SARATOGA INVESTMENT CORP

Previous wording

We and TJHA have committed to provide up to a combined $50.0 million of financing to SLF JV through cash contributions, where we provided $43.75 million and TJHA provides $6.25 million, resulting in an 87.5% and 12.5% ownership between the two parties. The financing is issued in the form of an unsecured note and equity. The unsecured note will pay a fixed rate of 10.0% per annum and is due and payable in full on October 20, 2033. As of August 31, 2024 our and TJHA’s investment in SLF JV consisted of an unsecured note of $17.6 million and $2.5 million, respectively; and membership interest of $17.6 million and $2.5 million, respectively. As of February 29, 2024, our and TJHA’s investment in SLF JV consisted of an unsecured note of $17.6 million and $2.5 million, respectively; and membership interest of $17.6 million and $2.5 million, respectively. As of August 31, 2024 and February 29, 2024, the Company’s investment in the unsecured note of SLF JV had a fair value of $16.3 million and $15.8 million, respectively, and the Company’s investment in the membership interests of SLF JV had a fair value of $5.1 million and $9.4 million, respectively.

Current wording

We and TJHA have committed to provide up to a combined $50.0 million of financing to SLF JV through cash contributions, where we provided $43.75 million and TJHA provides $6.25 million, resulting in an 87.5% and 12.5% ownership between the two parties. The financing is issued in the form of an unsecured note and equity. The unsecured note will pay a fixed rate of 10.0% per annum and is due and payable in full on October 20, 2033. As of November 30, 2024 our and TJHA’s investment in SLF JV consisted of an unsecured note of $17.6 million and $2.5 million, respectively; and membership interest of $17.6 million and $2.5 million, respectively. As of February 29, 2024, our and TJHA’s investment in SLF JV consisted of an unsecured note of $17.6 million and $2.5 million, respectively; and membership interest of $17.6 million and $2.5 million, respectively. As of November 30, 2024 and February 29, 2024, the Company’s investment in the unsecured note of SLF JV had a fair value of $16.2 million and $15.8 million, respectively, and the Company’s investment in the membership interests of SLF JV had a fair value of $4.8 million and $9.4 million, respectively.

Previous wording

Investments for which market quotations are readily available are fair valued at such market quotations obtained from independent third-party pricing services and market makers subject to any decision by our board of directors to approve a fair value determination to reflect significant events affecting the value of these investments. We value investments for which market quotations are not readily available at fair value as approved, in good faith, by our board of directors based on input from Saratoga Investment Advisors, the audit committee of our board of directors and a third party independent valuation firm. 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 we 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.

Current wording

Investments for which market quotations are readily available are fair valued at such market quotations obtained from independent third-party pricing services and market makers subject to any decision by our board of directors to approve a fair value determination to reflect significant events affecting the value of these investments. We value investments for which market quotations are not readily available at fair value as approved, in good faith, by our board of directors based on input from Saratoga Investment Advisors, the audit committee of our board of directors and a third party independent valuation firm. 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 we determine 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.

Previous wording

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

Current wording

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

Previous wording

In December 2023, the FASB issued ASU 2023-09,* Improvements to Income Tax Disclosures*. The amendments in this update require more disaggregated information on income taxes paid. ASU 2023-09 is effective for years beginning after December 15, 2024. Early adoption is permitted, however the Company has not elected to adopt this provision as of the date of the financial statements contained in this report. The Company is still assessing the impact of the new guidance.

Current wording

In December 2023, the FASB issued ASU 2023-09,* Improvements to Income Tax Disclosures*. The amendments in this update require more disaggregated information on income taxes paid. ASU 2023-09 is effective for years beginning after December 15, 2024. Early adoption is permitted, however the Company has not elected to early adopt this provision as of the date of the financial statements contained in this report. The Company is still assessing the impact of the new guidance.

Previous wording

During the three months ended August 31, 2024, we invested $2.6 million in new and existing portfolio companies and had $60.1 million in aggregate amount of exits and repayments resulting in net investments of $(57.5) million for the period. During the three months ended August 31, 2023, we invested $27.4 million in new and existing portfolio companies and had $6.0 million in aggregate amount of exits and repayments resulting in net repayments of $21.4 million for the period.

Current wording

During the three months ended November 30, 2024, we invested $84.4 million in new and existing portfolio companies and had $160.4 million in aggregate amount of exits and repayments resulting in net investments of $(76.0) million for the period. During the three months ended November 30, 2023, we invested $35.6 million in new and existing portfolio companies and had $2.1 million in aggregate amount of exits and repayments resulting in net investments of $33.5 million for the period.

Previous wording

During the six months ended August 31, 2024, we invested $41.9 million in new and existing portfolio companies and had $135.8 million in aggregate amount of exits and repayments resulting in net investments of $(93.9) million for the period. During the six months ended August 31, 2023, we invested $167.3 million in new and existing portfolio companies and had $17.1 million in aggregate amount of exits and repayments resulting in net repayments of $150.2 million for the period.

Current wording

During the nine months ended November 30, 2024, we invested $126.3 million in new and existing portfolio companies and had $296.2 million in aggregate amount of exits and repayments resulting in net investments of $(169.9) million for the period. During the nine months ended November 30, 2023, we invested $202.9 million in new and existing portfolio companies and had $19.2 million in aggregate amount of exits and repayments resulting in net repayments of $183.7 million for the period.

Previous wording

At August 31, 2024, our investment in the subordinated notes of Saratoga CLO, a collateralized loan obligation fund, had a fair value of $5.8 million and constituted 0.6% of our portfolio. This investment constitutes a first loss position in a portfolio that, as of August 31, 2024 and February 29, 2024, was composed of $586.3 million and $640.8 million, respectively, in aggregate principal amount of primarily senior secured first lien term loans. In addition, as of August 31, 2024, we also own $9.4 million in aggregate principal of the F-2-R-3 Notes in the Saratoga CLO, which only rank senior to the subordinated notes.

Current wording

At November 30, 2024, our investment in the subordinated notes of Saratoga CLO, a collateralized loan obligation fund, had a fair value of $1.3 million and constituted 0.1% of our portfolio. This investment constitutes a first loss position in a portfolio that, as of November 30, 2024 and February 29, 2024, was composed of $558.8 million and $640.8 million, respectively, in aggregate principal amount of primarily senior secured first lien term loans. In addition, as of November 30, 2024, we also own $4.3 million in aggregate principal of the F-2-R-3 Notes in the Saratoga CLO, which only rank senior to the subordinated notes.

Previous wording

We do not consolidate the Saratoga CLO portfolio in our consolidated financial statements. Accordingly, the metrics below do not include the underlying Saratoga CLO portfolio investments. However, at August 31, 2024, $547.3 million or 98.8% of the Saratoga CLO portfolio investments in terms of market value had a CMR (as defined below) color rating of green or yellow and two Saratoga CLO portfolio investment was in default with a fair value of $0.06 million. At February 29, 2024, $603.0 million or 99.2% of the Saratoga CLO portfolio investments in terms of market value had a CMR color rating of green or yellow and two Saratoga CLO portfolio investments were in default with a fair value of $0.3 million. For more information relating to the Saratoga CLO, see the audited financial statements for Saratoga in our Annual Report on Form 10-K for the fiscal year ended February 29, 2024.

Current wording

We do not consolidate the Saratoga CLO portfolio in our consolidated financial statements. Accordingly, the metrics below do not include the underlying Saratoga CLO portfolio investments. However, at November 30, 2024, $515.5 million or 98.1% of the Saratoga CLO portfolio investments in terms of market value had a CMR (as defined below) color rating of green or yellow and two Saratoga CLO portfolio investments were in default with a fair value of $0.04 million. At February 29, 2024, $603.0 million or 99.2% of the Saratoga CLO portfolio investments in terms of market value had a CMR color rating of green or yellow and two Saratoga CLO portfolio investments were in default with a fair value of $0.3 million. For more information relating to the Saratoga CLO, see the audited financial statements for Saratoga in our Annual Report on Form 10-K for the fiscal year ended February 29, 2024.

Previous wording

Operating results for the three and six months ended August 31, 2024 and August 31, 2023 was as follows:

Current wording

Operating results for the three and nine months ended November 30, 2024 and November 30, 2023 was as follows:

Previous wording

The composition of our investment income for three and six months ended August 31, 2024 and August 31, 2023 was as follows:

Current wording

The composition of our investment income for three and nine months ended November 30, 2024 and November 30, 2023 was as follows:

Previous wording

For the six months ended August 31, 2024, total investment income increased $11.5 million, or 16.4%, to $81.7 million from $70.1 million for the six months ended August 31, 2023. Interest income from investments increased $11.8 million, or 19.0%, to $73.7 million for the six months ended August 31, 2024 from $61.9 million for the six months ended August 31, 2023. Interest income from investments primarily increased due to the increase of the weighted average current yield on investments to 11.5% as of August 31, 2024, up from 11.3% at August 31, 2023, mainly resulting from the recognition of $7.9 million interest income related to our Knowland investment that was previously on non-accrual.

Current wording

For the three months ended November 30, 2024, total investment income decreased $0.5 million, or 1.3%, to $35.9 million from $36.3 million for the three months ended November 30, 2023. Interest income from investments decreased $1.9 million, or 5.8%, to $30.8 million for the three months ended November 30, 2024 from $32.7 million for the three months ended November 30, 2023. Interest income from investments primarily decreased due to (i) 9.6% reduction in average investments year-over-year, combined with (ii) a decrease in the weighted average current yield on investments to 10.8% at November 30, 2024 from 11.4% at November 30, 2023.

Previous wording

For the three months ended August 31, 2024, total investment income increased $7.5 million, or 21.1%, to $43.0 million from $35.5 million for the three months ended August 31, 2023. Interest income from investments increased $7.0 million, or 21.7%, to $39.4 million for the three months ended August 31, 2024 from $32.3 million for the three months ended August 31, 2023. Interest income from investments primarily increased due to the increase of the weighted average current yield on investments to 11.5% at August 31, 2024, up from 11.3% at August 31, 2023, mainly resulting from the recognition of $7.9 million interest income related to our Knowland investment that was previously on non-accrual.

Current wording

For the nine months ended November 30, 2024, total investment income increased $11.1 million, or 10.4%, to $117.6 million from $106.5 million for the nine months ended November 30, 2023. Interest income from investments increased $9.9 million, or 10.5%, to $104.4 million for the nine months ended November 30, 2024 from $94.5 million for the nine months ended November 30, 2023. Interest income from investments primarily increased due to the recognition of $8.2 million interest income related to our Knowland investment that was previously on non-accrual.

Previous wording

For the three and six months ended August 31, 2024 and August 31, 2023, total PIK income was $1.9 million and $0.9 million, respectively and $2.5 million and $1.3 million, respectively. The increase in both periods primarily related to the recognition of PIK income on our Knowland investment that was previously on non-accrual.

Current wording

For the three and nine months ended November 30, 2024 and November 30, 2023, total PIK income was $0.8 million and $0.6 million, respectively and $3.3 million and $1.9 million, respectively. The increase in both periods primarily related to the recognition of PIK income on our Knowland investment that was previously on non-accrual.

Previous wording

For the three months ended August 31, 2024 and August 31, 2023, interest from cash and cash equivalents was $1.7 million and $0.5 million, respectively. The increase of $1.2 million for the quarter ended August 31, 2024 was due to increased cash and cash equivalents balances during this period as compared to last year, resulting from numerous repayments received during the quarter.

Current wording

For the three months ended November 30, 2024 and November 30, 2023, interest from cash and cash equivalents was $1.6 million and $0.5 million, respectively. The increase of $1.1 million for the quarter ended November 30, 2024 was due to increased cash and cash equivalents balances during this period as compared to last year, primarily resulting from repayments received during the quarter.

Previous wording

For the six months ended August 31, 2024 and August 31, 2023, interest from cash and cash equivalents was $2.3 million and $1.3 million, respectively. The increase of $1.0 million for the quarter ended August 31, 2024 was due to increased cash and cash equivalents balances during this period as compared to last year, resulting from numerous repayments received during the six months period.

Current wording

For the nine months ended November 30, 2024 and November 30, 2023, interest from cash and cash equivalents was $3.9 million and $1.9 million, respectively. The increase of $2.0 million for the quarter ended November 30, 2024 was due to increased cash and cash equivalents balances during this period as compared to last year, primarily resulting from repayments received during the nine months period.

Previous wording

Management fee income reflects the fee income received for managing the Saratoga CLO. For the three months ended August 31, 2024 and August 31, 2023, total management fee income was $0.8 million and $0.8 million, respectively. For the six months ended August 31, 2024 and August 31, 2023, total management fee income was $1.6 million and $1.6 million, respectively.

Current wording

Management fee income reflects the fee income received for managing the Saratoga CLO. For the three months ended November 30, 2024 and November 30, 2023, total management fee income was $0.8 million and $0.8 million, respectively. For the nine months ended November 30, 2024 and November 30, 2023, total management fee income was $2.4 million and $2.5 million, respectively.

Previous wording

For the three and six months ended August 31, 2024 and August 31, 2023, total dividend income was $1.1 million and $1.6 million, respectively and $2.6 million and $3.5 million respectively. Dividends received is recorded in the consolidated statements of operations when earned, and the decrease primarily reflects lower dividend income received on our membership interest in SLF JV during the three and six months ended August 31, 2024 as compared to the three and six months ended August 31, 2023.

Current wording

For the three and nine months ended November 30, 2024 and November 30, 2023, total dividend income was $1.1 million and $1.8 million, respectively and $3.7 million and $5.3 million respectively. Dividends received is recorded in the consolidated statements of operations when earned, and the decrease primarily reflects lower dividend income received on our membership interest in SLF JV during the three and nine months ended November 30, 2024 as compared to the three and nine months ended November 30, 2023.

Previous wording

For the three and six months ended August 31, 2024 and August 31, 2023, total structuring and advisory fee income was $0.0 million and $0.0 million, respectively and $0.0 million and $1.5 million, respectively. Structuring and advisory fee income represents fee income earned and received performing certain investment and advisory activities during the closing of new investments.

Current wording

For the three and nine months ended November 30, 2024 and November 30, 2023, total structuring and advisory fee income was $0.7 million and $0.3 million, respectively and $1.2 million and $1.8 million, respectively. Structuring and advisory fee income represents fee income earned and received performing certain investment and advisory activities during the closing of new investments.

Previous wording

For the three and six months ended August 31, 2024 and August 31, 2023, other income was $0.1 million and $0.1 million, respectively $1.0 million and $0.3 million, respectively. Other income includes origination fees, monitoring and amendment fees and prepayment fees and is recorded in the consolidated statements of operations when earned.

Current wording

For the three and nine months ended November 30, 2024 and November 30, 2023, other income was $0.9 million and $0.2 million, respectively, and $1.9 million and $0.5 million, respectively. Other income includes origination fees, monitoring and amendment fees and prepayment fees and is recorded in the consolidated statements of operations when earned, and the increase primarily reflects prepayment fees recognized on a higher level of repayments this year.

Previous wording

The composition of our operating expenses for the three and six months ended August 31, 2024 and August 31, 2023 was as follows:

Current wording

The composition of our operating expenses for the three and nine months ended November 30, 2024 and November 30, 2023 was as follows:

Previous wording

For the three months ended August 31, 2024, total operating expenses increased $3.3 million, or 15.1%, compared to the three months ended August 31, 2023. For the six months ended August 31, 2024, total operating expenses increased $8.9 million, or 22.2%, compared to the three months ended August 31, 2023.

Current wording

For the three months ended November 30, 2024, total operating expenses increased $1.3 million, or 5.7%, compared to the three months ended November 30, 2023. For the nine months ended November 30, 2024, total operating expenses increased $10.2 million, or 16.3%, compared to the three months ended November 30, 2023.

Previous wording

For the three months ended August 31, 2024, interest and debt financing expenses increased $0.7 million, or 5.8%, compared to the three months ended August 31, 2023. The increase is primarily attributable to an increase of 3.4% in average outstanding debt from $809.0 million for the three months ended August 31, 2023 to $836.9 million for the three months ended August 31, 2024.

Current wording

For the three months ended November 30, 2024, interest and debt financing expenses increased $0.5 million, or 4.2%, compared to the three months ended November 30, 2023. The increase is primarily attributable to an increase of 3.6% in average outstanding debt from $809.0 million for the three months ended November 30, 2023 to $837.9 million for the three months ended November 30, 2024.

Previous wording

For the six months ended August 31, 2024, interest and debt financing expenses increased $2.0 million, or 8.2%, compared to the six months ended August 31, 2023. The increase is primarily attributable to an increase of 5.0% in average outstanding debt from $795.0 million for the six months ended August 31, 2023 to $835.0 million for the six months ended August 31, 2024.

Current wording

For the nine months ended November 30, 2024, interest and debt financing expenses increased $2.5 million, or 6.8%, compared to the nine months ended November 30, 2023. The increase is primarily attributable to an increase of 5.1% in average outstanding debt from $795.0 million for the nine months ended November 30, 2023 to $835.9 million for the nine months ended November 30, 2024.

Previous wording

For the three and six months ended August 31, 2024 and August 31, 2023, the weighted average interest rate on our outstanding indebtedness was 6.06% and 6.01%, respectively and 6.06% and 5.66%, respectively. The increase in weighted average interest rate was primarily driven by the issuance of higher rate borrowings over the past year, primarily last year, reflecting the increase in base rates in the market at that time.

Current wording

For the three and nine months ended November 30, 2024 and November 30, 2023, the weighted average interest rate on our outstanding indebtedness was 5.56% and 5.58%, respectively and 6.06% and 5.43%, respectively. The increase in weighted average interest rate was primarily driven by the issuance of higher rate borrowings over the past year, primarily last year, reflecting the increase in base rates and spreads in the market at that time.

Previous wording

For the three months ended August 31, 2024, base management fees decreased $0.07 million, or 1.5%, from $4.8 million to $4.8 million compared to the three months ended August 31, 2023. The decrease in base management fees results from the 1.8% decrease in the average value of our total assets, less cash and cash equivalents, from $1,100.5 million for the three months ended August 31, 2023 to $1,080.6 million for the three months ended August 31, 2024.

Current wording

For the three months ended November 30, 2024, base management fees decreased $0.5 million, or 9.2%, from $4.4 million to $4.9 million compared to the three months ended November 30, 2023. The decrease in base management fees results from the 8.7% decrease in the average value of our total assets, less cash and cash equivalents, from $1,108.5 million for the three months ended November 30, 2023 to $1,011.2 million for the three months ended November 30, 2024.

Previous wording

For the six months ended August 31, 2024, base management fees increased $0.3 million, or 3.7%, from $9.7 million to $9.4 million compared to the six months ended August 31, 2023. The increase in base management fees results from the 3.4% increase in the average value of our total assets, less cash and cash equivalents, from $1,069.0 million for the six months ended August 31, 2023 to $1,105.1 million for the six months ended August 31, 2024.

Current wording

For the nine months ended November 30, 2024, base management fees decreased $0.1 million, or 0.7%, from $14.3 million to $14.2 million compared to the nine months ended November 30, 2023. The decrease in base management fees results from the 0.1% decrease in the average value of our total assets, less cash and cash equivalents, from $1,082.1 million for the nine months ended November 30, 2023 to $1,074.0 million for the nine months ended November 30, 2024.

Previous wording

For the three months ended August 31, 2024, incentive management fees increased $2.1 million, or 83.4%, compared to the three months ended August 31, 2023. The incentive fee on income increased from $3.3 million to $4.6 million for the three months ended August 31, 2023 and 2024, respectively, reflecting the increase in net investment income during the three months ended August 31, 2024 as compared to the three months ended August 31, 2023. The incentive fee on capital gains decreased from a $(0.8) million benefit for the three months ended August 31, 2023 to a $(0.9) million benefit for the three months ended August 31, 2024, reflecting the incentive fee on net realized and unrealized depreciation recognized during both these periods, with the liability floor capped at zero.

Current wording

For the three months ended November 30, 2024, incentive management fees increased $0.9 million, or 38.6%, compared to the three months ended November 30, 2023. The incentive fee on income decreased from $3.3 million to $3.1 million for the three months ended November 30, 2023 and 2024, respectively, reflecting the decrease in net investment income during the three months ended November 30, 2024 as compared to the three months ended November 30, 2023. The incentive fee on capital gains decreased from a $(1.1) million benefit for the three months ended November 30, 2023 to a $0.0 million benefit for the three months ended November 30, 2024, reflecting the incentive fee on net realized and unrealized depreciation recognized during both these periods, with the liability floor capped at zero.

Previous wording

For the six months ended August 31, 2024, incentive management fees increased $5.6 million, or 214.7%, compared to the six months ended August 31, 2023. The incentive fee on income increased from $6.5 million to $8.1 million for the six months ended August 31, 2023 and 2024, respectively, reflecting the increase in net investment income during the six months ended August 31, 2024 as compared to the six months ended August 31, 2023. The incentive fee on capital gains increased from a $(3.9) million benefit for the six months ended August 31, 2023 to a $(3.7) million benefit for the six months ended August 31, 2024, reflecting the incentive fee on net realized and unrealized depreciation recognized during both these periods, with the liability floor capped at zero.

Current wording

For the nine months ended November 30, 2024, incentive management fees increased $6.4 million, or 132.9%, compared to the nine months ended November 30, 2023. The incentive fee on income increased from $9.8 million to $11.2 million for the nine months ended November 30, 2023 and 2024, respectively, reflecting the increase in net investment income during the nine months ended November 30, 2024 as compared to the nine months ended November 30, 2023. The incentive fee on capital gains increased from a $(5.0) million benefit for the nine months ended November 30, 2023 to a $0.0 million benefit for the nine months ended November 30, 2024, reflecting the incentive fee on net realized and unrealized depreciation recognized during both these periods, with the liability floor capped at zero.

Previous wording

For the three months ended August 31, 2024, professional fees decreased $0.4 million, or 74.1%, from $0.5 million for the three months ended August 31, 2024 to $0.1 million for the three months ended August 31, 2023.

Current wording

For the three months ended November 30, 2024, professional fees increased $0.2 million, or 54.3%, from $0.4 million for the three months ended November 30, 2023 to $0.7 million for the three months ended November 30, 2024.

Previous wording

For the six months ended August 31, 2024, professional fees increased $0.2 million, or 15.7%, from $1.0 million for the six months ended August 31, 2024 to $1.1 million for the six months ended August 31, 2023.

Current wording

For the nine months ended November 30, 2024, professional fees increased $0.4 million, or 27.6%, from $1.4 million for the nine months ended November 30, 2023 to $1.8 million for the nine months ended November 30, 2024.

Previous wording

For the three and six months ended August 31, 2024, administrator expenses increased $0.2 million, or 25.3% and $0.5 million, or 28.2%, respectively compared to the three and six months ended August 31, 2023, reflecting the contractual changes to the administrator agreement cap.

Current wording

For the three and nine months ended November 30, 2024, administrator expenses increased $0.2 million, or 16.3% and $0.7 million, or 23.6%, respectively compared to the three and nine months ended November 30, 2023, reflecting the contractual changes to the administrator agreement cap.

Previous wording

For the three and six months ended August 31, 2024, general and administrative expenses increased $0.4 million, or 75.9% and $0.1 million, or 10.2%, respectively compared to the three and six months ended August 31, 2023.

Current wording

For the three and nine months ended November 30, 2024, general and administrative expenses increased $1.0 million, or 15.1% and $0.2 million, or 11.9%, respectively compared to the three and nine months ended November 30, 2023.

Previous wording

As discussed above, the increase in interest and debt financing expenses for the three months ended August 31, 2024 compared to the three months ended August 31, 2023 is attributable both to an increase in the average dollar amount of outstanding debt, as well as the higher cost of that debt. For the three months ended August 31, 2024 and August 31, 2023, the average borrowings outstanding under the Encina Credit Facility was $32.5 million and $35.0 million, respectively, and the average weighted average interest rate on the outstanding borrowing under the Encina Credit Facility was 9.89% and 9.75%, respectively. For the three months ended August 31, 2024 and August 31, 2023, the average borrowings outstanding under the Live Oak Credit Facility was $19.0 million and $0.0 million, respectively, and the average weighted average interest rate on the outstanding borrowing under the Live Oak Credit Facility was 9.55% and 0.0%, respectively. For the three months ended August 31, 2024 and August 31, 2023, the average borrowings outstanding of SBA debentures was $214.0 million and $202.6 million, respectively. For the three months ended August 31, 2024 and August 31, 2023, the weighted average interest rate on the outstanding borrowings of the SBA debentures was 3.34% and 2.89%, respectively. For the three months ended August 31, 2024 and August 31, 2023, the average borrowings outstanding of our Notes Payable was $571.4 million and $571.4 million, respectively. For the three months ended August 31, 2024 and August 31, 2023, the weighted average interest rate on the Notes Payable was 6.06% and 5.92%, respectively.

Current wording

As discussed above, the increase in interest and debt financing expenses for the three months ended November 30, 2024 compared to the three months ended November 30, 2023 is attributable both to an increase in the average dollar amount of outstanding debt, as well as the higher cost of that debt. For the three months ended November 30, 2024 and November 30, 2023, the average borrowings outstanding under the Encina Credit Facility was $32.5 million and $35.0 million, respectively, and the average weighted average interest rate on the outstanding borrowing under the Encina Credit Facility was 9.40% and 9.79%, respectively. For the three months ended November 30, 2024 and November 30, 2023, the average borrowings outstanding under the Live Oak Credit Facility was $20.0 million and $0.0 million, respectively, and the average weighted average interest rate on the outstanding borrowing under the Live Oak Credit Facility was 9.00% and 0.0%, respectively. For the three months ended November 30, 2024 and November 30, 2023, the average borrowings outstanding of SBA debentures was $214.0 million and $200.4 million, respectively. For the three months ended November 30, 2024 and November 30, 2023, the weighted average interest rate on the outstanding borrowings of the SBA debentures was 3.30% and 3.25%, respectively. For the three months ended November 30, 2024 and November 30, 2023, the average borrowings outstanding of our Notes Payable was $571.4 million and $571.4 million, respectively. For the three months ended November 30, 2024 and November 30, 2023, the weighted average interest rate on the Notes Payable was 6.06% and 6.02%, respectively.

Previous wording

As discussed above, the increase in interest and debt financing expenses for the six months ended August 31, 2024 compared to the six months ended August 31, 2023 is attributable both to an increase in the average dollar amount of outstanding debt, as well as the higher cost of that debt. For the six months ended August 31, 2024 and August 31, 2023, the average borrowings outstanding under the Encina Credit Facility was $33.6 million and $40.9 million, respectively, and the average weighted average interest rate on the outstanding borrowing under the Encina Credit Facility was 9.89% and 9.56%, respectively. For the six months ended August 31, 2024 and August 31, 2023, the average borrowings outstanding under the Live Oak Credit Facility was $16.0 million and $0.0 million, respectively, and the average weighted average interest rate on the outstanding borrowing under the Live Oak Credit Facility was 9.54% and 0.0%, respectively. For the six months ended August 31, 2024 and August 31, 2023, the average borrowings outstanding of SBA debentures was $214.0 million and $202.3 million, respectively. For the six months ended August 31, 2024 and August 31, 2023, the weighted average interest rate on the outstanding borrowings of the SBA debentures was 3.35% and 2.89%, respectively. For the six months ended August 31, 2024 and August 31, 2023, the average borrowings outstanding of our Notes Payable was $571.4 million and $551.8 million, respectively. For the six months ended August 31, 2024 and August 31, 2023, the weighted average interest rate on the Notes Payable was 6.06% and 5.99%, respectively.

Current wording

As discussed above, the increase in interest and debt financing expenses for the nine months ended November 30, 2024 compared to the nine months ended November 30, 2023 is attributable both to an increase in the average dollar amount of outstanding debt, as well as the higher cost of that debt. For the nine months ended November 30, 2024 and November 30, 2023, the average borrowings outstanding under the Encina Credit Facility was $33.3 million and $38.9 million, respectively, and the average weighted average interest rate on the outstanding borrowing under the Encina Credit Facility was 9.73% and 9.62%, respectively. For the nine months ended November 30, 2024 and November 30, 2023, the average borrowings outstanding under the Live Oak Credit Facility was $17.3 million and $0.0 million, respectively, and the average weighted average interest rate on the outstanding borrowing under the Live Oak Credit Facility was 9.34% and 0.0%, respectively. For the nine months ended November 30, 2024 and November 30, 2023, the average borrowings outstanding of SBA debentures was $214.0 million and $201.7 million, respectively. For the nine months ended November 30, 2024 and November 30, 2023, the weighted average interest rate on the outstanding borrowings of the SBA debentures was 3.33% and 3.01%, respectively. For the nine months ended November 30, 2024 and November 30, 2023, the average borrowings outstanding of our Notes Payable was $571.4 million and $558.3 million, respectively. For the nine months ended November 30, 2024 and November 30, 2023, the weighted average interest rate on the Notes Payable was 6.06% and 6.02%, respectively.

Previous wording

The weighted average dollar amount of our unsecured notes for the three and six months ended August 31, 2024 and August 31, 2023 was as follows:

Current wording

The weighted average dollar amount of our unsecured notes for the three and nine months ended November 30, 2024 and November 30, 2023 was as follows:

Previous wording

For the three and six months ended August 31, 2024 and August 31, 2023, there were income tax expense (benefits) of $0.1 million and ($0.2) million, respectively and $0.1 million and ($0.2) million, respectively. This relates to net deferred federal and state income tax expense (benefit) with respect to operating gains and losses and income derived from equity investments held in entities that are treated as corporations for U.S. federal income tax purposes, as well as current U.S. federal and state income taxes on those operating gains and losses when realized.

Current wording

For the three and nine months ended November 30, 2024 and November 30, 2023, there were income tax expense (benefits) of $0.0 million and $0.2 million, respectively and $0.1 million and ($0.01) million, respectively. This relates to net deferred federal and state income tax expense (benefit) with respect to operating gains and losses and income derived from equity investments held in entities that are treated as corporations for U.S. federal income tax purposes, as well as current U.S. federal and state income taxes on those operating gains and losses when realized.

Previous wording

For the three months ended August 31, 2024, we had $60.1 million of sales, repayments, exits or restructurings resulting in $33.4 million of net realized losses. For the six months ended August 31, 2024, we had $135.8 million of sales, repayments, exits or restructurings resulting in $54.6 million of net realized losses.

Current wording

For the three months ended November 30, 2024, we had $160.4 million of sales, repayments, exits or restructurings resulting in $5.4 million of net realized gains. For the nine months ended November 30, 2024, we had $296.2 million of sales, repayments, exits or restructurings resulting in $49.2 million of net realized losses.

Previous wording

The most significant cumulative net change in realized gains (losses) for the six months ended August 31, 2024 were the following (dollars in thousands):

Current wording

The most significant cumulative net change in realized gains (losses) for the nine months ended November 30, 2024 were the following (dollars in thousands):

Previous wording

The $6.1 million of net realized losses was from the sale of the equity position in our Netreo Holdings, LLC investment.

Current wording

The $5.4 million of net realized losses was from the sale of the equity position in our Netreo Holdings, LLC investment.

Previous wording

The $0.6 million of net realized gains was from the sale of the equity position in our Book4Time, Inc. investment.

Current wording

The $0.5 million of net realized gains was from the sale of the equity position in our Book4Time, Inc. investment.