What changed in this filing

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Item 1. Business

2026-05-05 compared with 2025-05-07 · 614 added, 517 removed, 702 unchanged (62% of the section changed)

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company, which may rank ahead of, or be junior to, other security interests.

Term loans are loans that do not allow the borrowers to repay

all or a portion of the loans prior to maturity and then re-borrow such repaid amounts under the loan again.

We also invest in mezzanine

debt and make equity investments in middle-market companies.

Mezzanine debt is typically unsecured and subordinated to senior debt of

the portfolio company.

Term loans are loans that do not allow the borrowers to

repay all or a portion of the loans prior to maturity and then re-borrow such repaid amounts under the loan again.

We also invest in

mezzanine debt and make equity investments in middle-market companies.

Mezzanine debt is typically unsecured and subordinated to senior

debt of the portfolio company.

While our primary focus is to generate current

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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 Investment Company Act of 1940, as amended (“1940

Act”), which includes private equity funds, to no more than 15% of our net assets.

to do so, we may invest in private equity funds in the future.

Private equity funds are not limited in how they invest their assets,

and the underlying investments held by private equity funds may impact our strategies, risks, and costs.

Shareholders may have limited

information about the underlying investments of the private equity funds in which we invest, including with respect to such funds’

holdings, liquidity, and valuation.

As of February 28, 2026, we had total assets of

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February 28, 2026, investment in the Class F-2-R-3 Note of Saratoga CLO which as of February 28, 2026 had a fair value of $0.0 million,

investment in the Class E Note of Saratoga Investment Corp.

Senior Loan Fund 2022-1, Ltd which as of February 28, 2025 has affair value

investment in the Class E-R Note of Saratoga Investment Corp.

Senior Loan Fund 2022-1, Ltd which as of February 28, 2026 has a fair value

of $8.4 million and investments in the Saratoga Senior Loan Fund I JV LLC (“SLF JV”) and its subsidiaries, a joint venture

which as of February 28, 2025 had a fair value of $19.6 million.

The overall portfolio composition as of February 28, 2025 consisted

of 88.7% of first lien term loans, 0.7% of second lien term loans, 1.7% of unsecured loans, 1.5% of structured finance securities and

7.4% of equity interests.

As of February 28, 2025, the weighted average yield on all of our investments, including our investment in the

subordinated notes of Saratoga CLO and Class F-2-R-3 Note was approximately 10.8%.

The weighted average yield of our investments is not

the same as a return on investment for our stockholders and, among other things, is calculated before the payment of our fees and expenses.

As of February 28, 2025, our total return based on market value was 27.17% and our total return based on net asset value (“NAV”)

per share was 10.11%.

As of February 29, 2024, our total return based on market value was –3.92% and our total return based on net

asset value per share was 4.20%.

Total return based on market value is the change in the ending market value of the Company’s common

stock plus dividends distributed during the period assuming participation in the Company’s dividend reinvestment plan divided by

the beginning market value of the Company’s common stock.

Total return based on NAV is the change in ending NAV per share plus dividends

distributed per share paid during the period assuming participation in the Company’s dividend reinvestment plan divided by the beginning

NAV per share.

While total return based on NAV and total return based on market value reflect fund expenses, they do not reflect any sales

load that may be paid by investors.

As of February 28, 2025, approximately 100% of our first lien debt investments were fully collateralized

in the sense that the portfolio companies in which we held such investments had an enterprise value or our investment had an asset coverage

equal to or greater than the principal amount of the related debt investment.

The Company uses enterprise value to assess the level of

collateralization of its portfolio companies.

The enterprise value of a portfolio company is determined by analyzing various factors,

including EBITDA, cash flows from operations less capital expenditures and other pertinent factors, such as recent offers to purchase

a portfolio company’s securities or other liquidation events.

As a result, while we consider a portfolio company to be collateralized

if its enterprise value exceeds the amount of our loan, we do not hold tangible assets as collateral in our portfolio companies that we

would obtain in the event of a default.

Our investment in the subordinated notes of Saratoga CLO represents a first loss position in a

portfolio that, at February 28, 2025, was composed of $527.1 million in aggregate principal amount of predominantly senior secured first

lien term loans.

A first loss position means that we will suffer the first economic losses if losses are incurred on loans held by the

Saratoga CLO.

As a result, this investment is subject to unique risks.

“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.”

which as of February 28, 2026 had a total fair value of $17.7 million which consists of both membership interests and an unsecured

The overall portfolio composition as of February 28, 2026 consisted of 82.1% of first lien term loans, 3.9% of second lien term

loans, 1.5% of unsecured loans, 4.9% of structured finance securities and 7.6% of equity interests.

As of February 28, 2026, the weighted

average yield on all of our investments, including our investment in the subordinated notes of Saratoga CLO and Class F-2-R-3 Note was

approximately 9.6%.

The weighted average yield of our investments is not the same as a return on investment for our stockholders and,

among other things, is calculated before the payment of our fees and expenses.

As of February 28, 2026, our total return based on market

value was 1.54% and our total return based on net asset value (“NAV”) per share was 7.50%.

As of February 28, 2025, our total

return based on market value was 27.17% and our total return based on net asset value per share was 10.11%.

Total return based on market

value is the change in the ending market value of the Company’s common stock plus dividends distributed during the period assuming

participation in the Company’s dividend reinvestment plan divided by the beginning market value of the Company’s common stock.

Total return based on NAV is the change in ending NAV per share plus dividends distributed per share paid during the period assuming participation

in the Company’s dividend reinvestment plan divided by the beginning NAV per share.

While total return based on NAV and total return

based on market value reflect fund expenses, they do not reflect any sales load that may be paid by investors.

As of February 28, 2026,

approximately 100% of our first lien debt investments were fully collateralized in the sense that the portfolio companies in which we

held such investments had an enterprise value or our investment had an asset coverage equal to or greater than the principal amount of

the related debt investment.

The Company uses enterprise value to assess the level of collateralization of its portfolio companies.

enterprise value of a portfolio company is determined by analyzing various factors, including EBITDA, cash flows from operations less

capital expenditures and other pertinent factors, such as recent offers to purchase a portfolio company’s securities or other liquidation

As a result, while we consider a portfolio company to be collateralized if its enterprise value exceeds the amount of our loan,

we do not hold tangible assets as collateral in our portfolio companies that we would obtain in the event of a default.

Our investment

in the subordinated notes of Saratoga CLO represents a first loss position in a portfolio that, at February 28, 2026, was composed of

$391.0 million in aggregate principal amount of predominantly senior secured first lien term loans.

A first loss position means that we

will suffer the first economic losses if losses are incurred on loans held by the Saratoga CLO.

As a result, this investment is subject

to unique risks.

“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 are an externally managed, closed-end, non-diversified

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asset coverage ratio of 150% under Sections 18(a)(1) and 18(a)(2) of the 1940 Act.

The 150% asset coverage ratio became effective on April

We have elected to be treated for U.S.

income tax purposes as a regulated investment company (“RIC”), under Subchapter M of the Internal Revenue Code of 1986, as

amended (the “Code”).

The 150% asset coverage ratio became effective on

April 16, 2019.

We have elected, and intend to qualify annually,

to be treated for U.S.

federal income tax purposes as a regulated investment company (“RIC”), under subchapter M of the Internal

Revenue Code of 1986, as amended (the “Code”).

As a RIC, we generally will not be subject to U.S.

federal income tax on any net ordinary income or

capital gains that we timely distribute to our stockholders if we meet certain source-of-income, annual distribution and asset diversification

requirements.

In addition, we have had three wholly owned subsidiaries

that are each licensed as a small business investment company (“SBIC”) and regulated by the Small Business Administration

On March 28, 2012, our wholly owned subsidiary, Saratoga Investment Corp.

SBIC LP (“SBIC LP”), received

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

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

federal income tax on any

net ordinary income or capital gains that we timely distribute to our stockholders if we meet certain source-of-income, annual distribution

and asset diversification requirements.

In addition, our wholly owned subsidiaries, Saratoga

Investment Corp.

SBIC II LP (“SBIC II LP”), also received an SBIC license from the SBA.

On September 29, 2022, our wholly

owned subsidiary, Saratoga Investment Corp.

SBIC III LP (“SBIC III LP” and, together with SBIC LP and SBIC II LP, the “SBIC

Subsidiaries”), also received an SBIC license from the SBA, which provides up to $175.0 million in additional long-term capital

in the form of SBA-guaranteed debentures.

As a result, Saratoga’s SBA relationship increased from $325.0 million to $350.0 million

of committed capital.

For two or more SBICs under common control, the maximum amount of outstanding SBA debentures cannot exceed $350.0

Our wholly owned SBIC Subsidiaries are able to borrow funds from the SBA against the SBIC’s regulatory capital (which

generally approximates equity capital in the respective SBIC) and is subject to customary regulatory requirements, including, but not

limited to, periodic examination by the SBA.

Following the debentures being fully repaid to the SBA, SBIC LP surrendered its license on

January 3, 2024, providing the Company access to all undistributed capital of SBIC LP, and SBIC LP subsequently merged with and into the

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 licenses to operate as a small business investment company (“SBIC”)

from the Small Business Administration (“SBA”) on August 14, 2019 and September 29, 2022, respectively.

Each of the SBIC

Subsidiaries provides up to $175.0 million in long-term capital in the form of debentures guaranteed by the SBA.

With all debentures

repaid to the SBA, SBIC LP’s (“SBIC LP”) license was surrendered on January 3, 2024, providing the Company access to

all undistributed capital of SBIC LP, and SBIC LP subsequently merged with and into the Company.

Under current SBIC regulations, for

two or more SBICs under common control, the maximum amount of outstanding SBA debentures cannot exceed $350.0 million with at least $175.0

million in combined regulatory capital.

“Business—Small Business Investment Company Regulations.”

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The Company has established wholly owned subsidiaries,

SIA-AAP, Inc., SIA-ARC, Inc., SIA-Avionte, Inc., SIA-AX, Inc., SIA-G4, Inc., SIA-GH, Inc., SIA-MDP, Inc., SIA-PP Inc., SIA-SZ, Inc., SIA-TG,

Inc., SIA-TT, Inc.

and SIA-Vector, Inc., which are structured as Delaware entities that are treated as corporations for U.S.

federal income tax purposes and are intended to facilitate its compliance with the requirements to be treated as a RIC under the Code

by holding equity or equity-like investments in portfolio companies organized as limited liability companies, or LLCs (or other forms

of pass through entities).

These entities are consolidated for accounting purposes, but are not consolidated for U.S.

federal income tax

purposes and may incur U.S.

SIA-AAP, Inc., SIA-SAIS, Inc., SIA-ARC, Inc., SIA-Avionte, Inc., SIA-AX, Inc., SIA-G4, Inc., SIA-GH, Inc., SIA-MDP, Inc., SIA-PP

Inc., SIA-SIQ, Inc., SIA-SZ, Inc., SIA-TG, Inc., SIA-TT, Inc.

and SIA-Vector, Inc., which are structured as Delaware entities that

are treated as corporations for U.S.

federal income tax purposes and are intended to facilitate its compliance with the requirements

to be treated as a RIC under the Code by holding equity or equity-like investments in portfolio companies organized as limited liability

companies, or LLCs (or other forms of pass through entities).

These entities are consolidated for accounting purposes, but are not consolidated

federal income tax purposes and may incur U.S.

federal income tax expenses as a result of their ownership of portfolio companies.

In February 2022, SIA-GH,

Inc., SIA-TT Inc.

and SIA-VR, Inc.

received an approved plan of liquidation following the sale of equity held by each of the portfolio

In June 2024, SIA-MAC, Inc.

and SIA-VR, Inc.

were dissolved.

On October 26, 2021, the Company and TJHA JV I

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Delaware limited liability company and became our investment adviser in July 2010.

Our Investment Adviser is led by four principals, Christian

Our Investment Adviser is led by five principals, Christian

Oberbeck, Michael J.

Grisius, Thomas V.

Grisius, David DeSantis, Thomas V.

Inglesby, and Charles G.

Phillips, with 37, 35, 38 and 28 years of experience in

leveraged finance, respectively, and the Chief Financial Officer, Chief Compliance Officer, Treasurer and Secretary, Henri J.

Phillips, with 38, 36, 25, 39 and 29 years of experience

in leveraged finance, respectively, and the Chief Financial Officer, Chief Compliance Officer, Treasurer and Secretary, Henri J.

who has 27 years of experience in financial services and leveraged finance.

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and experience of Saratoga Investment Advisors to enhance the growth of our business.

We currently have no employees and each of our executive

officers is also an officer of Saratoga Investment Advisors.

We currently have no employees and each of our

executive officers is also an officer of Saratoga Investment Advisors.

We have entered into an investment advisory and

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basis if approved annually at an in-person meeting of the board of directors, a majority of whom must be independent directors.

Most recently,

our board of directors approved the renewal of the Management Agreement for an additional one-year term at an in-person meeting held on

July 8, 2024.

Pursuant to the Management Agreement, Saratoga Investment Advisors implements our business strategy on a day-to-day basis

and performs certain services for us under the direction of our board of directors.

Saratoga Investment Advisors is responsible for, among

other duties, performing all of our day-to-day functions, determining investment criteria, sourcing, analyzing and executing investment

transactions, asset sales, financings and performing asset management duties.

recently, our board of directors approved the renewal of the Management Agreement for an additional one-year term at an in-person meeting

held on July 7, 2025.

Pursuant to the Management Agreement, Saratoga Investment Advisors implements our business strategy on a day-to-day

basis and performs certain services for us under the direction of our board of directors.

Saratoga Investment Advisors is responsible

for, among other duties, performing all of our day-to-day functions, determining investment criteria, sourcing, analyzing and executing

investment transactions, asset sales, financings and performing asset management duties.

Saratoga Investment Advisors has formed an investment

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financing and leveraging strategies and investment guidelines.

We believe that the collective experience of the investment committee members

across a variety of fixed income asset classes will benefit us.

The investment committee must unanimously approve all investments in excess

of $1.0 million made by us.

In addition, all sales of our investments must be approved by all four of our investment committee members.

We believe that the collective experience of the investment committee

members across a variety of fixed income asset classes will benefit us.

The investment committee must unanimously approve all investments

in excess of $1.0 million made by us.

In addition, all sales of our investments must be approved by all five of our investment committee

The current members of the investment committee are Messrs.

Oberbeck, Grisius, Inglesby, and Phillips.

Oberbeck, Grisius, DeSantis, Inglesby, and Phillips.

We have also entered into a separate Administration

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The Administration Agreement has

an initial term of two years from its effective date of July 30, 2010, and will remain in effect on a year-to-year basis, subject to annual

approval by our board of directors, a majority of whom must be our independent directors.

Most recently, on July 8, 2024, our board of

directors approved the renewal of the Administration Agreement for an additional one-year term and determined to increase the cap on the

payment or reimbursement of expenses by the Company from $4.3 million to $5.0 million effective August 1, 2024.

The Company’s board

of directors will continue to assess the cap on payment or reimbursement of expenses on an annual basis.

Under the Administration Agreement,

Saratoga Investment Advisors also performs, or oversees the performance of our required administrative services, which include, among

other things, being responsible for the financial records which we are required to maintain, preparing reports for our stockholders and

reports required to be filed with the SEC.

Payments under the Administration Agreement will be equal to an amount based upon the allocable

portion of Saratoga Investment Advisors’ overhead in performing its obligations under the Administration Agreement, including rent

and the allocable portion of the cost of our officers and their respective staffs relating to the performance of services under the Administration

an initial term of two years from its effective date of July 30, 2010, and will remain in effect on a year-to-year basis, subject to

annual approval by our board of directors, a majority of whom must be our independent directors.

Most recently, on July 7, 2025, our

board of directors approved the renewal of the Administration Agreement for an additional one-year term and determined to increase the

cap on the payment or reimbursement of expenses by the Company from $5.0 million to $5.4 million effective August 1, 2025.

The Company’s

board of directors will continue to assess the cap on payment or reimbursement of expenses on an annual basis.

Under the Administration

Agreement, Saratoga Investment Advisors also performs, or oversees the performance of our required administrative services, which include,

among other things, being responsible for the financial records which we are required to maintain, preparing reports for our stockholders

and reports required to be filed with the SEC.

Payments under the Administration Agreement will be equal to an amount based upon the

allocable portion of Saratoga Investment Advisors’ overhead in performing its obligations under the Administration Agreement, including

rent and the allocable portion of the cost of our officers and their respective staffs relating to the performance of services under

the Administration Agreement.

Our portfolio is comprised primarily of investments

in leveraged loans (both first and second lien term loans) issued by middle-market companies.

Investments in middle-market companies are

generally less liquid than equivalent investments in companies with larger capitalizations.

These investments are sourced in both the

primary and secondary markets through a network of relationships with commercial and investment banks, commercial finance companies and

financial sponsors.

Investments in middle-market companies

are generally less liquid than equivalent investments in companies with larger capitalizations.

These investments are sourced in both

the primary and secondary markets through a network of relationships with commercial and investment banks, commercial finance companies

and financial sponsors.

The leveraged loans that we purchase are generally used to finance buyouts, strategic acquisitions, growth initiatives,

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of the risks pertaining to our secured investments, see Part I.

“Risk Factors—Our investments may be risky, and you

could lose all or part of your investment.”

“Risk Factors—Our investments may be risky, and

you could lose all or part of your investment.”

As part of our long-term strategy, we also invest

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“Risk Factors—If we make unsecured debt investments, we may lack adequate

protection in the event our portfolio companies become distressed or insolvent and will likely experience a lower recovery than more senior

debtholders in the event our portfolio companies default on their indebtedness.”

Sub stantially

all of the debt investments held in our portfolio hold a non-investment grade rating by one or more rating agencies or, if not rated,

would be rated below investment grade if rated, which are often referred to as “junk.” As of February 28, 2025, 87.1%

of our debt portfolio at fair value consisted of debt securities for which issuers were not required to make principal payments until

the maturity of such debt securities, which could result in a substantial loss to us if such issuers are unable to refinance or repay

their debt at maturity.

Such “interest-only” loans are structured such that the borrower makes only interest payments throughout

the life of the loan and makes a large, “balloon payment” at the end of the loan term.

The ability of a borrower to make

or refinance a balloon payment may be affected by a number of factors, including the financial condition of the borrower, prevailing

economic conditions, higher interest rates, and collateral values.

If the interest-only loan borrower is unable to make or refinance

a balloon payment, we may experience greater losses than if the loan were structured as amortizing.

As of February 28, 2025, 14.0%

of our interest-only loans provided for contractual PIK interest, which represents contractual interest added to a loan balance and due

at the end of such loan’s term, and 29.5% of such investments elected to pay a portion of interest

In addition, 97.4% of our debt investments at February 28, 2025, had variable interest

rates that reset periodically based on benchmarks such as BSBY, SOFR and the prime rate.

As a result, significant increases in such benchmarks

in the future may make it more difficult for these borrowers to service their obligations under the debt investments that we hold.

protection in the event our portfolio companies become distressed or insolvent and will likely experience a lower recovery than more

senior debtholders in the event our portfolio companies default on their indebtedness.”

Substantially all of the debt investments held in our portfolio hold

a non-investment grade rating by one or more rating agencies or, if not rated, would be rated below investment grade if rated, which are

often referred to as “junk.” As of February 28, 2026, 95.2% of our debt portfolio at fair value consisted of debt securities

for which issuers were not required to make principal payments until the maturity of such debt securities, which could result in a substantial

loss to us if such issuers are unable to refinance or repay their debt at maturity.

Such “interest-only” loans are structured

such that the borrower makes only interest payments throughout the life of the loan and makes a large, “balloon payment” at

the end of the loan term.

The ability of a borrower to make or refinance a balloon payment may be affected by a number of factors, including

the financial condition of the borrower, prevailing economic conditions, higher interest rates, and collateral values.

If the interest-only

loan borrower is unable to make or refinance a balloon payment, we may experience greater losses than if the loan were structured as amortizing.

As of February 28, 2026, 13.6% of our interest-only loans provided for contractual PIK interest, which represents contractual interest

added to a loan balance and due at the end of such loan’s term, and 37.0% of such investments elected to pay a portion of interest

In addition, 98.8% of our debt investments at February 28, 2026, had variable interest rates that reset periodically

based on benchmarks such as SOFR and the prime rate.

As a result, significant increases in such benchmarks in the future may make it more

difficult for these borrowers to service their obligations under the debt investments that we hold.

As a BDC, we are required to comply with certain

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in the 1940 Act unless, at the time of and after giving effect to such acquisition, at least 70% of our total assets are qualifying assets.

See “Business—Business Development Company Regulations – Qualifying Assets.”

While our primary focus is to generate current

income and capital appreciation from our debt and equity investments in middle-market companies, we may 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, private equity, securities of public companies that are not thinly traded, joint ventures 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% of its net assets.

“Business—Business Development Company Regulations – Qualifying Assets.”

Leveraged loans

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lien term loans hold a first priority with regard to right of payment.

Generally, first lien term loans offer floating rate interest payments,

have a stated maturity of five to seven years, and have a fixed amortization schedule.

First lien term loans generally have restrictive

financial and negative covenants.

Second lien term loans are secured by a second priority perfected security interest on all or substantially

all of the assets of the borrower and typically include a second priority pledge of the capital stock of the borrower.

Second lien term

loans hold a second priority with regard to right of payment.

Second lien term loans offer either floating rate or fixed rate interest

payments, generally have a stated maturity of five to eight years and may or may not have a fixed amortization schedule.

Second lien term

loans that do not have fixed amortization schedules require payment of the principal amount of the loan upon the maturity date of the

Second lien term loans have less restrictive financial and negative covenants than those that govern first lien term loans.

Generally, first lien term loans offer floating rate interest

payments, have a stated maturity of five to seven years, and have a fixed amortization schedule.

First lien term loans generally have

restrictive financial and negative covenants.

Second lien term loans are secured by a second priority perfected security interest on

all or substantially all of the assets of the borrower and typically include a second priority pledge of the capital stock of the borrower.

Second lien term loans hold a second priority with regard to right of payment.

Second lien term loans offer either floating rate or fixed

rate interest payments, generally have a stated maturity of five to eight years and may or may not have a fixed amortization schedule.

Second lien term loans that do not have fixed amortization schedules require payment of the principal amount of the loan upon the maturity

date of the loan.

Second lien term loans have less restrictive financial and negative covenants than those that govern first lien term

Mezzanine debt

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Opportunistic investments may include investments

in distressed debt, which may include securities of companies in bankruptcy, debt and equity securities of public companies that are not

thinly traded, emerging market debt, structured finance vehicles such as collateralized loan obligation funds and debt of middle-market

companies located outside the United States.

See Note 4 and Note 5 to the Consolidated Financial Statements contained herein for more

information about Saratoga CLO and SLF JV.

in distressed debt, which may include securities of companies in bankruptcy, debt and equity securities of public companies that are

not thinly traded, emerging market debt, structured finance vehicles such as equity and debt securities in collateralized loan obligation

funds and debt of middle-market companies located outside the United States.

See Notes to the Consolidated Financial Statements (Note

Investment in Saratoga CLO and Note 5.

Investment in SLF JV ) contained herein for more information about Saratoga CLO

We might also opportunistically invest in CLO

BB and CLO BBB debt, either in the primary or secondary market.

These investments are generally more liquid than our other investments.

We follow a rigorous process of analyzing and assessing various CLO managers by organizing them in different tiers based on

various metrics and historical performance, and then primarily invest in issuances of those managers that are classified in the top tiers.

Prospective portfolio company characteristics

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with one or more of the following characteristics:

a history of generating stable earnings and strong free cash flow;

well-constructed balance sheets with the ability to withstand industry cycles, supported by sustainable enterprise values;

reasonable debt-to-cash flow multiples;

exceptional management with meaningful stake;

industry leadership with competitive advantages and sustainable market shares and growth prospects in attractive and healthy sectors;

capital structures that provide appropriate terms and reasonable covenants.

a history of generating stable earnings and strong

free cash flow;

well-constructed balance sheets with the ability to

withstand industry cycles, supported by sustainable enterprise values;

reasonable debt-to-cash

flow multiples;

exceptional management

with meaningful stake;

industry leadership with competitive advantages and

sustainable market shares and growth prospects in attractive and healthy sectors;

capital structures that

provide appropriate terms and reasonable covenants.

Investment selection

In managing us, Saratoga Investment Advisors employs

the same investment philosophy and portfolio management methodologies used by Saratoga Partners.

Through this investment selection process,

based on quantitative and qualitative analysis, Saratoga Investment Advisors seeks to identify portfolio companies with superior fundamental

risk-reward profiles and strong, defensible business franchises with the goal of minimizing principal losses while maximizing risk-adjusted

In managing us, Saratoga Investment Advisors

employs the same investment philosophy and portfolio management methodologies used by Saratoga Partners.

Through this investment selection

process, based on quantitative and qualitative analysis, Saratoga Investment Advisors seeks to identify portfolio companies with superior

fundamental risk-reward profiles and strong, defensible business franchises with the goal of minimizing principal losses while maximizing

risk-adjusted returns.

Saratoga Investment Advisors’ investment process emphasizes the following:

bottom-up, company-specific research and analysis;

capital preservation, low volatility and minimization of downside risk;

investing with experienced management teams that hold meaningful equity ownership in their businesses.

bottom-up, company-specific

research and analysis;

capital preservation, low

volatility and minimization of downside risk;

investing with experienced

management teams that hold meaningful equity ownership in their businesses.

Our Investment Adviser’s investment process

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Initial screening.

A brief analysis identifies the investment opportunity and reviews the merits of the transaction.

The initial screening memorandum provides a brief description of the company, its industry, competitive position, capital structure, financials, equity sponsor and deal economics.

If the deal is determined to be attractive by the senior members of the deal team, the opportunity is fully analyzed.

A brief analysis identifies the

investment opportunity and reviews the merits of the transaction.

The initial screening memorandum provides a brief description of

the company, its industry, competitive position, capital structure, financials, equity sponsor and deal economics.

If the deal is

determined to be attractive by the senior members of the deal team, the opportunity is fully analyzed.

Full analysis.

A full analysis includes:

Business and Industry analysis—a review of the company’s business position, competitive dynamics within its industry, cost and growth drivers and technological and geographic factors.

Business and industry research often includes meetings with industry experts, consultants, other investors, customers and competitors.

Company analysis—a review of the company’s historical financial performance, future projections, cash flow characteristics, balance sheet strength, liquidation value, legal, financial and accounting risks, contingent liabilities, market share analysis and growth prospects.

Structural/security analysis—a thorough legal document analysis including but not limited to an assessment of financial and negative covenants, events of default, enforceability of liens and voting rights.

Business and Industry analysis—a review of the

company’s business position, competitive dynamics within its industry, cost and growth drivers and technological and geographic

Business and industry research often includes meetings with industry experts, consultants, other investors, customers and

Company analysis—a review of the company’s

historical financial performance, future projections, cash flow characteristics, balance sheet strength, liquidation value, legal,

financial and accounting risks, contingent liabilities, market share analysis and growth prospects.

Structural/security analysis—a thorough legal

document analysis including but not limited to an assessment of financial and negative covenants, events of default, enforceability

of liens and voting rights.

Approval of the investment committee.

The investment is then presented to the investment committee for approval.

The investment committee must unanimously approve all investments in excess of $1 million made by us.

In addition, all sales of our investments must be approved by all four of our investment committee members.

The investment

is then presented to the investment committee for approval.

The investment committee must unanimously approve all investments in

excess of $1 million made by us.

In addition, all sales of our investments must be approved by all five of our investment committee

The members of our investment committee are Christian L.

Oberbeck, Michael J.

Grisius, Thomas V.

Inglesby, and Charles G.

Grisius, David DeSantis, Thomas V.

and Charles G.

Investment structure

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These methods

maintenance leverage covenants requiring a decreasing ratio of debt to cash flow;

maintenance cash flow covenants requiring an increasing ratio of cash flow to the sum of interest expense and capital expenditures;

debt incurrence prohibitions, limiting a company’s ability to re-lever.

maintenance leverage covenants

requiring a decreasing ratio of debt to cash flow;

maintenance cash flow covenants requiring an increasing

ratio of cash flow to the sum of interest expense and capital expenditures;

debt incurrence prohibitions,

limiting a company’s ability to re-lever.

In addition, limitations on asset sales and capital

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to limit the downside potential of our investments by:

requiring a total return on our investments (including both interest and potential equity appreciation) that compensates us for credit risk;

requiring companies to use a portion of their excess cash flow to repay debt;

selecting investments with covenants that incorporate call protection as part of the investment structure;

selecting investments with affirmative and negative covenants, default penalties, lien protection, change of control provisions and board rights, including either observation or participation rights.

requiring a total return on our investments (including

both interest and potential equity appreciation) that compensates us for credit risk;

requiring companies to

use a portion of their excess cash flow to repay debt;

selecting investments with covenants that incorporate

call protection as part of the investment structure;

selecting investments with affirmative and negative

covenants, default penalties, lien protection, change of control provisions and board rights, including either observation or participation

Valuation process

We account for our investments at fair value in

accordance with FASB ASC Topic 820, Fair Value Measurement (“ASC 820”), as determined in good faith using written policies

and procedures adopted by our board of directors.

Investments for which market quotations are readily available are recorded in our consolidated

financial statements at such market quotations 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 determined in good faith by our board of directors based on input from Saratoga Investment Advisors, our audit

committee and an independent valuation firm engaged by our board of directors.

We use multiple techniques for determining fair value based

on the nature of the investment and experience with those types of investments and specific portfolio companies.

The selections of the

valuation techniques and the inputs and assumptions used within those techniques often require subjective judgements and estimates.

techniques include market comparables, discounted cash flows and enterprise value waterfalls.

Fair value is best expressed as a range

of values from which the Company determines a single best estimate.

The types of inputs and assumptions that may be considered in determining

the range of values of our investments include the nature and realizable value of any collateral, the portfolio company’s ability

to make payments, market yield trend analysis and volatility in future interest rates, call and put features, the markets in which the

portfolio company does business, comparison to publicly traded companies, discounted cash flows and other relevant factors.

We account for our investments at fair value

in accordance with FASB ASC Topic 820, Fair Value Measurement (“ASC 820”), as determined in good faith using written

policies and procedures adopted by our board of directors.

Investments for which market quotations are readily available are recorded

in our consolidated financial statements at such market quotations 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 determined in good faith by our board of directors based on input from Saratoga Investment

Advisors, our audit committee and an independent valuation firm engaged by our board of directors.

We use multiple techniques for determining

fair value based on the nature of the investment and experience with those types of investments and specific portfolio companies.

selections of the valuation techniques and the inputs and assumptions used within those techniques often require subjective judgements

and estimates.

These techniques include market comparables, discounted cash flows and enterprise value waterfalls.

Fair value is best

expressed as a range of values from which the Company determines a single best estimate.

The types of inputs and assumptions that may

be considered in determining the range of values of our investments include the nature and realizable value of any collateral, the portfolio

company’s ability to make payments, market yield trend analysis and volatility in future interest rates, call and put features,

the markets in which the portfolio company does business, comparison to publicly traded companies, discounted cash flows and other relevant

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 the senior management;

an independent valuation firm engaged by our board of directors independently reviews a selection of these preliminary valuations each quarter so that the valuation of each investment for which market quotes are not readily available is reviewed by the independent valuation firm at least once each fiscal year.

We use a third-party independent valuation firm to value our investment in the subordinated notes of Saratoga CLO, the Class F-2-R-3 Notes tranche of the Saratoga CLO and the Class E Notes tranche of the SLF 2022 every quarter.

each investment is initially

valued by the responsible investment professionals of Saratoga Investment Advisors and preliminary valuation conclusions are documented

and discussed with the senior management;

an independent valuation firm

engaged by our board of directors independently reviews a selection of these preliminary valuations each quarter so that the valuation

of each investment for which market quotes are not readily available is reviewed by the independent valuation firm at least once

each fiscal year.

We use a third-party independent valuation firm to value our investment in the subordinated notes of Saratoga CLO,

the Class F-2-R-3 Notes tranche of the Saratoga CLO and the Class E-R Notes tranche of the SLF 2022 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 our Investment Adviser and independent valuation firm (if applicable) will supplement the preliminary valuation to reflect any comments provided by the audit committee;

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

Our investment in Saratoga CLO is carried at fair

value, which is based on a discounted cash flow model that utilizes prepayment, re-investment and loss assumptions based on historical

the audit committee of our board of directors reviews

and approves each preliminary valuation and our Investment Adviser and independent valuation firm (if applicable) will supplement

the preliminary valuation to reflect any comments provided by the audit committee;

our board of directors discusses the valuations and

approves the fair value of each investment in good faith based on the input of our Investment Adviser, independent valuation firm

(to the extent applicable) and the audit committee of our board of directors.

Our investment in Saratoga CLO is carried at

fair value, which is based on a discounted cash flow model that utilizes prepayment, re-investment and loss assumptions based on historical

experience and projected performance, economic factors, the characteristics of the underlying cash flow, and comparable yields for equity

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for the valuation of our investment in Saratoga CLO.

The models use a set of assumptions including projected default rates, recovery rates,

reinvestment rates and prepayment rates in order to arrive at estimated valuations.

The assumptions are based on available market data

and projections provided by third parties as well as management estimates.

The models use a set of assumptions including projected default rates, recovery

rates, reinvestment rates and prepayment rates in order to arrive at estimated valuations.

The assumptions are based on available market

data and projections provided by third parties as well as management estimates.

We use the output from the Intex models (i.e., the estimated

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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.

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

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We pay quarterly dividends to our stockholders.

We have adopted a dividend reinvestment plan (“DRIP”) that

provides for reinvestment of our dividend distributions on behalf of our stockholders unless a stockholder elects to receive cash.

a result, if our board of directors authorizes, and we declare, a cash dividend, then our stockholders who have not “opted out”

of the DRIP by the dividend record date will have their cash dividends automatically reinvested into additional shares of our common stock,

We have adopted a dividend reinvestment plan (“DRIP”) that provides

for reinvestment of our dividend distributions on behalf of our stockholders unless a stockholder elects to receive cash.

if our board of directors authorizes, and we declare, a cash dividend, then our stockholders who have not “opted out” of

the DRIP by the dividend record date will have their cash dividends automatically reinvested into additional shares of our common stock,

rather than receiving the cash dividends.

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In order to maintain our tax treatment as a RIC,

we generally must, among other things, for each fiscal year, timely distribute an amount equal to at least 90% of our ordinary net taxable

income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, reduced by deductible expenses.

In addition, we will be subject to a non-deductible 4% U.S.

federal excise tax to the extent we do not distribute during the calendar

year at least (1) 98% of our net ordinary income for the calendar year, (2) 98.2% of our capital gain net income for the one year period

ending on October 31 of the calendar year and (3) any net ordinary income and capital gain net income that we recognized for preceding

years, but were not distributed during such years, and on which we paid no U.S.

we generally must, among other things, for each fiscal year, timely distribute an amount equal to at least 90% of our “investment

company taxable income,” which is generally our ordinary net taxable income and realized net short-term capital gains in excess

of realized net long-term capital losses, if any, to our stockholders on an annual basis.

In addition, we will be subject to a non-deductible

federal excise tax on certain undistributed income unless we distribute in a timely manner during the calendar year an amount

at least equal to the sum of (1) 98% of our net ordinary income for the calendar year, (2) 98.2% of our capital gain net income for the

one year period ending on October 31 of the calendar year and (3) certain undistributed amounts from previous years on which we paid

federal income tax.

For the 2024 calendar year, the Company

did not make sufficient distributions such that we did incur the U.S.

For the 2025 calendar year, the Company did not make sufficient distributions such that we did incur the

federal excise tax.

We may elect to not distribute a portion of

our ordinary income for the 2025 calendar year and/or portion of the capital gains in excess of capital losses realized during the one-year

period ending October 31, 2025, if any, and, if we do so, we would expect to incur U.S.

We may elect to not distribute a portion of our ordinary income for the 2026 calendar year and/or portion of

the capital gains in excess of capital losses realized during the one-year period ending October 31, 2026, if any, and, if we do so,

we would expect to incur U.S.

federal taxes as a result.

We may distribute taxable dividends that are payable

in cash or shares of our common stock at the election of each stockholder.

Under 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.

The IRS has issued a revenue procedure indicating that this rule will apply if the total amount of cash to be

distributed is not less than 20% of the total distribution.

Under the revenue procedure, if too many stockholders elect to receive their

distributions in cash, the cash available for distribution must be allocated among the stockholders electing to receive cash (with the

balance of the distribution paid in stock).

In no event will any stockholder, electing to receive cash, receive the lesser of (a) the

portion of the distribution such shareholder has elected to receive in cash or (b) an amount equal to his or her entire distribution times

the percentage limitation on cash available for distribution.

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

federal income

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

Stockholders receiving such distributions will be required to include the full amount of the dividend as ordinary income (or as long-term

capital gain or qualified dividend income to the extent such distribution is properly reported as such) to the extent of our current and

accumulated earnings and profits for U.S.

We may distribute taxable dividends that are

payable in cash or shares of our common stock at the election of each stockholder.

Under certain applicable provisions of the Code and

the Treasury regulations and a revenue procedure issued by the Internal Revenue Service (“IRS”), a publicly offered 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 from an IRS revenue procedure that the aggregate

amount of cash to be distributed to all stockholders must be at least 20% of the aggregate declared distribution.

Under the revenue procedure,

if too many stockholders elect to receive their distributions in cash, the cash available for distribution must be allocated among the

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

In no event will any stockholder, electing

to receive cash, receive the lesser of (a) the portion of the distribution such shareholder has elected to receive in cash or (b) an

amount equal to his or her entire distribution times the percentage limitation on cash available for distribution.

If these and certain

other requirements are met, for U.S.

federal income tax purposes, the amount of the dividend paid in stock will be equal to the amount

of cash that could have been received instead of stock.

Stockholders receiving such distributions will be required to include the full

amount of the dividend as ordinary income (or as long-term capital gain or qualified dividend income to the extent such distribution

is properly reported as such) to the extent of our current and accumulated earnings and profits for U.S.

federal income tax purposes.

As a result of receiving distributions in the form of our common

stock, a U.S.

stockholder may be required to pay tax with respect to such distributions in excess of any cash received.

sells the stock he or she receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in

income with respect to the dividend, depending on the market price of our stock at the time of the sale.

Furthermore, with respect to

As a result of receiving distributions in the form of our common stock, a U.S.

stockholder may be required to pay tax with respect to

such distributions in excess of any cash received.

stockholder sells the stock he or she receives as a dividend in order to

pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market

price of our stock at the time of the sale.

Furthermore, with respect to non-U.S.

stockholders, we may be required to withhold U.S.

federal tax with respect to such dividends, including in respect of all or

a portion of such dividend that is payable in stock.

In addition, if a significant number of our stockholders determine to sell shares

of our stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our stock.

tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock.

if a significant number of our stockholders determine to sell shares of our stock in order to pay taxes owed on dividends, it may put

downward pressure on the trading price of our stock.

Our primary competitors in providing financing

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not expect to have any employees in the future.

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

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

For a discussion of the Management

Agreement, see “Business—Investment Advisory and Management Agreement” below.

We reimburse Saratoga Investment Advisors

for our allocable portion of expenses incurred by it in performing its obligations under the Administration Agreement, including rent

and our allocable portion of the cost of our officers and their respective staffs, subject to certain limitations.

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

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

For a discussion of

the Administration Agreement, see “Business—Administration Agreement” below.

the Management Agreement, see Part I.

“Business—Investment Advisory and Management Agreement” below.

Saratoga Investment Advisors for our allocable portion of expenses incurred by it in performing its obligations under the Administration

Agreement, including rent and our allocable portion of the cost of our officers and their respective staffs, subject to certain limitations.

For a discussion of the Administration Agreement, see Part I.

“Business—Administration Agreement” below.

Investment Advisory and Management Agreement

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Our Investment Adviser was formed in 2010 as a Delaware limited liability company and became our investment advisor in July

Subject to the overall supervision of our board of directors, Saratoga Investment Advisors manages our day-to-day operations and provides

investment advisory and management services to us.

Subject to the overall supervision of our board of directors, Saratoga Investment Advisors manages our day-to-day operations and

provides investment advisory and management services to us.

Under the terms of the Management Agreement, Saratoga Investment Advisors:

determines the composition of our portfolio, the nature and timing of the changes to our portfolio and the manner of implementing such changes;

identifies, evaluates and negotiates the structure of the investments we make (including performing due diligence on our prospective portfolio companies);

closes and monitors the investments we make;

determines the securities and other assets that we purchase, retain or sell.

determines the composition of our portfolio, the nature

and timing of the changes to our portfolio and the manner of implementing such changes;

identifies, evaluates and negotiates the structure

of the investments we make (including performing due diligence on our prospective portfolio companies);

closes and monitors the

investments we make;

determines the securities

and other assets that we purchase, retain or sell.

Saratoga Investment Advisors services under the

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base management fee and an incentive fee.

The base management fee is paid quarterly in arrears,

and equals 1.75% per annum of our gross assets (other than cash or cash equivalents but including assets purchased with borrowed funds)

and calculated at the end of each fiscal quarter based on the average value of our gross assets (other than cash or cash equivalents but

including assets purchased with borrowed funds) as of the end of such fiscal quarter and the end of the immediate prior fiscal quarter.

The base management fee is paid quarterly in

arrears, and equals 1.75% per annum of our gross assets (other than cash or cash equivalents but including assets purchased with borrowed

funds) and calculated at the end of each fiscal quarter based on the average value of our gross assets (other than cash or cash equivalents

but including assets purchased with borrowed funds) as of the end of such fiscal quarter and the end of the immediate prior fiscal quarter.

As a result, Saratoga Investment Advisors will benefit as we incur debt or use leverage to purchase assets.

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income means interest income, dividend income and any other income (including any other fees such as commitment, origination, structuring,

diligence, managerial and consulting fees or other fees that we receive from portfolio companies) accrued during the fiscal quarter, minus

our operating expenses for the quarter (including the base management fee, expenses payable under the Administration Agreement, and any

interest expense and dividends paid on any issued and outstanding preferred stock or debt security, but excluding the incentive fee).

diligence, managerial and consulting fees or other fees that we receive from portfolio companies) accrued during the fiscal quarter,

minus our operating expenses for the quarter (including the base management fee, expenses payable under the Administration Agreement,

and any interest expense and dividends paid on any issued and outstanding preferred stock or debt security, but excluding the incentive

Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as market discount,

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fee with respect to our pre-incentive fee net investment income in each fiscal quarter as follows:

no incentive fee in any fiscal quarter in which our pre-incentive fee net investment income does not exceed the quarterly hurdle rate of 1.875%;

100.0% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than or equal to 2.344% in any fiscal quarter is payable to Saratoga Investment Advisors;

20.0% of the amount of our pre-incentive fee net investment income, if any, that exceeds 2.344% in any fiscal quarter.

We refer to the amount specified in clause (B) as the “catch-up.” The “catch-up” provision is intended to provide Saratoga Investment Advisors with an incentive fee of 20.0% on all of our pre-incentive fee net investment income as if a hurdle rate did not apply when our pre-incentive fee net investment income exceeds 2.344% in any fiscal quarter.

Notwithstanding the foregoing, with respect to any period ending on or prior to December 31, 2010, Saratoga Investment Advisors was only entitled to 20.0% of the amount of our pre-incentive fee net investment income, if any, that exceeded 1.875% in any fiscal quarter without any catch-up provision.

These calculations are appropriately pro-rated when such calculations are applicable for any period of less than three months.

no incentive fee in any fiscal quarter in which our

pre-incentive fee net investment income does not exceed the quarterly hurdle rate of 1.875%;

100.0% of our pre-incentive fee net investment income

with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than

or equal to 2.344% in any fiscal quarter is payable to Saratoga Investment Advisors;

20.0% of the amount of our pre-incentive fee net investment

income, if any, that exceeds 2.344% in any fiscal quarter.

We refer to the amount specified in clause (B) as the “catch-up.”

The “catch-up” provision is intended to provide Saratoga Investment Advisors with an incentive fee of 20.0% on all of

our pre-incentive fee net investment income as if a hurdle rate did not apply when our pre-incentive fee net investment income exceeds

2.344% in any fiscal quarter.

Notwithstanding the foregoing, with respect to any period ending on or prior to December 31, 2010,

Saratoga Investment Advisors was only entitled to 20.0% of the amount of our pre-incentive fee net investment income, if any, that

exceeded 1.875% in any fiscal quarter without any catch-up provision.

These calculations are appropriately pro-rated when such calculations

are applicable for any period of less than three months.

There is no accumulation of amounts from quarter

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paid to Saratoga Investment Advisors if subsequent quarters are below the quarterly hurdle or the “catch-up” parameters.

there is no delay of payment to Saratoga Investment Advisors if prior quarters are below the quarterly hurdle or “catch-up.”

Furthermore, there is no delay of payment to Saratoga Investment Advisors if prior quarters are below the quarterly hurdle or “catch-up.”

The following is a graphical representation of

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Pre-Incentive Fee Net Investment Income

(expressed as a percentage of the value of net

(expressed as a percentage of the value of

Percentage of Pre-Incentive Fee Net Investment

Income allocated to income-related portion of

incentive fee

Income allocated to income-related portion

of incentive fee

The second part of the incentive fee, the capital

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and is calculated at the end of each applicable fiscal year by subtracting (1) the sum of our cumulative aggregate realized capital losses

and aggregate unrealized capital depreciation from (2) our cumulative aggregate realized capital gains, in each case calculated from May

31, 2010 on each investment in the Company’s portfolio.

If such amount is positive at the end of such year, then the capital gains

fee for such year is equal to 20.0% of such amount, less the cumulative aggregate amount of capital gains fees paid in all prior years.

and aggregate unrealized capital depreciation from (2) our cumulative aggregate realized capital gains, in each case calculated from

May 31, 2010 on each investment in the Company’s portfolio.

If such amount is positive at the end of such year, then the capital

gains fee for such year is equal to 20.0% of such amount, less the cumulative aggregate amount of capital gains fees paid in all prior

If such amount is negative, then there is no capital gains fee for such year.

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fee, and Saratoga Investment Advisors will be entitled to 20.0% of net capital gains that arise after May 31, 2010.

In addition, the cost

basis for computing our realized gains and losses on investments held by us as of May 31, 2010 equals the fair value of such investments

In addition, the

cost basis for computing our realized gains and losses on investments held by us as of May 31, 2010 equals the fair value of such investments

as of such date.

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Management fee(3) = 0.4375%

Other expenses (legal, accounting, custodian, transfer agent, etc.)(4) = 0.33%

Other expenses (legal,

accounting, custodian, transfer agent, etc.)(4) = 0.33%

Alternative 1

Additional Assumptions

Investment income (including interest, dividends, fees, etc.) = 1.25%

Pre-incentive fee net investment income (investment income–(management fee + other expenses)) = 0.4825% Pre-incentive fee net investment income does not exceed hurdle rate, therefore there is no incentive fee.

Investment income (including

interest, dividends, fees, etc.) = 1.25%

Pre-incentive fee net investment income (investment

income–(management fee + other expenses)) = 0.4825% Pre-incentive fee net investment income does not exceed hurdle rate, therefore

there is no incentive fee.

Alternative 2

Additional Assumptions

Investment income (including interest, dividends, fees, etc.) = 3.0%

Pre-incentive fee net investment income (investment income–(management fee + other expenses)) = 2.2325%

Investment income (including

interest, dividends, fees, etc.) = 3.0%

Pre-incentive fee net investment

income (investment income–(management fee + other expenses)) = 2.2325%

Pre-incentive fee net investment income exceeds

hurdle rate, but does not fully satisfy the “catch-up” provision, therefore the income related portion of the incentive fee

Incentive Fee

(100.0% × (pre-incentive fee net investment income–1.875%)

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100.0%(0.3575%)

The hypothetical amount of pre-incentive fee net investment income shown is based on a percentage of total net assets.

The hypothetical amount of pre-incentive fee net investment

income shown is based on a percentage of total net assets.

Represents 7.5% hurdle rate.

Represents 1.75% annualized management fee.

For the purposes of this example, we have assumed that we have not incurred any indebtedness and that we maintain no cash or cash equivalents.

The “catch-up” provision is intended to provide our Investment Adviser with an incentive fee of 20.0% on all pre-incentive fee net investment income as if a hurdle rate did not apply when our net investment income exceeds 2.344% in any fiscal quarter.

purposes of this example, we have assumed that we have not incurred any indebtedness and that we maintain no cash or cash equivalents.

The “catch-up” provision is intended to

provide our Investment Adviser with an incentive fee of 20.0% on all pre-incentive fee net investment income as if a hurdle rate

did not apply when our net investment income exceeds 2.344% in any fiscal quarter.

Alternative 3

Additional Assumptions

Investment income (including interest, dividends, fees, etc.) = 3.5%

Pre-Incentive Fee Net Investment Income (investment income–(management fee + other expenses) = 2.7325%

Investment income (including interest, dividends, fees,

Pre-Incentive Fee Net Investment Income (investment

income–(management fee + other expenses) = 2.7325%

Pre-incentive fee net investment income exceeds

the hurdle rate, and fully satisfies the “catch-up” provision, therefore the income related portion of the incentive fee is

the hurdle rate, and fully satisfies the “catch-up” provision, therefore the income related portion of the incentive fee

Incentive fee

100.0% × pre-incentive fee net investment income (subject to “catch-up”)(4)

100.0% × pre-incentive fee net investment income

(subject to “catch-up”)(4)

Incentive fee

100.0% × “catch-up” + (20.0% × (Pre-incentive fee net investment income–2.344%))

100.0% × “catch-up” + (20.0% ×

(Pre-incentive fee net investment income–2.344%))

2.344%–1.875%

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Assumptions(1)

$20.0 million investment made in Company A (“Investment A”), and $30.0 million investment made in Company B (“Investment B”)

Investment A is sold for $50.0 million and fair market value (“FMV”) of Investment B determined to be $32.0 million

FMV of Investment B determined to be $25.0 million

$20.0 million investment made in Company A

(“Investment A”), and $30.0 million investment made in Company B (“Investment B”)

Investment A is sold for $50.0 million and

fair market value (“FMV”) of Investment B determined to be $32.0 million

FMV of Investment B determined to be $25.0

Investment B sold for $31.0 million

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calculated under the cumulative method would be:

$6 million (20.0% multiplied by $30.0 million realized capital gains on sale of Investment A)

$5 million (20.0% multiplied by ($30.0 million realized cumulative capital gains less $5.0 million cumulative capital depreciation)) less $6.0 million (capital gains incentive fee paid in Year 2)

$6.2 million (20.0% multiplied by $31.0 million cumulative realized capital gains) less $6.0 million (capital gains incentive fee paid in Year 2)

$6 million (20.0% multiplied by $30.0 million

realized capital gains on sale of Investment A)

$5 million (20.0% multiplied by ($30.0

million realized cumulative capital gains less $5.0 million cumulative capital depreciation)) less $6.0 million (capital gains incentive

fee paid in Year 2)

$6.2 million (20.0% multiplied by

$31.0 million cumulative realized capital gains) less $6.0 million (capital gains incentive fee paid in Year 2)

Alternative 2

Assumptions(1)

$20.0 million investment made in Company A (“Investment A”), $30.0 million investment made in Company B (“Investment B”) and $25.0 million investment made in Company C (“Investment C”)

Investment A sold for $50.0 million, FMV of Investment B determined to be $25.0 million and FMV of Investment C determined to be $25.0 million

FMV of Investment B determined to be $27.0 million and Investment C sold for $30.0 million

The examples assume that Investment A and Investment B were acquired by us subsequent to May 31, 2010.

If Investment A and B were acquired by us prior to May 31, 2010, then the cost basis for computing our realized gains and losses on such investments would equal the fair value of such investments as of May 31, 2010.

FMV of Investment B determined to be $35.0 million

$20.0 million investment made in Company A

(“Investment A”), $30.0 million investment made in Company B (“Investment B”) and $25.0 million investment

made in Company C (“Investment C”)

Investment A sold for $50.0 million, FMV of

Investment B determined to be $25.0 million and FMV of Investment C determined to be $25.0 million

FMV of Investment B determined to be $27.0

million and Investment C sold for $30.0 million

The examples assume that Investment A and Investment

B were acquired by us subsequent to May 31, 2010.

If Investment A and B were acquired by us prior to May 31, 2010, then the cost

basis for computing our realized gains and losses on such investments would equal the fair value of such investments as of May 31,

FMV of Investment B determined to be $35.0

Investment B sold for $20.0 million

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if any, calculated under the cumulative method would be:

$5.0 million (20.0% multiplied by $25.0 million ($30.0 million realized capital gains on Investment A less $5.0 million unrealized capital depreciation on Investment B))

$1.4 million ($6.4 million (20.0% multiplied by $32.0 million ($35.0 million cumulative realized capital gains less $3.0 million unrealized capital depreciation)) less $5.0 million (capital gains incentive fee paid in Year 2))

None ($5.0 million (20.0% multiplied by $25.0 million (cumulative realized capital gains of $35.0 million less realized capital losses of $10.0 million)) less $6.4 million (cumulative capital gains incentive fee paid in Year 2 and Year 3))

$5.0 million (20.0% multiplied by $25.0 million

($30.0 million realized capital gains on Investment A less $5.0 million unrealized capital depreciation on Investment B))

$1.4 million ($6.4 million (20.0% multiplied

by $32.0 million ($35.0 million cumulative realized capital gains less $3.0 million unrealized capital depreciation)) less $5.0 million

(capital gains incentive fee paid in Year 2))

None ($5.0 million (20.0% multiplied by $25.0

million (cumulative realized capital gains of $35.0 million less realized capital losses of $10.0 million)) less $6.4 million (cumulative

capital gains incentive fee paid in Year 2 and Year 3))

The Management Agreement with Saratoga Investment

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organization;

calculating our NAV (including the cost and expenses of any independent valuation firm);

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

expenses incurred by our Investment Adviser payable for travel and due diligence on our prospective portfolio companies;

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

calculating our NAV (including the cost and expenses

of any independent valuation firm);

expenses incurred by our Investment Adviser payable

to third parties, including agents, consultants or other advisers, in monitoring financial and legal affairs for us and in monitoring

our investments and performing due diligence on our prospective portfolio companies;

expenses incurred by our Investment Adviser 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;

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;

all costs of registration and listing our common stock

on any securities exchange;

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;

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 the Administration Agreement, including rent and the allocable portion of the cost of our officers and their respective staffs (including travel 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;

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 the Administration

Agreement, including rent and the allocable portion of the cost of our officers and their respective staffs (including travel expenses)).

Duration and Termination

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continuously, unless terminated under the termination provisions of the Management Agreement.

The Management Agreement provides that it

may be terminated at any time, without the payment of any penalty, upon 60 days written notice, by the vote of stockholders holding a

majority of our outstanding voting securities, or by the vote of our directors or by Saratoga Investment Advisors.

The Management Agreement provides that

it may be terminated at any time, without the payment of any penalty, upon 60 days written notice, by the vote of stockholders holding

a majority of our outstanding voting securities, or by the vote of our directors or by Saratoga Investment Advisors.

The Management Agreement will, unless terminated

as described above, continue in effect from year to year so long as it is approved at least annually by (i) the vote of the board of directors,

or by the vote of stockholders holding a majority of our outstanding voting securities, and (ii) the vote of a majority of our directors

who are not parties to the Management Agreement or “interested persons” (as such term is defined in Section 2(a)(19) of the

1940 Act) of any party to such agreement, in accordance with the requirements of the 1940 Act.

as described above, continue in effect from year to year so long as it is approved at least annually by (i) the vote of the board of

directors, or by the vote of stockholders holding a majority of our outstanding voting securities, and (ii) the vote of a majority of

our directors who are not parties to the Management Agreement or “interested persons” (as such term is defined in Section

2(a)(19) of the 1940 Act) of any party to such agreement, in accordance with the requirements of the 1940 Act.

Indemnification

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We also provide indemnification to Saratoga Investment

Advisors and certain of its affiliates for damages, liabilities, costs and expenses incurred by them in or by reason of any pending, threatened

or completed action, suit, investigation or other proceeding arising out of or otherwise based upon the performance of any of its duties

or obligations under the agreement or otherwise as an investment adviser to us.

However, we would not provide indemnification against

any liability to us or our security holders to which Saratoga Investment Advisors or such affiliates would otherwise be subject by reason

of willful misfeasance, bad faith or gross negligence in the performance of any such person’s duties or by reason of the reckless

disregard of its duties and obligations under the agreement.

Advisors and certain of its affiliates for damages, liabilities, costs and expenses incurred by them in or by reason of any pending,

threatened or completed action, suit, investigation or other proceeding arising out of or otherwise based upon the performance of any

of its duties or obligations under the agreement or otherwise as an investment adviser to us.

However, we would not provide indemnification

against any liability to us or our security holders to which Saratoga Investment Advisors or such affiliates would otherwise be subject

by reason of willful misfeasance, bad faith or gross negligence in the performance of any such person’s duties or by reason of

the reckless disregard of its duties and obligations under the agreement.

Organization of the Investment Adviser

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upon 60 days written notice to the other party.

Our board of directors, including a majority of independent directors, will annually review

the compensation we pay to the Adviser to determine that the provisions of the Administrative Agreement are carried out satisfactorily

Our board of directors, including a majority of independent directors, will annually

review the compensation we pay to the Adviser to determine that the provisions of the Administrative Agreement are carried out satisfactorily

and to determine, among other things, whether the fees payable under such agreement are reasonable in light of the services provided.

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assets to the same ratio as reported by other comparable funds.

Most recently, on July 8, 2024, our board of directors approved the renewal

of the Administration Agreement for an additional one-year term and determined to increase the cap on the payment or reimbursement of

expenses by the Company from $4.3 million to $5.0 million effective August 1, 2024.

Most recently, on July 7, 2025, the Company’s board of directors

approved the renewal of the Administration Agreement for an additional one-year term, and subsequently also determined to increase the

cap on the payment or reimbursement of expenses by the Company from $5.0 million to $5.4 million, effective August 1, 2025.

The Company’s

board of directors will continue to assess the cap on payment or reimbursement of expenses on an annual basis.

Indemnification

Under the Administration Agreement, Saratoga Investment

Advisors and certain of its affiliates are not liable to us for any action taken or omitted to be taken by Saratoga Investment Advisors

in connection with the performance of any of its duties or obligations under the agreement.

Under the Administration Agreement, Saratoga

Investment Advisors and certain of its affiliates are not liable to us for any action taken or omitted to be taken by Saratoga Investment

Advisors in connection with the performance of any of its duties or obligations under the agreement.

We also provide indemnification to Saratoga Investment

Advisors and certain of its affiliates for damages, liabilities, costs and expenses incurred by them in or by reason of any pending, threatened

or completed action, suit, investigation or other proceeding arising out of or otherwise based upon the performance of any of its duties

or obligations under the agreement or otherwise as an administrator to us.

However, we do not provide indemnification against any liability

to us or our security holders to which Saratoga Investment Advisors or such affiliates would otherwise be subject by reason of willful

misfeasance, bad faith or gross negligence in the performance of any such person’s duties or by reason of the reckless disregard

of its duties and obligations under the agreement.

Advisors and certain of its affiliates for damages, liabilities, costs and expenses incurred by them in or by reason of any pending,

threatened or completed action, suit, investigation or other proceeding arising out of or otherwise based upon the performance of any

of its duties or obligations under the agreement or otherwise as an administrator to us.

However, we do not provide indemnification against

any liability to us or our security holders to which Saratoga Investment Advisors or such affiliates would otherwise be subject by reason

of willful misfeasance, bad faith or gross negligence in the performance of any such person’s duties or by reason of the reckless

disregard of its duties and obligations under the agreement.

License Agreement

We entered into a trademark license agreement

with Saratoga Investment Advisors, pursuant to which Saratoga Investment Advisors grants us a non-exclusive, royalty-free license to use

the name “Saratoga.” Under this agreement, we have a right to use the “Saratoga” name, for so long as Saratoga

with Saratoga Investment Advisors, pursuant to which Saratoga Investment Advisors grants us a non-exclusive, royalty-free license to

use the name “Saratoga.” Under this agreement, we have a right to use the “Saratoga” name, for so long as Saratoga

Investment Advisors or one of its affiliates remains our Investment Adviser.

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As with other companies regulated by the 1940 Act, a BDC must adhere to certain substantive regulatory requirements.

1940 Act contains prohibitions and restrictions relating to transactions between BDCs and their affiliates (including any investment advisers

or sub-advisers), principal underwriters and affiliates of those affiliates or underwriters, and requires that a majority of the directors

be independent directors.

In addition, the 1940 Act provides that we may not change the nature of our business so as to cease to be, or

to withdraw our election to be regulated as, a BDC, unless approved by “a majority of our outstanding voting securities,”

1940 Act contains prohibitions and restrictions relating to transactions between BDCs and their affiliates (including any investment

advisers or sub-advisers), principal underwriters and affiliates of those affiliates or underwriters, and requires that a majority of

the directors be independent directors.

In addition, the 1940 Act provides that we may not change the nature of our business so as to

cease to be, or to withdraw our election to be regulated as, a BDC, unless approved by “a majority of our outstanding voting securities,”

as defined in the 1940 Act.

A majority of the outstanding voting securities of a company is defined under the 1940 Act as the lesser of:

(i) 67.0% or more of such company’s stock present at a meeting if more than 50.0% of the outstanding stock of such company is present

and represented by proxy or (ii) more than 50.0% of the outstanding stock of such company.

A majority of the outstanding voting securities of a company is defined under the 1940 Act as the lesser

(i) 67.0% or more of such company’s stock present at a meeting if more than 50.0% of the outstanding stock of such company

is present and represented by proxy or (ii) more than 50.0% of the outstanding stock of such company.

We do not intend to acquire securities issued

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Furthermore, as a BDC, we are prohibited

from protecting any director or officer against any liability to us or our stockholders arising from willful misfeasance, bad faith, gross

negligence or reckless disregard of the duties involved in the conduct of such person’s office.

from protecting any director or officer against any liability to us or our stockholders arising from willful misfeasance, bad faith,

gross negligence or reckless disregard of the duties involved in the conduct of such person’s office.

We and our investment adviser have adopted and

implemented written policies and procedures reasonably designed to prevent violation of the federal securities laws and review these policies

and procedures annually for their adequacy and the effectiveness of their implementation.

We and the Investment Adviser have designated

a chief compliance officer to be responsible for administering these policies and procedures.

We expect to be periodically examined by

the SEC for compliance with the federal securities laws, including the 1940 Act.

implemented written policies and procedures reasonably designed to prevent violation of the federal securities laws and review these

policies and procedures annually for their adequacy and the effectiveness of their implementation.

We and the Investment Adviser have

designated a chief compliance officer to be responsible for administering these policies and procedures.

We expect to be periodically

examined by the SEC for compliance with the federal securities laws, including the 1940 Act.

Qualifying assets

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The principal categories of qualifying assets relevant to our business are the following:

Securities purchased in transactions not involving any public offering from the issuer of such securities, which issuer (subject to certain limited exceptions) is an eligible portfolio company, or from any person who is, or has been during the preceding 13 months, an affiliated person of an eligible portfolio company, or from any other person, subject to such rules as may be prescribed by the SEC.

An eligible portfolio company is defined in the 1940 Act as any issuer which:

is organized under the laws of, and has its principal place of business in, the United States;

is not an investment company (other than a small business investment company wholly owned by the BDC) or a company that would be an investment company but for certain exclusions under the 1940 Act;

Securities purchased in transactions not involving

any public offering from the issuer of such securities, which issuer (subject to certain limited exceptions) is an eligible portfolio

company, or from any person who is, or has been during the preceding 13 months, an affiliated person of an eligible portfolio company,

or from any other person, subject to such rules as may be prescribed by the SEC.

An eligible portfolio company is defined in the

1940 Act as any issuer which:

is organized under the laws of, and has its principal

place of business in, the United States;

is not an investment company (other than a small business

investment company wholly owned by the BDC) or a company that would be an investment company but for certain exclusions under the

satisfies either of the following:

does not have any class of securities listed on a national securities exchange;

has a class of securities listed on a national securities exchange but has an aggregate market value of outstanding voting and non-voting common equity of less than $250.0 million;

is controlled by a BDC or a group of companies including a BDC and the BDC has an affiliated person who is a director of the eligible portfolio company;

is a small and solvent company having total assets of not more than $4.0 million and capital and surplus of not less than $2.0 million;

meets such other criteria as may established by the SEC.

does not have any class of securities listed on a national

securities exchange;

has a class of securities listed on a national securities

exchange but has an aggregate market value of outstanding voting and non-voting common equity of less than $250.0 million;

is controlled by a BDC or a group of companies including

a BDC and the BDC has an affiliated person who is a director of the eligible portfolio company;

is a small and solvent company having total assets

of not more than $4.0 million and capital and surplus of not less than $2.0 million;

meets such other criteria as may established by the

(2) Securities of any eligible portfolio company which we control.

Securities purchased in a private transaction from a U.S.

issuer that is not an investment company or from an affiliated person of the issuer, or in transactions incident thereto, if the issuer is in bankruptcy and subject to reorganization or if the issuer, immediately prior to the purchase of its securities was unable to meet its obligations as they came due without material assistance other than conventional lending or financing arrangements.

Securities of an eligible portfolio company purchased from any person in a private transaction if there is no ready market for such securities and we already own at least 60.0% of the outstanding equity of the eligible portfolio company.

Securities received in exchange for or distributed on or with respect to securities described in (1) through (4) above, or pursuant to the exercise of options, warrants or rights relating to such securities.

Cash, cash equivalents, U.S.

Securities purchased

in a private transaction from a U.S.

issuer that is not an investment company or from an affiliated person of the issuer, or in transactions

incident thereto, if the issuer is in bankruptcy and subject to reorganization or if the issuer, immediately prior to the purchase

of its securities was unable to meet its obligations as they came due without material assistance other than conventional lending

or financing arrangements.

Securities of an eligible

portfolio company purchased from any person in a private transaction if there is no ready market for such securities and we already

own at least 60.0% of the outstanding equity of the eligible portfolio company.

Securities received

in exchange for or distributed on or with respect to securities described in (1) through (4) above, or pursuant to the exercise of

options, warrants or rights relating to such securities.

Cash, cash equivalents,

Government securities or high-quality debt securities maturing in one year or less from the time of investment.

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Significant managerial assistance to portfolio

A BDC generally must offer to make available to

the issuer of the securities in which it invests significant managerial assistance, except in circumstances where either (i) the BDC controls

such issuer of securities or (ii) the BDC purchases such securities in conjunction with one or more other persons acting together and

one of the other persons in the group makes available such managerial assistance.

As a BDC, we must offer, and must provide upon request,

managerial assistance to our portfolio companies.

Making available significant managerial assistance means, among other things, any arrangement

whereby the BDC, through its directors, officers or employees or those of its investment adviser or administrator, offers to provide,

and, if accepted, does so provide, significant guidance and counsel concerning the management, operations or business objectives and policies

of a portfolio company.

This assistance could involve, among other things, monitoring the operations of our portfolio companies, participating

in board and management meetings, consulting with and advising officers of portfolio companies and providing other organizational and

financial guidance.

A BDC generally must offer to make available

to the issuer of the securities in which it invests significant managerial assistance, except in circumstances where either (i) the BDC

controls such issuer of securities or (ii) the BDC purchases such securities in conjunction with one or more other persons acting together

and one of the other persons in the group makes available such managerial assistance.

As a BDC, we must offer, and must provide upon

request, managerial assistance to our portfolio companies.

Making available significant managerial assistance means, among other things,

any arrangement whereby the BDC, through its directors, officers or employees or those of its investment adviser or administrator, offers

to provide, and, if accepted, does so provide, significant guidance and counsel concerning the management, operations or business objectives

and policies of a portfolio company.

This assistance could involve, among other things, monitoring the operations of our portfolio companies,

participating in board and management meetings, consulting with and advising officers of portfolio companies and providing other organizational

and financial guidance.

Pursuant to a separate Administration Agreement, Saratoga Investment Advisors provides such managerial assistance

on our behalf to portfolio companies that request this assistance, recognizing that our involvement with each investment will vary based

on factors including the size of the company, the nature of our investment, the company’s overall stage of development and our relative

position in the capital structure.

on factors including the size of the company, the nature of our investment, the company’s overall stage of development and our

relative position in the capital structure.

We may receive fees for these services.

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

See “Risk Factors – Effective April 16, 2019, our asset coverage requirement was reduced from 200% to 150%, which may increase

the risk of investing in the Company.” We may also borrow amounts up to 5.0% of the value of our total assets for temporary or emergency

purposes without regard to asset coverage.

“Risk Factors – Effective April 16, 2019, our asset coverage requirement was reduced from 200% to 150%,

which may increase the risk of investing in the Company.” We may also borrow amounts up to 5.0% of the value of our total assets

for temporary or emergency purposes without regard to asset coverage.

The 1940 Act also limits the amount of warrants,

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Our code of ethics is also available on our corporate governance webpage at

http://ir.saratogainvestmentcorp.com/corporate-governance .

ir.saratogainvestmentcorp.com/corporate-governance .

Proxy voting policies and procedures

SEC registered investment advisers that have the

authority to vote (client) proxies (which authority may be implied from a general grant of investment discretion) are required to adopt

policies and procedures reasonably designed to ensure that the adviser votes proxies in the best interests of its clients.

SEC registered investment advisers that have

the authority to vote (client) proxies (which authority may be implied from a general grant of investment discretion) are required to

adopt policies and procedures reasonably designed to ensure that the adviser votes proxies in the best interests of its clients.

investment advisers also must maintain certain records on proxy voting.

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voting policies and procedures in place.

In determining how to vote, officers of Saratoga Investment Advisors will consult with each other,

taking into account our interests and the interests of our investors, as well as any potential conflicts of interest.

Saratoga Investment

Advisors will consult with legal counsel to identify potential conflicts of interest.

Where a potential conflict of interest exists, Saratoga

Investment Advisors may, if it so elects, resolve it by following the recommendation of a disinterested third party, by seeking the direction

of our independent directors or, in extreme cases, by abstaining from voting.

While Saratoga Investment Advisors may retain an outside

service to provide voting recommendations and to assist in analyzing votes, it will not delegate its voting authority to any third party.

In determining how to vote, officers of Saratoga Investment Advisors will consult with each

other, taking into account our interests and the interests of our investors, as well as any potential conflicts of interest.

Investment Advisors will consult with legal counsel to identify potential conflicts of interest.

Where a potential conflict of interest

exists, Saratoga Investment Advisors may, if it so elects, resolve it by following the recommendation of a disinterested third party,

by seeking the direction of our independent directors or, in extreme cases, by abstaining from voting.

While Saratoga Investment Advisors

may retain an outside service to provide voting recommendations and to assist in analyzing votes, it will not delegate its voting authority

to any third party.

An officer of Saratoga Investment Advisors will

keep a written record of how all such proxies are voted.

It will retain records of (1) proxy voting policies and procedures, (2) all proxy

statements received (or it may rely on proxy statements filed on the SEC’s EDGAR system in lieu thereof), (3) all votes cast, (4)

investor requests for voting information, and (5) any specific documents prepared or received in connection with a decision on a proxy

If it uses an outside service, Saratoga Investment Advisors may rely on such service to maintain copies of proxy statements and

records, so long as such service will provide a copy of such documents promptly upon request.

It will retain records of (1) proxy voting policies and procedures, (2) all

proxy statements received (or it may rely on proxy statements filed on the SEC’s EDGAR system in lieu thereof), (3) all votes cast,

(4) investor requests for voting information, and (5) any specific documents prepared or received in connection with a decision on a

If it uses an outside service, Saratoga Investment Advisors may rely on such service to maintain copies of proxy statements

and records, so long as such service will provide a copy of such documents promptly upon request.

Saratoga Investment Advisors’ proxy voting

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as failure to:

(1) implement proposals to declassify a board, (2) implement a majority vote requirement, (3) submit a rights plan to a

stockholder vote or (4) act on tender offers where a majority of stockholders have tendered their shares.

(1) implement proposals to declassify a board, (2) implement a majority vote requirement, (3) submit a rights plan to

a stockholder vote or (4) act on tender offers where a majority of stockholders have tendered their shares.

Finally, Saratoga Investment

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Changes in Capital Structure:

a portfolio company’s organizational documents may be required by state or federal regulation.

In general, Saratoga Investment Advisors

will cast our votes in accordance with the management on such proposals.

However, Saratoga Investment Advisors will consider carefully

any proposal regarding a change in corporate structure that is not required by state or federal regulation.

in a portfolio company’s organizational documents may be required by state or federal regulation.

In general, Saratoga Investment

Advisors will cast our votes in accordance with the management on such proposals.

However, Saratoga Investment Advisors will consider

carefully any proposal regarding a change in corporate structure that is not required by state or federal regulation.

Corporate Restructurings, Mergers and Acquisitions:

We believe proxy votes dealing with corporate reorganizations are an extension of the investment decision.

Accordingly, Saratoga Investment

Advisors will analyze such proposals on a case-by-case basis and vote in accordance with its perception of our interests.

Accordingly, Saratoga

Investment Advisors will analyze such proposals on a case-by-case basis and vote in accordance with its perception of our interests.

Proposals Affecting Stockholder Rights:

We will generally vote in favor of proposals that give stockholders a greater voice in the affairs of a portfolio company and oppose any

measure that seeks to limit such rights.

We will generally vote in favor of proposals that give stockholders a greater voice in the affairs of a portfolio company and oppose

any measure that seeks to limit such rights.

However, when analyzing such proposals, Saratoga Investment Advisors will balance the financial

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Authorized Employees of Saratoga Investment Advisors .

It is our policy that only authorized employees of Saratoga Investment Advisors who need to know a stockholder’s personal information will have access to it.

It is our policy that only authorized employees of Saratoga Investment Advisors who need to know a stockholder’s personal information

will have access to it.

Service Providers.

We may disclose your personal information to companies that provide services on our behalf, such as recordkeeping, processing a stockholder’s trades, and mailing stockholder information.

These companies are required to protect our stockholders’ information and use it solely for the purpose for which they received it.

We may disclose your personal

information to companies that provide services on our behalf, such as recordkeeping, processing a stockholder’s trades, and

mailing stockholder information.

These companies are required to protect our stockholders’ information and use it solely for

the purpose for which they received it.

Courts and Government Officials.

If required by law, we may disclose a stockholder’s personal information in accordance with a court order or at the request of government regulators.

by law, we may disclose a stockholder’s personal information in accordance with a court order or at the request of government

Only that information required by law, subpoena, or court order will be disclosed.

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Furthermore, as a BDC, we are prohibited

from protecting any director or officer against any liability to us or our stockholders arising from willful misfeasance, bad faith, gross

negligence or reckless disregard of the duties involved in the conduct of such person’s office.

We and Saratoga Investment Advisors are each required

to adopt and implement written policies and procedures reasonably designed to prevent violation of the federal securities laws, review

these policies and procedures annually for their adequacy and the effectiveness of their implementation, and designate a chief compliance

officer to be responsible for administering the policies and procedures.

from protecting any director or officer against any liability to us or our stockholders arising from willful misfeasance, bad faith,

gross negligence or reckless disregard of the duties involved in the conduct of such person’s office.

We and Saratoga Investment Advisors are each

required to adopt and implement written policies and procedures reasonably designed to prevent violation of the federal securities laws,

review these policies and procedures annually for their adequacy and the effectiveness of their implementation, and designate a chief

compliance officer to be responsible for administering the policies and procedures.

The New York Stock Exchange (“NYSE”)

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Affiliated Transactions

The Company may be prohibited under the 1940 Act

from participating in certain transactions with certain of its affiliates without the prior approval of our independent directors and,

in some cases, the prior approval of the SEC.

The Company may be prohibited under the 1940

Act from participating in certain transactions with certain of its affiliates without the prior approval of our independent directors

and, in some cases, the prior approval of the SEC.

On December 12, 2023, the SEC granted an exemptive order (collectively, the “Order”)

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Small Business Investment Company Regulations

Our wholly owned subsidiaries, SBIC LP, SBIC II

LP, and SBIC III LP, received an SBIC license from the SBA on March 28, 2012, August 14, 2019, and September 29, 2022, respectively.

the debentures being fully repaid to the SBA, SBIC LP surrendered its license 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.

The SBIC licenses allows our SBIC Subsidiaries

Our wholly owned subsidiaries, SBIC II LP and

SBIC III LP, received licenses to operate as an SBIC from the SBA on August 14, 2019 and September 29, 2022, respectively.

SBIC Subsidiaries provides up to $175.0 million in long-term capital in the form of debentures guaranteed by the SBA.

With all debentures

repaid to the SBA, SBIC LP’s (“SBIC LP”) license was surrendered on January 3, 2024, providing the Company access to

all undistributed capital of SBIC LP, and SBIC LP subsequently merged with and into the Company.

The SBIC licenses allow our SBIC Subsidiaries

to obtain leverage by issuing SBA-guaranteed debentures, subject to the satisfaction of certain customary procedures.

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 at the time of issuance at a market-driven spread over U.S.

Treasury Notes with 10-year maturities.

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.

interest rate of SBA-guaranteed debentures is fixed at the time of issuance at a market-driven spread over U.S.

Treasury Notes with 10-year

SBICs are designed to stimulate the flow of private

33 unchanged sentences

The SBIC Subsidiaries have $259.0 million of committed capital on an aggregate basis.

SBA regulations currently limit

the amount of SBA-guaranteed debentures that an individual SBIC may issue to $175.0 million when it has at least $87.5 million in regulatory

As of February 29, 2024, SBIC LP was dissolved.

As of February 28, 2025, we have funded SBIC II LP with an aggregate total of $87.5 million of equity capital and have $131.0 million

of SBA-guaranteed debentures outstanding, and we have funded SBIC III LP with an aggregate total of $87.5 million of equity capital and

have $39.0 million of SBA-guaranteed debentures outstanding.

SBA regulations currently limit the amount

of SBA-guaranteed debentures that an individual SBIC may issue to $175.0 million when it has at least $87.5 million in regulatory capital.

As of February 28, 2026, we have funded SBIC

II LP with an aggregate total of $87.5 million of equity capital and have $84.0 million of SBA-guaranteed debentures outstanding, and

we have funded SBIC III LP with an aggregate total of $87.5 million of equity capital and have $76.0 million of SBA-guaranteed debentures

Available Information

11 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business