SEC Filing | Saratoga Investment Corp

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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, 2022

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

Commission File No. 814-00732

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
7.25% Notes due 2025	SAK	The New York Stock Exchange
6.00% Notes due 2027	SAT	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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☐

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

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

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

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

The number of outstanding common shares of the registrant as of July 6, 2022 was 11,984,898.

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION	1

Item 1.	Consolidated Financial Statements	1

	Consolidated Statements of Assets and Liabilities as of May 31, 2022 (unaudited) and February 28, 2022	1

	Consolidated Statements of Operations for the three months ended May 31, 2022 (unaudited) and May 31, 2021 (unaudited)	2

	Consolidated Statements of Changes in Net Assets for three months ended May 31, 2022 (unaudited) and May 31, 2021 (unaudited)	3

	Consolidated Statements of Cash Flows for the three months ended May 31, 2022 (unaudited) and May 31, 2021 (unaudited)	4

	Consolidated Schedules of Investments as of May 31, 2022 (unaudited) and February 28, 2022	5

	Notes to Consolidated Financial Statements as of May 31, 2022 (unaudited)	16

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	89

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	127

Item 4.	Controls and Procedures	128

PART II.	OTHER INFORMATION	129

Item 1.	Legal Proceedings	129

Item 1A.	Risk Factors	129

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	129

Item 3.	Defaults Upon Senior Securities	129

Item 4.	Mine Safety Disclosures	129

Item 5.	Other Information	129

Item 6.	Exhibits	130

Signatures		132

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Saratoga Investment Corp.

Consolidated Statements of Assets and Liabilities

	May 31, 2022			February 28, 2022
	(unaudited)
ASSETS
Investments at fair value
Non-control/Non-affiliate investments (amortized cost of $732,722,272 and $654,965,044, respectively)	$	745,481,455		$	668,358,516
Affiliate investments (amortized cost of $53,468,875 and $46,224,927, respectively)		56,045,678			48,234,124
Control investments (amortized cost of $96,356,420 and $95,058,356, respectively)		93,006,013			100,974,715
Total investments at fair value (amortized cost of $882,547,567 and $796,248,327, respectively)		894,533,146			817,567,355
Cash and cash equivalents		94,939,634			47,257,801
Cash and cash equivalents, reserve accounts		6,550,220			5,612,541
Interest receivable (net of reserve of $733,379 and $0, respectively)		5,325,756			5,093,561
Due from affiliate (See Note 7)		105,637			90,968
Management fee receivable		362,777			362,549
Other assets		220,209			254,980
Total assets	$	1,002,037,379		$	876,239,755

LIABILITIES
Revolving credit facility	$	25,000,000		$	12,500,000
Deferred debt financing costs, revolving credit facility		(1,075,765	)		(1,191,115	)
SBA debentures payable		217,000,000			185,000,000
Deferred debt financing costs, SBA debentures payable		(4,891,468	)		(4,344,983	)
7.25% Notes Payable 2025		43,125,000			43,125,000
Deferred debt financing costs, 7.25% notes payable 2025		(996,761	)		(1,078,201	)
7.75% Notes Payable 2025		5,000,000			5,000,000
Deferred debt financing costs, 7.75% notes payable 2025		(170,551	)		(184,375	)
4.375% Notes Payable 2026		175,000,000			175,000,000
Premium on 4.375% notes payable 2026		1,033,136			1,086,013
Deferred debt financing costs, 4.375% notes payable 2026		(3,183,076	)		(3,395,435	)
4.35% Notes Payable 2027		75,000,000			75,000,000
Discount on 4.35% notes payable 2027		(470,120	)		(499,263	)
Deferred debt financing costs, 4.35% notes payable 2027		(1,636,102	)		(1,722,908	)
6.25% Notes Payable 2027		15,000,000			15,000,000
Deferred debt financing costs, 6.25% notes payable 2027		(398,281	)		(416,253	)
6.00% Notes Payable 2027		97,500,000			-
Deferred debt financing costs, 6.00% notes payable 2027		(3,276,855	)		-
Base management and incentive fees payable		8,637,481			12,947,025
Deferred tax liability		1,578,323			1,249,015
Accounts payable and accrued expenses		1,020,841			799,058
Current income tax payable		2,690,196			2,820,036
Interest and debt fees payable		5,129,247			2,801,621
Directors fees payable		108,566			70,000
Due to manager		77,757			263,814
Excise tax payable		-			630,183
Total liabilities		656,801,568			520,459,232

Commitments and contingencies (See Note 9)

NET ASSETS
Common stock, par value $0.001, 100,000,000 common shares authorized, 12,031,998 and 12,131,350 common shares issued and outstanding, respectively		12,032			12,131
Capital in excess of par value		325,433,869			328,062,246
Total distributable earnings (deficit)		19,789,910			27,706,146
Total net assets		345,235,811			355,780,523
Total liabilities and net assets	$	1,002,037,379		$	876,239,755
NET ASSET VALUE PER SHARE	$	28.69		$	29.33

See accompanying notes to consolidated financial statements.

Saratoga Investment Corp.

Consolidated Statements of Operations

(unaudited)

	For the three months ended
	May 31, 2022			May 31, 2021
INVESTMENT INCOME
Interest from investments
Interest income:
Non-control/Non-affiliate investments	$	13,851,146		$	11,236,737
Affiliate investments		1,050,148			340,512
Control investments		1,546,130			1,854,985
Payment-in-kind interest income:
Non-control/Non-affiliate investments		85,681			176,766
Affiliate investments		-			-
Control investments		73,221			77,675
Total interest from investments		16,606,326			13,686,675
Interest from cash and cash equivalents		717			522
Management fee income		815,964			818,232
Dividend Income*		300,129			398,616
Structuring and advisory fee income		851,728			1,301,875
Other income*		104,268			610,070
Total investment income		18,679,132			16,815,990

OPERATING EXPENSES
Interest and debt financing expenses		6,871,513			4,340,912
Base management fees		3,802,063			2,758,908
Incentive management fees expense (benefit)		(1,903,985	)		5,262,536
Professional fees		417,325			507,061
Administrator expenses		750,000			693,750
Insurance		87,310			86,318
Directors fees and expenses		110,000			92,000
General and administrative		667,416			490,651
Income tax expense (benefit)		(98,732	)		27,919
Total operating expenses		10,702,910			14,260,055
NET INVESTMENT INCOME		7,976,222			2,555,935

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) from investments:
Non-control/Non-affiliate investments		162,509			1,910,141
Affiliate investments		-			-
Control investments		-			-
Net realized gain (loss) from investments		162,509			1,910,141
Income tax (provision) benefit from realized gain on investments		69,250			-
Net change in unrealized appreciation (depreciation) on investments:
Non-control/Non-affiliate investments		(634,289	)		5,448,887
Affiliate investments		567,606			3,062,348
Control investments		(9,266,766	)		8,301,342
Net change in unrealized appreciation (depreciation) on investments		(9,333,449	)		16,812,577
Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments		(361,951	)		(230,144	)
Net realized and unrealized gain (loss) on investments		(9,463,641	)		18,492,574
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	(1,487,419	)	$	21,048,509

WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE	$	(0.12	)	$	1.88
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED		12,112,372			11,170,045

Certain prior period amounts have been reclassified to conform to current period presentation.

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, 2022			May 31, 2021
INCREASE (DECREASE) FROM OPERATIONS:
Net investment income	$	7,976,222		$	2,555,935
Net realized gain from investments		162,509			1,910,141
Realized losses on extinguishment of debt		-			-
Income tax (provision) benefit from realized gain on investments		69,250			-
Net change in unrealized appreciation (depreciation) on investments		(9,333,449	)		16,812,577
Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments		(361,951	)		(230,144	)
Net increase (decrease) in net assets resulting from operations		(1,487,419	)		21,048,509

DECREASE FROM SHAREHOLDER DISTRIBUTIONS:
Total distributions to shareholders		(6,428,817	)		(4,799,405	)
Net decrease in net assets from shareholder distributions		(6,428,817	)		(4,799,405	)

CAPITAL SHARE TRANSACTIONS:
Stock dividend distribution		1,108,680			914,102
Repurchases of common stock		(3,734,316	)		(1,003,420	)
Repurchase fees		(2,840	)		(800	)
Net increase (decrease) in net assets from capital share transactions		(2,628,476	)		(90,118	)
Total increase (decrease) in net assets		(10,544,712	)		16,158,986
Net assets at beginning of period		355,780,523			304,185,770
Net assets at end of period	$	345,235,811		$	320,344,756

See accompanying notes to consolidated financial statements.

Saratoga Investment Corp.

Consolidated Statements of Cash Flows

(unaudited)

	For the three months ended
	May 31, 2022			May 31, 2021
Operating activities
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	(1,487,419	)	$	21,048,509
ADJUSTMENTS TO RECONCILE NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Payment-in-kind and other adjustments to cost		1,322,915			(191,699	)
Net accretion of discount on investments		(350,408	)		(321,106	)
Amortization of deferred debt financing costs		798,768			470,314
Income tax expense (benefit)		(37,823	)		27,919
Net realized (gain) loss from investments		(162,509	)		(1,910,141	)
Net change in unrealized (appreciation) depreciation on investments		9,333,449			(16,812,577	)
Net change in provision for deferred taxes on unrealized appreciation (depreciation) on investments		361,951			230,144
Proceeds from sales and repayments of investments		10,088,607			14,941,409
Purchases of investments		(97,197,844	)		(119,166,038	)
(Increase) decrease in operating assets:
Interest receivable		(232,195	)		(2,398,700	)
Due from affiliate		(14,669	)		119,000
Management and incentive fee receivable		(228	)		(818,232	)
Other assets		34,771			78,581
Increase (decrease) in operating liabilities:
Base management and incentive fees payable		(4,309,544	)		4,171,274
Accounts payable and accrued expenses		221,783			236,250
Current tax payable		(129,840	)		-
Interest and debt fees payable		2,327,626			(882,442	)
Directors fees payable		38,566			21,500
Excise tax payable		(630,183	)		(691,672	)
Due to manager		(186,057	)		88,948
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(80,210,283	)		(101,758,759	)

Financing activities
Borrowings on debt		44,500,000			49,000,000
Issuance of notes		97,500,000			50,000,000
Payments of deferred debt financing costs		(4,112,912	)		(2,289,179	)
Payments of cash dividends		(5,320,137	)		(3,885,303	)
Repurchases of common stock		(3,734,316	)		(1,003,420	)
Repurchases fees		(2,840	)		(800	)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		128,829,795			91,821,298
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS, RESERVE ACCOUNTS		48,619,512			(9,937,461	)
CASH AND CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS, RESERVE ACCOUNTS, BEGINNING OF PERIOD		52,870,342			29,915,074
CASH AND CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS, RESERVE ACCOUNTS, END OF PERIOD	$	101,489,854		$	19,977,613

Supplemental information:
Interest paid during the period	$	3,589,281		$	4,753,043
Cash paid for taxes		374			692,740
Supplemental non-cash information:
Payment-in-kind interest income and other adjustments to cost		(1,322,915	)		191,699
Net accretion of discount on investments		350,408			321,106
Amortization of deferred debt financing costs		798,768			470,314
Stock dividend distribution		1,108,680			914,102

See accompanying notes to consolidated financial statements.

Saratoga Investment Corp.

Consolidated Schedule of Investments

May 31, 2022

(unaudited)

Company(1)	Industry	Investment Interest Rate/ Maturity	Original Acquisition Date	Principal/ Number of Shares		Cost		Fair Value (c)		% of Net Assets
Non-control/Non-affiliate investments - 213.8% (b)
Targus Holdings, Inc. (h)	Consumer Products	Common Stock	12/31/2009		210,456	$	1,589,630	$	699,494		0.2	%
		Total Consumer Products					1,589,630		699,494		0.2	%
Schoox, Inc. (h), (i)	Corporate Education Software	Series 1 Membership Interest	12/8/2020		1,050		475,698		3,448,050		1.0	%
		Total Corporate Education Software					475,698		3,448,050		1.0	%
GreyHeller LLC (h)	Cyber Security	Common Stock	11/10/2021		7,857,689		1,906,275		2,374,651		0.7	%
		Total Cyber Security					1,906,275		2,374,651		0.7	%
New England Dental Partners	Dental Practice Management	First Lien Term Loan (3M USD LIBOR+8.00%), 9.61% Cash, 11/25/2025	11/25/2020	$	6,555,000		6,507,634		6,519,603		1.9	%
New England Dental Partners (j)	Dental Practice Management	Delayed Draw Term Loan (3M USD LIBOR+8.00%), 9.61% Cash, 11/25/2025	11/25/2020	$	2,150,000		2,134,277		2,138,390		0.6	%
		Total Dental Practice Management					8,641,911		8,657,993		2.5	%
PDDS Buyer, LLC (d)	Dental Practice Management Software	First Lien Term Loan (3M USD LIBOR+5.50%), 7.11% Cash, 7/15/2024	7/15/2019	$	49,000,000		48,786,954		49,000,000		14.2	%
PDDS Buyer, LLC (h)	Dental Practice Management Software	Series A-1 Preferred Shares	8/10/2020		1,755,831		2,000,000		9,994,778		2.9	%
		Total Dental Practice Management Software					50,786,954		58,994,778		17.1	%
Exigo, LLC	Direct Selling Software	First Lien Term Loan (1M USD LIBOR+5.75%), 6.87% Cash, 3/16/2027	3/16/2022	$	25,000,000		24,794,011		24,750,000		7.2	%
Exigo, LLC (j)	Direct Selling Software	Delayed Draw Term Loan (1M USD LIBOR+5.75%), 6.87% Cash, 3/16/2027	3/16/2022	$	-		-		-		0.0	%
Exigo, LLC (j)	Direct Selling Software	Revolving Credit Facility (1M USD LIBOR+5.75%), 6.87% Cash, 3/16/2027	3/16/2022	$	208,333		208,333		206,250		0.1	%
Exigo, LLC (h), (i)	Direct Selling Software	Common Units	3/16/2022		1,041,667		1,041,667		1,041,667		0.3	%
		Total Direct Selling Software					26,044,011		25,997,917		7.6	%
C2 Educational Systems	Education Services	First Lien Term Loan (3M USD LIBOR+8.50%), 10.11% Cash, 5/31/2023	5/31/2017	$	18,500,000		18,487,150		18,413,050		5.3	%
C2 Education Systems, Inc. (h)	Education Services	Series A-1 Preferred Stock	5/18/2021		3,127		499,904		611,355		0.2	%
Zollege PBC	Education Services	First Lien Term Loan (3M USD LIBOR+5.50%), 7.11% Cash, 5/11/2026	5/11/2021	$	16,000,000		15,884,618		15,804,800		4.6	%
Zollege PBC (j)	Education Services	Delayed Draw Term Loan (3M USD LIBOR+5.50%), 7.11% Cash, 5/11/2026	5/11/2021	$	500,000		496,063		481,700		0.1	%
Zollege PBC (h)	Education Services	Class A Units	5/11/2021		250,000		250,000		200,342		0.1	%
		Total Education Services					35,617,735		35,511,247		10.3	%
Destiny Solutions Inc. (h), (i)	Education Software	Limited Partner Interests	5/16/2018		3,065		3,969,291		8,339,265		2.4	%
Identity Automation Systems (d)	Education Software	First Lien Term Loan (3M USD LIBOR+9.24%), 10.99% Cash, 5/8/2024	8/25/2014	$	16,831,875		16,831,875		16,784,746		4.9	%
Identity Automation Systems (h)	Education Software	Common Stock Class A-2 Units	8/25/2014		232,616		232,616		544,519		0.2	%
Identity Automation Systems (h)	Education Software	Common Stock Class A-1 Units	3/6/2020		43,715		171,571		204,866		0.1	%
GoReact	Education Software	First Lien Term Loan (3M USD LIBOR+7.50%), 9.50% Cash, 1/17/2025	1/17/2020	$	8,000,000		7,927,226		7,992,800		2.3	%
GoReact (j)	Education Software	Delayed Draw Term Loan (3M USD LIBOR+7.50%), 9.50% Cash, 1/17/2025	1/18/2022	$	2,000,000		2,000,000		1,998,200		0.6	%
		Total Education Software					31,132,579		35,864,396		10.5	%
TG Pressure Washing Holdings, LLC (h)	Facilities Maintenance	Preferred Equity	8/12/2019		488,148		488,148		499,634		0.1	%
		Total Facilities Maintenance					488,148		499,634		0.1	%
Davisware, LLC	Field Service Management	First Lien Term Loan (3M USD LIBOR+7.00%), 9.00% Cash, 7/31/2024	9/6/2019	$	6,000,000		5,960,141		5,954,400		1.7	%
Davisware, LLC (j)	Field Service Management	Delayed Draw Term Loan (3M USD LIBOR+7.00%), 9.00% Cash, 7/31/2024	9/6/2019	$	977,790		975,859		970,359		0.3	%
		Total Field Service Management					6,936,000		6,924,759		2.0	%
GDS Software Holdings, LLC	Financial Services	First Lien Term Loan (3M USD LIBOR+7.00%), 8.61% Cash, 12/30/2026	12/30/2021	$	22,713,926		22,586,066		22,566,286		6.5	%
GDS Software Holdings, LLC (j)	Financial Services	Delayed Draw Term loan (3M USD LIBOR+7.00%), 8.61% Cash, 12/30/2026	12/30/2021	$	1,500,000		1,485,719		1,490,250		0.4	%
GDS Software Holdings, LLC (h)	Financial Services	Common Stock Class A Units	8/23/2018		250,000		250,000		503,775		0.1	%
		Total Financial Services					24,321,785		24,560,311		7.0	%
Ascend Software, LLC	Financial Services Software	First Lien Term Loan (3M USD LIBOR+7.50%), 9.11% Cash, 12/15/2026	12/15/2021	$	6,000,000		5,945,623		5,940,000		1.7	%
Ascend Software, LLC (j)	Financial Services Software	Delayed Draw Term Loan (3M USD LIBOR+7.50%), 9.11% Cash, 12/15/2026	12/15/2021	$	1,300,000		1,287,170		1,287,000		0.4	%
		Total Financial Services Software					7,232,793		7,227,000		2.1	%
Ohio Medical, LLC (h)	Healthcare Products Manufacturing	Common Stock	1/15/2016		5,000		380,353		634,183		0.2	%
		Total Healthcare Products Manufacturing					380,353		634,183		0.2	%
Axiom Parent Holdings, LLC (h)	Healthcare Services	Common Stock Class A Units	6/19/2018	$	400,000		400,000		1,269,248		0.4	%
Axiom Purchaser, Inc. (d)	Healthcare Services	First Lien Term Loan (3M USD LIBOR+6.00%), 7.75% Cash, 6/19/2023	6/19/2018	$	7,500,000		7,484,272		7,479,750		2.2	%
Axiom Purchaser, Inc. (d)	Healthcare Services	Delayed Draw Term Loan (3M USD LIBOR+6.00%), 7.75% Cash, 6/19/2023	6/19/2018	$	4,500,000		4,486,480		4,487,850		1.3	%
ComForCare Health Care (d)	Healthcare Services	First Lien Term Loan (3M USD LIBOR+6.25%), 7.86% Cash, 1/31/2025	1/31/2017	$	25,000,000		24,908,782		25,000,000		7.2	%
		Total Healthcare Services					37,279,534		38,236,848		11.1	%

Company(1)	Industry	Investment Interest Rate/ Maturity	Original Acquisition Date	Principal/ Number of Shares		Cost		Fair Value (c)		% of Net Assets
TRC HemaTerra, LLC (h)	Healthcare Software	Class D Membership Interests	4/15/2019		2,487		2,816,693		3,912,271		1.1	%
HemaTerra Holding Company, LLC (d)	Healthcare Software	First Lien Term Loan (3M USD LIBOR+8.25%), 9.86% Cash, 1/31/2026	4/15/2019	$	35,910,000		35,636,083		35,550,900		10.3	%
HemaTerra Holding Company, LLC (d)	Healthcare Software	Delayed Draw Term Loan (3M USD LIBOR+8.25%), 9.86% Cash, 1/31/2026	4/15/2019	$	13,965,000		13,881,774		13,825,350		4.0	%
Procurement Partners, LLC	Healthcare Software	First Lien Term Loan (3M USD LIBOR+5.50%), 7.11% Cash, 11/12/2025	11/12/2020	$	35,125,000		34,848,066		34,896,688		10.1	%
Procurement Partners, LLC (j)	Healthcare Software	Delayed Draw Term Loan (3M USD LIBOR+5.50%), 7.11% Cash, 11/12/2025	11/12/2020	$	1,200,000		1,188,650		1,192,200		0.3	%
Procurement Partners Holdings LLC (h)	Healthcare Software	Class A Units	11/12/2020		550,986		550,986		630,757		0.2	%
		Total Healthcare Software					88,922,252		90,008,166		26.0	%
Roscoe Medical, Inc. (h)	Healthcare Supply	Common Stock	3/26/2014		5,081		508,077		-		0.0	%
		Total Healthcare Supply					508,077		-		0.0	%
Book4Time, Inc. (a), (d)	Hospitality/Hotel	First Lien Term Loan (3M USD LIBOR+8.50%), 10.25%, 12/22/2025	12/22/2020	$	3,136,517		3,113,515		3,103,270		0.9	%
Book4Time, Inc. (a)	Hospitality/Hotel	Delayed Draw Term Loan (3M USD LIBOR+8.50%), 10.25%, 12/22/2025	12/22/2020	$	2,000,000		1,980,015		1,978,800		0.6	%
Book4Time, Inc. (a), (h), (i)	Hospitality/Hotel	Class A Preferred Shares	12/22/2020		200,000		156,826		216,744		0.1	%
Knowland Group, LLC (k)	Hospitality/Hotel	Second Lien Term Loan (3M USD LIBOR+8.00%), 10.00% Cash/1.00% PIK, 5/9/2024	11/9/2018	$	15,878,989		15,878,989		10,059,339		2.9	%
Sceptre Hospitality Resources, LLC	Hospitality/Hotel	First Lien Term Loan (3M USD LIBOR+8.00%), 9.61% Cash, 9/2/2026	4/27/2020	$	6,000,000		5,954,100		5,904,000		1.7	%
Sceptre Hospitality Resources, LLC (j)	Hospitality/Hotel	Delayed Draw Term Loan (3M USD LIBOR+8.00%), 9.61% Cash, 9/2/2026	9/2/2021	$	750,000		742,524		738,000		0.2	%
		Total Hospitality/Hotel					27,825,969		22,000,153		6.4	%
Granite Comfort, LP	HVAC Services and Sales	First Lien Term Loan (3M USD LIBOR+7.00%), 8.61% Cash, 11/16/2025	11/16/2020	$	33,000,000		32,734,758		33,059,400		9.6	%
Granite Comfort, LP(j)	HVAC Services and Sales	Delayed Draw Term Loan (3M USD LIBOR+7.00%), 8.61% Cash, 11/16/2025	11/16/2020	$	2,000,000		1,981,632		2,003,600		0.6	%
		Total HVAC Services and Sales					34,716,390		35,063,000		10.2	%
AgencyBloc, LLC	Insurance Software	First Lien Term Loan (3M USD BSBY+8.00%), 9.52% Cash, 10/1/2026	10/1/2021	$	9,000,000		8,930,595		8,862,300		2.6	%
Panther ParentCo LLC (h)	Insurance Software	Class A Units	10/1/2021		2,000,000		2,000,000		2,334,414		0.7	%
		Total Insurance Software					10,930,595		11,196,714		3.3	%
Vector Controls Holding Co., LLC (d)	Industrial Products	First Lien Term Loan (3M USD LIBOR+6.50%), 8.11% Cash, 3/6/2025	3/6/2013	$	4,746,986		4,746,986		4,705,213		1.4	%
Vector Controls Holding Co., LLC (h)	Industrial Products	Warrants to Purchase Limited Liability Company Interests, Expires 11/30/2027	5/31/2015		343		-		3,978,000		1.2	%
		Total Industrial Products					4,746,986		8,683,213		2.6	%
LogicMonitor, Inc. (d)	IT Services	First Lien Term Loan (3M USD LIBOR+5.00), 6.61% Cash, 5/17/2023	3/20/2020	$	43,000,000		42,851,422		43,000,000		12.5	%
		Total IT Services					42,851,422		43,000,000		12.5	%
Centerbase, LLC	Legal Software	First Lien Term Loan (Daily USD SOFR+7.75%), 8.75% Cash, 1/18/2027	1/18/2022	$	21,408,000		21,186,767		21,193,920		6.1	%
		Total Legal Software					21,186,767		21,193,920		6.1	%
Madison Logic, Inc.	Marketing Orchestration Software	First Lien Term Loan (1M USD LIBOR+5.50%), 6.62% Cash, 11/22/2026	12/10/2021	$	28,843,373		28,722,334		28,704,925		8.3	%
Madison Logic, Inc. (j)	Marketing Orchestration Software	Revolving Credit Facility (1M USD LIBOR+5.50%), 6.62% Cash, 11/22/2026	12/10/2021	$	-		-		-		0.0	%
		Total Marketing Orchestration Software					28,722,334		28,704,925		8.3	%
inMotionNow, Inc.	Marketing Services	First Lien Term Loan (3M USD LIBOR+7.50), 10.00% Cash, 5/15/2024	5/15/2019	$	12,200,000		12,148,027		12,151,200		3.5	%
inMotionNow, Inc. (d)	Marketing Services	Delayed Draw Term Loan (3M USD LIBOR+7.50) 10.00% Cash, 5/15/2024	5/15/2019	$	5,000,000		4,976,703		4,980,000		1.4	%
		Total Marketing Services					17,124,730		17,131,200		4.9	%
Chronus LLC	Mentoring Software	First Lien Term Loan (3M USD LIBOR+5.25), 6.86% Cash, 8/26/2026	8/26/2021	$	15,000,000		14,870,093		14,920,500		4.3	%
Chronus LLC (h)	Mentoring Software	Series A Preferred Stock	8/26/2021		3,000		3,000,000		3,389,432		1.0	%
		Total Mentoring Software					17,870,093		18,309,932		5.3	%

Company(1)	Industry	Investment Interest Rate/ Maturity	Original Acquisition Date	Principal/ Number of Shares		Cost		Fair Value (c)		% of Net Assets
Omatic Software, LLC	Non-profit Services	First Lien Term Loan (3M USD LIBOR+8.00%), 9.75% Cash/1.00% PIK, 5/29/2023	5/29/2018	$	10,036,289		9,993,648		9,939,941		2.9	%
		Total Non-profit Services					9,993,648		9,939,941		2.9	%
Emily Street Enterprises, L.L.C.	Office Supplies	Senior Secured Note (3M USD LIBOR+8.50%), 10.11% Cash, 12/31/2023	12/28/2012	$	3,300,000		3,300,000		3,252,150		0.9	%
Emily Street Enterprises, L.L.C. (h)	Office Supplies	Warrant Membership Interests Expires 12/28/2022	12/28/2012		49,318		400,000		507,642		0.1	%
		Total Office Supplies					3,700,000		3,759,792		1.0	%
Apex Holdings Software Technologies, LLC	Payroll Services	First Lien Term Loan (3M USD LIBOR+8.00%), 9.61% Cash, 9/21/2024	9/21/2016	$	16,500,000		16,492,637		16,488,450		4.7	%
		Total Payroll Services					16,492,637		16,488,450		4.7	%
Buildout, Inc.	Real Estate Services	First Lien Term Loan (3M USD LIBOR+7.00%), 8.61% Cash, 7/9/2025	7/9/2020	$	14,000,000		13,904,509		13,904,800		4.0	%
Buildout, Inc.	Real Estate Services	Delayed Draw Term Loan (3M USD LIBOR+7.00%), 8.61% Cash, 7/9/2025	2/12/2021	$	38,500,000		38,190,646		38,238,200		11.0	%
Buildout, Inc. (h), (i)	Real Estate Services	Limited Partner Interests	7/9/2020		1,205		1,205,308		1,256,264		0.4	%
		Total Real Estate Services					53,300,463		53,399,264		15.4	%
LFR Chicken LLC	Restaurant	First Lien Term Loan (1M USD LIBOR+7.00%), 8.12% Cash, 11/19/2026	11/19/2021	$	12,000,000		11,893,721		11,851,200		3.4	%
LFR Chicken LLC (j)	Restaurant	Delayed Draw Term Loan (1M USD LIBOR+7.00%), 8.12% Cash, 11/19/2026	11/19/2021	$	9,000,000		8,912,727		8,888,400		2.6	%
LFR Chicken LLC (h)	Restaurant	Series B Preferred Units	11/19/2021		497,183		1,000,000		1,196,146		0.3	%
TMAC Acquisition Co., LLC	Restaurant	Unsecured Term Loan 8.00% PIK, 9/01/2023	3/1/2018	$	2,979,312		2,979,312		2,785,387		0.8	%
		Total Restaurant					24,785,760		24,721,133		7.1	%
Pepper Palace, Inc. (d)	Specialty Food Retailer	First Lien Term Loan (3M USD LIBOR+6.25%), 7.86% Cash, 6/30/2026	6/30/2021	$	33,745,000		33,458,240		28,828,353		8.3	%
Pepper Palace, Inc. (j)	Specialty Food Retailer	Delayed Draw Term Loan (3M USD LIBOR+6.25%), 7.86% Cash, 6/30/2026	6/30/2021	$	-		-		-		0.0	%
Pepper Palace, Inc. (j)	Specialty Food Retailer	Revolving Credit Facility (3M USD LIBOR+6.25%), 7.86% Cash, 6/30/2026	6/30/2021	$	-		-		-		0.0	%
Pepper Palace, Inc. (h)	Specialty Food Retailer	Membership Interest	6/30/2021		1,000,000		1,000,000		157,598		-0.1	%
		Total Specialty Food Retailer					34,458,240		28,985,951		8.2	%
ArbiterSports, LLC (d)	Sports Management	First Lien Term Loan (3M USD LIBOR+6.50%), 8.25% Cash, 2/21/2025	2/21/2020	$	26,000,000		25,864,509		25,706,200		7.3	%
ArbiterSports, LLC (d)	Sports Management	Delayed Draw Term Loan (3M USD LIBOR+6.50%), 8.25% Cash, 2/21/2025	2/21/2020	$	1,000,000		1,000,000		988,700		0.3	%
		Total Sports Management					26,864,509		26,694,900		7.6	%
Avionte Holdings, LLC (h)	Staffing Services	Class A Units	1/8/2014		100,000		100,000		2,059,840		0.6	%
		Total Staffing Services					100,000		2,059,840		0.6	%
JDXpert	Talent Acquisition Software	First Lien Term Loan (3M USD LIBOR+8.50%), 10.11% Cash, 5/2/2027	5/2/2022	$	6,000,000		5,940,044		5,940,000
JDXpert (j)	Talent Acquisition Software	Delayed Draw Term Loan (3M USD LIBOR+8.50%), 10.11% Cash, 5/2/2027	5/2/2022	$	-		-		-
Jobvite, Inc. (d)	Talent Acquisition Software	Second Lien Term Loan (3M USD LIBOR+7.50%), 9.11% Cash, 1/6/2027	7/6/2021	$	20,000,000		19,847,950		19,576,000		5.7	%
		Total Talent Acquisition Software					25,787,994		25,516,000		5.7	%
National Waste Partners (d)	Waste Services	Second Lien Term Loan 10.00% Cash, 11/13/2022	2/13/2017	$	9,000,000		9,000,000		8,993,700		2.6	%
		Total Waste Services					9,000,000		8,993,700		2.6	%
Sub Total Non-control/Non-affiliate investments							732,722,272		745,481,455		213.8	%
Affiliate investments - 16.2% (b)
Artemis Wax Corp. (d), (f), (j)	Consumer Services	Delayed Draw Term Loan (1M USD LIBOR+9.00%), 11.00% Cash, 5/20/2026	5/20/2021	$	30,000,000		29,741,794		29,949,000		8.7	%
Artemis Wax Corp. (f)	Consumer Services	Delayed Draw Term Loan (1M USD LIBOR+6.50%), 8.50% Cash, 5/20/2026	5/19/2022	$	6,000,000		5,940,132		5,989,800		1.7	%
Artemis Wax Corp. (f), (h)	Consumer Services	Series B-1 Preferred Stock	5/20/2021		934,463		1,500,000		2,837,765		0.8	%
Artemis Wax Corp. (f), (h)	Consumer Services	Series C Preferred Stock	5/20/2021		5,745		5,745,485		5,745,481		1.7	%
		Total Consumer Services					42,927,411		44,522,046		12.9	%

Company(1)	Industry	Investment Interest Rate/ Maturity	Original Acquisition Date	Principal/ Number of Shares		Cost		Fair Value (c)		% of Net Assets
Axero Holdings, LLC (f)	Employee Collaboration Software	First Lien Term Loan (3M USD LIBOR+10.00%), 11.61% Cash, 6/30/2026	6/30/2021	$	5,500,000		5,452,434		5,513,200		1.6	%
Axero Holdings, LLC (f), (j)	Employee Collaboration Software	Delayed Draw Term Loan (3M USD LIBOR+10.00%), 11.61% Cash, 6/30/2026	6/30/2021	$	1,100,000		1,089,030		1,102,640		0.3	%
Axero Holdings, LLC (f), (j)	Employee Collaboration Software	Revolving Credit Facility (3M USD LIBOR+10.00%), 11.61% Cash, 6/30/2026	2/3/2022	$	-		-		-		0.0	%
Axero Holdings, LLC (f), (h)	Employee Collaboration Software	Series A Preferred Units	6/30/2021		2,000,000		2,000,000		2,275,000		0.6	%
Axero Holdings, LLC (f), (h)	Employee Collaboration Software	Series B Preferred Units	6/30/2021		2,000,000		2,000,000		2,632,792		0.8	%
		Total Employee Collaboration Software					10,541,464		11,523,632		3.3	%
Sub Total Affiliate investments							53,468,875		56,045,678		16.2	%
Control investments - 26.8% (b)
Netreo Holdings, LLC (g)	IT Services	First Lien Term Loan (3M USD LIBOR +8.00%), 9.61% Cash 12/31/2025	7/3/2018	$	5,466,933		5,444,758		5,463,653		1.5	%
Netreo Holdings, LLC (d), (g), (j)	IT Services	Delayed Draw Term Loan (3M USD LIBOR +8.00%), 9.61% Cash, 12/31/2025	5/26/2020	$	16,019,435		15,968,598		16,009,823		4.6	%
Netreo Holdings, LLC (g), (h)	IT Services	Common Stock Class A Unit	7/3/2018		4,600,677		8,344,500		18,270,011		5.3	%
		Total IT Services					29,757,856		39,743,487		11.4	%
Saratoga Investment Corp. CLO 2013-1, Ltd. (a), (e), (g)	Structured Finance Securities	Other/Structured Finance Securities 5.15%, 4/20/2033	1/22/2008	$	111,000,000		30,973,564		24,117,794		7.0	%
Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-2-R-3 Note (a), (g)	Structured Finance Securities	Other/Structured Finance Securities (3M USD LIBOR+10.00%), 11.61%, 4/20/2033	8/9/2021	$	9,375,000		9,375,000		9,375,000		2.7	%
		Total Structured Finance Securities					40,348,564		33,492,794		9.7	%
Saratoga Senior Loan Fund I JV, LLC (a), (g), (j)	Investment Fund	Unsecured Loan 10.00%, 6/15/2023	2/17/2022	$	13,125,000		13,125,000		13,125,000		3.8	%
Saratoga Senior Loan Fund I JV, LLC (a), (g)	Investment Fund	Membership Interest	2/17/2022		13,125,000		13,125,000		6,644,732		1.9	%
		Total Investment Fund					26,250,000		19,769,732		5.7	%
Sub Total Control investments							96,356,420		93,006,013		26.8	%
TOTAL INVESTMENTS - 256.8% (b)						$	882,547,567	$	894,533,146		256.8	%

	Number of Shares		Cost		Fair Value		% of Net Assets
Cash and cash equivalents and cash and cash equivalents, reserve accounts - 29.4% (b)
U.S. Bank Money Market (l)		101,489,854	$	101,489,854	$	101,489,854		29.4	%
Total cash and cash equivalents and cash and cash equivalents, reserve accounts		101,489,854	$	101,489,854	$	101,489,854		29.4	%

(1)

Securities are exempt from registration under Rule 144A of the Securities Act of 1933, as amended, and are restricted securities.

(a)

Represents an investment that is not a “qualifying asset” under Section 55(a) of the Investment Company Act of 1940, as amended (the 1940 Act”). As of May 31, 2022, non-qualifying assets represent 5.8% of the Company’s portfolio at fair value. As a BDC, the Company generally has to invest at least 70% of its total assets in qualifying assets.

(b)

Percentages are based on net assets of $345,235,811 as of May 31, 2022.

(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 8 to the consolidated financial statements).

(e)

This investment does not have a stated interest rate that is payable thereon. As a result, the 5.15% 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 1940 Act, this portfolio company is an “affiliate” as we own between 5.0% and 25.0% of the outstanding voting securities. Transactions during the quarter ended May 31, 2022 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 (Depreciation)
Artemis Wax Corp.	$	5,940,000	$	-	$	880,798	$	-	$	-	$	134,348
Axero Holdings, LLC		1,089,000		-		169,350		-		-		433,258
Total	$	7,029,000	$	-	$	1,050,148	$	-	$	-	$	567,606

(g)

As defined in the 1940 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, 2022 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)
Netreo Holdings, LLC	$	2,475,000	$	-	$	444,031	$	-	$	-	$	(657,884	)
Saratoga Investment Corp. CLO 2013-1, Ltd.		-		-		592,681		815,964		-		(3,237,550	)
Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-2-R-3 Note		-		-		254,514		-		-		-
Saratoga Senior Loan Fund I JV, LLC		-		-		328,125		-		-		-
Saratoga Senior Loan Fund I JV, LLC		-		-		-		-		-		(5,371,332	)
Total	$	2,475,000	$	-	$	1,619,351	$	815,964	$	-	$	(9,266,766	)

(h)

Non-income producing at May 31, 2022.

(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, 2022. (See Note 9 to the consolidated financial statements).

(k)

As of May 31, 2022, there were no investments on non-accrual status. (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, 2022.

BSBY - Bloomberg Short-Term Bank Yield

LIBOR - London Interbank Offered Rate

SOFR - Secured Overnight Financing Rate

3M USD BSBY - The 3 month USD BSBY rate as of May 31, 2022 was 1.56%.

1M USD LIBOR - The 1 month USD LIBOR rate as of May 31, 2022 was 1.12%.

3M USD LIBOR - The 3 month USD LIBOR rate as of May 31, 2022 was 1.63%.

Daily USD SOFR - The daily USD SOFR rate as of May 31, 2022 was 0.79%

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, 2022

Company(1)	Industry	Investment Interest Rate/Maturity	Original Acquisition Date	Principal/ Number of Shares		Cost		Fair Value (c)		% of Net Assets
Non-control/Non-affiliate investments - 187.4% (b)
Targus Holdings, Inc. (h)	Consumer Products	Common Stock	12/31/2009		210,456	$	1,589,630	$	692,535		0.2	%
		Total Consumer Products					1,589,630		692,535		0.2	%
Schoox, Inc. (h), (i)	Corporate Education Software	Series 1 Membership Interest	12/8/2020		1,050		475,698		3,305,839		0.9	%
		Total Corporate Education Software					475,698		3,305,839		0.9	%
GreyHeller LLC (h)	Cyber Security	Common Stock	11/10/2021		6,742,392		1,635,704		1,635,704		0.5	%
		Total Cyber Security					1,635,704		1,635,704		0.5	%
New England Dental Partners	Dental Practice Management	First Lien Term Loan (3M USD LIBOR+8.00%), 8.50% Cash, 11/25/2025	11/25/2020	$	6,555,000		6,502,672		6,404,891		1.8	%
New England Dental Partners (j)	Dental Practice Management	Delayed Draw Term Loan (3M USD LIBOR+8.00%), 8.50% Cash, 11/25/2025	11/25/2020	$	2,150,000		2,132,639		1,997,715		0.6	%
		Total Dental Practice Management					8,635,311		8,402,606		2.4	%
PDDS Buyer, LLC (d)	Dental Practice Management Software	First Lien Term Loan (3M USD LIBOR+5.50%), 6.00% Cash, 7/15/2024	7/15/2019	$	28,000,000		27,943,852		27,938,400		7.9	%
PDDS Buyer, LLC (h)	Dental Practice Management Software	Series A-1 Preferred Shares	8/10/2020		1,755,831		2,000,000		7,099,940		2.0	%
		Total Dental Practice Management Software					29,943,852		35,038,340		9.9	%
C2 Educational Systems	Education Services	First Lien Term Loan (3M USD LIBOR+8.50%), 10.00% Cash, 5/31/2023	5/31/2017	$	18,500,000		18,484,747		18,220,650		5.1	%
C2 Education Systems, Inc. (h)	Education Services	Series A-1 Preferred Stock	5/18/2021		3,127		499,904		599,296		0.2	%
Zollege PBC	Education Services	First Lien Term Loan (3M USD LIBOR+5.50%), 6.50% Cash, 5/11/2026	5/11/2021	$	16,000,000		15,877,908		15,794,300		4.4	%
Zollege PBC (j)	Education Services	Delayed Draw Term Loan (3M USD LIBOR+5.50%), 6.50% Cash, 5/11/2026	5/11/2021	$	500,000		495,811		493,950		0.1	%
Zollege PBC (h)	Education Services	Class A Units	5/11/2021		250,000		250,000		201,218		0.1	%
		Total Education Services					35,608,370		35,309,414		9.9	%
Destiny Solutions Inc. (h), (i)	Education Software	Limited Partner Interests	5/16/2018		3,065		3,969,291		7,632,061		2.1	%
Identity Automation Systems (d)	Education Software	First Lien Term Loan (3M USD LIBOR+9.24%), 10.99% Cash, 5/8/2024	8/25/2014	$	16,941,250		16,941,250		16,941,250		4.8	%
Identity Automation Systems (h)	Education Software	Common Stock Class A-2 Units	8/25/2014		232,616		232,616		801,923		0.2	%
Identity Automation Systems (h)	Education Software	Common Stock Class A-1 Units	3/6/2020		43,715		171,571		200,820		0.1	%
GoReact	Education Software	First Lien Term Loan (3M USD LIBOR+7.50%), 9.50% Cash, 1/17/2025	1/17/2020	$	8,000,000		7,920,033		8,080,000		2.3	%
GoReact (j)	Education Software	Delayed Draw Term Loan (3M USD LIBOR+7.50%), 9.50% Cash, 1/17/2025	1/18/2022	$	-		-		-		0.0	%
		Total Education Software					29,234,761		33,656,054		9.5	%
TG Pressure Washing Holdings, LLC (h)	Facilities Maintenance	Preferred Equity	8/12/2019		488,148		488,148		482,036		0.1	%
		Total Facilities Maintenance					488,148		482,036		0.1	%
Davisware, LLC	Field Service Management	First Lien Term Loan (3M USD LIBOR+7.00%), 9.00% Cash, 7/31/2024	9/6/2019	$	6,000,000		5,954,705		6,003,000		1.7	%
Davisware, LLC (j)	Field Service Management	Delayed Draw Term Loan (3M USD LIBOR+7.00%), 9.00% Cash, 7/31/2024	9/6/2019	$	977,790		975,504		978,279		0.3	%
		Total Field Service Management					6,930,209		6,981,279		2.0	%
GDS Software Holdings, LLC	Financial Services	First Lien Term Loan (3M USD LIBOR+7.00%), 8.00% Cash, 12/30/2026	12/30/2021	$	22,713,926		22,579,864		22,570,829		6.3	%
GDS Software Holdings, LLC (j)	Financial Services	Delayed Draw Term loan (3M USD LIBOR+7.00%), 8.00% Cash, 12/30/2026	12/18/2021	$	500,000		495,031		496,850		0.1	%
GDS Software Holdings, LLC (h)	Financial Services	Common Stock Class A Units	8/23/2018		250,000		250,000		472,009		0.1	%
		Total Financial Services					23,324,895		23,539,688		6.5	%
Ascend Software, LLC	Financial Services Software	First Lien Term Loan (3M USD LIBOR+7.50%), 8.50% Cash, 12/15/2026	12/15/2021	$	6,000,000		5,942,482		5,940,000		1.7	%
Ascend Software, LLC (j)	Financial Services Software	Delayed Draw Term Loan (3M USD LIBOR+7.50%), 8.50% Cash, 12/15/2026	12/15/2021	$	-		-		-		0.0	%
		Total Financial Services Software					5,942,482		5,940,000		1.7	%
Ohio Medical, LLC (h)	Healthcare Products Manufacturing	Common Stock	1/15/2016		5,000		380,353		714,271		0.2	%
		Total Healthcare Products Manufacturing					380,353		714,271		0.2	%

Company(1)	Industry	Investment Interest Rate/Maturity	Original Acquisition Date	Principal/ Number of Shares		Cost		Fair Value (c)		% of Net Assets
Axiom Parent Holdings, LLC (h)	Healthcare Services	Common Stock Class A Units	6/19/2018		400,000		400,000		1,032,934		0.3	%
Axiom Purchaser, Inc. (d)	Healthcare Services	First Lien Term Loan (3M USD LIBOR+6.00%), 7.75% Cash, 6/19/2023	6/19/2018	$	10,000,000		9,974,217		10,013,000		2.8	%
Axiom Purchaser, Inc. (d)	Healthcare Services	Delayed Draw Term Loan (3M USD LIBOR+6.00%), 7.75% Cash, 6/19/2023	6/19/2018	$	6,000,000		5,977,846		6,007,800		1.7	%
ComForCare Health Care (d)	Healthcare Services	First Lien Term Loan (3M USD LIBOR+7.25%), 8.25% Cash, 1/31/2025	1/31/2017	$	25,000,000		24,903,581		25,000,000		7.0	%
		Total Healthcare Services					41,255,644		42,053,734		11.8	%
TRC HemaTerra, LLC (h)	Healthcare Software	Class D Membership Interests	4/15/2019		2,487		2,816,693		3,788,769		1.1	%
HemaTerra Holding Company, LLC (d)	Healthcare Software	First Lien Term Loan (3M USD LIBOR+8.25%), 9.25% Cash, 1/31/2026	4/15/2019	$	36,000,000		35,715,061		35,640,000		10.0	%
HemaTerra Holding Company, LLC (d)	Healthcare Software	Delayed Draw Term Loan (3M USD LIBOR+8.25%), 9.25% Cash, 1/31/2026	4/15/2019	$	14,000,000		13,912,744		13,860,000		3.9	%
Procurement Partners, LLC	Healthcare Software	First Lien Term Loan (3M USD LIBOR+5.50%), 6.50% Cash, 11/12/2025	11/12/2020	$	35,125,000		34,827,633		34,998,550		9.8	%
Procurement Partners, LLC (j)	Healthcare Software	Delayed Draw Term Loan (3M USD LIBOR+5.50%), 6.50% Cash, 11/12/2025	11/12/2020	$	1,200,000		1,188,047		1,195,680		0.3	%
Procurement Partners Holdings LLC (h)	Healthcare Software	Class A Units	11/12/2020		550,986		550,986		643,044		0.2	%
		Total Healthcare Software					89,011,164		90,126,043		25.3	%
Roscoe Medical, Inc. (h)	Healthcare Supply	Common Stock	3/26/2014		5,081		508,077		52,853		0.0	%
Roscoe Medical, Inc.	Healthcare Supply	Second Lien Term Loan 11.25% Cash, 3/31/2022	3/26/2014	$	5,141,413		5,141,413		5,141,413		1.4	%
		Total Healthcare Supply					5,649,490		5,194,266		1.4	%
Book4Time, Inc. (a), (d)	Hospitality/Hotel	First Lien Term Loan (3M USD LIBOR+8.50%), 10.25%, 12/22/2025	12/22/2020	$	3,136,517		3,111,278		3,112,052		0.9	%
Book4Time, Inc. (a), (j)	Hospitality/Hotel	Delayed Draw Term Loan (3M USD LIBOR+8.50%), 10.25%, 12/22/2025	12/22/2020	$	-		-		-		0.0	%
Book4Time, Inc. (a), (h), (i)	Hospitality/Hotel	Class A Preferred Shares	12/22/2020	$	200,000		156,826		198,638		0.1	%
Knowland Group, LLC	Hospitality/Hotel	Second Lien Term Loan (3M USD LIBOR+8.00%), 10.00% Cash/1.00% PIK, 5/9/2024	11/9/2018	$	15,878,989		15,878,989		10,592,873		3.0	%
Sceptre Hospitality Resources, LLC	Hospitality/Hotel	First Lien Term Loan (1M USD LIBOR+8.00%), 9.00% Cash, 9/2/2026	4/27/2020	$	6,000,000		5,952,460		6,021,000		1.7	%
Sceptre Hospitality Resources, LLC (j)	Hospitality/Hotel	Delayed Draw Term Loan (1M USD LIBOR+8.00%), 9.00% Cash, 9/2/2026	9/2/2021	$	-		-		-		0.0	%
		Total Hospitality/Hotel					25,099,553		19,924,563		5.7	%
Granite Comfort, LP	HVAC Services and Sales	First Lien Term Loan (1M USD LIBOR+8.00%), 9.00% Cash, 11/16/2025	11/16/2020	$	28,000,000		27,764,146		27,977,600		7.9	%
Granite Comfort, LP(j)	HVAC Services and Sales	Delayed Draw Term Loan (1M USD LIBOR+8.00%), 9.00% Cash, 11/16/2025	11/16/2020	$	2,000,000		1,980,805		1,998,400		0.6	%
		Total HVAC Services and Sales					29,744,951		29,976,000		8.5	%
AgencyBloc, LLC	Insurance Software	First Lien Term Loan (3M USD BSBY+8.00%), 9.00% Cash, 10/1/2026	10/1/2021	$	9,000,000		8,925,938		8,920,800		2.5	%
Panther ParentCo LLC (h)	Insurance Software	Class A Units	10/1/2021		2,000,000		2,000,000		2,000,000		0.6	%
		Total Insurance Software					10,925,938		10,920,800		3.1	%
Vector Controls Holding Co., LLC (d)	Industrial Products	First Lien Term Loan (3M USD LIBOR+6.50%), 8.00% Cash, 3/6/2025	3/6/2013	$	5,008,186		5,008,186		5,008,186		1.4	%
Vector Controls Holding Co., LLC (h)	Industrial Products	Warrants to Purchase Limited Liability Company Interests, Expires 11/30/2027	5/31/2015		343		-		3,418,993		1.0	%
		Total Industrial Products					5,008,186		8,427,179		2.4	%
LogicMonitor, Inc. (d)	IT Services	First Lien Term Loan (3M USD LIBOR+5.00), 6.00% Cash, 5/17/2023	3/20/2020	$	43,000,000		42,806,801		43,000,000		12.1	%
		Total IT Services					42,806,801		43,000,000		12.1	%
Centerbase, LLC	Legal Software	First Lien Term Loan (Daily USD SOFR+7.50%), 8.50% Cash, 1/18/2027	1/18/2022	$	7,500,000		7,409,860		7,425,000		2.1	%
		Total Legal Software					7,409,860		7,425,000		2.1	%
Madison Logic, Inc.	Marketing Orchestration Software	First Lien Term Loan (1M USD LIBOR+5.75%), 6.75% Cash, 11/22/2026	12/10/2021	$	28,915,663		28,782,977		28,776,867		8.1	%

Company(1)	Industry	Investment Interest Rate/Maturity	Original Acquisition Date	Principal/ Number of Shares		Cost		Fair Value (c)			% of Net Assets
Madison Logic, Inc. (j)	Marketing Orchestration Software	Revolving Credit Facility (1M USD LIBOR+5.75%), 6.75% Cash, 11/22/2026	12/10/2021	$	-		-		-			0.0	%
		Total Marketing Orchestration Software					28,782,977		28,776,867			8.1	%
inMotionNow, Inc.	Marketing Services	First Lien Term Loan (3M USD LIBOR+7.50), 10.00% Cash, 5/15/2024	5/15/2019	$	12,200,000		12,139,533		12,290,280			3.5	%
inMotionNow, Inc. (d)	Marketing Services	Delayed Draw Term Loan (3M USD LIBOR+7.50) 10.00% Cash, 5/15/2024	5/15/2019	$	5,000,000		4,972,992		5,037,000			1.4	%
		Total Marketing Services					17,112,525		17,327,280			4.9	%
Chronus LLC	Mentoring Software	First Lien Term Loan (3M USD LIBOR+5.25), 6.25% Cash, 8/26/2026	8/26/2021	$	15,000,000		14,861,338		14,938,500			4.2	%
Chronus LLC (h)	Mentoring Software	Series A Preferred Stock	8/26/2021		3,000		3,000,000		3,382,625			1.0	%
		Total Mentoring Software					17,861,338		18,321,125			5.2	%
Omatic Software, LLC	Non-profit Services	First Lien Term Loan (3M USD LIBOR+8.00%), 9.75% Cash/1.00% PIK, 5/29/2023	5/29/2018	$	10,010,685		9,955,082		10,038,714			2.8	%
		Total Non-profit Services					9,955,082		10,038,714			2.8	%
Emily Street Enterprises, L.L.C.	Office Supplies	Senior Secured Note (3M USD LIBOR+8.50%), 10.00% Cash, 12/31/2023	12/28/2012	$	3,300,000		3,300,000		3,278,880			0.9	%
Emily Street Enterprises, L.L.C. (h)	Office Supplies	Warrant Membership Interests Expires 12/28/2022	12/28/2012		49,318		400,000		446,927			0.1	%
		Total Office Supplies					3,700,000		3,725,807			1.0	%
Apex Holdings Software Technologies, LLC	Payroll Services	First Lien Term Loan (3M USD LIBOR+8.00%), 9.00% Cash, 9/21/2024	9/21/2016	$	17,000,000		16,990,006		17,000,000			4.7	%
		Total Payroll Services					16,990,006		17,000,000			4.7	%
Buildout, Inc.	Real Estate Services	First Lien Term Loan (3M USD LIBOR+7.00%), 8.00% Cash, 7/9/2025	7/9/2020	$	14,000,000		13,897,546		13,904,800			3.9	%
Buildout, Inc.	Real Estate Services	Delayed Draw Term Loan (3M USD LIBOR+7.00%), 8.00% Cash, 7/9/2025	2/12/2021	$	38,500,000		38,173,998		38,238,200			10.6	%
Buildout, Inc. (h), (i)	Real Estate Services	Limited Partner Interests	7/9/2020		1,205		1,205,308		1,363,014			0.4	%
		Total Real Estate Services					53,276,852		53,506,014			14.9	%
LFR Chicken LLC	Restaurant	First Lien Term Loan (1M USD LIBOR+7.00%), 8.00% Cash, 11/19/2026	11/19/2021	$	12,000,000		11,886,588		11,880,000			3.3	%
LFR Chicken LLC (j)	Restaurant	Delayed Draw Term Loan (1M USD LIBOR+7.00%), 8.00% Cash, 11/19/2026	11/19/2021	$	-		-		-			0.0	%
LFR Chicken LLC (h)	Restaurant	Series B Preferred Units	11/19/2021		497,183		1,000,000		999,984			0.3	%
TMAC Acquisition Co., LLC	Restaurant	Unsecured Term Loan 8.00% PIK, 9/01/2023	3/1/2018	$	2,979,312		2,979,312		2,805,541			0.8	%
		Total Restaurant					15,865,900		15,685,525			4.4	%
Pepper Palace, Inc. (d)	Specialty Food Retailer	First Lien Term Loan (3M USD LIBOR+6.25%), 7.25% Cash, 6/30/2026	6/30/2021	$	33,830,000		33,531,592		33,261,656			9.2	%
Pepper Palace, Inc. (j)	Specialty Food Retailer	Delayed Draw Term Loan (3M USD LIBOR+6.25%), 7.25% Cash, 6/30/2026	6/30/2021	$	-		-		(33,600	)		0.0	%
Pepper Palace, Inc. (j)	Specialty Food Retailer	Revolving Credit Facility (3M USD LIBOR+6.25%), 7.25% Cash, 6/30/2026	6/30/2021	$	-		-		(42,000	)		0.0	%
Pepper Palace, Inc. (h)	Specialty Food Retailer	Membership Interest	6/30/2021		1,000,000		1,000,000		827,050			0.1	%
		Total Specialty Food Retailer					34,531,592		34,013,106			9.3	%
ArbiterSports, LLC (d)	Sports Management	First Lien Term Loan (3M USD LIBOR+6.50%), 8.25% Cash, 2/21/2025	2/21/2020	$	26,000,000		25,846,091		25,667,199			7.1	%

Company(1)	Industry	Investment Interest Rate/Maturity	Original Acquisition Date	Principal/ Number of Shares		Cost		Fair Value (c)		% of Net Assets
ArbiterSports, LLC (d)	Sports Management	Delayed Draw Term Loan (3M USD LIBOR+6.50%), 8.25% Cash, 2/21/2025	2/21/2020	$	1,000,000		999,997		987,200		0.3	%
		Total Sports Management					26,846,088		26,654,399		7.4	%
Avionte Holdings, LLC (h)	Staffing Services	Class A Units	1/8/2014		100,000		100,000		1,912,328		0.5	%
		Total Staffing Services					100,000		1,912,328		0.5	%
Jobvite, Inc. (d)	Talent Acquisition Software	Second Lien Term Loan (3M USD LIBOR+7.50%), 8.50% Cash, 1/6/2027	7/6/2021	$	20,000,000		19,841,684		19,652,000		5.5	%
		Total Talent Acquisition Software					19,841,684		19,652,000		5.5	%
National Waste Partners (d)	Waste Services	Second Lien Term Loan 10.00% Cash, 11/13/2022	2/13/2017	$	9,000,000		9,000,000.0		9,000,000.0		2.5	%
		Total Waste Services					9,000,000		9,000,000		2.5	%
Sub Total Non-control/Non-affiliate investments							654,965,044		668,358,516		187.4	%
Affiliate investments - 13.5% (b)
Artemis Wax Corp. (f), (j)	Consumer Services	Delayed Draw Term Loan (1M USD LIBOR+9.00%), 11.00% Cash, 5/20/2026	5/20/2021	$	30,000,000		29,727,282		30,000,000		8.4	%
Artemis Wax Corp. (f), (h)	Consumer Services	Series B-1 Preferred Stock	5/20/2021		934,463		1,500,000		2,687,573		0.8	%
Artemis Wax Corp. (f), (h)	Consumer Services	Series C Preferred Stock	5/20/2021		5,547		5,546,609		5,546,605		1.6	%
		Total Consumer Services					36,773,891		38,234,178		10.8	%
Axero Holdings, LLC (f)	Employee Collaboration Software	First Lien Term Loan (3M USD LIBOR+10.00%), 11.00% Cash, 6/30/2026	6/30/2021	$	5,500,000		5,451,036		5,482,950		1.5	%
Axero Holdings, LLC (f), (j)	Employee Collaboration Software	Delayed Draw Term Loan (3M USD LIBOR+10.00%), 11.00% Cash, 6/30/2026	6/30/2021	$	-		-		-		0.0	%
Axero Holdings, LLC (f), (j)	Employee Collaboration Software	Revolving Credit Facility (3M USD LIBOR+10.00%), 11.00% Cash, 6/30/2026	2/3/2022	$	-		-		-		0.0	%
Axero Holdings, LLC (f), (h)	Employee Collaboration Software	Series A Preferred Units	6/30/2021		2,000,000		2,000,000		2,198,000		0.5	%
Axero Holdings, LLC (f), (h)	Employee Collaboration Software	Series B Preferred Units	6/30/2021		2,000,000		2,000,000		2,318,996		0.7	%
		Total Employee Collaboration Software					9,451,036		9,999,946		2.7	%
Sub Total Affiliate investments							46,224,927		48,234,124		13.5	%
Control investments - 28.3% (b)
Netreo Holdings, LLC (g)	IT Services	First Lien Term Loan (3M USD LIBOR +8.00%), 9.00% Cash 12/31/2025	7/3/2018	$	5,432,440		5,409,201		5,421,575		1.4	%
Netreo Holdings, LLC (d), (g), (j)	IT Services	Delayed Draw Term Loan (3M USD LIBOR +8.00%), 9.00% Cash, 12/31/2025	5/26/2020	$	13,433,515		13,406,530		13,406,648		3.8	%
Netreo Holdings, LLC (g), (h)	IT Services	Common Stock Class A Unit	7/3/2018		4,600,677		8,344,500		18,975,523		5.3	%
		Total IT Services					27,160,231		37,803,746		10.5	%
Saratoga Investment Corp. CLO 2013-1, Ltd. (a), (e), (g)	Structured Finance Securities	Other/Structured Finance Securities 9.27%, 4/20/2033	1/22/2008	$	111,000,000		32,273,125		28,654,905		8.1	%
Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-2-R-3 Note (a), (g)	Structured Finance Securities	Other/Structured Finance Securities (3M USD LIBOR+10.00%), 10.17%, 4/20/2033	8/9/2021	$	9,375,000		9,375,000		9,375,000		2.6	%
		Total Structured Finance Securities					41,648,125		38,029,905		10.7	%
Saratoga Senior Loan Fund I JV, LLC (a), (g), (j)	Investment Fund	Unsecured Loan 10.00%, 6/15/2023	2/17/2022	$	13,125,000		13,125,000		13,125,000		3.7	%
Saratoga Senior Loan Fund I JV, LLC (a), (g), (j)	Investment Fund	Membership Interest	2/17/2022		13,125,000		13,125,000		12,016,064		3.4	%
		Total Investment Fund					26,250,000		25,141,064		7.1	%
Sub Total Control investments							95,058,356		100,974,715		28.3	%
TOTAL INVESTMENTS - 229.2% (b)						$	796,248,327	$	817,567,355		229.2	%

	Number of Shares		Cost		Fair Value		% of Net Assets
Cash and cash equivalents and cash and cash equivalents, reserve accounts - 14.9% (b)
U.S. Bank Money Market (k)		52,870,342	$	52,870,342	$	52,870,342		14.9	%
Total cash and cash equivalents and cash and cash equivalents, reserve accounts		52,870,342	$	52,870,342	$	52,870,342		14.9	%

(1)

Securities are exempt from registration under Rule 144A of the Securities Act of 1933, as amended, and are restricted securities.

(a)

Represents an investment that is not a “qualifying asset” under Section 55(a) of the Investment Company Act of 1940, as amended (the 1940 Act”). As of February 28, 2022, non-qualifying assets represent 6.7% of the Company’s portfolio at fair value. As a BDC, the Company generally has to invest at least 70% of its total assets in qualifying assets.

(b)

Percentages are based on net assets of $355,780,523 as of February 28, 2022.

(c)

(d)

These securities are either fully or partially pledged as collateral under a senior secured revolving credit facility (see Note 8 to the consolidated financial statements).

(e)

This investment does not have a stated interest rate that is payable thereon. As a result, the 9.27% 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 1940 Act, this portfolio company is an “affiliate” as we own between 5.0% and 25.0% of the outstanding voting securities. GreyHeller, LLC is no longer an affiliate as of February 28, 2022. Transactions during the year ended February 28, 2022 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 (Depreciation)
Artemis Wax Corp.	$	36,200,000	$	-		$	1,919,100	$	-	$	-	$	1,460,287
Axero Holdings, LLC		9,445,000		-			416,092		-		-		548,910
GreyHeller, LLC		8,910,000		(26,428,457	)		973,278		-		7,328,457		(3,102,569	)
Top Gun		-		-			-		-		-		1,066,536
Total	$	54,555,000	$	(26,428,457	)	$	3,308,471	$	-	$	7,328,457	$	(26,836	)

(g)

As defined in the 1940 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, 2022 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)
Netreo Holdings, LLC	$	17,074,500	$	-		$	1,814,735	$	-	$	-		$	5,055,909
Saratoga Investment Corp. CLO 2013-1, Ltd.		-		-			4,372,958		3,262,591		-			(1,221,309	)
Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-R-3 Note		-		(17,875,000	)		814,431		-		-			(454,025	)
Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-1-R-3 Note		8,500,000		(8,500,000	)		4,786		-		(139,867	)		-
Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-2-R-3 Note		9,375,000		-			539,564		-		-			-
Saratoga Senior Loan Fund I JV, LLC		13,125,000		-			126,389		-		-			-
Saratoga Senior Loan Fund I JV, LLC		13,125,000		-			-		-		-			(1,108,936	)
Total	$	61,199,500	$	(26,375,000	)	$	7,672,863	$	3,262,591	$	(139,867	)	$	2,271,639

(h)

Non-income producing at February 28, 2022.

(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, 2022. (See Note 9 to the consolidated financial statements).

(k)

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, 2022.

BSBY - Bloomberg Short-Term Bank Yield

LIBOR - London Interbank Offered Rate

SOFR - Secured Overnight Financing Rate

3M USD BSBY - The 3 month USD BSBY rate as of February 28, 2022 was 0.50%.

1M USD LIBOR - The 1 month USD LIBOR rate as of February 28, 2022 was 0.24%.

3M USD LIBOR - The 3 month USD LIBOR rate as of February 28, 2022 was 0.50%.

Daily USD SOFR - The daily USD SOFR rate as of February 28, 2022 was 0.05%

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

See accompanying notes to consolidated financial statements.

SARATOGA INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2022

(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, as amended (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 for U.S. federal income tax purposes as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). 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” or “Saratoga Investment Advisors”), pursuant to an investment advisory and 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-AX, Inc., SIA-GH, Inc., SIA-MAC, Inc., SIA-PEP, Inc., SIA-PP Inc., SIA-TG, Inc., SIA-TT, Inc., SIA-Vector, Inc. and SIA-VR, 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). In February 2022, SIA-GH, Inc., SIA-TT Inc. and SIA-VR, Inc. received an approved plan of liquidation following the sale of equity held by each of the portfolio companies. Tax Blockers are consolidated for accounting purposes, but are not consolidated for U.S. federal income tax purposes and may incur U.S. federal income tax expenses 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 August 14, 2019, our wholly owned subsidiary, Saratoga Investment Corp. SBIC II LP (“SBIC II LP”), also received an SBIC license from the SBA. SBIC II LP’s SBIC license provides up to $175.0 million in additional long-term capital in the form of SBA debentures.

The Company has formed a wholly owned special purpose entity, Saratoga Investment Funding II LLC, a Delaware limited liability company (“SIF II”), for the purpose of entering into a $50.0 million senior secured revolving credit facility with Encina Lender Finance, LLC (the “Lender”), supported by loans held by SIF II and pledged to the Lender under the credit facility (the “Encina Credit Facility”). The Encina Credit Facility closed on October 4, 2021. During the first two years following the closing date, SIF II may request an increase in the commitment amount under the Encina Credit Facility to up to $75.0 million. The terms of the Encina Credit Facility require a minimum drawn amount of $12.5 million at all times during the first six months following the closing date, which increases to the greater of $25.0 million or 50% of the commitment amount in effect at any time thereafter. The term of the Encina Credit Facility is three years. Advances under the Encina Credit Facility bear interest at a floating rate per annum equal to LIBOR plus 4.0%, with LIBOR having a floor of 0.75%, with customary provisions related to the selection by the Lender and the Company of a replacement benchmark rate. Concurrently with the closing of the Encina Credit Facility, all remaining amounts outstanding on the Company’s existing revolving credit facility with Madison Capital Funding, LLC were repaid and the revolving credit facility terminated.

On October 26, 2021, the Company and TJHA JV I LLC (“TJHA”) entered into a Limited Liability Company Agreement (the “LLC Agreement”) to co-manage Saratoga Senior Loan Fund I JV LLC (“SLF JV”). SLF JV is under joint control and is not consolidated. SLF JV is invested in Saratoga Investment Corp Senior Loan Fund 2021-1 Ltd. (“SLF 2021”), which is a wholly owned subsidiary of SLF JV. SLF 2021 was formed for the purpose of making investments in a diversified portfolio of broadly syndicated first lien and second lien term loans or bonds in the primary and secondary markets.

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 wholly owned special purpose financing subsidiaries, Saratoga Investment Funding, LLC (previously known as GSC Investment Funding LLC), SIF II, SBIC LP, SBIC II LP, SIA-Avionte, Inc., SIA-AX, Inc., SIA-GH, Inc., SIA-MAC, Inc., SIA-PEP, Inc., SIA-PP, Inc., SIA-TG, 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, SBIC LP and SBIC II LP are all 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, SBIC LP or SBIC II LP’s status as investment companies during the three months ended May 31, 2022.

Principles of Consolidation

Under the investment company rules and regulations pursuant to ASC Topic 946, the Company is precluded from consolidating any entity other than another investment company.

The Company has determined that SLF JV is an investment company under ASC 946; however, in accordance with such guidance the Company will generally not consolidate its investment in a company other than a wholly-owned investment company subsidiary. SLF JV is not a wholly-owned investment company subsidiary as the Company and TJHA each have an equal 50% voting interest in SLF JV and thus neither party has a controlling financial interest. Furthermore, ASC 810 concludes that in a joint venture where both members have equal decision making authority, it is not appropriate for one member to consolidate the joint venture since neither has control. Accordingly, the Company does not consolidate its investment in SLF JV.

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 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 investment company’s total outstanding voting shares;

●

we were to hold securities in the investment company having an aggregate value in excess of 5.0% of the value of our total assets; or

●

we were to hold securities in investment companies having an aggregate value in excess of 10.0% of the value of our total assets.

As of May 31, 2022, 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 revolving credit facilities. 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 revolving credit facilities.

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 subsidiaries, SBIC LP and SBIC II 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, 2022		May 31, 2021
Cash and cash equivalents	$	94,939,634	$	317,932
Cash and cash equivalents, reserve accounts		6,550,220		19,659,681
Total cash and cash equivalents and cash and cash equivalents, reserve accounts	$	101,489,854	$	19,977,613

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 Measurements 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 measurement 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.

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 the Manager and preliminary valuation conclusions are documented, reviewed and discussed with our senior management; and

●

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 third-party independent valuation firm to value our investment in the subordinated notes of Saratoga Investment Corp. CLO 2013-1, Ltd. (“Saratoga CLO”) and the Class F-2-R-3 Notes tranche of the Saratoga CLO every quarter.

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.

We use multiple techniques for determining fair value based on the nature of the investment and experience with those types of investments and specific portfolio companies. The selections of the valuation techniques and the inputs and assumptions used within those techniques often require subjective judgements and estimates. These techniques include market comparables, discounted cash flows and enterprise value waterfalls. Fair value is best expressed as a range of values from which the Company determines a single best estimate. The types of inputs and assumptions that may be considered in determining the range of values of our investments include the nature and realizable value of any collateral, the portfolio company’s ability to make payments, market yield trend analysis and volatility in future interest rates, call and put features, the markets in which the portfolio company does business, comparison to publicly traded companies, discounted cash flows and other relevant factors.

The Company’s investment in Saratoga CLO is carried at fair value, which is based on a discounted cash flow valuation technique that utilizes prepayment, re-investment and loss inputs 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 flows, or an appropriate substitute, to form the basis for the valuation of our investment in Saratoga CLO. The cash flows use a set of inputs including projected default rates, recovery rates, reinvestment rates and prepayment rates in order to arrive at estimated valuations. The inputs 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 the valuation for our investment in Saratoga CLO.

The Company’s equity investment in SLF JV is measured using the proportionate share of the net asset value, or equivalent, of SLF JV as a practical expedient for fair value, provided by ASC 820.

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 using the effective yield method. The amortized cost of investments represents the original cost adjusted for the accretion of discounts over the life of the investment and amortization of premiums on investments up to the earliest call date.

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. At May 31, 2022, our investment in one portfolio company was on non-accrual status with a fair value of approximately $10.1 million, or 1.12% of the fair value of our portfolio. At February 28, 2022, there were no investments on non-accrual status.

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.

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. The Company stops accruing PIK interest if it is expected that the issuer will not be able to pay all principal and interest when due.

Dividend Income

Dividend income is recorded in the consolidated statements of operations when earned.

Structuring and Advisory Fee Income

Structuring and advisory fee income represents various fee income earned and received for performing certain investment structuring and advisory activities during the closing of new investments.

Other Income

Other income includes prepayment income fees, and monitoring, administration and amendment fees and is recorded in the consolidated statements of operations when earned.

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 the SBA debentures of SBIC LP and SBIC II LP are deferred and amortized using the straight-line method over the life of the debentures. Any discount or premium on the issuance of any debt is amortized using the effective interest method over the life of the respective debt security.

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.

Realized Loss on Extinguishment of Debt

Upon the repayment of debt obligations that are deemed to be extinguishments, the difference between the principal amount due at maturity adjusted for any unamortized debt issuance costs is recognized as a loss (i.e., the unamortized debt issuance costs are recognized as a loss upon extinguishment of the underlying debt obligation).

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 reasonably believes 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, and intends to qualify annually, to be treated for U.S. federal income tax purposes as a RIC under Subchapter M of the Code. By meeting these requirements, the Company will not be subject to corporate federal income taxes on ordinary income or capital gains timely distributed to stockholders. Therefore, no provision has been recorded for federal income taxes, except as related to the Taxable Blockers and long-term capital gains, 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% 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% on undistributed income if it does not distribute at least (1) 98% of its net ordinary income in any calendar year, (2) 98.2% of its capital gain net income for each one-year period ending on October 31 and (3) any net ordinary income and capital gain net income that it recognized for preceding years, but were not distributed during such year, and on which the Company paid no U.S federal income tax.

Depending on the level of investment company taxable income earned in a tax year and the amount of net capital gains recognized in such tax year, the Company may choose to carry forward investment company taxable income and net capital gains in excess of current year dividend distributions into the next tax year and pay the 4.0% U.S. federal excise tax on such income, as required. To the extent that the Company determines that its estimated current year annual investment company taxable income will be in excess of estimated current year dividend distributions for U.S. federal excise tax purposes, the Company accrues the U.S. federal excise tax, if any, on estimated excess taxable income as taxable income is earned. For the fiscal years ended February 28, 2022, 2021 and 2020, the excise tax accrual on estimated excess table income was $0.6 million, $0.7 million and $0.0 million, respectively.

In accordance with U.S. Treasury regulations and published guidance issued by the Internal Revenue Service (“IRS”), a publicly offered RIC may treat a distribution of its own stock as counting toward its RIC distribution requirements if each stockholder elects to receive his, her, or its entire distribution in either cash or stock of the RIC. This published guidance indicates that the rule will apply where the aggregate amount of cash to be distributed to all stockholders is not at least 20.0% of the aggregate declared distribution. Under the published guidance, if too many stockholders elect to receive cash, the cash available for distribution must be allocated among the stockholders electing to receive 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 U.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 U.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, 2022, the Company did not incur any interest or penalties. Although we file federal and state tax returns, our major tax jurisdiction is federal. The 2019, 2020, 2021 and 2022 federal tax years for the Company remain subject to examination by the IRS. As of May 31, 2022 and February 28, 2022, 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 some or all of our net 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 by the Company to the Manager on the consolidated statements of assets and liabilities when the net realized and unrealized gain on its investments exceed all net realized and unrealized capital losses on its investments because 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 Manager related to capital gains will be determined and payable in arrears at the end of each fiscal year and only reflected those net realized capital gains net of realized and unrealized losses for the period.

Recent Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (“ASU 2020-04”). The amendments in ASU 2020-04 provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The Company has agreements that have LIBOR as a reference rate with certain portfolio companies and under the Encina Credit Facility. Many of these agreements (including the credit agreements relating to the Encina Credit Facility) include an alternative successor rate or language for choosing an alternative successor rate when LIBOR reference is no longer considered to be appropriate. With respect to other agreements, the Company intends to work with its portfolio companies to modify agreements to choose an alternative successor rate. Contract modifications are required to be evaluated in determining whether the modifications result in the establishment of new contracts or the continuation of existing contracts. The standard is effective as of March 12, 2020 through December 31, 2022. Management does not believe this optional guidance has 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. 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 independent 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 that 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. 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 technique. We use multiple techniques for determining fair value based on the nature of the investment and experience with those types of investments and specific portfolio companies. The selections of the valuation techniques and the inputs and assumptions used within those techniques often require subjective judgements and estimates.

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, 2022 (dollars in thousands), according to the fair value hierarchy:

	Fair Value Measurements							Valued Using Net Asset
	Level 1		Level 2			Level 3		Value*		Total
First lien term loans	$	-	$	-		$	718,090		-	$	718,090
Second lien term loans		-		-			38,629		-		38,629
Unsecured term loans		-		-			15,910		-		15,910
Structured finance securities		-		-			33,493		-		33,493
Equity interests		-		-			81,766		6,645		88,411
Total	$	-	$	-	&nb