SARATOGA INVESTMENT CORP.

Previous wording

Our wholly owned subsidiaries, Saratoga Investment Corp. SBIC II LP (“SBIC II LP”) and Saratoga Investment Corp. SBIC III LP (“SBIC III LP”, and together with SBIC II LP, the “SBIC Subsidiaries”), received SBIC licenses from the SBA on August 14, 2019 and September 29, 2022, respectively. Each of the SBIC Subsidiaries provides up to $175.0 million in long-term capital in the form of debentures guaranteed by the SBA. Our wholly owned subsidiary SBIC LP repaid its outstanding debentures and subsequently surrendered its license to the SBA on January 3, 2024, providing the Company access to all undistributed capital of SBIC LP, and SBIC LP subsequently merged with and into the Company. Under current SBIC regulations, for two or more SBICs under common control, the maximum amount of outstanding SBA debentures cannot exceed $350.0 million with at least $175.0 million in combined regulatory capital.

Current wording

Our wholly owned subsidiaries, Saratoga Investment Corp. SBIC II LP (“SBIC II LP”) and Saratoga Investment Corp. SBIC III LP (“SBIC III LP”, and together with SBIC II LP, the “SBIC Subsidiaries”), received SBIC licenses from the SBA on August 14, 2019 and September 29, 2022, respectively. Each of the SBIC Subsidiaries provides up to $175.0 million in long-term capital in the form of debentures guaranteed by the SBA. With all debentures repaid to the SBA, SBIC LP’s license was surrendered on January 3, 2024, providing the Company access to all undistributed capital of SBIC LP, and SBIC LP subsequently merged with and into the Company. Under current SBIC regulations, for two or more SBICs under common control, the maximum amount of outstanding SBA debentures cannot exceed $350.0 million with at least $175.0 million in combined regulatory capital.

Previous wording

On June 10, 2024, the Company completed its fifth refinancing of the Saratoga CLO. This refinancing, among other things, did not extend the Saratoga CLO reinvestment period nor extend its legal maturity, while adjusting the interest rate of two of the existing Notes. The Issuer issued $422.5 million of notes (the “2013-1 2024 Reset CLO Notes”), consisting of Class A-1-R-4 and Class A-2-R-4. The 2013-1 2024 Reset CLO Notes were issued pursuant to the Indenture with the same Trustee. Proceeds of the issuance of the 2013-1 2024 Reset CLO Notes were used along with existing assets of the Saratoga CLO to redeem the existing Class A-1-R-3 and Class A-2-R-3 Notes. No other Notes were refinanced as part of this refinancing. The Saratoga CLO paid $0.5 million of transaction costs related to the refinancing.

Current wording

On June 10, 2024, we completed the fifth refinancing of the Saratoga CLO. This refinancing, among other things, did not extend the Saratoga CLO reinvestment period nor extend its legal maturity, while adjusting the interest rate of two of the existing Notes. The Issuer issued $422.5 million of notes (the “2013-1 2024 Reset CLO Notes”), consisting of Class A-1-R-4 and Class A-2-R-4. The 2013-1 2024 Reset CLO Notes were issued pursuant to the Indenture with the same Trustee. Proceeds of the issuance of the 2013-1 2024 Reset CLO Notes were used along with existing assets of the Saratoga CLO to redeem the existing Class A-1-R-3 and Class A-2-R-3 Notes. No other Notes were refinanced as part of this refinancing. The Saratoga CLO paid $0.5 million of transaction costs related to the refinancing.

Previous wording

We have formed a wholly owned special purpose entity, Saratoga Investment Funding III LLC, a Delaware limited liability company (“SIF III”), for the purpose of entering into a senior secured revolving credit facility with Live Oak Banking Company (“Live Oak”), supported by loans held by SIF III and pledged to Live Oak under the credit facility (the “Live Oak Credit Facility). The Live Oak Credit Facility closed on March 27, 2024. During the first two years following the closing date, SIF III may request an increase in the commitment amount under the Live Oak Credit Facility to up to $150.0 million. The terms of the Live Oak Credit Facility require a minimum drawn amount of $12.5 million at all times during the period ending March 27, 2025, which increases to the greater of $25.0 million or 50% of the facility amount in effect at any time thereafter. The term of the Live Oak Credit Facility is three years. Advances under the Live Oak Credit Facility bear interest at a floating rate per annum equal to Adjusted Term SOFR plus an applicable margin between 3.50% and 4.25% based on the Live Oak Credit Facility’s utilization. On June 14, 2024, the Live Oak Credit Facility was amended to, among other things: (i) increase the borrowings available under the Live Oak Credit Facility from up to $50.0 million to up to $75.0 million, subject to a borrowing base requirement; (ii) add new lenders to the Live Oak Credit Agreement; (iii) replace administrative agent approval with “Required Lender” (as defined in the Live Oak Credit Agreement) approval with respect to certain matters; (iv) replace Required Lender approval with 100% lender approval with respect to certain matters; and (v) change the definition of Required Lender to require the approval of at least two unaffiliated lenders.

Current wording

We have formed a wholly owned special purpose entity, Saratoga Investment Funding III LLC, a Delaware limited liability company (“SIF III”), for the purpose of entering into a $50.0 million senior secured revolving credit facility with Live Oak Banking Company (“Live Oak”), supported by loans held by SIF III and pledged to Live Oak under the credit facility (the “Live Oak Credit Facility). The Live Oak Credit Facility closed on March 27, 2024. During the first two years following the closing date, SIF III may request an increase in the commitment amount under the Live Oak Credit Facility to up to $150.0 million. The terms of the Live Oak Credit Facility required a minimum drawn amount of $12.5 million at all times during the period ended March 27, 2025, which increased to the greater of $25.0 million or 50% of the facility amount in effect at any time thereafter. The term of the Live Oak Credit Facility is three years. Advances under the Live Oak Credit Facility bear interest at a floating rate per annum equal to Adjusted Term SOFR plus an applicable margin between 3.50% and 4.25% based on the Live Oak Credit Facility’s utilization. On June 14, 2024, the Live Oak Credit Facility was amended to, among other things: (i) increase the borrowings available under the Live Oak Credit Facility from up to $50.0 million to up to $75.0 million, subject to a borrowing base requirement; (ii) add new lenders to the Live Oak Credit Agreement; (iii) replace administrative agent approval with “Required Lender” (as defined in the Live Oak Credit Agreement) approval with respect to certain matters; (iv) replace Required Lender approval with 100% lender approval with respect to certain matters; and (v) change the definition of Required Lender to require the approval of at least two unaffiliated lenders.

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 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.

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 provided $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 May 31, 2025 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 28, 2025, 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 May 31, 2025 and February 28, 2025, our investment in the unsecured note of SLF JV had a fair value of $16.6 million and $16.5 million, respectively, and our investment in the membership interests of SLF JV had a fair value of $3.1 million and $3.1 million, respectively.

Previous wording

Rule 2a-5 under the 1940 Act (“Rule 2a-5”) establishes a regulatory framework for determining fair value in good faith for purposes of the 1940 Act. Rule 2a-5 permits boards, subject to board oversight and certain other conditions, to designate the investment adviser to perform fair value determinations. Rule 2a-5 also defines when market quotations are “readily available” for purposes of the 1940 Act and the threshold for determining whether a fund must determine the fair value of a security. Rule 31a-4 under the 1940 Act (“Rule 31a-4”) provides the recordkeeping requirements associated with fair value determinations. While our board of directors has not elected to designate Saratoga Investment Advisors as the valuation designee, we has adopted certain revisions to its valuation policies and procedures in order comply with the applicable requirements of Rule 2a-5 and Rule 31a-4.

Current wording

Rule 2a-5 under the 1940 Act (“Rule 2a-5”) establishes a regulatory framework for determining fair value in good faith for purposes of the 1940 Act. Rule 2a-5 permits boards, subject to board oversight and certain other conditions, to designate the investment adviser to perform fair value determinations. Rule 2a-5 also defines when market quotations are “readily available” for purposes of the 1940 Act and the threshold for determining whether a fund must determine the fair value of a security. Rule 31a-4 under the 1940 Act (“Rule 31a-4”) provides the recordkeeping requirements associated with fair value determinations. While our board of directors has not elected to designate Saratoga Investment Advisors as the valuation designee, we have adopted certain revisions to its valuation policies and procedures in order comply with the applicable requirements of Rule 2a-5 and Rule 31a-4.

Previous wording

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

Current wording

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. We stop accruing interest on our investments when it is determined that interest is no longer collectible. Discounts and premiums on investments purchased are accreted/amortized over the life of the respective investment using the effective yield method. The amortized cost of investments represents the original cost adjusted for the accretion of discounts and amortization of premiums on investments.

Previous 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.

Current 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 an 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

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

Current wording

On January 22, 2008, we entered into a collateral management agreement with Saratoga CLO, pursuant to which we act as its collateral manager. The Saratoga CLO was refinanced in October 2013 and November 2016 with its reinvestment period extended to October 2016 and October 2018, respectively.

Previous wording

On December 14, 2018, we completed a third refinancing and upsize of the Saratoga CLO. The third Saratoga CLO refinancing, among other things, extended its reinvestment period to January 2021, and extended its legal maturity date to January 2030, and added a non-call period of January 2020. Following this refinancing, the Saratoga CLO portfolio increased from approximately $300.0 million in aggregate principal amount to approximately $500.0 million of predominantly senior secured first lien term loans. In addition to refinancing its liabilities, we invested an additional $13.8 million in all of the newly issued subordinated notes of the Saratoga CLO and also purchased $2.5 million in aggregate principal amount of the Class F-R-2 and $7.5 million aggregate principal amount of the Class G-R-2 notes tranches at par, with a coupon of 3M USD LIBOR plus 8.75% and 3M USD LIBOR plus 10.00%, respectively. As part of this refinancing, we also redeemed our existing $4.5 million aggregate amount of the Class F notes tranche at par and the $20.0 million CLO 2013-1 Warehouse Loan was repaid.

Current wording

On December 14, 2018, we completed a third refinancing and upsize of the Saratoga CLO. The third Saratoga CLO refinancing, among other things, extended its reinvestment period to January 2021, and extended its legal maturity date to January 2030, and added a non-call period of January 2020. Following this refinancing, the Saratoga CLO portfolio increased its aggregate principal amount from approximately $300.0 million to approximately $500.0 million of predominantly senior secured first lien term loans. In addition to refinancing its liabilities, we invested an additional $13.8 million in all of the newly issued subordinated notes of the Saratoga CLO and also purchased $2.5 million in aggregate principal amount of the Class F-R-2 and $7.5 million aggregate principal amount of the Class G-R-2 notes tranches at par, with a coupon of 3M USD LIBOR plus 8.75% and 3M USD LIBOR plus 10.00%, respectively. As part of this refinancing, we also redeemed our existing $4.5 million aggregate amount of the Class F notes tranche at par and the $20.0 million CLO 2013-1 Warehouse Loan was repaid.

Previous wording

On February 11, 2020, we entered into an unsecured loan agreement (“CLO 2013-1 Warehouse 2 Loan”) with Saratoga Investment Corp. CLO 2013-1 Warehouse 2, Ltd (“CLO 2013-1 Warehouse 2”), a wholly owned subsidiary of Saratoga CLO, pursuant to which CLO 2013-1 Warehouse 2 may borrow from time to time up to $20.0 million from the Company in order to provide capital necessary to support warehouse activities. On October 23, 2020, the availability under the CLO 2013-1 Warehouse 2 Loan was increased to $25.0 million, which was immediately fully drawn and, which expires on August 20, 2021. The interest rate was also amended to be based on a pricing grid, starting at an annual rate of 3M USD LIBOR + 4.46%. During the fourth quarter ended February 28, 2021, the CLO 2013-1 Warehouse 2 Ltd was repaid in full.

Current wording

On February 11, 2020, we entered into an unsecured loan agreement (“CLO 2013-1 Warehouse 2 Loan”) with Saratoga Investment Corp. CLO 2013-1 Warehouse 2, Ltd (“CLO 2013-1 Warehouse 2”), a wholly owned subsidiary of Saratoga CLO, which was fully repaid during the fourth quarter ended February 28, 2021.

Previous wording

On February 26, 2021, we completed the fourth refinancing of the Saratoga CLO. This refinancing, among other things, extended the Saratoga CLO reinvestment period to April 2024, extended its legal maturity to April 2033, and added a non-call period of February 2022. In addition, and as part of the refinancing, the Saratoga CLO was upsized from $500 million in assets to approximately $650 million. As part of this refinancing and upsizing, the Company invested an additional $14.0 million in all of the newly issued subordinated notes of the Saratoga CLO, and purchased $17.9 million in aggregate principal amount of the Class F-R-3 Notes tranche at par. Concurrently, the existing $2.5 million of Class F-R-2 Notes, $7.5 million of Class G-R-2 Notes and $25.0 million of the CLO 2013-1 Warehouse 2 Loan were repaid. We also paid $2.6 million of transaction costs related to the refinancing and upsizing on behalf of the Saratoga CLO, to be reimbursed from future equity distributions. At August 31, 2021, the outstanding receivable of $2.6 million was repaid in full.

Current wording

On February 26, 2021, we completed the fourth refinancing of the Saratoga CLO. This refinancing, among other things, extended the Saratoga CLO reinvestment period to April 2024, extended its legal maturity to April 2033, and added a non-call period of February 2022. In addition, and as part of the refinancing, the Saratoga CLO was upsized from $500 million in assets to approximately $650 million. As part of this refinancing and upsizing, we invested an additional $14.0 million in all of the newly issued subordinated notes of the Saratoga CLO, and purchased $17.9 million in aggregate principal amount of the Class F-R-3 Notes tranche at par. Concurrently with the fourth refinancing of the Saratoga CLO, the existing $2.5 million of Class F-R-2 Notes, $7.5 million of Class G-R-2 Notes and $25.0 million of the CLO 2013-1 Warehouse 2 Loan were repaid. We also paid $2.6 million of transaction costs related to the refinancing and upsizing on behalf of the Saratoga CLO, to be reimbursed from future equity distributions. At August 31, 2021, the outstanding receivable of $2.6 million was repaid in full.

Previous wording

On June 10, 2024, the Company completed its fifth refinancing of the Saratoga CLO. This refinancing, among other things, did not extend the Saratoga CLO reinvestment period nor extend its legal maturity, while adjusting the interest rate of two of the existing Notes. The Issuer issued $422.5 million of notes, consisting of Class A-1-R-4 and Class A-2-R-4. The 2013-1 2024 Reset CLO Notes were issued pursuant to the Indenture with the same Trustee. Proceeds of the issuance of the 2013-1 2024 Reset CLO Notes were used along with existing assets of the Saratoga CLO to redeem the existing Class A-1-R-3 and Class A-2-R-3 Notes. No other Notes were refinanced as part of this refinancing. The Saratoga CLO paid $0.5 million of transaction costs related to the refinancing.

Current wording

On June 10, 2024, we completed our fifth refinancing of the Saratoga CLO, which adjusted the interest rate of two of the existing Notes. Saratoga CLO issued $422.5 million notes (the “2013-1 2024 Reset CLO Notes”), consisting of Class A-1-R-4 and Class A-2-R-4. The 2013-1 2024 Reset CLO Notes were issued pursuant to the indenture with the same trustee. Proceeds of the issuance of the 2013-1 2024 Reset CLO Notes were used along with existing assets of the Saratoga CLO to redeem the existing Class A-1-R-3 and Class A-2-R-3 Notes. No other Notes were refinanced as part of this refinancing. The Saratoga CLO paid $0.5 million of transaction costs related to the refinancing.

Previous wording

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

Current wording

The Saratoga CLO remains effectively 100% owned and managed by Saratoga Investment Corp. We receive a base management fee of 0.10% per annum and a subordinated management fee of 0.40% per annum of the outstanding principal amount of Saratoga CLO’s assets, paid quarterly to the extent of available proceeds.

Previous wording

On October 26, 2021, the Company and TJHA entered into the LLC Agreement to co-manage SLF JV. SLF JV is invested in Saratoga Investment Corp Senior Loan Fund 2022-1, 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.

Current wording

On October 26, 2021, we and TJHA entered into the LLC Agreement to co-manage SLF JV. SLF JV is invested in Saratoga Investment Corp Senior Loan Fund 2022-1, 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.

Previous wording

The Company and TJHA have equal voting interest on all material decisions with respect to SLF JV, including those involving its investment portfolio, and equal control of corporate governance. No management fee is charged to SLF JV as control and management of SLF JV is shared equally.

Current wording

We and TJHA have equal voting interest on all material decisions with respect to SLF JV, including those involving its investment portfolio, and equal control of corporate governance. No management fee is charged to SLF JV as control and management of SLF JV is shared equally.

Previous wording

The Company and TJHA have committed to provide up to a combined $50.0 million of financing to SLF JV through cash contributions, with the Company providing $43.75 million and TJHA providing $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 pays a fixed rate of 10% per annum and is due and payable in full on October 20, 2033.

Current wording

We and TJHA have committed to provide up to a combined $50.0 million of financing to SLF JV through cash contributions, with us providing $43.75 million and TJHA providing $6.25 million, resulting in 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 pays a fixed-rate of 10% per annum and is due and payable in full on October 20, 2033.

Previous wording

The Company records interest income from its investment in an unsecured loan with SLF JV on an accrual basis and records dividend income from its membership interest when earned. All operating decisions are shared with a 50% voting interest in SLF JV.

Current wording

We record interest income from its investment in an unsecured loan with SLF JV on an accrual basis and records dividend income from its membership interest when earned. All operating decisions are shared with a 50% voting interest in SLF JV

Previous wording

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

Current wording

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

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 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.

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 we have not elected to adopt this provision as of the date of the financial statements contained in this report. We are still assessing the impact of the new guidance.

Previous 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.

Current wording

During the three months ended May 31, 2025, we invested $50.1 million in new and existing portfolio companies and had $64.3 million in aggregate amount of exits and repayments resulting in net investments of $(14.2) million for the period. During the three months ended May 31, 2024, we invested $39.3 million in new and existing portfolio companies and had $75.7 million in aggregate amount of exits and repayments resulting in net repayments of $(36.4) million for the period.

Previous 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.

Current wording

At May 31, 2025, our investment in the subordinated notes of Saratoga CLO, a collateralized loan obligation fund, had a fair value of $0.2 million and constituted 0.02% of our portfolio. This investment constitutes a first loss position in a portfolio that, as of May 31, 2025 and February 28, 2025, was composed of $495.7 million and $527.1 million, respectively, in aggregate principal amount of primarily senior secured first lien term loans. In addition, as of May 31, 2025, 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.

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 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.

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 May 31, 2025, $438.1 million or 98.5% of the Saratoga CLO portfolio investments in terms of market value had a CMR (as defined below) color rating of green or yellow and 10 Saratoga CLO portfolio investments were in default with a fair value of $4.6 million. At February 28, 2025, $484.3 million or 98.4% of the Saratoga CLO portfolio investments in terms of market value had a CMR color rating of green or yellow and eight of the Saratoga CLO portfolio investments were in default with a fair value of $4.4 million. For more information relating to the Saratoga CLO, see the audited financial statements for Saratoga in our Annual Report on Form 10-K for the fiscal year ended February 28, 2025.

Previous wording

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

Current wording

Operating results for the three months ended May 31, 2025 and May 31, 2024 was as follows:

Previous wording

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

Current wording

The composition of our investment income for three months ended May 31, 2025 and May 31, 2024 was as follows:

Previous 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.

Current wording

For the three months ended May 31, 2025, total investment income decreased $6.4 million, or 16.4%, to $32.3 million from $38.7 million for the three months ended May 31, 2024. Interest income from investments decreased $6.3 million, or 18.4%, to $28.0 million for the three months ended May 31, 2025 from $34.3 million for the three months ended May 31, 2024. Interest income from investments decreased due to the decrease of $127.3 million, or 11.6%, in total investments at May 31, 2025 from $1,095.6 million at May 31, 2024 to $968.3 million as of May 31, 2025, combined with the decrease in the weighted average current yield on investments to 10.6%, down from 11.5% at May 31, 2024, primarily due to the reduction in SOFR base rates during this period.

Previous 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.

Current wording

For the three months ended May 31, 2025 and May 31, 2024, total PIK income was $0.8 million and $0.6 million, respectively.

Previous 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.

Current wording

For the three months ended May 31, 2025 and May 31, 2024, interest from cash and cash equivalents was $2.0 million and $0.6 million, respectively. The increase of $1.4 million was due to increased cash and cash equivalents balances during this period as compared to last year, reflecting the significant levels of repayments experienced during this period.

Previous 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.

Current wording

Management fee income reflects the fee income received for managing the Saratoga CLO. For the three months ended May 31, 2025 and May 31, 2024, total management fee income was $0.7 million and $0.8 million, respectively.

Previous 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.

Current wording

For the three months ended May 31, 2025 and May 31, 2024, total dividend income was $1.0 million and $1.5 million, respectively. Dividends received is recorded in the consolidated statements of operations when earned, and the decrease primarily reflects lower dividend income of $0.4 million received on our membership interest in SLF JV during the three months ended May 31, 2025 as compared to last year.

Previous 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.

Current wording

For the three months ended May 31, 2025 and May 31, 2024, total structuring and advisory fee income was $0.3 million and $0.4 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 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.

Current wording

For the three months ended May 31, 2025 and May 31, 2024, other income was $0.3 million and $1.0 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.

Previous wording

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

Current wording

The composition of our operating expenses for the three months ended May 31, 2025 and May 31, 2024 was as follows:

Previous 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.

Current wording

For the three months ended May 31, 2025, interest and debt financing expenses decreased $0.5 million, or 3.9%, compared to the three months ended May 31, 2024. The decrease is primarily attributable to a decrease of 4.8% in average outstanding debt from $833.0 million for the three months ended May 31, 2024 to $792.8 million for the three months ended May 31, 2025.

Previous 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.

Current wording

For the three months ended May 31, 2025 and May 31, 2024, the weighted average interest rate on our outstanding indebtedness was relatively unchanged at 5.58% and 5.58%, respectively.

Previous wording

As of November 30, 2024 and February 29, 2024, the SBA debentures represented 25.5% and 26.1% of overall debt, respectively.

Current wording

As of May 31, 2025 and February 28, 2025, the SBA debentures represented 21.4% and 21.4% of overall debt, respectively.

Previous 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.

Current wording

For the three months ended May 31, 2025, base management fees decreased $0.7 million, or 13.0%, from $5.0 million to $4.3 million compared to the three months ended May 31, 2024. The decrease in base management fees results from the 13.0% decrease in the average value of our total assets, less cash and cash equivalents, from $1,129.6 million for the three months ended May 31, 2024 to $982.4 million for the three months ended May 31, 2025.

Previous 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.

Current wording

For the three months ended May 31, 2025, incentive management fees decreased $1.1 million to $2.5 million, or 29.2%, compared to $3.6 million the three months ended May 31, 2024. The incentive fee on income decreased from $3.6 million to $2.5 million for the three months ended May 31, 2024 and 2025, respectively, reflecting the decrease in net investment income during the three months ended May 31, 2025 as compared to the three months ended May 31, 2024. The incentive fee on capital gains decreased from a $0.0 million expense for the three months ended May 31, 2024 to a $0.0 million benefit for the three months ended May 31, 2025, 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 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.

Current wording

For the three months ended May 31, 2025, professional fees decreased $0.3 million, or 30.0% compared to the three months ended May 31, 2024.

Previous 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.

Current wording

For the three months ended May 31, 2025, administrator expenses increased $0.2 million, or 16.3% compared to the three months ended May 31, 2024, reflecting the contractual changes to the administrator agreement cap.

Previous 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.

Current wording

For the three months ended May 31, 2025, general and other expenses increased $0.04 million, or 6.0% compared to the three months ended May 31, 2024.