NEW YORK, May 08, 2019 (GLOBE NEWSWIRE) -- Saratoga Investment Corp. (NYSE:SAR) (“Saratoga Investment” or “the Company”), a business development company, today announced financial results for its 2019 fiscal year end and fourth quarter.

Summary Financial Information

The Company’s summarized financial information is as follows:

		For the year ended and as of February 28, 2019				For the year ended and as of February 28, 2018				For the year ended and as of February 28, 2017
		($ thousands except per share)
AUM			402,020				342,694				292,661
NAV			180,875				143,691				127,295
NAV per share			23.62				22.96				21.97
Investment Income			47,708				38,615				33,157
Net Investment Income per share			2.60				2.11				1.68
Adjusted Net Investment Income per share			2.63				2.27				2.01
Earnings per share			2.63				2.93				1.98
Dividends per share (declared)			2.10				1.94				1.78
Return on Equity – last twelve months			10.6	%			13.2	%			9.0	%
Originations			187,708				107,698				126,935
Repayments			135,265				66,320				121,159

  

		For the quarter ended February 28, 2019				For the quarter ended November 30, 2018				For the quarter ended February 28, 2018
		($ thousands except per share)
AUM			402,020				443,812				342,694
NAV			180,875				173,269				143,691
NAV per share			23.62				23.13				22.96
Investment Income			12,984				12,833				10,128
Net Investment Income per share			0.54				0.69				0.53
Adjusted Net Investment Income per share			0.66				0.65				0.60
Earnings per share			1.04				0.49				0.89
Dividends per share (declared)			0.54				0.53				0.50
Return on Equity – last twelve months			10.6	%			10.1	%			13.2	%
– annualized quarter			17.7	%			8.5	%			15.7	%
Originations			29,340				73,732				20,820
Repayments			77,042				23,365				20,742

“Fiscal year 2019 continued the strong performance trend for Saratoga Investment Corp. with significant strengthening of our organizational and capital foundation,” said Christian L. Oberbeck, Chairman and Chief Executive Officer of Saratoga Investment. “We continued to make steady progress growing our high quality asset base while maintaining our industry leadership in key performance metrics and credit quality. We also took important steps to expand our capitalization and liquidity through equity and long-term debt issuances, raising over $90 million in the public capital markets. We increased our quarterly dividend for the 18^th consecutive quarter to $0.54 per share, reflecting a 2% year-over-year increase while still overearning the dividend. Year-over-year, NAV grew by 26% and NAV per share by 3%. Our LTM ROE for the year was 10.6% is in the top tier of the BDC industry.”

Michael J. Grisius, President and Chief Investment Officer, added, “In this fiscal year, our organization originated $167.7 million of new investments, excluding the CLO warehouse – a record amount for us. We continue to see steady year-over-year asset base expansion, with an increase in our investments at fair value of 17% compared to last year, despite some significant repayments in Q4 of $57.0 million, excluding the CLO warehouse. Furthermore, market headwinds have not impaired our exceptional underwriting standards and consistent ability to deploy capital in high quality credits. This continued post quarter-end as we closed investments in three new platforms. 99% of our investments continue to hold our highest quality rating. Our belief remains that successful investing rests on sound judgment and steady, continuous discipline, taken one decision at a time. It is our conviction that our commitment to a long-term strategy and focus on quality will continue to reap positive rewards.” 

As of February 28, 2019, Saratoga Investment increased its assets under management (“AUM”) to $402.0 million, an increase of 17.3% from $342.7 million as of February 28, 2018, and a decrease of 9.4% from $443.8 million as of November 30, 2018. The annual increase reflects originations of $187.7 million new investments during the year ended February 28, 2019, offset by repayments and amortizations of $135.7 million. These investments and repayments for the year are inclusive of the $29.3 million in originations and $77.0 million in repayments during the quarter ended February 28, 2019. Since Saratoga management has taken over the management of the BDC, $357.8 million of repayments and sales of investments originated by Saratoga have generated a gross unlevered IRR of 13.8%. Saratoga Investment’s portfolio has remained strong, with a continued high level of investment quality in loan investments, with 98.6% of its loans at its highest internal rating for this quarter.

As a result, both the year and quarter ended February 28, 2019 benefitted from higher investment income as compared to the prior-year period – investment income increased to $47.7 million for the year ended February 28, 2019, up 23.5% from $38.6 million for the year ended February 28, 2018, and up to $13.0 million from $10.1 million for the same quarterly periods, a 28.2% increase. This increased investment income was generated from an investment base that has grown by 17.3% since last year, partially offset by the weighted average current yield decreasing from 11.1% to 10.7%. In addition, this quarter’s investment income was also up 1.2% from $12.8 million for the quarter ended November 30, 2018.

As compared to the year ended February 28, 2018, the investment income increase was offset by (i) increased debt and financing expenses, as the growth in AUM this year was partially financed from increased SBA debentures and the $60.0 million baby bond issuance, (ii) increased base and incentive management fees generated from the management of this larger pool of investments, and (iii) increased total expenses, excluding interest and debt financing expenses, base management fees and incentive fees and income tax benefit, reflecting primarily higher administrator expenses, higher directors fees and expenses and higher professional and general and administrative expenses, partially due to increased Sarbanes-Oxley (“SOX”) activities now that the Company has qualified as an accelerated filer. The increased expenses were offset by the recognition of a $1.0 million income tax benefit generated from net operating losses in Saratoga Investment’s blocker subsidiaries. 

Net investment income on a weighted average per share basis was $2.60 and $0.54 for the year and quarter ended February 28, 2019, respectively. Adjusted for the incentive fee accrual related to net unrealized capital gains, the net investment income on a weighted average per share basis was $2.63 and $0.66, respectively. This compares to adjusted net investment income per share of $2.27 and $0.60 for the year and quarter ended February 28, 2018, reflecting an increase of $0.36 and $0.06 per share, respectively. This also compares to adjusted net investment income of $0.65 per share for the quarter ended November 30, 2018, an increase of $0.01 per share.

Net investment income yield as a percentage of average net asset value (“Net Investment Income Yield”) was 10.5% and 9.2% for the year and quarter ended February 28, 2019, respectively. Adjusted for the incentive fee accrual related to net unrealized capital gains, the Net Investment Income Yield was 10.6% and 11.2%, respectively. In comparison, adjusted Net Investment Income Yield was 10.2% for the year ended February 28, 2018, and 11.2% and 10.7% for the quarters ended November 30, 2018, and February 28, 2018, respectively.

Net Asset Value (“NAV”) was $180.9 million as of February 28, 2019, an increase of $37.2 million from $143.7 million as of February 28, 2018, and an increase of $7.6 million from $173.3 million as of November 30, 2018. 

• For the year ended February 28, 2019, $18.3 million of net investment income and $2.0 million of net realized and unrealized gains were earned, offset by $1.8 million of deferred tax expense on net unrealized gains in Saratoga Investment’s blocker subsidiaries, and $14.2 million of dividends declared. In addition, $30.8 million of common stock was issued, net of offering costs and $2.2 million of stock dividend distributions were made through the Company’s dividend reinvestment plan (“DRIP”). 146,549 shares were sold through the Company’s At-the-Market (“ATM”) equity offering during the year.   

NAV per share was $23.62 as of February 28, 2019, compared to $22.96 as of February 28, 2018, and $23.13 as of November 30, 2018. 

• During the past twelve months, NAV per share increased by $0.66 per share, primarily reflecting (i) the $4.3 million, or $0.57 per share increase in net assets resulting from operations (net of the $2.06 per share dividend paid during fiscal 2019) and (ii) the $0.09 accretive impact of the year’s 1,400,127 share issuances, including the equity offering, the ATM and the DRIP. The Company made no purchases of common stock in the open market during the year.  

Return on equity for the year ended February 28, 2019, was 10.6%, compared to 13.2% for the comparable period last year.

Earnings per share for the year and quarter ended February 28, 2019, was $2.63 per share and $1.04 per share, respectively, compared to earnings per share of $2.93 per share and $0.89 per share for the year and quarter ended February 28, 2018, respectively, and $0.49 per share for the quarter ended November 30, 2018.

Investment portfolio activity for the year ended February 28, 2019:

• Cost of investments made during the period: $187.7 million
• Principal repayments and amortizations during the period: $135.7 million  

Investment portfolio activity for the quarter ended February 28, 2019:

• Cost of investments made during the period: $29.3 million
• Principal repayments and amortizations during the period: $77.0 million 

Additional Financial Information

For the fiscal year ended February 28, 2019, Saratoga Investment reported net investment income of $18.3 million, or $2.60 on a weighted average per share basis, and a net gain on investments of $0.2 million, or $0.03 on a weighted average per share basis, resulting in a net increase in net assets from operations of $18.5 million, or $2.63 on a weighted average per share basis. The $0.2 million net gain on investments was comprised of $4.9 million in net realized gain on investments offset by $2.9 million in net unrealized depreciation on investments and $1.8 million of net deferred tax expense on unrealized appreciation on investments in Saratoga Investment’s blocker subsidiaries. The net realized gain primarily relates to the $4.7 million gain on the Company’s Health Media Network investment realized in the fourth quarter. The $2.9 million unrealized depreciation primarily reflects (i) a reversal of the previously recognized appreciation following the realization of the Company’s Health Media Network investment, (ii) $1.4 million unrealized depreciation on the Company’s My Alarm Center investment, (iii) $1.6 million unrealized depreciation on the Company’s legacy Elyria investment and (iv) $1.8 million unrealized depreciation on the Company’s Roscoe Medical investment. These unrealized depreciations were partially offset by (i) $1.8 million unrealized appreciation on the Company’s Easy Ice investment, most notably the participating preferred equity, (ii) $2.1 million unrealized appreciation on the Company’s Netreo Holdings investment, and (iii) approximately $1.0 million of unrealized appreciation on each of the Company’s Grey Heller, Censis and Vector investments. This compared to the fiscal year ended February 28, 2018, with net investment income of $12.7 million, or $2.11 on a weighted average per share basis, and a net gain on investments of $4.9 million, or $0.82 on a weighted average per share basis, resulting in a net increase in net assets from operations of $17.7 million, or $2.93 on a weighted average per share basis. The $4.9 million net gain on investments consisted of $5.9 million in net realized loss on investments offset by $10.8 million unrealized appreciation.

Adjusted for the incentive fee accrual related to net unrealized capital gains, the net investment income was $18.6 million and $13.7 million for the years ended February 28, 2019, and February 28, 2018, respectively – this is an increase of $4.9 million year-over-year, or 35.9%. 

For the quarter ended February 28, 2019, Saratoga Investment reported net investment income of $4.1 million, or $0.54 on a weighted average per share basis, and a net gain on investments of $3.8 million, or $0.50 on a weighted average per share basis, resulting in a net increase in net assets from operations of $7.9 million, or $1.04 on a weighted average per share basis. The $3.8 million net gain on investments was comprised of $4.7 million in net realized gain on investments offset by $0.4 million in net unrealized depreciation on investments and $0.6 million of net deferred tax expense on unrealized appreciation on investments in Saratoga Investment’s blocker subsidiaries. The net realized gain relates to the $4.7 million gain on the Company’s Health Media Network investment discussed above. The $0.4 million unrealized depreciation primarily reflects (i) a reversal of the previously recognized appreciation following the realization of the Company’s Health Media Network investment, and (ii) $1.1 million unrealized depreciation on the Company’s Roscoe Medical investment. These unrealized depreciations were partially offset by (i) $1.4 million unrealized appreciation on the Company’s Netreo Holdings investment, (ii) $0.6 million unrealized appreciation on the Company’s Ohio Medical investment, (iii) $0.6 million unrealized appreciation on Saratoga Investment’s CLO equity investment, reflecting fourth quarter performance exceeding projections, and (iv) numerous smaller unrealized appreciations across the portfolio on various investments. This compared to the quarter ended February 28, 2018, with net investment income of $3.3 million, or $0.53 on a weighted average per share basis, and a net gain on investments of $2.2 million, or $0.36 on a weighted average per share basis, resulting in a net increase in net assets from operations of $5.5 million, or $0.89 on a weighted average per share basis. The $2.2 million net gain on investments consisted of $2.4 million unrealized appreciation offset by $0.2 million in net realized loss on investments.

Adjusted for the incentive fee accrual related to net unrealized capital gains, the net investment income was $4.9 million and $3.8 million for the quarters ended February 28, 2019, and February 28, 2018, respectively – this is an increase of $1.2 million year-over-year, or 31.1%.

Total expenses, excluding interest and debt financing expenses, base management fees and incentive management fees, decreased from $4.8 million for the year ended February 28, 2018 to $4.5 million for the year ended February 28, 2019, and decreased from 1.2% to 1.1% of average total assets. For the quarters ended February 28, 2019, and February 28, 2018, these total expenses decreased from $1.2 million to $1.0 million. 

Portfolio and Investment Activity

As of February 28, 2019, the fair value of Saratoga Investment’s portfolio was $402.0 million (excluding $62.1 million in cash and cash equivalents), principally invested in 31 portfolio companies and one collateralized loan obligation fund (“CLO”). The overall portfolio composition consisted of 50.5% of first lien term loans, 31.3% of second lien term loans, 8.8% of CLO subordinated notes, 0.5% of unsecured term loans, and 8.9% of equity interests.

For the fiscal year ended February 28, 2019, Saratoga Investment invested $187.7 million in new or existing portfolio companies and had $135.7 million in aggregate amount of exits and repayments, resulting in net investments of $52.0 million for the year. For the quarter ended February 28, 2019, Saratoga Investment invested $29.3 million in new or existing portfolio companies, and had $77.0 million in aggregate amount of exits and repayments, resulting in $47.7 million of net exits and repayments for the quarter.

As of February 28, 2019, the weighted average current yield on Saratoga Investment’s portfolio for the twelve months ended was 10.7%, which was comprised of a weighted average current yield of 10.9% on first lien term loans, 11.7% on second lien term loans, 14.6% on CLO subordinated notes, and 3.1% on equity interests.

As of February 28, 2019, 83.7% of Saratoga Investment’s portfolio is in floating rate debt, with many of these investments having floors. For all of these investments, the relevant 1-month or 3-month LIBOR rate is currently above the floors. Saratoga Investment has analyzed the potential impact of changes in interest rates on interest income from investments, and assuming that the investments as of February 28, 2019, were to remain constant for a full fiscal year and no actions were taken to alter the existing interest rate terms, a hypothetical change of 1.0% in interest rates would cause a corresponding increase of approximately $2.8 million to interest income. 
  

Liquidity and Capital Resources

As of February 28, 2019, Saratoga Investment had $0.0 million in outstanding borrowings under its $45 million senior secured revolving credit facility with Madison Capital Funding LLC. At the same time, Saratoga Investment had $150.0 million outstanding of SBA debentures, $134.5 million of Baby Bonds (fair value of $136.3 million) and an aggregate of $62.1 million in cash and cash equivalents.

With the $45.0 million credit facility and the $62.1 million of cash and cash equivalents, Saratoga Investment has a total of $107.1 million of undrawn borrowing capacity and cash and cash equivalents available as of February 28, 2019. The net proceeds from the DRIP and ATM equity program totaled $32.9 million and $3.7 million of equity issuances for the year and quarter ended February 28, 2019, respectively. Saratoga Investment also has the ability to issue additional Baby Bonds through the existing shelf registration statement.

On March 16, 2017, we entered into an equity distribution agreement with Ladenburg Thalmann & Co. Inc., through which Saratoga may offer for sale, from time to time, up to $30.0 million of its common stock through an ATM offering. As of February 28, 2019, the Company sold 494,672 shares for gross proceeds of $11.2 million at an average price of $22.72 for aggregate net proceeds of $11.1 million (net of transaction costs).

On July 13, 2018, Saratoga Investment issued 1,150,000 shares of its common stock priced at $25.00 per share (par value $0.001 per share) at an aggregate total of $28.75 million. The net proceeds, after deducting underwriting commissions of $1.15 million and offering costs of approximately $0.2 million, amounted to approximately $27.4 million. The Company also granted the underwriters a 30-day option to purchase up to an additional 172,500 shares of its common stock, which was not exercised. 

On August 28, 2018, Saratoga Investment issued $40.0 million in aggregate principal amount of 6.25% fixed-rate notes due 2025 (the “2025 Notes”) for net proceeds of $38.7 million after deducting underwriting commissions of approximately $1.25 million and offering costs of approximately $0.3 million. The issuance included the full exercise of the underwriters’ option to purchase an additional $5.0 million aggregate principal amount of 2025 Notes within 30 days. Interest on the 2025 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 6.25% per year, beginning November 30, 2018. The 2025 Notes mature on August 31, 2025, and commencing August 28, 2021, may be redeemed in whole or in part, at any time or from time to time, at its option. The 2025 Notes are listed on the NYSE under the trading symbol “SAF” with a par value of $25.00 per share.

On February 5, 2019, Saratoga Investment completed a re-opening and up-sizing of its existing 2025 Notes by issuing an additional $20.0 million in aggregate principal amount for net proceeds of $19.2 million after deducting underwriting commissions of approximately $0.6 million and discount of $0.2 million. Offering costs incurred were approximately $0.2 million. The issuance included the full exercise of the underwriters’ option to purchase an additional $2.5 million aggregate principal amount of 2025 Notes within 30 days. Interest rate, interest payment dates and maturity remain unchanged from the existing 2025 Notes issued in August 2018.

On September 27, 2018, the SBA issued a “green light” letter inviting Saratoga Investment to file a formal license application for a second SBIC license. If approved, the additional SBIC license would provide the Company with an incremental source of long-term capital by permitting us to issue, subject to SBA approval, up to $175.0 million of additional SBA-guaranteed debentures in addition to the $150.0 million already approved under the Company’s first license. Receipt of a green light letter from the SBA does not assure an applicant that the SBA will ultimately issue an SBIC license and the Company has received no assurance or indication from the SBA that it will receive an additional SBIC license, or of the timeframe in which it would receive an additional license, should one ultimately be granted. 

Dividend

During fiscal year 2019, Saratoga Investment declared and paid quarterly cash dividends of $2.06 per share, including $0.50 per share for the quarter ended February 28, 2018, $0.51 per share for the quarter ended May 31, 2018, $0.52 per share for the quarter ended August 31, 2018 and $0.53 per share for the quarter ended November 30, 2018.

On February 26, 2019, our board of directors declared a dividend of $0.54 per share for the quarter ended February 28, 2019, which was paid on March 28, 2019. Shareholders have the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant the Company’s DRIP.

Share Repurchase Plan

In fiscal year 2015, the Company announced the approval of an open market share repurchase plan that allows it to repurchase up to 200,000 shares of its common stock at prices below its NAV as reported in its then most recently published financial statements. During fiscal year 2018, the share repurchase plan was increased to 600,000 shares of common stock, and during fiscal year 2019, this share repurchase plan was extended for another year, through January 2020, at the same level of approval. As of February 28, 2019, the Company purchased 218,491 shares of common stock, at the average price of $16.87 for approximately $3.7 million pursuant to this repurchase plan.

We made no purchases of common stock in the open market during the year ended February 28, 2019.

2019 Fiscal Year End and Fourth Quarter Conference Call/Webcast Information

When:     Thursday, May 9, 2018, 10:00 a.m. Eastern Daylight Time (EDT) 

Call:     Interested parties may participate by dialing (877) 312-9208 (U.S. and Canada) or (678) 224-7872 (outside U.S. and Canada). 

A replay of the call will be available from 1:00 p.m. EDT on Thursday, May 9, 2019, through 1:00 p.m. ET on Thursday, May 16, 2019, by dialing (855) 859-2056 (U.S. and Canada) or (404) 537-3406 (outside U.S. and Canada), passcode for both replay numbers: 3985768. 

Webcast:     Interested parties may access a simultaneous webcast of the call and find the FY and Q4 2019 presentation by going to the ?Events & Presentations? section of Saratoga Investment Corp.?s investor relations website, http://ir.saratogainvestmentcorp.com/events-presentations

About Saratoga Investment Corp.

Saratoga Investment is a specialty finance company that provides customized financing solutions to U.S. middle-market businesses. The Company invests primarily in senior and unitranche leveraged loans and mezzanine debt, and, to a lesser extent, equity to provide financing for change of ownership transactions, strategic acquisitions, recapitalizations and growth initiatives in partnership with business owners, management teams and financial sponsors.  Saratoga Investment’s objective is to create attractive risk-adjusted returns by generating current income and long-term capital appreciation from its debt and equity investments.  Saratoga Investment has elected to be regulated as a business development company under the Investment Company Act of 1940 and is externally-managed by Saratoga Investment Advisors, LLC, an SEC-registered investment advisor focusing on credit-driven strategies.  Saratoga Investment owns an SBIC-licensed subsidiary and manages a $500 million collateralized loan obligation (“CLO”) fund.  It also owns 100% of the Class F-R-2, G-R-2 and subordinated notes of the CLO.  The Company’s diverse funding sources, combined with a permanent capital base, enable Saratoga Investment to provide a broad range of financing solutions.

Forward-Looking Statements

This press release contains certain forward-looking statements. These forward-looking statements are subject to risks and uncertainties and other factors enumerated in this press release that could cause our actual results to differ materially from those expressed or implied in such statements. Additional information is contained in the filings Saratoga Investment Corp. makes with the SEC. Saratoga Investment Corp. undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 
  

Financials

Saratoga Investment Corp.
Consolidated Statements of Assets and Liabilities

		February 28, 2019				February 28, 2018
ASSETS
Investments at fair value
Non-control/Non-affiliate investments (amortized cost of $307,136,188 and $281,534,277, respectively)		$	306,511,427			$	286,061,722
Affiliate investments (amortized cost of $18,514,716 and $18,358,611, respectively)			11,463,081				12,160,564
Control investments (amortized cost of $76,265,189 and $39,797,229, respectively)			84,045,212				44,471,767
Total investments at fair value (amortized cost of $401,916,093 and $339,690,117, respectively)			402,019,720				342,694,053
Cash and cash equivalents			30,799,068				3,927,579
Cash and cash equivalents, reserve accounts			31,295,326				9,849,912
Interest receivable (net of reserve of $647,210 and $1,768,021, respectively)			3,746,604				3,047,125
Due from affiliate			1,673,747				-
Management and incentive fee receivable			542,094				233,024
Other assets			595,543				584,668
Total assets		$	470,672,102			$	360,336,361
LIABILITIES
Revolving credit facility		$	-			$	-
Deferred debt financing costs, revolving credit facility			(605,189	)			(697,497	)
SBA debentures payable			150,000,000				137,660,000
Deferred debt financing costs, SBA debentures payable			(2,396,931	)			(2,611,120	)
2023 Notes payable			74,450,500				74,450,500
Deferred debt financing costs, 2023 notes payable			(1,919,620	)			(2,316,370	)
2025 Notes payable			60,000,000				-
Deferred debt financing costs, 2025 notes payable			(2,377,551	)			-
Base management and incentive fees payable			6,684,785				5,776,944
Deferred tax liability			739,716				-
Accounts payable and accrued expenses			1,615,443				924,312
Interest and debt fees payable			3,224,671				3,004,354
Directors fees payable			62,000				43,500
Due to manager			319,091				410,371
Total liabilities		$	289,796,915			$	216,644,994
Commitments and contingencies (See Note 8)
NET ASSETS
Common stock, par value $.001, 100,000,000 common shares authorized, 7,657,156 and 6,257,029 common shares issued and outstanding, respectively		$	7,657			$	6,257
Capital in excess of par value			203,552,800				188,975,590
Total distributable earnings (loss)			(22,685,270	)			(45,290,480	)
Total net assets			180,875,187				143,691,367
Total liabilities and net assets		$	470,672,102			$	360,336,361
NET ASSET VALUE PER SHARE		$	23.62			$	22.96
Asset Coverage Ratio			234.5	%			293.0	%

Certain prior year numbers have been adjusted to conform with the SEC final rules on disclosure updates and simplification effective November 5, 2018. 

Saratoga Investment Corp.
Consolidated Statements of Operations

		For the year ended
		February 28, 2019				February 28, 2018				February 28, 2017
INVESTMENT INCOME
Interest from investments
Interest income:
Non-control/Non-affiliate investments		$	33,329,539			$	26,648,380			$	26,167,951
Affiliate investments			963,289				886,948				246,035
Control investments			4,785,044				4,768,534				2,281,397
Payment-in-kind interest income:
Non-control/Non-affiliate investments			780,112				984,305				652,847
Affiliate investments			150,284				80,460				-
Control investments			3,288,902				1,741,334				-
Total interest from investments			43,297,170				35,109,961				29,348,230
Interest from cash and cash equivalents			64,024				27,495				31,151
Management fee income			1,722,180				1,509,317				1,499,001
Incentive fee income			633,232				591,368				-
Other income			1,991,357				1,376,837				2,278,770
Total investment income			47,707,963				38,614,978				33,157,152
OPERATING EXPENSES
Interest and debt financing expenses			13,125,718				10,938,654				9,888,127
Base management fees			6,879,324				5,846,400				4,898,657
Incentive management fees			4,891,004				4,333,983				2,947,543
Professional fees			1,849,424				1,590,798				1,243,400
Administrator expenses			1,895,833				1,645,833				1,366,667
Insurance			253,141				259,571				275,787
Directors fees and expenses			290,500				197,500				235,422
General & administrative			1,224,462				1,058,009				1,121,594
Income tax benefit			(1,027,118	)			-				-
Excise tax expense (credit)			-				(14,738	)			44,770
Other expense			23,466				27,310				19,780
Total operating expenses			29,405,754				25,883,320				22,041,747
Loss on extinguishment of debt			-				-				1,454,595
NET INVESTMENT INCOME			18,302,209				12,731,658				9,660,810
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) from investments:
Non-control/Non-affiliate investments			4,874,305				(5,877,734	)			12,368,115
Control investments			-				166				-
Net realized gain (loss) from investments			4,874,305				(5,877,568	)			12,368,115
Net change in unrealized appreciation (depreciation) on investments:
Non-control/Non-affiliate investments			(5,152,206	)			6,178,457				(11,687,337	)
Affiliate investments			(853,588	)			818,323				(3,141	)
Control investments			3,105,485				3,828,275				1,049,034
Net change in unrealized appreciation (depreciation) on investments			(2,900,309	)			10,825,055				(10,641,444	)
Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments			(1,766,835	)			-				-
Net realized and unrealized gain (loss) on investments			207,161				4,947,487				1,726,671
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS		$	18,509,370			$	17,679,145			$	11,387,481
WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE		$	2.63			$	2.93			$	1.98
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED			7,046,686				6,024,040				5,740,450

Saratoga Investment Corp.
Consolidated Statements of Operations

		For the three months ended
		February 28, 2019				February 28, 2018
INVESTMENT INCOME
Interest from investments
Interest income:
Non-control/Non-affiliate investments		$	8,628,236			$	7,168,988
Affiliate investments			242,551				223,833
Control investments			1,444,864				919,247
Payment-in-kind interest income:
Non-control/Non-affiliate investments			158,650				210,723
Affiliate investments			39,386				32,173
Control investments			1,017,543				736,570
Total interest from investments			11,531,230				9,291,534
Interest from cash and cash equivalents			22,619				7,144
Management fee income			592,259				381,233
Incentive fee income			139,386				114,281
Other income			698,664				333,942
Total investment income			12,984,158				10,128,134
OPERATING EXPENSES
Interest and debt financing expenses			3,922,981				2,693,304
Base management fees			1,851,983				1,488,170
Incentive management fees			2,087,220				1,393,633
Professional fees			430,952				410,885
Administrator expenses			500,000				437,500
Insurance			63,225				62,664
Directors fees and expenses			60,000				43,500
General & administrative			316,288				273,938
Income tax benefit			(342,598	)			-
Excise tax expense (credit)			270				-
Other expense			2,445				3,893
Total operating expenses			8,892,766				6,807,487
NET INVESTMENT INCOME			4,091,392				3,320,647
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) from investments:
Non-control/Non-affiliate investments			4,729,298				(155,685	)
Affiliate investments			-				-
Control investments			-				(63,554	)
Net realized gain (loss) from investments			4,729,298				(219,239	)
Net change in unrealized appreciation (depreciation) on investments:
Non-control/Non-affiliate investments			(2,724,083	)			1,401,934
Affiliate investments			271,652				877,612
Control investments			2,094,551				151,255
Net change in unrealized appreciation (depreciation) on investments			(357,880	)			2,430,801
Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments			(607,254	)			-
Net realized and unrealized gain (loss) on investments			3,764,164				2,211,562
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS		$	7,855,556			$	5,532,209
WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE		$	1.04			$	0.89
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED			7,534,235				6,243,896

  

Saratoga Investment Corp.

Consolidated Schedule of Investments

February 28, 2019

Company		Industry		Investment Interest Rate/ Maturity		Original Acquisition Date		Principal/ Number of Shares				Cost				Fair Value (c)				% of Net Assets
Non-control/Non-affiliate investments - 169.5% (b)
Apex Holdings Software Technologies, LLC		Business Services		First Lien Term Loan (3M USD LIBOR+8.00%), 10.62% Cash, 9/21/2021		9/21/2016		$	18,000,000			$	17,922,851			$	18,000,000				10.0	%
Apex Holdings Software Technologies, LLC		Business Services		Delayed Draw Term Loan  (3M USD LIBOR+8.00%), 10.62% Cash, 9/21/2021		10/1/2018		$	1,000,000				992,183				1,000,000				0.6	%
Avionte Holdings, LLC (h)		Business Services		Class A Units		1/8/2014			100,000				100,000				635,781				0.4	%
CLEO Communications Holding, LLC		Business Services		First Lien Term Loan (3M USD LIBOR+8.00%), 10.62% Cash/2.00% PIK, 3/31/2022		3/31/2017		$	13,514,320				13,437,153				13,514,320				7.5	%
CLEO Communications Holding, LLC		Business Services		Delayed Draw Term Loan (3M USD LIBOR+8.00%), 10.62% Cash/2.00% PIK, 3/31/2022		3/31/2017		$	12,142,015				12,040,280				12,142,015				6.7	%
Destiny Solutions Inc. (a)		Business Services		First Lien Term Loan (3M USD LIBOR+7.00%), 9.62% Cash, 5/16/2023		5/16/2018		$	8,500,000				8,426,441				8,489,800				4.7	%
Destiny Solutions Inc. (a), (j)		Business Services		Delayed Draw Term Loan (3M USD LIBOR+7.00%), 9.62% Cash, 5/16/2023		5/16/2018		$	-				-				-				0.0	%
Destiny Solutions Inc. (a), (h), (i)		Business Services		Limited Partner Interests		5/16/2018			999,000				999,000				1,062,440				0.6	%
Emily Street Enterprises, L.L.C.		Business Services		Senior Secured Note (3M USD LIBOR+8.50%), 11.12% Cash, 1/23/2020		12/28/2012		$	3,300,000				3,299,122				3,314,520				1.8	%
Emily Street Enterprises, L.L.C. (h)		Business Services		Warrant Membership Interests Expires 12/28/2022		12/28/2012			49,318				400,000				505,509				0.3	%
Erwin, Inc. (d)		Business Services		Second Lien Term Loan (3M USD LIBOR+11.50%), 14.12% Cash/1.00% PIK, 8/28/2021		2/29/2016		$	15,888,102				15,796,316				15,888,102				8.8	%
FMG Suite Holdings, LLC (d)		Business Services		Second Lien Term Loan (1M USD LIBOR+8.00%), 10.49% Cash, 11/16/2023		5/16/2018		$	23,000,000				22,844,123				23,000,000				12.7	%
GDS Holdings US, LLC (d)		Business Services		First Lien Term Loan (3M USD LIBOR+7.00%), 9.62% Cash, 8/23/2023		8/23/2018		$	7,500,000				7,430,649				7,495,500				4.0	%
GDS Holdings US, LLC (j)		Business Services		Delayed Draw Term Loan (3M USD LIBOR+7.00%), 9.62% Cash, 8/23/2023		8/23/2018		$	-				-				-				0.0	%
GDS Software Holdings, LLC (h)		Business Services		Common Stock Class A Units		8/23/2018			250,000				250,000				277,139				0.2	%
Identity Automation Systems (h)		Business Services		Common Stock Class A Units		8/25/2014			232,616				232,616				629,555				0.3	%
Identity Automation Systems (d)		Business Services		First Lien Term Loan (3M USD LIBOR+9.00%), 11.62% Cash, 3/31/2021		8/25/2014		$	24,100,000				23,991,294				24,100,000				13.3	%
Knowland Group, LLC		Business Services		Second Lien Term Loan (3M USD LIBOR+8.00%), 10.62% Cash, 5/9/2024		11/9/2018		$	15,000,000				15,000,000				15,000,000				8.3	%
Microsystems Company		Business Services		Second Lien Term Loan  (3M USD LIBOR+8.25%), 10.87% Cash, 7/1/2022		7/1/2016		$	18,000,000				17,889,554				17,881,200				9.9	%
National Waste Partners (d)		Business Services		Second Lien Term Loan 10.00% Cash, 2/13/2022		2/13/2017		$	9,000,000				8,942,155				8,864,100				4.9	%
Omatic Software, LLC		Business Services		First Lien Term Loan (3M USD LIBOR+8.00%), 10.62% Cash, 5/29/2023		5/29/2018		$	5,500,000				5,451,758				5,537,400				3.1	%
Omatic Software, LLC (j)		Business Services		Delayed Draw Term Loan  (3M USD LIBOR+8.00%), 10.62% Cash, 5/29/2023		5/29/2018		$	-				-				-				0.0	%
Passageways, Inc.		Business Services		First Lien Term Loan (3M USD LIBOR+7.75%), 10.37% Cash, 7/5/2023		7/5/2018		$	5,000,000				4,955,204				5,063,500				2.8	%
Passageways, Inc. (h)		Business Services		Series A Preferred Stock		7/5/2018			2,027,205				1,000,000				1,339,705				0.7	%

  

Saratoga Investment Corp.
Consolidated Schedule of Investments
February 28, 2019

Company		Industry		Investment Interest Rate/ Maturity		Original Acquisition Date		Principal/ Number of Shares				Cost				Fair Value (c)				% of Net Assets
Vector Controls Holding Co., LLC (d)		Business Services		First Lien Term Loan  11.50% (9.75% Cash/1.75% PIK), 3/6/2022		3/6/2013		$	9,311,956				9,310,703				9,371,929				5.2	%
Vector Controls Holding Co., LLC (h)		Business Services		Warrants to Purchase Limited Liability Company Interests, Expires 11/30/2027		5/31/2015			343				-				2,210,149				1.2	%
				Total Business Services									190,711,402				195,322,664				108.0	%
Targus Holdings, Inc. (h)		Consumer Products		Common Stock		12/31/2009			210,456				1,713,605				505,094				0.3	%
				Total Consumer Products									1,713,605				505,094				0.3	%
My Alarm Center, LLC (k)		Consumer Services		Preferred Equity Class A Units 8.00% PIK		7/14/2017			2,227				2,357,879				1,112,543				0.6	%
My Alarm Center, LLC (h)		Consumer Services		Preferred Equity Class B Units		7/14/2017			1,797				1,796,880				-				0.0	%
My Alarm Center, LLC		Consumer Services		Preferred Equity Class Z Units 25.00% PIK		9/12/2018			676				655,987				2,053,514				1.1	%
My Alarm Center, LLC (h)		Consumer Services		Common Stock		7/14/2017			96,224				-				-				0.0	%
				Total Consumer Services									4,810,746				3,166,057				1.7	%
C2 Educational Systems (d)		Education		First Lien Term Loan (3M USD LIBOR+7.00%), 9.62% Cash, 5/31/2020		5/31/2017		$	16,000,000				15,929,485				16,032,000				8.9	%
Kev Software Inc. (a),		Education		First Lien Term Loan (1M USD LIBOR+8.63%), 11.12% Cash, 9/13/2023		9/13/2018		$	21,446,929				21,273,211				21,438,351				11.9	%
M/C Acquisition Corp., L.L.C. (h)		Education		Class A Common Stock		6/22/2009			544,761				30,241				-				0.0	%
M/C Acquisition Corp., L.L.C. (k)		Education		First Lien Term Loan 1.00% Cash, 3/31/2020		8/10/2004		$	2,315,090				1,189,177				6,260				0.0	%
Texas Teachers of Tomorrow, LLC (h), (i)		Education		Common Stock		12/2/2015			750,000				750,000				792,165				0.4	%
Texas Teachers of Tomorrow, LLC		Education		Second Lien Term Loan (3M USD LIBOR+9.75%), 12.37% Cash, 6/2/2021		12/2/2015		$	10,000,000				9,952,251				9,807,000				5.4	%
				Total Education									49,124,365				48,075,776				26.6	%
TMAC Acquisition Co., LLC (k)		Food and Beverage		Unsecured Term Loan 8.00% PIK, 9/01/2023		3/1/2018		$	2,216,427				2,216,427				2,100,286				1.2	%
				Total Food and Beverage									2,216,427				2,100,286				1.2	%
Axiom Parent Holdings, LLC (h)		Healthcare Services		Common Stock Class A Units		6/19/2018			400,000				400,000				402,990				0.2	%
Axiom Purchaser, Inc. (d)		Healthcare Services		First Lien Term Loan (3M USD LIBOR+6.00%), 8.62% Cash, 6/19/2023		6/19/2018		$	10,000,000				9,923,962				10,020,000				5.5	%
Axiom Purchaser, Inc. (j)		Healthcare Services		Delayed Draw Term Loan (3M USD LIBOR+6.00%), 8.62% Cash, 6/19/2023		6/19/2018		$	-				-				-				0.0	%
Censis Technologies, Inc.		Healthcare Services		First Lien Term Loan B (1M USD LIBOR+8.30%), 10.79% Cash, 9/27/2023		7/25/2014		$	19,950,000				19,877,861				19,991,895				11.1	%
Censis Technologies, Inc. (h), (i)		Healthcare Services		Limited Partner Interests		7/25/2014			999				999,000				2,387,705				1.3	%
ComForCare Health Care		Healthcare Services		First Lien Term Loan (3M USD LIBOR+7.50%), 10.12% Cash, 1/31/2022		1/31/2017		$	15,000,000				14,898,535				15,096,000				8.3	%
Ohio Medical, LLC (h)		Healthcare Services		Common Stock		1/15/2016			5,000				500,000				208,250				0.1	%
Ohio Medical, LLC		Healthcare Services		Senior Subordinated Note 12.00% Cash, 7/15/2021		1/15/2016		$	7,300,000				7,263,114				6,735,710				3.8	%
Roscoe Medical, Inc. (h)		Healthcare Services		Common Stock		3/26/2014			5,081				508,077				-				0.0	%
Roscoe Medical, Inc. (k)		Healthcare Services		Second Lien Term Loan 11.25% Cash, 3/28/2021		3/26/2014		$	4,200,000				4,189,094				2,499,000				1.4	%
				Total Healthcare Services									58,559,643				57,341,550				31.7	%
Sub Total Non-control/Non-affiliate investments													307,136,188				306,511,427				169.5	%

  

Saratoga Investment Corp. 
Consolidated Schedule of Investments 
February 28, 2019

Company		Industry		Investment Interest Rate/ Maturity		Original Acquisition Date		Principal/ Number of Shares				Cost				Fair Value (c)				% of Net Assets
Affiliate investments - 6.4% (b)
GreyHeller LLC (f)		Business Services		First Lien Term Loan (3M USD LIBOR+11.00%), 13.62% Cash, 11/16/2021		11/17/2016		$	7,000,000				6,956,976				7,140,000				4.0	%
GreyHeller LLC (f), (h)		Business Services		Series A Preferred Units		11/17/2016			850,000				850,000				1,496,169				0.8	%
				Total Business Services									7,806,976				8,636,169				4.8	%
Elyria Foundry Company, L.L.C. (f), (h)		Metals		Common Stock		7/30/2010			60,000				9,685,028				1,804,200				1.0	%
Elyria Foundry Company, L.L.C. (d), (f)		Metals		Second Lien Term Loan 15.00% PIK, 8/10/2022		7/30/2010		$	1,022,712				1,022,712				1,022,712				0.6	%
				Total Metals									10,707,740				2,826,912				1.6	%
Sub Total Affiliate investments													18,514,716				11,463,081				6.4	%
Control investments - 46.5% (b)
Easy Ice, LLC (g)		Business Services		Preferred Equity 10.00% PIK		2/3/2017			5,080,000				9,683,612				13,357,444				7.4	%
Easy Ice, LLC (d), (g)		Business Services		Second Lien Term Loan 7.03% Cash/5.97% PIK, 2/28/2023		3/29/2013		$	21,184,063				21,126,021				21,268,799				11.8	%
Easy Ice Masters, LLC (d), (g)		Business Services		Second Lien Term Loan 7.03% Cash/5.97% PIK, 2/28/2023		10/31/2018		$	3,804,244				3,768,025				3,819,461				2.1	%
Netreo Holdings, LLC (g)		Business Services		First Lien Term Loan (3M USD LIBOR +6.25%), 9.00% Cash/2.00% PIK, 7/3/2023		7/3/2018		$	5,067,057				5,021,133				5,092,899				2.8	%
Netreo Holdings, LLC (g), (h)		Business Services		Common Stock Class A Unit		7/3/2018			3,150,000				3,150,000				5,179,101				2.9	%
				Total Business Services									42,748,791				48,717,704				27.0	%
Saratoga Investment Corp. CLO 2013-1, Ltd. (a), (e), (g)		Structured Finance Securities		Other/Structured Finance Securities 16.67%, 1/20/2030		1/22/2008		$	69,500,000				23,516,398				25,393,508				14.0	%
Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-R-2 Note (a), (g)		Structured Finance Securities		Other/Structured Finance Securities (3M USD LIBOR+8.75%), 11.37%, 1/20/2030		12/14/2018		$	2,500,000				2,500,000				2,483,500				1.4	%
Saratoga Investment Corp. CLO 2013-1, Ltd. Class G-R-2 Note (a), (g)		Structured Finance Securities		Other/Structured Finance Securities (3M USD LIBOR+10.00%), 12.62%, 1/20/2030		12/14/2018		$	7,500,000				7,500,000				7,450,500				4.1	%
				Total Structured Finance Securities									33,516,398				35,327,508				19.5	%
Sub Total Control investments													76,265,189				84,045,212				46.5	%
TOTAL INVESTMENTS - 222.4% (b)												$	401,916,093			$	402,019,720				222.4	%

		Number of Shares				Cost				Fair Value				% of Net Assets
Cash and cash equivalents and cash and cash equivalents, reserve accounts - 34.3% (b)
U.S. Bank Money Market (l)			62,094,394			$	62,094,394			$	62,094,394				34.3	%
Total cash and cash equivalents and cash and cash equivalents, reserve accounts			62,094,394			$	62,094,394			$	62,094,394				34.3	%

(a)       Represents a non-qualifying investment as defined under Section 55(a) of the Investment Company Act of 1940, as amended. As of February 28, 2019, non-qualifying assets represent 16.5% of the Company's portfolio at fair value. As a BDC, the Company can only invest 30% of its portfolio in non-qualifying assets.
(b)       Percentages are based on net assets of $180,875,187 as of February 28, 2019.
(c)       Because there is no readily available market value for these investments, the fair values of these investments were determined using significant unobservable inputs and approved in good faith by our board of directors.  These investments have been included as Level 3 in the Fair Value Hierarchy.
(d)       These securities are either fully or partially pledged as collateral under a senior secured revolving credit facility.
(e)       This investment does not have a stated interest rate that is payable thereon. As a result, the 16.67% interest rate in the table above represents the effective interest rate currently earned on the investment cost and is based on the current cash interest and other income generated by the investment. 
(f)       As defined in the Investment Company Act, this portfolio company is an Affiliate as we own between 5.0% and 25.0% of the voting securities. Transactions during the year ended February 28, 2019 in which the issuer was an Affiliate are as follows: 

Company		Purchases				Sales				Total Interest from Investments				Management and Incentive Fee Income				Net Realized  Gain (Loss) from Investments				Net Change in Unrealized Appreciation (Depreciation)
GreyHeller LLC		$	-			$	-			$	963,289			$	-			$	-			$	776,012
Elyria Foundry Company, L.L.C.			-				-				150,284				-				-				(1,629,600	)
Total		$	-			$	-			$	1,113,573			$	-			$	-			$	(853,588	)

(g)       As defined in the Investment Company Act, we "Control" this portfolio company because we own more than 25% of the portfolio company's outstanding voting securities. Transactions during the year ended February 28, 2019 in which the issuer was both an Affiliate and a portfolio company that we Control are as follows:

Company		Purchases				Sales				Total Interest from Investments				Management and Incentive Fee Income				Net Realized  Gain (Loss) from Investments				Net Change in Unrealized Appreciation (Depreciation)
Easy Ice, LLC		$	1,684,448			$	-			$	3,424,369			$	-			$	-			$	1,720,004
Easy Ice Masters, LLC			3,629,682				-				161,468				-				-				51,436
Netreo Holdings, LLC			8,100,000				-				374,843				-				-				2,100,867
Saratoga Investment Corp. CLO 2013-1, Ltd.			14,268,609				(48,083	)			2,922,372				2,355,412				-				(701,722	)
Saratoga Investment Corp. CLO 2013-1, Ltd. Class F Note			-				(4,500,000	)			412,069				-				-				900
Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-R-2 Notes			2,500,000				-				61,761				-				-				(16,500	)
Saratoga Investment Corp. CLO 2013-1, Ltd. Class G-R-2 Notes			7,500,000				-				205,333				-				-				(49,500	)
Saratoga Investment Corp. CLO 2013-1 Warehouse, Ltd.			20,000,000				(20,000,000	)			511,731				-				-				-
Total		$	57,682,739			$	(24,548,083	)		$	8,073,946			$	2,355,412			$	-			$	3,105,485

  

(h)       Non-income producing at February 28, 2019.
(i)       Includes securities issued by an affiliate of the Company.
(j)       All or a portion of this investment has an unfunded commitment as of February 28, 2019.
(k)       As of February 28, 2019, the investment was on non-accrual status. The fair value of these investments was approximately $5.7 million, which represented 1.4% of the Company's portfolio.
(l)       Included within cash and cash equivalents and cash and cash equivalents, reserve accounts in the Company's consolidated statements of assets and liabilities as of February 28, 2019. 

LIBOR - London Interbank Offered Rate

1M USD LIBOR - The 1 month USD LIBOR rate as of February 28, 2019 was 2.49%.
3M USD LIBOR - The 3 month USD LIBOR rate as of February 28, 2019 was 2.62%.
PIK - Payment-in-Kind 

Supplemental Information Regarding Adjusted Net Investment Income, Adjusted Net Investment Income Yield and Adjusted Net Investment Income per share

On a supplemental basis, we provide information relating to adjusted net investment income, adjusted net investment income yield, and adjusted net investment income per share, which are non-GAAP measures. These measures are provided in addition to, but not as a substitute for, net investment income, net investment income yield, and net investment income per share. Adjusted net investment income represents net investment income excluding any capital gains incentive fee expense or reversal attributable to unrealized gains. The management agreement with Saratoga Investment’s advisor provides that a capital gains incentive fee is determined and paid annually with respect to cumulative realized capital gains (but not unrealized capital gains) to the extent such realized capital gains exceed realized and unrealized losses for such year. In addition, we accrue, but do not pay, a capital gains incentive fee in connection with any unrealized capital appreciation, as appropriate. As such, we believe that adjusted net investment income, adjusted net investment income yield, and adjusted net income per share is a useful indicator of operations exclusive of any capital gains incentive fee expense or reversal attributable to unrealized gains. In addition, for fiscal 2017, adjusted net investment income also excludes the loss on extinguishment of Saratoga Investment’s 2020 Notes, and the interest expense related to the 2020 Notes during the call notice period while the 2023 Notes were already issued and outstanding. Both these expenses are directly attributable to the issuance of the 2023 Notes and the subsequent repayment of the 2020 Notes, and are deemed to be non-recurring in nature and not representative of the operations of Saratoga Investment. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. The following table provides a reconciliation of net investment income to adjusted net investment income, net investment income yield to adjusted net investment income yield, and net investment income per share to adjusted net investment income per share for the years and quarters ended February 28, 2019 and February 28, 2018, and the year ended February 28, 2017. 

		For the years ended February 28
		2019				2018				2017
Net Investment Income		$	18,302,209			$	12,731,658			$	9,660,810
Changes in accrued capital gains incentive fee expense/ reversal			251,090				919,806				133,937
Loss on extinguishment of debt			-				-				1,454,595
Interest on 2020 notes during call period(3)			-				-				268,895
Adjusted net investment income			18,553,299				13,651,464				11,518,237
Net investment income yield			10.5	%			9.5	%			7.6	%
Changes in accrued capital gains incentive fee expense/ reversal			0.1	%			0.7	%			0.1	%
Loss on extinguishment of debt			-				-				1.2	%
Interest on 2020 notes during call period(3)			-				-				0.2	%
Adjusted net investment income yield (1)			10.6	%			10.2	%			9.1	%
Net investment income per share		$	2.60			$	2.11			$	1.68
Changes in accrued capital gains incentive fee expense/ reversal			0.03				0.16				0.03
Loss on extinguishment of debt			-				-				0.25
Interest on 2020 notes during call period(3)			-				-				0.05
Adjusted net investment income per share (2)		$	2.63			$	2.27			$	2.01

  
(1)       Adjusted net investment income is calculated as adjusted net investment income divided by average net asset value.
(2)       Adjusted net investment income per share is calculated as adjusted net investment income divided by weighted average common shares outstanding.
(3)       Interest on 2020 notes during call period is presented net of the incentive fee accrual
   

		For the quarters ended February 28
		2019				2018
Net Investment Income		$	4,091,392			$	3,320,647
Changes in accrued capital gains incentive fee expense/ reversal			851,151				450,502
Loss on extinguishment of debt			-				-
Interest on 2020 notes during call period(3)			-				-
Adjusted net investment income			4,942,543				3,771,149
Net investment income yield			9.2	%			9.4	%
Changes in accrued capital gains incentive fee expense/ reversal			2.0	%			1.3	%
Loss on extinguishment of debt			-				-
Interest on 2020 notes during call period(3)			-				-
Adjusted net investment income yield (1)			11.2	%			10.7	%
Net investment income per share		$	0.54			$	0.53
Changes in accrued capital gains incentive fee expense/ reversal			0.12				0.07
Loss on extinguishment of debt			-				-
Interest on 2020 notes during call period(3)			-				-
Adjusted net investment income per share (2)		$	0.66			$	0.60

    
(1)       Adjusted net investment income is calculated as adjusted net investment income divided by average net asset value.
(2)       Adjusted net investment income per share is calculated as adjusted net investment income divided by weighted average common shares outstanding.
(3)       Interest on 2020 notes during call period is presented net of the incentive fee accrual

Contact: Henri Steenkamp
Saratoga Investment Corp.
212-906-7800

Roland Tomforde
Broadgate Consultants
212-232-2222

Source: Saratoga Investment Corp