What changed in this filing

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Item 9A. Controls and Procedures

2021-05-05 compared with 2020-05-06 · 3059 added, 3059 removed, 941 unchanged (87% of the section changed)

This section is long enough that the comparison stopped early. What follows is partial, and the remainder is not necessarily unchanged.

CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our

management, including our chief executive officer and our chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934).

Based on that evaluation, our chief executive officer and our chief financial officer have concluded that our current disclosure controls and procedures are

effective in facilitating timely decisions regarding required disclosure of any material information relating to us that is required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934.

evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management

necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Managements annual report on internal control over financial reporting

The Companys management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in

Rules 13a-15(f) and 15d-15(f) of the Exchange Act).

Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the

reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with U.S.

of disclosure controls and procedures

of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of

our management, including our chief executive officer and our chief financial officer, of the effectiveness of the design and

operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of

Based on that evaluation, our chief executive officer and our chief financial officer have concluded that our current

disclosure controls and procedures are effective in facilitating timely decisions regarding required disclosure of any material

information relating to us that is required to be disclosed by us in the reports we file or submit under the Securities Exchange Act

However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no

matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and

management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and

Management’s

annual report on internal control over financial reporting

Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined

in Rules 13a-15(f) and 15d-15(f) of the Exchange Act).

Our internal control over financial reporting is a process designed to provide

reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting

purposes in accordance with U.S.

Internal control over financial reporting includes those policies and procedures that (i) pertain

to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that the transactions are recorded as necessary to permit

preparation of financial statements in accordance with U.S.

GAAP, and that the receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide

reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal

control over financial reporting may not prevent or detect misstatements.

Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the

degree of compliance with polices or procedures may deteriorate.

Under the supervision and with participation of our Chief Executive

Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of internal control over financial reporting based on the criteria established in Internal ControlIntegrated Framework (2013) issued by the

Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on the Companys evaluation under the framework in Internal ControlIntegrated Framework (2013), management concluded that the Companys internal control

over financial reporting was effective as of February 29, 2020.

Attestation Report of the Registered Public Accounting Firm

Our internal control over financial reporting as of February 29, 2020 has been audited by Ernst & Young LLP, an

independent registered public accounting firm, as stated in their report, which is included in the consolidated financial statements of the Company in this Annual Report under the heading Report of Independent Registered Public Accounting Firm.

Changes in internal controls over financial reporting

There have been no changes in the Companys internal control over financial reporting (as defined in Rule

13a-15(f) of Exchange Act) that occurred during our most recently completed fiscal year that have materially affected, or are reasonably likely to materially affect, the Companys internal control over

financial reporting.

to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets

of the company;

(ii) provide reasonable assurance that the transactions are recorded as necessary to permit preparation of financial

statements in accordance with U.S.

GAAP, and that the receipts and expenditures of the company are being made only in accordance with

authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection

of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Projections of

any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,

or that the degree of compliance with polices or procedures may deteriorate.

the supervision and with participation of our Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation

of the effectiveness of internal control over financial reporting based on the criteria established in Internal Control—Integrated

Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on the Company’s

evaluation under the framework in Internal Control—Integrated Framework (2013), management concluded that the Company’s internal

control over financial reporting was effective as of February 28, 2021.

in internal controls over financial reporting

have been no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) of Exchange Act)

that occurred during our most recently completed fiscal year that have materially affected, or are reasonably likely to materially affect,

the Company’s internal control over financial reporting.

OTHER INFORMATION

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Director and Executive Officer Information

The following table sets

forth the names, ages and positions held by each of our directors, followed by a brief biography of each individual, including the business experience of each individual during the past five years and the specific qualifications that led to the

conclusion that each individual should serve as a director.

and Executive Officer Information

following table sets forth the names, ages and positions held by each of our directors, followed by a brief biography of each individual,

including the business experience of each individual during the past five years and the specific qualifications that led to the conclusion

that each individual should serve as a director.

Interested Directors

Chairman of the Board and Chief Executive Officer

President and Director

Chairman of the Board, Chief Executive Officer and President

Chief Financial Officer, Chief Compliance Officer, Treasurer and Secretary

Independent Directors

Cabell Williams

Oberbeck Mr.

Oberbeck has over 35 years of experience in leveraged

finance, from distressed debt to private equity, and has been involved in originating, structuring, negotiating, consummating, managing and monitoring investments in these businesses.

Oberbeck is the Managing Member of Saratoga Investment

Advisors, LLC, the Companys investment adviser, and the Chairman of the Board and Chief Executive Officer of the Company.

Oberbeck also served as President of the Company until February 2014.

Oberbeck is also the Managing

Partner of Saratoga Partners, a middle market private equity investment firm.

Prior to assuming full management responsibility for

Saratoga Partners in 2008, Mr.

Oberbeck —Mr.

Oberbeck has over 36 years of experience in leveraged finance, from distressed debt to private equity,

and has been involved in originating, structuring, negotiating, consummating, managing and monitoring investments in a broad array of

Oberbeck is the Managing Member of Saratoga Investment Advisors, LLC, the Company’s investment adviser and the

Chairman of the Board, Chief Executive Officer and President of the Company.

Oberbeck is also the Managing Partner of Saratoga Partners,

a middle market private equity investment firm.

to assuming full management responsibility for Saratoga Partners in 2008, Mr.

Oberbeck had co-managed Saratoga Partners since 1995.

Oberbeck joined Dillon Read and Saratoga Partners from Castle Harlan, Inc., a corporate buyout firm which he had joined at its founding in 1987 and

was a Managing Director, leading successful investments in manufacturing and financial services companies.

Prior to that, he worked in the Corporate Development Group of Arthur Young and in corporate finance at Blyth Eastman Paine Webber.

Oberbeck has been a director of numerous middle market companies.

Oberbeck graduated from Brown University in 1982 with

a BS in Physics and a BA in Mathematics.

In 1985, he earned an MBA from Columbia University.

Oberbecks qualifications as a director include his extensive experience in the investment and finance industry, as well as his intimate

knowledge of the Companys operations, gained through his service as an executive officer.

Grisius has over 29 years of experience in leveraged finance, investment management and financial services.

He has originated, structured, negotiated, consummated, managed and monitored numerous successful investments

in mezzanine debt, private equity, senior debt, structured products and commercial real estate debt.

Grisius is Chief Investment Officer and a Managing Director of Saratoga Investment Advisors, LLC, the Companys investment adviser,

and was appointed President of the Company in February 2013.

Grisius joined Saratoga Investment Advisors, LLC in July 2011.

Prior to joining Saratoga Investment Advisors, Mr.

Grisius served as Managing Director at Allied Capital Corporation, where he was an

investment professional for 16 years.

At Allied Capital Corporation, Mr.

Grisius held several senior positions including co-head of Mezzanine Finance and member of its Management Committee and its

Investment Committee.

Grisius was appointed co-chairman of the Allied Capital Corporations Investment Committee.

He also had responsibility for structuring and managing Unitranche Fund, LLC.

During his tenure at Allied,

Grisius built and led teams that made investments in subordinated debt, control equity and real estate mortgage debt.

Grisius has served on the board of directors of numerous middle market companies.

Prior to joining Allied Capital

Grisius worked in leveraged finance at Chemical Bank from 1989 to 1992 and held senior accountant and consultant positions with KPMG LLP from 1985 to 1988.

Grisius graduated with a BS from Georgetown University in 1985 and earned an MBA from Cornell Universitys Johnson Graduate

School of Management in 1990.

Grisius qualifications as a director include his broad experience in leverage finance, investment management, private equity and financial services.

Looney is a Managing Director of Peale

Inc., a strategic advisory firm specializing in change management, revenue enhancement and business process improvement for middle market enterprises and is a CPA and an attorney.

Looney has served as a consultant and

director to numerous companies in the healthcare, manufacturing and services industries.

Between 2000 and 2005, he served as Senior Vice President and Chief Financial Officer of PCCI, Inc., a private IT staffing and outsourcing firm.

Oberbeck joined Dillon Read and Saratoga Partners from Castle Harlan, Inc., a corporate buyout firm which he had joined at its founding

in 1987 and was a Managing Director, leading successful investments in manufacturing and financial services companies.

Prior to that,

he worked in the Corporate Development Group of Arthur Young and in corporate finance at Blyth Eastman Paine Webber.

been a director of numerous middle market companies.

Oberbeck graduated from Brown University in 1982 with a BS in Physics and a BA in Mathematics.

In 1985, he earned an MBA from Columbia

Oberbeck’s qualifications as a director include his extensive experience in the investment and finance industry,

as well as his intimate knowledge of the Company’s operations, gained through his service as an executive officer.

Looney —Mr.

Looney is a Managing Director of Peale Davies & Co.

Inc., a strategic advisory firm specializing in change

management and revenue enhancement for middle market enterprises, and is a CPA and an attorney.

served as a consultant and director to numerous companies in the healthcare, manufacturing and services industries.

Between 2000 and

2005, he served as Senior Vice President and Chief Financial Officer of PCCI, Inc., a private IT staffing and outsourcing firm.

1992 and 2000, Mr.

Looney worked at WH Industries as Chief Financial and Administrative Officer.

Looney is a trustee of Excellent Education for Everyone, a nonprofit organization.

Looney graduated summa cum laude from the

University of Washington with a B.A.

Looney is a trustee of Excellent

Education for Everyone, a nonprofit organization and founder of its affiliate, Education Moms.

Looney graduated summa cum laude from

the University of Washington with a B.A.

degree in accounting and received a J.D.

from the University of Washington School of Law where he was a member of the law review.

from the University of Washington School of Law where

he was a member of the law review.

He began his career at the United States Securities and Exchange Commission.

Looneys qualifications as director include his experience as a Managing Director of Peale Davies & Co.

and as Chief Financial and Administrative Officer of WH Industries, as well as his financial, accounting and legal

Whitman III Mr.

Looney’s qualifications

as director include his experience as a Managing Director of Peale Davies & Co., as Chief Financial and Administrative Officer of

WH Industries and as General Counsel and Chief Compliance Officer of A.G.

Becker-Warburg Paribas Becker, as well as his financial, accounting

and legal expertise.

Whitman III —Mr.

Whitman is senior counsel (retired) at Davis Polk & Wardwell LLP.

Whitman was a partner in Davis Polks Corporate Department for 28 years, representing clients in a broad range of corporate finance matters, including shelf registrations, securities compliance for financial institutions, foreign asset

privatizations, and mergers and acquisitions.

Whitman was a partner in Davis

Polk’s Corporate Department for 28 years, representing clients in a broad range of corporate finance matters, including shelf registrations,

securities compliance for financial institutions, foreign asset privatizations, and mergers and acquisitions.

From 1971 to 1973, Mr.

Whitman served as Executive Assistant to three successive Chairmen of the SEC.

Whitman graduated from Harvard College and graduated magna cum laude from Harvard Law

School with a LL.B.

Whitman graduated from Harvard College and graduated

magna cum laude from Harvard Law School with a LL.B.

Whitman also received an LL.M.

from Cambridge University in England.

Whitmans qualifications as director include his 28 years of experience representing clients, including AT&T, Exxon Mobil, General

Motors and BP, in securities matters as a partner in Davis Polks corporate department.

Williams Mr.

Williams has served as the Managing General Partner of Williams and Gallagher, a private equity partnership located in Chevy Chase, Maryland since 2004.

Williams is a Partner, Senior Manager and Director of

Farragut Capital Partners, which is a Mezzanine Fund based out of Chevy Chase, Maryland.

Williams concluded a 23-year career at Allied Capital Corporation, a business development company based in Washington, DC, which was acquired

by Ares Capital Corporation in 2010.

Whitman’s

qualifications as director include his 28 years of experience representing clients, including AT&T, Exxon Mobil, General Motors and

BP, in securities matters as a partner in Davis Polk’s corporate department.

Steenkamp —Mr.

Steenkamp, 45 years old, is a Director of the Board and Chief Financial Officer, Chief Compliance Officer,

Treasurer and Secretary of the Company and of Saratoga Investment Advisors LLC, the Company’s investment adviser.

Prior to this,

Steenkamp had served as the Chief Financial Officer of MF Global Holdings Ltd., a broker in commodities and derivatives, from April

Prior to that, Mr.

Steenkamp held the position of Chief Accounting Officer and Global Controller at MF Global for four years.

joined MF Global, then Man Financial, in 2006 as Vice President of External Reporting and Accounting Policy.

After MF Global filed for

bankruptcy protection in October 2011, he continued to serve as Chief Financial Officer of the holding company through January 2013.

joining MF Global, Mr.

Steenkamp spent eight years with PricewaterhouseCoopers (“PwC”), including four years in Transaction

Services in its New York office, managing a variety of capital-raising transactions on a global basis.

His focus was also on the SEC

registration and public company filing process, including technical accounting.

He spent four years with PwC in South Africa, where he

served as an auditor primarily for SEC registrants and assisted South African companies as they went public in the U.S.

is a chartered accountant and holds an honors degree in Finance.

Steenkamp’s qualifications as director include his extensive

experience in the investment and finance industry, as well as his intimate knowledge of the Company’s operations, gained through

his service as the Company’s Chief Financial Officer, Chief Compliance Officer, Treasurer and Secretary.

Cabell Williams —Mr.

Williams has served as the Managing General Partner of Williams and Gallagher, a private equity partnership

located in Chevy Chase, Maryland since 2004.

Williams is a Partner, Senior Manager and Director of Farragut Capital Partners, which

is a Mezzanine Fund based out of Chevy Chase, Maryland.

Williams concluded a 23-year career at Allied Capital Corporation,

a business development company based in Washington, DC, which was acquired by Ares Capital Corporation in 2010.

While at Allied, Mr.

Williams held a variety of positions, including President, CIO and finally Managing Director following Allieds merger with its affiliates in 1998.

From 1991 to 2004,

Williams either led or co-managed the firms Private Equity Group.

For the nine years prior to 1999, Mr.

Williams led Allieds Mezzanine investment activities.

For 15 years,

Williams served on Allieds Investment Committee where he was responsible for reviewing and approving all of the firms investments.

Williams held a variety of positions, including President, CIO and finally Managing Director following Allied’s merger with its

affiliates in 1998.

From 1991 to 2004, Mr.

Williams either led or co-managed the firm’s Private Equity Group.

For the nine years

prior to 1999, Mr.

Williams ran Allieds Minority Small Business Investment Company.

also founded Allied Capital Commercial Corporation, a real estate investment vehicle.

Williams led Allied’s Mezzanine investment activities.

For 15 years, Mr.

Williams served on Allied’s Investment

Committee where he was responsible for reviewing and approving all of the firm’s investments.

Prior to 1991, Mr.

Williams ran Allied’s

Minority Small Business Investment Company.

He also founded Allied Capital Commercial Corporation, a real estate investment vehicle.

Williams has served on the board of directors of various public and private companies.

Williams attended The Landon School, and graduated from

Mercersburg Academy and Rollins College, receiving a B.S.

Williams attended The Landon School, and

graduated from Mercersburg Academy and Rollins College, receiving a B.S.

in Business Administration from the latter.

Williams qualifications as director include his 28 years of experience managing investment activities at Allied Capital, where he

served in a variety of positions, including President, CIO and Managing Director.

Executive Officer Who Is Not Also a Director

The following table sets forth the name, age and position held by our executive officer who is not also a director, followed by a brief

biography, including the business experience during the past five years.

Executive Officer

Chief Financial Officer, Chief Compliance Officer, Treasurer and Secretary

Steenkamp Mr.

Steenkamp, 44 years old, had served as the Chief Financial

Officer of MF Global Holdings Ltd., a broker in commodities and derivatives, from April 2011.

Prior to that, Mr.

Steenkamp held the position of Chief Accounting Officer and Global Controller at MF Global for four years.

He joined MF Global,

then Man Financial, in 2006 as Vice President of External Reporting and Accounting Policy.

After MF Global filed for bankruptcy protection in October 2011, he continued to serve as Chief Financial Officer of the holding company through January 2013.

Before joining MF Global, Mr.

Steenkamp spent eight years with PricewaterhouseCoopers

(PwC), including four years in Transaction Services in its New York office, managing a variety of capital-raising transactions on a global basis.

His focus was also on the SEC registration and public company filing process, including

technical accounting.

He spent four years with PwC in South Africa, where he served as an auditor primarily for SEC registrants and assisted South African companies as they went public in the U.S.

Steenkamp is a chartered accountant and

holds an honors degree in Finance.

Code of Business Conduct and Ethics

We have adopted a Code of Business Conduct and Ethics which applies to, among others, our executive officers, including our principal executive

Williams’

qualifications as director include his 28 years of experience managing investment activities at Allied Capital, where he served in a

variety of positions, including President, CIO and Managing Director.

of Business Conduct and Ethics

have adopted a Code of Business Conduct and Ethics which applies to, among others, our executive officers, including our principal executive

officer and principal financial officer, as well as every officer, director and employee of the Company.

Requests for copies should be sent in writing to Saratoga Investment Corp., 535 Madison Avenue, New York, New York 10022.

The Companys

Code of Business Conduct and Ethics is also available on our website at www.s a rat o ga i nvestme n tcorp.co m .

If we make any substantive amendment to, or grant a waiver from, a provision of our Code of Business Conduct and Ethics, we will promptly

disclose the nature of the amendment or waiver on our website at www.sarat o ga i nvestme n tcor p .

Practices and Policies Regarding Hedging, Speculative Trading and Pledging of Securities

Our insider trading policy generally prohibits the Companys and our Investment Advisers directors, officers and employees from

engaging in any short-term trading, short sales and other speculative transactions involving our securities, including buying or selling puts or calls or other derivative securities based on our securities.

In addition, such persons are generally

prohibited under our insider trading policy from entering into hedging or monetization transactions or similar arrangements, as well as pledging our securities in a margin account or as collateral for a loan, except in limited circumstances that are

pre-approved by our chief compliance officer.

Nomination of Directors

There have been no material changes to the procedures by which stockholders may recommend nominees to our board of directors implemented since

Requests for copies should be

sent in writing to Saratoga Investment Corp., 535 Madison Avenue, New York, New York 10022.

The Company’s Code of Business Conduct

and Ethics is also available on our website at www.saratogainvestmentcorp.com.

we make any substantive amendment to, or grant a waiver from, a provision of our Code of Business Conduct and Ethics, we will promptly

disclose the nature of the amendment or waiver on our website at www.saratogainvestmentcorp.com.

and Policies Regarding Hedging, Speculative Trading and Pledging of Securities

insider trading policy generally prohibits the Company’s and our Investment Adviser’s directors, officers and employees from

engaging in any short-term trading, short sales and other speculative transactions involving our securities, including buying or selling

puts or calls or other derivative securities based on our securities.

In addition, such persons are generally prohibited under our insider

trading policy from entering into hedging or monetization transactions or similar arrangements, as well as pledging our securities in

a margin account or as collateral for a loan, except in limited circumstances that are pre-approved by our chief compliance officer.

have been no material changes to the procedures by which stockholders may recommend nominees to our board of directors implemented since

the filing of our Proxy Statement for our 2018 Annual Meeting of Stockholders.

Audit Committee

The current members of the audit committee are Steven M.

current members of the audit committee are Steven M.

Looney (Chairman), Charles S.

1 unchanged sentence

Cabell Williams.

directors has determined that Mr.

Looney is an audit committee financial expert as defined under Item 407 of Regulation S-K of the Securities Exchange Act of 1934 and that each of Messrs.

Whitman and Williams are financially literate as required by NYSE corporate governance standards.

The board of directors

has determined that Mr.

Looney is an “audit committee financial expert”

as defined under Item 407 of Regulation S-K of the

Securities Exchange Act of 1934 and that each of Messrs.

Whitman and Williams are “financially literate”

as required by NYSE

corporate governance standards.

All of these members are independent directors.

EXECUTIVE COMPENSATION

Executive Compensation

Currently, none of

our executive officers are compensated by us.

We currently have no employees, and each of our executive officers is also an employee of Saratoga Investment Advisors.

Services necessary for our business are provided by individuals who are employees

of Saratoga Investment Advisors, pursuant to the terms of the Management Agreement and the Administration Agreement.

Director Compensation

Our independent directors receive an annual fee of $60,000.

They also receive $2,500 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each board meeting and receive $1,000 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each committee meeting.

In addition, the chairman of the audit committee receives an annual fee of $10,000 and the chairman of each other committee

receives an annual fee of $5,000 for their additional services in these capacities.

In addition, we have purchased directors and officers liability insurance on behalf of our directors and officers.

Independent directors have the option

to receive their directors fees in the form of our common stock issued at a price per share equal to the greater of net asset value or the market price at the time of payment.

No compensation is paid to directors who are interested

The following table sets forth information concerning total compensation earned by or paid

to each of our directors during the fiscal year ended February 29, 2020:

Fees Earned or

none of our executive officers are compensated by us.

We currently have no employees, and each of our executive officers is also an employee

of Saratoga Investment Advisors.

Services necessary for our business are provided by individuals who are employees of Saratoga Investment

Advisors, pursuant to the terms of the Management Agreement and the Administration Agreement.

independent directors receive an annual fee of $70,000.

They also receive $3,000 plus reimbursement of reasonable out-of-pocket expenses

incurred in connection with attending each board meeting and receive $1,500 plus reimbursement of reasonable out-of-pocket expenses incurred

in connection with attending each committee meeting.

In addition, the chairman of the audit committee receives an annual fee of $12,500

and the chairman of each other committee receives an annual fee of $6,000 for their additional services in these capacities.

we have purchased directors’

and officers’

liability insurance on behalf of our directors and officers.

Independent directors

have the option to receive their directors’

fees in the form of our common stock issued at a price per share equal to the greater

of net asset value or the market price at the time of payment.

No compensation is paid to directors who are “interested persons.”

following table sets forth information concerning total compensation earned by or paid to each of our directors during the fiscal year

ended February 28, 2021:

Fees Earned or Paid in Cash

Interested Directors

1 unchanged sentence

Cabell Williams

No compensation was paid to directors who are interested persons of us as defined in the 1940 Act.

Compensation Committee Interlocks and Insider Participation

The current members of the compensation committee are G.

(1) No compensation was paid to directors who are interested persons

of us as defined in the 1940 Act.

Committee Interlocks and Insider Participation

current members of the compensation committee are G.

Cabell Williams (Chairman), Steven M.

Looney and Charles S.

members are independent directors.

The compensation committee is responsible for overseeing the Companys compensation policies generally and making recommendations to the board of directors with respect to incentive compensation and

equity-based plans of the Company that are subject to board of directors approval, evaluating executive officer performance and reviewing the Companys management succession plan, overseeing and setting compensation for the Companys

directors and, as applicable, its executive officers and, as applicable, preparing the report on executive officer compensation that SEC rules require to be included in our Annual Report on Form 10-K.

Currently, none of our executive officers are compensated by the Company and as such the compensation committee is not required to produce a report on executive officer compensation for inclusion in our Annual Report on Form 10-K.

During fiscal year 2020, none of the Companys executive officers served on the board of

directors (or a compensation committee thereof or other board committee performing equivalent functions) of any entities that had one or more executive officers serve on the compensation committee or on the board of directors.

No current or past

executive officers or employees of the Company or its affiliates serve on the compensation committee.

OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth, as of May 5,

2020, the beneficial ownership of each current director, the nominees for director, the Companys executive officers, each person known to us to beneficially own 5.0% or more of the outstanding shares of our common stock, and the executive

these members are independent directors.

The compensation committee is responsible for overseeing the Company’s compensation policies

generally and making recommendations to the board of directors with respect to incentive compensation and equity-based plans of the Company

that are subject to board of directors approval, evaluating executive officer performance and reviewing the Company’s management

succession plan, overseeing and setting compensation for the Company’s directors and, as applicable, its executive officers and,

as applicable, preparing the report on executive officer compensation that SEC rules require to be included in our Annual Report on Form

Currently, none of our executive officers are compensated by the Company and as such the compensation committee is not required

to produce a report on executive officer compensation for inclusion in our Annual Report on Form 10-K.

fiscal year ended February 28, 2021 none of the Company’s executive officers served on the board of directors (or a compensation

committee thereof or other board committee performing equivalent functions) of any entities that had one or more executive officers serve

on the compensation committee or on the board of directors.

No current or past executive officers or employees of the Company or its

affiliates serve on the compensation committee.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

following table sets forth, as of May 4, 2021, the beneficial ownership of each current director, the nominees for director, the Company’s

executive officers, each person known to us to beneficially own 5.0% or more of the outstanding shares of our common stock, and the executive

officers and directors as a group.

The percentage ownership is based on 11,217,545 shares of common stock outstanding as of May 5, 2020.

Shares of common stock that are subject to warrants or other convertible securities currently exercisable or exercisable within 60 days thereof, are deemed outstanding for the purposes of computing the percentage ownership of the person holding

these options or convertible securities, but are not deemed outstanding for computing the percentage ownership of any other person.

Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power with

respect to securities.

To our knowledge, unless otherwise indicated in the footnotes to this table, the persons and entities named in the table have sole voting and sole investment power with respect to all shares beneficially owned.

otherwise indicated by footnote, the address for each listed individual is Saratoga Investment Corp., 535 Madison Avenue, New York, New York 10022.

percentage ownership is based on 11,199,995 shares of common stock outstanding as of May 4, 2021.

Shares of common stock that are subject

to warrants or other convertible securities currently exercisable or exercisable within 60 days thereof, are deemed outstanding for the

purposes of computing the percentage ownership of the person holding these options or convertible securities, but are not deemed outstanding

for computing the percentage ownership of any other person.

Beneficial ownership is determined under the rules of the SEC and generally

includes voting or investment power with respect to securities.

To our knowledge, unless otherwise indicated in the footnotes to this

table, the persons and entities named in the table have sole voting and sole investment power with respect to all shares beneficially

Unless otherwise indicated by footnote, the address for each listed individual is Saratoga Investment Corp., 535 Madison Avenue,

New York, New York 10022.

Name of Beneficial Owners

Number of Shares of

Beneficially Owned

Interested Directors

Executive Officer

1,535,792 (1)

Independent Directors

Cabell Williams

All Directors and Executive Officers as a Group

All Directors as a Group

Owners of 5% or more of our common stock

1 unchanged sentence

Elizabeth Oberbeck(3)

Less than 1.0%

Oberbeck and Inglesby are affiliates who make up 16.8% of the ownership of SAR.

Includes 725,435 shares of common stock directly held by Mr.

Oberbeck, 217,774 shares of common stock held

by CLO Partners LLC, an entity wholly owned by Mr.

Oberbeck, 31,843 shares of common stock directly held by Mr.

Oberbeck, Mr.

Grisius and Mr.

Inglesby are affiliates who

make up 18.4% of the ownership of SAR.

(1) Includes 722,868 shares of common stock directly held by

Oberbeck, 217,774 shares of common stock held by CLO Partners LLC, an entity wholly owned by Mr.

Oberbeck, 44,869 shares of common

stock directly held by Mr.

Oberbeck's children, for which Mr.

Oberbeck retains the voting rights, 1,011 shares of common stock directly held by

Oberbeck retains the voting rights, 1,100 shares of common stock directly

Oberbeck's wife, for which Mr.

Oberbeck retains the voting rights, and 549,183 shares of common stock directly held by Elizabeth Oberbeck.

Oberbeck retains the voting rights, and 549,183 shares of common stock directly held by Elizabeth

See footnote 3 below.

(2) Based on information included in Amendment No.

9 to Schedule 13G filed by Black Diamond Capital

Management, L.L.C.

9 to Schedule

13G filed by Black Diamond Capital Management, L.L.C.

with the SEC on February 16, 2021.

The address of Black Diamond Capital Management, L.L.C.

The address of Black Diamond Capital Management,

is One Sound Shore Drive, Suite 200, Greenwich, CT 06830.

(3) Based on information included in Amendment No.

3 to Schedule 13D filed jointly by Christian L.

Elizabeth Oberbeck, Saratoga Investment Advisors and CLO Partners LLC on November 4, 2014.

Pursuant to an Agreement Relating to Shares of Common Stock of Saratoga Investment Corp.

(the Transfer Agreement), Christian L.

transferred 744,183 shares of common stock beneficially owned by him to Elizabeth Oberbeck.

Elizabeth Oberbeck has full ownership rights with respect to the shares, including without limitation, the right to (A) receive any cash and/or stock

dividends and distributions paid on or with respect to the shares and (B) sell the shares in accordance with the provisions of the Transfer Agreement and receive all proceeds therefrom.

However, pursuant to the terms of the Transfer Agreement,

Oberbeck has retained the right to vote the shares, except that Elizabeth Oberbeck has retained the right to vote the shares on all matters submitted to shareholders with respect to any matter that could give rise to dissenters or other

rights of an objecting shareholder under Maryland General Corporation Law.

The Transfer Agreement also contains a right of first refusal that requires Elizabeth Oberbeck to offer Christian L.

Oberbeck the opportunity to purchase any shares of Common

Stock owned by her prior to her intended sale of the shares.

Any such purchases may be made either directly by Mr.

2 to Schedule 13D filed on January 16, 2020, which

amends and supplements the statements on Schedule 13D originally filed with the Securities and Exchange Commission on October 27,

2014 and amended by Amendment No.

1 on April 2, 2019.

The original 13D was filed jointly by Christian L.

Oberbeck, Elizabeth

Oberbeck, Saratoga Investment Advisors and CLO Partners LLC on November 4, 2014.

Pursuant to an Agreement Relating to Shares of

Common Stock of Saratoga Investment Corp.

(the “Transfer Agreement”), Christian L.

Oberbeck transferred 744,183 shares

of common stock beneficially owned by him to Elizabeth Oberbeck.

Elizabeth Oberbeck has full ownership rights with respect to the

shares, including without limitation, the right to (A) receive any cash and/or stock dividends and distributions paid on or with

respect to the shares and (B) sell the shares in accordance with the provisions of the Transfer Agreement and receive all proceeds

However, pursuant to the terms of the Transfer Agreement, Christian L.

Oberbeck has retained the right to vote the

shares, except that Elizabeth Oberbeck has retained the right to vote the shares on all matters submitted to shareholders with

respect to any matter that could give rise to dissenters or other rights of an objecting shareholder under Maryland General

Corporation Law.

The Transfer Agreement also contains a right of first refusal that requires Elizabeth Oberbeck to offer Christian

Oberbeck the opportunity to purchase any shares of Common Stock owned by her prior to her intended sale of the shares.

purchases may be made either directly by Mr.

Oberbeck or through entities affiliated with him.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

Transactions with Related Persons

We have entered into a Management Agreement with Saratoga Investment Advisors, LLC.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

with Related Persons

have entered into a Management Agreement with Saratoga Investment Advisors, LLC.

We have also entered into a license agreement with Saratoga

Investment Advisors, LLC, pursuant to which Saratoga Investment Advisors has agreed to grant us a non-exclusive, royalty-free license to use the name Saratoga. In addition, pursuant to the terms of

the Administration Agreement, Saratoga Investment Advisors, LLC provides us with the office facilities and administrative services necessary to conduct our day-to-day

Oberbeck, our chief executive officer, is the primary investor in and controls Saratoga Investment Advisors, LLC.

Investment Advisors, LLC, pursuant to which Saratoga Investment Advisors has agreed to grant us a non-exclusive, royalty-free license

to use the name “Saratoga.”

In addition, pursuant to the terms of the Administration Agreement, Saratoga Investment Advisors,

LLC provides us with the office facilities and administrative services necessary to conduct our day-to-day operations.

our chief executive officer, is the primary investor in and controls Saratoga Investment Advisors, LLC.

Approval or Ratification of Transactions with Related Persons

The Audit Committee of our board is required to review and approve any

transactions with related persons (as such term is defined in Item 404 of Regulation S-K).

In accordance with rules of the NYSE, the board of directors annually determines the independence of each director.

director is considered independent unless the board of directors has determined that he or she has no material relationship with the Company.

The Company monitors the status of its directors and officers through the activities of the Companys

Nominating and Corporate Governance Committee and through a questionnaire to be completed by each director no less frequently than annually, with updates periodically if information provided in the most recent questionnaire has changed.

In order to evaluate the materiality of any such relationship, the board of directors uses the definition of director independence set forth

Audit Committee of our board is required to review and approve any transactions with related persons (as such term is defined in Item

404 of Regulation S-K).

accordance with rules of the NYSE, the board of directors annually determines the independence of each director.

No director is considered

independent unless the board of directors has determined that he or she has no material relationship with the Company.

The Company monitors

the status of its directors and officers through the activities of the Company’s Nominating and Corporate Governance Committee

and through a questionnaire to be completed by each director no less frequently than annually, with updates periodically if information

provided in the most recent questionnaire has changed.

order to evaluate the materiality of any such relationship, the board of directors uses the definition of director independence set forth

in the NYSE Listed Company Manual.

Section 303A.00 of the NYSE Listed Company Manual provides that business development companies, or BDCs, such as the Company, are required to comply with all of the provisions of Section 303A applicable

to domestic issuers other than Sections 303A.02, the section that defines director independence.

Section 303A.00 provides that a

director of a BDC shall be considered to be independent if he or she is not an interested person of the Company, as defined in Section 2(a)(19) of the 1940 Act.

Section 2(a)(19) of the 1940 Act defines an interested

person to include, among other things, any person who has, or within the last two years had, a material business or professional relationship with the Company.

The board of directors has determined that each of the directors is independent and has no relationship with the Company, except as a director

Section 303A.00 of the NYSE Listed Company Manual provides that business development companies, or

BDCs, such as the Company, are required to comply with all of the provisions of Section 303A applicable to domestic issuers other than

Sections 303A.02, the section that defines director independence.

303A.00 provides that a director of a BDC shall be considered to be independent if he or she is not an “interested person”

of the Company, as defined in Section 2(a)(19) of the 1940 Act.

Section 2(a)(19) of the 1940 Act defines an “interested person”

to include, among other things, any person who has, or within the last two years had, a material business or professional relationship

with the Company.

board of directors has determined that each of the directors is independent and has no relationship with the Company, except as a director

and stockholder of the Company, with the exception of Messrs.

Oberbeck and Grisius who are interested persons of the Company due to their positions as officers of the Company and its Investment Adviser.

Oberbeck and Grisius who are interested persons of the Company due to their

positions as officers of the Company and its Investment Adviser.

PRINCIPAL ACCOUNTING FEES AND SERVICES

Independent Registered Public Accounting Firm

For the years ended February 29, 2020 and February 28, 2019, the Company incurred the following fees for services provided by

Ernst & Young LLP, including expenses:

Registered Public Accounting Firm

the years ended February 28, 2021 and February 29, 2020, the Company incurred the following fees for services provided by Ernst &

Young LLP, including expenses:

Fiscal Year Ended

February 29, 2020

February 28, 2019

In addition to the services listed above, Ernst & Young LLP provided audit services to the

Companys subsidiaries.

The following are the related fees:

addition to the services listed above, Ernst & Young LLP provided audit services to the Company’s subsidiaries.

ended February 29, 2020 Ernst Young LLP was the auditor for Saratoga Investment Corp.

CLO 2013-1, Ltd.

The following are the related

Fiscal Year Ended

February 29, 2020

February 28, 2019

CLO Audit Fees

Tax Services for Companys Subsidiaries

All Other Fees

Audit fees include fees for services that normally would be provided by

the accountant in connection with statutory and regulatory filings or engagements and that generally only the independent accountant can provide.

In addition to fees for the audit of our annual consolidated financial statements, the audit of the

effectiveness of our internal control over financial reporting and the review of our quarterly consolidated financial statements in accordance with generally accepted auditing standards, this category contains fees for comfort letters, statutory

audits, consents, and assistance with and review of documents filed with the SEC.

Audit Related Fees .

Audit related fees are

assurance related services that traditionally are performed by the independent accountant, such as attest services that are not required by statute or regulation.

Tax fees include services in conjunction with preparation of the Companys tax return.

Tax Services for Company’s Subsidiaries

All Other Fees

Audit fees include fees for services that normally would be provided by the accountant in connection with statutory and regulatory

filings or engagements and that generally only the independent accountant can provide.

In addition to fees for the audit of our annual

consolidated financial statements, the audit of the effectiveness of our internal control over financial reporting and the review of

our quarterly consolidated financial statements in accordance with generally accepted auditing standards, this category contains fees

for comfort letters, statutory audits, consents, and assistance with and review of documents filed with the SEC.

Related Fees .

Audit related fees are assurance related services that traditionally are performed by the independent accountant, such

as attest services that are not required by statute or regulation.

Tax fees include services in conjunction with preparation of the Company’s tax return.

Fees for other services would include fees for products and services other than the services reported above.

It is the policy of the audit committee to pre-approve all audit, review or attest engagements and

permissible non-audit services to be performed by our independent registered public accounting firm.

is the policy of the audit committee to pre-approve all audit, review or attest engagements and permissible non-audit services to be

performed by our independent registered public accounting firm.

EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

The following documents are filed or incorporated by reference as part of this Annual Report:

following documents are filed or incorporated by reference as part of this Annual Report:

Consolidated Financial Statements

8 unchanged sentences

Financial Statement Schedules

Reference is made to the Index to Other Financial Statements on page S-1.

is made to the Index to Other Financial Statements on page S-1.

Exhibits required to be filed by Item 601 of Regulation S-K

The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC:

EXHIBIT INDEX

following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC:

Articles of Incorporation of Saratoga Investment Corp.

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

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

Articles of Amendment of Saratoga Investment Corp.

(incorporated by reference to Saratoga Investment Corp.s Current Report on Form 8-K filed August 3, 2010).

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

Articles of Amendment of Saratoga Investment Corp.

(incorporated by reference to Saratoga Investment Corp.s Current Report on Form 8-K filed August 13, 2010).

Second Amended and Restated Bylaws of Saratoga Investment Corp.

(incorporated by reference to Saratoga Investment Corp.s Current Report

on Form 8-K filed on June 14, 2011).

Specimen certificate of Saratoga Investment Corp.s common stock, par value $0.001 per share.

(incorporated by reference to Saratoga

Investment Corp.s Registration Statement on Form N-2, File No.

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

Third Amended and Restated Bylaws of Saratoga Investment Corp (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 10-Q filed January 6, 2021).

Specimen certificate of Saratoga Investment Corp.’s common stock, par value $0.001 per share.

(incorporated by reference to Saratoga Investment Corp.’s Registration Statement on Form N-2, File No.

333-169135, filed on September 1, 2010).

Registration Rights Agreement dated July

30, 2010 between GSC Investment Corp., GSC CDO III L.L.C., and the investors party thereto (incorporated by reference to Saratoga Investment Corp.s Current Report on Form 8-K filed on August

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

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

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

Form of Indenture by and between the Company and U.S.

Bank National Association, as trustee (incorporated by reference to Saratoga Investment

Corp.s Pre-Effective Amendment No.

Bank National Association, as trustee (incorporated by reference to Saratoga Investment Corp.’s Pre-Effective Amendment No.

2 to the Registration Statement on Form N-2, File No.

333-186323 filed

April 30, 2013).

333-186323 filed April 30, 2013).

Form of Second Supplemental Indenture between the Company and U.S.

Bank National Association (incorporated by reference to Amendment No.

to Saratoga Investment Corp.s Registration Statement on Form N-2, File No.

2 to Saratoga Investment Corp.’s Registration Statement on Form N-2, File No.

333- 214182, filed on December 12, 2016).

1 unchanged sentence

Form of Third Supplemental Indenture between the Company and U.S.

Bank National Association (incorporated by reference to Post-Effective Amendment

9 to the Registrants Registration Statement on Form N-2, File No.

Bank National Association (incorporated by reference to Post-Effective Amendment No.

9 to the Registrant’s Registration Statement on Form N-2, File No.

333-216344, filed on August 28, 2018).

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

Form of Articles Supplementary Establishing and Fixing the Rights and Preferences of Preferred Stock (incorporated by reference to Saratoga

Investment Corp.s registration statement on Form N-2 Pre-Effective Amendment No.

333-196526, filed

on December 5, 2014).

Form of Articles Supplementary Establishing and Fixing the Rights and Preferences of Preferred Stock (incorporated by reference to Saratoga Investment Corp.’s registration statement on Form N-2 Pre-Effective Amendment No.

333-196526, filed on December 5, 2014).

Description of Securities.

Investment Advisory and Management Agreement dated July

30, 2010 between GSC Investment Corp.

and Saratoga Investment Advisors, LLC (incorporated by reference to Saratoga Investment Corp.s Current Report on Form 8-K filed on August 3, 2010).

Custodian Agreement dated March

21, 2007 between GSC Investment LLC and U.S.

Bank National Association (incorporated by reference to Saratoga Investment Corp.s Form 10-Q for the quarterly period ended May 31, 2007).

Administration Agreement dated July

30, 2010 between GSC Investment Corp.

and Saratoga Investment Advisors, LLC (incorporated by reference to Saratoga Investment Corp.s Current Report on Form 8-K filed on August 3, 2010).

Trademark License Agreement dated July

30, 2010 between Saratoga Investment Advisors, LLC and GSC Investment Corp.

(incorporated by reference to Saratoga Investment Corp.s Current Report on Form 8-K filed on August 3, 2010).

Credit, Security and Management Agreement dated July

30, 2010 by and among GSC Investment Funding LLC, Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Madison Capital Funding LLC and U.S.

Bank National Association (incorporated by reference to Saratoga Investment Corp.s Current Report

on Form 8-K filed on August 3, 2010).

Fourth Supplemental Indenture between the Company and U.S.

Bank National Association, as trustee, relating to the 7.25% Note due 2025 (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K (File No.

814-00732) filed on June 24, 2020).

Form of 7.25% Notes due 2025 (incorporated by reference to Exhibit 4.11 hereto).

Eighth Supplemental Indenture between the Company and U.S.

Bank National Association, as trustee, relating to the 4.375% Note due 2026 (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K (File No.

814-00732) filed on March 10, 2021).

Form of 4.375% Notes due 2026 (incorporated by reference to Exhibit 4.13 hereto).

Investment Advisory and Management Agreement dated July 30, 2010 between GSC Investment Corp.

and Saratoga Investment Advisors, LLC (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on August 3, 2010).

Custodian Agreement dated March 21, 2007 between GSC Investment LLC and U.S.

Bank National Association (incorporated by reference to Saratoga Investment Corp.’s Form 10-Q for the quarterly period ended May 31, 2007).

Administration Agreement dated July 30, 2010 between GSC Investment Corp.

and Saratoga Investment Advisors, LLC (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on August 3, 2010).

Trademark License Agreement dated July 30, 2010 between Saratoga Investment Advisors, LLC and GSC Investment Corp.

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

Credit, Security and Management Agreement dated July 30, 2010 by and among GSC Investment Funding LLC, Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Madison Capital Funding LLC and U.S.

Bank National Association (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on August 3, 2010).

Form of Indemnification Agreement between Saratoga Investment Corp.

and each officer and director of Saratoga Investment Corp.

(incorporated

by reference to Amendment No.

2 to Saratoga Investment Corp.s Registration Statement on Form N-2 filed on January 12, 2007).

(incorporated by reference to Amendment No.

2 to Saratoga Investment Corp.’s Registration Statement on Form N-2 filed on January 12, 2007).

Amendment No.

1 to Credit, Security and Management Agreement dated February

24, 2012 by and among Saratoga Investment Funding LLC, Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Madison Capital Funding LLC and U.S.

Bank National Association (incorporated by reference to Saratoga Investment Corp.s Current Report

on Form 8-K filed on February 29, 2012).

Amended and Restated Indenture, dated as of November

15, 2016, among Saratoga Investment Corp.

1 to Credit, Security and Management Agreement dated February 24, 2012 by and among Saratoga Investment Funding LLC, Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Madison Capital Funding LLC and U.S.

Bank National Association (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on February 29, 2012).

Amended and Restated Indenture, dated as of November 15, 2016, among Saratoga Investment Corp.

CLO 2013-1, Ltd., Saratoga Investment Corp.

1 unchanged sentence

Bank National Association.

(incorporated by reference to Saratoga

Investment Corp.s Registration Statement on Form N-2, File No.

(incorporated by reference to Saratoga Investment Corp.’s Registration Statement on Form N-2, File No.

333-216344, filed on February 28, 2017).

Amended and Restated Collateral Management Agreement, dated October

17, 2013, by and between Saratoga Investment Corp.

Amended and Restated Collateral Management Agreement, dated October 17, 2013, by and between Saratoga Investment Corp.

and Saratoga Investment Corp.

CLO 2013-1, Ltd.

(incorporated by reference to Saratoga Investment Corp.s Registration Statement on Form N-2, File No.

(incorporated by reference to Saratoga Investment Corp.’s Registration Statement on Form N-2, File No.

333-196526, filed on December 5, 2014).

Amendment No.

2 to Credit, Security and Management Agreement dated September

17, 2014 by and among Saratoga Investment Funding LLC, Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Madison Capital Funding LLC and U.S.

Bank National Association (incorporated by reference to Saratoga Investment Corp.s Current Report

on Form 8-K filed on September 18, 2014).

Amendment No.

3 to Credit, Security and Management Agreement, dated May

18, 2017, by and among Saratoga Investment Funding LLC, Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Madison Capital Funding LLC and U.S.

Bank National Association (incorporated by reference to Saratoga Investment Corp.s Current Report

on Form 8-K filed on May 18, 2017).

Equity Distribution Agreement dated March

16, 2017, by and among Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Ladenburg Thalmann and Co.

and BB&T Capital Markets, a division of BB&T Securities, LLC (incorporated by reference to Saratoga Investment Corp.s Post-Effective

2 to Credit, Security and Management Agreement dated September 17, 2014 by and among Saratoga Investment Funding LLC, Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Madison Capital Funding LLC and U.S.

Bank National Association (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on September 18, 2014).

Amendment No.

3 to Credit, Security and Management Agreement, dated May 18, 2017, by and among Saratoga Investment Funding LLC, Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Madison Capital Funding LLC and U.S.

Bank National Association (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on May 18, 2017).

Equity Distribution Agreement dated March 16, 2017, by and among Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Ladenburg Thalmann and Co.

and BB&T Capital Markets, a division of BB&T Securities, LLC (incorporated by reference to Saratoga Investment Corp.’s Post-Effective Amendment No.

1 to the Registration Statement on Form N-2, File No.

1 unchanged sentence

Amendment No.

1 to the Equity Distribution Agreement dated October

12, 2017, by and among Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Ladenburg Thalmann and Co.

Inc., BB&T Capital Markets, a division of BB&T Securities, LLC, and FBR Capital Markets

(incorporated by reference to Saratoga Investment Corp.s Post-Effective Amendment No.

1 to the Equity Distribution Agreement dated October 12, 2017, by and among Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Ladenburg Thalmann and Co.

Inc., BB&T Capital Markets, a division of BB&T Securities, LLC, and FBR Capital Markets & Co.

(incorporated by reference to Saratoga Investment Corp.’s Post-Effective Amendment No.

2 to the Registration Statement on Form N-2, File No.

1 unchanged sentence

Amendment No.

2 to the Equity Distribution Agreement dated January

11, 2018, by and among Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Ladenburg Thalmann and Co.

Inc., BB&T Capital Markets, a division of BB&T Securities, LLC, and FBR Capital Markets

(incorporated by reference to Saratoga Investment Corp.s Post-Effective Amendment No.

3 to Saratoga Investment Corp.s Registration Statement on Form N-2, File No.

2 to the Equity Distribution Agreement dated January 11, 2018, by and among Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Ladenburg Thalmann and Co.

Inc., BB&T Capital Markets, a division of BB&T Securities, LLC, and FBR Capital Markets & Co.

(incorporated by reference to Saratoga Investment Corp.’s Post-Effective Amendment No.

3 to Saratoga Investment Corp.’s Registration Statement on Form N-2, File No.

333- 216344, filed on January 11, 2018).

Amendment No.

3 to the Equity Distribution Agreement dated October

16, 2018, by and among Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Ladenburg Thalmann and Co.

3 to the Equity Distribution Agreement dated October 16, 2018, by and among Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Ladenburg Thalmann and Co.

Inc., BB&T Capital Markets, a division of BB&T Securities, LLC, and B.

Riley FBR, Inc.

(incorporated by reference to Post-Effective Amendment

1 to the registrants Registration Statement on Form N-2, File No.

(incorporated by reference to Post-Effective Amendment No.

1 to the registrant’s Registration Statement on Form N-2, File No.

333-227116, filed on October 16, 2018).

Amendment No.

4 to the Equity Distribution Agreement dated July

11, 2019, by and among Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Ladenburg Thalmann and Co.

4 to the Equity Distribution Agreement dated July 11, 2019, by and among Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Ladenburg Thalmann and Co.

Inc., BB&T Capital Markets, a division of BB&T Securities, LLC, and B.

Riley FBR, Inc.

(incorporated by reference to Post-Effective Amendment

5 to the registrants Registration Statement on Form N-2, File No.

(incorporated by reference to Post-Effective Amendment No.

5 to the registrant’s Registration Statement on Form N-2, File No.

333-227116, filed on July 12, 2019).

Amendment No.

5 to the Equity Distribution Agreement dated October

10, 2019, by and among Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Ladenburg Thalmann and Co.

5 to the Equity Distribution Agreement dated October 10, 2019, by and among Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Ladenburg Thalmann and Co.

Inc., BB&T Capital Markets, a division BB&T Securities, LLC, and B.

Riley FBR, Inc.

(incorporated by reference to Saratoga Investment

Corp.s Current Report on Form 8-K filed on October 10, 2019).

(incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on October 10, 2019).

Amendment No.

4 to Credit, Security and Management Agreement, dated April 24, 2020, by and among Saratoga Investment Funding LLC, Saratoga

Investment Corp., Saratoga Investment Advisors, LLC, Madison Capital Funding LLC and U.S.

Bank National Association (incorporated by reference to Saratoga Investment Corp.s Current Report on Form 8-K filed on April 29, 2020).

4 to Credit, Security and Management Agreement, dated April 24, 2020, by and among Saratoga Investment Funding LLC, Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Madison Capital Funding LLC and U.S.

Bank National Association (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on April 29, 2020).

Amendment No.

5 to Credit, Security and Management Agreement, dated September 14, 2020, by and among Saratoga Investment Funding LLC, Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Madison Capital Funding LLC and U.S.

Bank National Association (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on September 17, 2020).

Amended and Restated Collateral Management Agreement, dated February 26, 2021, by and between Saratoga Investment Corp.

and Saratoga Investment Corp.

CLO 2013-1, Ltd.

(incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on March 4, 2021).

Amended and Restated Collateral Administration Agreement, dated February 26, 2021, by and between Saratoga Investment Corp., Saratoga Investment Corp.

CLO 2013-1, Ltd.

Bank National Association (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on March 4, 2021).

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

Code of Ethics of the Company adopted under Rule 17j-1 (incorporated by reference to Amendment No.7

to Saratoga Investment Corp.s Registration Statement on Form N-2, File No.

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

333-138051, filed on March 22, 2007).

List of Subsidiaries

Consent of Ernst & Young LLP for Saratoga Investment Corp.

Consent of Ernst & Young Ltd.

for Saratoga Investment Corp.

CLO 2013-1, Ltd.

List of Subsidiaries (Incorporated by reference to Saratoga Investment Corp.’s Annual Report on Form 10-K filed on May 6, 2020).

Consent of Ernst & Young LLP for Saratoga Investment Corp.

Consent of CohnReznick LLP for Saratoga Investment Corp.

CLO 2013-1, Ltd.

1 unchanged sentence

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

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.

Filed herewith

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

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

FORM 10-K SUMMARY

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to

be signed on its behalf by the undersigned, thereunto duly authorized.

SARATOGA INVESTMENT CORP.

/s/ CHRISTIAN L.

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed

on its behalf by the undersigned, thereunto duly authorized.

INVESTMENT CORP.

Executive Officer

Financial Officer and Chief Compliance Officer

ALL PERSONS BY THESE PRESENT, that each person whose signature appears below hereby constitutes and appoints Christian L.

Steenkamp, and each of them (with full power to each of them to act alone), his true and lawful attorneys-in-fact and agents,

with full power of substitution and resubstitution, for him and in his name, place, and stead, in any and all capacities, to sign this

report and any and all amendments thereto, and to file the same, with the Securities and Exchange Commission, granting unto said attorneys-in-fact

and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the

premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact

and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the

registrant and in the capacities and on the dates indicated.

of the Board of Directors,

Chief Executive Officer

Chief Financial Officer and Chief Compliance Officer

KNOW ALL PERSONS BY THESE PRESENT, that each person whose signature appears below hereby constitutes and

appoints Christian L.

Oberbeck and Henri J.

Steenkamp, and each of them (with full power to each of them to act alone), his true and lawful attorneys-in-fact and agents, with full power of substitution and

resubstitution, for him and in his name, place, and stead, in any and all capacities, to sign this report and any and all amendments thereto, and to file the same, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to

all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of

the registrant and in the capacities and on the dates indicated.

/s/ CHRISTIAN L.

Chairman of the Board of Directors, Chief Executive

Officer (Principal Executive Officer)

/s/ MICHAEL J.

Member of the Board of Directors

Chief Financial Officer (Principal Accounting Officer and

Principal Financial Officer)

/s/ STEVEN M.

Member of the Board of Directors

/s/ CHARLES S.

Member of the Board of Directors

CABELL WILLIAMS

(Principal Executive Officer)

Financial Officer

(Principal Accounting Officer and

Financial Officer),

Member of the Board of Directors

of the Board of Directors

CABELL WILLIAMS

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

of the Board of Directors

TO CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm

Consolidated Statements of Assets and Liabilities as of February 29, 2020 and

February 28, 2019

Consolidated Statements of Operations for the years ended February 29, 2020, February

28, 2019 and February 28, 2018

Consolidated Statements of Changes in Net Assets for the years ended February

29, 2020, February 28, 2019 and February 28, 2018

Consolidated Statements of Cash Flows for the years ended February 29, 2020, February

28, 2019 and February 28, 2018

Consolidated Schedules of Investments as of February 29, 2020 and February 28,

Consolidated Statements of Assets and Liabilities as of February 28, 2021 and February 29, 2020

Consolidated Statements of Operations for the years ended February 28, 2021, February 29, 2020 and February 28, 2019

Consolidated Statements of Changes in Net Assets for the years ended February 28, 2021, February 29, 2020 and February 28, 2019

Consolidated Statements of Cash Flows for the years ended February 28, 2021, February 29, 2020 and February 28, 2019

Consolidated Schedule of Investment for the year ended February 28, 2021, February 29, 2020

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

The Shareholders and the Board of Directors of Saratoga Investment Corp.

of Independent Registered Public Accounting Firm

The Shareholders and the Board of Directors of Saratoga Investment

Opinion on the Financial Statements

We have audited the

accompanying consolidated statements of assets and liabilities of Saratoga Investment Corp.

(the Company), including the consolidated schedules of investments, as of February 29, 2020 and February 28, 2019, the related

consolidated statements of operations, changes in net assets, and cash flows for each of the three years in the period ended February 29, 2020, and the related notes (collectively referred to as the consolidated financial

statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at February 29, 2020 and February 28, 2019, and the results of its operations, changes

in its net assets and its cash flows for each of the three years in the period ended February 29, 2020, in conformity with US generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Companys internal

control over financial reporting as of February 29, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report

dated May 6, 2020 expressed an unqualified opinion thereon.

Basis for opinion

These financial statements are the responsibility of the Companys management.

Our responsibility is to express an opinion on the Companys financial

statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of

the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that

we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material

misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial

Our procedures included confirmation of investments owned as of February 29, 2020 and February 28, 2019 by correspondence with the portfolio companies, custodians and debt agents.

Our audits also included evaluating the

accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Companys

auditor since 2006.

New York, New York

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Saratoga Investment Corp.

Opinion on Internal Control over Financial Reporting

have audited Saratoga Investment Corp.s internal control over financial reporting as of February 29, 2020, based on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the

Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Saratoga Investment Corp.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of February 29, 2020,

based on the COSO criteria .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United

States) (PCAOB), the 2020 consolidated financial statements of the Company and our report dated May 6, 2020 expressed an unqualified opinion thereon.

We have audited the accompanying consolidated

statements of assets and liabilities of Saratoga Investment Corp.

(the “Company”), including the consolidated schedules of

investments, as of February 28, 2021 and February 29, 2020, the related consolidated statements of operations, changes in net assets,

and cash flows for each of the three years in the period ended February 28, 2021, and the related notes (collectively referred to as the

“consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material

respects, the financial position of the Company at February 28, 2021 and February 29, 2020, and the results of its operations, changes

in its net assets and its cash flows for each of the three years in the period ended February 28, 2021, in conformity with US generally

accepted accounting principles.

Basis for Opinion

The Companys management is

responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Managements Annual Report on Internal Control

Over Financial Reporting.

Our responsibility is to express an opinion on the Companys internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent

with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable

assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an

understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other

procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and

Limitations of Internal Control Over Financial Reporting

A companys internal control over financial reporting is a process designed to provide

reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A companys internal control over financial

reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable

assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with

authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect

on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

These financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are

required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and

regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged

to perform, an audit of its internal controls over financial reporting.

As part of our audits we are required to obtain an understanding

of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our procedures included confirmation of investments owned as of February 28, 2021 and February 29, 2020 by correspondence with the portfolio

companies, custodians and debt agents.

Our audits also included evaluating the accounting principles used and significant estimates made

by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable

basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is

a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the

audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially

challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on

the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a

separate opinion on the critical audit matter or on the account or disclosure to which is relates.

Valuation of investments using significant unobservable inputs

Description of the Matter

At February 28, 2021, the fair value of the Company's investments categorized in Level 3 of the fair value hierarchy (Level 3 investments) totaled $554,312,715.

Management determines the fair value of these investments by applying the valuation techniques described in Notes 2 and 3 to the consolidated financial statements and using significant unobservable inputs and assumptions.

The selection of the valuation techniques and the significant unobservable inputs and assumptions used by management requires subjective judgments and estimates.

The valuation techniques used by the Company include market comparables, discounted cash flows and enterprise value waterfalls.

The significant unobservable inputs used to measure fair value include market yields, EBITDA multiples, revenue multiples, discount rates, recovery rates and prepayment rates.

Auditing the fair value of the Company's Level 3 investments was complex and involved auditor judgment, as the valuation techniques selected and the significant unobservable inputs and assumptions used by the Company are highly judgmental and require estimation, and the selection of such techniques, inputs and assumptions has a significant effect on the fair value measurement of such investments.

How We Addressed the Matter in Our Audit

To test the valuation of the Company’s Level 3 investments, we gained an understanding of the valuation techniques, significant unobservable inputs and assumptions used by the Company to value the Level 3 investments and reviewed the information considered by the Board of Directors relating to the fair value of each investment.

For a sample of Level 3 investments, we evaluated the valuation techniques used, tested the significant unobservable inputs and assumptions, and tested the mathematical accuracy of the related valuation models.

For this sample of Level 3 investments, we agreed the significant inputs and underlying data used in the Company’s valuations (for example, deal terms, portfolio company operating results, market yields) to transaction agreements, most recently available portfolio company financial statements or other financial information, information available from third-party sources and market data, as applicable.

We involved our valuation specialists to assist in developing independent estimates of fair value for a sample of investments by using portfolio company and market information, and we compared such estimates to the Company’s fair value of these investments.

We also searched for and evaluated information that corroborated or contradicted the Company’s valuations of Level 3 investments.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2006.

New York, New York

Saratoga Investment Corp.

Consolidated Statements of Assets and Liabilities

FINANCIAL INFORMATION

Consolidated Financial Statements

Investment Corp.

Statements of Assets and Liabilities

Investments at fair value

Non-control/Non-affiliate

investments (amortized cost of $418,006,725 and $307,136,188, respectively)

Non-control/Non-affiliate investments (amortized cost of $471,328,212 and $418,006,725, respectively)

$ 469,946,494

$ 420,442,928

Affiliate investments (amortized cost of $17,331,707 and $23,998,917, respectively)

Control investments (amortized cost of $61,353,761 and $44,293,619, respectively)

Total investments at fair value (amortized cost of $486,299,261 and $401,916,093,

respectively)

Total investments at fair value (amortized cost of $550,013,680 and $486,299,261, respectively)

Cash and cash equivalents

3 unchanged sentences

Management fee receivable

$ 592,152,378

$ 530,865,996

Revolving credit facility

6 unchanged sentences

Deferred debt financing costs, 7.25% notes payable 2025

7.75% Notes Payable 2025

Deferred debt financing costs, 7.75% notes payable 2025

6.25% Notes Payable 2027

Deferred debt financing costs, 6.25% notes payable 2027

Base management and incentive fees payable

4 unchanged sentences

Due to manager

Excise tax payable

Total liabilities

Commitments and contingencies (See Note 8)

Common stock, par value $.001, 100,000,000 common shares authorized, 11,217,545 and 7,657,156

common shares issued and outstanding, respectively

Common stock, par value

$0.001, 100,000,000 common shares authorized, 11,161,416 and 11,217,545 common shares issued and outstanding,

Capital in excess of par value

Total distributable earnings (loss)

Total distributable earnings (deficit)

Total net assets

Total liabilities and net assets

$ 592,152,378

$ 530,865,996

NET ASSET VALUE PER SHARE

See accompanying notes to consolidated financial statements.

Saratoga Investment Corp.

Consolidated Statements of Operations

accompanying notes to consolidated financial statements.

Investment Corp.

Statements of Operations

For the year ended

2 unchanged sentences

Interest income:

Non-control/Non-affiliate

Non-control/Non-affiliate investments

Affiliate investments

Control investments

Payment-in-kind

interest income:

Non-control/Non-affiliate

Payment-in-kind interest income:

Non-control/Non-affiliate investments

Affiliate investments

10 unchanged sentences

Base management fees

Incentive management fees

Incentive management fees expense (benefit)

Professional fees

3 unchanged sentences

Income tax expense (benefit)

Excise tax credit

Excise tax expense (credit)

Other expense

Total operating expenses

Loss on extinguishment of debt

NET INVESTMENT INCOME

1 unchanged sentence

Net realized gain (loss) from investments:

Non-control/Non-affiliate

Non-control/Non-affiliate investments

Affiliate investments

Control investments

Net realized gain (loss) from investments

Income tax (provision) benefit from realized gain on investments

Net change in unrealized appreciation (depreciation) on investments:

Non-control/Non-affiliate

Non-control/Non-affiliate investments

Affiliate investments

1 unchanged sentence

Net change in unrealized appreciation (depreciation) on investments

Net change in provision for deferred taxes on unrealized (appreciation) depreciation on

Net realized and unrealized gain on investments

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

WEIGHTED AVERAGEBASIC AND DILUTED EARNINGS PER COMMON SHARE

Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments

Net realized and unrealized gain (loss) on investments

Realized losses on extinguishment of debt*

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED

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

See accompanying notes to consolidated financial statements.

Saratoga Investment Corp.

Consolidated Statements of Changes in Net Assets

* Certain prior period amounts have been reclassified to

conform to current period presentation.

accompanying notes to consolidated financial statements.

Investment Corp.

Statements of Changes in Net Assets

For the year ended

February 29, 2020

February 28, 2019

February 28, 2018

INCREASE FROM OPERATIONS:

INCREASE (DECREASE) FROM OPERATIONS:

Net investment income

Net realized gain (loss) from investments

Net realized gain from investments

Realized losses on extinguishment of debt

Income tax (provision) benefit from realized gain on investments

Net change in unrealized appreciation (depreciation) on investments

Net change in provision for deferred taxes on unrealized (appreciation) depreciation on

Net increase in net assets resulting from operations

Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments

Net increase (decrease) in net assets resulting from operations

DECREASE FROM SHAREHOLDER DISTRIBUTIONS:

Total distributions to shareholders(a)

Total distributions to shareholders

(13,746,998 )

(20,097,580 )

(14,188,588 )

Net decrease in net assets from shareholder distributions

(13,746,998 )

(20,097,580 )

(14,188,588 )

CAPITAL SHARE TRANSACTIONS:

1 unchanged sentence

Stock dividend distribution

Repurchases of common stock

Repurchase fees

Offering costs

Net increase in net assets from capital share transactions

Total increase in net assets

Net assets at beginning of period, as previously reported

Total increase (decrease) in net assets

Net assets at beginning of period

Cumulative effect of the adoption of ASC 606 (See Note 2)

Net assets at beginning of period, as adjusted

Net assets at end of period(b)

Distributions from net investment income and from net realized gains are no longer required to be separately

For the year ended February 28, 2018, total distributions represented distributions from net investment income of $11,375,577.

Parenthetical disclosure of accumulated undistributed net investment income is no longer required.

ended February 28, 2018, end of period net assets included accumulated distributions in excess of net investment income of $27,862,543.

See accompanying notes to consolidated financial statements.

Saratoga Investment Corp.

Consolidated Statements of Cash Flows

Net assets at end of period

$ 304,185,770

$ 304,286,853

$ 180,875,187

accompanying notes to consolidated financial statements.

Investment Corp.

Statements of Cash Flows

For the year ended

Operating activities

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

ADJUSTMENTS TO RECONCILE NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS TO NET CASH USED IN

OPERATING ACTIVITIES:

Payment-in-kind

and other adjustments to cost

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

ADJUSTMENTS TO RECONCILE NET INCREASE (DECREASE) IN NET ASSETS RESULTING

FROM OPERATIONS TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:

Payment-in-kind and other adjustments to cost

Net accretion of discount on investments

Amortization of deferred debt financing costs

Loss on extinguishment of debt

Realized Loss on extinguishment of debt

Income tax expense (benefit)

Net realized (gain) loss from investments

(42,877,155 )

Net change in unrealized (appreciation) depreciation on investments

Net change in provision for deferred taxes on unrealized appreciation (depreciation) on

Net change in provision for deferred taxes on unrealized appreciation (depreciation) on investments

Proceeds from sales and repayments of investments

Purchases of investments

(202,260,764 )

(204,643,371 )

(187,707,807 )

(Increase) decrease in operating assets:

3 unchanged sentences

Cumulative effect of the adoption of ASC 606 (See Note 2)

Receivable from unsettled trades

Increase (decrease) in operating liabilities:

3 unchanged sentences

Directors fees payable

Excise tax payable

Due to manager

NET CASH USED IN OPERATING ACTIVITIES

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

(62,346,410 )

(15,144,734 )

(39,979,919 )

Financing activities

1 unchanged sentence

Paydowns on debt

(33,000,000 )

(20,200,000 )

(33,250,000 )

Issuance of notes

Repayments of notes

(74,450,500 )

Payments of deferred debt financing costs

1 unchanged sentence

Payments of cash dividends

(11,265,914 )

(17,001,088 )

(12,012,695 )

Repurchases of common stock

Repurchases fees

Payments of offering costs

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS, RESERVE

CASH AND CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS, RESERVE ACCOUNTS, BEGINNING OF

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS, RESERVE ACCOUNTS

(22,644,042 )

CASH AND CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS, RESERVE ACCOUNTS, BEGINNING OF PERIOD

CASH AND CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS, RESERVE ACCOUNTS, END OF PERIOD

3 unchanged sentences

Supplemental non-cash information:

Payment-in-kind

interest income

Payment-in-kind interest income and other adjustments to cost

Net accretion of discount on investments

1 unchanged sentence

Stock dividend distribution

See accompanying notes to consolidated financial statements.

Saratoga Investment Corp.

Consolidated Schedule of Investments

February 29, 2020

Investment Interest Rate/

Original Acquisition

accompanying notes to consolidated financial statements.

Investment Corp.

Schedule of Investments

Interest Rate/Maturity

Acquisition Date

Number of Shares

Non-control/Non-affiliate

investments138.2% (b)

Apex Holdings Software Technologies, LLC

Business Services

First Lien Term Loan

Non-control/Non-affiliate investments - 154.5% (b)

Holdings, Inc.

Total Consumer Products

Alarm Center, LLC (k)

Equity Class A Units

Alarm Center, LLC (h)

Equity Class B Units

Alarm Center, LLC (h)

Equity Class Z Units

Alarm Center, LLC (h)

Total Consumer Services

Education Software

1 Membership Interest

Total Corporate Education Software

Lien Term Loan

(3M USD LIBOR+7.00%), 8.75% Cash, 12/31/2025

Apex Holdings Software Technologies, LLC

Business Services

Delayed Draw Term Loan

Draw Term Loan

(3M USD LIBOR+7.00%), 8.75% Cash, 12/31/2025

ArbiterSports, LLC

Business Services

First Lien Term Loan

A Preferred Stock

Total Corporate Governance

England Dental Partners

Practice Management

Lien Term Loan

(3M USD LIBOR+8.00%), 8.50% Cash, 11/25/2025

Arbiter Sports, LLC (j)

Business Services

Delayed Draw Term Loan

England Dental

Practice Management

Draw Term Loan

(3M USD LIBOR+8.00%), 8.50% Cash, 11/25/2025

Avionte Holdings, LLC (h)

Business Services

Class A Units

CLEO Communications Holding, LLC

Business Services

First Lien Term Loan

(3M USD LIBOR+8.00%), 9.46% Cash/2.00% PIK, 3/31/2022

CLEO Communications Holding, LLC

Business Services

Delayed Draw Term Loan

(3M USD LIBOR+8.00%), 9.46% Cash/2.00% PIK, 3/31/2022

CoConstruct, LLC

Business Services

First Lien Term Loan

Total Dental Practice Management

Practice Management Software

Lien Term Loan

(3M USD LIBOR+7.00%), 9.50% Cash, 7/15/2024

CoConstruct, LLC (j)

Business Services

Delayed Draw Term Loan

Practice Management Software

Draw Term Loan

(3M USD LIBOR+7.00%), 9.50% Cash, 7/15/2024

Davisware, LLC

Business Services

First Lien Term Loan

Buyer, LLC (h)

Practice Management Software

A-1 Preferred Shares

Total Dental Practice Management Software

Educational Systems (d)

Lien Term Loan

(3M USD LIBOR+8.50%), 10.00% Cash, 5/31/2023

Davisware, LLC (j)

Business Services

Delayed Draw Term Loan

Teachers of Tomorrow, LLC (h), (i)

Teachers of Tomorrow, LLC (d)

Lien Term Loan

(3M USD LIBOR+7.25%), 9.75% Cash, 6/28/2024

Destiny Solutions Inc.

Business Services

First Lien Term Loan

Total Education Services

Solutions Inc.

Lien Term Loan

(3M USD LIBOR+7.50%), 9.50% Cash, 10/24/2024

Destiny Solutions Inc.

Business Services

Limited Partner Interests

Emily Street Enterprises, L.L.C.

Business Services

Senior Secured Note

Solutions Inc.

Partner Interests

Lien Term Loan

(3M USD LIBOR+9.24%), 10.99% Cash, 5/8/2024

Emily Street Enterprises, L.L.C.

Business Services

Warrant Membership Interests

Expires 12/28/2022

Business Services

Second Lien Term Loan

(3M USD LIBOR+11.50%), 12.96% Cash/1.00% PIK, 8/28/2021

FMG Suite Holdings, LLC (d)

Business Services

Second Lien Term Loan

Stock Class A-2 Units

Stock Class A-1 Units

See accompanying notes to consolidated financial statements.

Investment Corp.

Schedule of Investments

Interest Rate/Maturity

Acquisition Date

Number of Shares

Lien Term Loan

(3M USD LIBOR+7.50%), 9.50% Cash, 1/17/2025

GDS Holdings US, Inc.

Business Services

First Lien Term Loan

Draw Term Loan

(3M USD LIBOR+7.50%), 9.50% Cash, 1/17/2025

GDS Holdings US, Inc.

Business Services

Delayed Draw Term Loan

Software Inc.

Lien Term Loan

(1M USD LIBOR+8.63%), 9.63% Cash, 9/13/2023

GDS Software Holdings, LLC (h)

Business Services

Common Stock Class A Units

Identity Automation Systems (h)

Business Services

Common Stock Class A Units

Identity Automation Systems (d)

Business Services

First Lien Term Loan

Total Education Software

Service Management

Lien Term Loan

(3M USD LIBOR+7.00%), 9.00% Cash, 7/31/2024

inMotionNow, Inc.

Business Services

First Lien Term Loan

Service Management

Draw Term Loan

(3M USD LIBOR+7.00%), 9.00% Cash, 7/31/2024

inMotionNow, Inc.

Business Services

Delayed Draw Term Loan

Total Field Service Management

Software Holdings, LLC (h)

Stock Class A Units

Total Financial Services

Medical, LLC (h)

Products Manufacturing

Total Healthcare Products Manufacturing

Parent Holdings,

Stock Class A Units

Purchaser, Inc.

Lien Term Loan

(3M USD LIBOR+6.00%), 7.75% Cash, 6/19/2023

Knowland Group, LLC

Business Services

Second Lien Term Loan

Purchaser, Inc.

Draw Term Loan

(3M USD LIBOR+6.00%), 7.75% Cash, 6/19/2023

National Waste Partners (d)

Business Services

Second Lien Term Loan

Lien Term Loan

(3M USD LIBOR+7.75%), 8.75% Cash, 1/31/2025

Total Healthcare Services

HemaTerra, LLC (h)

D Membership Interests

Holding Company, LLC

Lien Term Loan

(3M USD LIBOR+6.75%), 9.25% Cash, 4/15/2024

Holding Company, LLC (d), (j)

Draw Term Loan

(3M USD LIBOR+6.75%), 9.25% Cash, 4/15/2024

Partners, LLC

Lien Term Loan

(3M USD LIBOR+6.50%), 7.50% Cash, 11/12/2025

Draw Term Loan

(3M USD LIBOR+6.50%), 7.50% Cash, 11/12/2025

Partners Holdings LLC (h)

Total Healthcare Software

Medical, Inc.

Lien Term Loan

11.25% Cash, 6/28/2021

Omatic Software, LLC

Business Services

First Lien Term Loan

Total Healthcare Supply

Hospitality/Hotel

Lien Term Loan

(3M USD LIBOR+8.50%), 10.25%, 12/22/2025

Hospitality/Hotel

Draw Term Loan

(3M USD LIBOR+8.50%), 10.25%, 12/22/2025

Hospitality/Hotel

A Preferred Shares

Hospitality/Hotel

Lien Term Loan

(3M USD LIBOR+8.00%), 10.00% Cash, 5/9/2024

Omatic Software, LLC (j)

Business Services

Delayed Draw Term Loan

Hospitality Resources, LLC

Hospitality/Hotel

Lien Term Loan

(1M USD LIBOR+9.00%), 10.00% Cash, 4/27/2025

Passageways, Inc.

Business Services

First Lien Term Loan

Total Hospitality/Hotel

Services and Sales

Lien Term Loan

(1M USD LIBOR+9.00%), 10.00% Cash, 11/16/2025

Passageways, Inc.

Business Services

Delayed Draw Term Loan

Services and Sales

Draw Term Loan

(1M USD LIBOR+9.00%), 10.00% Cash, 11/16/2025

Passageways, Inc.

Business Services

Series A Preferred Stock

Vector Controls Holding Co., LLC (d)

Business Services

First Lien Term Loan

10.50% (9.00% Cash/1.50% PIK), 3/6/2022

Vector Controls Holding Co., LLC (h)

Business Services

Warrants to Purchase Limited Liability Company Interests, Expires 11/30/2027

Total Business Services

Targus Holdings, Inc.

Consumer Products

Total Consumer Products

My Alarm Center, LLC (k)

Consumer Services

Preferred Equity Class A Units

My Alarm Center, LLC (h)

Consumer Services

Preferred Equity Class B Units

My Alarm Center, LLC (h)

Consumer Services

Preferred Equity Class Z Units

My Alarm Center, LLC (h)

Consumer Services

Total Consumer Services

Total HVAC Services and Sales

See accompanying notes to consolidated financial statements.

Investment Interest Rate/

Original Acquisition

Investment Corp.

Schedule of Investments

Interest Rate/Maturity

Acquisition Date

Number of Shares

C2 Educational Systems (d)

First Lien Term Loan

Controls Holding Co., LLC (d)

Lien Term Loan

11.50% (9.75% Cash/1.75% PIK), 3/6/2022

Controls Holding Co., LLC (d), (h)

to Purchase Limited Liability Company Interests, Expires 11/30/2027

Total Industrial Products

Communications Holding, LLC (d)

Lien Term Loan

(3M USD LIBOR+8.00%), 9.00% Cash/2.00% PIK, 3/31/2022

Communications Holding, LLC (d), (j)

Draw Term Loan

(3M USD LIBOR+8.00%), 9.00% Cash/2.00% PIK, 3/31/2022

LogicMonitor,

Lien Term Loan

(3M USD LIBOR+5.00), 6.00% Cash, 5/17/2023

EMS LINQ, Inc.

First Lien Term Loan

Total IT Services

Lien Term Loan

(3M USD LIBOR+7.50), 10.00% Cash, 5/15/2024

First Lien Term Loan

Draw Term Loan

(3M USD LIBOR+7.50) 10.00% Cash, 5/15/2024

Delayed Draw Term Loan

Total Marketing Services

Software, LLC

Lien Term Loan

(3M USD LIBOR+8.00%), 9.75% Cash, 5/29/2023

Kev Software Inc.

First Lien Term Loan

Total Non-profit Services

Street Enterprises, L.L.C.

(3M USD LIBOR+8.50%), 10.00% Cash, 12/31/2023

Texas Teachers of Tomorrow, LLC (h), (i)

Texas Teachers of Tomorrow, LLC (d)

First Lien Term Loan

Street Enterprises, L.L.C.

Membership Interests

Expires 12/28/2022

Total Office Supplies

Holdings Software Technologies, LLC

Lien Term Loan

(3M USD LIBOR+8.00%), 9.00% Cash, 9/21/2024

Total Education

TMAC Acquisition Co., LLC

Food and Beverage

Unsecured Term Loan

8.00% PIK, 9/01/2023

Total Food and Beverage

Axiom Parent Holdings, LLC (h)

Healthcare Services

Common Stock Class A Units

Axiom Purchaser, Inc.

Healthcare Services

First Lien Term Loan

Holdings Software Technologies, LLC

Draw Term Loan

(3M USD LIBOR+8.00%), 9.00% Cash, 9/21/2024

Axiom Purchaser, Inc.

Healthcare Services

Delayed Draw Term Loan

Total Payroll Services

Realty Holdings LLC

Lien Term Loan

(3M USD LIBOR+6.50%), 8.75% Cash, 10/8/2024

ComForCare Health Care

Healthcare Services

First Lien Term Loan

Realty Holdings

Draw Term Loan

(3M USD LIBOR+6.50%), 8.75% Cash, 10/8/2024

HemaTerra Holding Company, LLC

Healthcare Services

First Lien Term Loan

Rental Holdings LLC (h)

A-1 Membership Units

Total Property Management

Estate Services

Lien Term Loan

(3M USD LIBOR+7.75%), 9.25% Cash, 7/9/2025

HemaTerra Holding Company, LLC (j)

Healthcare Services

Delayed Draw Term Loan

Estate Services

Draw Term Loan

(3M USD LIBOR+7.75%), 9.25% Cash, 7/9/2025

TRC HemaTerra, LLC (h)

Healthcare Services

Class D Membership Interests

Ohio Medical, LLC (h)

Healthcare Services

Ohio Medical, LLC

Healthcare Services

Senior Subordinated Note

12.00% Cash, 7/15/2021

PDDS Buyer, LLC

Healthcare Services

First Lien Term Loan

Estate Services

Partner Interests

Total Real Estate Services

Acquisition Co.,

8.00% PIK, 9/01/2023

Total Restaurant

ArbiterSports,

Lien Term Loan

(3M USD LIBOR+6.50%), 8.25% Cash, 2/21/2025

PDDS Buyer, LLC (j)

Healthcare Services

Delayed Draw Term Loan

ArbiterSports,

Draw Term Loan

(3M USD LIBOR+6.50%), 8.25% Cash, 2/21/2025

Roscoe Medical, Inc.

Healthcare Services

Roscoe Medical, Inc.

Healthcare Services

Second Lien Term Loan

Total Sports Management

Holdings, LLC (h)

Total Staffing Services

Waste Partners (d)

Lien Term Loan

10.00% Cash, 2/13/2022

Total Healthcare Services

Total Waste Services

Total Non-control/Non-affiliate investments

See accompanying notes to consolidated financial statements.

Village Realty Holdings LLC

Property Management

First Lien Term Loan

(3M USD LIBOR+6.50%), 8.75% Cash, 10/8/2024

Village Realty Holdings LLC (j)

Property Management

Delayed Draw Term Loan

Investment Corp.

Schedule of Investments

Interest Rate/Maturity

Acquisition Date

Number of Shares

investments - 6.4% (b)

Lien Term Loan

(3M USD LIBOR+11.00%), 12.00% Cash, 12/31/2025

V Rental Holdings LLC (h)

Property Management

Class A-1 Membership Units

Total Property Management

Non-control/Non-affiliate investments

Affiliate investments6.0% (b)

Top Gun Pressure Washing, LLC (f)

Business Services

First Lien Term Loan

LLC (d), (f), (j)

Draw Term Loan

(3M USD LIBOR+11.00%), 12.00% Cash, 12/31/2025

Top Gun Pressure Washing, LLC (f), (j)

Business Services

Delayed Draw Term Loan

A Preferred Units

Total Cyber Security

Gun Pressure Washing, LLC (f)

Lien Term Loan

(3M USD LIBOR+7.00%), 9.50% Cash, 8/12/2024

TG Pressure Washing Holdings, LLC (f), (h)

Business Services

Preferred Equity

GreyHeller LLC (f)

Business Services

First Lien Term Loan

Gun Pressure Washing, LLC (f), (j)

Draw Term Loan

(3M USD LIBOR+7.00%), 9.50% Cash, 8/12/2024

GreyHeller LLC (f), (h)

Business Services

Series A Preferred Units

Total Business Services

Elyria Foundry Company, L.L.C.

Second Lien Term Loan

15.00% PIK, 8/10/2022

Sub Total Affiliate investments

Control investments15.4% (b)

Netreo Holdings, LLC (g)

Business Services

First Lien Term Loan

Pressure Washing Holdings, LLC (f), (h)

Total Facilities Maintenance

Total Affiliate investments

investments - 21.4% (b)

Holdings, LLC (g)

Lien Term Loan

(3M USD LIBOR +6.25%), 9.00% Cash/2.75% PIK,

Netreo Holdings, LLC (g), (h)

Business Services

Common Stock Class A Unit

Total Business Services

Saratoga Investment Corp.

Holdings, LLC (g), (j)

Draw Term Loan

(3M USD LIBOR +6.25%), 9.00% Cash/2.75% PIK,

Holdings, LLC (g), (h)

Stock Class A Unit

Total IT Services

Investment Corp.

CLO 2013-1, Ltd.

Structured Finance Securities

Other/Structured Finance Securities

(a), (e), (g)

Finance Securities

Other/Structured

Finance Securities

11.72%, 1/20/2030

Saratoga Investment Corp.

Investment Corp.

CLO 2013-1, Ltd.

Class F-R-3 Note (a), (g)

Structured Finance Securities

Other/Structured Finance Securities

(3M USD LIBOR+8.75%), 10.21%, 1/20/2030

Saratoga Investment Corp.

CLO 2013-1, Ltd.

Class G-R-2 Note (a), (g)

Structured Finance Securities

Other/Structured Finance Securities

(3M USD LIBOR+10.00%), 11.46%, 1/20/2030

Saratoga Investment Corp.

CLO 2013-1 Warehouse 2, Ltd.

Structured Finance Securities

Unsecured Loan

Finance Securities

Other/Structured

Finance Securities

(3M USD LIBOR+10.00%), 10.19%, 4/20/2033

Total Structured Finance Securities

Sub Total Control investments

TOTAL INVESTMENTS159.6% (b)

Cash and cash equivalents and cash and cash equivalents, reserve accounts13.0%

Total Control investments

INVESTMENTS - 182.2% (b)

and cash equivalents and cash and cash equivalents, reserve accounts - 6.2% (b)

Bank Money Market (l)

Total cash and cash equivalents and cash and cash equivalents, reserve

Represents a non-qualifying investment as defined under

cash and cash equivalents and cash and cash equivalents, reserve accounts

(a) Represents an ineligible investment as defined under

Section 55(a) of the Investment Company Act of 1940, as amended.

As of February 29, 2020, non-qualifying assets represent 11.5% of the Companys portfolio at fair value.

As a BDC, the Company

can only invest 30% of its portfolio in non-qualifying assets.

Percentages are based on net assets of $304,286,853 as of February 29, 2020.

Because there is no readily available market value for these investments, the fair values of these investments

were determined using significant unobservable inputs and approved in good faith by our board of directors.

These investments have been included as Level 3 in the Fair Value Hierarchy (see Note 3 to the consolidated financial statements).

These securities are either fully or partially pledged as collateral under a senior secured revolving credit

facility (see Note 7 to the consolidated financial statements).

This investment does not have a stated interest rate that is payable thereon.

As a result, the 10.97% interest

rate in the table above represents the effective interest rate currently earned on the investment cost and is based on the current cash interest and other income generated by the investment.

As defined in the Investment Company Act, this portfolio company is an Affiliate as we own between 5.0% and

25.0% of the voting securities.

Transactions during the year ended February 29, 2020 in which the issuer was an Affiliate are as follows:

Total Interest from

Gain (Loss) from

Net Change in

(Depreciation)

GreyHeller LLC

As of February 28, 2021 non-qualifying assets represent 9.5%

of the Company’s portfolio at fair value.

As a BDC, the Company can only invest 30% of its portfolio in non-qualifying assets.

(b) Percentages are based on net assets of $304,185,770 as

of February 28, 2021.

these investments, the fair values of these investments were determined using significant unobservable inputs and approved in

good faith by our board of directors.

These investments have been included as Level 3 in the Fair Value Hierarchy (see Note 3

to the consolidated financial statements).

(d) These securities are either fully or partially pledged

as collateral under a senior secured revolving credit facility (see Note 7 to the consolidated financial statements).

(e) This investment does not have a stated interest rate

that is payable thereon.

As a result, the 11.72% interest rate in the table above represents the effective interest rate currently

earned on the investment cost and is based on the current cash interest and other income generated by the investment.

See accompanying notes to consolidated financial statements.

Investment Corp.

Schedule of Investments

(f) As defined in the Investment Company Act, this portfolio company

is an Affiliate as we own between 5.0% and 25.0% of the voting securities.

Transactions during the year ended February 28, 2021 in which

the issuer was an Affiliate are as follows:

Total Interest from Investments

Management Fee Income

Gain (Loss) from Investments

Net Change in Unrealized Appreciation (Depreciation)

Elyria Foundry Company, L.L.C.

$ (2,309,806 )

$ (8,726,013 )

GreyHeller LLC

Top Gun Pressure Washing, LLC

TG Pressure Washing Holdings, LLC

As defined in the Investment Company Act, we Control this portfolio company because we own more than

25% of the portfolio companys outstanding voting securities.

Transactions during the year ended February 29, 2020 in which the issuer was both an Affiliate and a portfolio company that we Control are as follows:

Total Interest from

Gain (Loss) from

Net Change in

(Depreciation)

Easy Ice, LLC

Easy Ice Masters, LLC

$ (2,309,806 )

$ (8,726,013 )

(g) As defined in the Investment Company Act, we “Control”

this portfolio company because we own more than 25% of the portfolio company’s outstanding voting securities.

Transactions during

the year ended February 28, 2021 in which the issuer was both an Affiliate and a portfolio company that we Control are as follows:

Total Interest from Investments

Management Fee Income

Gain (Loss) from Investments

Net Change in Unrealized Appreciation (Depreciation)

Netreo Holdings, LLC

6 unchanged sentences

CLO 2013-1, Ltd.

Class F-R-3 Note

Saratoga Investment Corp.

CLO 2013-1, Ltd.

Class G-R-2 Notes

1 unchanged sentence

CLO 2013-1 Warehouse 2, Ltd.

Non-income producing at February 29, 2020.

Includes securities issued by an affiliate of the Company.

All or a portion of this investment has an unfunded commitment as of February 29, 2020.

(see Note 8 to the

consolidated financial statements).

As of February 29, 2020, the investment was on non-accrual status.

The fair value of these investments was approximately $2.1 million, which represented 0.4% of the Companys portfolio (see Note 2 to the consolidated financial statements).

Included within cash and cash equivalents and cash and cash equivalents, reserve accounts in the Companys

consolidated statements of assets and liabilities as of February 29, 2020.

(25,000,000 )

$ (35,000,000 )

(h) Non-income producing at February 28, 2021.

(i) Includes securities issued by an affiliate of the Company.

(j) All or a portion of this investment has an unfunded commitment

as of February 28, 2021.

(see Note 8 to the consolidated financial statements).

(k) As of February 28, 2021, the investment was on non-accrual

The fair value of these investments was approximately $2.1 million, which represented 0.4% of the Company’s portfolio

(see Note 2 to the consolidated financial statements).

(l) Included within cash and cash equivalents and cash and

cash equivalents, reserve accounts in the Company’s consolidated statements of assets and liabilities as of February 28, 2021.

LIBOR - London Interbank Offered Rate

1M USD LIBORThe 1 month USD LIBOR rate as of February 29, 2020 was 1.52%.

3M USD LIBORThe 3 month USD LIBOR rate as of February 29, 2020 was 1.46%.

1M USD LIBOR - The 1 month USD LIBOR rate as of February 28,

2021 was 0.12%.

3M USD LIBOR - The 3 month USD LIBOR rate as of February 28,

2021 was 0.19%.

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

See accompanying notes to consolidated financial statements.

Saratoga Investment Corp.

Consolidated Schedule of Investments

February 28, 2019

Investment Interest Rate/

Fair Value (c)

accompanying notes to consolidated financial statements.

Investment Corp.

Schedule of Investments

Interest Rate/Maturity

Acquisition Date

Number of Shares

Non-control/Non-affiliate

investments - 138.2% (b)

Apex Holdings Software Technologies, LLC

Business Services

First Lien Term Loan

Management Services

(3M USD LIBOR+7.50%), 10.00% Cash, 7/5/2024

Apex Holdings Software Technologies, LLC

Business Services

Delayed Draw Term Loan

Management Services

Draw Term Loan

(3M USD LIBOR+7.50%), 10.00% Cash, 7/5/2024

Avionte Holdings, LLC (h)

Business Services

Class A Units

CLEO Communications Holding, LLC

Business Services

Total Construction Management Services

Holdings, Inc.

Total Consumer Products

Alarm Center, LLC (k)

Consumer Services

Preferred Equity Class

Alarm Center, LLC (h)

Consumer Services

Preferred Equity Class

Alarm Center, LLC (h)

Consumer Services

Preferred Equity Class

Alarm Center, LLC (h)

Total Consumer Services

Corporate Governance

First Lien Term Loan

(3M USD LIBOR+8.00%),

10.62% Cash/2.00% PIK, 3/31/2022

CLEO Communications Holding, LLC

Business Services

(3M USD LIBOR+7.00%), 8.75% Cash, 7/5/2023

Corporate Governance

Delayed Draw Term Loan

(3M USD LIBOR+8.00%),

10.62% Cash/2.00% PIK, 3/31/2022

Destiny Solutions Inc.

Business Services

(3M USD LIBOR+7.00%), 8.75% Cash, 7/5/2023

A Preferred Stock

Total Corporate Governance

Educational Systems (d)

Education Services

First Lien Term Loan

(3M USD LIBOR+7.00%), 8.50% Cash, 5/31/2020

Destiny Solutions Inc.

Business Services

Delayed Draw Term Loan

Teachers of Tomorrow, LLC (h), (i)

Education Services

Teachers of Tomorrow, LLC (d)

Lien Term Loan

(3M USD LIBOR+7.25%), 9.75% Cash, 6/28/2024

Destiny Solutions Inc.

(a), (h), (i)

Business Services

Total Education Services

Solutions Inc.

Education Software

First Lien Term Loan

(3M USD LIBOR+7.25%), 9.25% Cash, 10/23/2024

Solutions Inc.

Education Software

Limited Partner Interests

Emily Street Enterprises, L.L.C.

Business Services

Senior Secured Note

Education Software

Common Stock Class A

Education Software

First Lien Term Loan

(3M USD LIBOR+9.24%), 10.99% Cash, 5/8/2024

Emily Street Enterprises, L.L.C.

Business Services

Warrant Membership Interests

Expires 12/28/2022

Business Services

Second Lien Term Loan

(3M USD LIBOR+11.50%), 14.12% Cash/1.00% PIK, 8/28/2021

FMG Suite Holdings, LLC (d)

Business Services

Second Lien Term Loan

Education Software

First Lien Term Loan

(1M USD LIBOR+8.50%), 10.02% Cash, 8/9/2024

GDS Holdings US, LLC (d)

Business Services

Education Software

First Lien Term Loan

(3M USD LIBOR+7.50%), 9.50% Cash, 1/17/2025

GDS Holdings US, LLC (j)

Business Services

Education Software

Delayed Draw Term Loan

(3M USD LIBOR+7.50%), 9.50% Cash, 1/17/2025

GDS Software Holdings, LLC (h)

Business Services

Common Stock Class A Units

Identity Automation Systems (h)

Business Services

Common Stock Class A Units

Identity Automation Systems (d)

Business Services

Software Inc.

Lien Term Loan

(1M USD LIBOR+8.63%), 10.15% Cash, 9/13/2023

Total Education Software

Field Service Management

First Lien Term Loan

(3M USD LIBOR+7.00%), 9.00% Cash, 7/31/2024

Knowland Group, LLC

Business Services

Second Lien Term Loan

Service Management

Draw Term Loan

(3M USD LIBOR+7.00%), 9.00% Cash, 7/31/2024

Microsystems Company

Business Services

Second Lien Term Loan

Total Field Service Management

Investment Corp.

Schedule of Investments

Interest Rate/Maturity

Acquisition Date

Number of Shares

Holdings US, Inc.

Financial Services

First Lien Term Loan

(3M USD LIBOR+7.00%), 8.50% Cash, 8/23/2023

See accompanying notes to consolidated

financial statements.

Investment Interest Rate/

Fair Value (c)

National Waste Partners (d)

Business Services

Second Lien Term Loan

Holdings US, Inc.

Financial Services

Delayed Draw Term Loan

(3M USD LIBOR+7.00%), 8.50% Cash, 8/23/2023

Software Holdings, LLC (h)

Financial Services

Common Stock Class A

Suite Holdings, LLC (d)

Financial Services

Lien Term Loan

(1M USD LIBOR+8.00%), 9.52% Cash, 11/16/2023

Total Financial Services

Medical, LLC (h)

Healthcare Products

Manufacturing

Products Manufacturing

Subordinated Note

12.00% Cash, 7/15/2021

Omatic Software, LLC

Business Services

Total Healthcare Products Manufacturing

Parent Holdings, LLC (h)

Healthcare Services

Common Stock Class A

Purchaser, Inc.

Healthcare Services

First Lien Term Loan

(3M USD LIBOR+8.00%),

10.62% Cash, 5/29/2023

Omatic Software, LLC (j)

Business Services

(3M USD LIBOR+6.00%), 7.75% Cash, 6/19/2023

Purchaser, Inc.

Healthcare Services

Delayed Draw Term Loan

(3M USD LIBOR+8.00%),

10.62% Cash, 5/29/2023

Passageways, Inc.

Business Services

(3M USD LIBOR+6.00%), 7.75% Cash, 6/19/2023

Lien Term Loan

(3M USD LIBOR+7.50%), 8.96% Cash, 1/31/2022

Total Healthcare Services

Holding Company, LLC

Healthcare Software

First Lien Term Loan

(3M USD LIBOR+7.75%),

(3M USD LIBOR+6.75%), 9.25% Cash, 4/15/2024

Holding Company, LLC (j)

Healthcare Software

Delayed Draw Term Loan

(3M USD LIBOR+6.75%), 9.25% Cash, 4/15/2024

HemaTerra, LLC (h)

Healthcare Software

Class D Membership Interests

Healthcare Software

First Lien Term Loan

(3M USD LIBOR+7.00%), 9.50% Cash, 7/15/2024

Buyer, LLC (j)

Draw Term Loan

(3M USD LIBOR+7.00%), 9.50% Cash, 7/15/2024

Total Healthcare Software

Medical, Inc.

Healthcare Supply

Medical, Inc.

Lien Term Loan

11.25% Cash, 3/28/2021

Passageways, Inc.

Business Services

Series A Preferred Stock

Vector Controls Holding Co., LLC (d)

Business Services

Total Healthcare Supply

Hospitality/Hotel

Lien Term Loan

(3M USD LIBOR+8.00%), 10.00% Cash, 5/9/2024

Total Hospitality/Hotel

Controls Holding Co., LLC (d)

Industrial Products

First Lien Term Loan

10.50% (9.00% Cash/1.50% PIK), 3/6/2022

Vector Controls Holding Co., LLC (h)

Business Services

Warrants to Purchase Limited Liability Company Interests, Expires 11/30/2027

Total Business Services

Targus Holdings, Inc.

Consumer Products

Total Consumer Products

My Alarm Center, LLC (k)

Consumer Services

Preferred Equity Class A Units

My Alarm Center, LLC (h)

Consumer Services

Preferred Equity Class B Units

My Alarm Center, LLC

Consumer Services

Preferred Equity Class Z Units

My Alarm Center, LLC (h)

Consumer Services

Total Consumer Services

C2 Educational Systems (d)

Controls Holding Co., LLC (h)

to Purchase Limited Liability Company Interests, Expires 11/30/2027

Total Industrial Products

Communications Holding, LLC

First Lien Term Loan

(3M USD LIBOR+7.00%),

9.62% Cash, 5/31/2020

Kev Software Inc.

(3M USD LIBOR+8.00%), 9.46% Cash/2.00% PIK, 3/31/2022

Communications Holding, LLC

Delayed Draw Term Loan

(3M USD LIBOR+8.00%), 9.46% Cash/2.00% PIK, 3/31/2022

Lien Term Loan

(3M USD LIBOR+11.50%), 12.96% Cash/1.00% PIK, 8/28/2021

Total IT Services

Marketing Services

First Lien Term Loan

(1M USD LIBOR+8.63%),

11.12% Cash, 9/13/2023

M/C Acquisition Corp., L.L.C.

Class A Common Stock

M/C Acquisition Corp., L.L.C.

(3M USD LIBOR+7.25), 9.75% Cash, 5/15/2024

Draw Term Loan

(3M USD LIBOR+7.25) 9.75% Cash, 5/15/2024

Total Marketing Services

Investment Corp.

Schedule of Investments

Interest Rate/Maturity

Acquisition Date

Number of Shares

Software, LLC

Non-profit Services

First Lien Term Loan

1.00% Cash, 3/31/2020

Texas Teachers of Tomorrow, LLC (h), (i)

Texas Teachers of Tomorrow, LLC

Second Lien Term Loan

(3M USD LIBOR+9.75%),

12.37% Cash, 6/2/2021

Total Education

TMAC Acquisition Co., LLC (k)

Food and Beverage

Unsecured Term Loan

8.00% PIK, 9/01/2023

Total Food and Beverage

Axiom Parent Holdings, LLC (h)

Healthcare Services

Common Stock Class A Units

Axiom Purchaser, Inc.

Healthcare Services

(3M USD LIBOR+8.00%), 9.75% Cash, 5/29/2023

Software, LLC (j)

Draw Term Loan

(3M USD LIBOR+8.00%), 9.75% Cash, 5/29/2023

Total Non-profit Services

Street Enterprises, L.L.C.

Office Supplies

Senior Secured Note

(3M USD LIBOR+8.50%), 10.00% Cash, 4/22/2020

Street Enterprises, L.L.C.

Membership Interests

Expires 12/28/2022

Total Office Supplies

Holdings Software Technologies, LLC

Payroll Services

First Lien Term Loan

(3M USD LIBOR+6.00%),

8.62% Cash, 6/19/2023

Axiom Purchaser, Inc.

Healthcare Services

(3M USD LIBOR+8.00%), 9.46% Cash, 9/21/2021

Holdings Software Technologies, LLC

Draw Term Loan

(3M USD LIBOR+8.00%), 9.46% Cash, 9/21/2021

Total Payroll Services

Realty Holdings LLC

Property Management

First Lien Term Loan

(3M USD LIBOR+6.50%), 8.75% Cash, 10/8/2024

Realty Holdings LLC (j)

Property Management

Delayed Draw Term Loan

(3M USD LIBOR+6.00%),

8.62% Cash, 6/19/2023

Censis Technologies, Inc.

Healthcare Services

First Lien Term Loan B

(1M USD LIBOR+8.30%),

10.79% Cash, 9/27/2023

Censis Technologies, Inc.

Healthcare Services

Limited Partner Interests

ComForCare Health Care

Healthcare Services

(3M USD LIBOR+6.50%), 8.75% Cash, 10/8/2024

Rental Holdings LLC (h)

A-1 Membership Units

Total Property Management

Acquisition Co., LLC

8.00% PIK, 9/01/2023

Total Restaurant

ArbiterSports,

Sports Management

First Lien Term Loan

(3M USD LIBOR+7.50%),

10.12% Cash, 1/31/2022

Ohio Medical, LLC (h)

Healthcare Services

Ohio Medical, LLC

Healthcare Services

Senior Subordinated Note

12.00% Cash, 7/15/2021

Roscoe Medical, Inc.

Healthcare Services

Roscoe Medical, Inc.

Healthcare Services

Second Lien Term Loan

(3M USD LIBOR+6.50%), 8.25% Cash, 2/21/2025

Sports, LLC (j)

Draw Term Loan

(3M USD LIBOR+6.50%), 8.25% Cash, 2/21/2025

Total Sports Management

Holdings, LLC (h)

Total Staffing Services

Waste Partners (d)

Lien Term Loan

10.00% Cash, 2/13/2022

Total Healthcare Services

Non-control/Non-affiliate investments

Affiliate investments6.3% (b)

GreyHeller LLC (f)

Business Services

Total Waste Services

Total Non-control/Non-affiliate investments

investments - 6.0% (b)

Cyber Security

First Lien Term Loan

(3M USD LIBOR+11.00%),

13.62% Cash, 11/16/2021

GreyHeller LLC (f), (h)

Business Services

Series A Preferred Units

Total Business Services

Elyria Foundry Company, L.L.C.

Second Lien Term Loan

(3M USD LIBOR+11.00%), 12.46% Cash, 11/16/2021

A Preferred Units

Total Cyber Security

Gun Pressure Washing, LLC (f)

Facilities Maintenance

First Lien Term Loan

(3M USD LIBOR+7.00%), 9.50% Cash, 8/12/2024

Gun Pressure Washing, LLC (f), (j)

Facilities Maintenance

Delayed Draw Term Loan

(3M USD LIBOR+7.00%), 9.50% Cash, 8/12/2024

Pressure Washing Holdings, LLC (f), (h)

Total Facililties Maintenance

Foundry Company, L.L.C.

Lien Term Loan

15.00% PIK, 8/10/2022

Sub Total Affiliate investments

See accompanying notes to consolidated financial statements.

Investment Interest Rate/

Control investments46.5% (b)

Easy Ice, LLC (g)

Business Services

Preferred Equity 10.00% PIK

Easy Ice, LLC (d), (g)

Business Services

Second Lien Term Loan

7.03% Cash/5.97% PIK, 2/28/2023

Easy Ice Masters, LLC (d), (g)

Business Services

Second Lien Term Loan

7.03% Cash/5.97% PIK, 2/28/2023

Netreo Holdings, LLC (g)

Business Services

Total Affiliate investments

Investment Corp.

Schedule of Investments

Interest Rate/Maturity

Acquisition Date

Number of Shares

investments - 15.4% (b)

Holdings, LLC (g)

First Lien Term Loan

(3M USD LIBOR +6.25%), 9.00% Cash/2.00% PIK,

Netreo Holdings, LLC (g), (h)

Business Services

Common Stock Class A Unit

Total Business Services

Saratoga Investment Corp.

Holdings, LLC (g), (h)

Stock Class A Unit

Total IT Services

Investment Corp.

CLO 2013-1, Ltd.

(a), (e), (g)

Structured Finance Securities

Other/Structured Finance Securities

Other/Structured Finance

10.97%, 1/20/2030

Saratoga Investment Corp.

Investment Corp.

CLO 2013-1, Ltd.

1 unchanged sentence

Structured Finance Securities

Other/Structured Finance Securities

Other/Structured Finance

(3M USD LIBOR+8.75%), 10.21%, 1/20/2030

Saratoga Investment Corp.

Investment Corp.

CLO 2013-1, Ltd.

1 unchanged sentence

Structured Finance Securities

Other/Structured Finance Securities

Other/Structured Finance

(3M USD LIBOR+10.00%), 11.46%, 1/20/2030

Investment Corp.

CLO 2013-1 Warehouse 2, Ltd.

(a), (g), (j)

Finance Securities

(3M USD LIBOR+7.50%), 8.96%, 8/20/2021

Total Structured Finance Securities

Sub Total Control investments

TOTAL INVESTMENTS222.3% (b)

Cash and cash equivalents and cash and cash equivalents, reserve accounts34.3%

Total Control investments

INVESTMENTS - 159.6% (b)

$ 486,299,261

$ 485,631,974

and cash equivalents and cash and cash equivalents, reserve accounts - 13.0% (b)

Bank Money Market (l)

Total cash and cash equivalents and cash and cash equivalents, reserve

Represents a non-qualifying investment as defined under

cash and cash equivalents and cash and cash equivalents, reserve accounts

* Certain reclassifications have been made to previously

reported industry groupings to show results on a consistent basis across periods.

(a) Represents a non-qualifying investment as defined under

Section 55(a) of the Investment Company Act of 1940, as amended.

As of February 28, 2019, non-qualifying assets represent 16.5% of the Companys portfolio at fair value.

As a BDC, the Company

can only invest 30% of its portfolio in non-qualifying assets.

Percentages are based on net assets of $180,875,187 as of February 28, 2019.

Because there is no readily available market value for these investments, the fair values of these investments

were determined using significant unobservable inputs and approved in good faith by our board of directors.

These investments have been included as Level 3 in the Fair Value Hierarchy (see Note 3 to the consolidated financial statements).

These securities are either fully or partially pledged as collateral under a senior secured revolving credit

facility (see Note 7 to the consolidated financial statements).

This investment does not have a stated interest rate that is payable thereon.

As a result, the 16.67% interest

rate in the table above represents the effective interest rate currently earned on the investment cost and is based on the current cash interest and other income generated by the investment.

As defined in the Investment Company Act, this portfolio company is an Affiliate as we own between 5.0% and

25.0% of the voting securities.

Transactions during the year ended February 28, 2019 in which the issuer was an Affiliate are as follows:

Total Interest from

Management and

Incentive Fee

Gain (Loss) from

Net Change in

(Depreciation)

As of February 29, 2020, non-qualifying assets represent 11.5%

of the Company’s portfolio at fair value.

As a BDC, the Company can only invest 30% of its portfolio in non-qualifying assets.

(b) Percentages are based on net assets of $304,286,853 as

of February 29, 2020.

these investments, the fair values of these investments were determined using significant unobservable inputs and approved in

good faith by our board of directors.

These investments have been included as Level 3 in the Fair Value Hierarchy (see Note 3

to the consolidated financial statements).

(d) These securities are either fully or partially pledged

as collateral under a senior secured revolving credit facility (see Note 7 to the consolidated financial statements).

(e) This investment does not have a stated interest rate

that is payable thereon.

As a result, the 10.97% interest rate in the table above represents the effective interest rate currently

earned on the investment cost and is based on the current cash interest and other income generated by the investment.

Investment Corp.

Schedule of Investments

(f) As defined in the Investment Company Act, this portfolio

company is an Affiliate as we own between 5.0% and 25.0% of the voting securities.

Transactions during the year ended February

29, 2020 in which the issuer was an Affiliate are as follows:

Total Interest from Investments

Management Fee Income

Gain (Loss) from Investments

Net Change in Unrealized Appreciation (Depreciation)

GreyHeller LLC

Elyria Foundry Company, L.L.C.

As defined in the Investment Company Act, we Control this portfolio company because we own more than

25% of the portfolio companys outstanding voting securities.

Transactions during the year ended February 28, 2019 in which the issuer was both an Affiliate and a portfolio company that we Control are as follows:

See accompanying notes to

consolidated financial statements.

Total Interest from

Management and

Gain (Loss) from

Net Change in

(Depreciation)

Top Gun Pressure Washing, LLC

TG Pressure Washing Holdings, LLC

(g) As defined in the Investment Company Act, we “Control”

this portfolio company because we own more than 25% of the portfolio company’s outstanding voting securities.

Transactions during

the year ended February 29, 2020 in which the issuer was both an Affiliate and a portfolio company that we Control are as follows:

Total Interest from Investments

Management Fee Income

Gain (Loss) from Investments

Net Change in Unrealized Appreciation (Depreciation)

Easy Ice, LLC

$ (65,219,080 )

$ (3,816,610 )

Easy Ice Masters, LLC

4 unchanged sentences

CLO 2013-1, Ltd.

Saratoga Investment Corp.

CLO 2013-1, Ltd.

Class F-R-2 Notes

3 unchanged sentences

Saratoga Investment Corp.

CLO 2013-1 Warehouse,

Non-income producing at February 28, 2019.

Includes securities issued by an affiliate of the Company.

All or a portion of this investment has an unfunded commitment as of February 28, 2019.

(see Note 8 to the

consolidated financial statements).

As of February 28, 2019, the investment was on non-accrual status.

The fair value of these investments was approximately $5.7 million, which represented 1.4% of the Companys portfolio (see Note 2 to the consolidated financial statements).

Included within cash and cash equivalents and cash and cash equivalents, reserve accounts in the Companys

consolidated statements of assets and liabilities as of February 28, 2019.

CLO 2013-1 Warehouse 2, Ltd (j)

$ (69,388,201 )

$ (5,370,450 )

(h) Non-income producing at February 29, 2020.

(i) Includes securities issued by an affiliate of the Company.

(j) All or a portion of this investment has an unfunded commitment

as of February 29, 2020.

(see Note 8 to the consolidated financial statements).

(k) As of February 29, 2020, the investment was on non-accrual

The fair value of these investments was approximately $2.1 million, which represented 0.4% of the Company’s portfolio

(see Note 2 to the consolidated financial statements).

(l) Included within cash and cash equivalents and cash and

cash equivalents, reserve accounts in the Company’s consolidated statements of assets and liabilities as of February 29, 2020.

LIBOR - London Interbank Offered Rate

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

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

1M USD LIBOR - The 1 month USD LIBOR rate as of February 29,

2020 was 1.52%.

3M USD LIBOR - The

3 month USD LIBOR rate as of February 29, 2020 was 1.46%.

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

See accompanying notes to consolidated financial statements.

SARATOGA INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

February 29, 2020

Saratoga Investment Corp.

(the Company, we, our and us) is a

non-diversified closed end management investment company incorporated in Maryland that has elected to be treated and is regulated as a business development company (BDC) under the Investment Company Act of 1940 (the 1940

The Company commenced operations on March 23, 2007 as GSC Investment Corp.

and completed the initial public offering (IPO) on March 28, 2007.

The Company has elected to be treated as a regulated investment company

(RIC) under subchapter M of the Internal Revenue Code (the Code).

accompanying notes to consolidated financial statements.

INVESTMENT CORP.

TO CONSOLIDATED FINANCIAL STATEMENTS

Investment Corp.

(the “Company”, “we”, “our”

and “us”) is a non-diversified closed end

management investment company incorporated in Maryland that has elected to be treated and is regulated as a business development company

(“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”).

The Company commenced operations

on March 23, 2007 as GSC Investment Corp.

and completed the initial public offering (“IPO”) on March 28, 2007.

has elected to be treated as a regulated investment company (“RIC”) under subchapter M of the Internal Revenue Code of 1986,

as amended (the “Code”).

The Company expects to continue to qualify and to elect to be treated, for tax purposes, as a RIC.

The Companys investment objective is to generate

current income and, to a lesser extent, capital appreciation from its investments.

GSC Investment, LLC (the LLC) was

organized in May 2006 as a Maryland limited liability company.

As of February 28, 2007, the LLC had not yet commenced its operations and investment activities.

On March 21, 2007, the Company was incorporated and concurrently therewith the LLC was merged with and into the Company, with the Company as

the surviving entity, in accordance with the procedure for such merger in the LLCs limited liability company agreement and Maryland law.

In connection with such merger, each outstanding limited liability company interest of the LLC was

converted into a share of common stock of the Company.

On July 30, 2010, the Company changed its name from GSC Investment

Corp. to Saratoga Investment Corp. in connection with the consummation of a recapitalization transaction.

is externally managed and advised by the investment adviser, Saratoga Investment Advisors, LLC (the Manager), pursuant to a management agreement (the Management Agreement).

Prior to July 30, 2010, the Company was managed and

advised by GSCP (NJ), L.P.

The Company has established wholly-owned subsidiaries, SIA-Avionte, Inc., SIA-Easy Ice, LLC, SIA-GH, Inc., SIA-HT, Inc., SIA-MAC, Inc., SIA-TG, Inc., SIA-TT, Inc., SIA-Vector, Inc.

and SIA-VR, Inc., which are structured as Delaware entities, or tax blockers (Taxable Blockers), to hold equity or equity-like investments in portfolio companies organized as limited liability companies, or

LLCs (or other forms of pass through entities).

The Company’s investment objective is to generate current income and, to a lesser extent, capital appreciation from its investments.

Investment, LLC (the “LLC”) was organized in May 2006 as a Maryland limited liability company.

As of February 28, 2007, the

LLC had not yet commenced its operations and investment activities.

March 21, 2007, the Company was incorporated and concurrently therewith the LLC was merged with and into the Company, with the Company

as the surviving entity, in accordance with the procedure for such merger in the LLC’s limited liability company agreement and

Maryland law.

In connection with such merger, each outstanding limited liability company interest of the LLC was converted into a share

of common stock of the Company.

July 30, 2010, the Company changed its name from “GSC Investment Corp.”

to “Saratoga Investment Corp.”

in connection

with the consummation of a recapitalization transaction.

Company is externally managed and advised by the investment adviser, Saratoga Investment Advisors, LLC (the “Manager”

“Saratoga Investment Advisors”), pursuant to an investment advisory and management agreement (the “Management Agreement”).

Prior to July 30, 2010, the Company was managed and advised by GSCP (NJ), L.P.

Company has established wholly-owned subsidiaries, SIA-Avionte, Inc., SIA-GH, Inc., SIA-MAC, SIA-PP Inc., Inc., SIA-TG, Inc., SIA-TT,

Inc., SIA-Vector, Inc.

and SIA-VR, Inc., which are structured as Delaware entities, or tax blockers (“Taxable Blockers”),

to hold equity or equity-like investments in portfolio companies organized as limited liability companies, or LLCs (or other forms of

pass through entities).

Tax Blockers are consolidated for accounting purposes, but are not consolidated for U.S.

federal income tax purposes and may incur U.S.

federal income tax expenses as a result of their ownership of

portfolio companies.

On December 31, 2019, the Companys second lien term loans in Easy Ice, LLC and Easy Ice Masters, LLC were

repaid at par, and its preferred equity was sold in a change of control transaction.

In addition to the second lien term loans of $27.9 million and the preferred equity of $10.7 million being repaid in full including all accrued interest,

the Company also received approximately $35.6 million of additional proceeds, interest and fees.

The Company recognized a gain of $31.2 million, which is included in the net realized gain (loss) from investments in the Companys

consolidated statement of operations from the sale.

The SIA-Easy Ice, LLC Taxable Blocker was sold as part of this transaction.

On February 11, 2020, the Company 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 Investment Corp.

CLO 2013-1, Ltd.

(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.

The CLO 2013-1 Warehouse 2 Loan, which expires on August 20, 2021, bears interest at an annual rate of 3M USD LIBOR + 7.5%.

As of February 29, 2020, the Companys investment in the CLO 2013-1

Warehouse 2 had a fair value of $2.2 million.

On March 28, 2012, our wholly-owned subsidiary, Saratoga Investment Corp.

(SBIC LP), received a Small Business Investment Company (SBIC) license from the Small Business Administration (SBA).

On August 14, 2019, our wholly-owned subsidiary, Saratoga Investment Corp.

(SBIC II LP), also received an SBIC license from the SBA.

The new license will provide up to $175.0 million in additional long-term capital in the form of SBA debentures.

federal income tax purposes

and may incur U.S.

federal income tax expenses as a result of their ownership of portfolio companies.

December 31, 2019, the Company’s second lien term loans in Easy Ice, LLC and Easy Ice Masters, LLC were repaid at par, and its

preferred equity was sold in a change of control transaction.

In addition to the second lien term loans of $27.9 million and the preferred

equity of $10.7 million being repaid in full including all accrued interest, the Company also received approximately $35.6 million of

additional proceeds, interest and fees.

The Company recognized a gain of $31.2 million, which is included in the net realized gain (loss)

from investments in the Company’s consolidated statement of operations from the sale.

The SIA-Easy Ice, LLC Taxable Blocker was

sold as part of this transaction.

March 28, 2012, our wholly-owned subsidiary, Saratoga Investment Corp.

SBIC, LP (“SBIC LP”), received a Small Business Investment

Company (“SBIC”) license from the Small Business Administration (“SBA”).

On August 14, 2019, our wholly-owned

subsidiary, Saratoga Investment Corp.

SBIC II LP (“SBIC II LP”), also received an SBIC license from the SBA.

The new license

will provide up to $175.0 million in additional long-term capital in the form of SBA debentures.

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying

consolidated financial statements have been prepared on the accrual basis of accounting in conformity with U.S.

generally accepted accounting principles (U.S.

GAAP), are stated in U.S.

Dollars and include the accounts of the Company and

its special purpose financing subsidiaries, Saratoga Investment Funding, LLC (previously known as GSC Investment Funding LLC), SBIC LP, SBIC II LP, SIA-Avionte, Inc., SIA-Easy Ice, LLC, SIA-GH, Inc., SIA-HT, Inc., SIA-MAC, Inc., SIA-TG, Inc., SIA-TT, Inc., SIA-Vector, Inc.

of Presentation

accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with U.S.

accepted accounting principles (“U.S.

GAAP”), are stated in U.S.

Dollars and include the accounts of the Company and its

special purpose financing subsidiaries, Saratoga Investment Funding, LLC (previously known as GSC Investment Funding LLC), SBIC LP, SBIC

II LP, SIA-Avionte, Inc., SIA-GH, Inc., SIA-MAC, Inc., SIA-PP, Inc., SIA-TG, Inc., SIA-TT, Inc., SIA-Vector, Inc.

and SIA-VR, Inc.

intercompany accounts and transactions have been eliminated in consolidation.

All references made to the Company, we, and us herein include Saratoga Investment Corp.

and its consolidated subsidiaries, except as

stated otherwise.

The Company, SBIC LP and SBIC II LP are all considered to be investment companies for financial reporting purposes and

have applied the guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 946, Financial Services Investment Companies (ASC 946).

have been no changes to the Company, SBIC LP or SBIC II LPs status as investment companies during the year ended February 29, 2020.

Estimates in the Preparation of Financial Statements

The preparation of the accompanying consolidated financial statements in

conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and income,

gains (losses) and expenses during the period reported.

Actual results could differ materially from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include short-term, liquid investments in a money market fund.

Cash and cash equivalents are carried at cost

which approximates fair value.

Per section 12(d)(1)(A) of the 1940 Act, the Company may not invest in another registered investment company such as, a money market fund if such investment would cause the Company to exceed any of the following

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

we were to hold securities in the money market fund having an aggregate value in excess of 5.0% of the value of

our total assets, except as allowed pursuant to Rule 12d1-1 of Section 12(d)(1) of the 1940 Act which is designed to permit cash sweep arrangements rather than investments directly in short-term instruments;

we were to hold securities in money market funds and other registered investment companies and BDCs having an

aggregate value in excess of 10.0% of the value of our total assets.

As of February 29, 2020, the Company did not

exceed any of these limitations.

Cash and Cash Equivalents, Reserve Accounts

Cash and cash equivalents, reserve accounts include amounts held in designated bank accounts in the form of cash and short-term liquid investments in money market funds, representing payments received on secured investments or other reserved amounts associated with the Companys $45.0 million senior secured revolving

credit facility with Madison Capital Funding LLC.

The Company is required to use these amounts to pay interest expense, reduce borrowings, or pay other amounts in accordance with the terms of the senior secured revolving credit facility.

In addition, cash and cash equivalents, reserve accounts also include amounts held in designated bank accounts, in the form of cash and

short-term liquid investments in money market funds, within our wholly-owned subsidiaries, SBIC LP and SBIC II LP.

The statements of cash

flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash and restricted cash equivalents when reconciling the

beginning-of-period and end-of-period total amounts.

The following table provides a reconciliation of cash and cash equivalents and cash and cash

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

All references made to the “Company,”

“we,”

and “us”

herein include Saratoga Investment Corp.

and its consolidated subsidiaries, except as stated otherwise.

Company, SBIC LP and SBIC II LP are all considered to be investment companies for financial reporting purposes and have applied the guidance

in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, “

Services —

Investment Companies ”

(“ASC 946”).

There have been no changes to the Company, SBIC LP or SBIC

II LP’s status as investment companies during the year ended February 28, 2021.

of Estimates in the Preparation of Financial Statements

preparation of the accompanying consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates

and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the

date of the financial statements, and income, gains (losses) and expenses during the period reported.

Actual results could differ materially

from those estimates.

and Cash Equivalents

and cash equivalents include short-term, liquid investments in a money market fund.

Cash and cash equivalents are carried at cost which

approximates fair value.

Per section 12(d)(1)(A) of the 1940 Act, the Company may not invest in another registered investment company

such as, a money market fund if such investment would cause the Company to exceed any of the following limitations:

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

were to hold securities in the money market fund having an aggregate value in excess of 5.0%

of the value of our total assets, except as allowed pursuant to Rule 12d1-1 of Section 12(d)(1)

of the 1940 Act which is designed to permit “cash sweep”

arrangements rather

than investments directly in short-term instruments;

were to hold securities in money market funds and other registered investment companies and

BDCs having an aggregate value in excess of 10.0% of the value of our total assets.

of February 28, 2021, the Company did not exceed any of these limitations.

and Cash Equivalents, Reserve Accounts

and cash equivalents, reserve accounts include amounts held in designated bank accounts in the form of cash and short-term liquid investments

in money market funds, representing payments received on secured investments or other reserved amounts associated with the Company’s

$45.0 million senior secured revolving credit facility with Madison Capital Funding LLC.

The Company is required to use these amounts

to pay interest expense, reduce borrowings, or pay other amounts in accordance with the terms of the senior secured revolving credit

addition, cash and cash equivalents, reserve accounts also include amounts held in designated bank accounts, in the form of cash and

short-term liquid investments in money market funds, within our wholly-owned subsidiary, SBIC LP and SBIC II LP.

statements of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described

as restricted cash and restricted cash equivalents when reconciling the beginning-of-period and end-of-period total amounts.

The following table provides a reconciliation of cash and cash equivalents and cash and cash equivalents, reserve accounts

reported within the consolidated statements of assets and liabilities that sum to the total of the same such amounts shown

in the consolidated statements of cash flows:

Cash and cash equivalents

1 unchanged sentence

Total cash and cash equivalents and cash and cash equivalents, reserve accounts

Investment Classification

The Company classifies its investments in accordance with the requirements of the 1940 Act.

Under the 1940 Act, Control Investments

are defined as investments in companies in which we own more than 25.0% of the voting securities or maintain greater than 50.0% of the board representation.

Under the 1940 Act, Affiliated Investments are defined as those non-control investments in companies in which we own between 5.0% and 25.0% of the voting securities.

Under the 1940 Act, Non-affiliated Investments are defined as investments that are neither Control

Investments nor Affiliated Investments.

Investment Valuation

The Company accounts for its investments at fair value in accordance with the FASB ASC Topic 820, Fair Value Measurement (ASC

ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements.

ASC 820 requires the Company to assume that its investments are to be sold or its liabilities are to be transferred at the balance sheet date in the principal market to independent market participants, or in the absence of a principal market, in the

most advantageous market, which may be a hypothetical market.

Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact.

Investments for which market quotations are readily available are fair valued at such market quotations obtained from independent third-party pricing services and market makers subject to any decision by our board of directors to approve a fair value determination to reflect significant events affecting the value of these investments.

investments for which market quotations are not readily available at fair value as approved, in good faith, by our board of directors based on input from our Manager, the audit committee of our board of directors and a

third-party independent valuation firm.

Determinations of fair value may involve subjective judgments and estimates.

The types of factors that may be considered in determining the fair value of our investments

include the nature and realizable value of any collateral, the portfolio companys ability to make payments, market yield trend analysis, the markets in which the portfolio company does business, comparison to publicly traded companies,

discounted cash flow and other relevant factors.

The Company undertakes a multi-step valuation process each quarter when valuing

investments for which market quotations are not readily available, as described below:

Each investment is initially valued by the responsible investment professionals of the Manager and preliminary

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

An independent valuation firm engaged by our board of directors independently reviews a selection of these

preliminary valuations each quarter so that the valuation of each investment for which market quotes are not readily available is reviewed by the independent valuation firm at least once each fiscal year.

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

The audit committee of our board of directors reviews and approves each preliminary valuation and our Manager and

independent valuation firm (if applicable) will supplement the preliminary valuation to reflect any comments provided by the audit committee;

Our board of directors discusses the valuations and approves the fair value of each investment, in good faith,

based on the input of our Manager, independent valuation firm (to the extent applicable) and the audit committee of our board of directors.

The Companys investment in Saratoga Investment Corp.

Classification

Company classifies its investments in accordance with the requirements of the 1940 Act.

Under the 1940 Act, “Control Investments”

are defined as investments in companies in which we own more than 25.0% of the voting securities or maintain greater than 50.0% of the

board representation.

Under the 1940 Act, “Affiliated Investments”

are defined as those non-control investments in companies

in which we own between 5.0% and 25.0% of the voting securities.

Under the 1940 Act, “Non-affiliated Investments”

as investments that are neither Control Investments nor Affiliated Investments.

Company accounts for its investments at fair value in accordance with the FASB ASC Topic 820, Fair Value Measurement (“ASC 820”).

ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality

of inputs used to measure fair value and enhances disclosure requirements for fair value measurements.

ASC 820 requires the Company to

assume that its investments are to be sold or its liabilities are to be transferred at the measurement date in the principal market to

independent market participants, or in the absence of a principal market, in the most advantageous market, which may be a hypothetical

Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable,

and willing and able to transact.

for which market quotations are readily available are fair valued at such market quotations obtained from independent third-party pricing

services and market makers subject to any decision by our board of directors to approve a fair value determination to reflect significant

events affecting the value of these investments.

We value investments for which market quotations are not readily available at fair value

as approved, in good faith, by our board of directors based on input from our Manager, the audit committee of our board of directors

and a third-party independent valuation firm.

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

as described below:

investment is initially valued by the responsible investment professionals of the Manager and preliminary valuation conclusions

are documented, reviewed and discussed with our senior management;

independent valuation firm engaged by our board of directors independently reviews a selection of these preliminary valuations

each quarter so that the valuation of each investment for which market quotes are not readily available is reviewed by the independent

valuation firm at least once each fiscal year.

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

audit committee of our board of directors reviews and approves each preliminary valuation and our Manager and independent valuation

firm (if applicable) will supplement the preliminary valuation to reflect any comments provided by the audit committee;

board of directors discusses the valuations and approves the fair value of each investment, in good faith, based on the input

of our Manager, independent valuation firm (to the extent applicable) and the audit committee of our board of directors.

use multiple techniques for determining fair value based on the nature of the investment and experience with those types of investments

and specific portfolio companies.

The selections of the valuation techniques and the inputs and assumptions used within those techniques

often require subjective judgements and estimates.

These techniques include market comparables, discounted cash flows and enterprise

value waterfalls.

Fair value is best expressed as a range of values from which the Company determines a single best estimate.

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.

Company’s investment in Saratoga Investment Corp.

CLO 2013-1, Ltd.

(Saratoga CLO) is carried at fair value, which is based

on a discounted cash flow model that utilizes prepayment, re-investment and loss assumptions based on historical experience and projected performance, economic factors, the characteristics of the underlying cash flow, and comparable yields for

equity interests in collateralized loan obligation funds similar to Saratoga CLO, when available, as determined by our Manager and recommended to our board of directors.

Specifically, we use Intex cash flow models, or an appropriate substitute, to

form the basis for the valuation of our investment in Saratoga CLO.

The models use a set of assumptions including projected default rates, recovery rates, reinvestment rates and prepayment rates in order to arrive at estimated valuations.

assumptions are based on available market data and projections provided by third parties as well as management estimates.

The Company uses the output from the Intex models (i.e., the estimated cash flows) to perform a discounted cash flow analysis

on expected future cash flows to determine the valuation for our investment in Saratoga CLO.

Because such valuations, and particularly

valuations of private investments and private companies, are inherently uncertain, they may fluctuate over short periods of time and may be based on estimates.

The determination of fair value may differ materially from the values that would have

been used if a ready market for these investments existed.

The Companys net asset value could be materially affected if the determinations regarding the fair value of our investments were materially higher or lower than the values that we

ultimately realize upon the disposal of such investments.

Derivative Financial Instruments

The Company accounts for derivative financial instruments in accordance with FASB ASC Topic 815, Derivatives and Hedging (ASC

ASC 815 requires recognizing all derivative instruments as either assets or liabilities on the consolidated statements of assets and liabilities at fair value.

The Company values derivative contracts at the closing fair value provided by

the counterparty.

(“Saratoga CLO”) is carried at fair value, which

is based on a discounted cash flow valuation technique that utilizes prepayment, re-investment and loss inputs based on historical experience

and projected performance, economic factors, the characteristics of the underlying cash flow, and comparable yields for equity interests

in collateralized loan obligation funds similar to Saratoga CLO, when available, as determined by our Manager and recommended to our

board of directors.

Specifically, we use Intex cash flows, or an appropriate substitute, to form the basis for the valuation of our investment

in Saratoga CLO.

The cash flows use a set of inputs including projected default rates, recovery rates, reinvestment rates and prepayment

rates in order to arrive at estimated valuations.

The inputs are based on available market data and projections provided by third parties

as well as management estimates.

The Company uses the output from the Intex models (i.e., the estimated cash flows) to perform a discounted

cash flow analysis on expected future cash flows to determine the valuation for our investment in Saratoga CLO.

such valuations, and particularly valuations of private investments and private companies, are inherently uncertain, they may fluctuate

over short periods of time and may be based on estimates.

The determination of fair value may differ materially from the values that

would have been used if a ready market for these investments existed.

The Company’s net asset value could be materially affected

if the determinations regarding the fair value of our investments were materially higher or lower than the values that we ultimately

realize upon the disposal of such investments.

Financial Instruments

Company accounts for derivative financial instruments in accordance with FASB ASC Topic 815, Derivatives and Hedging (“ASC

ASC 815 requires recognizing all derivative instruments as either assets or liabilities on the consolidated statements of

assets and liabilities at fair value.

The Company values derivative contracts at the closing fair value provided by the counterparty.

Changes in the values of derivative contracts are included in the consolidated statements of operations.

Investment Transactions and

Income Recognition

Purchases and sales of investments and the related realized gains or losses are recorded on a trade-date basis.

Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis to the extent that such amounts are expected to be collected.

The Company stops

accruing interest on its investments when it is determined that interest is no longer collectible.

Discounts and premiums on investments purchased are accreted/amortized using the effective yield method.

The amortized cost of investments represents

the original cost adjusted for the accretion of discounts over the life of the investment and amortization of premiums on investments up to the earliest call date.

Loans are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected.

Transactions and Income Recognition

and sales of investments and the related realized gains or losses are recorded on a trade-date basis.

Interest income, adjusted for amortization

of premium and accretion of discount, is recorded on an accrual basis to the extent that such amounts are expected to be collected.

Company stops accruing interest on its investments when it is determined that interest is no longer collectible.

Discounts and premiums

on investments purchased are accreted/amortized using the effective yield method.

The amortized cost of investments represents the original

cost adjusted for the accretion of discounts over the life of the investment and amortization of premiums on investments up to the earliest

are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected.

Accrued interest

is generally reserved when a loan is placed on non-accrual status.

Interest payments received on non-accrual loans may be recognized as a reduction in principal depending upon managements judgment

regarding collectability.

Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in managements judgment, are likely to remain current, although we may make

exceptions to this general rule if the loan has sufficient collateral value and is in the process of collection.

At February 29, 2020, certain investments in two portfolio companies, including preferred equity interests, were on non-accrual

status with a fair value of approximately $2.1 million, or 0.4% of the fair value of our portfolio.

At February 28, 2019, certain investments in four portfolio companies, including preferred equity interests, were on non-accrual status with a fair value of approximately $5.7 million, or 1.4% of the fair value of our portfolio.

Interest income on our investment in Saratoga CLO is recorded using the effective interest method in accordance with the provisions of ASC

Topic 325, Investments-Other, Beneficial Interests in Securitized Financial Assets , (ASC 325), based on the anticipated yield and the estimated cash flows over the projected life of the investment.

Yields are revised when there

are changes in actual or estimated cash flows due to changes in prepayments and/or re-investments, credit losses or asset pricing.

Changes in estimated yield are recognized as an adjustment to the estimated

yield over the remaining life of the investment from the date the estimated yield was changed.

Adoption of ASC 606

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (ASC

606), which supersedes the revenue recognition requirements in Revenue Recognition (ASC 605).

In May 2016, ASU 2016-12 amended ASU 2014-09 and deferred

the effective period for annual periods beginning after December 15, 2017.

Under the new guidance, the Company recognizes revenue in

a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

Under this standard, revenue is based on a

contract with a determinable transaction price and distinct performance obligations with probable collectability.

Interest payments received on non-accrual loans may be recognized

as a reduction in principal depending upon management’s judgment regarding collectability.

Non-accrual loans are restored to accrual

status when past due principal and interest is paid and, in management’s judgment, are likely to remain current, although we may

make exceptions to this general rule if the loan has sufficient collateral value and is in the process of collection.

At February 28,

2021, certain investments in two portfolio companies, including preferred equity interests, were on non-accrual status with a fair value

of approximately $2.1 million, or 0.4% of the fair value of our portfolio.

At February 29, 2020, certain investments in four portfolio

companies, including preferred equity interests, were on non-accrual status with a fair value of approximately $2.1 million,

or 0.4% of the fair value of our portfolio.

income on our investment in Saratoga CLO is recorded using the effective interest method in accordance with the provisions of ASC Topic

325, Investments-Other, Beneficial Interests in Securitized Financial Assets , (“ASC 325”), based on the anticipated

yield and the estimated cash flows over the projected life of the investment.

Yields are revised when there are changes in actual or

estimated cash flows due to changes in prepayments and/or re-investments, credit losses or asset pricing.

Changes in estimated yield

are recognized as an adjustment to the estimated yield over the remaining life of the investment from the date the estimated yield was

May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”), which supersedes the revenue

recognition requirements in Revenue Recognition (“ASC 605”).

In May 2016, ASU 2016-12 amended ASU 2014-09 and deferred the

effective period for annual periods beginning after December 15, 2017.

the new guidance, the Company recognizes revenue in a way that depicts the transfer of promised goods or services to customers in an

amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

standard, revenue is based on a contract with a determinable transaction price and distinct performance obligations with probable collectability.

Revenues cannot be recognized until the performance obligation(s) are satisfied and control is transferred to the customer.

has concluded that the majority of its revenues associated with financial instruments are scoped out of ASC 606, and has concluded that the only significant impact relates to the timing of the recognition of the CLO incentive fee income.

adoption of ASC 606 did not have an impact on the Companys management fee income or investment income.

The Company adopted ASC 606

to all applicable contracts under the modified retrospective approach using the practical expedient provided for within paragraph

606-10-65-1(f)(4);

has concluded that the majority of its revenues associated with financial instruments are scoped out of ASC 606, and has concluded that

the only significant impact relates to the timing of the recognition of the CLO incentive fee income.

The adoption of ASC 606 did not

have an impact on the Company’s management fee income or investment income.

Company adopted ASC 606 to all applicable contracts under the modified retrospective approach using the practical expedient provided

for within paragraph 606-10-65-1(f)(4);

therefore, the presentation of prior year periods has not been adjusted.

The Company recognized the cumulative

effect of initially adopting ASC 606 as an adjustment to the opening balance of components of equity as of March 1, 2018.

The Company recognized

the cumulative effect of initially adopting ASC 606 as an adjustment to the opening balance of components of equity as of March 1, 2018.

fee income is recognized based on the performance of Saratoga CLO during the period, subject to the achievement of minimum return levels

in accordance with the terms set out in the investment management agreement between the Company and Saratoga CLO.

Incentive fee income

Incentive fee income is recognized based on the performance of Saratoga CLO during the period, subject to the achievement of minimum

return levels in accordance with the terms set out in the investment management agreement between the Company and Saratoga CLO.

Incentive fee income is realized in cash on a quarterly basis.

Once realized, such fees are no longer subject to

Upon the adoption of ASC 606, the Company recognizes incentive fee income only when the amount is realized and no longer

subject to reversal.

is realized in cash on a quarterly basis.

Once realized, such fees are no longer subject to reversal.

the adoption of ASC 606, the Company recognizes incentive fee income only when the amount is realized and no longer subject to reversal.

Therefore, the Company no longer recognizes unrealized incentive fee income in the consolidated financial statements.

The adoption of ASC 606 results in the delayed recognition of unrealized incentive fee income in the

consolidated financial statements until it becomes realized at the end of the measurement period and all uncertainties are eliminated, which is typically quarterly.

The Company adopted ASC 606 for incentive fee income using the modified retrospective approach with an effective date of March 1, 2018.

The cumulative effect of the adoption resulted in the reversal of $0.07 million of unrealized incentive fee income and is presented as a reduction to the opening balances of components of equity as of March 1, 2018.

In conjunction with the third refinancing and issuance of the Saratoga

CLOs 2013-1 Reset CLO Notes (the 2013-1 Reset CLO Notes) on December 14, 2018, the Company is no longer entitled to

receive an incentive management fee from Saratoga CLO.

The adoption of

ASC 606 results in the delayed recognition of unrealized incentive fee income in the consolidated financial statements until it becomes

realized at the end of the measurement period and all uncertainties are eliminated, which is typically quarterly.

Company adopted ASC 606 for incentive fee income using the modified retrospective approach with an effective date of March 1, 2018.

cumulative effect of the adoption resulted in the reversal of $0.07 million of unrealized incentive fee income and is presented as a

reduction to the opening balances of components of equity as of March 1, 2018.

conjunction with the third refinancing and issuance of the Saratoga CLO’s 2013-1 Reset CLO Notes (the “2013-1 Reset CLO

Notes”) on December 14, 2018, the Company is no longer entitled to receive an incentive management fee from Saratoga CLO.

See Note 4 for additional information.

Prior to the refinancing, the Company received $0.6 million in incentive fees from the Saratoga CLO and is reported as incentive fee income on the

Companys consolidated statement of operations for the year ended February 28, 2019.

The following table presents the impact of incentive fee income on the consolidated

statement of assets and liabilities upon the adoption of ASC 606 effective March 1, 2018:

Consolidated Statement of Assets and

February 28, 2018

Adjustments (1)

As Adjusted for

Management and incentive fee receivable

Cumulative effect adjustment for Adoption of ASC 606

Total net assets

NET ASSET VALUE PER SHARE

Unrealized incentive fee receivable balance as of February 28, 2018.

For the year ended February 28, 2019, the impact on the consolidated statement of operations without the adoption of ASC 606 is shown in

Prior to the refinancing, the Company received $0.6 million in incentive fees from the Saratoga

CLO and is reported as incentive fee income on the Company’s consolidated statement of operations for the year ended February 28,

the year ended February 28, 2019, the impact on the consolidated statement of operations without the adoption of ASC 606 is shown in

the table below:

Consolidated Statements of Operations

Statements of Operations

For the Year Ended February 28, 2019

4 unchanged sentences

WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE

Payment-in-Kind Interest

The Company holds debt and preferred equity investments in its portfolio that contain a payment-in-kind

(PIK) interest provision.

The PIK interest, which represents contractually deferred interest added to the investment balance that is generally due at maturity, is generally recorded on the accrual basis to the extent such amounts are

expected to be collected.

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

Structuring and Advisory Fee Income

Structuring and advisory fee income represents fee income earned and received performing certain investment and advisory activities during the

closing of new investments.

Other income includes dividends received, origination fees and prepayment income fees and is recorded in the consolidated statements of

operations when earned.

Deferred Debt Financing Costs

Financing costs incurred in connection with our credit facility and notes are deferred and amortized using the straight-line method over the

life of the respective facility and debt securities.

Financing costs incurred in connection with our SBA debentures are deferred and amortized using the straight-line method over the life of the debentures.

The Company presents deferred debt financing costs on the balance sheet as a contra-liability as a direct deduction from the carrying amount

Payment-in-Kind

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

The PIK interest, which represents contractually deferred interest added to the investment balance that is generally due at maturity,

is generally recorded on the accrual basis to the extent such amounts are expected to be collected.

The Company stops accruing PIK interest

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

and Advisory Fee Income

and advisory fee income represents various fee income earned and received performing certain investment structuring and advisory activities

during the closing of new investments.

income includes dividends received, prepayment income fees, and origination, monitoring, administration and amendment fees and is recorded

in the consolidated statements of operations when earned.

Debt Financing Costs

costs incurred in connection with our credit facility and notes are deferred and amortized using the straight-line method over the life

of the respective facility and debt securities.

Financing costs incurred in connection with our SBA debentures are deferred and amortized

using the straight-line method over the life of the debentures.

Company presents deferred debt financing costs on the balance sheet as a contra-liability as a direct deduction from the carrying amount

of that debt liability, consistent with debt discounts.

Contingencies

In the ordinary course of business, the Company may enter into contracts or agreements that contain indemnifications or warranties.

the ordinary course of business, the Company may enter into contracts or agreements that contain indemnifications or warranties.

events could occur that lead to the execution of these provisions against the Company.

Based on its history and experience, management feels that the likelihood of such an event is remote.

Therefore, the Company has not accrued any liabilities in

connection with such indemnifications.

In the ordinary course of business, the Company may directly or indirectly be a defendant or

plaintiff in legal actions with respect to bankruptcy, insolvency or other types of proceedings.

Such lawsuits may involve claims that could adversely affect the value of certain financial instruments owned by the Company.

The Company has elected to

be treated for tax purposes as a RIC under the Code and, among other things, intends to make the requisite distributions to its stockholders which will relieve the Company from federal income taxes.

Therefore, no provision has been recorded for

federal income taxes, except as related to the Taxable Blockers when applicable.

In order to qualify as a RIC, among other requirements,

the Company is required to timely distribute to its stockholders at least 90.0% of its investment company taxable income, as defined by the Code, for each fiscal tax year.

The Company will be subject to a nondeductible U.S.

federal excise tax of

4.0% on undistributed income if it does not distribute at least 98.0% of its ordinary income in any calendar year and 98.2% of its capital gain net income for each one-year period ending on October 31.

Depending on the level of taxable income earned in a tax year, the Company may choose to carry forward taxable income in excess of current

year dividend distributions into the next tax year and pay a 4.0% excise tax on such income, as required.

To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year

dividend distributions for excise tax purposes, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned.

In accordance with certain applicable U.S.

Treasury regulations and private letter rulings issued by the Internal Revenue Service

(IRS), a RIC may treat a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder may elect to receive his or her entire distribution in either cash or stock of the RIC subject to a limitation on

the aggregate amount of cash to be distributed to all stockholders, which limitation must be at least 20.0% of the aggregate declared distribution.

If too many stockholders elect to receive cash, each stockholder electing to receive cash will

receive a pro rata amount of cash (with the balance of the distribution paid in stock).

In no event will any stockholder, electing to receive cash, receive less than 20.0% of his or her entire distribution in cash.

If these and certain other

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

The Company may utilize wholly-owned holding companies taxed under Subchapter C of the Code or tax blockers, when making equity investments in

portfolio companies taxed as pass-through entities to meet its source-of-income requirements as a RIC.

Taxable Blockers are consolidated in the Companys U.S.

financial statements and may result in current and deferred federal and state income tax expense with respect to income derived from those investments.

Such income, net of applicable income taxes, is not included in the Companys tax-basis net investment income until distributed by the Taxable Blocker, which may result in timing and character differences between the Companys U.S.

tax-basis net investment income and realized gains and losses.

Income tax expense or benefit from Taxable Blockers related to net investment income are included in total operating expenses, while any expense

or benefit related to federal or state income tax originated for capital gains and losses are included together with the applicable net realized or unrealized gain or loss line item.

Deferred tax assets of the Taxable Blockers are reduced by a

valuation allowance when, in the opinion of management, it is more-likely than-not that some portion or all of the deferred tax assets will not be realized.

FASB ASC Topic 740, Income Taxes , (ASC 740), provides guidance for how

uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements.

ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Companys tax returns to

determine whether the tax positions are more-likely-than-not of being sustained by the applicable tax authority.

Tax positions deemed to meet a

more-likely-than-not threshold would be recorded as a tax benefit or expense in the current period.

The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as

income tax expense on the consolidated statements of operations.

During the fiscal year ended February 29, 2020, the Company did not incur any interest or penalties.

Although we file federal and state tax returns, our major tax jurisdiction is

The 2017, 2018 and 2019 federal tax years for the Company remain subject to examination by the IRS.

At February 29, 2020 and February 28, 2019, there were no uncertain tax positions.

The Company is not aware of any tax positions for

which it is reasonably possible that the total amounts of unrecognized tax benefits will change significantly in the next 12 months.

Dividends to common stockholders are recorded on the ex-dividend date.

The amount to be paid out as a dividend is determined by the

board of directors.

Net realized capital gains, if any, are generally distributed at least annually, although we may decide to retain such capital gains for reinvestment.

We have adopted a dividend reinvestment plan (DRIP) that provides for reinvestment of our dividend distributions on behalf of our

stockholders unless a stockholder elects to receive cash.

As a result, if our board of directors authorizes, and we declare, a cash dividend, then our stockholders who have not opted out of the DRIP by the dividend record date will have

their cash dividends automatically reinvested into additional shares of our common stock, rather than receiving the cash dividends.

We have the option to satisfy the share requirements of the DRIP through the issuance of new shares of common stock

or through open market purchases of common stock by the DRIP plan administrator.

Capital Gains Incentive Fee

The Company records an expense accrual on the consolidated statements of operations, relating to the capital gains incentive fee payable on the

consolidated statements of assets and liabilities, by the Company to the Manager when the net realized and unrealized gain on its investments exceed all net realized and unrealized capital losses on its investments given the fact that a capital

gains incentive fee would be owed to the Manager if the Company were to liquidate its investment portfolio at such time.

incentive fee payable to the Companys Manager related to capital gains will be determined and payable in arrears at the end of each fiscal year and only reflected those realized capital gains net of realized and unrealized losses for the

New Accounting Pronouncements

In August 2018, FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

FrameworkChanges to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13).

The primary focus of ASU 2018-13 is to improve the

effectiveness of the disclosure requirements for fair value measurements.

The changes affect all companies that are required to include fair value measurement disclosures.

In general, the amendments in ASU

2018-13 are effective for all entities for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019.

An entity is permitted to early adopt the removed or modified

disclosures upon the issuance of ASU 2018-13 and may delay adoption of the additional disclosures, which are required for public companies only, until their effective date.

Management is currently evaluating

the impact these changes will have on the Companys financial statements and disclosures.

SEC Disclosure Update and Simplification

In March 2019, the U.S.

Securities Exchange Commission (the SEC) adopted the final rule under SEC Release No.

33-10618, Fast Act Modernization and Simplification of Regulation S-K , amending certain disclosure requirements.

The amendments are intended to simplify

certain disclosure requirements and to provide for a consistent set of rules to govern incorporating information by reference and hyperlinking, improve readability and navigability of disclosure documents, and discourage repetition and disclosure of

immaterial information.

Based on its history and experience, management

feels that the likelihood of such an event is remote.

Therefore, the Company has not accrued any liabilities in connection with such

indemnifications.

the ordinary course of business, the Company may directly or indirectly be a defendant or plaintiff in legal actions with respect to

bankruptcy, insolvency or other types of proceedings.

Such lawsuits may involve claims that could adversely affect the value of certain

financial instruments owned by the Company.

Company has elected to be treated for tax purposes as a RIC under the Code and, among other things, intends to make the requisite distributions

to its stockholders which will relieve the Company from federal income taxes.

Therefore, no provision has been recorded for federal income

taxes, except as related to the Taxable Blockers and long-term capital gains, when applicable.

order to qualify as a RIC, among other requirements, the Company is required to timely distribute to its stockholders at least

90.0% of its investment company taxable income, as defined by the Code, for each fiscal tax year.

The Company will be subject

to a nondeductible U.S.

federal excise tax of 4.0% on undistributed income if it does not distribute at least 98.0% of its ordinary

income in any calendar year and 98.2% of its capital gain net income for each one-year period ending on October 31.

on the level of taxable income earned in a tax year, the Company may choose to carry forward taxable income in excess of current year

dividend distributions into the next tax year and pay a 4.0% excise tax on such income, as required.

To the extent that the Company determines

that its estimated current year annual taxable income will be in excess of estimated current year dividend distributions for excise tax

purposes, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned.

For the year ended

February 28, 2021, the excise tax accrual on estimated excess table income was $0.7 million.

accordance with certain applicable U.S.

Treasury regulations and private letter rulings issued by the Internal Revenue Service (“IRS”),

a RIC may treat a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder may elect to receive

his or her entire distribution in either cash or stock of the RIC subject to a limitation on the aggregate amount of cash to be distributed

to all stockholders, which limitation must be at least 20.0% of the aggregate declared distribution.

If too many stockholders elect to

receive cash, each stockholder electing to receive cash will receive a pro rata amount of cash (with the balance of the distribution

paid in stock).

In no event will any stockholder, electing to receive cash, receive less than 20.0% of his or her entire distribution

If these and certain other requirements are met, for U.S federal income tax purposes, the amount of the dividend paid in stock

will be equal to the amount of cash that could have been received instead of stock.

Company may utilize wholly-owned holding companies taxed under Subchapter C of the Code or tax blockers, when making equity investments

in portfolio companies taxed as pass-through entities to meet its source-of-income requirements as a RIC.

Taxable Blockers are consolidated

in the Company’s U.S.

GAAP financial statements and may result in current and deferred federal and state income tax expense with

respect to income derived from those investments.

Such income, net of applicable income taxes, is not included in the Company’s

tax-basis net investment income until distributed by the Taxable Blocker, which may result in timing and character differences between

the Company’s U.S.

GAAP and tax-basis net investment income and realized gains and losses.

Income tax expense or benefit from Taxable

Blockers related to net investment income are included in total operating expenses, while any expense or benefit related to federal or

state income tax originated for capital gains and losses are included together with the applicable net realized or unrealized gain or

loss line item.

Deferred tax assets of the Taxable Blockers are reduced by a valuation allowance when, in the opinion of management,

it is more-likely than-not that some portion or all of the deferred tax assets will not be realized.

ASC Topic 740, Income Taxes , (“ASC 740”), provides guidance for how uncertain tax positions should be recognized,

measured, presented and disclosed in the financial statements.

ASC 740 requires the evaluation of tax positions taken or expected to

be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not”

of being sustained by the applicable tax authority.

Tax positions deemed to meet a “more-likely-than-not”

threshold would

be recorded as a tax benefit or expense in the current period.

The Company recognizes interest and penalties, if any, related to unrecognized

tax benefits as income tax expense on the consolidated statements of operations.

During the fiscal year ended February 28, 2021 the Company

did not incur any interest or penalties.

Although we file federal and state tax returns, our major tax jurisdiction is federal.

2019 and 2020 federal tax years for the Company remain subject to examination by the IRS.

At February 28, 2021, and February 29, 2020,

there were no uncertain tax positions.

The Company is not aware of any tax positions for which it is reasonably possible that the total

amounts of unrecognized tax benefits will change significantly in the next 12 months.

to common stockholders are recorded on the ex-dividend date.

The amount to be paid out as a dividend is determined by the board of directors.

Net realized capital gains, if any, are generally distributed at least annually, although we may decide to retain such capital gains

for reinvestment.

have adopted a dividend reinvestment plan (“DRIP”) that provides for reinvestment of our dividend distributions on behalf

of our stockholders unless a stockholder elects to receive cash.

As a result, if our board of directors authorizes, and we declare, a

cash dividend, then our stockholders who have not “opted out”

of the DRIP by the dividend record date will have their cash

dividends automatically reinvested into additional shares of our common stock, rather than receiving the cash dividends.

option to satisfy the share requirements of the DRIP through the issuance of new shares of common stock or through open market purchases

of common stock by the DRIP plan administrator.

Gains Incentive Fee

Company records an expense accrual on the consolidated statements of operations, relating to the capital gains incentive fee payable

on the consolidated statements of assets and liabilities, by the Company to the Manager when the net realized and unrealized gain on

its investments exceed all net realized and unrealized capital losses on its investments given the fact that a capital gains incentive

fee would be owed to the Manager if the Company were to liquidate its investment portfolio at such time.

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 only reflected those realized capital gains net of realized and unrealized losses for the period.

Accounting Pronouncements

March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (“ASU 2020-04”).

The amendments in ASU 2020-04 provide

optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference

rate reform if certain criteria are met.

The standard is effective as of March 12, 2020 through December 31, 2022.

Management does not

believe this optional guidance has a material impact on the Company’s consolidated financial statements and disclosures.

Rule 12b-2 Update

March 2020, the SEC adopted a final rule under SEC Release No.

34-88365 (the “Final Rule”), amending the accelerated filer

and large accelerated filer definitions in Exchange Act Rule 12b-2.

The amendments include a provision under which a BDC will be excluded

from the “accelerated filer”

and “large accelerated filer”

definitions if the BDC has (1) a public float of $75

million or more, but less than $700 million, and (2) has annual investment income of less than $100 million.

In addition, BDCs are subject

to the same transition provisions for accelerated filer and large accelerated filer status as other issuers, but instead substituting

investment income for revenue.

The amendments will reduce the number of issuers required to comply with the auditor attestation on the

internal control over financial reporting requirement provided under Section 404(b) of the Sarbanes-Oxley Act of 2002.

The Final Rule

applies to annual report filings due on or after April 27, 2020.

The Company has assessed the Final Rule, and concluded that effective

February 28, 2021, it is no longer an accelerated filer.

As a result, the Company has filed this Annual Report on Form 10-K for the

fiscal year ending February 28, 2021 as a non-accelerated filer.

Disclosure Update and Simplification

March 2019, the U.S.

Securities Exchange Commission (the “SEC”) adopted the final rule under SEC Release No.

33-10618, Fast

Act Modernization and Simplification of Regulation S-K , amending certain disclosure requirements.

The amendments are intended to

simplify certain disclosure requirements and to provide for a consistent set of rules to govern incorporating information by reference

and hyperlinking, improve readability and navigability of disclosure documents, and discourage repetition and disclosure of immaterial

The Company has adopted the final rule, as applicable under SEC Release No.

33-10618 and determined the effect of the adoption of the simplification rules on financial

statements will be limited to the modification and removal of certain disclosures.

Risk Management

In the ordinary course of its business, the Company manages a variety of risks, including market risk and credit risk.

Market risk is the risk

of potential adverse changes to the value of investments because of changes in market conditions such as interest rate movements and volatility in investment prices.

Credit risk is the risk of default or non-performance by portfolio companies, equivalent to the

investments carrying amount.

The Company is also exposed to credit risk related to maintaining all of its cash and cash equivalents, including those in reserve accounts, at a major financial institution and credit risk related to any of its

derivative counterparties.

The Company has investments in lower rated and comparable quality unrated high yield bonds and bank loans.

Investments in high yield investments are accompanied by a greater degree of credit risk.

The risk of loss due to default by the issuer is significantly greater for holders of high yield securities, because such investments are generally unsecured

and are often subordinated to other creditors of the issuer.

As noted above, the Company values all investments in accordance with ASC 820.

ASC 820 requires enhanced disclosures about assets and

liabilities that are measured and reported at fair value.

As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement

ASC 820 establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability of inputs

used in measuring investments at fair value.

Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment.

Investments with readily available active quoted prices

or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

Based on the observability of the inputs used in the valuation techniques, the Company is required to provide disclosures on fair value

measurements according to the fair value hierarchy.

33-10618 and determined the effect

of the adoption of the simplification rules on financial statements will be limited to the modification and removal of certain disclosures.

the ordinary course of its business, the Company manages a variety of risks, including market risk and credit risk.

Market risk is the

risk of potential adverse changes to the value of investments because of changes in market conditions such as interest rate movements

and volatility in investment prices.

risk is the risk of default or non-performance by portfolio companies, equivalent to the investment’s carrying amount.

is also exposed to credit risk related to maintaining all of its cash and cash equivalents, including those in reserve accounts, at a

major financial institution and credit risk related to any of its derivative counterparties.

Company has investments in lower rated and comparable quality unrated high yield bonds and bank loans.

Investments in high yield investments

are accompanied by a greater degree of credit risk.

The risk of loss due to default by the issuer is significantly greater for holders

of high yield securities, because such investments are generally unsecured and are often subordinated to other creditors of the issuer.

noted above, the Company values all investments in accordance with ASC 820.

As defined in ASC 820, fair value is the price that would

be received to sell an asset or paid to transfer a liability in an orderly transaction between independent market participants at the

measurement date.

820 establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability of inputs used

in measuring investments at fair value.

Market price observability is affected by a number of factors, including the type of investment

and the characteristics specific to the investment.

Investments with readily available active quoted prices or for which fair value can

be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment

used in measuring fair value.

on the observability of the inputs used in the valuation techniques, the Company is required to provide disclosures on fair value measurements

according to the fair value hierarchy.

The fair value hierarchy ranks the observability of the inputs used to determine fair values.

Investments carried at fair value are classified and disclosed in one of the following three

Level 1Valuations based on quoted prices in active markets for identical assets or liabilities that the

Company has the ability to access.

Level 2 Pricing inputs are other than quoted prices in active markets, which are either directly or

indirectly observable as of the reporting date.

Such inputs may be quoted prices for similar assets or liabilities, quoted markets that are not active, or other inputs that are observable or can be corroborated by observable market data for

substantially the full character of the financial instrument, or inputs that are derived principally from, or corroborated by, observable market information.

Investments which are generally included in this category include illiquid debt securities

and less liquid, privately held or restricted equity securities, for which some level of recent trading activity has been observed.

Level 3 Pricing inputs are unobservable for the investment and includes situations where there is

little, if any, market activity for the investment.

The inputs may be based on the Companys own assumptions about how market participants would price the asset or liability or may use Level 2 inputs, as adjusted, to reflect specific

investment attributes relative to a broader market assumption.

These inputs into the determination of fair value may require significant management judgment or estimation.

Even if observable market data for comparable performance or valuation

measures (earnings multiples, discount rates, other financial/valuation ratios, etc.) are available, such investments are grouped as Level 3 if any significant data point that is not also market observable (private company earnings, cash flows,

etc.) is used in the valuation methodology.

In addition to using the above inputs in investment valuations, the Company

continues to employ the valuation policy approved by the board of directors that is consistent with ASC 820 and the 1940 Act (see Note 2).

Consistent with our valuation policy, we evaluate the source of inputs, including any markets in which our

investments are trading, in determining fair value.

The following table presents fair value measurements of investments, by major class, as of

February 29, 2020 (dollars in thousands), according to the fair value hierarchy:

Fair Value Measurements

Investments carried at fair value are classified and disclosed in one of the following three categories:

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

2—Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as

of the reporting date.

Such inputs may be quoted prices for similar assets or liabilities, quoted markets that are not active,

or other inputs that are observable or can be corroborated by observable market data for substantially the full character of the

financial instrument, or inputs that are derived principally from, or corroborated by, observable market information.

which are generally included in this category include illiquid debt securities and less liquid, privately held or restricted equity

securities, for which some level of recent trading activity has been observed.

3—Pricing inputs are unobservable for the investment and includes situations where there is little, if any, market activity

for the investment.

The inputs may be based on the Company’s own assumptions about how market participants would price the

asset or liability or may use Level 2 inputs, as adjusted, to reflect specific investment attributes relative to a broader market

Even if observable market data for comparable performance or valuation measures (earnings multiples, discount rates,

other financial/valuation ratios, etc.) are available, such investments are grouped as Level 3 if any significant data point that

is not also market observable (private company earnings, cash flows, etc.) is used in the valuation technique.

We use multiple

techniques for determining fair value based on the nature of the investment and experience with those types of investments and

specific portfolio companies.

The selections of the valuation techniques and the inputs and assumptions used within those techniques

often require subjective judgements and estimates.

These techniques include market comparables, discounted cash flows and enterprise

value waterfalls.

Fair value is best expressed as a range of values from which the Company determines a single best estimate.

The types of inputs and assumptions that may be considered in determining the range of values of our investments include the nature

and realizable value of any collateral, the portfolio company’s ability to make payments, market yield trend analysis and

volatility in future interest rates, call and put features, the markets in which the portfolio company does business, comparison

to publicly traded companies, discounted cash flows and other relevant factors.

addition to using the above inputs in investment valuations, the Company continues to employ the valuation policy approved by the board

of directors that is consistent with ASC 820 and the 1940 Act (see Note 2).

Consistent with our valuation policy, we evaluate the source

of inputs, including any markets in which our investments are trading, in determining fair value.

The following table presents fair value measurements of investments,

by major class, as of February 28, 2021 (dollars in thousands), according to the fair value hierarchy:

Value Measurements

First lien term loans

3 unchanged sentences

Equity interests

The following table presents fair value measurements of investments, by major class, as of February 28,

2019 (dollars in thousands), according to the fair value hierarchy:

Fair Value Measurements

The following table presents fair value measurements of investments,

by major class, as of February 29, 2020 (dollars in thousands), according to the fair value hierarchy:

Value Measurements

First lien term loans

Second lien terms loans

Unsecured term loans

Structured finance securities

Equity interests

The following table provides a reconciliation of the beginning and ending balances for investments that

use Level 3 inputs for the year ended February 28, 2021 (dollars in thousands):

First lien term loans

Second lien term loans

2 unchanged sentences

Equity interests

The following table provides a reconciliation of the beginning and ending balances for investments that use

Level 3 inputs for the year ended February 29, 2020 (dollars in thousands):

Balance as of February 29, 2020

Payment-in-kind

and other adjustments to cost

Payment-in-kind and other adjustments to cost

Net accretion of discount on investments

3 unchanged sentences

Balance as of February 28, 2021

Net change in unrealized appreciation (depreciation) for the year relating to those Level 3

assets that were still held by the Company at the end of the year

Purchases and other adjustments to cost include purchases of new investments at cost, effects of

refinancing/restructuring, accretion/amortization of income from discount/premium on debt securities, and PIK interests.

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

Transfers and restructurings, if any, are recognized at the beginning of the period in which

There were no transfers or restructures in or out of Levels 1, 2, or 3 during the year ended February 29, 2020.

following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the year ended February 28, 2019 (dollars in thousands):

Net change in unrealized appreciation (depreciation) for the year relating to those Level 3 assets that were still held by the Company at the end of the year

and other adjustments to cost include purchases of new investments at cost, effects of refinancing/restructuring, accretion/amortization

of income from discount/premium on debt securities, and PIK interests.

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

and restructurings, if any, are recognized at the beginning of the period in which they occur.

There were no restructures in or out of

Levels 1, 2, or 3 during the year ended February 28, 2021.

The following table provides a reconciliation of the beginning and

ending balances for investments that use Level 3 inputs for the year ended February 29, 2020 (dollars in thousands):

First lien term loans

Second lien term loans

Unsecured term loans

Structured finance securities

Equity interests

Balance as of February 28, 2019

Payment-in-kind

and other adjustments to cost

Payment-in-kind and other adjustments to cost

Net accretion of discount on investments

3 unchanged sentences

Balance as of February 29, 2020

Net change in unrealized appreciation (depreciation) for the year relating to those Level

3 assets that were still held by the Company at the end of the year

Transfers and restructurings, if any, are recognized at the beginning of the period in which they occur.

were no transfers or restructures in or out of Levels 1, 2, or 3 during the year ended February 29, 2019.

The valuation techniques and

significant unobservable inputs used in recurring Level 3 fair value measurements of assets as of February 29, 2020 were as follows (dollars in thousands):

Net change in unrealized appreciation (depreciation) for the year relating to those Level 3 assets that were still held by the Company at the end of the year

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

and restructurings, if any, are recognized at the beginning of the period in which they occur.

There were no restructures in or out of

Levels 1, 2, or 3 during the year ended February 29, 2020.

The valuation techniques and significant unobservable

inputs used in recurring Level 3 fair value measurements of assets as of February 28, 2021 were as follows (dollars in thousands):

Valuation Technique

5 unchanged sentences

EBITDA Multiples (x)

Revenue Multiples (x)

Second lien term loans

1 unchanged sentence

Market Yield (%)

10.0% - 24.5%

EBITDA Multiples (x)

2 unchanged sentences

Market Yield (%)

18.3% - 21.3%

EBITDA Multiples (x)

7 unchanged sentences

Equity interests

Market Comparables

Enterprise Value Waterfall

EBITDA Multiples (x)

Revenue Multiples (x)

The weighted average in the table above is calculated based on each investments fair value weighting,

using the applicable unobservable input.

The valuation techniques and significant unobservable inputs used in recurring Level 3

fair value measurements of assets as of February 28, 2019 were as follows (dollars in thousands):

* The weighted average in the table above is calculated

based on each investment’s fair value weighting, using the applicable unobservable input, excluding the recovery rate for Structured

finance securities.

The valuation techniques and significant unobservable inputs

used in recurring Level 3 fair value measurements of assets as of February 29, 2020 were as follows (dollars in thousands):

Valuation Technique

8 unchanged sentences

Market Yield (%)

10.5% - 41.1%

EBITDA Multiples (x)

2 unchanged sentences

Market Yield (%)

18.3% - 21.3%

EBITDA Multiples (x)

2 unchanged sentences

Discount Rate (%)

9.25% - 16.00%

Recovery Rate (%)

2 unchanged sentences

Equity interests

Market Comparables

Enterprise Value Waterfall

EBITDA Multiples (x)

Revenue Multiples (x)

The weighted average in the table above is calculated based on each investments fair value weighting,

using the applicable unobservable input.

For investments utilizing a market comparables valuation technique, a

significant increase (decrease) in the market yield, in isolation, would result in a significantly lower (higher) fair value measurement, and a significant increase (decrease) in any of the earnings before interest, tax, depreciation and

amortization (EBITDA) or revenue valuation multiples, in isolation, would result in a significantly higher (lower) fair value measurement.

For investments utilizing a discounted cash flow valuation technique, a significant increase

(decrease) in the discount rate, and prepayment rate, in isolation, would result in a significantly lower (higher) fair value measurement while a significant increase (decrease) in recovery rate, in isolation, would result in a significantly higher

(lower) fair value measurement.

For investments utilizing a market quote in deriving a value, a significant increase (decrease) in the market quote, in isolation, would result in a significantly higher (lower) fair value measurement.

The composition of our investments as of February 29, 2020 at amortized cost and fair value was as follows (dollars in thousands):

Investments at

Amortized Cost

Percentage of

Total Portfolio

Investments at

Percentage of

Total Portfolio

* The weighted average in the table above is calculated

based on each investment’s fair value weighting, using the applicable unobservable input, excluding the recovery rate for Structured

finance securities.

investments utilizing a market comparables valuation technique, a significant increase (decrease) in the market yield, in isolation,

would result in a significantly lower (higher) fair value measurement, and a significant increase (decrease) in any of the earnings before

interest, tax, depreciation and amortization (“EBITDA”) or revenue valuation multiples, in isolation, would result in a significantly

higher (lower) fair value measurement.

For investments utilizing a discounted cash flow valuation technique, a significant increase (decrease)

in the discount rate, and prepayment rate, in isolation, would result in a significantly lower (higher) fair value measurement while

a significant increase (decrease) in recovery rate, in isolation, would result in a significantly higher (lower) fair value measurement.

For investments utilizing a market quote in deriving a value, a significant increase (decrease) in the market quote, in isolation, would

result in a significantly higher (lower) fair value measurement.

The composition of our investments as of February 28, 2021 at

amortized cost and fair value was as follows (dollars in thousands):

at Amortized Cost

Amortized Cost Percentage of Total Portfolio

at Fair Value

Value Percentage of Total Portfolio

First lien term loans

3 unchanged sentences

Equity interests

The composition of our investments as of February 28, 2019 at amortized cost and fair

value was as follows (dollars in thousands):

Investments at

Amortized Cost

Percentage of

Total Portfolio

Investments at

Percentage of

Total Portfolio

The composition of our investments as of February 29, 2020 at

amortized cost and fair value was as follows (dollars in thousands):

at Amortized Cost

Cost Percentage of Total Portfolio

at Fair Value

Value Percentage of Total Portfolio

First lien term loans

3 unchanged sentences

Equity interests

For loans and debt securities for which market quotations are not available, we determine their fair value

based on third party indicative broker quotes, where available, or the assumptions that a hypothetical market participant would use to value the security in a current hypothetical sale using a market yield valuation methodology.

In applying the

market yield valuation methodology, we determine the fair value based on such factors as market participant assumptions including synthetic credit ratings, estimated remaining life, current market yield and interest rate spreads of similar

securities as of the measurement date.

If, in our judgment, the market yield methodology is not sufficient or appropriate, we may use additional methodologies such as an asset liquidation or expected recovery model.

For equity securities of portfolio companies and partnership interests, we determine the fair value based on the market approach with value

then attributed to equity or equity like securities using the enterprise value waterfall valuation methodology.

Under the enterprise value waterfall valuation methodology, we determine the enterprise fair value of the portfolio company and then

waterfall the enterprise value over the portfolio companys securities in order of their preference relative to one another.

To estimate the enterprise value of the portfolio company, we weigh some or all of the traditional market valuation

methods and factors based on the individual circumstances of the portfolio company in order to estimate the enterprise value.

The methodologies for performing investments may be based on, among other things:

valuations of comparable public

companies, recent sales of private and public comparable companies, discounting the forecasted cash flows of the portfolio company, third party valuations of the portfolio company, considering offers from third parties to buy the company, estimating

the value to potential strategic buyers and considering the value of recent investments in the equity securities of the portfolio company.

For non-performing investments, we may estimate the liquidation or

collateral value of the portfolio companys assets and liabilities.

loans and debt securities for which market quotations are not available, we determine their fair value based on third party indicative

broker quotes, where available, or the inputs that a hypothetical market participant would use to value the security in a current hypothetical

sale using a market comparables valuation technique.

In applying the market comparables valuation technique, we determine the fair value

based on such factors as market participant inputs including synthetic credit ratings, estimated remaining life, current market yield

and interest rate spreads of similar securities as of the measurement date.

If, in our judgment, the market comparables technique is

not sufficient or appropriate, we may use additional techniques such as an asset liquidation or expected recovery model.

equity securities of portfolio companies and partnership interests, we determine the fair value using an enterprise value waterfall valuation

Under the enterprise value waterfall valuation technique, we determine the enterprise fair value of the portfolio company

and then waterfall the enterprise value over the portfolio company’s securities in order of their preference relative to one another.

To estimate the enterprise value of the portfolio company, we weigh some or all of the traditional market valuation techniques and factors

based on the individual circumstances of the portfolio company in order to estimate the enterprise value.

The techniques for performing

investments may be based on, among other things:

valuations of comparable public companies, recent sales of private and public comparable

companies, discounting the forecasted cash flows of the portfolio company, third party valuations of the portfolio company, considering

offers from third parties to buy the company, estimating the value to potential strategic buyers and considering the value of recent

investments in the equity securities of the portfolio company.

For non-performing investments, we may estimate the liquidation or collateral

value of the portfolio company’s assets and liabilities.

We also take into account historical and anticipated financial results.

Our investment in Saratoga CLO is carried at fair value, which is based on a discounted cash flow model that utilizes prepayment,

re-investment and loss assumptions based on historical experience and projected performance, economic factors, the characteristics of the underlying cash flow, and comparable yields for equity interests in collateralized loan obligation funds

similar to Saratoga CLO, when available, as determined by our Manager and recommended to our board of directors.

Specifically, we use Intex cash flow models, or an appropriate substitute, to form the basis for the valuation of our investment in

Saratoga CLO.

The models use a set of assumptions including projected default rates, recovery rates, reinvestment rates and prepayment rates in order to arrive at estimated valuations.

The assumptions are based on available market data and

projections provided by third parties as well as management estimates.

In connection with the refinancing of the Saratoga CLO liabilities, we ran Intex models based on assumptions about the refinanced Saratoga CLOs structure, including capital

investment in Saratoga CLO is carried at fair value, which is based on a discounted cash flow valuation technique that utilizes prepayment,

re-investment and loss inputs based on historical experience and projected performance, economic factors, the characteristics of the

underlying cash flow, and comparable yields for equity interests in collateralized loan obligation funds similar to Saratoga CLO, when

available, as determined by our Manager and recommended to our board of directors.

Specifically, we use Intex cash flows, or an appropriate

substitute, to form the basis for the valuation of our investment in Saratoga CLO.

The cash flows use a set of inputs including projected

default rates, recovery rates, reinvestment rates and prepayment rates in order to arrive at estimated valuations.

The inputs are based

on available market data and projections provided by third parties as well as management estimates.

In connection with the refinancing

of the Saratoga CLO liabilities, we ran Intex models based on inputs about the refinanced Saratoga CLO’s structure, including capital

structure, cost of liabilities and reinvestment period.

We use the output from the Intex models (i.e., the estimated cash flows) to perform a discounted cash flow analysis on expected future cash flows to determine a valuation for our investment in

Saratoga CLO at February 29, 2020.

We use the output from the Intex models (i.e., the estimated cash flows) to perform

a discounted cash flow analysis on expected future cash flows to determine a valuation for our investment in Saratoga CLO at February

The inputs at February 28, 2021 for the valuation model include:

Default rate:

Recovery rate:

Discount rate:

Prepayment rate:

Reinvestment rate / price:

● Reinvestment

rate / price:

L+365bps / $99.00

Investment Concentration

Set forth is a

brief description of each portfolio company in which the fair value of our investment represents greater than 5% of our total assets as of February 29, 2020.

CLEO Communications Holding, LLC

Communications Holding, LLC (Cleo) is a provider of technology enabled data communication and integration platform for daily business transactions.

Cleos platform allows for the automation of business-to-business transaction information for customers operating in the retail, manufacturing, logistics and the healthcare verticals.

The platform also allows for internal

application-to-application communication, allowing customers core enterprise software applications to easily share and transfer data.

Destiny Solutions Inc.

Destiny Solutions

provides a SaaS-based student lifecycle management (SLM) software solution used by higher education institutions to manage their continuing education (CE) and non-degree educational

programs for non-traditional students who fall outside of the traditional student profile.

Traditional students are full-time students working toward an undergraduate, graduate, or

doctorate degree.

Destinys software acts as the ERP, CRM, e-commerce platform, and student information management system for non-traditional student

Saratoga Investment Corp.

Concentration

forth is a brief description of each portfolio company in which the fair value of our investment represents greater than 5% of our total

assets as of February 28, 2021.

Communications Holding, LLC

Communications Holding, LLC (“Cleo”) is a provider of technology enabled data communication and integration platform for

daily business transactions.

Cleo’s platform allows for the automation of business-to-business transaction information for customers

operating in the retail, manufacturing, logistics and the healthcare verticals.

The platform also allows for internal application-to-application

communication, allowing customers’

core enterprise software applications to easily share and transfer data.

Solutions Inc.

Solutions provides a SaaS-based student lifecycle management (“SLM”) software solution used by higher education institutions

to manage their continuing education (“CE”) and non-degree educational programs for “non-traditional”

who fall outside of the “traditional”

student profile.

Traditional students are full-time students working toward an undergraduate,

graduate, or doctorate degree.

Destiny’s software acts as the ERP, CRM, e-commerce platform, and student information management

system for non-traditional student programs.

Investment Corp.

CLO 2013-1, Ltd.

The Company has a collateral management agreement with Saratoga CLO, pursuant to which the Company acts as its collateral manager.

Company has a collateral management agreement with Saratoga CLO, pursuant to which the Company acts as its collateral manager.

CLO invests primarily in senior secured first lien term loans.

The Company also holds an investment in the subordinated note and Class F-R-2 and G-R-2 notes of the Saratoga CLO.

In addition, the Company entered into an unsecured loan agreement with CLO 2013-1 Warehouse 2, a wholly-owned subsidiary of Saratoga CLO, in

order to provide capital necessary to support warehouse activities.

The Company also holds an investment in the subordinated note and Class

Investment in Saratoga Investment Corp.

CLO 2013-1, Ltd.

On January 22, 2008, the Company entered into a collateral management agreement with Saratoga CLO, pursuant to which

the Company acts as its collateral manager.

(“Saratoga CLO”)

January 22, 2008, the Company entered into a collateral management agreement with Saratoga CLO, pursuant to which the Company acts as

its collateral manager.

The Saratoga CLO was initially refinanced in October 2013 with its reinvestment period extended to October 2016.

On November 15, 2016, the Company completed a second refinancing of the Saratoga CLO

with its reinvestment period extended to October 2018.

On August 7, 2018, the Company entered into an unsecured loan agreement

(CLO 2013-1 Warehouse Loan) with Saratoga Investment Corp.

On November 15, 2016, the Company completed a second refinancing of the Saratoga CLO with its reinvestment period extended to October

August 7, 2018, the Company entered into an unsecured loan agreement (“CLO 2013-1 Warehouse Loan”) with Saratoga Investment

CLO 2013-1 Warehouse, Ltd.

Warehouse), a wholly-owned subsidiary of Saratoga CLO, pursuant to which CLO 2013-1 Warehouse may borrow from time to time up to $20 million from the Company in order to provide capital necessary to

support warehouse activities.

(“CLO 2013-1 Warehouse”), a wholly-owned subsidiary of Saratoga CLO, pursuant to which CLO

2013-1 Warehouse may borrow from time to time up to $20 million from the Company in order to provide capital necessary to support warehouse

The CLO 2013-1 Warehouse Loan, which expired on February 7, 2020, bears interest at an annual rate of 3M USD LIBOR + 7.5%.

Interest accrued on the investment in the CLO 2013-1 Warehouse Loan is included in interest income on the Companys consolidated statement of operations.

During the year ended February 28, 2019, the maximum amount invested by the Company in the CLO 2013-1 Warehouse Loan amounted to $20.0 million and at February 28, 2019, the Company no longer held an investment in the CLO 2013-1 Warehouse Loan.

On December 14, 2018, the Company completed a third refinancing and upsize of the Saratoga CLO (the

2013-1 Reset CLO Notes).

The third Saratoga CLO refinancing, among other things, extended its reinvestment period to January 2021, and extended its legal maturity date to January 2030.

Interest accrued on the investment in the CLO 2013-1 Warehouse Loan is included in interest income on the Company’s consolidated

statement of operations.

During the year ended February 28, 2019, the maximum amount invested by the Company in the CLO 2013-1 Warehouse

Loan amounted to $20.0 million and at February 29, 2020, the Company no longer held an investment in the CLO 2013-1 Warehouse Loan.

December 14, 2018, the Company completed a third refinancing and upsize of the Saratoga CLO (the “2013-1 Reset CLO Notes”).

The third Saratoga CLO refinancing, among other things, extended its reinvestment period to January 2021, and extended its legal maturity

date to January 2030.

A non-call period ending January 2020 was also added.

Following this refinancing, the Saratoga CLO portfolio increased from approximately $300.0 million in aggregate principal amount to approximately

$500.0 million of predominantly senior secured first lien term loans.

In addition to refinancing its liabilities, the Company invested an additional $13.8 million in all of the newly issued subordinated notes of the Saratoga CLO and also

purchased $2.5 million in aggregate principal amount of the Class F-R-2 and $7.5 million aggregate principal amount of the

Class G-R-2 notes tranches at par, with a coupon of 3M USD LIBOR plus 8.75% and 3M USD LIBOR plus 10.00%, respectively.

As part of this refinancing, the

Company also redeemed our existing $4.5 million aggregate amount of the Class F notes tranche at par and the $20.0 million CLO 2013-Warehouse loan was repaid.

On February 11, 2020, the Company entered into an unsecured loan agreement (CLO 2013-1 Warehouse 2 Loan) with 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.

CLO 2013-1 Warehouse 2 Loan, which expires on August 20, 2021, bears interest at an annual rate of 3M USD LIBOR + 7.5%.

During the year ended February 29, 2020, the Company invested $2.5 million

in aggregate principal amount of the CLO 2013-1 Warehouse 2 Loan and as of February 29, 2020, the fair value of this investment was $2.2 million.

The Saratoga CLO remains 100.0% owned and managed by the Company.

Following this refinancing, the Saratoga CLO portfolio increased

from approximately $300.0 million in aggregate principal amount to approximately $500.0 million of predominantly senior secured first

lien term loans.

In addition to refinancing its liabilities, the Company invested an additional $13.8 million in all of the newly issued

subordinated notes of the Saratoga CLO and also purchased $2.5 million in aggregate principal amount of the Class F-R-2 and $7.5 million

aggregate principal amount of the Class G-R-2 notes tranches at par, with a coupon of 3M USD LIBOR plus 8.75% and 3M USD LIBOR plus 10.00%,

respectively.

As part of this refinancing, the Company also redeemed our existing $4.5 million aggregate amount of the Class F notes

tranche at par and the $20.0 million CLO 2013-Warehouse loan was repaid.

February 11, 2020, the Company entered into an unsecured loan agreement with Saratoga Investment Corp.

CLO 2013-1 Warehouse 2, Ltd.,

(“CLO 2013-1 Warehouse 2”) a wholly-owned subsidiary 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 CLO 2013-1 Warehouse 2 Loan was increased to $25.0 million availability, 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%.

February 26, 2021, the Company completed the fourth refinancing of the Saratoga CLO.

This refinancing, among other things, extended the

Saratoga CLO reinvestment period to April 2024, and extended its legal maturity to April 2033.

A non-call period ending February

2022 was also added.

In addition, and as part of the refinancing, the Saratoga CLO has also been 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

CLO 2013-1 Warehouse 2 Loan were repaid.

The Company 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.

As of February 28, 2021, there remained

an outstanding receivable of $2.6 million for such transaction costs which is presented as due from affiliate on the Company’s

consolidated statement of assets and liabilities.

Saratoga CLO remains 100.0% owned and managed by the Company.

We receive a base management fee of 0.10% per annum and a subordinated

management fee of 0.40% per annum of the outstanding principal amount of Saratoga CLOs assets, paid quarterly to the extent of available proceeds.

For the years ended February 29, 2020, February 28, 2019 and February 28, 2018,

we accrued management fee income of $2.5 million, $1.7 million and $1.5 million, respectively, and interest income of $4.1 million, $2.9 million and $2.4 million, respectively, from the Saratoga CLO.

In conjunction with

the third refinancing and issuance of the Saratoga CLOs 2013-1 Reset CLO Notes (the 2013-1 Reset CLO Notes) on

December 14, 2018, the Company is no longer entitled to receive an incentive management fee from Saratoga CLO.

See Note 4 for additional.

Prior to the refinancing, incentive fee income of $0.6 million and $0.6 million for the years

ended February 28, 2019 and February 28, 2018, respectively, was recognized related to the Saratoga CLO, reflecting the 12.0% hurdle rate that has been achieved.

The incentive fee income from the Saratoga CLO is reported as incentive fee

income on the Companys consolidated statement of operations.

See Note 4 for additional information.

As of February 29, 2020,

the Company determined that the fair value of its investment in the subordinated notes of Saratoga CLO was $22.6 million.

The Company determines the fair value of its investment in the subordinated notes of Saratoga CLO based on the present

value of the projected future cash flows of the subordinated notes over the life of Saratoga CLO.

As of February 29, 2020, the fair value of its investment in the

Class F-R-2 Notes and G-R-2 Notes of Saratoga CLO was $2.5 million and

$7.4 million, respectively.

As of February 29, 2020, Saratoga CLO had investments with a principal balance of $528.4 million and a weighted average spread over LIBOR of 4.0% and had debt with a principal balance of $475.1 million

with a weighted average spread over LIBOR of 2.2%.

As a result, Saratoga CLO earns a spread between the interest income it receives on its investments and the interest expense it pays on its debt and other operating expenses, which is

distributed quarterly to the Company as the holder of its subordinated notes.

As of February 29, 2020, the present value of the projected future cash flows of the subordinated notes was approximately $22.9 million, using a 16.0% discount

The Companys total investment in the subordinate notes of Saratoga CLO is $43.8 million, which is comprised of the initial investment of $30.0 million in January 2008 plus the additional investment of $13.8 million in

December 2018, and to date the Company has since received distributions of $60.5 million, management fees of $22.1 million and incentive fees of $1.2 million.

In conjunction with the third refinancing of the 2013-1 Reset CLO Notes on December 14, 2018, the Company is no longer entitled to receive an incentive management fee from Saratoga CLO.

As of February 28, 2019, the Company determined that the fair value of its investment in the subordinated notes of Saratoga CLO was

$25.4 million.

As of February 28, 2019, the fair value of its investment in the Class F-R-2 Notes and G-R-2 Notes of Saratoga CLO was $2.5 million and $7.5 million, respectively.

As of February 28, 2019, Saratoga CLO had investments with a principal balance of $510.3 million and a weighted

average spread over LIBOR of 4.0% and had debt with a principal balance of $470.0 million with a weighted average spread over LIBOR of 2.3%.

management fee of 0.40% per annum of the outstanding principal amount of Saratoga CLO’s assets, paid quarterly to the extent of

available proceeds.

Following the third refinancing and the issuance of the 2013-1 Reset CLO Notes on December 14, 2018, we are no longer

entitled to an incentive management fee equal to 20.0% of excess cash flow to the extent the Saratoga CLO subordinated notes receive

an internal rate of return paid in cash equal to or greater than 12.0%.

the years ended February 28, 2021, February 29, 2020 and February 28, 2019, we accrued management fee income of $2.5 million, $2.5 million

and $1.7 million, respectively, and interest income of $3.5 million, $4.1 million and $2.9 million, respectively, from the Saratoga CLO.

to the refinancing, incentive fee income of $0.6 million for the year ended February 28, 2019, was recognized related to the Saratoga

CLO, reflecting the 12.0% hurdle rate that has been achieved.

The incentive fee income from the Saratoga CLO is reported as incentive

fee income on the Company’s consolidated statement of operations.

of February 28, 2021, the Company determined that the fair value of its investment in the subordinated notes of Saratoga CLO was $31.4

The Company determines the fair value of its investment in the subordinated notes of Saratoga CLO based on the present value

of the projected future cash flows of the subordinated notes over the life of Saratoga CLO.

As of February 28, 2021, the fair value of

its investment in the Class F-R-3 Notes was $18.3 million, As of February 28, 2021, Saratoga CLO had investments with a principal balance

of $603.7 million and a weighted average spread over LIBOR of 3.8% and had debt with a principal balance of $611.0 million with a weighted

average spread over LIBOR of 2.2%.

As a result, Saratoga CLO earns a “spread”

between the interest income it receives on

its investments and the interest expense it pays on its debt and other operating expenses, which is distributed quarterly to the Company

as the holder of its subordinated notes.

As of February 28, 2021, the present value of the projected future cash flows of the subordinated

notes was approximately $31.7 million, using a 15.0% discount rate.

The separate audited financial statements of the Saratoga CLO

as of February 29, 2020 and February 28, 2019, pursuant to Rule 3-09 of SEC rules Regulation S-X, and for the years ended February 29, 2020, February 28, 2019 and February 28, 2018, are presented on

The Company intends to operate so as to qualify to be taxed as a RIC under Subchapter M of the Code and, as such, will not be subject to

The Company’s total investment in the subordinate notes of

Saratoga CLO is $57.8 which consists of additional investments of $30 million in January 2008, $13.8 million in December 2018 and $14.0

million in February 2021;

to date the Company has since received distributions of $67.5 million, management fees of $24.9 million and

incentive fees of $1.2 million.

In conjunction with the third refinancing of the 2013-1 Reset CLO Notes on December 14, 2018, the Company

is no longer entitled to receive an incentive management fee from Saratoga CLO.

of February 29, 2020, the Company determined that the fair value of its investment in the subordinated notes of Saratoga CLO was $22.6

As of February 29, 2020, the fair value of its investment in the Class F-R-2 Notes and G-R-2 Notes of Saratoga CLO was $2.5

million and $7.4 million, respectively.

As of February 29, 2020, Saratoga CLO had investments with a principal balance of $528.4 million

and a weighted average spread over LIBOR of 4.0% and had debt with a principal balance of $475.1 million with a weighted average spread

over LIBOR of 2.2%.

As of February 29, 2020, the present value of the projected future cash flows of the subordinated notes, was approximately

$22.9 million, using a 16.0% discount rate.

For the fourth quarter ended February 28, 2021, the F-R-2 Notes and G-R-2 Notes were redeemed

separate audited financial statements of the Saratoga CLO as of February 28, 2021 and February 29, 2020, pursuant to Rule 3-09 of SEC

rules Regulation S-X, and for the years ended February 28, 2021, February 29, 2020 and February 28, 2019, are presented on page S-1.

Company intends to operate so as to qualify to be taxed as a RIC under Subchapter M of the Code and, as such, will not be subject to

federal income tax on the portion of taxable income and gains distributed to stockholders.

The Company owns 100.0% of Saratoga CLO, an

exempted company incorporated in the Cayman Islands.

For financial reporting purposes, the Saratoga CLO is not included as part of the consolidated financial statements.

For federal income tax purposes, the Company has requested and received

approval from the IRS to treat the Saratoga CLO as a disregarded entity.

As such, for federal income tax purposes and for purposes of meeting the RIC qualification and diversification tests, the results of operations of the Saratoga CLO are included

with those of the Company to qualify as a RIC.

The Company is required to meet certain income and asset diversification tests in addition to distributing at least 90.0% of its investment company taxable income, as defined by the Code.

federal income tax regulations differ from U.S.

GAAP, distributions as required in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes.

Differences between these

distributions and U.S.

GAAP financial results may be permanent or temporary in nature.

Permanent differences are reclassified among capital accounts in the consolidated financial statements to reflect their tax character.

Differences in

classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

As of February 29, 2020 and February 28, 2019, the Company reclassified for book purposes amounts

arising from permanent book/tax differences primarily related to expired capital losses, nondeductible excise tax, reversal of blocker income earned, the sale of a blocker corporation, market discount and interest income with respect to the Saratoga

CLO which is consolidated for tax purposes as follows (dollars in thousands):

Company owns 100.0% of Saratoga CLO, an exempted company incorporated in the Cayman Islands.

For financial reporting purposes, the Saratoga

CLO is not included as part of the consolidated financial statements.

For federal income tax purposes, the Company has requested and

received approval from the IRS to treat the Saratoga CLO as a disregarded entity.

As such, for U.S.

federal income tax purposes and for

purposes of meeting the RIC qualification and diversification tests, the results of operations of the Saratoga CLO are included with

those of the Company to qualify as a RIC.

The Company is required to meet certain income and asset diversification tests in addition

to timely distributing at least 90.0% of its investment company taxable income, as defined by the Code.

federal income tax

regulations differ from U.S.

GAAP, distributions as required in accordance with tax regulations may differ from net investment income

and realized gains recognized for financial reporting purposes.

Differences between these distributions and U.S.

GAAP financial results

may be permanent or temporary in nature.

Permanent differences are reclassified among capital accounts in the consolidated financial

statements to reflect their tax character.

Differences in classification may also result from the treatment of short-term gains as ordinary

income for U.S.

federal income tax purposes.

As of February 28, 2021 and February 29, 2020, the Company reclassified for book purposes

amounts arising from permanent book/tax differences primarily related to nondeductible U.S.

federal excise and capital gains tax and

worthless securities losses (dollars in thousands):

Capital in excess of par value

Total distributable earnings (loss)

For income tax purposes, distributions paid to shareholders are reported as ordinary income, return of

capital, long term capital gains or a combination thereof.

The tax character of distributions paid for the years ended February 29, 2020, February 28, 2019 and February 28, 2018 was as follows (dollars in thousands):

February 29, 2020

February 28, 2019

February 28, 2018

U.S federal income tax purposes, distributions paid to shareholders are reported as ordinary income, return of capital, long term capital

gains or a combination thereof.

The tax character of distributions paid for the years ended February 28, 2021, February 29, 2020 and

February 28, 2019 was as follows (dollars in thousands):

Ordinary income

Capital gains

For federal income tax purposes, as of February 29, 2020, the aggregate net unrealized depreciation for

all securities was $17.5 million.

The aggregate cost of securities for federal income tax purposes was $969.4 million.

For federal income

tax purposes, as of February 28, 2019, the aggregate net unrealized depreciation for all securities was $9.3 million.

federal income tax purposes, as of February 28, 2021, the aggregate net unrealized appreciation for all securities was $12.2 million.

The aggregate cost of securities for federal income tax purposes was $1.1 billion.

federal income tax purposes, as of February 29, 2020, the aggregate net unrealized depreciation for all securities was $17.5 million.

The aggregate cost of securities for federal income tax purposes was $969.4 million.

As of February 29, 2020 and February 28, 2019, the components of accumulated losses on a tax basis as detailed below differ from the amounts

reflected per the Companys consolidated statements of assets and liabilities by temporary book/tax differences primarily arising from the consolidation of the Saratoga CLO for tax purposes, market discount and original issue discount income,

interest income accrual on defaulted loan, write-off of investments, and amortization of organizational expenditures and partnership interests (dollars in thousands).

of February 28, 2021 and February 29, 2020, the components of accumulated losses on a tax basis as detailed below differ from the amounts

reflected per the Company’s consolidated statements of assets and liabilities by temporary book/tax differences primarily arising

from the consolidation of the Saratoga CLO for U.S federal tax purposes, market discount and original issue discount income, interest

income accrual on defaulted bonds, write-off of investments, and amortization of organizational expenditures and partnership interests

(dollars in thousands).

Post October loss deferred

1 unchanged sentence

Other temporary differences

Undistributed Long Term Gain

Undistributed ordinary income

1 unchanged sentence

Total components of accumulated losses

The Company had incurred capital losses of $9.3 million for year ended February 28,

2011 that expired on February 28, 2019 and incurred capital losses of $13.0 million for the year ended February 28, 2010 that expired as of February 28, 2018.

As of February 29, 2020, the Company had net capital gains of $25.9 million.

February 28, 2021, the Company had a short-term capital loss of $0.4 million and a long-term capital loss of $19.1 million, available

to offset future capital gains.

Post RIC-modernization act losses are deemed to arise on the first day of the fund’s following

fiscal year and there is no expiration for these losses.

on the level of taxable income earned in a tax year, the Company may choose to carry forward taxable income in excess of current year

dividend distributions into the next tax year and pay a 4.0% excise tax on such income, as required.

To the extent that the Company determines

that its estimated current year annual taxable income will be in excess of estimated current year dividend distributions for excise tax

purposes, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned.

For the calendar year

ended December 31, 2020, the Company did not distribute at least 98% of its ordinary income and 98.2% of its capital gains and accrued

$0.7 million in federal excise taxes on undistributed taxable income for the year ended February 28, 2021.

of February 29, 2020, the Company had net capital gains of $21.9 million.

The Company utilized $10.7 million of short-term capital loss

carryovers and $4.3 million of long-term capital loss carryovers during the fiscal year ended February 29,2020.

These prior year losses were deemed to arise on the first day of the Companys fiscal year.

As of February 29, 2020, the Company

has no remaining capital loss carryovers.

The Company is subject to a nondeductible U.S.

federal excise tax of 4.0% on undistributed

income if it does not distribute at least 98% of its ordinary income in any calendar year and 98.2% of its capital gain net income for each one-year period ending on October 31 of such calendar year.

Depending on the level of Investment Company Taxable Income (ICTI) earned in a tax year, the Company may choose to carry forward ICTI in excess of current year dividend distributions into the next tax year and pay a 4.0% excise tax on

such income, as required.

To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year dividend distributions for excise tax purposes, the Company accrues excise tax, if

any, on estimated excess taxable income as taxable income is earned.

Any such carryover ICTI must be distributed before the end of that next tax year through a dividend declared prior to filing the final tax return related to the year which

generated such ICTI.

Management has analyzed the Companys tax positions taken on federal income tax returns for all open years

(fiscal years 20172020) and has concluded that no provision for uncertain income tax positions is required in the Companys consolidated financial statements.

On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the Modernization Act) was enacted, and the

provisions with the Modernization were are effective for the Company for the year ended February 29, 2012.

The Modernization Act was the first major piece of legislation affecting RICs since 1986 and it modernized several of the federal income and

These prior years losses

were deemed to arise on the first day of the Company’s fiscal year.

As of February 29, 2020, the Company has no remaining capital

loss carryovers.

has analyzed the Company’s tax positions taken on federal income tax returns for all open years (fiscal years 2018- 2021) and has

concluded that no provision for uncertain income tax positions is required in the Company’s consolidated financial statements.

December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Modernization Act”) was enacted, and

the provisions with the Modernization were are effective for the Company for the year ended February 29, 2012.

The Modernization Act

was the first major piece of legislation affecting RICs since 1986 and it modernized several of the U.S.

federal income and U.S.

excise tax provisions related to RICs.

Some highlights of the enacted provisions are as follows:

New capital losses may now be carried

forward indefinitely and retain the character of the original loss.

Under pre-enactment law, capital losses could be carried forward for eight years, and carried forward as

short-term capital, irrespective of the character of the original loss.

The Modernization Act

contains simplification provisions, which are aimed at preventing disqualification of a RIC for inadvertent failures of the asset diversification and/or qualifying income tests.

Additionally, the Modernization Act exempts RICs from the

preferential dividend rule and repealed the 60-day designation requirement for certain types of pay-through income and gains.

Finally, the Modernization Act contains several provisions aimed at preserving the character of distributions made by a fiscal year RIC during

the portion of its taxable year ending after October 31 or December 31, reducing the circumstances under which a RIC might be required to file amended Forms 1099 to restate previously reported distributions.

SIA-Avionte, Inc., SIA-Easy Ice, LLC, SIA-GH Inc., SIA-HT, Inc., SIA-MAC, Inc., SIA-TG, Inc.,

SIA-TT, Inc., SIA-Vector, Inc., and SIA-VR, Inc., each 100% owned by the Company, are each filing standalone C Corporation tax

returns for federal and state purposes.

As separately regarded entities for tax purposes, these entities are taxed at normal corporate rates.

For tax purposes, any distributions by the entities to the parent company would generally need to be

distributed to the Companys shareholders.

Generally, such distributions of the entities income to the Companys shareholders will be considered as qualified dividends for tax purposes.

The entities taxable net income will differ

GAAP net income because of deferred tax temporary differences adjustments arising from net operating losses and unrealized appreciation and deprecation of securities held.

Deferred tax assets and liabilities are measured using enacted

corporate federal and state tax rates expected to apply to taxable income in the years in which those net operating losses are utilized and the unrealized gains and losses are realized.

Deferred tax assets and deferred tax liabilities are netted off

by entity, as allowed.

The recoverability of deferred tax assets is assessed and a valuation allowance is recorded to the extent that it is more likely than not that any portion of the deferred tax asset will not be realized on the basis of a

history of operating losses combined with insufficient projected taxable income or other taxable events in the taxable blockers.

SIA-Easy Ice, LLC was sold during the year ended February 29, 2020 and as part of this transaction, the actual legal

entity (Tax Blocker) that owned the preferred equity was sold.

This Tax Blocker was a wholly-owned subsidiary of the Company.

capital losses may now be carried forward indefinitely and retain the character of the original loss.

Under pre-enactment law, capital

losses could be carried forward for eight years, and carried forward as short-term capital, irrespective of the character of the original

Modernization Act contains simplification provisions, which are aimed at preventing disqualification of a RIC for “inadvertent”

failures of the asset diversification and/or qualifying income tests.

Additionally, the Modernization Act exempts RICs from the preferential

dividend rule and repealed the 60-day designation requirement for certain types of pay-through income and gains.

the Modernization Act contains several provisions aimed at preserving the character of distributions made by a fiscal year RIC during

the portion of its taxable year ending after October 31 or December 31, reducing the circumstances under which a RIC might be required

to file amended Forms 1099 to restate previously reported distributions.

Inc., SIA-GH Inc., SIA-MAC, Inc., SIA-PP Inc., SIA-TG, Inc., SIA-TT, Inc., SIA-Vector, Inc., and SIA-VR, Inc., each 100% owned by the

Company, are each filing standalone C Corporation tax returns for federal and state purposes.

As separately regarded entities for tax

purposes, these entities are taxed at normal corporate rates.

For tax purposes, any distributions by the entities to the parent company

would generally need to be distributed to the Company’s shareholders.

Generally, such distributions of the entities’

to the Company’s shareholders will be considered as qualified dividends for tax purposes.

The entities’

taxable net income

will differ from U.S.

GAAP net income because of deferred tax temporary differences arising from net operating losses and unrealized

appreciation and deprecation of securities held.

Deferred tax assets and liabilities are measured using enacted corporate federal and

state tax rates expected to apply to taxable income in the years in which those net operating losses are utilized and the unrealized

gains and losses are realized.

Deferred tax assets and deferred tax liabilities are netted off by entity, as allowed.

The recoverability

of deferred tax assets is assessed and a valuation allowance is recorded to the extent that it is more likely than not that any portion

of the deferred tax asset will not be realized on the basis of a history of operating losses combined with insufficient projected taxable

income or other taxable events in the taxable blockers.

Company’s Easy Ice investment was sold during the year ended February 29, 2020.

As part of the transaction, the actual legal entity,

SIA-Easy Ice, LLC (“Tax Blocker”) that owned the preferred equity was sold.

This Tax Blocker was a wholly-owned subsidiary

of the Company.

For purposes of tax accounting, the Company had an $8.0 million tax basis in the Tax Blocker.

Deferred tax assets and liabilities, and related valuation allowances, as

of February 29, 2020, February 28, 2019 and February 28, 2018, were as follows:

Company may distribute a portion of its realized net long term capital gains in excess of realized net short term capital losses to its

stockholders, but may also decide to retain a portion, or all, of its net capital gains and elect to pay the 21% U.S.

federal tax on

the net capital gain, potentially in the form of a “deemed distribution”

to its stockholders.

Income tax (provision)

relating to an election to retain its net capital gains, including in the form of a deemed distribution, is included as a component of

income tax (provision) benefit from realized gains on investments, depending on the character of the underlying taxable income (ordinary

or capital gains), on the consolidated statements of operations.

During the year ended February 28, 2021, the Company paid federal

tax of $3.9 million on the undistributed net capital gains it elected to retain for the tax year ended February 29, 2020.

tax assets and liabilities, and related valuation allowances, as of February 28, 2021, February 29, 2020 and February 28, 2019,

were as follows:

Total deferred tax assets

1 unchanged sentence

Valuation allowance on net deferred tax assets

Net deferrred tax liability

As of February 29, 2020, the valuation allowance on deferred tax assets was $1.7 million, which

represents the federal and state tax effect of net operating losses and unrealized losses that we do not believe we will realize through future taxable income.

Any adjustments to the Companys valuation allowance will depend on estimates of

future taxable income and will be made in the period such determination is made.

Net deferred tax (benefit) expense for the year ended

February 29, 2020 includes $(0.4) million net change in unrealized appreciation (depreciation) on investments and $1.0 million net change in total operating expense, in the consolidated statement of operations, respectively.

Net deferred tax (benefit) expense for the year ended February 28, 2019 includes $1.8 million change in unrealized appreciation

(depreciation) on investments and $(1.1) million net change in total operating expense, in the consolidated statement of operations, respectively.

Net deferred tax (benefit) expense for the year ended February 28, 2018 includes $0.0 million change in unrealized appreciation

(depreciation) on investments and $0.0 million net change in total operating expense, in the consolidated statement of operations, respectively.

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

Federal and state income tax provisions (benefits) on investments are as follows:

February 29, 2020

February 28, 2019

February 28, 2018

tax liability

$ (1,922,664 )

$ (1,347,363 )

of February 28, 2021, the valuation allowance on deferred tax assets was $2.0 million, which represents the federal and state tax effect

of net operating losses and unrealized losses that we do not believe we will realize through future taxable income.

Any adjustments to

the Company’s valuation allowance will depend on estimates of future taxable income and will be made in the period such determination

deferred tax (benefit) expense for the year ended February 28, 2021 includes $0.6 million net change in unrealized appreciation (depreciation)

on investments and $0.0 million net change in total operating expense, in the consolidated statement of operations, respectively.

deferred tax (benefit) expense for the year ended February 29, 2020 includes $(0.4) million net change in unrealized appreciation (depreciation)

on investments and $1.0 million net change in total operating expense, in the consolidated statement of operations, respectively.

deferred tax (benefit) expense for the year ended February 28, 2019 includes $1.8 million change in unrealized appreciation (depreciation)

on investments and $(1.1) million net change in total operating expense, in the consolidated statement of operations, respectively.

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

Federal and state income tax provisions

(benefits) on investments are as follows:

Net current expense

1 unchanged sentence

Net tax provision

The Company has federal net operating loss carryforwards of $0.1 million which will expire

starting in 2037, with the remaining net operating loss carryforwards of $3.5 million having an indefinite life.

In addition, the Company has state net operating loss carryforwards of $1.7 million, which begin to expire in fiscal year 2028.

Income tax expense was computed by applying the U.S.

federal statutory rate of 21% combined with the weighted average state tax rate

applicable to each taxable blocker based on the states they operate in.

Company has federal net operating loss carryforwards of $0.1 million which will expire starting in 2038, with the remaining net operating

loss carryforwards of $2.5 million having an indefinite life.

In addition, the Company has state net operating loss carryforwards of

$1.1 million, which begin to expire in fiscal year 2029.

tax expense was computed by applying the U.S.

federal statutory rate of 21% combined with the weighted average state tax rate applicable

to each taxable blocker based on the states they operate in.

Agreements and Related Party Transactions

Investment Advisory and Management Agreement

On July 30, 2010, the Company entered into the Management Agreement with our Manager.

Advisory and Management Agreement

July 30, 2010, the Company entered into the Management Agreement with our Manager.

The initial term of the Management Agreement was two

years, with automatic, one-year renewals at the end of each year, subject to certain approvals by our board of directors and/or the Companys stockholders.

On July 9, 2019, our board of directors

approved the renewal of the Management Agreement for an additional one-year term.

Pursuant to the Management Agreement, our Manager implements our business strategy on a day-to-day basis and performs certain services for us, subject to oversight by

our board of directors.

Our Manager is responsible for, among other duties, determining investment criteria, sourcing, analyzing and executing investments transactions, asset sales, financings and performing asset management duties.

Management Agreement, we have agreed to pay our Manager a management fee for investment advisory and management services consisting of a base management fee and an incentive management fee.

Base Management Fee and Incentive Management Fee

The base management fee of 1.75% per year is calculated based on the average value of our gross assets (other than cash or cash equivalents,

years, with automatic, one-year renewals at the end of each year, subject to certain approvals by our board of directors and/or the Company’s

stockholders.

On July 7, 2020, our board of directors approved the renewal of the Management Agreement for an additional one-year term.

Pursuant to the Management Agreement, our Manager implements our business strategy on a day-to-day basis and performs certain services

for us, subject to oversight by our board of directors.

Our Manager is responsible for, among other duties, determining investment criteria,

sourcing, analyzing and executing investments transactions, asset sales, financings and performing asset management duties.

Management Agreement, we have agreed to pay our Manager a management fee for investment advisory and management services consisting of

a base management fee and an incentive management fee.

Management Fee and Incentive Management Fee

base management fee of 1.75% per year is calculated based on the average value of our gross assets (other than cash or cash equivalents,

but including assets purchased with borrowed funds) at the end of the two most recently completed fiscal quarters.

The base management fee is paid quarterly following the filing of the most recent 10-Q.

The incentive management fee consists of the following two parts:

The first, payable quarterly in arrears, equals 20.0% of our pre-incentive fee net investment income,

expressed as a rate of return on the value of our net assets at the end of the immediately preceding quarter, that exceeds a 1.875% quarterly hurdle rate measured as of the end of each fiscal quarter, subject to a

catch-up provision.

Under this provision, in any fiscal quarter, our Manager receives no incentive fee unless our pre-incentive fee net investment income

exceeds the hurdle rate of 1.875%.

Our Manager will receive 100.0% of pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than or equal to 2.344% in any fiscal quarter;

The base management

fee is paid quarterly following the filing of the most recent 10-Q.

incentive management fee consists of the following two parts:

first, payable quarterly in arrears, equals 20.0% of our pre-incentive fee net investment income, expressed as a rate of return on the

value of our net assets at the end of the immediately preceding quarter, that exceeds a 1.875% quarterly hurdle rate measured as of the

end of each fiscal quarter, subject to a “catch-up”

Under this provision, in any fiscal quarter, our Manager receives

no incentive fee unless our pre-incentive fee net investment income exceeds the hurdle rate of 1.875%.

Our Manager will receive 100.0%

of pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than or equal to 2.344% in any fiscal quarter;

and 20.0% of the amount of our pre-incentive fee net investment income, if any, that exceeds 2.344% in any fiscal quarter.

There is no accumulation of amounts on the hurdle rate from quarter to quarter, and accordingly there is no claw back of

amounts previously paid if subsequent quarters are below the quarterly hurdle rate, and there is no delay of payment if prior quarters are below the quarterly hurdle rate.

The second part of the incentive fee is determined and payable in arrears as of the end of each fiscal year (or upon termination of the

Management Agreement) and equals 20.0% of our incentive fee capital gains, which equals our realized capital gains on a cumulative basis from May 31, 2010 through the end of the fiscal year, if any, computed net of all realized

capital losses and unrealized capital depreciation on a cumulative basis on each investment in the Companys portfolio, less the aggregate amount of any previously paid capital gain incentive fee.

Importantly, the capital gains portion of the

incentive fee is based on realized gains and realized and unrealized losses from May 31, 2010.

Therefore, realized and unrealized losses incurred prior to such time will not be taken into account when calculating the capital gains portion of the

incentive fee, and our Manager will be entitled to 20.0% of incentive fee capital gains that arise after May 31, 2010.

In addition, for the purpose of the incentive fee capital gains calculations, the cost basis for computing realized

gains and losses on investments held by us as of May 31, 2010 will equal the fair value of such investments as of such date.

years ended February 29, 2020, February 28, 2019 and February 28, 2018, the Company incurred $8.1 million, $6.9 million and $5.8 million in base management fees, respectively.

For the years ended February 29, 2020,

February 28, 2019 and February 28, 2018, the Company incurred $5.8 million, $4.6 million and $3.4 million in incentive fees related to pre-incentive fee net investment income.

years ended February 29, 2020, February 28, 2019 and February 28, 2018, we accrued $8.4 million, $0.3 million and $0.9 million, respectively, in incentive fees related to capital gains.

The accrual is calculated using both realized and unrealized capital gains for the period.

accumulation of amounts on the hurdle rate from quarter to quarter, and accordingly there is no claw back of amounts previously paid

if subsequent quarters are below the quarterly hurdle rate, and there is no delay of payment if prior quarters are below the quarterly

second part of the incentive fee is determined and payable in arrears as of the end of each fiscal year (or upon termination of the Management

Agreement) and equals 20.0% of our “incentive fee capital gains,”

which equals our realized capital gains on a cumulative

basis from May 31, 2010 through the end of the fiscal year, if any, computed net of all realized capital losses and unrealized capital

depreciation on a cumulative basis on each investment in the Company’s portfolio, less the aggregate amount of any previously paid

capital gain incentive fee.

Importantly, the capital gains portion of the incentive fee is based on realized gains and realized and unrealized

losses from May 31, 2010.

Therefore, realized and unrealized losses incurred prior to such time will not be taken into account when calculating

the capital gains portion of the incentive fee, and our Manager will be entitled to 20.0% of incentive fee capital gains that arise after

May 31, 2010.

In addition, for the purpose of the “incentive fee capital gains”

calculations, the cost basis for computing

realized gains and losses on investments held by us as of May 31, 2010 will equal the fair value of such investments as of such date.

the years ended February 28, 2021, February 29, 2020 and February 28, 2019, the Company incurred $9.1 million, $8.1 million

and $6.9 million in base management fees, respectively.

For the years ended February 28, 2021, February 29, 2020 and February

28, 2019, the Company incurred $5.4 million, $5.8 million and $4.6 million in incentive fees related to pre-incentive fee net

investment income.

For the years ended February 28, 2021, February 29, 2020 and February 28, 2019, we accrued $0.0 million,

$8.4 million and $0.3 million, respectively, in incentive fees related to capital gains.

accrual is calculated using both realized and unrealized capital gains for the period.

The actual incentive fee related to capital gains

will be determined and payable in arrears at the end of the fiscal year and will include only realized capital gains for the period.

As of February 29, 2020, the base management fees accrual was $2.1 million and the incentive fees accrual

was $13.7 million and is included in base management and incentive fees payable in the accompanying consolidated statements of assets and liabilities.

As of February 28, 2019, the base management fees accrual was $1.9 million and the

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

Administration Agreement

On July 30, 2010, the Company entered into a separate administration agreement (the Administration Agreement) with our

Manager, pursuant to which our Manager, as our administrator, has agreed to furnish us with the facilities and administrative services necessary to conduct our

day-to-day operations and provide managerial assistance on our behalf to those portfolio companies to which we are required to provide such assistance.

The initial term

of the Administration Agreement was two years, with automatic, one-year renewals at the end of each year subject to certain approvals by our board of directors and/or our stockholders.

The amount of expenses

payable or reimbursable thereunder by the Company was capped at $1.0 million for the initial two-year term of the Administration Agreement and subsequent renewals.

On July 8, 2015, our board of

directors approved the renewal of the Administration Agreement for an additional one-year term and determined to increase the cap on the payment or reimbursement of expenses by the Company thereunder, which

had not been increased since the inception of the agreement, to $1.3 million.

On July 7, 2016, our board of directors approved the renewal of the Administration Agreement for an additional one-year

On October 5, 2016, our board of directors determined to increase the cap on the payment or reimbursement of expenses by the Company under the Administration Agreement, from $1.3 million to $1.5 million, effective

November 1, 2016.

On July 11, 2017, our board of directors approved the renewal of the Administration Agreement for an additional one-year term and determined to increase the cap on the payment or

reimbursement of expenses by the Company from $1.5 million to $1.75 million, effective August 1, 2017.

On July 9, 2018, our board of directors approved the renewal of the Administration Agreement for an additional one-year term and determined to increase the cap on the payment or reimbursement of expenses by the Company from $1.75 million to $2.0 million, effective August 1, 2018.

On July 9, 2019, our

board of directors approved the renewal of the Administration Agreement for an additional one-year term and determined to increase the cap on the payment or reimbursement of expenses by the Company from

$2.0 million to $2.225 million effective August 1, 2019.

For the years ended February 29, 2020, February 28,

2019 and February 28, 2018, we recognized $2.1 million, $1.9 million and $1.6 million in administrator expenses, respectively, pertaining to bookkeeping, recordkeeping and other administrative services provided to us in addition

to our allocable portion of rent and other overhead related expenses.

As of February 29, 2020, $0.5 million of administrator expenses were accrued and included in due to manager in the accompanying consolidated statements of assets and

As of February 28, 2019, $0.3 million of administrator expenses were accrued and included in due to manager in the accompanying consolidated statements of assets and liabilities.

On August 7, 2018, the

Company entered into an unsecured loan agreement with CLO 2013-1 Warehouse, a wholly-owned subsidiary of Saratoga CLO, pursuant to which CLO 2013-1 Warehouse may borrow

from time to time up to $20 million from the Company in order to provide capital necessary to support warehouse activities.

The CLO 2013-1 Warehouse Loan, which expired on February 7, 2020, bears

interest at an annual rate of 3M USD LIBOR + 7.5%.

On December 14, 2018, the Company completed the third refinancing and issuance of

the 2013-1 Reset CLO Notes.

This refinancing, among other things, extended the Saratoga CLO reinvestment period to January 2021, and extended its legal maturity to January 2030.

A non-call period ending January 2020 was also added.

In addition, and as part of the refinancing, the Saratoga CLO has also been upsized from $300 million in assets to approximately $500 million.

this refinancing and upsizing, the Company invested an additional $13.8 million in all of the newly issued subordinated notes of the Saratoga CLO, and purchased $2.5 million in aggregate principal amount of the Class F-R-2 Notes tranche and $7.5 million in aggregate principal amount of the

Class G-R-2 Notes tranche at par.

Concurrently, the existing $4.5 million of Class F notes and $20.0 million CLO

2013-1 Warehouse Loan were repaid.

The Company also paid $2.0 million of transaction costs related to the refinancing and upsizing on behalf of the Saratoga CLO, to be reimbursed from future equity

distributions.

During the year ended February 29, 2020, the Company received full payment of $1.7 million from the Saratoga CLO for such transaction costs.

During the year ended February 28, 2019, the maximum amount invested by the Company in the CLO

2013-1 Warehouse Loan amounted to $20.0 million, with interest income of $0.5 million recognized related to the CLO 2013-1 Warehouse Loan and is included in

interest from investments on the Companys consolidated statement of operations for the year ended February 28, 2019.

For the years ended February 29, 2020, February 28, 2019 and February 28,

2018, we recognized $2.5 million, $1.7 million and $1.5 million in management fee income, respectively, related to the Saratoga CLO.

In conjunction with the third refinancing and issuance of the 2013-1 Reset CLO Notes on

December 14, 2018, the Company is no longer entitled to receive an incentive management fee from Saratoga CLO.

As of February 28, 2021, the base management fees accrual was $2.4 million and the incentive fees accrual was $13.8 million and is included

in base management and incentive fees payable in the accompanying consolidated statements of assets and liabilities.

As of February 29,

2020, the base management fees accrual was $2.1 million and the incentive fees accrual was $13.7 million and is included in base management

and incentive fees payable in the accompanying consolidated statements of assets and liabilities.

Administration

July 30, 2010, the Company entered into a separate administration agreement (the “Administration Agreement”) with our Manager,

pursuant to which our Manager, as our administrator, has agreed to furnish us with the facilities and administrative services necessary

to conduct our day-to-day operations and provide managerial assistance on our behalf to those portfolio companies to which we are required

to provide such assistance.

The initial term of the Administration Agreement was two years, with automatic, one-year renewals at the

end of each year subject to certain approvals by our board of directors and/or our stockholders.

The amount of expenses payable or reimbursable

thereunder by the Company was capped at $1.0 million for the initial two-year term of the Administration Agreement and subsequent renewals.

On July 8, 2015, our board of directors approved the renewal of the Administration Agreement for an additional one-year term and determined

to increase the cap on the payment or reimbursement of expenses by the Company thereunder, which had not been increased since the inception

of the agreement, to $1.3 million.

On July 7, 2016, our board of directors approved the renewal of the Administration Agreement for an

additional one-year term.

On October 5, 2016, our board of directors determined to increase the cap on the payment or reimbursement of

expenses by the Company under the Administration Agreement, from $1.3 million to $1.5 million, effective November 1, 2016.

2017, our board of directors approved the renewal of the Administration Agreement for an additional one-year term and determined to increase

the cap on the payment or reimbursement of expenses by the Company from $1.5 million to $1.75 million, effective August 1, 2017.

9, 2018, our board of directors approved the renewal of the Administration Agreement for an additional one-year term and determined to

increase the cap on the payment or reimbursement of expenses by the Company from $1.75 million to $2.0 million, effective August 1, 2018.

On July 9, 2019, our board of directors approved the renewal of the Administration Agreement for an additional one-year term and determined

to increase the cap on the payment or reimbursement of expenses by the Company from $2.0 million to $2.225 million effective August 1,

On July 7, 2020, our board of directors approved the renewal of the Administration Agreement for an additional one-year term and

determined to increase the cap on the payment or reimbursement of expenses by the Company from $2.225 million to $2.775 million effective

August 1, 2020.

the years ended February 28, 2021, February 29, 2020 and February 28, 2019, we recognized $2.5 million, $2.1 million and $1.9 million

in administrator expenses, respectively, pertaining to bookkeeping, recordkeeping and other administrative services provided to us in

addition to our allocable portion of rent and other overhead related expenses.

As of February 28, 2021, $0.3 million of administrator

expenses were accrued and included in due to manager in the accompanying consolidated statements of assets and liabilities.

As of February

29, 2020, $0.5 million of administrator expenses were accrued and included in due to manager in the accompanying consolidated statements

of assets and liabilities.

August 7, 2018, the Company entered into an unsecured loan agreement with CLO 2013-1 Warehouse, a wholly-owned subsidiary of Saratoga

CLO, pursuant to which CLO 2013-1 Warehouse may borrow from time to time up to $20 million from the Company in order to provide capital

necessary to support warehouse activities.

The CLO 2013-1 Warehouse Loan, which expired on February 7, 2020, bears interest at an annual

rate of 3M USD LIBOR + 7.5%.

December 14, 2018, the Company completed the third refinancing and issuance of the 2013-1 Reset CLO Notes.

This refinancing, among other

things, extended the Saratoga CLO reinvestment period to January 2021, and extended its legal maturity to January 2030.

A non-call period

ending January 2020 was also added.

In addition, and as part of the refinancing, the Saratoga CLO has also been upsized from $300 million

in assets to approximately $500 million.

As part of this refinancing and upsizing, the Company invested an additional $13.8 million in

all of the newly issued subordinated notes of the Saratoga CLO, and purchased $2.5 million in aggregate principal amount of the Class

F-R-2 Notes tranche and $7.5 million in aggregate principal amount of the Class G-R-2 Notes tranche at par.

Concurrently, the existing

$4.5 million of Class F notes and $20.0 million CLO 2013-1 Warehouse Loan were repaid.

The Company also paid $2.0 million of transaction

costs related to the refinancing and upsizing on behalf of the Saratoga CLO, to be reimbursed from future equity distributions.

the year ended February 29, 2020, the Company received full payment of $1.7 million from the Saratoga CLO for such transaction costs.

the year ended February 28, 2019, the maximum amount invested by the Company in the CLO 2013-1 Warehouse Loan amounted to $20.0 million,

with interest income of $0.5 million recognized related to the CLO 2013-1 Warehouse Loan and is included in interest from investments

on the Company’s consolidated statement of operations for the year ended February 28, 2019.

February 11, 20dedu20, we entered into an unsecured loan agreement (“CLO 2013-1 Warehouse 2 Loan”) with Saratoga Investment

CLO 2013-1 Warehouse 2, Ltd (“CLO 2013-1 Warehouse 2”), a wholly-owned subsidiary of Saratoga Investment Corp.

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 CLO 2013-1 Warehouse 2 Loan was increased to $25.0 million

availability, 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%.

February 26, 2021, the Company completed the fourth refinancing of the Saratoga CLO.

This refinancing, among other things, extended the

Saratoga CLO reinvestment period to April 2024, and extended its legal maturity to April 2033.

A non-call period ending February

2022 was also added.

In addition, and as part of the refinancing, the Saratoga CLO has also been 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

CLO 2013-1 Warehouse 2 Loan were repaid.

The Company 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.

As of February 28, 2021, there remained

an outstanding receivable of $2.6 million for such transaction costs which is presented as due from affiliate on the Company’s

consolidated statement of assets and liabilities.

the year ended February 28, 2021, the maximum amount invested by the Company in the CLO 2013-1 Warehouse 2 Loan amounted

to $25.0 million, with interest income of $0.7 million recognized related to the CLO 2013-1 Warehouse 2 Loan and

is included in interest from investments on the Company’s consolidated statement of operations for the year ended February 28,

the years ended February 28, 2021, February 29, 2020 and February 28, 2019, we recognized $2.5 million, $2.5 million and $1.7 million

in management fee income, respectively, related to the Saratoga CLO.

conjunction with the third refinancing and issuance of the 2013-1 Reset CLO Notes on December 14, 2018, the Company is no longer entitled

to receive an incentive management fee from Saratoga CLO.

See Note 4 for additional information.

For the years ended February 28, 2019 and February 28, 2018, we recognized incentive

fee income of $0.6 million and $0.6 million, respectively, related to the Saratoga CLO.

On February 11, 2020, the Company

entered into an unsecured loan agreement CLO 2013-1 Warehouse 2 Loan with 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.

The CLO 2013-1 Warehouse 2 Loan, which expires on August 20, 2021, bears interest at an annual rate of 3M USD LIBOR + 7.5%.

During the year ended February 29, 2020, the Company invested $2.5 million in

aggregate principal amount of the CLO 2013-1 Warehouse 2 Loan and as of February 29, 2020, the fair value of this investment was $2.2 million.

For the years ended February 29, 2020, February 28, 2019 and February 28, 2018, the Company neither bought nor sold any investments from the

Saratoga CLO.

As a BDC, we are only allowed to employ leverage to the extent that our asset coverage, as defined in the 1940 Act,

equals at least 200.0% after giving effect to such leverage, or, if we obtain the required approvals from our independent directors and/or stockholders, 150.0%.

The amount of leverage that we employ at any time depends on our assessment of the

market and other factors at the time of any proposed borrowing.

For the year ended February 28, 2019,

we recognized incentive fee income of $0.6 million related to the Saratoga CLO.

from Other Affiliate

of February 28, 2021, there is an outstanding receivable from an affiliate of the Company totaling $0.1 million, relating to the reimbursement

of deal expenses originally paid by the Company.

a BDC, we are only allowed to employ leverage to the extent that our asset coverage, as defined in the 1940 Act, equals at least 200.0%

after giving effect to such leverage, or, if we obtain the required approvals from our independent directors and/or stockholders, 150.0%.

The amount of leverage that we employ at any time depends on our assessment of the market and other factors at the time of any proposed

Our asset coverage ratio, as defined in the 1940 Act, was 347.1% as of February 28, 2021 and 607.1% as of February 29, 2020.

On April 16, 2018, as permitted by the Small

Business Credit Availability Act, which was signed into law on March 23, 2018, our non-interested board of directors approved of our becoming subject to a minimum asset coverage ratio of 150.0% under

Sections 18(a)(1) and 18(a)(2) of the Investment Company Act, as amended.

On April 16, 2018, as permitted by the Small Business Credit Availability Act, which was signed into law on March 23, 2018, our non-interested

board of directors approved of our becoming subject to a minimum asset coverage ratio of 150.0% under Sections 18(a)(1) and 18(a)(2)

of the Investment Company Act, as amended.

The 150.0% asset coverage ratio became effective on April 16, 2019.

On April 11, 2007, we entered into a $100.0 million revolving securitized credit facility (the Revolving Facility).

May 1, 2007, we entered into a $25.7 million term securitized credit facility (the Term Facility and, together with the Revolving Facility, the Facilities), which was fully drawn at closing.

In December 2007, we

consolidated the Facilities by using a draw under the Revolving Facility to repay the Term Facility.

In response to the market wide decline in financial asset prices, which negatively affected the value of our portfolio, we terminated the revolving

period of the Revolving Facility effective January 14, 2009 and commenced a two-year amortization period during which all principal proceeds from the collateral were used to repay outstanding borrowings.

April 11, 2007, we entered into a $100.0 million revolving securitized credit facility (the “Revolving Facility”).

1, 2007, we entered into a $25.7 million term securitized credit facility (the “Term Facility”

and, together with the Revolving

Facility, the “Facilities”), which was fully drawn at closing.

In December 2007, we consolidated the Facilities by using

a draw under the Revolving Facility to repay the Term Facility.

In response to the market wide decline in financial asset prices, which

negatively affected the value of our portfolio, we terminated the revolving period of the Revolving Facility effective January 14, 2009

and commenced a two-year amortization period during which all principal proceeds from the collateral were used to repay outstanding borrowings.

A significant percentage of our total assets had been pledged under the Revolving Facility to secure our obligations thereunder.

Under the Revolving Facility, funds were borrowed from or through certain lenders and interest was payable monthly at

the greater of the commercial paper rate and our lenders prime rate plus 4.00% plus a default rate of 2.00% or, if the commercial paper market was unavailable, the greater of the prevailing LIBOR rates and our lenders prime rate plus

6.00% plus a default rate of 3.00%.

On July 30, 2010, we used the net proceeds from (i) a stock purchase transaction and (ii) a

portion of the funds available to us under the $40.0 million senior secured revolving credit facility (the Credit Facility) with Madison Capital Funding LLC, in each case, to pay the full amount of principal and accrued interest,

including default interest, outstanding under the Revolving Facility.

the Revolving Facility, funds were borrowed from or through certain lenders and interest was payable monthly at the greater of the commercial

paper rate and our lender’s prime rate plus 4.00% plus a default rate of 2.00% or, if the commercial paper market was unavailable,

the greater of the prevailing LIBOR rates and our lender’s prime rate plus 6.00% plus a default rate of 3.00%.

July 30, 2010, we used the net proceeds from (i) the stock purchase transaction and (ii) a portion of the funds available to us under

the $45.0 million senior secured revolving credit facility with Madison Capital Funding LLC (the “Credit Facility”), in each

case, to pay the full amount of principal and accrued interest, including default interest, outstanding under the Revolving Facility.

As a result, the Revolving Facility was terminated in connection therewith.

Substantially all of our total assets, other than those held by SBIC LP, have been pledged under the

Credit Facility to secure our obligations thereunder.

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

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

extend the period during which we may make and repay borrowings under the Credit Facility from July 30, 2013 to

February 24, 2015 (the Revolving Period).

The Revolving Period may, upon the occurrence of an event of default, by action of the lenders or automatically, be terminated.

All borrowings and other amounts payable under the Credit Facility

are due and payable five years after the end of the Revolving Period;

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

Capital Funding LLC.

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

other things:

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

extend the maturity date of the Credit Facility from February 24, 2020 to September 17, 2022 (unless terminated

sooner upon certain events);

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

reduce the floor on base rate borrowings from 3.00% to 2.25%;

and on LIBOR borrowings from 2.00% to 1.25%.

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

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

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

Substantially all of our total assets, other than those held

by SBIC LP, have been pledged under the Credit Facility to secure our obligations thereunder.

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

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

the period during which we may make and repay borrowings under the Credit Facility from July

30, 2013 to February 24, 2015 (the “Revolving Period”).

The Revolving Period

may, upon the occurrence of an event of default, by action of the lenders or automatically,

be terminated.

All borrowings and other amounts payable under the Credit Facility are due

and payable five years after the end of the Revolving Period;

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

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

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

the maturity date of the Credit Facility from February 24, 2020 to September 17, 2022 (unless

terminated sooner upon certain events);

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

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

reduce the commitment fee rate from 0.75% to 0.50% for any period during which the ratio of advances outstanding

to aggregate commitments, expressed as a percentage, is greater than or equal to 50%.

In addition to any fees or other

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

As of February 29, 2020 and February 28, 2019, there were no outstanding borrowings under the Credit Facility.

During the applicable

periods, the Company was in compliance with all of the limitations and requirements of the Credit Facility.

Financing costs of $3.1 million related to the Credit Facility have been capitalized and are being amortized over the term of the

For the years ended February 29, 2020, February 28, 2019 and February 28, 2018, we recorded $0.6 million, $0.7 million and $0.8 million of interest expense, respectively, which includes commitment and

administrative agent fees.

For the years ended February 29, 2020, February 28, 2019 and February 28, 2018, we recorded

$0.09 million, $0.1 million and $0.1 million of amortization of deferred financing costs related to the Credit Facility and Revolving Facility, respectively.

Interest expense and amortization of deferred financing costs are reported

as interest and debt financing expense on the consolidated statements of operations.

For the fiscal year ended February 29, 2020, the average borrowings outstanding and the weighted average interest rate on outstanding borrowings under the Credit

Facility was approximately $0.6 million and 6.66%, respectively.

For the fiscal year ended February 28, 2019, the average borrowings outstanding and the weighted average interest rate on outstanding borrowings under the Credit Facility was

approximately $3.4 million and 7.10%, respectively.

For the fiscal year ended February 28, 2018, the average borrowings outstanding and the weighted average interest rate on outstanding borrowings under the Credit Facility was

approximately $7.1 million and 6.02%, respectively.

The Credit Facility contains limitations as to how borrowed funds may be used,

such as restrictions on industry concentrations, asset size, weighted average life, currency denomination and collateral interests.

The Credit Facility also includes certain requirements relating to portfolio performance, the violation of which

could result in the limit of further advances and, in some cases, result in an event of default, allowing the lenders to accelerate repayment of amounts owed thereunder.

The Credit Facility has an eight-year

term, consisting of a three-year period (the Revolving Period), under which the Company may make and repay borrowings, and a final maturity five years from the end of the Revolving Period.

Availability on the Credit Facility will be subject to a borrowing base calculation, based on, among other things, applicable advance rates (which vary from 50.0% to 75.0% of par or fair value depending on the type of loan asset) and the value of

certain eligible loan assets included as part of the Borrowing Base.

Funds may be borrowed at the greater of the prevailing one-month LIBOR rate and 1.00%, plus an applicable margin of 4.75%.

the Companys option, funds may be borrowed based on an alternative base rate, which in no event will be less than 2.00%, and the applicable margin over such alternative base rate is 3.75%.

In addition, the Company will pay the lenders a

commitment fee of 0.75% per year (or 0.50% if the ratio of advances outstanding to aggregate commitments is greater than or equal to 50%) on the unused amount of the Credit Facility for the duration of the Revolving Period.

Our borrowing base under the Credit Facility was $35.6 million, subject to the Credit

Facility cap of $45.0 million at February 29, 2020.

For purposes of determining the borrowing base, most assets are assigned the values set forth in our most recent Annual Report on Form 10-K or

Quarterly Report on Form 10-Q filed with the U.S.

Securities and Exchange Commission (SEC).

Accordingly, the February 29, 2020 borrowing base relies upon the valuations set forth in the Quarterly Report on Form 10-Q for the period

ended November 30, 2019, as filed with the SEC on January 8, 2020.

The valuations presented in this Annual Report on Form 10-K will not be incorporated into the borrowing base until after this Annual Report on Form 10-K is filed with the SEC.

SBA Debentures

wholly-owned SBIC subsidiaries are able to borrow funds from the SBA against regulatory capital (which approximates equity capital) that is paid in and is subject to customary regulatory requirements including but not limited to an examination by

On August 14, 2019, the Companys wholly-owned subsidiary, SBIC II LP, received an SBIC license from the SBA.

license provides up to $175.0 million in additional long-term capital in the form of SBA debentures.

As a result of the 2016 omnibus spending bill signed into law in December 2015, the maximum amount of

SBA-guaranteed debentures that affiliated SBIC funds can have outstanding was increased from $225.0 million to $350.0 million.

With this license approval, Saratoga will grow its SBA relationship

from $150.0 million to $325.0 million of committed capital.

As of February 29, 2020, we have funded SBIC LP with an

aggregate total of $75.0 million of equity capital and have $150.0 million of SBA-guaranteed debentures outstanding and have funded SBIC II LP with an aggregate total of $50.0 million of equity

capital and do not have any SBA-guaranteed debentures outstanding.

SBA debentures are non-recourse to us, have a 10-year

maturity, and may be prepaid at any time without penalty.

The interest rate of SBA debentures is fixed at the time of issuance, often referred to as pooling, at a market-driven spread over 10-year U.S.

the applicable margin rate on base rate borrowings from 4.50% to 3.75%, and on LIBOR borrowings

from 5.50% to 4.75%;

the floor on base rate borrowings from 3.00% to 2.25%;

and on LIBOR borrowings from 2.00% to 1.25%.

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

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

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

(unless terminated sooner upon certain events);

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

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

the commitment fee rate from 0.75% to 0.50% for any period during which the ratio of advances

outstanding to aggregate commitments, expressed as a percentage, is greater than or equal

April 24, 2020, we entered into a fourth amendment to the Credit Facility to, among other things:

certain amendments related to the Paycheck Protection Program (“Permitted PPP Amendment”)

to Loan Asset Documents;

certain debt and interest amounts allowed by the Permitted PPP Amendments from certain calculations

related to Net Leverage Ratio, Interest Coverage Ratio and EBITDA;

such Permitted PPP Amendments from constituting a Material Modification.

September 14, 2020, we entered into a fifth amendment to the Credit Facility to, among other things:

the commitment termination date of the Credit Facility from September 17, 2020 to September

17, 2021, with no change to the maturity date of September 17, 2025.

for the transition away from the LIBOR Rate in the market, and

the definition of “Eligible Loan Asset”

to allow investments with certain recurring

revenue features to qualify as Collateral and be included in the borrowing base.

addition to any fees or other amounts payable under the terms of the Credit Facility, an administrative agent fee per annum equal to

$0.1 million is payable in equal monthly installments in arrears.

of February 28, 2021 and February 29, 2020, there were no outstanding borrowings under the Credit Facility.

During the applicable periods,

the Company was in compliance with all of the limitations and requirements of the Credit Facility.

Financing costs of $3.3 million related

to the Credit Facility have been capitalized and are being amortized over the term of the facility.

For the years ended February 28,

2021, February 29, 2020 and February 28, 2019, we recorded $0.5 million, $0.6 million and $0.7 million of interest expense, respectively,

which includes commitment and administrative agent fees.

the years ended February 28, 2021, February 29, 2020 and February 28, 2019, we recorded $0.1 million, $0.09 million and $0.1 million

of amortization of deferred financing costs related to the Credit Facility and Revolving Facility, respectively.

Interest expense and

amortization of deferred financing costs are reported as interest and debt financing expense on the consolidated statements of operations.

For the fiscal year ended February 28, 2021, the average borrowings outstanding and the weighted average interest rate on outstanding

borrowings under the Credit Facility was approximately $1.8 million and 0.17%, respectively.

For the fiscal year ended February 29, 2020,

the average borrowings outstanding and the weighted average interest rate on outstanding borrowings under the Credit Facility was approximately

$0.6 million and 6.66%, respectively.

For the fiscal year ended February 28, 2019, the average borrowings outstanding and the weighted

average interest rate on outstanding borrowings under the Credit Facility was approximately $3.4 million and 7.10%, respectively.

Credit Facility contains limitations as to how borrowed funds may be used, such as restrictions on industry concentrations, asset size,

weighted average life, currency denomination and collateral interests.

The Credit Facility also includes certain requirements relating

to portfolio performance, the violation of which could result in the limit of further advances and, in some cases, result in an event

of default, allowing the lenders to accelerate repayment of amounts owed thereunder.

The Credit Facility has an eight-year term, consisting

of a three-year period (the “Revolving Period”), under which the Company may make and repay borrowings, and a final maturity

five years from the end of the Revolving Period.

Availability on the Credit Facility will be subject to a borrowing base calculation,

based on, among other things, applicable advance rates (which vary from 50.0% to 75.0% of par or fair value depending on the type of

loan asset) and the value of certain “eligible”

loan assets included as part of the Borrowing Base.

Funds may be borrowed

at the greater of the prevailing one-month LIBOR rate and 1.00%, plus an applicable margin of 4.75%.

At the Company’s option, funds

may be borrowed based on an alternative base rate, which in no event will be less than 2.00%, and the applicable margin over such alternative

base rate is 3.75%.

In addition, the Company will pay the lenders a commitment fee of 0.75% per year (or 0.50% if the ratio of advances

outstanding to aggregate commitments is greater than or equal to 50%) on the unused amount of the Credit Facility for the duration of

the Revolving Period.

borrowing base under the Credit Facility was $38.9 million, subject to the Credit Facility cap of $45.0 million at February 28, 2021.

For purposes of determining the borrowing base, most assets are assigned the values set forth in our most recent Annual Report on Form

10-K or Quarterly Report on Form 10-Q filed with the U.S.

Securities and Exchange Commission (“SEC”).

Accordingly, the February

28, 2021 borrowing base relies upon the valuations set forth in the Quarterly Report on Form 10-Q for the period ended November 30, 2020,

as filed with the SEC on January 6, 2021.

The valuations presented in this Annual Report on Form 10-K will not be incorporated into the

borrowing base until after this Annual Report on Form 10-K is filed with the SEC.

wholly-owned SBIC subsidiaries are able to borrow funds from the SBA against regulatory capital (which approximates equity capital) that

is paid in and is subject to customary regulatory requirements including but not limited to an examination by the SBA.

August 14, 2019, the Company’s wholly-owned subsidiary, SBIC II LP, received an SBIC license from the SBA.

The new license provides

up to $175.0 million in additional long-term capital in the form of SBA debentures.

As a result of the 2016 omnibus spending

bill signed into law in December 2015, the maximum amount of SBA-guaranteed debentures that affiliated SBIC funds can have outstanding

was increased from $225.0 million to $350.0 million.

With this license approval, Saratoga will grow its SBA relationship from $150.0

million to $325.0 million of committed capital.

of February 28, 2021, we have funded SBIC LP and SBIC II LP with an aggregate total of equity capital of $75.0 million and $69.0 million,

respectively, and have $158.0 million in SBA-guaranteed debentures outstanding, of which $124.0 million is held in SBIC LP and $34.0

million held in SBIC II LP.

SBA debentures are non-recourse to us, have a 10-year maturity, and may be prepaid at any time without penalty.

The interest rate of SBA debentures is fixed at the time of issuance, often referred to as pooling, at a market-driven spread over 10-year

Treasury Notes.

SBA current regulations limit the amount that SBIC LP and SBIC II LP may borrow to a maximum of $150.0 million and $175.0 million, respectively, which is up to twice its potential regulatory capital.

SBICs are designed to stimulate the flow of private equity capital to eligible small businesses.

Under SBA regulations, SBICs may make loans to

eligible small businesses and invest in the equity securities of small businesses.

Under present SBA regulations, eligible small businesses include businesses that have a tangible net worth not exceeding $19.5 million and have average annual

SBA current regulations limit the amount that SBIC LP and SBIC II LP may borrow to a maximum of $150.0 million and

$175.0 million, respectively, which is up to twice its potential regulatory capital.

are designed to stimulate the flow of private equity capital to eligible small businesses.

Under SBA regulations, SBICs may make loans

to eligible small businesses and invest in the equity securities of small businesses.

Under present SBA regulations, eligible small businesses

include businesses that have a tangible net worth not exceeding $19.5 million and have average annual fully taxed net income not exceeding

$6.5 million for the two most recent fiscal years.

In addition, an SBIC must devote 25.0% of its investment activity to “smaller”

concerns as defined by the SBA.

A smaller concern is one that has a tangible net worth not exceeding $6.0 million and has average annual

fully taxed net income not exceeding $2.0 million for the two most recent fiscal years.

In addition, an SBIC must devote 25.0% of its investment activity to smaller concerns as defined by the SBA.

A smaller concern is

one that has a tangible net worth not exceeding $6.0 million and has average annual fully taxed net income not exceeding $2.0 million for the two most recent fiscal years.

SBA regulations also provide alternative size standard criteria to

determine eligibility, which depend on the industry in which the business is engaged and are based on such factors as the number of employees and gross sales.

SBA regulations also provide alternative size

standard criteria to determine eligibility, which depend on the industry in which the business is engaged and are based on such factors

as the number of employees and gross sales.

According to SBA regulations, SBICs may make long-term loans to small businesses, invest

in the equity securities of such businesses and provide them with consulting and advisory services.

SBIC LP and SBIC II LP are subject to

regulation and oversight by the SBA, including requirements with respect to maintaining certain minimum financial ratios and other covenants.

Receipt of an SBIC license does not assure that SBIC II LP will receive

SBA-guaranteed debenture funding, which is dependent upon SBIC II LP continuing to be in compliance with SBA regulations and policies.

The SBA, as a creditor, will have a superior claim to SBIC LP and SBIC II

LP assets over our stockholders and debtholders in the event we liquidate SBIC LP and SBIC II LP or the SBA exercises its remedies under the SBA-guaranteed debentures issued by SBIC LP and SBIC II LP upon an event of default.

The Company received exemptive relief from the SEC to permit it to exclude the debt of our SBIC subsidiaries guaranteed by the SBA from the

definition of senior securities in the asset coverage test under the 1940 Act.

This allows the Company increased flexibility under the asset coverage test by permitting it to borrow up to $325.0 million more than it would otherwise be able to

absent the receipt of this exemptive relief.

On April 16, 2018, as permitted by the Small Business Credit Availability Act, which was signed into law on March 23, 2018, the non-interested board of directors of the Company approved of the

Company becoming subject to a minimum asset coverage ratio of 150.0% from 200% under Sections 18(a)(1) and 18(a)(2) of the Investment Company Act, as amended.

LP and SBIC II LP are subject to regulation and oversight by the SBA, including requirements with respect to maintaining certain minimum

financial ratios and other covenants.

Receipt of an SBIC license does not assure that SBIC II LP will receive SBA-guaranteed debenture

funding, which is dependent upon SBIC II LP continuing to be in compliance with SBA regulations and policies.

The SBA, as a creditor,

will have a superior claim to SBIC LP and SBIC II LP assets over our stockholders and debtholders in the event we liquidate SBIC LP and

SBIC II LP or the SBA exercises its remedies under the SBA-guaranteed debentures issued by SBIC LP and SBIC II LP upon an event of default.

Company received exemptive relief from the SEC to permit it to exclude the debt of SBIC subsidiaries guaranteed by the SBA from the definition

of senior securities in the asset coverage test under the 1940 Act.

This allows the Company increased flexibility under the asset coverage

test by permitting it to borrow up to $325.0 million more than it would otherwise be able to absent the receipt of this exemptive relief.

On April 16, 2018, as permitted by the Small Business Credit Availability Act, which was signed into law on March 23, 2018, the non-interested

board of directors of the Company approved of the Company becoming subject to a minimum asset coverage ratio of 150.0% from 200% under

Sections 18(a)(1) and 18(a)(2) of the Investment Company Act, as amended.

The 150.0% asset coverage ratio became effective on April 16,

At February 29, 2020 and February 28, 2019, there was $150.0 million and $150.0 million outstanding of SBA debentures, respectively.

The carrying amount of the amount outstanding of SBA debentures approximates its fair value, which is based on a waterfall analysis showing adequate collateral coverage and would be classified as a Level 3 liability within the fair value

Financing costs of $5.0 million and $0.7 million related to the SBA debentures issued by SBIC LP and SBIC II LP, respectively, have been capitalized and are being amortized over the term of the commitment and drawdown.

February 28, 2021 and February 29, 2020, there was $158.0 million and $150.0 million outstanding of SBA debentures, respectively.

carrying amount of the amount outstanding of SBA debentures approximates its fair value, which is based on a waterfall analysis showing

adequate collateral coverage and would be classified as a Level 3 liability within the fair value hierarchy.

Financing costs of $5.0

million and $1.5 million related to the SBA debentures issued by SBIC LP and SBIC II LP, respectively, have been capitalized and are

being amortized over the term of the commitment and drawdown.

During the year ended February 28, 2021, the Company repaid $26.0 million

of SBA debentures, resulting in a realized loss on extinguishment of $0.1 million related to the acceleration of deferred debt financing

the years ended February 28, 2021, February 29, 2020 and February 28, 2019, we recorded $5.5 million, $4.8 million and $4.7 million of

interest expense related to the SBA debentures, respectively.

For the years ended February 28, 2021, February 29, 2020 and February 28,

2018, we recorded $4.8 million, $4.7 million and $4.1 million of interest expense related to the SBA debentures, respectively.

For the years ended February 29, 2020, February 28, 2019 and February 28, 2018, we recorded

$0.5 million, $0.5 million and $0.5 million of amortization of deferred financing costs related to the SBA debentures, respectively.

Interest expense and amortization of deferred financing costs are reported as interest and debt

financing expense on the consolidated statements of operations.

The weighted average interest rate during the years ended February 29, 2020, February 28, 2019 and February 28, 2018 on the outstanding borrowings of the SBA debentures

was 3.23%, 3.20% and 3.14%, respectively.

During the years ended February 29, 2020 and February 28, 2019, the average dollar amount of SBA debentures outstanding was $150.0 million and $146.0 million, respectively.

In December 2015, the 2016 omnibus spending bill approved by Congress and signed into law by the President increased the amount of

SBA-guaranteed debentures that affiliated SBIC funds can have outstanding from $225.0 million to $350.0 million, subject to SBA approval.

SBA regulations previously limited the amount of

SBA-guaranteed debentures that an SBIC may issue to $150.0 million when it has at least $75.0 million in regulatory capital but this has increased to $175.0 million for new licenses when it has

at least $87.5 million in regulatory capital.

Affiliated SBICs are permitted to issue up to a combined maximum amount of $350.0 million in SBA-guaranteed debentures when they have at least

$175.0 million in combined regulatory capital.

On May 10, 2013, the Company issued $42.0 million in aggregate principal amount of 7.50% fixed-rate notes due 2020 (the 2020

The 2020 Notes will mature on May 31, 2020, and since May 31, 2016, may be redeemed in whole or in part at any time or from time to time at the Companys option.

Interest will be payable quarterly beginning

August 15, 2013.

On May 17, 2013, the Company closed an additional $6.3 million in aggregate principal amount of the 2020 Notes, pursuant to the full exercise of the underwriters option to purchase additional 2020 Notes.

2020 Notes were redeemed in full on January 13, 2017.

On May 29, 2015, the Company entered into a Debt Distribution Agreement

with Ladenburg Thalmann & Co.

through which the Company may offer for sale, from time to time, up to $20.0 million in aggregate principal amount of the 2020 Notes through an At-the-Market (ATM) offering.

Prior to the 2020 Notes being redeemed in full, the Company had sold 539,725 bonds with a principal of $13.5 million at an average price of $25.31 for aggregate

net proceeds of $13.4 million (net of transaction costs).

On December 21, 2016, the Company issued $74.5 million in aggregate

principal amount of our 6.75% fixed-rate notes due 2023 (the 2023 Notes) for net proceeds of $71.7 million after deducting underwriting commissions of approximately $2.3 million and offering costs of approximately

$0.5 million.

The issuance included the exercise of substantially all of the underwriters option to purchase an additional $9.8 million aggregate principal amount of 2023 Notes within 30 days.

Interest on the 2023 Notes is paid

quarterly in arrears on March 15, June 15, September 15 and December 15, at a rate of 6.75% per year, beginning March 30, 2017.

The 2023 Notes mature on December 30, 2023, and commencing December 21, 2019, may be redeemed in whole or in part at any

time or from time to time at our option.

The net proceeds from the offering were used to repay all of the outstanding indebtedness under the 2020 Notes, which amounted to $61.8 million, and for general corporate purposes in accordance with our

investment objective and strategies.

As of February 28, 2019, the carrying amount and fair value of the 2023 Notes was $74.5 million and $76.4 million, respectively.

On December 21, 2019 and February 7, 2020, the Company redeemed $50.0 million and $24.5 million, respectively, in

aggregate principal amount of the $74.5 million in aggregate principal amount of issued and outstanding 2023 Notes.

Upon the extinguishment of the 2023 Notes, the remaining unamortized deferred debt financing costs of $1.6 million

(including underwriting commissions and net of issuance premiums), was recorded within loss on debt extinguishment in the consolidated statements of operations for the year ended February 29, 2020 when the related 2023 Notes were extinguished.

The 2023 Notes were listed on the NYSE under the trading symbol SAB with a par value of $25.00 per share, and have been delisted following the redemption.

For the years ended February 28, 2019 and February 28, 2018, we recorded $5.0 million and $5.0 million, respectively, of

interest expense and $0.4 million and $0.4 million, respectively, of amortization of deferred financing cost related to the 2023 Notes.

2019, we recorded $0.6 million, $0.5 million and $0.5 million of amortization of deferred financing costs related to the SBA debentures,

respectively.

Interest expense and amortization of deferred financing costs are reported as interest and debt financing expense on the

consolidated statements of operations.

The weighted average interest rate during the years ended February 28, 2021, February 29, 2020

and February 28, 2019 on the outstanding borrowings of the SBA debentures was 3.25%, 3.23% and 3.20%, respectively.

During the years

ended February 28, 2021 and February 29, 2020, the average dollar amount of SBA debentures outstanding was $169.3 million and $150.0

million, respectively.

December 2015, the 2016 omnibus spending bill approved by Congress and signed into law by the President increased the amount of SBA-guaranteed

debentures that affiliated SBIC funds can have outstanding from $225.0 million to $350.0 million, subject to SBA approval.

SBA regulations

previously limited the amount of SBA-guaranteed debentures that an SBIC may issue to $150.0 million when it has at least $75.0 million

in regulatory capital but this has increased to $175.0 million for new licenses when it has at least $87.5 million in regulatory capital.

Affiliated SBICs are permitted to issue up to a combined maximum amount of $350.0 million in SBA-guaranteed debentures when they have

at least $175.0 million in combined regulatory capital.

May 10, 2013, the Company issued $42.0 million in aggregate principal amount of 7.50% fixed-rate notes due 2020 (the “2020 Notes”).

The 2020 Notes will mature on May 31, 2020, and since May 31, 2016, may be redeemed in whole or in part at any time or from time to time

at the Company’s option.

Interest will be payable quarterly beginning August 15, 2013.

On May 17, 2013, the Company closed an additional

$6.3 million in aggregate principal amount of the 2020 Notes, pursuant to the full exercise of the underwriters’

option to purchase

additional 2020 Notes.

The 2020 Notes were redeemed in full on January 13, 2017.

May 29, 2015, the Company entered into a Debt Distribution Agreement with Ladenburg Thalmann & Co.

through which the Company may

offer for sale, from time to time, up to $20.0 million in aggregate principal amount of the 2020 Notes through an At-the-Market (“ATM”)

Prior to the 2020 Notes being redeemed in full, the Company had sold 539,725 bonds with a principal of $13.5 million at an

average price of $25.31 for aggregate net proceeds of $13.4 million (net of transaction costs).

December 21, 2016, the Company issued $74.5 million in aggregate principal amount of our 6.75% fixed-rate notes due 2023 (the “2023

Notes”) for net proceeds of $71.7 million after deducting underwriting commissions of approximately $2.3 million and offering costs

of approximately $0.5 million.

The issuance included the exercise of substantially all of the underwriters’

option to purchase

an additional $9.8 million aggregate principal amount of 2023 Notes within 30 days.

Interest on the 2023 Notes is paid quarterly in arrears

on March 15, June 15, September 15 and December 15, at a rate of 6.75% per year, beginning March 30, 2017.

The 2023 Notes mature on December

30, 2023, and commencing December 21, 2019, may be redeemed in whole or in part at any time or from time to time at our option.

proceeds from the offering were used to repay all of the outstanding indebtedness under the 2020 Notes, which amounted to $61.8 million,

and for general corporate purposes in accordance with our investment objective and strategies.

The remaining unamortized deferred debt

financing costs of $1.5 million (including underwriting commissions and net of issuance premiums), was recorded within loss on debt extinguishment

in the consolidated statements of operations in the fourth quarter of the fiscal year ended February 28, 2017, when the related 2020

Notes were extinguished.

December 21, 2019 and February 7, 2020, the Company redeemed $50.0 million and $24.5 million, respectively, in aggregate principal amount

of the $74.5 million in aggregate principal amount of issued and outstanding 2023 Notes.

The 2023 Notes were listed on the NYSE under

the trading symbol “SAB”

with a par value of $25.00 per share, and have been delisted following the redemption.

the year ended February 28, 2019, we recorded $5.0 million of interest expense and $0.4 million of amortization of deferred

financing cost related to the 2023 Notes.

Interest expense and amortization of deferred financing cost are reported as interest and debt

financing expense on the consolidated statements of operations.

During the years ended February 28, 2019 and February 28, 2018, the average dollar amount of 2023 Notes outstanding was $74.5 million and $74.5 million,

respectively.

On August 28, 2018, the Company issued $40.0 million in aggregate principal amount of our 6.25% fixed-rate notes

due 2025 (the 2025 Notes) for net proceeds of $38.7 million after deducting underwriting commissions of approximately $1.3 million.

Offering costs incurred were approximately $0.3 million.

The issuance included the full

exercise of the underwriters option to purchase an additional $5.0 million aggregate principal amount of 2025 Notes within 30 days.

Interest on the 2025 Notes is paid quarterly in arrears on February 28, May 31, August 31 and

November 30, at a rate of 6.25% per year, beginning November 30, 2018.

The 2025 Notes mature on August 31, 2025 and commencing August 31, 2021, may be redeemed in whole or in part at any time or from time to time at our option.

proceeds from the offering were used for general corporate purposes in accordance with our investment objective and strategies.

During the years ended February 28, 2019 the average dollar amount

of 2023 Notes outstanding was $74.5 million.

August 28, 2018, the Company issued $40.0 million in aggregate principal amount of our 6.25% fixed-rate notes due 2025 (the “6.25%

2025 Notes”) for net proceeds of $38.7 million after deducting underwriting commissions of approximately $1.3 million.

costs incurred were approximately $0.3 million.

The issuance included the full exercise of the underwriters’

option to purchase

an additional $5.0 million aggregate principal amount of 6.25% 2025 Notes within 30 days.

Interest on the 6.25% 2025 Notes is paid quarterly

in arrears on February 28, May 31, August 31 and November 30, at a rate of 6.25% per year, beginning November 30, 2018.

The 6.25% 2025

Notes mature on August 31, 2025 and commencing August 31, 2021, may be redeemed in whole or in part at any time or from time to time

at our option.

The net proceeds from the offering were used for general corporate purposes in accordance with our investment objective

and strategies.

Financing costs of $1.6 million related to the 6.25% 2025 Notes have been capitalized and are being amortized over the

term of the 6.25% 2025 Notes.

On February 5, 2019, the Company completed a

re-opening and up-sizing of its existing 2025 Notes by issuing an additional $20.0 million in aggregate principal amount for net proceeds of $19.2 million

after deducting underwriting commissions of approximately $0.6 million and discount of $0.2 million.

February 5, 2019, the Company completed a re-opening and up-sizing of its existing 6.25% 2025 Notes by issuing an additional $20.0 million

in aggregate principal amount for net proceeds of $19.2 million after deducting underwriting commissions of approximately $0.6 million

and discount of $0.2 million.

Offering costs incurred were approximately $0.2 million.

The issuance included the full exercise of the underwriters option to

purchase an additional $2.5 million aggregate principal amount of 2025 Notes within 30 days.

Interest rate, interest payment dates and maturity remain unchanged from the existing 2025 Notes issued in August 2018.

The net proceeds from this

offering were used for general corporate purposes in accordance with our investment objective and strategies.

The financing costs and discount of $1.0 million related to the 2025 Notes have been capitalized and are being amortized over the term

of the 2025 Notes.

As of February 29, 2020, the total 2025 Notes outstanding was $60.0 million.

The 2025 Notes are listed on

the NYSE under the trading symbol SAF with a par value of $25.00 per share.

As of February 29, 2020, the carrying amount and fair value of the 2025 Notes was $60.0 million and $60.6 million, respectively.

The fair value of the

2025 Notes, which are publicly traded, is based upon closing market quotes as of the measurement date and would be classified as a Level 1 liability within the fair value hierarchy.

For the year ended February 29, 2020 and February 28, 2019, we recorded $3.7 million and $1.6 million, respectively, of

interest expense and $0.4 million and $0.2 million, respectively, of amortization of deferred financing costs related to the 2025 Notes.

Interest expense and amortization of deferred financing cost are reported as interest and debt

financing expense on the consolidated statements of operations.

For the year ended February 29, 2020 and February 28, 2019, the average dollar amount of 2025 Notes outstanding was $60 million and $25 million, respectively.

As noted above, on December 21, 2019 and February 7, 2020, the Company redeemed $50.0 million and $24.5 million,

respectively, in aggregate principal amount of the $74.5 million in aggregate principal amount of issued and outstanding 2023 Notes.

As of February 28, 2019, the carrying amount and fair value of the 2023 Notes was $74.5 million and

$76.4 million, respectively.

Senior Securities

Information about our senior securities is shown in the following table as of February 28/29 for the fiscal years indicated in the table,

unless otherwise noted.

See Managements Discussion and Analysis of Financial Condition and Results of OperationsFinancial condition, liquidity and capital resources for more detailed information regarding the senior

The issuance included the full exercise of the

underwriters’

option to purchase an additional $2.5 million aggregate principal amount of 6.25% 2025 Notes within 30 days.

rate, interest payment dates and maturity remain unchanged from the existing 6.25% 2025 Notes issued in August 2018.

The net proceeds

from this offering were used for general corporate purposes in accordance with our investment objective and strategies.

The financing

costs and discount of $1.0 million related to the 6.25% 2025 Notes have been capitalized and are being amortized over the term of the

6.25% 2025 Notes.

of February 28, 2021, the total 6.25% 2025 Notes outstanding was $60.0 million.

The 6.25% 2025 Notes are listed on the NYSE under the

trading symbol “SAF”

with a par value of $25.00 per share.

As of February 28, 2021, the carrying amount and fair value of

the 6.25% 2025 Notes was $60.0 million and $61.2 million, respectively.

The fair value of the 6.25% 2025 Notes, which are publicly traded,

is based upon closing market quotes as of the measurement date and would be classified as a Level 1 liability within the fair value hierarchy.

discussed above, during the fourth quarter of 2020 fiscal year, the Company redeemed $74.45 million in aggregate principal amount of

issued outstanding 2023 Notes.

June 24, 2020, the Company issued $37.5 million in aggregate principal amount of our 7.25% fixed-rate notes due 2025 (the “7.25%

2025 Notes”) for net proceeds of $36.3 million after deducting underwriting commissions of approximately $1.2 million.

costs incurred were approximately $0.3 million.

On July 6, 2020, the underwriters exercised their option in full to purchase an additional

$5.625 million in aggregate principal amount of its 7.25% 2025 Notes.

Net proceeds to the Company were $5.4 million after deducting underwriting

commissions of approximately $0.2 million.

Interest on the 7.25% 2025 Notes is paid quarterly in arrears on February 28, May 31, August

31 and November 30, at a rate of 7.25% per year, beginning August 31, 2020.

The 7.25% 2025 Notes mature on June 30, 2025 and commencing

June 24, 2022, may be redeemed in whole or in part at any time or from time to time at our option.

The net proceeds from the offering

were used for general corporate purposes in accordance with our investment objective and strategies.

Financing costs of $1.6 million

related to the 7.25% 2025 Notes have been capitalized and are being amortized over the term of the 7.25% 2025 Notes.

of February 28, 2021, the total 7.25% Notes 2025 outstanding was $43.1 million.

The 7.25% 2025 Notes are listed on the NYSE under the

trading symbol “SAK”

with a par value of $25.00 per share.

As of February 28, 2021, the carrying amount and fair value of

the 7.25% 2025 Notes was $43.1 million and $45.7 million, respectively.

The fair value of the 7.25% 2025 Notes, which are publicly traded,

is based upon closing market quotes as of the measurement date and would be classified as a Level 1 liability within the fair value hierarchy.

the years ended February 28, 2021 and February 29, 2020, we recorded $2.2 million and $0.0 million, respectively, of interest expense

and $0.2 million and $0.0 million, respectively, of amortization of deferred financing costs related to the 7.25% 2025 Notes.

expense and amortization of deferred financing cost are reported as interest and debt financing expense on the consolidated statements

of operations.

For the year ended February 28, 2021 and February 29, 2020, the average dollar amount of 7.25% 2025 Notes outstanding

was $43.1 million and $0.0 million, respectively.

July 9, 2020, the Company issued $5.0 million aggregate principal amount of our 7.75% fixed-rate notes due in 2025 (the “7.75%

Notes 2025”) for net proceeds of $4.8 million after deducting underwriting commissions of approximately $0.2 million.

costs incurred were approximately $0.1 million.

Interest on the 7.75% Notes 2025 is paid quarterly in arrears on February 28, May 31,

August 31 and November 30, at a rate of 7.75% per year, beginning August 31, 2020.

The 7.75% Notes 2025 mature on July 9, 2025 and may

be redeemed in whole or in part at any time or from time to time at our option.

The net proceeds from the offering were used for general

corporate purposes in accordance with our investment objective and strategies.

Financing costs of $0.3 million related to the 7.75% Notes

2025 have been capitalized and are being amortized over the term of the Notes.

of February 28, 2021, the total 7.75% Notes 2025 outstanding was $5.0 million.

The 7.75% Notes 2025 are not listed and have a par value

of $25.00 per share.

The carrying amount of the amount outstanding of 7.75% 2025 Notes approximates its fair value, which is based on

a waterfall analysis showing adequate collateral coverage and would be classified as a Level 3 liability within the fair value hierarchy.

the years ended February 28, 2021 and February 29, 2020, we recorded $0.3 million and $0.0 million, respectively, of interest expense

and $0.04 million and $0.0 million, respectively, of amortization of deferred financing costs related to the 7.75% 2025 Notes.

expense and amortization of deferred financing cost are reported as interest and debt financing expense on the consolidated statements

of operations.

For the year ended February 28, 2021 and February 29, 2020, the average dollar amount of 7.75% 2025 Notes outstanding

was $5.0 million and $0.0 million, respectively.

December 29, 2020, the Company issued $5.0 million aggregate principal amount of our 6.25% fixed-rate notes due in 2027 (the “6.25%

Notes 2027”).

Offering costs incurred were approximately $0.1 million.

Interest on the 6.25% Notes 2027 is paid

quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 6.25% per year, beginning February

The 6.25% Notes 2027 mature on December 29, 2027 and may be redeemed in whole or in part at any time or from time to time at

our option, on or after December 29, 2024.

The net proceeds from the offering were used for general corporate purposes in accordance

with our investment objective and strategies.

Financing costs of $0.1 million related to the 6.25% Notes 2027 have been capitalized

and are being amortized over the term of the Notes.

January 28, 2021, the Company issued $10.0 million aggregate principal amount of our 6.25% fixed rate Notes due in 2027 (the

“6.25% Notes 2027”) for net proceeds of $9.7 million after deducting underwriting commissions of approximately

$0.3 million.

Offering costs incurred were approximately $0.0 million.

Interest on the 6.25% Notes 2027 is paid quarterly in

arrears on February 28, May 31, August 31 and November 30, at a rate of 6.25% per year, beginning February 28, 2021.

6.25% Notes 2027 mature on January 28, 2027 and commencing January 28, 2023, may be redeemed in whole or in part at any time

or from time to time at our option.

The net proceeds from the offering were used for general corporate purposes in accordance

with our investment objective and strategies.

Financing costs of $0.3 million related to the 6.25% Notes 2027 have been

capitalized and are being amortized over the term of the Notes.

of February 28, 2021, the total 6.25% Notes 2027 outstanding was $15.0 million.

The 6.25% 2027 Notes are not listed and have a par value

of $25.00 per share.

The carrying amount of the amount outstanding of 6.25% 2027 Notes approximates its fair value, which is based on

a waterfall analysis showing adequate collateral coverage and would be classified as a Level 3 liability within the fair value hierarchy.

the years ended February 28, 2021 and February 29, 2020, we recorded $0.1 million and $0.0 million, respectively, of interest expense

and $0.01 million and $0.0 million, respectively, of amortization of deferred financing costs related to the 6.25% 2027 Notes.

expense and amortization of deferred financing cost are reported as interest and debt financing expense on the consolidated statements

of operations.

For the year ended February 28, 2021 and February 29, 2020, the average dollar amount of 6.25% 2027 Notes outstanding

was $7.0 million and $0.0 million, respectively.

about our senior securities is shown in the following table as of February 28/29 for the fiscal years indicated in the table, unless

otherwise noted.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial

condition, liquidity and capital resources”

for more detailed information regarding the senior securities.

SENIOR SECURITIES

(dollar amounts in thousands, except per share data)

(dollar amounts in

thousands, except per share data)

Class and Year (1)(2)

Securities (3)

Outstanding Exclusive of Treasury Securities (3)

Asset Coverage

Liquidating Preference per Share (5)

Average Market

Value per Share (6)

(in thousands)

14 unchanged sentences

Fiscal year 2008 (as of February 29, 2008)

Fiscal year 2007 (as of February 28, 2007)

Notes due 2020 (7)

18 unchanged sentences

Fiscal year 2020 (as of February 29, 2020)

We have excluded our SBA-guaranteed debentures from this

table because the SEC has granted us exemptive relief that permits us to exclude such debentures from the definition of senior securities in the 200% asset coverage ratio we are required to maintain under the 1940 Act.

See Managements

Discussion and Analysis of Financial Condition and Results of OperationsFinancial Condition, Liquidity and Capital Resources.

This table does not include the senior securities of our predecessor entity, GSC Investment Corp., relating to

a revolving securitized credit facility with Deutsche Bank, in light of the fact that the Company was under different management during the time that such credit facility was outstanding.

Fiscal year 2019 (as of February 28, 2019)

7.25% Notes due 2025

Fiscal year 2021 (as of February 28, 2021)

7.75% Notes due 2025

Fiscal year 2021 (as of February 28, 2021)

6.25% Notes due 2027

Fiscal year 2021 (as of February 28, 2021)

We have excluded our SBA-guaranteed debentures from this table because the SEC has granted us exemptive relief that permits us to exclude such debentures from the definition of senior securities in the 150% asset coverage ratio we are required to maintain under the 1940 Act.

This table does not include the senior securities of our predecessor entity, GSC Investment Corp., relating to a revolving securitized credit facility with Deutsche Bank, in light of the fact that the Company was under different management during the time that such credit facility was outstanding.

Total amount of senior securities outstanding at the end of the period presented.

Asset coverage per unit is the ratio of our total assets, less all liabilities and indebtedness not represented

by senior securities, to the aggregate amount of senior securities representing indebtedness.

Asset coverage per unit is the ratio of our total assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness.

Asset coverage per unit is expressed in terms of dollar amounts per $1,000 of indebtedness, calculated on a total basis.

The amount to which such class of senior security would be entitled upon the involuntary liquidation of the

issuer in preference to any security junior to it.

The indicates information which the Securities and Exchange Commission expressly does not require to be disclosed for certain types of senior securities.

The amount to which such class of senior security would be entitled upon the involuntary liquidation of the issuer in preference to any security junior to it.

The “—”

indicates information which the Securities and Exchange Commission expressly does not require to be disclosed for certain types of senior securities.

Not applicable for credit facility because not registered for public trading.

On January 13, 2017, the Company redeemed in full its 2020 Notes.

The Company used a portion of the net

proceeds from the 2023 Notes offering, which was completed in December 2016, to redeem the 2020 Notes in full.

The Company used a portion of the net proceeds from the 2023 Notes offering, which was completed in December 2016, to redeem the 2020 Notes in full.

Based on the average daily trading price of the 2020 Notes on the NYSE.

On December 21, 2019 and February 7, 2020, the Company redeemed $50.0 million and

$24.5 million, respectively, in aggregate principal amount of the $74.5 million in aggregate principal amount of issued and outstanding 2023 Notes.

On December 21, 2019 and February 7, 2020, the Company redeemed $50.0 million and $24.45 million, respectively, in aggregate principal amount of the $74.45 million in aggregate principal amount of issued and outstanding 2023 Notes.

Based on the average daily trading price of the 2023 Notes on the NYSE.

Based on the average daily trading price of the 2025 Notes on the NYSE.

The carrying value of this unlisted security approximates its fair value, based on a waterfall analysis showing adequate collateral coverage.

Commitments and Contingencies

Contractual Obligations

The following

table shows our payment obligations for repayment of debt and other contractual obligations at February 29, 2020:

The following table shows our payment obligations for repayment of debt and other contractual obligations at February 28, 2021:

Payment Due by Period

3 unchanged sentences

SBA debentures

6.25% 2025 Notes

7.25% 2025 Notes

7.75% 2025 Notes

6.25% 2027 Notes

Total Long-Term Debt Obligations

Off-Balance Sheet Arrangements

At February 29, 2020 and February 28, 2019, the Companys off-balance sheet arrangements

consisted of $64.1 million and $4.5 million, respectively, of unfunded commitments outstanding to provide debt financing to its portfolio companies or to fund limited partnership interests.

Such commitments are generally up to the

Companys discretion to approve, or the satisfaction of certain financial and nonfinancial covenants and involve, to varying degrees, elements of credit risk in excess of the amount recognized in the Companys consolidated statements of

assets and liabilities and are not reflected in the Companys consolidated statements of assets and liabilities.

A summary of the

unfunded commitments outstanding as of February 29, 2020 and February 28, 2019 is shown in the table below (dollars in thousands):

February 29, 2020

February 28, 2019

At Companys discretion

Sheet Arrangements

February 28, 2021 and February 29, 2020, the Company’s off-balance sheet arrangements consisted of $58.8 million and $64.1 million,

respectively, of unfunded commitments outstanding to provide debt financing to its portfolio companies or to fund limited partnership

Such commitments are generally up to the Company’s discretion to approve, or the satisfaction of certain financial and

nonfinancial covenants and involve, to varying degrees, elements of credit risk in excess of the amount recognized in the Company’s

consolidated statements of assets and liabilities and are not reflected in the Company’s consolidated statements of assets and

A summary of the unfunded commitments outstanding as of February 28, 2021 and February 29, 2020 is shown in the table below (dollars in thousands):

At Company’s discretion

Book4Time, Inc.

CLEO Communications Holding, LLC

GreyHeller LLC

inMotionNow, Inc.

Netreo Holdings, LLC

Omatic Software, LLC

2 unchanged sentences

Saratoga Investment Corp.

CLO 2013-1 Warehouse 2,

CLO 2013-1 Warehouse 2, Ltd.

Top Gun Pressure Washing, LLC

Village Realty Holdings LLC

At portfolio companys discretion - satisfaction of certain financial and nonfinancial

covenants required

At portfolio company’s discretion - satisfaction of certain financial and nonfinancial covenants required

ArbiterSports, LLC

2 unchanged sentences

Davisware, LLC

Destiny Solutions Inc.

GDS Holdings US, Inc.

Granite Comfort, LP

HemaTerra Holding Company, LLC

New England Dental Partners

Passageways, Inc.

Procurement Partners, LLC

Village Realty Holdings LLC

Directors Fees

The independent directors each receive an annual fee of $60,000.

They also receive $2,500 plus reimbursement of reasonable out-of- pocket expenses incurred in connection with attending each board meeting and receive $1,000 plus reimbursement of reasonable out-of- pocket expenses incurred in connection with attending each committee meeting.

In addition, the chairman of the Audit Committee receives an annual fee of $10,000 and the chairman of each other

committee receives an annual fee of $5,000 for their additional services in these capacities.

In addition, we have purchased directors and officers liability insurance on behalf of our directors and officers.

Independent directors have

the option to receive their directors fees in the form of our common stock issued at a price per share equal to the greater of net asset value or the market price at the time of payment.

No compensation is paid to directors who are

interested persons of the Company (as such term is defined in the 1940 Act).

For the years ended February 29, 2020, February 28, 2019 and February 28, 2018, we incurred $0.3 million, $0.3 million and

$0.2 million for directors fees and expenses, respectively.

As of February 29, 2020 and February 28, 2019, $0.06 million and $0.06 million in directors fees and expenses were accrued and unpaid, respectively.

of February 29, 2020, we had not issued any common stock to our directors as compensation for their services.

Stockholders Equity

On May 16, 2006, GSC Group, Inc.

capitalized the LLC, by contributing $1,000 in exchange for 67 shares, constituting all of the

issued and outstanding shares of the LLC.

On March 20, 2007, the Company issued 95,995.5 and 8,136.2 shares of common stock, priced at

$150.00 per share, to GSC Group and certain individual employees of GSC Group, respectively, in exchange for the general partnership interest and a limited partnership interest in GSC Partners CDO III GP, LP, collectively valued at

$15.6 million.

At this time, the 6.7 shares owned by GSC Group in the LLC were exchanged for 6.7 shares of the Company.

March 28, 2007, the Company completed its IPO of 725,000 shares of common stock, priced at $150.00 per share, before underwriting discounts and commissions.

Total proceeds received from the IPO, net of $7.1 million in underwriters

discount and commissions, and $1.0 million in offering costs, were $100.7 million.

On July 30, 2010, our Manager and its

affiliates purchased 986,842 shares of common stock at $15.20 per share.

Total proceeds received from this sale were $15.0 million.

On August 12, 2010, we effected a one-for-ten reverse

stock split of our outstanding common stock.

As a result of the reverse stock split, every ten shares of our common stock were converted into one share of our common stock.

Any fractional shares received as a result of the reverse stock split were

redeemed for cash.

independent directors each receive an annual fee of $70,000.

They also receive $3,000 plus reimbursement of reasonable out-of-pocket

expenses incurred in connection with attending each board meeting and receive $1,500 plus reimbursement of reasonable out-of-pocket expenses

incurred in connection with attending each committee meeting.

In addition, the chairman of the Audit Committee receives an annual fee

of $12,500 and the chairman of each other committee receives an annual fee of $6,000 for their additional services in these capacities.

In addition, we have purchased directors’

and officers’

liability insurance on behalf of our directors and officers.

directors have the option to receive their directors’

fees in the form of our common stock issued at a price per share equal to

the greater of net asset value or the market price at the time of payment.

No compensation is paid to directors who are “interested

persons”

of the Company (as such term is defined in the 1940 Act).

For the years ended February 28, 2021, February 29, 2020 and

February 28, 2019, we incurred $0.3 million, $0.3 million and $0.3 million for directors’

fees and expenses, respectively.

February 28, 2021 and February 29, 2020, $0.07 million and $0.06 million in directors’

fees and expenses were accrued and unpaid,

respectively.

As of February 28, 2021, we had not issued any common stock to our directors as compensation for their services.

Stockholders’

May 16, 2006, GSC Group, Inc.

capitalized the LLC, by contributing $1,000 in exchange for 67 shares, constituting all of the issued and

outstanding shares of the LLC.

March 20, 2007, the Company issued 95,995.5 and 8,136.2 shares of common stock, priced at $150.00 per share, to GSC Group and certain

individual employees of GSC Group, respectively, in exchange for the general partnership interest and a limited partnership interest

in GSC Partners CDO III GP, LP, collectively valued at $15.6 million.

At this time, the 6.7 shares owned by GSC Group in the LLC were

exchanged for 6.7 shares of the Company.

March 28, 2007, the Company completed its IPO of 725,000 shares of common stock, priced at $150.00 per share, before underwriting discounts

and commissions.

Total proceeds received from the IPO, net of $7.1 million in underwriter’s discount and commissions, and $1.0

million in offering costs, were $100.7 million.

July 30, 2010, our Manager and its affiliates purchased 986,842 shares of common stock at $15.20 per share.

Total proceeds received from

this sale were $15.0 million.

August 12, 2010, we effected a one-for-ten reverse stock split of our outstanding common stock.

As a result of the reverse stock split,

every ten shares of our common stock were converted into one share of our common stock.

Any fractional shares received as a result of

the reverse stock split were redeemed for cash.

The total cash payment in lieu of shares was $230.

Immediately after the reverse stock split, we had 2,680,842 shares of our common stock outstanding.

On September 24, 2014, the Company announced the approval of an open market share repurchase plan that allowed it to repurchase up to

Immediately after the reverse stock

split, we had 2,680,842 shares of our common stock outstanding.

September 24, 2014, the Company announced the approval of an open market share repurchase plan that allowed it to repurchase up to 200,000

shares of its common stock at prices below its NAV as reported in its then most recently published consolidated financial statements

On October 7, 2015, the Companys board of directors extended the open market share repurchase

plan for another year and increased the number of shares the Company is permitted to repurchase at prices below its NAV, as reported in its then most recently published consolidated financial statements, to 400,000 shares of its common stock.

October 5, 2016, the Companys board of directors extended the open market share repurchase plan for another year to October 15, 2017 and increased the number of shares the Company is permitted to repurchase at prices below its NAV,

as reported in its then most recently published consolidated financial statements, to 600,000 shares of its common stock.

On October 10, 2017, January 8, 2019 and January 7, 2020, the Companys board of directors extended the

open market share repurchase plan for another year to October 15, 2018, January 15, 2020 and January 15, 2021, respectively, each time leaving the number of shares unchanged at 600,000 shares of its common stock.

On May 4, 2020,

the Board of Directors increased the share repurchase plan to 1.3 million shares of common stock.

As of February 29, 2020, the Company purchased 218,491 shares of common stock, at the average price of $16.87 for approximately

$3.7 million pursuant to this repurchase plan.

On March 16, 2017, we entered into an equity distribution agreement with Ladenburg

Thalmann & Co.

Inc., through which we may offer for sale, from time to time, up to $30.0 million of our common stock through an ATM offering.

Subsequent to this, BB&T Capital Markets and B.

(the “Share Repurchase Plan”).

On October 7, 2015, our board of directors extended the Share Repurchase Plan for another

year and increased the number of shares the Company is permitted to repurchase at prices below its NAV, as reported in its then most

recently published consolidated financial statements, to 400,000 shares of its common stock.

On October 5, 2016, our board of directors

extended the Share Repurchase Plan for another year to October 15, 2017 and increased the number of shares the Company is permitted to

repurchase at prices below its NAV, as reported in its then most recently published consolidated financial statements, to 600,000 shares

of its common stock.

On October 10, 2017, January 8, 2019 and January 7, 2020, our board of directors extended the Share Repurchase Plan

for another year to October 15, 2018, January 15, 2020 and January 15, 2021, respectively, each time leaving the number of shares unchanged

at 600,000 shares of its common stock.

On May 4, 2020, our board of directors increased the Share Repurchase Plan to 1.3 million shares

of common stock.

On January 5, 2021, our board of directors extended the Shares Repurchase Plan for another year to January 15, 2022,

leaving the number of shares unchanged at 1.3 million shares of common stock.

As of February 28, 2021, the Company purchased 408,812

shares of common stock, at the average price of $17.84 for approximately $7.3 million pursuant to the Share Repurchase Plan.

year ended February 28, 2021 the Company purchased 190,321 shares of common stock, at the average price $18.96 for approximately $3.6

million pursuant to the Share Repurchase Plan.

March 16, 2017, we entered into an equity distribution agreement with Ladenburg Thalmann & Co.

Inc., through which we may offer for

sale, from time to time, up to $30.0 million of our common stock through an ATM offering.

Subsequent to this, BB&T Capital Markets

Riley FBR, Inc.

were also added to the

On July 11, 2019, the amount of the common stock to be offered was increased to $70.0 million, and on October 8, 2019, the amount of the common stock to be offered was increased to $130.0 million.

February 29, 2020, the Company sold 3,922,018 shares for gross proceeds of $97.1 million at an average price of $24.77 for aggregate net proceeds of $95.9 million (net of transaction costs).

For the year ended February 29, 2020,

the Company sold 3,427,346 shares for gross proceeds of $85.9 million at an average price of $25.06 for aggregate net proceeds of $84.7 million (net of transaction costs).

On July 13, 2018, the Company issued 1,150,000 shares of its common stock priced at $25.00 per share (par value $0.001 per share) at an

were also added to the agreement.

On July 9, 2019, the amount of the common stock to be offered through this offering

was increased to $70.0 million, and on October 8, 2019, the amount of the common stock to be offered was increased to $130.0 million.

As of February 28, 2021, the Company sold 3,922,018 shares for gross proceeds of $97.1 million at an average price of $24.77 for aggregate

net proceeds of $95.9 million (net of transaction costs).

For the year ended February 28, 2021, there was no activity related to the

ATM offerings.

July 13, 2018, the Company issued 1,150,000 shares of its common stock priced at $25.00 per share (par value $0.001 per share) at an

aggregate total of $28.75 million.

The net proceeds, after deducting underwriting commissions of $1.15 million and offering costs of approximately $0.2 million, amounted to approximately $27.4 million.

The Company also

granted the underwriters a 30-day option to purchase up to an additional 172,500 shares of its common stock, which was not exercised.

The Company elected early adoption of Rule 3-04/Rule

8-03(a)(5) under Regulation S-X (Note 2).

Pursuant to the regulation, the Company has presented a reconciliation of the changes in each significant caption of

stockholders equity for each of the three fiscal years ended February 29, 2020, February 28, 2019 and February 28, 2018, as shown in the tables below:

For the Year Ended February 29, 2020

The net proceeds, after deducting underwriting commissions of $1.15 million and offering costs

of approximately $0.2 million, amounted to approximately $27.4 million.

The Company also granted the underwriters a 30-day option

to purchase up to an additional 172,500 shares of its common stock, which was not exercised.

The Company adopted Rule 3-04/Rule 8-03(a)(5) under Regulation S-X (Note 2).

Pursuant to the regulation, the Company has presented a reconciliation of the changes in each significant caption of stockholders’

equity as shown in the tables below:

Distributable

Earnings (Loss)

Balance at February 29, 2020

$ 289,476,991

$ 304,286,853

Increase (Decrease) from Operations:

2 unchanged sentences

Net change in unrealized appreciation (depreciation) on investments

Net change in provision for deferred taxes on unrealized (appreciation) depreciation on

(31,950,369 )

Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments

Decrease from Shareholder Distributions:

Distributions of investment income net

Distributions of investment income –

Capital Share Transactions:

4 unchanged sentences

Balance at May 31, 2020

$ 289,476,991

$ (7,857,191 )

$ 281,631,018

Increase (Decrease) from Operations:

2 unchanged sentences

Net change in unrealized appreciation (depreciation) on investments

Net change in provision for deferred taxes on unrealized (appreciation) depreciation on

Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments

Decrease from Shareholder Distributions:

Distributions of investment income net

Distributions of investment income –

Capital Share Transactions:

2 unchanged sentences

Repurchases of common stock

Repurchase fees

Offering costs

Balance at August 31, 2020

$ 288,699,868

$ 298,177,358

Increase (Decrease) from Operations:

1 unchanged sentence

Net realized gain (loss) from investments

Income tax (provision) benefit from realized gain on investments

Net change in unrealized appreciation (depreciation) on investments

Net change in provision for deferred taxes on unrealized (appreciation) depreciation on

Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments

Decrease from Shareholder Distributions:

Distributions of investment income net

Distributions of investment income –

Capital Share Transactions:

2 unchanged sentences

Repurchases of common stock

Repurchase fees

Offering costs

Balance at November 30, 2020

$ 288,590,554

$ 299,852,890

Increase (Decrease) from Operations:

1 unchanged sentence

Net realized gain (loss) from investments

Income tax (provision) benefit from realized gain on investments

Realized losses on extinguishment of debt

Net change in unrealized appreciation (depreciation) on investments

Net change in provision for deferred taxes on unrealized (appreciation) depreciation on

Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments

Decrease from Shareholder Distributions:

Distributions of investment income net

Distributions of investment income –

Capital Share Transactions:

2 unchanged sentences

Repurchases of common stock

Repurchase fees

Offering costs

Tax reclassification of stockholders equity in accordance with generally accepted accounting

Tax reclassification of stockholders’

equity in accordance with generally accepted accounting principles

(16,529,030 )

Balance at February 28, 2021

$ 304,874,957

$ 304,185,770

Earnings Per Share

In accordance with the provisions of FASB ASC 260, Earnings per Share (ASC 260), basic earnings per share is

computed by dividing earnings available to common shareholders by the weighted average number of shares outstanding during the period.

Other potentially dilutive common shares, and the related impact to earnings, are considered when calculating

earnings per share on a diluted basis.

The following information sets forth the computation of the weighted average basic and diluted net

increase in net assets resulting from operations per share for the years ended February 29, 2020, February 28, 2019 and February 28, 2018 (dollars in thousands except share and per share amounts):

accordance with the provisions of FASB ASC Topic 260, “

Earnings per Share ”

(“ASC 260”), basic earnings

per share is computed by dividing earnings available to common shareholders by the weighted average number of shares outstanding during

Other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per

share on a diluted basis.

The following information sets forth the computation of the weighted average basic and diluted net increase in net assets resulting from operations per share for the years ended February 28, 2021, February 29, 2020 and February 28, 2019 (dollars in thousands except share and per share amounts):

Basic and Diluted

2 unchanged sentences

Weighted average earnings per common share

On January 7, 2020, the Company declared a dividend of $0.56 per share, which was paid on February 6, 2020, to common stockholders of

record on January 24, 2020.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to the Companys DRIP.

Based on shareholder elections, the dividend consisted of approximately

$5.4 million in cash and 35,682 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising the stock portion was calculated based on a price of

$25.44 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on January 24, 27, 28, 29, 30, 31 and February 3, 4, 5 and 6, 2020.

On August 27, 2019, the Company declared a dividend of $0.56 per share, which was paid on September 26, 2019, to common stockholders

of record on September 13, 2019.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to the Companys DRIP.

Based on shareholder elections, the dividend consisted of

approximately $4.5 million in cash and 34,575 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising the stock portion was calculated based on

a price of $23.34 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on September 13, 16, 17, 18, 19, 20, 23, 24, 25 and 26, 2019.

On May 28, 2019, the Company declared a dividend of $0.55 per share, which was paid on June 27, 2019, to common stockholders of

record on June 13, 2019.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to the Companys DRIP.

Based on shareholder elections, the dividend consisted of approximately

$3.6 million in cash and 31,545 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising the stock portion was calculated based on a price of

$22.65 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on June 14, 17, 18, 19, 20, 21, 24, 25, 26 and 27, 2019.

On February 26, 2019, our board of directors declared a dividend of $0.54 per share, which was paid on March 28, 2019, to common

stockholders of record as of March 14, 2019.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP.

Based on shareholder elections, the dividend consisted of

approximately $3.5 million in cash and 31,240 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising the stock portion was calculated based on

a price of $21.36 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on March 15, 18, 19, 20, 21, 22, 25, 26, 27 and 28, 2019.

On November 27, 2018, the Company declared a dividend of $0.53 per share, which was paid on January 2, 2019, to common stockholders

of record on December 17, 2018.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to the Companys DRIP.

Based on shareholder elections, the dividend consisted of

approximately $3.4 million in cash and 30,797 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising the stock portion was calculated based on

a price of $18.88 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on December 18, 19, 20, 21, 24, 26, 27, 28, 31, 2018 and January 2, 2019.

On August 28, 2018, the Company declared a dividend of $0.52 per share, which was paid

on September 27, 2018, to common stockholders of record as of September 17, 2018.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP.

Based on shareholder

elections, the dividend consisted of approximately $3.3 million in cash and 25,863 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising the

stock portion was calculated based on a price of $22.35 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on September 14, 17, 18, 19, 20, 21, 24, 25, 26 and 27, 2018.

On May 30, 2018, the Company declared a dividend of $0.51 per share, which was paid on June 27, 2018, to common stockholders of

record as of June 15, 2018.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP.

Based on shareholder elections, the dividend consisted of approximately

$2.7 million in cash and 21,563 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising the stock portion was calculated based on a price of

$23.72 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on June 14, 15, 18, 19, 20, 21, 22, 25, 26 and 27, 2018.

On February 26, 2018, the Company declared a dividend of $0.50 per share, which was paid on March 26, 2018, to common stockholders

January 5, 2021, our board of directors declared a dividend of $0.42 per share, which was paid on February 10, 2021, to common stockholders

of record as of January 26, 2021.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common

stock, pursuant to the DRIP.

Based on shareholder elections, the dividend consisted of approximately $3.8 million in cash and 41,388

newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment.

The number of shares of common

stock comprising the stock portion was calculated based on a price of $21.75 per share, which equaled 95% of the volume weighted average

trading price per share of the common stock on January 28, 29 and February 1, 2, 3, 4, 5, 8, 9 and 10, 2021.

October 7, 2020, our board of directors declared a dividend of $0.41 per share, which was paid on November 10, 2020, to common stockholders

of record as of October 26, 2020.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common

stock, pursuant to the DRIP.

Based on shareholder elections, the dividend consisted of approximately $3.8 million in cash and 45,706

newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment.

The number of shares of common

stock comprising the stock portion was calculated based on a price of $17.63 per share, which equaled 95% of the volume weighted average

trading price per share of the common stock on October 28, 29, 30 and November 2, 3, 4, 5, 6, 9, and 10, 2020.

July 7, 2020, our board of directors declared a dividend of $0.40 per share, which was paid on August 12, 2020, to common stockholders

of record as of July 27, 2020.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock,

pursuant to the DRIP.

Based on shareholder elections, the dividend consisted of approximately $3.7 million in cash and 47,098 newly issued

shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising

the stock portion was calculated based on a price of $16.45 per share, which equaled 95% of the volume weighted average trading price

per share of the common stock on July 30, 31 and August 3, 4, 5, 6, 7, 10, 11 and 12, 2020.

the three months ended May 31, 2020, there were no dividends declared.

January 7, 2020, the Company declared a dividend of $0.56 per share, which was paid on February 6, 2020, to common stockholders of record

on January 24, 2020.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant

to the Company’s DRIP.

Based on shareholder elections, the dividend consisted of approximately $5.4 million in cash and 35,682

newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment.

The number of shares of common

stock comprising the stock portion was calculated based on a price of $25.44 per share, which equaled 95.0% of the volume weighted average

trading price per share of the common stock on January 24, 27, 28, 29, 30, 31 and February 3, 4, 5 and 6, 2020.

August 27, 2019, the Company declared a dividend of $0.56 per share, which was paid on September 26, 2019, to common stockholders of

record on September 13, 2019.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock,

pursuant to the Company’s DRIP.

Based on shareholder elections, the dividend consisted of approximately $4.5 million in cash and

34,575 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment.

The number of shares

of common stock comprising the stock portion was calculated based on a price of $23.34 per share, which equaled 95.0% of the volume weighted

average trading price per share of the common stock on September 13, 16, 17, 18, 19, 20, 23, 24, 25 and 26, 2019.

May 28, 2019, the Company declared a dividend of $0.55 per share, which was paid on June 27, 2019, to common stockholders of record on

June 13, 2019.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to

the Company’s DRIP.

Based on shareholder elections, the dividend consisted of approximately $3.6 million in cash and 31,545 newly

issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment.

The number of shares of common

stock comprising the stock portion was calculated based on a price of $22.65 per share, which equaled 95.0% of the volume weighted average

trading price per share of the common stock on June 14, 17, 18, 19, 20, 21, 24, 25, 26 and 27, 2019.

February 26, 2019, our board of directors declared a dividend of $0.54 per share, which was paid on March 28, 2019, to common stockholders

of record as of March 14, 2019.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP.

Based on shareholder elections, the dividend consisted of approximately

$2.6 million in cash and 25,355 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising the stock portion was calculated based on a price of

$19.91 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on March 13, 14, 15, 16, 19, 20, 21, 22, 23 and 26, 2018.

On November 29, 2017, the Company declared a dividend of $0.49 per share, which was paid on December 27, 2017, to common stockholders of

record on December 15, 2017.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant the Companys DRIP.

Based on shareholder elections, the dividend consisted of approximately

$2.5 million in cash and 25,435 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising the stock portion was calculated based on a price of

$21.14 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on December 13, 14, 15, 18, 19, 20, 21, 22, 26 and 27, 2017.

On August 28, 2017, the Company declared a dividend of $0.48 per share, which was paid on September 26, 2017, to common stockholders of record

as of September 15, 2017.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP.

Based on shareholder elections, the dividend consisted of approximately $2.2 million in

cash and 33,551 newly issued shares of common stock, or 0.6% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising the stock portion was calculated based on a price of $20.19 per share, which

equaled 95.0% of the volume weighted average trading price per share of the common stock on September 13, 14, 15, 18, 19, 20, 21, 22, 25 and 26, 2017.

On May 30, 2017, the Company declared a dividend of $0.47 per share, which was paid on June 27, 2017, to common stockholders of record as

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock,

pursuant to our DRIP.

Based on shareholder elections, the dividend consisted of approximately $3.5 million in cash and 31,240 newly issued

shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising

the stock portion was calculated based on a price of $21.36 per share, which equaled 95.0% of the volume weighted average trading price

per share of the common stock on March 15, 18, 19, 20, 21, 22, 25, 26, 27 and 28, 2019.

November 27, 2018, the Company declared a dividend of $0.53 per share, which was paid on January 2, 2019, to common stockholders of record

on December 17, 2018.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant

to the Company’s DRIP.

Based on shareholder elections, the dividend consisted of approximately $3.4 million in cash and 30,797

newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment.

The number of shares of common

stock comprising the stock portion was calculated based on a price of $18.88 per share, which equaled 95.0% of the volume weighted average

trading price per share of the common stock on December 18, 19, 20, 21, 24, 26, 27, 28, 31, 2018 and January 2, 2019.

August 28, 2018, the Company declared a dividend of $0.52 per share, which was paid on September 27, 2018, to common stockholders of

record as of September 17, 2018.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common

stock, pursuant to our DRIP.

Based on shareholder elections, the dividend consisted of approximately $3.3 million in cash and 25,863

newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment.

The number of shares of common

stock comprising the stock portion was calculated based on a price of $22.35 per share, which equaled 95.0% of the volume weighted average

trading price per share of the common stock on September 14, 17, 18, 19, 20, 21, 24, 25, 26 and 27, 2018.

May 30, 2018, the Company declared a dividend of $0.51 per share, which was paid on June 27, 2018, to common stockholders of record as

of June 15, 2018.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant

Based on shareholder elections, the dividend consisted of approximately $2.7 million in cash and 21,563 newly issued shares

of common stock, or 0.3% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising

the stock portion was calculated based on a price of $23.72 per share, which equaled 95.0% of the volume weighted average trading price

per share of the common stock on June 14, 15, 18, 19, 20, 21, 22, 25, 26 and 27, 2018.

February 26, 2018, the Company declared a dividend of $0.50 per share, which was paid on March 26, 2018, to common stockholders of record

as of March 14, 2018.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant

Based on shareholder elections, the dividend consisted of approximately $2.6 million in cash and 25,355 newly issued shares

of common stock, or 0.4% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising

the stock portion was calculated based on a price of $19.91 per share, which equaled 95.0% of the volume weighted average trading price

per share of the common stock on March 13, 14, 15, 16, 19, 20, 21, 22, 23 and 26, 2018.

November 29, 2017, the Company declared a dividend of $0.49 per share, which was paid on December 27, 2017, to common stockholders of

record on December 15, 2017.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock,

pursuant the Company’s DRIP.

Based on shareholder elections, the dividend consisted of approximately $2.5 million in cash and 25,435

newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising the stock portion was calculated based on a price of $20.04 per share, which equaled

95.0% of the volume weighted average trading price per share of the common stock on June 14, 15, 16, 19, 20, 21, 22, 23, 26 and 27, 2017.

On February 28, 2017, the Company declared a dividend of $0.46 per share, which was paid on March 28, 2017, to common stockholders of record

The number of shares of common

stock comprising the stock portion was calculated based on a price of $21.14 per share, which equaled 95.0% of the volume weighted average

trading price per share of the common stock on December 13, 14, 15, 18, 19, 20, 21, 22, 26 and 27, 2017.

August 28, 2017, the Company declared a dividend of $0.48 per share, which was paid on September 26, 2017, to common stockholders of

record as of September 15, 2017.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common

stock, pursuant to our DRIP.

Based on shareholder elections, the dividend consisted of approximately $2.2 million in cash and 33,551

newly issued shares of common stock, or 0.6% of our outstanding common stock prior to the dividend payment.

The number of shares of common

stock comprising the stock portion was calculated based on a price of $20.19 per share, which equaled 95.0% of the volume weighted average

trading price per share of the common stock on September 13, 14, 15, 18, 19, 20, 21, 22, 25 and 26, 2017.

May 30, 2017, the Company declared a dividend of $0.47 per share, which was paid on June 27, 2017, to common stockholders of record as

of June 15, 2017.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant

Based on shareholder elections, the dividend consisted of approximately $2.3 million in cash and 26,222 newly issued shares

of common stock, or 0.4% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising

the stock portion was calculated based on a price of $20.04 per share, which equaled 95.0% of the volume weighted average trading price

per share of the common stock on June 14, 15, 16, 19, 20, 21, 22, 23, 26 and 27, 2017.

February 28, 2017, the Company declared a dividend of $0.46 per share, which was paid on March 28, 2017, to common stockholders of record

as of March 15, 2017.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP.

Based on shareholder elections, the dividend consisted of approximately $2.0 million in cash

and 29,096 newly issued shares of common stock, or 0.5% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising the stock portion was calculated based on a price of $21.38 per share, which

equaled 95.0% of the volume weighted average trading price per share of the common stock on March 15, 16, 17, 20, 21, 22, 23, 24, 27 and 28, 2017.

On January 12, 2017, the Company declared a dividend of $0.45 per share, which was paid

on February 9, 2017, to common stockholders of record as of January 31, 2017.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP.

Based on shareholder elections, the

dividend consisted of approximately $1.6 million in cash and 50,453 newly issued shares of common stock, or 0.9% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising the stock portion

was calculated based on a price of $20.25 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on January 27, 30, 31 and February 1, 2, 3, 6, 7, 8 and 9, 2017.

On October 5, 2016, the Company declared a dividend of $0.44 per share, which was paid on November 9, 2016, to common stockholders of record

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant

Based on shareholder elections, the dividend consisted of approximately $2.0 million in cash and 29,096 newly issued shares

of common stock, or 0.5% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising

the stock portion was calculated based on a price of $21.38 per share, which equaled 95.0% of the volume weighted average trading price

per share of the common stock on March 15, 16, 17, 20, 21, 22, 23, 24, 27 and 28, 2017.

January 12, 2017, the Company declared a dividend of $0.45 per share, which was paid on February 9, 2017, to common stockholders of record

as of January 31, 2017.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant

Based on shareholder elections, the dividend consisted of approximately $1.6 million in cash and 50,453 newly issued shares

of common stock, or 0.9% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising

the stock portion was calculated based on a price of $20.25 per share, which equaled 95.0% of the volume weighted average trading price

per share of the common stock on January 27, 30, 31 and February 1, 2, 3, 6, 7, 8 and 9, 2017.

October 5, 2016, the Company declared a dividend of $0.44 per share, which was paid on November 9, 2016, to common stockholders of record

as of October 31, 2016.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP.

Based on shareholder elections, the dividend consisted of approximately $1.5 million in

cash and 58,548 newly issued shares of common stock, or 1.0% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising the stock portion was calculated based on a price of $17.12 per share, which

equaled 95.0% of the volume weighted average trading price per share of the common stock on October 27, 28, 31 and November 1, 2, 3, 4, 7, 8 and 9, 2016.

On August 8, 2016, the Company declared a special dividend of $0.20 per share, which was paid on September 5, 2016, to common stockholders of

record as of August 24, 2016.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP.

Based on shareholder elections, the dividend consisted of approximately $0.7 million

in cash and 24,786 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising the stock portion was calculated based on a price of $17.06 per share,

which equaled 95.0% of the volume weighted average trading price per share of the common stock on August 22, 23, 24, 25, 26, 29, 30, 31 and September 1 and 2, 2016.

On July 7, 2016, the Company declared a dividend of $0.43 per share, which was paid on August 9, 2016, to common stockholders of record as of

July 29, 2016.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant

Based on shareholder elections, the dividend consisted of approximately $1.5 million in cash and 58,548 newly issued shares

of common stock, or 1.0% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising

the stock portion was calculated based on a price of $17.12 per share, which equaled 95.0% of the volume weighted average trading price

per share of the common stock on October 27, 28, 31 and November 1, 2, 3, 4, 7, 8 and 9, 2016.

August 8, 2016, the Company declared a special dividend of $0.20 per share, which was paid on September 5, 2016, to common stockholders

of record as of August 24, 2016.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common

stock, pursuant to our DRIP.

Based on shareholder elections, the dividend consisted of approximately $0.7 million in cash and 24,786

newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising the stock portion was calculated based on a price of $16.32 per share, which equaled

95.0% of the volume weighted average trading price per share of the common stock on July 27, 28, 29 and August 1, 2, 3, 4, 5, 8 and 9, 2016.

On March 31, 2016, the Company declared a dividend of $0.41 per share, which was paid on April 27, 2016, to common stockholders of record

The number of shares of common

stock comprising the stock portion was calculated based on a price of $17.06 per share, which equaled 95.0% of the volume weighted average

trading price per share of the common stock on August 22, 23, 24, 25, 26, 29, 30, 31 and September 1 and 2, 2016.

July 7, 2016, the Company declared a dividend of $0.43 per share, which was paid on August 9, 2016, to common stockholders of record

as of July 29, 2016.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant

Based on shareholder elections, the dividend consisted of approximately $1.5 million in cash and 58,167 newly issued shares

of common stock, or 1.0% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising

the stock portion was calculated based on a price of $16.32 per share, which equaled 95.0% of the volume weighted average trading price

per share of the common stock on July 27, 28, 29 and August 1, 2, 3, 4, 5, 8 and 9, 2016.

March 31, 2016, the Company declared a dividend of $0.41 per share, which was paid on April 27, 2016, to common stockholders of record

as of April 15, 2016.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP.

Based on shareholder elections, the dividend consisted of approximately $1.5 million in cash

and 56,728 newly issued shares of common stock, or 1.0% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising the stock portion was calculated based on a price of $15.43 per share, which

equaled 95.0% of the volume weighted average trading price per share of the common stock on April 14, 15, 18, 19, 20, 21, 22, 25, 26 and 27, 2016.

On January 12, 2016, the Company declared a dividend of $0.40 per share, which was paid on February 29, 2016, to common stockholders of

record on February 1, 2016.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP.

Based on shareholder elections, the dividend consisted of approximately $1.4 million in

cash and 66,765 newly issued shares of common stock, or 1.2% of the Companys outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising the stock portion was calculated based on a price of $13.11

per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on February 16, 17, 18, 19, 22, 23, 24, 25, 26 and 29, 2016.

On October 7, 2015, the Company declared a dividend of $0.36 per share, which was paid on November 30, 2015, to common stockholders of record

on November 2, 2015.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP.

Based on shareholder elections, the dividend consisted of approximately $1.1 million in cash

and 61,029 newly issued shares of common stock, or 1.1% of the Companys outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising the stock portion was calculated based on a price of $14.53 per

share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on November 16, 17, 18, 19, 20, 23, 24, 25, 27 and 30, 2015.

On July 8, 2015, the Company declared a dividend of $0.33 per share, which was paid on

August 31, 2015, to common stockholders of record on August 3, 2015.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP.

Based on shareholder elections, the dividend

consisted of approximately $1.1 million in cash and 47,861 newly issued shares of common stock, or 0.9% of the Companys outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising the stock

portion was calculated based on a price of $15.28 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on August 18, 19, 20, 21, 24, 25, 26, 27, 28 and 31, 2015.

On May 14, 2015, the Company declared a special dividend of $1.00 per share, which was paid on June 5, 2015, to common stockholders of

record on May 26, 2015.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP.

Based on shareholder elections, the dividend consisted of approximately $3.4 million

in cash and 126,230 newly issued shares of common stock, or 2.3% of the Companys outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising the stock portion was calculated based on a price of

$16.47 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on May 22, 26, 27, 28, 29 and June 1, 2, 3, 4, and 5, 2015.

On April 9, 2015, the Company declared a dividend of $0.27 per share, which was paid on May 29, 2015, to common stockholders of record on

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP.

Based on shareholder elections, the dividend consisted of approximately $0.9 million in cash and

33,766 newly issued shares of common stock, or 0.6% of the Companys outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising the stock portion was calculated based on a price of $16.78 per share,

which equaled 95.0% of the volume weighted average trading price per share of the common stock on May 15, 18, 19, 20, 21, 22, 26, 27, 28 and 29, 2015.

On September 24, 2014, the Company declared a dividend of $0.22 per share, which was paid on February 27, 2015.

Shareholders have the

option to receive payment of the dividend in cash, or receive shares of common stock pursuant to the Companys DRIP.

Based on shareholder elections, the dividend consisted of approximately $0.8 million in cash and 26,858 newly issued

shares of common stock, or 0.5% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising the stock portion was calculated based on a price of $14.97 per share, which equaled 95.0% of the volume

weighted average trading price per share of the common stock on February 13, 17, 18, 19, 20, 23, 24, 25, 26 and 27, 2015.

24, 2014, the Company declared a dividend of $0.18 per share, which was paid on November 28, 2014.

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock pursuant to the Companys DRIP.

on shareholder elections, the dividend consisted of approximately $0.6 million in cash and 22,283 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock

comprising the stock portion was calculated based on a price of $14.37 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on November 14, 17, 18, 19, 20, 21, 24, 25, 26 and 28, 2014.

On October 30, 2013, the Company declared a dividend of $2.65 per share, which was paid on December 27, 2013.

Shareholders had the option to

receive payment of the dividend in cash, shares of common stock, or a combination of cash and shares of common stock, provided that the aggregate cash payable to all shareholders was limited to approximately $2.5 million or $0.53 per share.

This dividend was declared in reliance on certain private letter rulings issued by the IRS concluding that a RIC may treat a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder may elect to receive his

or her entire distribution in either cash or stock of the RIC subject to a limitation on the aggregate amount of cash to be distributed to all stockholders, which limitation must be at least 20.0% of the aggregate declared distribution.

shareholder elections, the dividend consisted of approximately $2.5 million in cash and 649,500 shares of common stock, or 13.7% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising the

stock portion was calculated based on a price of $15.439 per share, which equaled the volume weighted average trading price per share of the common stock on December 11, 13, and 16, 2013.

On November 9, 2012, the Company declared a dividend of $4.25 per share, which was paid

on December 31, 2012.

Shareholders had the option to receive payment of the dividend in cash, shares of common stock, or a combination of cash and shares of common stock, provided that the aggregate cash payable to all shareholders was limited

to approximately $3.3 million or $0.85 per share.

Based on shareholder elections, the dividend consisted of approximately $3.3 million in cash and 853,455 shares of common stock, or 22.0% of our outstanding common stock prior to the

dividend payment.

The amount of cash elected to be received was greater than the cash limit of 20.0% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash.

number of shares of common stock comprising the stock portion was calculated based on a price of $15.444 per share, which equaled the volume weighted average trading price per share of the common stock on December 14, 17, and 19, 2012.

On November 15, 2011, the Company declared a dividend of $3.00 per share, which was paid on December 30, 2011.

Shareholders had the

option to receive payment of the dividend in cash, shares of common stock, or a combination of cash and shares of common stock, provided that the aggregate cash payable to all shareholders was limited to approximately $2.0 million or $0.60 per

Based on shareholder elections, the dividend consisted of approximately $2.0 million in cash and 599,584 shares of common stock, or 18.0% of our outstanding common stock prior to the dividend payment.

The amount of cash elected to be

received was greater than the cash limit of 20.0% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash.

The number of shares of common stock comprising the

stock portion was calculated based on a price of $13.1171 per share, which equaled the volume weighted average trading price per share of the common stock on December 20, 21 and 22, 2011.

On November 12, 2010, the Company declared a dividend of $4.40 per share, which was paid on December 29, 2010.

Shareholders had the option to

Based on shareholder elections, the dividend consisted of approximately $1.2 million in cash and 596,235 shares of common stock, or 22.0% of our outstanding common stock prior to the dividend payment.

The amount of cash elected to be received

was greater than the cash limit of 10.0% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash.

The number of shares of common stock comprising the stock

portion was calculated based on a price of $17.8049 per share, which equaled the volume weighted average trading price per share of the common stock on December 20, 21 and 22, 2010.

The consolidated financial statements for the period ended

November 30, 2010 have been retroactively adjusted to reflect the increase in common stock as a result of the dividend in accordance with the provisions of ASC 505-20-S50 regarding disclosure of a capital

structure change after the interim balance sheet but before the release of the financial statements.

On November 13, 2009, we declared a

dividend of $18.25 per share payable on December 31, 2009.

Shareholders had the option to receive payment of the dividend in cash, shares of common stock, or a combination of cash and shares of common stock, provided that the aggregate cash payable

to all shareholders was limited to $2.1 million or $2.50 per share.

Based on shareholder elections, the dividend consisted of $2.1 million in cash and 864,872.5 of newly issued shares of common stock.

The following tables summarize dividends declared for the years ended February 29,

2020, February 28, 2019, February 28, 2018, February 28, 2017 and February 29, 2016 (dollars in thousands except for share amounts):

Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant

Based on shareholder elections, the dividend consisted of approximately $1.5 million in cash and 56,728 newly issued shares

of common stock, or 1.0% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising

the stock portion was calculated based on a price of $15.43 per share, which equaled 95.0% of the volume weighted average trading price

per share of the common stock on April 14, 15, 18, 19, 20, 21, 22, 25, 26 and 27, 2016.

The following tables summarize dividends declared for the years ended February 28, 2021, February 29, 2020, February 28, 2019, February 28, 2018 and February 28, 2017 (dollars in thousands except for share amounts):

Date Declared

Amount per Share

Total Amount*

January 5, 2021

1 unchanged sentence

February 10, 2021

October 7, 2020

October 26, 2020

November 10, 2020

July 27, 2020

August 12, 2020

Total dividends declared

Date Declared

Amount per Share

Total Amount*

January 7, 2020

January 24, 2020

February 6, 2020

August 27, 2019

September 13, 2019

7 unchanged sentences

Date Declared

Amount per Share

Total Amount*

November 27, 2018

11 unchanged sentences

Date Declared

Amount per Share

Total Amount*

November 29, 2017

11 unchanged sentences

Date Declared

Amount per Share

Total Amount*

January 12, 2017

13 unchanged sentences

Total dividends declared

Date Declared

January 12, 2016

February 1, 2016

February 29, 2016

October 7, 2015

November 2, 2015

November 30, 2015

August 3, 2015

August 31, 2015

April 9, 2015

Total dividends declared

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

* Total amount is calculated based on the number of shares

outstanding at the date of record.

Financial Highlights

The following is a schedule of financial highlights as of and for the years ended February 29, 2020, February 28, 2019, February 28, 2018,

February 28, 2017 and February 29, 2016:

The following is a schedule of financial highlights as of and for the years ended February 28, 2021, February 29, 2020, February 28, 2019, February 28, 2018 and February 28, 2017:

Per share data

4 unchanged sentences

Net realized and unrealized gains (losses) on investments(1)

Realized losses on extinguishment of debt*

Net increase in net assets resulting from operations

2 unchanged sentences

Issuance of common stock above net asset value(2)

Repurchases of common stock(3)

Net asset value at end of period

Net assets at end of period

$ 304,185,770

$ 304,286,853

$ 180,875,187

$ 143,691,367

$ 127,294,777

Shares outstanding at end of period

4 unchanged sentences

Ratio of net investment income to average net assets(7)*

Ratio of operating expenses to average net assets

Ratio of loss on extinguishment of debt to average net assets(7)

Ratio of operating expenses to average net assets(7)

Ratio of incentive management fees to average net assets(7)

4 unchanged sentences

Average market value per unit

Credit Facility(8)

SBA Debentures(8)

Revolving Credit Facility(10)

SBA Debentures Payable(10)

7.50% Notes Payable 2020

6.75% Notes Payable 2023(11)

6.25% Notes Payable 2025

7.25% Notes Payable 2025

7.75% Notes Payable 2025(10)

6.25% Notes Payable 2027(10)

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

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

The continuous issuance of common stock may cause an incremental increase in net asset value per share due to

the sale of shares at the then prevailing public offering price and the receipt of net proceeds per share by the Company in excess of net asset value per share on each subscription closing date.

The per share data was derived by computing

(i) the sum of (A) the number of shares issued in connection with subscriptions and/or distribution reinvestment on each share transaction date multiplied by (B) the differences between the net proceeds per share and the net asset

value per share on each share transaction date, divided by (ii) the total shares outstanding during the period.

Represents the dilutive effect of issuing common stock below net asset value per share during the period in

connection with the satisfaction of the Companys annual RIC distribution requirement and may include the impact of the different share amounts used for different items (weighted average basic common shares outstanding for the corresponding

year and actual common shares outstanding at the end of the year) in the per common share data calculation and rounding impacts.

The continuous issuance of common stock may cause an incremental increase in net asset value per share due to the sale of shares at the then prevailing public offering price and the receipt of net proceeds per share by the Company in excess of net asset value per share on each subscription closing date.

The per share data was derived by computing (i) the sum of (A) the number of shares issued in connection with subscriptions and/or distribution reinvestment on each share transaction date multiplied by (B) the differences between the net proceeds per share and the net asset value per share on each share transaction date, divided by (ii) the total shares outstanding during the period.

Represents the

anti-dilutive impact on the net asset value per share (“NAV”) of the Company due to the repurchase of common shares.

Note 10, Stockholders’

See Note 12, Dividend.

Total investment return is calculated assuming a purchase of common shares at the current market value on the

first day and a sale at the current market value on the last day of the periods reported.

Dividends and distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the Companys DRIP.

investment return does not reflect brokerage commissions.

Total investment return is calculated assuming a purchase of common shares at the current net asset value on

the first day and a sale at the current net asset value on the last day of the periods reported.

Dividends and distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the Companys DRIP.

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

See Note 12, Dividend.

Total investment return is calculated assuming a purchase of common shares at the current market value on the first day and a sale at the current market value on the last day of the periods reported.

Dividends and distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the Company’s DRIP.

Total investment return does not reflect brokerage commissions.

Total investment return is calculated assuming a purchase of common shares at the current net asset value on the first day and a sale at the current net asset value on the last day of the periods reported.

Dividends and distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the Company’s DRIP.

Total investment return does not reflect brokerage commissions.

Ratios are annualized.

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

Asset coverage ratio per unit is the ratio of the carrying value of our total consolidated assets, less all

liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness.

Asset coverage ratio per unit is the ratio of the carrying value of our total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness.

Asset coverage ratio per unit is expressed in terms of dollar amounts per $1,000 of indebtedness.

coverage ratio per unit does not include unfunded commitments.

Asset coverage ratio per unit does not include unfunded commitments.

The inclusion of unfunded commitments in the calculation of the asset coverage ratio per unit would not cause us to be below the required amount of regulatory coverage.

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

The Revolving Credit Facility, SBA Debentures, 7.75% Notes Payable 2025 and 6.25% Notes Payable 2027 are not registered for public trading.

On December 21, 2019 and February 7, 2020, the Company redeemed $50.0 million and $24.5 million, respectively, in aggregate principal amount of the $74.5 million in aggregate principal amount of issued and outstanding 2023 Notes and are no longer listed on the NYSE.

Selected Quarterly Data (Unaudited)

3 unchanged sentences

Net realized and unrealized gain (loss)

Realized losses on extinguishment of debt*

Net increase in net assets resulting from operations

7 unchanged sentences

Net realized and unrealized gain (loss)

Realized losses on extinguishment of debt*

Net increase in net assets resulting from operations

12 unchanged sentences

Net asset value per common share

* Certain prior period amounts have been reclassified to conform

to current period presentation.

Subsequent Events

The Company has evaluated subsequent events through the filing of this Form 10-K and determined that there have been no events that have

occurred that would require adjustments to the Companys consolidated financial statements and disclosures in the consolidated financial statements except for the following:

We evaluated subsequent events from February 29, 2020 through May 6, 2020.

On March 11, 2020, the World Health Organization declared the novel

coronavirus (COVID-19) as a pandemic, and on March 13, 2020 the United States declared a national emergency with respect to COVID-19.

The outbreak of COVID-19 has severely impacted global economic activity and caused significant

volatility and negative pressure in financial markets.

The global impact of the outbreak has been rapidly evolving and many countries, including the United States, have reacted by instituting quarantines, mandating business and school closures and

restricting travel.

Such actions are creating disruption in global supply chains and adversely impacting a number of industries.

The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global

economic slowdown.

The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19.

Nevertheless, COVID-19 presents material uncertainty and risks with respect to the underlying value of

the Companys portfolio companies, the Companys business, financial condition, results of operations and cash flows, such as the potential negative impact to financing arrangements, company decisions to delay, defer and/or modify the

character of dividends in order to preserve liquidity, increased costs of operations, changes in law and/or regulation, and uncertainty regarding government and regulatory policy.

As of February 29, 2020, the Company valued its portfolio investments in conformity with U.S.

GAAP based on the facts and circumstances known

by the Company at that time, or reasonably expected to be known at that time.

Due to the overall volatility that the COVID-19 pandemic has caused during the months that followed our February 29, 2020 valuation, any valuations conducted now or in the

future in conformity with U.S.

GAAP could result in a lower fair value of our portfolio.

The potential impact to our results will depend

to a large extent on future developments and new information that may emerge regarding the duration and severity of COVID-19 and the actions taken by authorities and other entities to contain the coronavirus or treat its impact, all of which are

beyond our control.

Accordingly, the Company cannot predict the extent to which its financial condition and results of operations will be affected at this time.

Credit Facility

On April 24, 2020, we

entered into a fourth amendment to the Credit Facility with Madison Capital Funding LLC to, among other things:

permit certain amendments related to the Paycheck Protection Program (Permitted PPP Amendment) to

Loan Asset Documents;

exclude certain debt and interest amounts allowed by the Permitted PPP Amendments from certain calculations

related to Net Leverage Ratio, Interest Coverage Ratio and EBITDA;

exclude such Permitted PPP Amendments from constituting a Material Modification.

INDEX TO OTHER FINANCIAL STATEMENTS

Saratoga Investment Corp.

Company has evaluated subsequent events through the filing of this Form 10-K and determined that there have been no events that have

occurred that would require adjustments to the Company’s consolidated financial statements and disclosures in the consolidated

financial statements except for the following:

Company announced on March 10, 2021, that it has closed a public offering of $50.0 million aggregate principal amount of its

4.375% notes due 2026 (the “Notes”), which resulted in net proceeds to the Company of approximately $48.8 million

based on a public offering price of 100% of the aggregate principal amount of the Notes, after deducting payment of underwriting discounts

and commissions and estimated offering expenses payable by the Company.

Notes will mature on February 28, 2026, and may be redeemed in whole or in part at any time or from time to time at the Company’s

option at par plus a “make-whole”

premium, if applicable.

The Notes will bear interest at a rate of 4.375% per year payable

semi-annually on February 28 and August 28 of each year, beginning August 28, 2021.

On March 22, 2021, the Company declared a dividend of $0.43 per share payable on April 22, 2021, to common stockholders of record on April

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

Based on shareholder elections, the dividend consisted of approximately $3.9 million in cash and 38,580 newly issued shares of common

stock, or 0.3% of our outstanding common stock prior to the dividend payment.

The number of shares of common stock comprising the stock

portion was calculated based on a price of $23.69 per share, which equaled 95% of the volume weighted average trading price per share

of the common stock on April 9,12, 13, 14, 15, 16, 19, 20, 21 and 22, 2021.

to February 28, 2021, the global outbreak of the coronavirus pandemic has adversely affected some of the Company’s investments

and continues to have adverse consequences on the U.S.

and global economies.

The ultimate economic fallout from the pandemic, and the

long-term impact on economies, markets, industries and individual portfolio companies, remains uncertain.

At the time of this filing,

there is no indication of a reportable subsequent event impacting the Company’s financial statements for the year ended February

The Company cannot predict the extent to which its financial condition and results of operations will be adversely affected

at this time.

The potential impact to our results will depend to a large extent on future developments and new information that may emerge

regarding the duration and severity of COVID-19.

The Company continues to observe and respond to the evolving COVID-19 environment and

its potential impact on areas across its business.

TO OTHER FINANCIAL STATEMENTS

Investment Corp.

CLO 2013-1, Ltd.

1 unchanged sentence

Statements of Assets and Liabilities as of February 28, 2021 and February 29, 2020

Statements of Operations for the years ended February 29, 2020, February 28,

2019 and February 28, 2018

Statements of Changes in Net Assets for the years ended February 29, 2020,

February 28, 2019 and February 28, 2018

Statements of Cash Flows for the years ended February 29, 2020, February 28,

2019 and February 28, 2018

Statements of Operations for the years ended February 28, 2021, February 29, 2020 and February 28, 2019

Schedules of Investments as of February 28, 2021 and February 29, 2020

Statements of Changes in Net Assets for the years ended February 28, 2021, February 29, 2020 and February 28, 2019

Statements of Cash Flows for the years ended February 28, 2021, February 29, 2020 and February 28, 2019

Notes to Financial Statements

IMPORTANT NOTE

In accordance with certain SEC rules, Saratoga Investment Corp.

(the Company) is providing additional information regarding one of

its portfolio companies, Saratoga Investment Corp.

accordance with certain SEC rules, Saratoga Investment Corp.

(the “Company”) is providing additional information regarding

one of its portfolio companies, Saratoga Investment Corp.

CLO 2013-1, Ltd.

(Saratoga CLO).

The Company owns 100% of the subordinated notes of the Saratoga CLO.

The additional financial information

regarding the Saratoga CLO does not directly impact the Companys financial position, results of operations or cash flows.

Report of Independent Auditors

(“Saratoga CLO”).

The Company owns 100% of the

subordinated notes of the Saratoga CLO.

The additional financial information regarding the Saratoga CLO does not directly impact the

Company’s financial position, results of operations or cash flows.

Auditor’s Report

the Board of Directors

1 unchanged sentence

CLO 2013-1, Ltd.

We have audited the accompanying financial statements of Saratoga Investment Corp.

CLO 2013-1, Ltd., which comprise the statements of assets and liabilities, including the schedule of investments, as of February 29, 2020 and February 28, 2019, and the related statements of operations,

changes in net assets and cash flows for the years ended February 29, 2020 and February 28, 2019, and the related notes to the financial statements.

Managements Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in conformity with U.S.

generally accepted accounting

this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.

Auditors Responsibility

Our responsibility is to

express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit

evidence about the amounts and disclosures in the financial statements.

The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud

In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control.

have audited the accompanying financial statements of Saratoga Investment Corp.

CLO 2013-1, Ltd., which comprise the statement of assets

and liabilities, including the schedule of investments, as of February 28, 2021, and the related statements of operations, changes in

net assets and cash flows for the year then ended, and the related notes to the financial statements.

Responsibility for the Financial Statements

is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally

accepted in the United States of America;

this includes the design, implementation, and maintenance of internal control relevant to the

preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error.

Responsibility

responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing

standards generally accepted in the United States of America.

Those standards require that we plan and perform the audit to obtain reasonable

assurance about whether the financial statements are free from material misstatement.

audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.

The procedures

selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements,

whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the entity's preparation

and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but

not for the purpose of expressing an opinion on the effectiveness of the entity's internal control.

Accordingly, we express no such opinion.

An audit also includes evaluating the appropriateness of accounting policies used

and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

In our opinion, the financial statements

referred to above present fairly, in all material respects, the financial position of Saratoga Investment Corp.

CLO 2013-1, Ltd.

at February 29, 2020 and February 28, 2019, and the results of its

operations, changes in its net assets and its cash flows for the years ended February 29, 2020 and February 28, 2019 in conformity with U.S.

generally accepted accounting principles.

Report of Other Auditors on February 28, 2018 Financial Statements

The financial statements of Saratoga Investment Corp.

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates

made by management, as well as evaluating the overall presentation of the financial statements.

believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

our opinion, the statements referred to above present fairly, in all material respects, the financial position of Saratoga Investment

CLO 2013-1, Ltd.

for the year ended February 28, 2018 was

audited by other auditors who expressed an unmodified opinion on those statements on May 14, 2018.

/s/ Ernst & Young Ltd.

Grand Cayman, Cayman Islands

Saratoga Investment Corp.

as of February 28, 2021, and the results of its operations, changes in net assets and its cash flows for the year

then ended in accordance with accounting principles generally accepted in the United States of America.

of Other Auditors

financial statements of Saratoga Investment Corp., CLO 2013-1, Ltd.

as of and for the year ended February 29, 2020 and for the year ended

February 28, 2019 were audited by other auditors whose report dated May 6, 2020, expressed an unmodified opinion on those statements.

CohnReznick LLP

Investment Corp.

CLO 2013-1, Ltd.

Statements of Assets and Liabilities

of Assets and Liabilities

February 28, 2021

2 unchanged sentences

Loans at fair value (amortized cost of $594,722,350 and $523,438,207, respectively)

$ 591,518,866

$ 500,999,677

Equities at fair value (amortized cost of $527,124 and $2,566,752, respectively)

Total investments at fair value (amortized cost of $526,004,959 and $509,676,701,

respectively)

Total investments at fair value (amortized cost of $595,249,474 and $526,004,959, respectively)

Cash and cash equivalents

2 unchanged sentences

Prepaid expenses and other assets

$ 709,683,402

$ 521,879,724

Interest payable

2 unchanged sentences

Accrued subordinated management fee

Due to affiliate

Accounts payable and accrued expenses

Loan payable, related party (See Note 7)

Due to Affiliate

Loan payable, related party

Loan payable, third party

1 unchanged sentence

CLO 2013-1, Ltd.

A-1FL-R-2 Senior Secured Floating Rate Notes

A-1FXD-R-2 Senior Secured Fixed Rate Notes

Class A-1FL-R-2 Senior Secured Floating Rate Notes

Class A-1FXD-R-2 Senior Secured Fixed Rate Notes

Class-A-2-R-2 Senior Secured Floating Rate Notes

Senior Secured Floating Rate Notes

Deferrable Mezzanine Floating Rate Notes

Class C-R-2 Notes

Deferrable Mezzanine Floating Rate Notes

Class D-R-2 Notes

E-1-R-2 Deferrable Mezzanine Floating Rate Notes

Class A-1-R-3 Senior Secured Floating Rate Notes

Class A-2-R-3 Senior Secured Floating Rate Notes

Class B-FL-R-3 Senior Secured Floating Rate Notes

Class B-FXD-R-3 Senior Secured Fixed Rate Notes

Class B-R-2 Senior Secured Floating Rate Notes

Class C-FL-R-3 Deferrable Mezzanine Floating Rate Notes

Class C-FXD-R-3 Deferrable Mezzanine Fixed Rate Notes

Class C-R-2 Deferrable Mezzanine Floating Rate Notes

Discount on Class C-R-2 Notes

Class D-R-2 Deferrable Mezzanine Floating Rate Notes

Discount on Class D-R-2 Notes

Class D-R-3 Deferrable Mezzanine Floating Rate Notes

Discount on Class D-R-3 Notes

Class E-1-R-2 Deferrable Mezzanine Floating Rate Notes

Class E-2-R-2 Deferrable Mezzanine Fixed Rate Notes

Deferrable Junior Floating Rate Notes

Class E-R-3 Deferrable Mezzanine Floating Rate Notes

Discount on Class E-R-3 Notes

Class F-R-2 Deferrable Junior Floating Rate Notes

Class F-R-3 Notes Deferrable Junior Floating Rate Notes

Class G-R-2 Deferrable Junior Floating Rate Notes

Deferred debt financing costs

1 unchanged sentence

Discount on Subordinated Notes

(48,039,412 )

(22,899,324 )

Total liabilities

Commitments and contingencies (See Note 6)

Ordinary equity, par value $1.00, 250 ordinary shares authorized, 250 and 250 issued and

outstanding, respectively

$ 738,221,266

$ 556,981,893

Ordinary equity, par value $1.00, 250 ordinary shares authorized, 250 and 250 common shares issued and outstanding, respectively

Total distributable earnings (loss)

Total net assets (deficit)

(28,538,114 )

(35,102,419 )

Total net assets

(28,537,864 )

(35,102,169 )

Total liabilities and net assets

See accompanying notes to financial statements.

Saratoga Investment Corp.

$ 709,683,402

$ 521,879,724

See accompanying notes

to financial statements.

Investment Corp.

CLO 2013-1, Ltd.

Statements of Operations

of Operations

For the year ended

February 29, 2020

February 28, 2019

February 28, 2018

INVESTMENT INCOME

Interest from investments

Total interest from investments

Interest from cash and cash equivalents

6 unchanged sentences

Trustee expenses

Miscellaneous fee expense

Loss on extinguishment of debt

Other expense

Total expenses

NET INVESTMENT INCOME

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

Net realized gain (loss) on investments

Net change in unrealized appreciation (depreciation) on investments

NET INVESTMENT INCOME (LOSS)

REALIZED AND UNREALIZED LOSS ON INVESTMENTS

Net realized loss from investments

(10,922,627 )

Net change in unrealized depreciation on investments

(13,733,384 )

Net realized and unrealized gain (loss) on investments

(18,528,569 )

Realized losses on extinguishment of debt*

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

See accompanying notes to financial statements.

Saratoga Investment Corp.

$ (17,202,500 )

$ (6,654,350 )

* Certain prior period amounts have been reclassified to conform

to current period presentation.

accompanying notes to financial statements.

Investment Corp.

CLO 2013-1, Ltd.

Statements of Changes in Net Assets

For the year ended

INCREASE (DECREASE) FROM OPERATIONS:

Net investment income

Net investment income (loss)

$ (1,299,881 )

Net realized gain (loss) from investments

(10,922,627 )

Realized losses on extinguishment of debt

Net change in unrealized appreciation (depreciation) on investments

(13,733,384 )

Net increase (decrease) in net assets resulting from operations

(17,202,500 )

Total increase (decrease) in net assets

(17,202,500 )

Net assets at beginning of period

(35,102,169 )

(17,899,669 )

(11,245,319 )

Net assets at end of period

See accompanying notes to financial statements.

Saratoga Investment Corp.

$ (28,537,864 )

$ (35,102,169 )

$ (17,899,669 )

accompanying notes to financial statements.

Investment Corp.

CLO 2013-1, Ltd.

Statements of Cash Flows

of Cash Flows

For the year ended

1 unchanged sentence

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

ADJUSTMENTS TO RECONCILE NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS TO NET CASH USED IN

OPERATING ACTIVITIES:

interest income and other adjustments to cost

$ (17,202,500 )

$ (6,654,350 )

ADJUSTMENTS TO RECONCILE NET INCREASE (DECREASE) IN NET ASSETS RESULTING

FROM OPERATIONS TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:

Payment-in-kind and other adjustments to cost

Net accretion of discount on investments

Amortization of discount and deferred financing costs on debt

Loss on extinguishment of debt

Amortization of discount and deferred debt financing costs

Realized Loss on extinguishment of debt

Net realized (gain) loss from investments

Net change in unrealized (appreciation) depreciation on investments

Proceeds from sale and redemption of investments

Purchase of investments

(21,775,577 )

Proceeds from sales and repayments of investments

Purchases of investments

(220,783,828 )

(229,996,697 )

(378,523,269 )

(Increase) decrease in operating assets:

1 unchanged sentence

Receivable from open trades

Prepaid expenses and other assets

Increase (decrease) in operating liabilities:

Interest payable

Interest and debt fees payable

Payable for open trades

2 unchanged sentences

Accrued incentive fee

Due to affiliate

Accounts payable and accrued expenses

NET CASH USED IN OPERATING ACTIVITIES

Due to affiliate

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

(39,224,936 )

(14,399,991 )

(184,060,735 )

Financing activities

1 unchanged sentence

Paydowns on debt

Deferred debt financing costs

NET CASH PROVIDED BY FINANCING ACTIVITIES

(475,100,000 )

(282,400,000 )

Deferred debt financing costs paid

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

1 unchanged sentence

CASH AND CASH EQUIVALENTS, END OF PERIOD

$ 114,145,406

Supplemental Information:

1 unchanged sentence

Supplemental non-cash information:

interest income and other adjustments to cost

Paid-in-kind interest income and other adjustments to cost

Net accretion of discount on investments

Amortization of deferred debt financing costs

See accompanying notes to financial statements.

Saratoga Investment Corp.

accompanying notes to financial statements.

Investment Corp.

CLO 2013-1 Ltd.

Schedule of Investments

February 29, 2020

of Investments

Reference Rate/Spread

Maturity Date

Number of Shares

Education Management II LLC

Education Management II A-2 Preferred Shares

Education Management II LLC

Education Management II A-1 Preferred Shares

Unlimited Liability Company

Beverage Food & Tobacco

1M USD LIBOR + 1.75%

24 Hour Fitness Worldwide Inc.

Term Loan (5/18)

1M USD LIBOR + 3.50%

Covia Holdings C/S (Unimin)

Metals & Mining

Fusion Connect Warrant

Telecommunications

J Jill Common Stock

McDermott International (Americas), Inc.

Lealand Finance (McDermott International) C/S - Cl

ABB Con-Cise Optical Group LLC

1 unchanged sentence

6M USD LIBOR+

1M USD LIBOR + 2.75%

Advantage Sales & Marketing Inc.

First Lien Term Loan

1M USD LIBOR + 3.25%

Advantage Sales & Marketing Inc.

Term Loan B Incremental

Adtalem Global Education Inc.

Adtalem Global Education T/L B (02/21)

1M USD LIBOR+

Advisor Group Holdings Inc

Advisor Group, Inc.

Banking, Finance, Insurance & Real Estate

Term Loan (7/19)

Advisor Group Holdings T/L B1

1M USD LIBOR+

Aegis Toxicology Sciences Corporation

Aegis Sciences Corporation

Healthcare & Pharmaceuticals

4 unchanged sentences

1M USD LIBOR+

Agrofresh Inc.

Beverage Food & Tobacco

Agiliti Health Inc.

Healthcare & Pharmaceuticals

Term Loan (1/19)

1M USD LIBOR+

AI Convoy Bidco Limited

Aerospace & Defense

AI Convoy Bidco T/L B (USD)

Ahead Data Blue, LLC

Term Loan (10/20)

6M USD LIBOR+

AI Mistral (Luxembourg) Subco Sarl

High Tech Industries

AI Convoy (Luxembourg) S.a.r.l.

Aerospace & Defense

AI Convoy (Luxembourg) USD T/L B

6M USD LIBOR+

1 unchanged sentence

3M USD LIBOR+

Alchemy Copyrights, LLC

Diversified & Production

1M USD LIBOR+

Alchemy US Holdco 1, LLC

3 unchanged sentences

Aerospace & Defense

Term Loan B (1st Lien)

Term Loan (2/21)

1M USD LIBOR+

AlixPartners, LLP

Banking, Finance, Insurance & Real Estate

AlixPartners T/L B (01/21)

1M USD LIBOR+

Allen Media, LLC

Advertising Printing & Publishing

Diversified & Production

Allen Media T/L B (1/20)

3M USD LIBOR+

Altisource S.a r.l.

Altisource Solutions S.a r.l.

Banking, Finance, Insurance & Real Estate

1 unchanged sentence

3M USD LIBOR+

Altium Packaging LLC

Containers, Packaging & Glass

Altium Packaging (Consolidated Container) T/L (01/

3M USD LIBOR+

Altra Industrial Motion Corp.

1 unchanged sentence

1M USD LIBOR+

American Dental Partners Inc.

Healthcare & Pharmaceuticals

3M USD LIBOR + 4.25%

American Greetings Corporation

1 unchanged sentence

1M USD LIBOR+

American Residential Services LLC

American Trailer World Corp

American Trailer World T/L

1M USD LIBOR+

AmeriLife Group LLC

AmeriLife Holdings LLC

Banking, Finance, Insurance & Real Estate

1 unchanged sentence

1M USD LIBOR+

AmeriLife Group LLC(a)

Banking Finance Insurance & Real Estate

Unfunded Commitment

3M USD LIBOR + 4.00%

Amex GBT (2/20) T/L

Banking Finance Insurance & Real Estate

3M USD LIBOR + 4.00%

Amex GBT 2/20 D/T/L(a)

Banking Finance Insurance & Real Estate

Unfunded Commitment

3M USD LIBOR + 4.00%

Amynta Agency Borrower Inc.

AmWINS Group, LLC

Banking, Finance, Insurance & Real Estate

AmWINS Group (2/21) T/L

1M USD LIBOR+

6 unchanged sentences

3M USD LIBOR+

Api Group DE Inc

1M USD LIBOR + 2.50%

APLP Holdings Limited Partnership

APLP Holdings T/L B (Atlantic Power)

1M USD LIBOR + 2.75%

Aramark Services Inc.

1M USD LIBOR + 1.75%

Arctic Glacier U.S.A.

Beverage Food & Tobacco

Term Loan (3/18)

1M USD LIBOR + 3.50%

Aretec Group Inc.

Banking Finance Insurance & Real Estate

Term Loan (10/18)

1M USD LIBOR + 4.25%

ASG Technologies Group Inc.

High Tech Industries

1M USD LIBOR + 3.50%

AssetMark Financial Holdings Inc.

Banking Finance Insurance & Real Estate

3M USD LIBOR + 3.00%

Astoria Energy LLC

1M USD LIBOR + 4.00%

Banking Finance Insurance & Real Estate

Term Loan B-4 (Replacement)

1M USD LIBOR + 3.00%

Banking Finance Insurance & Real Estate

1M USD LIBOR + 3.00%

Athenahealth Inc.

Healthcare & Pharmaceuticals

1M USD LIBOR + 4.50%

Telecommunications

1M USD LIBOR + 4.25%

Avison Young (Canada) Inc.

3M USD LIBOR + 5.00%

B&G Foods Inc.

Beverage Food & Tobacco

1M USD LIBOR + 2.50%

Ball Metalpack Finco LLC

Containers Packaging & Glass

3M USD LIBOR + 4.50%

Bausch Health Companies Inc.

Healthcare & Pharmaceuticals

Term Loan B (05/18)

1M USD LIBOR + 3.00%

Berry Global Inc.

Chemicals Plastics & Rubber

1M USD LIBOR + 2.00%

Blount International Inc.

Forest Products & Paper

Term Loan B (09/18)

1M USD LIBOR + 3.75%

Term Loan (11/17)

2M USD LIBOR + 3.00%

Bombardier Recreational Products Inc.

Consumer goods:

Term Loan (1/20)

1M USD LIBOR + 2.00%

Boxer Parent Company Inc.

1M USD LIBOR + 4.25%

Bracket Intermediate Holding Corp.

Healthcare & Pharmaceuticals

3M USD LIBOR + 4.25%

Broadstreet Partners Inc.

Banking Finance Insurance & Real Estate

1M USD LIBOR + 3.25%

Brookfield WEC Holdings Inc.

Term Loan 1/20

1M USD LIBOR + 3.00%

Buckeye Partners L.P.

1M USD LIBOR + 2.75%

BW Gas & Convenience Holdings LLC

Beverage Food & Tobacco

1M USD LIBOR + 6.25%

Calceus Acquisition Inc.

Consumer goods:

1M USD LIBOR + 5.50%

Callaway Golf Company

1M USD LIBOR + 4.50%

CareerBuilder LLC

1M USD LIBOR + 6.75%

CareStream Health Inc.

High Tech Industries

1M USD LIBOR + 6.25%

Casa Systems Inc.

Telecommunications

1M USD LIBOR + 4.00%

Castle US Holding Corporation

High Tech Industries

Term Loan B (USD)

1M USD LIBOR + 3.75%

CCS-CMGC Holdings Inc.

Healthcare & Pharmaceuticals

3M USD LIBOR + 5.50%

Cengage Learning Inc.

Advertising Printing & Publishing

1M USD LIBOR + 4.25%

See accompanying notes to

financial statements.

Reference Rate/Spread

Number of Shares

CenturyLink Inc.

Telecommunications

Term Loan B (1/20)

1M USD LIBOR + 2.25%

Citadel Securities LP

Banking Finance Insurance & Real Estate

Term Loan (2/20)

1M USD LIBOR + 2.75%

Clarios Global LP

1M USD LIBOR + 3.50%

Compass Power Generation L.L.C.

Term Loan B (08/18)

1M USD LIBOR + 3.50%

Compuware Corporation

High Tech Industries

Term Loan (08/18)

1M USD LIBOR + 4.00%

Concordia International Corp.

Healthcare & Pharmaceuticals

3M USD LIBOR + 5.50%

Telecommunications

Delayed Draw Term Loan B

1M USD LIBOR + 4.50%

Consolidated Communications Inc.

Telecommunications

1M USD LIBOR + 3.00%

Co-Borrower LLC

Telecommunications

Term Loan B-5

1M USD LIBOR + 2.25%

Covia Holdings Corporation

Metals & Mining

3M USD LIBOR + 4.00%

CPI Acquisition Inc

Banking Finance Insurance & Real Estate

Term Loan B (1st Lien)

6M USD LIBOR + 4.50%

Crown Subsea Communications Holding Inc

Construction & Building

1M USD LIBOR + 6.00%

CSC Holdings LLC

Broadcasting & Subscription

Term Loan B (03/17)

1M USD LIBOR + 2.25%

CSC Holdings LLC

Broadcasting & Subscription

Term Loan B-5

1M USD LIBOR + 2.50%

CSC Holdings LLC

Broadcasting & Subscription

1M USD LIBOR + 2.25%

Cushman & Wakefield U.S.

Construction & Building

1M USD LIBOR + 2.75%

Daseke Companies Inc.

Transportation:

Replacement Term Loan

1M USD LIBOR + 5.00%

High Tech Industries

Term Loan B-1

1M USD LIBOR + 1.75%

Dealer Tire LLC

Dealer Tire T/L B-1

1M USD LIBOR + 4.25%

Delek US Holdings Inc.

1M USD LIBOR + 2.25%

Dell International L.L.C.

High Tech Industries

Term Loan B-1

1M USD LIBOR + 2.00%

Delta 2 (Lux) SARL

Hotel Gaming & Leisure

1M USD LIBOR + 2.50%

DHX Media Ltd.

Broadcasting & Subscription

1M USD LIBOR + 4.25%

Diamond Sports Group LLC

Broadcasting & Subscription

1M USD LIBOR + 3.25%

Digital Room Holdings Inc.

Advertising Printing & Publishing

1M USD LIBOR + 5.00%

Dole Food Company Inc.

Beverage Food & Tobacco

1M USD LIBOR + 2.75%

DRW Holdings LLC

Banking Finance Insurance & Real Estate

1M USD LIBOR + 4.25%

DynCorp International Inc.

Aerospace & Defense

1M USD LIBOR + 6.00%

Eagletree-Carbide Acquisition Corp.

Consumer goods:

3M USD LIBOR + 4.25%

EIG Investors Corp.

High Tech Industries

Term Loan (06/18)

3M USD LIBOR + 3.75%

Chemicals Plastics & Rubber

1M USD LIBOR + 3.25%

Endo Luxembourg Finance Company I S.a.r.l.

Healthcare & Pharmaceuticals

Term Loan B (4/17)

1M USD LIBOR + 4.25%

Energy Acquisition LP

Capital Equipment

Term Loan (6/18)

3M USD LIBOR + 4.25%

Envision Healthcare Corporation

Healthcare & Pharmaceuticals

Term Loan B (06/18)

1M USD LIBOR + 3.75%

EyeCare Partners LLC

Healthcare & Pharmaceuticals

EyeCare Partners T/L B

1M USD LIBOR + 3.75%

EyeCare Partners LLC(a)

Healthcare & Pharmaceuticals

EyeCare Partners Delayed Draw Term Loan

1M USD LIBOR + 3.75%

Banking Finance Insurance & Real Estate

2018 Term Loan B

1M USD LIBOR + 2.00%

First Eagle Holdings Inc.

Banking Finance Insurance & Real Estate

Refinancing Term Loan

3M USD LIBOR + 2.50%

Fitness International LLC

Term Loan B (4/18)

1M USD LIBOR + 3.25%

Franklin Square Holdings L.P.

Banking Finance Insurance & Real Estate

1M USD LIBOR + 2.25%

Froneri International Ltd

Beverage Food & Tobacco

Term Loan B-2

1M USD LIBOR + 2.25%

Fusion Connect Inc.

Telecommunications

Exit Term Loan (1/20)

3M USD LIBOR + 9.50%

Fusion Connect Inc.

Telecommunications

Take Back 2nd Out Term Loan

6M USD LIBOR + 8.00%

GBT Group Services B.V.

Hotel Gaming & Leisure

3M USD LIBOR + 2.50%

GC EOS Buyer Inc.

Term Loan B (06/18)

1M USD LIBOR + 4.50%

General Nutrition Centers Inc.

3M USD LIBOR + 8.75%

General Nutrition Centers Inc.

FILO Term Loan

1M USD LIBOR + 7.00%

Genesee & Wyoming Inc.

Transportation:

Term Loan (11/19)

3M USD LIBOR + 2.00%

GEO Group Inc.

Banking Finance Insurance & Real Estate

Term Loan Refinance

1M USD LIBOR + 2.00%

GI Chill Acquisition LLC

3M USD LIBOR + 4.00%

GI Revelation Acquisition LLC

1M USD LIBOR + 5.00%

1M USD LIBOR + 4.25%

Global Tel*Link Corporation

Telecommunications

1M USD LIBOR + 4.25%

Go Wireless Inc.

Telecommunications

1M USD LIBOR + 6.50%

Goodyear Tire & Rubber Company The

Chemicals Plastics & Rubber

Second Lien Term Loan

1M USD LIBOR + 2.00%

Greenhill & Co.

Banking Finance Insurance & Real Estate

1M USD LIBOR + 3.25%

Grosvenor Capital Management Holdings LLLP

Banking Finance Insurance & Real Estate

1M USD LIBOR + 2.75%

Guidehouse LLP

Aerospace & Defense

1M USD LIBOR + 4.50%

Harland Clarke Holdings Corp.

Advertising Printing & Publishing

3M USD LIBOR + 4.75%

HD Supply Waterworks Ltd.

Construction & Building

3M USD LIBOR + 2.75%

Helix Acquisition Holdings Inc.

Capital Equipment

Term Loan (2019 Incremental)

3M USD LIBOR + 3.75%

Helix Gen Funding LLC

Term Loan B (02/17)

1M USD LIBOR + 3.75%

HLF Financing SaRL LLC

Consumer goods:

Term Loan B (08/18)

1M USD LIBOR + 2.75%

Holley Purchaser Inc.

3M USD LIBOR + 5.00%

Hudson River Trading LLC

Banking Finance Insurance & Real Estate

Term Loan B (01/20)

1M USD LIBOR + 3.00%

Hyperion Refinance S.a.r.l.

Banking Finance Insurance & Real Estate

Tem Loan (12/17)

1M USD LIBOR + 3.50%

ICH US Intermediate Holdings II Inc.

Healthcare & Pharmaceuticals

3M USD LIBOR + 5.75%

High Tech Industries

1M USD LIBOR + 4.00%

Informatica LLC

High Tech Industries

Term Loan B (02/20)

1M USD LIBOR + 3.25%

3M USD LIBOR + 4.00%

Innophos Holdings Inc

Chemicals Plastics & Rubber

1M USD LIBOR + 3.75%

See accompanying notes to

financial statements.

Reference Rate/Spread

Number of Shares

ION Media Networks Inc.

Broadcasting & Subscription

1M USD LIBOR + 3.00%

Isagenix International LLC

Beverage Food & Tobacco

3M USD LIBOR + 5.75%

Jefferies Finance LLC / JFIN Co-Issuer Corp

Banking Finance Insurance & Real Estate

1M USD LIBOR + 3.25%

Jill Holdings LLC

Term Loan (1st Lien)

3M USD LIBOR + 5.00%

JP Intermediate B LLC

Consumer goods:

3M USD LIBOR + 5.50%

KAR Auction Services Inc.

Term Loan B (09/19)

1M USD LIBOR + 2.25%

Kindred Healthcare Inc.

Healthcare & Pharmaceuticals

Kindred Healthcare T/L (6/18)

1M USD LIBOR + 5.00%

Lakeland Tours LLC

Hotel Gaming & Leisure

3M USD LIBOR + 4.25%

Lannett Company Inc.

Healthcare & Pharmaceuticals

1M USD LIBOR + 5.38%

Learfield Communications LLC

Advertising Printing & Publishing

Initial Term Loan (A-L Parent)

1M USD LIBOR + 3.25%

Lifetime Brands Inc.

Consumer goods:

1M USD LIBOR + 3.50%

Lighthouse Network LLC

Banking Finance Insurance & Real Estate

1M USD LIBOR + 4.50%

Lightstone Holdco LLC

1M USD LIBOR + 3.75%

Lightstone Holdco LLC

1M USD LIBOR + 3.75%

Lindblad Expeditions Inc.

Hotel Gaming & Leisure

US 2018 Term Loan

1M USD LIBOR + 3.25%

Lindblad Expeditions Inc.

Hotel Gaming & Leisure

Cayman Term Loan

1M USD LIBOR + 3.25%

Liquidnet Holdings Inc.

Banking Finance Insurance & Real Estate

1M USD LIBOR + 3.25%

LPL Holdings Inc.

Banking Finance Insurance & Real Estate

1M USD LIBOR + 1.75%

Marriott Ownership Resorts Inc.

Hotel Gaming & Leisure

Term Loan (11/19)

1M USD LIBOR + 1.75%

Match Group Inc.

Term Loan (1/20)

3M USD LIBOR + 1.75%

1M USD LIBOR + 3.75%

McDermott International (Americas) Inc.(b)

Construction & Building

3M USD LIBOR + 5.00%

McGraw-Hill Global Education Holdings LLC

Advertising Printing & Publishing

1M USD LIBOR + 4.00%

Meredith Corporation

Advertising Printing & Publishing

1M USD LIBOR + 2.50%

Messer Industries GMBH

Chemicals Plastics & Rubber

3M USD LIBOR + 2.50%

Michaels Stores Inc.

1M USD LIBOR + 2.50%

Midwest Physician Administrative Services LLC

Healthcare & Pharmaceuticals

Term Loan (2/18)

1M USD LIBOR + 2.75%

Milk Specialties Company

Beverage Food & Tobacco

Term Loan (2/17)

1M USD LIBOR + 4.00%

MKS Instruments Inc.

High Tech Industries

1M USD LIBOR + 1.75%

MLN US HoldCo LLC

Telecommunications

1M USD LIBOR + 4.50%

MRC Global (US) Inc.

Metals & Mining

1M USD LIBOR + 3.00%

NAI Entertainment Holdings LLC

Hotel Gaming & Leisure

1M USD LIBOR + 2.50%

Natgasoline LLC

Chemicals Plastics & Rubber

6M USD LIBOR + 3.50%

National Mentor Holdings Inc.

Healthcare & Pharmaceuticals

1M USD LIBOR + 4.00%

National Mentor Holdings Inc.

Healthcare & Pharmaceuticals

1M USD LIBOR + 4.00%

Telecommunications

Term Loan B4 (03/18)

1M USD LIBOR + 3.50%

Telecommunications

Term Loan B-5

1M USD LIBOR + 4.50%

Nexstar Broadcasting Inc.

Broadcasting & Subscription

1M USD LIBOR + 2.75%

NMI Holdings Inc.

Banking Finance Insurance & Real Estate

1M USD LIBOR + 4.75%

NorthPole Newco S.a r.l

Aerospace & Defense

3M USD LIBOR + 7.00%

Novetta Solutions LLC

Aerospace & Defense

1M USD LIBOR + 5.00%

Novetta Solutions LLC

Aerospace & Defense

Second Lien Term Loan

1M USD LIBOR + 8.50%

NPC International Inc.(b)

Beverage Food & Tobacco

3M USD LIBOR + 3.50%

Octave Music Group Inc.

2M USD LIBOR + 5.25%

Office Depot Inc.

1M USD LIBOR + 5.25%

Owens & Minor Distribution Inc.

Healthcare & Pharmaceuticals

1M USD LIBOR + 4.50%

Patriot Container Corp.

Environmental Industries

Term Loan (3/18)

1M USD LIBOR + 3.50%

PCI Gaming Authority

Hotel Gaming & Leisure

1M USD LIBOR + 2.50%

Peraton Corp.

Aerospace & Defense

2M USD LIBOR + 5.25%

PGX Holdings Inc.

1M USD LIBOR + 5.25%

PI UK Holdco II Limited

Term Loan B1 (PI UK Holdco II)

1M USD LIBOR + 3.25%

Pixelle Specialty Solutions LLC

Forest Products & Paper

1M USD LIBOR + 6.50%

Plastipak Packaging Inc

Anchor Packaging, LLC

Containers, Packaging & Glass

Plastipak Packaging T/L B (04/18)

1M USD LIBOR+

Playtika Holding Corp.

High Tech Industries

Trm Loan B (12/19)

1M USD LIBOR + 6.00%

Polymer Process Holdings Inc

APi Group DE, Inc.

(J2 Acquisition)

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures