SARATOGA INVESTMENT CORP. 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with our consolidated financial statements and related notes and other financial information appearing elsewhere in this Annual Report on Form 10-K. In addition to historical information, the following discussion and other parts of this Annual Report contain forward-looking information that involves risks and uncertainties. Our actual results could differ materially from those anticipated by such forward-looking information due to the factors discussed under Part I. Item 1A. “Risk Factors” and “Note about Forward-Looking Statements” appearing elsewhere herein. The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or are within our control. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. The forward-looking statements contained in this Annual Report on Form 10-K involve risks and uncertainties, including statements as to: ● our future operating results; ● the introduction, withdrawal, success and timing of business initiatives and strategies; ● changes in political, economic or industry conditions, the interest rate environment or financial and capital markets, which could result in changes in the value of our assets; ● the relative and absolute investment performance and operations of our Manager; ● the impact of increased competition; ● our ability to turn potential investment opportunities into transactions and thereafter into completed and successful investments; ● the unfavorable resolution of any future legal proceedings; ● our business prospects and the operational and financial performance of our portfolio companies, including their ability to achieve our respective objectives as a result of the current economic conditions caused by, among other things, elevated levels of inflation, and uncertainty relating to the interest rate environment, and the effects of the disruptions caused thereby on our ability to continue to effectively manage our business; ● interest rate volatility, including the uncertainty relating to the interest rate environment, could adversely affect our results, particularly if we elect to use leverage as part of our investment strategy; ● the impact of investments that we expect to make and future acquisitions and divestitures; ● our contractual arrangements and relationships with third parties; ● the dependence of our future success on the general economy and its impact on the industries in which we invest; ● the ability of our portfolio companies to achieve their objectives; ● our expected financings and investments; ● our regulatory structure and tax treatment, including our ability to operate as a business development company (“BDC”), or to operate our small business investment company (“SBIC”) subsidiaries, and to continue to qualify to be taxed as a regulated investment company (“RIC”); 68 ● the adequacy of our cash resources and working capital; ● the timing of cash flows, if any, from the operations of our portfolio companies; ● the impact of supply chain constraints and labor difficulties on our portfolio companies and the global economy; ● the elevated level of inflation, and its impact on our portfolio companies and on the industries in which we invest; ● the uncertainty associated with the imposition of tariffs and trade barriers and changes in trade policy and its impact on our portfolio companies and the global economy; ● the impact of geopolitical conditions on our portfolio companies and on the industries in which we invest; ● the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government agencies relating to us or our Manager; ● the impact of changes to tax legislation and, generally, our tax position; ● our ability to access capital and any future financings by us; ● the ability of our Manager to attract and retain highly talented professionals; and ● the ability of our Manager to locate suitable investments for us and to monitor and effectively administer our investments. Such forward-looking statements may include statements preceded by, followed by or that otherwise include terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “project,” “should,” “will” and “would” or the negative of these terms or other comparable terminology. We have based the forward-looking statements included in this Annual Report on Form 10-K on information available to us on the date of this Annual Report on Form 10-K, and we assume no obligation to update any such forward-looking statements. Actual results could differ materially from those anticipated in our forward-looking statements, and future results could differ materially from historical performance. We undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law or SEC rule or regulation. You are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the U.S. Securities and Exchange Commission (the “SEC”), including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. The following analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes thereto contained elsewhere in this Annual Report on Form 10-K. OVERVIEW We are a Maryland corporation that has elected to be regulated as a BDC under the Investment Company Act of 1940, as amended (the “1940 Act”). Our investment objective is to create attractive risk-adjusted returns by generating current income and long-term capital appreciation from our investments. We invest primarily in senior and unitranche leveraged loans and mezzanine debt issued by private U.S. middle-market companies, which we define as companies having earnings before interest, tax, depreciation and amortization (“EBITDA”) of between $2 million and $50 million, both through direct lending and through participation in loan syndicates. We may also invest up to 30.0% of the portfolio in opportunistic investments in order to seek to enhance returns to stockholders. Such investments may include investments in distressed debt, which may include securities of companies in bankruptcy, foreign debt, private equity, securities of public companies that are not thinly traded and structured finance vehicles such as collateralized loan obligation funds. Although we have no current intention to do so, 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. We have elected and qualified to be treated as a RIC under subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). 69 Corporate History We commenced operations, at the time known as GSC Investment Corp., on March 23, 2007 and completed an initial public offering of shares of common stock on March 28, 2007. Prior to July 30, 2010, we were externally managed and advised by GSCP (NJ), L.P., an entity affiliated with GSC Group, Inc. In connection with the consummation of a recapitalization transaction on July 30, 2010, as described below we engaged Saratoga Investment Advisors to replace GSCP (NJ), L.P. as our investment adviser and changed our name to Saratoga Investment Corp. Our wholly owned subsidiaries, Saratoga Investment Corp. SBIC II LP (“SBIC II LP”) and Saratoga Investment Corp. SBIC III LP (“SBIC III LP”, and together with SBIC II LP, the “SBIC Subsidiaries”), received SBIC licenses from the SBA on August 14, 2019 and September 29, 2022, respectively. Each of the SBIC Subsidiaries provides up to $175.0 million in long-term capital in the form of debentures guaranteed by the SBA. Our wholly owned subsidiary SBIC LP repaid its outstanding debentures and subsequently surrendered its license to the SBA on January 3, 2024, providing the Company access to all undistributed capital of SBIC LP, and SBIC LP subsequently merged with and into the Company. Under current SBIC regulations, for two or more SBICs under common control, the maximum amount of outstanding SBA debentures cannot exceed $350.0 million with at least $175.0 million in combined regulatory capital. On February 26, 2021, we completed the fourth refinancing of the Saratoga CLO. This refinancing, among other things, extended the Saratoga CLO reinvestment period to April 2024, and extended its legal maturity to April 2033, and added a non-call period ending February 2022. In addition, and as part of the refinancing, the Saratoga CLO was upsized from $500 million in assets to approximately $650 million. As part of this refinancing and upsizing, we invested an additional $14.0 million in all of the newly issued subordinated notes of the Saratoga CLO, and purchased $17.9 million in aggregate principal amount of the Class F-R-3 Notes tranche at par. Concurrently, the existing $2.5 million of Class F-R-2 Notes, $7.5 million of Class G-R-2 Notes and $25.0 million CLO 2013-1 Warehouse 2 Loan were repaid. We also paid $2.6 million of transaction costs related to the refinancing and upsizing on behalf of the Saratoga CLO, to be reimbursed from future equity distributions. At August 31, 2021, the outstanding receivable of $2.6 million was repaid. On June 10, 2024, the Company completed its fifth refinancing of the Saratoga CLO. This refinancing, among other things, did not extend the Saratoga CLO reinvestment period nor extend its legal maturity, while adjusting the interest rate of two of the existing Notes. The Issuer issued $422.5 million of notes (the “2013-1 2024 Reset CLO Notes”), consisting of Class A-1-R-4 and Class A-2-R-4. The 2013-1 2024 Reset CLO Notes were issued pursuant to the Indenture with the same Trustee. Proceeds of the issuance of the 2013-1 2024 Reset CLO Notes were used along with existing assets of the Saratoga CLO to redeem the existing Class A-1-R-3 and Class A-2-R-3 Notes. No other Notes were refinanced as part of this refinancing. The Saratoga CLO paid $0.5 million of transaction costs related to the refinancing. We have utilized a wholly owned special purpose entity, Saratoga Investment Funding II LLC, a Delaware limited liability company (“SIF II”), for the purpose of entering into a $85.0 million senior secured revolving credit facility with Valley National Bank (“Valley”), supported by loans held by SIF II and pledged to Valley under the credit facility (the “Valley Credit Facility). The Valley Credit Facility closed on November 6, 2025. The terms of the Valley Credit Facility require a minimum drawn amount equal to the greater of $25.0 million or 38% of the facility amount in effect at such time. The term of the Valley Credit Facility is three years. Advances under the Valley Credit Facility bear interest at a floating rate per annum equal to Term SOFR plus an applicable margin of 2.85%, with a SOFR Floor of 1.00%. Concurrently with the closing of the Valley Credit Facility, all remaining amounts outstanding on our existing revolving credit facility with Encina Lender Finance, LLC were repaid and the facility was terminated. We have formed a wholly owned special purpose entity, Saratoga Investment Funding III LLC, a Delaware limited liability company (“SIF III”), for the purpose of entering into a $50.0 million senior secured revolving credit facility with Live Oak Banking Company (“Live Oak”), supported by loans held by SIF III and pledged to Live Oak under the credit facility (the “Live Oak Credit Facility). The Live Oak Credit Facility closed on March 27, 2024. During the first two years following the closing date, SIF III may request an increase in the commitment amount under the Live Oak Credit Facility to up to $150.0 million. The terms of the Live Oak Credit Facility require a minimum drawn amount of $12.5 million at all times during the period ending March 27, 2025, which increases to the greater of $25.0 million or 50% of the facility amount in effect at any time thereafter. The term of the Live Oak Credit Facility is three years. Advances under the Live Oak Credit Facility bear interest at a floating rate per annum equal to Adjusted Term SOFR plus an applicable margin between 3.50% and 4.25% based on the Live Oak Credit Facility’s utilization. On June 14, 2024, the Live Oak Credit Facility was amended to, among other things: (i) increase the borrowings available under the Live Oak Credit Facility from up to $50.0 million to up to $75.0 million, subject to a borrowing base requirement; (ii) add new lenders to the Live Oak Credit Agreement; (iii) replace administrative agent approval with “Required Lender” (as defined in the Live Oak Credit Agreement) approval with respect to certain matters; (iv) replace Required Lender approval with 100% lender approval with respect to certain matters; and (v) change the definition of Required Lender to require the approval of at least two unaffiliated lenders. 70 On October 26, 2021, we entered into a Limited Liability Company Agreement with TJHA JV I LLC (“TJHA”) to co-manage Saratoga Senior Loan Fund I JV LLC (“SLF JV”). SLF JV is invested in Saratoga Investment Corp Senior Loan Fund 2021-1 Ltd (“SLF 2021”), which is a wholly owned subsidiary of SLF JV. SLF 2021 was formed for the purpose of making investments in a diversified portfolio of broadly syndicated first lien and second lien term loans or bonds in the primary and secondary markets. On September 30, 2022, SLF 2021 was renamed to Saratoga Investment Corp Senior Loan Fund 2022-1, Ltd. (“SLF 2022”). We and TJHA have equal voting interest on all material decisions with respect to SLF JV, including those involving its investment portfolio, and equal control of corporate governance. No management fee is charged to SLF JV as control and management of SLF JV is shared equally. We and TJHA have committed to provide up to a combined $50.0 million of financing to SLF JV through cash contributions, where we provided $43.75 million and TJHA provides $6.25 million, resulting in an 87.5% and 12.5% ownership between the two parties. The financing is issued in the form of an unsecured note and equity. The unsecured note will pay a fixed rate of 10.0% per annum and is due and payable in full on October 20, 2033. As of February 28, 2026, our and TJHA’s investment in SLF JV consisted of an unsecured note of $17.6 million and $2.5 million, respectively; and membership interest of $19.2 million and $2.7 million, respectively. As of February 28, 2025, the Company and TJHA’s investment in SLF JV consisted of an unsecured note of $17.6 million and $2.5 million, respectively; and membership interest of $17.6 million and $2.5 million, respectively. As of February 28, 2026, and February 28, 2025, the Company’s investment in the unsecured note of SLF JV had a fair value of $16.1 million and $16.5 million, respectively, and the Company’s investment in the membership interests of SLF JV had a fair value of $1.5 million and $3.1 million, respectively. SLF JV’s initial investment in SLF 2022 was in the form of an unsecured loan. The unsecured loan paid a floating rate of LIBOR plus 7.00% per annum and was paid in full on June 9, 2023. The unsecured loan was repaid in full on October 28, 2022, as part of the CLO closing. We have determined that SLF JV is an investment company under (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial Services—Investment Companies ; however, in accordance with such guidance we will generally not consolidate our investment in a company other than a wholly owned investment company subsidiary. SLF JV is not a wholly owned investment company subsidiary as we and TJHA each have an equal 50% voting interest in SLF JV and thus neither party has a controlling financial interest. Furthermore, FASB ASC Topic 810, Consolidation , concludes that in a joint venture where both members have equal decision making authority, it is not appropriate for one member to consolidate the joint venture since neither has control. Accordingly, we do not consolidate SLF JV. On September 24, 2025, the Company completed the first refinancing of SLF 2022. This refinancing, among other things, extended SLF 2022’s investment period to October 2028. As part of this refinancing, the Company purchased $8.8 million of the SLF 2022-1 Class E-R Notes tranche at par. Concurrently, the existing $12.3 million of the SLF 2022-1 Class E Notes were repaid. The Company also paid $1.6 million of additional equity investment related to the refinancing of SLF JV. As of February 28, 2026, the fair value of the Class E-R Notes was $8.4 million. 71 Critical Accounting Policies and Estimates Basis of Presentation The preparation of financial statements in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make certain estimates and assumptions affecting amounts reported in our consolidated financial statements. We have identified investment valuation, revenue recognition and the recognition of capital gains incentive fee expense as our most critical accounting estimates. We continuously evaluate our estimates, including those related to the matters described below. These estimates are based on the information that is currently available to us and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ materially from those estimates under different assumptions or conditions. A discussion of our critical accounting policies and estimates follows. Investment Valuation We account for investments at fair value in accordance with the FASB ASC Topic 820, Fair Value Measurement (“ASC 820”). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. Under ASC 820 we are required to assume that its investments are to be sold or its liabilities are to be transferred at the balance sheet date in the principal market to independent market participants, or in the absence of a principal market, in the most advantageous market, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact. Investments for which market quotations are readily available are fair valued at such market quotations obtained from independent third-party pricing services and market makers subject to any decision by our board of directors to approve a fair value determination to reflect significant events affecting the value of these investments. We value investments for which market quotations are not readily available at fair value as approved, in good faith, by our board of directors based on input from Saratoga Investment Advisors, the audit committee of our board of directors and a third party independent valuation firm. We use multiple techniques for determining fair value based on the nature of the investment and experience with those types of investments and specific portfolio companies. The selections of the valuation techniques and the inputs and assumptions used within those techniques often require subjective judgements and estimates. These techniques include market comparables, discounted cash flows and enterprise value waterfalls. Fair value is best expressed as a range of values from which we determine a single best estimate. The types of inputs and assumptions that may be considered in determining the range of values of our investments include the nature and realizable value of any collateral, the portfolio company’s ability to make payments, market yield trend analysis and volatility in future interest rates, call and put features, the markets in which the portfolio company does business, comparison to publicly traded companies, discounted cash flows and other relevant factors. We undertake a multi-step valuation process each quarter when valuing investments for which market quotations are not readily available, as described below: ● each investment is initially valued by the responsible investment professionals of Saratoga Investment Advisors and preliminary valuation conclusions are documented and discussed with our senior management; and ● an independent valuation firm engaged by our board of directors independently reviews a selection of these preliminary valuations each quarter so that the valuation of each investment for which market quotes are not readily available is reviewed by the independent valuation firm at least once each fiscal year. We use a third-party independent valuation firm to value our investment in the subordinated notes of Saratoga CLO and the Class F-2-R-3 Notes tranche of the Saratoga CLO every quarter. 72 In addition, all our investments are subject to the following valuation process: ● the audit committee of our board of directors reviews and approves each preliminary valuation and Saratoga Investment Advisors and an independent valuation firm (if applicable) will supplement the preliminary valuation to reflect any comments provided by the audit committee; and ● our board of directors discusses the valuations and approves the fair value of each investment, in good faith, based on the input of Saratoga Investment Advisors, independent valuation firm (to the extent applicable) and the audit committee of our board of directors. Our investment in Saratoga CLO is carried at fair value, which is based on a discounted cash flows that utilizes prepayment, re-investment and loss assumptions based on historical experience and projected performance, economic factors, the characteristics of the underlying cash flow, and market comparables for equity interests in collateralized loan obligation funds similar to Saratoga CLO, when available, as determined by Saratoga Investment Advisors and recommended to our board of directors. Specifically, we use Intex cash flows, or an appropriate substitute, to form the basis for the valuation of our investment in Saratoga CLO. The cash flows use a set of inputs including projected default rates, recovery rates, reinvestment rates and prepayment rates in order to arrive at estimated valuations. The inputs are based on available market data and projections provided by third parties as well as management estimates. We use the output from the Intex models (i.e., the estimated cash flows) to perform a discounted cash flow analysis on expected future cash flows to determine a valuation for our investment in Saratoga CLO. The Company’s investments in CLO BB and CLO BBB debt have been valued using recent actual market trades or an independent pricing service. The valuation methodology of the independent pricing service includes incorporating data comprised of observable market transactions, executable bids, broker quotes from dealers with two sided markets, as well as transaction activity from comparable securities to those being valued. As the independent pricing service contemplates real-time market data and no unobservable inputs or significant judgment has been used by Saratoga Investment Advisors in the valuation of the Company’s investments in CLO BB and CLO BBB debt, such positions are considered level II assets. Rule 2a-5 under the 1940 Act (“Rule 2a-5”) establishes a regulatory framework for determining fair value in good faith for purposes of the 1940 Act. Rule 2a-5 permits boards, subject to board oversight and certain other conditions, to designate the investment adviser to perform fair value determinations. Rule 2a-5 also defines when market quotations are “readily available” for purposes of the 1940 Act and the threshold for determining whether a fund must determine the fair value of a security. Rule 31a-4 under the 1940 Act (“Rule 31a-4”) provides the recordkeeping requirements associated with fair value determinations. While our board of directors has not elected to designate Saratoga Investment Advisors as the valuation designee, we has adopted certain revisions to its valuation policies and procedures in order comply with the applicable requirements of Rule 2a-5 and Rule 31a-4. Revenue Recognition Income Recognition Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis to the extent that such amounts are expected to be collected. The Company stops accruing interest on its investments when it is determined that interest is no longer collectible. Discounts and premiums on investments purchased are accreted/amortized over the life of the respective investment using the effective yield method. The amortized cost of investments represents the original cost adjusted for the accretion of discounts and amortization of premiums on investments. Loans are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected. Accrued interest is generally reserved when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as a reduction in principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current, although we may make exceptions to this general rule if the loan has sufficient collateral value and is in the process of collection. 73 Payment-in-Kind Interest We may hold debt and preferred equity investments in our portfolio that contain a payment-in-kind (“PIK”) interest provision. The PIK interest, which represents contractually deferred interest added to the investment balance that is generally due at maturity, is generally recorded on the accrual basis to the extent such amounts are expected to be collected. We stop accruing PIK interest if we do not expect the issuer to be able to pay all principal and interest when due. Revenues We generate revenue in the form of interest income and capital gains on the debt investments that we hold and capital gains, if any, on equity interests that we may acquire. We expect our debt investments, whether in the form of leveraged loans or mezzanine debt, to have terms of up to ten years, and to bear interest at either a fixed or floating rate. Interest on debt will be payable generally either quarterly or semi-annually. In some cases, our debt or preferred equity investments may provide for a portion or all of the interest to be PIK. To the extent interest is PIK, it will be payable through the increase of the principal amount of the obligation by the amount of interest due on the then-outstanding aggregate principal amount of such obligation. The principal amount of the debt and any accrued but unpaid interest will generally become due at the maturity date. In addition, we may generate revenue in the form of commitment, origination, structuring, amendment, redemption or diligence fees, fees for providing managerial assistance or investment management services and possibly consulting fees. Any such fees will be generated in connection with our investments and recognized as earned. We may also invest in preferred equity or common equity securities that pay dividends on a current basis. On January 22, 2008, we entered into a collateral management agreement with Saratoga CLO, pursuant to which we act as its collateral manager. The Saratoga CLO was initially refinanced in October 2013 with its reinvestment period extended to October 2016. On November 15, 2016, we completed a second refinancing of the Saratoga CLO with its reinvestment period extended to October 2018. On December 14, 2018, we completed a third refinancing and upsize of the Saratoga CLO. The third Saratoga CLO refinancing, among other things, extended its reinvestment period to January 2021, and extended its legal maturity date to January 2030, and added a non-call period of January 2020. Following this refinancing, the Saratoga CLO portfolio increased from approximately $300.0 million in aggregate principal amount to approximately $500.0 million of predominantly senior secured first lien term loans. In addition to refinancing its liabilities, we invested an additional $13.8 million in all of the newly issued subordinated notes of the Saratoga CLO and also purchased $2.5 million in aggregate principal amount of the Class F-R-2 and $7.5 million aggregate principal amount of the Class G-R-2 notes tranches at par, with a coupon of 3M USD LIBOR plus 8.75% and 3M USD LIBOR plus 10.00%, respectively. As part of this refinancing, we also redeemed our existing $4.5 million aggregate amount of the Class F notes tranche at par and the $20.0 million CLO 2013-1 Warehouse Loan was repaid. On February 11, 2020, we entered into an unsecured loan agreement (“CLO 2013-1 Warehouse 2 Loan”) with Saratoga Investment Corp. CLO 2013-1 Warehouse 2, Ltd (“CLO 2013-1 Warehouse 2”), a wholly owned subsidiary of Saratoga CLO, pursuant to which CLO 2013-1 Warehouse 2 may borrow from time to time up to $20.0 million from the Company in order to provide capital necessary to support warehouse activities. On October 23, 2020, the availability under the CLO 2013-1 Warehouse 2 Loan was increased to $25.0 million, which was immediately fully drawn and, which expires on August 20, 2021. The interest rate was also amended to be based on a pricing grid, starting at an annual rate of 3M USD LIBOR + 4.46%. During the fourth quarter ended February 28, 2021, the CLO 2013-1 Warehouse 2 Ltd was repaid in full. On February 26, 2021, we completed the fourth refinancing of the Saratoga CLO. This refinancing, among other things, extended the Saratoga CLO reinvestment period to April 2024, extended its legal maturity to April 2033, and added a non-call period of February 2022. In addition, and as part of the refinancing, the Saratoga CLO was upsized from $500 million in assets to approximately $650 million. As part of this refinancing and upsizing, the Company invested an additional $14.0 million in all of the newly issued subordinated notes of the Saratoga CLO, and purchased $17.9 million in aggregate principal amount of the Class F-R-3 Notes tranche at par. Concurrently, the existing $2.5 million of Class F-R-2 Notes, $7.5 million of Class G-R-2 Notes and $25.0 million of the CLO 2013-1 Warehouse 2 Loan were repaid. We also paid $2.6 million of transaction costs related to the refinancing and upsizing on behalf of the Saratoga CLO, to be reimbursed from future equity distributions. At August 31, 2021, the outstanding receivable of $2.6 million was repaid in full. 74 On August 9, 2021, we exchanged our existing $17.9 million Class F-R-3 Notes for $8.5 million Class F-1-R-3 Notes and $9.4 million Class F-2-R-3 Notes at par. On August 11, 2021, we sold our Class F-1-R-3 Notes to third parties, resulting in a realized loss of $0.1 million. On June 10, 2024, we completed our fifth refinancing of the Saratoga CLO, which adjusted the interest rate of two of the existing Notes. Saratoga CLO issued $422.5 million notes (the “2013-1 2024 Reset CLO Notes”), consisting of Class A-1-R-4 and Class A-2-R-4. The 2013-1 2024 Reset CLO Notes were issued pursuant to the indenture with the same trustee. Proceeds of the issuance of the 2013-1 2024 Reset CLO Notes were used along with existing assets of the Saratoga CLO to redeem the existing Class A-1-R-3 and Class A-2-R-3 Notes. No other Notes were refinanced as part of this refinancing. The Saratoga CLO paid $0.5 million of transaction costs related to the refinancing. The Saratoga CLO remains effectively 100% owned and managed by Saratoga Investment Corp. We receive a base management fee of 0.10% per annum and a subordinated management fee of 0.40% per annum of the outstanding principal amount of Saratoga CLO’s assets, paid quarterly to the extent of available proceeds. Prior to the second refinancing and the issuance of the 2013-1 Amended CLO Notes, we received a base management fee of 0.25% per annum and a subordinated management fee of 0.25% per annum of the outstanding principal amount of Saratoga CLO’s assets, paid quarterly to the extent of available proceeds. Following the third refinancing and the issuance of the 2013-1 Reset CLO Notes on December 14, 2018, we are no longer entitled to an incentive management fee equal to 20.0% of excess cash flow to the extent the Saratoga CLO subordinated notes receive an internal rate of return paid in cash equal to or greater than 12.0%. Interest income on our investment in Saratoga CLO is recorded using the effective interest method in accordance with the provisions of FASB ASC Topic 325-40, Investments-Other, Beneficial Interests in Securitized Financial Assets, based on the anticipated yield and the estimated cash flows over the projected life of the investment. Yields are revised when there are changes in actual or estimated cash flows due to changes in prepayments and/or re-investments, credit losses or asset pricing. Changes in estimated yield are recognized as an adjustment to the estimated yield over the remaining life of the investment from the date the estimated yield was changed. Expenses Our primary operating expenses include the payment of investment advisory and management fees, professional fees, directors’ and officers’ insurance, fees paid to directors who are not “interested persons” (as defined in Section 2(a)(19) of the 1940 Act) of the Company (“independent directors”) and administrator expenses, including our allocable portion of our administrator’s overhead. Our investment advisory and management fees compensate our Manager for its work in identifying, evaluating, negotiating, closing and monitoring our investments. We bear all other costs and expenses of our operations and transactions, including those relating to: ● organization; ● calculating our net asset value (“NAV”) (including the cost and expenses of any independent valuation firm); ● expenses incurred by our Manager payable to third parties, including agents, consultants or other advisers, in monitoring our financial and legal affairs and in monitoring our investments and performing due diligence on our prospective portfolio companies; ● expenses incurred by our Manager payable for travel and due diligence on our prospective portfolio companies; 75 ● interest payable on debt, if any, incurred to finance our investments; ● offerings of our common stock and other securities; ● investment advisory and management fees; ● fees payable to third parties, including agents, consultants or other advisers, relating to, or associated with, evaluating and making investments; ● transfer agent and custodial fees; ● federal and state registration fees; ● all costs of registration and listing our common stock on any securities exchange; ● U.S. federal, state and local taxes; ● independent directors’ fees and expenses; ● costs of preparing and filing reports or other documents required by governmental bodies (including the Securities and Exchange Commission (the “SEC”) and the SBA); ● costs of any reports, proxy statements or other notices to common stockholders including printing costs; ● our fidelity bond, directors’ and officers’ errors and omissions liability insurance, and any other insurance premiums; ● direct costs and expenses of administration, including printing, mailing, long distance telephone, copying, secretarial and other staff, independent auditors and outside legal costs; and ● administration fees and all other expenses incurred by us or, if applicable, the administrator in connection with administering our business (including payments under the Administration Agreement based upon our allocable portion of the administrator’s overhead in performing its obligations under an Administration Agreement, including rent and the allocable portion of the cost of our officers and their respective staffs (including travel expenses)). Pursuant to the investment advisory and management agreement that we had with GSCP (NJ), L.P., our former investment adviser and administrator, we had agreed to pay GSCP (NJ), L.P. as investment adviser a quarterly base management fee of 1.75% of the average value of our total assets (other than cash or cash equivalents but including assets purchased with borrowed funds) at the end of the two most recently completed fiscal quarters and an incentive fee. The incentive fee had two parts: ● A fee, payable quarterly in arrears, equal to 20.0% of our pre-incentive fee net investment income, expressed as a rate of return on the value of the net assets at the end of the immediately preceding quarter, that exceeded a 1.875% quarterly hurdle rate measured as of the end of each fiscal quarter. Under this provision, in any fiscal quarter, our investment adviser received no incentive fee unless our pre-incentive fee net investment income exceeded the hurdle rate of 1.875%. Amounts received as a return of capital were not included in calculating this portion of the incentive fee. Since the hurdle rate was based on net assets, a return of less than the hurdle rate on total assets could still have resulted in an incentive fee. ● A fee, payable at the end of each fiscal year, equal to 20.0% of our net realized capital gains, if any, computed net of all realized capital losses and unrealized capital depreciation, in each case on a cumulative basis on each investment in our portfolio, less the aggregate amount of capital gains incentive fees paid to the investment adviser through such date. 76 We deferred cash payment of any incentive fee otherwise earned by our former investment adviser if, during the then most recent four full fiscal quarters ending on or prior to the date such payment was to be made, the sum of (a) our aggregate distributions to our stockholders and (b) our change in net assets (defined as total assets less liabilities) (before taking into account any incentive fees payable during that period) was less than 7.5% of our net assets at the beginning of such period. These calculations were appropriately pro-rated for the first three fiscal quarters of operation and adjusted for any share issuances or repurchases during the applicable period. Such incentive fee would become payable on the next date on which such test had been satisfied for the most recent four full fiscal quarters or upon certain terminations of the investment advisory and management agreement. We commenced deferring cash payment of incentive fees during the quarterly period ended August 31, 2007 and continued to defer such payments through the quarterly period ended May 31, 2010. As of July 30, 2010, the date on which GSCP (NJ), L.P. ceased to be our investment adviser and administrator, we owed GSCP (NJ), L.P. $2.9 million in fees for services previously provided to us; of which $0.3 million has been paid by us. GSCP (NJ), L.P. agreed to waive payment by us of the remaining $2.6 million in connection with the consummation of the stock purchase transaction with Saratoga Investment Advisors and certain of its affiliates described elsewhere in this Annual Report. The terms of the investment advisory and management agreement with Saratoga Investment Advisors, our current investment adviser, are substantially similar to the terms of the investment advisory and management agreement we had entered into with GSCP (NJ), L.P., our former investment adviser, except for the following material distinctions in the fee terms: ● The capital gains portion of the incentive fee was reset with respect to gains and losses from May 31, 2010, and therefore losses and gains incurred prior to such time will not be taken into account when calculating the capital gains fee payable to Saratoga Investment Advisors and, as a result, Saratoga Investment Advisors will be entitled to 20.0% of net gains that arise after May 31, 2010. In addition, the cost basis for computing realized gains and losses on investments held by us as of May 31, 2010 equal the fair value of such investment as of such date. Under the investment advisory and management agreement with our former investment adviser, GSCP (NJ), L.P., the capital gains fee was calculated from March 21, 2007, and the gains were substantially outweighed by losses. ● Under the “catch up” provision, 100.0% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income that exceeds 1.875% but is less than or equal to 2.344% in any fiscal quarter is payable to Saratoga Investment Advisors. This will enable Saratoga Investment Advisors to receive 20.0% of all net investment income as such amount approaches 2.344% in any quarter, and Saratoga Investment Advisors will receive 20.0% of any additional net investment income. Under the investment advisory and management agreement with our former investment adviser, GSCP (NJ), L.P. only received 20.0% of the excess net investment income over 1.875%. ● We will no longer have deferral rights regarding incentive fees in the event that the distributions to stockholders and change in net assets is less than 7.5% for the preceding four fiscal quarters. Capital Gains Incentive Fee We record an expense accrual relating to the capital gains incentive fee payable by us to the Manager when the unrealized gains on its investments exceed all realized capital losses on its investments given the fact that a capital gains incentive fee would be owed to the Manager if we were to liquidate our investment portfolio at such time. The actual incentive fee payable to the Company’s Manager related to capital gains will be determined and payable in arrears at the end of each fiscal year and will include only realized capital gains for the period. Recent Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures . The amendments in this update require more disaggregated information on income taxes paid. ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024. We have adopted ASU 2023-09 effective as of February 28, 2026, and concluded that the application of this guidance did not have a material impact on our consolidated financial statements. See Note 6 in Item 8, Financial Statements and Supplementary Data , for further information. 77 In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses , which requires additional disclosure of the nature of expenses included in the income statement in response to requests from investors for more information about an entity’s expenses. The new standard requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. The new guidance is effective for annual periods beginning after December 15, 2027. The Company is currently evaluating the impact of the new standard on the Company’s consolidated financial statements and related disclosures and does not believe it will have a material impact on its consolidated financial statements or its disclosures. Portfolio and investment activity Investment Portfolio Overview February 28, 2026 February 28, 2025 February 29, 2024 ($ in millions) Number of investments(1) 108 135 139 Number of portfolio companies(2) 49 48 55 Average investment per portfolio company(2) $ 21.2 $ 20.1 $ 20.1 Average investment size(1) $ 9.6 $ 7.2 $ 8.1 Weighted average maturity(3) 3.0 yrs 2.2 yrs 2.5 yrs Number of industries(5) 43 41 43 Non-performing or delinquent investments (fair value) $ 2.0 $ 2.6 $ 18.9 Fixed rate debt (% of interest earning portfolio)(3) $ 11.2(1.2 )% $ 26.1(3.0 )% $ 5.5(0.5 )% Fixed rate debt (weighted average current coupon)(3) 9.1 % 7.4 % 15.0 % Floating rate debt (% of interest earning portfolio)(3) $ 942.5(98.8 )% $ 850.5(97.0 )% $ 997.9(99.5 )% Floating rate debt (weighted average current spread over LIBOR)(3)(4) 6.6 % 7.2 % 7.5 % (1) Excludes our investment in the subordinated notes of Saratoga CLO, and our investments in BBB and BB CLO debt securities. (2) Excludes our investment in the subordinated notes and F-2-R-3 Notes of Saratoga CLO, the unsecured notes and equity interests in the SLF JV, Class E Notes and E-R Notes of SLF 2022, and our investments in BB and BBB CLO debt securities. (3) Excludes our investment in the subordinated notes of Saratoga CLO and equity interests, as well as the unsecured notes and equity interests in SLF JV, Class E Notes and E-R Notes of the SLF 2022 and our investments in BB and BBB CLO debt securities. (4) Calculation uses either 1-month or 3-month LIBOR, depending on the contractual terms, and after factoring in any existing LIBOR floors. (5) Our investment in the subordinated notes of Saratoga CLO and Class F-2-R-3 Note tranche, the unsecured notes and equity interests in the SLF JV, the Class E Notes and E-R Notes of the SLF 2022 and our investments in BB and BBB CLO debt securities are included in Structured Finance Securities industry. During the fiscal year ended February 28, 2026, we invested $309.5 million in new and existing portfolio companies and had $184.6 million in aggregate amount of exits and repayments, including $180.0 million of proceeds from sales and repayments of debt and equity investments in the current period and $4.6 million of additional proceeds from sales of equity investments realized in a prior period, resulting in net investments of $124.9 million for the year. During the fiscal year ended February 28, 2025, we invested $168.1 million in new and existing portfolio companies and had $312.1 million in aggregate amount of exits and repayments resulting in net repayments of $144.0 million for the year. During the fiscal year ended February 29, 2024, we invested $246.1 million in new and existing portfolio companies and had $30.3 million in aggregate amount of exits and repayments resulting in net investments of $215.8 million for the year. 78 Portfolio Composition Our portfolio composition at February 28, 2026, February 28, 2025 and February 29, 2024 at fair value was as follows: February 28, 2026 February 28, 2025 February 29, 2024 Percentage of Total Portfolio Weighted Average Current Yield Percentage of Total Portfolio Weighted Average Current Yield Percentage of Total Portfolio Weighted Average Current Yield First lien term loans 82.1 % 10.2 % 88.7 % 11.3 % 85.7 % 12.6 % Second lien term loans 3.9 11.9 0.7 16.7 1.6 5.1 Unsecured term loans 1.5 10.9 1.7 10.7 1.4 11.1 Structured finance securities 4.9 11.6 1.5 19.9 2.7 10.3 Equity interests 7.6 - 7.4 - 8.6 - Total 100.0 % 9.6 % 100.0 % 10.8 % 100.0 % 11.4 % At February 28, 2026, our investment in the subordinated notes of Saratoga CLO, a collateralized loan obligation fund, had a fair value of $0.0 million and constituted 0.0% of our portfolio. This investment constitutes a first loss position in a portfolio that, as of February 28, 2026 and February 28, 2025, was composed of $391.0 million and $527.1 million, respectively, in aggregate principal amount of primarily senior secured first lien term loans. In addition, as of February 28, 2026, we also own $9.4 million in aggregate principal of the F-2-R-3 Notes in the Saratoga CLO, which only rank senior to the subordinated notes, and had a fair value of $0.0 million. This investment is subject to unique risks. (See Part 1. Item 1A. “Risk Factors—Our investment in Saratoga CLO constitutes a leveraged investment in a portfolio of subordinated notes representing the lowest-rated securities issued by a pool of predominantly senior secured first lien term loans and is subject to additional risks and volatility. All losses in the pool of loans will be borne by our subordinated notes and only after the value of our subordinated notes is reduced to zero will the higher-rated notes issued by the pool bear any losses”). We do not consolidate the Saratoga CLO portfolio in our consolidated financial statements. Accordingly, the metrics below do not include the underlying Saratoga CLO portfolio investments. However, at February 28, 2026, $348.3 million or 98.4% of the Saratoga CLO portfolio investments in terms of market value had a CMR color rating of green or yellow and one of the Saratoga CLO portfolio investments were in default with a fair value of $0.9 million. At February 28, 2025, $484.3 million or 98.4% of the Saratoga CLO portfolio investments in terms of market value had a CMR color rating of green or yellow and eight of the Saratoga CLO portfolio investments were in default with a fair value of $4.4 million. For more information relating to Saratoga CLO, see the audited financial statements for Saratoga CLO included elsewhere herein. Saratoga Investment Advisors normally grades all of our investments using a credit and monitoring rating system (“CMR”). The CMR consists of a single component: a color rating. The color rating is based on several criteria, including financial and operating strength, probability of default, and restructuring risk. The color ratings are characterized as follows: (Green)—performing credit; (Yellow)—underperforming credit; (Red)—in principal payment default and/or expected loss of principal. 79 Portfolio CMR distribution The CMR distribution of our investments at February 28, 2026 and February 28, 2025 was as follows: Saratoga Investment Corp. February 28, 2026 February 28, 2025 Color Score Investments at Fair Value Percentage of Total Portfolio Investments at Fair Value Percentage of Total Portfolio ($ in thousands) Green $ 700,326 63.1 % $ 890,437 91.0 % Yellow 20,695 1.9 1,086 0.1 Red 2,039 0.2 1,547 0.2 N/A(1) 386,074 34.8 85,008 8.7 Total $ 1,109,134 100.0 % $ 978,078 100.0 % (1) Comprised of our investment in the subordinated notes of Saratoga CLO, equity interests, and our investments in BB and BBB CLO debt securities. The change in reserve from $0.2 million as of February 28, 2025 to $0.5 million as of February 28, 2026 was primarily related to the non-accrual of interest income related to our investments in Pepper Palace, Inc. and Class F-2-R-3 Notes of the Saratoga CLO. The CMR distribution of Saratoga CLO investments at February 28, 2026 and February 28, 2025 was as follows: Saratoga CLO February 28, 2026 February 28, 2025 Color Score Investments at Fair Value Percentage of Total Portfolio Investments at Fair Value Percentage of Total Portfolio ($ in thousands) Green $ 326,391 92.2 % $ 446,859 90.8 % Yellow 21,870 6.2 37,453 7.6 Red 5,023 1.4 6,198 1.3 N/A(1) 832 0.2 1,685 0.3 Total $ 354,116 100.0 % $ 492,195 100.0 % (1) Comprised of Saratoga CLO’s equity interests. 80 Portfolio composition by industry grouping at fair value The following table shows our portfolio composition by industry grouping at fair value at February 28, 2026 and February 28, 2025: Saratoga Investment Corp. February 28, 2026 February 28, 2025 Investments At Fair Value Percentage of Total Portfolio Investments At Fair Value Percentage of Total Portfolio ($ in thousands) Healthcare Services $ 93,354 8.4 % $ 85,149 8.5 % Structured Finance Securities(1) 72,499 6.6 14,772 1.5 Consumer Services 66,299 6.0 59,439 6.1 Restaurant 55,648 5.0 31,600 3.2 Real Estate Services 52,325 4.7 51,750 5.3 HVAC Services and Sales 52,066 4.7 57,458 5.9 Healthcare Software 45,724 4.1 45,986 4.7 Custom Millwork Software 40,354 3.6 31,722 3.2 Research Software 36,553 3.3 26,280 2.7 Education Services 35,720 3.2 27,533 2.8 Employee Collaboration Software 34,926 3.1 27,179 2.8 Surgical Benefits Management 34,694 3.1 - 0.0 Municipal Government Software 33,694 3.0 29,720 3.0 Dental Practice Management 32,423 2.9 35,159 3.6 Financial Services 32,252 2.9 26,302 2.7 Education Software 31,936 2.9 41,595 4.3 Revenue Cycle Management & Related Services 28,175 2.6 - 0.0 Talent Acquisition Software 27,282 2.5 27,334 2.8 Health/Fitness Franchisor 24,608 2.2 28,453 2.9 Architecture & Engineering Software 23,697 2.1 25,293 2.6 Insurance Software 23,317 2.1 20,345 2.1 Property Operations Management Software 22,783 2.1 - 0.0 Mentoring Software 20,549 1.9 22,027 2.3 Corporate Education Software 20,442 1.8 17,346 1.8 Direct Selling Software 20,417 1.8 24,064 2.5 Fire Inspection Business Software 20,046 1.8 10,178 1.0 IT Services 19,272 1.7 18,810 1.9 Marketing Orchestration Software 16,791 1.5 18,444 1.9 Veterinary Services 13,291 1.2 12,667 1.3 Alternative Investment Management Software 13,089 1.2 11,576 1.2 Volunteer Program Management Software 12,910 1.2 - 0.0 Supply Chain Planning Software 11,690 1.1 - 0.0 Industrial Products 8,604 0.8 9,404 1.0 HVAC Monitoring Devices 8,228 0.7 - 0.0 Product Compliance Software 5,961 0.5 - 0.0 Office Supplies 5,313 0.5 5,339 0.5 Cyber Security 4,233 0.4 3,517 0.4 Staffing Services 2,362 0.2 3,426 0.4 Specialty Food Retailer 2,039 0.2 1,546 0.2 Association Management Software 1,860 0.2 24,850 2.5 Physician Compensation Management Software 1,375 0.1 - 0.0 Mental Healthcare Services 333 0.0 32,405 3.3 Investment Fund - 0.0 19,615 2.0 Non-profit Services - 0.0 16,470 1.7 Field Service Management - 0.0 11,751 1.2 Lead Management Software - 0.0 11,641 1.2 Financial Services Software - 0.0 9,933 1.0 Total $ 1,109,134 100.0 % $ 978,078 100.0 % (1) As of February 28, 2026 and February 28, 2025, the foregoing comprised of our investment in the subordinated notes and F-2-R-3 Notes of Saratoga CLO, the unsecured notes and equity interests in the SLF JV, Class E Notes and E-R Notes of the SLF 2022, and our investments in BB and BBB CLO debt securities. 81 The following table shows Saratoga CLO’s portfolio composition by industry grouping at fair value at February 28, 2026 and February 28, 2025: Saratoga CLO February 28, 2026 February 28, 2025 Investments at Fair Value Percentage of Total Portfolio Investments at Fair Value Percentage of Total Portfolio ($ in thousands) Banking, Finance, Insurance & Real Estate $ 67,426 19.0 % $ 101,194 20.9 % Services: Business 35,712 10.1 46,915 9.5 High Tech Industries 25,614 7.3 39,950 8.1 Retail 21,289 6.0 22,306 4.5 Services: Consumer 19,876 5.6 26,923 5.5 Chemicals, Plastics, & Rubber 18,018 5.1 25,268 5.1 Healthcare & Pharmaceuticals 17,486 4.9 26,032 5.3 Hotel, Gaming & Leisure 16,665 4.7 16,900 3.3 Consumer goods: Durable 14,267 4.0 14,008 2.8 Media: Advertising, Printing & Publishing 13,159 3.7 17,309 3.4 Telecommunications 13,140 3.7 19,475 4.0 Beverage, Food & Tobacco 11,139 3.1 12,920 2.6 Consumer goods: Non-durable 9,066 2.6 10,571 2.1 Automotive 8,261 2.3 16,730 3.4 Construction & Building 7,197 2.0 13,129 2.7 Utilities: Oil & Gas 6,353 1.8 6,417 1.3 Transportation: Cargo 6,331 1.8 7,153 1.5 Media: Broadcasting & Subscription 6,171 1.8 7,069 1.4 Wholesale 5,880 1.7 8,061 1.6 Containers, Packaging & Glass 5,221 1.5 13,522 2.7 Capital Equipment 4,339 1.2 4,739 1.0 Media: Diversified & Production 4,075 1.2 6,286 1.3 Forest Products & Paper 3,419 1.0 4,408 0.9 Energy: Electricity 3,276 0.9 3,306 0.7 Transportation: Consumer 3,268 0.9 3,727 0.8 Energy: Oil & Gas 2,818 0.8 3,012 0.6 Aerospace & Defense 2,761 0.8 8,353 1.7 Metals & Mining 1,890 0.5 1,936 0.4 Environmental Industries - - 2,588 0.5 Utilities: Electric - - 1,988 0.4 Total $ 354,117 100.0 % $ 492,195 100.0 % Portfolio composition by geographic location at fair value The following table shows our portfolio composition by geographic location at fair value at February 28, 2026 and February 28, 2025. The geographic composition is determined by the location of the corporate headquarters of the portfolio company. February 28, 2026 February 28, 2025 Investments at Fair Value Percentage of Total Portfolio Investments at Fair Value Percentage of Total Portfolio ($ in thousands) Midwest $ 340,057 30.7 % $ 364,944 37.3 % Southeast 224,036 20.2 234,144 23.9 Northeast 187,405 16.9 128,787 13.2 West 141,267 12.7 120,361 12.3 Southwest 108,542 9.8 63,278 6.5 International 19,272 1.7 18,810 1.9 Other(1) 88,555 8.0 47,754 4.9 Total $ 1,109,134 100.0 % $ 978,078 100.0 % (1) As of February 28, 2026, comprised of our investment in the subordinated notes, F-2-R-3 Notes of Saratoga CLO, the unsecured notes and equity interests in the SLF JV, Class E Notes and E-R Notes of SLF 2022, foreign investments and our investments in BB and BBB CLO debt securities. 82 Results of operations Operating results for the fiscal years ended February 28, 2026, February 28, 2025 and February 29, 2024 were as follows: For the Year Ended February 28, 2026 February 28, 2025 February 29, 2024 ($ in thousands) Total investment income $ 125,713 $ 148,855 $ 143,720 Total operating expenses 88,906 95,852 86,846 Net investment income 36,807 53,003 56,874 Net realized gains (losses) from investments 5,746 (42,030 ) 154 Income tax (provision) benefit from realized gain on investments - - - Net change in unrealized appreciation (depreciation) on investments (5,238 ) 18,974 (47,091 ) Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments 113 (1,061 ) (893 ) Loss on extinguishment of debt* (824 ) (800 ) (110 ) Net increase in net assets resulting from operations $ 36,604 $ 28,086 $ 8,934 * Certain prior period amounts have been reclassified to conform to current period presentation. Investment income The composition of our investment income for the fiscal years ended February 28, 2026, February 28, 2025 and February 29, 2024 were as follows: For the Year Ended February 28, 2026 February 28, 2025 February 29, 2024 ($ in thousands) Interest from investments $ 106,898 $ 131,022 $ 127,785 Interest from cash and cash equivalents 7,882 6,530 2,512 Management fee income 2,587 3,114 3,270 Incentive fee income - - - Dividend Income* 4,548 4,562 6,533 Structuring and advisory fee income 2,249 1,583 2,150 Other income* 1,549 2,044 1,470 Total investment income $ 125,713 $ 148,855 $ 143,720 * Certain prior period amounts have been reclassified to conform to current period presentation. For the fiscal year ended February 28, 2026, total investment income decreased $23.2 million, or 15.6%, to $125.7 million compared to $148.9 million for the fiscal year ended February 28, 2025. Interest income from investments decreased $24.1 million, or 18.4%, to $106.9 million for the year ended February 28, 2026 from $131.0 million for the fiscal year ended February 28, 2025. The decrease in interest income for the fiscal year ended February 28, 2026 is primarily attributable to (i) the non-recurrence of $7.9 million interest income related to our Knowland investment recognized last year that was previously on non-accrual, (ii) decrease of our average investment portfolio by 2.8% from $1,042.6 million last year to $1,013.4 million this year, and (iii) the decrease of the weighted average current yield on our core investments to 9.6% as of February 28, 2026, down from 10.8% at February 28, 2025, reflecting both the reduction in SOFR base rates during this period, as well as the tightening of spreads in the middle market. For the fiscal year ended February 28, 2025, total investment income increased $5.1 million, or 3.6%, to $148.9 million for the fiscal year ended February 28, 2025 compared to $143.7 million for the fiscal year ended February 29, 2024. Interest income from investments increased $3.2 million, or 2.5%, to $131.0 million for the year ended February 28, 2025 from $127.8 million for the fiscal year ended February 29, 2024. The increase in interest income for the fiscal year ended February 28, 2025 is primarily due to the recognition of $8.2 million interest income related to our Knowland investment that was previously on non-accrual and was fully repaid this year with all interest, offset by lower interest income on the overall portfolio as the weighted average interest rate decreased from 11.4% as of February 29, 2024 to 10.8% as of February 28, 2025. 83 For the fiscal year ended February 28, 2026 and February 28, 2025, total PIK income was $2.9 million and $4.0 million, respectively. This decrease was primarily due to the recognition of reserved Knowland PIK interest recognized last year. For the fiscal year ended February 28, 2025 and February 29, 2024, total PIK income was $4.0 million and $2.5 million, respectively. This increase was due to investment growth and amended terms of debt securities that elected to pay a portion of their interest in PIK. Management fee income reflects the fee income received for managing the Saratoga CLO. For the years ended February 28, 2026, February 28, 2025 and February 29, 2024, total management fee income was $2.6 million, $3.1 million and $3.3 million, respectively. The reduction reflects the reduction of the asset levels in the Saratoga CLO as it is currently in winddown mode. For the fiscal year ended February 28, 2026, February 28, 2025 and February 29, 2024, total dividend income was $4.5 million, $4.6 million and $6.5 million, respectively. Dividends received is recorded in the consolidated statements of operations when earned. For the fiscal year ended February 28, 2026, February 28, 2025 and February 29, 2024, total structuring and advisory fee income was $2.2 million, $1.6 million and $2.1 million, respectively. Structuring and advisory fee income represents fee income earned and received performing certain investment and advisory activities during the closing of new investments, with the changes year-over-year primarily reflecting the increased or decreased originations during the period. For the fiscal year ended February 28, 2026, February 28, 2025 and February 29, 2024, other income was $1.5 million, $2.0 million and $1.5 million, respectively. Other income primarily includes prepayment, monitoring and amendment fees and is recorded in the consolidated statements of operations when earned. Operating expenses The composition of our operating expenses for the years ended February 28, 2026, February 28, 2025 and February 29, 2024 were as follows: For the Year Ended February 28, 2026 February 28, 2025 February 29, 2024 ($ in thousands) Interest and debt financing expenses $ 49,303 $ 52,059 $ 49,180 Base management fees 17,770 18,382 19,212 Incentive management fees 9,230 13,254 8,025 Professional fees 2,817 2,058 1,767 Administrator expenses 5,233 4,708 3,873 Insurance 300 304 322 Directors fees and expenses 430 367 351 General and administrative and other expenses 2,227 1,902 2,243 Income tax expense (benefit) (138 ) 412 43 Excise tax expense (benefit) 1,734 2,406 1,830 Total operating expenses $ 88,906 $ 95,852 $ 86,846 For the year ended February 28, 2026, total operating expenses decreased $7.0 million, or 7.3%, to $88.9 million compared to $95.9 million for the year ended February 28, 2025. For the year ended February 28, 2025, total operating expenses increased $9.0 million, or 10.4%, to $95.9 million compared to $86.8 million for the year ended February 29, 2024. For the year ended February 28, 2026, interest and debt financing expenses decreased $2.8 million, or 5.2% compared to the year ended February 28, 2025. The decrease is primarily attributable to both the total average outstanding debt decreasing from $836.2 million for the year ended February 28, 2025 to $791.3 million for the year ended February 28, 2026. The weighted average interest rate on our outstanding indebtedness also decreased slightly from 5.56% to 5.55% for the same periods. 84 For the year ended February 28, 2025, interest and debt financing expenses increased $2.9 million, or 5.9% compared to the year ended February 29, 2024. The increase is attributable to both the total average outstanding debt increasing from $798.9 million for the year ended February 29, 2024 to $836.2 million for the year ended February 28, 2025, as well as the weighted average interest rate on our outstanding indebtedness increasing from 5.46% to 5.56% for the same periods. The increase in total average outstanding debt and the weighted average interest rate was primarily due to the issuance during the year ended February 28, 2025 of the higher-cost 8.75% 2025 Notes and 8.50% 2028 Notes. At February 28, 2025 and February 29, 2024, the lower-cost SBA debentures represented 26.1% and 27.7% of overall debt, respectively. For the year ended February 28, 2026, base management fees decreased $0.6 million, or 3.3% compared to the fiscal year ended February 28, 2025. The decrease in base management fees is due to the 3.3% decrease in the average value of our total assets, less cash and cash equivalents, from $1,050.5 million as of February 28, 2025 to $1,015.4 million as of February 28, 2026. For the year ended February 28, 2025, base management fees decreased $0.8 million, or 4.3% compared to the fiscal year ended February 29, 2024. The decrease in base management fees is due to the 4.3% decrease in the average value of our total assets, less cash and cash equivalents, from $1,097.8 million as of February 29, 2024 to $1,050.5 million as of February 28, 2025. For the year ended February 28, 2026, incentive fees decreased $4.0 million, or 30.4% compared to the fiscal year ended February 28, 2025. The incentive fee on income decreased this year from $13.2 million for the year ended February 28, 2025 to $9.2 million for the year ended February 28, 2026, reflecting the decrease in net investment income during this period. The incentive fees on capital gains remained unchanged at $0.0 million for both the twelve months ended February 28, 2026 and 2025, reflecting no incentive fee on net realized and unrealized depreciation recognized during both these periods, with the liability floor capped at zero. For the year ended February 28, 2025, incentive fees increased $5.2 million, or 65.1% compared to the fiscal year ended February 29, 2024. The incentive fee on income increased this year from $13.0 million for the year ended February 29, 2024 to $13.2 million for the year ended February 28, 2025, reflecting the increased operating performance of our debt investments during this period. The incentive fees on capital gains increased from $(8.3) million benefit for the fiscal year ended February 29, 2024 to $(5.9) million benefit for the fiscal year ended February 28, 2025, both reflecting the incentive fee income and expense on net unrealized appreciation and depreciation recognized during both these periods. For the year ended February 28, 2026, professional fees increased $0.8 million, or 36.9% compared to the fiscal year ended February 28, 2025. This increase primarily reflects the growth across accounting, legal and consulting fees in connection with an increase in our assets and legal entities, as well as inflationary increases across these vendors. For the year ended February 28, 2025, professional fees increased $0.3 million, or 16.5% compared to the fiscal year ended February 29, 2024. This increase is primarily due to inflationary increases from vendors across accounting, legal and consulting fees across the Company. For the year ended February 28, 2026, administrator expenses increased $0.5 million, or 11.2% compared to the fiscal year ended February 28, 2025, which reflects an increase to the cap on the payment or reimbursement of expenses by the Company from $5.0 million last year to $5.4 million, effective August 1, 2025 For the year ended February 28, 2025, administrator expenses increased $0.8 million, or 21.6% compared to the fiscal year ended February 29, 2024, which reflects an increase to the cap on the payment or reimbursement of expenses by the Company from $4.3 million last year to $5.0 million, effective August 1, 2024. For the fiscal years ended February 28, 2026, February 28, 2025 and February 29, 2024, the average borrowings outstanding under the Credit Facilities was approximately $68.7 million, $33.1 million and $37.9 million, respectively, and the average weighted average interest rate on the outstanding borrowing under the Credit Facilities was 8.20%, 9.49% and 9.66%, respectively. For the fiscal years ended February 28, 2026, February 28, 2025 and February 29, 2024, the average borrowings outstanding of SBA debentures was $167.5 million, $213.8 million and $202.5 million, respectively. For the years ended February 28, 2026, February 28, 2025 and February 29, 2024, the weighted average interest rate on the outstanding borrowings of the SBA debentures was 3.06%, 3.32% and 3.08%, respectively. 85 The weighted average dollar amount of our unsecured notes for the fiscal years ended February 28, 2026 and February 28, 2025 were as follows: Fiscal Year Ended (in millions) February 28, 2026 February 28, 2025 7.75% 2025 Notes $ - $ 5.0 6.25% 2027 Notes 15.0 15.0 4.375% 2026 Notes 0.0 175.0 4.35% 2027 Notes 75.0 75.0 6.00% 2027 Notes 105.5 105.5 7.00% 2025 Notes - 12.0 8.00% 2027 Notes 46.0 46.0 8.125% 2027 Notes 60.4 60.4 8.75% 2025 Notes - 20.0 8.50% 2028 Notes 57.5 57.5 7.25% 2030 Notes 50.0 - 7.50% 2031 Notes 100.0 - For the years ended February 28, 2026, February 28, 2025 and February 29, 2024, we recognized income tax expense (benefit) of $(0.14) million, $0.41 million and $0.04 million, respectively. This relates to net deferred federal and state income tax expense (benefit) with respect to operating gains and losses and income derived from equity investments held in entities that are treated as corporations for U.S. federal income tax purposes, as well as current U.S. federal and state income taxes on those operating gains and losses when realized. For the year ended February 28, 2026, we accrued excise taxes of $1.7 million on undistributed taxable income as of December 31, 2025. For the year ended February 28, 2025, we accrued excise taxes of $2.4 million on undistributed taxable income as of December 31, 2024. Net realized gains (losses) on sales of investments For the fiscal year ended February 28, 2026, we had $184.6 million of sales, repayments, exits or restructurings resulting in $5.7 million of net realized gains. The most significant realized gains and losses during the year ended February 28, 2026 were as follows (dollars in thousands): Fiscal year ended February 28, 2026 Issuer Asset Type Gross Proceeds Cost Net Realized Gain (Loss) Axiom Parent Holdings, LLC Equity Interests $ 2,320 $ 258 $ 2,062 HemaTerra Holdings Company, LLC Equity Interests 327 - 327 Identity Automation Systems Equity Interests 3,579 404 3,175 Netreo Holdings, LLC Equity Interests 638 - 638 Roscoe Medical, Inc. Equity Interests - 508 (508 ) The $2.1 million of net realized gains was from the sale of the equity position in our Axiom Parent Holdings, LLC investment. We received escrow payments from the prior sales of our investments in HemaTerra Holdings Company, LLC and Netreo Holdings, LLC. The $3.2 million of net realized gains was from the sale of the equity position in our Identity Automation Systems investment. The $0.5 million of net realized losses was from the sale of the equity position in our Roscoe Medical, Inc. investment. 86 For the fiscal year ended February 28, 2025, we had $312.1 million of sales, repayments, exits or restructurings resulting in $42.0 million of net realized losses. The most significant realized gains and losses during the year ended February 28, 2025 were as follows (dollars in thousands): Fiscal year ended February 28, 2025 Issuer Asset Type Gross Proceeds Cost Net Realized Gain (Loss) Zollege PBC First Lien Term Loan & Equity Interests $ 3,205 $ 18,316 $ (15,111 ) Netreo Holdings, LLC Equity Interests 2,260 7,706 (5,446 ) Book4Time, Inc. First Lien Term Loan, Second Lien Term Loan &Equity Interests 707 157 550 Pepper Palace, Inc. First Lien Term Loan & Equity Interests - - (34,007 ) Invita (fka HemaTerra Holding Company, LLC) Equity Interests 7,577 2,817 4,760 Modern Campus (fka Destiny Solutions Inc.) Limited Partner Interests 9,430 3,969 5,461 Emily Street Enterprises, L.L.C. Equity Interests 1,670 400 1,270 The $15.1 million of net realized losses was from the restructuring of our Zollege PBC investment. The $5.4 million of net realized losses was from the sale of the equity interests in our Netreo Holdings, LLC investment. The $0.5 million of net realized gains was from the sale of the equity interests in our Book4Time, Inc. investment. The $34.0 million of net realized losses was from the restructuring of our Pepper Palace, Inc. investment. The $4.8 million of net realized gains was from the sale of the equity interests in our Invita (fka HemaTerra Holding Company, LLC) investment. The $5.5 million of net realized gains was from the sale of the limited partner interests in our Modern Campus (fka Destiny Solutions Inc.) investment. The $1.3 million of net realized gains was from the sale of the equity interests in our Emily Street Enterprises, L.L.C. investment. For the fiscal year ended February 29, 2024, we had $30.3 million of sales, repayments, exits or restructurings resulting in $0.2 million of net realized gains. The most significant realized gains and losses during the year ended February 29, 2024 were as follows (dollars in thousands): Fiscal year ended February 29, 2024 Issuer Asset Type Gross Proceeds Cost Net Realized Gain PDDS Buyer, LLC Equity Interests $ - $ - $ 41,350 Censis Technologies, Inc. Equity Interests - - 6,773 GreyHeller LLC Equity Interests - - 42,568 Ohio Medical, LLC Equity Interests - - 60,565 Targus Holdings, Inc Equity Interests - - 2,327 We received escrow payments from the prior sales of our investments in PPDS Buyer, LLC, Censis Technologies, Inc., Ohio Medical, LLC, GreyHeller LLC and Targus Holdings, Inc. The $7.9 million of net realized gains was from the sales of the equity position in our investment in PDDS Buyer, LLC. The $0.4 million of net realized gains was from the sales of the equity position in our investment in Ohio Medical, LLC. The $1.0 million of net realized loss was from the sales of the equity position in our investment in Targus Holding, Inc. We received escrow payments from the prior sales of our investments in Censis Technologies, Inc., Texas Teachers of Tomorrow, LLC and V Rental Holdings LLC. 87 Net change in unrealized appreciation (depreciation) on investments For the year ended February 28, 2026, our investments had a net change in unrealized depreciation of $5.2 million compared to a net change in unrealized appreciation of $19.0 million for the year ended February 28, 2025. The most significant cumulative changes in unrealized appreciation (depreciation) for the year ended February 28, 2026, were the following (dollars in thousands): Fiscal year ended February 28, 2026 Issuer Asset Type Cost Fair Value Total Unrealized Appreciation (Depreciation) YTD Change in Unrealized Appreciation (Depreciation) Saratoga Senior Loan Fund I JV, LLC Unsecured Loan & Equity Interests 36,817 17,666 (19,151 ) (3,563 ) Exigo, LLC First Lien Term Loan, Revolving Credit Facility & Equity Interests 24,797 20,613 (4,184 ) (3,244 ) Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-2-R-3 Note First Lien Term Loan & Structured Finance Securities 9,375 - (9,375 ) (2,281 ) Madison Logic, Inc. First Lien Term Loan 18,943 16,791 (2,152 ) (1,947 ) Chronus LLC First Lien Term Loan & Equity Interests 22,970 20,549 (2,421 ) (1,528 ) Zollege PBC First Lien Term Loan & Equity Interests 2,136 12,049 9,913 7,996 AgencyBloc, LLC First Lien Term Loan & Equity Interests 19,899 23,317 3,418 1,127 Modis Dental Partners OpCo First Lien Term Loan & Equity Interests 23,022 24,094 1,072 1,115 The $3.6 million net change in unrealized depreciation in our investment in Saratoga Senior Loan Fund I JV, LLC was primarily driven by the impact of the performance of individual credits in the portfolio. The $3.2 million net change in unrealized depreciation in our investment in Exigo, LLC was primarily driven by overall company performance. The $2.3 million net change in unrealized depreciation in our investment Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-2-R-3 Note was driven by the impact of the performance of individual credits in the CLO portfolio. The $1.9 million net change in unrealized depreciation in our investment in Madison Logic, Inc. was primarily driven by overall company performance. The $1.5 million net change in unrealized depreciation in our investment in Chronus LLC was primarily driven by overall company performance. The $8.0 million net change in unrealized appreciation in our investment in Zollege PBC was primarily driven by improved company performance. The $1.1 million net change in unrealized appreciation in our investment in AgencyBloc LLC was primarily driven by strong financial portfolio company performance. The $1.1 million net change in unrealized appreciation in our investment in Modis Dental Partners OpCo was primarily driven by overall market conditions. 88 For the year ended February 28, 2025, our investments had a net change in unrealized appreciation of $19.0 million compared to a net change in unrealized depreciation of $47.1 million for the year ended February 29, 2024. The most significant cumulative changes in unrealized appreciation (depreciation) for the year ended February 28, 2025, were the following (dollars in thousands): Fiscal year ended February 28, 2025 Issuer Asset Type Cost Fair Value Total Unrealized Appreciation (Depreciation) YTD Change in Unrealized Appreciation (Depreciation) Pepper Palace, Inc. First Lien Term Loan & Equity Interests $ 2,939 $ 1,547 $ (1,392 ) $ 31,558 Zollege PBC First Lien Term Loan & Equity Interests 2,020 3,937 1,917 16,082 Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-2-R-3 Note Structured Finance Securities 9,375 2,281 (7,094 ) (6,594 ) Destiny Solutions Inc. First Lien Term Loan & Equity Interests - - - (5,925 ) Saratoga Senior Loan Fund I JV, LLC Equity Interests 35,202 19,615 (15,588 ) (5,608 ) Artemis Wax Corp. First Lien Term Loan & Equity Interests 60,546 59,439 (1,107 ) (5,588 ) ARC Health OpCo LLC First Lien Term Loan & Equity Interests 37,533 32,405 (5,128 ) (4,993 ) Netreo Holdings, LLC First Lien Term Loan & Equity Interests - - - 3,803 Knowland Group, LLC Second Lien Term Loan - - - 3,236 HemaTerra Holding Company, LLC First Lien Term Loan & Equity Interests - - - (3,094 ) Axero Holdings, LLC First Lien Term Loan & Equity Interests 20,637 26,665 6,028 2,552 Saratoga Investment Corp. CLO 2013-1, Ltd. Structured Finance Securities 14,889 241 (14,648 ) (2,147 ) Granite Comfort, LP First Lien Term Loan 58,943 57,458 (1,485 ) (1,852 ) Stretch Zone Franchising, LLC First Lien Term Loan 28,526 27,255 (1,271 ) (1,500 ) ETU Holdings, Inc. First Lien Term Loan, Second Lien Term Loan & Equity Interests 17,053 13,368 (3,685 ) (1,250 ) Vector Controls Holding Co., LLC First Lien Term Loan & Equity Interests - 9,404 9,404 1,233 89 The $31.6 million net change in unrealized appreciation in our investment in Pepper Palace, Inc. was driven by the restructuring of the investment, resulting in a reversal of previously recognized unrealized depreciation reclassified to realized loss. The $16.1 million net change in unrealized appreciation in our investment in Zollege PBC was driven by the restructuring of the investment, resulting in a reversal of previously recognized unrealized depreciation reclassified to realized loss. The $6.6 million net change in unrealized depreciation in our investment Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-2-R-3 Note was driven by the impact of the performance of individual credits in the CLO portfolio. The $5.9 million net change in unrealized depreciation in our investment Modern Campus (fka Destiny Solutions Inc.) was driven by the sale of the equity position, resulting in a reversal of previously recognized unrealized appreciation reclassified to realized gain. The $5.6 million net change in unrealized depreciation in our investment Saratoga Senior Loan Fund I, JV, LLC was primarily driven by the impact of the performance of individual credits in the portfolio. The $5.6 million of net change in unrealized depreciation in our investment Artemis Wax Corp. was driven by a decline in company performance, overall market conditions and capital structure changes. The $5.0 million of net change in unrealized depreciation in our investment ARC Health OpCo LLC was driven by declines in company performance and capital structure changes. The $3.8 million net change in unrealized appreciation in our investment Netreo Holdings, LLC was driven by the sale of the equity position, resulting in a reversal of previously recognized unrealized depreciation reclassified to realized loss. The $3.2 million net change in unrealized appreciation in our investment in Knowland Group, LLC was driven by the completed sales process and the full recovery of Saratoga’s principal. The $3.1 million net change in unrealized depreciation in our investment Invita (fka HemaTerra Holding Company, LLC) was driven by market factors that reduced the eventual proceeds received from the sale. The $2.6 million net change in unrealized appreciation in our investment Axero Holdings, LLC was driven by strong financial portfolio company performance. The $2.4 million net change in unrealized depreciation in our investment in Stretch Zone Franchising, LLC was driven by a decline in company performance. The $2.1 million net change in unrealized depreciation in our investment Saratoga Investment Corp. CLO 2013-1, Ltd. was primarily driven by the weakened performance of individual credits in the portfolio. The $1.9 million net change in unrealized depreciation in our investment in Granite Comfort, LP was driven by a decline in company performance. The $1.2 million net change in unrealized depreciation in our investment ETU Holdings, Inc. was driven by a decline in company performance, overall market conditions and capital structure changes. The $1.2 million net change in unrealized appreciation in our investment in Vector Controls Holding Co., LLC was driven by company performance. 90 For the year ended February 29, 2024, our investments had a net change in unrealized depreciation of $47.1 million compared to a net change in unrealized depreciation of $15.2 million for the year ended February 28, 2023. The most significant cumulative changes in unrealized appreciation (depreciation) for the year ended February 29, 2024, were the following (dollars in thousands): Fiscal year ended February 29, 2024 Issuer Asset Type Cost Fair Value Total Unrealized Appreciation (Depreciation) YTD Change in Unrealized Appreciation (Depreciation) Pepper Palace, Inc. First Lien Term Loan & Equity Interests $ 35,438 $ 2,489 $ (32,949 ) $ (23,104 ) Zollege PBC First Lien Term Loan & Equity Interests 17,949 3,784 (14,165 ) (12,845 ) Netreo Holdings, LLC First Lien Term Loan & Equity Interests 39,225 35,422 (3,803 ) (12,083 ) Saratoga Senior Loan Fund I JV, LLC Equity Interests 35,202 25,222 (9,980 ) (5,504 ) Saratoga Investment Corp. CLO 2013-1, Ltd. Structured Finance Securities 22,002 9,501 (12,501 ) (4,734 ) Knowland Group, LLC Second Lien Term Loan 15,879 12,643 (3,236 ) 2,882 ETU Holdings, Inc. First Lien Term Loan, Second Lien Term Loan & Equity Interests 16,034 13,600 (2,434 ) (2,518 ) Vector Controls Holding Co., LLC First Lien Term Loan & Equity Interests 924 9,095 8,171 1,653 Chronus LLC First Lien Term Loan & Equity Interests 22,875 22,069 (806 ) (1,304 ) Avionte Holdings, LLC Equity Interests 100 3,288 3,188 1,209 Buildout, Inc. First Lien Term Loan, Second Lien Term Loan & Equity Interests 53,666 52,350 (1,316 ) (1,167 ) The $23.1 million net change in unrealized depreciation in our investment in Pepper Palace, Inc. was driven by further declines in company performance during the year ended February 29, 2024. The $12.8 million net change in unrealized depreciation in our investment in Zollege PBC was driven by further declines in company performance during the year ended February 29, 2024. The $12.1 million net change in unrealized depreciation in our investment in Netreo Holdings, LLC was driven by increased company leverage and declines in company performance. The $5.5 million net change in unrealized depreciation in our investment in Saratoga Senior Loan Fund I JV, LLC was primarily driven by overall market conditions. The $4.7 million net change in unrealized depreciation in our investment in Saratoga Investment Corp. CLO 2013-1, Ltd. was driven by overall market conditions as well as the mark-down of specific investments. The $2.9 million net change in unrealized appreciation in our investment in Knowland Group, LLC was driven by overall improved company performance and valuation. The $2.5 million net change in unrealized depreciation in our investment in ETU Holdings, Inc. was driven by declining company performance. The $1.7 million net change in unrealized appreciation in our investment in Vector Controls Holding Co., LLC was driven by overall company performance. The $1.3 million net change in unrealized depreciation in our investment in Chronus LLC was driven by overall company performance. The $1.2 million net change in unrealized appreciation in our investment in Avionte Holdings, Inc. was driven by overall company performance. The $1.2 million net change in unrealized depreciation in our investment in Buildout, Inc. was driven by overall company performance. 91 Changes in net assets resulting from operations For the fiscal years ended February 28, 2026, February 28, 2025 and February 29, 2024, we recorded a net increase in net assets resulting from operations of $36.6 million, $28.1 million and $8.9 million, respectively. Based on 15,850,270 weighted average common shares outstanding as of February 28, 2026, our per share net increase in net assets resulting from operations was $2.31 for the fiscal year ended February 28, 2026. This compares to a per share net increase in net assets resulting from operations of $2.02 for the fiscal year ended February 28, 2025 (based on 13,912,170 weighted average common shares outstanding as of February 28, 2025), and a per share net increase in net assets resulting from operations of $0.71 for the fiscal year ended February 29, 2024 (based on 12,670,939 weighted average common shares outstanding as of February 29, 2024). FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES We intend to continue to generate cash primarily from cash flows from operations, including interest earned from our investments in debt in middle-market companies, interest earned from the temporary investment of cash in U.S. government securities and other high-quality debt investments that mature in one year or less, draws of the Valley Credit Facility and the Live Oak Credit Facility, our continued access to the SBA debentures future borrowings and future offerings of both private and public debt and equity securities. Although we expect to continue to fund the growth of our investment portfolio through the net proceeds from future equity offerings, including our dividend reinvestment plan (“DRIP”), our equity ATM Program (as defined below), and issuances of senior securities or future borrowings, to the extent permitted by the 1940 Act, we cannot assure you that our plans to raise capital will be successful. In this regard, because our common stock has historically traded at a price below our current NAV per share and we are limited in our ability to sell our common stock at a price below NAV per share, we have been and may continue to be limited in our ability to raise equity capital. In addition, we intend to distribute to our stockholders substantially all of our operating taxable income in order to satisfy the distribution requirement applicable to RICs under the Code. In satisfying this distribution requirement, in accordance with certain applicable provisions of the Code and the Treasury regulations and a revenue procedure issued by the Internal Revenue Service (“IRS”), a RIC may treat a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder may elect to receive his or her entire distribution in either cash or stock of the RIC subject to a limitation that the aggregate amount of cash to be distributed to all stockholders must be at least 20% of the aggregate declared distribution. We may rely on the revenue procedure in future periods to satisfy our RIC distribution requirement. Also, as a BDC, we generally are required to meet a coverage ratio of total assets, less liabilities and indebtedness not represented by senior securities, to total senior securities, which include all of our borrowings and any outstanding preferred stock, of at least 200%, reduced to 150% effective April 16, 2019 following the approval received from our board of directors, including a majority of our independent directors, on April 16, 2018. This requirement limits the amount that we may borrow. Our asset coverage ratio, as defined in the 1940 Act, was 168.4% as of February 28, 2026 and 162.9% as of February 28, 2025. To fund growth in our investment portfolio in the future, we anticipate needing to raise additional capital from various sources, including the equity markets and other public and private debt-related markets, which may or may not be available on favorable terms, if at all. Consequently, we may not have the funds or the ability to fund new investments, to make additional investments in our portfolio companies, to fund our unfunded commitments to portfolio companies, to pay dividends or to repay borrowings. Also, the illiquidity of our portfolio investments may make it difficult for us to sell these investments when desired and, if we are required to sell these investments, we may realize significantly less than their recorded value. Due to the diverse capital sources available to us at this time, we believe we have adequate liquidity to support our near term capital requirements. 92 Encina Credit Facility Below is a summary of the terms of the senior secured revolving credit facility we entered into with Encina Lender Finance, LLC on October 4, 2021 and as amended on January 27, 2023 (the “Encina Credit Facility” and the related credit agreement, the “Encina Credit Agreement”). On November 6, 2025, the Company terminated in full (i) the Encina Credit Agreement, and (ii) the Equity Pledge Agreement, dated as of October 4, 2021 (the “Encina Equity Pledge Agreement”), by and between the Company and Encina, as collateral agent. All outstanding obligations were repaid. The Encina Credit Agreement and the Encina Equity Pledge Agreement terminated upon the satisfaction of all obligations and liabilities of SIF II and the Company to secured parties thereunder, including, without limitation, payments of principal and interest, other fees, breakage costs and other amounts owing to the secured parties. Commitment . The Encina Credit Agreement provided for borrowings up to $65.0 million (the “Encina Facility Amount”). Availability . We were able to draw up to the lesser of (i) the Encina Facility Amount and (ii) the borrowing base. The borrowing base is an amount equal to (i) the difference of (A) the product of the applicable advance rate which varied from 50.0% to 75.0% depending on the type of loan asset (Defaulted Loans being excluded in that they carry an advance rate of 0%) and the value, determined in accordance with the Encina Credit Facility (the “Adjusted Borrowing Value”), of certain “eligible” loan assets pledged as security for the loan (the “Borrowing Base Value”) and (B) the Excess Concentration Amount, as calculated in accordance with the Encina Credit Facility, plus (ii) any amounts held in the Prefunding Account and, without duplication, Excess Cash held in the Collection Account, less (iii) the product of (a) the amount of any undrawn funding commitments we have under any loan asset and (b) the Unfunded Exposure Haircut Percentage, and less (iv) $100,000. Each loan asset we held as of the date on which the Encina Credit Facility was closed was valued as of that date and each loan asset that we acquire after such date will be valued at the lowest of its fair value, its face value (excluding accrued interest) and the purchase price paid for such loan asset. Adjustments to the value of a loan asset were made to reflect, among other things and under certain circumstances, changes in its fair value, a default by the obligor on the loan asset, insolvency of the obligor, acceleration of the loan asset, and certain modifications to the terms of the loan asset. The Encina Credit Facility contained limitations on the type of loan assets that were “eligible” to be included in the borrowing base and as to the concentration level of certain categories of loan assets in the borrowing base such as restrictions on geographic and industry concentrations, asset size and quality, payment frequency, status and terms, average life, and collateral interests. In addition, if an asset was to remain an “eligible” loan asset, we could not make changes to the payment, amortization, collateral and certain other terms of the loan assets without the consent of the administrative agent that would either result in subordination of the loan asset or be materially adverse to the lenders. The Encina Credit Facility required certain minimum drawn amounts. For the period beginning on the closing date and ending April 4, 2022, the minimum funding amount was $12.5 million. For the period beginning on April 5, 2022, the minimum funding amount was the greater of $25.0 million and 50% of the Encina Facility Amount in effect from time to time. Collateral . The Encina Credit Facility was secured by assets of SIF II, a wholly owned special purpose entity, and pledged to Encina under the Encina Credit Facility. Interest Rate and Fees . Under the Encina Credit Facility, funds were borrowed from or through certain lenders at the greater of the prevailing LIBOR rate and 0.75%, plus an applicable margin of 4.00%. The Encina Credit Agreement included benchmark replacement provisions which permitted the Administrative Agent and the borrower to select a replacement rate upon the unavailability of LIBOR. In addition, we paid the lenders a commitment fee of 0.75% per year (or 0.50% if the ratio of advances outstanding to aggregate commitments was greater than or equal to 50%) on the unused amount of the Encina Credit Facility for the duration of the term of the Encina Credit Facility. Accrued interest and commitment fees were payable monthly in arrears. We were also obligated to pay certain other fees to the lenders in connection with the closing of the Encina Credit Facility. Collateral Tests . It was a condition precedent to any borrowing under the Encina Credit Facility that the principal amount outstanding under the Encina Credit Facility, after giving effect to the proposed borrowings, not exceed the borrowing base (the “Borrowing Base Test”). In addition to satisfying the Borrowing Base Test, the following tests must also be satisfied (together with Borrowing Base Test, the “Collateral Tests”): o Interest Coverage Ratio. The ratio (expressed as a percentage) of interest collections with respect to pledged loan assets, less certain fees and expenses relating to the Encina Credit Facility, to accrued interest and commitment fees payable to the lenders under the Encina Credit Facility for the last 6 payment periods must equal at least 175.0%. o Overcollateralization Ratio. The ratio (expressed as a percentage) of the aggregate Adjusted Borrowing Value of “eligible” pledged loan assets plus the fair value of certain ineligible pledged loan assets (in each case, subject to certain adjustments) to outstanding borrowings under the Encina Credit Facility plus the Unfunded Exposure Amount must equal at least 200.0%. 93 The Encina Credit Facility also required payment of outstanding borrowings or replacement of pledged loan assets upon our breach of our representation and warranty that pledged loan assets included in the borrowing base were “eligible” loan assets. Such ineligible collateral loans were excluded from the calculation of the borrowing base and could have led to a Borrowing Base Deficiency, which could have been cured by effecting one or more (or any combination thereof) of the following actions: (A) deposit into or credit to the collection account cash and eligible investments, (B) repay outstanding borrowings (together with certain costs and expenses), (C) sell or substitute loan assets in accordance with the Encina Credit Facility, or (D) pledge additional loan assets as collateral. Compliance with the Collateral Tests was also a condition to the discretionary sale of pledged loan assets by us. Priority of Payments . The priority of payments provisions of the Encina Credit Facility required, after payment of specified fees and expenses, that collections of interest from the loan assets and, to the extent that these are insufficient, collections of principal from the loan assets, be applied on each payment date to payment of outstanding borrowings if the Borrowing Base Test, the Overcollateralization Ratio and the Interest Coverage Ratio would not otherwise be met. Operating Expenses . The priority of payments provision of the Encina Credit Facility provided for the payment of certain of our operating expenses out of collections on interest and principal in accordance with the priority established in such provision. The operating expenses payable pursuant to the priority of payment provisions was limited to $200,000 per annum. Covenants; Representations and Warranties; Events of Default . The Encina Credit Agreement contained customary representations and warranties, affirmative covenants, negative covenants and events of default. The Encina Credit Agreement did not contain grace periods for breach by us of any negative covenants or of certain of the affirmative covenants, including, without limitation, those related to preservation of the existence and separateness of the Company. Other events of default under the Encina Credit Agreement include, among other things, the following: o our failure to maintain an Interest Coverage Ratio of less than 175%; o our failure to maintain an Overcollateralization Ratio of less than 200%; o the filing of certain ERISA or tax liens on our assets or the equity holder; o failure by Specified Holders to collectively, directly or indirectly, own and control at least 51% of the outstanding equity interests of Saratoga Investment Advisor, or (y) possess the right to elect (through contract, ownership of voting securities or otherwise) at all times a majority of the board of directors (or similar governing body) of Saratoga Investment Advisor and to direct the management policies and decisions of Saratoga Investment Advisor, or (ii) the dissolution, termination or liquidation in whole or in part, transfer or other disposition, in each case, of all or substantially all of the assets of, Saratoga Investment Advisor; o indictment or conviction of Saratoga Investment Advisors or any “key person” for a felony offense, or any fraud, embezzlement or misappropriation of funds by Saratoga Investment Advisors or any “key person” and, in the case of “key persons,” without a reputable, experienced individual reasonably satisfactory to Encina Lender Finance appointed to replace such key person within 30 days; o resignation, termination, disability or death of a “key person” or failure of any “key person” to provide active participation in Saratoga Investment Advisors’ daily activities, all without a reputable, experienced individual reasonably satisfactory to Encina Lender Finance appointed within 30 days. Fees and Expenses . We paid certain fees and reimbursed Encina for the aggregate amount of all documented, out-of-pocket costs and expenses, including the reasonable fees and expenses of lawyers, incurred by Encina in connection with the Encina Credit Facility and the carrying out of any and all acts contemplated thereunder up to and as of the date of closing. These amounts totaled $1.4 million. 94 On January 27, 2023, we entered into the first amendment to the Encina Credit Agreement which, among other things: (i) increased the borrowings available under the Encina Credit Facility from up to $50.0 million to up to $65.0 million; (ii) changed the underlying benchmark used to compute interest under the Encina Credit Agreement from LIBOR to Term SOFR for a one-month tenor plus a 0.10% credit spread adjustment; (iii) increased the applicable effective margin rate on borrowings from 4.00% to 4.25%; (iv) extended the revolving period from October 4, 2024 to January 27, 2026; (v) extended the period during which the borrower may request one or more increases in the borrowings available under the Encina Credit Facility (each such increase, a “Facility Increase”) from October 4, 2023 to January 27, 2025, and increased the maximum borrowings available pursuant to the Encina Facility Increase from $75.0 million to $150.0 million; (vi) revised the eligibility criteria for eligible collateral loans to exclude certain industries in which an obligor or related guarantor may be involved; and (vii) amended the provisions permitting the borrower to request an extension in the Commitment Termination Date (as defined in the Encina Credit Agreement) to allow requests to extend any applicable Commitment Termination Date, rather than a one-time request to extend the original Commitment Termination Date, subject to a notice requirement. As of February 28, 2026, we had no outstanding borrowings under the Encina Credit Facility. As of February 28, 2025, we had $32.5 million outstanding borrowings under the Encina Credit Facility. Our borrowing base under the Encina Credit Facility at February 28, 2026 and February 28, 2025 was $0 million and $78.6 million, respectively. Live Oak Credit Facility Below is a summary of the terms of the senior secured revolving credit facility we entered into with Live Oak Banking Company on March 27, 2024. Commitment. We entered into the Credit and Security Agreement (the “Live Oak Credit Agreement”) relating to the Live Oak Credit Facility in the initial facility amount of $50.0 million (the “Live Oak Facility Amount”). The Live Oak Credit Facility matures on March 27, 2027. Availability . We can draw up to the lesser of (i) the Live Oak Facility Amount and (ii) the borrowing base. The borrowing base is an amount equal to (i) the difference of (A) the product of the applicable advance rate which varies from 50.0% to 75.0% depending on the type of loan asset (Defaulted Loans being excluded in that they carry an advance rate of 0%) and the value, determined in accordance with the Live Oak Credit Facility (the “Adjusted Borrowing Value”), of certain “eligible” loan assets pledged as security for the loan (the “Borrowing Base Value”) and (B) the Excess Concentration Amount, as calculated in accordance with the Live Oak Credit Facility, plus (ii) any amounts held in the Prefunding Account and, without duplication, Excess Cash held in the Collection Account, less (iii) the product of (a) the amount of any undrawn funding commitments we have under any loan asset and (b) the Unfunded Exposure Haircut Percentage, and less (iv) $100,000. Each loan asset we held as of the date on which the Live Oak Credit Facility was closed was valued as of that date and each loan asset that we acquire after such date will be valued at the lowest of its fair value, its face value (excluding accrued interest) and the purchase price paid for such loan asset. Adjustments to the value of a loan asset will be made to reflect, among other things and under certain circumstances, changes in its fair value, a default by the obligor on the loan asset, insolvency of the obligor, acceleration of the loan asset, and certain modifications to the terms of the loan asset. The Live Oak Credit Facility contains limitations on the type of loan assets that are “eligible” to be included in the borrowing base and as to the concentration level of certain categories of loan assets in the borrowing base such as restrictions on geographic and industry concentrations, asset size and quality, payment frequency, status and terms, average life, and collateral interests. In addition, if an asset is to remain an “eligible” loan asset, we may not make changes to the payment, amortization, collateral and certain other terms of the loan assets without the consent of the administrative agent that will either result in subordination of the loan asset or be materially averse to the lenders. The Live Oak Credit Facility requires certain minimum drawn amounts. For the period beginning on the closing date of March 27, 2025, and ending March 27, 2027, the minimum funding amount was $12.5 million. For the period beginning on March 28, 2025, through maturity, the minimum funding amount is the greater of $25.0 million and 50% of the Live Oak Facility Amount in effect from time to time. Collateral . The Live Oak Credit Facility is secured by assets of Saratoga Investment Funding III LLC (“SIF III”) and pledged to Live Oak under the Live Oak Credit Facility. SIF III is a wholly owned special purpose entity formed for the purpose of entering into the Live Oak Credit Facility. Interest Rate and Fees . Advances under the Live Oak Credit Facility bear interest at a floating rate per annum equal to the greater of the prevailing Adjusted Term SOFR and 0.75%, plus an applicable margin between 3.50% and 4.25% based on the Live Oak Credit Facility’s utilization. In addition, we pay the lenders a commitment fee of 0.50% per year on the unused amount of the Live Oak Credit Facility for the duration of the term of the Live Oak Credit Facility. Accrued interest and commitment fees are payable monthly in arrears. We were also obligated to pay certain other fees to the lenders in connection with the closing of the Live Oak Credit Facility. 95 Collateral Tests. It is a condition precedent to any borrowing under the Live Oak Credit Facility that the principal amount outstanding under the Live Oak Credit Facility, after giving effect to the proposed borrowings, not exceed the borrowing base (the “Borrowing Base Test”). In addition to satisfying the Borrowing Base Test, the following tests must also be satisfied (together with Borrowing Base Test, the “Collateral Tests”): ● Interest Coverage Ratio . The ratio (expressed as a percentage) of interest collections with respect to pledged loan assets, less certain fees and expenses relating to the Live Oak Credit Facility, to accrued interest and commitment fees payable to the lenders under the Live Oak Credit Facility for the last 6 payment periods must equal at least 175.0%. ● Overcollateralization Ratio . The ratio (expressed as a percentage) of the aggregate Adjusted Borrowing Value of “eligible” pledged loan assets plus the fair value of certain ineligible pledged loan assets (in each case, subject to certain adjustments) to outstanding borrowings under the Live Oak Credit Facility plus the Unfunded Exposure Amount must equal at least 200.0%. The Live Oak Credit Facility also may require payment of outstanding borrowings or replacement of pledged loan assets upon our breach of our representation and warranty that pledged loan assets included in the borrowing base are “eligible” loan assets. Such ineligible collateral loans will be excluded from the calculation of the borrowing base and may lead to a Borrowing Base Deficiency, which may be cured by effecting one or more (or any combination thereof) of the following actions: (A) deposit into or credit to the Collection Account cash and Eligible Investments, (B) repay Advances (together with all accrued and unpaid costs and expenses of the Agents, Custodian, Collateral Administrator, Securities Intermediary and the Lenders), (C) sell or substitute Collateral Loans in accordance with Article X, or (D) pledge additional Collateral Loans as Collateral. Priority of Payments. The priority of payments provisions of the Live Oak Credit Facility require, after payment of specified fees and expenses, that collections of interest from the loan assets and, to the extent that these are insufficient, collections of principal from the loan assets, be applied on each payment date to payment of outstanding borrowings if the Borrowing Base Test, the Overcollateralization Ratio and the Interest Coverage Ratio would not otherwise be met. Operating Expenses . The priority of payments provision of the Live Oak Credit Facility provides for the payment of certain of our operating expenses out of collections on interest and principal in accordance with the priority established in such provision. The operating expenses payable pursuant to the priority of payment provisions is limited to $200,000 per annum. Covenants; Representations and Warranties; Events of Default . The Live Oak Credit Agreement contains customary representations and warranties, affirmative covenants, negative covenants and events of default. The Live Oak Credit Agreement does not contain grace periods for breach by us of any negative covenants or of certain of the affirmative covenants, including, without limitation, those related to preservation of the existence and separateness of the Company. Other events of default under the Live Oak Credit Agreement include, among other things, the following: ● our failure to maintain an Interest Coverage Ratio of less than 175%; ● our failure to maintain an Overcollateralization Ratio of less than 200%; ● the filing of certain ERISA or tax liens on our assets or the Equity holder; ● failure by Specified Holders to collectively, directly or indirectly, own and control at least 51% of the outstanding equity interests of Saratoga Investment Advisor, or (y) possess the right to elect (through contract, ownership of voting securities or otherwise) at all times a majority of the board of directors (or similar governing body) of Saratoga Investment Advisor and to direct the management policies and decisions of Saratoga Investment Advisor, or (ii) the dissolution, termination or liquidation in whole or in part, transfer or other disposition, in each case, of all or substantially all of the assets of, Saratoga Investment Advisor; ● indictment or conviction of Saratoga Investment Advisors or any “key person” for a felony offense, or any fraud, embezzlement or misappropriation of funds by Saratoga Investment Advisors or any “key person” and, in the case of “key persons,” without a reputable, experienced individual reasonably satisfactory to Live Oak Lender Finance appointed to replace such key person within 30 days; ● resignation, termination, disability or death of a “key person” or failure of any “key person” to provide active participation in Saratoga Investment Advisors’ daily activities, all without a reputable, experienced individual reasonably satisfactory to Live Oak Lender Finance appointed within 30 days. Fees and Expenses . We paid certain fees and reimbursed Live Oak Lender Finance, LLC for the aggregate amount of all documented, out-of-pocket costs and expenses, including the reasonable fees and expenses of lawyers, incurred by Live Oak Banking Company in connection with the Live Oak Credit Facility and the carrying out of any and all acts contemplated thereunder up to and as of the date of closing. These amounts totaled $0.8 million. 96 As of February 28, 2026, we had $37.5 million outstanding borrowings under the Live Oak Credit Facility. During the applicable period, we were in compliance with all of the limitations and requirements under the Live Oak Credit Agreement. As of February 28, 2025, we had $20.0 million outstanding borrowings under the Live Oak Credit Facility. Our borrowing base under the Live Oak Credit Facility at February 28, 2026 and February 28, 2025 was $99.2 million and $86.9 million, respectively. Valley Credit Facility Below is a summary of the terms of the senior secured revolving credit facility we entered into with Valley on November 6, 2025. Commitment . We entered into the Credit and Security Agreement (the “Valley Credit Agreement”) relating to the Valley Credit Facility in the initial facility amount of $85.0 million (the “Valley Facility Amount”). The Valley Credit Facility matures on November 6, 2028. Availability . SIF II can draw up to the lesser of (i) the Valley Facility Amount and (ii) the borrowing base. The borrowing base is an amount equal to (i) the difference of (x) the Aggregate Borrowing Base Value less (y) the Excess Concentration Amount, plus (ii) the amount on deposit in the Pre-Funding Account plus , without duplication, the amount of Excess Cash on deposit in the Collection Account, minus (iii) the product of (A) with respect to each Delayed Drawdown Collateral Loan, the portion of the Unfunded Exposure Amount attributable to such Delayed Drawdown Collateral Loan multiplied by (B) the Unfunded Exposure Haircut Percentage with respect to such Delayed Drawdown Collateral Loan, minus (iv) the Availability Block, in each case, as of such date. Each loan asset we held as of the date on which the Valley Credit Facility was closed was valued as of that date and each loan asset that we acquire after such date will be valued at the lowest of its fair value, its face value (excluding accrued interest) and the purchase price paid for such loan asset. Adjustments to the value of a loan asset will be made to reflect, among other things and under certain circumstances, changes in its fair value, a default by the obligor on the loan asset, insolvency of the obligor, acceleration of the loan asset, and certain modifications to the terms of the loan asset. The Valley Credit Facility contains limitations on the type of loan assets that are “eligible” to be included in the borrowing base and as to the concentration level of certain categories of loan assets in the borrowing base such as restrictions on geographic and industry concentrations, asset size and quality, payment frequency, status and terms, average life, and collateral interests. In addition, if an asset is to remain an “eligible” loan asset, we may not make changes to the payment, amortization, collateral and certain other terms of the loan assets without the consent of the administrative agent that this change will not result in either the subordination of the loan asset or be materially adverse to the lenders. The Valley Credit Facility requires a minimum drawn amount at all times equal to the greater of $25.0 million or 38% of the facility amount in effect at such time. Collateral . The Valley Credit Facility is secured by assets of SIF II and pledged to Valley under the Valley Credit Facility. SIF II is a wholly owned special purpose entity formed for the purpose of entering into senior secured revolving credit facilities. Interest Rate and Fees . Under the Valley Credit Facility, funds may be borrowed from or through certain lenders at a floating rate per annum equal to Term SOFR plus an applicable margin of 2.85%, with a SOFR Floor of 1.00%. In addition, SIF II is required to pay an unused fee on the amount by which the commitment amount exceeds outstanding principal amounts on each day at a rate per annum equal to 0.75% if the unused amount is greater than 62% of the commitment amount, or otherwise 0.50%. We were also obligated to pay certain other fees to the lenders in connection with the closing of the Valley Credit Facility. 97 Collateral Tests . It is a condition precedent to any borrowing under the Valley Credit Facility that the principal amount outstanding under the Valley Credit Facility, after giving effect to the proposed borrowings, not exceed the borrowing base (the “Borrowing Base Test”). In addition to satisfying the Borrowing Base Test, the following tests must also be satisfied (together with Borrowing Base Test, the “Collateral Tests”): ● Interest Coverage Ratio. The ratio (expressed as a percentage) of interest collections with respect to pledged loan assets, less certain fees and expenses relating to the Valley Credit Facility, to accrued interest and commitment fees payable to the lenders under the Valley Credit Facility for the last six payment periods must equal at least 175.0%. ● Overcollateralization Ratio. The ratio (expressed as a percentage) of the aggregate Adjusted Borrowing Value of “eligible” pledged loan assets plus the fair value of certain ineligible pledged loan assets (in each case, subject to certain adjustments) to outstanding borrowings under the Valley Credit Facility plus the Unfunded Exposure Amount must equal at least 200.0%. The Valley Credit Facility also may require payment of outstanding borrowings or replacement of pledged loan assets upon our breach of our representation and warranty that pledged loan assets included in the borrowing base are “eligible” loan assets. Such ineligible collateral loans will be excluded from the calculation of the borrowing base and may lead to a Borrowing Base Deficiency, which may be cured by effecting one or more (or any combination thereof) of the following actions: (A) deposit into or credit to the collection account cash and eligible investments, (B) repay outstanding borrowings (together with certain costs and expenses), (C) sell or substitute loan assets in accordance with the Valley Credit Facility, or (D) pledge additional loan assets as collateral. Compliance with the Collateral Tests is also a condition to the discretionary sale of pledged loan assets by us. Priority of Payments . The priority of payments provisions of the Valley Credit Facility require, after payment of specified fees and expenses, that collections of interest from the loan assets and, to the extent that these are insufficient, collections of principal from the loan assets, be applied on each payment date to payment of outstanding borrowings if the Borrowing Base Test, the Overcollateralization Ratio and the Interest Coverage Ratio would not otherwise be met. Operating Expenses . The priority of payments provision of the Valley Credit Facility provides for the payment of certain of our operating expenses out of collections on interest and principal in accordance with the priority established in such provision. The operating expenses payable pursuant to the priority of payment provisions is limited to $200,000 per annum. Covenants; Representations and Warranties; Events of Default . The Valley Credit Agreement contains customary representations and warranties, affirmative covenants, negative covenants and events of default. The Valley Credit Agreement does not contain grace periods for breach by us of any negative covenants or of certain of the affirmative covenants, including, without limitation, those related to preservation of the existence and separateness of the Company. Other events of default under the Valley Credit Agreement include, among other things, the following: ● our failure to maintain an Interest Coverage Ratio of less than 175%; ● our failure to maintain an Overcollateralization Ratio of less than 200%; ● the filing of certain ERISA or tax liens on our assets or the equity holder; 98 ● failure by Specified Holders to collectively, directly or indirectly, own and control at least 51% of the outstanding equity interests of Saratoga Investment Advisor, or (y) possess the right to elect (through contract, ownership of voting securities or otherwise) at all times a majority of the board of directors (or similar governing body) of Saratoga Investment Advisor and to direct the management policies and decisions of Saratoga Investment Advisor, or (ii) the dissolution, termination or liquidation in whole or in part, transfer or other disposition, in each case, of all or substantially all of the assets of, Saratoga Investment Advisor; ● indictment or conviction of Saratoga Investment Advisors or any “key person” for a felony offense, or any fraud, embezzlement or misappropriation of funds by Saratoga Investment Advisors or any “key person” and, in the case of “key persons,” without a reputable, experienced individual reasonably satisfactory to Valley appointed to replace such key person within 30 days; and ● resignation, termination, disability or death of two or more “key persons” or failure of any two or more “key persons” to provide active participation in Saratoga Investment Advisors’ daily activities, all without a reputable, experienced individual reasonably satisfactory to the Required Lenders (as defined in the Valley Credit Agreement) appointed within 30 days. Fees and Expenses . We paid certain fees and reimbursed Valley for the aggregate amount of all documented, out-of-pocket costs and expenses, including the reasonable fees and expenses of lawyers, incurred by Valley in connection with the Valley Credit Facility and the carrying out of any and all acts contemplated thereunder up to and as of the date of closing. These amounts totaled $1.4 million. As of February 28, 2026, we had $32.5 million outstanding borrowings under the Valley Credit Facility. Our borrowing base under the Valley Credit Facility at February 28, 2026 was $77.1 million. SBA Debentures The Company’s wholly owned subsidiaries, SBIC II LP and SBIC III LP, received SBIC licenses from the SBA on August 14, 2019 and September 29, 2022, respectively. Each of the SBIC Subsidiaries provide up to $175.0 million in long-term capital in the form of debentures guaranteed by the SBA. The Company’s wholly owned subsidiary, SBIC LP, repaid its outstanding debentures and subsequently surrendered its license to the SBA on January 3, 2024, providing the Company access to all undistributed capital of SBIC LP, and SBIC LP subsequently merged with and into the Company. Under current SBIC regulations, for two or more SBICs under common control, the maximum amount of outstanding SBA debentures cannot exceed $350.0 million. SBICs are designed to stimulate the flow of private equity capital to eligible small businesses. Under SBA regulations, SBICs may make loans to eligible small businesses and invest in the equity securities of small businesses. Under present SBA regulations, eligible small businesses include businesses that have a tangible net worth not exceeding $24.0 million and have average annual fully taxed net income not exceeding $8.0 million for the two most recent fiscal years. In addition, an SBIC must devote 25.0% of its investment activity to “smaller enterprises” as defined by the SBA. A smaller enterprise is one that has a net worth not exceeding $6.0 million and has an average annual fully taxed net income not exceeding $2.0 million for the two most recent fiscal years. SBA regulations also provide alternative size standard criteria to determine eligibility, which depend on the industry in which the business is engaged and are based on such factors as the number of employees and gross sales. According to SBA regulations, SBICs may make long-term loans to small businesses, invest in the equity securities of such businesses and provide them with consulting and advisory services. The SBIC Subsidiaries are able to borrow funds from the SBA against each SBIC’s regulatory capital (which generally approximates equity capital in the respective SBIC). The SBIC Subsidiaries are subject to customary regulatory requirements including but not limited to, a periodic examination by the SBA and requirements to maintain certain minimum financial ratios and other covenants. Receipt of an SBIC license does not assure that the SBIC Subsidiaries will receive SBA-guaranteed debenture funding, which is dependent upon the SBIC Subsidiaries complying with SBA regulations and policies. The SBA, as a creditor, will have a superior claim to each SBIC Subsidiary’s assets over the Company’s stockholders and debtholders in the event that the Company liquidates such SBIC Subsidiary or the SBA exercises its remedies under the SBA-guaranteed debentures issued by the SBIC Subsidiary upon an event of default. The Company received exemptive relief from the SEC to permit it to exclude the debentures guaranteed by the SBA of the SBIC Subsidiaries from the definition of senior securities in the asset coverage test under the 1940 Act. This allows the Company increased flexibility under the asset coverage requirement by permitting it to borrow up to $350.0 million more than it would otherwise be able to absent the receipt of this exemptive relief. As of February 28, 2026, SBIC II LP had $87.5 million in regulatory capital and $84.0 million SBA-guaranteed debentures outstanding. SBIC III LP had $87.5 million in regulatory capital and $76.0 million SBA-guaranteed debentures outstanding. 99 Unsecured notes 7.75% 2025 Notes On July 9, 2020, we issued $5.0 million in aggregate principal amount of our 7.75% fixed-rate notes due in 2025 (the “7.75% 2025 Notes”) for net proceeds of $4.8 million after deducting underwriting commissions of approximately $0.2 million. Offering costs incurred were approximately $0.1 million. Interest on the 7.75% 2025 Notes was paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 7.75% per year. The 7.75% 2025 Notes matured and were paid off on July 9, 2025. At February 28, 2026, the total amount of 7.75% 2025 Notes outstanding was $0.0 million. 6.25% 2027 Notes On December 29, 2020, the Company issued $5.0 million in aggregate principal amount of 6.25% fixed-rate notes due in 2027 (the “Existing 6.25% 2027 Notes”). Offering costs incurred were approximately $0.1 million. On January 28, 2021, the Company issued an additional $10.0 million in aggregate principal amount of the 6.25% 2027 Notes for net proceeds of $9.7 million after deducting underwriting commissions of approximately $0.3 million (the “Additional 6.25% 2027 Notes” and together with the Existing 6.25% 2027 Notes, the 6.25% 2027 Notes). Offering costs incurred were approximately $0.1 million. The Additional 6.25% 2027 Notes are treated as a single series with the existing 6.25% 2027 Notes under the indenture and have the same terms as the existing 6.25% 2027 Notes. Interest on the 6.25% 2027 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 6.25% per year. The 6.25% 2027 Notes mature on December 29, 2027 and may be redeemed in whole or in part at any time or from time to time at the Company’s option, on or after December 29, 2024. The net proceeds from the offering were used for general corporate purposes in accordance with the Company’s investment objective and strategies. Financing costs of $0.5 million related to the 6.25% 2027 Notes have been capitalized and are being amortized over the term of the Notes. At February 28, 2026, the total amount of 6.25% 2027 Notes outstanding was $15.0 million. 4.375% 2026 Notes On March 10, 2021, we issued $50.0 million in aggregate principal amount of the 4.375% fixed rate notes due 2026 (the “Existing 4.375% 2026 Notes”) for net proceeds of $49.0 million after deducting underwriting commissions of approximately $1.0 million. Offering costs incurred were approximately $0.3 million. On July 15, 2021, the Company issued an additional $125.0 million in aggregate principal amount of the 4.375% 2026 Notes (the “Additional 4.375% 2026 Notes” and together with the Existing 4.375% 2026 Notes, the “4.375% 2026 Notes”) for net proceeds for approximately $123.8 million, based on the public offering price of 101.00% of the aggregate principal amount of the Additional 4.375% 2026 Notes, after deducting the underwriting commissions of $2.5 million. Offering costs incurred were approximately $0.2 million. The Additional 4.375% 2026 Notes were treated as a single series with the existing 4.375% 2026 Notes under the indenture and had the same terms as the existing 4.375% 2026 Notes. Interest on the 4.375% 2026 Notes was paid semi-annually in arrears on February 28 and August 28, at a rate of 4.375% per year. The 4.375% 2026 Notes matured and were paid off on February 28, 2026. At February 28, 2026 the total amount of 4.375% 2026 Notes outstanding was $0.0 million. 4.35% 2027 Notes On January 19, 2022, we issued $75.0 million in aggregate principal amount of our 4.35% fixed-rate Notes due in 2027 (the “4.35% 2027 Notes”) for net proceeds of $73.0 million, based on the public offering price of 99.317% of the aggregate principal amount of the 4.35% 2027 Notes, after deducting the underwriting commissions of approximately $1.5 million. Offering costs incurred were approximately $0.3 million. Interest on the 4.35% 2027 Notes is paid semi-annually in arrears on February 28 and August 28, at a rate of 4.35% per year. The 4.35% 2027 Notes mature on February 28, 2027 and may be redeemed in whole or in part at our option at any time prior to November 28, 2026, at par plus a “make-whole” premium, and thereafter at par . The net proceeds from the offering were used for general corporate purposes in accordance with our investment objective and strategies. Financing costs of $1.8 million related to the 4.35% 2027 Notes have been capitalized and are being amortized over the term of the 4.35% 2027 Notes. 100 At February 28, 2026 the total amount of 4.35% 2027 Notes outstanding was $75.0 million. 6.00% 2027 Notes On April 27, 2022, the Company issued $87.5 million in aggregate principal amount of 6.00% fixed-rate notes due 2027 (the “Existing 6.00% 2027 Notes”) for net proceeds of $84.8 million after deducting underwriting commissions of approximately $2.7 million. Offering costs incurred were approximately $0.1 million. On May 10, 2022, the underwriters partially exercised their option to purchase an additional $10.0 million in aggregate principal amount of the Existing 6.00% 2027 Notes for net proceeds of $9.7 million after deducting underwriting commissions of approximately $0.3 million. On August 15, 2022, the Company issued an additional $8.0 million in aggregate principal amount of the 6.00% 2027 Notes (the “Additional 6.00% 2027 Notes” and together with the Existing 6.00% 2027 Notes, the “6.00% 2027 Notes”) for net proceeds of $7.8 million, based on the public offering price of 97.80% of the aggregate principal amount of the 6.00% 2027 Notes. Additional offering costs incurred were approximately $0.2 million. The Additional 6.00% 2027 Notes are treated as a single series with the existing 6.00% 2027 Notes under the indenture and have the same terms as the Existing 6.00% 2027 Notes. Interest on the 6.00% 2027 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 6.00% per year. The 6.00% 2027 Notes mature on April 30, 2027 and commencing April 27, 2024, may be redeemed in whole or in part at any time or from time to time at the Company’s option. The net proceeds from the offering were used for general corporate purposes in accordance with the Company’s investment objective and strategies. Financing costs of $3.3 million related to the 6.00% 2027 Notes have been capitalized and are being amortized over the term of the 6.00% 2027 Notes. The 6.00% 2027 Notes are listed on the NYSE under the trading symbol “SAT” with a par value of $25.00 per note. At February 28, 2026 the total amount of 6.00% 2027 Notes outstanding was $105.5 million. 7.00% 2025 Notes On September 8, 2022, the Company issued $12.0 million in aggregate principal amount of 7.00% fixed-rate notes due 2025 (the “7.00% 2025 Notes”) for net proceeds of $11.6 million after deducting underwriting discounts of approximately $0.4 million. Additional offering costs incurred were approximately $0.05 million. Interest on the 7.00% 2025 Notes was paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 7.00% per year. The 7.00% 2025 Notes matured and were paid off on September 8, 2025. Financing costs of $0.04 million related to the 7.00% 2025 Notes have been capitalized and are being amortized over the term of the 7.00% 2025 Notes. At February 28, 2026 the total amount of 7.00% 2025 Notes outstanding was $0.0 million. 8.00% 2027 Notes On October 27, 2022, the Company issued $40.0 million in aggregate principal amount of our 8.00% fixed-rate notes due 2027 (the “8.00% 2027 Notes”) for net proceeds of $38.7 million after deducting underwriting commissions of approximately $1.3 million. Offering costs incurred were approximately $0.2 million. On November 10, 2022, the underwriters partially exercised their option to purchase an additional $6.0 million in aggregate principal amount of the 8.00% 2027 Notes for net proceeds to the Company of $5.8 million after deducting underwriting commissions of approximately $0.2 million. Interest on the 8.00% 2027 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 8.00% per year. The 8.00% 2027 Notes mature on October 31, 2027 and commencing October 27, 2024, may be redeemed in whole or in part at any time or from time to time at the Company’s option. The net proceeds from the offering were used for general corporate purposes in accordance with the Company’s investment objective and strategies. Financing costs of $1.7 million related to the 8.00% 2027 Notes have been capitalized and are being amortized over the term of the 8.00% 2027 Notes. The 8.00% 2027 Notes are listed on the NYSE under the trading symbol “SAJ” with a par value of $25.00 per note. At February 28, 2026 the total amount of 8.00% 2027 Notes outstanding was $46.0 million. 8.125% 2027 Notes On December 13, 2022, we issued $52.5 million in aggregate principal amount of 8.125% fixed-rate notes due 2027 (the “8.125% 2027 Notes”) for net proceeds of $50.8 million after deducting underwriting commissions of approximately $1.6 million. Offering costs incurred were approximately $0.1 million. On December 21, 2022, the underwriters fully exercised their option to purchase an additional $7.875 million in aggregate principal amount of the 8.125% 2027 Notes for net proceeds of $7.6 million after deducting underwriting commissions of approximately $0.2 million. Interest on the 8.125% 2027 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 8.125% per year. The 8.125% 2027 Notes mature on December 31, 2027 and commencing December 13, 2024, may be redeemed in whole or in part at any time or from time to time at our option. The net proceeds from this offering were used to make investments in middle-market companies (including investments made through our SBIC subsidiaries) in accordance with our investment objective and strategies and for general corporate purposes. Financing costs of $2.0 million related to the 8.125% 2027 Notes have been capitalized and are being amortized over the term of the 8.125% 2027 Notes. The 8.125% 2027 Notes are listed on the NYSE under the trading symbol “SAY” with a par value of $25.00 per note. 101 At February 28, 2026, the total amount of 8.125% 2027 Notes outstanding was $60.4 million. 8.75% 2025 Notes On March 31, 2023, we issued $10.0 million in aggregate principal amount of 8.75% fixed-rate notes due 2024 (the “8.75% 2025 Notes”) for net proceeds of $9.7 million after deducting underwriting discounts of approximately $0.4 million. On May 1, 2023, we issued an additional $10.0 million in aggregate principal amount of the 8.75% 2025 Notes for net proceeds of $9.7 million after deducting underwriting discounts of approximately $0.4 million. Offering costs incurred were approximately $0.03 million. Interest on the 8.75% 2025 Notes was paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 8.75% per year. On February 2, 2024, pursuant to the terms of the indenture governing the 8.75% 2025 Notes, we elected to exercise our option to extend the maturity date of the 8.75% 2025 Notes from March 31, 2024 to March 31, 2025. The 8.75% 2025 Notes were paid off in full at maturity on March 31, 2025. At February 28, 2026, the total amount of 8.75% 2025 Notes outstanding was $0.0 million. 8.50% 2028 Notes On April 14, 2023, we issued $50.0 million in aggregate principal amount of 8.50% fixed-rate notes due 2028 (the “8.50% 2028 Notes”) for net proceeds of $48.4 million after deducting underwriting commissions of approximately $1.6 million. Offering costs incurred were approximately $0.03 million. On April 26, 2023, the underwriters fully exercised their option to purchase an additional $7.5 million in aggregate principal amount of the 8.50% 2028 Notes for net proceeds of $7.3 million after deducting underwriting commissions of approximately $0.2 million. Interest on the 8.50% 2028 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 8.50% per year. The 8.50% 2028 Notes mature on April 15, 2028, and commencing April 14, 2025, may be redeemed in whole or in part at any time or from time to time at our option. Net proceeds from this offering were used to repay a portion of the outstanding indebtedness under the Encina Credit Facility, make investments in middle-market companies (including investments made through our SBIC Subsidiaries) in accordance with our investment objective and strategies and for general corporate purposes. Financing costs of $2.0 million related to the 8.50% 2028 Notes have been capitalized and are being amortized over the term of the 8.50% 2028 Notes. The 8.50% 2028 Notes are listed on the NYSE under the trading symbol “SAZ” with a par value of $25.00 per note. At February 28, 2026, the total amount of 8.50% 2028 Notes outstanding was $57.5 million. 7.25% 2030 Notes On January 23, 2026, we issued $50.0 million in aggregate principal amount of 7.25% fixed-rate notes due 2030 (the “7.25% 2030 Notes”) for net proceeds of approximately $48.8 million, based on an offering price of 99.117% per Note, and after deducting the placement agent fee and estimated offering expenses of approximately $0.8 million. Interest on the 7.25% 2030 Notes is paid semi-annually in arrears on May 1 and November 1, at a rate of 7.25% per year, commencing on May 1, 2026. The 7.25% 2030 Notes will mature on May 1, 2030 and may be redeemed in whole or in part at the Company’s option at any time prior to January 23, 2028 at par plus a “make-whole” premium, and thereafter at par. Net proceeds from this offering were used to pay off the Company’s outstanding 4.375% 2026 Notes and for general corporate purposes. Financing costs of $0.03 million related to the 7.25% 2030 Notes have been capitalized and are being amortized over the term of the 7.25% 2030 Notes. As of February 28, 2026, the total amount of 7.25% 2030 Notes outstanding was $50.0 million. 7.50% 2031 Notes On February 6, 2026, we issued $100.0 million in aggregate principal amount of 7.50% fixed-rate notes due 2031 (the “7.50% 2031 Notes”) for net proceeds were approximately $96.7 million, after deducting the underwriting commission of approximately $3.1 million and estimated offering costs of approximately $0.2 million. Interest on the 7.50% 2031 Notes is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 7.50% per year, commencing May 31, 2026. The 7.50% 2031 Notes mature on February 6, 2031 and, commencing February 6, 2028, may be redeemed in whole or in part at any time or from time to time at our option. Net proceeds from this offering, together with available cash, were used to pay off the outstanding 4.375% 2026 Notes at maturity on February 28, 2026. Financing costs of $0.04 million related to the 7.50% 2031 Notes have been capitalized and are being amortized over the term of the 7.50% 2031 Notes. The 7.50% 2031 Notes are listed on the NYSE under the trading symbol “SAV” with a par value of $25.00 per note. As of February 28, 2026, the total amount of 7.50% 2031 Notes outstanding was $100.0 million. Our asset coverage ratio, as defined in the 1940 Act, was 168.4% as of February 28, 2026 and 162.9% as of February 28, 2025. 102 At February 28, 2026 and February 28, 2025, the fair value of total cash and cash equivalents, cash and cash equivalents in reserve accounts and total investments by major category are as follows: February 28, 2026 February 28, 2025 Fair Value Percentage of Total Fair Value Percentage of Total ($ in thousands) Cash and cash equivalents $ 1,680 0.2 % $ 148,218 12.6 % Cash and cash equivalents, reserve accounts 20,106 1.8 56,505 4.8 First lien term loans 910,991 80.5 867,866 73.4 Second lien term loans 42,707 3.8 6,388 0.5 Structured finance securities 54,834 4.8 14,772 1.2 Unsecured loan 16,130 1.4 16,534 1.4 Equity interests 84,472 7.5 72,518 6.1 Total $ 1,130,920 100.0 % $ 1,182,801 100.0 % Equity Capital Activities Share Repurchases On September 24, 2014, we announced the approval of the Share Repurchase Plan. Since September 24, 2014, the Share Repurchase Plan has been extended annually, and we have periodically increased the amount of shares of common stock that may be purchased under the Share Repurchase Plan. Most recently, on January 6, 2026, our board of directors extended the Share Repurchase Plan for another year to January 15, 2027, which currently permits up to 1.7 million shares of common stock to be repurchased under the Share Repurchase Plan. As of February 28, 2026, we purchased 1,037,698 shares of common stock, at the average price of $22.05 for approximately $22.9 million pursuant to the Share Repurchase Plan. During the three months and year ended February 28, 2026 we purchased 2,495 shares of common stock, at the average price of $21.75 for approximately $0.1 million pursuant to the Share Repurchase Plan. Public Equity Offering On July 13, 2018, we issued 1,150,000 shares of common stock priced at $25.00 per share (par value $0.001 per share) at an aggregate total of $28.75 million. The net proceeds, after deducting underwriting commissions of $1.15 million and offering costs of approximately $0.2 million, amounted to approximately $27.4 million. We also granted the underwriters a 30-day option to purchase up to an additional 172,500 shares of common stock, which was not exercised. Equity ATM Program On March 16, 2017, we entered into an equity distribution agreement with Ladenburg Thalmann & Co. Inc., through which we may offer for sale, from time to time, up to $30.0 million of our common stock through an ATM offering. Subsequent to this, we amended our equity distribution agreement to add BB&T Capital Markets and B. Riley FBR, Inc. as sales agents in our ATM offering. On July 11, 2019, the amount of the common stock to be offered was increased to $70.0 million, and on October 8, 2019, the amount of the common stock to be offered was increased to $130.0 million. This agreement was terminated as of July 29, 2021, and as of that date, we had sold 3,922,018 shares for gross proceeds of $97.1 million at an average price of $24.77 for aggregate net proceeds of $95.9 million (net of transaction costs). On July 30, 2021, we entered into an equity distribution agreement (the “Equity Distribution Agreement”) with Ladenburg Thalmann & Co. Inc. (“Ladenburg”) and Compass Point Research and Trading, LLC (“Compass Point”), each as distribution agents, through which we may offer for sale, from time to time, up to $150.0 million of our common stock through the Agents (as defined below), or to them, as principal for their account (the “ATM Program”). On July 6, 2023, we amended the Equity Distribution Agreement to increase the maximum amount of shares of our common stock to be sold through the ATM Program to $300.0 million from $150.0 million. On July 19, 2023, we amended the Equity Distribution Agreement to add an additional distribution agent, Raymond James & Associates, Inc. (“Raymond James”). On May 15, 2024, we amended the Equity Distribution Agreement to add an additional distribution agent, Lucid Capital Markets, LLC (“Lucid” and together with Ladenburg, Compass Point, and Raymond James, the “Agents”). The sales price per share of our common stock offered under the ATM Program, less the Agents’ commission, will not be less than the NAV per share of our common stock at the time of such sale. Consistent with the terms of the ATM Program, the Manager may, from time to time and in its sole discretion, contribute proceeds necessary to ensure that no sales are made at a price below the then-current NAV per share. As of February 28, 2026 we sold 8,591,915 shares for gross proceeds of $227.2 million at an average price of $26.37 per share for aggregate net proceeds of $225.4 million (net of transaction costs). During the three months ended February 28, 2026, we sold zero shares for gross proceeds of $0.0 million at an average price of $0.0 per share for aggregate net proceeds of $0.0 million (net of transaction costs). During the year ended February 28, 2026, we sold 747,199 shares for gross proceeds of $19.3 million at an average price of $25.83 per share for aggregate net proceeds of $19.3 million (net of transaction costs). The Manager agreed to reimburse the Company to the extent the per share price of the shares to the public, less underwriting fees, was less than net asset value per share. For the three months ended February 28, 2026, the Manager reimbursed the Company $0.0 million. For the year ended February 28, 2026, the Manager reimbursed the Company $0.6 million. 103 Dividend Distributions We have distributed or intend to distribute sufficient dividends to eliminate taxable income for our completed tax years. If we fail to satisfy the 90% distribution requirement or otherwise fail to qualify as a RIC in any tax year, we would be subject to U.S. federal income tax in that year on all of our taxable income imposed at corporate rates, regardless of whether we made any distributions to our shareholders. Shareholders have the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to the DRIP. Our distributions for the tax years ended February 28, 2027 to inception were as follows: Payment date Cash Dividend Tax Year February 28, 2027 April 23, 2026 $ 0.25 (62) March 19, 2026 0.25 (61) $ 0.50 Tax Year Ended February 28, 2026 February 23, 2026 $ 0.25 (60) January 22, 2026 0.25 (59) December 18, 2025 0.50 (58) November 20, 2025 0.25 (57) October 23, 2025 0.25 (56) September 24, 2025 0.25 (55) August 21, 2025 0.25 (54) July 24, 2025 0.25 (53) June 24, 2025 0.25 (52) May 22, 2025 0.25 (51) April 24, 2025 0.25 (50) March 25, 2025 0.74 (49) $ 3.74 Tax Year Ended February 28, 2025 December 19, 2024 $ 1.09 (48) September 26, 2024 0.74 (47) June 27, 2024 0.74 (46) March 28, 2024 0.73 (45) $ 3.30 Tax Year Ended February 29, 2024 December 28, 2023 $ 0.72 (44) September 28, 2023 0.71 (43) June 29, 2023 0.70 (42) March 30, 2023 0.69 (1) $ 2.82 Tax Year Ended February 28, 2023 January 4, 2023 $ 0.68 (2) September 29, 2022 0.54 (3) June 29, 2022 0.53 (4) March 28, 2022 0.53 (5) $ 2.28 Tax Year Ended February 28, 2022 January 19, 2022 $ 0.53 (6) September 28, 2021 0.52 (7) June 29, 2021 0.44 (8) April 22, 2021 0.43 (9) $ 1.92 Tax Year Ended February 28, 2021 February 10, 2021 $ 0.42 (10) November 10, 2020 0.41 (11) August 12, 2020 0.40 (12) $ 1.23 104 Payment date Cash Dividend Tax Year Ended February 29, 2020 February 6, 2020 $ 0.56 (13) September 26, 2019 0.56 (14) June 27, 2019 0.55 (15) March 28, 2019 0.54 (16) $ 2.21 Tax Year Ended February 28, 2019 January 2, 2019 $ 0.53 (17) September 27, 2018 0.52 (18) June 27, 2018 0.51 (19) March 26, 2018 0.50 (20) $ 2.06 Tax Year Ended February 28, 2018 December 27, 2017 $ 0.49 (21) September 26, 2017 0.48 (22) June 27, 2017 0.47 (23) March 28, 2017 0.46 (24) $ 1.90 Tax Year Ended February 28, 2017 February 9, 2017 $ 0.45 (25) November 9, 2016 0.44 (26) September 5, 2016 0.20 (27) August 9, 2016 0.43 (28) April 27, 2016 0.41 (29) $ 1.93 Tax Year Ended February 29, 2016 February 29, 2016 $ 0.40 (30) November 30, 2015 0.36 (31) August 31, 2015 0.33 (32) June 5, 2015 1.00 (33) May 29. 2015 0.27 (34) $ 2.36 Tax Year Ended February 28, 2015 February 27, 2015 $ 0.22 (35) November 28, 2014 0.18 (36) $ 0.40 Tax Year Ended February 28. 2014 December 27, 2013 $ 2.65 (37) $ 2.65 Tax Year Ended February 28, 2013 December 31, 2012 $ 4.25 (38) $ 4.25 Tax Year Ended February 29, 2012 December 30, 2011 $ 3.00 (39) $ 3.00 Tax Year Ended February 28, 2011 December 29, 2010 $ 4.40 (40) $ 4.40 Tax Year Ended February 28, 2010 December 31, 2009 $ 18.25 (41) $ 18.25 (1) Based on shareholder elections, the dividend consisted of approximately $7.1 million in cash and 45,818 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $23.11 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on March 17, 20, 21, 22, 23, 24, 27, 28, 29, and 30, 2023. 105 (2) Based on shareholder elections, the dividend consisted of approximately $6.8 million in cash and 53,615 newly issued shares of common stock, or 0.5% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $24.26 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on December 20, 21, 22, 23, 27, 28, 29 and 30 2022 and January 3 and 4, 2023. (3) Based on shareholder elections, the dividend consisted of approximately $5.3 million in cash and 52,312 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $22.00 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on September 16, 19, 20, 21, 22, 23, 26, 27, 28 and 29, 2022. (4) Based on shareholder elections, the dividend consisted of approximately $5.1 million in cash and 48,590 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $22.40 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on June 15, 16, 17, 21, 22, 23, 24, 27, 28 and 29, 2022. (5) Based on shareholder elections, the dividend consisted of approximately $5.3 million in cash and 42,825 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $25.89 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on March 15, 16, 17, 18, 21, 22, 23, 24, 25 and 28, 2022. (6) Based on shareholder elections, the dividend consisted of approximately $5.3 million in cash and 41,520 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $26.85 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on January 5, 6, 7, 10, 11, 12, 13, 14, 18 and 19, 2022. (7) Based on shareholder elections, the dividend consisted of approximately $4.9 million in cash and 38,016 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $26.77 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on September 15, 16, 17, 20, 21, 22, 23, 24, 27 and 28, 2021. (8) Based on shareholder elections, the dividend consisted of approximately $4.1 million in cash and 33,100 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $25.03 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on June 16, 17, 18, 21, 22, 23, 24, 25, 28 and 29, 2021. (9) Based on shareholder elections, the dividend consisted of approximately $3.9 million in cash and 38,580 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $23.69 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on April 9,12, 13, 14, 15, 16, 19, 20, 21 and 22, 2021. (10) Based on shareholder elections, the dividend consisted of approximately $3.8 million in cash and 41,388 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $21.75 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on January 28, 29 and February 1, 2, 3, 4, 5, 8, 9 and 10, 2021. (11) Based on shareholder elections, the dividend consisted of approximately $3.8 million in cash and 45,706 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $17.63 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on October 28, 29, 30 and November 2, 3, 4, 5, 6, 9 and 10, 2020. (12) Based on shareholder elections, the dividend consisted of approximately $3.7 million in cash and 47,098 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $16.45 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on July 30, 31 and August 3, 4, 5, 6, 7, 10, 11 and 12, 2020. 106 (13) Based on shareholder elections, the dividend consisted of approximately $5.4 million in cash and 35,682 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $25.44 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on January 24, 27, 28, 29, 30, 31 and February 3, 4, 5 and 6, 2020. (14) Based on shareholder elections, the dividend consisted of approximately $4.5 million in cash and 34,575 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $23.34 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on September 13, 16, 17, 18, 19, 20, 23, 24, 25 and 26, 2019. (15) Based on shareholder elections, the dividend consisted of approximately $3.6 million in cash and 31,545 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $22.65 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on June 14, 17, 18, 19, 20, 21, 24, 25, 26 and 27, 2019. (16) Based on shareholder elections, the dividend consisted of approximately $3.5 million in cash and 31,240 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $21.36 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on March 15, 18, 19, 20, 21, 22, 25, 26, 27 and 28, 2019. (17) Based on shareholder elections, the dividend consisted of approximately $3.4 million in cash and 30,796 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $18.88 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on December 18, 19, 20, 21, 24, 26, 27, 28, 31, 2018 and January 2, 2019. (18) Based on shareholder elections, the dividend consisted of approximately $3.3 million in cash and 25,862 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $22.35 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on September 14, 17, 18, 19, 20, 21, 24, 25, 26 and 27, 2018. (19) Based on shareholder elections, the dividend consisted of approximately $2.7 million in cash and 21,562 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $23.72 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on June 14, 15, 18, 19, 20, 21, 22, 25, 26 and 27, 2018. (20) Based on shareholder elections, the dividend consisted of approximately $2.6 million in cash and 25,354 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $19.91 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on March 13, 14, 15, 16, 19, 20, 21, 22, 23 and 26, 2018. (21) Based on shareholder elections, the dividend consisted of approximately $2.5 million in cash and 25,435 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $21.14 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on December 13, 14, 15, 18, 19, 20, 21, 22, 26 and 27, 2017. (22) Based on shareholder elections, the dividend consisted of approximately $2.2 million in cash and 33,551 newly issued shares of common stock, or 0.6% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $20.19 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on September 13, 14, 15, 18, 19, 20, 21, 22, 25 and 26, 2017. 107 (23) Based on shareholder elections, the dividend consisted of approximately $2.3 million in cash and 26,222 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $20.04 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on June 14, 15, 16, 19, 20, 21, 22, 23, 26 and 27, 2017. (24) Based on shareholder elections, the dividend consisted of approximately $2.0 million in cash and 29,096 newly issued shares of common stock, or 0.5% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $21.38 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on March 15, 16, 17, 20, 21, 22, 23, 24, 27 and 28, 2017. (25) Based on shareholder elections, the dividend consisted of approximately $1.6 million in cash and 50,453 newly issued shares of common stock, or 0.9% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $20.25 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on January 27, 30, 31 and February 1, 2, 3, 6, 7, 8 and 9, 2017. (26) Based on shareholder elections, the dividend consisted of approximately $1.5 million in cash and 58,548 newly issued shares of common stock, or 1.0% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $17.12 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on October 27, 28, 31 and November 1, 2, 3, 4, 7, 8 and 9, 2016. (27) Based on shareholder elections, the dividend consisted of approximately $0.7 million in cash and 24,786 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $17.06 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on August 22, 23, 24, 25, 26, 29, 30, 31 and September 1 and 2, 2016. (28) Based on shareholder elections, the dividend consisted of approximately $1.5 million in cash and 58,167 newly issued shares of common stock, or 1.0% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $16.32 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on July 27, 28, 29 and August 1, 2, 3, 4, 5, 8 and 9, 2016. (29) Based on shareholder elections, the dividend consisted of approximately $1.5 million in cash and 56,728 newly issued shares of common stock, or 1.0% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $15.43 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on April 14, 15, 18, 19, 20, 21, 22, 25, 26 and 27, 2016. (30) Based on shareholder elections, the dividend consisted of approximately $1.4 million in cash and 66,765 newly issued shares of common stock, or 1.2% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $13.11 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on February 16, 17, 18, 19, 22, 23, 24, 25, 26 and 29, 2016. (31) Based on shareholder elections, the dividend consisted of approximately $1.1 million in cash and 61,029 newly issued shares of common stock, or 1.1% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $14.53 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on November 16, 17, 18, 19, 20, 23, 24, 25, 27 and 30, 2015. 108 (32) Based on shareholder elections, the dividend consisted of approximately $1.1 million in cash and 47,861 newly issued shares of common stock, or 0.9% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $15.28 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on August 18, 19, 20, 21, 24, 25, 26, 27, 28 and 31, 2015. (33) Based on shareholder elections, the dividend consisted of approximately $3.4 million in cash and 126,230 newly issued shares of common stock, or 2.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $16.47 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on May 22, 26, 27, 28, 29 and June 1, 2, 3, 4, and 5, 2015. (34) Based on shareholder elections, the dividend consisted of approximately $0.9 million in cash and 33,766 newly issued shares of common stock, or 0.6% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $16.78 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on May 15, 18, 19, 20, 21, 22, 26, 27, 28 and 29, 2015. (35) Based on shareholder elections, the dividend consisted of approximately $0.8 million in cash and 26,858 newly issued shares of common stock, or 0.5% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $14.97 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on February 13, 17, 18, 19, 20, 23, 24, 25, 26 and 27, 2015. (36) Based on shareholder elections, the dividend consisted of approximately $0.6 million in cash and 22,283 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $14.37 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on November 14, 17, 18, 19, 20, 21, 24, 25, 26 and 28, 2014. (37) Based on shareholder elections, the dividend consisted of approximately $2.5 million in cash and 649,500 shares of common stock, or 13.7% of our outstanding common stock prior to the dividend payment. The amount of cash elected to be received was greater than the cash limit of 20.0% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash. The number of shares of common stock comprising the stock portion was calculated based on a price of $15.439 per share, which equaled the volume weighted average trading price per share of the common stock on December 11, 13 and 16, 2013. (38) Based on shareholder elections, the dividend consisted of $3.3 million in cash and 853,455 shares of common stock, or 22.0% of our outstanding common stock prior to the dividend payment. The amount of cash elected to be received was greater than the cash limit of 20.0% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash. The number of shares of common stock comprising the stock portion was calculated based on a price of $15.444 per share, which equaled the volume weighted average trading price per share of the common stock on December 14, 17 and 19, 2012. (39) Based on shareholder elections, the dividend consisted of $2.0 million in cash and 599,584 shares of common stock, or 18.0% of our outstanding common stock prior to the dividend payment. The amount of cash elected to be received was greater than the cash limit of 20.0% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash. The number of shares of common stock comprising the stock portion was calculated based on a price of $13.117067 per share, which equaled the volume weighted average trading price per share of the common stock on December 20, 21 and 22, 2011. 109 (40) Based on shareholder elections, the dividend consisted of $1.2 million in cash and 596,235 shares of common stock, or 22.0% of our outstanding common stock prior to the dividend payment. The amount of cash elected to be received was greater than the cash limit of 10.0% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash. The number of shares of common stock comprising the stock portion was calculated based on a price of $17.8049 per share, which equaled the volume weighted average trading price per share of the common stock on December 20, 21 and 22, 2010. (41) Based on shareholder elections, the dividend consisted of $2.1 million in cash and 864,872 shares of common stock, or 104.0% of our outstanding common stock prior to the dividend payment. The amount of cash elected to be received was greater than the cash limit of 13.7% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash. The number of shares of common stock comprising the stock portion was calculated based on a price of $1.5099 per share, which equaled the volume weighted average trading price per share of the common stock on December 24 and 28, 2009. (42) Based on shareholder elections, the dividend consisted of approximately $7.6 million in cash and 29,627 newly issued shares of common stock, or 0.2% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $25.29 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on June 15, 16, 20, 21, 22, 23, 26, 27, 28, and 29, 2023. (43) Based on shareholder elections, the dividend consisted of approximately $8.4 million in cash and 35,196 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $24.41 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on September 15, 18, 19, 20, 21, 22, 25, 26, 27, and 28, 2023. (44) Based on shareholder elections, the dividend consisted of approximately $8.9 million in cash and 37,394 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $24.47 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on December 14, 15, 18, 19, 20, 21, 22, 26, 27, and 28, 2023. (45) Based on shareholder elections, the dividend consisted of approximately $9.0 million in cash and 45,490 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $22.85 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on March 15, 18, 19, 20, 21, 22, 25, 26, 27, and 28, 2024. (46) Based on shareholder elections, the dividend consisted of approximately $9.1 million in cash and 46,803 newly issued shares of common stock, or 10.0% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $21.76 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on June 13, 14, 17, 18, 20, 21, 24, 25, 26, and 27, 2024. (47) Based on shareholder elections, the dividend consisted of approximately $9.0 million in cash and 54,999 newly issued shares of common stock, or 10.0% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $22.08 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on September 13, 16, 17, 18, 19, 20, 23, 24, 25, and 26, 2024. (48) Based on shareholder elections, the dividend consisted of approximately $13.7 million in cash and 81,471 newly issued shares of common stock, or 11.9% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $22.80 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on December 6, 9, 10, 11, 12, 13, 16, 17, 18, and 19, 2024. 110 (49) Based on shareholder elections, the dividend consisted of approximately $9.9 million in cash and 60,611 newly issued shares of common stock, or 12.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $22.96 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on March 12, 13, 14, 17, 18, 19, 20, 21, 24, and 25, 2025. (50) Based on shareholder elections, the dividend consisted of approximately $3.4 million in cash and 20,086 newly issued shares of common stock, or 11.5% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $22.02 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on April 10, 11, 14, 15, 16, 17, 21, 22, 23, and 24, 2025. (51) Based on shareholder elections, the dividend consisted of approximately $3.4 million in cash and 20,784 newly issued shares of common stock, or 12.5% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $23.02 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on May 9, 12, 13, 14, 15, 16, 19, 20, 21, and 22, 2025. (52) Based on shareholder elections, the dividend consisted of approximately $3.4 million in cash and 19,750 newly issued shares of common stock, or 11.7% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $23.09 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on June 10, 11, 12, 13, 16, 17, 18, 20, 23, and 24, 2025. (53) Based on shareholder elections, the dividend consisted of approximately $3.5 million in cash and 17,443 newly issued shares of common stock, or 10.6% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $23.86 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on July 11, 14, 15, 16, 17, 18, 21, 22, 23 and 24, 2025. (54) Based on shareholder elections, the dividend consisted of approximately $3.6 million in cash and 17,320 newly issued shares of common stock, or 10.5% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $24.11 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on August 8, 11, 12, 13, 14, 15, 18, 19, 20 and 21, 2025. (55) Based on shareholder elections, the dividend consisted of approximately $3.6 million in cash and 17,673 newly issued shares of common stock, or 10.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $23.32 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on September 11, 12, 15, 16, 17, 18, 19, 22, 23 and 24, 2025. (56) Based on shareholder elections, the dividend consisted of approximately $3.6 million in cash and 20,898 newly issued shares of common stock, or 10.9% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $20.97 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on October 10, 13, 14, 15, 16, 17, 20, 21, 22, and 23, 2025. (57) Based on shareholder elections, the dividend consisted of approximately $3.6 million in cash and 20,552 newly issued shares of common stock, or 10.7% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $20.99 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on November 7, 10, 11, 12, 13, 14, 17, 18, 19, and 20, 2025. (58) Based on shareholder elections, the dividend consisted of approximately $7.2 million in cash and 41,155 newly issued shares of common stock, or 11.1% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $21.85 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on December 5, 8, 9, 10, 11, 12, 15, 16, 17, and 18, 2025. (59) Based on shareholder elections, the dividend consisted of approximately $3.6 million in cash and 20,092 newly issued shares of common stock, or 11.0% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $22.12 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on January 8, 9, 12, 13, 14, 15, 16, 20, 21, and 22, 2026. 111 (60) Based on shareholder elections, the dividend consisted of approximately $3.6 million in cash and 20,049 newly issued shares of common stock, or 10.9% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $22.07 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on February 9, 10, 11, 12, 13, 17, 18, 19, 20, and 23, 2026. (61) Based on shareholder elections, the dividend consisted of approximately $ 3.6 million in cash and 20,766 newly issued shares of common stock, or 11.0 % of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $ 21.45 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on March 6, 9, 10, 11, 12, 13, 16, 17, 18, and 19, 2026. (62) Based on shareholder elections, the dividend consisted of approximately $3.6 million in cash and 22,784 newly issued shares of common stock, or 12.2% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $21.71 per share, which equaled 95% of the volume weighted average trading price per share of the common stock on April 10, 13, 14, 15, 16, 17, 20, 21, 22, and 23, 2026. We cannot provide any assurance that these measures will provide sufficient sources of liquidity to support our operations and growth. Subsequent Events On March 17, 2026, the Company declared the following dividends for the quarter ending May 31, 2026. Shareholders have the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to the DRIP. Month Amount per Share Record Date Payment Date March 2026 $ 0.25 April 7, 2026 April 23, 2026 April 2026 $ 0.25 May 5, 2026 May 21, 2026 May 2026 $ 0.25 June 4, 2026 June 23, 2026 On April 10, 2026, the Company issued $25.0 million in aggregate principal amount of 7.25% fixed-rate notes due 2029 (the “7.25% 2029 Notes”) for net proceeds of approximately $24.5 million, based on an offering price of 98.00% per Note. Estimated offering costs incurred were approximately $0.2 million. Interest on the 7.25% 2029 Notes is paid quarterly on February 28, May 31, August 31 and November 30 of each year, beginning on May 31, 2026. The Notes will mature on April 10, 2029, and may be extended to October 10, 2029, at the sole discretion of the Company. The Notes may be redeemed at the Company’s option, in whole or in part at any time, or from time to time on or after April 10, 2027, at the redemption price of par, plus accrued and unpaid interest. The Company intends to use the net proceeds from the offering for general corporate purposes in accordance with the Company’s investment objective and strategies. Pursuant to the terms of the Notes Purchase Agreement, upon the mutual agreement of the Company and the Purchaser, the Company may issue additional Notes for sale in one or more subsequent private offerings by July 10, 2026, in an aggregate amount of up to $25.0 million, resulting in a total maximum issuance of $50.0 million. In addition, holders of the 7.25% 2029 Notes will have the option to have the 7.25% 2029 Notes repaid prior to the stated maturity date if (i) the Company is no longer directly managed by Saratoga Investment Advisors or any of its affiliates, or if two or more of Christian L. Oberbeck, Michael J. Grisius, Thomas V. Inglesby, Charles G. Phillips or Henri J. Steenkamp cease to work or be employed on a full-time basis with respect to the business of Saratoga Investment Advisors at least the duties and responsibilities delegated to him as of the date of the Seventeenth Supplemental Indenture and has not been promptly replaced by another person reasonably acceptable by the holders of the Notes; or (ii) the Company violates Section 18(a)(1)(A) as modified by Section 61(a)(2) of the 1940 Act as in effect as of the date of the Seventeenth Supplemental Indenture, but giving effect to any exemptive relief granted to the Company by the SEC. Contractual obligations The following table shows our payment obligations for repayment of debt and other contractual obligations at February 28, 2026: Payment Due by Period Long-Term Debt Obligations Total Less Than 1 Year 1 - 3 Years 3 - 5 Years More Than 5 Years ($ in thousands) Live Oak credit facility 37,500 - 37,500 - - Valley Bank Credit Facility 32,500 - 32,500 - - SBA debentures 160,000 - - 99,000 61,000 4.35% 2027 Notes 75,000 75,000 - - - 6.00% 2027 Notes 105,500 - 105,500 - - 6.25% 2027 Notes 15,000 - 15,000 - - 8.00% 2027 Notes 46,000 - 46,000 - - 8.125% 2027 Notes 60,375 - 60,375 - - 8.50% 2028 Notes 57,500 - 57,500 - - 7.25% 2030 Notes 50,000 - - 50,000 7.50% 2031 Notes 100,000 - - 100,000 Total Long-Term Debt Obligations $ 739,375 $ 75,000 $ 354,375 $ 249,000 $ 61,000 112 Off-Balance sheet arrangements At February 28, 2026 and February 28, 2025, our off-balance sheet arrangements consisted of $153.1 million and $126.7 million, respectively, of unfunded commitments outstanding to provide debt financing to its portfolio companies or to fund limited partnership interests. Such commitments are generally up to our discretion to approve, or the satisfaction of certain financial and nonfinancial covenants and involve, to varying degrees, elements of credit risk in excess of the amount recognized in our consolidated statements of assets and liabilities. A summary of the unfunded commitments outstanding as of February 28, 2026 and February 28, 2025 is shown in the table below (dollars in thousands): February 28, 2026 February 28, 2025 At Company’s discretion ActiveProspect, Inc. $ - $ 10,000 Angry Chickz, Inc. 4,000 $ - Artemis Wax Corp. 7,500 23,500 Ascend Software, LLC - 5,000 Better Impact USA, Inc. 5,000 - C2 Educational Systems, Inc - 2,000 Davisware, LLC - 1,000 Haystack Team Inc. 5,000 - JDXpert 4,500 4,500 LFR Chicken LLC 10,000 10,000 Pepper Palace, Inc. 800 1,200 Procurement Partners, LLC - - Saratoga Senior Loan Fund I JV, LLC 6,933 8,548 SAI Systems Health, LLC 4,000 - Source 44 LLC 20,000 - StockIQ Technologies, LLC 5,000 - VetnCare MSO, LLC - 10,000 Total $ 72,733 $ 75,748 At portfolio company’s discretion - satisfaction of certain financial and nonfinancial covenants required Angry Chickz, Inc. $ 2,100 $ - Axero Holdings, LLC - Revolver 500 500 Axiom Medical Consulting, LLC - 1,500 Better Impact USA, Inc. 5,000 - BQE Software, Inc. 250 2,250 Breezeway Homes, Inc. 4,000 - Cloudpermit 8,500 5,000 Davisware, LLC - 1,750 Exigo, LLC - Revolver 625 625 Gen4 Dental Partners Holdings, LLC 2,381 2,857 Granite Comfort, LP - 11,637 Innergy, Inc. 1,500 5,000 Inspect Point Holdings, LLC 4,000 1,500 LFR Chicken LLC 25,000 - Ludi, Inc. - Revolver 3,600 - Modis Dental Partners OpCo, LLC - 8,900 Pepper Palace, Inc. - Revolver - 600 SAI Systems Health, LLC 1,474 - SmartAC.com, Inc. 17,000 - Source 44 LLC 500 - Source 44 LLC - Revolver 2,000 - StockIQ Technologies, LLC 400 - Stretch Zone Franchising, LLC - 1,500 VetnCare MSO, LLC - 7,319 Zollege PBC 1,500 - 80,330 50,938 Total $ 153,063 $ 126,686 We believe our assets will provide adequate coverage to satisfy these unfunded commitments. As of February 28, 2026, we had cash and cash equivalents of $1.7 million, $52.5 million in available borrowings under the Valley Credit Facility and $37.5 million in available borrowings under the Live Oak Credit Facility. We also have $99.0 million available SBA debentures that can be used for any commitments held in SBIC III LP. 113