SEC Filing | Saratoga Investment Corp

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Form 10-Q

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 May 31, 2019

☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File No. 001-33376

SARATOGA INVESTMENT CORP.

(Exact name of Registrant as specified in its charter)

Maryland

20-8700615

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

535 Madison Avenue

New York, New York 10022

(Address of principal executive offices)

(212) 906-7800

(Registrant’s telephone number, including area code)

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	SAR	The New York Stock Exchange
6.75% Notes due 2023	SAB	The New York Stock Exchange
6.25% Notes due 2025	SAF	The New York Stock Exchange

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 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. (Check one):

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 Act). Yes ☐ No ☒

The number of outstanding common shares of the registrant as of July 9, 2019 was 8,018,188.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION


		Page

PART I.	FINANCIAL INFORMATION		3

Item 1.	Consolidated Financial Statements		3

	Consolidated Statements of Assets and Liabilities as of May 31, 2019 (unaudited) and February 28, 2019		3

	Consolidated Statements of Operations for the three months ended May 31, 2019 (unaudited) and May 31, 2018 (unaudited)		4

	Consolidated Schedules of Investments as of May 31, 2019 (unaudited) and February 28, 2019		5

	Consolidated Statements of Changes in Net Assets for the three months ended May 31, 2019 (unaudited) and May 31, 2018 (unaudited)		18

	Consolidated Statements of Cash Flows for the three months ended May 31, 2019 (unaudited) and May 31, 2018 (unaudited)		19

	Notes to Consolidated Financial Statements as of May 31, 2019 (unaudited)		20

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		76

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		107

Item 4.	Controls and Procedures		109

PART II.	OTHER INFORMATION		110

Item 1.	Legal Proceedings		110

Item 1A.	Risk Factors		110

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		110

Item 3.	Defaults Upon Senior Securities		110

Item 4.	Mine Safety Disclosures		110

Item 5.	Other Information		110

Item 6.	Exhibits		111

Signatures			114

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Saratoga Investment Corp.

Consolidated Statements of Assets and Liabilities


	May 31, 2019			February 28, 2019
	(unaudited)
ASSETS
Investments at fair value
Non-control/Non-affiliate investments (amortized cost of $308,061,752 and $307,136,188, respectively)	$	309,830,182		$	306,511,427
Affiliate investments (amortized cost of $18,557,809 and $18,514,716, respectively)		11,676,118			11,463,081
Control investments (amortized cost of $78,739,023 and $76,265,189, respectively)		87,945,041			84,045,212

Total investments at fair value (amortized cost of $405,358,584 and $401,916,093, respectively)		409,451,341			402,019,720
Cash and cash equivalents		37,183,604			30,799,068
Cash and cash equivalents, reserve accounts		23,812,643			31,295,326
Interest receivable (net of reserve of $873,414 and $647,210, respectively)		3,815,502			3,746,604
Due from affiliate (See Note 6)		1,243,197			1,673,747
Management and incentive fee receivable		279,828			542,094
Other assets		550,093			595,543

Total assets	$	476,336,208		$	470,672,102

LIABILITIES
Revolving credit facility	$	—		$	—
Deferred debt financing costs, revolving credit facility		(581,922	)		(605,189	)
SBA debentures payable		150,000,000			150,000,000
Deferred debt financing costs, SBA debentures payable		(2,274,866	)		(2,396,931	)
2023 Notes payable		74,450,500			74,450,500
Deferred debt financing costs, 2023 notes payable		(1,819,617	)		(1,919,620	)
2025 Notes payable		60,000,000			60,000,000
Deferred debt financing costs, 2025 notes payable		(2,320,888	)		(2,377,551	)
Base management and incentive fees payable		7,522,070			6,684,785
Deferred tax liability		762,783			739,716
Accounts payable and accrued expenses		1,430,701			1,615,443
Interest and debt fees payable		1,978,494			3,224,671
Directors fees payable		63,500			62,000
Due to manager		341,752			319,091

Total liabilities	$	289,552,507		$	289,796,915

Commitments and contingencies (See Note 8)

NET ASSETS
Common stock, par value $.001, 100,000,000 common shares authorized, 7,764,844 and 7,657,156 common shares issued and outstanding, respectively	$	7,765		$	7,657
Capital in excess of par value		205,988,350			203,552,800
Total distributable earnings (loss)		(19,212,414	)		(22,685,270	)

Total net assets		186,783,701			180,875,187

Total liabilities and net assets	$	476,336,208		$	470,672,102

NET ASSET VALUE PER SHARE	$	24.06		$	23.62

See accompanying notes to consolidated financial statements.

Saratoga Investment Corp.

Consolidated Statements of Operations

(unaudited)


	For the three months ended
	May 31, 2019			May 31, 2018
INVESTMENT INCOME
Interest from investments
Interest income:
Non-control/Non-affiliate investments	$	8,527,740		$	7,405,909
Affiliate investments		249,325			239,350
Control investments		1,648,146			1,146,665
Payment-in-kind interest income:
Non-control/Non-affiliate investments		151,897			216,010
Affiliate investments		40,150			34,147
Control investments		985,869			564,857

Total interest from investments		11,603,127			9,606,938
Interest from cash and cash equivalents		51,359			16,293
Management fee income		629,516			385,194
Incentive fee income		—			199,183
Other income		467,182			280,410

Total investment income		12,751,184			10,488,018

OPERATING EXPENSES
Interest and debt financing expenses		3,864,576			2,722,792
Base management fees		1,812,169			1,532,468
Incentive management fees		2,113,169			1,072,612
Professional fees		395,126			542,797
Administrator expenses		500,000			437,500
Insurance		64,619			63,859
Directors fees and expenses		60,000			95,500
General & administrative		258,601			347,850
Income tax expense (benefit)		2,136			(267,310	)
Excise tax expense (credit)		—			(270	)
Other expense		—			12,572

Total operating expenses		9,070,396			6,560,370

NET INVESTMENT INCOME		3,680,788			3,927,648

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) from investments:
Non-control/Non-affiliate investments		—			212,008

Net realized gain (loss) from investments		—			212,008
Net change in unrealized appreciation (depreciation) on investments:
Non-control/Non-affiliate investments		2,393,191			303,705
Affiliate investments		169,944			(475,562	)
Control investments		1,425,995			815,062

Net change in unrealized appreciation (depreciation) on investments		3,989,130			643,205
Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments		(20,930	)		(940,546	)

Net realized and unrealized gain (loss) on investments		3,968,200			(85,333	)

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	7,648,988		$	3,842,315

WEIGHTED AVERAGE—BASIC AND DILUTED EARNINGS PER COMMON SHARE	$	0.99		$	0.61
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—BASIC AND DILUTED		7,746,187			6,275,494

See accompanying notes to consolidated financial statements.

Saratoga Investment Corp.

Consolidated Schedule of Investments

May 31, 2019

(unaudited)


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—165.9% (b)

Apex Holdings Software Technologies, LLC	Business Services	First Lien Term Loan (3M USD LIBOR+8.00%), 10.50% Cash, 9/21/2021		9/21/2016	$	18,000,000	$	17,932,070	$	18,000,000		9.7	%

Apex Holdings Software Technologies, LLC	Business Services	Delayed Draw Term Loan (3M USD LIBOR+8.00%), 10.50% Cash, 9/21/2021		10/1/2018	$	1,500,000		1,488,728		1,500,000		0.8	%

Avionte Holdings, LLC (h)	Business Services	Class A Units		1/8/2014		100,000		100,000		707,472		0.4	%

CLEO Communications Holding, LLC	Business Services	First Lien Term Loan (3M USD LIBOR+8.00%), 10.50% Cash/2.00% PIK, 3/31/2022		3/31/2017	$	13,583,511		13,517,395		13,583,512		7.3	%

CLEO Communications Holding, LLC	Business Services	Delayed Draw Term Loan (3M USD LIBOR+8.00%), 10.50% Cash/2.00% PIK, 3/31/2022		3/31/2017	$	12,204,179		12,105,751		12,204,179		6.5	%

Destiny Solutions Inc. (a)	Business Services	First Lien Term Loan (3M USD LIBOR+7.00%), 9.50% Cash, 5/16/2023		5/16/2018	$	8,500,000		8,429,988		8,513,600		4.6	%

Destiny Solutions Inc. (a), (j)	Business Services	Delayed Draw Term Loan (3M USD LIBOR+7.00%), 9.50% 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		1,083,543		0.6	%

Emily Street Enterprises, L.L.C.	Business Services	Senior Secured Note (3M USD LIBOR+8.50%), 11.00% Cash, 1/23/2020		12/28/2012	$	3,300,000		3,299,665		3,307,657		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		414,271		0.2	%

Erwin, Inc. (d)	Business Services	Second Lien Term Loan (3M USD LIBOR+11.50%), 14.00% Cash/1.00% PIK, 8/28/2021		2/29/2016	$	15,928,264		15,845,224		15,928,264		8.5	%

See accompanying notes to consolidated financial statements.


Company	Industry	Investment Interest Rate/ Maturity	Original Acquisition Date		Principal/ Number of Shares		Cost		Fair Value (c)		% of Net Assets
Fancy Chap, Inc.	Business Services	First Lien Term Loan (3M USD LIBOR+7.50%), 10.00% Cash, 4/8/2024		4/8/2019	$	6,000,000		5,940,434		5,991,000		3.2	%

Fancy Chap, Inc. (j)	Business Services	Delayed Draw Term Loan (3M USD LIBOR+7.50%), 10.00% Cash, 4/8/2024		4/8/2019	$	—		—		—		0.0	%

Fancy Chap, Inc. (h)	Business Services	Series C Preferred Stock		4/8/2019		38,398		925,123		2,076,658		1.1	%

FMG Suite Holdings, LLC (d)	Business Services	Second Lien Term Loan (1M USD LIBOR+8.00%), 10.43% Cash, 11/16/2023		5/16/2018	$	23,000,000		22,849,679		22,958,600		12.3	%

GDS Holdings US, Inc. (d)	Business Services	First Lien Term Loan (3M USD LIBOR+7.00%), 9.50% Cash, 8/23/2023		8/23/2018	$	7,500,000		7,435,464		7,492,500		4.0	%

GDS Holdings US, Inc.	Business Services	Delayed Draw Term Loan (3M USD LIBOR+7.00%), 9.50% Cash, 8/23/2023		3/29/2019	$	1,000,000		990,143		999,000		0.5	%

GDS Software Holdings, LLC (h)	Business Services	Common Stock Class A Units		8/23/2018		250,000		250,000		299,892		0.2	%

Identity Automation Systems (h)	Business Services	Common Stock Class A Units		8/25/2014		232,616		232,616		640,811		0.3	%

Identity Automation Systems (d)	Business Services	First Lien Term Loan (3M USD LIBOR+9.24%), 11.74% Cash, 3/31/2021		8/25/2014	$	15,500,000		15,437,640		15,500,000		8.3	%

inMotionNow, Inc.	Business Services	First Lien Term Loan (3M USD LIBOR+7.25), 9.75% Cash, 5/15/2024		5/15/2019	$	12,200,000		12,078,703		12,078,000		6.5	%

inMotionNow, Inc. (j)	Business Services	Delayed Draw Term Loan (3M USD LIBOR+7.25) 9.75% Cash, 5/15/2024		5/15/2019	$	—		—		—		0.0	%

Knowland Group, LLC	Business Services	Second Lien Term Loan (3M USD LIBOR+8.00%), 10.50% Cash, 5/9/2024		11/9/2018	$	15,000,000		15,000,000		14,953,500		8.0	%

National Waste Partners (d)	Business Services	Second Lien Term Loan 10.00% Cash, 2/13/2022		2/13/2017	$	9,000,000		8,946,185		8,853,300		4.7	%

Omatic Software, LLC	Business Services	First Lien Term Loan (3M USD LIBOR+8.00%), 10.50% Cash, 5/29/2023		5/29/2018	$	5,500,000		5,453,319		5,527,500		3.0	%

See accompanying notes to consolidated financial statements.


Company	Industry	Investment Interest Rate/ Maturity	Original Acquisition Date		Principal/ Number of Shares		Cost		Fair Value (c)		% of Net Assets
Omatic Software, LLC (j)	Business Services	Delayed Draw Term Loan (3M USD LIBOR+8.00%), 10.50% Cash, 5/29/2023		5/29/2018	$	—		—		—		0.0	%

Passageways, Inc.	Business Services	First Lien Term Loan (3M USD LIBOR+7.75%), 10.25% Cash, 7/5/2023		7/5/2018	$	5,000,000		4,956,214		5,059,500		2.7	%

Passageways, Inc. (h)	Business Services	Series A Preferred Stock		7/5/2018		2,027,205		1,000,000		1,395,128		0.7	%

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	$	9,098,356		9,097,625		9,166,594		4.9	%

Vector Controls Holding Co., LLC (h)	Business Services	Warrants to Purchase Limited Liability Company Interests, Expires 11/30/2027		5/31/2015		343		—		2,076,854		1.1	%

		Total Business Services						184,710,966		190,311,335		101.9	%

Targus Holdings, Inc. (h)	Consumer Products	Common Stock		12/31/2009		210,456		1,713,605		501,112		0.3	%

		Total Consumer Products						1,713,605		501,112		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		374,662		0.2	%

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 (h)	Consumer Services	Preferred Equity Class Z Units		9/12/2018		676		655,987		1,997,158		1.0	%

My Alarm Center, LLC (h)	Consumer Services	Common Stock		7/14/2017		96,224		—		—		0.0	%

		Total Consumer Services						4,810,746		2,371,820		1.2	%

C2 Educational Systems (d)	Education	First Lien Term Loan (3M USD LIBOR+7.00%), 9.50% Cash, 5/31/2020		5/31/2017	$	16,000,000		15,943,708		15,920,139		8.5	%

Kev Software Inc. (a)	Education	First Lien Term Loan (1M USD LIBOR+8.63%), 11.06% Cash, 9/13/2023		9/13/2018	$	21,393,178		21,226,465		21,388,899		11.5	%

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		801,908		0.4	%

See accompanying notes to consolidated financial statements.


Company	Industry	Investment Interest Rate/ Maturity	Original Acquisition Date		Principal/ Number of Shares		Cost		Fair Value (c)		% of Net Assets
Texas Teachers of Tomorrow, LLC	Education	Second Lien Term Loan (3M USD LIBOR+9.75%), 12.25% Cash, 6/2/2021		12/2/2015	$	10,000,000		9,956,443		9,953,204		5.3	%

		Total Education						49,096,034		48,070,410		25.7	%

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		2,057,888		1.1	%

		Total Food and Beverage						2,216,427		2,057,888		1.1	%

Axiom Parent Holdings, LLC (h)	Healthcare Services	Common Stock Class A Units		6/19/2018		400,000		400,000		424,155		0.2	%

Axiom Purchaser, Inc. (d)	Healthcare Services	First Lien Term Loan (3M USD LIBOR+6.00%), 8.50% Cash, 6/19/2023		6/19/2018	$	10,000,000		9,926,809		9,999,000		5.4	%

Axiom Purchaser, Inc. (j)	Healthcare Services	Delayed Draw Term Loan (3M USD LIBOR+6.00%), 8.50% Cash, 6/19/2023		6/19/2018	$	—		—		—		0.0	%

Censis Technologies, Inc.	Healthcare Services	First Lien Term Loan B (1M USD LIBOR+8.30%), 10.73% Cash, 9/27/2023		7/25/2014	$	19,900,000		19,873,291		19,963,680		10.7	%

Censis Technologies, Inc. (h), (i)	Healthcare Services	Limited Partner Interests		7/25/2014		999		999,000		4,018,452		2.1	%

ComForCare Health Care	Healthcare Services	First Lien Term Loan (3M USD LIBOR+7.50%), 10.00% Cash, 1/31/2022		1/31/2017	$	15,000,000		14,905,794		15,063,000		8.1	%

HemaTerra Holding Company, LLC	Healthcare Services	First Lien Term Loan (3M USD LIBOR+6.75%), 9.25% Cash, 4/15/2024		4/15/2019	$	6,000,000		5,941,146		5,940,000		3.2	%

HemaTerra Holding Company, LLC (j)	Healthcare Services	Delayed Draw Term Loan (3M USD LIBOR+6.75%), 9.25% Cash, 4/15/2024		4/15/2019	$	—		—		—		0.0	%

TRC HemaTerra, LLC (h)	Healthcare Services	Class D Membership Interests		4/15/2019		1,000,000		1,000,000		1,000,000		0.5	%

Ohio Medical, LLC (h)	Healthcare Services	Common Stock		1/15/2016		5,000		500,000		441,950		0.2	%

Ohio Medical, LLC	Healthcare Services	Senior Subordinated Note 12.00% Cash, 7/15/2021		1/15/2016	$	7,300,000		7,266,535		7,262,040		4.0	%

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		4,193,322		2,405,340		1.3	%

		Total Healthcare Services						65,513,974		66,517,617		35.7	%

See accompanying notes to consolidated financial statements.


Company	Industry	Investment Interest Rate/ Maturity	Original Acquisition Date		Principal/ Number of Shares		Cost		Fair Value (c)		% of Net Assets
Sub Total Non-control/Non-affiliate investments								308,061,752		309,830,182		165.9	%

Affiliate investments—6.3% (b)

GreyHeller LLC (f)	Business Services	First Lien Term Loan (3M USD LIBOR+11.00%), 13.50% Cash, 11/16/2021		11/17/2016	$	7,000,000		6,960,362		7,140,000		3.8	%

GreyHeller LLC (f), (h)	Business Services	Series A Preferred Units		11/17/2016		850,000		850,000		1,629,899		0.9	%

		Total Business Services						7,810,362		8,769,899		4.7	%

Elyria Foundry Company, L.L.C. (f), (h)	Metals	Common Stock		7/30/2010		60,000		9,685,028		1,843,800		1.0	%

Elyria Foundry Company, L.L.C. (d), (f)	Metals	Second Lien Term Loan 15.00% PIK, 8/10/2022		7/30/2010	$	1,062,419		1,062,419		1,062,419		0.6	%
		Total Metals						10,747,447		2,906,219		1.6	%

Sub Total Affiliate investments								18,557,809		11,676,118		6.3	%

Control investments—47.0% (b)

Easy Ice, LLC (g)	Business Services	Preferred Equity 10.00% PIK		2/3/2017		5,080,000		9,925,702		13,510,126		7.2	%

Easy Ice, LLC (d), (g)	Business Services	Second Lien Term Loan 7.03% Cash/5.97% PIK, 2/28/2023		3/29/2013	$	21,867,482		21,820,919		21,976,819		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	$	3,931,585		3,895,045		3,951,243		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	$	5,092,999		5,048,142		5,135,271		2.7	%

Netreo Holdings, LLC (g), (h)	Business Services	Common Stock Class A Unit		7/3/2018		3,150,000		3,150,000		5,406,229		2.9	%

		Total Business Services						43,839,808		49,979,688		26.7	%

Saratoga Investment Corp. CLO 2013-1, Ltd. (a), (e), (g)	Structured Finance Securities	Other/Structured Finance Securities 19.50%, 1/20/2030		1/22/2008	$	69,500,000		24,899,215		28,024,105		15.0	%

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%), 11.25%, 1/20/2030		12/14/2018	$	2,500,000		2,500,000		2,485,183		1.3	%

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%), 12.50%, 1/20/2030		12/14/2018	$	7,500,000		7,500,000		7,456,065		4.0	%

See accompanying notes to consolidated financial statements.


Company	Industry	Investment Interest Rate/ Maturity	Original Acquisition Date	Principal/ Number of Shares		Cost		Fair Value (c)		% of Net Assets
		Total Structured Finance Securities					34,899,215		37,965,353		20.3	%

Sub Total Control investments							78,739,023		87,945,041		47.0	%

TOTAL INVESTMENTS—219.2% (b)						$	405,358,584	$	409,451,341		219.2	%


				Number of Shares		Cost		Fair Value		% of Net Assets
Cash and cash equivalents and cash and cash equivalents, reserve accounts—32.7% (b)
U.S. Bank Money Market (l)					60,996,247	$	60,996,247	$	60,996,247		32.7	%

Total cash and cash equivalents and cash and cash equivalents, reserve accounts					60,996,247	$	60,996,247	$	60,996,247		32.7	%

(a)

Represents a non-qualifying investment as defined under Section 55(a) of the Investment Company Act of 1940, as amended. As of May 31, 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 $186,783,701 as of May 31, 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 (see Note 3 to the consolidated financial statements).

(d)	These securities are either fully or partially pledged as collateral under a senior secured revolving credit facility (see Note 6 to the consolidated financial statements).

(e)

This investment does not have a stated interest rate that is payable thereon. As a result, the 19.50% 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 quarter ended May 31, 2019 in which the issuer was an Affiliate are as follows:


Company	Purchases		Sales		Total Interest from Investments		Management Fee Income		Net Realized Gain (Loss) from Investments		Net Change in Unrealized Appreciation
GreyHeller LLC	$	—	$	—	$	249,325	$	—	$	—	$	130,344
Elyria Foundry Company, L.L.C.		—		—		40,150		—		—		39,600

Total	$	—	$	—	$	289,475	$	—	$	—	$	169,944

See accompanying notes to consolidated financial statements.

(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 quarter ended May 31, 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 Fee Income		Net Realized Gain (Loss) from Investments		Net Change in Unrealized Appreciation (Depreciation)
Easy Ice, LLC	$	—	$	—	$	961,894	$	—	$	—	$	(76,286	)
Easy Ice Masters, LLC		—		—		130,808		—		—		4,762
Netreo Holdings, LLC		—		—		143,991		—		—		242,491
Saratoga Investment Corp. CLO 2013-1, Ltd.		—		—		1,081,435		629,516		—		1,247,780
Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-R-2 Notes		—		—		72,982		—		—		1,683
Saratoga Investment Corp. CLO 2013-1, Ltd. Class G-R-2 Notes				—		242,905		—		—		5,565

Total	$	—	$	—	$	2,634,015	$	629,516	$	—	$	1,425,995

(h)	Non-income producing at May 31, 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 May 31, 2019. (see Note 7 to the consolidated financial statements).

(k)	As of May 31, 2019, the investment was on non-accrual status. The fair value of these investments was approximately $4.9 million, which represented 1.2% of the Company’s portfolio (see Note 2 to the consolidated financial statements).

(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 May 31, 2019.

LIBOR—London Interbank Offered Rate

1M USD LIBOR - The 1 month USD LIBOR rate as of May 31, 2019 was 2.43%.

3M USD LIBOR - The 3 month USD LIBOR rate as of May 31, 2019 was 2.50%.

PIK - Payment-in-Kind (see Note 2 to the consolidated financial statements).

See accompanying notes to consolidated financial statements.

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	%

See accompanying notes to consolidated financial statements.


Company	Industry	Investment Interest Rate/ Maturity	Original Acquisition Date		Principal/ Number of Shares		Cost		Fair Value (c)		% of Net Assets

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	%

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	%

See accompanying notes to consolidated financial statements.


Company	Industry	Investment Interest Rate/ Maturity	Original Acquisition Date		Principal/ Number of Shares		Cost		Fair Value (c)		% of Net Assets

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	%

See accompanying notes to consolidated financial statements.


Company	Industry	Investment Interest Rate/ Maturity	Original Acquisition Date		Principal/ Number of Shares		Cost		Fair Value (c)		% of Net Assets

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	%

Affiliate investments - 6.3% (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		0.5	%

		Total Metals						10,707,740		2,826,912		1.5	%

Sub Total Affiliate investments								18,514,716		11,463,081		6.3	%

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	%

See accompanying notes to consolidated financial statements.


Company	Industry		Investment Interest Rate/ Maturity	Original Acquisition Date		Principal/ Number of Shares		Cost		Fair Value (c)		% of Net Assets

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—222.3% (b)								$	401,916,093	$	402,019,720		222.3	%

						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)

(d)	These securities are either fully or partially pledged as collateral under a senior secured revolving credit facility (see Note 7 to the consolidated financial statements).

(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	)

See accompanying notes to consolidated financial statements.

(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. (see Note 8 to the consolidated financial statements).

(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 (see Note 2 to the consolidated financial statements).

(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 (see Note 2 to the consolidated financial statements).

See accompanying notes to consolidated financial statements.

Saratoga Investment Corp.

Consolidated Statements of Changes in Net Assets

(unaudited)


	For the three months ended
	May 31, 2019			May 31, 2018
INCREASE FROM OPERATIONS:
Net investment income	$	3,680,788		$	3,927,648
Net realized gain from investments		—			212,008
Net change in unrealized appreciation on investments		3,989,130			643,205
Net change in provision for deferred taxes on unrealized appreciation on investments		(20,930	)		(940,546	)

Net increase in net assets resulting from operations		7,648,988			3,842,315

DECREASE FROM SHAREHOLDER DISTRIBUTIONS:
Total distributions to shareholders		(4,176,132	)		(3,128,513	)

Net decrease in net assets from shareholder distributions		(4,176,132	)		(3,128,513	)

CAPITAL SHARE TRANSACTIONS:
Proceeds from issuance of common stock		1,772,634			—
Stock dividend distribution		667,389			504,878
Offering costs		(4,365	)		—

Net increase in net assets from capital share transactions		2,435,658			504,878

Total increase in net assets		5,908,514			1,218,680
Net assets at beginning of period, as previously reported		180,875,187			143,691,367
Cumulative effect of the adoption of ASC 606 (See Note 2)		—			(65,300	)

Net assets at beginning of period, as adjusted		180,875,187			143,626,067

Net assets at end of period	$	186,783,701		$	144,844,747

See accompanying notes to consolidated financial statements.

Saratoga Investment Corp.

Consolidated Statements of Cash Flows

(unaudited)


	For the three months ended
	May 31, 2019			May 31, 2018
Operating activities
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	7,648,988		$	3,842,315
ADJUSTMENTS TO RECONCILE NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Payment-in-kind and other adjustments to cost		(2,672,834	)		(758,415	)
Net accretion of discount on investments		(318,260	)		(380,862	)
Amortization of deferred debt financing costs		341,688			254,601
Net realized (gain) loss from investments		—			(212,008	)
Net change in unrealized (appreciation) depreciation on investments		(3,989,130	)		(643,205	)
Net change in provision for deferred taxes on unrealized appreciation (depreciation) on investments		20,930			940,546
Proceeds from sales and repayments of investments		26,917,351			36,540,803
Purchases of investments		(27,368,748	)		(35,203,552	)
(Increase) decrease in operating assets:
Interest receivable		(68,898	)		(733,644	)
Due from affiliate		430,550			—
Management and incentive fee receivable		262,266			49,099
Cumulative effect of the adoption of ASC 606 (See Note 2)		—			(65,300	)
Other assets		45,304			40,331
Deferred tax asset		2,136			(267,310	)
Receivable from unsettled trades		—			(159,271	)
Increase (decrease) in operating liabilities:
Base management and incentive fees payable		837,285			173,779
Accounts payable and accrued expenses		(184,742	)		135,183
Interest and debt fees payable		(1,246,177	)		(1,036,724	)
Directors fees payable		1,500			43,000
Due to manager		22,661			17,589

NET CASH PROVIDED BY OPERATING ACTIVITIES		681,870			2,576,955

Financing activities
Payments of deferred debt financing costs		(39,689	)		—
Proceeds from issuance of common stock		1,772,634			—
Payments of cash dividends		(3,508,743	)		(2,623,635	)
Payments of offering costs		(4,219	)		—

NET CASH USED IN FINANCING ACTIVITIES		(1,780,017	)		(2,623,635	)

NET DECREASE IN CASH AND CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS, RESERVE ACCOUNTS		(1,098,147	)		(46,680	)
CASH AND CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS, RESERVE ACCOUNTS, BEGINNING OF PERIOD		62,094,394			13,777,491

CASH AND CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS, RESERVE ACCOUNTS, END OF PERIOD	$	60,996,247		$	13,730,811

Supplemental information:
Interest paid during the period	$	4,769,065		$	3,504,914
Cash paid for taxes		5,761			14,070
Supplemental non-cash information:
Payment-in-kind interest income	$	2,672,834		$	758,415
Net accretion of discount on investments		318,260			380,862
Amortization of deferred debt financing costs		341,688			254,601
Stock dividend distribution		667,389			504,878

See accompanying notes to consolidated financial statements.

SARATOGA INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2019

(unaudited)

Note 1. Organization

Saratoga Investment Corp. (the “Company”, “we”, “our” and “us”) is a non-diversified closed end management investment company incorporated in Maryland that has elected to be treated and is regulated as a business development company (“BDC”) under the Investment Company Act of 1940 (the “1940 Act”). The Company commenced operations on March 23, 2007 as GSC Investment Corp. and completed the initial public offering (“IPO”) on March 28, 2007. The Company has elected to be treated as a regulated investment company (“RIC”) under subchapter M of the Internal Revenue Code (the “Code”). The Company expects to continue to qualify and to elect to be treated, for tax purposes, as a RIC. The Company’s investment objective is to generate current income and, to a lesser extent, capital appreciation from its investments.

GSC Investment, LLC (the “LLC”) was organized in May 2006 as a Maryland limited liability company. As of February 28, 2007, the LLC had not yet commenced its operations and investment activities.

On March 21, 2007, the Company was incorporated and concurrently therewith the LLC was merged with and into the Company, with the Company as the surviving entity, in accordance with the procedure for such merger in the LLC’s limited liability company agreement and Maryland law. In connection with such merger, each outstanding limited liability company interest of the LLC was converted into a share of common stock of the Company.

On July 30, 2010, the Company changed its name from “GSC Investment Corp.” to “Saratoga Investment Corp.” in connection with the consummation of a recapitalization transaction.

The Company is externally managed and advised by the investment adviser, Saratoga Investment Advisors, LLC (the “Manager”), pursuant to a management agreement (the “Management Agreement”). Prior to July 30, 2010, the Company was managed and advised by GSCP (NJ), L.P.

The Company has established wholly-owned subsidiaries, SIA-Avionte, Inc., SIA-Easy Ice, LLC, SIA-GH, Inc., SIA-HT, Inc., SIA-MAC, Inc., SIA-TT, Inc. and SIA-Vector, Inc., which are structured as Delaware entities, or tax blockers (“Taxable Blockers”), to hold equity or equity-like investments in portfolio companies organized as limited liability companies, or LLCs (or other forms of pass through entities). Tax Blockers are consolidated for accounting purposes, but are not consolidated for income tax purposes and may incur income tax expense as a result of their ownership of portfolio companies.

On March 28, 2012, our wholly-owned subsidiary, Saratoga Investment Corp. SBIC, LP (“SBIC LP”), received a Small Business Investment Company (“SBIC”) license from the Small Business Administration (“SBA”).

On September 27, 2018, the SBA issued a “green light” letter inviting us 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.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”), are stated in U.S. Dollars and include the accounts of the Company and its special purpose financing subsidiaries, Saratoga Investment Funding, LLC (previously known as GSC Investment Funding LLC), SBIC LP, SIA-Avionte, Inc., SIA-Easy Ice, LLC, SIA-GH, Inc., SIA-HT, Inc., SIA-MAC, Inc., SIA-TT, Inc. and SIA-Vector, Inc. All intercompany accounts and transactions have been eliminated in consolidation. All references made to the “Company,” “we,” and “us” herein include Saratoga Investment Corp. and its consolidated subsidiaries, except as stated otherwise.

The Company and SBIC LP are both considered to be investment companies for financial reporting purposes and have applied the guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, “Financial Services—Investment Companies” (“ASC 946”). There have been no changes to the Company or SBIC LP’s status as investment companies during the three months ended May 31, 2019.

Use of Estimates in the Preparation of Financial Statements

The preparation of the accompanying consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and income, gains (losses) and expenses during the period reported. Actual results could differ materially from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include short-term, liquid investments in a money market fund. Cash and cash equivalents are carried at cost which approximates fair value. Per section 12(d)(1)(A) of the 1940 Act, the Company may not invest in another registered investment company such as, a money market fund if such investment would cause the Company to exceed any of the following limitations:

•

we were to own more than 3.0% of the total outstanding voting stock of the money market fund;

•

we were to hold securities in the money market fund having an aggregate value in excess of 5.0% of the value of our total assets, except as allowed pursuant to Rule 12d1-1 of Section 12(d)(1) of the 1940 Act which is designed to permit “cash sweep” arrangements rather than investments directly in short-term instruments; or

•

we were to hold securities in money market funds and other registered investment companies and BDCs having an aggregate value in excess of 10.0% of the value of our total assets.

As of May 31, 2019, the Company did not exceed any of these limitations.

Cash and Cash Equivalents, Reserve Accounts

Cash and cash equivalents, reserve accounts include amounts held in designated bank accounts in the form of cash and short-term liquid investments in money market funds, representing payments received on secured investments or other reserved amounts associated with the Company’s $45.0 million senior secured revolving credit facility with Madison Capital Funding LLC. The Company is required to use these amounts to pay interest expense, reduce borrowings, or pay other amounts in accordance with the terms of the senior secured revolving credit facility.

In addition, cash and cash equivalents, reserve accounts also include amounts held in designated bank accounts, in the form of cash and short-term liquid investments in money market funds, within our wholly-owned subsidiary, SBIC LP.

The statements of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash and restricted cash equivalents when reconciling the beginning-of-period and end-of-period total amounts.

The following table provides a reconciliation of cash and cash equivalents and cash and cash equivalents, reserve accounts reported within the consolidated statements of assets and liabilities that sum to the total of the same such amounts shown in the consolidated statements of cash flows:


	May 31, 2019		May 31, 2018
Cash and cash equivalents	$	37,183,604	$	3,313,448
Cash and cash equivalents, reserve accounts		23,812,643		10,417,363

Total cash and cash equivalents and cash and cash equivalents, reserve accounts	$	60,996,247	$	13,730,811

Investment Classification

The Company classifies its investments in accordance with the requirements of the 1940 Act. Under the 1940 Act, “Control Investments” are defined as investments in companies in which we own more than 25.0% of the voting securities or maintain greater than 50.0% of the board representation. Under the 1940 Act, “Affiliated Investments” are defined as those non-control investments in companies in which we own between 5.0% and 25.0% of the voting securities. Under the 1940 Act, “Non-affiliated Investments” are defined as investments that are neither Control Investments nor Affiliated Investments.

Investment Valuation

The Company accounts for its investments at fair value in accordance with the FASB ASC Topic 820, Fair Value Measurement (“ASC 820”). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 820 requires the Company to assume that its investments are to be sold or its liabilities are to be transferred at the balance sheet date in the principal market to independent market participants, or in the absence of a principal market, in the most advantageous market, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact.

Investments for which market quotations are readily available are fair valued at such market quotations obtained from independent third-party pricing services and market makers subject to any decision by our board of directors to approve a fair value determination to reflect significant events affecting the value of these investments. We value investments for which market quotations are not readily available at fair value as approved, in good faith, by our board of directors based on input from our Manager, the audit committee of our board of directors and a third party independent valuation firm. Determinations of fair value may involve subjective judgments and estimates. The types of factors that may be considered in determining the fair value of our investments include the nature and realizable value of any collateral, the portfolio company’s ability to make payments, market yield trend analysis, the markets in which the portfolio company does business, comparison to publicly traded companies, discounted cash flow and other relevant factors.

The Company undertakes a multi-step valuation process each quarter when valuing investments for which market quotations are not readily available, as described below:

•

Each investment is initially valued by the responsible investment professionals of Saratoga Investment Advisors and preliminary valuation conclusions are documented, reviewed and discussed with our senior management; and

•

In addition, all our investments are subject to the following valuation process:

•

The audit committee of our board of directors reviews and approves each preliminary valuation and our Manager and independent valuation firm (if applicable) will supplement the preliminary valuation to reflect any comments provided by the audit committee; and

•

Our board of directors discusses the valuations and approves the fair value of each investment, in good faith, based on the input of our Manager, independent valuation firm (to the extent applicable) and the audit committee of our board of directors.

The Company’s investment in Saratoga Investment Corp. CLO 2013-1, Ltd. (“Saratoga CLO”) is carried at fair value, which is based on a discounted cash flow model that utilizes prepayment, re-investment and loss assumptions based on historical experience and projected performance, economic factors, the characteristics of the underlying cash flow, and comparable yields for equity interests in collateralized loan obligation funds similar to Saratoga CLO, when available, as determined by our Manager and recommended to our board of directors. Specifically, we use Intex cash flow models, or an appropriate substitute, to form the basis for the valuation of our investment in Saratoga CLO. The models use a set of assumptions including projected default rates, recovery rates, reinvestment rates and prepayment rates in order to arrive at estimated valuations. The assumptions are based on available market data and projections provided by third parties as well as management estimates. The Company uses the output from the Intex models (i.e., the estimated cash flows) to perform a discounted cash flow analysis on expected future cash flows to determine a valuation for our investment in Saratoga CLO.

Because such valuations, and particularly valuations of private investments and private companies, are inherently uncertain, they may fluctuate over short periods of time and may be based on estimates. The determination of fair value may differ materially from the values that would have been used if a ready market for these investments existed. The Company’s net asset value could be materially affected if the determinations regarding the fair value of our investments were materially higher or lower than the values that we ultimately realize upon the disposal of such investments.

Derivative Financial Instruments

The Company accounts for derivative financial instruments in accordance with FASB ASC Topic 815, Derivatives and Hedging (“ASC 815”). ASC 815 requires recognizing all derivative instruments as either assets or liabilities on the consolidated statements of assets and liabilities at fair value. The Company values derivative contracts at the closing fair value provided by the counterparty. Changes in the values of derivative contracts are included in the consolidated statements of operations.

Investment Transactions and Income Recognition

Purchases and sales of investments and the related realized gains or losses are recorded on a trade-date basis. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis to the extent that such amounts are expected to be collected. The Company stops accruing interest on its investments when it is determined that interest is no longer collectible. Discounts and premiums on investments purchased are accreted/amortized over the life of the respective investment using the effective yield method. The amortized cost of investments represents the original cost adjusted for the accretion of discounts and amortization of premiums on investments.

payments received on non-accrual loans may be recognized as a reduction in principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current, although we may make exceptions to this general rule if the loan has sufficient collateral value and is in the process of collection. At May 31, 2019, certain investments in four portfolio companies, including preferred equity interests, were on non-accrual status with a fair value of approximately $4.9 million, or 1.2% of the fair value of our portfolio. At February 28, 2019, certain investments in four portfolio companies, including preferred equity interests, were on non-accrual status with a fair value of approximately $5.7 million, or 1.4% of the fair value of our portfolio.

Interest income on our investment in Saratoga CLO is recorded using the effective interest method in accordance with the provisions of ASC Topic 325, Investments-Other, Beneficial Interests in Securitized Financial Assets, (“ASC 325”), based on the anticipated yield and the estimated cash flows over the projected life of the investment. Yields are revised when there are changes in actual or estimated cash flows due to changes in prepayments and/or re-investments, credit losses or asset pricing. Changes in estimated yield are recognized as an adjustment to the estimated yield over the remaining life of the investment from the date the estimated yield was changed.

Adoption of ASC 606

Under the new guidance, the Company recognizes revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Under this standard, revenue is based on a contract with a determinable transaction price and distinct performance obligations with probable collectability. Revenues cannot be recognized until the performance obligation(s) are satisfied and control is transferred to the customer. Management has concluded that the majority of its revenues associated with financial instruments are scoped out of ASC 606, and has concluded that the only significant impact relates to the timing of the recognition of the CLO incentive fee income. The adoption of ASC 606 did not have an impact on the Company’s management fee income or investment income.

The Company adopted ASC 606 to all applicable contracts under the modified retrospective approach using the practical expedient provided for within paragraph 606-10-65-1(f)(4); therefore, the presentation of prior year periods has not been adjusted. The Company recognized the cumulative effect of initially adopting ASC 606 as an adjustment to the opening balance of components of equity as of March 1, 2018.

Incentive Fee Income

Incentive fee income is recognized based on the performance of Saratoga CLO during the period, subject to the achievement of minimum return levels in accordance with the terms set out in the investment management agreement between the Company and Saratoga CLO. Incentive fee income is realized in cash on a quarterly basis. Once realized, such fees are no longer subject to reversal.

Upon the adoption of ASC 606, the Company recognizes incentive fee income only when the amount is realized and no longer subject to reversal. Therefore, the Company no longer recognizes unrealized incentive fee income in the consolidated financial statements. The adoption of ASC 606 results in the delayed recognition of unrealized incentive fee income in the consolidated financial statements until it becomes realized at the end of the measurement period and all uncertainties are eliminated, which is typically quarterly.

The Company adopted ASC 606 for incentive fee income using the modified retrospective approach with an effective date of March 1, 2018. The cumulative effect of the adoption resulted in the reversal of $0.07 million of unrealized incentive fee income and is presented as a reduction to the opening balances of components of equity as of March 1, 2018.

In conjunction with the third refinancing and issuance of the Saratoga CLO’s 2013-1 Reset CLO Notes (the “2013-1 Reset CLO Notes”) on December 14, 2018, the Company is no longer entitled to receive an incentive management fee from Saratoga CLO. See Note 4 for additional information. Prior to the refinancing, the Company reported $0.2 million in incentive fees from the Saratoga CLO for the three months ended May 31, 2018 and is reported as incentive fee income on the Company’s consolidated statement of operations.

The following table presents the impact of incentive fees on the consolidated statement of assets and liabilities upon the adoption of ASC 606 effective March 1, 2018:

Consolidated Statement of Assets and Liabilities


	February 28, 2018
	As Reported		Adjustments(1)			As Adjusted for Adoption of ASC 606
Management and incentive fee receivable	$	233,024	$	(65,300	)	$	167,724
Total assets		360,336,361		(65,300	)		360,271,061
Cumulative effect adjustment for Adoption of ASC 606		—		(65,300	)		(65,300	)
Total net assets		143,691,367		(65,300	)		143,626,067
NET ASSET VALUE PER SHARE	$	22.96	$	(0.01	)	$	22.95

(1)	Unrealized incentive fees receivable balance as of February 28, 2018.

Without the adoption of ASC 606, there was no impact to either the consolidated statements of assets and liabilities as of May 31, 2019 and February 28, 2019 or the consolidated statement of operations for the three months ended May 31, 2019.

For the three months ended May 31, 2018, the impact on the consolidated statement of operations without the adoption of ASC 606 is shown in the table below:

Consolidated Statement of Operations


	For the Three Months Ended May 31, 2018
	As Reported		Adjustments		Without Adoption of ASC 606
Incentive fee income	$	199,183	$	27,652	$	226,835
Total investment income		10,488,018		27,652		10,515,670
NET INVESTMENT INCOME		3,927,648		27,652		3,955,300
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS		3,842,315		27,652		3,869,967
WEIGHTED AVERAGE—BASIC AND DILUTED EARNINGS PER COMMON SHARE	$	0.61	$	0.01	$	0.62

Other Income

Other income includes dividends received, origination fees, structuring fees and advisory fees, and is recorded in the consolidated statements of operations when earned.

Payment-in-Kind Interest

The Company holds debt and preferred equity investments in its portfolio that contain a payment-in-kind (“PIK”) interest provision. The PIK interest, which represents contractually deferred interest added to the investment balance that is generally due at maturity, is generally recorded on the accrual basis to the extent such amounts are expected to be collected. We stop accruing PIK interest if we do not expect the issuer to be able to pay all principal and interest when due.

Deferred Debt Financing Costs

Financing costs incurred in connection with our credit facility and notes are deferred and amortized using the straight-line method over the life of the respective facility and debt securities. Financing costs incurred in connection with our SBA debentures are deferred and amortized using the straight-line method over the life of the debentures.

The Company presents deferred debt financing costs on the balance sheet as a contra-liability as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts.

Contingencies

In the ordinary course of business, the Company may enter into contracts or agreements that contain indemnifications or warranties. Future events could occur that lead to the execution of these provisions against the Company. Based on its history and experience, management feels that the likelihood of such an event is remote. Therefore, the Company has not accrued any liabilities in connection with such indemnifications.

In the ordinary course of business, the Company may directly or indirectly be a defendant or plaintiff in legal actions with respect to bankruptcy, insolvency or other types of proceedings. Such lawsuits may involve claims that could adversely affect the value of certain financial instruments owned by the Company.

Income Taxes

The Company has elected to be treated for tax purposes as a RIC under the Code and, among other things, intends to make the requisite distributions to its stockholders which will relieve the Company from federal income taxes. Therefore, no provision has been recorded for federal income taxes, except as related to the Taxable Blockers when applicable.

In order to qualify as a RIC, among other requirements, the Company is required to timely distribute to its stockholders at least 90.0% of its investment company taxable income, as defined by the Code, for each fiscal tax year. The Company will be subject to a nondeductible U.S. federal excise tax of 4.0% on undistributed income if it does not distribute at least 98.0% of its ordinary income in any calendar year and 98.2% of its capital gain net income for each one-year period ending on October 31.

Depending on the level of taxable income earned in a tax year, the Company may choose to carry forward taxable income in excess of current year dividend distributions into the next tax year and pay a 4.0% excise tax on such income, as required. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year dividend distributions for excise tax purposes, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned.

In accordance with certain applicable U.S. Treasury regulations and private letter rulings issued by the Internal Revenue Service (“IRS”), a RIC may treat a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder may elect to receive his or her entire distribution in either cash or stock of the RIC subject to a limitation on the aggregate amount of cash to be distributed to all stockholders, which limitation must be at least 20.0% of the aggregate declared distribution. If too many stockholders elect to receive cash, each stockholder electing to receive cash will receive a pro rata amount of cash (with the balance of the distribution paid in stock). In no event will any stockholder, electing to receive cash, receive less than 20.0% of his or her

entire distribution in cash. If these and certain other requirements are met, for U.S. federal income tax purposes, the amount of the dividend paid in stock will be equal to the amount of cash that could have been received instead of stock.

The Company may utilize wholly-owned holding companies taxed under Subchapter C of the Code or tax blockers, when making equity investments in portfolio companies taxed as pass-through entities to meet its source-of-income requirements as a RIC. Taxable Blockers are consolidated in the Company’s GAAP financial statements and may result in current and deferred federal and state income tax expense with respect to income derived from those investments. Such income, net of applicable income taxes, is not included in the Company’s tax-basis net investment income until distributed by the Taxable Blocker, which may result in timing and character differences between the Company’s GAAP and tax-basis net investment income and realized gains and losses. Income tax expense or benefit from Taxable Blockers related to net investment income are included in total operating expenses, while any expense or benefit related to federal or state income tax originated for capital gains and losses are included together with the applicable net realized or unrealized gain or loss line item. Deferred tax assets of the Taxable Blockers are reduced by a valuation allowance when, in the opinion of management, it is more-likely than-not that some portion or all of the deferred tax assets will not be realized.

FASB ASC Topic 740, Income Taxes, (“ASC 740”), provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions deemed to meet a “more-likely-than-not” threshold would be recorded as a tax benefit or expense in the current period. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense on the consolidated statements of operations. During the fiscal year ended February 28, 2019, the Company did not incur any interest or penalties. Although we file federal and state tax returns, our major tax jurisdiction is federal. The 2016, 2017 and 2018 federal tax years for the Company remain subject to examination by the IRS. As of May 31, 2019 and February 28, 2019, there were no uncertain tax positions. The Company is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change significantly in the next 12 months.

Dividends

Dividends to common stockholders are recorded on the ex-dividend date. The amount to be paid out as a dividend is determined by the board of directors. Net realized capital gains, if any, are generally distributed at least annually, although we may decide to retain such capital gains for reinvestment.

We have adopted a dividend reinvestment plan (“DRIP”) that provides for reinvestment of our dividend distributions on behalf of our stockholders unless a stockholder elects to receive cash. As a result, if our board of directors authorizes, and we declare, a cash dividend, then our stockholders who have not “opted out” of the DRIP by the dividend record date will have their cash dividends automatically reinvested into additional shares of our common stock, rather than receiving the cash dividends. We have the option to satisfy the share requirements of the DRIP through the issuance of new shares of common stock or through open market purchases of common stock by the DRIP plan administrator.

Capital Gains Incentive Fee

The Company records an expense accrual on the consolidated statements of operations, relating to the capital gains incentive fee payable on the consolidated statements of assets and liabilities, by the Company to the Manager when the net realized and unrealized gain on its investments exceed all net realized and unrealized capital losses on its investments given the fact that a capital gains incentive fee would be owed to the Manager if the Company were to liquidate its investment portfolio at such time.

The actual incentive fee payable to the Company’s Manager related to capital gains will be determined and payable in arrears at the end of each fiscal year and will include only realized capital gains net of realized and unrealized losses for the period.

Regulatory Matters

In August 2018, the SEC issued Final Rule Release No.33-10532, Disclosure Update and Simplification, which in part amends certain disclosure requirements of Regulation S-X that have become redundant, duplicative, overlapping, outdated, or superseded, in light of other Commission disclosure requirements, U.S. GAAP or changes in the information environment. The amendments are intended to facilitate the disclosure of information to investors and simplify compliance without significantly altering the total mix of information provided to investors. The effective date for these disclosures was November 5, 2018. Management has adopted these amendments as currently required and these are reflected in the Company’s consolidated financial statements and related disclosures. The presentation of certain prior year information has been adjusted to conform with these amendments.

New Accounting Pronouncements

In August 2018, FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). The primary focus of ASU 2018-13 is to improve the effectiveness of the disclosure requirements for fair value measurements. The changes affect all companies that are required to include fair value measurement disclosures. In general, the amendments in ASU 2018-13 are effective for all entities for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019. An entity is permitted to early adopt the removed or modified disclosures upon the issuance of ASU 2018-13 and may delay adoption of the additional disclosures, which are required for public companies only, until their effective date. Management has assessed these changes and does not believe they would have a material impact on the Company’s consolidated financial statements and disclosures.

In March 2017, the FASB issued ASU 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities (“ASU 2017-08”) which amends the amortization period for certain purchased callable debt securities held at a premium, shortening such period to the earliest call date. ASU 2017-08 does not require any accounting change for debt securities held at a discount; the discount continues to be amortized to maturity. ASU 2017-08 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Management has assessed these changes and concluded these changes do not have a material impact on the Company’s consolidated financial statements and disclosures.

Risk Management

In the ordinary course of its business, the Company manages a variety of risks, including market risk and credit risk. Market risk is the risk of potential adverse changes to the value of investments because of changes in market conditions such as interest rate movements and volatility in investment prices.

Credit risk is the risk of default or non-performance by portfolio companies, equivalent to the investment’s carrying amount. The Company is also exposed to credit risk related to maintaining all of its cash and cash equivalents, including those in reserve accounts, at a major financial institution and credit risk related to any of its derivative counterparties.

The Company has investments in lower rated and comparable quality unrated high yield bonds and bank loans. Investments in high yield investments are accompanied by a greater degree of credit risk. The risk of loss due to default by the issuer is significantly greater for holders of high yield securities, because such investments are generally unsecured and are often subordinated to other creditors of the issuer.

Note 3. Investments

As noted above, the Company values all investments in accordance with ASC 820. ASC 820 requires enhanced disclosures about assets and liabilities that are measured and reported at fair value. As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

ASC 820 establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability of inputs used in measuring investments at fair value. Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

Based on the observability of the inputs used in the valuation techniques, the Company is required to provide disclosures on fair value measurements according to the fair value hierarchy. The fair value hierarchy ranks the observability of the inputs used to determine fair values. Investments carried at fair value are classified and disclosed in one of the following three categories:

•

Level 1—Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

•

Level 2— Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date. Such inputs may be quoted prices for similar assets or liabilities, quoted markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full character of the financial instrument, or inputs that are derived principally from, or corroborated by, observable market information. Investments which are generally included in this category include illiquid debt securities and less liquid, privately held or restricted equity securities, for which some level of recent trading activity has been observed.

•

Level 3— Pricing inputs are unobservable for the investment and includes situations where there is little, if any, market activity for the investment. The inputs may be based on the Company’s own assumptions about how market participants would price the asset or liability or may use Level 2 inputs, as adjusted, to reflect specific investment attributes relative to a broader market assumption. These inputs into the determination of fair value may require significant management judgment or estimation. Even if observable market data for comparable performance or valuation measures (earnings multiples, discount rates, other financial/valuation ratios, etc.) are available, such investments are grouped as Level 3 if any significant data point that is not also market observable (private company earnings, cash flows, etc.) is used in the valuation methodology.

In addition to using the above inputs in investment valuations, the Company continues to employ the valuation policy approved by the board of directors that is consistent with ASC 820 and the 1940 Act (see Note 2). Consistent with our valuation policy, we evaluate the source of inputs, including any markets in which our investments are trading, in determining fair value.

The following table presents fair value measurements of investments, by major class, as of May 31, 2019 (dollars in thousands), according to the fair value hierarchy:


	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
First lien term loans	$	—	$	—	$	219,479	$	219,479
Second lien term loans		—		—		109,305		109,305
Unsecured term loans		—		—		2,058		2,058
Structured finance securities		—		—		37,965		37,965
Equity interests		—		—		40,644		40,644

Total	$	—	$	—	$	409,451	$	409,451

The following table presents fair value measurements of investments, by major class, as of February 28, 2019 (dollars in thousands), according to the fair value hierarchy:


	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
First lien term loans	$	—	$	—	$	202,846	$	202,846
Second lien term loans		—		—		125,786		125,786
Unsecured term loans		—		—		2,100		2,100
Structured finance securities		—		—		35,328		35,328
Equity interests		—		—		35,960		35,960

Total	$	—	$	—	$	402,020	$	402,020

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the three months ended May 31, 2019 (dollars in thousands):


	First lien term loans			Second lien term loans			Unsecured term loans			Structured finance securities		Equity interests		Total
Balance as of February 28, 2019	$	202,846		$	125,786		$	2,100		$	35,328	$	35,960	$	402,020
Payment-in-kind and other adjustments to cost		323			1,043			—			1,383		242		2,991
Net change in unrealized appreciation (depreciation) on investments		(217	)		476			(42	)		1,254		2,517		3,988
Purchases		25,444			—			—			—		1,925		27,369
Sales and repayments		(8,917	)		(18,000	)		—			—		—		(26,917	)
Net realized gain (loss) from investments		—			—			—			—		—		—

Balance as of May 31, 2019	$	219,479		$	109,305		$	2,058		$	37,965	$	40,644	$	409,451

Net change in unrealized appreciation (depreciation) for the period relating to those Level 3 assets that were still held by the Company at the end of the period	$	(217	)	$	468		$	(42	)	$	1,254	$	2,517	$	3,980

Purchases and other adjustments to cost include purchases of new investments at cost, effects of refinancing/restructuring, accretion/amortization of income from discount/premium on debt securities, and PIK.

Sales and repayments represent net proceeds received from investments sold, and principal paydowns received during the period.

Transfers and restructurings, if any, are recognized at the beginning of the period in which they occur. There were no restructures in or out of Levels 1, 2 or 3 during the three months ended May 31, 2019.

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the three months ended May 31, 2018 (dollars in thousands):


	Syndicated loans			First lien term loans			Second lien term loans			Unsecured term loans			Structured finance securities			Equity interests		Total
Balance as of February 28, 2018	$	4,106		$	197,359		$	95,075		$	—		$	16,374		$	29,780	$	342,694
Payment-in-kind and other adjustments to cost		73			271			531			—			—			265		1,140
Net change in unrealized appreciation (depreciation) on investments		(73	)		(22	)		(186	)		(66	)		130			860		643
Purchases		—			16,335			15,653			2,216			—			999		35,203
Sales and repayments		(4,106	)		(18,387	)		(14,000	)		—			(48	)		—		(36,541	)
Net realized gain from investments		—			212			—			—			—			—		212
Restructures in		—			—			—			—			—			—		—
Restructures out		—			—			—			—			—			—		—

Balance as of May 31, 2018	$	—		$	195,768		$	97,073		$	2,150		$	16,456		$	31,904	$	343,351

Net change in unrealized appreciation (depreciation) for the period relating to those Level 3 assets that were still held by the Company at the end of the period	$	—		$	(167	)	$	(93	)	$	(66	)	$	130		$	860	$	664

The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements of assets as of May 31, 2019 were as follows (dollars in thousands):

Fair Value

Valuation Technique

Unobservable Input

Range

Weighted Average*

First lien term loans

219,479

Market Comparables

Market Yield (%)

8.5% - 13.0%

10.8%

EBITDA Multiples (x)

3.0x

Second lien term loans

109,305

Market Comparables

Market Yield (%)

10.5% - 47.5%

12.7%

EBITDA Multiples (x)

5.0x

Unsecured term loans

2,058

Market Comparables

Market Yield (%)

19.2% - 19.2%

19.2%

EBITDA Multiples (x)

4.8x

Structured finance securities

37,965

Discounted Cash Flow

Discount Rate (%)

9.0% - 15.0%

13.7%

Equity interests

40,644

Market Comparables

EBITDA Multiples (x)

4.0x - 14.0x

7.3x

Revenue Multiples (x)

0.6x - 39.5x

8.2x

Total

409,451

*	The weighted average in the table above is calculated based on each investment’s fair value weighting, using the applicable unobservable input.

The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements of assets as of February 28, 2019 were as follows (dollars in thousands):

Fair Value

Valuation Technique

Unobservable Input

Range

Weighted Average*

First lien term loans

202,846

Market Comparables

Market Yield (%)

8.6% - 13.2%

11.0%

EBITDA Multiples (x)

3.0x

Second lien term loans

125,786

Market Comparables

Market Yield (%)

10.5% - 41.1%

12.8%

EBITDA Multiples (x)

5.0x

Unsecured term loans

2,100

Market Comparables

Market Yield (%)

15.00%

15.0%

EBITDA Multiples (x)

4.8x

Structured finance securities

35,328

Discounted Cash Flow

Discount Rate (%)

9.0% - 15.0%

13.6%

Equity interests

35,960

Market Comparables

EBITDA Multiples (x)

4.0x - 14.7x

6.7x

Revenue Multiples (x)

0.6x - 39.6x

10.1x

Total

402,020

*	The weighted average in the table above is calculated based on each investment’s fair value weighting, using the applicable unobservable input.

For investments utilizing a market comparables valuation technique, a significant increase (decrease) in the market yield, in isolation, would result in a significantly lower (higher) fair value measurement, and a significant increase (decrease) in any of the earnings before interest, tax, depreciation and amortization (“EBITDA”) or revenue valuation multiples, in isolation, would result in a significantly higher (lower) fair value measurement. For investments utilizing a discounted cash flow valuation technique, a significant increase (decrease) in the discount rate, in isolation, would result in a significantly lower (higher) fair value measurement. For investments utilizing a market quote in deriving a value, a significant increase (decrease) in the market quote, in isolation, would result in a significantly higher (lower) fair value measurement.

The composition of our investments as of May 31, 2019 at amortized cost and fair value was as follows (dollars in thousands):


	Investments at Amortized Cost		Amortized Cost Percentage of Total Portfolio			Investments at Fair Value		Fair Value Percentage of Total Portfolio
First lien term loans	$	219,178		54.1	%	$	219,479		53.6	%
Second lien term loans		110,836		27.3			109,305		26.7
Unsecured term loans		2,217		0.6			2,058		0.5
Structured finance securities		34,899		8.6			37,965		9.3
Equity interests		38,229		9.4			40,644		9.9

Total	$	405,359		100.0	%	$	409,451		100.0	%

The composition of our investments as of February 28, 2019 at amortized cost and fair value was as follows (dollars in thousands):


	Investments at Amortized Cost		Amortized Cost Percentage of Total Portfolio			Investments at Fair Value		Fair Value Percentage of Total Portfolio
First lien term loans	$	202,328		50.3	%	$	202,846		50.5	%
Second lien term loans		127,793		31.8			125,786		31.3
Unsecured term loans		2,217		0.6			2,100		0.5
Structured finance securities		33,516		8.3			35,328		8.8
Equity interests		36,062		9.0			35,960		8.9

Total	$	401,916		100.0	%	$	402,020		100.0	%

For loans and debt securities for which market quotations are not available, we determine their fair value based on third party indicative broker quotes, where available, or the assumptions that a hypothetical market participant would use to value the security in a current hypothetical sale using a market yield valuation methodology. In applying the market yield valuation methodology, we determine the fair value based on such factors as market participant assumptions including synthetic credit ratings, estimated remaining life, current market yield and interest rate spreads of similar securities as of the measurement date. If, in our judgment, the market yield methodology is not sufficient or appropriate, we may use additional methodologies such as an asset liquidation or expected recovery model.

For equity securities of portfolio companies and partnership interests, we determine the fair value based on the market approach with value then attributed to equity or equity like securities using the enterprise value waterfall valuation methodology. Under the enterprise value waterfall valuation methodology, we determine the enterprise fair value of the portfolio company and then waterfall the enterprise value over the portfolio company’s securities in order of their preference relative to one another. To estimate the enterprise value of the portfolio company, we weigh some or all of the traditional market valuation methods and factors based on the individual circumstances of the portfolio company in order to estimate the enterprise value. The methodologies for performing investments may be based on, among other things: valuations of comparable public companies, recent sales of private and public comparable companies, discounting the forecasted cash flows of the portfolio company, third party valuations of the portfolio company, considering offers from third parties to buy the company, estimating the value to potential strategic buyers and considering the value of recent investments in the equity securities of the portfolio company. For non-performing investments, we may estimate the liquidation or collateral value of the portfolio company’s assets and liabilities. We also take into account historical and anticipated financial results.

Our investment in Saratoga CLO is carried at fair value, which is based on a discounted cash flow model that utilizes prepayment, re-investment and loss assumptions based on historical experience and projected performance, economic factors, the characteristics of the underlying cash flow, and comparable yields for equity interests in collateralized loan obligation funds similar to Saratoga CLO, when available, as determined by our Manager and recommended to our board of directors. Specifically, we use Intex cash flow models, or an appropriate substitute, to form the basis for the valuation of our investment in Saratoga CLO. The models use a set of assumptions including projected default rates, recovery rates, reinvestment rates and prepayment rates in order to arrive at estimated valuations. The assumptions are based on available market data and projections provided by third parties as well as management estimates. In connection with the refinancing of the Saratoga CLO liabilities, we ran Intex models based on assumptions about the refinanced Saratoga CLO’s structure, including capital structure, cost of liabilities and reinvestment period. We use the output from the Intex models (i.e., the estimated cash flows) to perform a discounted cash flow analysis on expected future cash flows to determine a valuation for our investment in Saratoga CLO at May 31, 2019. The significant inputs at May 31, 2019 for the valuation model include:

•

Default rate: 2.0%

•

Recovery rate: 35-70%

•

Discount rate: 15.0%

•

Prepayment rate: 20.0%

•

Reinvestment rate / price: L+375bps / $99.50

Note 4. Investment in Saratoga Investment Corp. CLO 2013-1, Ltd. (“Saratoga CLO”)

On January 22, 2008, the Company entered into a collateral management agreement with Saratoga CLO, pursuant to which the Company acts as its collateral manager. The Saratoga CLO was initially refinanced in October 2013 with its reinvestment period extended to October 2016. On November 15, 2016, the Company completed a second refinancing of the Saratoga CLO with its reinvestment period extended to October 2018.

On August 7, 2018, the Company entered into an unsecured loan agreement (“CLO 2013-1 Warehouse Loan”) with Saratoga Investment Corp. CLO 2013-1 Warehouse, Ltd (“CLO 2013-1 Warehouse”), a wholly-owned subsidiary of Saratoga CLO, pursuant to which CLO 2013-1 Warehouse may borrow from time to time up to $20 million from the Company in order to provide capital necessary to support warehouse activities. The CLO 2013-1 Warehouse Loan, which expires on February 7, 2020, bears interest at an annual rate of 3M USD LIBOR + 7.5%. Interest accrued on the investment in the CLO 2013-1 Warehouse Loan is included in interest income on the Company’s consolidated statement of operations. During the year ended February 28, 2019, the maximum amount invested by the Company in the CLO 2013-1 Warehouse Loan amounted to $20.0 million.

On December 14, 2018, the Company completed a third refinancing and upsize of the Saratoga CLO (the “2013-1 Reset CLO Notes”). The third Saratoga CLO refinancing, among other things, extended its reinvestment period to January 2021, and extended its legal maturity date to January 2030. A non-call period ending January 2020 was also added. Following this refinancing, the Saratoga CLO portfolio increased from approximately $300.0 million in aggregate principal amount to approximately $500.0 million of predominantly senior secured first lien term loans. In addition to refinancing its liabilities, the Company invested an additional $13.8 million in all of the newly issued subordinated notes of the Saratoga CLO and also purchased $2.5 million in aggregate principal amount of the Class F-R-2 and $7.5 million aggregate principal amount of the Class G-R-2 notes tranches at par, with a coupon of LIBOR plus 8.75% and LIBOR plus 10.00%, respectively. As part of this refinancing, the Company also redeemed our existing $4.5 million aggregate amount of the Class F notes tranche at par.

The Saratoga CLO remains 100.0% owned and managed by the Company. We receive a base management fee of 0.10% per annum and a subordinated management fee of 0.40% per annum of the outstanding principal amount of Saratoga CLO’s assets, paid quarterly to the extent of available proceeds. Following the third refinancing and the issuance of the 2013-1 Reset CLO Notes on December 14, 2018, we are no longer entitled to an incentive management fee equal to 20.0% of excess cash flow to the extent the Saratoga CLO subordinated notes receive an internal rate of return paid in cash equal to or greater than 12.0%.

For the three months ended May 31, 2019 and May 31, 2018, we accrued management fee income of $0.6 million and $0.4 million, respectively, and interest income of $1.1 million and $0.8 million, respectively, from the Saratoga CLO. For the three months ended May 31, 2018, we accrued $0.2 million related to the incentive management fee from Saratoga CLO.

As of May 31, 2019, the Company determined that the fair value of its investment in the subordinated notes of Saratoga CLO was $28.0 million. The Company determines the fair value of its investment in the subordinated notes of Saratoga CLO based on the present value of the projected future cash flows of the subordinated notes over the life of Saratoga CLO. As of May 31, 2019, the fair value of its investment in the Class F-R-2 Notes and G-R-2 Notes of Saratoga CLO was $2.5 million and $7.5 million, respectively. As of May 31, 2019, Saratoga CLO had investments with a principal balance of $513.4 million and a weighted average spread over LIBOR of 4.0% and had debt with a principal balance of $470.0 million with a weighted average spread over LIBOR of 2.0%. As a result, Saratoga CLO earns a “spread” between the interest income it receives on its investments and the interest expense it pays on its debt and other operating expenses, which is distributed quarterly to the Company as the holder of its subordinated notes. As of May 31, 2019, the present value of the projected future cash flows of the subordinated notes was approximately $28.6 million, using a 15.0% discount rate. The Company’s total investment in the subordinate notes of Saratoga CLO is $43.8 million, which is comprised of the initial investment of $30.0 million in January 2008 plus the additional investment of $13.8 million in December 2018, and to date the Company has since received distributions of $55.9 million, management fees of $20.2 million and incentive fees of $1.2 million.

As of February 28, 2019, the Company determined that the fair value of its investment in the subordinated notes of Saratoga CLO was $25.4 million. The Company determines the fair value of its investment in the subordinated notes of Saratoga CLO based on the present value of the projected future cash flows of the

subordinated notes over the life of Saratoga CLO. As of February 28, 2019, the fair value of its investment in the Class F-R-2 Notes and G-R-2 Notes of Saratoga CLO was $2.5 million and $7.5 million, respectively. As of February 28, 2019, Saratoga CLO had investments with a principal balance of $510.3 million and a weighted average spread over LIBOR of 4.0% and had debt with a principal balance of $470.0 million with a weighted average spread over LIBOR of 2.3%. As of February 28, 2019, the present value of the projected future cash flows of the subordinated notes was approximately $26.6 million, using a 15.0% discount rate.

Below is certain financial information from the separate financial statements of Saratoga CLO as of May 31, 2019 (unaudited) and February 28, 2019 and for the three months ended May 31, 2019 (unaudited) and May 31, 2018 (unaudited).

Saratoga Investment Corp. CLO 2013-1, Ltd.

Statements of Assets and Liabilities


	May 31, 2019			February 28, 2019
	(unaudited)
ASSETS
Investments at fair value
Loans at fair value (amortized cost of $508,645,633 and $506,145,483, respectively)	$	497,734,598		$	498,389,369
Equities at fair value (amortized cost of $2,566,752 and $3,531,218, respectively)		151			15,691

Total investments at fair value (amortized cost of $511,212,385 and $509,676,701, respectively)		497,734,749			498,405,060
Cash and cash equivalents		8,579,399			18,495,653
Receivable from open trades		1,204,614			7,855,309
Interest receivable (net of reserve of $291,580 and $168,443, respectively)		1,886,128			2,104,495

Total assets	$	509,404,890		$	526,860,517

LIABILITIES
Interest payable	$	2,461,179		$	4,963,472
Payable from open trades		14,504,906			26,232,247
Accrued base management fee		55,966			108,419
Accrued subordinated management fee		223,862			433,675
Due to affiliate		1,243,197			1,673,747
Accounts payable and accrued expenses		23,136			1,221,110
Saratoga Investment Corp. CLO 2013-1, Ltd. Notes:
Class A-1FL-R-2 Senior Secured Floating Rate Notes		255,000,000			255,000,000
Class A-1FXD-R-2 Senior Secured Fixed Rate Notes		25,000,000			25,000,000
Class-A-2-R-2 Senior Secured Floating Rate Notes		40,000,000			40,000,000
Class B-R-2 Senior Secured Floating Rate Notes		59,500,000			59,500,000
Class C-R-2 Deferrable Mezzanine Floating Rate Notes		22,500,000			22,500,000
Discount on Class C-R-2 Notes		(571,332	)		(585,059	)
Class D-R-2 Deferrable Mezzanine Floating Rate Notes		31,000,000			31,000,000
Discount on Class D-R-2 Notes		(1,039,656	)		(1,064,636	)
Class E-1-R-2 Deferrable Mezzanine Floating Rate Notes		27,000,000			27,000,000
Class E-2-R-2 Deferrable Mezzanine Fixed Rate Notes		—			—
Class F-R-2 Deferrable Junior Floating Rate Notes		2,500,000			2,500,000
Class G-R-2 Deferrable Junior Floating Rate Notes		7,500,000			7,500,000
Deferred debt financing costs		(2,408,435	)		(2,465,897	)
Subordinated Notes		69,500,000			69,500,000
Discount on Subordinated Notes		(24,664,279	)		(25,256,892	)

Total liabilities	$	529,328,544		$	544,760,186

NET ASSETS
Ordinary equity, par value $1.00, 250 ordinary shares authorized, 250 and 250 issued and outstanding, respectively	$	250		$	250
Total distributable earnings (loss)		(19,923,904	)		(17,899,919	)

Total net assets (deficit)		(19,923,654	)		(17,899,669	)

Total liabilities and net assets	$	509,404,890		$	526,860,517

Saratoga Investment Corp. CLO 2013-1, Ltd.

Statements of Operations

(unaudited)


	For the three months ended
	May 31, 2019			May 31, 2018
INVESTMENT INCOME
Interest from investments	$	8,203,707		$	5,032,427
Interest from cash and cash equivalents		7,363			4,015
Other income		140,123			142,957

Total investment income		8,351,193			5,179,399

EXPENSES
Interest and debt financing expenses		6,418,808			3,994,176
Base management fee		125,903			77,039
Subordinated management fee		503,613			308,155
Incentive fees		—			226,835
Professional fees		124,508			25,888
Trustee expenses		19,879			45,468
Miscellaneous fee expense		32,538			27,389

Total expenses		7,225,249			4,704,950

NET INVESTMENT INCOME		1,125,944			474,449

REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investments		(943,934	)		(1,157,929	)
Net change in unrealized depreciation on investments		(2,205,995	)		(110,177	)

Net realized and unrealized loss on investments		(3,149,929	)		(1,268,106	)

NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	(2,023,985	)	$	(793,657	)

Saratoga Investment Corp. CLO 2013-1 Ltd.

Schedule of Investments

May 31, 2019

(unaudited)


Issuer Name	Industry	Asset Name	Asset Type	Reference Rate/Spread				LIBOR Floor			Current Rate (All In)			Maturity Date		Principal/ Number of Shares		Cost		Fair Value
Education Management II LLC	Services: Consumer	Education Management II A-1 Preferred Shares	Equity		-												6,692	$	669,214	$	134
Education Management II LLC	Services: Consumer	Education Management II A-2 Preferred Shares	Equity		-												18,975		1,897,538		17
24 Hour Fitness Worldwide Inc.	Services: Consumer	Term Loan (5/18)	Loan		1M USD LIBOR+	3.50	%		0.00	%		5.93	%		5/30/2025	$	2,982,487		2,971,392		2,965,100
ABB Con-Cise Optical Group LLC	Healthcare & Pharmaceuticals	Term Loan B	Loan		3M USD LIBOR+	5.00	%		1.00	%		7.50	%		6/15/2023		2,098,066		2,074,926		1,966,936
Achilles Acquisition LLC	Banking Finance Insurance & Real Estate	Term Loan (09/18)	Loan		1M USD LIBOR+	4.00	%		0.00	%		6.43	%		10/13/2025		3,000,000		2,993,593		2,992,500
Acosta Inc.	Media: Advertising Printing & Publishing	Term Loan B (1st Lien)	Loan		1M USD LIBOR+	3.25	%		1.00	%		5.68	%		9/27/2021		1,910,400		1,904,699		788,040
ADMI Corp.	Services: Consumer	Term Loan B	Loan		1M USD LIBOR+	2.75	%		0.00	%		5.18	%		4/30/2025		1,985,000		1,976,388		1,956,873
Advantage Sales & Marketing Inc.	Services: Business	First Lien Term Loan	Loan		1M USD LIBOR+	3.25	%		1.00	%		5.68	%		7/23/2021		2,389,899		2,388,562		2,067,574
Advantage Sales & Marketing Inc.	Services: Business	Term Loan B Incremental	Loan		1M USD LIBOR+	3.25	%		1.00	%		5.68	%		7/23/2021		493,719		487,181		424,909
Aegis Toxicology Sciences Corporation	Healthcare & Pharmaceuticals	Term Loan	Loan		3M USD LIBOR+	5.50	%		1.00	%		8.00	%		5/9/2025		3,980,000		3,946,077		3,831,984
Agiliti Health Inc.	Healthcare & Pharmaceuticals	Term Loan (1/19)	Loan		1M USD LIBOR+	3.00	%		0.00	%		5.43	%		1/5/2026		500,000		500,000		500,000
Agrofresh Inc.	Beverage Food & Tobacco	Term Loan	Loan		6M USD LIBOR+	4.75	%		1.00	%		7.27	%		7/30/2021		2,912,180		2,908,470		2,824,814
AI Mistral (Luxembourg) Subco Sarl	High Tech Industries	Term Loan	Loan		1M USD LIBOR+	3.00	%		1.00	%		5.43	%		3/11/2024		490,000		490,000		426,300
AIS Holdco LLC	Services: Business	Term Loan	Loan		3M USD LIBOR+	5.00	%		0.00	%		7.50	%		8/15/2025		2,468,750		2,457,800		2,271,250
Akorn Inc.	Healthcare & Pharmaceuticals	Term Loan B	Loan		1M USD LIBOR+	7.00	%		1.00	%		9.43	%		4/16/2021		398,255		397,752		371,624
Albertson’s LLC	Retail	Term Loan B7	Loan		1M USD LIBOR+	3.00	%		0.75	%		5.43	%		11/17/2025		4,141,132		4,130,851		4,113,717
Alchemy US Holdco 1 LLC	Metals & Mining	Term Loan	Loan		1M USD LIBOR+	5.50	%		0.00	%		7.93	%		10/10/2025		1,987,500		1,959,956		1,977,562
Alera Group Intermediate Holdings Inc.	Banking Finance Insurance & Real Estate	Term Loan B	Loan		1M USD LIBOR+	4.50	%		0.00	%		6.93	%		8/1/2025		497,500		496,377		498,744
Alion Science and Technology Corporation	Aerospace & Defense	Term Loan B (1st Lien)	Loan		1M USD LIBOR+	4.50	%		1.00	%		6.93	%		8/19/2021		3,626,521		3,620,887		3,626,521


Issuer Name	Industry	Asset Name	Asset Type	Reference Rate/Spread				LIBOR Floor			Current Rate (All In)			Maturity Date		Principal/ Number of Shares		Cost		Fair Value
Allen Media LLC	Media: Diversified & Production	Term Loan B	Loan		4M USD LIBOR+	6.50	%		1.00	%		7.50	%		8/30/2023		2,962,500		2,898,258		2,943,984
Altisource S.a r.l.	Banking Finance Insurance & Real Estate	Term Loan B (03/18)	Loan		3M USD LIBOR+	4.00	%		1.00	%		6.50	%		4/3/2024		1,676,074		1,666,089		1,651,637
Altra Industrial Motion Corp.	Capital Equipment	Term Loan	Loan		1M USD LIBOR+	2.00	%		0.00	%		4.43	%		10/1/2025		1,917,909		1,913,622		1,893,130
American Dental Partners Inc.	Healthcare & Pharmaceuticals	Term Loan B	Loan		3M USD LIBOR+	4.25	%		1.00	%		6.75	%		3/24/2023		997,500		987,844		985,031
American Greetings Corporation	Media: Advertising Printing & Publishing	Term Loan	Loan		1M USD LIBOR+	4.50	%		1.00	%		6.93	%		4/5/2024		4,969,900		4,967,612		4,957,475
American Residential Services LLC	Services: Consumer	Term Loan B	Loan		1M USD LIBOR+	4.00	%		1.00	%		6.43	%		6/30/2022		3,956,604		3,945,057		3,897,255
Amynta Agency Borrower Inc.	Banking Finance Insurance & Real Estate	Term Loan	Loan		1M USD LIBOR+	4.50	%		0.00	%		6.93	%		2/28/2025		3,488,714		3,448,337		3,384,053
Anastasia Parent LLC	Consumer goods: Non-durable	Term Loan	Loan		1M USD LIBOR+	3.75	%		0.00	%		6.18	%		8/11/2025		995,000		990,594		856,526
Anchor Glass Container Corporation	Containers Packaging & Glass	Term Loan (07/17)	Loan		1M USD LIBOR+	2.75	%		1.00	%		5.18	%		12/7/2023		488,794		487,055		439,000
Arctic Glacier U.S.A. Inc.	Beverage Food & Tobacco	Term Loan (3/18)	Loan		1M USD LIBOR+	3.50	%		1.00	%		5.93	%		3/20/2024		3,350,967		3,330,502		3,346,778
Aretec Group Inc.	Banking Finance Insurance & Real Estate	Term Loan (10/18)	Loan		1M USD LIBOR+	4.25	%		0.00	%		6.68	%		10/1/2025		1,995,000		1,990,648		1,960,088
ASG Technologies Group Inc.	High Tech Industries	Term Loan	Loan		1M USD LIBOR+	3.50	%		1.00	%		5.93	%		7/31/2024		492,516		490,599		489,437
AssetMark Financial Holdings Inc.	Banking Finance Insurance & Real Estate	Term Loan	Loan		3M USD LIBOR+	3.50	%		0.00	%		6.00	%		11/14/2025		2,493,750		2,490,117		2,499,984
Astoria Energy LLC	Energy: Electricity	Term Loan	Loan		1M USD LIBOR+	4.00	%		1.00	%		6.43	%		12/24/2021		1,406,149		1,398,360		1,408,202
Asurion LLC	Banking Finance Insurance & Real Estate	Term Loan B-4 (Replacement)	Loan		1M USD LIBOR+	3.00	%		0.00	%		5.43	%		8/4/2022		2,078,304		2,071,534		2,068,660
Asurion LLC	Banking Finance Insurance & Real Estate	Term Loan B6	Loan		1M USD LIBOR+	3.00	%		0.00	%		5.43	%		11/3/2023		496,660		493,172		494,549
Athenahealth Inc.	Healthcare & Pharmaceuticals	Term Loan B	Loan		3M USD LIBOR+	4.50	%		0.00	%		7.00	%		2/11/2026		2,000,000		1,962,053		2,002,500
Avaya Inc.	Telecommunications	Term Loan B	Loan		1M USD LIBOR+	4.25	%		0.00	%		6.68	%		12/16/2024		1,984,975		1,970,465		1,945,275
Avison Young (Canada) Inc.	Services: Business	Term Loan	Loan		3M USD LIBOR+	5.00	%		0.00	%		7.50	%		1/30/2026		1,995,000		1,955,885		1,955,100
Ball Metalpack Finco LLC	Containers Packaging & Glass	Term Loan	Loan		3M USD LIBOR+	4.50	%		0.00	%		7.00	%		7/31/2025		3,974,975		3,956,970		3,967,542
Bausch Health Companies Inc.	Healthcare & Pharmaceuticals	Term Loan B (05/18)	Loan		1M USD LIBOR+	3.00	%		0.00	%		5.43	%		6/2/2025		1,708,604		1,701,767		1,701,137
Berry Global Group Inc.	Chemicals Plastics & Rubber	Term Loan (05/19)	Loan		3M USD LIBOR+	2.50	%		0.00	%		5.00	%		6/15/2026		5,000,000		4,987,500		4,968,050


Issuer Name	Industry	Asset Name	Asset Type	Reference Rate/Spread				LIBOR Floor			Current Rate (All In)			Maturity Date		Principal/ Number of Shares		Cost		Fair Value
Blount International Inc.	Forest Products & Paper	Term Loan B (09/18)	Loan		1M USD LIBOR+	3.75	%		1.00	%		6.18	%		4/12/2023		3,480,013		3,476,754		3,481,091
Blucora Inc.	High Tech Industries	Term Loan (11/17)	Loan		2M USD LIBOR+	3.00	%		1.00	%		4.00	%		5/22/2024		956,667		952,736		954,878
Boxer Parent Company Inc.	Services: Business	Term Loan	Loan		3M USD LIBOR+	4.25	%		0.00	%		6.75	%		10/2/2025		2,493,750		2,471,351		2,411,357
Bracket Intermediate Holding Corp.	Healthcare & Pharmaceuticals	Term Loan	Loan		3M USD LIBOR+	4.25	%		0.00	%		6.75	%		9/5/2025		995,000		990,507		990,025
Broadstreet Partners Inc.	Banking Finance Insurance & Real Estate	Term Loan B2	Loan		1M USD LIBOR+	3.25	%		1.00	%		5.68	%		11/8/2023		1,032,536		1,030,459		1,025,763
Cable & Wireless Communications Limited	Telecommunications	Term Loan B4	Loan		1M USD LIBOR+	3.25	%		0.00	%		5.68	%		1/30/2026		2,186,667		2,184,342		2,188,591
Calceus Acquisition Inc.	Consumer goods: Non-durable	Term Loan B	Loan		1M USD LIBOR+	5.50	%		0.00	%		7.93	%		2/12/2025		993,750		981,768		985,989
Callaway Golf Company	Retail	Term Loan B	Loan		1M USD LIBOR+	4.50	%		0.00	%		6.93	%		1/2/2026		748,125		733,835		754,671
Canyon Valor Companies Inc.	Media: Advertising Printing & Publishing	Term Loan B	Loan		3M USD LIBOR+	2.75	%		0.00	%		5.25	%		6/16/2023		936,691		934,349		929,956
Capital Automotive L.P.	Banking Finance Insurance & Real Estate	First Lien Term Loan	Loan		1M USD LIBOR+	2.50	%		1.00	%		4.93	%		3/25/2024		476,840		475,124		470,965
CareerBuilder LLC	Services: Business	Term Loan	Loan		3M USD LIBOR+	6.75	%		1.00	%		9.25	%		7/31/2023		2,266,211		2,226,525		2,246,382
CareStream Health Inc.	High Tech Industries	Term Loan	Loan		1M USD LIBOR+	5.75	%		1.00	%		8.18	%		2/28/2021		2,809,881		2,798,872		2,725,585
Casa Systems Inc.	Telecommunications	Term Loan	Loan		1M USD LIBOR+	4.00	%		1.00	%		6.43	%		12/20/2023		1,466,250		1,456,054		1,319,625
CCS-CMGC Holdings Inc.	Healthcare & Pharmaceuticals	Term Loan	Loan		1M USD LIBOR+	5.25	%		0.00	%		7.68	%		10/1/2025		2,493,750		2,471,156		2,428,288
Cengage Learning Inc.	Media: Advertising Printing & Publishing	Term Loan	Loan		1M USD LIBOR+	4.25	%		1.00	%		6.68	%		6/7/2023		1,458,708		1,444,248		1,390,338
CenturyLink Inc.	Telecommunications	Term Loan B	Loan		1M USD LIBOR+	2.75	%		0.00	%		5.18	%		1/31/2025		3,959,975		3,937,524		3,849,214
Charter Communications Operating LLC.	Media: Broadcasting & Subscription	Term Loan (12/17)	Loan		1M USD LIBOR+	2.00	%		0.00	%		4.43	%		4/30/2025		1,580,000		1,578,463		1,578,562
Compass Power Generation L.L.C.	Utilities: Electric	Term Loan B (08/18)	Loan		1M USD LIBOR+	3.50	%		1.00	%		5.93	%		12/20/2024		1,948,039		1,943,458		1,948,039
Compuware Corporation	High Tech Industries	Term Loan (08/18)	Loan		1M USD LIBOR+	3.50	%		0.00	%		5.93	%		8/22/2025		498,750		497,630		498,336
Concordia International Corp.	Healthcare & Pharmaceuticals	Term Loan	Loan		1M USD LIBOR+	5.50	%		1.00	%		7.93	%		9/6/2024		1,201,860		1,142,088		1,121,636
Consolidated Aerospace Manufacturing LLC	Aerospace & Defense	Term Loan (1st Lien)	Loan		1M USD LIBOR+	3.75	%		1.00	%		6.18	%		8/11/2022		2,418,750		2,412,778		2,400,609
Consolidated Communications Inc.	Telecommunications	Term Loan B	Loan		1M USD LIBOR+	3.00	%		1.00	%		5.43	%		10/5/2023		1,486,781		1,474,512		1,454,726
Covia Holdings Corporation	Metals & Mining	Term Loan	Loan		3M USD LIBOR+	4.00	%		1.00	%		6.50	%		6/2/2025		992,500		992,500		836,181


Issuer Name	Industry	Asset Name	Asset Type	Reference Rate/Spread				LIBOR Floor			Current Rate (All In)			Maturity Date		Principal/ Number of Shares		Cost		Fair Value
CPI Acquisition Inc	Banking Finance Insurance & Real Estate	Term Loan B (1st Lien)	Loan		3M USD LIBOR+	4.50	%		1.00	%		7.00	%		8/17/2022		1,436,782		1,425,623		1,149,425
Crown Subsea Communications Holding Inc	Construction & Building	Term Loan	Loan		1M USD LIBOR+	6.00	%		0.00	%		8.43	%		11/3/2025		3,950,000		3,908,672		3,903,904
CSC Holdings LLC	Media: Broadcasting & Subscription	Term Loan B (03/17)	Loan		1M USD LIBOR+	2.25	%		0.00	%		4.68	%		7/17/2025		1,989,848		1,966,492		1,946,569
CSC Holdings LLC	Media: Broadcasting & Subscription	Term Loan B	Loan		1M USD LIBOR+	2.25	%		0.00	%		4.68	%		1/15/2026		498,750		497,591		486,072
CT Technologies Intermediate Hldgs Inc	Healthcare & Pharmaceuticals	New Term Loan	Loan		1M USD LIBOR+	4.25	%		1.00	%		6.68	%		12/1/2021		1,436,531		1,430,430		1,147,070
Cumulus Media New Holdings Inc.	Media: Broadcasting & Subscription	Term Loan	Loan		1M USD LIBOR+	4.50	%		1.00	%		6.93	%		5/13/2022		334,968		332,401		333,504
Daseke Companies Inc.	Transportation: Cargo	Replacement Term Loan	Loan		1M USD LIBOR+	5.00	%		1.00	%		7.43	%		2/27/2024		1,970,662		1,960,592		1,966,346
Dealer Tire LLC	Automotive	Term Loan B	Loan		1M USD LIBOR+	5.50	%		0.00	%		7.93	%		12/12/2025		3,000,000		2,895,065		3,000,000
Delek US Holdings Inc.	Utilities: Oil & Gas	Term Loan B	Loan		1M USD LIBOR+	2.25	%		0.00	%		4.68	%		3/31/2025		4,484,924		4,438,638		4,440,075
Dell International L.L.C.	High Tech Industries	Term Loan B	Loan		1M USD LIBOR+	2.00	%		0.75	%		4.43	%		9/7/2023		3,964,874		3,914,817		3,940,966
Delta 2 (Lux) SARL	Hotel Gaming & Leisure	Term Loan B	Loan		1M USD LIBOR+	2.50	%		1.00	%		4.93	%		2/1/2024		1,318,289		1,315,604		1,286,505
DHX Media Ltd.	Media: Broadcasting & Subscription	Term Loan	Loan		Prime+	3.72	%		1.00	%		4.72	%		12/29/2023		332,042		330,617		325,401
Digital Room Holdings Inc.	Media: Advertising Printing & Publishing	Term Loan	Loan		1M USD LIBOR+	5.00	%		0.00	%		7.43	%		5/21/2026		3,000,000		2,955,000		2,947,500
Dole Food Company Inc.	Beverage Food & Tobacco	Term Loan B	Loan		Prime+	2.75	%		1.00	%		3.75	%		4/8/2024		478,125		476,404		466,024
Drew Marine Group Inc.	Transportation: Consumer	First Lien Term Loan	Loan		1M USD LIBOR+	3.25	%		1.00	%		5.68	%		11/19/2020		2,833,564		2,822,926		2,817,639
DTZ U.S. Borrower LLC	Construction & Building	Term Loan B	Loan		1M USD LIBOR+	3.25	%		0.00	%		5.68	%		8/21/2025		3,975,013		3,957,093		3,961,338
Eagletree-Carbide Acquisition Corp.	High Tech Industries	Term Loan	Loan		3M USD LIBOR+	4.25	%		1.00	%		6.75	%		8/28/2024		3,957,456		3,939,756		3,878,307
Education Management II LLC (a)	Services: Consumer	Term Loan B	Loan		Prime+	8.50	%		1.00	%		9.50	%		7/2/2020		954,307		947,426		477
Education Management II LLC (a)	Services: Consumer	Term Loan A	Loan		Prime+	5.50	%		1.00	%		6.50	%		7/2/2020		423,861		420,013		8,477
EIG Investors Corp.	High Tech Industries	Term Loan (06/18)	Loan		3M USD LIBOR+	3.75	%		1.00	%		6.25	%		2/9/2023		2,370,640		2,354,858		2,362,058
Emerald 2 Ltd. (Eagle US / Emerald Newco / ERM Canada / ERM US)	Environmental Industries	Term Loan	Loan		3M USD LIBOR+	4.00	%		1.00	%		6.50	%		5/14/2021		988,553		984,749		985,152
Endo Luxembourg Finance Company I S.a.r.l.	Healthcare & Pharmaceuticals	Term Loan B (4/17)	Loan		1M USD LIBOR+	4.25	%		0.75	%		6.68	%		4/29/2024		3,967,310		3,943,497		3,853,250


Issuer Name	Industry	Asset Name	Asset Type	Reference Rate/Spread				LIBOR Floor			Current Rate (All In)			Maturity Date		Principal/ Number of Shares		Cost		Fair Value
Energy Acquisition LP	Capital Equipment	Term Loan (6/18)	Loan		3M USD LIBOR+	4.25	%		0.00	%		6.75	%		6/26/2025		1,985,000		1,967,240		1,875,825
Envision Healthcare Corporation	Healthcare & Pharmaceuticals	Term Loan B (06/18)	Loan		1M USD LIBOR+	3.75	%		0.00	%		6.18	%		10/10/2025		4,987,500		4,976,718		4,518,125
Fastener Acquisition Inc.	Construction & Building	Term Loan B	Loan		Prime+	3.25	%		1.00	%		4.25	%		3/28/2025		495,000		492,889		490,050
FinCo I LLC	Banking Finance Insurance & Real Estate	2018 Term Loan B	Loan		1M USD LIBOR+	2.00	%		0.00	%		4.43	%		12/27/2022		360,542		359,822		359,576
First Eagle Holdings Inc.	Banking Finance Insurance & Real Estate	Term Loan B (10/18)	Loan		3M USD LIBOR+	2.75	%		0.00	%		5.25	%		12/2/2024		4,987,500		4,961,905		4,968,796
Fitness International LLC	Services: Consumer	Term Loan B (4/18)	Loan		1M USD LIBOR+	3.25	%		0.00	%		5.68	%		4/18/2025		2,717,217		2,699,813		2,702,788
Franklin Square Holdings L.P.	Banking Finance Insurance & Real Estate	Term Loan	Loan		2M USD LIBOR+	2.50	%		0.00	%		2.50	%		8/1/2025		4,477,500		4,447,102		4,477,500
Fusion Connect Inc. (a)	Telecommunications	Term Loan B	Loan		Prime+	7.00	%		1.00	%		8.00	%		5/4/2023		1,964,623		1,900,115		1,326,120
Fusion Connect Inc.	Telecommunications	Bridge Term Loan	Loan		1M USD LIBOR+	10.00	%		0.00	%		12.43	%		6/3/2019		67,108		64,843		62,746
GBT Group Services B.V.	Hotel Gaming & Leisure	Term Loan	Loan		3M USD LIBOR+	2.50	%		0.00	%		5.00	%		8/13/2025		4,477,500		4,476,395		4,466,306
GC EOS Buyer Inc.	Automotive	Term Loan B (06/18)	Loan		1M USD LIBOR+	4.50	%		0.00	%		6.93	%		8/1/2025		2,985,000		2,957,516		2,970,075
General Nutrition Centers Inc.	Retail	Term Loan B2	Loan		1M USD LIBOR+	8.75	%		0.75	%		11.18	%		3/4/2021		930,446		928,194		840,193
General Nutrition Centers Inc.	Retail	FILO Term Loan	Loan		1M USD LIBOR+	7.00	%		0.00	%		9.43	%		1/3/2023		585,849		584,477		590,243
GI Chill Acquisition LLC	Services: Business	Term Loan	Loan		3M USD LIBOR+	4.00	%		0.00	%		6.50	%		8/6/2025		2,487,500		2,476,465		2,475,063
GI Revelation Acquisition LLC	Services: Business	Term Loan	Loan		1M USD LIBOR+	5.00	%		0.00	%		7.43	%		4/16/2025		1,241,247		1,235,779		1,225,731
Gigamon Inc.	Services: Business	Term Loan B	Loan		3M USD LIBOR+	4.25	%		1.00	%		6.75	%		12/27/2024		1,975,000		1,958,439		1,910,813
Global Tel*Link Corporation	Telecommunications	Term Loan B	Loan		1M USD LIBOR+	4.25	%		0.00	%		6.68	%		11/28/2025		3,062,779		3,062,779		3,069,150
Go Wireless Inc.	Telecommunications	Term Loan	Loan		1M USD LIBOR+	6.50	%		1.00	%		8.93	%		12/22/2024		3,336,039		3,288,820		3,242,897
GoodRX Inc.	Healthcare & Pharmaceuticals	Term Loan B	Loan		1M USD LIBOR+	3.00	%		0.00	%		5.43	%		10/10/2025		2,959,472		2,952,670		2,947,457
Goodyear Tire & Rubber Company The	Chemicals Plastics & Rubber	Second Lien Term Loan	Loan		1M USD LIBOR+	2.00	%		0.00	%		4.43	%		3/7/2025		2,000,000		2,000,000		1,968,120
Greenhill & Co. Inc.	Banking Finance Insurance & Real Estate	Term Loan B	Loan		1M USD LIBOR+	3.25	%		0.00	%		5.68	%		4/12/2024		2,000,000		1,990,279		1,988,760
Grosvenor Capital Management Holdings LLLP	Banking Finance Insurance & Real Estate	Term Loan B	Loan		1M USD LIBOR+	2.75	%		1.00	%		5.18	%		3/28/2025		920,941		916,908		916,337
Guidehouse LLP	Aerospace & Defense	Term Loan	Loan		1M USD LIBOR+	3.00	%		0.00	%		5.43	%		5/1/2025		1,985,000		1,980,727		1,960,188
Harland Clarke Holdings Corp.	Media: Advertising Printing & Publishing	Term Loan	Loan		3M USD LIBOR+	4.75	%		1.00	%		7.25	%		11/3/2023		1,805,702		1,797,111		1,497,974


Issuer Name	Industry	Asset Name	Asset Type	Reference Rate/Spread				LIBOR Floor			Current Rate (All In)			Maturity Date		Principal/ Number of Shares		Cost		Fair Value
HD Supply Waterworks Ltd.	Construction & Building	Term Loan	Loan		3M USD LIBOR+	3.00	%		1.00	%		5.50	%		8/1/2024		492,500		491,492		490,860
Helix Acquisition Holdings Inc.	Capital Equipment	Term Loan (04/18)	Loan		3M USD LIBOR+	3.75	%		0.00	%		6.25	%		9/30/2024		3,000,000		2,940,659		2,925,000
Helix Gen Funding LLC	Energy: Electricity	Term Loan B (02/17)	Loan		1M USD LIBOR+	3.75	%		1.00	%		6.18	%		6/3/2024		264,030		263,595		245,474
HLF Financing SaRL LLC	Consumer goods: Non-durable	Term Loan B (08/18)	Loan		1M USD LIBOR+	3.25	%		0.00	%		5.68	%		8/18/2025		3,980,000		3,964,169		3,973,791
Hoffmaster Group Inc.	Forest Products & Paper	Term Loan B1	Loan		1M USD LIBOR+	4.00	%		1.00	%		6.43	%		11/21/2023		1,071,649		1,074,400		1,066,966
Holley Purchaser Inc.	Automotive	Term Loan B	Loan		3M USD LIBOR+	5.00	%		0.00	%		7.50	%		10/24/2025		2,493,750		2,470,922		2,418,938
Hostess Brands LLC	Beverage Food & Tobacco	Cov-Lite Term Loan B	Loan		3M USD LIBOR+	2.25	%		0.75	%		4.75	%		8/3/2022		1,464,027		1,461,004		1,451,583
Hudson River Trading LLC	Banking Finance Insurance & Real Estate	Term Loan B (10/18)	Loan		1M USD LIBOR+	3.50	%		0.00	%		5.93	%		4/3/2025		4,470,050		4,448,109		4,467,279
Hyperion Refinance S.a.r.l.	Banking Finance Insurance & Real Estate	Term Loan (12/17)	Loan		1M USD LIBOR+	3.50	%		1.00	%		5.93	%		12/20/2024		1,722,866		1,714,213		1,719,145
Idera Inc.	High Tech Industries	Term Loan B	Loan		1M USD LIBOR+	4.50	%		1.00	%		6.93	%		6/28/2024		1,959,799		1,942,451		1,953,273
IG Investments Holdings LLC	Services: Business	Term Loan	Loan		3M USD LIBOR+	4.00	%		1.00	%		6.50	%		5/23/2025		1,389,718		1,383,349		1,380,338
Inmar Inc.	Services: Business	Term Loan B	Loan		3M USD LIBOR+	4.00	%		1.00	%		6.50	%		5/1/2024		3,483,636		3,392,605		3,281,167
Isagenix International LLC	Beverage Food & Tobacco	Term Loan	Loan		3M USD LIBOR+	5.75	%		1.00	%		8.25	%		6/16/2025		2,912,179		2,859,684		2,286,061
Jefferies Finance LLC / JFIN Co-Issuer Corp	Banking Finance Insurance & Real Estate	Term Loan	Loan		3M USD LIBOR+	3.75	%		0.00	%		6.25	%		5/22/2026		2,000,000		1,995,000		1,996,260
Jill Holdings LLC	Retail	Term Loan (1st Lien)	Loan		3M USD LIBOR+	5.00	%		1.00	%		7.50	%		5/9/2022		1,854,084		1,849,857		1,798,462
JP Intermediate B LLC	Consumer goods: Non-durable	Term Loan	Loan		3M USD LIBOR+	5.50	%		1.00	%		8.00	%		11/20/2025		4,875,000		4,823,515		4,302,188
Kinetic Concepts Inc.	Healthcare & Pharmaceuticals	1/17 USD Term Loan	Loan		3M USD LIBOR+	3.25	%		1.00	%		5.75	%		2/2/2024		2,358,000		2,349,801		2,358,660
KUEHG Corp.	Services: Consumer	Term Loan B-3	Loan		3M USD LIBOR+	3.75	%		1.00	%		6.25	%		2/21/2025		496,250		495,190		494,285
Lakeland Tours LLC	Hotel Gaming & Leisure	Term Loan B	Loan		3M USD LIBOR+	4.00	%		1.00	%		6.50	%		12/16/2024		2,476,241		2,467,719		2,470,050
Lannett Company Inc.	Healthcare & Pharmaceuticals	Term Loan B	Loan		1M USD LIBOR+	5.38	%		1.00	%		7.81	%		11/25/2022		2,506,885		2,476,921		2,341,856
Learfield Communications LLC	Media: Advertising Printing & Publishing	Initial Term Loan (A-L Parent)	Loan		1M USD LIBOR+	3.25	%		1.00	%		5.68	%		12/1/2023		488,750		487,145		488,291
Lighthouse Network LLC	Banking Finance Insurance & Real Estate	Term Loan B	Loan		3M USD LIBOR+	4.50	%		1.00	%		7.00	%		12/2/2024		3,406,875		3,394,841		3,404,047
Lightstone Holdco LLC	Energy: Electricity	Term Loan B	Loan		1M USD LIBOR+	3.75	%		1.00	%		6.18	%		1/30/2024		1,322,520		1,320,446		1,306,491
Lightstone Holdco LLC	Energy: Electricity	Term Loan C	Loan		1M USD LIBOR+	3.75	%		1.00	%		6.18	%		1/30/2024		74,592		74,483		73,688
Lindblad Expeditions Inc.	Hotel Gaming & Leisure	US 2018 Term Loan	Loan		1M USD LIBOR+	3.25	%		0.00	%		5.68	%		3/27/2025		397,000		396,154		397,496


Issuer Name	Industry	Asset Name	Asset Type	Reference Rate/Spread				LIBOR Floor			Current Rate (All In)			Maturity Date		Principal/ Number of Shares		Cost		Fair Value
Lindblad Expeditions Inc.	Hotel Gaming & Leisure	Cayman Term Loan	Loan		1M USD LIBOR+	3.25	%		0.00	%		5.68	%		3/27/2025		99,250		99,039		99,374
Liquidnet Holdings Inc.	Banking Finance Insurance & Real Estate	Term Loan B	Loan		1M USD LIBOR+	3.25	%		1.00	%		5.68	%		7/15/2024		3,111,651		3,102,514		3,103,872
LPL Holdings Inc.	Banking Finance Insurance & Real Estate	Incremental Term Loan B	Loan		1M USD LIBOR+	2.25	%		0.00	%		4.68	%		9/23/2024		1,719,441		1,716,271		1,712,993
McAfee LLC	Services: Business	Term Loan B	Loan		1M USD LIBOR+	3.75	%		0.00	%		6.18	%		9/30/2024		2,683,414		2,655,341		2,676,329
McDermott International Inc.	Construction & Building	Term Loan B	Loan		1M USD LIBOR+	5.00	%		1.00	%		7.43	%		5/12/2025		1,980,000		1,945,314		1,929,946
McGraw-Hill Global Education Holdings LLC	Media: Advertising Printing & Publishing	Term Loan	Loan		1M USD LIBOR+	4.00	%		1.00	%		6.43	%		5/4/2022		964,313		961,874		917,004
MedPlast Holdings Inc.	Healthcare & Pharmaceuticals	Term Loan (06/18)	Loan		3M USD LIBOR+	3.75	%		0.00	%		6.25	%		7/2/2025		497,500		495,284		492,938
Meredith Corporation	Media: Advertising Printing & Publishing	Term Loan B (10/18)	Loan		1M USD LIBOR+	2.75	%		0.00	%		5.18	%		1/31/2025		619,590		618,326		618,685
Messer Industries GMBH	Chemicals Plastics & Rubber	Term Loan B	Loan		3M USD LIBOR+	2.50	%		0.00	%		5.00	%		3/2/2026		3,000,000		2,992,539		2,947,500
Michaels Stores Inc.	Retail	Term Loan B	Loan		1M USD LIBOR+	2.50	%		1.00	%		4.93	%		1/30/2023		2,621,402		2,610,806		2,552,591
Midwest Physician Administrative Services LLC	Healthcare & Pharmaceuticals	Term Loan (2/18)	Loan		1M USD LIBOR+	2.75	%		0.75	%		5.18	%		8/15/2024		977,985		973,973		954,758
Milk Specialties Company	Beverage Food & Tobacco	Term Loan (2/17)	Loan		1M USD LIBOR+	4.00	%		1.00	%		6.43	%		8/16/2023		3,959,345		3,898,674		3,880,158
MKS Instruments Inc.	High Tech Industries	Term Loan B-5	Loan		1M USD LIBOR+	2.25	%		0.00	%		4.68	%		2/2/2026		1,000,000		990,347		999,250
MLN US HoldCo LLC	Telecommunications	Term Loan	Loan		1M USD LIBOR+	4.50	%		0.00	%		6.93	%		11/28/2025		997,500		995,329		984,672
MRC Global (US) Inc.	Metals & Mining	Term Loan B2	Loan		1M USD LIBOR+	3.00	%		0.00	%		5.43	%		9/20/2024		493,750		492,710		493,444
NAI Entertainment Holdings LLC	Hotel Gaming & Leisure	Term Loan B	Loan		1M USD LIBOR+	2.50	%		1.00	%		4.93	%		5/8/2025		995,000		992,867		988,363
Natgasoline LLC	Chemicals Plastics & Rubber	Term Loan	Loan		3M USD LIBOR+	3.50	%		0.00	%		6.00	%		11/14/2025		498,750		496,587		498,750
National Mentor Holdings Inc.	Healthcare & Pharmaceuticals	Term Loan	Loan		1M USD LIBOR+	4.25	%		0.00	%		6.68	%		3/9/2026		1,883,041		1,864,622		1,885,790
National Mentor Holdings Inc.	Healthcare & Pharmaceuticals	Term Loan C	Loan		1M USD LIBOR+	4.25	%		0.00	%		6.68	%		3/9/2026		116,959		115,834		117,130
NeuStar Inc.	Telecommunications	Term Loan B4 (03/18)	Loan		1M USD LIBOR+	3.50	%		1.00	%		5.93	%		8/8/2024		2,984,848		2,939,264		2,875,394
NeuStar Inc.	Telecommunications	Term Loan B-5	Loan		1M USD LIBOR+	4.50	%		0.00	%		6.93	%		8/8/2024		1,000,000		980,732		984,380
New Media Holdings II LLC	Media: Diversified & Production	Term Loan	Loan		1M USD LIBOR+	6.25	%		1.00	%		8.68	%		7/14/2022		5,958,652		5,946,847		5,913,962
NMI Holdings Inc.	Banking Finance Insurance & Real Estate	Term Loan	Loan		1M USD LIBOR+	4.75	%		1.00	%		7.18	%		5/23/2023		3,481,212		3,486,036		3,472,509


Issuer Name	Industry	Asset Name	Asset Type	Reference Rate/Spread				LIBOR Floor			Current Rate (All In)			Maturity Date		Principal/ Number of Shares		Cost		Fair Value
NorthPole Newco S.a r.l	Aerospace & Defense	Term Loan	Loan		1M USD LIBOR+	7.00	%		0.00	%		9.43	%		4/10/2025		5,000,000		4,500,000		4,475,000
Novetta Solutions LLC	Aerospace & Defense	Term Loan	Loan		1M USD LIBOR+	5.00	%		1.00	%		7.43	%		10/17/2022		1,934,870		1,924,512		1,896,173
Novetta Solutions LLC	Aerospace & Defense	Second Lien Term Loan	Loan		1M USD LIBOR+	8.50	%		1.00	%		10.93	%		10/16/2023		1,000,000		993,643		970,000
NPC International Inc.	Beverage Food & Tobacco	Term Loan	Loan		1M USD LIBOR+	3.50	%		1.00	%		5.93	%		4/19/2024		491,250		490,836		388,579
Ocean Bidco Inc.	Banking Finance Insurance & Real Estate	Term Loan	Loan		6M USD LIBOR+	4.75	%		1.00	%		7.27	%		3/21/2025		473,186		471,045		469,046
OCI Partners LP	Chemicals Plastics & Rubber	Term Loan B (2/18)	Loan		3M USD LIBOR+	4.00	%		0.00	%		6.50	%		3/13/2025		3,059,470		3,038,507		3,055,646
Office Depot Inc.	Retail	Term Loan B	Loan		1M USD LIBOR+	5.25	%		1.00	%		7.68	%		11/8/2022		2,796,480		2,779,363		2,826,766
Outcomes Group Holdings Inc.	Banking Finance Insurance & Real Estate	Term Loan	Loan		3M USD LIBOR+	3.50	%		0.00	%		6.00	%		10/24/2025		498,750		497,590		490,855
Owens & Minor Distribution Inc.	Healthcare & Pharmaceuticals	Term Loan B	Loan		1M USD LIBOR+	4.50	%		0.00	%		6.93	%		4/30/2025		496,250		487,460		415,818
Panther BF Aggregator 2 LP	Automotive	Term Loan B	Loan		1M USD LIBOR+	3.50	%		0.00	%		5.93	%		4/30/2026		1,500,000		1,491,226		1,493,130
PCI Gaming Authority	Hotel Gaming & Leisure	Term Loan	Loan		3M USD LIBOR+	3.00	%		0.00	%		5.50	%		5/15/2026		1,000,000		995,000		998,750
Peraton Corp.	Aerospace & Defense	Term Loan	Loan		1M USD LIBOR+	5.25	%		1.00	%		7.68	%		4/29/2024		1,965,000		1,957,705		1,933,069
PGX Holdings Inc.	Services: Consumer	Term Loan	Loan		1M USD LIBOR+	5.25	%		1.00	%		7.68	%		9/29/2020		3,646,940		3,627,894		3,428,124
PI UK Holdco II Limited	Services: Business	Term Loan B1 (PI UK Holdco II)	Loan		1M USD LIBOR+	3.25	%		1.00	%		5.68	%		1/3/2025		1,485,000		1,477,652		1,463,839
Plastipak Packaging Inc	Containers Packaging & Glass	Term Loan B (04/18)	Loan		1M USD LIBOR+	2.50	%		0.00	%		4.93	%		10/15/2024		985,000		980,865		979,090
Polymer Process Holdings Inc	Containers Packaging & Glass	Term Loan	Loan		1M USD LIBOR+	6.00	%		0.00	%		8.43	%		4/30/2026		3,000,000		2,940,389		2,940,000
Presidio Inc.	Services: Business	Term Loan B 2017	Loan		3M USD LIBOR+	2.75	%		1.00	%		5.25	%		2/2/2024		1,644,326		1,612,761		1,636,515
Prime Security Services Borrower LLC	Services: Consumer	Refi Term Loan B-1	Loan		1M USD LIBOR+	2.75	%		1.00	%		5.18	%		5/2/2022		1,696,914		1,691,626		1,681,082
Priority Payment Systems Holdings LLC	High Tech Industries	Term Loan	Loan		1M USD LIBOR+	5.00	%		1.00	%		7.43	%		1/3/2023		2,491,830		2,479,932		2,488,715
Project Accelerate Parent LLC	Services: Business	Term Loan	Loan		1M USD LIBOR+	4.25	%		1.00	%		6.68	%		1/2/2025		1,980,000		1,971,620		1,980,000
Prometric Holdings Inc.	Services: Business	Term Loan	Loan		1M USD LIBOR+	3.00	%		1.00	%		5.43	%		1/29/2025		495,000		492,950		487,575
Quad/Graphics Inc.	Media: Advertising Printing & Publishing	Term Loan B (12/18)	Loan		1M USD LIBOR+	5.00	%		0.00	%		7.43	%		2/2/2026		4,500,000		4,436,948		4,511,250
Rackspace Hosting Inc.	High Tech Industries	Term Loan B	Loan		3M USD LIBOR+	3.00	%		1.00	%		5.50	%		11/3/2023		1,487,418		1,477,523		1,376,101
Radio Systems Corporation	Consumer goods: Durable	Term Loan	Loan		1M USD LIBOR+	2.75	%		1.00	%		5.18	%		5/2/2024		1,473,750		1,473,750		1,457,170
Radiology Partners Inc.	Healthcare & Pharmaceuticals	Term Loan	Loan		6M USD LIBOR+	4.75	%		0.00	%		7.27	%		7/9/2025		1,497,494		1,491,212		1,499,830


Issuer Name	Industry	Asset Name	Asset Type	Reference Rate/Spread				LIBOR Floor			Current Rate (All In)			Maturity Date		Principal/ Number of Shares		Cost		Fair Value
Research Now Group Inc.	Media: Advertising Printing & Publishing	Term Loan	Loan		3M USD LIBOR+	5.50	%		1.00	%		8.00	%		12/20/2024		3,957,462		3,831,367		3,938,664
Resolute Investment Managers Inc.	Banking Finance Insurance & Real Estate	Term Loan (10/17)	Loan		3M USD LIBOR+	3.25	%		1.00	%		5.75	%		4/29/2022		2,702,363		2,704,763		2,712,496
Revspring Inc.	Services: Business	Term Loan B	Loan		1M USD LIBOR+	4.25	%		0.00	%		6.68	%		10/10/2025		997,500		995,294		996,253
Reynolds Group Holdings Inc.	Metals & Mining	Term Loan (01/17)	Loan		1M USD LIBOR+	2.75	%		0.00	%		5.18	%		2/6/2023		1,721,509		1,721,509		1,702,865
RGIS Services LLC	Services: Business	Term Loan	Loan		3M USD LIBOR+	7.50	%		1.00	%		10.00	%		3/31/2023		482,554		477,021		375,587
Robertshaw US Holding Corp.	Consumer goods: Durable	Term Loan B	Loan		1M USD LIBOR+	3.50	%		1.00	%		5.93	%		2/28/2025		990,000		987,840		918,225
Rocket Software Inc.	High Tech Industries	Term Loan (11/18)	Loan		1M USD LIBOR+	4.25	%		0.00	%		6.68	%		11/28/2025		4,000,000		3,983,420		3,923,000
Rovi Solutions Corporation	Media: Diversified & Production	Term Loan B	Loan		1M USD LIBOR+	2.50	%		0.75	%		4.93	%		7/2/2021		1,332,669		1,330,506		1,293,795
Russell Investments US Institutional Holdco Inc.	Banking Finance Insurance & Real Estate	Term Loan B	Loan		3M USD LIBOR+	3.25	%		1.00	%		5.75	%		6/1/2023		4,174,054		4,060,948		4,140,995
Sahara Parent Inc.	High Tech Industries	Term Loan B (11/18)	Loan		1M USD LIBOR+	4.50	%		0.00	%		6.93	%		8/16/2024		1,970,100		1,952,021		1,959,895
Sally Holdings LLC	Retail	Term Loan (Fixed)	Loan		Fixed	0.00	%		0.00	%		4.50	%		7/5/2024		1,000,000		996,257		962,500
Sally Holdings LLC	Retail	Term Loan B	Loan		1M USD LIBOR+	2.25	%		0.00	%		4.68	%		7/5/2024		775,864		772,678		770,045
Savage Enterprises LLC	Transportation: Cargo	Term Loan	Loan		1M USD LIBOR+	4.50	%		0.00	%		6.93	%		8/1/2025		3,582,692		3,537,920		3,590,538
SCS Holdings I Inc.	High Tech Industries	Term Loan	Loan		1M USD LIBOR+	4.25	%		1.00	%		6.68	%		10/31/2022		3,393,482		3,379,666		3,397,724
Seadrill Operating LP	Energy: Oil & Gas	Term Loan B	Loan		3M USD LIBOR+	6.00	%		1.00	%		8.50	%		2/21/2021		912,725		889,081		696,810
SG Acquisition Inc.	Banking Finance Insurance & Real Estate	Term Loan (Safe-Guard)	Loan		3M USD LIBOR+	5.00	%		1.00	%		7.50	%		3/29/2024		1,590,000		1,578,207		1,578,075
Shearer’s Foods LLC	Beverage Food & Tobacco	Term Loan	Loan		1M USD LIBOR+	4.25	%		1.00	%		6.68	%		6/30/2021		2,877,498		2,869,886		2,865,498
Shutterfly Inc.	Media: Advertising Printing & Publishing	Term Loan B2	Loan		1M USD LIBOR+	2.50	%		0.00	%		4.93	%		8/19/2024		3,010,328		2,961,429		2,989,647
Sirius Computer Solutions Inc.	High Tech Industries	Term Loan	Loan		3M USD LIBOR+	4.25	%		0.00	%		6.75	%		5/22/2026		2,000,000		1,995,000		2,001,660
Sirva Worldwide Inc.	Transportation: Cargo	Term Loan B	Loan		3M USD LIBOR+	5.50	%		0.00	%		8.00	%		8/4/2025		2,484,375		2,457,050		2,422,266
SMB Shipping Logistics LLC	Transportation: Consumer	Term Loan B	Loan		6M USD LIBOR+	4.00	%		1.00	%		6.52	%		2/2/2024		1,957,930		1,956,288		1,948,140
SP PF Buyer LLC	Consumer goods: Durable	Term Loan B	Loan		1M USD LIBOR+	4.50	%		0.00	%		6.93	%		12/19/2025		2,000,000		1,923,708		1,907,500
SRAM LLC	Consumer goods: Durable	Term Loan	Loan		Prime+	2.72	%		1.00	%		3.72	%		3/15/2024		1,868,791		1,855,885		1,861,783
SS&C Technologies Inc.	Services: Business	Term Loan B-5	Loan		1M USD LIBOR+	2.25	%		0.00	%		4.68	%		4/16/2025		497,459		496,373		494,489
SS&C Technologies Inc.	Services: Business	Term Loan B3	Loan		1M USD LIBOR+	2.25	%		0.00	%		4.68	%		4/16/2025		324,131		323,440		322,070


Issuer Name	Industry	Asset Name	Asset Type	Reference Rate/Spread				LIBOR Floor			Current Rate (All In)			Maturity Date		Principal/ Number of Shares		Cost		Fair Value
SS&C Technologies Inc.	Services: Business	Term Loan B4	Loan		1M USD LIBOR+	2.25	%		0.00	%		4.68	%		4/16/2025		227,364		226,879		225,918
SSH Group Holdings Inc.	Consumer goods: Non-durable	Term Loan	Loan		3M USD LIBOR+	4.25	%		0.00	%		6.75	%		7/30/2025		2,390,000		2,381,638		2,354,150
Staples Inc.	Retail	Term Loan (03/19)	Loan		3M USD LIBOR+	5.00	%		0.00	%		7.50	%		4/16/2026		1,975,000		1,970,370		1,896,830
Stats LLC	Hotel Gaming & Leisure	Term Loan	Loan		3M USD LIBOR+	5.25	%		0.00	%		7.75	%		5/22/2026		2,000,000		1,950,000		1,950,000
Steak N Shake Operations Inc.	Beverage Food & Tobacco	Term Loan	Loan		1M USD LIBOR+	3.75	%		1.00	%		6.18	%		3/19/2021		832,491		830,052		645,180
Sybil Software LLC	High Tech Industries	Term Loan B (4/18)	Loan		3M USD LIBOR+	2.25	%		1.00	%		4.75	%		9/29/2023		355,219		353,781		353,571
Tenneco Inc	Capital Equipment	Term Loan B	Loan		1M USD LIBOR+	2.75	%		0.00	%		5.18	%		10/1/2025		1,496,250		1,482,744		1,412,086
Ten-X LLC	Banking Finance Insurance & Real Estate	Term Loan	Loan		1M USD LIBOR+	4.00	%		1.00	%		6.43	%		9/30/2024		1,975,000		1,973,156		1,953,611
Terex Corporation	Capital Equipment	Term Loan	Loan		1M USD LIBOR+	2.75	%		0.75	%		5.18	%		1/31/2024		1,000,000		995,199		999,380
TGG TS Acquisition Company	Media: Diversified & Production	Term Loan (12/18)	Loan		3M USD LIBOR+	6.50	%		0.00	%		9.00	%		12/15/2025		2,962,500		2,821,992		2,936,578
The Edelman Financial Center LLC	Banking Finance Insurance & Real Estate	Term Loan B (06/18)	Loan		1M USD LIBOR+	3.25	%		0.00	%		5.68	%		7/21/2025		1,246,875		1,241,358		1,241,164
Thor Industries Inc.	Automotive	Term Loan (USD)	Loan		1M USD LIBOR+	3.75	%		0.00	%		6.18	%		2/2/2026		2,641,515		2,611,274		2,573,285
Tivity Health Inc.	Healthcare & Pharmaceuticals	Term Loan B	Loan		1M USD LIBOR+	5.25	%		0.00	%		7.68	%		3/6/2026		2,390,814		2,332,247		2,380,055
Tivity Health Inc.	Healthcare & Pharmaceuticals	Term Loan A	Loan		1M USD LIBOR+	4.25	%		0.00	%		6.68	%		3/8/2024		1,750,000		1,733,049		1,733,953
Townsquare Media Inc.	Media: Broadcasting & Subscription	Term Loan B (02/17)	Loan		1M USD LIBOR+	3.00	%		1.00	%		5.43	%		4/1/2022		881,975		879,413		880,873
Transdigm Inc.	Aerospace & Defense	Term Loan G	Loan		1M USD LIBOR+	2.50	%		0.00	%		4.93	%		8/22/2024		4,137,719		4,144,231		4,040,317
Travel Leaders Group LLC	Hotel Gaming & Leisure	Term Loan B (08/18)	Loan		1M USD LIBOR+	4.00	%		0.00	%		6.43	%		1/25/2024		2,481,250		2,476,769		2,471,945
TRC Companies Inc.	Services: Business	Term Loan	Loan		1M USD LIBOR+	3.50	%		1.00	%		5.93	%		6/21/2024		3,402,727		3,391,459		3,389,967
Trico Group LLC	Containers Packaging & Glass	Incremental Term Loan	Loan		3M USD LIBOR+	7.00	%		1.00	%		9.50	%		2/2/2024		4,912,852		4,779,805		4,679,491
Truck Hero Inc.	Transportation: Cargo	First Lien Term Loan	Loan		1M USD LIBOR+	3.75	%		1.00	%		6.18	%		4/22/2024		2,949,962		2,931,468		2,800,016
Trugreen Limited Partnership	Services: Consumer	Term Loan (03/19)	Loan		1M USD LIBOR+	3.75	%		1.00	%		6.18	%		3/19/2026		988,813		979,250		991,285
Twin River Worldwide Holdings Inc.	Hotel Gaming & Leisure	Term Loan B	Loan		1M USD LIBOR+	2.75	%		0.00	%		5.18	%		5/11/2026		1,000,000		995,019		998,500
United Natural Foods Inc.	Beverage Food & Tobacco	Term Loan B	Loan		1M USD LIBOR+	4.25	%		0.00	%		6.68	%		10/22/2025		3,489,306		3,274,799		2,974,633
Univar USA Inc.	Chemicals Plastics & Rubber	Term Loan B3 (11/17)	Loan		1M USD LIBOR+	2.25	%		0.00	%		4.68	%		7/1/2024		1,851,592		1,844,293		1,844,649
Univar USA Inc.	Chemicals Plastics & Rubber	Term Loan B-4	Loan		1M USD LIBOR+	2.50	%		0.00	%		4.93	%		7/1/2024		1,633,588		1,625,629		1,630,729


Issuer Name	Industry	Asset Name	Asset Type	Reference Rate/Spread				LIBOR Floor			Current Rate (All In)			Maturity Date		Principal/ Number of Shares		Cost		Fair Value
Univision Communications Inc.	Media: Broadcasting & Subscription	Term Loan	Loan		1M USD LIBOR+	2.75	%		1.00	%		5.18	%		3/15/2024		2,746,369		2,734,005		2,607,897
UOS LLC	Capital Equipment	Term Loan B	Loan		1M USD LIBOR+	5.50	%		1.00	%		7.93	%		4/18/2023		589,746		592,139		592,695
UPC Financing Partnership	Media: Broadcasting & Subscription	Term Loan (10/17)	Loan		1M USD LIBOR+	2.50	%		0.00	%		4.93	%		1/15/2026		832,911		832,134		830,912
VeriFone Systems Inc.	Banking Finance Insurance & Real Estate	Term Loan (7/18)	Loan		3M USD LIBOR+	4.00	%		0.00	%		6.50	%		8/20/2025		5,472,500		5,443,430		5,396,377
Verra Mobility Corp.	Construction & Building	Term Loan	Loan		1M USD LIBOR+	3.75	%		0.00	%		6.18	%		3/3/2025		495,000		492,872		496,445
VFH Parent LLC	Banking Finance Insurance & Real Estate	Term Loan B	Loan		3M USD LIBOR+	3.50	%		0.00	%		6.00	%		3/2/2026		2,900,000		2,885,855		2,897,941
Virtus Investment Partners Inc.	Banking Finance Insurance & Real Estate	Term Loan B	Loan		3M USD LIBOR+	2.25	%		0.75	%		4.75	%		6/3/2024		3,567,004		3,566,338		3,547,671
Vistra Operations Company LLC	Utilities: Electric	2018 Incremental Term Loan	Loan		1M USD LIBOR+	2.00	%		0.00	%		4.43	%		12/31/2025		992,500		991,395		990,644
Vizient Inc.	Healthcare & Pharmaceuticals	Term Loan B	Loan		1M USD LIBOR+	2.75	%		0.00	%		5.18	%		5/6/2026		500,000		498,608		500,210
Wand NewCo 3 Inc.	Automotive	Term Loan B	Loan		1M USD LIBOR+	3.50	%		0.00	%		5.93	%		2/5/2026		250,000		247,584		250,625
Web.Com Group Inc.	High Tech Industries	Term Loan B (08/18)	Loan		1M USD LIBOR+	3.75	%		0.00	%		6.18	%		10/10/2025		454,338		453,310		449,890
WeddingWire Inc.	Services: Consumer	Term Loan	Loan		1M USD LIBOR+	4.50	%		0.00	%		6.93	%		12/19/2025		3,990,000		3,983,163		3,980,025
Weight Watchers International Inc.	Services: Consumer	Term Loan B	Loan		3M USD LIBOR+	4.75	%		0.75	%		7.25	%		11/29/2024		1,810,065		1,780,006		1,776,126
West Corporation	Telecommunications	Term Loan B	Loan		3M USD LIBOR+	3.50	%		1.00	%		6.00	%		10/10/2024		2,983,719		2,901,690		2,702,145
West Corporation	Telecommunications	Term Loan B (Olympus Merger)	Loan		3M USD LIBOR+	4.00	%		1.00	%		6.50	%		10/10/2024		1,246,843		1,163,421		1,153,642
Western Dental Services Inc.	Retail	Term Loan (12/18)	Loan		1M USD LIBOR+	5.25	%		1.00	%		7.68	%		6/30/2023		2,457,481		2,441,265		2,408,332
Western Digital Corporation	High Tech Industries	Term Loan B-4	Loan		1M USD LIBOR+	1.75	%		0.00	%		4.18	%		4/29/2023		1,296,349		1,265,285		1,254,217
Wheel Pros LLC	Automotive	Term Loan	Loan		1M USD LIBOR+	4.75	%		0.00	%		7.18	%		4/4/2025		2,000,000		1,982,141		1,980,000
Wirepath LLC	Consumer goods: Non-durable	Term Loan	Loan		1M USD LIBOR+	4.00	%		1.00	%		6.43	%		8/5/2024		2,977,562		2,951,058		2,962,675
Wynn Resorts Limited	Hotel Gaming & Leisure	Term Loan B	Loan		1M USD LIBOR+	2.25	%		0.00	%		4.68	%		10/30/2024		1,995,000		1,977,968		1,978,661
YS Garments LLC	Retail	Term Loan	Loan		1W USD LIBOR+	6.00	%		1.00	%		8.39	%		8/9/2024		1,975,000		1,957,489		1,955,250
Zep Inc.	Chemicals Plastics & Rubber	Term Loan	Loan		3M USD LIBOR+	4.00	%		1.00	%		6.50	%		8/12/2024		2,462,500		2,453,195		1,955,225
Zest Acquisition Corp.	Healthcare & Pharmaceuticals	Term Loan	Loan		1M USD LIBOR+	3.50	%		0.00	%		5.93	%		3/14/2025		990,000		985,734		937,203

																		$	511,212,385	$	497,734,749


	Number of Shares		Cost		Fair Value
Cash and cash equivalents
U.S. Bank Money Market (b)		8,579,399	$	8,579,399	$	8,579,399

Total cash and cash equivalents		8,579,399	$	8,579,399	$	8,579,399

(a)	Security is in default as of May 31, 2019.

(b)	Included within cash and cash equivalents in Saratoga CLO’s Statements of Assets and Liabilities as of May 31, 2019.

LIBOR—London Interbank Offered Rate

1W USD LIBOR—The 1 week USD LIBOR rate as of May 31, 2019 was 2.47%.

1M USD LIBOR—The 1 month USD LIBOR rate as of May 31, 2019 was 2.43%.

2M USD LIBOR—The 2 month USD LIBOR rate as of May 31, 2019 was 2.47%.

3M USD LIBOR—The 3 month USD LIBOR rate as of May 31, 2019 was 2.50%.

6M USD LIBOR—The 6 month USD LIBOR rate as of May 31, 2019 was 2.52%.

Prime—The Prime Rate as of May 31, 2019 was 5.50%.

Saratoga Investment Corp. CLO 2013-1 Ltd.

Schedule of Investments

February 28, 2019


Issuer Name	Industry	Asset Name	Asset Type	Reference Rate/Spread			LIBOR Floor			Current Rate (All In)			Maturity Date		Principal/ Number of Shares		Cost		Fair Value
Education Management II LLC	Services: Consumer	A-1 Preferred Shares	Equity													6,692	$	669,214	$	13,384
Education Management II LLC	Services: Consumer	A-2 Preferred Shares	Equity													18,975		1,897,538		1,670
New Millennium Holdco, Inc.	Healthcare & Pharmaceuticals	Common Stock	Equity													14,813		964,466		637
24 Hour Fitness Worldwide Inc.	Services: Consumer	Term Loan (5/18)	Loan	1M USD LIBOR+	3.50	%		0.00	%		5.99	%		5/30/2025	$	2,990,000		2,978,426		2,987,518
ABB Con-Cise Optical Group LLC	Healthcare & Pharmaceuticals	Term Loan B	Loan	1M USD LIBOR+	5.00	%		1.00	%		7.49	%		6/15/2023		2,103,445		2,080,167		2,037,712
Achilles Acquisition LLC	Banking Finance Insurance & Real Estate	Term Loan (09/18)	Loan	1M USD LIBOR+	4.00	%		0.00	%		6.49	%		10/13/2025		6,000,000		5,985,885		5,962,500
Acosta Inc.	Media: Advertising Printing & Publishing	Term Loan B (1st Lien)	Loan	1M USD LIBOR+	3.25	%		1.00	%		5.74	%		9/27/2021		1,915,375		1,909,171		957,687
ADMI Corp.	Services: Consumer	Term Loan B	Loan	1M USD LIBOR+	3.00	%		0.00	%		5.49	%		4/30/2025		1,990,000		1,981,204		1,968,607
Advantage Sales & Marketing Inc.	Services: Business	First Lien Term Loan	Loan	1M USD LIBOR+	3.25	%		1.00	%		5.74	%		7/23/2021		2,396,156		2,394,791		2,098,889
Advantage Sales & Marketing Inc.	Services: Business	Term Loan B Incremental	Loan	1M USD LIBOR+	3.25	%		1.00	%		5.74	%		7/23/2021		494,975		487,610		431,247
Aegis Toxicology Sciences Corporation	Healthcare & Pharmaceuticals	Term Loan	Loan	3M USD LIBOR+	5.50	%		1.00	%		8.11	%		5/9/2025		3,990,000		3,954,925		3,850,350
Agiliti Health Inc.	Healthcare & Pharmaceuticals	Delayed Draw Term Loan	Loan	1M USD LIBOR+	3.00	%		0.00	%		5.49	%		1/5/2026		500,000		500,000		499,375
Agrofresh Inc.	Beverage Food & Tobacco	Term Loan	Loan	3M USD LIBOR+	4.75	%		1.00	%		7.36	%		7/30/2021		2,919,744		2,915,422		2,883,247
AI Mistral (Luxembourg) Subco Sarl	High Tech Industries	Term Loan	Loan	1M USD LIBOR+	3.00	%		1.00	%		5.49	%		3/11/2024		491,250		491,250		455,020
AIS Holdco LLC	Services: Business	Term Loan	Loan	3M USD LIBOR+	5.00	%		0.00	%		7.61	%		8/15/2025		2,484,375		2,472,344		2,422,266
Akorn Inc.	Healthcare & Pharmaceuticals	Term Loan B	Loan	1M USD LIBOR+	5.50	%		1.00	%		7.99	%		4/16/2021		398,056		397,485		316,455
Albertson’s LLC	Retail	Term Loan B7	Loan	1M USD LIBOR+	3.00	%		0.75	%		5.49	%		11/17/2025		4,151,511		4,140,731		4,124,733
Alchemy US Holdco 1 LLC	Metals & Mining	Term Loan	Loan	6M USD LIBOR+	5.50	%		0.00	%		8.19	%		10/10/2025		2,000,000		1,971,432		1,990,000
Alera Group Intermediate Holdings Inc.	Banking Finance Insurance & Real Estate	Term Loan B	Loan	1M USD LIBOR+	4.50	%		0.00	%		6.99	%		8/1/2025		498,750		497,585		499,997
Alion Science and Technology Corporation	Aerospace & Defense	Term Loan B (1st Lien)	Loan	1M USD LIBOR+	4.50	%		1.00	%		6.99	%		8/19/2021		3,626,521		3,620,261		3,614,445
Allen Media LLC	Media: Diversified & Production	Term Loan B	Loan	3M USD LIBOR+	6.50	%		1.00	%		7.50	%		8/30/2023		3,000,000		2,931,901		2,872,500


Issuer Name	Industry	Asset Name	Asset Type	Reference Rate/Spread			LIBOR Floor			Current Rate (All In)			Maturity Date		Principal/ Number of Shares		Cost		Fair Value
Altisource S.a r.l.	Banking Finance Insurance & Real Estate	Term Loan B (03/18)	Loan	3M USD LIBOR+	4.00	%		1.00	%		6.61	%		4/3/2024		1,677,030		1,666,628		1,639,296
Altra Industrial Motion Corp.	Capital Equipment	Term Loan	Loan	1M USD LIBOR+	2.00	%		0.00	%		4.49	%		10/1/2025		1,955,223		1,950,844		1,930,783
American Greetings Corporation	Media: Advertising Printing & Publishing	Term Loan	Loan	1M USD LIBOR+	4.50	%		1.00	%		6.99	%		4/5/2024		4,982,450		4,979,868		4,929,536
American Residential Services LLC	Services: Consumer	Term Loan B	Loan	1M USD LIBOR+	4.00	%		1.00	%		6.49	%		6/30/2022		3,966,883		3,954,749		3,907,380
Amynta Agency Borrower Inc.	Banking Finance Insurance & Real Estate	Term Loan	Loan	1M USD LIBOR+	4.00	%		0.00	%		6.49	%		2/28/2025		3,497,500		3,455,778		3,410,063
Anastasia Parent LLC	Consumer goods: Non-durable	Term Loan	Loan	1M USD LIBOR+	3.75	%		0.00	%		6.24	%		8/11/2025		997,500		992,909		944,732
Anchor Glass Container Corporation	Containers Packaging & Glass	Term Loan (07/17)	Loan	1M USD LIBOR+	2.75	%		1.00	%		5.24	%		12/7/2023		490,038		488,206		392,520
AqGen Ascensus Inc.	Services: Consumer	Term Loan	Loan	1M USD LIBOR+	3.50	%		1.00	%		5.99	%		12/5/2022		408,906		408,242		405,839
Aramark Services Inc.	Services: Consumer	Term Loan B-2	Loan	1M USD LIBOR+	1.75	%		0.00	%		4.24	%		3/28/2024		1,294,904		1,294,904		1,287,212
Arctic Glacier U.S.A. Inc.	Beverage Food & Tobacco	Term Loan (3/18)	Loan	1M USD LIBOR+	3.50	%		1.00	%		5.99	%		3/20/2024		3,350,967		3,329,140		3,283,948
Aretec Group Inc.	Banking Finance Insurance & Real Estate	Term Loan (10/18)	Loan	1M USD LIBOR+	4.25	%		0.00	%		6.74	%		10/1/2025		2,000,000		1,995,758		1,975,000
ASG Technologies Group Inc.	High Tech Industries	Term Loan	Loan	1M USD LIBOR+	3.50	%		1.00	%		5.99	%		7/31/2024		493,763		491,798		485,739
AssetMark Financial Holdings Inc.	Banking Finance Insurance & Real Estate	Term Loan	Loan	3M USD LIBOR+	3.50	%		0.00	%		6.11	%		11/14/2025		2,500,000		2,496,120		2,490,625
Astoria Energy LLC	Energy: Electricity	Term Loan	Loan	1M USD LIBOR+	4.00	%		1.00	%		6.49	%		12/24/2021		1,406,149		1,397,673		1,407,612
Asurion LLC	Banking Finance Insurance & Real Estate	Term Loan B-4 (Replacement)	Loan	1M USD LIBOR+	3.00	%		0.00	%		5.49	%		8/4/2022		2,084,268		2,077,055		2,082,788
Asurion LLC	Banking Finance Insurance & Real Estate	Term Loan B6	Loan	1M USD LIBOR+	3.00	%		0.00	%		5.49	%		11/3/2023		497,955		494,277		497,512
Athenahealth Inc.	Healthcare & Pharmaceuticals	Term Loan B	Loan	3M USD LIBOR+	4.50	%		0.00	%		7.11	%		2/11/2026		2,000,000		1,960,211		1,988,760
Avaya Inc.	Telecommunications	Term Loan B	Loan	2M USD LIBOR+	4.25	%		0.00	%		6.82	%		12/16/2024		1,990,000		1,974,743		1,987,015
Avolon TLB Borrower 1 US LLC	Capital Equipment	Term Loan B3	Loan	1M USD LIBOR+	2.00	%		0.75	%		4.49	%		1/15/2025		913,731		909,648		912,763
Ball Metalpack Finco LLC	Containers Packaging & Glass	Term Loan	Loan	1M USD LIBOR+	4.50	%		0.00	%		6.99	%		7/31/2025		3,984,987		3,966,751		3,970,044
Bausch Health Companies Inc.	Healthcare & Pharmaceuticals	Term Loan B (05/18)	Loan	1M USD LIBOR+	3.00	%		0.00	%		5.49	%		6/2/2025		1,752,582		1,745,304		1,752,144
Bausch Health Companies Inc.	Healthcare & Pharmaceuticals	Term Loan	Loan	1M USD LIBOR+	2.75	%		0.00	%		5.24	%		11/27/2025		481,250		476,571		479,310
Blackboard Inc.	High Tech Industries	Term Loan B4	Loan	3M USD LIBOR+	5.00	%		1.00	%		7.61	%		6/30/2021		2,932,500		2,919,562		2,818,866
Blount International Inc.	Forest Products & Paper	Term Loan B (09/18)	Loan	1M USD LIBOR+	3.75	%		1.00	%		6.24	%		4/12/2023		3,488,756		3,485,266		3,484,395
Blucora Inc.	High Tech Industries	Term Loan (11/17)	Loan	1M USD LIBOR+	3.00	%		1.00	%		5.49	%		5/22/2024		706,667		703,725		704,900


Issuer Name	Industry	Asset Name	Asset Type	Reference Rate/Spread			LIBOR Floor			Current Rate (All In)			Maturity Date		Principal/ Number of Shares		Cost		Fair Value
Boxer Parent Company Inc.	Services: Business	Term Loan	Loan	3M USD LIBOR+	4.25	%		0.00	%		6.86	%		10/2/2025		2,500,000		2,476,591		2,484,150
Bracket Intermediate Holding Corp.	Healthcare & Pharmaceuticals	Term Loan	Loan	3M USD LIBOR+	4.25	%		0.00	%		6.86	%		9/5/2025		997,500		992,812		985,031
Broadstreet Partners Inc.	Banking Finance Insurance & Real Estate	Term Loan B2	Loan	1M USD LIBOR+	3.25	%		1.00	%		5.74	%		11/8/2023		1,035,177		1,032,997		1,032,589
Brookfield WEC Holdings Inc.	Energy: Electricity	Term Loan	Loan	1M USD LIBOR+	3.75	%		0.75	%		6.24	%		8/1/2025		2,000,000		1,990,924		2,001,880
Cable & Wireless Communications Limited	Telecommunications	Term Loan B4	Loan	1M USD LIBOR+	3.25	%		0.00	%		5.74	%		1/30/2026		2,500,000		2,497,271		2,488,200
Cable One Inc.	Media: Broadcasting & Subscription	Term Loan B	Loan	1M USD LIBOR+	1.75	%		0.00	%		4.24	%		5/1/2024		492,500		492,049		490,348
Calceus Acquisition Inc.	Consumer goods: Non-durable	Term Loan B	Loan	1M USD LIBOR+	5.50	%		0.00	%		7.99	%		2/12/2025		1,000,000		987,601		995,420
Callaway Golf Company	Retail	Term Loan B	Loan	1M USD LIBOR+	4.50	%		0.00	%		6.99	%		1/2/2026		750,000		735,504		753,127
Canyon Valor Companies Inc.	Media: Advertising Printing & Publishing	Term Loan B	Loan	3M USD LIBOR+	2.75	%		0.00	%		5.36	%		6/16/2023		939,191		936,843		929,019
Capital Automotive L.P.	Banking Finance Insurance & Real Estate	First Lien Term Loan	Loan	1M USD LIBOR+	2.50	%		1.00	%		4.99	%		3/25/2024		478,053		476,166		470,284
CareerBuilder LLC	Services: Business	Term Loan	Loan	3M USD LIBOR+	6.75	%		1.00	%		9.36	%		7/31/2023		2,266,211		2,224,216		2,257,713
Casa Systems Inc.	Telecommunications	Term Loan	Loan	1M USD LIBOR+	4.00	%		1.00	%		6.49	%		12/20/2023		1,470,000		1,459,340		1,451,625
CCS-CMGC Holdings Inc.	Healthcare & Pharmaceuticals	Term Loan	Loan	1M USD LIBOR+	5.50	%		0.00	%		7.99	%		10/1/2025		2,500,000		2,476,183		2,393,750
Cengage Learning Inc.	Media: Advertising Printing & Publishing	Term Loan	Loan	1M USD LIBOR+	4.25	%		1.00	%		6.74	%		6/7/2023		1,462,458		1,450,545		1,343,999
CenturyLink Inc.	Telecommunications	Term Loan B	Loan	1M USD LIBOR+	2.75	%		0.00	%		5.24	%		1/31/2025		3,970,000		3,946,810		3,904,813
CEOC LLC	Hotel Gaming & Leisure	Term Loan	Loan	1M USD LIBOR+	2.00	%		0.00	%		4.49	%		10/4/2024		990,000		990,000		980,734
Charter Communications Operating LLC.	Media: Broadcasting & Subscription	Term Loan (12/17)	Loan	1M USD LIBOR+	2.00	%		0.00	%		4.49	%		4/30/2025		1,584,000		1,582,488		1,578,773
Compass Power Generation L.L.C.	Utilities: Electric	Term Loan B (08/18)	Loan	1M USD LIBOR+	3.50	%		1.00	%		5.99	%		12/20/2024		1,953,052		1,948,283		1,948,775
Compuware Corporation	High Tech Industries	Term Loan (08/18)	Loan	1M USD LIBOR+	3.50	%		0.00	%		5.99	%		8/22/2025		500,000		498,788		501,250
Concordia International Corp.	Healthcare & Pharmaceuticals	Term Loan	Loan	1M USD LIBOR+	5.50	%		1.00	%		7.99	%		9/6/2024		1,207,930		1,145,627		1,145,190
Consolidated Aerospace Manufacturing LLC	Aerospace & Defense	Term Loan (1st Lien)	Loan	1M USD LIBOR+	3.75	%		1.00	%		6.24	%		8/11/2022		2,418,750		2,412,445		2,409,680
Consolidated Communications Inc.	Telecommunications	Term Loan B	Loan	1M USD LIBOR+	3.00	%		1.00	%		5.49	%		10/5/2023		1,490,574		1,477,850		1,451,133
Covia Holdings Corporation	Metals & Mining	Term Loan	Loan	3M USD LIBOR+	3.75	%		1.00	%		6.36	%		6/2/2025		995,000		995,000		844,685
CPI Acquisition Inc	Banking Finance Insurance & Real Estate	Term Loan B (1st Lien)	Loan	6M USD LIBOR+	4.50	%		1.00	%		7.19	%		8/17/2022		1,436,782		1,424,775		894,396
Crown Subsea Communications Holding Inc	Construction & Building	Term Loan	Loan	1M USD LIBOR+	6.00	%		0.00	%		8.49	%		11/3/2025		4,000,000		3,957,810		3,975,000
CSC Holdings LLC	Media: Broadcasting & Subscription	Term Loan B (03/17)	Loan	1M USD LIBOR+	2.25	%		0.00	%		4.74	%		7/17/2025		1,994,924		1,970,647		1,967,853


Issuer Name	Industry	Asset Name	Asset Type	Reference Rate/Spread			LIBOR Floor			Current Rate (All In)			Maturity Date		Principal/ Number of Shares		Cost		Fair Value
CSC Holdings LLC	Media: Broadcasting & Subscription	Term Loan B	Loan	1M USD LIBOR+	2.25	%		0.00	%		4.74	%		1/15/2026		500,000		498,804		493,250
CT Technologies Intermediate Hldgs Inc	Healthcare & Pharmaceuticals	New Term Loan	Loan	1M USD LIBOR+	4.25	%		1.00	%		6.74	%		12/1/2021		1,440,263		1,433,574		1,229,984
Cumulus Media New Holdings Inc.	Media: Broadcasting & Subscription	Term Loan	Loan	1M USD LIBOR+	4.50	%		1.00	%		6.99	%		5/13/2022		335,864		333,061		329,006
Daseke Companies Inc.	Transportation: Cargo	Replacement Term Loan	Loan	1M USD LIBOR+	5.00	%		1.00	%		7.49	%		2/27/2024		1,975,651		1,965,011		1,965,772
Dealer Tire LLC	Automotive	Term Loan B	Loan	1M USD LIBOR+	5.50	%		0.00	%		7.99	%		12/12/2025		3,000,000		2,892,107		3,000,000
Delek US Holdings Inc.	Utilities: Oil & Gas	Term Loan B	Loan	1M USD LIBOR+	2.25	%		0.00	%		4.74	%		3/31/2025		2,992,462		2,956,032		2,952,572
Dell International L.L.C.	High Tech Industries	Term Loan B	Loan	1M USD LIBOR+	2.00	%		0.75	%		4.49	%		9/7/2023		3,974,937		3,922,161		3,960,031
Delta 2 (Lux) SARL	Hotel Gaming & Leisure	Term Loan B	Loan	1M USD LIBOR+	2.50	%		1.00	%		4.99	%		2/1/2024		1,318,289		1,315,251		1,289,036
DHX Media Ltd.	Media: Broadcasting & Subscription	Term Loan	Loan	1M USD LIBOR+	3.75	%		1.00	%		6.24	%		12/29/2023		332,042		330,546		320,005
Digital Room Holdings Inc.	Media: Advertising Printing & Publishing	Term Loan	Loan	1M USD LIBOR+	5.00	%		1.00	%		7.49	%		12/29/2023		3,101,339		3,074,510		3,070,325
Dole Food Company Inc.	Beverage Food & Tobacco	Term Loan B	Loan	Prime+	2.75	%		1.00	%		3.75	%		4/8/2024		481,250		479,436		473,733
Drew Marine Group Inc.	Transportation: Consumer	First Lien Term Loan	Loan	1M USD LIBOR+	3.25	%		1.00	%		5.74	%		11/19/2020		2,841,040		2,828,735		2,819,732
DTZ U.S. Borrower LLC	Construction & Building	Term Loan B	Loan	1M USD LIBOR+	3.25	%		0.00	%		5.74	%		8/21/2025		5,985,000		5,957,110		5,936,402
Dynatrace LLC	High Tech Industries	Term Loan	Loan	1M USD LIBOR+	3.25	%		0.00	%		5.74	%		8/22/2025		1,000,000		1,000,000		994,580
Eagletree-Carbide Acquisition Corp.	High Tech Industries	Term Loan	Loan	3M USD LIBOR+	4.25	%		1.00	%		6.86	%		8/28/2024		3,967,480		3,948,716		3,927,805
Education Management II LLC (a)	Services: Consumer	Term Loan A	Loan	Prime+	5.50	%		1.00	%		6.50	%		7/2/2020		423,861		419,105		8,477
Education Management II LLC (a)	Services: Consumer	Term Loan B	Loan	Prime+	8.50	%		1.00	%		9.50	%		7/2/2020		954,307		945,813		840
EIG Investors Corp.	High Tech Industries	Term Loan (06/18)	Loan	3M USD LIBOR+	3.75	%		1.00	%		6.36	%		2/9/2023		2,410,685		2,394,658		2,397,282
Emerald 2 Ltd. (Eagle US / Emerald Newco / ERM Canada / ERM US)	Environmental Industries	Term Loan	Loan	3M USD LIBOR+	4.00	%		1.00	%		6.61	%		5/14/2021		988,553		985,300		978,745
Emerald Performance Materials LLC	Chemicals Plastics & Rubber	Term Loan	Loan	1M USD LIBOR+	3.50	%		1.00	%		5.99	%		7/30/2021		475,777		474,869		469,682
Endo Luxembourg Finance Company I S.a.r.l.	Healthcare & Pharmaceuticals	Term Loan B (4/17)	Loan	1M USD LIBOR+	4.25	%		0.75	%		6.74	%		4/29/2024		3,977,405		3,952,044		3,978,240
Energy Acquisition LP	Capital Equipment	Term Loan (6/18)	Loan	3M USD LIBOR+	4.25	%		0.00	%		6.86	%		6/26/2025		1,990,000		1,971,730		1,910,400
Envision Healthcare Corporation	Healthcare & Pharmaceuticals	Term Loan B (06/18)	Loan	1M USD LIBOR+	3.75	%		0.00	%		6.24	%		10/10/2025		5,000,000		4,988,764		4,807,800
Evergreen AcqCo 1 LP	Retail	Term Loan C	Loan	3M USD LIBOR+	3.75	%		1.25	%		6.36	%		7/9/2019		935,156		934,453		883,723
EWT Holdings III Corp.	Capital Equipment	Term Loan	Loan	1M USD LIBOR+	3.00	%		1.00	%		5.49	%		12/20/2024		2,809,641		2,798,064		2,806,129


Issuer Name	Industry	Asset Name	Asset Type	Reference Rate/Spread			LIBOR Floor			Current Rate (All In)			Maturity Date		Principal/ Number of Shares		Cost		Fair Value
Extreme Reach Inc.	Media: Advertising Printing & Publishing	Term Loan	Loan	1M USD LIBOR+	6.25	%		1.00	%		8.74	%		2/7/2020		5,492,555		5,432,541		5,351,836
Fastener Acquisition Inc.	Construction & Building	Term Loan B	Loan	3M USD LIBOR+	4.25	%		1.00	%		6.86	%		3/28/2025		496,250		493,979		486,325
FinCo I LLC	Banking Finance Insurance & Real Estate	2018 Term Loan B	Loan	1M USD LIBOR+	2.00	%		0.00	%		4.49	%		12/27/2022		415,611		414,701		412,236
First Eagle Holdings Inc.	Banking Finance Insurance & Real Estate	Term Loan B (10/18)	Loan	3M USD LIBOR+	2.75	%		0.00	%		5.36	%		12/2/2024		5,000,000		4,973,959		4,987,500
Fitness International LLC	Services: Consumer	Term Loan B (4/18)	Loan	1M USD LIBOR+	3.25	%		0.00	%		5.74	%		4/18/2025		2,776,214		2,759,824		2,755,392
Franklin Square Holdings L.P.	Banking Finance Insurance & Real Estate	Term Loan	Loan	2M USD LIBOR+	2.50	%		0.00	%		5.07	%		8/1/2025		4,488,750		4,457,527		4,474,745
Fusion Connect Inc.	Telecommunications	Term Loan B	Loan	3M USD LIBOR+	7.50	%		1.00	%		10.11	%		5/4/2023		1,925,000		1,857,064		1,732,500
GBT Group Services B.V.	Hotel Gaming & Leisure	Term Loan	Loan	3M USD LIBOR+	2.50	%		0.00	%		5.11	%		8/13/2025		4,488,750		4,487,571		4,466,306
GC EOS Buyer Inc.	Automotive	Term Loan B (06/18)	Loan	1M USD LIBOR+	4.50	%		0.00	%		6.99	%		8/1/2025		2,992,500		2,964,056		2,955,094
General Nutrition Centers Inc.	Retail	FILO Term Loan	Loan	1M USD LIBOR+	7.00	%		0.00	%		9.49	%		1/3/2023		585,849		585,849		593,172
General Nutrition Centers Inc.	Retail	Term Loan B2	Loan	Prime+	9.16	%		0.75	%		9.91	%		3/4/2021		1,035,789		1,035,789		1,008,341
GI Chill Acquisition LLC	Services: Business	Term Loan	Loan	3M USD LIBOR+	4.00	%		0.00	%		6.61	%		8/6/2025		2,493,750		2,482,280		2,487,516
GI Revelation Acquisition LLC	Services: Business	Term Loan	Loan	1M USD LIBOR+	5.00	%		0.00	%		7.49	%		4/16/2025		1,244,373		1,238,702		1,231,930
Gigamon Inc.	Services: Business	Term Loan B	Loan	3M USD LIBOR+	4.25	%		1.00	%		6.86	%		12/27/2024		1,980,000		1,962,889		1,952,775
Global Tel*Link Corporation	Telecommunications	Term Loan B	Loan	1M USD LIBOR+	4.25	%		0.00	%		6.74	%		11/28/2025		3,070,455		3,070,455		3,070,455
Go Wireless Inc.	Telecommunications	Term Loan	Loan	1M USD LIBOR+	6.50	%		1.00	%		8.99	%		12/22/2024		3,380,519		3,331,962		3,250,944
GoodRX Inc.	Healthcare & Pharmaceuticals	Term Loan B	Loan	1M USD LIBOR+	3.00	%		0.00	%		5.49	%		10/10/2025		3,000,000		2,992,953		2,976,570
Goodyear Tire & Rubber Company The	Chemicals Plastics & Rubber	Second Lien Term Loan	Loan	1M USD LIBOR+	2.00	%		0.00	%		4.49	%		3/7/2025		2,000,000		2,000,000		1,956,660
Grosvenor Capital Management Holdings LLLP	Banking Finance Insurance & Real Estate	Term Loan B	Loan	1M USD LIBOR+	2.75	%		1.00	%		5.24	%		3/28/2025		920,941		916,777		916,337
Guidehouse LLP	Aerospace & Defense	Term Loan	Loan	1M USD LIBOR+	3.00	%		0.00	%		5.49	%		5/1/2025		1,990,000		1,985,566		1,965,125
Hargray Communications Group Inc.	Media: Broadcasting & Subscription	Term Loan B	Loan	1M USD LIBOR+	3.00	%		1.00	%		5.49	%		5/16/2024		985,000		983,012		973,308
Harland Clarke Holdings Corp.	Media: Advertising Printing & Publishing	Term Loan	Loan	3M USD LIBOR+	4.75	%		1.00	%		7.36	%		11/3/2023		1,833,245		1,824,008		1,741,583
HD Supply Waterworks Ltd.	Construction & Building	Term Loan	Loan	6M USD LIBOR+	3.00	%		1.00	%		5.69	%		8/1/2024		493,750		492,687		489,430
Helix Gen Funding LLC	Energy: Electricity	Term Loan B (02/17)	Loan	1M USD LIBOR+	3.75	%		1.00	%		6.24	%		6/3/2024		264,030		263,460		256,204
HLF Financing SaRL LLC	Consumer goods: Non-durable	Term Loan B (08/18)	Loan	1M USD LIBOR+	3.25	%		0.00	%		5.74	%		8/18/2025		3,990,000		3,973,021		3,990,000
Hoffmaster Group Inc.	Forest Products & Paper	Term Loan B1	Loan	1M USD LIBOR+	4.00	%		1.00	%		6.49	%		11/21/2023		1,074,390		1,077,199		1,070,361
Holley Purchaser Inc.	Automotive	Term Loan B	Loan	3M USD LIBOR+	5.00	%		0.00	%		7.61	%		10/24/2025		2,500,000		2,475,886		2,450,000


Issuer Name	Industry	Asset Name	Asset Type	Reference Rate/Spread			LIBOR Floor			Current Rate (All In)			Maturity Date		Principal/ Number of Shares		Cost		Fair Value
Hostess Brands LLC	Beverage Food & Tobacco	Cov-Lite Term Loan B	Loan	3M USD LIBOR+	2.25	%		0.75	%		4.86	%		8/3/2022		1,467,734		1,464,418		1,448,169
Hudson River Trading LLC	Banking Finance Insurance & Real Estate	Term Loan B (10/18)	Loan	1M USD LIBOR+	3.50	%		0.00	%		5.99	%		4/3/2025		3,980,025		3,958,223		3,960,125
Hyland Software Inc.	High Tech Industries	Term Loan 3	Loan	1M USD LIBOR+	3.50	%		0.75	%		5.99	%		7/1/2024		1,586,222		1,584,204		1,588,205
Hyperion Refinance S.a.r.l.	Banking Finance Insurance & Real Estate	Tem Loan (12/17)	Loan	1M USD LIBOR+	3.50	%		1.00	%		5.99	%		12/20/2024		2,229,370		2,219,751		2,225,647
Idera Inc.	High Tech Industries	Term Loan B	Loan	1M USD LIBOR+	4.50	%		1.00	%		6.99	%		6/28/2024		1,964,786		1,947,430		1,962,330
IG Investments Holdings LLC	Services: Business	Term Loan	Loan	3M USD LIBOR+	3.50	%		1.00	%		6.11	%		5/23/2025		3,398,256		3,380,175		3,382,115
Inmar Inc.	Services: Business	Term Loan B	Loan	1M USD LIBOR+	3.50	%		1.00	%		5.99	%		5/1/2024		3,492,500		3,398,589		3,389,471
Isagenix International LLC	Beverage Food & Tobacco	Term Loan	Loan	3M USD LIBOR+	5.75	%		1.00	%		8.36	%		6/16/2025		2,950,000		2,895,451		2,787,750
Jill Holdings LLC	Retail	Term Loan (1st Lien)	Loan	3M USD LIBOR+	5.00	%		1.00	%		7.61	%		5/9/2022		1,859,387		1,854,837		1,830,343
JP Intermediate B LLC	Consumer goods: Non-durable	Term Loan	Loan	3M USD LIBOR+	5.50	%		1.00	%		8.11	%		11/20/2025		4,937,500		4,883,059		4,702,969
Kinetic Concepts Inc.	Healthcare & Pharmaceuticals	1/17 USD Term Loan	Loan	3M USD LIBOR+	3.25	%		1.00	%		5.86	%		2/2/2024		2,364,000		2,355,394		2,357,499
KUEHG Corp.	Services: Consumer	Term Loan B-3	Loan	3M USD LIBOR+	3.75	%		1.00	%		6.36	%		2/21/2025		497,500		496,313		493,023
Lakeland Tours LLC	Hotel Gaming & Leisure	Term Loan B	Loan	3M USD LIBOR+	4.00	%		1.00	%		6.61	%		12/16/2024		2,482,494		2,474,016		2,458,836
Lannett Company Inc.	Healthcare & Pharmaceuticals	Term Loan B	Loan	1M USD LIBOR+	5.38	%		1.00	%		7.87	%		11/25/2022		2,546,382		2,513,728		2,338,419
Learfield Communications LLC	Media: Advertising Printing & Publishing	Initial Term Loan (A-L Parent)	Loan	1M USD LIBOR+	3.25	%		1.00	%		5.74	%		12/1/2023		490,000		488,374		488,775
Lighthouse Network LLC	Banking Finance Insurance & Real Estate	Term Loan B	Loan	3M USD LIBOR+	4.50	%		1.00	%		7.11	%		12/2/2024		3,415,500		3,402,695		3,402,692
Lightstone Holdco LLC	Energy: Electricity	Term Loan B	Loan	1M USD LIBOR+	3.75	%		1.00	%		6.24	%		1/30/2024		1,353,009		1,350,840		1,320,199
Lightstone Holdco LLC	Energy: Electricity	Term Loan C	Loan	1M USD LIBOR+	3.75	%		1.00	%		6.24	%		1/30/2024		74,592		74,478		72,783
Lindblad Expeditions Inc.	Hotel Gaming & Leisure	US 2018 Term Loan	Loan	1M USD LIBOR+	3.50	%		0.00	%		5.99	%		3/27/2025		398,000		397,117		397,005
Lindblad Expeditions Inc.	Hotel Gaming & Leisure	Cayman Term Loan	Loan	1M USD LIBOR+	3.50	%		0.00	%		5.99	%		3/27/2025		99,500		99,279		99,251
Liquidnet Holdings Inc.	Banking Finance Insurance & Real Estate	Term Loan B	Loan	1M USD LIBOR+	3.25	%		1.00	%		5.74	%		7/15/2024		3,154,276		3,144,386		3,150,333
LPL Holdings Inc.	Banking Finance Insurance & Real Estate	Incremental Term Loan B	Loan	1M USD LIBOR+	2.25	%		0.00	%		4.74	%		9/23/2024		1,723,805		1,720,511		1,708,721
McAfee LLC	Services: Business	Term Loan B	Loan	1M USD LIBOR+	3.75	%		0.00	%		6.24	%		9/30/2024		2,690,156		2,661,137		2,694,810
McDermott International Inc.	Construction & Building	Term Loan B	Loan	1M USD LIBOR+	5.00	%		1.00	%		7.49	%		5/12/2025		1,985,000		1,948,934		1,907,625
McGraw-Hill Global Education Holdings LLC	Media: Advertising Printing & Publishing	Term Loan	Loan	1M USD LIBOR+	4.00	%		1.00	%		6.49	%		5/4/2022		974,920		972,268		897,229
MedPlast Holdings Inc.	Healthcare & Pharmaceuticals	Term Loan (06/18)	Loan	3M USD LIBOR+	3.75	%		0.00	%		6.36	%		7/2/2025		498,750		496,426		500,620


Issuer Name	Industry	Asset Name	Asset Type	Reference Rate/Spread			LIBOR Floor			Current Rate (All In)			Maturity Date		Principal/ Number of Shares		Cost		Fair Value
Meredith Corporation	Media: Advertising Printing & Publishing	Term Loan B (10/18)	Loan	1M USD LIBOR+	2.75	%		0.00	%		5.24	%		1/31/2025		681,944		680,552		681,563
Messer Industries LLC	Chemicals Plastics & Rubber	Term Loan	Loan	3M USD LIBOR+	2.50	%		0.00	%		5.11	%		2/5/2026		3,000,000		2,992,500		2,977,500
Michaels Stores Inc.	Retail	Term Loan B	Loan	1M USD LIBOR+	2.50	%		1.00	%		4.99	%		1/30/2023		2,628,816		2,617,545		2,600,898
Midwest Physician Administrative Services LLC	Healthcare & Pharmaceuticals	Term Loan (2/18)	Loan	1M USD LIBOR+	2.75	%		0.75	%		5.24	%		8/15/2024		977,985		973,790		958,836
Milk Specialties Company	Beverage Food & Tobacco	Term Loan (2/17)	Loan	1M USD LIBOR+	4.00	%		1.00	%		6.49	%		8/16/2023		3,969,672		3,905,366		3,946,529
MKS Instruments Inc.	High Tech Industries	Term Loan B-5	Loan	1M USD LIBOR+	2.25	%		0.00	%		4.74	%		2/2/2026		1,000,000		990,327		998,750
MLN US HoldCo LLC	Telecommunications	Term Loan	Loan	1M USD LIBOR+	4.50	%		0.00	%		6.99	%		11/28/2025		1,000,000		997,824		992,500
MRC Global (US) Inc.	Metals & Mining	Term Loan B2	Loan	1M USD LIBOR+	3.00	%		0.00	%		5.49	%		9/20/2024		495,000		493,864		495,000
NAI Entertainment Holdings LLC	Hotel Gaming & Leisure	Term Loan B	Loan	1M USD LIBOR+	2.50	%		1.00	%		4.99	%		5/8/2025		997,500		995,282		989,600
Natgasoline LLC	Chemicals Plastics & Rubber	Term Loan	Loan	3M USD LIBOR+	3.50	%		0.00	%		6.11	%		11/14/2025		500,000		497,720		500,625
National Mentor Holdings Inc.	Healthcare & Pharmaceuticals	Term Loan	Loan	3M USD LIBOR+	4.25	%		0.00	%		6.86	%		2/5/2026		2,000,000		1,980,000		2,005,840
Navistar Financial Corporation	Automotive	Term Loan	Loan	1M USD LIBOR+	3.75	%		0.00	%		6.24	%		7/30/2025		1,990,000		1,980,604		1,982,538
NeuStar Inc.	Telecommunications	Term Loan B4 (03/18)	Loan	1M USD LIBOR+	3.50	%		1.00	%		5.99	%		8/8/2024		3,992,424		3,925,243		3,822,746
New Media Holdings II LLC	Media: Diversified & Production	Term Loan	Loan	1M USD LIBOR+	6.25	%		1.00	%		8.74	%		7/14/2022		5,973,699		5,959,159		5,921,430
NMI Holdings Inc.	Banking Finance Insurance & Real Estate	Term Loan	Loan	1M USD LIBOR+	4.75	%		1.00	%		7.24	%		5/23/2023		3,489,981		3,494,699		3,489,981
Novetta Solutions LLC	Aerospace & Defense	Term Loan	Loan	1M USD LIBOR+	5.00	%		1.00	%		7.49	%		10/17/2022		1,939,870		1,928,782		1,898,648
Novetta Solutions LLC	Aerospace & Defense	Second Lien Term Loan	Loan	1M USD LIBOR+	8.50	%		1.00	%		10.99	%		10/16/2023		1,000,000		993,349		945,000
NPC International Inc.	Beverage Food & Tobacco	Term Loan	Loan	2M USD LIBOR+	3.50	%		1.00	%		6.07	%		4/19/2024		492,500		492,068		461,719
Ocean Bidco Inc.	Banking Finance Insurance & Real Estate	Term Loan	Loan	2M USD LIBOR+	4.75	%		1.00	%		7.32	%		3/21/2025		473,186		470,976		464,115
OCI Partners LP	Chemicals Plastics & Rubber	Term Loan B (2/18)	Loan	3M USD LIBOR+	4.00	%		0.00	%		6.61	%		3/13/2025		3,067,196		3,045,069		3,059,528
Office Depot Inc.	Retail	Term Loan B	Loan	1M USD LIBOR+	5.25	%		1.00	%		7.74	%		11/8/2022		2,909,851		2,888,913		2,971,685
Onex Carestream Finance LP	High Tech Industries	Term Loan	Loan	1M USD LIBOR+	5.75	%		1.00	%		8.24	%		2/28/2021		2,834,110		2,822,053		2,780,970
Outcomes Group Holdings Inc.	Banking Finance Insurance & Real Estate	Term Loan	Loan	3M USD LIBOR+	3.50	%		0.00	%		6.11	%		10/24/2025		500,000		498,833		493,125
Owens & Minor Distribution Inc.	Healthcare & Pharmaceuticals	Term Loan B	Loan	1M USD LIBOR+	4.50	%		0.00	%		6.99	%		4/30/2025		497,500		488,393		420,800
P2 Upstream Acquisition Co.	High Tech Industries	Term Loan	Loan	3M USD LIBOR+	4.00	%		1.00	%		6.61	%		10/30/2020		945,558		943,988		929,011
Peraton Corp.	Aerospace & Defense	Term Loan	Loan	3M USD LIBOR+	5.25	%		1.00	%		7.86	%		4/29/2024		1,970,000		1,962,137		1,915,825
PGX Holdings Inc.	Services: Consumer	Term Loan	Loan	1M USD LIBOR+	5.25	%		1.00	%		7.74	%		9/29/2020		2,674,370		2,667,939		2,614,197


Issuer Name	Industry	Asset Name	Asset Type	Reference Rate/Spread			LIBOR Floor			Current Rate (All In)			Maturity Date		Principal/ Number of Shares		Cost		Fair Value
PI UK Holdco II Limited	Services: Business	Term Loan B1 (PI UK Holdco II)	Loan	1M USD LIBOR+	3.50	%		1.00	%		5.99	%		1/3/2025		1,488,750		1,481,083		1,473,237
Plastipak Packaging Inc	Containers Packaging & Glass	Term Loan B (04/18)	Loan	1M USD LIBOR+	2.50	%		0.00	%		4.99	%		10/15/2024		987,500		983,130		974,100
Presidio Inc.	Services: Business	Term Loan B 2017	Loan	3M USD LIBOR+	2.75	%		1.00	%		5.36	%		2/2/2024		1,697,600		1,663,332		1,678,078
Prime Security Services Borrower LLC	Services: Consumer	Refi Term Loan B-1	Loan	1M USD LIBOR+	2.75	%		1.00	%		5.24	%		5/2/2022		1,950,361		1,943,928		1,943,925
Priority Payment Systems Holdings LLC	High Tech Industries	Term Loan	Loan	1M USD LIBOR+	5.00	%		1.00	%		7.49	%		1/3/2023		1,150,910		1,145,156		1,145,881
Priority Payment Systems Holdings LLC	High Tech Industries	Delayed Draw Term Loan	Loan	3M USD LIBOR+	5.00	%		1.00	%		7.61	%		1/3/2023		—		—		—
Project Accelerate Parent LLC	Services: Business	Term Loan	Loan	1M USD LIBOR+	4.25	%		1.00	%		6.74	%		1/2/2025		1,985,000		1,976,356		1,985,000
Prometric Holdings Inc.	Services: Business	Term Loan	Loan	1M USD LIBOR+	3.00	%		1.00	%		5.49	%		1/29/2025		496,250		494,124		492,528
Quad/Graphics Inc.	Media: Advertising Printing & Publishing	Term Loan B (12/18)	Loan	1M USD LIBOR+	5.00	%		0.00	%		7.49	%		2/2/2026		4,500,000		4,434,606		4,483,125
Rackspace Hosting Inc.	High Tech Industries	Term Loan B	Loan	3M USD LIBOR+	3.00	%		1.00	%		5.61	%		11/3/2023		1,491,203		1,480,810		1,418,969
Radio Systems Corporation	Consumer goods: Durable	Term Loan	Loan	1M USD LIBOR+	2.75	%		1.00	%		5.24	%		5/2/2024		1,477,500		1,477,500		1,457,184
Radiology Partners Inc.	Healthcare & Pharmaceuticals	Term Loan	Loan	3M USD LIBOR+	4.75	%		0.00	%		7.36	%		7/9/2025		1,000,000		995,568		1,005,000
Research Now Group Inc.	Media: Advertising Printing & Publishing	Term Loan	Loan	1M USD LIBOR+	5.50	%		1.00	%		7.99	%		12/20/2024		3,967,481		3,836,608		3,942,684
Resolute Investment Managers Inc.	Banking Finance Insurance & Real Estate	Term Loan (10/17)	Loan	3M USD LIBOR+	3.25	%		1.00	%		5.86	%		4/29/2022		2,709,661		2,712,126		2,713,049
Restaurant Technologies Inc.	Beverage Food & Tobacco	Term Loan (9/18)	Loan	1M USD LIBOR+	3.25	%		0.00	%		5.74	%		10/1/2025		1,000,000		997,720		999,380
Revspring Inc.	Services: Business	Term Loan B	Loan	3M USD LIBOR+	4.25	%		0.00	%		6.86	%		10/10/2025		1,000,000		997,767		985,000
Reynolds Group Holdings Inc.	Metals & Mining	Term Loan (01/17)	Loan	1M USD LIBOR+	2.75	%		0.00	%		5.24	%		2/6/2023		1,725,912		1,725,912		1,718,369
RGIS Services LLC	Services: Business	Term Loan	Loan	3M USD LIBOR+	7.50	%		1.00	%		10.11	%		3/31/2023		486,033		480,179		415,558
Robertshaw US Holding Corp.	Consumer goods: Durable	Term Loan B	Loan	1M USD LIBOR+	3.50	%		1.00	%		5.99	%		2/28/2025		992,500		990,321		929,228
Rocket Software Inc.	High Tech Industries	Term Loan (11/18)	Loan	1M USD LIBOR+	4.25	%		0.00	%		6.74	%		11/28/2025		4,000,000		3,982,916		4,000,000
Rovi Solutions Corporation	Media: Diversified & Production	Term Loan B	Loan	1M USD LIBOR+	2.50	%		0.75	%		4.99	%		7/2/2021		1,332,669		1,330,256		1,311,013
Russell Investments US Institutional Holdco Inc.	Banking Finance Insurance & Real Estate	Term Loan B	Loan	1M USD LIBOR+	3.25	%		1.00	%		5.74	%		6/1/2023		4,184,784		4,064,980		4,142,936
Sahara Parent Inc.	High Tech Industries	Term Loan B (11/18)	Loan	1M USD LIBOR+	4.50	%		0.00	%		6.99	%		8/16/2024		1,975,050		1,956,153		1,967,031
Sally Holdings LLC	Retail	Term Loan B	Loan	1M USD LIBOR+	2.25	%		0.00	%		4.74	%		7/5/2024		987,455		983,210		973,877
Sally Holdings LLC	Retail	Term Loan (Fixed)	Loan	Fixed	4.50	%		0.00	%		4.50	%		7/5/2024		1,000,000		996,030		963,750
Savage Enterprises LLC	Transportation: Cargo	Term Loan	Loan	1M USD LIBOR+	4.50	%		0.00	%		6.99	%		8/1/2025		3,823,951		3,774,062		3,836,684


Issuer Name	Industry	Asset Name	Asset Type	Reference Rate/Spread			LIBOR Floor			Current Rate (All In)			Maturity Date		Principal/ Number of Shares		Cost		Fair Value
SCS Holdings I Inc.	High Tech Industries	Term Loan	Loan	1M USD LIBOR+	4.25	%		1.00	%		6.74	%		10/31/2022		3,393,482		3,378,749		3,401,966
Seadrill Operating LP	Energy: Oil & Gas	Term Loan B	Loan	3M USD LIBOR+	6.00	%		1.00	%		8.61	%		2/21/2021		915,243		888,341		763,084
SG Acquisition Inc.	Banking Finance Insurance & Real Estate	Term Loan (Safe-Guard)	Loan	3M USD LIBOR+	5.00	%		1.00	%		7.61	%		3/29/2024		1,660,000		1,647,194		1,647,550
Shearer’s Foods LLC	Beverage Food & Tobacco	Term Loan	Loan	1M USD LIBOR+	4.25	%		1.00	%		6.74	%		6/30/2021		2,925,531		2,916,771		2,898,704
Shutterfly Inc.	Media: Advertising Printing & Publishing	Term Loan B2	Loan	1M USD LIBOR+	2.75	%		0.00	%		5.24	%		8/19/2024		3,017,873		2,966,805		2,981,417
Sirva Worldwide Inc.	Transportation: Cargo	Term Loan B	Loan	3M USD LIBOR+	5.50	%		0.00	%		8.11	%		8/4/2025		2,500,000		2,471,352		2,443,750
SMB Shipping Logistics LLC	Transportation: Consumer	Term Loan B	Loan	6M USD LIBOR+	4.00	%		1.00	%		6.69	%		2/2/2024		1,969,937		1,968,013		1,953,528
SP PF Buyer LLC	Consumer goods: Durable	Term Loan B	Loan	3M USD LIBOR+	4.50	%		0.00	%		7.11	%		12/19/2025		2,000,000		1,921,772		1,970,000
SRAM LLC	Consumer goods: Durable	Term Loan	Loan	Prime+	2.73	%		1.00	%		3.73	%		3/15/2024		1,984,685		1,970,345		1,967,319
SS&C Technologies Inc.	Services: Business	Term Loan B3	Loan	1M USD LIBOR+	2.25	%		0.00	%		4.74	%		4/16/2025		616,068		614,712		612,815
SS&C Technologies Inc.	Services: Business	Term Loan B4	Loan	1M USD LIBOR+	2.25	%		0.00	%		4.74	%		4/16/2025		235,988		235,469		234,742
SS&C Technologies Inc.	Services: Business	Term Loan B-5	Loan	1M USD LIBOR+	2.25	%		0.00	%		4.74	%		4/16/2025		498,743		497,588		496,189
SSH Group Holdings Inc.	Consumer goods: Non-durable	Term Loan	Loan	2M USD LIBOR+	4.25	%		0.00	%		6.82	%		7/30/2025		1,995,000		1,990,196		1,970,063
Staples Inc.	Retail	Term Loan B (07/17)	Loan	1M USD LIBOR+	4.00	%		1.00	%		6.49	%		9/12/2024		1,975,000		1,970,996		1,959,240
Starfruit US Holdco LLC	Chemicals Plastics & Rubber	Term Loan B	Loan	1M USD LIBOR+	3.25	%		0.00	%		5.74	%		10/1/2025		500,000		497,640		496,375
Steak N Shake Operations Inc.	Beverage Food & Tobacco	Term Loan	Loan	1M USD LIBOR+	3.75	%		1.00	%		6.24	%		3/19/2021		834,991		832,242		638,768
Sybil Software LLC	High Tech Industries	Term Loan B (4/18)	Loan	3M USD LIBOR+	2.50	%		1.00	%		5.11	%		9/29/2023		677,351		674,400		676,220
Tenneco Inc	Capital Equipment	Term Loan B	Loan	1M USD LIBOR+	2.75	%		0.00	%		5.24	%		10/1/2025		1,500,000		1,485,848		1,484,070
Ten-X LLC	Banking Finance Insurance & Real Estate	Term Loan	Loan	1M USD LIBOR+	4.00	%		1.00	%		6.49	%		9/30/2024		1,980,000		1,978,059		1,955,250
TGG TS Acquisition Company	Media: Diversified & Production	Term Loan (12/18)	Loan	3M USD LIBOR+	6.50	%		0.00	%		9.11	%		12/15/2025		3,000,000		2,854,156		2,981,250
The Edelman Financial Center LLC	Banking Finance Insurance & Real Estate	Term Loan B (06/18)	Loan	3M USD LIBOR+	3.25	%		0.00	%		5.86	%		7/21/2025		1,250,000		1,244,166		1,247,138
Thor Industries Inc.	Automotive	Term Loan (USD)	Loan	1M USD LIBOR+	3.75	%		0.00	%		6.24	%		2/2/2026		2,830,276		2,797,635		2,734,754
Topgolf International Inc.	Hotel Gaming & Leisure	Term Loan (02/19)	Loan	1M USD LIBOR+	5.50	%		0.00	%		7.99	%		2/6/2026		500,000		495,177		499,375
Townsquare Media Inc.	Media: Broadcasting & Subscription	Term Loan B (02/17)	Loan	1M USD LIBOR+	3.00	%		1.00	%		5.49	%		4/1/2022		881,975		879,219		868,745
Transdigm Inc.	Aerospace & Defense	Term Loan G	Loan	1M USD LIBOR+	2.50	%		0.00	%		4.99	%		8/22/2024		4,148,194		4,154,661		4,087,381
Travel Leaders Group LLC	Hotel Gaming & Leisure	Term Loan B (08/18)	Loan	1M USD LIBOR+	4.00	%		0.00	%		6.49	%		1/25/2024		2,487,500		2,482,802		2,493,719
TRC Companies Inc.	Services: Business	Term Loan	Loan	1M USD LIBOR+	3.50	%		1.00	%		5.99	%		6/21/2024		3,411,364		3,399,559		3,368,722


Issuer Name	Industry	Asset Name	Asset Type	Reference Rate/Spread			LIBOR Floor			Current Rate (All In)			Maturity Date		Principal/ Number of Shares		Cost		Fair Value
Trico Group LLC	Containers Packaging & Glass	Incremental Term Loan	Loan	Prime+	6.00	%		1.00	%		7.00	%		2/2/2024		4,943,750		4,804,906		4,696,562
Truck Hero Inc.	Transportation: Cargo	First Lien Term Loan	Loan	1M USD LIBOR+	3.75	%		1.00	%		6.24	%		4/22/2024		2,957,469		2,937,874		2,890,926
Trugreen Limited Partnership	Services: Consumer	Term Loan B (07/17)	Loan	1M USD LIBOR+	4.00	%		1.00	%		6.49	%		4/13/2023		488,813		483,230		490,034
Twin River Management Group Inc.	Hotel Gaming & Leisure	Term Loan	Loan	3M USD LIBOR+	3.50	%		1.00	%		6.11	%		7/10/2020		713,415		713,888		712,223
United Natural Foods Inc.	Beverage Food & Tobacco	Term Loan B	Loan	1M USD LIBOR+	4.25	%		0.00	%		6.74	%		10/22/2025		3,500,000		3,278,105		3,119,375
Univar USA Inc.	Chemicals Plastics & Rubber	Term Loan B3 (11/17)	Loan	1M USD LIBOR+	2.25	%		0.00	%		4.74	%		7/1/2024		4,250,492		4,231,419		4,241,183
Univision Communications Inc.	Media: Broadcasting & Subscription	Term Loan	Loan	1M USD LIBOR+	2.75	%		1.00	%		5.24	%		3/15/2024		2,746,369		2,733,489		2,557,556
UOS LLC	Capital Equipment	Term Loan B	Loan	1M USD LIBOR+	5.50	%		1.00	%		7.99	%		4/18/2023		591,247		593,692		594,203
UPC Financing Partnership	Media: Broadcasting & Subscription	Term Loan (10/17)	Loan	1M USD LIBOR+	2.50	%		0.00	%		4.99	%		1/15/2026		832,911		832,042		831,687
VeriFone Systems Inc.	Banking Finance Insurance & Real Estate	Term Loan (7/18)	Loan	3M USD LIBOR+	4.00	%		0.00	%		6.61	%		8/20/2025		5,486,250		5,456,319		5,464,689
Verra Mobility Corp.	Construction & Building	Term Loan	Loan	1M USD LIBOR+	3.75	%		0.00	%		6.24	%		3/3/2025		496,250		494,043		497,903
VFH Parent LLC	Banking Finance Insurance & Real Estate	Term Loan B	Loan	3M USD LIBOR+	3.50	%		0.00	%		6.11	%		1/30/2026		3,000,000		2,985,000		3,006,570
Virtus Investment Partners Inc.	Banking Finance Insurance & Real Estate	Term Loan B	Loan	1M USD LIBOR+	2.25	%		0.75	%		4.74	%		6/3/2024		3,836,368		3,834,675		3,820,371
Vistra Operations Company LLC	Utilities: Electric	2018 Incremental Term Loan	Loan	1M USD LIBOR+	2.00	%		0.00	%		4.49	%		12/31/2025		995,000		993,884		992,095
Vizient Inc.	Healthcare & Pharmaceuticals	Term Loan B	Loan	1M USD LIBOR+	2.75	%		1.00	%		5.24	%		2/13/2023		296,814		291,350		295,923
Wand NewCo 3 Inc.	Automotive	Term Loan B	Loan	1M USD LIBOR+	3.50	%		0.00	%		5.99	%		2/5/2026		250,000		247,562		250,625
Web.Com Group Inc.	High Tech Industries	Term Loan B (08/18)	Loan	1M USD LIBOR+	3.75	%		0.00	%		6.24	%		10/10/2025		500,000		498,856		496,250
WeddingWire Inc.	Services: Consumer	Term Loan	Loan	3M USD LIBOR+	4.50	%		0.00	%		7.11	%		12/19/2025		4,000,000		3,993,119		3,995,000
WEI Sales LLC	Beverage Food & Tobacco	Term Loan B	Loan	1M USD LIBOR+	2.75	%		0.00	%		5.24	%		3/31/2025		496,250		495,108		495,009
Weight Watchers International Inc.	Services: Consumer	Term Loan B	Loan	3M USD LIBOR+	4.75	%		0.75	%		7.36	%		11/29/2024		1,900,000		1,867,434		1,839,827
West Corporation	Telecommunications	Term Loan B	Loan	3M USD LIBOR+	3.50	%		1.00	%		6.11	%		10/10/2024		4,241,234		4,068,929		4,003,830
Western Dental Services Inc.	Retail	Term Loan (12/18)	Loan	1M USD LIBOR+	5.25	%		1.00	%		7.74	%		6/30/2023		2,463,734		2,446,863		2,402,141
Western Digital Corporation	High Tech Industries	Term Loan B-4	Loan	1M USD LIBOR+	1.75	%		0.00	%		4.24	%		4/29/2023		1,299,622		1,266,499		1,274,605
Wirepath LLC	Consumer goods: Non-durable	Term Loan	Loan	3M USD LIBOR+	4.00	%		1.00	%		6.61	%		8/5/2024		2,985,044		2,957,351		2,925,343
Wynn Resorts Limited	Hotel Gaming & Leisure	Term Loan B	Loan	1M USD LIBOR+	2.25	%		0.00	%		4.74	%		10/30/2024		1,000,000		997,579		986,500


Issuer Name	Industry	Asset Name	Asset Type	Reference Rate/Spread			LIBOR Floor			Current Rate (All In)			Maturity Date		Principal/ Number of Shares		Cost		Fair Value
YS Garments LLC	Retail	Term Loan	Loan	1W USD LIBOR+	6.00	%		1.00	%		8.41	%		8/9/2024		1,987,500		1,969,194		1,952,719
Zep Inc.	Chemicals Plastics & Rubber	Term Loan	Loan	3M USD LIBOR+	4.00	%		1.00	%		6.61	%		8/12/2024		2,468,750		2,458,786		2,139,592
Zest Acquisition Corp.	Healthcare & Pharmaceuticals	Term Loan	Loan	1M USD LIBOR+	3.50	%		0.00	%		5.99	%		3/14/2025		992,500		988,123		918,062

																	$	509,676,701	$	498,405,060


															Number of Shares		Cost		Fair Value
Cash and cash equivalents
U.S. Bank Money Market (b)																18,495,653	$	18,495,653	$	18,495,653

Total cash and cash equivalents																18,495,653	$	18,495,653	$	18,495,653

(a)	Security is in default as of February 28, 2019.

(b)	Included within cash and cash equivalents in Saratoga CLO’s Statements of Assets and Liabilities as of February 28, 2019.

LIBOR—London Interbank Offered Rate

1W USD LIBOR—The 1 week USD LIBOR rate as of February 28, 2019 was 2.41%.

1M USD LIBOR—The 1 month USD LIBOR rate as of February 28, 2019 was 2.49%.

2M USD LIBOR—The 2 month USD LIBOR rate as of February 28, 2019 was 2.57%.

3M USD LIBOR—The 3 month USD LIBOR rate as of February 28, 2019 was 2.62%.

6M USD LIBOR—The 6 month USD LIBOR rate as of February 28, 2019 was 2.69%.

Prime—The Prime Rate as of February 28, 2019 was 5.50%.

Note 5. Income Taxes

SIA-Avionte, Inc., SIA-Easy Ice, LLC, SIA-GH Inc., SIA-HT, Inc., SIA-MAC, Inc., SIA-TT, Inc., and SIA-Vector, Inc., each 100% owned by the Company, are each filing standalone C Corporation tax returns for federal and state purposes. As separately regarded entities for tax purposes, these entities are taxed at normal corporate rates. For tax purposes, any distributions by the entities to the parent company would generally need to be distributed to the Company’s shareholders. Generally, such distributions of the entities’ income to the Company’s shareholders will be considered as qualified dividends for tax purposes. The entities taxable net income will differ from U.S. GAAP net income because of deferred tax temporary differences adjustments arising from net operating losses and unrealized appreciation and deprecation of securities held. Deferred tax assets and liabilities are measured using enacted corporate federal and state tax rates expected to apply to taxable income in the years in which those net operating losses are utilized and the unrealized gains and losses are realized. Deferred tax assets and deferred tax liabilities are netted off by entity, as allowed. The recoverability of deferred tax assets is assessed and a valuation allowance is recorded to the extent that it is more likely than not that any portion of the deferred tax asset will not be realized on the basis of a history of operating losses combined with insufficient projected taxable income or other taxable events in the taxable blockers.

Deferred tax assets and liabilities, and related valuation allowance as of May 31, 2019 and February 28, 2019 were as follows:


	May 31, 2019			February 28, 2019
Total deferred tax assets	$	2,711,105		$	2,533,426
Total deferred tax liabilities		(1,787,765	)		(1,766,835	)
Valuation allowance on net deferred tax assets		(1,686,123	)		(1,506,307	)

Net deferred tax liability	$	(762,783	)	$	(739,716	)

As of May 31, 2019, the valuation allowance on deferred tax assets was $1.7 million, which represents the federal and state tax effect of net operating losses and unrealized losses that we do not believe we will realize through future taxable income. Any adjustments to the Company’s valuation allowance will depend on estimates of future taxable income and will be made in the period such determination is made.

Net change in unrealized appreciation (depreciation) on investments reported in the consolidated statement of operations includes $0.03 million and $0.9 million of net deferred tax (benefit) expense for the three months ended May 31, 2019 and May 31, 2018, respectively.

Deferred tax temporary differences may include differences for state taxes and joint venture interests.

Federal and state income tax provisions (benefits) on investments for the three months ended May 31, 2019 and 2018 are as follows:


	May 31, 2019		May 31, 2018
Current
Federal	$	—	$	—
State		—		—

Net current expense		—		—

Deferred
Federal		13,290		624,753
State		9,776		48,483

Net deferred expense		23,066		673,236

Net tax provision	$	23,066	$	673,236

Note 6. Agreements and Related Party Transactions

On July 30, 2010, the Company entered into the Management Agreement with our Manager. The initial term of the Management Agreement was two years, with automatic, one-year renewals at the end of each year, subject to certain approvals by our board of directors and/or the Company’s stockholders. On July 9, 2019, our board of directors approved the renewal of the Management Agreement for an additional one-year term. Pursuant to the Management Agreement, our Manager implements our business strategy on a day-to-day basis and performs certain services for us, subject to oversight by our board of directors. Our Manager is responsible for, among other duties, determining investment criteria, sourcing, analyzing and executing investments transactions, asset sales, financings and performing asset management duties. Under the Management Agreement, we have agreed to pay our Manager a management fee for investment advisory and management services consisting of a base management fee and an incentive management fee.

The base management fee of 1.75% is calculated based on the average value of our gross assets (other than cash or cash equivalents, but including assets purchased with borrowed funds) at the end of the two most recently completed fiscal quarters. The base management fee is paid quarterly following the filing of the most recent 10-Q.

The incentive management fee consists of the following two parts:

The first, payable quarterly in arrears, equals 20.0% of our pre-incentive fee net investment income, expressed as a rate of return on the value of our net assets at the end of the immediately preceding quarter, that exceeds a 1.875% quarterly hurdle rate measured as of the end of each fiscal quarter, subject to a “catch-up” provision. Under this provision, in any fiscal quarter, our Manager receives no incentive fee unless our pre-incentive fee net investment income exceeds the hurdle rate of 1.875%. Our Manager will receive 100.0% of pre- incentive fee net investment income, if any, that exceeds the hurdle rate but is less than or equal to 2.344% in any fiscal quarter; and 20.0% of the amount of our pre-incentive fee net investment income, if any, that exceeds 2.344% in any fiscal quarter. There is no accumulation of amounts on the hurdle rate from quarter to quarter, and accordingly there is no claw back of amounts previously paid if subsequent quarters are below the quarterly hurdle rate, and there is no delay of payment if prior quarters are below the quarterly hurdle rate.

The second part of the incentive fee is determined and payable in arrears as of the end of each fiscal year (or upon termination of the Management Agreement) and equals 20.0% of our “incentive fee capital gains,” which equals our realized capital gains on a cumulative basis from May 31, 2010 through the end of the fiscal year, if any, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis on each investment in the Company’s portfolio, less the aggregate amount of any previously paid capital gain incentive fee. Importantly, the capital gains portion of the incentive fee is based on realized gains and realized and unrealized losses from May 31, 2010. Therefore, realized and unrealized losses incurred prior to such time will not be taken into account when calculating the capital gains portion of the incentive fee, and our Manager will be entitled to 20.0% of incentive fee capital gains that arise after May 31, 2010. In addition, for the purpose of the “incentive fee capital gains” calculations, the cost basis for computing realized gains and losses on investments held by us as of May 31, 2010 will equal the fair value of such investments as of such date.

For the three months ended May 31, 2019 and May 31, 2018, the Company incurred $1.8 million and $1.5 million in base management fees, respectively. For the three months ended May 31, 2019 and May 31, 2018, the Company incurred $1.2 million and $1.0 million in incentive fees related to pre-incentive fee net investment income, respectively. For the three months ended May 31, 2019 and May 31, 2018, the Company accrued an increase of $1.0 million and an increase of $0.9 million in incentive fees related to capital gains. The accrual is calculated using both realized and unrealized capital gains for the period. The actual incentive fee related to capital gains will be determined and payable in arrears at the end of the fiscal year and will include only realized capital gains for the period. As of May 31, 2019, the base management fees accrual was $1.8 million and the incentive fees accrual was $5.7 million and is included in base management and incentive fees payable in the accompanying consolidated statements of assets and liabilities. As of February 28, 2019, the

base management fees accrual was $1.9 million and the incentive fees accrual was $4.8 million and is included in base management and incentive fees payable in the accompanying consolidated statements of assets and liabilities.

On July 30, 2010, the Company entered into a separate administration agreement (the “Administration Agreement”) with our Manager, pursuant to which our Manager, as our administrator, has agreed to furnish us with the facilities and administrative services necessary to conduct our day-to-day operations and provide managerial assistance on our behalf to those portfolio companies to which we are required to provide such assistance. The initial term of the Administration Agreement was two years, with automatic, one-year renewals at the end of each year subject to certain approvals by our board of directors and/or our stockholders. The amount of expenses payable or reimbursable thereunder by the Company was capped at $1.0 million for the initial two-year term of the Administration Agreement and subsequent renewals. On July 8, 2015, our board of directors approved the renewal of the Administration Agreement for an additional one- year term and determined to increase the cap on the payment or reimbursement of expenses by the Company thereunder, which had not been increased since the inception of the agreement, to $1.3 million. On July 7, 2016, our board of directors approved the renewal of the Administration Agreement for an additional one-year term. On October 5, 2016, our board of directors determined to increase the cap on the payment or reimbursement of expenses by the Company under the Administration Agreement, from $1.3 million to $1.5 million, effective November 1, 2016. On July 11, 2017, our board of directors approved the renewal of the Administration Agreement for an additional one-year term and determined to increase the cap on the payment or reimbursement of expenses by the Company from $1.5 million to $1.75 million, effective August 1, 2017. On July 9, 2018, our board of directors approved the renewal of the Administration Agreement for an additional one-year term and determined to increase the cap on the payment or reimbursement of expenses by the Company from $1.75 million to $2.0 million, effective August 1, 2018. On July 9, 2019, our board of directors approved the renewal of the Administration Agreement for an additional one-year term and determined to increase the cap on the payment or reimbursement of expenses by the Company from $2.0 million to $2.225 million, effective August 1, 2019.

For the three months ended May 31, 2019 and May 31, 2018, we recognized $0.5 million and $0.4 million in administrator expenses, respectively, pertaining to bookkeeping, record keeping and other administrative services provided to us in addition to our allocable portion of rent and other overhead related expenses. As of May 31, 2019, $0.3 million of administrator expenses were accrued and included in due to manager in the accompanying consolidated statements of assets and liabilities. As of February 28, 2019, $0.3 million of administrator expenses were accrued and included in due to manager in the accompanying consolidated statements of assets and liabilities. For the three months ended May 31, 2019 and May 31, 2018, the Company neither bought nor sold any investments from the Saratoga CLO.

For the three months ended May 31, 2019 and May 31, 2018, we recognized management fee income of $0.6 million and $0.4 million, respectively, and incentive fee income of $0.0 million and $0.2 million, respectively, related to the Saratoga CLO.

On December 14, 2018, the Company completed the third refinancing of the Saratoga CLO. This refinancing, among other things, extended the Saratoga CLO reinvestment period to January 2021, and extended its legal maturity to January 2030. A non-call period ending January 2020 was also added. In addition, and as part of the refinancing, the Saratoga CLO has also been upsized from $300 million in assets to approximately $500 million. As part of this refinancing and upsizing, the Company invested an additional $13.8 million in all of the newly issued subordinated notes of the Saratoga CLO, and purchased $2.5 million in aggregate principal amount of the Class F-R-2 Notes tranche and $7.5 million in aggregate principal amount of the Class G-R-2 Notes tranche at par. Concurrently, the existing $4.5 million of Class F notes were repaid. The Company also paid $2.0 million of transaction costs related to the refinancing and upsizing on behalf of the Saratoga CLO, to be reimbursed from future equity distributions. As of May 31, 2019, there remained an outstanding receivable of $1.2 million for such transaction costs which is presented as due from affiliate on the Company’s consolidated statement of assets and liabilities.

Note 7. Borrowings

Credit Facility

As a BDC, we are only allowed to employ leverage to the extent that our asset coverage, as defined in the 1940 Act, equals at least 200.0% after giving effect to such leverage, or, if we obtain the required approvals from our independent directors and/or stockholders, 150.0%. The amount of leverage that we employ at any time depends on our assessment of the market and other factors at the time of any proposed borrowing. Our asset coverage ratio, as defined in the 1940 Act, was 238.9% as of May 31, 2019 and 234.5% as of February 28, 2019. On April 16, 2018, as permitted by the Small Business Credit Availability Act, which was signed into law on March 23, 2018, our non-interested board of directors approved of our becoming subject to a minimum asset coverage ratio of 150.0% under Sections 18(a)(1) and 18(a)(2) of the Investment Company Act, as amended. The 150.0% asset coverage ratio became effective on April 16, 2019.

On April 11, 2007, we entered into a $100.0 million revolving securitized credit facility (the “Revolving Facility”). On May 1, 2007, we entered into a $25.7 million term securitized credit facility (the “Term Facility” and, together with the Revolving Facility, the “Facilities”), which was fully drawn at closing. In December 2007, we consolidated the Facilities by using a draw under the Revolving Facility to repay the Term Facility. In response to the market wide decline in financial asset prices, which negatively affected the value of our portfolio, we terminated the revolving period of the Revolving Facility effective January 14, 2009 and commenced a two-year amortization period during which all principal proceeds from the collateral were used to repay outstanding borrowings. A significant percentage of our total assets had been pledged under the Revolving Facility to secure our obligations thereunder. Under the Revolving Facility, funds were borrowed from or through certain lenders and interest was payable monthly at the greater of the commercial paper rate and our lender’s prime rate plus 4.00% plus a default rate of 2.00% or, if the commercial paper market was unavailable, the greater of the prevailing LIBOR rates and our lender’s prime rate plus 6.00% plus a default rate of 3.00%.

On July 30, 2010, we used the net proceeds from (i) the stock purchase transaction and (ii) a portion of the funds available to us under the $45.0 million senior secured revolving credit facility (the “Credit Facility”) with Madison Capital Funding LLC, in each case, to pay the full amount of principal and accrued interest, including default interest, outstanding under the Revolving Facility. As a result, the Revolving Facility was terminated in connection therewith. Substantially all of our total assets, other than those held by SBIC LP, have been pledged under the Credit Facility to secure our obligations thereunder.

On February 24, 2012, we amended the Credit Facility to, among other things:

•

expand the borrowing capacity under the Credit Facility from $40.0 million to $45.0 million;

•

extend the period during which we may make and repay borrowings under the Credit Facility from July 30, 2013 to February 24, 2015 (the “Revolving Period”). The Revolving Period may, upon the occurrence of an event of default, by action of the lenders or automatically, be terminated. All borrowings and other amounts payable under the Credit Facility are due and payable five years after the end of the Revolving Period; and

•

remove the condition that we may not acquire additional loan assets without the prior written consent of Madison Capital Funding LLC.

On September 17, 2014, we entered into a second amendment to the Credit Facility to, among other things:

•

extend the commitment termination date from February 24, 2015 to September 17, 2017;

•

extend the maturity date of the Credit Facility from February 24, 2020 to September 17, 2022 (unless terminated sooner upon certain events);

•

reduce the applicable margin rate on base rate borrowings from 4.50% to 3.75%, and on LIBOR borrowings from 5.50% to 4.75%; and

•

reduce the floor on base rate borrowings from 3.00% to 2.25%, and on LIBOR borrowings from 2.00% to 1.25%.

On May 18, 2017, we entered into a third amendment to the Credit Facility to, among other things:

•

extend the commitment termination date from September 17, 2017 to September 17, 2020;

•

extend the final maturity date of the Credit Facility from September 17, 2022 to September 17, 2025 (unless terminated sooner upon certain events);

•

reduce the floor on base rate borrowings from 2.25% to 2.00%;

•

reduce the floor on LIBOR borrowings from 1.25% to 1.00%; and

•

reduce the commitment fee rate from 0.75% to 0.50% for any period during which the ratio of advances outstanding to aggregate commitments, expressed as a percentage, is greater than or equal to 50%.

In addition to any fees or other amounts payable under the terms of the Credit Facility agreement with Madison Capital Funding LLC, an administrative agent fee per annum equal to $0.1 million is payable in equal monthly installments in arrears.

As of May 31, 2019, there were $0.0 million of outstanding borrowings under the Credit Facility. There were no outstanding borrowings under the Credit Facility as of February 28, 2019. During the applicable periods, the Company was in compliance with all of the limitations and requirements of the Credit Facility. Financing costs of $0.0 million related to the Credit Facility have been capitalized and are being amortized over the term of the facility.

For the three months ended May 31, 2019 and May 31, 2018, we recorded $0.1 million and $0.1 million of interest expense related to the Credit Facility, respectively, which includes commitment and administrative agent fees. For the three months ended May 31, 2019 and May 31, 2018, we recorded $0.02 million and $0.02 million of amortization of deferred financing costs related to the Credit Facility, respectively. Interest expense and amortization of deferred financing costs are reported as interest and debt financing expense on the consolidated statements of operations.

There were no outstanding borrowings under the Credit Facility during the three months ended May 31, 2019 and May 31, 2018.

The Credit Facility contains limitations as to how borrowed funds may be used, such as restrictions on industry concentrations, asset size, weighted average life, currency denomination and collateral interests. The Credit Facility also includes certain requirements relating to portfolio performance, the violation of which could result in the limit of further advances and, in some cases, result in an event of default, allowing the lenders to accelerate repayment of amounts owed thereunder. The Credit Facility has an eight-year term, consisting of a three-year period (the “Revolving Period”), under which the Company may make and repay borrowings, and a final maturity five years from the end of the Revolving Period. Availability on the Credit Facility will be subject to a borrowing base calculation, based on, among other things, applicable advance rates (which vary from 50.0% to 75.0% of par or fair value depending on the type of loan asset) and the value of certain “eligible” loan assets included as part of the Borrowing Base. Funds may be borrowed at the greater of the prevailing one-month LIBOR rate and 1.00%, plus an applicable margin of 4.75%. At the Company’s option, funds may be borrowed based on an alternative base rate, which in no event will be less than 2.00%, and the applicable margin over such alternative base rate is 3.75%. In addition, the Company will pay the lenders a commitment fee of 0.75% per year (or 0.50% if the ratio of advances outstanding to aggregate commitments is greater than or equal to 50%) on the unused amount of the Credit Facility for the duration of the Revolving Period.

Our borrowing base under the Credit Facility was $27.3 million subject to the Credit Facility cap of $45.0 million at May 31, 2019. For purposes of determining the borrowing base, most assets are assigned the

values set forth in our most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (“SEC”). Accordingly, the May 31, 2019 borrowing base relies upon the valuations set forth in the Annual Report on Form 10-K for the year ended February 28, 2019. The valuations presented in this Quarterly Report on Form 10-Q will not be incorporated into the borrowing base until after this Quarterly Report on Form 10-Q is filed with the SEC.

SBA Debentures

SBIC LP is able to borrow funds from the SBA against regulatory capital (which approximates equity capital) that is paid in and is subject to customary regulatory requirements including but not limited to an examination by the SBA. As of May 31, 2019, we have funded SBIC LP with $75.0 million of equity capital and have $150.0 million of SBA-guaranteed debentures outstanding. SBA debentures are non-recourse to us, have a 10-year maturity, and may be prepaid at any time without penalty. The interest rate of SBA debentures is fixed at the time of issuance, often referred to as pooling, at a market-driven spread over 10-year U.S. Treasury Notes. SBA current regulations limit the amount that SBIC LP may borrow to a maximum of $150.0 million, which is up to twice its potential regulatory capital.

SBICs are designed to stimulate the flow of private equity capital to eligible small businesses. Under SBA regulations, SBICs may make loans to eligible small businesses and invest in the equity securities of small businesses. Under present SBA regulations, eligible small businesses include businesses that have a tangible net worth not exceeding $19.5 million and have average annual fully taxed net income not exceeding $6.5 million for the two most recent fiscal years. In addition, an SBIC must devote 25.0% of its investment activity to ‘‘smaller’’ concerns as defined by the SBA. A smaller concern is one that has a tangible net worth not exceeding $6.0 million and has average annual fully taxed net income not exceeding $2.0 million for the two most recent fiscal years. SBA regulations also provide alternative size standard criteria to determine eligibility, which depend on the industry in which the business is engaged and are based on such factors as the number of employees and gross sales. According to SBA regulations, SBICs may make long-term loans to small businesses, invest in the equity securities of such businesses and provide them with consulting and advisory services.

SBIC LP is subject to regulation and oversight by the SBA, including requirements with respect to maintaining certain minimum financial ratios and other covenants. Receipt of an SBIC license does not assure that SBIC LP will receive SBA-guaranteed debenture funding, which is dependent upon SBIC LP continuing to be in compliance with SBA regulations and policies. The SBA, as a creditor, will have a superior claim to SBIC LP’s assets over our stockholders and debtholders in the event we liquidate SBIC LP or the SBA exercises its remedies under the SBA-guaranteed debentures issued by SBIC LP upon an event of default.

The Company received exemptive relief from the SEC to permit it to exclude the debt of SBIC LP guaranteed by the SBA from the definition of senior securities in the 200.0% asset coverage test under the 1940 Act. This allows the Company increased flexibility under the 200.0% asset coverage test by permitting it to borrow up to $150.0 million more than it would otherwise be able to absent the receipt of this exemptive relief. On April 16, 2018, as permitted by the Small Business Credit Availability Act, which was signed into law on March 23, 2018, the non-interested board of directors of the Company approved of the Company becoming subject to a minimum asset coverage ratio of 150.0% under Sections 18(a)(1) and 18(a)(2) of the Investment Company Act, as amended. The 150.0% asset coverage ratio became effective on April 16, 2019.

As of May 31, 2019 and February 28, 2019, there was $150.0 million and $150.0 million outstanding of SBA debentures, respectively. The carrying amount of the amount outstanding of SBA debentures approximates its fair value, which is based on a waterfall analysis showing adequate collateral coverage and would be classified as a Level 3 liability within the fair value hierarchy. Financing costs of $5.0 million related to the SBA debentures have been capitalized and are being amortized over the term of the commitment and drawdown.

For the three months ended May 31, 2019 and May 31, 2018, we recorded $1.2 million and $1.1 million of interest expense related to the SBA debentures, respectively. For the three months ended May 31, 2019 and

May 31, 2018, we recorded $0.1 million and $0.1 million of amortization of deferred financing costs related to the SBA debentures, respectively. Interest expense and amortization of deferred financing costs are reported as interest and debt financing expense on the consolidated statements of operations. The weighted average interest rate during the three months ended May 31, 2019 and May 31, 2018 on the outstanding borrowings of the SBA debentures was 3.25% and 3.17%, respectively. During the three months ended May 31, 2019 and May 31, 2018, the average dollar amount of SBA debentures outstanding was $150.0 million and $137.7 million, respectively.

In December 2015, the 2016 omnibus spending bill approved by Congress and signed into law by the President increased the amount of SBA-guaranteed debentures that affiliated SBIC funds can have outstanding from $225.0 million to $350.0 million, subject to SBA approval. SBA regulations currently limit the amount of SBA-guaranteed debentures that an SBIC may issue to $150.0 million when it has at least $75.0 million in regulatory capital. Affiliated SBICs are permitted to issue up to a combined maximum amount of $350.0 million in SBA-guaranteed debentures when they have at least $175.0 million in combined regulatory capital.

Notes

On May 10, 2013, the Company issued $42.0 million in aggregate principal amount of 7.50% fixed-rate notes due 2020 (the “2020 Notes”). The 2020 Notes will mature on May 31, 2020, and since May 31, 2016, may be redeemed in whole or in part at any time or from time to time at the Company’s option. Interest will be payable quarterly beginning August 15, 2013. On May 17, 2013, the Company closed an additional $6.3 million in aggregate principal amount of the 2020 Notes, pursuant to the full exercise of the underwriters’ option to purchase additional 2020 Notes. The 2020 Notes were redeemed in full on January 13, 2017.

On May 29, 2015, the Company entered into a Debt Distribution Agreement with Ladenburg Thalmann & Co. through which the Company may offer for sale, from time to time, up to $20.0 million in aggregate principal amount of the 2020 Notes through an At-the- Market (“ATM”) offering. Prior to the 2020 Notes being redeemed in full, the Company had sold 539,725 bonds with a principal of $13.5 million at an average price of $25.31 for aggregate net proceeds of $13.4 million (net of transaction costs).

On December 21, 2016, the Company issued $74.5 million in aggregate principal amount of our 6.75% fixed-rate notes due 2023 (the “2023 Notes”) for net proceeds of $71.7 million after deducting underwriting commissions of approximately $2.3 million and offering costs of approximately $0.5 million. The issuance included the exercise of substantially all of the underwriters’ option to purchase an additional $9.8 million aggregate principal amount of 2023 Notes within 30 days. Interest on the 2023 Notes is paid quarterly in arrears on March 15, June 15, September 15 and December 15, at a rate of 6.75% per year, beginning March 30, 2017. The 2023 Notes mature on December 30, 2023 and commencing December 21, 2019, may be redeemed in whole or in part at any time or from time to time at our option. The net proceeds from the offering were used to repay all of the outstanding indebtedness under the 2020 Notes, which amounted to $61.8 million, and for general corporate purposes in accordance with our investment objective and strategies. The 2023 Notes are listed on the NYSE under the trading symbol “SAB” with a par value of $25.00 per share. The remaining unamortized deferred debt financing costs of $1.5 million (including underwriting commissions and net of issuance premiums), was recorded within loss on debt extinguishment in the consolidated statements of operations in the fourth quarter of the fiscal year ended February 28, 2017, when the related 2020 Notes were extinguished. As of

May 31, 2019, $2.8 million of financing costs related to the 2023 Notes have been capitalized and are being amortized over the term of the 2023 Notes.

On August 28, 2018, the Company issued $40.0 million in aggregate principal amount of our 6.25% fixed-rate notes due 2025 (the “2025 Notes”) for net proceeds of $38.7 million after deducting underwriting commissions of approximately $1.3 million. Offering costs incurred were 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 our option. The net proceeds from the offering were used for general corporate purposes in accordance with our investment objective and strategies. Financing costs of $1.6 million of financing costs related to the 2025 Notes have been capitalized and are being amortized over the term of the 2025 Notes.

On February 5, 2019, the Company 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. The net proceeds from this offering were used for general corporate purposes in accordance with our investment objective and strategies. The financing costs and discount of $1.0 million related to the 2025 Notes have been capitalized and are being amortized over the term of the 2025 Notes.

As of May 31, 2019, the total 2025 Notes outstanding was $60.0 million. The 2025 Notes are listed on the NYSE under the trading symbol “SAF” with a par value of $25.00 per share.

As of May 31, 2019, the carrying amount and fair value of the 2025 Notes was $60.0 million and $60.7 million, respectively, and the carrying amount and fair value of the 2023 Notes was $74.5 million and $76.8 million, respectively. The fair value of the 2025 Notes and 2023 Notes, which both are publicly traded, is based upon closing market quotes as of the measurement date and would be classified as a Level 1 liability within the fair value hierarchy. As of February 28, 2019, the carrying amount and fair value of the 2025 Notes was $60.0 million and $59.9 million, respectively, and the carrying amount and fair value of the 2023 Notes was $74.5 million and $76.4 million, respectively.

For the three months ended May 31, 2019, we recorded $0.9 million of interest expense and $0.1 million of amortization of deferred financing costs related to the 2025 Notes. For the three months ended May 31, 2019, the average dollar amount of 2025 Notes outstanding was $60.0 million.

For the three months ended May 31, 2019 and May 31, 2018, we recorded $1.3 million and $1.3 million, respectively, of interest expense and $0.1 million and $0.1 million, respectively, of amortization of deferred financing cost related to the 2023 Notes. Interest expense and amortization of deferred financing costs are reported as interest and debt financing expense on the consolidated statements of operations. During the three months ended May 31, 2019 and May 31, 2018, the average dollar amount of 2023 Notes outstanding was $74.5 million and $74.5 million, respectively.

Note 8. Commitments and contingencies

Contractual obligations

The following table shows our payment obligations for repayment of debt and other contractual obligations at May 31, 2019:


	Total		Payment Due by Period
Long-Term Debt Obligations	Total		Less Than 1 Year		1 - 3 Years		3 - 5 Years		More Than 5 Years
	($ in thousands)
Revolving credit facility	$	—	$	—	$	—	$	—	$	—
SBA debentures		150,000		—		—		50,000		100,000
2023 Notes		74,451		—		—		74,451		—
2025 Notes		60,000		—		—		—		60,000

Total Long-Term Debt Obligations	$	284,451	$	—	$	—	$	124,451	$	160,000

Off-balance sheet arrangements

As of May 31, 2019 and February 28, 2019, the Company’s off-balance sheet arrangements consisted of $24.5 million and $4.5 million, respectively, of unfunded commitments outstanding to provide debt financing to its portfolio companies or to fund limited partnership interests. Such commitments are generally up to the Company’s discretion to approve, or the satisfaction of certain financial and nonfinancial covenants and involve, to varying degrees, elements of credit risk in excess of the amount recognized in the Company’s consolidated statements of assets and liabilities and are not reflected in the Company’s consolidated statements of assets and liabilities.

A summary of the unfunded commitments outstanding as of May 31, 2019 and February 28, 2019 is shown in the table below (dollars in thousands):


	May 31, 2019		February 28, 2019
Axiom Purchaser, Inc.	$	1,000	$	1,000
Destiny Solutions, Inc.		1,500		1,500
Fancy Chap, Inc.		14,000		—
GDS Holdings US, Inc.		—		1,000
HemaTerra Holding Company, LLC		2,000		—
inMotionNow, Inc.		5,000		—
Omatic Software, LLC		1,000		1,000

Total	$	24,500	$	4,500

Note 9. Directors Fees

The independent directors receive an annual fee of $60,000. They also receive $2,500 plus reimbursement of reasonable out-of- pocket expenses incurred in connection with attending each board meeting and receive $1,000 plus reimbursement of reasonable out-of- pocket expenses incurred in connection with attending each committee meeting. In addition, the chairman of the Audit Committee receives an annual fee of $10,000 and the chairman of each other committee receives an annual fee of $5,000 for their additional services in these capacities. In addition, we have purchased directors’ and officers’ liability insurance on behalf of our directors and officers. Independent directors have the option to receive their directors’ fees in the form of our common stock issued at a price per share equal to the greater of net asset value or the market price at the time of payment. No compensation is paid to directors who are “interested persons” of the Company (as such term is defined in the 1940 Act). For the three months ended May 31, 2019 and May 31, 2018, we incurred $0.1 million and $0.1 million for directors’ fees and expenses, respectively. As of May 31, 2019 and February 28, 2019,

$0.06 million and $0.06 million in directors’ fees and expenses were accrued and unpaid, respectively. As of May 31, 2019, we had not issued any common stock to our directors as compensation for their services.

Note 10. Stockholders’ Equity

On May 16, 2006, GSC Group, Inc. capitalized the LLC, by contributing $1,000 in exchange for 67 shares, constituting all of the issued and outstanding shares of the LLC.

On March 20, 2007, the Company issued 95,995.5 and 8,136.2 shares of common stock, priced at $150.00 per share, to GSC Group and certain individual employees of GSC Group, respectively, in exchange for the general partnership interest and a limited partnership interest in GSC Partners CDO III GP, LP, collectively valued at $15.6 million. At this time, the 6.7 shares owned by GSC Group in the LLC were exchanged for 6.7 shares of the Company.

On March 28, 2007, the Company completed its IPO of 725,000 shares of common stock, priced at $150.00 per share, before underwriting discounts and commissions. Total proceeds received from the IPO, net of $7.1 million in underwriter’s discount and commissions, and $1.0 million in offering costs, were $100.7 million.

On July 30, 2010, our Manager and its affiliates purchased 986,842 shares of common stock at $15.20 per share. Total proceeds received from this sale were $15.0 million.

On August 12, 2010, we effected a one-for-ten reverse stock split of our outstanding common stock. As a result of the reverse stock split, every ten shares of our common stock were converted into one share of our common stock. Any fractional shares received as a result of the reverse stock split were redeemed for cash. The total cash payment in lieu of shares was $230. Immediately after the reverse stock split, we had 2,680,842 shares of our common stock outstanding.

On September 24, 2014, the Company announced the approval of an open market share repurchase plan that allowed 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 consolidated financial statements. On October 7, 2015, the Company’s board of directors extended the open market share repurchase plan for another year and increased the number of shares the Company is permitted to repurchase at prices below its NAV, as reported in its then most recently published consolidated financial statements, to 400,000 shares of its common stock. On October 5, 2016, the Company’s board of directors extended the open market share repurchase plan for another year to October 15, 2017 and increased the number of shares the Company is permitted to repurchase at prices below its NAV, as reported in its then most recently published consolidated financial statements, to 600,000 shares of its common stock. On October 10, 2017 and January 8, 2019, the Company’s board of directors extended the open market share repurchase plan for another year to October 15, 2018 and January 15, 2020, respectively, each time leaving the number of shares unchanged at 600,000 shares of its common stock. As of May 31, 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.

On March 16, 2017, we entered into an equity distribution agreement with Ladenburg Thalmann & Co. Inc., through which we may offer for sale, from time to time, up to $30.0 million of our common stock through an ATM offering. Subsequent to this, BB&T Capital Markets and B. Riley FBR, Inc were also added to the agreement. On July 9, 2019, the amount of the common stock to be offered through this offering was increased to $70.0 million. As of May 31, 2019, the Company sold 571,120 shares for gross proceeds of $13.0 million at an average price of $22.78 for aggregate net proceeds of $12.9 million (net of transaction costs).

On July 13, 2018, the Company 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.

The Company elected early adoption of Rule 3-04/Rule 8-03(a)(5) under Regulation S-X (Note 2). Pursuant to the regulation, the Company has presented a reconciliation of the changes in each significant caption of stockholders’ equity as shown in the table below:


	Common Stock				Capital in Excess of Par Value			Total Distributable Earnings (Loss)			Net Assets
	Common Stock
	Shares		Amount
Balance at February 28, 2018		6,257,029	$	6,257	$	188,975,590		$	(45,290,480	)	$	143,691,367
Cumulative effect of the adoption of ASC 606 (Note 2)		—		—		—			(65,300	)		(65,300	)

Balance at March 1, 2018		6,257,029		6,257		188,975,590			(45,355,780	)		143,626,067

Increase (Decrease) from Operations:
Net investment income		—		—		—			3,927,648			3,927,648
Net realized gain (loss) from investments		—		—		—			212,008			212,008
Net change in unrealized appreciation (depreciation) on investments		—		—		—			643,205			643,205
Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments		—		—		—			(940,546	)		(940,546	)
Decrease from Shareholder Distributions:
Distributions of investment income—net		—		—		—			(3,128,513	)		(3,128,513	)
Capital Share Transactions:
Proceeds from issuance of common stock		—		—		—			—			—
Stock dividend distribution		25,355		25		504,853			—			504,878
Repurchases of common stock		—		—		—			—			—
Offering costs		—		—		—			—			—

Balance at May 31, 2018		6,282,384		6,282		189,480,443			(44,641,978	)		144,844,747

Increase (Decrease) from Operations:
Net investment income		—		—		—			5,144,228			5,144,228
Net realized gain (loss) from investments		—		—		—			163			163
Net change in unrealized appreciation (depreciation) on investments		—		—		—			(2,154,521	)		(2,154,521	)
Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments		—		—		—			152,546			152,546
Decrease from Shareholder Distributions:
Distributions of investment income—net		—		—		—			(3,204,014	)		(3,204,014	)
Capital Share Transactions:
Proceeds from issuance of common stock		1,150,000		1,150		28,748,850			—			28,750,000
Stock dividend distribution		21,563		22		511,523			—			511,545
Repurchases of common stock		—		—		—			—			—
Offering costs		—		—		(1,386,667	)		—			(1,386,667	)

Balance at August 31, 2018		7,453,947		7,454		217,354,149			(44,703,576	)		172,658,027


	Common Stock				Capital in Excess of Par Value			Total Distributable Earnings (Loss)			Net Assets
	Common Stock
	Shares		Amount
Increase (Decrease) from Operations:
Net investment income		—		—		—			5,138,941			5,138,941
Net realized gain (loss) from investments		—		—		—			(67,164	)		(67,164	)
Net change in unrealized appreciation (depreciation) on investments		—		—		—			(1,031,113	)		(1,031,113	)
Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments		—		—		—			(371,581	)		(371,581	)
Decrease from Shareholder Distributions:
Distributions of investment income—net		—		—		—			(3,876,050	)		(3,876,050	)
Capital Share Transactions:
Proceeds from issuance of common stock		10,373		10		241,228			—			241,238
Stock dividend distribution		25,863		26		578,057			—			578,083
Repurchases of common stock		—		—		—			—			—
Offering costs		—		—		(1,290	)		—			(1,290	)

Balance at November 30, 2018		7,490,183		7,490		218,172,144			(44,910,543	)		173,269,091

Increase (Decrease) from Operations:
Net investment income		—		—		—			4,091,392			4,091,392
Net realized gain (loss) from investments		—		—		—			4,729,298			4,729,298
Net change in unrealized appreciation (depreciation) on investments		—		—		—			(357,880	)		(357,880	)
Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments		—		—		—			(607,254	)		(607,254	)
Decrease from Shareholder Distributions:
Distributions of investment income— net		—		—		—			(3,980,011	)		(3,980,011	)
Capital Share Transactions:
Proceeds from issuance of common stock		136,176		136		3,158,783			—			3,158,919
Stock dividend distribution		30,797		31		581,356			—			581,387
Repurchases of common stock		—		—		—			—			—
Offering costs		—		—		(9,755	)		—			(9,755	)
Tax reclassification of stockholders’ equity in accordance with generally accepted accounting principles		—		—		(18,349,728	)		18,349,728			—

Balance at February 28, 2019		7,657,156	$	7,657	$	203,552,800		$	(22,685,270	)	$	180,875,187


	Common Stock				Capital in Excess of Par Value			Total Distributable Earnings (Loss)			Net Assets
	Common Stock
	Shares		Amount
Increase (Decrease) from Operations:
Net investment income		—		—		—			3,680,788			3,680,788
Net realized gain (loss) from investments		—		—		—			—			—
Net change in unrealized appreciation (depreciation) on investments		—		—		—			3,989,130			3,989,130
Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments		—		—		—			(20,930	)		(20,930	)
Decrease from Shareholder Distributions:
Distributions of investment income—net		—		—		—			(4,176,132	)		(4,176,132	)
Capital Share Transactions:
Proceeds from issuance of common stock		76,448		77		1,772,557			—			1,772,634
Stock dividend distribution		31,240		31		667,358			—			667,389
Repurchases of common stock		—		—		—			—			—
Offering costs		—		—		(4,365	)		—			(4,365	)

Balance at May 31, 2019		7,764,844	$	7,765	$	205,988,350		$	(19,212,414	)	$	186,783,701

Note 11. Earnings Per Share

In accordance with the provisions of FASB ASC Topic 260, “Earnings per Share” (“ASC 260”), basic earnings per share is computed by dividing earnings available to common shareholders by the weighted average number of shares outstanding during the period. Other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis.

The following information sets forth the computation of the weighted average basic and diluted net increase in net assets resulting from operations per share for the three months ended May 31, 2019 and May 31, 2018 (dollars in thousands except share and per share amounts):


	For the three months ended
Basic and Diluted	May 31, 2019		May 31, 2018
Net increase in net assets resulting from operations	$	7,649	$	3,842
Weighted average common shares outstanding		7,746,187		6,275,494
Weighted average earnings per common share	$	0.99	$	0.61

Note 12. Dividend

On February 26, 2019, our board of directors declared a dividend of $0.54 per share, which was paid on March 28, 2019, to common stockholders of record as of March 14, 2019. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately $3.5 million in cash and 31,240 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $21.36 per share, which equaled the volume weighted average trading price per share of the common stock on March 15, 18, 19, 20, 21, 22, 25, 26, 27 and 28, 2019.

The following table summarizes dividends declared for the three months ended May 31, 2019 (dollars in thousands except per share amounts):


Date Declared	Record Date		Payment Date		Amount Per Share		Total Amount*
February 26, 2019		March 14, 2019		March 28, 2019	$	0.54	$	4,176

Total dividends declared					$	0.54	$	4,176

*	Total amount is calculated based on the number of shares outstanding at the date of record.

The following table summarizes dividends declared for the three months ended May 31, 2018 (dollars in thousands except per share amounts):


Date Declared	Record Date	Payment Date	Amount Per Share		Total Amount*
February 26, 2018	March 14, 2018	March 26, 2018	$	0.50	$	3,129

Total dividends declared			$	0.50	$	3,129

*	Total amount is calculated based on the number of shares outstanding at the date of record.

Note 13. Financial Highlights

The following is a schedule of financial highlights as of and for the three months ended May 31, 2019 and May 31, 2018:


Per share data	May 31, 2019			May 31, 2018
Net asset value at beginning of period	$	23.62		$	22.96
Adoption of ASC 606		—			(0.01	)

Net asset value at beginning of period, as adjusted		23.62			22.95
Net investment income(1)		0.48			0.63
Net realized and unrealized gains and losses on investments(1)		0.51			(0.02	)

Net increase in net assets resulting from operations		0.99			0.61
Distributions declared from net investment income		(0.54	)		(0.50	)

Total distributions to stockholders		(0.54	)		(0.50	)
Dilution(2)		(0.01	)		—

Net asset value at end of period	$	24.06		$	23.06

Net assets at end of period	$	186,783,701		$	144,844,747
Shares outstanding at end of period		7,764,844			6,282,384
Per share market value at end of period	$	24.65		$	22.79
Total return based on market value(3)(4)		9.69	%		12.51	%
Total return based on net asset value(3)(5)		4.42	%		2.96	%
Ratio/Supplemental data:
Ratio of net investment income to average net assets(6)		11.39	%		12.60	%
Expenses:
Ratio of operating expenses to average net assets(7)		6.69	%		7.60	%
Ratio of incentive management fees to average net assets(3)		1.15	%		0.74	%
Ratio of interest and debt financing expenses to average net assets(7)		8.37	%		7.49	%

Ratio of total expenses to average net assets(6)		16.21	%		15.83	%
Portfolio turnover rate(3)(8)		6.63	%		10.26	%
Asset coverage ratio per unit(9)		2,389			2,946
Average market value per unit
Credit Facility(10)		N/A			N/A
SBA Debentures(10)		N/A			N/A
2023 Notes	$	25.78		$	25.71
2025 Notes	$	25.28			N/A

(1)	Per share amounts are calculated using the weighted average shares outstanding during the period.

(2)

Represents the dilutive effect of issuing common stock below net asset value per share during the period in connection with the satisfaction of the Company’s annual RIC distribution requirement and may include the impact of the different share amounts used for different items (weighted average basic common shares outstanding for the corresponding year and actual common shares outstanding at the end of the year) in the per common share data calculation and rounding impacts. See Note 12, Dividend.

(3)	Ratios are not annualized.

(4)

Total investment return is calculated assuming a purchase of common shares at the current market value on the first day and a sale at the current market value on the last day of the periods reported. Dividends and distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the Company’s DRIP. Total investment return does not reflect brokerage commissions.

(5)

Total investment return is calculated assuming a purchase of common shares at the current net asset value on the first day and a sale at the current net asset value on the last day of the periods reported. Dividends and distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the Company’s DRIP. Total investment return does not reflect brokerage commissions.

(6)	Ratios are annualized. Incentive management fees included within the ratio are not annualized.

(7)	Ratios are annualized.

(8)	Portfolio turnover rate is calculated using the lesser of year-to-date sales or year-to-date purchases over the average of the invested assets at fair value.

(9)

Asset coverage ratio per unit is the ratio of the carrying value of our total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness. Asset coverage ratio per unit is expressed in terms of dollar amounts per $1,000 of indebtedness. Asset coverage ratio per unit does not include unfunded commitments. The inclusion of unfunded commitments in the calculation of the asset coverage ratio per unit would not cause us to be below the required amount of regulatory coverage.

(10)	The Credit Facility and SBA Debentures are not registered for public trading.

Note 14. Subsequent Events

The Company has evaluated subsequent events through the filing of this Form 10-Q and determined that there have been no events that have occurred that would require adjustments to the Company’s consolidated financial statements and disclosures in the consolidated financial statements except for the following:

On May 28, 2019, the Company declared a dividend of $0.55 per share, which was paid on June 27, 2019, to common stockholders of record as of June 13, 2019. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to the Company’s DRIP. Based on shareholder elections, the dividend consisted of approximately $3.6 million in cash and 31,545 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $22.65 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on June 14, 17, 18, 19, 20, 21, 24, 25, 26 and 27, 2019.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our consolidated financial statements and related notes and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, the following discussion and other parts of this Quarterly Report contain forward-looking information that involves risks and uncertainties. Our actual results could differ materially from those anticipated by such forward-looking information due to the factors discussed under “Note about Forward-Looking Statements” and Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended February 28, 2019.

The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or are within our control. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements.

The forward-looking statements contained in this Quarterly Report on Form 10-Q involve risks and uncertainties, including statements as to:

•

our future operating results;

•

the introduction, withdrawal, success and timing of business initiatives and strategies;

•

changes in political, economic or industry conditions, the interest rate environment or financial and capital markets, which could result in changes in the value of our assets;

•

the relative and absolute investment performance and operations of our Investment Adviser;

•

the impact of increased competition;

•

our ability to turn potential investment opportunities into transactions and thereafter into completed and successful investments;

•

the unfavorable resolution of any future legal proceedings;

•

our business prospects and the prospects of our portfolio companies;

•

the impact of investments that we expect to make and future acquisitions and divestitures;

•

our contractual arrangements and relationships with third parties;

•

the dependence of our future success on the general economy and its impact on the industries in which we invest;

•

the ability of our portfolio companies to achieve their objectives;

•

our expected financings and investments;

•

our regulatory structure and tax status, including our ability to operate as a business development company (“BDC”), or to operate our small business investment company (“SBIC”) subsidiary, and to continue to qualify to be taxed as a regulated investment company (“RIC”);

•

the adequacy of our cash resources and working capital;

•

the timing of cash flows, if any, from the operations of our portfolio companies;

•

the impact of interest rate volatility on our results, particularly because we use leverage as part of our investment strategy;

•

the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government agencies relating to us or our investment adviser;

•

the impact of changes to tax legislation and, generally, our tax position;

•

our ability to access capital and any future financings by us;

•

the ability of our Investment Adviser to attract and retain highly talented professionals; and

•

the ability of our Investment Adviser to locate suitable investments for us and to monitor and effectively administer our investments.

Such forward-looking statements may include statements preceded by, followed by or that otherwise include terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “project,” “should,” “will” and “would” or the negative of these terms or other comparable terminology.

We have based the forward-looking statements included in this quarterly report on Form 10-Q on information available to us on the date of this quarterly report on Form 10-Q, and we assume no obligation to update any such forward-looking statements. Actual results could differ materially from those anticipated in our forward-looking statements, and future results could differ materially from historical performance. We undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law or SEC rule or regulation. You are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

The following analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes thereto contained elsewhere in this quarterly report on Form 10-Q.

OVERVIEW

We are a Maryland corporation that has elected to be treated as a BDC under the Investment Company Act of 1940, as amended (the “1940 Act”). Our investment objective is to create attractive risk-adjusted returns by generating current income and long-term capital appreciation from our investments. We invest primarily in senior and unitranche leveraged loans and mezzanine debt issued by private U.S. middle market companies, which we define as companies having earnings before interest, tax, depreciation and amortization (“EBITDA”) of between $2 million and $50 million, both through direct lending and through participation in loan syndicates. We may also invest up to 30.0% of the portfolio in opportunistic investments in order to seek to enhance returns to stockholders. Such investments may include investments in distressed debt, which may include securities of companies in bankruptcy, foreign debt, private equity, securities of public companies that are not thinly traded and structured finance vehicles such as collateralized loan obligation funds. Although we have no current intention to do so, to the extent we invest in private equity funds, we will limit our investments in entities that are excluded from the definition of “investment company” under Section 3(c)(1) or Section 3(c)(7) of the 1940 Act, which includes private equity funds, to no more than 15.0% of its net assets. We have elected and qualified to be treated as a RIC under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

Corporate History and Recent Developments

We commenced operations, at the time known as GSC Investment Corp., on March 23, 2007 and completed an initial public offering of shares of common stock on March 28, 2007. Prior to July 30, 2010, we were externally managed and advised by GSCP (NJ), L.P., an entity affiliated with GSC Group, Inc. In connection with the consummation of a recapitalization transaction on July 30, 2010, as described below we engaged Saratoga Investment Advisors (“SIA”) to replace GSCP (NJ), L.P. as our investment adviser and changed our name to Saratoga Investment Corp.

As a result of the event of default under a revolving securitized credit facility with Deutsche Bank we previously had in place, in December 2008 we engaged the investment banking firm of Stifel, Nicolaus &

Company to evaluate strategic transaction opportunities and consider alternatives for us. On April 14, 2010, GSC Investment Corp. entered into a stock purchase agreement with Saratoga Investment Advisors and certain of its affiliates and an assignment, assumption and novation agreement with Saratoga Investment Advisors, pursuant to which GSC Investment Corp. assumed certain rights and obligations of Saratoga Investment Advisors under a debt commitment letter Saratoga Investment Advisors received from Madison Capital Funding LLC, which indicated Madison Capital Funding’s willingness to provide GSC Investment Corp. with a $40.0 million senior secured revolving credit facility, subject to the satisfaction of certain terms and conditions. In addition, GSC Investment Corp. and GSCP (NJ), L.P. entered into a termination and release agreement, to be effective as of the closing of the transaction contemplated by the stock purchase agreement, pursuant to which GSCP (NJ), L.P., among other things, agreed to waive any and all accrued and unpaid deferred incentive management fees up to and as of the closing of the transaction contemplated by the stock purchase agreement but continued to be entitled to receive the base management fees earned through the date of the closing of the transaction contemplated by the stock purchase agreement.

On July 30, 2010, the transactions contemplated by the stock purchase agreement with Saratoga Investment Advisors and certain of its affiliates were completed, the private sale of 986,842 shares of our common stock for $15.0 million in aggregate purchase price to Saratoga Investment Advisors and certain of its affiliates closed, the Company entered into the Credit Facility, and the Company began doing business as Saratoga Investment Corp.

We used the net proceeds from the private sale transaction and a portion of the funds available to us under the Credit Facility to pay the full amount of principal and accrued interest, including default interest, outstanding under our revolving securitized credit facility with Deutsche Bank. The revolving securitized credit facility with Deutsche Bank was terminated in connection with our payment of all amounts outstanding thereunder on July 30, 2010.

In January 2011, we registered for public resale of the 986,842 shares of our common stock issued to Saratoga Investment Advisors and certain of its affiliates.

On March 28, 2012, our wholly-owned subsidiary, Saratoga Investment Corp. SBIC, LP (“SBIC LP”), received an SBIC license from the Small Business Administration (“SBA”).

In May 2013, we issued $48.3 million in aggregate principal amount of our 7.50% fixed-rate unsecured notes due 2020 (the “2020 Notes”) for net proceeds of $46.1 million after deducting underwriting commissions of $1.9 million and offering costs of $0.3 million. The proceeds included the underwriters’ full exercise of their overallotment option. The 2020 Notes were listed on the NYSE under the trading symbol “SAQ” with a par value of $25.00 per share. The 2020 Notes were redeemed in full on January 13, 2017.

On May 29, 2015, we entered into a Debt Distribution Agreement with Ladenburg Thalmann & Co. through which we may offer for sale, from time to time, up to $20.0 million in aggregate principal amount of the 2020 Notes through an At-the-Market (“ATM”) offering. Prior to the 2020 Notes being redeemed in full, the Company had sold 539,725 bonds with a principal of $13.5 million at an average price of $25.31 for aggregate net proceeds of $13.4 million (net of transaction costs).

On December 21, 2016, we issued $74.5 million in aggregate principal amount of our 6.75% fixed-rate unsecured notes due 2023 (the “2023 Notes”) for net proceeds of $71.7 million after deducting underwriting commissions of approximately $2.3 million and offering costs of approximately $0.5 million. The issuance

included the exercise of substantially all of the underwriters’ option to purchase an additional $9.8 million aggregate principal amount of 2023 Notes within 30 days. Interest on the 2023 Notes is paid quarterly in arrears on March 15, June 15, September 15 and December 15, at a rate of 6.75% per year, beginning March 30, 2017. The 2023 Notes mature on December 20, 2023, and commencing December 21, 2019, may be redeemed in whole or in part at any time or from time to time at our option. The 2023 Notes are listed on the NYSE under the trading symbol “SAB” with a par value of $25.00 per share.

On March 16, 2017, we entered into an equity distribution agreement with Ladenburg Thalmann & Co. Inc., through which we may offer for sale, from time to time, up to $30.0 million of our common stock through an ATM offering. Subsequent to this, BB&T Capital Markets and B. Riley FBR, Inc. were also added to the agreement. On July 9, 2019, the amount of the common stock to be offered through this offering was increased to $70.0 million. As of May 31, 2019, the Company sold 571,120 shares for gross proceeds of $13.0 million at an average price of $22.78 for aggregate net proceeds of $12.9 million (net of transaction costs).

On August 28, 2018, the Company issued $40.0 million in aggregate principal amount of our 6.25% fixed-rate notes due 2025 (the “2025 Notes”) for net proceeds of $38.7 million after deducting underwriting commissions of approximately $1.3 million. Offering costs incurred were 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 our option. The net proceeds from the offering were used for general corporate purposes in accordance with our investment objective and strategies. Financing costs of $1.6 million related to the 2025 Notes have been capitalized and are being amortized over the term of the 2025 Notes.

On December 14, 2018, the Company completed the third refinancing of the Saratoga CLO (the “2013-1 Reset CLO Notes”). This refinancing, among other things, extended the Saratoga CLO reinvestment period to January 2021, and extended its legal maturity to January 2030. A non-call period of January 2020 was also added. In addition to and as part of the refinancing, the Saratoga CLO has also been upsized from $300 million in assets to approximately $500 million. As part of this refinancing and upsizing, the Company invested an additional $13.8 million in all of the newly issued subordinated notes of the Saratoga CLO, and purchased $2.5 million in aggregate principal amount of the Class F-R-2 Notes tranche and $7.5 million in aggregate principal amount of the Class G-R-2 Notes tranche at par. Concurrently, the existing $4.5 million of Class F notes were repaid.

On February 5, 2019, the Company 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. The net proceeds from this offering were used for general corporate purposes in accordance with our investment objective and strategies. The financing costs and discount of $1.0 million related to the 2025 Notes have been capitalized and are being amortized over the term of the 2025 Notes.

At May 31, 2019, the total 2025 Notes outstanding was $60.0 million. The 2025 Notes are listed on the NYSE under the trading symbol “SAF” with a par value of $25.00 per share.

Critical Accounting Policies

Basis of Presentation

The preparation of financial statements in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make certain estimates and assumptions affecting amounts reported in the Company’s consolidated financial statements. We have identified investment valuation, revenue recognition and the recognition of capital gains incentive fee expense as our most critical accounting estimates. We continuously evaluate our estimates, including those related to the matters described below. These estimates are based on the information that is currently available to us and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ materially from those estimates under different assumptions or conditions. A discussion of our critical accounting policies follows.

Investment Valuation

The Company accounts for its investments at fair value in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 820 requires the Company to assume that its investments are to be sold or its liabilities are to be transferred at the balance sheet date in the principal market to independent market participants, or in the absence of a principal market, in the most advantageous market, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact.

Investments for which market quotations are readily available are fair valued at such market quotations obtained from independent third-party pricing services and market makers subject to any decision by our board of directors to approve a fair value determination to reflect significant events affecting the value of these investments. We value investments for which market quotations are not readily available at fair value as approved, in good faith, by our board of directors based on input from Saratoga Investment Advisors, the audit committee of our board of directors and a third party independent valuation firm. Determinations of fair value may involve subjective judgments and estimates. The types of factors that may be considered in determining the fair value of our investments include the nature and realizable value of any collateral, the portfolio company’s ability to make payments, market yield trend analysis, the markets in which the portfolio company does business, comparison to publicly traded companies, discounted cash flow and other relevant factors.

We undertake a multi-step valuation process each quarter when valuing investments for which market quotations are not readily available, as described below:

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Each investment is initially valued by the responsible investment professionals of Saratoga Investment Advisors and preliminary valuation conclusions are documented and discussed with our senior management; and

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An independent valuation firm engaged by our board of directors independently reviews a selection of these preliminary valuations each quarter so that the valuation of each investment for which market quotes are not readily available is reviewed by the independent valuation firm at least once each fiscal year. We use a party independent valuation firm to value our investment in the subordinated notes of Saratoga CLO and the Class F-R-2 Notes and Class G-R-2 Notes tranches of the Saratoga CLOs every quarter.

In addition, all our investments are subject to the following valuation process:

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The audit committee of our board of directors reviews and approves each preliminary valuation and Saratoga Investment Advisors and an independent valuation firm (if applicable) will supplement the preliminary valuation to reflect any comments provided by the audit committee; and

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Our board of directors discusses the valuations and approves the fair value of each investment, in good faith, based on the input of Saratoga Investment Advisors, independent valuation firm (to the extent applicable) and the audit committee of our board of directors.

Our investment in Saratoga CLO is carried at fair value, which is based on a discounted cash flow model that utilizes prepayment, re- investment and loss assumptions based on historical experience and projected performance, economic factors, the characteristics of the underlying cash flow, and comparable yields for equity interests in collateralized loan obligation funds similar to Saratoga CLO, when available, as determined by SIA and recommended to our board of directors. Specifically, we use Intex cash flow models, or an appropriate substitute, to form the basis for the valuation of our investment in Saratoga CLO. The models use a set of assumptions including projected default rates, recovery rates, reinvestment rate and prepayment rates in order to arrive at estimated valuations. The assumptions are based on available market data and projections provided by third parties as well as management estimates. We use the output from the Intex models (i.e., the estimated cash flows) to perform a discounted cash flow analysis on expected future cash flows to determine a valuation for our investment in Saratoga CLO.

Revenue Recognition

Income Recognition

Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis to the extent that such amounts are expected to be collected. The Company stops accruing interest on its investments when it is determined that interest is no longer collectible. Discounts and premiums on investments purchased are accreted/amortized over the life of the respective investment using the effective yield method. The amortized cost of investments represents the original cost adjusted for the accretion of discounts and amortization of premiums on investments.

Loans are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected. Accrued interest is generally reserved when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as a reduction in principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current, although we may make exceptions to this general rule if the loan has sufficient collateral value and is in the process of collection.

Payment-in-Kind Interest

The Company holds debt and preferred equity investments in its portfolio that contain a payment-in-kind (“PIK”) interest provision.

The PIK interest, which represents contractually deferred interest added to the investment balance that is generally due at maturity, is generally recorded on the accrual basis to the extent such amounts are expected to be collected. We stop accruing PIK interest if we do not expect the issuer to be able to pay all principal and interest when due.

Revenues

We generate revenue in the form of interest income and capital gains on the debt investments that we hold and capital gains, if any, on equity interests that we may acquire. We expect our debt investments, whether in the form of leveraged loans or mezzanine debt, to have terms of up to ten years, and to bear interest at either a fixed or floating rate. Interest on debt will be payable generally either quarterly or semi-annually. In some cases, our debt or preferred equity investments may provide for a portion or all of the interest to be PIK. To the extent interest is PIK, it will be payable through the increase of the principal amount of the obligation by the amount of

interest due on the then-outstanding aggregate principal amount of such obligation. The principal amount of the debt and any accrued but unpaid interest will generally become due at the maturity date. In addition, we may generate revenue in the form of commitment, origination, structuring or diligence fees, fees for providing managerial assistance or investment management services and possibly consulting fees. Any such fees will be generated in connection with our investments and recognized as earned. We may also invest in preferred equity or common equity securities that pay dividends on a current basis.

On January 22, 2008, we entered into a collateral management agreement with Saratoga CLO, pursuant to which we act as its collateral manager. The Saratoga CLO was initially refinanced in October 2013 with its reinvestment period extended to October 2016. On November 15, 2016, we completed a second refinancing of the Saratoga CLO with its reinvestment period extended to October 2018.

On December 14, 2018, we completed a third refinancing and upsize of the Saratoga CLO. The third Saratoga CLO refinancing, among other things, extended its reinvestment period to January 2021, and extended its legal maturity date to January 2030. A non-call period of January 2020 was also added. Following this refinancing, the Saratoga CLO portfolio increased from approximately $300.0 million in aggregate principal amount to approximately $500.0 million of predominantly senior secured first lien term loans. In addition to refinancing its liabilities, we invested an additional $13.8 million in all of the newly issued subordinated notes of the Saratoga CLO and also purchased $2.5 million in aggregate principal amount of the Class F-R-2 and $7.5 million in aggregate principal amount of the Class G-R-2 notes tranches at par, with a coupon of LIBOR plus 8.75% and LIBOR plus 10.00%, respectively. As part of this refinancing, we also redeemed our existing $4.5 million aggregate amount of the Class F notes tranche at par.

The Saratoga CLO remains effectively 100% owned and managed by Saratoga Investment Corp. We receive a base management fee of 0.10% per annum and a subordinated management fee of 0.40% per annum of the outstanding principal amount of Saratoga CLO’s assets, paid quarterly to the extent of available proceeds. Prior to the second refinancing and the issuance of the 2013-1 Amended CLO Notes, we received a base management fee of 0.25% per annum and a subordinated management fee of 0.25% per annum of the outstanding principal amount of Saratoga CLO’s assets, paid quarterly to the extent of available proceeds.

Following the third refinancing and the issuance of the 2013-1 Reset CLO Notes on December 14, 2018, we are no longer entitled to an incentive management fee equal to 20.0% of excess cash flow to the extent the Saratoga CLO subordinated notes receive an internal rate of return paid in cash equal to or greater than 12.0%.

Interest income on our investment in Saratoga CLO is recorded using the effective interest method in accordance with the provisions of ASC Topic 325-40, Investments-Other, Beneficial Interests in Securitized Financial Assets (“ASC 325-40”), based on the anticipated yield and the estimated cash flows over the projected life of the investment. Yields are revised when there are changes in actual or estimated cash flows due to changes in prepayments and/or re-investments, credit losses or asset pricing. Changes in estimated yield are recognized as an adjustment to the estimated yield over the remaining life of the investment from the date the estimated yield was changed.

ASC 606

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”), which supersedes the revenue recognition requirements in Revenue Recognition (ASC 605). Under the new guidance, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In May 2016, ASU 2016-12 amended ASU 2014-09 and deferred the effective period for annual periods beginning after December 15, 2017. Management has concluded that the majority of its revenues associated with financial instruments are scoped out of ASC 606, and has concluded that the only significant impact relates to the timing of the recognition of the CLO incentive fee income. We adopted ASC 606 under the modified

retrospective approach using the practical expedient provided for, therefore the presentation of prior periods has not been adjusted.

Expenses

Our primary operating expenses include the payment of investment advisory and management fees, professional fees, directors and officers insurance, fees paid to independent directors and administrator expenses, including our allocable portion of our administrator’s overhead. Our investment advisory and management fees compensate our Investment Adviser for its work in identifying, evaluating, negotiating, closing and monitoring our investments. We bear all other costs and expenses of our operations and transactions, including those relating to:

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organization;

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calculating our net asset value (including the cost and expenses of any independent valuation firm);

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expenses incurred by our Investment Adviser payable to third parties, including agents, consultants or other advisers, in monitoring our financial and legal affairs and in monitoring our investments and performing due diligence on our prospective portfolio companies;

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expenses incurred by our Investment Adviser payable for travel and due diligence on our prospective portfolio companies;

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interest payable on debt, if any, incurred to finance our investments;

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offerings of our common stock and other securities;

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investment advisory and management fees;

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fees payable to third parties, including agents, consultants or other advisers, relating to, or associated with, evaluating and making investments;

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transfer agent and custodial fees;

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federal and state registration fees;

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all costs of registration and listing our common stock on any securities exchange;

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federal, state and local taxes;

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independent directors’ fees and expenses;

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costs of preparing and filing reports or other documents required by governmental bodies (including the U.S. Securities and Exchange Commission (“SEC”) and the SBA);

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costs of any reports, proxy statements or other notices to common stockholders including printing costs;

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our fidelity bond, directors and officers errors and omissions liability insurance, and any other insurance premiums;

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direct costs and expenses of administration, including printing, mailing, long distance telephone, copying, secretarial and other staff, independent auditors and outside legal costs; and

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administration fees and all other expenses incurred by us or, if applicable, the administrator in connection with administering our business (including payments under the Administration Agreement based upon our allocable portion of the administrator’s overhead in performing its obligations under an Administration Agreement, including rent and the allocable portion of the cost of our officers and their respective staffs (including travel expenses)).

Pursuant to the investment advisory and management agreement that we had with GSCP (NJ), L.P., our former investment adviser and administrator, we had agreed to pay GSCP (NJ), L.P. as investment adviser a

quarterly base management fee of 1.75% of the average value of our total assets (other than cash or cash equivalents but including assets purchased with borrowed funds) at the end of the two most recently completed fiscal quarters and an incentive fee.

The incentive fee had two parts:

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A fee, payable quarterly in arrears, equal to 20.0% of our pre-incentive fee net investment income, expressed as a rate of return on the value of the net assets at the end of the immediately preceding quarter, that exceeded a 1.875% quarterly hurdle rate measured as of the end of each fiscal quarter. Under this provision, in any fiscal quarter, our investment adviser received no incentive fee unless our pre-incentive fee net investment income exceeded the hurdle rate of 1.875%. Amounts received as a return of capital were not included in calculating this portion of the incentive fee. Since the hurdle rate was based on net assets, a return of less than the hurdle rate on total assets could still have resulted in an incentive fee.

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A fee, payable at the end of each fiscal year, equal to 20.0% of our net realized capital gains, if any, computed net of all realized capital losses and unrealized capital depreciation, in each case on a cumulative basis on each investment in the Company’s portfolio, less the aggregate amount of capital gains incentive fees paid to the investment adviser through such date.

We deferred cash payment of any incentive fee otherwise earned by our former investment adviser if, during the then most recent four full fiscal quarters ending on or prior to the date such payment was to be made, the sum of (a) our aggregate distributions to our stockholders and (b) our change in net assets (defined as total assets less liabilities) (before taking into account any incentive fees payable during that period) was less than 7.5% of our net assets at the beginning of such period. These calculations were appropriately pro-rated for the first three fiscal quarters of operation and adjusted for any share issuances or repurchases during the applicable period. Such incentive fee would become payable on the next date on which such test had been satisfied for the most recent four full fiscal quarters or upon certain terminations of the investment advisory and management agreement. We commenced deferring cash payment of incentive fees during the quarterly period ended August 31, 2007 and continued to defer such payments through the quarterly period ended May 31, 2010. As of July 30, 2010, the date on which GSCP (NJ), L.P. ceased to be our investment adviser and administrator, we owed GSCP (NJ), L.P. $2.9 million in fees for services previously provided to us; of which $0.3 million has been paid by us. GSCP (NJ), L.P. agreed to waive payment by us of the remaining $2.6 million in connection with the consummation of the stock purchase transaction with Saratoga Investment Advisors and certain of its affiliates described elsewhere in this Quarterly Report.

The terms of the investment advisory and management agreement with Saratoga Investment Advisors, our current investment adviser, are substantially similar to the terms of the investment advisory and management agreement we had entered into with GSCP (NJ), L.P., our former investment adviser, except for the following material distinctions in the fee terms:

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The capital gains portion of the incentive fee was reset with respect to gains and losses from May 31, 2010, and therefore losses and gains incurred prior to such time will not be taken into account when calculating the capital gains fee payable to Saratoga Investment Advisors and, as a result, Saratoga Investment Advisors will be entitled to 20.0% of net gains that arise after May 31, 2010. In addition, the cost basis for computing realized gains and losses on investments held by us as of May 31, 2010 equal the fair value of such investment as of such date. Under the investment advisory and management agreement with our former investment adviser, GSCP (NJ), L.P., the capital gains fee was calculated from March 21, 2007, and the gains were substantially outweighed by losses.

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Under the “catch up” provision, 100.0% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income that exceeds 1.875% but is less than or equal to 2.344% in any fiscal quarter is payable to Saratoga Investment Advisors. This will enable Saratoga Investment Advisors to receive 20.0% of all net investment income as such amount

approaches 2.344% in any quarter, and Saratoga Investment Advisors will receive 20.0% of any additional net investment income. Under the investment advisory and management agreement with our former investment adviser, GSCP (NJ), L.P. only received 20.0% of the excess net investment income over 1.875%.

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We will no longer have deferral rights regarding incentive fees in the event that the distributions to stockholders and change in net assets is less than 7.5% for the preceding four fiscal quarters.

Capital Gains Incentive Fee

The Company records an expense accrual relating to the capital gains incentive fee payable by the Company to its Manager when the unrealized gains on its investments exceed all realized capital losses on its investments given the fact that a capital gains incentive fee would be owed to the Manager if the Company were to liquidate its investment portfolio at such time. The actual incentive fee payable to the Company’s Manager related to capital gains will be determined and payable in arrears at the end of each fiscal year and will include only realized capital gains for the period.

Regulatory Matters

In August 2018, the SEC issued Final Rule Release No.33-10532, Disclosure Update and Simplification, which in part amends certain disclosure requirements of Regulation S-X that have become redundant, duplicative, overlapping, outdated, or superseded, in light of other Commission disclosure requirements, U.S. GAAP or changes in the information environment. The amendments are intended to facilitate the disclosure of information to investors and simplify compliance without significantly altering the total mix of information provided to investors. The effective date for these disclosures was November 5, 2018, effective for the first quarter that begins after the effective date. Management has adopted these amendments as currently required and these are reflected in the Company’s consolidated financial statements and related disclosures. The presentation of certain prior year information has been adjusted to conform with these amendments.

New Accounting Pronouncements

In March 2017, the FASB issued ASU 2017-08, Receivables — Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities (“ASU 2017-08”) which amends the amortization period for certain purchased callable debt securities held at a premium, shortening such period to the earliest call date. ASU 2017-08 does not require any accounting change for debt securities held at a discount; the discount continues to be amortized to maturity. ASU 2017-08 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Management has assessed these changes and concluded these changes do not have a material impact on the Company’s consolidated financial statements and disclosures.

Portfolio and Investment Activity

Investment Portfolio Overview


	May 31, 2019			February 28, 2019
	($ in millions)
Number of investments(1)		66			58
Number of portfolio companies(2)		33			31
Average investment per portfolio company(2)	$	11.3		$	11.8
Average investment size(1)	$	5.8		$	6.5
Weighted average maturity(3)		3.5yrs			3.6yrs
Number of industries		8			8
Non-performing or delinquent investments (fair value)	$	4.8		$	5.7
Fixed rate debt (% of interest earning portfolio)(3)	$	56.8(16.7%)		$	55.7(16.3%)
Fixed rate debt (weighted average current coupon)(3)		10.4	%		10.4	%
Floating rate debt (% of interest earning portfolio)(3)	$	284.0(83.3%)		$	285.0(83.7%)
Floating rate debt (weighted average current spread over LIBOR)(3)(4)		8.5	%		8.6	%

(1)	Excludes our investment in the subordinated notes of Saratoga CLO.

(2)	Excludes our investment in the subordinated notes of Saratoga CLO, Class F-R-2 Notes and Class G-R-2 Notes tranches of Saratoga CLO.

(3)	Excludes our investment in the subordinated notes of Saratoga CLO and equity interests.

(4)	Calculation uses either 1-month or 3-month LIBOR, depending on the contractual terms, and after factoring in any existing LIBOR floors.

During the three months ended May 31, 2019, we invested $27.4 million in new or existing portfolio companies and had $26.9 million in aggregate amount of exits and repayments resulting in net investments of $0.5 million for the period.

During the three months ended May 31, 2018, we invested $35.2 million in new or existing portfolio companies and had $36.5 million in aggregate amount of exits and repayments resulting in net exits and repayments of $1.3 million for the period.

Portfolio Composition

Our portfolio composition at May 31, 2019 and February 28, 2019 at fair value was as follows:


	May 31, 2019						February 28, 2019
	Percentage of Total Portfolio			Weighted Average Current Yield			Percentage of Total Portfolio			Weighted Average Current Yield
First lien term loans		53.6	%		10.7	%		50.5	%		10.9	%
Second lien term loans		26.7			11.8			31.3			11.7
Unsecured term loans		0.5			0.0			0.5			0.0
Structured finance securities		9.3			16.0			8.8			14.6
Equity interests		9.9			2.8			8.9			3.1

Total		100.0	%		10.6	%		100.0	%		10.7	%

At May 31, 2019, our investment in the subordinated notes of Saratoga CLO, a collateralized loan obligation fund, had a fair value of $28.0 million and constituted 6.8% of our portfolio.

This investment constitutes a first loss position in a portfolio that, as of May 31, 2019 and February 28, 2019, was composed of $513.4 million and $510.3 million, respectively, in aggregate principal amount of primarily senior secured first lien term loans. In addition, as of May 31, 2019, we also own $2.5 million of the F-R-2 Notes and $7.5 million of the G-R-2 Notes in the Saratoga CLO, that only rank senior to the subordinated notes.

This investment is subject to unique risks. (See “Part 1. Item 1A. Risk Factors—Our investment in Saratoga CLO constitutes a leveraged investment in a portfolio of predominantly senior secured first lien term loans and is subject to additional risks and volatility” in our Annual Report on Form 10-K for the fiscal year ended February 28, 2019).

We do not consolidate the Saratoga CLO portfolio in our consolidated financial statements. Accordingly, the metrics below do not include the underlying Saratoga CLO portfolio investments. However, at May 31, 2019, $491.0 million or 98.6% of the Saratoga CLO portfolio investments in terms of market value had a CMR (as defined below) color rating of green or yellow and three Saratoga CLO portfolio investments were in default with a fair value of $1.3 million. At February 28, 2019, $491.0 million or 98.5% of the Saratoga CLO portfolio investments in terms of market value had a CMR (as defined below) color rating of green or yellow and two Saratoga CLO portfolio investments were in default with a fair value of $0.01 million. For more information relating to the Saratoga CLO, see the audited financial statements for Saratoga in our Annual Report on Form 10-K for the fiscal year ended February 28, 2019.

Saratoga Investment Advisors normally grades all of our investments using a credit and monitoring rating system (“CMR”). The CMR consists of a single component: a color rating. The color rating is based on several criteria, including financial and operating strength, probability of default, and restructuring risk. The color ratings are characterized as follows: (Green)—performing credit; (Yellow)—underperforming credit; (Red)—in principal payment default and/or expected loss of principal.

Portfolio CMR distribution

The CMR distribution for our investments at May 31, 2019 and February 28, 2019 was as follows:

Saratoga Investment Corp.


	May 31, 2019					February 28, 2019
Color Score	Investments at Fair Value		Percentage of Total Portfolio			Investments at Fair Value		Percentage of Total Portfolio


	($ in thousands)
Green	$	336,314		82.1	%	$	336,061		83.6	%
Yellow		2,058		0.5			4,600		1.1
Red		2,411		0.6			6		0.0
N/A(1)		68,668		16.8			61,353		15.3

Total	$	409,451		100.0	%	$	402,020		100.0	%

(1)	Comprised of our investment in the subordinated notes of Saratoga CLO and equity interests.

The change in reserve from $0.6 million as of February 28, 2019 to $0.9 million as of May 31, 2019 was primarily related to the additional quarterly interest accruals reserved on Roscoe Medical, Inc. and TMAC Acquisition Co., LLC.

The CMR distribution of Saratoga CLO investments at May 31, 2019 and February 28, 2019 was as follows:

Saratoga CLO


	May 31, 2019					February 28, 2019
Color Score	Investments at Fair Value		Percentage of Total Portfolio			Investments at Fair Value		Percentage of Total Portfolio


	($ in thousands)
Green	$	458,082		92.0	%	$	462,171		92.7	%
Yellow		32,902		6.6			28,839		5.8
Red		6,751		1.4			7,379		1.5
N/A(1)		0		0.0			16		0.0

Total	$	497,735		100.0	%	$	498,405		100.0	%

(1)	Comprised of Saratoga CLO’s equity interests.

Portfolio composition by industry grouping at fair value

The following table shows our portfolio composition by industry grouping at fair value at May 31, 2019 and February 28, 2019:

Saratoga Investment Corp.


	May 31, 2019					February 28, 2019
	Investments At Fair Value		Percentage of Total Portfolio			Investments At Fair Value		Percentage of Total Portfolio


	($ in thousands)
Business Services	$	249,061		60.8	%	$	252,676		62.8	%
Healthcare Services		66,518		16.3			57,342		14.3
Education		48,070		11.7			48,076		12.0
Structured Finance Securities(1)		37,965		9.3			35,328		8.8
Metals		2,906		0.7			2,827		0.7
Consumer Services		2,372		0.6			3,166		0.8
Food and Beverage		2,058		0.5			2,100		0.5
Consumer Products		501		0.1			505		0.1

Total	$	409,451		100.0	%	$	402,020		100.0	%

(1)	Comprised of our investment in the subordinated notes, Class F-R-2 Notes and Class G-R-2 Notes of Saratoga CLO.

The following table shows Saratoga CLO’s portfolio composition by industry grouping at fair value at May 31, 2019 and February 28, 2019:

Saratoga CLO


	May 31, 2019					February 28, 2019
	Investments at Fair Value		Percentage of Total Portfolio			Investments at Fair Value		Percentage of Total Portfolio
	($ in thousands)
Banking Finance Insurance & Real Estate	$	75,212		15.1	%	$	74,638		15.0	%
Healthcare & Pharmaceuticals		43,983		8.8			39,242		7.9
Services: Business		35,698		7.2			36,575		7.3
High Tech Industries		35,433		7.1			38,886		7.8
Telecommunications		27,159		5.5			28,156		5.6
Media: Advertising Printing & Publishing		25,975		5.2			31,799		6.4
Services: Consumer		23,882		4.8			24,712		5.0
Retail		21,470		4.3			23,018		4.6
Aerospace & Defense		21,302		4.3			16,836		3.4
Beverage Food & Tobacco		21,129		4.2			23,436		4.7
Chemicals Plastics & Rubber		18,869		3.8			15,841		3.2
Hotel Gaming & Leisure		18,106		3.6			15,373		3.1
Consumer goods: Non-durable		15,435		3.1			15,528		3.1
Automotive		14,686		3.0			13,373		2.7
Media: Diversified & Production		13,088		2.6			13,086		2.6
Containers Packaging & Glass		13,005		2.6			10,033		2.0
Construction & Building		11,272		2.3			13,293		2.7
Transportation: Cargo		10,779		2.2			11,137		2.2
Capital Equipment		9,698		2.0			9,638		1.9
Media: Broadcasting & Subscription		8,990		1.8			10,410		2.1
Consumer goods: Durable		6,145		1.2			6,324		1.3
Metals & Mining		5,010		1.0			5,048		1.0
Transportation: Consumer		4,766		1.0			4,773		1.0
Forest Products & Paper		4,548		0.9			4,555		0.9
Utilities: Oil & Gas		4,440		0.9			2,953		0.6
Energy: Electricity		3,034		0.6			5,059		1.0
Utilities: Electric		2,939		0.6			2,941		0.6
Environmental Industries		985		0.2			979		0.2
Energy: Oil & Gas		697		0.1			763		0.1

Total	$	497,735	$	100.0	%	$	498,405		100.0	%

Portfolio composition by geographic location at fair value

The following table shows our portfolio composition by geographic location at fair value at May 31, 2019 and February 28, 2019. The geographic composition is determined by the location of the corporate headquarters of the portfolio company.


	May 31, 2019					February 28, 2019
	Investments at Fair Value		Percentage of Total Portfolio			Investments at Fair Value		Percentage of Total Portfolio


	($ in thousands)
Southeast	$	142,489		34.8	%	$	130,604		32.5	%
Midwest		108,534		26.5			116,388		29.0
Southwest		51,358		12.5			50,236		12.5
Northeast		18,306		4.5			19,061		4.7
West		11,043		2.7			10,777		2.7
Northwest		8,770		2.1			8,636		2.1
Other(1)		68,951		16.9			66,318		16.5

Total	$	409,451		100.0	%	$	402,020		100.0	%

(1)	Comprised of our investment in the subordinated notes, Class F-R-2 Notes and Class G-R-2 Notes of Saratoga CLO.

Results of operations

Operating results for the three months ended May 31, 2019 and May 31, 2018 was as follows:


	For the three months ended
	May 31, 2019			May 31, 2018
	($ in thousands)
Total investment income	$	12,751		$	10,488
Total operating expenses		9,070			6,561

Net investment income		3,681			3,927
Net realized gains (losses) from investments		—			212
Net change in unrealized appreciation (depreciation) on investments		3,989			643
Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments		(21	)		(940	)

Net increase in net assets resulting from operations	$	7,649		$	3,842

Investment income

The composition of our investment income for three months ended May 31, 2019 and May 31, 2018 was as follows:


	For the three months ended
	May 31, 2019		May 31, 2018
	($ in thousands)
Interest from investments	$	11,603	$	9,607
Management fee income		630		385
Incentive fee income		—		199
Interest from cash and cash equivalents and other income		518		297

Total investment income	$	12,751	$	10,488

For the three months ended May 31, 2019, total investment income increased $2.3 million, or 21.6% to $12.8 million from $10.5 million for the three months ended May 31, 2018. Interest income from investments increased $2.0 million, or 20.8%, to $11.6 million for the three months ended May 31, 2019 from $9.6 million for the three months ended May 31, 2018. This reflects an increase of $66.1 million, or 19.3% in total investments at May 31, 2019 from $343.4 million at May 31, 2018. At May 31, 2019, the weighted average current yield on investments was 10.6% compared to 11.3% at May 31, 2018, which offset some of the increase.

For the three months ended May 31, 2019 and May 31, 2018, total PIK income was $1.2 million and $0.8 million, respectively. This increase was primarily due to the increase in investment in Easy Ice, LLC, which primarily generates PIK income.

Management fee income reflects the fee income received for managing the Saratoga CLO. For the three months ended May 31, 2019, total management fee income increased $0.2 million, or 63.4% to $0.6 million from $0.4 million for the three months ended May 31, 2018. This reflects the increase in Saratoga CLO assets being managed by the Company following the third refinancing of the Saratoga CLO.

Following the third refinancing of the Saratoga CLO on December 14, 2018, the Company is no longer entitled to receive the incentive fee. For the three months ended May 31, 2018, incentive fee income of $0.2 million was recognized related to the Saratoga CLO, reflecting the 12.0% hurdle rate that has been achieved.

Operating expenses

The composition of our operating expenses for the three months ended May 31, 2019 and May 31, 2018 was as follows:


	For the three months ended
	May 31, 2019		May 31, 2018
	($ in thousands)
Interest and debt financing expenses	$	3,864	$	2,723
Base management fees		1,812		1,532
Incentive management fees		2,113		1,073
Professional fees		395		543
Administrator expenses		500		437
Insurance		65		64
Directors fees and expenses		60		96
General and administrative and other expenses		259		360
Income tax benefit		2		(267	)
Excise tax credit		—		0

Total operating expenses	$	9,070	$	6,561

For the three months ended May 31, 2019, total operating expenses increased $2.5 million, or 38.3% compared to the three months ended May 31, 2018.

For the three months ended May 31, 2019 and May 31, 2018, the increase in interest and debt financing expenses is primarily attributable to an increase in average outstanding debt from $212.1 million for the three months ended May 31, 2018 to $284.5 million for the three months ended May 31, 2019. For the three months ended May 31, 2019, the weighted average interest rate on our outstanding indebtedness was 4.80% compared to 4.44% for the three months ended May 31, 2018. The increase in weighted average interest rate was primarily driven by the issuance of the 2025 Notes which carry a fixed rate of 6.25%, versus the SBA debentures that carry a lower interest rate. For both May 31, 2019 and February 28, 2019, the SBA debentures represented 52.7% of overall debt.

For the three months ended May 31, 2019, base management fees increased $0.3 million, or 18.3% compared to the three months ended May 31, 2018. The increase in base management fees results from the 18.6% increase in the average value of our total assets, less cash and cash equivalents, from $347.4 million as of May 31, 2018 to $412.0 million as of May 31, 2019.

For the three months ended May 31, 2019, incentive management fees increased $1.0 million, or 97.0%, compared to the three months ended May 31, 2018. The first part of the incentive management fees increased from $1.0 million for the three months ended May 31, 2018 to $1.2 million for the three months ended May 31, 2019, as higher average total assets led to increased net investment income above the hurdle rate pursuant to the investment advisory and management agreement. The incentive management fees related to capital gains increased from $0.1 million for the three months ended May 31, 2018 to $1.0 million for the three months ended May 31, 2019, reflecting net realized gains on investments this period, including the impact of the deferred taxes on unrealized appreciation.

For the three months ended May 31, 2019, professional fees decreased $0.1 million, or 27.2% compared to the three months ended May 31, 2018. This decrease primarily relates to decreased legal and accounting fees this year following the Sarbanes-Oxley implementation costs last year.

For the three months ended May 31, 2019, administrator expenses increased $0.06 million, or 14.3%, compared to the three months ended May 31, 2018, which reflects an increase to the cap on the payment or reimbursement of expenses by the Company from $1.75 million to $2.0 million, effective August 1, 2018.

As discussed above, the increase in interest and debt financing expenses for the three months ended May 31, 2019 compared to the three months ended May 31, 2018 is primarily attributable to an increase in the amount of outstanding debt. During the three months ended May 31, 2019 and May 31, 2018, there were no borrowings outstanding under the Credit Facility. For the three months ended May 31, 2019 and May 31, 2018, the average borrowings outstanding of SBA debentures was $150.0 million and $137.7 million, respectively. For the three months ended May 31, 2019 and May 31, 2018, the weighted average interest rate on the outstanding borrowings of the SBA debentures was 3.25% and 3.17%, respectively. During the three months ended May 31, 2019, the average dollar amount of our 6.25% fixed-rate 2025 Notes outstanding was $60.0 million. There were no outstanding borrowings of our fixed-rate 2025 Notes during the three months ended May 31, 2018. During the three months ended May 31, 2019 and May 31, 2018, the average dollar amount of our 6.75% fixed-rate 2023 Notes outstanding was $74.5 million and $74.5 million, respectively.

For the three months ended May 31, 2019 and May 31, 2018, there were income tax benefits of $0.0 million and $0.3 million, respectively. This relates to net deferred federal and state income tax benefits with respect to operating losses and income derived from equity investments held in taxable blockers.

Net realized gains (losses) on sales of investments

For the three months ended May 31, 2019, the Company had $26.9 million of sales, repayments, exits or restructurings. For the three months ended May 31, 2018, the Company had $36.5 million of sales, repayments, exits or restructurings resulting in $0.2 million of net realized gains. There were no realized gains and losses during the three months ended May 31, 2019.

The most significant realized gains and losses during the three months ended May 31, 2018 were as follows (dollars in thousands):

Three Months ended May 31, 2018


Issuer	Asset Type	Gross Proceeds		Cost		Net Realized Gain (Loss)
Take 5 Oil Change, L.L.C.	Equity Interests	$	319	$	—	$	319
TM Restaurant Group L.L.C.	First Lien Term Loan		9,256		9,359		(103	)

Net change in unrealized appreciation (depreciation) on investments

For the three months ended May 31, 2019, our investments had a net change in unrealized appreciation of $4.0 million versus a net change in unrealized appreciation of $0.6 million for the three months ended May 31, 2018. The most significant cumulative net change in unrealized appreciation (depreciation) for the three months ended May 31, 2019 were the following (dollars in thousands):

Three Months ended May 31, 2019


Issuer	Asset Type	Cost		Fair Value		Total Unrealized Appreciation (Depreciation)			YTD Change in Unrealized Appreciation (Depreciation)
Censis Technologies, Inc.	Equity Interests	$	999	$	4,018	$	3,019		$	1,631
My Alarm Center, LLC	Equity Interests		4,811		2,372		(2,439	)		(794	)
Saratoga Investment Corp. CLO 2013-1, Ltd.	Structured Finance Securities		24,899		28,024		3,125			1,248

The $1.6 million net change in unrealized appreciation in our investment in Censis Technologies, Inc. was driven by continued outperformance of the business as well as the completion of a strategic acquisition.

The $0.8 million net change in unrealized depreciation in our investment in My Alarm Center, LLC was driven by the issuance of new securities senior to existing investments.

The $1.2 million net change in unrealized appreciation in our investment in Saratoga Investment Corp. CLO 2013-1, Ltd. was driven by continued outperformance of the Saratoga CLO.

The most significant cumulative net change in unrealized appreciation (depreciation) for the three months ended May 31, 2018 were the following (dollars in thousands):

Three Months ended May 31, 2018


Issuer	Asset Type	Cost		Fair Value		Total Unrealized Appreciation (Depreciation)			YTD Change in Unrealized Appreciation (Depreciation)
Elyria Foundry Company, L.L.C	Common Stock	$	9,685	$	2,672	$	(7,013	)	$	(761	)
Easy Ice, LLC	Preferred Equity		8,980		11,676		2,696			697
HMN Holdco, LLC	Warrant		—		3,166		3,166			469

The $0.8 million of net change in unrealized depreciation in our investment in Elyria Foundry, L.L.C. was driven by a decline in oil and gas end markets since year-end, negatively impacting the Company’s performance.

The $0.7 million of net change in unrealized appreciation in our investment in Easy Ice, LLC was driven by a continued increase in the scale and earnings of the business.

The $0.5 million of net change in unrealized appreciation in our investment in HMN Holdco, LLC was driven by a continued increase in the earnings of the business.

Changes in net assets resulting from operations

For the three months ended May 31, 2019 and May 31, 2018, we recorded a net increase in net assets resulting from operations of $7.6 million and $3.8 million, respectively. Based on 7,746,187 weighted average

common shares outstanding as of May 31, 2019, our per share net increase in net assets resulting from operations was $0.99 for the three months ended May 31, 2019. This compares to a per share net increase in net assets resulting from operations of $0.61 for the three months ended May 31, 2018 based on 6,275,494 weighted average common shares outstanding as of May 31, 2018.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

We intend to continue to generate cash primarily from cash flows from operations, including interest earned from our investments in debt in middle market companies, interest earned from the temporary investment of cash in U.S. government securities and other high-quality debt investments that mature in one year or less, future borrowings and future offerings of securities.

Although we expect to fund the growth of our investment portfolio through the net proceeds from future equity offerings, including our dividend reinvestment plan (“DRIP”), and issuances of senior securities or future borrowings, to the extent permitted by the 1940 Act, we cannot assure you that our plans to raise capital will be successful. In this regard, because our common stock has historically traded at a price below our current net asset value per share and we are limited in our ability to sell our common stock at a price below net asset value per share, we have been and may continue to be limited in our ability to raise equity capital.

In addition, we intend to distribute to our stockholders substantially all of our taxable income in order to satisfy the distribution requirement applicable to RICs under the Code. In satisfying this distribution requirement, we have in the past relied on Internal Revenue Service (“IRS”) issued private letter rulings concluding that a RIC may treat a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder may elect to receive his or her entire distribution in either cash or stock of the RIC subject to a limitation on the aggregate amount of cash to be distributed to all stockholders, which limitation must be at least 20.0% of the aggregate declared distribution. We may rely on these IRS private letter rulings in future periods to satisfy our RIC distribution requirement.

Also, as a BDC, we generally are required to meet a coverage ratio of total assets, less liabilities and indebtedness not represented by senior securities, to total senior securities, which include all of our borrowings and any outstanding preferred stock, of at least 200.0%, reduced to 150.0% effective April 16, 2019 following the approval received from the non-interested board of directors on April 16, 2018. This requirement limits the amount that we may borrow. Our asset coverage ratio, as defined in the 1940 Act, was 238.9% as of May 31, 2019 and 234.5% as of February 28, 2019. To fund growth in our investment portfolio in the future, we anticipate needing to raise additional capital from various sources, including the equity markets and other debt-related markets, which may or may not be available on favorable terms, if at all.

Consequently, we may not have the funds or the ability to fund new investments, to make additional investments in our portfolio companies, to fund our unfunded commitments to portfolio companies or to repay borrowings. Also, the illiquidity of our portfolio investments may make it difficult for us to sell these investments when desired and, if we are required to sell these investments, we may realize significantly less than their recorded value.

Madison revolving credit facility

Below is a summary of the terms of the senior secured revolving credit facility we entered into with Madison Capital Funding LLC (the “Credit Facility”) on June 30, 2010, which was most recently amended on May 18, 2017.

Availability. The Company can draw up to the lesser of (i) $40.0 million (the “Facility Amount”) and (ii) the product of the applicable advance rate (which varies from 50.0% to 75.0% depending on the type of loan asset) and the value, determined in accordance with the Credit Facility (the “Adjusted Borrowing Value”), of certain

“eligible” loan assets pledged as security for the loan (the “Borrowing Base”), in each case less (a) the amount of any undrawn funding commitments the Company has under any loan asset and which are not covered by amounts in the Unfunded Exposure Account referred to below (the “Unfunded Exposure Amount”) and outstanding borrowings. Each loan asset held by the Company as of the date on which the Credit Facility was closed was valued as of that date and each loan asset that the Company acquires after such date will be valued at the lowest of its fair value, its face value (excluding accrued interest) and the purchase price paid for such loan asset. Adjustments to the value of a loan asset will be made to reflect, among other things, changes in its fair value, a default by the obligor on the loan asset, insolvency of the obligor, acceleration of the loan asset, and certain modifications to the terms of the loan asset.

The Credit Facility contains limitations on the type of loan assets that are “eligible” to be included in the Borrowing Base and as to the concentration level of certain categories of loan assets in the Borrowing Base such as restrictions on geographic and industry concentrations, asset size and quality, payment frequency, status and terms, average life, and collateral interests. In addition, if an asset is to remain an “eligible” loan asset, the Company may not make changes to the payment, amortization, collateral and certain other terms of the loan assets without the consent of the administrative agent that will either result in subordination of the loan asset or be materially adverse to the lenders.

Collateral. The Credit Facility is secured by substantially all of the assets of the Company (other than assets held by our SBIC subsidiary) and includes the subordinated notes (“CLO Notes”) issued by Saratoga CLO and the Company’s rights under the CLO Management Agreement (as defined below).

Interest Rate and Fees. Under the Credit Facility, funds are borrowed from or through certain lenders at the greater of the prevailing LIBOR rate and 1.00%, plus an applicable margin of 4.75%. At the Company’s option, funds may be borrowed based on an alternative base rate, which in no event will be less than 2.00%, and the applicable margin over such alternative base rate is 3.75%. In addition, the Company pays the lenders a commitment fee of 0.75% per year on the unused amount of the Credit Facility for the duration of the Revolving Period (defined below). Accrued interest and commitment fees are payable monthly. The Company was also obligated to pay certain other fees to the lenders in connection with the closing of the Credit Facility.

Revolving Period and Maturity Date. The Company may make and repay borrowings under the Credit Facility for a period of three years following the closing of the Credit Facility (the “Revolving Period”). The Revolving Period may be terminated at an earlier time by the Company or, upon the occurrence of an event of default, by action of the lenders or automatically. All borrowings and other amounts payable under the Credit Facility are due and payable in full five years after the end of the Revolving Period.

Collateral Tests. It is a condition precedent to any borrowing under the Credit Facility that the principal amount outstanding under the Credit Facility, after giving effect to the proposed borrowings, not exceed the lesser of the Borrowing Base or the Facility Amount (the “Borrowing Base Test”). In addition to satisfying the Borrowing Base Test, the following tests must also be satisfied (together with Borrowing Base Test, the “Collateral Tests”):

•

Interest Coverage Ratio. The ratio (expressed as a percentage) of interest collections with respect to pledged loan assets, less certain fees and expenses relating to the Credit Facility, to accrued interest and commitment fees and any breakage costs payable to the lenders under the Credit Facility for the last 6 payment periods must equal at least 175.0%.

•

Overcollateralization Ratio. The ratio (expressed as a percentage) of the aggregate Adjusted Borrowing Value of “eligible” pledged loan assets plus the fair value of certain ineligible pledged loan assets and the CLO Notes (in each case, subject to certain adjustments) to outstanding borrowings under the Credit Facility plus the Unfunded Exposure Amount must equal at least 200.0%.

•

Weighted Average FMV Test. The aggregate adjusted or weighted value of “eligible” pledged loan assets as a percentage of the aggregate outstanding principal balance of “eligible” pledged loan assets

must be equal to or greater than 72.0% and 80.0% during the one-year periods prior to the first and second anniversary of the closing date, respectively, and 85.0% at all times thereafter.

The Credit Facility also requires payment of outstanding borrowings or replacement of pledged loan assets upon the Company’s breach of its representation and warranty that pledged loan assets included in the Borrowing Base are “eligible” loan assets. Such payments or replacements must equal the lower of the amount by which the Borrowing Base is overstated as a result of such breach or any deficiency under the Collateral Tests at the time of repayment or replacement. Compliance with the Collateral Tests is also a condition to the discretionary sale of pledged loan assets by the Company.

Priority of Payments. During the Revolving Period, the priority of payments provisions of the Credit Facility require, after payment of specified fees and expenses and any necessary funding of the Unfunded Exposure Account, that collections of principal from the loan assets and, to the extent that these are insufficient, collections of interest from the loan assets, be applied on each payment date to payment of outstanding borrowings if the Borrowing Base Test, the Overcollateralization Ratio and the Interest Coverage Ratio would not otherwise be met. Similarly, following termination of the Revolving Period, collections of interest are required to be applied, after payment of certain fees and expenses, to cure any deficiencies in the Borrowing Base Test, the Interest Coverage Ratio and the Overcollateralization Ratio as of the relevant payment date.

Reserve Account. The Credit Facility requires the Company to set aside an amount equal to the sum of accrued interest, commitment fees and administrative agent fees due and payable on the next succeeding three payment dates (or corresponding to three payment periods). If for any monthly period during which fees and other payments accrue, the aggregate Adjusted Borrowing Value of “eligible” pledged loan assets which do not pay cash interest at least quarterly exceeds 15.0% of the aggregate Adjusted Borrowing Value of “eligible” pledged loan assets, the Company is required to set aside such interest and fees due and payable on the next succeeding six payment dates. Amounts in the reserve account can be applied solely to the payment of administrative agent fees, commitment fees, accrued and unpaid interest and any breakage costs payable to the lenders.

Unfunded Exposure Account. With respect to revolver or delayed draw loan assets, the Company is required to set aside in a designated account (the “Unfunded Exposure Account”) 100.0% of its outstanding and undrawn funding commitments with respect to such loan assets. The Unfunded Exposure Account is funded at the time the Company acquires a revolver or delayed draw loan asset and requests a related borrowing under the Credit Facility. The Unfunded Exposure Account is funded through a combination of proceeds of the requested borrowing and other Company funds, and if for any reason such amounts are insufficient, through application of the priority of payment provisions described above.

Operating Expenses. The priority of payments provision of the Credit Facility provides for the payment of certain operating expenses of the Company out of collections on principal and interest during the Revolving Period and out of collections on interest following the termination of the Revolving Period in accordance with the priority established in such provision. The operating expenses payable pursuant to the priority of payment provisions is limited to $350,000 for each monthly payment date or $2.5 million for the immediately preceding period of twelve consecutive monthly payment dates. This ceiling can be increased by the lesser of 5.0% or the percentage increase in the fair market value of all the Company’s assets only on the first monthly payment date to occur after each one-year anniversary following the closing of the Credit Facility. Upon the occurrence of a Manager Event (described below), the consent of the administrative agent is required in order to pay operating expenses through the priority of payments provision.

Events of Default. The Credit Facility contains certain negative covenants, customary representations and warranties and affirmative covenants and events of default. The Credit Facility does not contain grace periods for breach by the Company of certain covenants, including, without limitation, preservation of existence, negative pledge, change of name or jurisdiction and separate legal entity status of the Company covenants and certain

other customary covenants. Other events of default under the Credit Facility include, among other things, the following:

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an Interest Coverage Ratio of less than 150.0%;

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an Overcollateralization Ratio of less than 175.0%;

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the filing of certain ERISA or tax liens;

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the occurrence of certain “Manager Events” such as:

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failure by Saratoga Investment Advisors and its affiliates to maintain collectively, directly or indirectly, a cash equity investment in the Company in an amount equal to at least $5.0 million at any time prior to the third anniversary of the closing date;

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failure of the Management Agreement between Saratoga Investment Advisors and the Company to be in full force and effect;

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indictment or conviction of Saratoga Investment Advisors or any “key person” for a felony offense, or any fraud, embezzlement or misappropriation of funds by Saratoga Investment Advisors or any “key person” and, in the case of “key persons,” without a reputable, experienced individual reasonably satisfactory to Madison Capital Funding appointed to replace such key person within 30 days;

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resignation, termination, disability or death of a “key person” or failure of any “key person” to provide active participation in Saratoga Investment Advisors’ daily activities, all without a reputable, experienced individual reasonably satisfactory to Madison Capital Funding appointed within 30 days; or

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occurrence of any event constituting “cause” under the Collateral Management Agreement between the Company and Saratoga CLO (the “CLO Management Agreement”), delivery of a notice under Section 12(c) of the CLO Management Agreement with respect to the removal of the Company as collateral manager or the Company ceases to act as collateral manager under the CLO Management Agreement.

Conditions to Acquisitions and Pledges of Loan Assets. The Credit Facility imposes certain additional conditions to the acquisition and pledge of additional loan assets. Among other things, the Company may not acquire additional loan assets without the prior written consent of the administrative agent until such time that the administrative agent indicates in writing its satisfaction with Saratoga Investment Advisors’ policies, personnel and processes relating to the loan assets.

Fees and Expenses. The Company paid certain fees and reimbursed Madison Capital Funding LLC for the aggregate amount of all documented, out-of-pocket costs and expenses, including the reasonable fees and expenses of lawyers, incurred by Madison Capital Funding LLC in connection with the Credit Facility and the carrying out of any and all acts contemplated thereunder up to and as of the date of closing of the stock purchase transaction with Saratoga Investment Advisors and certain of its affiliates. These amounts totaled $2.0 million.

On February 24, 2012, we amended our senior secured revolving credit facility with Madison Capital Funding LLC to, among other things:

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expand the borrowing capacity under the Credit Facility from $40.0 million to $45.0 million;

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remove the condition that we may not acquire additional loan assets without the prior written consent of the administrative agent.

On September 17, 2014, we entered into a second amendment to the Revolving Facility with Madison Capital Funding LLC to, among other things:

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extend the commitment termination date from February 24, 2015 to September 17, 2017;

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extend the maturity date of the Revolving Facility from February 24, 2020 to September 17, 2022 (unless terminated sooner upon certain events);

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reduce the applicable margin rate on base rate borrowings from 4.50% to 3.75%, and on LIBOR borrowings from 5.50% to 4.75%; and

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reduce the floor on base rate borrowings from 3.00% to 2.25%; and on LIBOR borrowings from 2.00% to 1.25%.

On May 18, 2017, we entered into a third amendment to the Credit Facility with Madison Capital Funding LLC to, among other things:

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extend the commitment termination date from September 17, 2017 to September 17, 2020;

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extend the final maturity date of the Credit Facility from September 17, 2022 to September 17, 2025;

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reduce the floor on base rate borrowings from 2.25% to 2.00%;

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reduce the floor on LIBOR borrowings from 1.25% to 1.00%; and

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reduce the commitment fee rate from 0.75% to 0.50% for any period during which the ratio of advances outstanding to aggregate commitments, expressed as a percentage, is greater than or equal to 50%.

As of May 31, 2019, we had $0.0 million of outstanding borrowings under the Credit Facility and $150.0 million of SBA-guaranteed debentures outstanding (which are discussed below). As of February 28, 2019, we had no outstanding borrowings under the Credit Facility and $150.0 million of SBA-guaranteed debentures outstanding. Our borrowing base under the Credit Facility at May 31, 2019 and February 28, 2019 was $27.3 million and $30.6 million, respectively.

Our asset coverage ratio, as defined in the 1940 Act, was 238.9% as of May 31, 2019 and 234.5% as of February 28, 2019.

SBA-guaranteed debentures

In addition, we, through a wholly-owned subsidiary, sought and obtained a license from the SBA to operate an SBIC. In this regard, on March 28, 2012, our wholly-owned subsidiary, Saratoga Investment Corp. SBIC, LP, received a license from the SBA to operate as an SBIC under Section 301(c) of the Small Business Investment Act of 1958. SBICs are designated to stimulate the flow of private equity capital to eligible small businesses. Under SBA regulations, SBICs may make loans to eligible small businesses and invest in the equity securities of small businesses.

The SBIC license allows our SBIC subsidiary to obtain leverage by issuing SBA-guaranteed debentures. SBA-guaranteed debentures are non-recourse, interest only debentures with interest payable semi-annually and have a ten-year maturity. The principal amount of

SBA-guaranteed debentures is not required to be paid prior to maturity but may be prepaid at any time without penalty. The interest rate of SBA-guaranteed debentures is fixed on a semi-annual basis at a market-driven spread over U.S. Treasury Notes with ten-year maturities.

SBA regulations currently limit the amount that our SBIC subsidiary may borrow to a maximum of $150.0 million when it has at least $75.0 million in regulatory capital, receives a capital commitment from the SBA and has been through an examination by the SBA subsequent to licensing. As of May 31, 2019, our SBIC subsidiary had $75.0 million in regulatory capital and $150.0 million SBA- guaranteed debentures outstanding.

We received exemptive relief from the SEC to permit us to exclude the debt of our SBIC subsidiary guaranteed by the SBA from the definition of senior securities in the asset coverage test under the 1940 Act. This allows us increased flexibility under the asset coverage test by permitting us to borrow up to $150.0 million more than we would otherwise be able to absent the receipt of this exemptive relief. On April 16, 2018, as permitted by the Small Business Credit Availability Act, which was signed into law on March 23, 2018, our non- interested board of directors approved of our becoming subject to a minimum asset coverage ratio of 150.0% from 200% under Sections 18(a)(1) and 18(a)(2) of the 1940 Act. The 150.0% asset coverage ratio became effective on April 16, 2019.

Unsecured notes

In May 2013, we issued $48.3 million in aggregate principal amount of our 2020 Notes for net proceeds of $46.1 million after deducting underwriting commissions of $1.9 million and offering costs of $0.3 million. The proceeds included the underwriters’ full exercise of their overallotment option. Interest on these 2020 Notes is paid quarterly in arrears on February 15, May 15, August 15 and November 15, at a rate of 7.50% per year, beginning August 15, 2013. The 2020 Notes mature on May 31, 2020 and since May 31, 2016, may be redeemed in whole or in part at any time or from time to time at our option. In connection with the issuance of the 2020 Notes, we agreed to the following covenants for the period of time during which the 2020 Notes are outstanding:

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we will not violate (whether or not we are subject to) Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act or any successor provisions, but giving effect to any exemptive relief granted to us by the SEC. Currently, these provisions generally prohibit us from making additional borrowings, including through the issuance of additional debt or the sale of additional debt securities, unless our asset coverage, as defined in the 1940 Act, equals at least 200.0% after such borrowings.

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we will not violate (regardless of whether we are subject to) Section 18(a)(1)(B) as modified by Section 61(a)(1) of the 1940 Act or any successor provisions, but giving effect to (i) any exemptive relief granted to us by the SEC and (ii) no-action relief granted by the SEC to another BDC (or to the Company if it determines to seek such similar no-action or other relief) permitting the BDC to declare any cash dividend or distribution notwithstanding the prohibition contained in Section 18(a) (1)(B) as modified by Section 61(a)(1) of the 1940 Act in order to maintain the BDC’s status as a regulated investment company under the Code. Currently these provisions generally prohibit us from declaring any cash dividend or distribution upon any class of our capital stock, or purchasing any such capital stock if our asset coverage, as defined in the 1940 Act, is below 200.0% at the time of the declaration of the dividend or distribution or the purchase and after deducting the amount of such dividend, distribution or purchase.

The 2020 Notes were redeemed in full on January 13, 2017 and are no longer listed on the NYSE.

On May 29, 2015, we entered into a Debt Distribution Agreement with Ladenburg Thalmann & Co. through which we may offer for sale, from time to time, up to $20.0 million in aggregate principal amount of the 2020 Notes through an ATM offering. Prior to the 2020 Notes being redeemed in full, the Company had sold 539,725 bonds with a principal of $13.5 million at an average price of $25.31 for aggregate net proceeds of $13.4 million (net of transaction costs).

On December 21, 2016, we issued $74.5 million in aggregate principal amount of our 2023 Notes for net proceeds of $71.7 million after deducting underwriting commissions of approximately $2.3 million and offering costs of approximately $0.5 million. The issuance included the exercise of substantially all of the underwriters’ option to purchase an additional $9.8 million aggregate principal amount of 2023 Notes within 30 days. Interest on the 2023 Notes is paid quarterly in arrears on March 15, June 15, September 15 and December 15, at a rate of 6.75% per year, beginning March 30, 2017. The 2023 Notes mature on December 30, 2023, and commencing December 21, 2019, may be redeemed in whole or in part at any time or from time to time at our option. The net proceeds from the offering were used to repay all of the outstanding indebtedness under the 2020 Notes on January 13, 2017, which amounted to $61.8 million, and for general corporate purposes in accordance with our investment objective and strategies. The 2023 Notes are listed on the NYSE under the trading symbol “SAB” with a par value of $25.00 per share.

On August 28, 2018, the Company issued $40.0 million in aggregate principal amount of our 6.25% fixed-rate notes due 2025 (the “2025 Notes”) for net proceeds of $38.7 million after deducting underwriting commissions of approximately $1.3 million. Offering costs incurred were 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 our option. The net proceeds from the offering were used for general corporate purposes in accordance with our investment objective and strategies. Financing costs of $1.6 million related to the 2025 Notes have been capitalized and are being amortized over the term of the 2025 Notes. 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, the Company 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. The net proceeds from this offering were used for general corporate purposes in accordance with our investment objective and strategies. The financing costs and discount of $1.0 million related to the 2025 Notes have been capitalized and are being amortized over the term of the 2025 Notes.

At May 31, 2019 the total 2023 Notes and 2025 Notes outstanding was $74.5 million and $60.0 million, respectively.

In connection with the issuance of the 2023 Notes and 2025 Notes, we agreed to the following covenants for the period of time during which the notes are outstanding:

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we will not violate (whether or not we are subject to) Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act or any successor provisions, but giving effect to any exemptive relief granted to us by the SEC. These provisions generally prohibit us from making additional borrowings, including through the issuance of additional debt or the sale of additional debt securities, unless our asset coverage, as defined in the 1940 Act, equals at least 200% after such borrowings, or, if we obtain the required approvals from our independent directors and/or stockholders, 150% (after deducting the amount of such dividend, distribution or purchase price, as the case may be).

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we will not declare any dividend (except a dividend payable in our stock), or declare any other distribution, upon a class of our capital stock, or purchase any such capital stock, unless, in every such case, at the time of the declaration of any such dividend or distribution, or at the time of any such purchase, we have an asset coverage (as defined in the 1940 Act) of at least 150.0%, as such obligation may be amended or superseded, after deducting the amount of such dividend, distribution or purchase price, as the case may be, and in each case giving effect to (i) any exemptive relief granted to us by the SEC, and (ii) any SEC no-action relief granted by the SEC to another BDC (or to us if we determine to seek such similar no-action or other relief) permitting the BDC to declare any cash dividend or distribution notwithstanding the prohibition contained in Section 18(a)(1)(B) as modified by such provisions of Section 61(a) of the 1940 Act as may be applicable to us from time to time, as such obligation may be amended or superseded, in order to maintain such BDC’s status as a regulated investment company under Subchapter M of the Code.

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if, at any time, we are not subject to the reporting requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, or the Exchange Act, to file any periodic reports with the SEC, we agree to furnish to holders of the 2023 Notes and 2025 Notes and the Trustee, for the period of time during which the 2023 Notes and/or the 2025 Notes are outstanding, our audited annual consolidated financial statements, within 90 days of our fiscal year end, and unaudited interim consolidated financial statements, within 45 days of our fiscal quarter end (other than our fourth fiscal quarter). All such financial statements will be prepared, in all material respects, in accordance with applicable United States generally accepted accounting principles.

At May 31, 2019 and February 28, 2019, the fair value of investments, cash and cash equivalents and cash and cash equivalents, reserve accounts were as follows:


	May 31, 2019					February 28, 2019
	Fair Value		Percentage of Total			Fair Value		Percentage of Total
	($ in thousands)
Cash and cash equivalents	$	37,184		7.9	%	$	30,799		6.6	%
Cash and cash equivalents, reserve accounts		23,813		5.1			31,295		6.7
First lien term loans		219,479		46.7			202,846		43.7
Second lien term loans		109,305		23.2			125,786		27.1
Unsecured term loans		2,058		0.4			2,100		0.5
Structured finance securities		37,965		8.1			35,328		7.6
Equity interests		40,644		8.6			35,960		7.8

Total	$	470,448		100.0	%	$	464,114		100.0	%

On March 16, 2017, we entered into an equity distribution agreement with Ladenburg Thalmann & Co. Inc., through which we may offer for sale, from time to time, up to $30.0 million of our common stock through an ATM offering. Subsequent to this, BB&T Capital Markets and B. Riley FBR, Inc. were also added to the agreement. On July 9, 2019, the amount of common stock to be offered through this offering was increased to $70.0 million. As of May 31, 2019, the Company sold 571,120 shares for gross proceeds of $13.0 million at an average price of $22.78 for aggregate net proceeds of $12.9 million (net of transaction costs).

On September 24, 2014, we announced the approval of an open market share repurchase plan that allows it to repurchase up to 200,000 shares of our common stock at prices below our NAV as reported in its then most recently published consolidated financial statements, which was subsequently increased to 400,000 shares of our

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common stock. On October 5, 2016, our board of directors extended the open market share repurchase plan for another year to October 15, 2017 and increased the number of shares we are permitted to repurchase at prices below our NAV, as reported in its then most recently published consolidated financial statements, to 600,000 shares of our common stock. On October 10, 2017 and January 8, 2019, the Company’s board of directors extended the open market share repurchase plan for another year to October 15, 2018 and January 15, 2020, respectively, each time leaving the number of shares unchanged at 600,000 shares of its common stock. As of May 31, 2019, we purchased 218,491 shares of common stock, at the average price of $16.87 for approximately $3.7 million pursuant to this repurchase plan.

On May 28, 2019, our board of directors declared a dividend of $0.55 per share, which was paid on June 27, 2019, to common stockholders of record as of June 13, 2019. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to the Company’s DRIP. Based on shareholder elections, the dividend consisted of approximately $3.6 million in cash and 31,545 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $22.65 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on June 14, 17, 18, 19, 20, 21, 24, 25, 26 and 27, 2019.

On February 26, 2019, our board of directors declared a dividend of $0.54 per share, which was paid on March 28, 2019, to common stockholders of record as of March 14, 2019. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately $3.5 million in cash and 31,240 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $21.36 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on March 15, 18, 19, 20, 21, 22, 25, 26, 27 and 28, 2019.

On November 27, 2018, our board of directors declared a dividend of $0.53 per share, which was paid on January 2, 2019, to common stockholders of record on December 17, 2018. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to the Company’s DRIP. Based on shareholder elections, the dividend consisted of approximately $3.4 million in cash and 30,796 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $18.88 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on December 18, 19, 20, 21, 24, 26, 27, 28, 31, 2018 and January 2, 2019.

On August 28, 2018, our board of directors declared a dividend of $0.52 per share, which was paid on September 27, 2018, to common stockholders of record as of September 17, 2018. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately $3.3 million in cash and 25,862 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $22.35 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on September 14, 17, 18, 19, 20, 21, 24, 25, 26 and 27, 2018.

On May 30, 2018, our board of directors declared a dividend of $0.51 per share, which was paid on June 27, 2018, to common stockholders of record as of June 15, 2018. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately $2.7 million in cash and 21,562 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $23.72 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on June 14, 15, 18, 19, 20, 21, 22, 25, 26 and 27, 2018.

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On February 26, 2018, our board of directors declared a dividend of $0.50 per share, which was paid on March 26, 2018, to common stockholders of record as of March 14, 2018. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately $2.6 million in cash and 25,354 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $19.91 per share, which equaled the volume weighted average trading price per share of the common stock on March 13, 14, 15, 16, 19, 20, 21, 22, 23 and 26, 2018.

On November 29, 2017, our board of directors declared a dividend of $0.49 per share, which was paid on December 27, 2017, to common stockholders of record on December 15, 2017. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately $2.5 million in cash and 25,435 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $21.14 per share, which equaled the volume weighted average trading price per share of the common stock on December 13, 14, 15, 18, 19, 20, 21, 22, 26 and 27, 2017.

On August 28, 2017, our board of directors declared a dividend of $0.48 per share, which was paid on September 26, 2017, to common stockholders of record on September 15, 2017. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately $2.2 million in cash and 33,551 newly issued shares of common stock, or 0.6% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $20.19 per share, which equaled the volume weighted average trading price per share of the common stock on September 13, 14, 15, 18, 19, 20, 21, 22, 25 and 26, 2017.

On May 30, 2017, our board of directors declared a dividend of $0.47 per share, which was paid on June 27, 2017, to common stockholders of record on June 15, 2017. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately $2.3 million in cash and 26,222 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $20.04 per share, which equaled the volume weighted average trading price per share of the common stock on June 14, 15, 16, 19, 20, 21, 22, 23, 26 and 27, 2017.

On February 28, 2017, our board of directors declared a dividend of $0.46 per share, which was paid on March 28, 2017, to common stockholders of record as of March 15, 2017. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately $2.0 million in cash and 29,096 newly issued shares of common stock, or 0.5% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $21.38 per share, which equaled the volume weighted average trading price per share of the common stock on March 15, 16, 17, 20, 21, 22, 23, 24, 27 and 28, 2017.

On January 12, 2017, our board of directors declared a dividend of $0.45 per share, which was paid on February 9, 2017, to common stockholders of record as of January 31, 2017. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately $1.6 million in cash and 50,453 newly issued shares of common stock, or 0.9% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $20.25 per share, which equaled the volume weighted average trading price per share of the common stock on January 27, 30, 31 and February 1, 2, 3, 6, 7, 8 and 9, 2017.

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On October 5, 2016, our board of directors declared a dividend of $0.44 per share, which was paid on November 9, 2016, to common stockholders of record as of October 31, 2016. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately $1.5 million in cash and 58,548 newly issued shares of common stock, or 1.0% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $17.12 per share, which equaled the volume weighted average trading price per share of the common stock on October 27, 28, 31 and November 1, 2, 3, 4, 7, 8 and 9, 2016.

On August 8, 2016, our board of directors declared a special dividend of $0.20 per share, which was paid on September 5, 2016, to common stockholders of record as of August 24, 2016. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately $0.7 million in cash and 24,786 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $17.06 per share, which equaled the volume weighted average trading price per share of the common stock on August 22, 23, 24, 25, 26, 29, 30, 31 and September 1 and 2, 2016.

On July 7, 2016, our board of directors declared a dividend of $0.43 per share, which was paid on August 9, 2016, to common stockholders of record as of July 29, 2016. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately $1.5 million in cash and 58,167 newly issued shares of common stock, or 1.0% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $16.32 per share, which equaled the volume weighted average trading price per share of the common stock on July 27, 28, 29 and August 1, 2, 3, 4, 5, 8 and 9, 2016.

On March 31, 2016, our board of directors declared a dividend of $0.41 per share, which was paid on April 27, 2016, to common stockholders of record as of April 15, 2016. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately $1.5 million in cash and 56,728 newly issued shares of common stock, or 1.0% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $15.43 per share, which equaled the volume weighted average trading price per share of the common stock on April 14, 15, 18, 19, 20, 21, 22, 25, 26 and 27, 2016.

On January 12, 2016, our board of directors declared a dividend of $0.40 per share, which was paid on February 29, 2016, to common stockholders of record as of February 1, 2016. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately $1.4 million in cash and 66,765 newly issued shares of common stock, or 1.2% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $13.11 per share, which equaled the volume weighted average trading price per share of the common stock on February 16, 17, 18, 19, 22, 23, 24, 25, 26 and 29, 2016.

On October 7, 2015, our board of directors declared a dividend of $0.36 per share, which was paid on November 30, 2015, to common stockholders of record as of November 2, 2015. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately $1.1 million in cash and 61,029 newly issued shares of common stock, or 1.1% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $14.53 per share, which equaled the volume weighted average trading price per share of the common stock on November 16, 17, 18, 19, 20, 23, 24, 25, 27 and 30, 2015.

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On July 8, 2015, our board of directors declared a dividend of $0.33 per share, which was paid on August 31, 2015, to common stockholders of record as of August 3, 2015. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately $1.1 million in cash and 47,861 newly issued shares of common stock, or 0.9% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $15.28 per share, which equaled the volume weighted average trading price per share of the common stock on August 18, 19, 20, 21, 24, 25, 26, 27, 28 and 31, 2015.

On May 14, 2015, our board of directors declared a special dividend of $1.00 per share, which was paid on June 5, 2015, to common stockholders of record on as of May 26, 2015. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately $3.4 million in cash and 126,230 newly issued shares of common stock, or 2.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $16.47 per share, which equaled the volume weighted average trading price per share of the common stock on May 22, 26, 27, 28, 29 and June 1, 2, 3, 4 and 5, 2015.

On April 9, 2015, our board of directors declared a dividend of $0.27 per share, which was paid on May 29, 2015, to common stockholders of record as of May 4, 2015. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately $0.9 million in cash and 33,766 newly issued shares of common stock, or 0.6% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $16.78 per share, which equaled the volume weighted average trading price per share of the common stock on May 15, 18, 19, 20, 21, 22, 26, 27, 28 and 29, 2015.

On September 24, 2014, our board of directors declared a dividend of $0.22 per share, which was paid on February 27, 2015, to common stockholders of record on February 2, 2015. Shareholders have the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately $0.8 million in cash and 26,858 newly issued shares of common stock, or 0.5% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $14.97 per share, which equaled the volume weighted average trading price per share of the common stock on February 13, 17, 18, 19, 20, 23, 24, 25, 26 and 27, 2015.

Also, on September 24, 2014, our board of directors declared a dividend of $0.18 per share, which was paid on November 28, 2014, to common stockholders of record on November 3, 2014. Shareholders had the option to receive payment of the dividend in cash or receive shares of common stock pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately $0.6 million in cash and 22,283 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $14.37 per share, which equaled the volume weighted average trading price per share of the common stock on November 14, 17, 18, 19, 20, 21, 24, 25, 26 and 28, 2014.

On October 30, 2013, our board of directors declared a dividend of $2.65 per share, which was paid on December 27, 2013, to common stockholders of record as of November 13, 2013. Shareholders had the option to receive payment of the dividend in cash, shares of common stock, or a combination of cash and shares of common stock, provided that the aggregate cash payable to all shareholders was limited to approximately $2.5 million or $0.53 per share. This dividend was declared in reliance on certain private letter rulings issued by the IRS concluding that a RIC may treat a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder may elect to receive his or her entire distribution in either cash or stock of the

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RIC subject to a limitation on the aggregate amount of cash to be distributed to all stockholders, which limitation must be at least 20.0% of the aggregate declared distribution. Based on shareholder elections, the dividend consisted of approximately $2.5 million in cash and 649,500 shares of common stock, or 13.7% of our outstanding common stock prior to the dividend payment. The amount of cash elected to be received was greater than the cash limit of 20.0% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash. The number of shares of common stock comprising the stock portion was calculated based on a price of $15.439 per share, which equaled the volume weighted average trading price per share of the common stock on December 11, 13, and 16, 2013.

On November 9, 2012, our board of directors declared a dividend of $4.25 per share, which was paid on December 31, 2012, to common stockholders of record as of November 20, 2012. Shareholders had the option to receive payment of the dividend in cash, shares of common stock, or a combination of cash and shares of common stock, provided that the aggregate cash payable to all shareholders was limited to approximately $3.3 million or $0.85 per share. Based on shareholder elections, the dividend consisted of $3.3 million in cash and 853,455 shares of common stock, or 22.0% of our outstanding common stock prior to the dividend payment. The amount of cash elected to be received was greater than the cash limit of 20.0% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash. The number of shares of common stock comprising the stock portion was calculated based on a price of $15.444 per share, which equaled the volume weighted average trading price per share of the common stock on December 14, 17 and 19, 2012.

On November 15, 2011, our board of directors declared a dividend of $3.00 per share, which was paid on December 30, 2011, to common stockholders of record as of November 25, 2011. Shareholders had the option to receive payment of the dividend in cash, shares of common stock, or a combination of cash and shares of common stock, provided that the aggregate cash payable to all shareholders was limited to $2.0 million or $0.60 per share. Based on shareholder elections, the dividend consisted of $2.0 million in cash and 599,584 shares of common stock, or 18.0% of our outstanding common stock prior to the dividend payment. The amount of cash elected to be received was greater than the cash limit of 20.0% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash. The number of shares of common stock comprising the stock portion was calculated based on a price of $13.117067 per share, which equaled the volume weighted average trading price per share of the common stock on December 20, 21 and 22, 2011.

On November 12, 2010, our board of directors declared a dividend of $4.40 per share to shareholders payable in cash or shares of our common stock, in accordance with the provisions of the IRS Revenue Procedure 2010-12, which allows a publicly-traded regulated investment company to satisfy its distribution requirements with a distribution paid partly in common stock provided that at least 10.0% of the distribution is payable in cash. The dividend was paid on December 29, 2010 to common shareholders of record on November 19, 2010. Based on shareholder elections, the dividend consisted of $1.2 million in cash and 596,235 shares of common stock, or 22.0% of our outstanding common stock prior to the dividend payment. The amount of cash elected to be received was greater than the cash limit of 10.0% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash. The number of shares of common stock comprising the stock portion was calculated based on a price of $17.8049 per share, which equaled the volume weighted average trading price per share of the common stock on December 20, 21 and 22, 2010.

On November 13, 2009, our board of directors declared a dividend of $18.25 per share, which was paid on December 31, 2009, to common stockholders of record as of November 25, 2009. Shareholders had the option to receive payment of the dividend in cash, shares of common stock, or a combination of cash and shares of common stock, provided that the aggregate cash payable to all shareholders was limited to $2.1 million or $0.25 per share. Based on shareholder elections, the dividend consisted of $2.1 million in cash and 864,872.5 shares of common stock, or 104.0% of our outstanding common stock prior to the dividend payment. The amount of cash

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elected to be received was greater than the cash limit of 13.7% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash. The number of shares of common stock comprising the stock portion was calculated based on a price of $1.5099 per share, which equaled the volume weighted average trading price per share of the common stock on December 24 and 28, 2009.

We cannot provide any assurance that these measures will provide sufficient sources of liquidity to support our operations and growth.

Contractual obligations

The following table shows our payment obligations for repayment of debt and other contractual obligations as of May 31, 2019:


			Payment Due by Period
Long-Term Debt Obligations	Total		Less Than 1 Year		1 - 3 Years		3 - 5 Years		More Than 5 Years
	($ in thousands)
Revolving credit facility	$	—	$	—	$	—	$	—	$	—
SBA debentures		150,000		—		—		50,000		100,000
2023 Notes		74,451		—		—		74,451		—
2025 Notes		60,000		—		—		—		60,000

Total Long-Term Debt Obligations	$	284,451	$	—	$	—	$	124,451	$	160,000

Off-balance sheet arrangements

A summary of the unfunded commitments outstanding as of May 31, 2019 and February 28, 2019 is shown in the table below (dollars in thousands):


	May 31, 2019		February 28, 2019
Axiom Purchaser, Inc.	$	1,000	$	1,000
Destiny Solutions, Inc.		1,500		1,500
Fancy Chap, Inc.		14,000		—
GDS Holdings US, Inc.		—		1,000
HemaTerra Holding Company, LLC		2,000		—
inMotionNow, Inc.		5,000		—
Omatic Software, LLC		1,000		1,000

Total	$	24,500	$	4,500

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our business activities contain elements of market risk. We consider our principal market risk to be the fluctuation in interest rates. Managing this risk is essential to our business. Accordingly, we have systems and

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procedures designed to identify and analyze our risks, to establish appropriate policies and thresholds and to continually monitor this risk and thresholds by means of administrative and information technology systems and other policies and processes.

Interest rate risk is defined as the sensitivity of our current and future earnings to interest rate volatility, including relative changes in different interest rates, variability of spread relationships, the difference in re-pricing intervals between our assets and liabilities and the effect that interest rates may have on our cash flows. Changes in the general level of interest rates can affect our net interest income, which is the difference between the interest income earned on interest earning assets and our interest expense incurred in connection with our interest-bearing debt and liabilities. Changes in interest rates can also affect, among other things, our ability to acquire leveraged loans, high yield bonds and other debt investments and the value of our investment portfolio.

Our investment income is affected by fluctuations in various interest rates, including LIBOR and the prime rate. A large portion of our portfolio is, and we expect will continue to be, comprised of floating rate investments that utilize LIBOR. Our interest expense is affected by fluctuations in LIBOR only on our revolving credit facility. At May 31, 2019, there were no borrowings outstanding on the revolving credit facility.

We have analyzed the potential impact of changes in interest rates on interest income from investments. Assuming that our investments as of May 31, 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 a 1.0% increase in interest rates would cause a corresponding increase of approximately $2.8 million to our interest income. Conversely, a hypothetical change of a 1.0% decrease in interest rates would cause a corresponding decrease of approximately $2.4 million to our interest income.

Changes in interest rates would have no impact to our current interest and debt financing expense, as all our borrowings except for our credit facility are fixed rate, and our credit facility is currently undrawn.

Although management believes that this measure is indicative of our sensitivity to interest rate changes, it does not adjust for potential changes in credit quality, size and composition of the assets on the statements of assets and liabilities and other business developments that could magnify or diminish our sensitivity to interest rate changes, nor does it account for divergences in LIBOR and the commercial paper rate, which have historically moved in tandem but, in times of unusual credit dislocations, have experienced periods of divergence. Accordingly, no assurances can be given that actual results would not materially differ from the potential outcome simulated by this estimate.

For further information, the following table shows the approximate annualized increase or decrease in the components of net investment income due to hypothetical base rate changes in interest rates, assuming no changes in our investments and borrowings as of May 31, 2019.


Basis Point Change	Increase (Decrease) in Interest Income			(Increase) Decrease in Interest Expense		Increase (Decrease) in Net Investment Income			Increase (Decrease) in Net Investment Income per Share
	($ in thousands)
-100	$	(2,362	)	$	—	$	(2,362	)	$	(0.30	)
-50		(1,232	)		—		(1,232	)		(0.16	)
-25		(616	)		—		(616	)		(0.08	)
25		698			—		698			0.09
50		1,408			—		1,408			0.18
100		2,828			—		2,828			0.37
200		5,669			—		5,669			0.73
300		8,510			—		8,510			1.10
400		11,351			—		11,351			1.47

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ITEM 4. CONTROLS AND PROCEDURES

(a)

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and our chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934). Based on that evaluation, our chief executive officer and our chief financial officer have concluded that our current disclosure controls and procedures are effective in facilitating timely decisions regarding required disclosure of any material information relating to us that is required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

(b)

There have been no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) of Exchange Act) that occurred during the quarter ended May 31, 2019 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Neither we nor our wholly-owned subsidiaries, Saratoga Investment Funding LLC and Saratoga Investment Corp. SBIC LP, are currently subject to any material legal proceedings.

Item 1A. Risk Factors

In addition to information set forth in this report, you should carefully consider the “Risk Factors” discussed in our most recent Annual Report on Form 10-K filed with the SEC, which could materially affect our business, financial condition and/or operating results. Other than as set forth below, there have been no material changes during the three months ended May 31, 2019 to the risk factors discussed in “Item 1A. Risk Factors” of our Annual Report on Form 10-K. Additional risks or uncertainties not currently known to us or that we currently deem to be immaterial also may materially affect our business, financial condition and/or operating results.

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

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

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ITEM 6. EXHIBITS

Listed below are the exhibits which are filed as part of this report (according to the number assigned to them in Item 601 of Regulation S-K):

EXHIBIT INDEX


Exhibit Number		Description

3.1(a)		Articles of Incorporation of Saratoga Investment Corp. (incorporated by reference to Saratoga Investment Corp.’s Form 10-Q for the quarterly period ended May 31, 2007).

3.1(b)		Articles of Amendment of Saratoga Investment Corp. (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed August 3, 2010).

3.1(c)		Articles of Amendment of Saratoga Investment Corp. (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed August 13, 2010).

3.2		Second Amended and Restated Bylaws of Saratoga Investment Corp. (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on June 14, 2011).

4.1		Specimen certificate of Saratoga Investment Corp.’s common stock, par value $0.001 per share. (incorporated by reference to Saratoga Investment Corp.’s Registration Statement on Form N-2, File No. 333-169135, filed on September 1, 2010).

4.2		Registration Rights Agreement dated July 30, 2010 between GSC Investment Corp., GSC CDO III L.L.C., and the investors party thereto (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on August 3, 2010).

4.3		Dividend Reinvestment Plan (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on September 24, 2014).

4.4		Form of Indenture by and between the Company and U.S. Bank National Association, as trustee (incorporated by reference to Saratoga Investment Corp.’s Pre-Effective Amendment No. 2 to the Registration Statement on Form N-2, File No. 333-186323 filed April 30, 2013).

4.5		Form of Second Supplemental Indenture between the Company and U.S. Bank National Association (incorporated by reference to Amendment No. 2 to Saratoga Investment Corp.’s Registration Statement on Form N-2, File No. 333-214182, filed on December 12, 2016).

4.6		Form of Global Note (incorporated by reference to Exhibit 4.5 hereto, and Exhibit A therein).

4.7		Form of Third Supplemental Indenture between the Company and U.S. Bank National Association (incorporated by reference to Post-Effective Amendment No. 9 to the Registrant’s Registration Statement on Form N-2, File No. 333- 216344, filed on August 28, 2018).

4.8		Form of Global Note (incorporated by reference to Exhibit 4.7 hereto, and Exhibit A therein).

4.9		Form of Articles Supplementary Establishing and Fixing the Rights and Preferences of Preferred Stock (incorporated by reference to Saratoga Investment Corp.’s registration statement on Form N-2 Pre-Effective Amendment No. 1, File No. 333-196526, filed on December 5, 2014).

10.1		Investment Advisory and Management Agreement dated July 30, 2010 between GSC Investment Corp. and Saratoga Investment Advisors, LLC (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on August 3, 2010).

10.2		Custodian Agreement dated March 21, 2007 between GSC Investment LLC and U.S. Bank National Association (incorporated by reference to Saratoga Investment Corp.’s Form 10-Q for the quarterly period ended May 31, 2007).

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Exhibit Number		Description

10.3		Administration Agreement dated July 30, 2010 between GSC Investment Corp. and Saratoga Investment Advisors, LLC (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on August 3, 2010).

10.4		Trademark License Agreement dated July 30, 2010 between Saratoga Investment Advisors, LLC and GSC Investment Corp. (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on August 3, 2010).

10.5		Credit, Security and Management Agreement dated July 30, 2010 by and among GSC Investment Funding LLC, Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Madison Capital Funding LLC and U.S. Bank National Association (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on August 3, 2010).

10.6		Form of Indemnification Agreement between Saratoga Investment Corp. and each officer and director of Saratoga Investment Corp. (incorporated by reference to Amendment No. 2 to Saratoga Investment Corp.’s Registration Statement on Form N-2 filed on January 12, 2007).

10.7		Amendment No. 1 to Credit, Security and Management Agreement dated February 24, 2012 by and among Saratoga Investment Funding LLC, Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Madison Capital Funding LLC and U.S. Bank National Association (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on February 29, 2012).

10.8		Amended and Restated Indenture, dated as of November 15, 2016, among Saratoga Investment Corp. CLO 2013-1, Ltd., Saratoga Investment Corp. CLO 2013-1, Inc. and U.S. Bank National Association. (incorporated by reference to Saratoga Investment Corp.’s Registration Statement on Form N-2, File No. 333-216344, filed on February 28, 2017).

10.9		Amended and Restated Collateral Management Agreement, dated October 17, 2013, by and between Saratoga Investment Corp. and Saratoga Investment Corp. CLO 2013-1, Ltd. (incorporated by reference to Saratoga Investment Corp.’s Registration Statement on Form N-2, File No. 333-196526, filed on December 5, 2014).

10.10		Amendment No. 2 to Credit, Security and Management Agreement dated September 17, 2014 by and among Saratoga Investment Funding LLC, Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Madison Capital Funding LLC and U.S. Bank National Association (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on September 18, 2014).

10.11		Amendment No. 3 to Credit, Security and Management Agreement, dated May 18, 2017, by and among Saratoga Investment Funding LLC, Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Madison Capital Funding LLC and U.S. Bank National Association (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8- K filed on May 18, 2017).

10.12		Equity Distribution Agreement dated March 16, 2017, by and among Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Ladenburg Thalmann and Co. Inc. and BB&T Capital Markets, a division of BB&T Securities, LLC (incorporated by reference to Saratoga Investment Corp.’s Post-Effective Amendment No. 1 to the Registration Statement on Form N-2, File No. 333-216344, filed on March 16, 2017).

10.13		Amendment No. 1 to the Equity Distribution Agreement dated October 12, 2017 by and among Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Ladenburg Thalmann and Co. Inc., BB&T Capital Markets, a division of BB&T Securities, LLC, and FBR Capital Markets & Co. (incorporated by reference to Saratoga Investment Corp.’s Post- Effective Amendment No. 2 to the Registration Statement on Form N-2, File No. 333-216344, filed on October 12, 2017).

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Exhibit Number		Description

10.14		Amendment No. 2 to the Equity Distribution Agreement dated January 11, 2018 by and among Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Ladenburg Thalmann and Co. Inc., BB&T Capital Markets, a division of BB&T Securities, LLC, and FBR Capital Markets & Co. (incorporated by reference to Saratoga Investment Corp.’s Post- Effective Amendment No. 3 to Saratoga Investment Corp.’s Registration Statement on Form N-2, File No. 333-216344, filed on January 11, 2018).

10.15		Amendment No. 3 to the Equity Distribution Agreement dated October 16, 2018 by and among Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Ladenburg Thalmann and Co. Inc., BB&T Capital Markets, a division of BB&T Securities, LLC, and B. Riley FBR, Inc. (incorporated by reference to Post-Effective Amendment No. 1 to the registrant’s Registration Statement on Form N-2, File No. 333-227116, filed on October 16, 2018).

11		Computation of Per Share Earnings (included in Note 11 to the consolidated financial statements contained in this report).

14		Code of Ethics of the Company adopted under Rule 17j-1 (incorporated by reference to Amendment No.7 to Saratoga Investment Corp.’s Registration Statement on Form N-2, File No. 333-138051, filed on March 22, 2007).

21.1		List of Subsidiaries and jurisdiction of incorporation/organization: Saratoga Investment Funding LLC—Delaware; Saratoga Investment Corp. SBIC, LP—Delaware; and Saratoga Investment Corp. GP, LLC—Delaware.

31.1*		Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

31.2*		Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934

32.1*		Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

32.2*		Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

*	Filed herewith

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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.


	SARATOGA INVESTMENT CORP.

Date: July 10, 2019	By:	/s/ CHRISTIAN L. OBERBECK
		Christian L. Oberbeck

		Chief Executive Officer


	By:	/s/ HENRI J. STEENKAMP
		Henri J. Steenkamp

	Chief Financial Officer and Chief Compliance Officer

114

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULE 13a-14(a) and 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Christian L. Oberbeck, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Saratoga Investment Corp.;

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

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

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

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

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

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

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

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

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

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

Date: July 10, 2019


		/s/ CHRISTIAN L. OBERBECK
		Christian L. Oberbeck

		Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULE 13a-14(a) and 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Henri J. Steenkamp, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Saratoga Investment Corp.;

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

Date: July 10, 2019

/s/ HENRI J. STEENKAMP

Name: Henri J. Steenkamp

Chief Financial Officer and Chief Compliance Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The certification set forth below is being submitted in connection with the accompanying Quarterly Report of Saratoga Investment Corp. on Form 10-Q (the “Report”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code.

Christian L. Oberbeck, the Chief Executive Officer, certifies that, to the best of his knowledge:

1.	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and

2.	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Saratoga Investment Corp.

Date: July 10, 2019



		/s/ CHRISTIAN L. OBERBECK
		Christian L. Oberbeck

		Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Henri J. Steenkamp, the Chief Financial Officer, Chief Compliance Officer and Secretary of Saratoga Investment Corp. certifies that, to the best of his knowledge:

1.	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and

2.	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Saratoga Investment Corp.

Date: July 10, 2019



		/s/ HENRI J. STEENKAMP
		Name: Henri J. Steenkamp

		Chief Financial Officer and Chief Compliance Officer