2024
(in thousands except share data)
Company (1)(2)	Industry	Interest Rate		Maturity Date	Principal Amount / No. Shares		Amortized Cost		Fair Value
Senior Secured Note – First Lien – 5.0%
Clarion Safety Systems, LLC	Visual Safety Solutions		15.0%	12/9/2028		22,500	$	22,500	$	22,500
Lawn Doctor, Inc.	Commercial and Professional Services		(3)	8/6/2029		29,490		29,490		29,490
Total Senior Secured Notes – First Lien								51,990		51,990
Senior Secured Note –14.4%
ATA Holding Company, LLC(4)	Real Estate Services		15.0%	4/1/2027	$	37,000	$	37,000	$	37,000
Auriemma Consulting Group, Inc.(4)	Information Services and Advisory Solutions		8.0%	8/1/2024		2,000		2,000		2,000
Healthcare Safety Holdings, LLC(4)	Healthcare Supplies		15.0%	7/16/2027		24,400		24,400		24,400
Polyform Products, Co.(4)	Hobby Goods and Supplies		16.0%	2/7/2026		15,700		15,700		15,700
Sill Holdings, LLC(4)	Business Services		14.0%	10/20/2030		15,851		15,851		15,851
Tacmed Holdings, LLC(4)	Healthcare Supplies		16.0%	3/24/2030		29,000		29,000		29,000
Vektek Holdings, LLC(4)	Engineered Products		(3)	5/6/2029		24,813		24,813		24,813
Total Senior Secured Note								148,764		148,764
Senior Secured Notes – Second Lien – 7.4%
Auriemma U.S. Roundtables	Information Services and Advisory Solutions		16.0%	8/1/2025		12,114	$	12,114	$	12,114
Blue Ridge ESOP Associates	Business Services		15.0%	12/28/2028		2,641		2,641		2,641
Douglas Machines Corp.	Sanitation Products		16.0%	10/7/2028		15,000		15,000		15,000
Lawn Doctor, Inc.	Commercial and Professional Services		16.0%	2/7/2030		15,000		15,000		15,000
Milton Industries Inc.	Engineered Products		15.0%	12/19/2027		3,353		3,353		3,353
Resolution Economics, LLC	Business Services		15.0%	1/2/2026		2,834		2,834		2,834
USA Water Intermediate Holdings, LLC	Commercial and Professional Services		16.0%	8/20/2031		1,376		1,376		1,376
Vektek Holdings, LLC	Engineered Products		15.0%	11/6/2029		24,400		24,400		24,400
Total Senior Secured Notes – Second Lien								76,718		76,718
Total Senior Secured Notes							$	277,472	$	277,472
Equity – 60.5%
ATA Holding Company, LLC(5)	Real Estate Services					37,985	$	37,125	$	32,809
Auriemma U.S. Roundtables(5)	Information Services and Advisory Solutions					33,094		33,476		59,170
Blue Ridge ESOP Associates	Business Services					11,489		12,793		26,247
Clarion Safety Systems, LLC(5)	Visual Safety Solutions					57,368		56,816		62,632

See notes to condensed consolidated financial statements.

39

CNL STRATEGIC CAPITAL, LLC CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS (UNAUDITED) AS OF MARCH 31, 2024
(in thousands except share data)
Company (1)(2)	Industry	Interest Rate	Maturity Date	Principal Amount / No. Shares		Amortized Cost		Fair Value
Douglas Machines Corp.(5)	Sanitation Products				35,500		35,500		42,982
Healthcare Safety Holdings, LLC(5)	Healthcare Supplies				17,320		17,320		45,927
Lawn Doctor, Inc.(5)	Commercial and Professional Services				7,746		27,555		80,466
Milton Industries Inc.	Engineered Products				6,647		6,647		19,639
Polyform Products, Co.(5)	Hobby Goods and Supplies				10,820		15,599		14,532
Resolution Economics, LLC	Business Services				7,666		8,118		15,683
Sill Holdings, LLC(5)	Business Services				58,549		58,549		58,549
Tacmed Holdings, LLC(5)	Healthcare Supplies				77,000		76,744		81,631
USA Water Intermediate Holdings, LLC	Commercial and Professional Services				86,245		8,624		8,624
Vektek Holdings, LLC(5)	Engineered Products				56,928		56,928		76,770
Total Equity							451,794		625,661
TOTAL INVESTMENTS – 87.3%						$	729,266	$	903,133
OTHER ASSETS IN EXCESS OF LIABILITIES – 12.7%									131,100
NET ASSETS – 100.0%								$	1,034,233

FOOTNOTES: 

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

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

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

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

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

See notes to condensed consolidated financial statements.

40

CNL STRATEGIC CAPITAL, LLC CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS  AS OF DECEMBER 31, 2023
(in thousands except share data)
Company (1)(2)	Industry	Interest Rate		Maturity Date	Principal Amount / No. Shares		Amortized Cost		Fair Value
Senior Secured Note – First Lien – 20.5%
ATA Holding Company, LLC	Real Estate Services		15.0%	4/1/2027		37,000	$	37,000	$	37,000
Auriemma U.S. Roundtables	Information Services and Advisory Solutions		8.0%	8/1/2024		2,000		2,000		2,000
Clarion Safety Systems, LLC	Visual Safety Solutions		15.0%	12/9/2028		22,500		22,500		22,500
Healthcare Safety Holdings, LLC	Healthcare Supplies		15.0%	7/16/2027		24,400		24,400		24,400
Lawn Doctor, Inc.	Commercial and Professional Services		(3)	2/7/2025		29,490		29,490		29,490
Polyform Products, Co.	Hobby Goods and Supplies		16.0%	2/7/2026		15,700		15,700		15,700
Sill Holdings, LLC	Business Services		14.0%	10/20/2030		15,851		15,851		15,851
Tacmed Holdings, LLC	Healthcare Supplies		16.0%	3/24/2030		29,000		29,000		29,000
Vektek Holdings, LLC	Engineered Products		(3)	5/6/2029		24,875		24,875		24,875
Total Senior Secured Notes – First Lien								200,816		200,816
Senior Secured Note – Second Lien – 7.7%
Auriemma U.S. Roundtables	Information Services and Advisory Solutions		16.0%	8/1/2025		12,114	$	12,114	$	12,114
Blue Ridge ESOP Associates	Business Services		15.0%	12/28/2028		2,641		2,641		2,641
Douglas Machines Corp.	Sanitation Products		16.0%	10/7/2028		15,000		15,000		15,000
Lawn Doctor, Inc.	Commercial and Professional Services		16.0%	7/7/2026		15,000		15,000		15,000
Milton Industries Inc.	Engineered Products		15.0%	12/19/2027		3,353		3,353		3,353
Resolution Economics, LLC	Business Services		15.0%	1/2/2026		2,834		2,834		2,834
Vektek Holdings, LLC	Engineered Products		15.0%	11/6/2029		24,400		24,400		24,400
Total Senior Secured Notes – Second Lien								75,342		75,342
Total Senior Secured Notes							$	276,158	$	276,158
Equity – 61.3%
ATA Holding Company, LLC(4)	Real Estate Services					37,985	$	37,125	$	32,376
Auriemma U.S. Roundtables(4)	Information Services and Advisory Solutions					33,094		33,476		58,964

See notes to condensed consolidated financial statements.

41

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

FOOTNOTES: 

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

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

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

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

See notes to condensed consolidated financial statements.

42

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

1. Principal Business and Organization

CNL Strategic Capital, LLC (the “Company”) is a limited liability company that primarily seeks to acquire and grow durable, middle-market U.S. businesses. The Company is externally managed by CNL Strategic Capital Management, LLC (the “Manager”) and sub-managed by Levine Leichtman Strategic Capital, LLC (the “Sub-Manager”). The Manager is responsible for the overall management of the Company’s activities and the Sub-Manager is responsible for the day-to-day management of the Company’s assets. The Manager and the Sub-Manager are each registered as an investment adviser under the Investment Advisers Act of 1940, as amended. The 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. The Company intends to acquire, directly or through syndication, various types of debt including secured and senior unsecured debt, notes and other instruments. The Company may also acquire minority equity interests as a standalone investment and as a co-investment in combination with other funds and partnerships managed by LLCP or its affiliates. The Company expects that these positions will comprise a minority of its total assets.

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

Through the Follow-On Public Offering, the Company is offering, in any combination, four classes of shares: Class A shares, Class T shares, Class D shares and Class I shares (collectively, the “Non-founder shares”). There are differing selling fees and commissions and dealer manager fees 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 Follow-On Public Offering (excluding sales pursuant to its distribution reinvestment plan). See Note 7. “Capital Transactions” and Note 13. “Subsequent Events” to our “Financial Statements” included in this supplement for additional information related to the Public Offerings.

43

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

2. Significant Accounting Policies

Basis of Presentation

The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) as contained in the Financial Accounting Standards Board Accounting Standards Codification (the “Codification” or “ASC”), which requires the use of estimates, assumptions and the exercise of subjective judgment as to future uncertainties. In the opinion of management, the condensed consolidated financial statements reflect all adjustments that are of a normal recurring nature and necessary for the fair presentation of financial results as of and for the periods presented.

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 condensed consolidated financial statements. However, the Company has not consolidated the results of its subsidiaries in which the Company holds debt and equity investments. All intercompany account balances and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

Cash and cash equivalents consist of demand deposits and money market funds 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.

As of March 31, 2024, the Company held no cash equivalents. As of December 31, 2023, the Company held cash equivalents in the form of money market fund shares held in Fidelity Government Money Market with a fair value of approximately $73.1 million which represented 7.2% of total assets. Cash equivalents in the form of money market fund shares are valued at their reported net asset value on the measurement date, and are categorized within Level 1 of the fair value hierarchy under ASC Topic 820, as inputs in the valuation are observable.

Use of Estimates

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

44

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

Valuation of Investments

ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC Topic 820”) clarifies that 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. U.S. Treasury securities are classified as Level 1 assets and are recorded at fair value based on the average of the bid and ask quotes for identical instruments.

45

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

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

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

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

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

Income Recognition

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

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

Dividend Income – Dividend income is recorded 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.

46

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

Paid in Capital

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

Share Repurchases

Under the Company’s share repurchase program (the “Share Repurchase Program”), shares are 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” to our “Financial Statements” included in this supplement for additional information.

Offering Expenses

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

Deferred Financing Costs

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

Allocation of Profit and Loss

Class-specific expenses, including base management fees, total return incentive fees, offering expenses, expense support (reimbursement), distribution and shareholder servicing fees and certain transfer agent fees, are allocated to each share class of common shares in accordance with how such expenses are attributable to the particular share classes, as determined by the Company’s board of directors, the Company’s governing agreements and, in certain cases, expenses which are specifically identifiable to a share class.

The following table reflects class-specific expenses by share class during the three months ended March 31, 2024 and 2023 (in thousands):

	Three Months Ended March 31, 2024
	Class FA  Shares		Class A Shares		Class T  Shares		Class D   Shares		Class I   Shares			Class S   Shares
Base management fees	$	265	$	850	$	405	$	414	$	1,957		$	127
Total return incentive fees		394		958		395		439		2,130			169
Offering expenses		—		99		16		17		124			—
Expense support		—		—		—		—		(257	)		(38	)
Other class-specific expenses (1)		9		34		227		117		53			6

47

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

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

⁽¹⁾ Other class-specific expenses consist of distribution and shareholder servicing fees and certain transfer agent fees.

Income and expenses which are not class-specific are allocated monthly pro rata among the share classes based on shares outstanding as of the end of the month.

Net Investment Income per Share and Net Increase in Net Assets Resulting from Operations per Share

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

Distributions

The Company’s board of directors has declared and intends to continue to declare distributions based on monthly record dates. The Company’s distributions are paid in the same month as the declared record date. 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 condensed 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, if the Company were otherwise treated as a publicly traded partnership, the Company would not be taxable as a corporation if 90% or more of its gross income for each taxable year consists of “qualifying income” (generally, interest (other than interest generated from a financial business), dividends, real property rents, gain from the sale of assets that produce qualifying income and certain other items) and the Company is not required to register under the Investment Company Act (the “qualifying income exception”). As a partnership, the individual shareholders are responsible for their proportionate share of the Company’s taxable income.

48

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

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, and related tax assets and liabilities are reflected in the Company’s condensed consolidated financial statements. See Note 9. “Income Taxes” to our “Financial Statements” included in this supplement for additional information.

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

Recently Issued Accounting Standards Updates

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

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

3. Investments

In February 2024, the Company, through its wholly-owned subsidiaries, USAW Strategic Capital EquityCo, LLC and USAW Strategic Capital DebtCo, LLC, made a co-investment in USA Water Intermediate Holdings, LLC (“USAW”) of approximately $10.0 million. The Company’s co-investment is comprised of a minority common equity position of approximately $8.6 million and $1.4 million of senior secured subordinated notes.

The Company’s investment portfolio is summarized as follows as of March 31, 2024 and December 31, 2023 (in thousands):

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

49

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

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

Collectively, the Company’s debt investments accrue interest at a weighted average per annum rate of 14.2% and have weighted average remaining years to maturity of 4.5 years as of March 31, 2024. The note purchase agreements contain customary covenants and events of default. As of March 31, 2024, all of the Company’s portfolio companies were in compliance with their respective debt covenants. As of March 31, 2024 and December 31, 2023, none of the Company’s debt investments were on non-accrual status.

The industry dispersion of the Company’s portfolio company investments, based on fair value, as of March 31, 2024 and December 31, 2023 were as follows:

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

All investment positions held at March 31, 2024 and December 31, 2023 were denominated in U.S. dollars and located in the United States based on their country of domicile.

50

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

Summarized Portfolio Company Financial Information

The Company had five significant portfolio companies in which it owned a controlling equity interest during the three months ended March 31, 2024 and 2023. The following tables present unaudited summarized operating data for the three months ended March 31, 2024 and 2023, and summarized balance sheet data as of March 31, 2024 (unaudited) and December 31, 2023 for these portfolio companies (in thousands):

Lawn Doctor

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

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

FOOTNOTE: 

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

Roundtables

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

51

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

	As of March 31, 2024			As of December 31, 2023
Current assets	$	12,346		$	2,376
Non-current assets		58,694			59,192
Current liabilities		13,376			5,071
Non-current liabilities		21,398			19,399
Stockholders’ equity		36,266			37,098
Ownership percentage(1)		81	%		81	%

FOOTNOTE: 

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

Douglas

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

	As of March 31, 2024			As of December 31, 2023
Current assets	$	10,350		$	10,750
Non-current assets		46,672			46,850
Current liabilities		3,784			4,458
Non-current liabilities		16,188			16,271
Stockholders’ equity		37,050			36,871
Ownership percentage(1)		90	%		90	%

FOOTNOTE: 

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

52

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

Vektek

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

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

FOOTNOTE: 

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

53

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

TacMed

The Company acquired its investments in TacMed in March 2023.

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

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

FOOTNOTE: 

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

4. Fair Value of Financial Instruments

The Company’s investments were categorized in the fair value hierarchy described in Note 2. “Significant Accounting Policies,” as follows as of March 31, 2024 and December 31, 2023 (in thousands):

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

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

As of March 31, 2024
Asset Group	Fair Value		Valuation Techniques	Unobservable Inputs	Range (Weighted Average)(1)	Impact to Valuation from an Increase in   Input(2)
Senior Debt	$	276,096	Discounted Cash Flow Market Comparables Transaction Method	Discount Rate EBITDA Multiple	10.8% – 14.5% (12.7%) 6.3x – 15.1x (11.7x)	Decrease Increase
	1,376		Transaction Precedent	Transaction Price	N/A	N/A
Equity	617,037		Discounted Cash Flow Market Comparables Transaction Method	Discount Rate EBITDA Multiple	10.8% – 14.5% (12.7%) 6.3x – 15.1x (11.7x)	Decrease Increase
	8,624		Transaction Precedent	Transaction Price	N/A	N/A
Total	$	903,133

54

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

As of December 31, 2023
Asset Group	Fair Value		Valuation Techniques	Unobservable Inputs	Range (Weighted Average)(1)	Impact to Valuation from an Increase in Input(2)
Senior Debt	$	276,158	Discounted Cash Flow Market Comparables Transaction Method	Discount Rate EBITDA Multiple EBITDA Multiple	10.5% – 14.5% (12.5%) 6.9x – 15.1x (10.8x) 6.3x – 16.0x (11.9x)	Decrease Increase Increase
Equity	600,685		Discounted Cash Flow Market Comparables Transaction Method	Discount Rate EBITDA Multiple EBITDA Multiple	10.5% – 14.5% (12.5%) 6.9x – 15.1x (10.8x) 6.3x – 16.0x (11.9x)	Decrease Increase Increase
Total	$	876,843

FOOTNOTES: 

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

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

The preceding tables include the significant unobservable inputs as they relate to the Company’s determination of fair values for its investments categorized within Level 3 as of March 31, 2024 and December 31, 2023. 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.

55

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

The following tables provide a reconciliation of investments for which Level 3 inputs were used in determining fair value for the three months ended March 31, 2024 and 2023 (in thousands):

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

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

FOOTNOTES: 

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

(2)        Included in net change in unrealized appreciation on investments in the condensed 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 Public Offerings, as well as the acquisition, management and sale of the assets of the Company, as follows:

Managing Dealer

Commissions — The Company pays CNL Securities Corp. (the “Managing Dealer”), 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 Follow-On Public Offering (excluding sales pursuant to the Company’s distribution reinvestment plan). The Managing Dealer may reallow all or a portion of the selling commissions to participating broker-dealers.

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 Follow-On Public Offering (excluding sales pursuant to the Company’s distribution reinvestment plan). The Managing Dealer may reallow all or a portion of such dealer manager fees to participating broker-dealers.

56

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

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, subject to certain limits, 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

Offering Costs — The Company reimburses the Manager and the Sub-Manager, along with their respective affiliates, for the offering costs (other than selling commissions and dealer manager fees) they have incurred on the Company’s behalf only to the extent that such expenses do not exceed 1.5% of the cumulative gross proceeds from the Public Offerings. The Company incurred an obligation to reimburse the Manager and Sub-Manager for offering costs based on actual amounts raised through the Public Offerings of approximately $0.3 million and $0.9 million during the three months ended March 31, 2024 and 2023, respectively.

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 $4.0 million and $2.7 million during the three months ended March 31, 2024 and 2023, 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 shares 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 shares 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, and adjusted for share conversions, if any, for such class.

57

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

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 $4.5 million and $3.6 million during the three months ended March 31, 2024 and 2023, 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.

58

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

• 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 in the calculation of Total Return to Shareholders for such share class. With respect to the calculation of Total Return to Shareholders, the following tables provides the applicable High Water Marks for the years ended December 31, 2024 and 2023:

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

For purposes of this calculation, “Average Adjusted Capital” for an applicable class is computed on the 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, as amended, (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.

59

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

If, on the last business day of the calendar year, the annual (calendar year) year-to-date available operating funds exceeds the sum of the annual (calendar year) year-to-date distributions paid per share class (the “Excess Operating Funds”), the Company 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.

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

Distributions

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

Related party fees and expenses incurred for the three months ended March 31, 2024 and 2023 are summarized below (in thousands):

		Three Months Ended March 31,
Related Party	Source Agreement & Description	2024		2023
Managing Dealer	Managing Dealer Agreement: Commissions	$	508	$	642
	Dealer manager fees	84		264
	Distribution and shareholder servicing fees	318		269
Manager and Sub-Manager	Management Agreement and Sub-Management Agreement: Offering expense reimbursement(1)(2)	256		904
	Base management fees(1)	4,018		2,663
	Total return incentive fees(1)	4,485		3,635
Manager and Sub-Manager	Expense Support and Conditional Reimbursement Agreement: Expense Support	(295)		(355)
	Expense Support and Condition Reimbursement Agreement: Reimbursement of Expense Support	—		242
Manager	Administrative Services Agreement: Reimbursement of third-party operating expenses(1)	28		25
Sub-Manager	Sub-Management Agreement: Reimbursement of third-party pursuit costs(1)(3)	505		185

FOOTNOTES: 

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

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

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

60

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

The following table presents amounts due to related parties net as of March 31, 2024 and December 31, 2023 (in thousands):

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

6. Distributions

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

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

FOOTNOTES: 

(1)       The Company’s board of directors declared distributions per share on a monthly basis. See Note 12. “Financial Highlights” to our “Financial Statements” included in this supplement for distributions declared by share class. Monthly distributions declared per share for each share class were as follows:

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

(2)       Amounts based on distribution record date.

The sources of declared distributions on a GAAP basis were as follows (in thousands):

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

FOOTNOTES: 

(1)        Net investment income includes Expense Support, net of $295 and $113 for the three months ended March 31, 2024 and 2023, respectively. See Note 5. “Related Party Transactions” to our “Financial Statements” included in this supplement for additional information. 

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

61

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

In March 2024, the Company’s board of directors declared a monthly cash distribution on the outstanding shares of all classes of common shares of record on April 26, 2024 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 Follow-On Public Offering, 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 Follow-On Public Offering, 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 Follow-On Public Offering: Class A shares, Class T shares, Class D shares and Class I shares. The initial minimum permitted purchase amount is $5,000 in shares. 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 March 28, 2024, the public offering price was $36.78 per Class A share, $35.38 per Class T share, $33.38 per Class D share and $34.13 per Class I share.

The Company is also offering, in any combination, up to $100.0 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” to our “Financial Statements” included in this supplement for additional information related to the Follow-On Public Offering.

The following tables summarize the total shares issued and proceeds received by share class in connection with the Public Offerings, excluding shares repurchased through the Share Repurchase Program described further below, for the three months ended March 31, 2024 and 2023 (in thousands except per share data):

	Three Months Ended March 31, 2024
	Proceeds from Public Offerings									Distributions Reinvested				Total
Share Class	Shares Issued		Gross Proceeds		Sales Load(1)			Net Proceeds to Company		Shares Issued		Proceeds to Company		Shares Issued		Net Proceeds to Company		Average Net Proceeds per Share
Class A		598	$	20,524	$	(442	)	$	20,082		34	$	1,132		632	$	21,214	$	33.59
Class T		92		3,231		(150	)		3,081		13		452		105		3,533		33.63
Class D		107		3,563		—			3,563		13		447		120		4,010		33.32
Class I		755		25,738		—			25,738		60		2,025		815		27,763		34.07
		1,552	$	53,056	$	(592	)	$	52,464		120	$	4,056		1,672	$	56,520	$	33.81

62

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

	Three Months Ended March 31, 2023
	Proceeds from Public Offerings									Distributions Reinvested				Total
Share Class	Shares Issued		Gross Proceeds		Sales Load(1)			Net Proceeds to Company		Shares Issued		Proceeds to Company		Shares Issued		Net Proceeds to Company(2)		Average Net Proceeds per Share
Class A		360	$	12,248	$	(464	)	$	11,784		16	$	505		376	$	12,289	$	32.70
Class T		278		9,511		(442	)		9,069		12		403		290		9,472		32.62
Class D		169		5,446		—			5,446		10		329		179		5,775		32.32
Class I		999		33,061		—			33,061		41		1,353		1,040		34,414		33.10
		1,806	$	60,266	$	(906	)	$	59,360		79	$	2,590		1,885	$	61,950	$	32.87

FOOTNOTES: 

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

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

Share Repurchase Program

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

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

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

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

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

63

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

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

Share Conversions

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

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

8. Borrowings

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

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

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

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

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

64

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

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

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

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

9. Income Taxes

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

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

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

65

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

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

	March 31, 2024			December 31, 2023
Deferred tax assets:
Carryforwards for net operating loss	$	1,155		$	1,249
Unrealized depreciation on investments		861			913
Other		7			—
Valuation allowance		(1,282	)		(1,324	)
Total deferred tax assets		741			838
Deferred tax liabilities:
Unrealized appreciation on investments		(8,974	)		(8,300	)
Total deferred tax liabilities		(8,974	)		(8,300	)
Deferred tax liabilities, net	$	(8,233	)	$	(7,462	)

10. Concentrations of Risk

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

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

11. Commitments & Contingencies

See Note 5. “Related Party Transactions” to our “Financial Statements” included in this supplement for information on contingent amounts due to the Manager and Sub-Manager for the reimbursement of offering costs under the Public Offerings and for the reimbursement of Expense Support.

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

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

66

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

12. Financial Highlights

The following are schedules of financial highlights of the Company attributed to each class of shares for the three months ended March 31, 2024 and 2023 (in thousands except per share data):

	Three Months Ended March 31, 2024
	Class FA   Shares			Class A Shares			Class T Shares			Class D Shares			Class I Shares			Class S Shares
OPERATING PERFORMANCE PER SHARE
Net Asset Value, Beginning of Period	$	36.67		$	33.57		$	33.64		$	33.31		$	34.06		$	37.25
Net investment income, before Expense Support (reimbursement)(1)		0.30			0.13			0.06			0.10			0.13			0.29
Expense Support (reimbursement)(1)(2)		—			—			—			—			0.02			0.02
Net investment income(1)		0.30			0.13			0.06			0.10			0.15			0.31
Net realized and unrealized gains, net of taxes(1)(3)		0.54			0.55			0.54			0.55			0.54			0.55
Net increase resulting from investment operations		0.84			0.68			0.60			0.65			0.69			0.86
Distributions to shareholders(4)		(0.31	)		(0.31	)		(0.25	)		(0.28	)		(0.31	)		(0.31	)
Net decrease resulting from distributions to shareholders		(0.31	)		(0.31	)		(0.25	)		(0.28	)		(0.31	)		(0.31	)
Net Asset Value, End of Period	$	37.20		$	33.94		$	33.99		$	33.68		$	34.44		$	37.80
Net assets, end of period	$	152,782		$	197,940		$	86,765		$	92,046		$	438,695		$	66,005
Average net assets(5)	$	153,445		$	181,432		$	89,105		$	88,861		$	421,591		$	65,221
Shares outstanding, end of period		4,107			5,832			2,552			2,733			12,737			1,746
Distributions declared	$	1,306		$	1,683		$	662		$	749		$	3,861		$	546
Total investment return based on net asset value before total return incentive fee(6)		2.56	%		2.54	%		2.25	%		2.45	%		2.54	%		2.59	%
Total investment return based on net asset value after total return incentive fee(6)		2.25	%		2.05	%		1.79	%		1.97	%		2.05	%		2.33	%
RATIOS/SUPPLEMENTAL DATA (not annualized):
Ratios to average net assets:(5)(7)
Total operating expenses before total return incentive fee		0.30	%		0.68	%		0.86	%		0.75	%		0.64	%		0.32	%
Total operating expenses before Expense Support (reimbursement)		0.55	%		1.21	%		1.30	%		1.24	%		1.14	%		0.58	%
Total operating expenses after Expense Support (reimbursement)		0.55	%		1.21	%		1.30	%		1.24	%		1.08	%		0.52	%
Net investment income before total return incentive fee(8)		1.07	%		0.90	%		0.62	%		0.79	%		0.94	%		1.09	%
Net investment income		0.81	%		0.37	%		0.18	%		0.30	%		0.43	%		0.83	%

67

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

	Three Months Ended March 31, 2023
	Class FA  Shares			Class A Shares			Class T Shares			Class D Shares			Class I Shares			Class S Shares
OPERATING PERFORMANCE PER SHARE
Net Asset Value, Beginning of Period	$	34.90		$	32.45		$	32.46		$	32.11		$	32.88		$	35.39
Net investment income before Expense Support (reimbursement)(1)		0.38			0.17			0.11			0.15			0.17			0.37
Expense Support (reimbursement)(1)(2)		(0.05	)		0.02			—			—			0.04			—
Net investment income(1)		0.33			0.19			0.11			0.15			0.21			0.37
Net realized and unrealized gains, net of taxes(1)(3)		0.58			0.59			0.59			0.59			0.58			0.58
Net increase resulting from investment operations		0.91			0.78			0.70			0.74			0.79			0.95
Distributions to shareholders(4)		(0.31	)		(0.31	)		(0.25	)		(0.28	)		(0.31	)		(0.31	)
Net decrease resulting from distributions to shareholders		(0.31	)		(0.31	)		(0.25	)		(0.28	)		(0.31	)		(0.31	)
Net Asset Value, End of Period	$	35.50		$	32.92		$	32.91		$	32.57		$	33.36		$	36.03
Net assets, end of period	$	150,083		$	85,090		$	85,762		$	69,384		$	326,074		$	63,567
Average net assets(5)	$	149,170		$	73,964		$	80,239		$	65,138		$	300,817		$	62,927
Shares outstanding, end of period		4,228			2,585			2,606			2,130			9,774			1,764
Distributions declared	$	1,326		$	706		$	614		$	566		$	2,837		$	552
Total investment return based on net asset value before total return incentive fee(6)		2.90	%		2.91	%		2.68	%		2.88	%		2.88	%		3.01	%
Total investment return based on net asset value after total return incentive fee(6)		2.58	%		2.42	%		2.17	%		2.32	%		2.42	%		2.71	%
RATIOS/SUPPLEMENTAL DATA (not annualized):
Ratios to average net assets:(5)(7)
Total operating expenses before total return incentive fee		0.30	%		0.85	%		1.01	%		0.84	%		0.76	%		0.32	%
Total operating expenses before Expense Support (reimbursement)		0.58	%		1.44	%		1.55	%		1.42	%		1.35	%		0.62	%
Total operating expenses after Expense Support (reimbursement)		0.74	%		1.39	%		1.55	%		1.42	%		1.24	%		0.62	%
Net investment income before total return incentive fee(8)		1.21	%		1.17	%		0.87	%		1.05	%		1.22	%		1.33	%
Net investment income		0.93	%		0.57	%		0.33	%		0.47	%		0.63	%		1.03	%

FOOTNOTES:

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

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

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

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

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

68

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

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

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

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

13. Subsequent Events

Distributions

In April 2024, the Company’s board of directors declared a monthly cash distribution on the outstanding shares of all classes of common shares of record on May 28, 2024 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 April 2024, the Company’s board of directors approved new per share offering prices for each share class in the Follow-On Public Offering. The new offering prices are effective as of April 30, 2024. The following table provides the new offering prices and applicable upfront selling commissions and dealer manager fees for each share class available in the Follow-On Public Offering:

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

69

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

Capital Transactions

During the period April 1, 2024 through May 8, 2024, the Company received additional net proceeds from the Follow-On Public Offering and distribution reinvestment plan of the following (in thousands except per share data):

	Proceeds from Follow-On Public Offering									Distribution Reinvestment Plan				Total
Share Class	Shares		Gross Proceeds		Sales Load			Net Proceeds to Company		Shares		Gross Proceeds		Shares		Net Proceeds to Company		Average Net Proceeds per Share
Class A		187	$	6,491	$	(138	)	$	6,353		12	$	413		199	$	6,766	$	34.00
Class T		22		773		(37	)		736		4		147		26		883		33.96
Class D		57		1,941		—			1,941		5		152		62		2,093		33.76
Class I		217		7,471		—			7,471		21		707		238		8,178		34.36
		483	$	16,676	$	(175	)	$	16,501		42	$	1,419		525	$	17,920	$	34.13

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