SAY filing — read by section

Item 7. Management’s Discussion and Analysis

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 
 
 The following discussion should be read in conjunction
with our consolidated financial statements and related notes and other financial information appearing elsewhere in this Annual Report
on Form 10-K. In addition to historical information, the following discussion and other parts of this Annual Report contain forward-looking
information that involves risks and uncertainties. Our actual results could differ materially from those anticipated by such forward-looking
information due to the factors discussed under Part I. Item 1A. “Risk Factors” and “Note about Forward-Looking Statements”
appearing elsewhere herein.
 
 The forward-looking statements are based on our
beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. These
beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or are
within our control. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from
those expressed in our forward-looking statements.
 
 The forward-looking statements contained in this
Annual Report on Form 10-K involve risks and uncertainties, including statements as to:
 
 ● 
 our future operating results; 

 ● 
 the introduction, withdrawal, success and timing of business initiatives and strategies; 

 ● 
 changes in political, economic or industry conditions, the elevated interest rate environment or financial and capital markets, which could result in changes in the value of our assets; 

 ● 
 the relative and absolute investment performance and operations of our Manager; 

 ● 
 the impact of increased competition; 

 ● 
 our ability to turn potential investment opportunities into transactions and thereafter into completed and successful investments; 

 ● 
 the unfavorable resolution of any future legal proceedings; 

 ● 
 our business prospects and the operational and financial performance of our portfolio companies, including their ability to achieve our respective objectives as a result of the current economic conditions caused by, among other things, elevated levels of inflation, and an elevated interest rate environment, and the effects of the disruptions caused thereby on our ability to continue to effectively manage our business; 

 ● 
 interest rate volatility, including an elevated interest rate environment, could adversely affect our results, particularly if we elect to use leverage as part of our investment strategy; 

 ● 
 the impact of investments that we expect to make and future acquisitions and divestitures; 

 ● 
 our contractual arrangements and relationships with third parties; 

 ● 
 the dependence of our future success on the general economy and its impact on the industries in which we invest; 

 ● 
 the ability of our portfolio companies to achieve their objectives; 

 ● 
 our expected financings and investments; 

 ● 
 our regulatory structure and tax treatment, including our ability to operate as a business development company (“BDC”), or to operate our small business investment company (“SBIC”) subsidiaries, and to continue to qualify to be taxed as a regulated investment company (“RIC”); 

 63 

 ● 
 the adequacy of our cash resources and working capital; 

 ● 
 the timing of cash flows, if any, from the operations of our portfolio companies; 

 ● 
 the impact of supply chain constraints and labor difficulties on our portfolio companies and the global economy; 

 ● 
 the elevated level of inflation, and its impact on our portfolio companies and on the industries in which we invest; 

 ● 
 the impact of geopolitical conditions on our portfolio companies and on the industries in which we invest; 

 ● 
 the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government agencies relating to us or our Manager; 

 ● 
 the impact of changes to tax legislation and, generally, our tax position; 

 ● 
 our ability to access capital and any future financings by us; 

 ● 
 the ability of our Manager to attract and retain highly talented professionals; and 

 ● 
 the ability of our Manager to locate suitable investments for us and to monitor and effectively administer our investments. 

 Such forward-looking statements may include statements
preceded by, followed by or that otherwise include terms such as “anticipate,” “believe,” “could,”
“estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “project,”
“should,” “will” and “would” or the negative of these terms or other comparable terminology.
 
 We have based the forward-looking statements included
in this Annual Report on Form 10-K on information available to us on the date of this Annual Report on Form 10-K, and we assume no obligation
to update any such forward-looking statements. Actual results could differ materially from those anticipated in our forward-looking statements,
and future results could differ materially from historical performance. We undertake no obligation to revise or update any forward-looking
statements, whether as a result of new information, future events or otherwise, unless required by law or SEC rule or regulation. You
are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with
the U.S. Securities and Exchange Commission (the “SEC”), including annual reports on Form 10-K, quarterly reports on Form
10-Q and current reports on Form 8-K.
 
 The following analysis of our financial condition
and results of operations should be read in conjunction with our consolidated financial statements and the related notes thereto contained
elsewhere in this Annual Report on Form 10-K.
 
 OVERVIEW 

 We are a Maryland corporation that has elected
to be regulated as a BDC under the Investment Company Act of 1940, as amended (the “1940 Act”). Our investment objective is
to create attractive risk-adjusted returns by generating current income and long-term capital appreciation from our investments. We invest
primarily in senior and unitranche leveraged loans and mezzanine debt issued by private U.S. middle-market companies, which we define
as companies having earnings before interest, tax, depreciation and amortization (“EBITDA”) of between $2 million and $50
million, both through direct lending and through participation in loan syndicates. We may also invest up to 30.0% of the portfolio in
opportunistic investments in order to seek to enhance returns to stockholders. Such investments may include investments in distressed
debt, which may include securities of companies in bankruptcy, foreign debt, private equity, securities of public companies that are not
thinly traded and structured finance vehicles such as collateralized loan obligation funds. Although we have no current intention to do
so, to the extent we invest in private equity funds, we will limit our investments in entities that are excluded from the definition of
“investment company” under Section 3(c)(1) or Section 3(c)(7) of the 1940 Act, which includes private equity funds, to no
more than 15.0% of our net assets. We have elected and qualified to be treated as a RIC under Subchapter M of the Internal Revenue Code
of 1986, as amended (the “Code”).
 
 64 

 Corporate History 
 
 We commenced operations, at the time known as
GSC Investment Corp., on March 23, 2007 and completed an initial public offering of shares of common stock on March 28, 2007. Prior to
July 30, 2010, we were externally managed and advised by GSCP (NJ), L.P., an entity affiliated with GSC Group, Inc. In connection with
the consummation of a recapitalization transaction on July 30, 2010, as described below we engaged Saratoga Investment Advisors to replace
GSCP (NJ), L.P. as our investment adviser and changed our name to Saratoga Investment Corp.
 
 Our wholly owned subsidiaries, Saratoga Investment
Corp. SBIC II LP (“SBIC II LP”) and Saratoga Investment Corp. SBIC III LP (“SBIC III LP”, and together with SBIC
II LP, the “SBIC Subsidiaries”), received SBIC licenses from the SBA on August 14, 2019 and September 29, 2022, respectively.
Each of the SBIC Subsidiaries provides up to $175.0 million in long-term capital in the form of debentures guaranteed by the SBA. Our
wholly owned subsidiary SBIC LP repaid its outstanding debentures and subsequently surrendered its license to the SBA on January 3, 2024,
providing the Company access to all undistributed capital of SBIC LP, and SBIC LP subsequently merged with and into the Company. Under
current SBIC regulations, for two or more SBICs under common control, the maximum amount of outstanding SBA debentures cannot exceed $350.0
million with at least $175.0 million in combined regulatory capital.
 
 On February 26, 2021, we completed the fourth
refinancing of the Saratoga CLO. This refinancing, among other things, extended the Saratoga CLO reinvestment period to April 2024, and
extended its legal maturity to April 2033, and added a non-call period ending February 2022. In addition, and as part of the refinancing,
the Saratoga CLO was upsized from $500 million in assets to approximately $650 million. As part of this refinancing and upsizing, we invested
an additional $14.0 million in all of the newly issued subordinated notes of the Saratoga CLO, and purchased $17.9 million in aggregate
principal amount of the Class F-R-3 Notes tranche at par. Concurrently, the existing $2.5 million of Class F-R-2 Notes, $7.5 million of
Class G-R-2 Notes and $25.0 million CLO 2013-1 Warehouse 2 Loan were repaid. We also paid $2.6 million of transaction costs related to
the refinancing and upsizing on behalf of the Saratoga CLO, to be reimbursed from future equity distributions. At August 31, 2021,
the outstanding receivable of $2.6 million was repaid.
 
 On June 10, 2024, the Company completed its fifth
refinancing of the Saratoga CLO. This refinancing, among other things, did not extend the Saratoga CLO reinvestment period nor extend
its legal maturity, while adjusting the interest rate of two of the existing Notes. The Issuer issued $422.5 million of notes (the “2013-1
2024 Reset CLO Notes”), consisting of Class A-1-R-4 and Class A-2-R-4. The 2013-1 2024 Reset CLO Notes were issued pursuant to the
Indenture with the same Trustee. Proceeds of the issuance of the 2013-1 2024 Reset CLO Notes were used along with existing assets of the
Saratoga CLO to redeem the existing Class A-1-R-3 and Class A-2-R-3 Notes. No other Notes were refinanced as part of this refinancing.
The Saratoga CLO paid $0.5 million of transaction costs related to the refinancing.
 
 We have 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 (“Encina”), supported by loans held
by SIF II and pledged to Encina under the credit facility (the “Encina Credit Facility). The 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. 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 our and Encina’s selection of a replacement benchmark rate. Concurrently with the closing of the Encina Credit Facility, all
remaining amounts outstanding on our existing revolving credit facility with Madison Capital Funding, LLC were repaid and the facility
was terminated. On January 27, 2023, among other things, the borrowings available under the Encina Credit Facility was increased from
up to $50.0 million to up to $65.0 million, the underlying benchmark rate used to compute interest changed from LIBOR to Term SOFR for
one-month tenor plus a 0.10% credit spread adjustment; the applicable effective margin rate on borrowings increased from 4.00% to 4.25%
and the maturity date was extended from October 4, 2024 to January 27, 2026.
 
 65 

 We have formed a wholly owned special purpose
entity, Saratoga Investment Funding III LLC, a Delaware limited liability company (“SIF III”), for the purpose of entering
into a $50.0 million senior secured revolving credit facility with Live Oak Banking Company (“Live Oak”), supported by loans
held by SIF III and pledged to Live Oak under the credit facility (the “Live Oak Credit Facility). The Live Oak Credit Facility
closed on March 27, 2024. During the first two years following the closing date, SIF III may request an increase in the commitment amount
under the Live Oak Credit Facility to up to $150.0 million. The terms of the Live Oak Credit Facility require a minimum drawn amount of
$12.5 million at all times during the period ending March 27, 2025, which increases to the greater of $25.0 million or 50% of the facility
amount in effect at any time thereafter. The term of the Live Oak Credit Facility is three years. Advances under the Live Oak Credit Facility
bear interest at a floating rate per annum equal to Adjusted Term SOFR plus an applicable margin between 3.50% and 4.25% based on the
Live Oak Credit Facility’s utilization. On June 14, 2024, the Live Oak Credit Facility was amended to, among other things:
(i) increase the borrowings available under the Live Oak Credit Facility from up to $50.0 million to up to $75.0 million, subject to a
borrowing base requirement; (ii) add new lenders to the Live Oak Credit Agreement; (iii) replace administrative agent approval with “Required
Lender” (as defined in the Live Oak Credit Agreement) approval with respect to certain matters; (iv) replace Required Lender approval
with 100% lender approval with respect to certain matters; and (v) change the definition of Required Lender to require the approval of
at least two unaffiliated lenders.
 
 On October 26, 2021, we entered into a Limited
Liability Company Agreement with TJHA JV I LLC (“TJHA”) to co-manage Saratoga Senior Loan Fund I JV LLC (“SLF JV”).
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.
 
 On September 30, 2022, SLF 2021 was renamed to
Saratoga Investment Corp Senior Loan Fund 2022-1, Ltd. (“SLF 2022”).
 
 We and TJHA have equal voting interest on all
material decisions with respect to SLF JV, including those involving its investment portfolio, and equal control of corporate governance.
No management fee is charged to SLF JV as control and management of SLF JV is shared equally.
 
 We and TJHA have committed to provide up to a
combined $50.0 million of financing to SLF JV through cash contributions, where we provided $43.75 million and TJHA provides $6.25 million,
resulting in an 87.5% and 12.5% ownership between the two parties. The financing is issued in the form of an unsecured note and equity.
The unsecured note will pay a fixed rate of 10.0% per annum and is due and payable in full on October 20, 2033. As of February 28, 2025,
our and TJHA’s investment in SLF JV consisted of an unsecured note of $17.6 million and $2.5 million, respectively; and membership
interest of $17.6 million and $2.5 million, respectively. As of February 29, 2024, the Company and TJHA’s investment in SLF JV consisted
of an unsecured note of $17.6 million and $2.5 million, respectively; and membership interest of $17.6 million and $2.5 million, respectively.
As of February 28, 2025, and February 29, 2024, the Company’s investment in the unsecured note of SLF JV had a fair value of $16.5
million and $15.8 million, respectively, and the Company’s investment in the membership interests of SLF JV had a fair value of
$3.1 million and $9.4 million, respectively.
 
 SLF JV’s initial investment in SLF 2022
was in the form of an unsecured loan. The unsecured loan paid a floating rate of LIBOR plus 7.00% per annum and was paid in full on June
9, 2023. The unsecured loan was repaid in full on October 28, 2022, as part of the CLO closing.
 
 We have determined that SLF JV is an investment
company under (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial Services—Investment
Companies ; however, in accordance with such guidance we will generally not consolidate our investment in a company other than a wholly
owned investment company subsidiary. SLF JV is not a wholly owned investment company subsidiary as we and TJHA each have an equal 50%
voting interest in SLF JV and thus neither party has a controlling financial interest. Furthermore, FASB ASC Topic 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, we do not consolidate SLF JV.
 
 On October 28, 2022, SLF 2022 issued $402.1 million
of debt through the JV CLO trust. The 2022 JV CLO Notes were issued pursuant to the JV Indenture, with the Trustee. As part of the transaction,
we purchased 87.50% of the Class E Notes from SLF 2022 with a par value of $12.25 million. As of February 28, 2025 and February 29, 2024,
the fair value of these Class E Notes were $12.3 million and $12.3 million, respectively.
 
 66 

 Critical Accounting Policies and Estimates 
 
 Basis of Presentation 
 
 The preparation of financial statements in accordance
with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make certain estimates and assumptions
affecting amounts reported in our consolidated financial statements. We have identified investment valuation, revenue recognition and
the recognition of capital gains incentive fee expense as our most critical accounting estimates. We continuously evaluate our estimates,
including those related to the matters described below. These estimates are based on the information that is currently available to us
and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ materially from
those estimates under different assumptions or conditions. A discussion of our critical accounting policies and estimates follows.
 
 Investment Valuation 
 
 We account for 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. Under ASC 820 we are required to assume that its investments are to be sold or its liabilities
are to be transferred at the balance sheet date in the principal market to independent market participants, or in the absence of a principal
market, in the most advantageous market, which may be a hypothetical market. Market participants are defined as buyers and sellers in
the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact.
 
 Investments for which market quotations are readily
available are fair valued at such market quotations obtained from independent third-party pricing services and market makers subject to
any decision by our board of directors to approve a fair value determination to reflect significant events affecting the value of these
investments. We value investments for which market quotations are not readily available at fair value as approved, in good faith, by our
board of directors based on input from Saratoga Investment Advisors, the audit committee of our board of directors and a third party independent
valuation firm. We use multiple techniques for determining fair value based on the nature of the investment and experience with those
types of investments and specific portfolio companies. The selections of the valuation techniques and the inputs and assumptions used
within those techniques often require subjective judgements and estimates. These techniques include market comparables, discounted cash
flows and enterprise value waterfalls. Fair value is best expressed as a range of values from which we determine a single best estimate.
The types of inputs and assumptions that may be considered in determining the range of values of our investments include the nature and
realizable value of any collateral, the portfolio company’s ability to make payments, market yield trend analysis and volatility
in future interest rates, call and put features, the markets in which the portfolio company does business, comparison to publicly traded
companies, discounted cash flows and other relevant factors.
 
 We undertake 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 Saratoga Investment Advisors and preliminary valuation conclusions are documented and discussed with our senior management; and 

 ● 
 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. We use a third-party independent valuation firm to value our investment in the subordinated notes of Saratoga CLO and the Class F-2-R-3 Notes tranche of the Saratoga CLO every quarter. 

 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 Saratoga Investment Advisors and an independent valuation firm (if applicable) will supplement the preliminary valuation to reflect any comments provided by the audit committee; and 

 ● 
 our board of directors discusses the valuations and approves the fair value of each investment, in good faith, based on the input of Saratoga Investment Advisors, independent valuation firm (to the extent applicable) and the audit committee of our board of directors. 

 67 

 Our investment in Saratoga CLO is carried at fair
value, which is based on a discounted cash flows that utilizes prepayment, re-investment and loss assumptions based on historical experience
and projected performance, economic factors, the characteristics of the underlying cash flow, and market comparables for equity interests
in collateralized loan obligation funds similar to Saratoga CLO, when available, as determined by Saratoga Investment Advisors 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 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.
 
 Rule 2a-5 under the 1940 Act (“Rule 2a-5”)
establishes a regulatory framework for determining fair value in good faith for purposes of the 1940 Act. Rule 2a-5 permits boards, subject
to board oversight and certain other conditions, to designate the investment adviser to perform fair value determinations. Rule 2a-5 also
defines when market quotations are “readily available” for purposes of the 1940 Act and the threshold for determining whether
a fund must determine the fair value of a security. Rule 31a-4 under the 1940 Act (“Rule 31a-4”) provides the recordkeeping
requirements associated with fair value determinations. While our board of directors has not elected to designate Saratoga Investment
Advisors as the valuation designee, we has adopted certain revisions to its valuation policies and procedures in order comply with the
applicable requirements of Rule 2a-5 and Rule 31a-4.
 
 Revenue Recognition 
 
 Income Recognition 
 
 Interest income, adjusted for amortization of
premium and accretion of discount, is recorded on an accrual basis to the extent that such amounts are expected to be collected. The Company
stops accruing interest on its investments when it is determined that interest is no longer collectible. Discounts and premiums on investments
purchased are accreted/amortized over the life of the respective investment using the effective yield method. The amortized cost of investments
represents the original cost adjusted for the accretion of discounts and amortization of premiums on investments.
 
 Loans are generally placed on non-accrual status
when there is reasonable doubt that principal or interest will be collected. Accrued interest is generally reserved when a loan is placed
on non-accrual status. Interest payments received on non-accrual loans may be recognized as a reduction in principal depending upon management’s
judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest is paid and,
in management’s judgment, are likely to remain current, although we may make exceptions to this general rule if the loan has sufficient
collateral value and is in the process of collection.
 
 Payment-in-Kind Interest 
 
 We may hold debt and preferred equity investments
in our portfolio that contain a payment-in-kind (“PIK”) interest provision. The PIK interest, which represents contractually
deferred interest added to the investment balance that is generally due at maturity, is generally recorded on the accrual basis to the
extent such amounts are expected to be collected. We stop accruing PIK interest if we do not expect the issuer to be able to pay all principal
and interest when due.
 
 Revenues 
 
 We generate revenue in the form of interest income
and capital gains on the debt investments that we hold and capital gains, if any, on equity interests that we may acquire. We expect our
debt investments, whether in the form of leveraged loans or mezzanine debt, to have terms of up to ten years, and to bear interest at
either a fixed or floating rate. Interest on debt will be payable generally either quarterly or semi-annually. In some cases, our debt
or preferred equity investments may provide for a portion or all of the interest to be PIK. To the extent interest is PIK, it will be
payable through the increase of the principal amount of the obligation by the amount of interest due on the then-outstanding aggregate
principal amount of such obligation. The principal amount of the debt and any accrued but unpaid interest will generally become due at
the maturity date. In addition, we may generate revenue in the form of commitment, origination, structuring, amendment, redemption or
diligence fees, fees for providing managerial assistance or investment management services and possibly consulting fees. Any such fees
will be generated in connection with our investments and recognized as earned. We may also invest in preferred equity or common equity
securities that pay dividends on a current basis.
 
 On January 22, 2008, we entered into a collateral
management agreement with Saratoga CLO, pursuant to which we act as its collateral manager. The Saratoga CLO was initially refinanced
in October 2013 with its reinvestment period extended to October 2016. On November 15, 2016, we completed a second refinancing of the
Saratoga CLO with its reinvestment period extended to October 2018.
 
 68 

 On December 14, 2018, we completed a third refinancing
and upsize of the Saratoga CLO. The third Saratoga CLO refinancing, among other things, extended its reinvestment period to January 2021,
and extended its legal maturity date to January 2030, and added a non-call period of January 2020. Following this refinancing, the Saratoga
CLO portfolio increased from approximately $300.0 million in aggregate principal amount to approximately $500.0 million of predominantly
senior secured first lien term loans. In addition to refinancing its liabilities, we invested an additional $13.8 million in all of the
newly issued subordinated notes of the Saratoga CLO and also purchased $2.5 million in aggregate principal amount of the Class F-R-2 and
$7.5 million aggregate principal amount of the Class G-R-2 notes tranches at par, with a coupon of 3M USD LIBOR plus 8.75% and 3M USD
LIBOR plus 10.00%, respectively. As part of this refinancing, we also redeemed our existing $4.5 million aggregate amount of the Class
F notes tranche at par and the $20.0 million CLO 2013-1 Warehouse Loan was repaid.
 
 On February 11, 2020, we entered into an unsecured
loan agreement (“CLO 2013-1 Warehouse 2 Loan”) with Saratoga Investment Corp. CLO 2013-1 Warehouse 2, Ltd (“CLO 2013-1
Warehouse 2”), a wholly owned subsidiary of Saratoga CLO, pursuant to which CLO 2013-1 Warehouse 2 may borrow from time
to time up to $20.0 million from the Company in order to provide capital necessary to support warehouse activities. On October 23,
2020, the availability under the CLO 2013-1 Warehouse 2 Loan was increased to $25.0 million, which was immediately fully drawn and, which
expires on August 20, 2021. The interest rate was also amended to be based on a pricing grid, starting at an annual rate of 3M USD LIBOR
+ 4.46%. During the fourth quarter ended February 28, 2021, the CLO 2013-1 Warehouse 2 Ltd was repaid in full.
 
 On February 26, 2021, we completed the fourth
refinancing of the Saratoga CLO. This refinancing, among other things, extended the Saratoga CLO reinvestment period to April 2024, extended
its legal maturity to April 2033, and added a non-call period of February 2022. In addition, and as part of the refinancing, the Saratoga
CLO was upsized from $500 million in assets to approximately $650 million. As part of this refinancing and upsizing, the Company
invested an additional $14.0 million in all of the newly issued subordinated notes of the Saratoga CLO, and purchased $17.9 million
in aggregate principal amount of the Class F-R-3 Notes tranche at par. Concurrently, the existing $2.5 million of
Class F-R-2 Notes, $7.5 million of Class G-R-2 Notes and $25.0 million of the CLO 2013-1 Warehouse 2 Loan were repaid.
We also paid $2.6 million of transaction costs related to the refinancing and upsizing on behalf of the Saratoga CLO, to be reimbursed
from future equity distributions. At August 31, 2021, the outstanding receivable of $2.6 million was repaid in full.
 
 On August 9, 2021, we exchanged our existing $17.9
million Class F-R-3 Notes for $8.5 million Class F-1-R-3 Notes and $9.4 million Class F-2-R-3 Notes at par. On August 11, 2021, we sold
our Class F-1-R-3 Notes to third parties, resulting in a realized loss of $0.1 million.
 
 The Saratoga CLO remains effectively 100% owned
and managed by Saratoga Investment Corp. We receive a base management fee of 0.10% per annum and a subordinated management fee of 0.40%
per annum of the outstanding principal amount of Saratoga CLO’s assets, paid quarterly to the extent of available proceeds. Prior
to the second refinancing and the issuance of the 2013-1 Amended CLO Notes, we received a base management fee of 0.25% per annum and a
subordinated management fee of 0.25% per annum of the outstanding principal amount of Saratoga CLO’s assets, paid quarterly to the
extent of available proceeds.
 
 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%.
 
 Interest income on our investment in Saratoga
CLO is recorded using the effective interest method in accordance with the provisions of FASB ASC Topic 325-40, Investments-Other, Beneficial
Interests in Securitized Financial Assets, 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.
 
 69 

 Expenses 
 
 Our primary operating expenses include the payment
of investment advisory and management fees, professional fees, directors and officers insurance, fees paid to directors who are not “interested
persons” (as defined in Section 2(a)(19) of the 1940 Act) of the Company (“independent directors”) and administrator
expenses, including our allocable portion of our administrator’s overhead. Our investment advisory and management fees compensate
our Manager for its work in identifying, evaluating, negotiating, closing and monitoring our investments. We bear all other costs and
expenses of our operations and transactions, including those relating to:
 
 ● 
 organization; 

 ● 
 calculating our net asset value (“NAV”) (including the cost and expenses of any independent valuation firm); 

 ● 
 expenses incurred by our Manager payable to third parties, including agents, consultants or other advisers, in monitoring our financial and legal affairs and in monitoring our investments and performing due diligence on our prospective portfolio companies; 

 ● 
 expenses incurred by our Manager payable for travel and due diligence on our prospective portfolio companies; 

 ● 
 interest payable on debt, if any, incurred to finance our investments; 

 ● 
 offerings of our common stock and other securities; 

 ● 
 investment advisory and management fees; 

 ● 
 fees payable to third parties, including agents, consultants or other advisers, relating to, or associated with, evaluating and making investments; 

 ● 
 transfer agent and custodial fees; 

 ● 
 federal and state registration fees; 

 ● 
 all costs of registration and listing our common stock on any securities exchange; 

 ● 
 U.S. federal, state and local taxes; 

 ● 
 independent directors’ fees and expenses; 

 ● 
 costs of preparing and filing reports or other documents required by governmental bodies (including the Securities and Exchange Commission (the “SEC”) and the SBA); 

 ● 
 costs of any reports, proxy statements or other notices to common stockholders including printing costs; 

 ● 
 our fidelity bond, directors and officers errors and omissions liability insurance, and any other insurance premiums; 

 ● 
 direct costs and expenses of administration, including printing, mailing, long distance telephone, copying, secretarial and other staff, independent auditors and outside legal costs; and 

 ● 
 administration fees and all other expenses incurred by us or, if applicable, the administrator in connection with administering our business (including payments under the Administration Agreement based upon our allocable portion of the administrator’s overhead in performing its obligations under an Administration Agreement, including rent and the allocable portion of the cost of our officers and their respective staffs (including travel expenses)). 

 Pursuant to the investment advisory and management
agreement that we had with GSCP (NJ), L.P., our former investment adviser and administrator, we had agreed to pay GSCP (NJ), L.P. as investment
adviser a quarterly base management fee of 1.75% of the average value of our total 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 and an incentive fee.
 
 70 

 The incentive fee had two parts:
 
 ● 
 A fee, payable quarterly in arrears, equal to 20.0% of our pre-incentive fee net investment income, expressed as a rate of return on the value of the net assets at the end of the immediately preceding quarter, that exceeded a 1.875% quarterly hurdle rate measured as of the end of each fiscal quarter. Under this provision, in any fiscal quarter, our investment adviser received no incentive fee unless our pre-incentive fee net investment income exceeded the hurdle rate of 1.875%. Amounts received as a return of capital were not included in calculating this portion of the incentive fee. Since the hurdle rate was based on net assets, a return of less than the hurdle rate on total assets could still have resulted in an incentive fee. 

 ● 
 A fee, payable at the end of each fiscal year, equal to 20.0% of our net realized capital gains, if any, computed net of all realized capital losses and unrealized capital depreciation, in each case on a cumulative basis on each investment in our portfolio, less the aggregate amount of capital gains incentive fees paid to the investment adviser through such date. 

 We deferred cash payment of any incentive fee
otherwise earned by our former investment adviser if, during the then most recent four full fiscal quarters ending on or prior to the
date such payment was to be made, the sum of (a) our aggregate distributions to our stockholders and (b) our change in net assets (defined
as total assets less liabilities) (before taking into account any incentive fees payable during that period) was less than 7.5% of our
net assets at the beginning of such period. These calculations were appropriately pro-rated for the first three fiscal quarters of operation
and adjusted for any share issuances or repurchases during the applicable period. Such incentive fee would become payable on the next
date on which such test had been satisfied for the most recent four full fiscal quarters or upon certain terminations of the investment
advisory and management agreement. We commenced deferring cash payment of incentive fees during the quarterly period ended August 31,
2007 and continued to defer such payments through the quarterly period ended May 31, 2010. As of July 30, 2010, the date on which GSCP
(NJ), L.P. ceased to be our investment adviser and administrator, we owed GSCP (NJ), L.P. $2.9 million in fees for services previously
provided to us; of which $0.3 million has been paid by us. GSCP (NJ), L.P. agreed to waive payment by us of the remaining $2.6 million
in connection with the consummation of the stock purchase transaction with Saratoga Investment Advisors and certain of its affiliates
described elsewhere in this Annual Report.
 
 The terms of the investment advisory and management
agreement with Saratoga Investment Advisors, our current investment adviser, are substantially similar to the terms of the investment
advisory and management agreement we had entered into with GSCP (NJ), L.P., our former investment adviser, except for the following material
distinctions in the fee terms:
 
 ● 
 The capital gains portion of the incentive fee was reset with respect to gains and losses from May 31, 2010, and therefore losses and gains incurred prior to such time will not be taken into account when calculating the capital gains fee payable to Saratoga Investment Advisors and, as a result, Saratoga Investment Advisors will be entitled to 20.0% of net gains that arise after May 31, 2010. In addition, the cost basis for computing realized gains and losses on investments held by us as of May 31, 2010 equal the fair value of such investment as of such date. Under the investment advisory and management agreement with our former investment adviser, GSCP (NJ), L.P., the capital gains fee was calculated from March 21, 2007, and the gains were substantially outweighed by losses. 

 ● 
 Under the “catch up” provision, 100.0% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income that exceeds 1.875% but is less than or equal to 2.344% in any fiscal quarter is payable to Saratoga Investment Advisors. This will enable Saratoga Investment Advisors to receive 20.0% of all net investment income as such amount approaches 2.344% in any quarter, and Saratoga Investment Advisors will receive 20.0% of any additional net investment income. Under the investment advisory and management agreement with our former investment adviser, GSCP (NJ), L.P. only received 20.0% of the excess net investment income over 1.875%. 

 ● 
 We will no longer have deferral rights regarding incentive fees in the event that the distributions to stockholders and change in net assets is less than 7.5% for the preceding four fiscal quarters. 

 71 

 Capital Gains Incentive Fee 
 
 We record an expense accrual relating to the capital
gains incentive fee payable by us to the Manager when the unrealized gains on its investments exceed all realized capital losses on its
investments given the fact that a capital gains incentive fee would be owed to the Manager if we were to liquidate our investment portfolio
at such time. The actual incentive fee payable to the Company’s Manager related to capital gains will be determined and payable
in arrears at the end of each fiscal year and will include only realized capital gains for the period.
 
 Recent Accounting Pronouncements 
 
 In December 2023, the FASB issued ASU 2023-09, Improvements
to Income Tax Disclosures . The amendments in this update require more disaggregated information on income taxes paid. ASU 2023-09
is effective for years beginning after December 15, 2024. Early adoption is permitted, however the Company has not elected to early adopt
this provision as of the date of the financial statements contained in this report. The Company is still assessing the impact of the new
guidance.
 
 In November 2024, the FASB issued ASU 2024-03,
“Disaggregation of Income Statement Expenses,” which requires additional disclosure of the nature of expenses included in the
income statement in response to requests from investors for more information about an entity’s expenses. The new standard requires disaggregation
of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. The new guidance
is effective for annual periods beginning after December 15, 2027. The Company is currently evaluating the impact of the new standard
on the Company’s consolidated financial statements and related disclosures and does not believe it will have a material impact on its
consolidated financial statements or its disclosures.
 
 Portfolio and investment activity 
 
 Investment Portfolio Overview 
 
 February 28,

2025 
 February 29,

2024 
 February 28,

2023 

 ($ in millions) 

 Number of investments(1) 
 135 
 139 
 115 

 Number of portfolio companies(2) 
 48 
 55 
 49 

 Average investment per portfolio company(2) 
 $ 20.1 
 $ 20.1 
 $ 19.0 

 Average investment size(1) 
 $ 7.2 
 $ 8.1 
 $ 8.3 

 Weighted average maturity(3) 
 2.2 yrs 
 2.5 yrs 
 2.9 yrs 

 Number of industries(5) 
 41 
 43 
 40 

 Non-performing or delinquent investments (fair value) 
 $ 2.6 
 $ 18.9 
 $ 9.8 

 Fixed rate debt (% of interest earning portfolio)(3) 
 $ 26.1(3.0 )% 
 $ 5.5(0.5 )% 
 $ 8.2(1.0 )% 

 Fixed rate debt (weighted average current coupon)(3) 
 7.4 % 
 15.0 % 
 12.2 % 

 Floating rate debt (% of interest earning portfolio)(3) 
 $ 850.5(97.0 )% 
 $ 997.9(99.5 )% 
 $ 817.1(99.0 )% 

 Floating rate debt (weighted average current spread over LIBOR/SOFR)(3)(4) 
 7.2 % 
 7.5 % 
 7.0 % 

 (1) 
 Excludes our investment in the subordinated notes of Saratoga CLO. 

 (2) 
 At February 28, 2025, excludes our investment in the subordinated notes of Saratoga CLO and Class F-2-R-3 Notes tranche, as well as the unsecured notes and equity interests in the SLF JV and the Class E Note tranche of the SLF 2022. At February 28, 2023, excludes our investment in the subordinated notes of Saratoga CLO, Class F-2-R-3 Note tranche, as well as the unsecured notes and equity interests in the SLF JV. 

 (3) 
 Excludes our investment in the subordinated notes of Saratoga CLO and equity interests, as well as the unsecured notes and equity interests in SLF JV and the Class E Note tranche of the SLF 2022. 

 (4) 
 Calculation uses either 1-month or 3-month LIBOR/SOFR,
 depending on the contractual terms, and after factoring in any existing LIBOR/SOFR floors. 

 (5) 
 Our investment in the subordinated notes of Saratoga CLO and Class F-R-3 Note tranche, as well as the unsecured notes and equity interests in the SLF JV and the Class E note tranche of the SLF 2022 are included in Structured Finance Securities industry. 

 72 

 During the fiscal year ended February 28, 2025,
we invested $168.1 million in new and existing portfolio companies and had $312.1 million in aggregate amount of exits and repayments
resulting in net repayments of $144.0 million for the year.
 
 During the fiscal year ended February 29, 2024,
we invested $246.1 million in new and existing portfolio companies and had $30.3 million in aggregate amount of exits and repayments resulting
in net investments of $215.8 million for the year.
 
 During the fiscal year ended February 28, 2023,
we invested $385.1 million in new and existing portfolio companies and had $222.2 million in aggregate amount of exits and repayments
resulting in net investments of $162.9 million for the year.
 
 Portfolio Composition 
 
 Our portfolio composition at February 28, 2025, February
29, 2024 and February 28, 2023 at fair value was as follows:
 
 February 28, 2025 
 February 29, 2024 
 February 28, 2023 

 Percentage of Total Portfolio 
 Weighted Average Current Yield 
 Percentage of Total Portfolio 
 Weighted Average Current Yield 
 Percentage of Total Portfolio 
 Weighted Average Current Yield 

 First lien term loans 
 88.7 % 
 11.3 % 
 85.7 % 
 12.6 % 
 82.1 % 
 12.3 % 

 Second lien term loans 
 0.7 
 16.7 
 1.6 
 5.1 
 1.5 
 5.3 

 Unsecured loans 
 1.7 
 10.7 
 1.4 
 11.1 
 2.1 
 9.8 

 Structured finance securities 
 1.5 
 19.9 
 2.7 
 10.3 
 4.3 
 7.4 

 Equity interests 
 7.4 
 - 
 8.6 
 - 
 10.0 
 - 

 Total 
 100.0 % 
 10.8 % 
 100.0 % 
 11.4 % 
 100.0 % 
 10.7 % 

 At February 28, 2025, our investment in the
 subordinated notes of Saratoga CLO, a collateralized loan obligation fund, had a fair value of $0.2 million and constituted 0.02% of
 our portfolio. This investment constitutes a first loss position in a portfolio that, as of February 28, 2025 and February 29, 2024,
 was composed of $527.1 million and $640.8 million, respectively, in aggregate principal amount of primarily senior secured first
 lien term loans. In addition, as of February 28, 2025, we also own $9.4 million in aggregate principal of the F-2-R-3 Notes in the
 Saratoga CLO, which only rank senior to the subordinated notes.
 
 This investment is subject to unique risks. (See
“Part 1. Item 1A. Risk Factors—Our investment in Saratoga CLO constitutes a leveraged investment in a portfolio of subordinated
notes representing the lowest-rated securities issued by a pool of predominantly senior secured first lien term loans and is subject to
additional risks and volatility. All losses in the pool of loans will be borne by our subordinated notes and only after the value of our
subordinated notes is reduced to zero will the higher-rated notes issued by the pool bear any losses”). We do not consolidate the
Saratoga CLO portfolio in our consolidated financial statements. Accordingly, the metrics below do not include the underlying Saratoga
CLO portfolio investments. However, at February 28, 2025, $484.3 million or 98.4% of the Saratoga CLO portfolio investments in terms of
market value had a CMR color rating of green or yellow and eight of the Saratoga CLO portfolio investments were in default with a fair
value of $4.4 million. At February 29, 2024, $603.0 million or 99.2% of the Saratoga CLO portfolio investments in terms of market value
had a CMR color rating of green or yellow and two of the Saratoga CLO portfolio investments were in default with a fair value of $0.3
million. For more information relating to Saratoga CLO, see the audited financial statements for Saratoga CLO included elsewhere herein.
 
 73 

 Saratoga Investment Advisors normally grades all
of our investments using a credit and monitoring rating system (“CMR”). The CMR consists of a single component: a color rating.
The color rating is based on several criteria, including financial and operating strength, probability of default, and restructuring risk.
The color ratings are characterized as follows: (Green)—performing credit; (Yellow)—underperforming credit; (Red)—in
principal payment default and/or expected loss of principal.
 
 Portfolio CMR distribution 
 
 The CMR distribution of our investments at February 28, 2025
and February 29, 2024 was as follows:
 
 Saratoga Investment Corp. 
 
 February 28, 2025 
 February 29, 2024 

 Color Score 
 Investments at Fair Value 
 Percentage of Total Portfolio 
 Investments at Fair Value 
 Percentage of Total Portfolio 

 ($ in thousands) 

 Green 
 $ 890,437 
 91.0 % 
 $ 1,000,298 
 87.8 % 

 Yellow 
 1,086 
 0.1 
 12,643 
 1.1 

 Red 
 1,547 
 0.2 
 6,273.00 
 0.6 

 N/A(1) 
 85,008 
 8.7 
 119,580 
 10.5 

 Total 
 $ 978,078 
 100.0 % 
 $ 1,138,794 
 100.0 % 

 (1) Comprised of our investment in the subordinated notes of Saratoga
CLO and equity interests. 

 The change in reserve from $9.5 million as of
February 29, 2024 to $0.2 million as of February 28, 2025 was primarily related to the reversal and receipt of the non-accrual of interest
income related to our investment in Knowland Group, and the write-down of all reserved interest income related to our investments in Pepper
Palace and Zollege as part of their restructurings this year.
 
 The CMR distribution of Saratoga CLO investments at February
28, 2025 and February 29, 2024 was as follows:
 
 Saratoga CLO 
 
 February 28, 2025 
 February 29, 2024 

 Color Score 
 Investments at Fair Value 
 Percentage of Total Portfolio 
 Investments at Fair Value 
 Percentage of Total Portfolio 

 ($ in thousands) 

 Green 
 $ 446,859 
 90.8 % 
 $ 560,384 
 92.2 % 

 Yellow 
 37,453 
 7.6 
 42,580 
 7.0 

 Red 
 6,198 
 1.3 
 3,568 
 0.6 

 N/A(1) 
 1,685 
 0.3 
 1,020 
 0.2 

 Total 
 $ 492,195 
 100.0 % 
 $ 607,552 
 100.0 % 

 (1) Comprised of Saratoga CLO’s equity interests. 

 74 

 Portfolio composition by industry grouping at fair
value 
 
 The following table shows our portfolio composition by industry
grouping at fair value at February 28, 2025 and February 29, 2024:
 
 Saratoga Investment Corp. 
 
 February 28, 2025 
 February 29, 2024 

 Investments At Fair Value 
 Percentage

 of Total

 Portfolio 
 Investments At Fair Value 
 Percentage of Total Portfolio 

 ($ in thousands) 

 Healthcare Services 
 $ 85,149 
 8.5 % 
 $ 51,094 
 4.5 % 

 Consumer Services 
 59,439 
 6.1 
 64,689 
 5.7 

 HVAC Services and Sales 
 57,458 
 5.9 
 59,208 
 5.2 

 Real Estate Services 
 51,750 
 5.3 
 52,350 
 4.6 

 Healthcare Software 
 45,986 
 4.7 
 120,500 
 10.8 

 Education Software 
 41,595 
 4.3 
 45,579 
 4.0 

 Dental Practice Management 
 35,159 
 3.6 
 40,235 
 3.5 

 Mental Healthcare Services 
 32,405 
 3.3 
 37,377 
 3.3 

 Cutsom Millwork Software 
 31,722 
 3.2 
 - 
 0.0 

 Restaurant 
 31,600 
 3.2 
 22,580 
 2.0 

 Municipal Government Software 
 29,720 
 3.0 
 - 
 0.0 

 Health/Fitness Franchisor 
 28,453 
 2.9 
 32,032 
 2.8 

 Education Services 
 27,533 
 2.8 
 25,819 
 2.3 

 Talent Acquisition Software 
 27,334 
 2.8 
 26,896 
 2.4 

 Employee Collaboration Software 
 27,179 
 2.8 
 14,150 
 1.2 

 Financial Services 
 26,302 
 2.7 
 26,276 
 2.3 

 Research Software 
 26,280 
 2.7 
 26,255 
 2.3 

 Architecture & Engineering Software 
 25,293 
 2.6 
 25,247 
 2.2 

 Association Management Software 
 24,850 
 2.5 
 24,089 
 2.1 

 Direct Selling Software 
 24,064 
 2.5 
 24,073 
 2.1 

 Mentoring Software 
 22,027 
 2.3 
 22,069 
 1.9 

 Insurance Software 
 20,345 
 2.1 
 19,821 
 1.7 

 Investment Fund 
 19,615 
 2.0 
 25,222 
 2.2 

 IT Services 
 18,810 
 1.9 
 78,422 
 6.9 

 Marketing Orchestration Software 
 18,444 
 1.9 
 18,420 
 1.6 

 Corporate Education Software 
 17,346 
 1.8 
 18,026 
 1.6 

 Non-profit Services 
 16,470 
 1.7 
 16,267 
 1.4 

 Structured Finance Securities(1) 
 14,772 
 1.5 
 30,626 
 2.7 

 Veterinary Services 
 12,667 
 1.3 
 4,753 
 0.4 

 Field Service Management 
 11,751 
 1.2 
 10,708 
 0.9 

 Lead Management Software 
 11,641 
 1.2 
 12,120 
 1.1 

 Alternative Investment Management Software 
 11,576 
 1.2 
 10,779 
 0.9 

 Fire Inspection Business Software 
 10,178 
 1.0 
 9,916 
 0.9 

 Financial Services Software 
 9,933 
 1.0 
 9,916 
 0.9 

 Industrial Products 
 9,404 
 1.0 
 9,095 
 0.8 

 Office Supplies 
 5,339 
 0.5 
 7,181 
 0.6 

 Cyber Security 
 3,517 
 0.4 
 2,826 
 0.2 

 Staffing Services 
 3,426 
 0.4 
 3,288 
 0.3 

 Specialty Food Retailer 
 1,546 
 0.2 
 2,489 
 0.2 

 Healthcare Supply 
 - 
 0.0 
 - 
 0.0 

 Facilities Maintenance 
 - 
 0.0 
 231 
 0.0 

 Hospitality/Hotel 
 - 
 0.0 
 41,447 
 3.6 

 Sports Management 
 - 
 0.0 
 27,000 
 2.4 

 Legal Software 
 - 
 0.0 
 20,709 
 1.8 

 Roofing Contractor Software 
 - 
 0.0 
 19,014 
 1.7 

 Total 
 $ 978,078 
 100.0 % 
 $ 1,138,794 
 100.0 % 

 (1) As of February 28, 2025, comprised of our investment in the subordinated
notes and F-2-R-3 Notes of Saratoga CLO, as well as the unsecured notes and equity interests in the SLF JV and E-Notes of SLF 2022. As
of February 29, 2024, comprised of our investment in the subordinated notes and Class F-2-R-3 Notes of Saratoga CLO, as well as the unsecured
notes and equity interests in the SLF JV and E-Notes of SLF 2022.
 
 75 

 The following table shows Saratoga CLO’s portfolio
composition by industry grouping at fair value at February 28, 2025 and February 29, 2024:
 
 Saratoga CLO 
 
 February 28, 2025 
 February 29, 2024 

 Investments
 at
 Fair Value 
 Percentage
 of Total
 Portfolio 
 Investments
 at
 Fair Value 
 Percentage
 of Total
 Portfolio 

 ($ in thousands) 

 Banking, Finance, Insurance & Real Estate 
 $ 101,194 
 20.9 % 
 $ 116,253 
 19.0 % 

 Services: Business 
 46,915 
 9.5 
 65,524 
 10.8 

 High Tech Industries 
 39,950 
 8.1 
 50,996 
 8.4 

 Services: Consumer 
 26,923 
 5.5 
 30,433 
 5.0 

 Healthcare & Pharmaceuticals 
 26,032 
 5.3 
 40,453 
 6.7 

 Chemicals, Plastics, & Rubber 
 25,268 
 5.1 
 30,219 
 5.0 

 Retail 
 22,306 
 4.5 
 26,339 
 4.3 

 Telecommunications 
 19,475 
 4.0 
 22,718 
 3.7 

 Media: Advertising, Printing & Publishing 
 17,309 
 3.4 
 20,265 
 3.3 

 Hotel, Gaming & Leisure 
 16,900 
 3.3 
 20,217 
 3.3 

 Automotive 
 16,730 
 3.4 
 20,007 
 3.3 

 Consumer goods: Durable 
 14,008 
 2.8 
 17,555 
 2.9 

 Containers, Packaging & Glass 
 13,522 
 2.7 
 17,138 
 2.8 

 Construction & Building 
 13,129 
 2.7 
 16,663 
 2.7 

 Beverage, Food & Tobacco 
 12,920 
 2.6 
 13,150 
 2.2 

 Consumer goods: Non-durable 
 10,571 
 2.1 
 10,698 
 1.8 

 Aerospace & Defense 
 8,353 
 1.7 
 13,068 
 2.2 

 Wholesale 
 8,061 
 1.6 
 7,255 
 1.2 

 Transportation: Cargo 
 7,153 
 1.5 
 8,890 
 1.5 

 Media: Broadcasting & Subscription 
 7,069 
 1.4 
 10,778 
 1.8 

 Utilities: Oil & Gas 
 6,417 
 1.3 
 8,046 
 1.3 

 Media: Diversified & Production 
 6,286 
 1.3 
 10,390 
 1.7 

 Capital Equipment 
 4,739 
 1.0 
 5,694 
 0.9 

 Forest Products & Paper 
 4,408 
 0.9 
 3,592 
 0.6 

 Transportation: Consumer 
 3,727 
 0.8 
 4,720 
 0.8 

 Energy: Electricity 
 3,306 
 0.7 
 2,855 
 0.5 

 Energy: Oil & Gas 
 3,012 
 0.6 
 4,024 
 0.7 

 Environmental Industries 
 2,588 
 0.5 
 3,120 
 0.5 

 Utilities: Electric 
 1,988 
 0.4 
 2,234 
 0.4 

 Metals & Mining 
 1,936 
 0.4 
 4,256 
 0.7 

 Total 
 $ 492,195 
 100.0 % 
 $ 607,550 
 100.0 % 

 76 

 Portfolio composition by geographic location at fair
value 
 
 The following table shows our portfolio composition by geographic
location at fair value at February 28, 2025 and February 29, 2024. The geographic composition is determined by the location of the corporate
headquarters of the portfolio company.
 
 February 28, 2025 
 February 29, 2024 

 Investments at

Fair Value 
 Percentage of

 Total

Portfolio 
 Investments at 

Fair Value 
 Percentage of

 Total Portfolio 

 ($ in thousands) 

 Midwest 
 $ 364,944 
 37.3 % 
 $ 264,966 
 23.3 % 

 Southeast 
 234,144 
 23.9 
 308,590 
 27.1 

 Northeast 
 128,787 
 13.2 
 144,562 
 12.7 

 West 
 120,361 
 12.3 
 233,791 
 20.5 

 Southwest 
 63,278 
 6.5 
 111,911 
 9.8 

 International / Other 
 18,810 
 1.9 
 - 
 0.0 

 Other(1) 
 47,754 
 4.9 
 74,974 
 6.6 

 Total 
 $ 978,078 
 100.0 % 
 $ 1,138,794 
 100.0 % 

 (1) As of February 28, 2025, comprised of our investments in the
subordinated notes, F-2-R-3 Notes of Saratoga CLO, as well as the unsecured notes and equity interests in the SLF JV and foreign investments.
As of February 29, 2024, comprised of our investments in the subordinated notes, F-2-R-3 Notes of Saratoga CLO, as well as the unsecured
notes and equity interests in the SLF JV and foreign investments. 

 Results of operations 
 
 Operating results for the fiscal years ended February 28,
2025, February 29, 2024 and February 28, 2023 were as follows:
 
 For the Year Ended 

 February 28,

2025 
 February 29,

2024 
 February 28,

2023 

 ($ in thousands) 

 Total investment income 
 $ 148,855 
 $ 143,720 
 $ 99,104 

 Total operating expenses 
 95,852 
 86,846 
 63,903 

 Net investment income 
 53,003 
 56,874 
 35,201 

 Net realized gains (losses) from investments 
 (42,030 ) 
 154 
 7,446 

 Income tax (provision) benefit from realized gain on investments 
 - 
 - 
 549 

 Net change in unrealized appreciation (depreciation) on investments 
 18,974 
 (47,091 ) 
 (15,218 ) 

 Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments 
 (1,061 ) 
 (893 ) 
 (1,715 ) 

 Loss on extinguishment of debt* 
 (800 ) 
 (110 ) 
 (1,587 ) 

 Net increase in net assets resulting from operations 
 $ 28,086 
 $ 8,934 
 $ 24,676 

 * Certain prior period amounts have been reclassified to conform
to current period presentation. 

 77 

 Investment income 
 
 The composition of our investment income for the fiscal years
ended February 28, 2025, February 29, 2024 and February 28, 2023 were as follows:
 
 For the Year Ended 

 February 28,

2025 
 February 29,

2024 
 February 28,

2023 

 ($ in thousands) 

 Interest from investments 
 $ 131,022 
 $ 127,785 
 $ 85,217 

 Interest from cash and cash equivalents 
 6,530 
 2,512 
 1,368 

 Management fee income 
 3,114 
 3,270 
 3,270 

 Incentive fee income 
 - 
 - 
 - 

 Dividend Income* 
 4,562 
 6,533 
 2,720 

 Structuring and advisory fee income 
 1,583 
 2,150 
 3,585 

 Other income* 
 2,044 
 1,470 
 2,944 

 Total investment income 
 $ 148,855 
 $ 143,720 
 $ 99,104 

 * Certain prior period amounts have been reclassified to conform
to current period presentation. 

 For the fiscal year ended February 28, 2025, total
investment income increased $5.1 million, or 3.6%, to $148.9 million for the fiscal year ended February 28, 2025 compared to $143.7 million
for the fiscal year ended February 29, 2024. Interest income from investments increased $3.2 million, or 2.5%, to $131.0 million for the
year ended February 28, 2025 from $127.8 million for the fiscal year ended February 29, 2024. The increase in interest income for the
fiscal year ended February 28, 2025 is primarily due to the recognition of $8.2 million interest income related to our Knowland investment
that was previously on non-accrual and was fully repaid this year with all interest, offset by lower interest income on the overall portfolio
as the weighted average interest rate decreased from 11.4% as of February 29, 2024 to 10.8% as of February 28, 2025.
 
 For the fiscal year ended February 29, 2024, total
investment income increased $44.6 million, or 45.0%, to $143.7 million for the fiscal year ended February 29, 2024 compared to $99.1 million
for the fiscal year ended February 28, 2023. Interest income from investments increased $42.6 million, or 50.0%, to $127.8 million for
the year ended February 29, 2024 from $85.2 million for the fiscal year ended February 28, 2023. The increase in interest income for the
fiscal year ended February 29, 2024 is primarily attributable to an increase of 17.1% in total investments to $1,138.8 million from $972.6
million in the prior period, as well as the increase in the weighted average current yield on investments of 11.4% compared to 10.7% in
the prior period.
 
 For the fiscal year ended February 28, 2025 and
February 29, 2024, total PIK income was $4.0 million and $2.5 million, respectively. This increase was primarily due to the recognition
of reserved Knowland PIK interest previously on non-accrual and fully repaid during this year.
 
 For the fiscal year ended February 29, 2024 and
February 28, 2023, total PIK income was $2.5 million and $1.2 million, respectively. This increase was due to investment growth and amended
terms of debt securities that elected to pay a portion of their interest in PIK.
 
 Management fee income reflects the fee income
received for managing the Saratoga CLO. For the years ended February 28, 2025, February 29, 2024 and February 28, 2023, total management
fee income was $3.1 million, $3.3 million and $3.3 million, respectively.
 
 For the fiscal year ended February 28, 2025, February
29, 2024 and February 28, 2023, total dividend income was $4.6 million, $6.5 million and $2.7 million, respectively. Dividends received
is recorded in the consolidated statements of operations when earned, and the decrease primarily reflects the reduced $4.0 million of
dividend income received on the SLF JV as of February 28, 2025 compared to $5.9 million as of February 29, 2024.
 
 For the fiscal year ended February 28, 2025, February
29, 2024 and February 28, 2023, total structuring and advisory fee income was $1.6 million, $2.1 million and $3.6 million, respectively.
Structuring and advisory fee income represents fee income earned and received performing certain investment and advisory activities during
the closing of new investments, with the changes year-over-year primarily reflecting the increased or decreased originations during the
period.
 
 For the fiscal year ended February 28, 2025, February
29, 2024 and February 28, 2023, other income was $2.0 million, $1.5 million and $2.9 million, respectively. Other income primarily includes
prepayment, amendment and redemption fees and is recorded in the consolidated statements of operations when earned.
 
 78 

 Operating expenses 
 
 The composition of our operating expenses for the years ended
February 28, 2025, February 29, 2024 and February 28, 2023 were as follows:
 
 For the Year Ended 

 February 28,

2025 
 February 29,

2024 
 February 28,

2023 

 ($ in thousands) 

 Interest and debt financing expenses 
 $ 52,059 
 $ 49,180 
 $ 33,499 

 Base management fees 
 18,382 
 19,212 
 16,424 

 Incentive management fees 
 13,254 
 8,025 
 5,057 

 Professional fees 
 2,058 
 1,767 
 1,812 

 Administrator expenses 
 4,708 
 3,873 
 3,160 

 Insurance 
 304 
 322 
 347 

 Directors fees and expenses 
 367 
 351 
 360 

 General and administrative and other expenses 
 1,902 
 2,243 
 2,329 

 Income tax expense (benefit) 
 412 
 43 
 (153 ) 

 Excise tax expense (benefit) 
 2,406 
 1,830 
 1,068 

 Total operating expenses 
 $ 95,852 
 $ 86,846 
 $ 63,903 

 For the year ended February 28, 2025, total operating
expenses increased $9.0 million, or 10.4%, to $95.9 million compared to $86.8 million for the year ended February 29, 2024. For the year
ended February 29, 2024, total operating expenses increased $22.9 million, or 35.9%, to $86.8 million compared to $63.9 million for the
year ended February 28, 2023.
 
 For the year ended February 28, 2025, interest
and debt financing expenses increased $2.9 million, or 5.9% compared to the year ended February 29, 2024. The increase is attributable
to both the total average outstanding debt increasing from $798.9 million for the year ended February 29, 2024 to $836.2 million for
the year ended February 28, 2025, as well as the weighted average interest rate on our outstanding indebtedness increasing from 5.46%
to 5.56% for the same periods.
 
 For the year ended February 29, 2024, interest
and debt financing expenses increased $15.7 million, or 46.8% compared to the year ended February 28, 2023. The increase is attributable
to both the total average outstanding debt increasing from $663.0 million for the year ended February 28, 2023 to $798.9 million for the
year ended February 29, 2024, as well as the weighted average interest rate on our outstanding indebtedness increasing from 4.48% to 5.46%
for the same periods. The increase in total average outstanding debt and the weighted average interest rate was primarily due to the issuance
during the year ended February 29, 2024 of the higher-cost 8.75% 2025 Notes and 8.50% 2028 Notes. At February 29, 2024 and February 28,
2023, the lower-cost SBA debentures represented 26.1% and 27.7% of overall debt, respectively. 
 
 For the year ended February 28, 2025, base management
fees decreased $0.8 million, or 4.3% compared to the fiscal year ended February 29, 2024. The decrease in base management fees is due
to the 4.3% decrease in the average value of our total assets, less cash and cash equivalents, from $1,097.8 million as of February 29,
2024 to $1,050.5 million as of February 28, 2025. 
 
 For the year ended February 29, 2024, base management
fees increased $2.8 million, or 17.0% compared to the fiscal year ended February 28, 2023. The increase in base management fees is due
to the 17.0% increase in the average value of our total assets, less cash and cash equivalents, from $938.5 million as of February 28,
2023 to $1,097.8 million as of February 29, 2024.
 
 For the year ended February 28, 2025, incentive
fees increased $5.2 million, or 65.1% compared to the fiscal year ended February 29, 2024. The incentive fee on income increased this
year from $13.0 million for the year ended February 29, 2024 to $13.2 million for the year ended February 28, 2025, reflecting the increased
operating performance of our debt investments during this period. The incentive fees on capital gains increased from $(8.3) million benefit
for the fiscal year ended February 29, 2024 to $(5.9) million benefit for the fiscal year ended February 28, 2025, both reflecting the
incentive fee income and expense on net unrealized appreciation and depreciation recognized during both these periods, with the liability
floor capped at zero.
 
 For the year ended February 29, 2024, incentive
fees increased $3.0 million, or 58.7% compared to the fiscal year ended February 28, 2023. The incentive fee on income increased this
year from $6.8 million for the year ended February 28, 2023 to $13.0 million for the year ended February 29, 2024, reflecting the increased
operating performance of our debt investments during this period. The incentive fees on capital gains decreased from ($1.8) million benefit
for the fiscal year ended February 28, 2023 to ($8.3) million benefit for the fiscal year ended February 29, 2024, both reflecting the
incentive fee income and expense on net unrealized appreciation and depreciation recognized during both these periods.
 
 79 

 For the year ended February 28, 2025, professional
fees increased $0.3 million, or 16.5% compared to the fiscal year ended February 29, 2024. This increase is primarily due to inflationary
increases from vendors across accounting, legal and consulting fees across the Company, as well as the additional cost of performing a
Sarbanes Oxley audit this year with the Company becoming an accelerated filer.
 
 For the year ended February 29, 2024, professional
fees decreased $0.05 million, or 2.5% compared to the fiscal year ended February 28, 2023. This decrease primarily reflects the benefit
of scale and optimization of costs and vendors across accounting, legal and consulting fees across the Company.
 
 For the year ended February 28, 2025, administrator
expenses increased $0.8 million, or 21.6% compared to the fiscal year ended February 29, 2024, which reflects an increase to the cap on
the payment or reimbursement of expenses by the Company from $4.3 million last year to $5.0 million, effective August 1, 2024.
 
 For the year ended February 29, 2024, administrator
expenses increased $0.7 million, or 22.5% compared to the fiscal year ended February 28, 2023, which reflects an increase to the cap on
the payment or reimbursement of expenses by the Company from $3.275 million last year to $ 4.3 million, effective August 1, 2023.
 
 For the fiscal years ended February 28, 2025,
February 29, 2024 and February 28, 2023, the average borrowings outstanding under the Credit Facilities was approximately $33.1 million,
$37.9 million and $26.3 million, respectively, and the average weighted average interest rate on the outstanding borrowing under the Credit
Facilities was 9.49%, 9.66% and 6.72%, respectively.
 
 For the fiscal years ended February 28, 2025,
February 29, 2024 and February 28, 2023, the average borrowings outstanding of SBA debentures was $213.8 million, $202.5 million and $230.0
million, respectively. For the years ended February 28, 2025, February 29, 2024 and February 28, 2023, the weighted average interest rate
on the outstanding borrowings of the SBA debentures was 3.32%, 3.08% and 2.78%, respectively.
 
 The weighted average dollar amount of our unsecured
notes for the fiscal years ended February 28, 2025 and February 29, 2024 were as follows:
 
 Fiscal Year Ended 

 (in millions) 
 February 28,
 2025 
 February 29,
 2024 

 7.75% 2025 Notes 
 $ 5.0 
 $ 5.0 

 6.25% 2027 Notes 
 15.0 
 15.0 

 4.375% 2026 Notes 
 175.0 
 175.0 

 4.35% 2027 Notes 
 75.0 
 75.0 

 6.00% 2027 Notes 
 105.5 
 105.5 

 7.00% 2025 Notes 
 12.0 
 12.0 

 8.00% 2027 Notes 
 46.0 
 46.0 

 8.125% 2027 Notes 
 60.4 
 60.4 

 8.75% 2025 Notes 
 20.0 
 17.5 

 8.50% 2028 Notes 
 57.5 
 50.2 

 For the years ended February 28, 2025, February
29, 2024 and February 28, 2023, we recognized income tax expense (benefit) of $0.41 million, $0.04 million and ($0.15) million, respectively.
This relates to net deferred federal and state income tax expense (benefit) with respect to operating gains and losses and income derived
from equity investments held in entities that are treated as corporations for U.S. federal income tax purposes, as well as current U.S.
federal and state income taxes on those operating gains and losses when realized.
 
 For the year ended February 28, 2025, we accrued
excise taxes of $2.4 million on undistributed taxable income as of December 31, 2024. For the year ended February 29, 2024, we accrued
excise taxes of $1.8 million on undistributed taxable income as of December 31, 2023.
 
 80 

 Net realized gains (losses) on sales of investments 
 
 For the fiscal year ended February 28, 2025, we
had $312.1 million of sales, repayments, exits or restructurings resulting in $42.0 million of net realized losses. The most significant
realized gains and losses during the year ended February 28, 2025 were as follows (dollars in thousands):
 
 Fiscal year ended February 28, 2025 

 Issuer 
 Asset Type 
 Gross Proceeds 
 Cost 
 Net
 Realized
 Gain (Loss) 

 Zollege PBC 
 First Lien Term Loan & Equity Interests 
 $ 3,205 
 $ 18,316 
 $ (15,111 ) 

 Netreo Holdings, LLC 
 Equity Interests 
 2,260 
 7,706 
 (5,446 ) 

 Book4Time, Inc. 
 First Lien Term Loan, Second Lien Term Loan & Equity Interests 
 707 
 157 
 550 

 Pepper Palace, Inc. 
 First Lien Term Loan & Equity Interests 
 - 
 - 
 (34,007 ) 

 Invita (fka HemaTerra Holding Company, LLC) 
 Equity Interests 
 7,577 
 2,817 
 4,760 

 Modern Campus (fka Destiny Solutions
 Inc.) 
 Limited Partner Interests 
 9,430 
 3,969 
 5,461 

 Emily Street Enterprises, L.L.C. 
 Equity Interests 
 1,670 
 400 
 1,270 

 The $15.1 million of net realized losses was
from the restructuring of our Zollege PBC investment.
 
 The $5.4 million of net realized losses was from
the sale of the equity interests in our Netreo Holdings, LLC investment.
 
 The $0.5 million of net realized gains was from
the sale of the equity interests in our Book4Time, Inc. investment.
 
 The $34.0 million of net realized losses was
from the restructuring of our Pepper Palace, Inc. investment.
 
 The $4.8 million of net realized gains was from
the sale of the equity interests in our Invita (fka HemaTerra Holding Company, LLC) investment. 
 
 The $5.5 million of net realized gains was from
the sale of the limited partner interests in our Modern Campus (fka Destiny Solutions Inc.) investment.
 
 The $1.3 million of net realized gains was from the sale of the equity
interests in our Emily Street Enterprises, L.L.C. investment.
 
 For the fiscal year ended February 29, 2024, we
had $30.3 million of sales, repayments, exits or restructurings resulting in $0.2 million of net realized gains. The most significant
realized gains and losses during the year ended February 29, 2024 were as follows (dollars in thousands):
 
 Fiscal year ended February 29, 2024 
 
 Issuer 
 Asset Type 
 Gross Proceeds 
 Cost 
 Net Realized Gain (Loss) 

 PDDS Buyer, LLC 
 Equity Interests 
 $ - 
 $ - 
 $ 41,350 

 Censis Technologies, Inc. 
 Equity Interests 
 - 
 - 
 6,773 

 GreyHeller LLC 
 Equity Interests 
 - 
 - 
 42,568 

 Ohio Medical, LLC 
 Equity Interests 
 - 
 - 
 60,565 

 Targus Holdings, Inc 
 Equity Interests 
 - 
 - 
 2,327 

 We received escrow payments from the prior sales
of our investments in PPDS Buyer, LLC, Censis Technologies, Inc., Ohio Medical, LLC, GreyHeller LLC and Targus Holdings, Inc.
 
 81 

 For the fiscal year ended February 28, 2023, we
had $222.2 million of sales, repayments, exits or restructurings resulting in $7.4 million of net realized loss. The most significant
realized gains and losses during the year ended February 28, 2023 were as follows (dollars in thousands):
 
 Fiscal year ended February 28, 2023 
 
 Issuer 
 Asset Type 
 Gross Proceeds 
 Cost 
 Net Realized Gain 

 PDDS Buyer, LLC 
 Equity Interests 
 $ 9,943,838 
 $ 2,000,000 
 $ 7,943,838 

 Ohio Medical, LLC 
 Equity Interests 
 770,161 
 380,353 
 389,808 

 Targus Holdings, Inc. 
 Equity Interests 
 540,075 
 1,589,630 
 (1,049,555 ) 

 Censis Technologies, Inc. 
 Equity Interests 
 - 
 - 
 68,731 

 Texas Teachers of Tomorrow, LLC 
 Equity Interests 
 - 
 - 
 24,977 

 V Rental Holdings LLC 
 Equity Interests 
 - 
 - 
 68,800 

 The $7.9 million of net realized gains was from
the sales of the equity position in our investment in PDDS Buyer, LLC.
 
 The $0.4 million of net realized gains was from
the sales of the equity position in our investment in Ohio Medical, LLC.
 
 The $1.0 million of net realized loss was from
the sales of the equity position in our investment in Targus Holding, Inc.
 
 We received escrow payments from the prior sales
of our investments in Censis Technologies, Inc., Texas Teachers of Tomorrow, LLC and V Rental Holdings LLC. 
 
 Net change in unrealized appreciation (depreciation) on investments 
 
 For the year ended February 28, 2025, our investments
had a net change in unrealized appreciation of $19.0 million compared to a net change in unrealized depreciation of $47.1 million for
the year ended February 29, 2024. The most significant cumulative changes in unrealized appreciation (depreciation) for the year ended
February 28, 2025, were the following (dollars in thousands):
 
 Fiscal year ended February 28, 2025 
 
 Issuer 
 Asset Type 
 Cost 
 Fair Value 
 Total Unrealized Appreciation (Depreciation) 
 YTD Change

 in Unrealized

 Appreciation

(Depreciation)
 
 Pepper Palace, Inc. 
 First Lien Term Loan & Equity Interests 
 $ 2,939 
 $ 1,547 
 $ (1,392 ) 
 $ 31,558 

 Zollege PBC 
 First Lien Term Loan & Equity Interests 
 2,020 
 3,937 
 1,917 
 16,082 

 Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-2-R-3 Note 
 Structured Finance Securities 
 9,375 
 2,281 
 (7,094 ) 
 (6,594 ) 

 Destiny Solutions Inc. 
 First Lien Term Loan & Equity Interests 
 - 
 - 
 - 
 (5,925 ) 

 Saratoga Senior Loan Fund I JV, LLC 
 Equity Interests 
 35,202 
 19,615 
 (15,588 ) 
 (5,608 ) 

 Artemis Wax Corp. 
 First Lien Term Loan & Equity Interests 
 60,546 
 59,439 
 (1,107 ) 
 (5,588 ) 

 ARC Health OpCo LLC 
 First Lien Term Loan & Equity Interests 
 37,533 
 32,405 
 (5,128 ) 
 (4,993 ) 

 Netreo Holdings, LLC 
 First Lien Term Loan & Equity Interests 
 - 
 - 
 - 
 3,803 

 Knowland Group, LLC 
 Second Lien Term Loan 
 - 
 - 
 - 
 3,236 

 HemaTerra Holding Company, LLC 
 First Lien Term Loan & Equity Interests 
 - 
 - 
 - 
 (3,094 ) 

 Axero Holdings, LLC 
 First Lien Term Loan & Equity Interests 
 20,637 
 26,665 
 6,028 
 2,552 

 Saratoga Investment Corp. CLO 2013-1, Ltd. 
 Structured Finance Securities 
 14,889 
 241 
 (14,648 ) 
 (2,147 ) 

 Granite Comfort, LP 
 First Lien Term Loan 
 58,943 
 57,458 
 (1,485 ) 
 (1,852 ) 

 Stretch Zone Franchising, LLC 
 First Lien Term Loan 
 28,526 
 27,255 
 (1,271 ) 
 (1,500 ) 

 ETU Holdings, Inc. 
 First Lien Term Loan, Second Lien Term Loan & Equity Interests 
 17,053 
 13,368 
 (3,685 ) 
 (1,250 ) 

 Vector Controls Holding Co., LLC 
 First Lien Term Loan & Equity Interests 
 - 
 9,404 
 9,404 
 1,233 

 The $31.6 million net change in unrealized appreciation
in our investment in Pepper Palace, Inc. was driven by the restructuring of the investment, resulting in a reversal of previously recognized
unrealized depreciation reclassified to realized loss.
 
 The $16.1 million net change in unrealized appreciation
in our investment in Zollege PBC was driven by the restructuring of the investment, resulting in a reversal of previously recognized unrealized
depreciation reclassified to realized loss.
 
 82 

 The $6.6 million net change in unrealized depreciation
in our investment Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-2-R-3 Note was driven by the impact of the performance of individual
credits in the CLO portfolio.
 
 The $5.9 million net change in unrealized depreciation
in our investment Modern Campus (fka Destiny Solutions Inc.) was driven by the sale of the equity position, resulting in a reversal of
previously recognized unrealized appreciation reclassified to realized gain.
 
 The $5.6 million net change in unrealized depreciation
in our investment Saratoga Senior Loan Fund I, JV, LLC was primarily driven by the impact of the performance of individual credits in
the portfolio.
 
 The $5.6 million of net change in unrealized depreciation
in our investment Artemis Wax Corp. was driven by a decline in company performance, overall market conditions and capital structure changes.
 
 The $5.0 million of net change in unrealized depreciation
in our investment ARC Health OpCo LLC was driven by declines in company performance and capital structure changes.
 
 The $3.8 million net change in unrealized appreciation
in our investment Netreo Holdings, LLC was driven by the sale of the equity position, resulting in a reversal of previously recognized
unrealized depreciation reclassified to realized loss.
 
 The $3.2 million net change in unrealized appreciation
in our investment in Knowland Group, LLC was driven by the completed sales process and the full recovery of Saratoga’s principal.
 
 The $3.1 million net change in unrealized depreciation
in our investment Invita (fka HemaTerra Holding Company, LLC) was driven by market factors that reduced the eventual proceeds received
from the sale.
 
 The $2.6 million net change in unrealized appreciation
in our investment Axero Holdings, LLC was driven by strong financial portfolio company performance.
 
 The $2.4 million net change in unrealized depreciation
in our investment in Stretch Zone Franchising, LLC was driven by a decline in company performance.
 
 The $2.1 million net change in unrealized depreciation
in our investment Saratoga Investment Corp. CLO 2013-1, Ltd. was primarily driven by the weakened performance of individual credits in
the portfolio.
 
 The $1.9 million net change in unrealized depreciation
in our investment in Granite Comfort, LP was driven by a decline in company performance.
 
 The $1.2 million net change in unrealized
depreciation in our investment ETU Holdings, Inc. was driven by a decline in company performance, overall market conditions and capital
structure changes.
 
 The $1.2 million net change in unrealized appreciation
in our investment in Vector Controls Holding Co., LLC was driven by company performance.
 
 83 

 For the year ended February 29, 2024, our investments
had a net change in unrealized depreciation of $47.1 million compared to a net change in unrealized depreciation of $15.2 million for
the year ended February 28, 2023. The most significant cumulative changes in unrealized appreciation (depreciation) for the year ended
February 29, 2024, were the following (dollars in thousands):
 
 Fiscal year ended February 29, 2024 
 
 Issuer 
 Asset Type 
 Cost 
 Fair Value 
 Total Unrealized Appreciation (Depreciation) 
 YTD Change

 in Unrealized

Appreciation

(Depreciation) 

 Pepper Palace, Inc. 
 First Lien Term Loan & Equity Interests 
 $ 35,438 
 $ 2,489 
 $ (32,949 ) 
 $ (23,104 ) 

 Zollege PBC 
 First Lien Term Loan & Equity Interests 
 17,949 
 3,784 
 (14,165 ) 
 (12,845 ) 

 Netreo Holdings, LLC 
 First Lien Term Loan & Equity Interests 
 39,225 
 35,422 
 (3,803 ) 
 (12,083 ) 

 Saratoga Senior Loan Fund I JV, LLC 
 Equity Interests 
 35,202 
 25,222 
 (9,980 ) 
 (5,504 ) 

 Saratoga Investment Corp. CLO 2013-1, Ltd. 
 Structured Finance Securities 
 22,002 
 9,501 
 (12,501 ) 
 (4,734 ) 

 Knowland Group, LLC 
 Second Lien Term Loan 
 15,879 
 12,643 
 (3,236 ) 
 2,882 

 ETU Holdings, Inc. 
 First Lien Term Loan, Second Lien Term Loan & Equity Interests 
 16,034 
 13,600 
 (2,434 ) 
 (2,518 ) 

 Vector Controls Holding Co., LLC 
 First Lien Term Loan & Equity Interests 
 924 
 9,095 
 8,171 
 1,653 

 Chronus LLC 
 First Lien Term Loan & Equity Interests 
 22,875 
 22,069 
 (806 ) 
 (1,304 ) 

 Avionte Holdings, LLC 
 Equity Interests 
 100 
 3,288 
 3,188 
 1,209 

 Buildout, Inc. 
 First Lien Term Loan, Second Lien Term Loan & Equity Interests 
 53,666 
 52,350 
 (1,316 ) 
 (1,167 ) 

 The $23.1 million net change in unrealized depreciation
in our investment in Pepper Palace, Inc. was driven by further declines in company performance during the year ended February 29, 2024.
 
 The $12.8 million net change in unrealized depreciation
in our investment in Zollege PBC was driven by further declines in company performance during the year ended February 29, 2024.
 
 The $12.1 million net change in unrealized depreciation
in our investment in Netreo Holdings, LLC was driven by increased company leverage and declines in company performance.
 
 The $5.5 million net change in unrealized depreciation
in our investment in Saratoga Senior Loan Fund I JV, LLC was primarily driven by overall market conditions.
 
 The $4.7 million net change in unrealized depreciation
in our investment in Saratoga Investment Corp. CLO 2013-1, Ltd. was driven by overall market conditions as well as the mark-down of specific
investments.
 
 The $2.9 million net change in unrealized appreciation
in our investment in Knowland Group, LLC was driven by overall improved company performance and valuation.
 
 The $2.5 million net change in unrealized depreciation
in our investment in ETU Holdings, Inc. was driven by declining company performance.
 
 The $1.7 million net change in unrealized appreciation
in our investment in Vector Controls Holding Co., LLC was driven by overall company performance.
 
 The $1.3 million net change in unrealized depreciation
in our investment in Chronus LLC was driven by overall company performance.
 
 The $1.2 million net change in unrealized appreciation
in our investment in Avionte Holdings, Inc. was driven by overall company performance.
 
 The $1.2 million net change in unrealized depreciation
in our investment in Buildout, Inc. was driven by overall company performance.
 
 84 

 For the year ended February 28, 2023, our investments
had a net change in unrealized depreciation of $15.2 million compared to a net change in unrealized appreciation of $17.0 million for
the year ended February 28, 2022. The most significant cumulative changes in unrealized appreciation (depreciation) for the year ended
February 28, 2023, were the following (dollars in thousands):
 
 Fiscal year ended February 28, 2023 
 
 Issuer 
 Asset Type 
 Cost 
 Fair Value 
 Total

Unrealized

Appreciation

(Depreciation) 
 YTD Change

 in Unrealized

 Appreciation

(Depreciation) 

 Pepper Palace, Inc. 
 First Lien Term Loan & Equity Interests 
 $ 34,256 
 $ 24,411 
 $ (9,845 ) 
 $ (9,327 ) 

 Artemis Wax Corp. 
 First Lien Term Loan & Equity Interests 
 60,059 
 63,642 
 3,583 
 1,460 

 Vector Controls Holding Co., LLC 
 First Lien Term Loan & Equity Interests 
 3,090 
 9,608 
 6,518 
 3,099 

 Axero Holdings, LLC 
 First Lien Term Loan & Equity Interests 
 10,551 
 13,052 
 2,500 
 1,952 

 Destiny Solutions Inc. 
 First Lien Term Loan & Equity Interests 
 3,969 
 8,941 
 4,972 
 1,309 

 Zollege PBC 
 First Lien Term Loan & Equity Interests 
 16,652 
 15,333 
 (1,319 ) 
 (1,185 ) 

 Netreo Holdings, LLC 
 First Lien Term Loan & Equity Interests 
 35,887 
 44,167 
 8,280 
 (2,363 ) 

 PDDS Buyer, LLC 
 First Lien Term Loan & Equity Interests 
 - 
 - 
 - 
 (5,094 ) 

 Saratoga Investment Corp. CLO 2013-1, Ltd. 
 Structured Finance Securities 
 28,944 
 21,177 
 (7,767 ) 
 (4,149 ) 

 Saratoga Senior Loan Fund I JV, LLC 
 Equity Interests 
 35,202 
 30,726 
 (4,476 ) 
 (3,368 ) 

 The $9.3 million net change in unrealized depreciation
in our investment in Pepper Palace, Inc. was driven by overall company performance.
 
 The $2.1 million net change in unrealized appreciation
in our investment in Artemis Wax Corp. was driven by improved financial performance.
 
 The $3.1 million net change in unrealized appreciation
in our investment in Vector Controls Holding Co., LLC was driven by improved financial performance.
 
 The $2.0 million net change in unrealized appreciation
in our investment in Axero Holdings, LLC was driven by growth and overall strong financial performance.
 
 The $1.3 million net change in unrealized appreciation
in our investment in Destiny Solutions Inc. was driven by growth and overall strong financial performance.
 
 The $1.2 million net change in unrealized depreciation
in our investment in Zollege PBC was driven by weakened financial performance.
 
 The $2.4 million net change in unrealized depreciation
in our investment in Netreo Holdings, LLC was driven by increased leverage and slowing top line growth.
 
 The $5.1 million net change in unrealized depreciation
in our investment in PDDS Buyer, LLC was driven by the sale of that investment, resulting in a reversal of previously recognized unrealized
appreciation reclassified to realized gains.
 
 The $4.1 million net change in unrealized depreciation
in our investment in Saratoga Investment Corp. CLO 2013-1 Ltd. was driven by the increase in discount rates and overall market conditions.
 
 The $3.4 million net change in unrealized depreciation
in our investment in Saratoga Senior Loan Fund I JV, LLC was driven by the increase in discount rates and overall market conditions. 
 
 Changes in net assets resulting from operations 
 
 For the fiscal years ended February 28, 2025,
February 29, 2024 and February 28, 2023, we recorded a net increase in net assets resulting from operations of $28.1 million, $8.9 million
and $24.7 million, respectively. Based on 13,912,170 weighted average common shares outstanding as of February 28, 2025, our per share
net increase in net assets resulting from operations was $2.02 for the fiscal year ended February 28, 2025. This compares to a per share
net increase in net assets resulting from operations of $0.71 for the fiscal year ended February 29, 2024 (based on 12,670,939 weighted
average common shares outstanding as of February 29, 2024), and a per share net increase in net assets resulting from operations of $2.06
for the fiscal year ended February 28, 2023 (based on 11,963,533 weighted average common shares outstanding as of February 28, 2023).
 
 85 

 FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES 
 
 We intend to continue to generate cash primarily
from cash flows from operations, including interest earned from our investments in debt in middle-market companies, interest earned from
the temporary investment of cash in U.S. government securities and other high-quality debt investments that mature in one year or less,
draws of the Encina Credit Facility and the Live Oak Credit Facility, our continued access to the SBA debentures future borrowings and
future offerings of both private and public debt and equity securities.
 
 Although we expect to continue to fund the growth
of our investment portfolio through the net proceeds from future equity offerings, including our dividend reinvestment plan (“DRIP”),
our equity ATM Program (as defined below), and issuances of senior securities or future borrowings, to the extent permitted by the 1940
Act, we cannot assure you that our plans to raise capital will be successful. In this regard, because our common stock has historically
traded at a price below our current NAV per share and we are limited in our ability to sell our common stock at a price below NAV per
share, we have been and may continue to be limited in our ability to raise equity capital.
 
 In addition, we intend to distribute to our stockholders
substantially all of our operating taxable income in order to satisfy the distribution requirement applicable to RICs under the Code.
In satisfying this distribution requirement, in accordance with certain applicable provisions of the Code and the Treasury regulations
and a revenue procedure 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 that the aggregate amount of cash to be distributed to all stockholders must be at least 20%
of the aggregate declared distribution. We may rely on the revenue procedure in future periods to satisfy our RIC distribution requirement.
 
 Also, as a BDC, we generally are required to meet
a coverage ratio of total assets, less liabilities and indebtedness not represented by senior securities, to total senior securities,
which include all of our borrowings and any outstanding preferred stock, of at least 200%, reduced to 150% effective April 16, 2019 following
the approval received from our board of directors, including a majority of our independent directors, on April 16, 2018. This requirement
limits the amount that we may borrow. Our asset coverage ratio, as defined in the 1940 Act, was 162.9% as of February 28, 2025 and 161.1%
as of February 29, 2024. To fund growth in our investment portfolio in the future, we anticipate needing to raise additional capital from
various sources, including the equity markets and other public and private debt-related markets, which may or may not be available on
favorable terms, if at all.
 
 Consequently, we may not have the funds or the
ability to fund new investments, to make additional investments in our portfolio companies, to fund our unfunded commitments to portfolio
companies, to pay dividends or to repay borrowings. Also, the illiquidity of our portfolio investments may make it difficult for us to
sell these investments when desired and, if we are required to sell these investments, we may realize significantly less than their recorded
value.
 
 Due to the diverse capital sources available to
us at this time, we believe we have adequate liquidity to support our near term capital requirements.
 
 Encina Credit Facility 
 
 Below is a summary of the terms of the Encina
Credit Facility.
 
 Commitment . We entered into the Credit
and Security Agreement (the “Encina Credit Agreement”) relating to the Encina Credit Facility in the initial facility amount
of $50.0 million (the “Encina Facility Amount”). 
 
 Availability . We can draw up to the lesser
of (i) the Encina Facility Amount and (ii) the Borrowing Base. The Borrowing Base is an amount equal to (i) the difference of (A) the
product of the applicable advance rate which varies from 50.0% to 75.0% depending on the type of loan asset (Defaulted Loans being excluded
in that they carry an advance rate of 0%) and the value, determined in accordance with the Encina Credit Facility (the “Adjusted
Borrowing Value”), of certain “eligible” loan assets pledged as security for the loan (the “Borrowing Base Value”)
and (B) the Excess Concentration Amount, as calculated in accordance with the Encina Credit Facility, plus (ii) any amounts held in the
Prefunding Account and, without duplication, Excess Cash held in the Collection Account, less (iii) the product of (a) the amount of any
undrawn funding commitments we have under any loan asset and (b) the Unfunded Exposure Haircut Percentage, and less (iv) $100,000. Each
loan asset we held as of the date on which the Encina Credit Facility was closed was valued as of that date and each loan asset that we
acquire after such date will be valued at the lowest of its fair value, its face value (excluding accrued interest) and the purchase price
paid for such loan asset. Adjustments to the value of a loan asset will be made to reflect, among other things and under certain circumstances,
changes in its fair value, a default by the obligor on the loan asset, insolvency of the obligor, acceleration of the loan asset, and
certain modifications to the terms of the loan asset.
 
 86 

 The Encina Credit Facility contains limitations
on the type of loan assets that are “eligible” to be included in the Borrowing Base and as to the concentration level of certain
categories of loan assets in the Borrowing Base such as restrictions on geographic and industry concentrations, asset size and quality,
payment frequency, status and terms, average life, and collateral interests. In addition, if an asset is to remain an “eligible”
loan asset, we may not make changes to the payment, amortization, collateral and certain other terms of the loan assets without the consent
of the administrative agent that will either result in subordination of the loan asset or be materially adverse to the lenders.
 
 The Encina Credit Facility requires certain minimum
drawn amounts. For the period beginning on the closing date and ended April 4, 2022, the minimum funding amount was $12.5 million. For
the period beginning on April 5, 2022 through maturity, the minimum funding amount is the greater of $25.0 million and 50% of the Encina
Facility Amount in effect from time to time.
 
 Collateral . The Encina Credit Facility
is secured by assets of SIF II and pledged to Encina under the Encina Credit Facility. SIF II is a wholly owned special purpose entity
formed for the purpose of entering into the Encina Credit Facility.
 
 Interest Rate and Fees . Under the Encina
Credit Facility, funds were borrowed from or through certain lenders at the greater of the prevailing LIBOR rate and 0.75%, plus an applicable
margin of 4.00%. The Encina Credit Agreement includes benchmark replacement provisions which permit the Administrative Agent and the borrower
to select a replacement rate upon the unavailability of LIBOR. In addition, we 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 Encina
Credit Facility for the duration of the term of the Encina Credit Facility. Accrued interest and commitment fees are payable monthly in
arrears. We were also obligated to pay certain other fees to the lenders in connection with the closing of the Encina Credit Facility.
 
 Collateral Tests . It is a condition precedent
to any borrowing under the Encina Credit Facility that the principal amount outstanding under the Encina Credit Facility, after giving
effect to the proposed borrowings, not exceed the Borrowing Base (the “Borrowing Base Test”). In addition to satisfying the
Borrowing Base Test, the following tests must also be satisfied (together with Borrowing Base Test, the “Collateral Tests”):
 
 o 
 Interest Coverage Ratio. The ratio (expressed as a percentage) of interest collections with respect to pledged loan assets, less certain fees and expenses relating to the Encina Credit Facility, to accrued interest and commitment fees payable to the lenders under the Encina Credit Facility for the last 6 payment periods must equal at least 175.0%. 

 o 
 Overcollateralization Ratio. The ratio (expressed as a percentage) of the aggregate Adjusted Borrowing Value of “eligible” pledged loan assets plus the fair value of certain ineligible pledged loan assets (in each case, subject to certain adjustments) to outstanding borrowings under the Encina Credit Facility plus the Unfunded Exposure Amount must equal at least 200.0%. 

 The Encina Credit Facility also may require payment
of outstanding borrowings or replacement of pledged loan assets upon our breach of our representation and warranty that pledged loan assets
included in the Borrowing Base are “eligible” loan assets. Such ineligible collateral loans will be excluded from the calculation
of the Borrowing Base and may lead to a Borrowing Base Deficiency, which may be cured by effecting one or more (or any combination thereof)
of the following actions: (A) deposit into or credit to the collection account cash and eligible investments, (B) repay outstanding borrowings
(together with certain costs and expenses), (C) sell or substitute loan assets in accordance with the Encina Credit Facility, or (D) pledge
additional loan assets as collateral. Compliance with the Collateral Tests is also a condition to the discretionary sale of pledged loan
assets by us.
 
 Priority of Payments . The priority of payments
provisions of the Encina Credit Facility require, after payment of specified fees and expenses, that collections of interest from the
loan assets and, to the extent that these are insufficient, collections of principal from the loan assets, be applied on each payment
date to payment of outstanding borrowings if the Borrowing Base Test, the Overcollateralization Ratio and the Interest Coverage Ratio
would not otherwise be met.
 
 Operating Expenses . The priority of payments
provision of the Encina Credit Facility provides for the payment of certain of our operating expenses out of collections on interest and
principal in accordance with the priority established in such provision. The operating expenses payable pursuant to the priority of payment
provisions is limited to $200,000 per annum.
 
 87 

 Covenants; Representations and Warranties;
Events of Default . The Encina Credit Agreement contains customary representations and warranties, affirmative covenants, negative
covenants and events of default. The Encina Credit Agreement does not contain grace periods for breach by us of any negative covenants
or of certain of the affirmative covenants, including, without limitation, those related to preservation of the existence and separateness
of the Company. Other events of default under the Encina Credit Agreement include, among other things, the following:
 
 o our failure to maintain an
Interest Coverage Ratio of less than 175%; 

 o 
 our failure to maintain an Overcollateralization Ratio of less than 200%; 

 o the filing of certain ERISA
or tax liens on our assets or the Equity holder; 

 o failure by Specified Holders
to collectively, directly or indirectly, own and control at least 51% of the outstanding equity interests of Saratoga Investment Advisor,
or (y) possess the right to elect (through contract, ownership of voting securities or otherwise) at all times a majority of the board
of directors (or similar governing body) of Saratoga Investment Advisor and to direct the management policies and decisions of Saratoga
Investment Advisor, or (ii) the dissolution, termination or liquidation in whole or in part, transfer or other disposition, in each case,
of all or substantially all of the assets of, Saratoga Investment Advisor; 

 o indictment or conviction of
Saratoga Investment Advisors or any “key person” for a felony offense, or any fraud, embezzlement or misappropriation of
funds by Saratoga Investment Advisors or any “key person” and, in the case of “key persons,” without a reputable,
experienced individual reasonably satisfactory to Encina Lender Finance appointed to replace such key person within 30 days; 

 o resignation, termination, disability
or death of a “key person” or failure of any “key person” to provide active participation in Saratoga Investment
Advisors’ daily activities, all without a reputable, experienced individual reasonably satisfactory to Encina Lender Finance appointed
within 30 days. 

 Fees and Expenses . We paid certain fees
and reimbursed Encina Lender Finance, LLC for the aggregate amount of all documented, out-of-pocket costs and expenses, including the
reasonable fees and expenses of lawyers, incurred by Encina Lender Finance, LLC in connection with the Encina Credit Facility and the
carrying out of any and all acts contemplated thereunder up to and as of the date of closing. These amounts totaled $1.4 million.
 
 On January 27, 2023, we entered into the first
amendment to the Encina Credit Agreement to, among other things:
 
 ● 
 increase the borrowings available under the Encina Credit Facility from up to $50.0 million to up to $65.0 million; 

 ● 
 change the underlying benchmark used to compute interest under the Encina Credit Agreement from LIBOR to Term SOFR for a one-month tenor plus a 0.10% credit spread adjustment; 

 ● 
 increase the applicable effective margin rate on borrowings from 4.00% to 4.25%; 

 ● 
 extend the revolving period from October 4, 2024 to January 27, 2026; 

 ● 
 extend the period during which the borrower may request one or more increases in the borrowings available under the Encina Credit Facility (each such increase, a “Facility Increase”) from October 4, 2023 to January 27, 2025, and increased the maximum borrowings available pursuant to the Encina Facility Increase from $75.0 million to $150.0 million; 

 ● 
 revised the eligibility criteria for eligible collateral loans to exclude certain industries in which an obligor or related guarantor may be involved; and 

 ● 
 amended the provisions permitting the borrower to request an extension in the Commitment Termination Date (as defined in the Encina Credit Agreement) to allow requests to extend any applicable Commitment Termination Date, rather than a one-time request to extend the original Commitment Termination Date, subject to a notice requirement. 

 88 

 As of February 28, 2025, we had $32.5 million
outstanding borrowings under the Encina Credit Facility. As of February 29, 2024, we had $35.0 million outstanding borrowings under the
Encina Credit Facility. Our borrowing base under the Encina Credit Facility at February 28, 2025 and February 29, 2024 was $78.6 million
and $65.0 million, respectively.
 
 Live Oak Facility 
 
 On March 27, 2024, the Company and its wholly
owned special purpose subsidiary, SIF III, entered into a credit and security agreement (the “Live Oak Credit Agreement”),
by and among SIF III, as borrower, the Company, as collateral manager and equityholder, the lenders from time to time parties thereto,
Live Oak, as administrative agent and collateral agent, U.S. Bank National Association, as custodian, and U.S. Bank Trust Company, National
Association, as collateral administrator, relating to Live Oak Credit Facility.
 
 The Live Oak Credit Facility originally provided
for borrowings in U.S. dollars in an aggregate amount of up to $50.0 million. During the first two years following the closing date,
SIF III may request one or more increases in the commitment amount from $50.0 million to an amount not to exceed $150.0 million,
subject to certain terms and conditions and a customary fee. The terms of the Live Oak Credit Agreement require a minimum drawn amount
of $12.5 million at all times during the period ending March 27, 2025 and, thereafter, the greater of: (i) $25.0 million and
(ii) 50% of the facility amount in effect at such time. The Live Oak Credit Facility matures on March 27, 2027. Advances are available
during the term of the Live Oak Credit Facility and must be repaid in full at maturity. SIF III may request an extension of the maturity
date by an additional one year, subject to the agreement of the lenders and an extension fee.
 
 On June 14, 2024, the Company entered into the
first amendment to the Live Oak Credit Agreement (the “Amendment”). The Amendment, among other things:
 
 ● 
 increased the borrowings available under the Live Oak Credit Facility from up to $50.0 million to up to $75.0 million, subject to a borrowing base requirement; 

 ● 
 added new lenders (as identified in the Amendment) to the Live Oak Credit Agreement; 

 ● 
 replaced administrative agent approval with “Required Lender” (as defined in the Live Oak Credit Agreement) approval with respect to certain matters; 

 ● 
 replaced Required Lender approval with 100% lender approval with respect to certain matters; and 

 ● 
 changed the definition of Required Lender to require the approval of at least two unaffiliated lenders. 

 Advances under the Live Oak Credit Facility are
subject to a borrowing base calculation, and the Live Oak Credit Facility has various eligibility criteria for loans to be included in
the borrowing base. Advances under the Live Oak Credit Facility bear interest at a floating rate per annum equal to Adjusted Term SOFR
plus an applicable margin between 3.50% and 4.25% based on the Live Oak Credit Facility’s utilization. The Live Oak Credit
Agreement also provides for an unused fee of 0.50% on the unused commitments. SIF III’s obligations to the lenders under the
Live Oak Credit Facility are secured by a first priority security interest in substantially all of SIF III’s assets. In addition,
SIF III’s obligations to the lenders under the Live Oak Credit Facility are secured by a pledge by the Company of its equity interests
in SIF III, which is evidenced by the equity pledge agreement, dated as of March 27, 2024, by and between the Company, as pledgor, and
Live Oak, as collateral agent for the benefit of the secured parties.
 
 In connection with the Live Oak Credit Agreement,
the Company entered into a loan sale and contribution agreement with SIF III, dated as of March 27, 2024, by and between the Company,
as seller, and SIF III, as purchaser, pursuant to which the Company will sell or contribute certain loans held by the Company to SIF III
to be used to support the borrowing base under the Live Oak Credit Facility. The Live Oak Credit Facility permits loan proceeds and excess
cash in SIF III’s collection accounts to be distributed to us at any time based on three business days advance notice, subject to
compliance with various conditions, including the absence of a default or event of default, the absence of an over-advance against the
borrowing base and the absence of a violation of the financial covenants.
 
 As of February 28, 2025, we had $20.0 million
outstanding borrowings under the Live Oak Credit Facility. As of February 29, 2024, we had zero outstanding borrowings under the Live
Oak Credit Facility. Our borrowing base under the Live Oak Credit Facility at February 28, 2025 and February 29, 2024 was $86.9 million
and $0.0 million, respectively.
 
 Our asset coverage ratio, as defined in
the 1940 Act, was 162.9% as of February 28, 2025 and 161.1% as of February 29, 2024.
 
 89 

 SBA-guaranteed debentures 
 
 In addition, we, through two current wholly owned
subsidiaries, sought and obtained licenses from the SBA to operate an SBIC. In this regard, our wholly owned subsidiaries, SBIC II LP
and SBIC III LP, received an SBIC license from the SBA on August 14, 2019 and September 29, 2022, respectively. SBICs are designated 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. Our wholly owned subsidiary SBIC LP fully repaid its outstanding debentures
and subsequently surrendered its license to the SBA on January 3, 2023, and SBIC LP subsequently merged with and into the Company.
 
 The SBIC license allows our SBIC Subsidiaries
to obtain leverage by issuing SBA-guaranteed debentures. SBA-guaranteed debentures are non-recourse, interest only debentures with interest
payable semi-annually and have a ten-year maturity. The principal amount of SBA-guaranteed debentures is not required to be paid prior
to maturity but may be prepaid at any time without penalty. The interest rate of SBA-guaranteed debentures is fixed on a semi-annual basis
at a market-driven spread over U.S. Treasury Notes with 10-year maturities.
 
 The SBIC Subsidiaries are regulated by the SBA.
SBA regulations currently limit the amount that our SBIC Subsidiaries may individually borrow up to a maximum of $175.0 million of SBA
debentures if the SBIC Subsidiary has at least $87.5 million in regulatory capital, subject to the SBA’s approval. Under current
SBIC regulations, for two or more SBICs under common control, the maximum amount of outstanding SBA debentures cannot exceed $350.0 million.
The SBIC Subsidiaries are able to borrow funds from the SBA against regulatory capital (which generally approximates equity capital in
the respective SBIC) and are subject to customary regulatory requirements, including, but not limited to, periodic examination by the
SBA.
 
 We received exemptive relief from the SEC to permit
us to exclude the debt of our SBIC Subsidiaries guaranteed by the SBA from the definition of senior securities in the asset coverage test
under the 1940 Act. This allows us increased flexibility under the asset coverage test by permitting us to borrow up to $350.0 million
more than we 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, our board of directors, including a majority of our independent
directors, approved of our becoming subject to a minimum asset coverage ratio of 150% from 200% under Sections 18(a)(1) and 18(a)(2) of
the Investment Company Act, as amended. The 150% asset coverage ratio became effective on April 16, 2019.
 
 As of February 28, 2025, SBIC LP had $0.0 million
in regulatory capital and $0.0 million SBA-guaranteed debentures outstanding. SBIC II LP had $87.5 million in regulatory capital
and $131.0 million SBA-guaranteed debentures outstanding. SBIC III LP had $87.5 million in regulatory capital and $39.0 million
SBA-guaranteed debentures outstanding.
 
 Unsecured notes 
 
 7.25% 2025 Notes 
 
 On June 24, 2020, we issued $37.5 million aggregate
principal amount of our 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 $0.3 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. 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 were amortized over the term of the 7.25% 2025 Notes.
 
 90 

 On July 14, 2022, we redeemed $43.1 million in
aggregate principal amount of the issued and outstanding 7.25% 2025 Notes. The 7.25% 2025 Notes were listed on the NYSE under the trading
symbol of “SAK” and have been delisted following the full redemption on July 14, 2022.
 
 At February 28, 2025, the total amount of 7.25%
2025 Notes outstanding was $0.0 million.
 
 7.75% 2025 Notes 
 
 On July 9, 2020, we issued $5.0 million aggregate
principal amount of our 7.75% fixed-rate notes due in 2025 (the “7.75% 2025 Notes”) for net proceeds of $4.8 million after
deducting underwriting commissions of approximately $0.2 million. Offering costs incurred were approximately $0.1 million. Interest on
the 7.75% 2025 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 7.75% per year. The
7.75% 2025 Notes 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, subject
to a fee depending on the date of repayment. 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% 2025 Notes have been capitalized and
are being amortized over the term of the Notes. The 7.75% 2025 Notes are not listed and have a par value of $25.00 per note.
 
 At February 28, 2025, the total amount of 7.75%
2025 Notes outstanding was $5.0 million.
 
 6.25% 2027 Notes 
 
 On December 29, 2020, we issued $5.0 million in
aggregate principal amount of our 6.25% fixed-rate notes due in 2027 (the “6.25% 2027 Notes”). Offering costs incurred
were approximately $0.1 million. Interest on the 6.25% 2027 Notes is paid quarterly in arrears on February 28, May 31,
August 31 and November 30, at a rate of 6.25% per year. The 6.25% 2027 Notes 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% 2027 Notes have been capitalized and are being amortized over the term of the Notes.
 
 On January 28, 2021, we issued an additional $10.0
million in aggregate principal amount of the 6.25% 2027 Notes for net proceeds of $9.7 million after deducting underwriting commissions
of approximately $0.3 million (the “Additional 6.25% 2027 Notes”). The Additional 6.25% 2027 Notes are treated as a single
series with the existing 6.25% 2027 Notes under the indenture and have the same terms as the existing 6.25% 2027 Notes. Offering costs
incurred were approximately $0.1 million. Interest on the 6.25% 2027 Notes is paid quarterly in arrears on February 28, May 31, August
31 and November 30, at a rate of 6.25% per year. The 6.25% 2027 Notes 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 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 $0.4
million related to the 6.25% 2027 Notes have been capitalized and are being amortized over the term of the 6.25% 2027 Notes. The 6.25%
2027 Notes are not listed and have a par value of $25.00 per note.
 
 At February 28, 2025, the total amount of 6.25%
2027 Notes outstanding was $15.0 million.
 
 4.375% 2026 Notes 
 
 On March 10, 2021, we issued $50.0 million in
aggregate principal amount of the 4.375% fixed rate notes due 2026 (the “4.375% 2026 Notes”) for net proceeds of $49.0 million
after deducting underwriting commissions of approximately $1.0 million. Offering costs incurred were approximately $0.3 million. 
Interest on the 4.375% 2026 Notes is paid semi-annually in arrears on February 28 and August 28, at a rate of 4.375% per year. The
4.375% 2026 Notes 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% 2026 Notes have
been capitalized and are being amortized over the term of the 4.375% 2026 Notes.
 
 91 

 On July 15, 2021, we issued an additional $125.0
million in aggregate principal amount of the 4.375% 2026 Notes (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 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. The Additional 4.375% 2026 Notes are treated as a single series with
the existing 4.375% 2026 Notes under the indenture and have the same terms as the existing 4.375% 2026 Notes.
 
 At February 28, 2025 the total amount of 4.375%
2026 Notes outstanding was $175.0 million.
 
 4.35% 2027 Notes 
 
 On January 19, 2022, we
issued $75.0 million in aggregate principal amount of our 4.35% fixed-rate Notes due in 2027 (the “4.35% 2027 Notes”)
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% 2027 Notes,
after deducting the underwriting commissions of approximately $1.5 million . Offering costs incurred
were approximately $0.3 million. Interest on the 4.35% 2027 Notes is paid semi-annually in arrears on February 28 and
August 28, at a rate of 4.35% per year. The 4.35% 2027 Notes mature on February 28, 2027 and may be redeemed in whole or
in part at our option at any time prior to November 28, 2026, 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 $1.8 million related to the 4.35% 2027 Notes have been capitalized and
are being amortized over the term of the 4.35% 2027 Notes. 
 
 At February 28, 2025 the total amount of 4.35%
2027 Notes outstanding was $75.0 million.
 
 6.00% 2027 Notes 
 
 On April 27, 2022, we issued $87.5 million in
aggregate principal amount of 6.00% fixed-rate notes due 2027 (the “6.00% 2027 Notes”) for net proceeds of $84.8 million after
deducting underwriting commissions of approximately $2.7 million. Offering costs incurred were approximately $0.1 million. On May 10,
2022, the underwriters partially exercised their option to purchase an additional $10.0 million in aggregate principal amount of the 6.00%
2027 Notes. Net proceeds were $9.7 million after deducting underwriting commissions of approximately $0.3 million. Interest on the 6.00%
2027 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 6.00% per year. The 6.00% 2027
Notes mature on April 30, 2027 and commencing April 27, 2024, 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 $3.3 million related to the 6.00% 2027 Notes have been capitalized and are being amortized over the term
of the 6.00% 2027 Notes. The 6.00% 2027 Notes are listed on the NYSE under the trading symbol “SAT” with a par value of $25.00
per note.
 
 On August 15, 2022, we issued an additional $8.0
million in aggregate principal amount of the 6.00% 2027 Notes (the “Additional 6.00% 2027 Notes”) for net proceeds of $7.8
million, based on the public offering price of 97.80% of the aggregate principal amount of the 6.00% 2027 Notes. The Additional 6.00%
2027 Notes are treated as a single series with the existing 6.00% 2027 Notes under the indenture and have the same terms as the existing
6.00% 2027 Notes. The net proceeds from the offering were used for general corporate purposes in accordance with our investment objective
and strategies. Additional offering costs incurred were approximately $0.03 million. Additional financing costs of $0.03 million related
to the 6.00% 2027 Notes have been capitalized and are being amortized over the term of the 6.00% 2027 Notes.
 
 At February 28, 2025 the total amount of 6.00%
2027 Notes outstanding was $105.5 million.
 
 92 

 7.00% 2025 Notes 
 
 On September 8, 2022, we issued $12.0 million
in aggregate principal amount of 7.00% fixed-rate notes due 2025 (the “7.00% 2025 Notes”) for net proceeds of $11.6 million
after deducting customary fees and offering expenses of approximately $0.4 million. Interest on the 7.00% 2025 Notes is paid quarterly
in arrears on February 28, May 31, August 31 and November 30, at a rate of 7.00% per year. The 7.00% 2025 Notes mature on September 8,
2025 and commencing September 8, 2024, 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 $0.05 million related to the 7.00% 2025 Notes have been capitalized and are being amortized over the term of the 7.00% 2025 Notes.
 
 At February 28, 2025 the total amount of 7.00%
2025 Notes outstanding was $12.0 million.
 
 8.00% 2027 Notes 
 
 On October 27, 2022, we issued $40.0 million in
aggregate principal amount of our 8.00% fixed-rate notes due 2027 (the “8.00% 2027 Notes”) for net proceeds of $38.7 million
after deducting underwriting commissions of approximately $1.3 million. Offering costs incurred were approximately $0.1 million. On November
10, 2022, the underwriters partially exercised their option to purchase an additional $6.0 million in aggregate principal amount of the
8.00% 2027 Notes. Net proceeds were $5.8 million after deducting underwriting commissions of approximately $0.2 million. Interest on the
8.00% 2027 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 8.00% per year. The 8.00%
2027 Notes mature on October 31, 2027 and commencing October 27, 2024, 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 $1.73 million related to the 8.00% 2027 Notes have been capitalized and are being amortized over the
term of the 8.00% 2027 Notes. The 8.00% 2027 Notes are listed on the NYSE under the trading symbol “SAJ” with a par value
of $25.00 per note.
 
 At February 28, 2025 the total amount of
8.00% 2027 Notes outstanding was $46.0 million.
 
 8.125% 2027 Notes 
 
 On December 13, 2022, we issued $52.5 million
in aggregate principal amount of 8.125% fixed-rate notes due 2027 (the “8.125% 2027 Notes”) for net proceeds of $50.8 million
after deducting underwriting commissions of approximately $1.6 million. Offering costs incurred were approximately $0.1 million. On December
21, 2022, the underwriters fully exercised their option to purchase an additional $7.875 million in aggregate principal amount of the
8.125% 2027 Notes. Net proceeds were $7.6 million after deducting underwriting commissions of approximately $0.2 million. Interest on
the 8.125% 2027 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 8.125% per year. The
8.125% 2027 Notes mature on December 31, 2027 and commencing December 13, 2024, may be redeemed in whole or in part at any time or from
time to time at our option. The net proceeds from this offering were used to make investments in middle-market companies (including investments
made through our SBIC subsidiaries) in accordance with our investment objective and strategies and for general corporate purposes. Financing
costs of $2.0 million related to the 8.125% 2027 Notes have been capitalized and are being amortized over the term of the 8.125% 2027
Notes. The 8.125% 2027 Notes are listed on the NYSE under the trading symbol “SAY” with a par value of $25.00 per note.
 
 At February 28, 2025, the total amount of 8.125%
2027 Notes outstanding was $60.4 million.
 
 8.75% 2025 Notes 
 
 On March 31, 2023, we issued $10.0 million in
aggregate principal amount of 8.75% fixed-rate notes due 2024 (the “8.75% 2025 Notes”) for net proceeds of $9.7 million after
deducting underwriting discounts of approximately $0.4 million. On May 1, 2023, we issued an additional $10.0 million in aggregate principal
amount of the 8.75% 2024 Notes for net proceeds of $9.7 million after deducting underwriting discounts of approximately $0.4 million.
Offering costs incurred were approximately $0.03 million. Interest on the 8.75% 2025 Notes is paid quarterly in arrears on February 28,
May 31, August 31 and November 30, at a rate of 8.75% per year. On February 2, 2024, pursuant to the terms of the indenture governing
the 8.75% 2025 Notes, we elected to exercise our option to extend the maturity date of the 8.75% 2025 Notes from March 31, 2024 to March
31, 2025. Net proceeds from this offering were used to make investments in middle-market companies (including investments made through
our SBIC Subsidiaries) in accordance with our investment objective and strategies and general corporate purposes. Financing costs and
discounts of $0.7 million related to the 8.75% 2025 Notes have been capitalized and are being amortized over the term of the 8.75% 2025
Notes.
 
 93 

 At February 28, 2025, the total amount of 8.75%
2025 Notes outstanding was $20.0 million.
 
 8.50% 2028 Notes 
 
 On April 14, 2023, we issued $50.0 million in
aggregate principal amount of 8.50% fixed-rate notes due 2028 (the “8.50% 2028 Notes”) for net proceeds of $48.4 million after
deducting underwriting commissions of approximately $1.6 million. Offering costs incurred were approximately $0.03 million. On April 26,
2023, the underwriters fully exercised their option to purchase an additional $7.5 million in aggregate principal amount of the 8.50%
2028 Notes. Net proceeds were $7.3 million after deducting underwriting commissions of approximately $0.2 million. Interest on the 8.50%
2028 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 8.50% per year. The 8.50%
2028 Notes mature on April 15, 2028, and commencing April 14, 2025, may be redeemed in whole or in part at any time or from time to time
at our option. Net proceeds from this offering were used to repay a portion of the outstanding indebtedness under the Encina Credit Facility,
make investments in middle-market companies (including investments made through our SBIC Subsidiaries) in accordance with our investment
objective and strategies and for general corporate purposes. Financing costs of $2.0 million related to the 8.50% 2028 Notes have been
capitalized and are being amortized over the term of the 8.50% 2028 Notes. The 8.50% 2028 Notes are listed on the NYSE under the trading
symbol “SAZ” with a par value of $25.00 per note.
 
 At February 28, 2025, the total amount of 8.50%
2028 Notes outstanding was $57.5 million.
 
 At February 28, 2025 and February 29, 2024, the
fair value of total cash and cash equivalents, cash and cash equivalents in reserve accounts and total investments by major category are
as follows:
 
 February 28, 2025 
 February 29, 2024 

 Fair Value 
 Percentage

of Total 
 Fair Value 
 Percentage

of Total 

 ($ in thousands) 

 Cash and cash equivalents 
 $ 148,218 
 12.6 % 
 $ 8,693 
 0.8 % 

 Cash and cash equivalents, reserve accounts 
 56,505 
 4.8 
 31,814 
 2.7 

 First lien term loans 
 867,866 
 73.4 
 976,423 
 82.8 

 Second lien term loans 
 6,388 
 0.5 
 18,097 
 1.5 

 Structured finance securities 
 14,772 
 1.2 
 30,626 
 2.6 

 Unsecrued loan 
 16,534 
 1.4 
 15,818 
 1.3 

 Equity interests 
 72,518 
 6.1 
 97,830 
 8.3 

 Total 
 $ 1,182,801 
 100.0 % 
 $ 1,179,301 
 100.0 % 

 Equity Capital Activities 
 
 Share Repurchases 
 
 On September 24, 2014, we announced the approval
of the Share Repurchase Plan. Since September 24, 2014, the Share Repurchase Plan has been extended annually, and we have periodically
increased the amount of shares of common stock that may be purchased under the Share Repurchase Plan. Most recently, on January 7, 2025,
our board of directors extended the Share Repurchase Plan for another year to January 15, 2026, which currently permits up to 1.7 million
shares of common stock to be repurchased under the Share Repurchase Plan. As of February 28, 2025, we purchased 1,035,203 shares of common
stock, at the average price of $22.05 for approximately $22.8 million pursuant to the Share Repurchase Plan. During the three months and
year ended February 28, 2025 we did not purchase any shares of common stock pursuant to the Share Repurchase Plan.
 
 94 

 Public Equity Offering 
 
 On July 13, 2018, we issued 1,150,000 shares of
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. We
also granted the underwriters a 30-day option to purchase up to an additional 172,500 shares of common stock, which was not exercised.
 
 Equity ATM Program 
 
 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, we amended our equity distribution agreement to add BB&T Capital Markets and B.
Riley FBR, Inc. as sales agents in our ATM offering. On July 11, 2019, the amount of the common stock to be offered was increased to $70.0
million, and on October 8, 2019, the amount of the common stock to be offered was increased to $130.0 million. This agreement was terminated
as of July 29, 2021, and as of that date, we had 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).
 
 On July 30, 2021, we entered into an equity distribution
agreement (the “Equity Distribution Agreement”) with Ladenburg Thalmann & Co. Inc. (“Ladenburg”) and Compass
Point Research and Trading, LLC (“Compass Point”), each as distribution agents, through which we may offer for sale, from
time to time, up to $150.0 million of our common stock through the Agents (as defined below), or to them, as principal for their account
(the “ATM Program”).
 
 On July 6, 2023, we amended the Equity Distribution
Agreement to increase the maximum amount of shares of our common stock to be sold through the ATM Program to $300.0 million from $150.0
million. On July 19, 2023, we amended the Equity Distribution Agreement to add an additional distribution agent, Raymond James & Associates,
Inc. (“Raymond James”). On May 15, 2024, we amended the Equity Distribution Agreement to add an additional distribution agent,
Lucid Capital Markets, LLC (“Lucid” and together with Ladenburg, Compass Point, and Raymond James, the “Agents”).
The sales price per share of our common stock offered under the ATM Program, less the Agents’ commission, will not be less than
the NAV per share of our common stock at the time of such sale. Consistent with the terms of the ATM Program, the Manager may, from time
to time and in its sole discretion, contribute proceeds necessary to ensure that no sales are made at a price below the then-current NAV
per share.
 
 As of February 28, 2025 we sold 7,844,716 shares
for gross proceeds of $207.9 million at an average price of $26.37 for aggregate net proceeds of $206.1 million (net of transaction costs).
During the three months ended February 28, 2025, we sold 1,192,400 shares for gross proceeds of $32.4 million at an average price of $26.99
for aggregate net proceeds of $32.2 million (net of transaction costs). During the year ended February 28, 2025, we sold 1,300,838 shares
for gross proceeds of $35.4 million at an average price of $26.99 for aggregate net proceeds of $35.1 million (net of transaction costs).
The Manager agreed to reimburse the Company to the extent the per share price of the shares to the public, less underwriting fees, was
less than net asset value per share. For the three months ended February 28, 2025, the Manager reimbursed the Company $2.2 million. For
the year ended February 28, 2025, the Manager reimbursed the Company $2.4 million. 
 
 95 

 Dividend Distributions 
 
 We have distributed or intend to distribute sufficient
dividends to eliminate taxable income for our completed tax years. If we fail to satisfy the 90% distribution requirement or otherwise
fail to qualify as a RIC in any tax year, we would be subject to U.S. federal income tax in that year on all of our taxable income imposed
at corporate rates, regardless of whether we made any distributions to our shareholders. Shareholders have the option to receive payment
of the dividend in cash, or receive shares of common stock, pursuant to the DRIP. Our distributions for the tax years ended February 28,
2026 to inception were as follows:
 
 Payment date 
 Cash Dividend 

 Tax Year Ended February 28, 2026 
 
 June 24, 2025 
 $ 
 0.25 (51) 

 May 22, 2025 
 
 0.25 (51) 

 April 24, 2025 
 
 0.25 (50) 

 March 25, 2025 
 0.74 (49) 

 $ 1.49 

 Tax Year Ended February 28, 2025 
 
 December 19, 2024 
 $ 1.09 (48) 

 September 26, 2024 
 0.74 (47) 

 June 27, 2024 
 0.74 (46) 

 March 28, 2024 
 0.73 (45) 

 $ 3.30 

 Tax Year Ended February 29, 2024 
 
 December 28, 2023 
 $ 0.72 (44) 

 September 28, 2023 
 0.71 (43) 

 June 29, 2023 
 0.70 (42) 

 March 30, 2023 
 0.69 (1) 

 $ 2.82 

 Tax Year Ended February 28, 2023 
 
 January 4, 2023 
 $ 0.68 (2) 

 September 29, 2022 
 0.54 (3) 

 June 29, 2022 
 0.53 (4) 

 March 28, 2022 
 0.53 (5) 

 $ 2.28 

 Tax Year Ended February 28, 2022 
 
 January 19, 2022 
 $ 0.53 (6) 

 September 28, 2021 
 0.52 (7) 

 June 29, 2021 
 0.44 (8) 

 April 22, 2021 
 0.43 (9) 

 $ 1.92 

 Tax Year Ended February 28, 2021 
 
 February 10, 2021 
 $ 0.42 (10) 

 November 10, 2020 
 0.41 (11) 

 August 12, 2020 
 0.40 (12) 

 $ 1.23 

 Tax Year Ended February 29, 2020 
 
 February 6, 2020 
 $ 0.56 (13) 

 September 26, 2019 
 0.56 (14) 

 June 27, 2019 
 0.55 (15) 

 March 28, 2019 
 0.54 (16) 

 $ 2.21 

 Tax Year Ended February 28, 2019 
 
 January 2, 2019 
 $ 0.53 (17) 

 September 27, 2018 
 0.52 (18) 

 June 27, 2018 
 0.51 (19) 

 March 26, 2018 
 0.50 (20) 

 $ 2.06 

 96 

 Payment date 
 Cash Dividend 

 Tax Year Ended February 28, 2018 
 
 December 27, 2017 
 $ 0.49 (21) 

 September 26, 2017 
 0.48 (22) 

 June 27, 2017 
 0.47 (23) 

 March 28, 2017 
 0.46 (24) 

 $ 1.90 

 Tax Year Ended February 28, 2017 
 
 February 9, 2017 
 $ 0.45 (25) 

 November 9, 2016 
 0.44 (26) 

 September 5, 2016 
 0.20 (27) 

 August 9, 2016 
 0.43 (28) 

 April 27, 2016 
 0.41 (29) 

 $ 1.93 

 Tax Year Ended February 29, 2016 
 
 February 29, 2016 
 $ 0.40 (30) 

 November 30, 2015 
 0.36 (31) 

 August 31, 2015 
 0.33 (32) 

 June 5, 2015 
 1.00 (33) 

 May 29. 2015 
 0.27 (34) 

 $ 2.36 

 Tax Year Ended February 28, 2015 
 
 February 27, 2015 
 $ 0.22 (35) 

 November 28, 2014 
 0.18 (36) 

 $ 0.40 

 Tax Year Ended February 28. 2014 
 
 December 27, 2013 
 $ 2.65 (37) 

 $ 2.65 

 Tax Year Ended February 28, 2013 
 
 December 31, 2012 
 $ 4.25 (38) 

 $ 4.25 

 Tax Year Ended February 29, 2012 
 
 December 30, 2011 
 $ 3.00 (39) 

 $ 3.00 

 Tax Year Ended February 28, 2011 
 
 December 29, 2010 
 $ 4.40 (40) 

 $ 4.40 

 Tax Year Ended February 28, 2010 
 
 December 31, 2009 
 $ 18.25 (41) 

 $ 18.25 

 (1) Based on shareholder elections,
the dividend consisted of approximately $7.1 million in cash and 45,818 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 $23.11 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on March 17,
20, 21, 22, 23, 24, 27, 28, 29, and 30, 2023. 

 97 

 (2) 
 Based on shareholder elections, the dividend consisted of approximately $6.8 million in cash and 53,615 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 $24.26 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on December 20, 21, 22, 23, 27, 28, 29 and 30 2022 and January 3 and 4, 2023. 

 (3) 
 Based on shareholder elections, the dividend consisted of approximately $5.3 million in cash and 52,312 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 $22.00 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on September 16, 19, 20, 21, 22, 23, 26, 27, 28 and 29, 2022. 

 (4) 
 Based on shareholder elections, the dividend consisted of approximately $5.1 million in cash and 48,590 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 $22.40 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on June 15, 16, 17, 21, 22, 23, 24, 27, 28 and 29, 2022. 

 (5) 
 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. 

 (6) 
 Based on shareholder elections, the dividend consisted of approximately $5.3 million in cash and 41,520 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 $26.85 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on January 5, 6, 7, 10, 11, 12, 13, 14, 18 and 19, 2022. 

 (7) 
 Based on shareholder elections, the dividend consisted of approximately $4.9 million in cash and 38,016 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 $26.77 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on September 15, 16, 17, 20, 21, 22, 23, 24, 27 and 28, 2021. 

 (8) 
 Based on shareholder elections, the dividend consisted of approximately $4.1 million in cash and 33,100 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 $25.03 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on June 16, 17, 18, 21, 22, 23, 24, 25, 28 and 29, 2021. 

 98 

 (9) 
 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. 

 (10) 
 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. 

 (11) 
 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. 

 (12) 
 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 95.0% 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. 

 (13) 
 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. 

 (14) 
 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. 

 (15) 
 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. 

 (16) 
 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. 

 99 

 (17) 
 Based on shareholder elections, the dividend consisted of approximately $3.4 million in cash and 30,796 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. 

 (18) 
 Based on shareholder elections, the dividend consisted of approximately $3.3 million in cash and 25,862 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. 

 (19) 
 Based on shareholder elections, the dividend consisted of approximately $2.7 million in cash and 21,562 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. 

 (20) 
 Based on shareholder elections, the dividend consisted of approximately $2.6 million in cash and 25,354 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. 

 (21) 
 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. 

 (22) 
 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. 

 (23) 
 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. 

 (24) 
 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. 

 100 

 (25) 
 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. 

 (26) 
 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. 

 (27) 
 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. 

 (28) 
 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. 

 (29) 
 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. 

 (30) 
 Based on shareholder elections, the dividend consisted of approximately $1.4 million in cash and 66,765 newly issued shares of common stock, or 1.2% of 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 $13.11 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on February 16, 17, 18, 19, 22, 23, 24, 25, 26 and 29, 2016. 

 (31) 
 Based on shareholder elections, the dividend consisted of approximately $1.1 million in cash and 61,029 newly issued shares of common stock, or 1.1% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $14.53 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on November 16, 17, 18, 19, 20, 23, 24, 25, 27 and 30, 2015. 

 (32) 
 Based on shareholder elections, the dividend consisted of approximately $1.1 million in cash and 47,861 newly issued shares of common stock, or 0.9% of 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 $15.28 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on August 18, 19, 20, 21, 24, 25, 26, 27, 28 and 31, 2015. 

 (33) 
 Based on shareholder elections, the dividend consisted of approximately $3.4 million in cash and 126,230 newly issued shares of common stock, or 2.3% of 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 $16.47 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on May 22, 26, 27, 28, 29 and June 1, 2, 3, 4, and 5, 2015. 

 101 

 (34) 
 Based on shareholder elections, the dividend consisted of approximately $0.9 million in cash and 33,766 newly issued shares of common stock, or 0.6% of 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 $16.78 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on May 15, 18, 19, 20, 21, 22, 26, 27, 28 and 29, 2015. 

 (35) 
 Based on shareholder elections, the dividend consisted of approximately $0.8 million in cash and 26,858 newly issued shares of common stock, or 0.5% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $14.97 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on February 13, 17, 18, 19, 20, 23, 24, 25, 26 and 27, 2015. 

 (36) 
 Based on shareholder elections, the dividend consisted of approximately $0.6 million in cash and 22,283 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $14.37 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on November 14, 17, 18, 19, 20, 21, 24, 25, 26 and 28, 2014. 

 (37) 
 Based on shareholder elections, the dividend consisted of approximately $2.5 million in cash and 649,500 shares of common stock, or 13.7% of our outstanding common stock prior to the dividend payment. The amount of cash elected to be received was greater than the cash limit of 20.0% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash. The number of shares of common stock comprising the stock portion was calculated based on a price of $15.439 per share, which equaled the volume weighted average trading price per share of the common stock on December 11, 13 and 16, 2013. 

 (38) 
 Based on shareholder elections, the dividend consisted of $3.3 million in cash and 853,455 shares of common stock, or 22.0% of our outstanding common stock prior to the dividend payment. The amount of cash elected to be received was greater than the cash limit of 20.0% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash. The number of shares of common stock comprising the stock portion was calculated based on a price of $15.444 per share, which equaled the volume weighted average trading price per share of the common stock on December 14, 17 and 19, 2012. 

 (39) 
 Based on shareholder elections, the dividend consisted of $2.0 million in cash and 599,584 shares of common stock, or 18.0% of our outstanding common stock prior to the dividend payment. The amount of cash elected to be received was greater than the cash limit of 20.0% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash. The number of shares of common stock comprising the stock portion was calculated based on a price of $13.117067 per share, which equaled the volume weighted average trading price per share of the common stock on December 20, 21 and 22, 2011. 

 (40) 
 Based on shareholder elections, the dividend consisted of $1.2 million in cash and 596,235 shares of common stock, or 22.0% of our outstanding common stock prior to the dividend payment. The amount of cash elected to be received was greater than the cash limit of 10.0% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash. The number of shares of common stock comprising the stock portion was calculated based on a price of $17.8049 per share, which equaled the volume weighted average trading price per share of the common stock on December 20, 21 and 22, 2010. 

 (41) 
 Based on shareholder elections, the dividend consisted of $2.1 million in cash and 864,872 shares of common stock, or 104.0% of our outstanding common stock prior to the dividend payment. The amount of cash elected to be received was greater than the cash limit of 13.7% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash. The number of shares of common stock comprising the stock portion was calculated based on a price of $1.5099 per share, which equaled the volume weighted average trading price per share of the common stock on December 24 and 28, 2009. 

 102 

 (42) 
 Based on shareholder elections, the dividend consisted of approximately $7.6 million in cash and 29,627 newly issued shares of common stock, or 0.2% 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 $25.29 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on June 15, 16, 20, 21, 22, 23, 26, 27, 28, and 29, 2023. 

 (43) 
 Based on shareholder elections, the dividend consisted of approximately $8.4 million in cash and 35,196 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 $24.41 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on September 15, 18, 19, 20, 21, 22, 25, 26, 27, and 28, 2023. 

 (44) 
 Based on shareholder elections, the dividend consisted of approximately $8.9 million in cash and 37,394 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 $24.47 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on December 14, 15, 18, 19, 20, 21, 22, 26, 27, and 28, 2023. 

 (45) 
 
 Based on shareholder elections, the dividend consisted of approximately
 $9.0 million in cash and 45,490 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 $22.85 per share, which equaled 95%
 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, 2024.

 (46) 
 
 Based on shareholder elections, the dividend consisted of approximately
 $9.1 million in cash and 46,803 newly issued shares of common stock, or 10.0% 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 $21.76 per share, which equaled 95%
 of the volume weighted average trading price per share of the common stock on June 13, 14, 17, 18, 20, 21, 24, 25, 26, and 27, 2024. 

 (47) 
 
 Based on shareholder elections, the dividend consisted of approximately
 $9.0 million in cash and 54,999 newly issued shares of common stock, or 10.0% 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 $22.08 per share, which equaled 95%
 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, 2024.
 
 (48) 
 
 Based on shareholder elections, the dividend consisted of approximately
 $13.7 million in cash and 81,471 newly issued shares of common stock, or 11.9% 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 $22.80 per share, which equaled 95%
 of the volume weighted average trading price per share of the common stock on December 6, 9, 10, 11, 12, 13, 16, 17, 18, and 19, 2024.

 103 

 (49) 
 Based on shareholder elections, the dividend consisted of approximately $9.9 million in cash and 60,611 newly issued shares of common stock, or 12.3% 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 $22.96 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on March 12, 13, 14, 17, 18, 19, 20, 21, 24, and 25, 2025. 

 (50) 
 Based on shareholder elections, the dividend consisted of approximately $3.4 million in cash and 20,086 newly issued shares of common stock, or 11.5% 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 $22.02 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on April 10, 11, 14, 15, 16, 17, 21, 22, 23, and 24, 2025. 

 (51) 
 These dividends were declared on February 18, 2025, and the cash and
newly issued shares of the common stock will be determined at a future date. 

 We cannot provide any assurance that these measures will
provide sufficient sources of liquidity to support our operations and growth. 
 
 Subsequent Events 
 
 The
Company has evaluated subsequent events through the filing of this Form 10-K and determined that there have been no events that have occurred
that would require adjustments to the Company’s consolidated financial statements and disclosures in the consolidated financial
statements as of and for the year ended February 28, 2025.
 
 Contractual obligations 
 
 The following table shows our payment obligations for repayment
of debt and other contractual obligations at February 28, 2025:
 
 Payment Due by Period 

 Long-Term Debt Obligations 
 Total 
 Less Than 1 Year 
 1 - 3 

Years 
 3 - 5

 Years 
 More Than 5 Years 

 ($ in thousands) 

 Encina credit facility 
 $ 32,500 
 $ 32,500 
 $ - 
 $ - 
 $ - 

 Live Oak credit facility 
 20,000 
 - 
 20,000 
 - 
 - 

 SBA debentures 
 170,000 
 - 
 - 
 - 
 170,000 

 8.75% 2025 Notes 
 20,000 
 20,000 
 - 
 - 
 - 

 7.00% 2025 Notes 
 12,000 
 12,000 
 - 
 - 
 - 

 7.75% 2025 Notes 
 5,000 
 5,000 
 - 
 - 
 - 

 4.375% 2026 Notes 
 175,000 
 175,000 
 - 
 - 
 - 

 4.35% 2027 Notes 
 75,000 
 - 
 75,000 
 - 
 - 

 6.00% 2027 Notes 
 105,500 
 - 
 105,500 
 - 
 - 

 6.25% 2027 Notes 
 15,000 
 - 
 15,000 
 - 
 - 

 8.00% 2027 Notes 
 46,000 
 - 
 46,000 
 - 
 - 

 8.125% 2027 Notes 
 60,375 
 - 
 60,375 
 - 
 - 

 8.50% 2028 Notes 
 57,500 
 - 
 - 
 57,500 
 - 

 Total Long-Term Debt Obligations 
 $ 793,875 
 $ 244,500 
 $ 321,875 
 $ 57,500 
 $ 170,000 

 Off-balance sheet arrangements 
 
 At February 28, 2025 and February 29, 2024, our
off-balance sheet arrangements consisted of $126.7 million and $132.4 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 our 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 our consolidated statements of assets and liabilities.
 
 104 

 A summary of the unfunded commitments outstanding
as of February 28, 2025 and February 29, 2024 is shown in the table below (dollars in thousands):
 
 February 28,

2025 
 February 29,

2024 

 At Company’s discretion 
 
 ActiveProspect, Inc. 
 $ 10,000 
 $ 10,000 

 Artemis Wax Corp. 
 23,500 
 23,500 

 Ascend Software, LLC 
 5,000 
 5,000 

 C2 Educational Systems 
 2,000 
 - 

 Davisware, LLC 
 1,000 
 - 

 Granite Comfort, LP 
 - 
 750 

 JDXpert 
 4,500 
 5,000 

 LFR Chicken LLC 
 10,000 
 - 

 Pepper Palace, Inc. 
 1,200 
 1,898 

 Procurement Partners, LLC 
 - 
 4,250 

 Saratoga Senior Loan Fund I JV, LLC 
 8,548 
 8,548 

 Sceptre Hospitality Resources, LLC 
 - 
 5,000 

 Stretch Zone Franchising, LLC 
 - 
 3,750 

 VetnCare MSO, LLC 
 10,000 
 10,000 

 Total 
 $ 75,748 
 $ 77,696 

 At portfolio company’s discretion - satisfaction of certain financial and nonfinancial covenants required 
 
 Alpha Aesthetics Partners OpCo, LLC 
 $ - 
 $ 6,500 

 ARC Health OpCo LLC 
 - 
 2,585 

 Axero Holdings, LLC - Revolver 
 500 
 500 

 Axiom Medical Consulting, LLC 
 1,500 
 2,000 

 BQE Software, Inc. 
 2,250 
 3,250 

 C2 Educational Systems 
 - 
 3,000 

 Cloudpermit Intermediate Holding Company 
 5,000 
 - 

 Davisware, LLC 
 1,750 
 750 

 Exigo, LLC - Revolver 
 625 
 1,042 

 Gen4 Dental Partners Holdings, LLC 
 2,857 
 - 

 GoReact 
 - 
 2,500 

 Granite Comfort, LP 
 11,637 
 11,637 

 Innergy, Inc. 
 5,000 
 - 

 Inspect Point Holding, LLC 
 1,500 
 1,500 

 Modis Dental Partners OpCo, LLC 
 8,900 
 - 

 Pepper Palace, Inc. - Revolver 
 600 
 2,500 

 Stretch Zone Franchising, LLC 
 1,500 
 1,500 

 VetnCare MSO, LLC 
 7,319 
 15,319 

 Zollege PBC 
 - 
 150 

 50,938 
 54,733 

 Total 
 $ 126,686 
 $ 132,429 

 We believe our assets will provide adequate coverage
to satisfy these unfunded commitments. As of February 28, 2025, we had cash and cash equivalents of $148.2 million, $32.5 million in available
borrowings under the Encina Credit Facility and $55.0 million in available borrowings under the Live Oak Credit Facility.
 
 105
SARATOGA INVESTMENT CORP. 10-K

Item 7. Management’s Discussion and Analysis
