UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

_______________________________________________________________________

FORM 10-Q

_______________________________________________________________________

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

For the quarterly period ended March 31, 2025

OR

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

Commission file number: 000-56162

__________________________________________________________________________________________________________________________________

CNL STRATEGIC CAPITAL, LLC

(Exact name of registrant as specified in its charter)

__________________________________________________________________________________________________________________________________

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

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

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

________________________________________________________________________________________________

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

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

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

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

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

As of May 8, 2025, the Company had 3,921,643 Class FA shares, 8,425,896 Class A shares, 2,485,802 Class T shares, 3,036,042 Class D shares, 14,999,592 Class I shares and 1,706,903 Class S shares outstanding.

INDEX

		PAGE
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited):	2
	Condensed Consolidated Statements of Assets and Liabilities	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Changes in Net Assets	5
	Condensed Consolidated Statements of Cash Flows	6
	Condensed Consolidated Schedules of Investments	7
	Notes to Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	56
Item 4.	Controls and Procedures	56
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	58
Item 1A.	Risk Factors	58
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	58
Item 3.	Defaults Upon Senior Securities	58
Item 4.	Mine Safety Disclosures	58
Item 5.	Other Information	58
Item 6.	Exhibits	59
Exhibit Index		59
Signatures		60

1

PART I.     FINANCIAL INFORMATION

Item 1.         Financial Statements

CNL STRATEGIC CAPITAL, LLC

CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(in thousands, except per share data)

	March 31, 2025 (Unaudited)		December 31, 2024
Assets
Investments at fair value:
Portfolio company investments (amortized cost of $911,824 and $892,940, respectively)	$	1,170,982	$	1,140,859
Cash and cash equivalents	118,008		146,319
Prepaid expenses and other assets	496		472
Total assets	1,289,486		1,287,650
Liabilities
Due to related parties, net (Note 5)	2,620		26,386
Payable for shares repurchased	18,567		19,169
Deferred tax liabilities, net	11,217		9,844
Accounts payable and other accrued expenses	1,869		1,043
Total liabilities	34,273		56,442
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; 3,922 and 4,017 shares outstanding, respectively	4		4
Class A Common shares, $0.001 par value, 94,660 shares authorized; 8,699 and 8,549 shares issued, respectively; 8,346 and 8,238 shares outstanding, respectively	8		8
Class T Common shares, $0.001 par value, 558,620 shares authorized; 3,689 and 3,582 shares issued, respectively; 2,520 and 2,511 shares outstanding, respectively	3		3
Class D Common shares, $0.001 par value, 94,660 shares authorized; 3,309 and 3,275 shares issued, respectively; 3,021 and 3,072 shares outstanding, respectively	3		3
Class I Common shares, $0.001 par value, 94,660 shares authorized; 16,687 and 15,936 shares issued, respectively; 14,638 and 14,154 shares outstanding, respectively	15		14
Class S Common shares, $0.001 par value, 100,000 shares authorized; 1,770 shares issued; 1,707 and 1,712 shares outstanding, respectively	2		2
Capital in excess of par value	1,047,335		1,031,526
Distributable earnings	207,843		199,648
Total Members’ Equity	$	1,255,213	$	1,231,208
Net asset value per share:
Class FA	$	39.84	$	39.55
Class A	$	35.92	$	35.68
Class T	$	35.94	$	35.72
Class D	$	35.65	$	35.42
Class I	$	36.34	$	36.12
Class S	$	40.38	$	40.09

See notes to condensed consolidated financial statements.

2

CNL STRATEGIC CAPITAL, LLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share data)

	Three Months Ended March 31,
	2025		2024
Investment income
From portfolio company investments:
Interest income	$	10,296	$	9,927
Dividend income	3,931		3,673
Payment-in-kind (“PIK”) dividend income	1,656		—
From U.S. Treasury bills and cash accounts
Interest and dividend income	1,023		1,320
Total investment income	16,906		14,920
Operating expenses
Total return incentive fees	388		4,485
Base management fees	5,305		4,018
Offering expenses	540		256
Professional services	664		587
Pursuit costs	417		505
Distribution and shareholder servicing fees	491		318
Custodian and accounting fees	148		133
Insurance expense	55		50
Director fees and expenses	51		53
General and administrative expenses	138		89
Total operating expenses	8,197		10,494
Expense support	(9)		(295)
Net operating expenses	8,188		10,199
Net investment income before taxes	8,718		4,721
Income tax expense	(17)		—
Net investment income	8,701		4,721
Realized and unrealized gain (loss) on investments and foreign currency
Net change in unrealized appreciation on investments, including unrealized foreign currency gain (loss):
Portfolio company investments	11,239		17,001
Provision for deferred taxes on investments	(1,373)		(771)
Total net change in unrealized appreciation on investments, including unrealized foreign currency gain (loss)	9,866		16,230
Net gain on investments	9,866		16,230
Net increase in net assets resulting from operations	$	18,567	$	20,951

See notes to condensed consolidated financial statements.

3

CNL STRATEGIC CAPITAL, LLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share data)

	Three Months Ended March 31,
	2025		2024
Net increase in net assets resulting from operations per share
Class FA	$	0.60	$	0.84
Class A	$	0.55	$	0.68
Class T	$	0.47	$	0.60
Class D	$	0.51	$	0.65
Class I	$	0.53	$	0.69
Class S	$	0.60	$	0.86
Weighted average shares
Class FA	4,016		4,179
Class A	8,287		5,401
Class T	2,507		2,648
Class D	3,085		2,666
Class I	14,401		12,373
Class S	1,712		1,748

See notes to condensed consolidated financial statements.

4

CNL STRATEGIC CAPITAL, LLC

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2025 AND 2024

(in thousands)

	Common Shares			Capital in Excess of Par Value		Distributable Earnings		Total Net Assets
	Number of Shares	Par Value
Balance as of December 31, 2024	33,704	$	34	$	1,031,526	$	199,648	$	1,231,208
Net investment income	—	—		—		8,701		8,701
Net change in unrealized appreciation on investments	—	—		—		9,866		9,866
Distributions to shareholders	—	—		—		(10,372)		(10,372)
Issuance of common shares through the Public Offerings	810	2		29,200		—		29,202
Issuance of common shares through distribution reinvestment plan	144	—		5,175		—		5,175
Repurchase of common shares pursuant to share repurchase program	(504)	(1)		(18,566)		—		(18,567)
Balance as of March 31, 2025	34,154	$	35	$	1,047,335	$	207,843	$	1,255,213

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

See notes to condensed consolidated financial statements.

5

CNL STRATEGIC CAPITAL, LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

	Three Months Ended March 31,
	2025		2024
Operating Activities:
Net increase in net assets resulting from operations	$	18,567	$	20,951
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:
Purchases of portfolio company investments	(17,438)		(9,938)
Proceeds from return of capital on portfolio company investments	210		649
Net change in unrealized appreciation on investments and foreign currency transactions, excluding deferred taxes	(11,239)		(17,001)
PIK dividends	(1,656)		—
Decrease in due to related parties	(23,766)		(9,943)
Increase (decrease) in accounts payable and other accrued expenses	826		(869)
Increase in deferred tax liabilities, net	1,373		771
(Decrease) increase in prepaid expenses and other assets	(156)		46
Other operating activities	(2)		20
Net cash used in operating activities	(33,281)		(15,314)
Financing Activities:
Proceeds from issuance of common shares	29,202		53,875
Payment on repurchases of common shares	(19,169)		(8,224)
Distributions paid, net of distributions reinvested	(5,197)		(4,751)
Deferred financing costs	134		(163)
Net cash provided by financing activities	4,970		40,737
Net (decrease) increase in cash and cash equivalents	(28,311)		25,423
Cash and cash equivalents, beginning of period	146,319		134,453
Cash and cash equivalents, end of period	$	118,008	$	159,876
Supplemental disclosure of cash flow information and non-cash financing activities:
Distributions reinvested	$	5,175	$	4,056
Amounts incurred but not paid (including amounts due to related parties):
Offering costs	$	242	$	134
Payable for shares repurchased	$	18,567	$	13,780

See notes to condensed consolidated financial statements.

6

CNL STRATEGIC CAPITAL, LLC CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS (UNAUDITED) AS OF MARCH 31, 2025
(in thousands except share data)
Company (1)(2)(3)	Industry	Interest Rate	Maturity Date	Principal Amount / No. Shares	Amortized Cost		Fair Value
Senior Secured Note – First Lien – 5.4%
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	(4)	8/6/2029	29,490	29,490		29,490
Madison Retirement Holdings TopCo, LLC	Retirement Plan Services	15.0%	7/18/2031	15,000	15,000		15,000
Total Senior Secured Notes – First Lien					66,990		66,990
Senior Secured Note –11.8%
ATA Holding Company, LLC(5)	Real Estate Services	15.0%	4/1/2027	37,000	$	37,000	$	37,000
Auriemma Consulting Group, Inc.(5)	Information Services and Advisory Solutions	8.0%	12/31/2028	2,000	2,000		2,000
Healthcare Safety Holdings, LLC(5)	Healthcare Supplies	15.0%	7/16/2027	24,400	24,400		24,400
Polyform Products, Co.(5)	Hobby Goods and Supplies	16.0%	2/7/2026	15,700	15,700		15,700
Sill Holdings, LLC(5)	Business Services	14.0%	10/20/2030	15,851	15,851		15,851
Tacmed Holdings, LLC(5)	Healthcare Supplies	16.0%	3/24/2030	29,000	29,000		29,000
Vektek Holdings, LLC(5)	Engineered Products	(4)	5/6/2029	24,813	24,563		24,563
Total Senior Secured Note					148,514		148,514
Senior Secured Notes – Second Lien – 6.1%
Auriemma U.S. Roundtables	Information Services and Advisory Solutions	16.0%	7/1/2028	12,114	$	12,114	$	12,114
Blue Ridge ESOP Associates	Retirement Plan Services	15.0%	12/28/2029	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%	12/19/2030	3,353	3,353		3,353
Resolution Economics, LLC	Business Services	15.0%	12/30/2027	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					$	292,222	$	292,222

See notes to condensed consolidated financial statements.

7

CNL STRATEGIC CAPITAL, LLC CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS (UNAUDITED) AS OF MARCH 31, 2025 (CONTINUED)
(in thousands except share data)
Company (1)(2)(3)	Industry	Interest Rate	Maturity Date	Principal Amount / No. Shares	Amortized Cost		Fair Value
Preferred Equity - 5.1%
LOCI Topco Limited(6)	Information Services and Advisory Solutions	8.5% PIK(7)		46,597,751	$	63,726	$	64,750
Total Preferred Equity					63,726		64,750
Common Equity – 64.9%
ATA Holding Company, LLC(8)	Real Estate Services			37,985	$	37,125	$	35,881
Auriemma U.S. Roundtables(8)	Information Services and Advisory Solutions			33,094	33,476		64,600
Blue Ridge ESOP Associates	Retirement Plan Services			11,489	10,200		35,641
Clarion Safety Systems, LLC(8)	Visual Safety Solutions			68,891	70,316		84,632
Douglas Machines Corp.(8)	Sanitation Products			35,500	35,500		36,325
Healthcare Safety Holdings, LLC(8)	Healthcare Supplies			17,320	17,320		46,345
LOCI Topco Limited(6)	Information Services and Advisory Solutions			73,215	93		96
Lawn Doctor, Inc.(8)	Commercial and Professional Services			7,746	27,610		90,923
Madison Retirement Holdings TopCo, LLC(8)	Retirement Plan Services			61,500	61,500		68,653
Milton Industries Inc.	Engineered Products			6,647	6,647		19,100
Polyform Products, Co.(8)	Hobby Goods and Supplies			10,820	15,599		12,242
Resolution Economics, LLC	Business Services			7,666	7,645		20,649
Sill Holdings, LLC(8)	Business Services			82,754	90,549		127,660
Tacmed Holdings, LLC(8)	Healthcare Supplies			77,000	76,744		91,337
USA Water Intermediate Holdings, LLC	Commercial and Professional Services			86,245	8,624		10,759
Vektek Holdings, LLC(8)	Engineered Products			56,928	56,928		69,167
Total Common Equity					555,876		814,010
Total Equity					$	619,602	$	878,760
TOTAL INVESTMENTS – 93.3%					$	911,824	$	1,170,982
OTHER ASSETS IN EXCESS OF LIABILITIES – 6.7%							84,231
NET ASSETS – 100.0%							$	1,255,213

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)    All investments are US based unless otherwise noted.

(4)    As of March 31, 2025, the senior debt investments in Lawn Doctor and Vektek accrue interest at a per annum rate of SOFR + 4.60%. SOFR at March 31, 2025 was 4.33%.

(5)    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.

(6)    LBR is headquartered in the United Kingdom. LBR investment represents 5.2% of net assets based on fair value as of March 31, 2025.

(7)    PIK dividend income is computed at the contractual rate in each applicable agreement and is accrued and recorded as dividend income and capitalized to the principal balance.

(8)    As of March 31, 2025, the Company owned a controlling interest in this portfolio company.

See notes to condensed consolidated financial statements.

8

CNL STRATEGIC CAPITAL, LLC CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2024
(in thousands except share data)
Company (1)(2)(3)	Industry	Interest Rate	Maturity Date	Principal Amount / No. Shares	Amortized Cost		Fair Value
Senior Secured Note – First Lien – 5.4%
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	(4)	8/6/2029	29,490	29,490		29,490
Madison Retirement Holdings TopCo, LLC	Retirement Plan Services	15.0%	7/18/2031	15,000	15,000		15,000
Total Senior Secured Note - First Lien					66,990		66,990
Senior Secured Note –12.1%
ATA Holding Company, LLC(5)	Real Estate Services	15.0%	4/1/2027	37,000	$	37,000	$	37,000
Auriemma Consulting Group, Inc.(5)	Information Services and Advisory Solutions	8.0%	12/31/2028	2,000	2,000		2,000
Healthcare Safety Holdings, LLC(5)	Healthcare Supplies	15.0%	7/16/2027	24,400	24,400		24,400
Polyform Products, Co.(5)	Hobby Goods and Supplies	16.0%	2/7/2026	15,700	15,700		15,700
Sill Holdings, LLC (5)	Business Services	14.0%	10/20/2030	15,851	15,851		15,851
Tacmed Holdings, LLC(5)	Healthcare Supplies	16.0%	3/24/2030	29,000	29,000		29,000
Vektek Holdings, LLC(5)	Engineered Products	(4)	5/6/2029	24,625	24,625		24,625
Total Senior Secured Note					148,576		148,576
Senior Secured Note – Second Lien – 6.2%
Auriemma U.S. Roundtables	Information Services and Advisory Solutions	16.0%	7/1/2028	12,114	$	12,114	$	12,114
Blue Ridge ESOP Associates	Retirement Plan Services	15.0%	12/28/2029	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%	12/19/2030	3,353	3,353		3,353
Resolution Economics, LLC	Business Services	15.0%	12/30/2027	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 Note - Second Lien					76,718		76,718
Total Senior Secured Notes					$	292,284	$	292,284

See notes to condensed consolidated financial statements.

9

CNL STRATEGIC CAPITAL, LLC CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 2024 (CONTINUED)
(in thousands except share data)
Company (1)(2)(3)	Industry	Interest Rate	Maturity Date	Principal Amount / No. Shares	Amortized Cost		Fair Value
Preferred Equity – 5.0%
LOCI Topco Limited (6)	Information Services and Advisory Solutions	8.5% PIK(7)		46,597,751	$	62,070	$	61,155
Total Preferred Equity					62,070		61,155
Common Equity – 64.0%
ATA Holding Company, LLC (8)	Real Estate Services			37,985	$	37,125	$	35,291
Auriemma U.S. Roundtables (8)	Information Services and Advisory Solutions			33,094	33,476		62,511
Blue Ridge ESOP Associates	Retirement Plan Services			11,489	10,200		36,896
Clarion Safety Systems, LLC (8)	Visual Safety Solutions			57,368	56,816		67,213
Douglas Machines Corp. (8)	Sanitation Products			35,500	35,500		39,057
Healthcare Safety Holdings, LLC (8)	Healthcare Supplies			17,320	17,320		47,726
LOCI Topco Limited (6)	Information Services and Advisory Solutions			73,215	93		1,618
Lawn Doctor, Inc (8)	Commercial and Professional Services			7,746	27,610		91,742
Madison Retirement Holdings TopCo, LLC(8)	Retirement Plan Services			57,500	57,500		60,463
Milton Industries, Inc	Engineered Products			6,647	6,647		18,849
Polyform Products, Co. (8)	Hobby Goods and Supplies			10,820	15,599		12,751
Resolution Economics, LLC	Business Services			7,666	7,855		20,400
Sill Holdings, LLC (8)	Business Services			82,754	90,549		119,736
Tacmed Holdings, LLC (8)	Healthcare Supplies			77,000	76,744		92,378
USA Water Intermediate Holdings, LLC	Commercial and Professional Services			86,245	8,624		10,370
Vektek Holdings, LLC (8)	Engineered Products			56,928	56,928		70,419
Total Common Equity					538,586		787,420
Total Equity					$	600,656	$	848,575
Total Investments – 92.7%					$	892,940	$	1,140,859
OTHER ASSETS IN EXCESS OF LIABILITIES–7.3%							90,349
NET ASSETS–100.0%							$	1,231,208

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)    All investments are US based unless otherwise noted.

(4)    As of December 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 December 31, 2024 was 4.53%.

(5)    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.

(6)    LBR is headquartered in the United Kingdom. LBR investment represents 5.10% of net assets based on fair value as of December 31, 2024.

(7)    PIK dividend income is computed at the contractual rate in each applicable agreement and is accrued and recorded as dividend income and capitalized to the principal balance.

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

See notes to condensed consolidated financial statements.

10

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2025

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 or as a co-investment in combination with other funds and partnerships managed by the Sub-Manager 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”), 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 “Follow-On Registration Statement”) filed with the Securities and Exchange Commission (the “SEC”). On November 1, 2024, the Company commenced a second follow-on public offering of up to $1.1 billion of shares (the “Second Follow-On Public Offering” and together with the Initial Public Offering and the Follow-On Public Offering, the “Public Offerings”), which includes up to $100.0 million of shares being offered through its distribution reinvestment plan, and terminated the Follow-On Public Offering.

Through the Second 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 Second Follow-On Public Offering (excluding sales pursuant to its distribution reinvestment plan). See Note 7. “Capital Transactions” and Note 13. “Subsequent Events” for additional information related to the Public Offerings.

2. Significant Accounting Policies

Basis of Presentation

The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) as contained in the Financial Accounting Standards Board Accounting Standards Codification (“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.

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CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2025

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 that are investment companies 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.

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.

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.

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CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2025

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

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

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

The Company’s board of directors is responsible for determining in good faith the fair value of the Company’s 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.

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CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2025

Foreign Securities

The accounting records of the Company are maintained in U.S. dollars. Investment securities denominated in foreign currencies are translated into U.S. dollars based on the rate of exchange of such currencies on the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollars based on the rate of exchange of such currencies on the respective dates of the transactions. The Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with "Net change in unrealized appreciation on investments, including unrealized foreign currency gain (loss)” in the Company's condensed consolidated statements of operations.

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.

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.

PIK Dividend Income - PIK dividend income is computed at the contractual rate specified in each applicable agreement and is accrued and recorded as dividend income and capitalized to the principal balance of the preferred equity. Such income is accrued only to the extent that the Company believes that the PIK dividend income is probable of being collected. PIK dividends capitalized to the principal balance are generally collected upon redemption of the equity.

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” 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.

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CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2025

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, 2025 and 2024 (in thousands):

	Three Months Ended March 31, 2025
	Class FA  Shares		Class A Shares		Class T Shares		Class D Shares		Class I Shares		Class S Shares
Base management fees	$	268	$	1,469	$	410	$	523	$	2,502	$	133
Total return incentive fees	270		—		—		—		—		118
Offering expenses	—		58		57		16		409		—
Expense support	—		—		—		—		—		(9)
Other class-specific expenses (1)	8		40		222		145		213		6

	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

(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.

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CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2025

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.

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 of the Taxable Subsidiaries are reflected in the Company’s condensed consolidated financial statements. See Note 9. “Income Taxes” for additional information.

During the three months ended March 31, 2025 and 2024, the Company did not incur any material interest or penalties. Tax years ending December 31, 2021 and forward remain subject to examination by taxing authorities.

Segment Reporting

The Company operates through a single operating and reporting segment with an investment objective to generate both current income and capital appreciation through debt and equity investments. The chief operating decision maker (the “CODM”) is comprised of the Company’s chief operating officer and the CODM assesses the performance and makes operating decisions of the Company on a consolidated basis primarily based on the Company’s net increase in net assets resulting from operations (“net income”). In addition to numerous other factors and metrics, the CODM utilizes net income, net assets and total return as key metrics in determining the amount of dividends to be distributed to the Company’s shareholders. As the Company’s operations comprise of a single reporting segment, the segment assets are reflected on the accompanying consolidated statement of assets and liabilities as “total assets” and the significant segment expenses are listed on the accompanying consolidated statement of operations.

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CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2025

Recently Adopted and 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 adopted this standard for the year ended December 31, 2024.

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 will be effective for the Company in its income tax disclosure included in its Annual Report on Form 10-K for the year ending December 31, 2025. The Company will review the extent of new disclosures necessary in the coming quarters, prior to implementation of quarterly disclosures during fiscal year 2026. Other than additional disclosure, we do not expect a change to our condensed consolidated financial statements.

3. Investments

In January 2025, the Company made an additional equity investment in Madison Retirement Holdings TopCo, LLC (“MAP”) of $4.0 million to purchase the equity interests of a minority shareholder of the portfolio company.

In February 2025, the Company made an additional equity investment in Clarion Safety Systems, LLC (“Clarion”) of approximately $13.5 million for Clarion’s acquisition of McLoone Metal Graphics. Founded in 1954 and headquartered in La Crosse, WI, McLoone manufactures metal nameplates and ID plates and flexible labels utilized by Original Equipment Manufacturers and other suppliers in a variety of end markets. McLoone’s products complement Clarion’s products and services for its customers’ industrial safety needs.

The Company’s investment portfolio is summarized as follows as of March 31, 2025 and December 31, 2024 (in thousands):

	As of March 31, 2025
Asset Category	Amortized Cost(1)		Fair Value		Fair Value Percentage of Investment Portfolio		Fair Value Percentage of Net Assets
Senior secured debt
First lien	$	66,990	$	66,990	5.7	%	5.4	%
Secured	148,514		148,514		12.7		11.8
Second lien	76,718		76,718		6.6		6.1
Total senior secured debt	292,222		292,222		25.0		23.3
Equity
Preferred	63,726		64,750		5.5		5.1
Common	555,876		814,010		69.5		64.9
Total equity	619,602		878,760		75.0		70.0
Total investments	$	911,824	$	1,170,982	100.0	%	93.3	%

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CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2025

	As of December 31, 2024
Asset Category	Amortized Cost(1)		Fair Value		Fair Value Percentage of Investment Portfolio		Fair Value Percentage of Net Assets
Senior secured debt
First lien	$	66,990	$	66,990	5.9	%	5.4	%
Secured	148,576		148,576		13.0		12.1
Second lien	76,718		76,718		6.7		6.2
Total senior secured debt	292,284		292,284		25.6		23.7
Equity
Preferred	62,070		61,155		5.4	%	5.0	%
Common	538,586		787,420		69.0		64.0
Total equity	600,656		848,575		74.4	%	69.0	%
Total investments	$	892,940	$	1,140,859	100.0	%	92.7	%

FOOTNOTE:

(1) The amortized cost represents the original cost adjusted for PIK dividends.

Collectively, the Company’s debt investments accrue interest at a weighted average per annum rate of 14.1% and have weighted average remaining years to maturity of 3.8 years as of March 31, 2025. The note purchase agreements contain customary covenants and events of default. As of March 31, 2025, all of the Company’s portfolio companies were in compliance with their respective debt covenants. As of March 31, 2025 and December 31, 2024, 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, 2025 and December 31, 2024 were as follows:

Industry	March 31, 2025		December 31, 2024
Healthcare Supplies	16.3	%	17.0	%
Business Services	14.3		13.9
Commercial and Professional Services	12.6		13.0
Information Services and Advisory Solutions	12.3		12.2
Engineered Products	12.0		12.4
Retirement Plan Services	10.4		10.1
Visual Safety Solutions	9.1		7.9
Real Estate Services	6.2		6.3
Sanitation Products	4.4		4.7
Hobby Goods and Supplies	2.4		2.5
Total	100.0	%	100.0	%

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, 2025 and 2024. The following tables present unaudited summarized operating data for the three months ended March 31, 2025 and 2024, and summarized balance sheet data as of March 31, 2025 (unaudited) and December 31, 2024 for these portfolio companies (in thousands):

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CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2025

Lawn Doctor

	Three Months Ended March 31,
	2025		2024
Revenues	$	11,923	$	9,792
Expenses	(11,022)		(9,589)
Income before taxes	901		203
Income tax expense	(352)		(169)
Consolidated net income	549		34
Net income attributable to non-controlling interests	141		182
Net income	$	690	$	216

	As of March 31, 2025			As of December 31, 2024
Current assets	$	12,204		$	10,387
Non-current assets	88,779			88,332
Current liabilities	11,556			8,821
Non-current liabilities	62,858			62,560
Non-controlling interests	(226)			(12)
Stockholders’ equity	26,795			27,350
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.

Clarion

	Three Months Ended March 31,
	2025		2024
Revenues	$	6,514	$	4,393
Expenses	(6,367)		(3,643)
Income before taxes	147		750
Income tax expense	(41)		(208)
Net income	$	106	$	542

	As of March 31, 2025			As of December 31, 2024
Current assets	$	11,477		$	7,124
Non-current assets	83,584			74,214
Current liabilities	2,966			2,551
Non-current liabilities	22,621			22,680
Stockholders’ equity	69,474			56,107
Ownership percentage(1)	97		%	96		%

FOOTNOTE:

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

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CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2025

TacMed

	Three Months Ended March 31,
	2025		2024
Revenues	$	9,508	$	8,428
Expenses	(10,756)		(10,763)
Loss before taxes	(1,248)		(2,335)
Income tax benefit	322		228
Net loss	$	(926)	$	(2,107)

	As of March 31, 2025			As of December 31, 2024
Current assets	$	22,184		$	23,757
Non-current assets	86,169			87,533
Current liabilities	4,916			6,031
Non-current liabilities	34,060			34,456
Stockholders’ equity	69,377			70,803
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.

Sill

	Three Months Ended March 31,
	2025		2024
Revenues	$	11,182	$	3,673
Expenses	(8,284)		(4,223)
Income (loss) before taxes	2,898		(550)
Income tax (expense) benefit	(624)		933
Net income	$	2,274	$	383

	As of March 31, 2025			As of December 31, 2024
Current assets	$	15,243		$	12,039
Non-current assets	107,387			107,938
Current liabilities	6,341			5,585
Non-current liabilities	18,809			18,908
Stockholders’ equity	97,480			95,484
Ownership percentage(1)	93		%	93		%

FOOTNOTE:

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

20

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2025

MAP

The Company acquired its investments in MAP in July 2024.

	Three Months Ended March 31,
	2025
Revenues	$	8,385
Expenses	(11,940)
Loss before taxes	(3,555)
Income tax expense	(1)
Net loss	$	(3,556)

	As of March 31, 2025			As of December 31, 2024
Current assets	$	19,897		$	15,800
Non-current assets	106,154			106,889
Current liabilities	10,597			7,854
Non-current liabilities	20,477			18,443
Stockholders’ equity	94,977			96,392
Ownership percentage(1)	60		%	57		%

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, 2025 and December 31, 2024 (in thousands):

	As of March 31, 2025								As of December 31, 2024
Description	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Senior Debt	$	—	$	—	$	292,222	$	292,222	$	—	$	—	$	292,284	$	292,284
Equity	—		—		878,760		878,760		—		—		848,575		848,575
Total Investments	$	—	$	—	$	1,170,982	$	1,170,982	$	—	$	—	$	1,140,859	$	1,140,859

The ranges of unobservable inputs used in the fair value measurement of the Company’s Level 3 investments as of March 31, 2025 and December 31, 2024 were as follows (in thousands):

As of March 31, 2025
Asset Group	Fair Value		Valuation Techniques	Unobservable Inputs	Range (Weighted Average)(1)	Impact to Valuation from an Increase in Input(2)
Senior Debt	$	292,222	Discounted Cash Flow Market Comparables Transaction Method	Discount Rate EBITDA Multiple	10.5% – 15.8% (13.3%) 6.0x – 21.6x (12.5x)	Decrease Increase
Equity	878,760		Discounted Cash Flow Market Comparables Transaction Method	Discount Rate EBITDA Multiple	10.5% – 15.8% (13.3%) 6.0x – 21.6x (12.5x)	Decrease Increase
Total	$	1,170,982

21

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2025

As of December 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	$	292,284	Discounted Cash Flow Market Comparables Transaction Method	Discount Rate EBITDA Multiple	10.8% – 16.0% (13.4%) 6.3x – 21.7x (12.4x)	Decrease Increase
Equity	848,575		Discounted Cash Flow Market Comparables Transaction Method	Discount Rate EBITDA Multiple	10.8% – 16.0% (13.4%) 6.3x – 21.7x (12.4x)	Decrease Increase
Total	$	1,140,859

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, 2025 and December 31, 2024. In addition to the techniques and inputs noted in the tables above, according to the Company’s valuation policy, the Company may also use other valuation techniques and methodologies when determining the fair value estimates for the Company’s investments. Any significant increases or decreases in the unobservable inputs would result in significant increases or decreases in the fair value of the Company’s investments.

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

The following tables provide a reconciliation of investments for which Level 3 inputs were used in determining fair value for the three months ended March 31, 2025 and 2024 (in thousands):

22

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2025

	Three Months Ended March 31, 2025
	Senior Debt		Equity		Total
Fair value balance as of January 1, 2025	$	292,284	$	848,575	$	1,140,859
Additions	—		17,500		17,500
Principal repayment	(62)		—		(62)
PIK dividends	—		1,656		1,656
Return of capital(1)	—		(210)		(210)
Net change in unrealized appreciation, including unrealized foreign currency gain	—		11,239		11,239
Fair value balance as of March 31, 2025	$	292,222	$	878,760	$	1,170,982
Change in net unrealized appreciation on investments held as of March 31, 2025	$	—	$	11,239	$	11,239

	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	—		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	$	—	$	17,001	$	17,001

FOOTNOTE:

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

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 Public Offerings (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 Public Offerings (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.

23

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2025

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 $0.5 million and $0.3 million during the three months ended March 31, 2025 and 2024, 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 $5.3 million and $4.0 million during the three months ended March 31, 2025 and 2024, 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.

24

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2025

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 $0.4 million and $4.5 million during the three months ended March 31, 2025 and 2024, respectively.

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

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

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

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

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

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

•For purposes of calculating the Total Return to Shareholders, the change in the Company’s net asset value is subject to a High Water Mark. The “High Water Mark” is equal to the highest year-end net asset value, for each share class of the Company since inception, adjusted for any special distributions resulting from the sale of the Company’s assets, provided such adjustment is approved by the Company’s board of directors. If, as of each calendar year end, the Company’s net asset value for the applicable share class is (A) above the High Water Mark, then, for such calendar year, the Total Return to Shareholders calculation will include the increase in the Company’s net asset value for such share class in excess of the High Water Mark, and (B) if the Company’s net asset value for the applicable share class is below the High Water Mark, for such calendar year, (i) any increase in the Company’s per share net asset value will be disregarded in the calculation of Total Return to Shareholders for such share class while (ii) any decrease in the Company’s per share net asset value will be included 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, 2025 and 2024:

For the year ended:	Class FA		Class A		Class T		Class D		Class I		Class S
December 31, 2025	$	39.55	$	35.68	$	35.72	$	35.42	$	36.12	$	40.09
December 31, 2024	36.67		33.57		33.64		33.31		34.06		37.25

25

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2025

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.

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 through March 31, 2025, approximately $4.9 million had been reimbursed and approximately $0.2 million was no longer eligible for reimbursement. As of March 31, 2025, approximately less than $0.1 million of Expense Support collected from the Manager and Sub-Manager is subject to reimbursement.

Distributions

Individuals and entities affiliated with the Manager and Sub-Manager owned approximately 0.4 million shares as of March 31, 2025 and 2024. These individuals and entities received distributions from the Company of approximately $0.1 million during the three months ended March 31, 2025 and 2024.

26

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2025

Related party fees and expenses incurred for the three months ended March 31, 2025 and 2024 are summarized below (in thousands):

		Three Months Ended March 31,
Related Party	Source Agreement & Description	2025		2024
Managing Dealer	Managing Dealer Agreement:      Commissions(1)	$	130	$	508
	Dealer manager fees(1)	72		84
	Distribution and shareholder servicing fees	337		318
Manager and Sub-Manager	Management Agreement and Sub-Management Agreement:      Offering expense reimbursement(2)(3)	540		256
	Base management fees(2)	5,305		4,018
	Total return incentive fees(2)	388		4,485
Manager and Sub-Manager	Expense Support and Conditional Reimbursement Agreement:  Expense Support	(9)		(295)
Manager	Administrative Services Agreement: Reimbursement of third-party operating expenses(2)(4)	41		28
	Shareholder servicing fees	154		—
Sub-Manager	Sub-Management Agreement: Reimbursement of third-party pursuit costs(2)(5)	417		505

FOOTNOTES:

(1)Included in “Issuance of common shares through the Public Offerings” in the Company’s condensed consolidated statements of changes in net assets.

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

(3)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.

(4)Included in “Professional services” in the Company’s condensed consolidated statements of operations.

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

The following table presents amounts due to related parties net as of March 31, 2025 and December 31, 2024 (in thousands):

	March 31, 2025		December 31, 2024
Due from related parties:
Expense Support	$	9	$	20
Total due from related parties	9		20
Due to related parties:
Total return incentive fees	$	(388)	$	(24,119)
Base management fees	(1,850)		(1,758)
Offering expenses	(242)		(138)
Distribution and shareholder servicing fees	(116)		(115)
Reimbursement of third-party operating expenses and pursuit costs	(33)		(276)
Due to related parties, net	$	(2,620)	$	(26,386)

27

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2025

6. Distributions

The Company’s board of directors declared distributions on a monthly basis in each of the three months ended March 31, 2025 and 2024 (three record dates). The following table reflects the total distributions declared during the three months ended March 31, 2025 and 2024 (in thousands except per share data):

	Three Months Ended March 31,
	2025						2024
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	$	10,372	$	5,175	$	5,197	$	8,807	$	4,056	$	4,751

FOOTNOTES:

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

Record Date Period	Class FA		Class A		Class T		Class D		Class I		Class S
January 1, 2025 - March 31, 2025	$	0.104167	$	0.104167	$	0.083333	$	0.093750	$	0.104167	$	0.104167
January 1, 2024 - March 31, 2024	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,
	2025				2024
	Amount		% of Distributions Declared		Amount		% of Distributions Declared
Net investment income(1)	$	8,701	83.9	%	$	4,721	53.6	%
Distributions in excess of net investment income(2)	1,671		16.1		4,086		46.4
Total distributions declared	$	10,372	100.0	%	$	8,807	100.0	%

FOOTNOTES:

(1)     Net investment income includes Expense Support of $9 and $295 for the three months ended March 31, 2025 and 2024, respectively. See Note 5. “Related Party Transactions” for additional information.

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

In March 2025, 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 25, 2025 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 Second 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 Second 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 Second 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 31, 2025, the public offering price was $39.14 per Class A share, $37.62 per Class T share, $35.54 per Class D share and $36.23 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.

28

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2025

See Note 13. “Subsequent Events” for additional information related to the Public Offerings.

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, 2025 and 2024 (in thousands except per share data):

	Three Months Ended March 31, 2025
	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	10	$	384	$	(33)	$	351	51	$	1,806	61	$	2,157	$	35.68
Class T	96	3,606		(170)		3,436		11	412		107	3,848		35.76
Class D	20	715		—		715		14	513		34	1,228		35.40
Class I	684	24,700		—		24,700		68	2,444		752	27,144		36.13
	810	$	29,405	$	(203)	$	29,202	144	$	5,175	954	$	34,377	$	36.03

	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

FOOTNOTE:

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

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, 2025 and 2024, the Company received requests for the repurchase of approximately $18.6 million and $13.8 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, 2025 and 2024 (in thousands except per share data):

29

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2025

	Shares Repurchased	Total Consideration		Average Price Paid per Share
Class FA	95	$	3,794	$	39.76
Class A	42	1,498		35.81
Class T	9	336		35.83
Class D	85	3,041		35.54
Class I	268	9,691		36.23
Class S	5	207		40.32
Three Months Ended March 31, 2025	504	$	18,567	$	36.78

	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

As of March 31, 2025 and December 31, 2024, the Company had a payable for shares repurchased of approximately $18.6 million and $19.2 million, respectively, which were paid in April and January 2025, 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, 2025, approximately 89,000 Class T shares were converted to approximately 89,000 Class A shares at an average conversion rate of 1.00. 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.

8. Borrowings

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 $0.2 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.

30

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2025

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.

In February 2025, the Company amended the 2024 Loan Agreement and related promissory note with Valley National Bank for the 2024 Line of Credit to extend the revolving maturity date to February 15, 2026. The amendment additionally grants Valley National Bank the ability to increase the maximum commitment an additional $50.0 million at their discretion. In connection with the extension of the 2024 Line of Credit, the Borrower paid a total commitment fee and Valley National Bank expenses of $0.1 million.

The Company had not borrowed any amounts under the 2024 Line of Credit as of March 31, 2025.

9. Income Taxes

The Company incurs income tax expense related to its Taxable Subsidiaries. The components of income tax expense were as follows during the three months ended March 31, 2025 and 2024 (in thousands):

	Three Months Ended March 31,
	2025		2024
Current tax expense	$	17	$	—
Deferred tax expense	1,373		771
Total income tax expense	$	1,390	$	771

The effective tax rate for the three months ended March 31, 2025 and 2024 was 7.0% and 3.5%, respectively. The primary items giving rise to the difference between the 21.0% federal statutory rate applicable to corporations and the effective tax rates are due to state taxes and the benefits of the partnership structure.

Significant components of the Company’s deferred tax assets and liabilities as of March 31, 2025 and December 31, 2024 were as follows (in thousands):

	March 31, 2025		December 31, 2024
Deferred tax assets:
Carryforwards of net operating loss	$	3,015	$	1,818
Other	57		45
Valuation allowance	(302)		(383)
Total deferred tax assets	2,770		1,480
Deferred tax liabilities:
Unrealized appreciation on investments	(13,987)		(11,324)
Total deferred tax liabilities	(13,987)		(11,324)
Deferred tax liabilities, net	$	(11,217)	$	(9,844)

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.

31

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2025

11. Commitments & Contingencies

See Note 5. “Related Party Transactions” for information on contingent amounts due to the Manager and Sub-Manager for the reimbursement of 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, 2025, 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.

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, 2025 and 2024 (in thousands except per share data):

	Three Months Ended March 31, 2025
	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	$	39.55		$	35.68		$	35.72		$	35.42		$	36.12		$	40.09
Net investment income, before Expense Support (reimbursement)(1)	0.31			0.27			0.18			0.23			0.24			0.31
Expense Support (reimbursement)(1)(2)	—			—			—			—			—			—
Net investment income(1)	0.31			0.27			0.18			0.23			0.24			0.31
Net realized and unrealized gains, net of taxes(1)(3)	0.29			0.28			0.29			0.28			0.29			0.29
Net increase resulting from investment operations	0.60			0.55			0.47			0.51			0.53			0.60
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	$	39.84		$	35.92		$	35.94		$	35.65		$	36.34		$	40.38
Net assets, end of period	$	156,247		$	299,816		$	90,549		$	107,710		$	531,970		$	68,921
Average net assets(5)	$	159,067		$	295,821		$	89,556		$	109,304		$	520,321		$	68,742
Shares outstanding, end of period	3,922			8,346			2,520			3,021			14,638			1,707
Distributions declared	$	1,255		$	2,589		$	626		$	868		$	4,499		$	535
Total investment return based on net asset value before total return incentive fee(6)	1.67		%	1.56		%	1.32		%	1.45		%	1.48		%	1.69		%
Total investment return based on net asset value after total return incentive fee(6)	1.53		%	1.56		%	1.32		%	1.45		%	1.48		%	1.51		%
RATIOS/SUPPLEMENTAL DATA (not annualized):
Ratios to average net assets:(5)(7)
Total operating expenses before total return incentive fee	0.27		%	0.64		%	0.88		%	0.73		%	0.71		%	0.30		%
Total operating expenses	0.44		%	0.64		%	0.88		%	0.73		%	0.71		%	0.46		%
Net investment income before total return incentive fee(8)	0.96		%	0.75		%	0.51		%	0.65		%	0.68		%	0.94		%
Net investment income	0.79		%	0.75		%	0.51		%	0.65		%	0.68		%	0.77		%

32

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2025

	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		%

FOOTNOTES:

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

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

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

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

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

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

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

(8)Amounts represent net investment income before total return incentive fee and related expense support as a percentage of average net assets. For the three months ended March 31, 2025, approximately 7% of total return incentive fees for Class S, were covered by Expense Support and none of the total return incentive fees for Class FA, Class A, Class T, Class D or Class I were covered by Expense Support. 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.

33

CNL STRATEGIC CAPITAL, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2025

13. Subsequent Events

Distributions

In April 2025, 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 27, 2025 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 2025, the Company’s board of directors approved new per share offering prices for each share class in the Second Follow-On Public Offering. The new offering prices are effective as of April 30, 2025. The following table provides the new offering prices and applicable upfront selling commissions and dealer manager fees for each share class available in the Second Follow-On Public Offering:

	Class A		Class T		Class D		Class I
Effective April 30, 2025:
Offering Price, Per Share	$	39.26	$	37.73	$	35.65	$	36.34
Selling Commissions, Per Share	2.36		1.13
Dealer Manager Fees, Per Share	0.98		0.66

Capital Transactions

During the period April 1, 2025 through May 8, 2025, the Company received additional net proceeds from the Second Follow-On Public Offering and distribution reinvestment plan of the following (in thousands except per share data):

	Proceeds from Second 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	1	$	29	$	(2)	$	27	17	$	606	18	$	633	$	35.92
Class T	24	922		(41)		881		4	139		28	1,020		35.94
Class D	10	365		—		365		5	170		15	535		35.65
Class I	338	12,287		—		12,287		23	839		361	13,126		36.34
	373	$	13,603	$	(43)	$	13,560	49	$	1,754	422	$	15,314	$	36.27

Investments

In April 2025, we made an additional investment in LOCI Topco Limited (“LBR”) of approximately $25.8 million to partially finance the merger of LBR and ALM Global LLC (“ALM”). ALM was founded in 1979 and is headquartered in New York, New York. Through its leading Law.com platform, ALM offers a global legal newsroom for professionals utilizing proprietary data intelligence, expert analysis and industry insights serving both the practice and business of law. ALM, in combination with LBR, creates a newly formed group uniquely positioned to serve clients globally by combining ALM’s deep U.S. market penetration with LBR’s strong U.K. and global presence.

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

The following discussion is based on the unaudited condensed consolidated financial statements as of March 31, 2025 and December 31, 2024, and for the three months ended March 31, 2025 and 2024. Amounts as of December 31, 2024 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, 2024 (our “Form 10-K”). Capitalized terms used in this Item 2 have the same meaning as in the accompanying unaudited condensed financial statements unless otherwise defined herein.

Statement Regarding Forward-Looking Information

Certain statements in this quarterly report on Form 10-Q for the quarterly period ended March 31, 2025 (this “Quarterly Report”) constitute “forward-looking statements.” Forward-looking statements are statements that do not relate strictly to historical or current facts, but reflect management’s current understandings, intentions, beliefs, plans, expectations, assumptions and/or predictions regarding the future of our business and its performance, the economy and other future conditions and forecasts of future events and circumstances. Forward-looking statements are typically identified by words such as “believes,” “expects,” “anticipates,” “intends,” “estimates,” “plans,” “continues,” “pro forma,” “may,” “will,” “seeks,” “should” and “could,” and words and terms of similar substance, although not all forward-looking statements include these words. The forward-looking statements contained in this Quarterly Report involve risks and uncertainties, including statements as to:

•our future operating results;

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

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

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

•our contractual arrangements and relationships with third parties;

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

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

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

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

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

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

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

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

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

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

•estimated net asset value per share of our shares;

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

35

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

•the degree and nature of our competition; or

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

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

Important factors that could cause our actual results to vary materially from those expressed or implied in our forward-looking statements include, but are not limited to, the factors listed and described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the “Risk Factors” sections of the Company’s documents filed from time to time with the U.S. Securities and Exchange Commission, including, but not limited to, our Form 10-K and this Quarterly Report.

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

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.

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 16 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, 2025, we had eleven investments structured as controlling equity interests in combination with debt positions, four investments structured as minority equity interests in combination with debt positions and one investment structured as a minority equity interest. All of our debt investments were current as of March 31, 2025.

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.

36

Our Common Shares Offerings

Public Offerings

On March 7, 2018, we commenced our 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 included up to $100.0 million of shares being offered through our distribution reinvestment plan, pursuant to the Follow-On Registration Statement upon which the Initial Registration Statement was deemed terminated. On November 1, 2024, we commenced the Second 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, pursuant to the Second Follow-On Registration Statement filed with the SEC. Upon commencement of the Second Follow-On Public Offering, the Follow-On Registration Statement was deemed terminated.

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

Through March 31, 2025, we had received net proceeds from the Public Offerings of approximately $1.0 billion, including approximately $51.6 million received through our distribution reinvestment plan. As of March 31, 2025, the public offering price was $39.14 per Class A share, $37.62 per Class T share, $35.54 per Class D share and $36.23 per Class I share. See Note 7. “Capital Transactions” and Note 13. “Subsequent Events” in Item 1. “Financial Statements” for additional information regarding the Public Offerings.

Through March 31, 2025, we had incurred selling commissions and dealer manager fees of approximately $14.4 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, 2025, 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 $12.2 million based on actual amounts raised through the Public Offerings through March 31, 2025. These offering costs related to the Public Offerings were advanced by the Manager and Sub-Manager, as described further in Note 5. “Related Party Transactions” of Item 1. “Financial Statements.”

In April 2025, our board of directors approved new per share public offering prices for each share class in the Second Follow-On Public Offering. The new public offering prices are effective as of April 30, 2025. 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 Second Follow-On Public Offering:

	Class A		Class T		Class D		Class I
Effective April 30, 2025:
Public Offering Price, Per Share	$	39.26	$	37.73	$	35.65	$	36.34
Selling Commissions, Per Share	2.36		1.13
Dealer Manager Fees, Per Share	0.98		0.66

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 $1.2 billion, including approximately $51.6 million received through our distribution reinvestment plan as of March 31, 2025.

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Portfolio and Investment Activity

As of March 31, 2025, we had invested in 16 portfolio companies, consisting of equity investments and debt investments in all but one portfolio company. The table below presents our portfolio company investments (in millions):

		As of March 31, 2025
		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		7/1/2028	12.1		45.6
Roundtables	11/13/2019	—		—		Secured	8.0		12/31/2028	2.0		2.0
Milton	11/21/2019	13		6.6		Second Lien	15.0		12/19/2030	3.4		10.0
Resolution Economics	1/2/2020	8		7.6		Second Lien	15.0		12/30/2027	2.8		10.4
Blue Ridge	3/24/2020	16		10.2		Second Lien	15.0		12/28/2029	2.6		12.8
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	97		70.3		First Lien	15.0		12/9/2028	22.5		92.8
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	24.6		24.6
TacMed	3/24/2023	95		76.7		Secured	16.0		3/24/2030	29.0		105.7
Sill	10/20/2023	93		90.6		Secured	14.0		10/20/2030	15.9		106.5
USAW	2/21/2024	5		8.6		Second Lien	16.0		8/20/2031	1.4		10.0
LBR	6/17/2024	7		63.9		(4)	(4)		(4)	—		63.9
MAP	7/18/2024	60		61.5		First Lien	15.0		7/18/2031	15.0		76.5
				$	619.5					$	292.3	$	911.8

FOOTNOTES:

(1)    The note purchase agreements contain customary covenants and events of default. As of March 31, 2025, all of our portfolio companies were in compliance with their respective debt covenants.

(2)    See the Schedule of Investments and Note 3. “Investments” of Item 1. “Financial Statements” for additional information related to our investments, including fair values as of March 31, 2025.

(3)    As of March 31, 2025, the senior debt investments in Lawn Doctor and Vektek accrue interest at a per annum rate of SOFR + 4.60%. SOFR at March 31, 2025 was 4.33%.

(4)    Investment in portfolio company consists of minority equity interests only.

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, 2024 for additional information regarding our portfolio companies and their related business activities.

Our Portfolio Companies

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

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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.

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Lawn Doctor

As of March 31, 2025 and December 31, 2024, Lawn Doctor, Inc. (“Lawn Doctor”) had total assets of approximately $101.0 million and $98.7 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, 2025 and 2024 (in thousands):

	Three Months Ended March 31,
	2025		2024
Revenues	$	11,923	$	9,792
Net income (GAAP)	$	690	$	216
Interest and debt related expenses	1,387		1,475
Depreciation and amortization	650		639
Income tax expense	352		169
Adjusted EBITDA (non-GAAP)	$	3,079	$	2,499
Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)	$	1,864	$	1,513

FOOTNOTE:

(1)Amounts based on our ownership percentage as of the end of the periods presented. As of March 31, 2025 and 2024, we owned approximately 61% of Lawn Doctor.

Polyform

As of March 31, 2025 and December 31, 2024, Polyform Products, Co. (“Polyform”) had total assets of approximately $31.4 million and $31.7 million, respectively.

The following table reconciles our proportionate share of Adjusted EBITDA from net loss of Polyform for the three months ended March 31, 2025 and 2024 (in thousands):

	Three Months Ended March 31,
	2025		2024
Revenues	$	4,800	$	3,721
Net loss (GAAP)	$	(96)	$	(443)
Interest and debt related expenses	720		723
Depreciation and amortization	468		465
Income tax benefit	(37)		(175)
Adjusted EBITDA (non-GAAP)	$	1,055	$	570
Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)	$	919	$	497

FOOTNOTE:

(1)Amounts based on our ownership percentage as of the end of the periods presented. As of March 31, 2025 and 2024, we owned approximately 87% of Polyform.

40

Roundtables

As of March 31, 2025 and December 31, 2024, Auriemma U.S. Roundtables (“Roundtables”) had total assets of approximately $69.7 million and $59.5 million, respectively.

The following table reconciles our proportionate share of Adjusted EBITDA from net income (loss) of Roundtables for the three months ended March 31, 2025 and 2024 (in thousands):

	Three Months Ended March 31,
	2025		2024
Revenues	$	4,737	$	4,311
Net income (loss) (GAAP)	$	128	$	(143)
Interest and debt related expenses	636		651
Depreciation and amortization	520		522
Income tax expense (benefit)	49		(44)
Adjusted EBITDA (non-GAAP)	$	1,333	$	986
Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)	$	1,077	$	796

FOOTNOTE:

(1)Amounts based on our ownership percentage as of the end of the periods presented. As of March 31, 2025 and 2024, we owned approximately 81% of Roundtables.

HSH

As of March 31, 2025 and December 31, 2024, Healthcare Safety Holdings, LLC (“HSH”) had total assets of approximately $40.7 million and $42.4 million, respectively.

The following table reconciles our proportionate share of Adjusted EBITDA from net income of HSH for the three months ended March 31, 2025 and 2024 (in thousands):

	Three Months Ended March 31,
	2025		2024
Revenues	$	9,133	$	8,331
Net income (GAAP)	$	446	$	597
Interest and debt related expenses	927		911
Depreciation and amortization	713		747
Income tax expense	145		210
Adjusted EBITDA (non-GAAP)	$	2,231	$	2,465
Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)	$	1,662	$	1,837

FOOTNOTE:

(1)Amounts based on our ownership percentage as of the end of the periods presented. As of March 31, 2025 and 2024, we owned approximately 75% of HSH.

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ATA

As of March 31, 2025 and December 31, 2024, ATA Holding Company, LLC (“ATA”) had total assets of approximately $83.5 million and $86.7 million, respectively.

The following table reconciles our proportionate share of Adjusted EBITDA from net loss of ATA for the three months ended March 31, 2025 and 2024 (in thousands):

	Three Months Ended March 31,
	2025		2024
Revenues	$	10,686	$	10,197
Net loss (GAAP)	$	(2,508)	$	(2,389)
Interest and debt related expenses	1,444		1,460
Depreciation and amortization	1,051		1,101
Adjusted EBITDA (non-GAAP)	$	(13)	$	172
Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)	$	(10)	$	129

FOOTNOTE:

(1)Amounts based on our ownership percentage as of the end of the periods presented. As of March 31, 2025 and 2024, we owned approximately 75% of ATA.

Douglas

As of March 31, 2025 and December 31, 2024, Douglas Machines Corp. (“Douglas”) had total assets of approximately $56.5 million and $55.9 million, respectively.

The following table reconciles our proportionate share of Adjusted EBITDA from net income of Douglas for the three months ended March 31, 2025 and 2024 (in thousands):

	Three Months Ended March 31,
	2025		2024
Revenues	$	8,087	$	6,552
Net income (GAAP)	$	130	$	190
Interest and debt related expenses	610		650
Depreciation and amortization	370		353
Income tax expense	13		14
Adjusted EBITDA (non-GAAP)	$	1,123	$	1,207
Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)	$	1,013	$	1,089

FOOTNOTE:

(1)Amounts based on our ownership percentage as of the end of the periods presented. As of March 31, 2025 and 2024, we owned approximately 90% of Douglas.

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Clarion

As of March 31, 2025 and December 31, 2024, Clarion had total assets of approximately $95.1 million and $81.3 million, respectively. In February 2025, we made an additional equity investment in Clarion of approximately $13.5 million for Clarion’s acquisition of McLoone Metal Graphics. Founded in 1954 and headquartered in La Crosse, WI, McLoone manufactures metal nameplates and ID plates and flexible labels utilized by Original Equipment Manufacturers and other suppliers in a variety of end markets. McLoone’s products complement Clarion’s products and services for its customers’ industrial safety needs.

The following table reconciles our proportionate share of Adjusted EBITDA from net income of Clarion for the three months ended March 31, 2025 and 2024 (in thousands):

	Three Months Ended March 31,
	2025		2024
Revenues	$	6,514	$	4,393
Net income (GAAP)	$	106	$	542
Interest and debt related expenses	808		841
Depreciation and amortization	297		256
Income tax expense	41		208
Adjusted EBITDA (non-GAAP)	$	1,252	$	1,847
Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)	$	1,209	$	1,779

FOOTNOTE:

(1)Amounts based on our ownership percentage as of the end of the periods presented. As of March 31, 2025 and 2024, we owned approximately 97% and 96%, respectively, of Clarion.

Vektek

As of March 31, 2025 and December 31, 2024, Vektek Holdings, LLC (“Vektek”) had total assets of approximately $109.3 million and $110.1 million, respectively.

The following table reconciles our proportionate share of Adjusted EBITDA from net income of Vektek for the three months ended March 31, 2025 and 2024 (in thousands):

	Three Months Ended March 31,
	2025		2024
Revenues	$	8,632	$	9,072
Net income (GAAP)	$	307	$	276
Interest and debt related expenses	1,488		1,557
Depreciation and amortization	911		922
Income tax expense	29		—
Adjusted EBITDA (non-GAAP)	$	2,735	$	2,755
Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)	$	2,290	$	2,306

FOOTNOTE:

(1)Amounts based on our ownership percentage as of the end of the periods presented. As of March 31, 2025 and 2024, we owned approximately 84% of Vektek.

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TacMed

As of March 31, 2025 and December 31, 2024, Tacmed Holdings, LLC (“TacMed”) had total assets of approximately $108.4 million and $111.3 million, respectively.

The following table reconciles our proportionate share of Adjusted EBITDA from net loss of TacMed for the three months ended March 31, 2025 and 2024 (in thousands):

	Three Months Ended March 31,
	2025		2024
Revenues	$	9,508	$	8,428
Net loss (GAAP)	$	(926)	$	(2,107)
Interest and debt related expenses	1,166		1,173
Depreciation and amortization	1,357		1,260
Income tax benefit	(322)		(228)
Transaction related expenses(1)	—		11
Adjusted EBITDA (non-GAAP)	$	1,275	$	109
Our Proportionate Share of Adjusted EBITDA (non-GAAP)(2)	$	1,218	$	104

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, 2025 and 2024, we owned approximately 95% of TacMed.

Sill

As of March 31, 2025 and December 31, 2024, Sill Holdings, LLC (“Sill”) had total assets of approximately $122.6 million and $120.0 million, respectively.

The following table reconciles our proportionate share of Adjusted EBITDA from net income of Sill for the three months ended March 31, 2025 and 2024 (in thousands):

	Three Months Ended March 31,
	2025		2024
Revenues	$	11,182	$	3,673
Net income (GAAP)	$	2,274	$	383
Interest and debt related expenses	605		569
Depreciation and amortization	884		550
Income tax expense (benefit)	624		(933)
Adjusted EBITDA (non-GAAP)	$	4,387	$	569
Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)	$	4,093	$	564

FOOTNOTE:

(1)Amounts based on our ownership percentage as of the end of the periods presented. As of March 31, 2025 and 2024, we owned approximately 93% and 99%, respectively, of Sill.

44

MAP

As of March 31, 2025 and December 31, 2024, MAP had total assets of approximately $126.1 million and $122.7 million, respectively . The Company made its initial investment in MAP in July 2024. In January 2025, we made an additional equity investment in MAP of $4.0 million to purchase the equity interests of a minority shareholder of the portfolio company. In January 2025, MAP acquired Retirement Service Group, a third-party administrator for retirement plans headquartered in Orange, CA.

The following table reconciles our proportionate share of Adjusted EBITDA from net loss of MAP for the three months ended March 31, 2025 (in thousands):

	Three Months Ended March 31,
	2025
Revenues	$	8,385
Net loss (GAAP)	$	(3,556)
Interest and debt related expenses	659
Depreciation and amortization	2,319
Income tax expense (benefit)	1
Adjusted EBITDA (non-GAAP)	$	(577)
Our Proportionate Share of Adjusted EBITDA (non-GAAP)(1)	$	(346)

FOOTNOTE:

(1)Amounts based on our ownership percentage as of the end of the periods presented. As of March 31, 2025, we owned approximately 60% of MAP.

Other Portfolio Companies

As of March 31, 2025, we held minority equity and debt positions in four portfolio companies and held a minority equity position in one portfolio company.

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.

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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, tariff policies 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.

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, 2025 and December 31, 2024, we had cash and cash equivalents of approximately $118.0 million and $146.3 million, respectively.

Sources of Liquidity and Capital Resources

Offerings. We received approximately $29.2 million and $53.9 million in net proceeds during the three months ended March 31, 2025 and 2024, respectively, from the Follow-On Public Offering and the Second Follow-On Public Offering, which excludes approximately $5.2 million and $4.1 million raised through our distribution reinvestment plan, respectively. As of March 31, 2025, we had approximately 810 million authorized common shares remaining for sale.

Investments. We received a return of capital from portfolio company investments of approximately $0.2 million and $0.6 million during the three months ended March 31, 2025 and 2024, respectively.

Borrowings. We did not borrow any amounts during the three months ended March 31, 2025 or 2024. See Note 8. “Borrowings” of Item 1. “Financial Statements” for additional information regarding our 2024 Line of Credit.

46

Uses of Liquidity and Capital Resources

Investments. We used approximately $17.4 million and $10.0 million of cash to purchase portfolio company investments during the three months ended March 31, 2025 and 2024, respectively.

Operating Activities. We used operating cash flows (excluding amounts related to investment activity) of approximately $16.1 million and $6.0 million during the three months ended March 31, 2025 and 2024, respectively.

Distributions. We paid distributions to our shareholders of approximately $5.2 million and $4.8 million (which excludes distributions reinvested of approximately $5.2 million and $4.1 million, respectively) during the three months ended March 31, 2025 and 2024, respectively. See “Distributions Declared” below for additional information.

Share Repurchases. We paid approximately $19.2 million and $8.2 million during the three months ended March 31, 2025 and 2024, respectively, to repurchase shares in accordance with our Share Repurchase Program.

Deferred Financing Costs. We paid approximately $0.1 million and $0.2 million in deferred financing costs during the three months ended March 31, 2025 and 2024, respectively.

Reimbursement of Expense Support. During the three months ended March 31, 2024, we reimbursed the Manager and Sub-Manager approximately $0.6 million for Expense Support received in previous years accrued as of December 31, 2023. Expense Support is received or Expense Support reimbursement is paid annually. No expense support was reimbursed to the Manager and Sub-Manager during the three months ended March 31, 2025.

As of March 31, 2025, there is approximately less than $0.1 million 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. See Note 5. “Related Party Transactions” of Item 1. “Financial Statements” for additional information.

Distributions Declared

The Company’s board of directors declared distributions on a monthly basis during the three months ended March 31, 2025 and 2024 (three record dates). The following table reflects the total distributions declared during the three months ended March 31, 2025 and 2024 (in thousands except per share data):

	Three Months Ended March 31,
	2025						2024
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	$	10,372	$	5,175	$	5,197	$	8,807	$	4,056	$	4,751

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, 2025 – March 31, 2025	$	0.104167	$	0.104167	$	0.083333	$	0.093750	$	0.104167	$	0.104167
January 1, 2024 – March 31, 2024	0.104167		0.104167		0.083333		0.093750		0.104167		0.104167

(2)    Amounts based on distribution record date.

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

	Three Months Ended March 31,
	2025				2024
	Amount		Percentage(1)		Amount		Percentage(1)
Net investment income before Expense Support (reimbursement)	$	8,692	167.3	%	$	4,426	93.2	%
Expense Support (reimbursement)	9		0.2		295		6.2
Net investment income	$	8,701	167.5	%	$	4,721	99.4	%
Cash distributions net of distributions reinvested in excess of net investment income	—		—		30		0.6
Cash distributions declared, net of distributions reinvested(2)	$	5,197	100.0	%	$	4,751	100.0	%

FOOTNOTES:

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

(2)    Excludes $5,175 and $4,056 of distributions reinvested pursuant to our distribution reinvestment plan during the three months ended March 31, 2025 and 2024, respectively.

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

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

Distribution Reinvestment Plan

We have adopted a distribution reinvestment plan pursuant to which shareholders who purchase shares in the Public Offerings have their cash distributions automatically reinvested in additional shares having the same class designation as the class of shares to which such distributions are attributable, unless such shareholders elect to receive distributions in cash, are residents of Opt-In States, or are clients of certain participating broker-dealers that do not permit automatic enrollment in our distribution reinvestment plan. Opt-In States include Alabama, Arkansas, California, 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.

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Share Repurchase Program

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

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

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

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

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.

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During the three months ended March 31, 2025 and 2024, we received requests for the repurchase of approximately $18.6 million and $13.8 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, 2025 and 2024 (in thousands except per share data):

	Shares Repurchased	Total Consideration		Average Price Paid per Share
Class FA shares	95	$	3,794	$	39.76
Class A shares	42	1,498		35.81
Class T shares	9	336		35.83
Class D shares	85	3,041		35.54
Class I shares	268	9,691		36.23
Class S shares	5	207		40.32
Three Months Ended March 31, 2025	504	$	18,567	$	36.78
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

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, 2025, we had acquired equity and debt investments in 16 portfolio companies. As of March 31, 2025 and 2024, the fair value of our portfolio company investments totaled approximately $1.2 billion and $903.1 million, respectively. 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, 2025 and 2024 (in thousands):

	Three Months Ended March 31,
	2025		2024
Total investment income	$	16,906	$	14,920
Total operating expenses	(8,197)		(10,494)
Expense support (reimbursement), net	9		295
Net investment income before taxes	8,718		4,721
Income tax expense	(17)		—
Net investment income	8,701		4,721
Total net change in unrealized appreciation on investments, including unrealized foreign currency gain (loss)	9,866		16,230
Net increase in net assets resulting from operations	$	18,567	$	20,951

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Investment Income

Investment income consisted of the following for the three months ended March 31, 2025 and 2024 (in thousands):

	Three Months Ended March 31,
	2025		2024
From portfolio company investments:
Interest income	$	10,296	$	9,927
Dividend income	3,931		3,673
PIK dividend income	1,656		—
From U.S. Treasury bills and cash accounts
Interest and dividend income	1,023		1,320
Total investment income	$	16,906	$	14,920

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, 2025 and 2024. As of March 31, 2025 and 2024, our weighted average annual yield on our accruing debt investments was 14.1% and 14.2%, respectively, based on amortized cost as defined above in “Portfolio and Investment Activity.” Interest income from our debt investments was approximately $10.3 million and $9.9 million during the three months ended March 31, 2025 and 2024, respectively. The increase in interest income from portfolio company investments during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, is primarily attributable new debt investments made during July and December 2024.

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 $3.9 million and $3.7 million during the three months ended March 31, 2025 and 2024, respectively. During each of the three months ended March 31, 2025 and 2024, we received dividend income from seven and eight of our portfolio companies, respectively.

PIK dividend income from portfolio company investments is computed at the contractual rate specified in each applicable agreement and is accrued and recorded as dividend income and added to the principal balance of the preferred equity. PIK dividend income was approximately $1.7 million for the three months ended March 31, 2025. No PIK dividend income was recognized for the three months ended March 31, 2024.

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, 2025 and 2024 were as follows (in thousands):

	Three Months Ended March 31,
	2025		2024
Total return incentive fees	$	388	$	4,485
Base management fees	5,305		4,018
Offering expenses	540		256
Professional services	664		587
Pursuit costs	417		505
Distribution and shareholder servicing fees	491		318
Custodian and accounting fees	148		133
Insurance expense	55		50
Director fees and expenses	51		53
General and administrative expenses	138		89
Total operating expenses	8,197		10,494
Expense support	(9)		(295)
Net expenses	$	8,188	$	10,199

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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).

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 $0.4 million and $4.5 million during the three months ended March 31, 2025 and 2024, respectively. The decrease in total return incentive fees during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, is primarily due to a decrease of $6.4 million in the net change in unrealized appreciation on investments, including foreign currency gain (loss) offset by an increase of $4.0 million in net investment income, taken over a larger Average Adjusted Capital during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024.

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 $5.3 million and $4.0 million during the three months ended March 31, 2025 and 2024, respectively. The increase in base management fees is primarily attributable to the increase in our average gross assets (excluding cash) which were approximately $1.2 billion and $886.7 million during the three months ended March 31, 2025 and 2024, 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 $0.5 million and $0.3 million during the three months ended March 31, 2025 and 2024, respectively. The increase is due to higher incurred offering expenses by the Manager during the three months ended March 31, 2025.

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 $0.4 million and $0.5 million during the three months ended March 31, 2025 and 2024, respectively.

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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 $0.5 million and $0.3 million during the three months ended March 31, 2025 and 2024.

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 $1.1 million and $0.9 million during the three months ended March 31, 2025 and 2024, respectively.

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, 2024, we reimbursed the Manager and Sub-Manager approximately $0.6 million for Expense Support received in previous years accrued as of December 31, 2023. Expense Support is received or Expense Support reimbursement is paid annually. No expense support was reimbursed to the Manager and Sub-Manager during the three months ended March 31, 2025.

As of March 31, 2025, there is approximately less than $0.1 million 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. See Note 5. “Related Party Transactions” of Item 1. “Financial Statements” for additional information. Additionally, the Company accrued expense support due from the Manager and Sub-Manager of approximately less than $0.1 million and $0.3 million during the three months ended March 31, 2025 and 2024, respectively.

The actual amount of Expense Support or Expense Support Reimbursement is determined as of the last business day of each calendar year and is paid within 90 days after each year end per the terms of the Expense Support and Conditional Reimbursement Agreement described above. See Note 5. “Related Party Transactions” of Item 1. “Financial Statements” for additional information.

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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. 

During the three months ended March 31, 2025, we recognized a net change in unrealized appreciation on our portfolio company investments of approximately $11.2 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 seven portfolio companies of approximately $9.0 million during the three months ended March 31, 2025. Gross unrealized appreciation was due to EBITDA growth, accretive add-on acquisitions, multiple expansion in certain of our portfolio companies and unrealized foreign currency gain. Gross unrealized depreciation was primarily driven by EBITDA declines and multiple compression. Additionally, deferred taxes on unrealized appreciation of portfolio company investments offset unrealized appreciation on portfolio company investments by approximately $1.4 million during the three months ended March 31, 2025.

During the three months ended March 31, 2024, we recognized a net change in unrealized appreciation on 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 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 $0.8 million during the three months ended March 31, 2024.

Net Assets

During the three months ended March 31, 2025 and 2024, the net increase in net assets consisted of the following (in thousands):

	Three Months Ended March 31,
	2025		2024
Operations	$	18,567	$	20,951
Distributions to shareholders	(10,372)		(8,807)
Capital transactions	15,810		42,740
Net increase in net assets	$	24,005	$	54,884

Operations decreased by approximately $2.4 million, during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The decrease in operations for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, is primarily due to a decrease in the net change in unrealized appreciation on investments of approximately $6.4 million offset by an increase in net investment income of approximately $4.0 million.

Distributions increased approximately $1.6 million, during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, primarily as a result of an increase in shares outstanding.

Capital transactions decreased by approximately $26.9 million, during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The decrease in capital transactions for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, is primarily due to a decrease in net proceeds received through the Public Offerings (including proceeds received through our distribution reinvestment plan) of approximately $22.1 million and an increase in share repurchases of approximately $4.8 million.

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Total Returns

The following table illustrates year-to-date return (“YTD Return”), trailing 12 months return (“1-Year Return”), trailing 36 months return (“3-year Return”), trailing 60 months return (“5-Year Return”) and Annualized Return Since Inception, and cumulative total returns through March 31, 2025 (“Cumulative Total Return”), with and without upfront sales load, as applicable:

	YTD Return(1)		1-Year Return(2)		3-Year Return(3)		5-Year Return(4)		Annualized Return Since Inception(5)		Cumulative Total Return(5)		Cumulative Total Return Period
Class FA (no sales load)	1.5	%	10.4	%	31.9	%	72.7	%	10.8	%	108.7	%	Feb. 7, 2018 - Mar. 31, 2025
Class FA (with sales load)	(5.1)	%	3.2	%	23.3	%	61.5	%	9.8	%	95.1	%	Feb. 7, 2018 - Mar. 31, 2025
Class A (no sales load)	1.6	%	9.7	%	28.4	%	66.5	%	9.8	%	92.4	%	Apr. 10, 2018 - Mar. 31, 2025
Class A (with sales load)	(7.1)	%	0.4	%	17.5	%	52.4	%	8.4	%	76.1	%	Apr. 10, 2018 - Mar. 31, 2025
Class I	1.5	%	9.3	%	28.0	%	66.5	%	10.0	%	93.9	%	Apr. 10, 2018 - Mar. 31, 2025
Class T (no sales load)	1.3	%	8.8	%	25.7	%	59.8	%	8.9	%	79.5	%	May 25, 2018 - Mar. 31, 2025
Class T (with sales load)	(3.5)	%	3.6	%	19.8	%	52.2	%	8.1	%	71.0	%	May 25, 2018 - Mar. 31, 2025
Class D	1.5	%	9.4	%	27.5	%	64.7	%	9.3	%	82.4	%	June 26, 2018 - Mar. 31, 2025
Class S (no sales load)	1.5	%	10.3	%	32.9	%	78.7	%	12.0	%	76.1	%	Mar. 31, 2020 - Mar. 31, 2025
Class S (with sales load)	(2.0)	%	6.5	%	28.2	%	72.4	%	11.2	%	69.9	%	Mar. 31, 2020 - Mar. 31, 2025

FOOTNOTES:

(1)     For the period from January 1, 2025 to March 31, 2025.

(2)    For the period from April 1, 2024 to March 31, 2025.

(3)    For the period from April 1, 2022 to March 31, 2025.

(4)    For the period from April 1, 2020 to March 31, 2025.

(5)    For the period from the date the first share was issued for each respective share class through March 31, 2025. The Annualized Return Since Inception captures the average annual performance over the return period. It is calculated as a geometric average, meaning it captures the effects of compounding over time.

We are not aware of any material trends or uncertainties, favorable or unfavorable, that may be reasonably anticipated to have a material impact on either capital resources or the revenues or income to be derived from our investments, other than those described above and the risk factors identified in Item 1A in Part I of our Form 10-K for the year ended December 31, 2024 and this Quarterly Report, including the negative impacts from recent 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, 2025, 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.

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, 2024 and Note 2. “Significant Accounting Policies” of Part I of this Quarterly Report for a summary of our critical accounting policies.

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Item 3.         Quantitative and Qualitative Disclosures About Market Risk

We anticipate that our primary market risks will be related to the credit quality of our counterparties, market interest rates and changes in exchange rates. We will seek to manage these risks while, at the same time, seeking to provide an opportunity to shareholders to realize attractive returns through ownership of our shares. Many of these risks have been magnified due to the continuing uncertainties caused by the recent geopolitical events; however, while we continue to monitor the geopolitical events, its impact on such risks remains uncertain and difficult to predict.

Credit Risk

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

Changes in Market Interest Rates

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

We had not borrowed any money as of March 31, 2025. However, to the extent that we borrow money to make investments, our net investment income will be dependent upon the difference between the rate at which we borrow funds and the rate at which we invest these funds. In periods of rising interest rates, our cost of funds may increase, which may reduce our net investment income. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.

Exchange Rate Sensitivity

We hold investments that are denominated in British pounds that may be affected by movements in the rate of exchange between the U.S. dollar and British pounds. We may manage exposure to investments in foreign currencies by hedging such risks. As of March 31, 2025, we have not entered into any derivative financial instruments or other arrangements to hedge a change in exchange rate against the US dollar. We estimate that as of March 31, 2025, a 10% decline in the rate of exchange of British pounds against the U.S. dollar would result in a decline in the “Net change in unrealized appreciation on investments” in the Company’s condensed consolidated statements of operations of $6.4 million.

Additionally, some of the portfolio companies we invest in conduct business in foreign jurisdictions and therefore our investments have an indirect exposure to risks associated with changes in foreign exchange rates.

Item 4.        Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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

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

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Changes in Internal Control over Financial Reporting

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

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PART II.    OTHER INFORMATION

Item 1.         Legal Proceedings

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

As of March 31, 2025, we were not involved in any legal proceedings. Additionally, there is no action, suit or proceeding pending before any court, or, to our knowledge, threatened by any regulatory agency or other third party, against the Manager, the Sub-Manager or the Managing Dealer that would have a material adverse effect on us. 

Item 1A.     Risk Factors

We have disclosed under the heading “Risk Factors” in our Form 10-K for the year ended December 31, 2024, risk factors which materially affect our business, financial condition or results of operations. You should carefully consider the risk factors set forth in our Form 10-K. You should be aware that these risk factors and other information may not describe every risk facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

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

Repurchase of Shares

In March 2019, our board of directors approved and adopted a share repurchase program, as amended (the “Share Repurchase Program”). The total amount of aggregate repurchases of Class FA, Class A, Class T, Class D, Class I and Class S shares will be limited to up to 2.5% of the aggregate net asset value per calendar quarter (based on the aggregate net asset value as of the last date of the month immediately prior to the repurchase date) and up to 10% of the aggregate net asset value per year (based on the average aggregate net asset value as of the end of each of the Company’s trailing four quarters). Notwithstanding the foregoing, at the sole discretion of our board of directors, we may also use other sources, including, but not limited to, offering proceeds and borrowings to repurchase shares. Our board of directors, in its sole discretion, may amend, suspend or terminate the Share Repurchase Program or waive any of its specific conditions to the extent it is in our best interest, including to ensure our ability to qualify as a partnership for U.S. federal income tax purposes.

During the quarter ended March 31, 2025, we repurchased the following shares (in thousands except per share data):

Period	Total Number of Shares Repurchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan	Maximum Value of Shares That May Yet Be Purchased Under the Plan (1)
January 1, 2025 to January 31, 2025	—	$	—	—	$	31,418
February 1, 2025 to February 28, 2025	—	—		—	31,418
March 1, 2025 to March 31, 2025	504	$	36.78	504	12,851

FOOTNOTE:

(1)     Repurchases are limited under the Share Repurchase Program as described above. During the quarter ended March 31, 2025, we received requests for the repurchase of approximately $18,567 of our common shares. Our board of directors approved the repurchases.

Item 3.     Defaults Upon Senior Securities

None.

Item 4.         Mine Safety Disclosures

Not applicable.

Item 5.         Other Information

Not applicable.

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Item 6.    Exhibits

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

EXHIBIT INDEX

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

3.1	Certificate of Formation of CNL Strategic Capital, LLC dated August 8, 2016 (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 (File No. 333-222986) filed with the SEC on February 12, 2018).
3.2	Eighth Amended and Restated Limited Liability Company Operating Agreement of CNL Strategic Capital, LLC (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 10-K filed with the SEC on March 31, 2025).
4.1	Distribution Reinvestment Plan (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-1 (File No. 333-222986) filed with the SEC on February 12, 2018).
4.2	Form of Subscription Agreement (incorporated by reference to Appendix A to the Prospectus files pursuant to Rule 424(b)(3) with the SEC on November 1, 2024).
4.3	Fifth Amended and Restated Share Repurchase Program (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 24, 2024).
10.1	First Amendment to the Loan and Security Agreement by and between CNL Strategic Capital B, Inc and Valley National Bank dated February 15, 2025 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 21, 2025).
31.1*	Certification of Chief Executive Officer of CNL Strategic Capital, LLC, Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer of CNL Strategic Capital, LLC, Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Executive Officer and Chief Financial Officer of CNL Strategic Capital, LLC, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*	The following materials from CNL Strategic Capital, LLC Quarterly Report on Form 10-Q for the three months ended March 31, 2025, formatted in iXBRL (Inline eXtensible Business Reporting Language); (i) Condensed Consolidated Statements of Assets and Liabilities, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Changes in Net Assets, (iv) Condensed Consolidated Statements of Cash Flows, (v) Consolidated Schedules of Investments, and (vi) Notes to the Condensed Consolidated Financial Statements.
104	Cover Page Interactive Data File included as Exhibit 101 (embedded within the Inline XBRL document)

* Filed herewith

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

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 9th day of May, 2025.

CNL STRATEGIC CAPITAL, LLC
By:	/s/ Chirag J. Bhavsar
	CHIRAG J. BHAVSAR
	Chief Executive Officer
	(Principal Executive Officer)
By:	/s/ Tammy J. Tipton
	TAMMY J. TIPTON
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

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