NEW YORK, Oct. 09, 2019 (GLOBE NEWSWIRE) — Saratoga Investment Corp. (NYSE:) (“Saratoga Investment” or “the Company”), a business development company, today announced financial results for its 2020 fiscal second quarter.

Summary Financial Information

The Company’s summarized financial information is as follows:

  For the three months ended and as of August 31, 2019  For the three months ended and as of May 31, 2019  For the three months ended and as of August 31, 2018   ($ in thousands except per share) AUM  486,880   409,451   392,887 NAV  224,337   186,784   172,658 NAV per share  24.47   24.06   23.16 Investment Income  13,888   12,751   11,403 Net Investment Income per share  0.59   0.48   0.74 Adjusted Net Investment Income per share  0.68   0.60   0.69 Earnings per share  0.91   0.99   0.45 Dividends per share (declared)  0.56   0.55   0.52 Return on Equity – last twelve months  14.3%  11.7%  11.6% – annualized quarter  14.7%  16.6%  7.9%Originations  93,194   27,369   51,726 Repayments  19,004   26,917   1,016 

“The second fiscal quarter of 2020 has been important for us with many significant accomplishments”, said Christian L. Oberbeck, Chairman and Chief Executive Officer of Saratoga Investment. “1) We received approval for a second SBIC license, providing us access to up to $175 million in additional long-term, low-cost capital in the form of SBA debentures to further enable us to support our core small business constituency; 2) Our second quarter performance metrics were also exceptionally strong with LTM return on equity of 14.3% and an increase in NAV per share of $0.41 to $24.47. Our adjusted NII per share of $0.68, taking into account our newly issued ATM shares, still over-earned our current $0.56 dividend per share, which was recently increased for the twentieth sequential quarter; 3) Our continued strong price and volume stock market performance enabled us to issue $34.1 million of equity accretively under our existing ATM program in Q2, importantly providing initial equity capitalization for this new second SBIC license; 4) Asset quality and growth were strong this quarter, with $2.6 million of net realized and unrealized gains on investments, and AUM growing by 19% to $486.9 million; and 5) with our new second SBIC license our dry powder has expanded significantly, providing us the ability to grow our AUM by a further 50% utilizing the current liquidity and committed credit facilities at our disposal.”

Michael J. Grisius, President and Chief Investment Officer, added, “This fiscal quarter has again demonstrated our ability to build AUM without sacrificing quality, as our investments grew by 19% from last quarter, while those rated in our highest category remained at 99%. We always emphasize that quarterly portfolio growth can be lumpy and is dependent on various factors, including a robust pipeline, credit quality of deal pipeline, and the level of repayments – this past quarter we benefitted from all three. We’ve accomplished this amid macroeconomic conditions and lending dynamics in the lower middle market that continue to provide headwinds, with LIBOR again decreasing this quarter. We also continue to bring new platform investments into the portfolio, with four more investments in new companies added this quarter, and two more since quarter-end. We remain confident that our experienced origination team, exceptional underwriting standards and tested investment strategy and focus will continue to steadily grow portfolio size and maintain quality over the long-term.”

As of August 31, 2019, Saratoga Investment increased its assets under management (“AUM”) to $486.9 million, an increase of 18.9% from $409.5 million as of May 31, 2019, and an increase of 23.9% from $392.9 million as of August 31, 2018. The increase this quarter consists of originations of $93.2 million, partially offset by repayments and amortizations of $19.0 million. Including realized and unrealized gains, Saratoga Investment’s portfolio has grown significantly this quarter and remains strong, with a continued high level of investment quality in loan investments, with 99.0% of its loans this quarter at its highest internal rating. Included in this quarter’s originations are also four investments in new portfolio companies. Since Saratoga Investment took over the management of the BDC, $392.5 million of repayments and sales of investments originated by Saratoga Investment have generated a gross unlevered IRR of 14.0%.

For the three months ended August 31, 2019, total investment income of $13.9 million increased by $2.5 million, or 21.8%, compared to $11.4 million for the three months ended August 31, 2018, and by 8.9% on a quarter-on-quarter basis from $12.8 million for the three months ended May 31, 2019. This increased investment income was generated from an investment base that has grown by 23.9% since last year and by 18.9% from last quarter. In addition, these increases were achieved despite a decrease in interest earned on CLO equity and the weighted average current coupon on non-CLO BDC investments decreasing to 10.5% this quarter from 11.1% last year and 10.8% last quarter. Much of the decrease in the current coupon is due to the reductions in LIBOR over these periods. The impact of the AUM increase is also only partially reflected in this quarter’s results.

As compared to the three months ended August 31, 2018, the investment income increase of $2.5 million was offset by: (i) increased debt and financing expenses, as the growth in AUM this year was partially financed from increased SBA debentures and the $60.0 million baby bond issuance last year; and (ii) increased base and incentive management fees generated from the management of this larger pool of investments. Total expenses, excluding interest and debt financing expenses, base management fees, incentive fees and income tax benefit, increased from $1.3 million for the three months ended August 31, 2018, to $1.4 million for the three months ended August 31, 2019.

Net investment income on a weighted average per share basis was $0.59 for the three months ended August 31, 2019. Adjusted for the incentive fee accrual related to net unrealized capital gains, the net investment income on a weighted average per share basis was $0.68. This compares to adjusted net investment income per share of $0.60 for the three months ended May 31, 2019, and $0.69 for the three months ended August 31, 2018. During these periods, weighted average common shares outstanding increased from 6.9 million shares for the three months ended August 31, 2018, to 7.7 million shares and 8.3 million shares for the three months ended May 31, 2019, and August 31, 2019, respectively. These share increases primarily reflect the secondary equity offering of 1.15 million shares on July 13, 2018, and the 1.4 million shares issued this quarter pursuant to the At-the-Market (“ATM”) equity offering program, both of which were accretive to net asset value (“NAV”) per share.

Net investment income yield as a percentage of average NAV (“Net Investment Income Yield”) was 9.6% for the three months ended August 31, 2019. Adjusted for the incentive fee accrual related to net unrealized capital gains, the Net Investment Income Yield was 11.0%. In comparison, adjusted Net Investment Income Yield was 10.1% and 11.9% for the three months ended May 31, 2019, and August 31, 2018, respectively.

NAV was $224.3 million as of August 31, 2019, an increase of $43.3 million from $180.9 million as of February 28, 2019, and an increase of $51.7 million from $172.7 million as of August 31, 2018.

 •For the six months ended August 31, 2019, $8.6 million of net investment income, $1.9 million in net realized gain from investments and $5.4 million of net unrealized appreciation were earned, partially offset by $0.7 million deferred tax expense on net unrealized gains in Saratoga Investment’s blocker subsidiaries and $8.5 million of dividends declared. In addition, $1.4 million of stock dividend distributions were made through the Company’s dividend reinvestment plan (“DRIP”), and 1,371,666 shares were sold through the ATM equity offering during the quarter for net proceeds of $33.6 million.

NAV per share was $24.47 as of August 31, 2019, compared to $24.06 as of May 31, 2019, $23.62 as of February 28, 2019, and $23.16 as of August 31, 2018.

 •For the six months ended August 31, 2019, NAV per share increased by $0.85 per share, primarily reflecting the $6.7 million, or $0.80 per share increase in net assets (net of the $1.09 dividend paid during the first two quarters). In addition, there was a $0.05 net accretive impact of the quarter’s 1,510,900 share issuances from the DRIP and ATM programs. The Company made no repurchases of common stock in the open market during the quarter.

Return on equity for the last twelve months ended August 31, 2019 was 14.3%, compared to 11.6% for the comparable period last year.

Earnings per share for the three months ended August 31, 2019, was $0.91, compared to earnings per share of $0.99 for the three months ended May 31, 2019, and $0.45 for the three months ended August 31, 2018.

Investment portfolio activity for the three months ended August 31, 2019:

 •Cost of investments made during the period: $93.2 million, including investments in four new portfolio companies    •Principal repayments during the period: $19.0 million

Additional Financial Information

For the fiscal quarter ended August 31, 2019, Saratoga Investment reported net investment income of $5.0 million, or $0.59 on a weighted average per share basis, and a net realized and unrealized gain on investments of $2.6 million, or $0.31 on a weighted average per share basis, resulting in a net increase in net assets from operations of $7.6 million, or $0.91 on a weighted average per share basis. The $2.6 million net gain on investments was comprised of $1.9 million in net realized gain on investments and $1.5 million in net unrealized appreciation on investments, offset slightly by $0.7 million of net deferred tax expense on unrealized gains in Saratoga Investment’s blocker subsidiaries.

The $1.9 million net realized gain reflects (i) a $1.3 million gain from the realization of the Company’s Fancy Chap investment during the quarter, as well as (ii) a $0.6 million gain on the Company’s Censis Technologies investment resulting from the receipt of a dividend recap in excess of the investment‘s cost basis.

The $1.5 million net unrealized appreciation primarily reflects (i) $1.3 million unrealized appreciation on the Company’s Censis Technologies investment, (ii) $1.9 million unrealized appreciation on the Company’s Easy Ice investment, (iii) $1.3 million unrealized appreciation on the Company’s Netreo Holdings investment, (iv) $0.6 million unrealized appreciation on the Company’s Grey Heller investment, and (v) numerous smaller unrealized appreciations across the portfolio on various investments. This was offset primarily by (i) $1.2 million reversal of previously recognized appreciation following the realization of the Company’s Fancy Chap investment, and (ii) $2.7 million unrealized depreciation on the Company’s CLO equity investment, reflecting both the equity distribution received during the quarter as well as an increase in the discount rate used to fair value the equity.

This is compared to the fiscal quarter ended August 31, 2018, with net investment income of $5.1 million, or $0.74 on a weighted average per share basis, and a net realized and unrealized loss on investments of $2.0 million, or $0.29 on a weighted average per share basis, resulting in a net increase in net assets from operations of $3.1 million, or $0.45 on a weighted average per share basis. The $2.0 million net loss on investments consisted of $2.2 million in net unrealized depreciation on investments, offset by $0.2 million in net deferred tax benefit on unrealized losses in Saratoga Investment’s blocker subsidiaries.

Adjusted for the incentive fee accrual related to net unrealized capital gains, the net investment income was $5.6 million and $4.8 million for the three months ended August 31, 2019 and 2018, respectively – an increase of $0.9 million year-over-year, or 18.3%.

Total expenses, excluding interest and debt financing expenses, base management fees and incentive management fees, increased from $0.9 million for the three months ended August 31, 2018, to $1.0 million for the three months ended August 31, 2019, increasing from 0.9% to 1.0% of average total assets.

Portfolio and Investment Activity

As of August 31, 2019, the fair value of Saratoga Investment’s portfolio was $486.9 million (excluding $24.1 million in cash and cash equivalents), principally invested in 36 portfolio companies and one collateralized loan obligation fund (“CLO”). The overall portfolio composition consisted of 62.5% of first lien term loans, 20.5% of second lien term loans, 0.4% of unsecured term loans, 7.4% of subordinated notes in a CLO and 9.2% of common equity.

For the fiscal quarter ended August 31, 2019, Saratoga Investment invested $93.2 million in new or existing portfolio companies and had $19.0 million in aggregate amount of exits and repayments, resulting in net investments of $74.2 million for the quarter.

As of August 31, 2019, the weighted average current yield on Saratoga Investment’s portfolio for the twelve months ended was 10.1%, which was comprised of a weighted average current yield of 10.3% on first lien term loans, 11.6% on second lien term loans, 0.0% on unsecured term loans, 14.7% on CLO subordinated notes and 2.6% on equity interests.

Liquidity and Capital Resources

As of August 31, 2019, Saratoga Investment had no outstanding borrowings under its $45 million senior secured revolving credit facility with Madison Capital Funding LLC. At the same time, Saratoga Investment had $150.0 million SBA debentures outstanding, $134.5 million of baby bonds (fair value of $138.6 million) issued and an aggregate of $24.1 million in cash and cash equivalents.

On August 14, 2019, Saratoga Investment’s application for a second SBIC license was approved. The new license will provide up to $175 million in additional long-term capital in the form of SBA debentures.

With $45.0 million available under the credit facility, the $24.1 million of cash and cash equivalents and $175.0 million in undrawn SBA debentures from the new second SBIC license, Saratoga Investment has a total of $244.1 million of undrawn borrowing capacity and cash and cash equivalents available as of August 31, 2019. This allows Saratoga Investment to grow current AUM by 50% without any new external financing. The net proceeds from the DRIP and ATM equity programs totaled $34.3 million of equity issuances for the three months ended August 31, 2019. Saratoga Investment also has the ability to issue additional equity or baby bonds through the existing shelf registration statement.

On March 16, 2017, Saratoga Investment entered into an equity distribution agreement with Ladenburg Thalmann & Co. Inc., through which Saratoga may offer for sale, from time-to-time, up to $30.0 million of its common stock through an ATM offering. Subsequent to this, BB&T Capital Markets and B. Riley FBR, Inc were also added to the agreement. On July 11, 2019, the amount of common stock to be offered through this offering was increased to $70.0 million, and on October 8, 2019, the amount of common stock to be offered through this offering was increased to $130.0 million. As of August 31, 2019, the Company sold 1,942,786 shares for gross proceeds of $47.1 million at an average price of $24.25 for aggregate net proceeds of $46.5 million (net of transaction costs).

Dividend

On August 27, 2019, Saratoga Investment announced a dividend of $0.56 per share for the fiscal quarter ended August 31, 2019, payable on September 26, 2019, to all stockholders of record at the close of business on September 13, 2019. This increase is the twentieth sequential increase to the Company’s quarterly dividends. On May 28, 2019, Saratoga Investment announced a dividend of $0.55 per share for the fiscal quarter ended May 31, 2019, payable on June 27, 2019, to all stockholders of record at the close of business on June 13, 2019. Total dividends declared for the fiscal years ended February 28, 2019, and 2018, were $2.10 per share and $1.94 per share, respectively.

Shareholders have the option to receive payment of the dividend in cash or receive shares of common stock, pursuant to the Company’s DRIP.

Share Repurchase Plan

In fiscal year 2015, the Company announced the approval of an open market share repurchase plan that allows it to repurchase up to 200,000 shares of its common stock at prices below its NAV as reported in its then most recently published financial statements. During fiscal year 2017, the share repurchase plan was increased to 600,000 shares of common stock, and during fiscal years 2018 and 2019, this share repurchase plan was extended for another year at the same level of approval, currently through January 2020. As of August 31, 2019, the Company purchased 218,491 shares of common stock, at the average price of $16.87 for approximately $3.7 million pursuant to this repurchase plan.

Saratoga Investment made no purchases of common stock in the open market during the three months ended August 31, 2019.

2020 Fiscal Second Quarter Conference Call/Webcast Information

When: Thursday, October 10, 2019, 10:00 a.m. Eastern Time (ET)

 Call:Interested parties may participate by dialing (U.S. and Canada) or (outside U.S. and Canada).     A replay of the call will be available from 1:00 p.m. ET on Thursday, October 10, 2019 through 1:00 p.m. ET on Thursday, October 17, 2019 by dialing (U.S. and Canada) or (outside U.S. and Canada), passcode for both replay numbers: 8626898.    Webcast:Interested parties may access a simultaneous webcast of the call and find the Q2 2020 presentation by going to the “Events & Presentations” section of Saratoga Investment Corp.’s investor relations website, http://ir.saratogainvestmentcorp/events-presentations

About Saratoga Investment Corp.

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

Forward Looking Statements

This press release contains certain forward-looking statements. These forward-looking statements are subject to risks and uncertainties and other factors enumerated in this press release and the filings Saratoga Investment makes with the SEC. Saratoga Investment undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Financials

Saratoga Investment Corp.
Consolidated Statements of Assets and Liabilities

  August 31, 2019  February 28, 2019   (unaudited)    ASSETS      Investments at fair value        Non-control/Non-affiliate investments (amortized cost of $376,936,296 and $307,136,188, respectively) $379,070,267  $306,511,427 Affiliate investments (amortized cost of $23,901,306 and $18,514,716, respectively)  17,750,919   11,463,081 Control investments (amortized cost of $80,491,992 and $76,265,189, respectively)  90,059,037   84,045,212 Total investments at fair value (amortized cost of $481,329,594 and $401,916,093, respectively)  486,880,223   402,019,720 Cash and cash equivalents  2,846,767   30,799,068 Cash and cash equivalents, reserve accounts  21,271,658   31,295,326 Interest receivable (net of reserve of $1,098,807 and $647,210, respectively)  4,896,769   3,746,604 Due from affiliate  –   1,673,747 Management and incentive fee receivable  279,960   542,094 Other assets  665,227   595,543 Total assets $516,840,604  $470,672,102          LIABILITIES        Revolving credit facility $-  $- Deferred debt financing costs, revolving credit facility  (558,655)  (605,189)SBA debentures payable  150,000,000   150,000,000 Deferred debt financing costs, SBA debentures payable  (2,152,801)  (2,396,931)2023 Notes payable  74,450,500   74,450,500 Deferred debt financing costs, 2023 notes payable  (1,719,614)  (1,919,620)2025 Notes payable  60,000,000   60,000,000 Deferred debt financing costs, 2025 notes payable  (2,232,061)  (2,377,551)Base management and incentive fees payable  8,633,468   6,684,785 Deferred tax liability  1,001,121   739,716 Accounts payable and accrued expenses  1,503,867   1,615,443 Interest and debt fees payable  3,200,510   3,224,671 Directors fees payable  75,000   62,000 Due to manager  302,702   319,091 Total liabilities $292,504,037  $289,796,915          Commitments and contingencies                 NET ASSETS        Common stock, par value $.001, 100,000,000 common shares        authorized, 9,168,056 and 7,657,156 common shares issued and outstanding, respectively $9,168  $7,657 Capital in excess of par value  240,296,267   203,552,800 Total distributable earnings (loss)  (15,968,868)  (22,685,270)Total net assets  224,336,567   180,875,187 Total liabilities and net assets $516,840,604  $470,672,102 NET ASSET VALUE PER SHARE $24.47  $23.62          Asset Coverage Ratio  266.9%  234.5%

Saratoga Investment Corp.
Consolidated Statements of Operations
(unaudited)

  For the three months ended   August 31, 2019  August 31, 2018 INVESTMENT INCOME      Interest from investments        Interest income:         Non-control/Non-affiliate investments $8,585,609  $8,046,730  Affiliate investments  267,533   241,607  Control investments  1,678,326   1,251,573 Payment-in-kind interest income:         Non-control/Non-affiliate investments  179,847   145,012  Affiliate investments  41,265   35,482  Control investments  989,367   594,367 Total interest from investments  11,741,947   10,314,771 Interest from cash and cash equivalents  145,793   11,455 Management fee income  629,745   363,962 Incentive fee income  –   147,061 Other income  1,370,728   565,525 Total investment income  13,888,213   11,402,774          OPERATING EXPENSES        Interest and debt financing expenses  3,866,722   2,866,414 Base management fees  1,997,240   1,645,653 Incentive management fees  2,085,486   807,521 Professional fees  384,874   468,253 Administrator expenses  518,750   458,333 Insurance  64,619   63,860 Directors fees and expenses  97,500   75,000 General & administrative  382,873   206,295 Income tax benefit  (465,925)  (341,232)Other expense  –   8,449 Total operating expenses  8,932,139   6,258,546 NET INVESTMENT INCOME  4,956,074   5,144,228          REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS        Net realized gain from investments:        Non-control/Non-affiliate investments  1,870,089   163 Net realized gain from investments  1,870,089   163 Net change in unrealized appreciation (depreciation) on investments:        Non-control/Non-affiliate investments  365,541   (1,086,162)Affiliate investments  731,304   (855,742)Control investments  361,027   (212,617)Net change in unrealized appreciation (depreciation) on investments  1,457,872   (2,154,521)Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments  (704,263)  152,546 Net realized and unrealized gain (loss) on investments  2,623,698   (2,001,812)         NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $7,579,772  $3,142,416          WEIGHTED AVERAGE – BASIC AND DILUTED EARNINGS PER COMMON SHARE $0.91  $0.45          WEIGHTED AVERAGE COMMON SHARES OUTSTANDING – BASIC AND DILUTED  8,333,570   6,915,966 

Saratoga Investment Corp.
Consolidated Statements of Operations
(unaudited)

  For the six months ended   August 31, 2019  August 31, 2018 INVESTMENT INCOME      Interest from investments        Interest income:         Non-control/Non-affiliate investments $17,113,349  $15,452,639  Affiliate investments  516,858   480,957  Control investments  3,326,472   2,398,238 Payment-in-kind interest income:         Non-control/Non-affiliate investments  331,744   361,022  Affiliate investments  81,415   69,629  Control investments  1,975,236   1,159,224 Total interest from investments  23,345,074   19,921,709 Interest from cash and cash equivalents  197,152   27,748 Management fee income  1,259,261   749,156 Incentive fee income  –   346,244 Other income  1,837,910   845,935 Total investment income  26,639,397   21,890,792          OPERATING EXPENSES        Interest and debt financing expenses  7,731,298   5,589,206 Base management fees  3,809,409   3,178,121 Incentive management fees  4,198,655   1,880,133 Professional fees  780,000   1,011,050 Administrator expenses  1,018,750   895,833 Insurance  129,238   127,719 Directors fees and expenses  157,500   170,500 General & administrative  641,474   554,145 Income tax benefit  (463,789)  (608,542)Excise tax credit  –   (270)Other expense  –   21,021 Total operating expenses  18,002,535   12,818,916 NET INVESTMENT INCOME  8,636,862   9,071,876          REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS        Net realized gain from investments:        Non-control/Non-affiliate investments  1,870,089   212,171 Net realized gain from investments  1,870,089   212,171 Net change in unrealized appreciation (depreciation) on investments:        Non-control/Non-affiliate investments  2,758,732   (782,457)Affiliate investments  901,248   (1,331,304)Control investments  1,787,022   602,445 Net change in unrealized appreciation (depreciation) on investments  5,447,002   (1,511,316)Net change in provision for deferred taxes on unrealized appreciation on investments  (725,193)  (788,000)Net realized and unrealized gain (loss) on investments  6,591,898   (2,087,145)NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $15,228,760  $6,984,731          WEIGHTED AVERAGE – BASIC AND DILUTED EARNINGS PER COMMON SHARE $1.89  $1.06          WEIGHTED AVERAGE COMMON SHARES OUTSTANDING – BASIC AND DILUTED  8,041,365   6,597,324 

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

On a supplemental basis, Saratoga Investment provides information relating to adjusted net investment income, adjusted net investment income yield and adjusted net investment income per share, which are non-GAAP measures. These measures are provided in addition to, but not as a substitute for, net investment income, net investment income yield and net investment income per share. Adjusted net investment income represents net investment income excluding any capital gains incentive fee expense or reversal attributable to unrealized gains. The management agreement with the Company’s advisor provides that a capital gains incentive fee is determined and paid annually with respect to cumulative realized capital gains (but not unrealized capital gains) to the extent such realized capital gains exceed realized and unrealized losses for such year. In addition, Saratoga Investment accrues, but does not pay, a capital gains incentive fee in connection with any unrealized capital appreciation, as appropriate. As such, Saratoga Investment believes that adjusted net investment income, adjusted net investment income yield and adjusted net investment income per share is a useful indicator of operations exclusive of any capital gains incentive fee expense or reversal attributable to unrealized gains. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. The following table provides a reconciliation of net investment income to adjusted net investment income, net investment income yield to adjusted net investment income yield and net investment income per share to adjusted net investment income per share for the three and six months ended August 31, 2019 and August 31, 2018.

  For the three months ended
August 31  For the six months ended
August 31   2019  2018  2019  2018              Net Investment Income $4,956,074  $5,144,228  $8,636,862  $9,071,876 Changes in accrued capital gains incentive fee expense/reversal  676,801   (383,118)  1,630,809   (310,852)Adjusted net investment income  5,632,875   4,761,109   10,267,671   8,761,024                  Net investment income yield  9.6%  12.9%  8.8%  12.0%Changes in accrued capital gains incentive fee expense/reversal  1.4%  (1.0%)  1.6%  (0.5%)Adjusted net investment income yield (1)  11.0%  11.9%  10.4%  11.5% Net investment income per share $0.59  $0.74  $1.07  $1.38 Changes in accrued capital gains incentive fee expense/reversal $0.09  ($0.05) $0.21  ($0.05)Adjusted net investment income per share (2) $0.68  $0.69  $1.28  $1.33 

 (1)Adjusted net investment income yield is calculated as adjusted net investment income divided by average net asset value.    (2)Adjusted net investment income per share is calculated as adjusted net investment income divided by weighted average common shares outstanding.

: Henri Steenkamp Saratoga Investment Corp. Roland Tomforde Broadgate Consultants