What changed in this filing

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Item 9A. Controls and Procedures

2022-05-04 compared with 2021-05-05 · 3033 added, 3033 removed, 967 unchanged (86% 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

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

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.

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 procedures.

Management’s annual report on internal control

over financial reporting

The 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

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.

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

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.

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.

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 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, 2022.

Changes in internal controls over financial reporting

There 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

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.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT

PREVENT INSPECTIONS

Not applicable.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE

Director and Executive Officer Information

Directors and Executive Officers

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.

Director Since

Interested Directors

3 unchanged sentences

Cabell Williams

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.

Oberbeck—

Oberbeck has over 36 years of experience in leveraged finance, including acquisition financing, distressed investing, and

private equity, and has been involved in originating, structuring, negotiating, consummating, managing, operating, and monitoring minority

and control investments in a broad array of businesses.

Oberbeck is the Founder and Managing Member of Saratoga Investment Advisors,

LLC, the Company’s investment adviser, and has served as the Chairman of the Board, Chief Executive Officer, and President of the

Company since 2010.

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.

5 unchanged sentences

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.

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.

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 —

Looney has served as member of our Board since 2007.

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 and founder of its affiliate, Education Moms.

Looney graduated summa cum laude from

the University of Washington with a B.A.

Inc., a strategic advisory

firm specializing in change management and revenue enhancement for middle market enterprises, is a Director and Audit Chair of ICG Loan

Funding Ltd., an investment company specializing in corporate debt, 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.

Between 1992 and 2000, Mr.

worked at WH Industries as Chief Financial and Administrative Officer.

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

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

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

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.

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—

Whitman has served as member of our Board since 2007.

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

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.

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.

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

from Cambridge University

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—

Steenkamp has served as the Chief Financial Officer, Chief Compliance Officer, Treasurer and Secretary of the Company since 2014, and

as a director of the Company since 2020.

Steenkamp has served as Treasurer and Secretary of Saratoga Investment Advisors LLC, the

Company’s investment adviser, since 2014.

Steenkamp has also 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.

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 Allied’s merger with its

affiliates in 1998.

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

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.

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.

Steenkamp’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.

Cabell Williams —

Williams has served as member of our Board since 2007.

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.

Since 2011, Mr.

Williams has also served as a partner

of Farragut Capital Partners, an investment firm based in Fairfax, VA.

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.

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.

years prior to 1999, Mr.

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.

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.

ran Allied’s Minority Small Business Investment Company.

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

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.

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 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.

current members of the audit committee are Steven M.

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.

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 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 Company’s Code of Business Conduct and Ethics is also available on our

website at www.saratogainvestmentcorp.com.

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.saratogainvestmentcorp.com.

Practices and Policies Regarding Hedging, Speculative

Trading and Pledging of Securities

Our 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.

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 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.

Looney (Chairman), Charles S.

1 unchanged sentence

Cabell Williams.

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.

The board of directors has determined that Mr.

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.

as required by NYSE corporate governance standards.

All of these members are independent directors.

EXECUTIVE COMPENSATION

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’

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 $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.

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.

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

The following table sets forth information

concerning total compensation earned by or paid to each of our directors during the fiscal year ended February 28, 2022:

Fees Earned or

Interested Directors

1 unchanged sentence

Cabell Williams

(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.

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.

Cabell Williams (Chairman), Steven M.

Looney and Charles S.

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.

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.

All of 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 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 ended February

28, 2022 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

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL

OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth,

as of May 4, 2022, 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 12,124,175 shares of common stock outstanding as of May 4, 2022.

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.

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

Percent of Class

Interested Directors

8 unchanged sentences

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, 1,100 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

Inglesby are affiliates who make up 16.9% of the ownership of SAR.

705,784 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, 55,378 shares of common stock directly held by Mr.

Oberbeck’s children, for which Mr.

Oberbeck retains

the voting rights, 1,187 shares of common stock directly held by Mr.

Oberbeck’s wife, for which Mr.

Oberbeck retains the voting rights,

and 549,183 shares of common stock directly held by Elizabeth Oberbeck.

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.

on information included in Amendment No.

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

with the SEC on February

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.

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

2187 Atlantic Street, 9th floor, Stamford, CT 06902

on information included in Amendment No.

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 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 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 operations.

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

Approval or Ratification of Transactions with Related Persons

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.

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.

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 therefrom.

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 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.

Oberbeck or through entities affiliated with

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,

AND DIRECTOR INDEPENDENCE

Transactions with Related Persons

We 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 operations.

Oberbeck, our chief executive officer, is the primary

investor in and controls Saratoga Investment Advisors, LLC.

Review, 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).

Director Independence

In 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

In 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.

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.

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 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.

PRINCIPAL ACCOUNTING FEES AND SERVICES

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

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

Independent Registered Public Accounting Firm

For the years ended February 28, 2022

and February 28, 2021, the Company incurred the following fees for services provided by Ernst & Young LLP, including expenses:

Fiscal Year Ended

In addition to the services listed above,

Ernst & Young LLP provided audit services to the Company’s subsidiaries.

The following are the related fees:

Fiscal Year Ended February 28,

CLO Audit Fees

1 unchanged sentence

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.

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.

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.

Tax fees include

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

All Other Fees .

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.

EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

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

The following documents are filed or incorporated by reference

as part of this Annual Report:

Consolidated Financial Statements

following consolidated financial statements of the Company are filed herewith:

The following consolidated

financial statements of the Company are filed herewith:

Report of Independent Registered Public Accounting Firm

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 Schedules of Investments as of February 28, 2021 and February 29, 2020

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 Statements of Assets and Liabilities as of

February 28, 2022 and February 28, 2021

Consolidated Statements of Operations for the years ended

February 28, 2022, February 28, 2021 and February 28, 2020

Consolidated Schedules of Investments as of February 28,

2022 and February 28, 2021

Consolidated Statements of Changes in Net Assets for the

years ended February 28, 2022, February 28, 2021 and

February 29, 2020

Consolidated Statements of Cash Flows for the years ended

February 28, 2022, February 28, 2021 and February 29, 2020

Notes to Consolidated Financial Statements

Financial Statement Schedules

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

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

Reference is made to the Index to Other Financial Statements

Exhibits required to be filed by Item 601 of Regulation

The following exhibits are filed as part of this report

or hereby incorporated by reference to exhibits previously filed with the SEC:

EXHIBIT INDEX

Exhibit Number

Articles of Incorporation of Saratoga Investment Corp.

4 unchanged sentences

(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).

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.

7 unchanged sentences

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.

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

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

Form of Global Note (incorporated by reference to Exhibit 4.5 hereto, and Exhibit A therein).

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

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).

Description of Securities.

Fourth Supplemental Indenture between the Company and U.S.

Fourth Supplemental Indenture between the Saratoga Investment Corp.

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.

1 unchanged sentence

Form of 7.25% Notes due 2025 (incorporated by reference to Exhibit 4.6 hereto).

Eighth Supplemental Indenture between the Company and U.S.

Eighth Supplemental Indenture between the Saratoga Investment Corp.

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).

Ninth Supplemental Indenture between Saratoga Investment Corp.

Bank National Association, as trustee, relating to the 4.375% Note due 2027 (incorporated by reference to the Registrant’s Current Report on Form 8-K (File No.

814-00732) filed on January 19, 2022).

Form of 4.375% Notes due 2026 (incorporated by reference to Exhibit 4.8 hereto).

Form of 4.375% Notes due 2027 (incorporated by reference to Exhibit 4.9 hereto).

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

6 unchanged sentences

(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.

2 unchanged sentences

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.

4 unchanged sentences

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

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.

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 Amendment No.

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

333-216344, filed on March 16, 2017).

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.

333-216344, filed on October 12, 2017).

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 & 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.

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

Riley FBR, Inc.

(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.

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

Riley FBR, Inc.

(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.

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).

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).

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.

5 unchanged sentences

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).

Credit and Security Agreement, dated as of October 4, 2021, by and among Saratoga Investment Funding II, LLC, Saratoga Investment Corp., as collateral manager and equityholder, the lenders party thereto, Encina Lender Finance, LLC, as administrative agent for the secured parties and the collateral agent, and U.S.

Bank National Association, as collateral custodian for the secured parties thereto and as collateral administrator (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on October 7, 2021).

Equity Pledge Agreement, dated as of October 4, 2021, by and between Saratoga Investment Corp.

and Encina Lender Finance, LLC, as collateral agent for the secured parties thereto (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on October 7, 2021).

Loan Sale and Contribution Agreement, dated as of October 4, 2021, by and between Saratoga Investment Corp., as seller, and Saratoga Investment Funding II LLC, as purchaser (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on October 7, 2021).

Saratoga Senior Loan Fund I JV LLC Limited Liability Company Agreement, dated October 26, 2021, by and between Saratoga Investment Corp.

and TJHA JV I LLC (incorporated by reference to Saratoga Investment Corp.’s Current Report on Form 8-K filed on October 27, 2021).

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 (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.

5 unchanged sentences

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

* Filed herewith

FORM 10-K SUMMARY

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,

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.

Chief Executive Officer

(Principal Executive Officer)

Financial Officer

(Principal Accounting Officer and

Financial 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)

Chief Financial Officer (Principal Accounting Officer and

Principal Financial Officer), Member of the Board of Directors

/s/ STEVEN M.

Member of the Board of Directors

of the Board of Directors

/s/ CHARLES S.

Member of the Board of Directors

CABELL WILLIAMS

of the Board of Directors

TO CONSOLIDATED FINANCIAL STATEMENTS

Member of the Board of Directors

Cabell Williams

INDEX TO CONSOLIDATED FINANCIAL

Reports of Independent Registered Public Accounting Firm

5 unchanged sentences

Notes to Consolidated Financial Statements

of Independent Registered Public Accounting Firm

Report 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 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.

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, 2022 and February 28, 2021, 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, 2022, 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, 2022 and February 28, 2021, 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, 2022, in conformity with US generally accepted accounting principles.

Basis for Opinion

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.

These financial statements are the responsibility of the Company’s

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

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.

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, 2022 and February 28, 2021 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.

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.

of investments using significant unobservable inputs

of the Matter

At February 28,

2022, the fair value of the Company’s investments categorized in Level 3 of the fair value hierarchy (Level 3 investments)

totaled $805,551,291.

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, collateral value coverage, discounted cash

flows and enterprise value waterfalls.

The significant unobservable inputs used to measure fair value include market yields, EBITDA

multiples, revenue multiples, net asset value, third-party bid, discount rates, recovery rates and prepayment rates.

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

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.

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.

4 unchanged sentences

Consolidated Financial Statements

Investment Corp.

Statements of Assets and Liabilities

Saratoga Investment Corp.

Consolidated Statements of Assets

and Liabilities

Investments at fair value

23 unchanged sentences

4.375% Notes Payable 2026

Premium on 4.375% notes payable 2026

Deferred debt financing costs, 4.375% notes payable 2026

4.35% Notes Payable 2027

Discount on 4.35% notes payable 2027

Deferred debt financing costs, 4.35% notes payable 2027

6.25% Notes Payable 2027

Deferred debt financing costs, 6.25% notes payable 2027

Base management and incentive fees payable

1 unchanged sentence

Accounts payable and accrued expenses

Current income tax payable

Interest and debt fees payable

4 unchanged sentences

Commitments and contingencies (See Note 9)

Common stock, par value

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

Common stock, par value $0.001, 100,000,000 common shares

authorized, 12,131,350 and 11,161,416 common shares issued and outstanding, respectively

Capital in excess of par value

5 unchanged sentences

NET ASSET VALUE PER SHARE

accompanying notes to consolidated financial statements.

Investment Corp.

Statements of Operations

See accompanying notes to consolidated financial

Saratoga Investment Corp.

Consolidated Statements of Operations

For the year ended

12 unchanged sentences

Management fee income

Incentive fee income

Dividend Income*

Structuring and advisory fee income

4 unchanged sentences

Base management fees

Incentive management fees expense (benefit)

Incentive management fees expense

Professional fees

4 unchanged sentences

Excise tax expense (credit)

Other expense

Total operating expenses

15 unchanged sentences

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

NET INCREASE IN NET ASSETS RESULTING

FROM OPERATIONS

WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED

* 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

* Certain prior period amounts have been reclassified to conform

to current period presentation.

See accompanying notes to consolidated financial statements.

Saratoga Investment Corp.

Consolidated Statements of Changes

in Net Assets

For the year ended

6 unchanged sentences

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

Net increase (decrease) in net assets resulting from operations

Net increase in net assets resulting from operations

DECREASE FROM SHAREHOLDER DISTRIBUTIONS:

13 unchanged sentences

Offering costs

Net increase in net assets from capital share transactions

Net increase (decrease) in net assets from capital share transactions

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

2 unchanged sentences

$ 304,286,853

accompanying notes to consolidated financial statements.

Investment Corp.

Statements of Cash Flows

See accompanying notes to

consolidated financial statements.

Saratoga Investment Corp.

Consolidated Statements of Cash Flows

For the year ended

6 unchanged sentences

Amortization of deferred debt financing costs

Realized Loss on extinguishment of debt

Income tax expense (benefit)

Realized losses on extinguishment of debt

Income tax expense

Net realized (gain) loss from investments

(13,398,327 )

(42,877,155 )

Net change in unrealized (appreciation) depreciation on investments

(17,019,993 )

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

8 unchanged sentences

Management and incentive fee receivable

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

Increase (decrease) in operating liabilities:

1 unchanged sentence

Accounts payable and accrued expenses

Current tax payable

Interest and debt fees payable

15 unchanged sentences

(60,000,000 )

(74,450,500 )

Payments of deferred debt financing costs

(10,008,424 )

Premium on debt issuance, 4.375% notes 2026

Discount on debt issuance, 4.35% notes 2027

Proceeds from issuance of common stock

19 unchanged sentences

Stock dividend distribution

accompanying notes to consolidated financial statements.

See accompanying notes to consolidated financial

Investment Corp.

Schedule of Investments

Interest Rate/Maturity

Acquisition Date

Interest Rate/

Original Acquisition

Number of Shares

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

Holdings, Inc.

Non-control/Non-affiliate investments

Targus Holdings,

Consumer Products

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

Corporate Education Software

Series 1 Membership Interest

Total Corporate Education Software

Lien Term Loan

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

Draw Term Loan

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

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

England Dental

Practice Management

Draw Term Loan

GreyHeller LLC (h)

Cyber Security

Total Cyber Security

New England Dental Partners

Dental Practice Management

First Lien Term Loan

(3M USD LIBOR+8.00%), 8.50%

Cash, 11/25/2025

New England Dental Partners

Dental Practice Management

Delayed Draw Term Loan

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

Total Dental Practice Management

Practice Management Software

Lien Term Loan

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

Practice Management Software

Draw Term Loan

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

Buyer, LLC (d)

Dental Practice Management Software

First Lien Term Loan

(3M USD LIBOR+5.50%),

6.00% Cash, 7/15/2024

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

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

Dental Practice Management

Series A-1 Preferred Shares

Total Dental Practice Management

C2 Educational

Education Services

First Lien Term Loan

(3M USD LIBOR+8.50%), 10.00%

Cash, 5/31/2023

Systems, Inc.

Education Services

Series A-1 Preferred Stock

Education Services

First Lien Term Loan

(3M USD LIBOR+5.50%), 6.50%

Cash, 5/11/2026

Education Services

Delayed Draw Term Loan

(3M USD LIBOR+5.50%), 6.50%

Cash, 5/11/2026

Education Services

Class A Units

Total Education Services

Solutions Inc.

Lien Term Loan

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

Solutions Inc.

Partner Interests

Lien Term Loan

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

Stock Class A-2 Units

Stock Class A-1 Units

See accompanying notes to consolidated financial statements.

Education Software

Limited Partner Interests

Automation Systems (d)

Education Software

First Lien Term Loan

(3M USD LIBOR+9.24%), 10.99%

Cash, 5/8/2024

Automation Systems (h)

Education Software

Common Stock Class A-2 Units

Automation Systems (h)

Education Software

Common Stock Class A-1 Units

Investment Corp.

Schedule of Investments

Interest Rate/Maturity

Acquisition Date

Interest Rate/

Original Acquisition

Number of Shares

Lien Term Loan

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

Draw Term Loan

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

Software Inc.

Lien Term Loan

Education Software

First Lien Term Loan

(3M USD LIBOR+7.50%),

9.50% Cash, 1/17/2025

Education Software

Delayed Draw Term Loan

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

Total Education Software

Service Management

Lien Term Loan

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

Service Management

Draw Term Loan

Pressure Washing Holdings, LLC (h)

Facilities Maintenance

Preferred Equity

Total Facilities Maintenance

Field Service Management

First Lien Term Loan

(3M USD LIBOR+7.00%), 9.00%

Cash, 7/31/2024

Field Service Management

Delayed Draw Term Loan

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

Total Field Service Management

Software Holdings, LLC

Financial Services

First Lien Term Loan

(3M USD LIBOR+7.00%), 8.00%

Cash, 12/30/2026

Software Holdings, LLC (j)

Financial Services

Delayed Draw Term loan

(3M USD LIBOR+7.00%), 8.00%

Cash, 12/30/2026

Software Holdings, LLC (h)

Stock Class A Units

Financial Services

Common 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

Purchaser, Inc.

Draw Term Loan

Ascend Software, LLC

Financial Services Software

First Lien Term Loan

(3M USD LIBOR+7.50%),

8.50% Cash, 12/15/2026

Ascend Software, LLC (j)

Financial Services Software

Delayed Draw Term Loan

(3M USD LIBOR+7.50%), 8.50% Cash, 12/15/2026

Lien Term Loan

Total Financial Services Software

Ohio Medical, LLC (h)

Healthcare Products Manufacturing

Total Healthcare Products Manufacturing

Axiom Parent Holdings, LLC (h)

Healthcare Services

Common Stock Class A Units

Axiom Purchaser, Inc.

Healthcare Services

First Lien Term Loan

(3M USD LIBOR+6.00%), 7.75%

Cash, 6/19/2023

Axiom Purchaser, Inc.

Healthcare Services

Delayed Draw Term Loan

(3M USD LIBOR+6.00%), 7.75%

Cash, 6/19/2023

Investment Corp.

Schedule of Investments

Interest Rate/

Original Acquisition

Number of Shares

ComForCare Health

Healthcare Services

First Lien Term

(3M USD LIBOR+7.25%), 8.25% 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)

TRC HemaTerra, LLC (h)

Healthcare Software

Class D Membership Interests

HemaTerra Holding Company, LLC (d)

Healthcare Software

First Lien Term Loan

(3M USD LIBOR+8.25%), 9.25%

Cash, 1/31/2026

HemaTerra Holding Company, LLC (d)

Healthcare Software

Delayed Draw Term Loan

(3M USD LIBOR+8.25%), 9.25%

Cash, 1/31/2026

Procurement Partners, LLC

Healthcare Software

First Lien Term Loan

(3M USD LIBOR+5.50%), 6.50%

Cash, 11/12/2025

Procurement Partners, LLC (j)

Healthcare Software

Delayed Draw Term Loan

(3M USD LIBOR+5.50%), 6.50%

Cash, 11/12/2025

Procurement Partners Holdings

Healthcare Software

Class A Units

Total Healthcare Software

Medical, Inc.

Lien Term Loan

Roscoe Medical, Inc.

Healthcare Supply

Roscoe Medical, Inc.

Healthcare Supply

Second Lien Term Loan

Cash, 3/31/2022

Total Healthcare Supply

Investment Corp.

Schedule of Investments

Interest Rate/

Acquisition Date

Number of Shares

Hospitality/Hotel

4 unchanged sentences

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

(a), (h), (i)

Hospitality/Hotel

2 unchanged sentences

Lien Term Loan

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

(3M USD LIBOR+8.00%), 10.00% Cash/1.00% PIK, 5/9/2024

Hospitality Resources, LLC

2 unchanged sentences

(1M USD LIBOR+8.00%), 9.00% Cash, 9/2/2026

Total Hospitality/Hotel

Services and Sales

Hospitality Resources, LLC (j)

Hospitality/Hotel

Draw Term Loan

(1M USD LIBOR+8.00%), 9.00% Cash, 9/2/2026

Hospitality/Hotel

HVAC Services

Lien Term Loan

(1M USD LIBOR+8.00%), 9.00% Cash, 11/16/2025

Comfort, LP(j)

Services and Sales

1 unchanged sentence

(1M USD LIBOR+8.00%), 9.00% Cash, 11/16/2025

Total HVAC Services and Sales

See accompanying notes to consolidated financial statements.

HVAC Services and Sales

Lien Term Loan

(3M USD BSBY+8.00%), 9.00% Cash, 10/1/2026

ParentCo LLC (h)

Insurance Software

Investment Corp.

Schedule of Investments

Interest Rate/Maturity

Acquisition Date

Interest Rate/

Original Acquisition

Number of Shares

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

Vector Controls Holding Co., LLC (d)

Industrial Products

First Lien Term Loan

(3M USD LIBOR+6.50%),

8.00% Cash, 3/6/2025

Vector Controls Holding Co.,

Industrial Products

Warrants 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

LogicMonitor, Inc.

First Lien Term Loan

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

Total IT Services

Lien Term Loan

Centerbase, LLC

Legal Software

First Lien Term Loan

USD SOFR+7.50%), 8.50% Cash, 1/18/2027

Total Legal Software

Madison Logic, Inc.

Marketing Orchestration Software

First Lien Term Loan

(1M USD LIBOR+5.75%), 6.75%

Cash, 11/22/2026

Madison Logic, Inc.

Marketing Orchestration Software

Revolving Credit Facility

(1M USD LIBOR+5.75%), 6.75% Cash, 11/22/2026

Draw Term Loan

Total Marketing Orchestration

inMotionNow, Inc.

Marketing Services

First Lien Term Loan

(3M USD LIBOR+7.50), 10.00%

Cash, 5/15/2024

inMotionNow, Inc.

Marketing Services

Delayed Draw Term Loan

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

Total Marketing Services

Software, LLC

Lien Term Loan

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

Total Non-profit Services

Street Enterprises, L.L.C.

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

Street Enterprises, L.L.C.

Membership Interests

Mentoring Software

First Lien Term Loan

(3M USD LIBOR+5.25), 6.25%

Cash, 8/26/2026

Chronus LLC (h)

Mentoring Software

Series A Preferred Stock

Total Mentoring Software

Omatic Software,

Non-profit Services

First Lien Term

(3M USD LIBOR+8.00%), 9.75% Cash/1.00% PIK, 5/29/2023

Investment Corp.

Schedule of Investments

Interest Rate/

Original Acquisition

Number of Shares

Total Non-profit

Emily Street Enterprises, L.L.C.

Office Supplies

Senior Secured Note

(3M USD LIBOR+8.50%), 10.00%

Cash, 12/31/2023

Emily Street Enterprises, L.L.C.

Office Supplies

Warrant 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

Holdings Software Technologies, LLC

Draw Term Loan

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

Apex Holdings Software Technologies,

Payroll Services

First Lien Term Loan

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

Total Payroll Services

Realty Holdings LLC

Lien Term Loan

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

Realty Holdings

Draw Term Loan

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

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

Estate Services

Draw Term Loan

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

Estate Services

Partner Interests

Buildout, Inc.

Real Estate Services

First Lien Term Loan

(3M USD LIBOR+7.00%), 8.00%

Cash, 7/9/2025

Buildout, Inc.

Real Estate Services

Delayed Draw Term Loan

(3M USD LIBOR+7.00%), 8.00%

Cash, 7/9/2025

Buildout, Inc.

Real Estate Services

Limited Partner Interests

Total Real Estate Services

Acquisition Co.,

LFR Chicken LLC

First Lien Term Loan

(1M USD LIBOR+7.00%), 8.00%

Cash, 11/19/2026

LFR Chicken LLC (j)

Delayed Draw Term Loan

(1M USD LIBOR+7.00%), 8.00%

Cash, 11/19/2026

LFR Chicken LLC (h)

Series B Preferred Units

TMAC Acquisition Co., LLC

Unsecured Term Loan

PIK, 9/01/2023

Total Restaurant

ArbiterSports,

Lien Term Loan

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

ArbiterSports,

Draw Term Loan

Investment Corp.

Schedule of Investments

Interest Rate/

Original Acquisition

Number of Shares

Pepper Palace, Inc.

Specialty Food Retailer

First Lien Term Loan

(3M USD LIBOR+6.25%),

7.25% Cash, 6/30/2026

Pepper Palace, Inc.

Specialty Food Retailer

Delayed Draw Term Loan

(3M USD LIBOR+6.25%), 7.25%

Cash, 6/30/2026

Pepper Palace, Inc.

Specialty Food Retailer

Revolving Credit Facility

(3M USD LIBOR+6.25%),

7.25% Cash, 6/30/2026

Pepper Palace, Inc.

Specialty Food Retailer

Membership Interest

Total Specialty Food Retailer

ArbiterSports, LLC (d)

Sports Management

First Lien Term Loan

(3M USD LIBOR+6.50%), 8.25%

Cash, 2/21/2025

ArbiterSports, LLC (d)

Sports Management

Delayed Draw Term Loan

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

Total Sports Management

Holdings, LLC (h)

Avionte Holdings, LLC (h)

Staffing Services

Class A Units

Total Staffing Services

Waste Partners (d)

Lien Term Loan

Jobvite, Inc.

Talent Acquisition Software

Second Lien Term Loan

USD LIBOR+7.50%), 8.50% Cash, 1/6/2027

Total Talent Acquisition Software

National Waste Partners (d)

Waste Services

Second Lien Term Loan

Cash, 11/13/2022

Total Waste Services

Total Non-control/Non-affiliate investments

See accompanying notes to consolidated financial statements.

Non-control/Non-affiliate investments

Investment Corp.

Schedule of Investments

Interest Rate/Maturity

Acquisition Date

Interest Rate/

Original Acquisition

Number of Shares

investments - 6.4% (b)

Lien Term Loan

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

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

Draw Term Loan

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

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

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

Draw Term Loan

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

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,

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

Affiliate investments

Artemis Wax Corp.

Consumer Services

Delayed Draw Term Loan

(1M USD LIBOR+9.00%), 11.00%

Cash, 5/20/2026

Artemis Wax Corp.

Consumer Services

Series B-1 Preferred Stock

Artemis Wax Corp.

Consumer Services

Series C Preferred Stock

Total Consumer Services

Axero Holdings, LLC (f)

Employee Collaboration Software

First Lien Term Loan

(3M USD LIBOR+10.00%), 11.00%

Cash, 6/30/2026

Axero Holdings, LLC (f), (j)

Employee Collaboration Software

Delayed Draw Term Loan

(3M USD LIBOR+10.00%),

11.00% Cash, 6/30/2026

Axero Holdigns, LLC (f), (j)

Employee Collaboration Software

Revolving Credit Facility

(3M USD LIBOR+10.00%),

11.00% Cash, 6/30/2026

Axero Holdings, LLC (f), (h)

Employee Collaboration Software

Series A Preferred Units

Axero Holdings, LLC (f), (h)

Employee Collaboration Software

Series B Preferred Units

Total Employee Collaboration

Affiliate investments

Investment Corp.

Schedule of Investments

Interest Rate/

Original Acquisition

Number of Shares

Control investments

Netreo Holdings, LLC (g)

First Lien Term Loan

(3M USD LIBOR +8.00%), 9.00%

Netreo Holdings, LLC (d), (g), (j)

Delayed Draw Term Loan

(3M USD LIBOR +8.00%),

Netreo Holdings, LLC (g), (h)

Common Stock Class A Unit

Total IT Services

Saratoga Investment Corp.

CLO 2013-1, Ltd.

(a), (e), (g)

Finance Securities

Other/Structured

Finance Securities

Structured Finance Securities

Other/Structured Finance Securities

9.27%, 4/20/2033

Investment Corp.

CLO 2013-1, Ltd.

$ 111,000,000

Saratoga Investment Corp.

Class F-2-R-3 Note (a), (g)

Finance Securities

Other/Structured

Finance Securities

Structured Finance Securities

Other/Structured Finance Securities

(3M USD LIBOR+10.00%), 10.17%, 4/20/2033

Total Structured Finance Securities

Total Control investments

INVESTMENTS - 182.2% (b)

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

Bank Money Market (l)

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 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.

Saratoga Senior Loan Fund I JV, LLC (a), (g), (j)

Investment Fund

Unsecured Loan

10.00%, 6/15/2023

Saratoga Senior Loan Fund I

JV, LLC (a), (g), (j)

Investment Fund

Membership Interest

Total Investment Fund

Sub Total Control

TOTAL INVESTMENTS -

$ 796,248,327

$ 817,567,355

Number of Shares

Cash and cash equivalents and cash and cash equivalents, reserve accounts - 14.9% (b)

Bank Money Market (k)

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

(1) Securities are exempt from registration under Rule 144A of

the Securities Act of 1933, as amended, and are restricted securities.

(a) Represents an investment that is not a “qualifying asset”

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

As of February 28, 2022, non-qualifying assets

represent 6.7% of the Company’s portfolio at fair value.

As a BDC, the Company generally has to invest at least 70% of its total assets

in qualifying assets.

(b) Percentages are based on net assets of $355,780,523 as of

February 28, 2022.

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:

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

(d) These securities are either fully or partially pledged as

collateral under a senior secured revolving credit facility (see Note 8 to the consolidated financial statements).

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

is payable thereon.

As a result, the 9.27% interest rate in the table above represents the effective interest rate currently earned on

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

(f) As defined in the 1940 Act, this portfolio company is an

“affiliate”

as we own between 5.0% and 25.0% of the outstanding voting securities.

GreyHeller, LLC is no longer an affiliate

as of February 28, 2022.

Transactions during the year ended February 28, 2022 in which the issuer was an affiliate are as follows:

Total Interest from Investments

2 unchanged sentences

Net Change in Unrealized Appreciation (Depreciation)

Elyria Foundry Company, L.L.C.

$ (2,309,806 )

$ (8,726,013 )

Artemis Wax Corp.

Axero Holdings, LLC

GreyHeller, LLC

Top Gun Pressure Washing, LLC

TG Pressure Washing Holdings, LLC

(26,428,457 )

$ (26,428,457 )

(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:

(g) As defined in the 1940 Act, we “control”

this portfolio

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

Transactions during the year ended February

28, 2022 in which the issuer was both an affiliate and a portfolio company that we control are as follows:

Investment Corp.

Schedule of Investments

Total Interest from Investments

7 unchanged sentences

CLO 2013-1, Ltd.

Class F-R-2 Notes

Class F-R-3 Note

(17,875,000 )

Saratoga Investment Corp.

3 unchanged sentences

CLO 2013-1, Ltd.

Class G-R-2 Notes

Saratoga Investment Corp.

CLO 2013-1 Warehouse 2, Ltd.

(25,000,000 )

Class F-2-R-3 Note

Saratoga Senior Loan Fund I JV, LLC

$ (26,375,000 )

4 unchanged sentences

(See Note 9 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.

(k) Included within cash and cash equivalents and cash and cash

equivalents, reserve accounts in the Company’s consolidated statements of assets and liabilities as of February 28, 2022.

BSBY - Bloomberg Short-Term Bank Yield

LIBOR - London Interbank Offered Rate

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

SOFR - Secured Overnight Financing Rate

3M USD BSBY - The 3 month USD BSBY rate as of February

28, 2022 was 0.50%.

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

1M USD LIBOR - The 1 month USD LIBOR rate as of

February 28, 2022 was 0.24%.

3M USD LIBOR - The 3 month USD LIBOR rate as of

February 28, 2022 was 0.50%.

Daily USD SOFR - The daily USD SOFR rate as of February

28, 2022 was 0.05%

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

accompanying notes to consolidated financial statements.

PIK - Payment-in-Kind (see Note 2 to the consolidated

financial statements).

Investment Corp.

Schedule of Investments

Interest Rate/Maturity

Acquisition Date

Interest Rate/

Number of Shares

Non-control/Non-affiliate

investments - 138.2% (b)

Management Services

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

Management Services

Draw Term Loan

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

Total Construction Management Services

Holdings, Inc.

Non-control/Non-affiliate investments

Targus Holdings,

Consumer Products

Total Consumer Products

Alarm Center, LLC (k)

My Alarm Center, LLC (k)

Consumer Services

Preferred Equity Class

Alarm Center, LLC (h)

Preferred Equity Class A Units

My Alarm Center, LLC (h)

Consumer Services

Preferred Equity Class

Alarm Center, LLC (h)

Preferred Equity Class B Units

My Alarm Center, LLC (h)

Consumer Services

Preferred Equity Class

Alarm Center, LLC (h)

Preferred Equity Class Z Units

My Alarm Center, LLC (h)

Consumer Services

Total Consumer Services

Corporate Education Software

Series 1 Membership Interest

Total Corporate Education Software

Passageways, Inc.

Corporate Governance

First Lien Term Loan

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

(3M USD LIBOR+7.00%), 8.75%

Cash, 12/31/2025

Passageways, Inc.

Corporate Governance

Delayed Draw Term Loan

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

A Preferred Stock

(3M USD LIBOR+7.00%), 8.75%

Cash, 12/31/2025

Passageways, Inc.

Corporate Governance

Series A Preferred Stock

Total Corporate Governance

Educational Systems (d)

Education Services

New England Dental Partners

Dental Practice Management

First Lien Term Loan

(3M USD LIBOR+8.00%), 8.50%

Cash, 11/25/2025

New England Dental Partners

Dental Practice Management

Delayed Draw Term Loan

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

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

Total Dental Practice Management

Investment Corp.

Schedule of Investments

Interest Rate/

Number of Shares

PDDS Buyer, LLC

Dental Practice Management Software

First Lien Term Loan

(3M USD LIBOR+7.00%), 9.50%

Cash, 7/15/2024

PDDS Buyer, LLC

Dental Practice Management Software

Delayed Draw Term Loan

(3M USD LIBOR+7.00%), 9.50%

Cash, 7/15/2024

PDDS Buyer, LLC (h)

Dental Practice Management

Series A-1 Preferred Shares

Total Dental Practice Management

C2 Educational Systems (d)

Education Services

Teachers of Tomorrow, LLC (d)

Lien Term Loan

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

First Lien Term Loan

(3M USD LIBOR+8.50%),

10.00% Cash, 5/31/2023

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

Education Services

Texas Teachers of Tomorrow,

Education Services

First Lien Term Loan

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

Total Education Services

Solutions Inc.

Destiny Solutions Inc.

Education Software

First Lien Term Loan

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

Solutions Inc.

(3M USD LIBOR+7.50%), 9.50%

Cash, 10/24/2024

Destiny Solutions Inc.

Education Software

Limited Partner Interests

Education Software

Common Stock Class A

Identity Automation Systems (d)

Education Software

First Lien Term Loan

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

(3M USD LIBOR+9.24%), 10.99%

Cash, 5/8/2024

Identity Automation Systems (h)

Education Software

First Lien Term Loan

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

Common Stock Class A-2 Units

Identity Automation Systems (h)

Education Software

Common Stock Class A-1 Units

Investment Corp.

Schedule of Investments

Interest Rate/

Number of Shares

Education Software

First Lien Term Loan

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

(3M USD LIBOR+7.50%),

9.50% Cash, 1/17/2025

Education Software

Delayed Draw Term Loan

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

Software Inc.

Lien Term Loan

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

(3M USD LIBOR+7.50%), 9.50%

Cash, 1/17/2025

Kev Software Inc.

Education Software

First Lien Term Loan

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

Total Education Software

Davisware, LLC

Field Service Management

First Lien Term Loan

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

Service Management

Draw Term Loan

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

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

Holdings US, Inc.

Financial Services

(3M USD LIBOR+7.00%), 9.00%

Cash, 7/31/2024

Davisware, LLC

Field Service Management

Delayed Draw Term Loan

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

Software Holdings, LLC (h)

Financial Services

Common Stock Class A

Suite Holdings, LLC (d)

Total Field Service Management

GDS Software Holdings, LLC

Financial Services

Lien Term Loan

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

Common Stock Class A Units

Total Financial Services

Medical, LLC (h)

Healthcare Products

Manufacturing

Products Manufacturing

Subordinated Note

12.00% Cash, 7/15/2021

Ohio Medical, LLC (h)

Healthcare Products Manufacturing

Total Healthcare Products Manufacturing

Parent Holdings, LLC (h)

Investment Corp.

Schedule of Investments

Interest Rate/

Number of Shares

Axiom Parent Holdings, LLC (h)

Healthcare Services

Common Stock Class A

Purchaser, Inc.

Common Stock Class A Units

Axiom Purchaser, Inc.

Healthcare Services

First Lien Term Loan

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

Purchaser, Inc.

(3M USD LIBOR+6.00%), 7.75%

Cash, 6/19/2023

Axiom Purchaser, Inc.

Healthcare Services

Delayed Draw Term Loan

(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

(3M USD LIBOR+6.00%), 7.75%

Cash, 6/19/2023

ComForCare Health Care

Healthcare Services

First Lien Term Loan

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

Total Healthcare Services

Holding Company, LLC

TRC HemaTerra, LLC (h)

Healthcare Software

Class D Membership Interests

HemaTerra Holding Company, LLC

Healthcare Software

First Lien Term Loan

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

Holding Company, LLC (j)

(3M USD LIBOR+6.75%), 9.25%

Cash, 4/15/2024

HemaTerra Holding Company, LLC (d), (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

(3M USD LIBOR+6.75%), 9.25%

Cash, 4/15/2024

Procurement Partners, LLC

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

(3M USD LIBOR+6.50%), 7.50%

Cash, 11/12/2025

Procurement Partners, LLC (j)

Healthcare Software

Delayed Draw Term Loan

(3M USD LIBOR+6.50%), 7.50%

Cash, 11/12/2025

Procurement Partners Holdings

Healthcare Software

Class A Units

Total Healthcare Software

Medical, Inc.

Roscoe Medical, Inc.

Healthcare Supply

Medical, Inc.

Lien Term Loan

Roscoe Medical, Inc.

Healthcare Supply

Second Lien Term Loan

Cash, 6/28/2021

Total Healthcare Supply

Investment Corp.

Schedule of Investments

Interest Rate/

Number of Shares

Book4Time, Inc.

Hospitality/Hotel

Lien Term Loan

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

First Lien Term Loan

(3M USD LIBOR+8.50%),

10.25%, 12/22/2025

Book4Time, Inc.

Hospitality/Hotel

Delayed Draw Term Loan

(3M USD LIBOR+8.50%), 10.25%,

Book4Time, Inc.

Hospitality/Hotel

Class A Preferred Shares

Knowland Group, LLC

Hospitality/Hotel

Second Lien Term Loan

(3M USD LIBOR+8.00%), 10.00%

Cash, 5/9/2024

Sceptre Hospitality Resources,

Hospitality/Hotel

First Lien Term Loan

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

Total Hospitality/Hotel

Controls Holding Co., LLC (d)

Granite Comfort, LP

HVAC Services and Sales

First Lien Term Loan

(1M USD LIBOR+9.00%), 10.00%

Cash, 11/16/2025

Granite Comfort, LP

HVAC Services and Sales

Delayed Draw Term Loan

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

Total HVAC Services and Sales

Vector Controls Holding Co., LLC (d)

Industrial Products

First Lien Term Loan

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

Controls Holding Co., LLC (h)

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

11.50% (9.75% Cash/1.75%

PIK), 3/6/2022

Vector Controls Holding Co.,

Industrial Products

Warrants to Purchase Limited

Liability Company Interests, Expires 11/30/2027

Total Industrial Products

Communications Holding, LLC

Investment Corp.

Schedule of Investments

Interest Rate/

Number of Shares

CLEO Communications Holding, LLC (d)

First Lien Term Loan

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

Communications Holding, LLC

(3M USD LIBOR+8.00%),

9.00% Cash/2.00% PIK, 3/31/2022

CLEO Communications Holding, LLC (d), (j)

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

(3M USD LIBOR+8.00%), 9.00%

Cash/2.00% PIK, 3/31/2022

LogicMonitor, Inc.

First Lien Term Loan

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

Total IT Services

inMotionNow, Inc.

Marketing Services

First Lien Term Loan

(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

(3M USD LIBOR+7.50), 10.00%

Cash, 5/15/2024

inMotionNow, Inc.

Marketing Services

Delayed Draw Term Loan

(3M USD LIBOR+7.50) 10.00%

Cash, 5/15/2024

Total Marketing

Omatic Software, LLC

Non-profit Services

First Lien Term Loan

(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

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

Total Non-profit Services

Street Enterprises, L.L.C.

Emily 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

(3M USD LIBOR+8.50%), 10.00%

Cash, 12/31/2023

Emily Street Enterprises, L.L.C.

Office Supplies

Warrant Membership Interests

Expires 12/28/2022

Total Office Supplies

Holdings Software Technologies, LLC

Apex Holdings Software Technologies, LLC

Payroll Services

First Lien Term Loan

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

Holdings Software Technologies, LLC

Draw Term Loan

(3M USD LIBOR+8.00%), 9.00%

Cash, 9/21/2024

Apex Holdings Software Technologies,

Payroll Services

Delayed Draw Term Loan

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

Total Payroll Services

Realty Holdings LLC

Village Realty Holdings LLC

Property Management

First Lien Term Loan

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

Realty Holdings LLC (j)

(3M USD LIBOR+6.50%), 8.75%

Cash, 10/8/2024

Village Realty Holdings LLC (j)

Property Management

Delayed Draw Term Loan

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

Rental Holdings LLC (h)

A-1 Membership Units

(3M USD LIBOR+6.50%), 8.75%

Cash, 10/8/2024

V Rental Holdings LLC (h)

Property Management

Class A-1 Membership Units

Total Property Management

Acquisition Co., LLC

Investment Corp.

Schedule of Investments

Interest Rate/

Original Acquisition

Number of Shares

Buildout, Inc.

Real Estate Services

First Lien Term Loan

(3M USD LIBOR+7.75%),

9.25% Cash, 7/9/2025

Buildout, Inc.

Real Estate Services

Delayed Draw Term Loan

(3M USD LIBOR+7.75%), 9.25%

Cash, 7/9/2025

Buildout, Inc.

Real Estate Services

Limited Partner Interests

Total Real Estate Services

TMAC Acquisition Co., LLC (k)

Unsecured Term Loan

PIK, 9/01/2023

Total Restaurant

ArbiterSports,

ArbiterSports, LLC (d)

Sports Management

First 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

ArbiterSports, LLC (d)

Sports Management

Delayed Draw Term Loan

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

Total Sports Management

Holdings, LLC (h)

Avionte Holdings, LLC (h)

Staffing Services

Class A Units

Total Staffing Services

Waste Partners (d)

Lien Term Loan

National Waste Partners (d)

Waste Services

Second Lien Term Loan

Cash, 2/13/2022

Total Waste Services

Total Non-control/Non-affiliate investments

investments - 6.0% (b)

Non-control/Non-affiliate investments

Interest Rate/

Original Acquisition

Number of Shares

Affiliate investments

GreyHeller LLC (f)

Cyber Security

First Lien Term Loan

(3M USD LIBOR+11.00%), 12.46% Cash, 11/16/2021

A Preferred Units

(3M USD LIBOR+11.00%), 12.00%

Cash, 12/31/2025

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

Cyber Security

Delayed Draw Term Loan

(3M USD LIBOR+11.00%),

12.00% Cash, 12/31/2025

GreyHeller LLC (f), (h)

Cyber Security

Series A Preferred Units

Total Cyber Security

Gun Pressure Washing, LLC (f)

Top 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)

(3M USD LIBOR+7.00%), 9.50%

Cash, 8/12/2024

Top 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

Total Affiliate investments

(3M USD LIBOR+7.00%), 9.50%

Cash, 8/12/2024

TG Pressure Washing Holdings,

Facilities Maintenance

Preferred Equity

Total Facilities Maintenance

Affiliate investments

Investment Corp.

Schedule of Investments

Interest Rate/Maturity

Acquisition Date

Interest Rate/

Original Acquisition

Number of Shares

investments - 15.4% (b)

Holdings, LLC (g)

Control investments

Netreo Holdings, LLC (g)

First Lien Term Loan

(3M USD LIBOR +6.25%), 9.00% Cash/2.00% PIK,

Holdings, LLC (g), (h)

Stock Class A Unit

(3M USD LIBOR +6.25%), 9.00%

Cash/2.75% PIK,

Netreo Holdings, LLC (g), (j)

Delayed Draw Term Loan

(3M USD LIBOR +6.25%),

9.00% Cash/2.75% PIK,

Netreo Holdings, LLC (g), (h)

Common Stock Class A Unit

Total IT Services

Investment Corp.

Saratoga Investment Corp.

CLO 2013-1, Ltd.

(a), (e), (g)

Structured Finance Securities

Other/Structured Finance

Other/Structured Finance Securities

11.72%, 1/20/2030

Investment Corp.

CLO 2013-1, Ltd.

$ 111,000,000

Saratoga Investment Corp.

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

Structured Finance Securities

Other/Structured Finance

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

Investment Corp.

CLO 2013-1, Ltd.

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

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

Other/Structured Finance Securities

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

Total Structured Finance Securities

Total Control investments

INVESTMENTS - 159.6% (b)

Control investments

TOTAL INVESTMENTS

$ 550,013,680

$ 554,312,715

and cash equivalents and cash and cash equivalents, reserve accounts - 13.0% (b)

Bank Money Market (l)

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 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.

Number of Shares

Cash 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 accounts

(1) Securities are exempt from registration under Rule 144A of

the Securities Act of 1933, as amended, and are restricted securities.

(a) Represents an investment that is not a “qualifying asset”

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

As of February 28, 2021 non-qualifying

assets represent 9.5% of the Company’s portfolio at fair value.

As a BDC, the Company generally has to invest at least 70% of its total

assets in qualifying assets.

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

February 28, 2021.

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

(d) These securities are either fully or partially pledged as

collateral under a senior secured revolving credit facility (see Note 8 to the consolidated financial statements).

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

is payable thereon.

As a result, the 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.

(f) As defined in the 1940 Act, this portfolio company is an

“affiliate”

as we own between 5.0% and 25.0% of the outstanding voting securities.

Transactions during the year ended February

4 unchanged sentences

Net Change in Unrealized Appreciation (Depreciation)

GreyHeller LLC

Elyria Foundry Company, L.L.C.

$ (2,309,806 )

$ (8,726,013 )

GreyHeller LLC

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:

$ (2,309,806 )

$ (8,726,013 )

Investment Corp.

Schedule of Investments

(g) As defined in the 1940 Act, we “control”

this portfolio

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

Transactions during the year ended February

28, 2021 in which the issuer was both an affiliate and a portfolio company that we control are as follows:

Total Interest from Investments

2 unchanged sentences

Net Change in Unrealized Appreciation (Depreciation)

Easy Ice, LLC

$ (65,219,080 )

$ (3,816,610 )

Easy Ice Masters, LLC

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

Saratoga Investment Corp.

CLO 2013-1 Warehouse 2, Ltd (j)

CLO 2013-1 Warehouse 2, Ltd.

(25,000,000 )

6 unchanged sentences

(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 29, 2020.

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 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).

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 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.”

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

February 28, 2022

Saratoga Investment Corp.

(the “Company”,

“we”, “our”

and “us”) is a non-diversified closed end management investment company incorporated in

Maryland that has elected to be treated and is regulated as a business development company (“BDC”) under the Investment Company

Act of 1940, as amended (the “1940 Act”).

The Company commenced operations on March 23, 2007 as GSC Investment Corp.

and completed

the initial public offering (“IPO”) on March 28, 2007.

The Company has elected to be treated 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 Company’s investment objective is to generate

current income and, to a lesser extent, capital appreciation from its investments.

GSC Investment, LLC (the “LLC”)

was organized in May 2006 as a Maryland limited liability company.

As of February 28, 2007, the LLC had not yet commenced its operations

and investment activities.

On March 21, 2007, the Company was

incorporated and concurrently therewith the LLC was merged with and into the Company, with the Company as the surviving entity, in accordance

with the procedure for such merger in the LLC’s limited liability company agreement and Maryland law.

In connection with such merger,

each outstanding limited liability company interest of the LLC was converted into a share of common stock of the Company.

On July 30, 2010, the Company changed

its name from “GSC Investment Corp.”

to “Saratoga Investment Corp.”

in connection

with the consummation of a recapitalization transaction.

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).

in connection with the consummation of a recapitalization

The Company is externally managed

and advised by the investment adviser, Saratoga Investment Advisors, LLC (the “Manager”

or “Saratoga Investment Advisors”),

pursuant to an investment advisory and management agreement (the “Management Agreement”).

Prior to July 30, 2010, the Company

was managed and advised by GSCP (NJ), L.P.

The Company has established wholly-owned

subsidiaries, SIA-Avionte, Inc., SIA-AX, Inc., SIA-GH, Inc., SIA-MAC, Inc., SIA-PEP, Inc., SIA-PP Inc., SIA-TG, Inc., SIA-TT, Inc., SIA-Vector,

and SIA-VR, Inc., which are structured as Delaware entities, or tax blockers (“Taxable Blockers”), to hold equity or

equity-like investments in portfolio companies organized as limited liability companies, or LLCs (or other forms of pass through entities).

In February 2022, SIA-GH, Inc., SIA-TT Inc.

and SIA-VR, Inc.

received an approved plan of liquidation following the sale of equity held

by each of the portfolio companies.

Tax Blockers are consolidated for accounting purposes, but are not consolidated for U.S.

federal income tax purposes

and may incur U.S.

federal income

tax 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

On 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.

On March 28, 2012, our wholly-owned

subsidiary, Saratoga Investment Corp.

SBIC, LP (“SBIC LP”), received a Small Business Investment Company (“SBIC”)

license from the Small Business Administration (“SBA”).

On August 14, 2019, our wholly-owned subsidiary, Saratoga Investment

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.

The new license will provide up to $175.0 million

in additional long-term capital in the form of SBA debentures.

The Company has formed a wholly owned

special purpose entity, Saratoga Investment Funding II LLC, a Delaware limited liability company (“SIF II”), for the purpose

of entering into a $50.0 million senior secured revolving credit facility with Encina Lender Finance, LLC (the “Lender”),

supported by loans held by SIF II and pledged to the Lender under the credit facility (the “Encina Credit Facility”).

Encina Credit Facility closed on October 4, 2021.

During the first two years following the closing date, SIF II may request an increase

in the commitment amount under the Encina Credit Facility to up to $75.0 million.

The terms of the Encina Credit Facility require a minimum

drawn amount of $12.5 million at all times during the first six months following the closing date, which increases to the greater of $25.0

million or 50% of the commitment amount in effect at any time thereafter.

The term of the Encina Credit Facility is three years.

under the Encina Credit Facility bear interest at a floating rate per annum equal to LIBOR plus 4.0%, with LIBOR having a floor of 0.75%,

with customary provisions related to the selection by the Lender and the Company of a replacement benchmark rate.

Concurrently with the

closing of the Encina Credit Facility, all remaining amounts outstanding on the Company’s existing revolving credit facility with

Madison Capital Funding, LLC were repaid and the revolving credit facility terminated.

On October 26, 2021, the Company and

TJHA JV I LLC (“TJHA”) entered into a Limited Liability Company Agreement (the “LLC Agreement”) to co-manage Saratoga

Senior Loan Fund I JV LLC (“SLF JV”).

SLF JV is under joint control and is not consolidated.

SLF JV is invested in Saratoga

Investment Corp Senior Loan Fund 2021-1 Ltd (“SLF 2021”), which is a wholly owned subsidiary of SLF JV.

SLF 2021 was formed

for the purpose of making investments in a diversified portfolio of broadly syndicated first lien and second lien term loans or bonds

in the primary and secondary markets.

Summary of Significant Accounting Policies

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.

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-GH, Inc., SIA-MAC, Inc., SIA-PP, Inc., SIA-TG, Inc., SIA-TT, Inc., SIA-Vector, Inc.

Dollars and include the accounts of the Company and its wholly owned special purpose financing subsidiaries,

Saratoga Investment Funding, LLC (previously known as GSC Investment Funding LLC), SIF II, SBIC LP, SBIC II LP, SIA-Avionte, Inc., SIA-AX,

Inc., SIA-GH, Inc., SIA-MAC, Inc., SIA-PEP, Inc., SIA-PP, Inc., SIA-TG, Inc., SIA-TT, Inc., SIA-Vector, Inc.

and SIA-VR, Inc.

intercompany accounts and transactions have been eliminated in consolidation.

All intercompany

accounts and transactions have been eliminated in consolidation.

All references made to the “Company,”

“we,”

and “us”

“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 ”

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 —

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:

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, 2022.

Principles of Consolidation

Under the investment company rules and regulations

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

The Company has determined that SLF JV is an investment

company under ASC 946;

however, in accordance with such guidance the Company will generally not consolidate its investment in a company

other than a wholly-owned investment company subsidiary.

SLF JV is not a wholly-owned investment company subsidiary as the Company and

TJHA each have an equal 50% voting interest in SLF JV and thus neither party has a controlling financial interest.

Furthermore, ASC 810

concludes that in a joint venture where both members have equal decision making authority, it is not appropriate for one member to consolidate

the joint venture since neither has control.

Accordingly, the Company does not consolidate its investment in SLF JV.

Use of Estimates in the Preparation of Financial Statements

The preparation of the accompanying

consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported

amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and income,

gains (losses) and expenses during the period reported.

Actual results could differ materially from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include

short-term, liquid investments in a money market fund.

Cash and cash equivalents are carried at cost which approximates fair value.

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:

● we were to own more than 3.0% of the investments company’s

total outstanding voting;

● we were to hold securities in the investment company having

an aggregate value in excess of 5.0% of the value of our total assets;

● we were to hold securities in investments companies having

an aggregate value in excess of 10.0% of the value of our total assets.

As of February 28, 2022, the Company did not exceed any

of these limitations.

Cash and Cash Equivalents, Reserve Accounts

Cash and cash equivalents, reserve accounts include

amounts held in designated bank accounts in the form of cash and short-term liquid investments in money market funds, representing payments

received on secured investments or other reserved amounts associated with the revolving credit facilities.

The Company is required to

use these amounts to pay interest expense, reduce borrowings, or pay other amounts in accordance with the terms of the revolving credit

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:

Cash and cash equivalents

Cash and cash equivalents, reserve accounts

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

Classification

Company classifies its investments in accordance with the requirements of the 1940 Act.

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.

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.

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.

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 820”).

ASC 820 defines fair value, establishes

a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and

enhances disclosure requirements for fair value measurements.

ASC 820 requires the Company to assume that its investments are to be sold

or its liabilities are to be transferred at the measurement date in the principal market to independent market participants, or in the

absence of a principal market, in the most advantageous market, which may be a hypothetical market.

Market participants are defined as

buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact.

Investments for which market quotations

are readily available are fair valued at such market quotations obtained from independent third-party pricing services and market makers

subject to any decision by our board of directors to approve a fair value determination to reflect significant events affecting the value

of these investments.

We value investments for which market quotations are not readily available at fair value as approved, in good faith,

by our board of directors based on input from our Manager, the audit committee of our board of directors and a third-party independent

valuation firm.

The Company undertakes a multi-step valuation

process each quarter when valuing investments for which market quotations are not readily available, as described below:

● Each investment is initially valued by the responsible investment

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

● 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.

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.

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

The 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 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.

(“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

The inputs are based on available market data and projections provided by third parties as well as management estimates.

Company uses the output from the Intex models (i.e., the estimated cash flows) to perform a discounted cash flow analysis on expected

future cash flows to determine the valuation for our investment in Saratoga CLO.

The Company’s equity investment

in SLF JV is measured using the proportionate share of the net asset value, or equivalent, of SLF JV as a practical expedient for fair

value, provided by ASC 820.

Because such valuations, and particularly

valuations of private investments and private companies, are inherently uncertain, they may fluctuate over short periods of time and may

be based on estimates.

The determination of fair value may differ materially from the values that would have been used if a ready market

for these investments existed.

The Company’s net asset value could be materially affected if the determinations regarding the fair

value of our investments were materially higher or lower than the values that we ultimately realize upon the disposal of such investments.

Derivative Financial Instruments

The Company accounts for derivative

financial instruments in accordance with FASB ASC Topic 815, Derivatives and Hedging (“ASC 815”).

ASC 815 requires

recognizing all derivative instruments as either assets or liabilities on the consolidated statements of assets and liabilities at fair

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.

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

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.

are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected.

1 unchanged sentence

is generally reserved when a loan is placed on non-accrual status.

Interest payments received on non-accrual loans may be recognized

as a reduction in principal depending upon management’s judgment regarding collectability.

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

2 unchanged sentences

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.

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.

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 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.

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 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:

Statements of Operations

For the Year Ended February 28, 2019

Incentive fee income

Total investment income

NET INVESTMENT INCOME

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE

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.

2022, there were no investments on non-accrual status.

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.

Interest income on our investment

in Saratoga CLO is recorded using the effective interest method in accordance with the provisions of ASC Topic 325, Investments-Other,

Beneficial Interests in Securitized Financial Assets , (“ASC 325”), based on the anticipated yield and the estimated cash

flows over the projected life of the investment.

Yields are revised when there are changes in actual or estimated cash flows due to changes

in prepayments and/or re-investments, credit losses or asset pricing.

Changes in estimated yield are recognized as an adjustment to the

estimated yield over the remaining life of the investment from the date the estimated yield was changed.

Payment-in-Kind Interest

The Company holds debt and preferred

equity investments in its portfolio that contain a payment-in-kind (“PIK”) interest provision.

The PIK interest, which represents

contractually deferred interest added to the investment balance that is generally due at maturity, is generally recorded on the accrual

basis to the extent such amounts are expected to be collected.

The Company stops accruing PIK interest if it is expected that the issuer

will not be able to pay all principal and interest when due.

Dividend Income

Dividends income is recorded in the consolidated

statements of operations when earned.

Structuring and Advisory Fee Income

Structuring and advisory fee income represents

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

Other income includes prepayment income fees, and

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

Deferred Debt Financing Costs

Financing costs incurred in connection with our

credit facility and notes are deferred and amortized using the straight-line method over the life of the respective facility and debt

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 of that debt liability, consistent with debt

Contingencies

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.

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.

In the ordinary course of business, the Company

may enter into contracts or agreements that contain indemnifications or warranties.

Future events could occur that lead to the execution

of these provisions against the Company.

Based on its history and experience, management reasonably believes that the likelihood of such

an event is remote.

Therefore, the Company has not accrued any liabilities in connection with such indemnifications.

In the ordinary course of business, the Company

may directly or indirectly be a defendant or plaintiff in legal actions with respect to bankruptcy, insolvency or other types of proceedings.

Such lawsuits may involve claims that could adversely affect the value of certain financial instruments owned by the Company.

The Company has elected, and intends to qualify

annually, to be treated for U.S.

federal income tax purposes as a RIC under Subchapter M of the Code.

By meeting these requirements, the

Company will not be subject to corporate federal income taxes on ordinary income or capital gains timely distributed to stockholders.

Therefore, no provision has been recorded for federal income taxes, except as related to the Taxable Blockers and long-term capital gains,

when applicable.

In order to qualify as a RIC, among other requirements,

the Company is required to timely distribute to its stockholders at least 90% of its “investment company taxable income”,

as defined by the Code, for each fiscal tax year.

The Company will be subject to a nondeductible U.S.

federal excise tax of 4% on undistributed

income if it does not distribute at least (1) 98% of its net ordinary income in any calendar year, (2) 98.2% of its capital gain net income

for each one-year period ending on October 31and (3) any net ordinary income and capital gain net income that it recognized for preceding

years, but were not distributed during such year, and on which the Company paid no U.S federal income tax.

Depending on the level of investment company taxable

income earned in a tax year and the amount of net capital gains recognized in such tax year, the Company may choose to carry forward investment

company taxable income and net capital gains in excess of current year dividend distributions into the next tax year and pay the 4.0%

federal excise tax on such income, as required.

To the extent that the Company determines that its estimated current year annual

investment company taxable income will be in excess of estimated current year dividend distributions for U.S.

federal excise tax purposes,

the Company accrues the U.S.

federal excise tax, if any, on estimated excess taxable income as taxable income is earned.

For the years

ended February 28, 2022, 2021 and 2020, the excise tax accrual on estimated excess table income was $0.6 million, $0.7 million and $0.0

million, respectively.

In accordance with U.S.

Treasury regulations and

published guidance issued by the Internal Revenue Service (“IRS”), a publicly offered RIC may treat a distribution of its

own stock as counting toward its RIC distribution requirements if each stockholder may elect to receive his, her, or its entire distribution

in either cash or stock of the RIC.

This published guidance indicates that the rule will apply where the aggregate amount of cash to be

distributed to all stockholders is not at least 20.0% of the aggregate declared distribution.

Under the published guidance, if too

many stockholders elect to receive cash, the cash available for distribution must be allocated among the stockholders electing to

receive cash (with the balance of the distribution paid in stock).

In no event will any stockholder, electing to receive cash, receive

less than 20.0% of his or her entire distribution in cash.

If these and certain other requirements are met, for U.S.

federal income tax

purposes, the amount of the dividend paid in stock will be equal to the amount of cash that could have been received instead of stock.

The Company may utilize wholly owned holding companies

taxed under Subchapter C of the Code or tax blockers, when making equity investments in portfolio companies taxed as pass-through entities

to meet its source-of-income requirements as a RIC.

Taxable Blockers are consolidated in the Company’s U.S.

GAAP financial statements

and may result in current and deferred federal and state income tax expense with respect to income derived from those investments.

income, net of applicable income taxes, is not included in the Company’s tax-basis net investment income until distributed by the

Taxable Blocker, which may result in timing and character differences between the Company’s U.S.

GAAP and tax-basis net investment

income and realized gains and losses.

Income tax expense or benefit from Taxable Blockers related to net investment income are included

in total operating expenses, while any expense or benefit related to federal or state income tax originated for capital gains and losses

are included together with the applicable net realized or unrealized gain or loss line item.

Deferred tax assets of the Taxable Blockers

are reduced by a valuation allowance when, in the opinion of management, it is more-likely than-not that some portion or all of the deferred

tax assets will not be realized.

FASB ASC Topic 740, Income Taxes,

(“ASC 740”), provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in

the financial statements.

ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the

Company’s tax returns to determine whether the tax positions are “more-likely-than-not”

of being sustained by the applicable

tax authority.

Tax positions deemed to meet a “more-likely-than-not”

threshold would

be recorded as a tax benefit or expense in the current period.

The Company recognizes interest and penalties, if any, related to unrecognized

tax benefits as income tax expense on the consolidated statements of operations.

During the fiscal year ended February 28, 2021 the Company

did not incur any interest or penalties.

threshold would be recorded as a tax benefit or expense

in the current period.

The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense

on the consolidated statements of operations.

During the fiscal year ended February 28, 2022, February 28, 2021 and 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 federal.

2019 and 2020 federal tax years for the Company remain subject to examination by the IRS.

The 2019, 2020, 2021 and 2022 federal tax years for the Company remain subject to examination by the IRS.

At February 28, 2022, and February

28, 2021, 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 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.

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.

Net realized capital

gains, if any, are generally distributed at least annually, although we may decide to retain some or all of our net capital gains for

reinvestment.

We have adopted a dividend reinvestment

plan (“DRIP”) that provides for reinvestment of our dividend distributions on behalf of our stockholders unless a stockholder

elects to receive cash.

As a result, if our board of directors authorizes, and we declare, a cash dividend, then our stockholders who

have not “opted out”

of the DRIP by the dividend record date will have their cash dividends automatically reinvested into

additional shares of our common stock, rather than receiving the cash dividends.

We have the option to satisfy the share requirements

of the DRIP through the issuance of new shares of common stock or through open market purchases of common stock by the DRIP plan administrator.

Capital Gains Incentive Fee

The Company records an expense accrual

on the consolidated statements of operations relating to the capital gains incentive fee payable by the Company to the Manager on the

consolidated statements of assets and liabilities when the net realized and unrealized gain on its investments exceed all net realized

and unrealized capital losses on its investments because a capital gains incentive fee would be owed to the Manager if the Company were

to liquidate its investment portfolio at such time.

The actual incentive fee payable to

the Manager related to capital gains will be determined and payable in arrears at the end of each fiscal year and only reflect those realized

capital gains net of realized and unrealized losses for the period.

New Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04, Reference

Rate Reform (“ASU 2020-04”).

The amendments in ASU 2020-04 provide optional expedients and exceptions for applying GAAP to

contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The Company has

agreements that have LIBOR as a reference rate with certain portfolio companies and under the Encina Credit Facility.

Many of these agreements

(including the credit agreements relating to the Encina Credit Facility) include an alternative successor rate or language for choosing

an alternative successor rate when LIBOR reference is no longer considered to be appropriate.

With respect to other agreements, the Company

intends to work with its portfolio companies to modify agreements to choose an alternative successor rate.

Contract modifications are

required to be evaluated in determining whether the modifications result in the establishment of new contracts or the continuation of

existing contracts.

The standard is effective as of March 12, 2020 through December 31, 2022.

Management does not

believe this optional guidance has a material impact on the Company’s consolidated financial statements and disclosures.

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.

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.

Management does not believe this optional

guidance has a material impact on the Company’s consolidated financial statements and disclosures.

Risk Management

In the ordinary course of its business,

the Company manages a variety of risks, including market risk and credit risk.

Market risk is the risk of potential adverse changes to

the value of investments because of changes in market conditions such as interest rate movements and volatility in investment prices.

Credit risk is the risk of default

or non-performance by portfolio companies, equivalent to the investment’s carrying amount.

The Company is also exposed to credit

risk related to maintaining all of its cash and cash equivalents, including those in reserve accounts, at a major financial institution

and credit risk related to any of its derivative counterparties.

The Company has investments in lower

rated and comparable quality unrated high yield bonds and bank loans.

Investments in high yield investments are accompanied by a greater

degree of credit risk.

The risk of loss due to default by the issuer is significantly greater for holders of high yield securities, because

such investments are generally unsecured and are often subordinated to other creditors of the issuer.

As noted above, the Company values

all investments in accordance with ASC 820.

As defined in ASC 820, fair value is the price that would be received to sell an asset or

paid to transfer a liability in an orderly transaction between independent market participants at the measurement date.

ASC 820 establishes a hierarchal disclosure

framework which prioritizes and ranks the level of market price observability of inputs used in measuring investments at fair value.

price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment.

Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally

will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

Based on the observability of the

inputs used in the valuation techniques, the Company is required to provide disclosures on fair value measurements according to the fair

value hierarchy.

The fair value hierarchy ranks the observability of the inputs used to determine fair values.

Investments carried at fair value are classified and disclosed in one of the following three categories:

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

Investments carried at

fair value are classified and disclosed in one of the following three categories:

● Level 1—Valuations based on quoted prices in active

markets for identical assets or liabilities that the Company has the ability to access.

● Level 2—

Pricing inputs are other than quoted prices

in active markets, which are either directly or indirectly observable as of the reporting date.

Such inputs may be quoted prices for

similar assets or liabilities, quoted markets that are not active, or other inputs that are observable or can be corroborated by observable

market data for substantially the full character of the financial instrument, or inputs that are derived principally from, or corroborated

by, observable market information.

Investments that are generally included in this category include illiquid debt securities and less

liquid, privately held or restricted equity securities, for which some level of recent trading activity has been observed.

● Level 3—Pricing inputs are unobservable for the investment

and includes situations where there is little, if any, market activity for the investment.

The inputs may be based on the Company’s

own assumptions about how market participants would price the asset or liability or may use Level 2 inputs, as adjusted, to reflect specific

investment attributes relative to a broader market assumption.

Even if observable market data for comparable performance or valuation

measures (earnings multiples, discount rates, other financial/valuation ratios, etc.) are available, such investments are grouped as

Level 3 if any significant data point that is not also market observable (private company earnings, cash flows, etc.) is used in the

valuation technique.

We use multiple techniques for determining fair value based on the nature of the investment and experience with

those types of investments and specific portfolio companies.

The selections of the valuation techniques and the inputs and assumptions

used within those techniques often require subjective judgements and estimates.

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

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 28, 2022 (dollars in thousands), according to the fair value hierarchy:

Fair Value Measurements

Valued Using Net Asset

First lien term loans

Second lien term loans

Unsecured term loans

Unsecured loans

Structured finance securities

Equity interests

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

* The Company's equity investment in SLF JV is measured using

the proportionate share of the net asset value, or equivalent, as a practical expedient and thus has not been classified in the fair

value hierarchy.

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:

Fair Value Measurements

First lien term loans

3 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 28, 2021 (dollars in thousands):

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, 2022 (dollars in thousands):

First lien term loans

9 unchanged sentences

Net realized gain (loss) from investments

Restructures in

Restructures out

Balance as of February 28, 2022

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.

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.

Sales and 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 they occur.

There were no restructures in or out of Levels 1, 2, or 3 during the

year ended February 28, 2022.

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

Unsecured term loans

Structured finance securities

First lien term

Equity interests

7 unchanged sentences

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

Unobservable Input

Weighted Average*

Transfers 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 valuation techniques and significant unobservable inputs used in

recurring Level 3 fair value measurements of assets as of February 28, 2022 were as follows (dollars in thousands):

First lien term loans

1 unchanged sentence

Market Yield (%)

EBITDA Multiples (x)

Revenue Multiples (x)

2 unchanged sentences

Market Yield (%)

10.0% - 24.5%

EBITDA Multiples (x)

2 unchanged sentences

Market Yield (%)

EBITDA Multiples (x)

Collateral Value Coverage

Net Asset Value

Structured finance securities

9 unchanged sentences

Revenue Multiples (x)

* 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):

Third-party bid

* 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

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)

10 unchanged sentences

Revenue Multiples (x)

* 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

* 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

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 or

third party bid in deriving a value, a significant increase (decrease) in the market quote or bid, 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

The composition of our investments as of February 28, 2022 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

First lien term loans

Second lien term loans

Unsecured term loans

Unsecured loans

Structured finance securities

Equity interests

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

The composition of our investments as of February 28, 2021 at amortized

cost and fair value was as follows (dollars in thousands):

Investments at

Amortized Cost

Percentage of

Total Portfolio

Investments at

Percentage of

First lien term loans

3 unchanged sentences

Equity interests

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.

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 inputs

that a hypothetical market participant would use to value the security in a current hypothetical sale using a market comparables valuation

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.

For equity securities of portfolio companies and

partnership interests, we determine the fair value using an enterprise value waterfall valuation technique.

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

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.

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

The inputs at February 28, 2021 for the valuation model include:

● Reinvestment

rate / price:

Our 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.

We ran Intex models

based on inputs about the refinanced Saratoga CLO’s structure, including capital structure, cost of liabilities and reinvestment

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 28, 2022.

The inputs at February 28, 2022 for

the valuation model include:

● Default rate:

● Recovery rate:

● Discount rate:

● Prepayment rate:

● Reinvestment rate / price:

L+365bps / $99.25

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.

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

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 28, 2022.

Hematerra Holdings Company, LLC

HemaTerra Holding Company, LLC (“HemaTerra”)

provides SaaS-based software solutions addressing complex supply chain issues across a variety of medical environments, including blood,

plasma, tissue, implants and DNA sample management, to customers in blood centers, hospitals, pharmaceuticals, and law enforcement settings.

Buildout, Inc.

(“Buildout”) provides

SaaS-based real estate marketing and customer relationship management (“CRM”) software to commercial real estate (“CRE”)

Buildout provides a suite of software solutions brokers use to manage relationships, efficiently create and distribute marketing

materials over a wide variety of channels, including direct mail, multiple listing websites, brokerage website, property specific websites

and manage back office functions like commission calculations and broker productivity .

Investment in Saratoga Investment Corp.

CLO 2013-1, Ltd.

(“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

August 7, 2018, the Company entered into an unsecured loan agreement (“CLO 2013-1 Warehouse Loan”) with Saratoga Investment

CLO 2013-1 Warehouse, Ltd.

(“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 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.

February 11, 2020, the Company entered into an unsecured loan agreement with Saratoga Investment Corp.

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.

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.

CLO 2013-1 Warehouse, 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

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%.

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.

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.

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.

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.

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 with Saratoga Investment Corp.

CLO 2013-1 Warehouse 2, Ltd., (“CLO 2013-1 Warehouse 2”) a wholly

owned subsidiary Saratoga CLO.

On 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.

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.

3 unchanged sentences

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 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 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.

At August 31, 2021, the outstanding receivable

of $2.6 million was repaid in full.

The 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 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%.

For the years ended February 28, 2022,

February 28, 2021 and February 29, 2020, we accrued management fee income of $3.3 million, $2.5 million and $2.5 million, respectively,

and interest income of $4.9 million, $3.5 million and $4.1 million, respectively, from the Saratoga CLO.

As of February 28, 2021, the Company

determined that the fair value of its investment in the subordinated notes of Saratoga CLO was $31.4 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 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%.

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.

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.

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.

For the fourth quarter ended February 28, 2021, the F-R-2

Notes and G-R-2 Notes were redeemed in full.

As of February 28, 2022, the Company

determined that the fair value of its investment in the subordinated notes of Saratoga CLO was $28.7 million.

As of February 28, 2022,

the fair value of its investment in the Class F-R-3 Notes of Saratoga CLO was $9.4 million.

As of February 28, 2022, Saratoga CLO had

investments with a principal balance of $660.2 million and a weighted average spread over LIBOR of 3.7% and had debt with a principal

balance of $611.0 million with a weighted average spread over LIBOR of 2.2%.

As of February 28, 2022, the present value of the projected

future cash flows of the subordinated notes, was approximately $27.9 million, using a 15.0% discount rate.

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 $72.8 million, management

fees of $28.6 million and incentive fees of $1.2 million.

The separate audited financial statements

of the Saratoga CLO as of February 28, 2022 and February 28, 2021, pursuant to Rule 3-09 of SEC rules Regulation S-X, and for the years

ended February 28, 2022, February 28, 2021 and February 29, 2020, are presented on page S-1.

Investment in SLF JV

On October 26, 2021, the Company and

TJHA entered into the LLC Agreement to co-manage SLF JV.

SLF JV is invested in SLF 2021, which is a wholly owned subsidiary of SLF JV.

SLF 2021 was formed for the purpose of making investments in a diversified portfolio of broadly syndicated first lien and second lien

term loans or bonds in the primary and secondary markets.

The Company and TJHA have equal voting

interest on all material decisions with respect to SLF JV, including those involving its investment portfolio, and equal control of corporate

No management fee is charged to SLF JV as control and management of SLF JV is shared equally.

The Company and TJHA have committed

to provide up to a combined $50.0 million of financing to SLF JV through cash contributions, with the Company providing $43.75 million

and TJHA providing $6.25 million, resulting in an 87.5% and 12.5% ownership between the two parties.

The financing is issued in the form

of an unsecured note and equity.

The unsecured note will pay a fixed rate of 10.0% per annum and is due and payable in full on June 15,

As of February 28, 2022, the Company and TJHA’s investment in SLF JV consisted of an unsecured note of $13.1 million and $1.9

million, respectively;

and membership interest of $13.1 million and $1.9 million, respectively.

For the period from October 26, 2021,

through February 28, 2022, the Company earned approximately $0.1 million of interest income related to SLF JV, which is included

in interest income.

As of February 28, 2022, approximately $0.1 million of interest income related to SLF JV was included in interest

SLF JV’s investment in SLF 2021

is in the form of an unsecured loan.

The unsecured note will pay a floating rate of SOFR plus 7.00% per annum and is due and payable in

full on June 9, 2023.

As of February 28, 2022, SLF JV’s investment in SLF 2021 had an aggregate fair value of approximately $28.7

The Company has determined that SLF

JV is an investment company under ASC 946;

however, in accordance with such guidance the Company will generally not consolidate its investment

in a company other than a wholly-owned investment company subsidiary.

SLF JV is not a wholly-owned investment company subsidiary as the

Company and TJHA each have an equal 50% voting interest in SLF JV and thus neither party has a controlling financial interest.

ASC 810, Consolidation concludes that in a joint venture where both members have equal decision making authority, it is not appropriate

for one member to consolidate the joint venture since neither has control.

Accordingly, the Company does not consolidate SLF JV.

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 U.S.

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 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.

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.

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.

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):

As of February 28, 2022

and February 28, 2021, 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):

February 28, 2022

February 28, 2021

Capital in excess of par value

Total distributable earnings (loss)

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):

For 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, 2022, February 28, 2021 and February 29,

2020 was as follows (dollars in thousands):

February 28, 2022

February 28, 2021

February 29, 2020

Ordinary income

Capital gains

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.

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).

For federal income tax purposes, as

of February 28, 2022, the aggregate net unrealized appreciation for all securities was $21.2 million.

The aggregate cost of securities

for federal income tax purposes was $1.4 billion.

For 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.

As of February 28, 2022 and February

28, 2021, 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).

February 28, 2022

February 28, 2021

Post October loss deferred

7 unchanged sentences

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 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.

At February 28, 2022 the company utilized $0.3 million of its short-term capital losses and $21.0

million of its long-term capital losses.

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.

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.

For the calendar years ended December 31,

2021 and 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 and $0.6 million in federal excise taxes on undistributed taxable income for the years ended February 28, 2022 and February

28, 2021, respectively.

As of February 28, 2022 and 2021,

the Company had net long-term capital losses of $1.1 million and $19.5 million.

Management has analyzed the Company’s

tax positions taken on federal income tax returns for all open years (fiscal years 2019- 2022) and has concluded that no provision for

uncertain income tax positions is required in the Company’s consolidated financial statements.

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.

1 unchanged sentence

Some highlights of the enacted provisions are as follows:

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.

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-AX, Inc., SIA-GH,

Inc., SIA-MAC, Inc., SIA-PEP Inc., SIA-PP Inc., SIA-TG, Inc., SIA-TT Inc., SIA-Vector, Inc., and SIA-VR, Inc.

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.

income 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.

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.

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.

In February 2022, SIA-GH, Inc., SIA-TT Inc.

and SIA-VR, Inc.

received an approved plan of liquidation following

the sale of equity held by each of the portfolio companies.

Company’s Easy Ice investment was sold during the year ended February 29, 2020.

4 unchanged sentences

For purposes of tax accounting, the Company had an $8.0 million tax basis in the Tax Blocker .

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”

The Company’s V Rental Holdings

LLC Class A-1 membership units was sold during the ended February 28, 2022.

The tax blocker which held this investment, SIA-VR, Inc.

remain in existence for a period of time until all ongoing indemnification obligations are settled, after which it will be dissolved.

For purposes of tax accounting, the Company had an $0.4 million tax basis in the investment, which resulted in a current income tax payable

of $0.4 million as of February 28, 2022.

The Company’s Texas Teachers

of Tomorrow, LLC common stock was sold during the year ended February 28, 2022.

The tax blocker which held this investment, SIA-TT, Inc.

will remain in existence for a period of time until all ongoing indemnification obligations are settled, after which it will be dissolved.

For purposes of tax accounting, the Company had an $0.8 million tax basis in the investment, which resulted in a current income tax payable

of $0.6 million as of February 28, 2022.

The Company’s GreyHeller LLC

Series A preferred units was sold during the year ended February 28, 2022.

The tax blocker which held this investment, SIA-TT, Inc.

remain in existence for a period of time until all ongoing indemnification obligations are settled, after which it will be dissolved.

For purposes of tax accounting, the Company had an $0.9 million tax basis in the investment, which resulted in a current income tax payable

of $1.8 million as of February 28, 2022.

The 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:

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, 2022, the Company paid federal tax of $1.3 million on the undistributed net capital gains it elected

to retain for the tax year ended February 28, 2021.

Deferred tax assets and liabilities,

and related valuation allowances, as of February 28, 2022 and February 28, 2021, were as follows:

February 28, 2022

February 28, 2021

Total deferred tax assets

1 unchanged sentence

Valuation allowance on net deferred tax assets

tax liability

Net deferred tax liability

$ (1,249,016 )

$ (1,922,664 )

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:

As of February 28, 2022, the valuation

allowance on deferred tax assets was $1.9 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 is made.

Net deferred tax (benefit) expense

for the year ended February 28, 2022 includes $0.7 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.

Net 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.

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.

Deferred tax temporary differences

may include differences for state taxes and joint venture interests.

Federal and state income tax provisions (benefits) on investments are

February 28, 2022

February 28, 2021

February 29, 2020

Net current expense

1 unchanged sentence

Net tax provision

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.

The Company has federal net operating

loss carryforwards of $0.0 million which will expire starting in 2037, with the remaining net operating loss carryforwards of $4.2 million

having an indefinite life.

In addition, the Company has state net operating loss carryforwards of $1.3 million, which begin to expire

in fiscal year 2026.

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.

Agreements and Related Party Transactions

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 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.

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.

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.

Investment Advisory and Management Agreement

On 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 Company’s stockholders.

On July 6, 2021,

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.

Under the 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

Base Management Fee and Incentive Management

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, 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

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”

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 Company’s portfolio, less the aggregate amount of any previously paid capital gain incentive fee.

the capital gains portion of the incentive fee is based on realized gains and realized and unrealized losses from May 31, 2010.

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.

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, 2022, February 28, 2021 and February 29, 2020, the Company incurred $11.9 million, $9.1 million and

$8.1 million in base management fees, respectively.

For the years ended February 28, 2022, February 28, 2021 and February 29, 2020,

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 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.

the Company incurred $6.4 million, $5.4 million and $5.8 million in incentive fees related to pre-incentive fee net investment

For the years ended February 28, 2022, February 28, 2021 and February 29, 2020, we accrued $5.5 million, $0.0 million and

$8.4 million, respectively, in incentive fees related to capital gains.

The 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 28, 2022, the base

management fees accrual was $3.2 million and the incentive fees accrual was $9.8 million and is included in base management and incentive

fees payable in the accompanying consolidated statements of assets and liabilities.

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.

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 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.

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.

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.

On July 6, 2021, 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 $2.775 million to $3.0 million effective August 1, 2021.

For the years ended February 28, 2022,

February 28, 2021 and February 29, 2020, we recognized $2.9 million, $2.5 million and $2.1 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, 2022, $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 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.

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

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.

During the year ended February 29, 2020, the

Company received full payment of $1.7 million from the Saratoga CLO for such transaction costs.

On February 11, 2020, we entered into

an unsecured loan agreement (“CLO 2013-1 Warehouse 2 Loan”) with Saratoga Investment Corp.

CLO 2013-1 Warehouse 2, Ltd (“CLO

2013-1 Warehouse 2”), a wholly-owned subsidiary of Saratoga Investment Corp.

CLO 2013-1, Ltd.

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%.

On 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.

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

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

2 unchanged sentences

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.

At August 31, 2021, the outstanding receivable

of 2.6 million was repaid in full.

During 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, 2021.

For the years ended February 28, 2022,

February 28, 2021 and February 29, 2020, we recognized $3.3 million, $2.5 million and $2.5 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.

See Note 4 for additional information.

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 October 26, 2021, the Company and

TJHA entered into an LLC Agreement to co-manage the SLF JV.

SLF JV is a joint venture that is expected to invest in the debt or equity

interests of collateralized loan obligations, loan, notes and other debt instruments.

As of February 28, 2022, the Company’s

investment in the SLF JV had a fair value of $25.1 million, consisting of an unsecured loan of $13.1 million and membership interest of

$12.0 million.

In addition, the Company had a receivable of $0.1 million outstanding from the SLF JV, included in Due from Affiliate in

the consolidated statements of assets and liabilities.

Credit Facility

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% after giving effect to such leverage, or, 150%

if certain requirements under the 1940 Act are met.

On April 16, 2018, as permitted by the Small Business Credit Availability Act, which

was signed into law on March 23, 2018, our board of directors, including a majority of our independent directors, approved a minimum asset

coverage ratio of 150%.

The 150% asset coverage ratio became effective on April 16, 2019.

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.

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.

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);

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.

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.

Our asset coverage ratio, as defined

in the 1940 Act, was 209.3% as of February 28, 2022 and 347.1% as of February 28, 2021.

On April 11, 2007, we entered into a $100.0 million

revolving securitized credit facility (the “Revolving Facility”).

On 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.

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 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%.

On 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 “Madison 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 and SBIC II LP, was pledged under the

Madison Credit Facility to secure our obligations thereunder.

On February 24, 2012, we amended the Madison Credit

Facility to, among other things:

expand the borrowing capacity under the Madison Credit Facility from $40.0 million to $45.0 million;

extend the period during which we may make and repay borrowings under the Madison 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 Madison 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 Madison 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 Madison 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% to 4.75%;

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 Madison 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 Madison Credit Facility from September 17, 2022 to September 17, 2025 (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%.

On April 24, 2020, we entered into a fourth amendment

to the Madison Credit Facility 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.

On September 14, 2020, we entered into a fifth

amendment to the Madison Credit Facility to, among other things:

extend the commitment termination date of the Madison Credit Facility from September 17, 2020 to September 17, 2021, with no change to the maturity date of September 17, 2025.

provide for the transition away from the LIBOR Rate in the market, and

expand 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.

On September 13, 2021, we entered into a sixth

amendment to the Madison Credit Facility to, among other things:

Extend the commitment termination date of the Madison Credit Facility from September 17, 2021 to October 1, 2021, with no change to maturity date of September 17, 2025.

On October 4, 2021, all outstanding amounts on

the Madison Credit Facility were repaid and the Madison Credit Facility was terminated.

The repayment and termination of the Madison

Credit Facility resulted in a realized loss on the extinguishment of debt of $0.8 million.

In addition to any fees or other amounts payable

under the terms of the Madison Credit Facility, an administrative agent fee per annum equal to $0.1 million is payable in equal monthly

installments in arrears.

On October 4, 2021, the Company entered into a

$50.0 million senior secured revolving credit facility with the Lender, supported by loans held by SIF II and pledged to the Encina Credit

During the first two years following the closing date, SIF II may request an increase in the commitment amount to up to $75.0

The terms of the Encina Credit Facility require a minimum drawn amount of $12.5 million at all times during the first six months

following the closing date, which increases to the greater of $25.0 million or 50% of the commitment amount in effect at any time thereafter.

The term of the Encina Credit Facility is three years.

Advances under the Encina Credit Facility bear interest at a floating rate per

annum equal to LIBOR plus 4.0%, with LIBOR having a floor of 0.75%, with customary provisions related to the selection by the Lender and

the Company of a replacement benchmark rate.

The commitment termination date is October 4, 2024.

In addition to any fees or other amounts payable

under the terms of the Encina Credit Facility, an administrative agent fee per annum equal to $0.1 million is payable in equal

monthly installments in arrears.

As of February 28, 2022 and February

28, 2021, there were $12.5 million and $0.0 million outstanding borrowings under the Encina Credit Facility and Madison Credit Facility,

respectively.

During the applicable periods, the Company was in compliance with all of the limitations and requirements of both facilities.

Financing costs of $1.4 million related to the Encina Credit Facility have been capitalized and are being amortized over the term of the

For the years ended February 28, 2022, February 28, 2021 and February 29, 2020, we recorded $0.8 million, $0.5 million and $0.6

million of interest expense related to the Encina Credit Facility and the Madison Credit Facility, respectively, which includes commitment

and administrative agent fees.

For the years ended February 28, 2022, February

28, 2021 and February 29, 2020, we recorded $0.3 million, $0.1 million and $0.09 million of amortization of deferred financing costs related

to the Encina Credit Facility and Madison Credit 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,

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.

2022, the average borrowings outstanding and the weighted average interest rate on outstanding borrowings under the Encina Credit Facility

and the Madison Credit Facility were approximately $8.7 million and 5.22%, respectively.

For the fiscal year ended February 28, 2021,

the average borrowings outstanding and the weighted average interest rate on outstanding borrowings under the Encina Credit Facility and

the Madison Credit Facility were 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 Madison Credit Facility were

approximately $0.6 million and 6.66%, respectively.

The Encina 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 Encina 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 Encina Credit Facility has a three-year term.

Availability on the Encina 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 0.75%, plus an applicable margin of

In addition, the Company will pay the lender 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 Encina Credit Facility.

Our borrowing base under the Encina Credit Facility

was $50.0 million subject to the Encina Credit Facility cap of $50.0 million at February 28, 2022.

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

Accordingly, the February 28, 2022 borrowing base relies upon the

valuations set forth in the Quarterly Report on Form 10-K for the period ended November 30, 2021 The valuations presented in this Quarterly

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

Our 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.

On 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.

As of February 28, 2022, we have funded SBIC LP

and SBIC II LP with an aggregate total of equity capital of $75.0 million and $87.5 million, respectively, and have $185.0 million in

SBA-guaranteed debentures outstanding, of which $86.0 million is held in SBIC LP and $99.0 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 U.S.

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.

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”

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 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.

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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.

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,

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,

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 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.

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.

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 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 board of directors, including a majority

of our independent 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, 2019.

At February 28, 2022 and February

28, 2021, there was $185.0 million and $158.0 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 hierarchy.

Financing costs of $5.0 million and $4.8 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, 2022, the Company repaid $38.0 million of SBA debentures, resulting in a realized loss

on extinguishment of $0.2 million related to the acceleration of deferred debt financing costs.

For the years ended February 28, 2022,

February 28, 2021 and February 29, 2020, we recorded $4.7 million, $5.5 million and $4.8 million of interest expense related to the SBA

debentures, respectively.

For the years ended February 28, 2022, February 28, 2021 and February 29, 2020, we recorded $0.7 million, $0.6

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, 2022, February 28, 2021 and February 29, 2020 on the outstanding

borrowings of the SBA debentures was 2.60%, 3.25% and 3.23%, respectively.

During the years ended February 28, 2022 and February 28, 2021,

the average dollar amount of SBA debentures outstanding was $180.4 million and $169.3 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.

In May 10, 2013, the Company issued $48.3 million

in aggregate principal amount of 7.50% fixed-rate notes due 2020 (the “2020 Notes”).

The 2020 Notes were redeemed in full

on January 13, 2017 and are no longer listed on the NYSE.

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.

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 net proceeds from the offering were used to repay all of the outstanding indebtedness under the 2020 Notes (as described above), and

for general corporate purposes in accordance with our investment objective and strategies.

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.

The 2023 Notes were listed on the NYSE under the trading symbol “SAB”

par value of $25.00 per share, and have been delisted following the redemption.

For 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.

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 the average dollar amount of 2023 Notes outstanding was $74.5 million.

On 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.

Offering costs incurred were approximately $0.3

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 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.

costs incurred were approximately $0.2 million.

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an additional $2.5 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

Interest 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.

On August 31, 2021, the Company redeemed $60.0

million in aggregate principal amount of issued and outstanding 6.25% 2025 Notes at par ($25 per note), plus the accrued and unpaid interest

thereon, through, but excluding, the redemption date of August 31, 2021.

The 6.25% 2025 Notes were listed on the NYSE under the trading

symbol of “SAF”

and have been delisted effective as of August 31, 2021, following the full redemption.

At August 31, 2021, the debt was extinguished.

As such, it was not fair valued with market quotes and is not fair value leveled.

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 repayment of the 6.25% 2025 Notes resulted in a realized

loss on the extinguishment of debt of $1.5 million.

As 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.

On 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.

Offering costs incurred were approximately $0.2 million.

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.

As of February 28, 2022, 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, 2022, the carrying amount and fair value of the 7.25% 2025 Notes was $43.1 million

and $43.9 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.

years ended February 28, 2022 and February 28, 2021, we recorded $3.1 million and $2.2 million, respectively, of interest expense and

$0.3 million and $0.2 million, respectively, of amortization of deferred financing costs related to the 7.25% 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 28, 2022 and February 28, 2021, the average dollar amount of 7.25% 2025 Notes outstanding was $43.1 million

and $43.1 million, respectively.

On 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.

Offering costs incurred were approximately $0.1 million.

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.

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term of the Notes.

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 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, 2022, the total 7.75% Notes 2025 outstanding was $5.0 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

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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.

For the years ended February 28, 2022 and February 28, 2021, we recorded

$0.4 million and $0.3 million, respectively, of interest expense and $0.05 million and $0.04 million, respectively, of amortization of

deferred financing costs related to the 7.75% 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 28, 2022 and February 28,

2021, the average dollar amount of 7.75% 2025 Notes outstanding was $5.0 million and $5.0 million, respectively.

On 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 28, 2021.

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.

proceeds from the offering were used for general corporate purposes in accordance with our investment objective and strategies.

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

$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

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.

The 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

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.

As of February 28, 2022, 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.

For the years ended February 28, 2022

and February 28, 2021, we recorded $0.9 million and $0.1 million, respectively, of interest expense and $0.07 million and $0.01 million,

respectively, of amortization of deferred financing costs related to the 6.25% 2027 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

28, 2022 and February 28, 2021, the average dollar amount of 6.25% 2027 Notes outstanding was $15.0 million and $7.0 million, respectively.

On March 10, 2021, the Company issued $50.0 million

aggregate principal amount of our 4.375% fixed-rate Notes due in 2026 (the “4.375% Notes 2026”) for net proceeds of $49.0

million after deducting underwriting commissions of approximately $1.0 million.

Offering costs incurred were approximately $0.2 million.

Interest on the 4.375% Notes 2026 is paid semi-annually in arrears on February 28 and August 28, at a rate of 4.375% per year, beginning

August 28, 2021.

The 4.375% Notes 2026 mature on February 28, 2026 and may be redeemed in whole or in part at any time on or after November

28, 2025 at par plus a “make-whole”

premium, and thereafter at par.

The net proceeds from the offering were used for general

corporate purposes in accordance with our investment objective and strategies.

Financing costs of $1.2 million related to the 4.375%

Notes 2026 have been capitalized and are being amortized over the term of the Notes.

On July 15, 2021, the Company issued an additional

$125.0 million aggregate principal amount of the Company’s 4.375% Notes 2026 (the “Additional 4.375% 2026 Notes”) for

net proceeds for approximately $123.5 million, based on the public offering price of 101.00% of the aggregate principal amount of the

Additional 4.375% 2026 Notes, after deducting the underwriting discount of $2.5 million and the estimated offering expenses of approximately

$0.2 million payable by the Company.

The net proceeds from the offering were used to redeem all of the outstanding 6.25% 2025 Notes (as

described above), and for general corporate purposes in accordance with our investment objective and strategies.

Financing costs of $2.7

million have been capitalized and are being amortized over the term of the Notes.

As of February 28, 2022, the total 4.375% Notes

2026 outstanding was $175.0 million.

The 4.375% Notes 2026 are not listed and are issued in minimum denominations of $2,000 and integral

multiples of $1,000 in excess thereof.

As of February 28, 2021, there was $0.0 million outstanding.

The carrying amount of the amount

outstanding of 4.375% Notes 2026 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.

For the years ended February 28, 2022 and February

28, 2021, we recorded $5.5 million and $0.0 million, respectively, of interest expense, $0.4 million and $0.0 million, respectively, of

amortization of deferred financing costs and $0.2 million and $0.0 million, respectively, of amortization of premium on issuance of 4.375%

Notes due 2026 (inclusive of the issuance of the Additional 4.375% 2026 Notes).

Interest expense, amortization of deferred financing costs

and amortization of premium on issuance of notes are reported as interest and debt financing expense on the consolidated statements of

During the years ended February 28, 2022 and February 28, 2021 the average dollar amount of 4.375% Notes 2026 outstanding

was $130.8 million and $0.0 million respectively.

January 19, 2022, the Company issued $75.0 million aggregate principal amount of our 4.35% fixed-rate Notes due in 2027 (the “4.35%

Notes 2027”) for net proceeds of $73.0 million, based on the public offering price of 99.317% of the aggregate principal amount

of the 4.35% Notes 2027, after deducting the underwriting commissions of approximately $1.5 million.

Offering costs incurred were approximately

$0.2 million.

Interest on the 4.35% Notes 2027 is paid semi-annually in arrears on February 28 and August 28, at a rate

of 4.35% per year, beginning August 28, 2022.

The 4.35% Notes 2027 mature on February 28, 2027 and may

be redeemed in whole or in part at the Company’s option at any time prior to November 28, 2026, at

par plus a “make-whole”

premium, and thereafter at par .

net proceeds from the offering were used for general corporate purposes in accordance with our investment objective and strategies.

costs of $1.7 million related to the 4.35% Notes 2027 have been capitalized and are being amortized over the term of the Notes.

As of February 28, 2022, the total 4.35% Notes

2027 outstanding was $75.0 million.

The 4.35% Notes 2027 are not listed.

As of February 28, 2021, there was $0.0 million outstanding.

The carrying amount of the amount outstanding of 4.35% Notes 2027 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.

For the years ended February 28, 2022 and February

28, 2021, we recorded $0.4 million and $0.0 million, respectively, of interest expense, $0.05 million and $0.0 million, respectively,

of amortization of deferred financing costs and $0.07 million and $0.0 million, respectively, of amortization of discount on issuance

of 4.35% Notes due 2027 (inclusive of the issuance of the Additional 4.35% 2027 Notes).

Interest expense, amortization of deferred financing

costs and amortization of premium on issuance of notes 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

During the years ended February 28, 2022 and February 28, 2021 the average dollar amount of 4.35% Notes 2027 outstanding

was $8.4 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”

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 “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)

Outstanding Exclusive of Treasury Securities (3)

Asset Coverage

Liquidating Preference per Share (5)

Average Market

Value per Share (6)

Securities(3)

Preference per

(in thousands)

Credit Facility with Encina Lender Finance, LLC

Fiscal year 2022 (as of February 28, 2022)

Credit Facility with Madison Capital Funding (14)

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Fiscal year 2020 (as of February 29, 2020)

Fiscal year 2019 (as of February 28, 2019)

7.25% Notes due 2025

Fiscal year 2022 (as of February 28, 2022)

Fiscal year 2021 (as of February 28, 2021)

7.75% Notes due 2025

Fiscal year 2022 (as of February 28, 2022)

Fiscal year 2021 (as of February 28, 2021)

4.375% Notes due 2026

Fiscal year 2022 (as of February 28, 2022)

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 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.

4.35% Notes due 2027

Fiscal year 2022 (as of February 28, 2022)

6.25% Notes due 2027

Fiscal year 2022 (as of February 28, 2022)

Fiscal year 2021 (as of February 28, 2021)

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.

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.

amount of senior securities outstanding at the end of the period presented.

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.

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.

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 $24.45 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.

indicates information which the Securities and Exchange Commission expressly does not require

to be disclosed for certain types of senior securities.

applicable for credit facility because not registered for public trading.

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.

on the average daily trading price of the 2020 Notes on the NYSE.

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.

on the average daily trading price of the 2023 Notes on the NYSE.

on the average daily trading price of the 2025 Notes on the NYSE.

carrying value of this unlisted security approximates its fair value, based on a waterfall analysis showing adequate collateral coverage.

August 31, 2021, the Company redeemed $60.0 million in aggregate principal amount of the issued and outstanding 6.25% 2025 Notes.

Company used a portion of the net proceeds from the 4.375% 2026 Notes offering, which was completed in July 2021, to redeem the 6.25%

2025 Notes in full.

October 4, 2021, the Company repaid all remaining amounts outstanding under the Madison Credit Facility and the credit agreement relating

to the Madison Credit Facility was terminated.

Commitments and Contingencies

The following table shows our payment obligations for repayment of debt and other contractual obligations at February 28, 2021:

Contractual Obligations

The following table shows our payment obligations for repayment of

debt and other contractual obligations at February 28, 2022:

Payment Due by Period

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4.35% 2027 Notes

6.25% 2027 Notes

Total Long-Term Debt Obligations

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 February 28, 2022 and February 28,

2021, the Company’s off-balance sheet arrangements consisted of $88.4 million and $58.8 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 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.

A summary of the unfunded commitments outstanding as of February

28, 2022 and February 28, 2021 is shown in the table below (dollars in thousands):

February 28, 2022

February 28, 2021

At Company’s discretion

Ascend Software LLC

Axero Holdings

Book4Time, Inc.

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GreyHeller LLC

inMotionNow, Inc.

LFR Chicken LLC

Netreo Holdings, LLC

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Passageways, Inc.

PDDS Buyer, LLC

Saratoga Investment Corp.

CLO 2013-1 Warehouse 2, Ltd.

Pepper Palace

Procrement Partners

Saratoga Senior Loan Fund I JV LLC

Sceptre Hospitality Resources

Top Gun Pressure Washing, LLC

1 unchanged sentence

At portfolio company’s discretion - satisfaction of certain financial and nonfinancial covenants required

ArbiterSports, LLC

Axiom Purchaser, Inc.

CoConstruct, LLC

Ascend Software LLC

Axero Holdings

Axero Holdings - Revolver

Davisware, LLC

GDS Holdings US, Inc.

Granite Comfort, LP

HemaTerra Holding Company, LLC

LFR Chicken LLC

Madison Logic - Revolver

New England Dental Partners

Passageways, Inc.

Pepper Palace - DDTL

Pepper Palace - Revolver

Procurement Partners, LLC

Village Realty Holdings LLC

The Company believes its assets will

provide adequate coverage to satisfy these unfunded commitments.

As of February 28, 2022, the Company had cash and cash equivalents of

$47.3 million and $37.5 in available borrowings under the Encina Credit Facility.

Directors Fees

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.

The 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’

1 unchanged sentence

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’

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 28, 2022, February 28, 2021 and February 29, 2020, 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.

As of February 28, 2022 and February 28, 2021, $0.07

million and $0.07 million in directors’

fees and expenses were accrued and unpaid, respectively.

As of February 28, 2022, 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.

On May 16, 2006, GSC Group, Inc.

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.

On 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

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

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.

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

(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

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 200,000 shares of its common

stock at prices below its NAV as reported in its then most recently published consolidated financial statements (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.

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

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, 2022, the Company purchased 508,435 shares of common stock, at the average price

of $19.35 for approximately $9.8 million pursuant to the Share Repurchase Plan.

During the three months ended February 28, 2022 the Company

purchased 50,000 shares of common stock, at the average price $25.86 for approximately $1.3 million pursuant to the Share Repurchase Plan.

During the year ended February 28, 2022, the Company purchased 99,623 shares of common stock, at the average price $25.55 for approximately

$2.5 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

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.

Riley FBR, Inc.

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.

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.

This agreement was terminated as

of July 29, 2021.

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.

On July 30, 2021, we entered into an equity distribution

agreement with Ladenburg Thalmann & Co.

and Compass Point Research and Trading, LLC (collectively the “Agents”),

through which we may offer for sale, from time to time, up to $150.0 million of our common stock through the Agents, or to them, as principal

for their account.

As of February 28, 2022, the Company sold 4,840,361 shares for gross proceeds of $123.9 million at an average price

of $25.61 for aggregate net proceeds of $122.4 million (net of transaction costs).

During the three months ended February 28, 2022, the

Company sold 392,926 shares for gross proceeds of $11.5 million at an average price of $29.31 for aggregate net proceeds of $11.4 million

(net of transaction cost).

During the year ended February 28, 2022, the Company sold 918,343 shares for gross proceeds of $26.8 million

at an average price of $29.22 for aggregate net proceeds of $26.6 million (net of transaction cost).

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’

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:

37 unchanged sentences

$ 298,177,358

Distributable

Increase (Decrease) from Operations:

36 unchanged sentences

$ 304,185,770

Earnings Per Share

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

Net increase in net assets resulting from operations

Weighted average common shares outstanding

Weighted average earnings per common share

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 $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

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 $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

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

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 $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

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

January 26, 2021

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

September 26, 2019

June 13, 2019

June 27, 2019

February 26, 2019

March 14, 2019

March 28, 2019

Total dividends declared

Date Declared

Amount per Share

Total Amount*

November 27, 2018

December 17, 2018

January 2, 2019

August 28, 2018

September 17, 2018

September 27, 2018

June 15, 2018

June 27, 2018

February 26, 2018

March 14, 2018

March 26, 2018

Total dividends declared

Date Declared

Amount per Share

Total Amount*

November 29, 2017

December 15, 2017

December 27, 2017

August 28, 2017

September 15, 2017

September 26, 2017

June 15, 2017

June 27, 2017

February 28, 2017

March 15, 2017

March 28, 2017

Total dividends declared

Date Declared

Amount per Share

Total Amount*

January 12, 2017

January 31, 2017

February 9, 2017

October 5, 2016

October 31, 2016

November 9, 2016

August 8, 2016

August 24, 2016

September 5, 2016

July 29, 2016

August 9, 2016

March 31, 2016

April 15, 2016

April 27, 2016

Total dividends declared

* 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 28, 2021, February 29, 2020, February 28, 2019, February 28, 2018 and February 28, 2017:

Per share data

Net asset value at beginning of period

Adoption of ASC 606

Net asset value at beginning of period, as adjusted

Increase (Decrease) from Operations:

Net investment income

Net realized and unrealized gains (losses) on investments(1)

Realized losses on extinguishment of debt*

Net increase in net assets resulting from operations

Distributions declared from net investment income

Total distributions to stockholders

Issuance of common stock above net asset value(2)

Net realized gain (loss) from investments

Net change in unrealized appreciation (depreciation) on investments

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

Decrease from Shareholder Distributions:

Distributions of investment income –

Capital Share Transactions:

Proceeds from issuance of common stock

Stock dividend distribution

Repurchases of common stock

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

Per share market value at end of period

Total return based on market value(5)

Total return based on net asset value(6)

Ratio/Supplemental data:

Ratio of net investment income to average net assets(7)*

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)

Ratio of interest and debt financing expenses to average net assets(7)

Ratio of total expenses to average net assets(7)*

Portfolio turnover rate(8)

Asset coverage ratio per unit(9)

Average market value per unit

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

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.

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 expressed in terms of dollar amounts per $1,000 of indebtedness.

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 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)

($ in thousands, except per share numbers)

Total investment income

Net investment income

Net realized and unrealized gain (loss)

Realized losses on extinguishment of debt*

Net increase in net assets resulting from operations

Net investment income per common share

Net realized and unrealized gain (loss) per common share

Dividends declared per common share

Net asset value per common share

($ in thousands, except per share numbers)

Total investment income

Net investment income

Net realized and unrealized gain (loss)

Realized losses on extinguishment of debt*

Net increase in net assets resulting from operations

Net investment income per common share

Net realized and unrealized gain (loss) per common share

Dividends declared per common share

Net asset value per common share

($ in thousands, except per share numbers)

Total investment income

Net investment income

Net realized and unrealized gain (loss)

Net increase in net assets resulting from operations

Net investment income per common share

Net realized and unrealized gain (loss) per common share

Dividends declared per common share

Net asset value per common share

* Certain prior period amounts have been reclassified to conform

to current period presentation.

Subsequent Events

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.

Report of Independent Auditors

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

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

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

Company’s financial position, results of operations or cash flows.

Auditor’s Report

the Board of Directors

Saratoga Investment Corp.

CLO 2013-1, Ltd.

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.

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.

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.

of Assets and Liabilities

February 28, 2021

February 29, 2020

Investments at fair value

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 $595,249,474 and $526,004,959, respectively)

Cash and cash equivalents

Receivable from open trades

Interest receivable (net of reserve of $35,000 and $307,705, respectively)

Prepaid expenses and other assets

$ 709,683,402

$ 521,879,724

Interest payable

Payable from open trades

Accrued base management fee

Accrued subordinated management fee

Accounts payable and accrued expenses

Due to Affiliate

Loan payable, related party

Loan payable, third party

Saratoga Investment Corp.

CLO 2013-1, Ltd.

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

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

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

Subordinated Notes

Discount on Subordinated Notes

(48,039,412 )

(22,899,324 )

Total liabilities

$ 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)

(28,538,114 )

(35,102,419 )

Total net assets

(28,537,864 )

(35,102,169 )

Total liabilities and net assets

Repurchase fees

Offering costs

Balance at May 31, 2021

$ 304,784,840

$ 320,344,756

See accompanying notes

to financial statements.

Investment Corp.

CLO 2013-1, Ltd.

of Operations

For the year ended

Distributable

Increase (Decrease) from Operations:

investment income

Total interest from investments

Interest from cash and cash equivalents

Total investment income

Interest and debt financing expenses

Base management fee

Subordinated management fee

Incentive fees

Professional fees

Trustee expenses

Other expense

Total expenses

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 )

Net realized gain (loss) from investments

tax (provision) benefit from realized gain on investments

Realized losses on extinguishment of debt

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

Net change in unrealized appreciation (depreciation) on

Net change in provision for deferred taxes on unrealized

(appreciation) depreciation on investments

from Shareholder Distributions:

Distributions of investment income –

Capital Share Transactions:

Proceeds from issuance of common stock

dividend distribution

Repurchases of common stock

Offering costs

Balance at August 31, 2021

$ 305,520,631

$ 324,111,845

* Certain prior period amounts have been reclassified to conform

to current period presentation.

accompanying notes to financial statements.

Investment Corp.

CLO 2013-1, Ltd.

For the year ended

Increase (Decrease) from Operations:

Net investment income (loss)

$ (1,299,881 )

investment income

Net realized gain (loss) from investments

(10,922,627 )

tax (provision) benefit from realized gain on investments

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

$ (28,537,864 )

$ (35,102,169 )

$ (17,899,669 )

accompanying notes to financial statements.

Investment Corp.

CLO 2013-1, Ltd.

of Cash Flows

For the year ended

Operating activities

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

Net change in 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 –

Capital Share Transactions:

Proceeds from issuance of common stock

dividend distribution

Repurchases of common stock

Offering costs

Balance at November 30, 2021

$ 321,559,189

$ 342,601,745

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 debt financing costs

Realized Loss on extinguishment of debt

Increase (Decrease) from Operations:

investment income

Net realized gain (loss) from investments

Net change in unrealized (appreciation) depreciation on 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:

Interest receivable

Receivable from open trades

Increase (decrease) in operating liabilities:

Interest and debt fees payable

Payable for open trades

Accrued base management fee

Accrued subordinated management fee

Accrued incentive fee

Accounts payable and accrued expenses

Due to affiliate

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

(39,224,936 )

(14,399,991 )

(184,060,735 )

Financing activities

Borrowings on debt

Paydowns on debt

(475,100,000 )

tax (provision) benefit from realized gain on investments

Realized losses on extinguishment of debt

Net change in unrealized appreciation (depreciation) on

Net change in provision for deferred taxes on unrealized

(appreciation) depreciation on investments

from Shareholder Distributions:

Distributions of investment income –

Share Transactions:

Proceeds from issuance of common stock

dividend distribution

Repurchases of common stock

Offering costs

reclassification of stockholders’

equity in accordance with generally accepted accounting principles

Balance at February 28, 2022

$ 328,062,246

Deferred debt financing costs paid

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

CASH AND CASH EQUIVALENTS, END OF PERIOD

$ 355,780,523

Supplemental Information:

Interest paid during the period

Supplemental non-cash information:

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

Net accretion of discount on investments

Amortization of deferred debt financing costs

accompanying notes to financial statements.

Investment Corp.

CLO 2013-1 Ltd.

of Investments

Reference Rate/Spread

Maturity Date

Number of Shares

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

Consumer goods:

6M USD LIBOR+

Adtalem Global Education Inc.

Adtalem Global Education T/L B (02/21)

1M USD LIBOR+

Advisor Group, Inc.

Banking, Finance, Insurance & Real Estate

Advisor Group Holdings T/L B1

1M USD LIBOR+

Aegis Sciences Corporation

Healthcare & Pharmaceuticals

3M USD LIBOR+

Agiliti Health Inc.

Healthcare & Pharmaceuticals

Term Loan (09/20)

1M USD LIBOR+

Agiliti Health Inc.

Healthcare & Pharmaceuticals

Term Loan (1/19)

1M USD LIBOR+

Ahead Data Blue, LLC

Term Loan (10/20)

6M USD LIBOR+

AI Convoy (Luxembourg) S.a.r.l.

Aerospace & Defense

AI Convoy (Luxembourg) USD T/L B

6M USD LIBOR+

AIS HoldCo, LLC

3M USD LIBOR+

Alchemy Copyrights, LLC

Diversified & Production

1M USD LIBOR+

Alchemy US Holdco 1, LLC

Metals & Mining

1M USD LIBOR+

Alion Science and Technology Corporation

Aerospace & Defense

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

Diversified & Production

Allen Media T/L B (1/20)

3M USD LIBOR+

Altisource Solutions S.a r.l.

Banking, Finance, Insurance & Real Estate

Term Loan B (03/18)

3M USD LIBOR+

Altium Packaging LLC

Containers, Packaging & Glass

Altium Packaging (Consolidated Container) T/L (01/

3M USD LIBOR+

Altra Industrial Motion Corp.

Capital Equipment

1M USD LIBOR+

American Greetings Corporation

Advertising, Printing & Publishing

1M USD LIBOR+

American Trailer World Corp

American Trailer World T/L

1M USD LIBOR+

AmeriLife Holdings LLC

Banking, Finance, Insurance & Real Estate

AmeriLife T/L

1M USD LIBOR+

AmWINS Group, LLC

Banking, Finance, Insurance & Real Estate

AmWINS Group (2/21) T/L

1M USD LIBOR+

Anastasia Parent LLC

Consumer goods:

3M USD LIBOR+

Anchor Glass Container Corporation

Containers, Packaging & Glass

Term Loan (07/17)

3M USD LIBOR+

Anchor Packaging, LLC

Containers, Packaging & Glass

1M USD LIBOR+

APi Group DE, Inc.

(J2 Acquisition)

Earnings Per Share

In 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 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 28, 2022, February

28, 2021 and February 29, 2020 (dollars in thousands except share and per share amounts):

Basic and Diluted

February 28, 2022

February 28, 2021

Net increase in net assets resulting from operations

Weighted average common shares outstanding

Weighted average earnings per common share

On February 24, 2022, the Company declared a dividend

of $0.53 per share payable on March 28, 2022, to common stockholders of record on March 14, 2022.

Shareholders have 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 $5.3 million in cash and 42,825 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 $25.89 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on March 15,

16, 17, 18, 21, 22, 23, 24, 25 and 28, 2022.

On November 30, 2021, the Company declared a dividend

of $0.53 per share payable on January 19, 2022, to common stockholders of record on January 4, 2021.

Shareholders have the option to receive

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

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