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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549   Form 10-K    ☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended February 28, 2019  ☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period
fromto Commission File No. 001-33376   SARATOGA INVESTMENT CORP. (Exact name of Registrant as specified in its charter)    Maryland

20-8700615(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number) 535 Madison Avenue New York, New York 10022 (Address of principal executive offices) (212) 906-7800 (Registrants telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act:  Title of Each Class

Name of Each Exchange on Which 
RegisteredCommon Stock, par value $0.001 per share6.75% Notes due 2023

The New York Stock Exchange
The New York Stock Exchange6.25% Notes due 2025

The New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None   Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
    Yes  ☐    No  ☒ Indicate by check mark if the registrant is
not required to file reports pursuant to Section 13 or 15(d) of the Act.     Yes  ☐    No  ☒ Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days:    Yes  ☒    No  ☐ Indicate by check mark whether the
registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files).    Yes  ☐    No  ☐ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  ☐ Indicate by check mark whether the registrant is
a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer,
accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act. (Check one):  Large accelerated filer

☐

Accelerated filer

☒Non-accelerated filer

☐  (Do not check if a smaller reporting company)

Smaller reporting company

☐Emerging growth company

☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act).    Yes  ☐    No  ☒ The aggregate market value of the voting
and non-voting common stock held by non-affiliates of the registrant as of August 31, 2018 was approximately $130.4 million based upon a closing price of
$24.85 reported for such date by the New York Stock Exchange. The number of outstanding common shares of the registrant as of
May 13, 2019 was 7,764,844. DOCUMENTS INCORPORATED BY REFERENCE None.




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NOTE ABOUT REFERENCES In this Annual Report on Form 10-K (the Annual Report), the Company,
we, us and our refer to Saratoga Investment Corp. and its wholly-owned subsidiaries, Saratoga Investment Funding LLC and Saratoga Investment Corp. SBIC, L.P., unless the context otherwise requires. We refer to
Saratoga Investment Advisors, LLC, our investment adviser, as Saratoga Investment Advisors, the Investment Adviser or the Manager. NOTE ABOUT FORWARD-LOOKING STATEMENTS Some of the statements in this Annual Report constitute forward-looking statements. Forward-looking statements relate to expectations,
beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by 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 occurring after the date of this Annual Report, 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 SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q
and current reports on Form 8- K. The forward-looking statements contained in this Annual Report
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 Investment Adviser;  

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 prospects of our portfolio companies;  

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 status, including our ability to operate as a business development company
(BDC), or to operate our small business investment company (SBIC) subsidiary, and to continue to qualify to be taxed as a regulated investment company (RIC);  

the adequacy of our cash resources and working capital;  

the timing of cash flows, if any, from the operations of our portfolio companies;  2




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

the impact of interest rate volatility on our results, particularly because we use leverage as part of our
investment strategy;  

the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions
of government agencies relating to us or our investment adviser;  

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 Investment Adviser to attract and retain highly talented professionals; and  

the ability of our Investment Adviser to locate suitable investments for us and to monitor and effectively
administer our investments. Although we believe that the assumptions on which these forward-looking statements are
based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. Important assumptions include our ability to originate new loans and
investments, borrowing costs and levels of profitability and the availability of additional capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this annual report on Form 10-K should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include those described in Risk Factors in this annual report on Form 10- K under Part 1A. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this annual report on Form 10-K.  3




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PART IItem 1. Business


5Item 1A. Risk Factors


28Item 1B. Unresolved Staff Comments


53Item 2. Properties


53Item 3. Legal Proceedings


53Item 4. Mine Safety Disclosures


53PART IIItem 
5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities


54Item 6. Selected Consolidated Financial Data


63Item 
7. Managements Discussion and Analysis of Financial Condition and Results of Operations


64Item 7A. Quantitative and Qualitative Disclosures About Market
Risk


95Item 8. Consolidated Financial Statements and Supplementary
Data


96Item 
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure


96Item 9A. Controls and Procedures


96Item 9B. Other Information


97PART IIIItem 10. Directors, Executive Officers and Corporate
Governance


98Item 11. Executive Compensation


100Item 
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters


101Item 
13. Certain Relationships and Related Transactions, and Director Independence


102Item 14. Principal Accounting Fees and Services


103PART IVItem 15. Exhibits, Consolidated Financial Statement
Schedules


105Item 16. Form 10-K
Summary


107Signatures


108  4




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PART I ITEM 1. BUSINESS General We are a specialty finance
company that provides customized financing solutions to U.S middle-market businesses. We primarily invest in senior and unitranche leveraged loans and mezzanine debt and, to a lesser extent, equity issued by private U.S. middle-market companies,
which we define as companies having annual earnings before interest, taxes, depreciation and amortization (EBITDA) of between $2 million and $50 million, both through direct lending and through participation in loan syndicates.
Our investment objective is to create attractive risk-adjusted returns by generating current income and long-term capital appreciation from our investments. Our investments generally provide financing for change of ownership transactions, strategic
acquisitions, recapitalizations and growth initiatives in partnership with business owners, management teams and financial sponsors. Our investment activities are externally managed and advised by Saratoga Investment Advisors, LLC, a New York-based
investment firm affiliated with Saratoga Partners, a middle market private equity investment firm. Our portfolio is comprised primarily
of investments in leveraged loans issued by middle market companies. Leveraged loans are generally senior debt instruments that rank ahead of subordinated debt with below investment grade or junk ratings or, if not rated, would be rated
below investment grade or junk and, as a result, carry a higher risk of default. Leveraged loans also have the benefit of security interests on the assets of the portfolio company, which may rank ahead of, or be junior to, other security
interests. Term loans are loans that do not allow the borrowers to repay all or a portion of the loans prior to maturity and then re-borrow such repaid amounts under the loan again. We also purchase mezzanine
debt and make equity investments in middle market companies. Mezzanine debt is typically unsecured and subordinated to senior debt of the portfolio company. While our primary focus is to generate current income and capital appreciation from our debt and equity investments in middle market
companies, we may invest up to 30.0% of our portfolio in opportunistic investments in order to seek to enhance returns to stockholders. Such investments may include investments in distressed debt, including securities of companies in bankruptcy,
foreign debt, private equity, securities of public companies that are not thinly traded and structured finance vehicles such as collateralized loan obligation funds. Although we have no current intention to do so, to the extent we invest in private
equity funds, we will limit our investments in entities that are excluded from the definition of investment company under Section 3(c)(1) or Section 3(c)(7) of Investment Company Act of 1940, as amended (1940 Act),
which includes private equity funds, to no more than 15% of its net assets. As of February 28, 2019, we had total assets of
$470.7 million and investments in 31 portfolio companies, an additional investment in the subordinated notes of one collateralized loan obligation fund, Saratoga Investment Corp. CLO 2013-1, Ltd.
(Saratoga CLO), which had a fair value of $25.4 million as of February 28, 2019 and also investments in the Class F-R-2 Notes and Class G-R-2 Notes tranches of the Saratoga CLO, which as of February 28, 2019 had fair values of $2.5 million and $7.5 million, respectively. The overall
portfolio composition as of February 28, 2019 consisted of 50.5% of first lien term loans, 31.3% of second lien term loans, 0.5% of unsecured term loans, 8.8% of structured finance securities and 8.9% of equity interests. As of
February 28, 2019, the weighted average yield on all of our investments, including our investment in the subordinated notes of Saratoga CLO and Class F-R-2
Notes and Class G-R-2 Notes tranches of the Saratoga CLO, was approximately 10.7%. The weighted average yield of our investments is not the same as a return on
investment for our stockholders and, among other things, is calculated before the payment of our fees and expenses. As of February 28, 2019, our total return based on market value was 16.11% and our total return based on net asset value per
share was 13.33%. As of February 28, 2018, our total return based on market value was 5.28% and our total return based on net asset value was 14.45%. Total return based on market value is the change in the ending market value of the
Companys common stock plus dividends distributed during the period assuming participation in the Companys dividend reinvestment plan divided by the beginning market value of the Companys common stock. Total return based on NAV is
the change in ending NAV per share plus dividends distributed per share paid during the period assuming participation in the Companys dividend reinvestment plan divided by the beginning NAV per share. While total return based on NAV and total
return based on market value reflect fund expenses, they do not reflect any sales load that may be paid by investors. As of February 28, 2019, approximately 100.0% of our first lien debt investments were fully collateralized in the sense that
the portfolio companies in which we held such investments had an enterprise value or our investment had an asset coverage equal to or greater than the principal amount of the related debt investment. The Company uses enterprise value to assess the
level of collateralization of its portfolio companies. The enterprise value of a portfolio company is determined by analyzing various factors, including EBITDA, cash flows from operations less capital expenditures and other pertinent factors, such
as recent offers to purchase a portfolio companys securities or other liquidation events. As a result, while we consider a portfolio company to be collateralized if its enterprise value exceeds the amount of our loan, we do not hold tangible
assets as collateral in our portfolio companies that we would obtain in the event of a default. Our investment in the subordinated notes of Saratoga CLO represents a first loss position in a portfolio that, at February 28, 2019, was composed of
$510.3 million in aggregate principal amount of predominantly senior secured first lien term loans. A first loss position means that we will suffer the first economic losses if losses are incurred on loans held by the Saratoga CLO. As a result,
this investment is subject to unique risks. See Part I. Item 1A. Risk FactorsOur investment in Saratoga CLO constitutes a leveraged investment in a portfolio of predominantly senior secured first lien term loans and is subject to
additional risks and volatility.  5




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We are an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a business development company (BDC) under the 1940 Act. As a BDC, we are required to comply with various regulatory
requirements, including limitations on our use of debt. We finance our investments through borrowings. However, as a BDC, we are only generally allowed to borrow amounts such that our asset coverage, as defined in the 1940 Act, equals at least
200.0% after such borrowing, or, if we obtain the required approvals from our independent directors and/or stockholders, 150.0%. On April 16, 2018, as permitted by the Small Business Credit Availability Act, which was signed into law on
March 23, 2018, our non-interested Board of Directors approved of our becoming subject to a minimum asset coverage ratio of 150.0% under Sections 18(a)(1) and 18(a)(2) of the 1940 Act. The 150.0% asset
coverage ratio became effective on April 16, 2019. We have elected to be treated for U.S. federal income tax purposes as a regulated
investment company (RIC), under Subchapter M of the Internal Revenue Code of 1986 (the Code). As a RIC, we generally will not have to pay corporate-level federal income taxes on any net ordinary income or capital gains that
we distribute to our stockholders if we meet certain source-of- income, distribution and asset diversification requirements. In addition, we have a wholly-owned subsidiary that is licensed as a small business investment company (SBIC) and regulated by the
Small Business Administration (SBA). See Item 1. BusinessSmall Business Investment Company Regulations. The SBIC license allows us, through our wholly-owned subsidiary, to issue
SBA-guaranteed debentures. We received exemptive relief from the Securities and Exchange Commission (SEC) to permit us to exclude the debt of our SBIC subsidiary guaranteed by the SBA from the
200.0% asset coverage ratio we are required to maintain under the 1940 Act. This allows us increased flexibility under the 200.0% asset coverage test by permitting us to borrow up to $150.0 million more than we would otherwise be able to absent
the receipt of this exemptive relief. The Company has established wholly-owned subsidiaries,
SIA-Avionte, Inc., SIA-Easy Ice, LLC, SIA-GH, Inc., SIA-HT, Inc., SIA-MAC, Inc., SIA-TT, Inc. and SIA-Vector, Inc., which are structured as Delaware entities, or tax blockers, to hold equity or
equity-like investments in portfolio companies organized as limited liability companies, or LLCs (or other forms of pass through entities). Tax blockers are consolidated for accounting purposes but are not consolidated for income tax purposes and
may incur income tax expense as a result of their ownership of portfolio companies. Corporate History and Information 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, we engaged Saratoga Investment Advisors (SIA) to replace GSCP (NJ), L.P. as our investment adviser and changed our name to Saratoga Investment Corp. The recapitalization transaction consisted of (i) the private sale of 986,842 shares of our common stock for $15.0 million in
aggregate purchase price to Saratoga Investment Advisors and certain of its affiliates and (ii) the entry into a $40.0 million senior secured revolving credit facility with Madison Capital Funding LLC (the Credit Facility). We
used the net proceeds from the private sale of shares of our common stock and a portion of the funds available to us under the Credit Facility to pay the full amount of principal and accrued interest, including default interest, outstanding under
our revolving securitized credit facility with Deutsche Bank AG, New York Branch. Specifically, in July 2009, we had exceeded permissible borrowing limits under the revolving securitized credit facility with Deutsche Bank, which resulted in an event
of default under the revolving securitized credit facility. As a result of the event of default, Deutsche Bank had the right to accelerate repayment of the outstanding indebtedness under the revolving securitized credit facility and to foreclose and
liquidate the collateral pledged under the revolving securitized credit facility. The revolving securitized credit facility with Deutsche Bank was terminated in connection with our payment of all amounts outstanding thereunder on July 30, 2010.
In January 2011, we registered for public resale by Saratoga Investment Advisors and certain of its affiliates the 986,842 shares of our common stock issued to them in the recapitalization.  6




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On March 28, 2012, our wholly-owned subsidiary, Saratoga Investment Corp. SBIC, LP
(SBIC LP), received an SBIC license from the SBA. Our corporate offices are located at 535 Madison Avenue, New York, New York
10022. Our telephone number is (212) 906- 7800. We maintain a website on the Internet at www.saratogainvestmentcorp.com. Information contained on our website is not incorporated by reference into this Annual
Report, and you should not consider that information to be part of this Annual Report. Saratoga Investment Advisors General Our Investment Adviser was formed
in 2010 as a Delaware limited liability company and became our investment adviser in July 2010. Our Investment Adviser is led by four principals, Christian L. Oberbeck, Michael J. Grisius, Thomas V. Inglesby, and Charles G. Phillips, with 31, 29, 32
and 22 years of experience in leveraged finance, respectively. Our Investment Adviser is affiliated with Saratoga Partners, a middle market private equity investment firm. Saratoga Partners was established in 1984 to be the middle market private
investment arm of Dillon Read & Co. Inc. and has been independent of Dillon Read and its successor entity, SBC Warburg Dillon Read, since 1998. Saratoga Partners has a 30-year history of private
investments in middle market companies and focuses on public and private equity, preferred stock, and senior and mezzanine debt investments. Our
Relationship with Saratoga Investment Advisors We utilize the personnel, infrastructure, relationships and experience of Saratoga
Investment Advisors to enhance the growth of our business. We currently have no employees and each of our executive officers is also an officer of Saratoga Investment Advisors. We have entered into an investment advisory and management agreement (the Management Agreement) with Saratoga Investment Advisors.
Pursuant to the 1940 Act, the initial term of the Management Agreement was for two years from its effective date of July 30, 2010, with automatic, one-year renewals, subject to approval by our board of
directors, a majority of whom must be our independent directors. On July 9, 2018, our board of directors approved the renewal of the Management Agreement for an additional one-year term at an in-person meeting. Pursuant to the Management Agreement, Saratoga Investment Advisors implements our business strategy on a day-to-day
basis and performs certain services for us under the direction of our board of directors. Saratoga Investment Advisors is responsible for, among other duties, performing all of our
day-to-day functions, determining investment criteria, sourcing, analyzing and executing investment transactions, asset sales, financings and performing asset management
duties. Saratoga Investment Advisors has formed an investment committee to advise and consult with its senior management team with
respect to our investment policies, investment portfolio holdings, financing and leveraging strategies and investment guidelines. We believe that the collective experience of the investment committee members across a variety of fixed income asset
classes will benefit us. The investment committee must unanimously approve all investments in excess of $1.0 million made by us. In addition, all sales of our investments must be approved by all four of our investment committee members. The
current members of the investment committee are Messrs. Oberbeck, Grisius, Inglesby, and Phillips. We pay Saratoga Investment Advisors a
fee for investment advisory and management services consisting of two components a base management fee and an incentive fee. The base management fee is calculated at an annual rate of 1.75% of our average gross assets, which includes assets
purchased with borrowed funds but excludes cash and cash equivalents. As a result, Saratoga Investment Advisors will benefit as we incur debt or use leverage to purchase assets. Our board of directors will monitor the conflicts presented by this
compensation structure by approving the amount of leverage that we may incur. In addition to the base management fee, we pay Saratoga
Investment Advisors an incentive fee, which consists of two parts. First, we pay Saratoga Investment Advisors an incentive fee with respect to our pre-incentive fee net investment income in each calendar
quarter as follows:  

no incentive fee in any calendar quarter in which, our pre-incentive fee
income does not exceed a fixed hurdle rate of 1.875% per quarter; and  7




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

100.0% of our pre-incentive fee net investment income with respect to
that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than or equal to 2.344% in any fiscal quarter is payable to the Investment Adviser. We refer to
this portion of our pre-incentive fee net investment income (which exceeds the hurdle rate but is less than or equal to 2.344%) as the catch-up. The catch-up provision is intended to provide our Investment Adviser with an incentive fee of 20.0% on all of our pre-incentive fee net investment income as if a
hurdle rate did not apply when our pre-incentive fee net investment income exceeds 2.344% in any fiscal quarter. Notwithstanding the foregoing, with respect to any period ending on or prior to
December 31, 2010, our Investment Adviser was only entitled to 20.0% of the amount of our pre-incentive fee net investment income, if any, that exceeded 1.875% in any fiscal quarter without any catch-up provision; and  

20.0% of the amount of our pre-incentive fee net investment income, if
any, that exceeds 2.344% in any fiscal quarter is payable to the Investment Adviser (once the hurdle is reached and the catch-up is achieved, 20.0% of all pre-incentive
fee net investment income thereafter is allocated to the Investment Adviser). There is no accumulation of amounts from
quarter to quarter on either the hurdle rate or the parameters set by the catch-up mechanism or any claw back of amounts previously paid to Saratoga Investment Advisors if subsequent quarters are
below the quarterly hurdle or the catch-up parameters. Furthermore, there is no delay of payment to Saratoga Investment Advisors if prior quarters are below the quarterly hurdle or catch-up. Pre-incentive fee net investment income
means interest income, dividend income and other income (including any other fees, such as commitment, origination, structuring, diligence, managerial and consulting fees or other fees that we receive from portfolio companies) earned during the
calendar quarter, minus our operating expenses for the quarter. Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses, unrealized capital appreciation or
depreciation, or realized gains or losses resulting from the extinguishment of our own debt. The second part of the incentive fee is
determined and payable in arrears as of the end of each fiscal year (or upon termination of the Management Agreement) and equals 20.0% of our incentive fee capital gains, which equals our realized capital gains on a cumulative basis from
May 31, 2010 through the end of the fiscal year, if any, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis on each investment in the Companys portfolio, less the aggregate amount of any
previously paid capital gain incentive fee. Importantly, the capital gains portion of the incentive fee is based on realized gains and realized and unrealized losses from May 31, 2010. Therefore, realized and unrealized losses incurred prior to
such time will not be taken into account when calculating the capital gains portion of the incentive fee, and our Manager will be entitled to 20.0% of incentive fee capital gains that arise after May 31, 2010. In addition, for the purpose of
the incentive fee capital gains calculations, the cost basis for computing realized gains and losses on investments held by us as of May 31, 2010 will equal the fair value of such investments as of such date. We have also entered into a separate Administration Agreement (the Administration Agreement) with Saratoga Investment Advisors
pursuant to which Saratoga Investment Advisors furnishes us with office facilities, equipment and clerical, bookkeeping and record keeping services. The Administration Agreement has an initial term of two years from its effective date of
July 30, 2010, with automatic one-year renewals, subject to approval by our board of directors, a majority of whom must be our independent directors. On July 8, 2015, our board of directors approved
the renewal of the Administration Agreement for an additional one-year term and determined to increase the cap on the payment or reimbursement of expenses by us thereunder to $1.3 million. On July 7,
2016, our board of directors approved the renewal of the Administration Agreement for an additional one-year term. On October 5, 2016, our board of directors determined to increase the cap on the payment
or reimbursement of expenses by the Company under the Administration Agreement, from $1.3 million to $1.5 million, effective November 1, 2016.On July 11, 2017, our board of directors approved the renewal of the
Administration Agreement for an additional one-year term and determined to increase the cap on the payment or reimbursement of expenses by the Company from $1.5 million to $1.75 million, effective
August 1, 2017. On July 9, 2018, our board of directors approved the renewal of the Administration Agreement for an additional one-year term and determined to increase the cap on the payment or
reimbursement of expenses by the Company from $1.75 million to $2.0 million, effective August 1, 2018. Under the Administration Agreement, Saratoga Investment Advisors also performs, or oversees the performance of our required
administrative services, which include, among other things, being responsible for the financial records which we are required to maintain, preparing reports for our stockholders and reports required to be filed with the SEC. Payments under the
Administration Agreement will be equal to an amount based upon the allocable portion of Saratoga Investment Advisors overhead in performing its obligations under the Administration Agreement, including rent and the allocable portion of the
cost of our officers and their respective staffs relating to the performance of services under the Administration Agreement.  8




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Investments Our portfolio is comprised primarily of investments in leveraged loans (both first and second lien term loans) issued by middle market
companies. Investments in middle market companies are generally less liquid than equivalent investments in companies with larger capitalizations. These investments are sourced in both the primary and secondary markets through a network of
relationships with commercial and investment banks, commercial finance companies and financial sponsors. The leveraged loans that we purchase are generally used to finance buyouts, strategic acquisitions, growth initiatives, recapitalizations and
other types of transactions. Leveraged loans are generally senior debt instruments that rank ahead of subordinated debt which are invested by companies with below investment grade or junk ratings or, if not rated, would be rated below
investment grade or junk and, as a result, carry a higher risk of default. Leveraged loans also have the benefit of security interests on the assets of the portfolio company, which may rank ahead of, or be junior to, other security
interests. For a discussion of the risks pertaining to our secured investments, see Part I. Item 1A. Risk FactorsOur investments may be risky, and you could lose all or part of your investment. As part of our long-term strategy, we also purchase mezzanine debt and make equity investments in middle market companies. Mezzanine debt is
typically unsecured and subordinated to senior debt of the portfolio company. See Part I. Item 1A. Risk FactorsIf we make unsecured debt investments, we may lack adequate protection in the event our portfolio companies become distressed
or insolvent and will likely experience a lower recovery than more senior debtholders in the event our portfolio companies default on their indebtedness. Substantially all of the debt investments held in our portfolio hold a non-investment grade rating by
one or more rating agencies or, if not rated, would be rated below investment grade if rated, which are often referred to as junk. As of February 28, 2019, 77.4% of our debt portfolio at fair value consisted of debt securities for which
issuers were not required to make principal payments until the maturity of such debt securities, which could result in a substantial loss to us if such issuers are unable to refinance or repay their debt at maturity. Such interest-only
loans are structured such that the borrower makes only interest payments throughout the life of the loan and makes a large, balloon payment at the end of the loan term. The ability of a borrower to make or refinance a balloon payment may
be affected by a number of factors, including the financial condition of the borrower, prevailing economic conditions, higher interest rates, and collateral values. If the interest-only loan borrower is unable to make or refinance a balloon payment,
we may experience greater losses than if the loan were structured as amortizing. As of February 28, 2019, 30.3% of our interest-only loans provided for contractual PIK interest, which represents contractual interest added to a loan balance and
due at the end of such loans term, and 72.5% of such investments elected to pay a portion of interest due in PIK. In addition, 83.7% of our debt investments at February 28, 2019, had variable interest rates that reset periodically based
on benchmarks such as LIBOR and the prime rate. As a result, significant increases in such benchmarks in the future may make it more difficult for these borrowers to service their obligations under the debt investments that we hold. As a BDC, we are required to comply with certain regulatory requirements. For instance, as a BDC, we may not acquire any assets other than
qualifying assets unless, at the time of and after giving effect to such acquisition, at least 70% of our total assets are qualifying assets. See BusinessBusiness Development Company Regulations  Qualifying
Assets. While our primary focus is to generate current income and capital appreciation from our debt and equity investments in
middle market companies, we may invest up to 30.0% of the portfolio in opportunistic investments in order to seek to enhance returns to stockholders. Such investments may include investments in distressed debt, private equity, securities of public
companies that are not thinly traded and structured finance vehicles such as collateralized loan obligation funds. Although we have no current intention to do so, to the extent we invest in private equity funds, we will limit our investments in
entities that are excluded from the definition of investment company under Section 3(c)(1) or Section 3(c)(7) of the 1940 Act, which includes private equity funds, to no more than 15% of its net assets. Leveraged loans Our leveraged loan portfolio is comprised primarily of first lien and second lien term loans. First lien term loans are secured by a first
priority perfected security interest on all or substantially all of the assets of the borrower and typically include a first priority pledge of the capital stock of the borrower. First lien term loans hold a first priority with regard to right of
payment. Generally, first lien term loans offer floating rate interest payments, have a stated maturity of five to seven years, and have a fixed amortization schedule. First lien term loans generally have restrictive financial and negative
covenants. Second lien term loans are secured by a second priority perfected security interest on all or substantially all of the assets of the borrower and typically include a second priority pledge of the capital stock of the borrower. Second lien
term loans hold a second priority with regard to right of payment. Second lien term loans offer either floating rate or fixed rate interest payments, generally have a stated maturity of five to eight years and may or may not have a fixed
amortization schedule. Second lien term loans that do not have fixed amortization schedules require payment of the principal amount of the loan upon the maturity date of the loan. Second lien term loans have less restrictive financial and negative
covenants than those that govern first lien term loans.  9




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Mezzanine debt Mezzanine debt usually ranks subordinate in priority of payment to senior debt and is often unsecured. However, mezzanine debt ranks senior to
common and preferred equity in a borrowers capital structure. Mezzanine debt typically has fixed rate interest payments and a stated maturity of six to eight years and does not have fixed amortization schedules. In some cases, our debt investments may provide for a portion of the interest payable to be payment-in-kind interest (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. Equity Investments Equity investments may consist of preferred equity that is expected to pay dividends on a current basis or preferred equity that does not pay
current dividends. Preferred equity at times may also have PIK interest payable. Preferred equity generally has a preference over common equity as to distributions on liquidation and dividends. In some cases, we may acquire common equity. In
general, our equity investments are not control-oriented investments and we expect that in many cases we will acquire equity securities as part of a group of private equity investors in which we are not the lead investor. Opportunistic Investments Opportunistic investments may include investments in distressed debt, which may include securities of companies in bankruptcy, debt and equity
securities of public companies that are not thinly traded, emerging market debt, structured finance vehicles such as collateralized loan obligation funds and debt of middle market companies located outside the United States. On January 22, 2008, GSC Group, Inc., as asset manager, with Lehman Brothers raising the financing, entered into a collateral management
agreement with Saratoga CLO. Saratoga CLO was structured with five tranches of debt, plus residual notes. Saratoga CLOs five tranches of debt were purchased by a wide variety of CLO debt market participants. In addition, we purchased for
$30.0 million all of the outstanding subordinated notes of Saratoga CLO. Pursuant to its terms, the investment period for Saratoga
CLO ended in January 2013, and certain restrictions in such terms limited portfolio reinvestment. As a result, the Company determined that it was in its best interest to refinance Saratoga CLO given its investment attractiveness. The Company did not
originate any of the loan assets included in the formation of Saratoga CLO, nor has it done so since the subsequent refinancing transaction. Moreover, the Company does not expect to originate any of the loans in the Saratoga CLO portfolio
prospectively. The Company has from time to time co-invested in loans with the Saratoga CLO. The Company currently has no co-investments between it and Saratoga CLO. With respect to our advisory services to Saratoga CLO, and in particular the underwriting standards used when determining which
investments qualify for inclusion in the Saratoga CLO, they are substantially similar to the process employed in selecting the Companys investments. All of the credit metrics for a Saratoga CLO investment are reviewed and documented in the
same manner as they would be for an investment for the Company, with some minor differences. For example, the Saratoga CLO investment process also includes multiple rating agency review and analysis of the loan investment and the assigned corporate
ratings, which typically does not apply to a prospective investment of the Company. Lastly, a Saratoga CLO investment also considers the likely secondary liquidity of the loan in considering the investment, whereas the Companys investments are
generally illiquid. The Saratoga CLO investment period was initially refinanced in October 2013 and 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 2013-1 Reset CLO Notes). This refinancing, among other things, extended the non-call period and reinvestment period to January 20, 2020 and January 20,
2021, respectively, and extended its legal final date to January 20, 2030. 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. As part of the refinancing of its liabilities, we 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 of the Saratoga CLO at
par, with a coupon of LIBOR plus 8.75% and LIBOR plus 10.00%, respectively. We also redeemed our existing $4.5 million aggregate principal amount of the Class F Notes tranche of the Saratoga CLO at par. The
Class F-R-2 Notes and Class G-R-2    Notes tranches are the
seventh and eighth tranches in the capital structure of Saratoga CLO and are subordinated to the other debt classes of Saratoga CLO, respectively. The Class F-R-2
and Class G-R-2 tranches are senior to the subordinated notes, which is effectively the equity position in Saratoga CLO. As a result, the other tranches of debt in
Saratoga CLO rank ahead of the $2.5 million Class F-R-2 tranche and $7.5 million
Class G-R-2 tranche and ahead of the aggregate principal amount of our position in the subordinated notes, with respect to priority of payments in the event of a
default or a liquidation. We also purchased an aggregate principal amount of $39.5 million of subordinated notes, which is in addition to the $30.0 million of subordinated notes issued in 2013 that were reset with an extended legal final
date to January 20, 2030. Following the refinancing, Saratoga Investment Corp. owns 100% of the Class F-R-2, Class G-R-2 and the subordinated notes of the Saratoga CLO. After the reinvestment period ends in January 2021, the Company will consider refinancing the Saratoga CLO, subject to market conditions. A
refinancing transaction entails finding existing and new investors that are willing to provide debt financing to Saratoga CLO which extends the investment period of the CLO on terms that are acceptable to it and in an amount sufficient to allow it
to repay all of its existing debt holders. If Saratoga CLO is unable to refinance its indebtedness by January 2021, then Saratoga CLO will be required to use investment repayments by portfolio companies received thereafter to repay its outstanding
indebtedness. At February 28, 2019, the aggregate fair value of our investments in the Class F-R-2, Class G-R-2 Notes and subordinated notes of the Saratoga CLO was $2.5 million, $7.5 million and $25.4 million, respectively.  10




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The terms of the subordinated notes of Saratoga CLO entitles the Company to the residual net
interest income in Saratoga CLO, which is paid on a quarterly basis after payment of all expenses, assuming that the Saratoga CLO remains in compliance with its various debt and rating agency compliance tests. The Companys investment in the
subordinated notes of Saratoga CLO can be sold or transferred at any time. The Company has held 100% of the subordinated notes of Saratoga CLO since the inception of Saratoga CLO. Generally, the interests of the holders of the various classes of securities issued by the Saratoga CLO are aligned with the interests of the
Company as holder of the subordinated notes. The investors in the various debt tranches of the securities issued by the Saratoga CLO are interested in the regular payment of interest income from the Saratoga CLO and the overcollateralization of the
underlying loan assets relative to the Saratoga CLO debt issued. On the other hand, the subordinated note holders might prefer purchasing higher yielding riskier assets that could increase returns while the returns of the holders of the debt
securities remain unchanged. With respect to the collateral management agreement that the Company has entered into with Saratoga CLO,
while the agreement is similar to the investment advisory and management agreement between the Company and Saratoga Investment Advisors in that it is an asset management agreement, there are material differences between the two. For example,
pursuant to Section 15 of the 1940 Act, the Management Agreement with Saratoga Investment Advisors has an initial term of two years, with annual renewals to be approved by the Companys board of directors. The contract can be terminated by
the Companys board of directors or stockholders with 60 days notice, with no penalty for termination. The collateral management agreement that the Company has entered into with Saratoga CLO, on the other hand, has no renewal requirement,
and can be terminated without cause with the approval of two-thirds of each of the class of CLO securities, excluding votes from interested noteholders (Investment Manager Securities). Furthermore,
the Saratoga CLO collateral management agreement may be terminated with cause at the direction of a majority of the most senior class of the Saratoga CLO securities then outstanding, excluding votes from the Investment Manager Securities. If the
Saratoga CLO collateral management agreement is terminated, the manager remains in place until a new manager is appointed by the issuer at the direction of either (i) a majority of the Saratoga CLO subordinated notes, and not rejected by a
majority of the most senior class of CLO securities then outstanding, or (ii) a majority of the most senior class of CLO securities then outstanding, and not rejected by a majority of the Saratoga CLO subordinated notes, in each case within 20
days of notice of a vote regarding the successor manager. If no successor investment manager shall have been appointed within 120 days after the date of notice of resignation by the investment manager, the resigning investment manager, a majority of
the controlling class or a majority of the subordinated notes may petition any court of competent jurisdiction for the appointment of a successor investment manager without the approval of the holders of the notes. 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%.  11




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The securities issued by the Saratoga CLO do not have any external credit enhancement
features that would minimize the potential losses to the subordinated notes. Saratoga CLO recognized losses on extinguishment of debt of approximately $1.2 million, $6.1 million and $3.4 million in the fiscal years ended
February 28, 2019, February 28, 2017 and February 28, 2014, respectively, related to the December 2018, November 2016 and October 2013 refinancing, primarily as a result of the legal and accounting costs associated with the
refinancing and the divestiture of certain Saratoga CLO loans not eligible for the refinanced Saratoga CLO. The cost of the refinancing was effectively borne by the Company as the holder of the subordinated notes in Saratoga CLO. The indenture for
the Saratoga CLO does not contemplate the issuance of additional securities while the existing Saratoga CLO securities remain outstanding. The indenture could be amended to allow the issuance of additional securities, which would require consents of
the holders of the Saratoga CLO debt securities and the approval of the rating agencies. The Saratoga CLO could issue additional securities pursuant to a refinancing of the existing securities. The costs of any such future refinancing would
effectively be borne by us as the holder of the subordinated notes in Saratoga CLO. The Company does not believe that any representations
or warranties made by the Company as manager of Saratoga CLO or investor in the subordinated notes could materially affect the Company. However, because the Company acts as the collateral manager to Saratoga CLO, it may be subject to claims by
third-party investors in Saratoga CLO for alleged or actual negligent acts, errors or omissions or breach of fiduciary duties committed in the scope of performing its services as the collateral manager. As of February 28, 2019, the Saratoga CLO portfolio consisted of $510.3 million in aggregate principal amount of primarily senior
secured first lien term loans. At February 28, 2019, 99.4% of the Saratoga CLO portfolio consisted of such loans to 243 borrowers with an average exposure to each borrower of $2.1 million. The weighted average maturity of the portfolio is
5.33 years. In addition, Saratoga CLO held $18.5 million in cash at February 28, 2019. Our investments in the Saratoga CLO falls into our 30% bucket of non-qualifying assets under the
1940 Act and currently has an aggregate cost basis of approximately $23.5 million, which is net of all principal payments made by Saratoga CLO on the Companys total investment in Saratoga CLO of $43.8 million, which is comprised of
the initial investment of $30.0 million in January 2008 plus the additional investment of $13.8 million in December 2018. Prospective portfolio company characteristics Our Investment Adviser generally selects portfolio companies with one or more of the following characteristics:  

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

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

reasonable debt-to-cash flow
multiples;  

exceptional management with meaningful stake;  

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

capital structures that provide appropriate terms and reasonable covenants. Investment selection In managing us, Saratoga Investment Advisors employs the same investment philosophy and portfolio management methodologies used by Saratoga
Partners. Through this investment selection process, based on quantitative and qualitative analysis, Saratoga Investment Advisors seeks to identify portfolio companies with superior fundamental risk-reward profiles and strong, defensible business
franchises with the goal of minimizing principal losses while maximizing risk-adjusted returns. Saratoga Investment Advisors investment process emphasizes the following:  

bottoms-up, company-specific research and analysis;  

capital preservation, low volatility and minimization of downside risk; and  

investing with experienced management teams that hold meaningful equity ownership in their businesses. Our Investment Advisers investment process generally includes the following steps:  

Initial screening. A brief analysis identifies the investment opportunity and reviews the merits of the
transaction. The initial screening memorandum provides a brief description of the company, its industry, competitive position, capital structure, financials, equity sponsor and deal economics. If the deal is determined to be attractive by the senior
members of the deal team, the opportunity is fully analyzed.  12




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

Full analysis. A full analysis includes:  

Business and Industry analysisa review of the companys business position, competitive dynamics within
its industry, cost and growth drivers and technological and geographic factors. Business and industry research often includes meetings with industry experts, consultants, other investors, customers and competitors.  

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

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

Approval of the investment committee. The investment is then presented to the investment committee for approval.
The investment committee must unanimously approve all investments in excess of $1 million made by us. In addition, all sales of our investments must be approved by all four of our investment committee members. The members of our investment
committee are Christian L. Oberbeck, Michael J. Grisius, Thomas V. Inglesby, and Charles G. Phillips. Investment
structure In general, our Investment Adviser intends to select investments with financial covenants and terms that reduce leverage
over time, thereby enhancing credit quality. These methods include:  

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

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

debt incurrence prohibitions, limiting a companys ability to
re-lever. In addition, limitations on asset sales and capital expenditures
should prevent a company from changing the nature of its business or capitalization without our consent. Our Investment Adviser seeks,
where appropriate, to limit the downside potential of our investments by:  

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

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

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

selecting investments with affirmative and negative covenants, default penalties, lien protection, change of
control provisions and board rights, including either observation or participation rights. Valuation process We account for our investments at fair value in accordance with the Financial Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements and Disclosures(ASC 820), as approved in good faith using written policies and procedures adopted by our board of directors. Investments for
which market quotations are readily available are recorded in our consolidated financial statements at such market quotations subject to any decision by our board of directors to approve a fair value determination to reflect significant events
affecting the value of these investments. We value investments for which market quotations are not readily available at fair value as approved in good faith by our board of directors based on input from Saratoga Investment Advisors, our audit
committee and an independent valuation firm engaged by our board of directors. Determinations of fair value may involve subjective judgments and estimates. The types of factors that may be considered in determining the fair value of our investments
include the nature and realizable value of any collateral, the portfolio companys ability to make payments, the markets in which the portfolio company does business, market yield trend analysis, comparison to publicly traded companies,
discounted cash flow and other relevant factors.  13




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Our investment in Saratoga CLO is carried at fair value, which is based on a discounted cash
flow model that utilizes prepayment, re-investment and loss assumptions based on historical experience and projected performance, economic factors, the characteristics of the underlying cash flow, and
comparable yields for equity interests in collateralized loan obligation funds similar to Saratoga CLO, when available, as determined by SIA and recommended to our board of directors. Specifically, we use Intex cash flow models, or an appropriate
substitute, to form the basis for the valuation of our investment in Saratoga CLO. The models use a set of assumptions including projected default rates, recovery rates, reinvestment rate and prepayment rates in order to arrive at estimated
valuations. The assumptions are based on available market data and projections provided by third parties as well as management estimates. We use the output from the Intex models (i.e., the estimated cash flows) to perform a discounted cash flow
analysis on expected future cash flows to determine a valuation for our investment in Saratoga CLO. We undertake a multi-step valuation
process each quarter when valuing investments for which market quotations are not readily available, as described below:  

Each investment is initially valued by the responsible investment professionals of Saratoga Investment Advisors
and preliminary valuation conclusions are documented and discussed with the senior management; 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. In addition, all our investments are subject to the following valuation process:  

The audit committee of our board of directors reviews and approves each preliminary valuation and our Investment
Adviser and independent valuation firm (if applicable) will supplement the preliminary valuation to reflect any comments provided by the audit committee; and  

Our board of directors discusses the valuations and approves the fair value of each investment in good faith
based on the input of our Investment Adviser, independent valuation firm (to the extent applicable) and the audit committee of our board of directors. Because such valuations, and particularly valuations of private investments and private companies, are inherently uncertain, they may
fluctuate over short periods of time and may be based on estimates. The determination of fair value may differ materially from the values that would have been used if a ready market for these investments existed. Our net asset value could be
materially affected if the determinations regarding the fair value of our investments were materially higher or lower than the values that we ultimately realize upon the disposal of such investments. Ongoing relationships with and monitoring of portfolio companies Saratoga Investment Advisors will closely monitor each investment we make and, when appropriate, will conduct a regular dialogue with both the
management team and other debtholders and seek specifically tailored financial reporting. In addition, in certain circumstances, senior investment professionals of Saratoga Investment Advisors may take board seats or board observation seats. Distributions Our distributions, if any,
will be determined by our board of directors and paid out of assets legally available for distribution. Any such distributions generally will be taxable to our stockholders, including to those stockholders who receive additional shares of our common
stock pursuant to our dividend reinvestment plan. Prior to January 2009, we paid quarterly dividends to our stockholders. However, in January 2009, we suspended the practice of paying quarterly dividends to our stockholders and thereafter paid five
annual dividend distributions (December 2013, 2012, 2011, 2010 and 2009) to our stockholders since such time, which distributions were made with a combination of cash and the issuance of shares of our common stock as discussed more fully below. On September 24, 2014, we announced the recommencement of quarterly dividends to our stockholders and have subsequently made
distributions under this new policy. We have adopted a dividend reinvestment plan (DRIP) that provides for reinvestment of our dividend distributions on behalf of our stockholders unless a stockholder elects to receive cash. As a result,
if our board of directors authorizes, and we declare, a cash dividend, then our stockholders who have not opted out of the DRIP by the dividend record date will have their cash dividends automatically reinvested into additional shares of
our common stock, rather than receiving the cash dividends. We have the option to satisfy the share requirements of the DRIP through the issuance of new shares of common stock or through open market purchases of common stock by the DRIP plan
administrator.  14




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In order to maintain our qualification as a RIC, we must, for each fiscal year, distribute
an amount equal to at least 90.0% of our ordinary net taxable income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, reduced by deductible expenses. In addition, we will be subject to federal
excise taxes to the extent we do not distribute during the calendar year at least (1) 98.0% of our ordinary income for the calendar year, (2) 98.2% of our capital gains in excess of capital losses for the one year period ending on October 31 of
the calendar year and (3) any ordinary income and net capital gains for preceding years that were not distributed during such years and on which we paid no federal income tax. For the 2018 calendar year, the Company made distributions
sufficient such that we did not incur any federal excise taxes. We may elect to withhold from distribution a portion of our ordinary income for the 2019 calendar year and/or portion of the capital gains in excess of capital losses realized during
the one-year period ending October 31, 2019, if any, and, if we do so, we would expect to incur federal excise taxes as a result. For the 2017 calendar year, our distributions were sufficient requiring no
excise taxes. We may distribute taxable dividends that are payable in cash or shares of our common stock at the election of each
stockholder. Under certain applicable provisions of the Code and the Treasury regulations, distributions payable in cash or in shares of stock at the election of stockholders are treated as taxable dividends. The Internal Revenue Service
(IRS) has issued private rulings indicating that this rule will apply even where the total amount of cash that may be distributed is limited to no more than 20.0% of the total distribution. Under these rulings, if too many stockholders
elect to receive their distributions in cash, each such stockholder would receive a pro rata share of the total cash to be distributed and would receive the remainder of their distribution in shares of stock. If we decide to make any distributions
consistent with these rulings that are payable in part in our stock, taxable stockholders receiving such dividends will be required to include the full amount of the dividend (whether received in cash, our stock, or a combination thereof) as
ordinary income (or as long-term capital gain to the extent such distribution is properly reported as a capital gain dividend) to the extent of our current and accumulated earnings and profits for United States federal income tax purposes. As a
result, a U.S. stockholder may be required to pay tax with respect to such dividends in excess of any cash received. If a U.S. stockholder sells the stock he or she receives as a dividend in order to pay this tax, the sales proceeds may be less than
the amount included in income with respect to the dividend, depending on the market price of our stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to
withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock. In addition, if a significant number of our stockholders determine to sell shares of our stock in order to pay
taxes owed on dividends, it may put downward pressure on the trading price of our stock. Competition Our primary competitors in providing financing to private middle market companies include public and private investment funds (including
private equity funds, mezzanine funds, BDCs and SBICs), commercial and investment banks and commercial financing companies. Additionally, alternative investment vehicles, such as hedge funds, frequently invest in middle-market companies. As a
result, competition for investment opportunities at middle-market companies can be intense, and in the past couple of years we believe there has been an increase in the amount of debt capital available on average. This has resulted in a somewhat
more competitive environment for making new investments. Many middle-market companies are still unable to raise senior debt financing through traditional large financial institutions, and we believe this approach to financing remains difficult as
implementation of U.S. and international financial reforms, such as Basel 3, limits the capacity of large financial institutions to hold non-investment grade leveraged loans on their balance sheets. We believe
that many of these financial institutions have de- emphasized their service and product offerings to middle-market companies in particular. Many of our competitors are substantially larger and have considerably greater financial and marketing resources than us. For example, some
competitors may have access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which may allow them to consider a wider variety of investments and
establish more relationships than us. Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC or that the Code imposes on us as a RIC. We use the industry information available to
the investment professionals of Saratoga Investment Advisors to assess investment risks and determine appropriate pricing for our investments in portfolio companies. In addition, we believe that the investment professionals of our Investment Adviser
enable us to learn about, and compete effectively for, financing opportunities with attractive leveraged companies in the industries in which we seek to invest. For additional information concerning the competitive risks we face, please see Part I. Item 1A. Risk FactorsWe operate in a
highly competitive market for investment opportunities.  15




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Staffing We do not currently have any employees and do not expect to have any employees in the future. Services necessary for our business are provided
by individuals who are employees of Saratoga Investment Advisors, pursuant to the terms of the Management Agreement and the Administration Agreement. For a discussion of the Management Agreement, see BusinessInvestment Advisory and
Management Agreement below. We reimburse Saratoga Investment Advisors for our allocable portion of expenses incurred by it in performing its obligations under the Administration Agreement, including rent and our allocable portion of the cost
of our officers and their respective staffs, subject to certain limitations. For a discussion of the Administration Agreement, see BusinessAdministration Agreement below. Investment Advisory and Management Agreement Saratoga Investment Advisors serves as our investment adviser. Our Investment Adviser was formed in 2010 as a Delaware limited liability
company and became our investment advisor in July 2010. Subject to the overall supervision of our board of directors, Saratoga Investment Advisors manages our day-to-day
operations and provides investment advisory and management services to us. Under the terms of the Management Agreement, Saratoga Investment Advisors:  

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

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

closes and monitors the investments we make; and  

determines the securities and other assets that we purchase, retain or sell. Saratoga Investment Advisors services under the Management Agreement are not exclusive, and it is free to furnish similar services to other
entities. Management Fee and Incentive Fee Pursuant to the Management Agreement with Saratoga Investment Advisors, we pay Saratoga Investment Advisors a fee for investment advisory and
management services consisting of two componentsa base management fee and an incentive fee. The base management fee is paid
quarterly in arrears, and equals 1.75% per annum of our gross assets (other than cash or cash equivalents but including assets purchased with borrowed funds) and calculated at the end of each fiscal quarter based on the average value of our gross
assets (other than cash or cash equivalents but including assets purchased with borrowed funds) as of the end of such fiscal quarter and the end of the immediate prior fiscal quarter. Base management fees for any partial month or quarter are
appropriately pro-rated. The incentive fee has the following two parts: The first part is calculated and payable quarterly in arrears based on our pre-incentive fee net
investment income for the immediately preceding fiscal quarter. Pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees such as commitment,
origination, structuring, diligence, managerial and consulting fees or other fees that we receive from portfolio companies) accrued during the fiscal quarter, minus our operating expenses for the quarter (including the base management fee, expenses
payable under the Administration Agreement, and any interest expense and dividends paid on any issued and outstanding preferred stock or debt security, but excluding the incentive fee). Pre-incentive fee net
investment income includes, in the case of investments with a deferred interest feature (such as market discount, debt instruments with PIK interest, preferred stock with PIK dividends and zero-coupon
securities), accrued income that we have not yet received in cash. Pre- incentive fee net investment income does not include any realized capital gains, realized capital losses, unrealized capital appreciation
or depreciation or realized gains or losses resulting from the extinguishment of our own debt. Pre-incentive fee net investment income, expressed as a rate of return on the value of our net assets (defined as
total assets less liabilities) at the end of the immediately preceding fiscal quarter, is compared to a hurdle rate of 1.875% per quarter, subject to a catch up provision. The base management fee is calculated prior to giving
effect to the payment of any incentive fees.  16




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We pay Saratoga Investment Advisors an incentive fee with respect to our pre-incentive fee net investment income in each fiscal quarter as follows: (A) no incentive fee in any fiscal quarter in which our pre-incentive fee net investment income
does not exceed the hurdle rate; (B) 100.0% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income,
if any, that exceeds the hurdle rate but is less than or equal to 2.344% in any fiscal quarter is payable to Saratoga Investment Advisors; and (C) 20.0% of the amount of our pre-incentive fee net investment
income, if any, that exceeds 2.344% in any fiscal quarter. We refer to the amount specified in clause (B) as the catch-up. The catch-up
provision is intended to provide Saratoga Investment Advisors with an incentive fee of 20.0% on all of our pre-incentive fee net investment income as if a hurdle rate did not apply when our pre-incentive fee net investment income exceeds 2.344% in any fiscal quarter. Notwithstanding the foregoing, with respect to any period ending on or prior to December 31, 2010, Saratoga Investment Advisors was
only entitled to 20.0% of the amount of our pre-incentive fee net investment income, if any, that exceeded 1.875% in any fiscal quarter without any catch-up provision.
These calculations are appropriately pro-rated when such calculations are applicable for any period of less than three months. The following is a graphical representation of the calculation of the income-related portion of the incentive fee subsequent to any period
ending after December 31, 2010: Quarterly Incentive Fee Based on Pre-Incentive
Fee Net Investment Income Pre-Incentive Fee Net Investment Income (expressed as a percentage of the value of net assets)  LOGO Percentage of Pre-Incentive Fee Net Investment Income allocated to income-related portion of incentive fee The second part of the incentive fee, the capital gains fee, is determined and payable in arrears as of the end of each fiscal year (or, upon
termination of the Management Agreement), and is calculated at the end of each applicable fiscal year by subtracting (1) the sum of our cumulative aggregate realized capital losses and aggregate unrealized capital depreciation from (2) our
cumulative aggregate realized capital gains, in each case calculated from May 31, 2010 on each investment in the Companys portfolio. If such amount is positive at the end of such year, then the capital gains fee for such year is equal to
20.0% of such amount, less the cumulative aggregate amount of capital gains fees paid in all prior years. If such amount is negative, then there is no capital gains fee for such year. Under the Management Agreement, the capital gains portion of the incentive fee is based on realized gains and realized and unrealized losses
from May 31, 2010. Therefore, realized and unrealized losses incurred prior to such time will not be taken into account when calculating the capital gains portion of the incentive fee, and Saratoga Investment Advisors will be entitled to 20.0%
of net capital gains that arise after May 31, 2010. In addition, the cost basis for computing our realized gains and losses on investments held by us as of May 31, 2010 equals the fair value of such investments as of such date. Examples of Quarterly Incentive Fee Calculation Example 1: Income Related Portion of Incentive Fee(1): Assumptions  

Hurdle rate(2) = 1.875%  

Management fee(3) = 0.4375%  17




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

Other expenses (legal, accounting, custodian, transfer agent, etc.)(4) = 0.33% Alternative 1 Additional Assumptions  

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

Pre-incentive fee net investment income (investment
income(management fee + other expenses)) = 0.4825% Pre- incentive fee net investment income does not exceed hurdle rate, therefore there is no incentive fee. Alternative 2 Additional Assumptions  

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

Pre-incentive fee net investment income (investment
income(management fee + other expenses)) = 2.2325% Pre-incentive fee net
investment income exceeds hurdle rate, but does not fully satisfy the catch-up provision, therefore the income related portion of the incentive fee is 0.3575%.  Incentive Fee

=

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

100.0%(2.2325%1.875%)=

100.0%(0.3575%)=

0.3575%  (1)
The hypothetical amount of pre-incentive fee net investment income
shown is based on a percentage of total net assets. (2)
Represents 7.5% hurdle rate. (3)
Represents 1.75% annualized management fee. For the purposes of this example, we have assumed that we have not
incurred any indebtedness and that we maintain no cash or cash equivalents. (4)
The catch-up provision is intended to provide our
Investment Adviser with an incentive fee of 20.0% on all pre-incentive fee net investment income as if a hurdle rate did not apply when our net investment income exceeds 2.344% in any fiscal quarter. Alternative 3 Additional Assumptions  

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

Pre-Incentive Fee Net Investment Income (investment
income(management fee + other expenses) = 2.7325% Pre-incentive fee net
investment income exceeds the hurdle rate, and fully satisfies the catch-up provision, therefore the income related portion of the incentive fee is 0.5467%.  Incentive fee

=

100.0% × pre-incentive fee net investment income
(subject to catch-up)(4)Incentive fee

=

100.0% × catch-up + (20.0% × (Pre-incentive fee net investment income2.344%))Catch up

=

2.344%1.875%=

0.469%Incentive fee

=

(100.0% × 0.469%) +(20.0% ×(2.7325%2.344%))=

0.469% +(20.0% × 0.3885%)=

0.469% + 0.0777%=

0.5467% Example 2: Capital Gains Portion of Incentive Fee: Alternative 1  18




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Assumptions(1)  

Year 1: $20.0 million investment made in Company A (Investment A), and $30.0 million
investment made in Company B (Investment B)  

Year 2: Investment A is sold for $50.0 million and fair market value (FMV) of Investment B
determined to be $32.0 million  

Year 3: FMV of Investment B determined to be $25.0 million  

Year 4: Investment B sold for $31.0 million The capital gains portion of the incentive fee, if any, calculated under the cumulative method would be:  

Year 1: None  

Year 2: $6 million (20.0% multiplied by $30.0 million realized capital gains on sale of Investment A)  

Year 3: None; $5 million (20.0% multiplied by ($30.0 million realized cumulative capital gains less
$5.0 million cumulative capital depreciation)) less $6.0 million (capital gains incentive fee paid in Year 2)  

Year 4: $200,000; $6.2 million (20.0% multiplied by $31.0 million cumulative realized capital gains)
less $6.0 million (capital gains incentive fee paid in Year 2) Alternative 2 Assumptions(1)  (1)
The examples assume that Investment A and Investment B were acquired by us subsequent to May 31, 2010. If
Investment A and B were acquired by us prior to May 31, 2010, then the cost basis for computing our realized gains and losses on such investments would equal the fair value of such investments as of May 31, 2010.  

Year 1: $20.0 million investment made in Company A (Investment A), $30.0 million investment
made in Company B (Investment B) and $25.0 million investment made in Company C (Investment C)  

Year 2: Investment A sold for $50.0 million, FMV of Investment B determined to be $25.0 million and FMV
of Investment C determined to be $25.0 million  

Year 3: FMV of Investment B determined to be $27.0 million and Investment C sold for $30.0 million  

Year 4: FMV of Investment B determined to be $35.0 million  

Year 5: Investment B sold for $20.0 million The capital gains portion of the incentive fee, if any, calculated under the cumulative method would be:  

Year 1: None  

Year 2: $5.0 million (20.0% multiplied by $25.0 million ($30.0 million realized capital gains on
Investment A less $5.0 million unrealized capital depreciation on Investment B))  

Year 3: $1.4 million ($6.4 million (20.0% multiplied by $32.0 million ($35.0 million
cumulative realized capital gains less $3.0 million unrealized capital depreciation)) less $5.0 million (capital gains incentive fee paid in Year 2))  

Year 4: None  

Year 5: None ($5.0 million (20.0% multiplied by $25.0 million (cumulative realized capital gains of
$35.0 million less realized capital losses of $10.0 million)) less $6.4 million (cumulative capital gains incentive fee paid in Year 2 and Year 3)) The Management Agreement with Saratoga Investment Advisors was approved by our board of directors at an
in-person meeting of the directors, including a majority of our independent directors, and was approved by our stockholders at the special meeting of stockholders held on July 30, 2010. On July 9,
2018, our board of directors approved the renewal of the Management Agreement for an additional one-year term at an in-person meeting.  19




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In approving this Management Agreement, the directors considered, among other things,
(i) the nature, extent and quality of the advisory and other services to be provided to us by Saratoga Investment Advisors; (ii) our investment performance and the investment performance of Saratoga Investment Advisors; (iii) the
expected costs of the services to be provided by Saratoga Investment Advisors (including management fees, advisory fees and expense ratios) as compared to other companies within the industry, and the profits expected to be realized by Saratoga
Investment Advisors; (iv) the limited potential for economies of scale in investment management associated with managing us; and (v) Saratoga Investment Advisors estimated pro forma profitability with respect to managing us. Payment of our expenses The Management Agreement provides that all investment professionals of Saratoga Investment Advisors and its staff, when and to the extent
engaged in providing investment advisory services required to be provided by Saratoga Investment Advisors, and the compensation and routine overhead expenses of such personnel allocable to such services, will be provided and paid for by Saratoga
Investment Advisors and not by us. We bear all costs and expenses of our operations and transactions, including those relating to:  

organization;  

calculating our net asset value (including the cost and expenses of any independent valuation firm);  

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

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

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

offerings of our common stock and other securities;  

investment advisory and management fees;  

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

transfer agent and custodial fees;  

federal and state registration fees;  

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

federal, state and local taxes;  

independent directors fees and expenses;  

costs of preparing and filing reports or other documents required by governmental bodies (including the 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 the Administration Agreement, including rent and the
allocable portion of the cost of our officers and their respective staffs (including travel expenses)). Duration
and Termination The Management Agreement will remain in effect continuously, unless terminated under the termination provisions of
the agreement. The Management Agreement provides that it may be terminated at any time, without the payment of any penalty, upon 60 days written notice, by the vote of stockholders holding a majority of our outstanding voting securities, or by the
vote of our directors or by Saratoga Investment Advisors.  20




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The Management Agreement will, unless terminated as described above, continue in effect from
year to year so long as it is approved at least annually by (i) the vote of the board of directors, or by the vote of stockholders holding a majority of our outstanding voting securities, and (ii) the vote of a majority of our directors
who are not parties to the Management Agreement or interested persons (as such term is defined in Section 2(a)(19) of the 1940 Act) of any party to such agreement, in accordance with the requirements of the 1940 Act. Indemnification Under the Management Agreement, Saratoga Investment Advisors and certain of its affiliates are not liable to us for any action taken or omitted
to be taken by Saratoga Investment Advisors in connection with the performance of any of its duties or obligations under the agreement or otherwise as an investment adviser to us, except to the extent specified in Section 36(b) of the 1940 Act
concerning loss resulting from a breach of fiduciary duty (as the same is finally determined by judicial proceedings) with respect to the receipt of compensation for services and except to the extent such action or omission constitutes gross
negligence, willful misfeasance, bad faith or reckless disregard of its duties and obligations under the agreement. We also provide
indemnification to Saratoga Investment Advisors and certain of its affiliates for damages, liabilities, costs and expenses incurred by them in or by reason of any pending, threatened or completed action, suit, investigation or other proceeding
arising out of or otherwise based upon the performance of any of its duties or obligations under the agreement or otherwise as an investment adviser to us. However, we would not provide indemnification against any liability to us or our security
holders to which Saratoga Investment Advisors or such affiliates would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of any such persons duties or by reason of the reckless disregard of
its duties and obligations under the agreement. Organization of the Investment Adviser Saratoga Investment Advisors is registered as an investment adviser under the Investment Advisers Act of 1940. The principal executive offices
of Saratoga Investment Advisors are located at 535 Madison Avenue, New York, New York 10022. Administration Agreement Pursuant to a separate Administration Agreement, Saratoga Investment Advisors, who also serves as our administrator, furnishes us with office
facilities, equipment and clerical, book-keeping and record keeping services. Under the Administration Agreement, our administrator also performs, or oversees the performance of, our required administrative services, which include, among other
things, being responsible for the financial records which we are required to maintain, preparing reports for our stockholders and reports required to be filed with the SEC. In addition, our administrator assists us in determining and publishing our
net asset value, oversees the preparation and filing of our tax returns and the printing and dissemination of reports to our stockholders, and generally oversees the payment of our expenses and the performance of administrative and professional
services rendered to us by others. Payments under the Administration Agreement equal an amount based upon our allocable portion of our administrators overhead in performing its obligations under the Administration Agreement, including rent and
our allocable portion of the cost of our officers and their respective staffs relating to the performance of services under this agreement (including travel expenses). Our allocable portion is based on the proportion that our total assets bears to
the total assets administered or managed by our administrator. Under the Administration Agreement, our administrator also provides managerial assistance, on our behalf, to those portfolio companies who accept our offer of assistance. The
Administration Agreement may be terminated by either party without penalty upon 60 days written notice to the other party. Our board of directors, including a majority of independent directors, will annually review the compensation we pay to the
Adviser to determine that the provisions of the Administrative Agreement are carried out satisfactorily and to determine, among other things, whether the fees payable under such agreement are reasonable in light of the services provided. Our board
of directors reviews the methodology employed in determining how the expenses are allocated to us and any proposed allocation of administrative expenses among us and any affiliates of the Adviser. Our board of directors then assesses the
reasonableness of such reimbursements for expenses allocated to us based on the breadth, depth and quality of the administrative services as compared to the estimated cost to us of obtaining similar services from third-party service providers known
to be available. In addition, our board of directors considers whether any single third-party service provider would be capable of providing all such services at comparable cost and quality. Finally, our board of directors compares the total amount
paid to the Adviser for such services as a percentage of our net assets to the same ratio as reported by other comparable funds. The amount payable by us under the Administration Agreement was initially capped at $1.0 million for each annual
term of the agreement. On July 8, 2015, our board of directors approved the renewal of the Administration Agreement for an additional one- year term and determined to increase the cap on the payment or
reimbursement of expenses by the Company thereunder, which had not been increased since the inception of the agreement, to $1.3 million. On July 7, 2016, our board of directors approved the renewal of the Administration Agreement for an
additional one-year term. On October 5, 2016, our board of directors determined to increase the cap on the payment or reimbursement of expenses by the Company under the Administration Agreement, from
$1.3 million to $1.5 million, effective November 1, 2016. On July 11, 2017, our board of directors approved the renewal of the Administration Agreement for an additional one-year term and
determined to increase the cap on the payment or reimbursement of expenses by the Company from $1.5 million to $1.75 million, effective August 1, 2017. On July 9, 2018, our board of directors approved the renewal of the
Administration Agreement for an additional one-year term and determined to increase the cap on the payment or reimbursement of expenses by the Company from $1.75 million to $2.0 million, effective
August 1, 2018.  21




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Indemnification Under the Administration Agreement, Saratoga Investment Advisors and certain of its affiliates are not liable to us for any action taken or
omitted to be taken by Saratoga Investment Advisors in connection with the performance of any of its duties or obligations under the agreement. We also provide indemnification to Saratoga Investment Advisors and certain of its affiliates for damages, liabilities, costs and expenses
incurred by them in or by reason of any pending, threatened or completed action, suit, investigation or other proceeding arising out of or otherwise based upon the performance of any of its duties or obligations under the agreement or otherwise as
an administrator to us. However, we do not provide indemnification against any liability to us or our security holders to which Saratoga Investment Advisors or such affiliates would otherwise be subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of any such persons duties or by reason of the reckless disregard of its duties and obligations under the agreement. License Agreement We entered into a
trademark license agreement with Saratoga Investment Advisors, pursuant to which Saratoga Investment Advisors grants us a non-exclusive, royalty-free license to use the name Saratoga. Under this
agreement, we have a right to use the Saratoga name, for so long as Saratoga Investment Advisors or one of its affiliates remains our Investment Adviser. Other than with respect to this limited license, we have no legal right to the
Saratoga name. Saratoga Investment Advisors has the right to terminate the license agreement if it is no longer acting as our investment adviser. In the event the Management Agreement is terminated, we would be required to change our
name to eliminate the use of the name Saratoga. Business Development Company Regulations We have elected to be treated as a BDC under the 1940 Act. As with other companies regulated by the 1940 Act, a BDC must adhere to certain
substantive regulatory requirements. The 1940 Act contains prohibitions and restrictions relating to transactions between BDCs and their affiliates (including any investment advisers or sub-advisers),
principal underwriters and affiliates of those affiliates or underwriters, and requires that a majority of the directors be persons other than interested persons, as that term is defined in the 1940 Act. In addition, the 1940 Act
provides that we may not change the nature of our business so as to cease to be, or to withdraw our election as, a BDC, unless approved by a majority of our outstanding voting securities, as defined in the 1940 Act. A majority of the
outstanding voting securities of a company is defined under the 1940 Act as the lesser of: (i) 67.0% or more of such companys stock present at a meeting if more than 50.0% of the outstanding stock of such company is present and represented by
proxy or (ii) more than 50.0% of the outstanding stock of such company. We do not intend to acquire securities issued by any
investment company (i.e., mutual fund, registered closed-end fund or BDC) that exceed the limits imposed by the 1940 Act. Under these limits, except for registered money market funds, we generally cannot
acquire more than 3% of the voting stock of any investment company, invest more than 5% of the value of our total assets in the securities of one investment company or invest more than 10% of the value of our total assets in the securities of more
than one investment company. With regard to that portion of our portfolio invested in securities issued by investment companies, it should be noted that such investments might subject our stockholders to additional expenses. We expect to be periodically examined by the SEC for compliance with the 1940 Act. We are required to provide and maintain a bond issued by a reputable fidelity insurance company to protect us against larceny and
embezzlement. Furthermore, as a BDC, we are prohibited from protecting any director or officer against any liability to us or our stockholders arising from willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved
in the conduct of such persons office.  22




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We and our investment adviser have adopted and implemented written policies and procedures
reasonably designed to prevent violation of the federal securities laws and review these policies and procedures annually for their adequacy and the effectiveness of their implementation. We and our investment adviser have designated a chief
compliance officer to be responsible for administering these policies and procedures. Qualifying assets A BDC must have been organized and have its principal place of business in the United States and must be operated for the purpose of making
investments in the types of securities described in (1), (2) or (3) below. Under the 1940 Act, a BDC may not acquire any asset other than assets of the type listed in Section 55(a) of the 1940 Act, which are referred to as qualifying
assets, unless, at the time the acquisition is made, qualifying assets represent at least 70.0% of the companys total assets. The principal categories of qualifying assets relevant to our business are the following:  (1)
Securities purchased in transactions not involving any public offering from the issuer of such securities,
which issuer (subject to certain limited exceptions) is an eligible portfolio company, or from any person who is, or has been during the preceding 13 months, an affiliated person of an eligible portfolio company, or from any other person, subject to
such rules as may be prescribed by the SEC. An eligible portfolio company is defined in the 1940 Act as any issuer which:  (a)
is organized under the laws of, and has its principal place of business in, the United States;  (b)
is not an investment company (other than a small business investment company wholly-owned by the BDC) or a
company that would be an investment company but for certain exclusions under the 1940 Act; and  (c)
satisfies either of the following:  (i)
does not have any class of securities listed on a national securities exchange;  (ii)
has a class of securities listed on a national securities exchange but has an aggregate market value of
outstanding voting and non-voting common equity of less than $250.0 million;  (iii)
is controlled by a BDC or a group of companies including a BDC and the BDC has an affiliated person who is a
director of the eligible portfolio company;  (iv)
is a small and solvent company having total assets of not more than $4.0 million and capital and surplus
of not less than $2.0 million; or  (v)
meets such other criteria as may established by the SEC.  (2)
Securities of any eligible portfolio company which we control.  (3)
Securities purchased in a private transaction from a U.S. issuer that is not an investment company or from an
affiliated person of the issuer, or in transactions incident thereto, if the issuer is in bankruptcy and subject to reorganization or if the issuer, immediately prior to the purchase of its securities was unable to meet its obligations as they came
due without material assistance other than conventional lending or financing arrangements.  (4)
Securities of an eligible portfolio company purchased from any person in a private transaction if there is no
ready market for such securities and we already own at least 60.0% of the outstanding equity of the eligible portfolio company.  (5)
Securities received in exchange for or distributed on or with respect to securities described in
(1) through (4) above, or pursuant to the exercise of options, warrants or rights relating to such securities.  (6)
Cash, cash equivalents, U.S. Government securities or high-quality debt securities maturing in one year or less
from the time of investment. The regulations defining qualifying assets may change over time. We may adjust our
investment focus as needed to comply with and/or take advantage of any regulatory, legislative, administrative or judicial actions in this area. Significant managerial assistance to portfolio companies A BDC generally must offer to make available to the issuer of the securities in which it invests significant managerial assistance, except in
circumstances where either (i) the BDC controls such issuer of securities or (ii) the BDC purchases such securities in conjunction with one or more other persons acting together and one of the other persons in the group makes available
such managerial assistance. As a BDC we offer, and must provide upon request, managerial assistance to our portfolio companies. Making available significant managerial assistance means, among other things, any arrangement whereby the BDC, through
its directors, officers or employees or those of its investment adviser, offers to provide, and, if accepted, does so provide, significant guidance and counsel concerning the management, operations or business objectives and policies of a portfolio
company. This assistance could involve, among other things, monitoring the operations of our portfolio companies, participating in board and management meetings, consulting with and advising officers of portfolio companies and providing other
organizational and financial guidance. Pursuant to a separate Administration Agreement, our Investment Adviser provides such managerial assistance on our behalf to portfolio companies that request this assistance, recognizing that our involvement
with each investment will vary based on factors including the size of the company, the nature of our investment, the companys overall stage of development and our relative position in the capital structure. We may receive fees for these
services.  23




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Temporary investments As a BDC, pending investment in other types of qualifying assets, as described above, our investments may consist of cash, cash
equivalents, U.S. Government securities or high-quality debt securities maturing in one year or less from the time of investment, which we refer to, collectively, as temporary investments, so that 70.0% of our assets are qualifying assets.
Typically, we will invest in U.S. Treasury bills or in repurchase agreements, provided that such agreements are fully collateralized by cash or securities issued by the U.S. Government or its agencies. A repurchase agreement involves the purchase by
an investor, such as us, of a specified security and the simultaneous agreement by the seller to repurchase it at an agreed-upon future date and at a price which is greater than the purchase price by an amount that reflects an agreed-upon interest
rate. There is no percentage restriction on the proportion of our assets that may be invested in such repurchase agreements. However, if more than 25.0% of our total assets constitute repurchase agreements from a single counterparty, we would not
meet the asset diversification requirements in order to qualify as a regulated investment company (RIC) for U.S. federal income tax purposes. Thus, we do not intend to enter into repurchase agreements with a single counterparty in excess
of this limit. Our Investment Adviser will monitor the creditworthiness of the counterparties with which we enter into repurchase agreement transactions. Indebtedness and senior securities As a BDC, we are permitted, under specified conditions, to issue multiple classes of indebtedness and one class of shares of stock, senior to
our common stock, if our asset coverage, as defined in the 1940 Act, is at least equal to 200.0% immediately after each such issuance. On April 16, 2018, as permitted by the Small Business Credit Availability Act, which was signed into law on
March 23, 2018, our non-interested Board of Directors approved of our becoming subject to a minimum asset coverage ratio of 150.0% under Sections 18(a)(1) and 18(a)(2) of the 1940 Act. The 150.0% asset
coverage ratio became effective on April 16, 2019. See Risk Factors  Recent legislation allows us to incur additional leverage. We may also borrow amounts up to 5.0% of the value of our total assets for temporary or emergency
purposes without regard to asset coverage. The 1940 Act also limits the amount of warrants, options and rights to common stock that we
may issue and the terms of such securities. Common stock We are generally not able to issue and sell our common stock at a price below net asset value per share. We may, however, sell our common
stock, warrants, options or rights to acquire our common stock, at a price below the current net asset value of the common stock if our board of directors determines that such sale is in our best interests and that of our stockholders, and our
stockholders approve such sale. In any such case, the price at which our securities are to be issued and sold may not be less than a price which, in the determination of our board of directors, closely approximates the market value of such
securities (less any distributing commission or discount). We may also make rights offerings to our stockholders at prices per share less than the net asset value per share, subject to applicable requirements of the 1940 Act. Code of ethics As
a BDC, we and Saratoga Investment Advisors have each adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Advisers Act,
respectively, that establishes procedures for personal investments and restricts certain personal securities transactions. Personnel subject to each code may invest in securities for their personal investment accounts, including securities that may
be purchased or held by us, so long as such investments are made in accordance with the codes requirements. You may read and copy the code of ethics at the SECs Public Reference Room in Washington, D.C. You may obtain information on the
operation of the Public Reference Room by calling the SEC at (202) 942-8090. In addition, each code of ethics is available on the EDGAR database on the SECs website at http://www.sec.gov. You may
also obtain copies of the code of ethics, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the SECs Public Reference
Section, Washington, D.C. 20549-0102. Our code of ethics is also available on our corporate governance webpage at http://ir.saratogainvestmentcorp.com/corporate-governance.  24




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Proxy voting policies and procedures SEC registered investment advisers that have the authority to vote (client) proxies (which authority may be implied from a general grant of
investment discretion) are required to adopt policies and procedures reasonably designed to ensure that the adviser votes proxies in the best interests of its clients. Registered investment advisers also must maintain certain records on proxy
voting. In most cases, we will invest in securities that do not generally entitle us to voting rights in our portfolio companies. When we do have voting rights, we will delegate the exercise of such rights to our Investment Adviser. Saratoga Investment Advisors has particular proxy voting policies and procedures in place. In determining how to vote, officers of Saratoga
Investment Advisors will consult with each other, taking into account our interests and the interests of our investors, as well as any potential conflicts of interest. Saratoga Investment Advisors will consult with legal counsel to identify
potential conflicts of interest. Where a potential conflict of interest exists, Saratoga Investment Advisors may, if it so elects, resolve it by following the recommendation of a disinterested third party, by seeking the direction of our independent
directors or, in extreme cases, by abstaining from voting. While Saratoga Investment Advisors may retain an outside service to provide voting recommendations and to assist in analyzing votes, it will not delegate its voting authority to any third
party. An officer of Saratoga Investment Advisors will keep a written record of how all such proxies are voted. It will retain records of
(1) proxy voting policies and procedures, (2) all proxy statements received (or it may rely on proxy statements filed on the SECs EDGAR system in lieu thereof), (3) all votes cast, (4) investor requests for voting information,
and (5) any specific documents prepared or received in connection with a decision on a proxy vote. If it uses an outside service, Saratoga Investment Advisors may rely on such service to maintain copies of proxy statements and records, so long
as such service will provide a copy of such documents promptly upon request. Saratoga Investment Advisors proxy voting policies are
not exhaustive and are designed to be responsive to the wide range of issues that may be subject to a proxy vote. In general, Saratoga Investment Advisors will vote our proxies in accordance with these guidelines unless: (1) it has determined
otherwise due to the specific and unusual facts and circumstances with respect to a particular vote, (2) the subject matter of the vote is not covered by these guidelines, (3) a material conflict of interest is present, or (4) it
finds it necessary to vote contrary to its general guidelines to maximize stockholder value or our best interests. In reviewing proxy
issues, Saratoga Investment Advisors generally will use the following guidelines: Elections of Directors:In general, Saratoga
Investment Advisors will vote in favor of the management-proposed slate of directors. If there is a proxy fight for seats on a portfolio companys board of directors, or Saratoga Investment Advisors determines that there are other compelling
reasons for withholding our vote, it will determine the appropriate vote on the matter. It may withhold votes for directors that fail to act on key issues, such as failure to: (1) implement proposals to declassify a board, (2) implement a
majority vote requirement, (3) submit a rights plan to a stockholder vote or (4) act on tender offers where a majority of stockholders have tendered their shares. Finally, Saratoga Investment Advisors may withhold votes for directors of non-U.S. issuers where there is insufficient information about the nominees disclosed in the proxy statement. Appointment of Auditors:We believe that a portfolio company remains in the best position to choose its independent auditors and
Saratoga Investment Advisors will generally support managements recommendation in this regard. Changes in Capital Structure:Changes in a portfolio companys organizational documents may be required by state or federal regulation. In general, Saratoga Investment Advisors will cast our votes in accordance with the management on such proposals. However, Saratoga
Investment Advisors will consider carefully any proposal regarding a change in corporate structure that is not required by state or federal regulation. Corporate Restructurings, Mergers and Acquisitions:We believe proxy votes dealing with corporate reorganizations are an extension of
the investment decision. Accordingly, Saratoga Investment Advisors will analyze such proposals on a case-by-case basis and vote in accordance with its perception of our
interests.  25




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Proposals Affecting Stockholder Rights:We will generally vote in favor of proposals
that give stockholders a greater voice in the affairs of a portfolio company and oppose any measure that seeks to limit such rights. However, when analyzing such proposals, Saratoga Investment Advisors will balance the financial impact of the
proposal against any impairment of stockholder rights as well as of our investment in the portfolio company. Corporate Governance:We recognize the importance of good corporate governance. Accordingly, Saratoga Investment Advisors will generally favor proposals that promote transparency and accountability within a portfolio company. Anti-Takeover Measures:Saratoga Investment Advisors will evaluate, on a case-by-case basis, any proposals regarding anti- takeover measures to determine the likely effect on stockholder value dilution. Share Splits:Saratoga Investment Advisors will generally vote with management on share split matters. Limited Liability of Directors:Saratoga Investment Advisors will generally vote with management on matters that could adversely affect
the limited liability of directors. Social and Corporate Responsibility:Saratoga Investment Advisors will review proposals
related to social, political and environmental issues to determine whether they may adversely affect stockholder value. It may abstain from voting on such proposals where they do not have a readily determinable financial impact on stockholder value. Privacy principles We are committed to protecting the privacy of our stockholders. The following explains the privacy policies of Saratoga Investment Corp.,
Saratoga Investment Advisors and their affiliated companies. We will safeguard, according to strict standards of security and
confidentiality, all information we receive about our stockholders. Generally, we do not receive any
non-public personal information relating to our stockholders, although certain non-public personal information of our stockholders may become available to us. The only
information we collect from stockholders is the holders name, address, number of shares and social security number. This information is used only so that we can send annual reports and other information about us to the stockholder and send the
stockholder proxy statements or other information required by law. We restrict access to non-public personal information about our stockholders to our Investment Advisers and Administrators
employees with a legitimate business need for the information. We maintain physical, electronic and procedural safeguards designed to protect the non-public personal information of our stockholders. We do not share this information with any non-affiliated third party except as described below:  

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

Service Providers.We may disclose your personal information to companies that provide services on our
behalf, such as recordkeeping, processing a stockholders trades, and mailing stockholder information. These companies are required to protect our stockholders information and use it solely for the purpose for which they received it.  

Courts and Government Officials.If required by law, we may disclose a stockholders personal
information in accordance with a court order or at the request of government regulators. Only that information required by law, subpoena, or court order will be disclosed. Compliance with applicable laws As a BDC, we are periodically examined by the SEC for compliance with the 1940 Act. We are required to provide and maintain a bond issued by a reputable fidelity insurance company to protect us against larceny and
embezzlement. Furthermore, as a BDC, we are prohibited from protecting any director or officer against any liability to us or our stockholders arising from willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved
in the conduct of such persons office.  26




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We and Saratoga Investment Advisors are each required to adopt and implement written
policies and procedures reasonably designed to prevent violation of the federal securities laws, review these policies and procedures annually for their adequacy and the effectiveness of their implementation, and designate a chief compliance officer
to be responsible for administering the policies and procedures. The NYSE Corporate Governance Regulations The NYSE has adopted corporate governance regulations that listed companies must comply with. We are in compliance with such corporate
governance listing standards applicable to BDCs. Co-investment We may be prohibited under the 1940 Act from knowingly participating in certain transactions with our affiliates without the prior approval of
our board of directors who are not interested persons and, in some cases, prior approval by the SEC. Thus, based on current SEC interpretations, co-investment transactions involving a BDC like us and an entity
that is advised by Saratoga Investment Advisors or an affiliated adviser generally could not be effected without SEC relief. The staff of the SEC has, however, granted no- action relief permitting for
purchases of a single class of privately-placed securities provided that the adviser negotiates no term other than price and certain other conditions are met. As a result, currently we only expect to co-invest
on a concurrent basis with affiliates of Saratoga Investment Advisors when each of us will own the same securities of the issuer and when no term is negotiated other than price. Any such investment would be made, subject to compliance with existing
regulatory guidance, applicable regulations and our allocation procedures. We may in the future submit an application for exemptive
relief to the SEC to permit greater flexibility to negotiate the terms of co-investments because we believe that it will be advantageous for us to co-invest with
affiliates of Saratoga Investment Advisors where such investment is consistent with the investment objective, investment positions, investment policies, investment strategies, investment restrictions, regulatory requirements and other pertinent
factors applicable to us. However, there is no assurance that any application for exemptive relief, if made, would be granted by the SEC. Small
Business Investment Company Regulations On March 28, 2012, our wholly-owned subsidiary, SBIC LP, received an SBIC license from
the SBA. The SBIC license allows our SBIC LP to obtain leverage by issuing SBA-guaranteed
debentures, subject to the satisfaction of certain customary procedures. SBA-guaranteed debentures are non-recourse, interest only debentures with interest payable semi-
annually and have a ten-year maturity. The principal amount of SBA-guaranteed debentures is not required to be paid prior to maturity but may be prepaid at any time
without penalty. The interest rate of SBA-guaranteed debentures is fixed at the time of issuance at a market-driven spread over U.S. Treasury Notes with 10-year
maturities. SBICs are designed to stimulate the flow of private equity capital to eligible small businesses. Under SBA regulations, SBICs
may make loans to eligible small businesses and invest in the equity securities of small businesses. Under present SBA regulations, eligible small businesses include businesses that have a tangible net worth not exceeding $19.5 million and have
average annual fully taxed net income not exceeding $6.5 million for the two most recent fiscal years. In addition, an SBIC must devote 25.0% of its investment activity to smaller concerns as defined by the SBA. A smaller concern is
one that has a tangible net worth not exceeding $6.0 million and has average annual fully taxed net income not exceeding $2.0 million for the two most recent fiscal years. SBA regulations also provide alternative size standard criteria to
determine eligibility, which depend on the industry in which the business is engaged and are based on such factors as the number of employees and gross sales. According to SBA regulations, SBICs may make long-term loans to small businesses, invest
in the equity securities of such businesses and provide them with consulting and advisory services. SBIC LP is subject to regulation and
oversight by the SBA, including requirements with respect to maintaining certain minimum financial ratios and other covenants. Receipt of an SBIC license does not assure that SBIC LP will receive SBA-
guaranteed debenture funding, which is dependent upon SBIC LP continuing to be in compliance with SBA regulations and policies. The SBA, as a creditor, will have a superior claim to SBIC LPs assets over our stockholders and debtholders in the
event we liquidate SBIC LP or the SBA exercises its remedies under the SBA-guaranteed debentures issued by SBIC LP upon an event of default.  27




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We received exemptive relief from the SEC to permit it to exclude the debt of SBIC LP
guaranteed by the SBA from the definition of senior securities in the asset coverage test under the 1940 Act. This allows us increased flexibility under the asset coverage test by permitting it to borrow up to $150.0 million more than it would
otherwise be able to absent the receipt of this exemptive relief. On April 16, 2018, as permitted by the Small Business Credit Availability Act, which was signed into law on March 23, 2018, our
non-interested board of directors approved of our becoming subject to a minimum asset coverage ratio of 150.0% under Sections 18(a)(1) and 18(a)(2) of the 1940 Act. The 150.0% asset coverage ratio became
effective on April 16, 2019. In December 2015, the 2016 omnibus spending bill approved by Congress and signed into law by the
President increased the amount of SBA-guaranteed debentures that affiliated SBIC funds can have outstanding from $225.0 million to $350.0 million, subject to SBA approval. SBA regulations currently
limit the amount of SBA-guaranteed debentures that an SBIC may issue to $150.0 million when it has at least $75.0 million in regulatory capital. Affiliated SBICs are permitted to issue up to a
combined maximum amount of $350.0 million in SBA-guaranteed debentures when they have at least $175.0 million in combined regulatory capital. On September 27, 2018, the SBA issued a green light letter inviting us to file a formal license application for a second SBIC
license. If approved, the additional SBIC license would provide the Company with an incremental source of long-term capital by permitting us to issue, subject to SBA approval, up to $175.0 million of additional
SBA-guaranteed debentures in addition to the $150.0 million already approved under the Companys first license. Receipt of a green light letter from the SBA does not assure an applicant that the SBA
will ultimately issue an SBIC license and the Company has received no assurance or indication from the SBA that it will receive an additional SBIC license, or of the timeframe in which it would receive an additional license, should one ultimately be
granted. As of February 28, 2019, our SBIC LP subsidiary had $75.0 million in regulatory capital and $150.0 million of SBA- guaranteed debentures outstanding. The SBA restricts the ability of SBICs to repurchase their capital stock. SBA regulations also include restrictions on a change of control or transfer of an SBIC
and require that SBICs invest idle funds in accordance with SBA regulations. In addition, our SBIC LP subsidiary may also be limited in its ability to make distributions to us if it does not have sufficient capital, in accordance with SBA
regulations. Available Information We file with or submit to the SEC annual, quarterly and current periodic reports, proxy statements and other information meeting the
informational requirements of the Securities Exchange of 1934, as amended (the Exchange Act). You may inspect and copy these reports, proxy statements and other information at the Public Reference Room of the SEC at 100 F Street, N.E.,
Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-
SEC-0330. Copies of these reports, proxy and information statements and other information may be obtained, after paying a duplicating fee, by electronic request at the following
e-mail address: publicinfo@sec.gov, or by writing the SECs Public Reference Section, Washington, D.C. 20549-0102. In addition, the SEC maintains an Internet website that contains reports, proxy and
information statements and other information filed electronically by us with the SEC at http://www.sec.gov. Our Internet address is
http://www.saratogainvestmentcorp.com.We make available free of charge on our Internet website our Annual Report on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Information contained on our website
is not incorporated by reference into this Annual Report, and you should not consider that information to be part of this Annual Report. ITEM 1A. RISK FACTORS Investing in our securities involves a number of significant risks. In addition to other information
contained in this Annual Report on Form 10-K, you should consider carefully the following information before making an investment in our securities. The risks set forth below are the principal risks with
respect to the Company generally and with respect to business development companies, they may not be the only risks we face. This section nonetheless describes the principal risk factors associated with investment in the Company specifically, as
well as those factors generally associated with investment in a company with investment objectives, investment policies, capital structure or trading markets similar to the Companys. If any of the risks occur, our business, financial condition
and results of operations could be materially adversely affected. In such case, our net asset value and the trading price of our securities could decline and you may lose all or part of your investment.  28




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Risks Related to Our Business and Structure Market volatility and the condition of the debt and equity capital markets could negatively impact our financial condition and stock price. From time to time, capital markets may experience periods of disruption and instability. For example, between 2008 and 2009, the global capital
markets were unstable as evidenced by periodic disruptions in liquidity in the debt capital markets, significant write-offs in the financial services sector, the re-pricing of credit risk in the broadly
syndicated credit market and the failure of major financial institutions. Despite actions of the U.S. federal government and foreign governments, these events contributed to worsening general economic conditions that materially and adversely
impacted the broader financial and credit markets and reduced the availability of debt and equity capital for the market as a whole and financial services firms in particular. While market conditions have largely recovered from the events of 2008
and 2009, there have been continuing periods of volatility, some lasting longer than others. For example, the referendum by British voters to exit the European Union in June 2016 led to further disruption and instability in the global markets (see
Risk FactorsRisks Related to Our Business and StructureUncertainty about the financial stability of the United States, China and several countries in Europe could have a significant adverse effect on our business, financial
condition and results of operations.). There can be no assurance these market conditions will not repeat themselves or worsen in the future. Equity capital may be difficult to raise during periods of adverse or volatile market conditions because, subject to some limited exceptions,
as a BDC, we are generally not able to issue additional shares of our common stock at a price less than net asset value without first obtaining approval for such issuance from our stockholders and our independent directors. Volatility and dislocation in the capital markets can also create a challenging environment in which to raise or access debt capital. The
reappearance of market conditions similar to those experienced from 2008 through 2009 for any substantial length of time could make it difficult to extend the maturity of or refinance our existing indebtedness or obtain new indebtedness with similar
terms and any failure to do so could have a material adverse effect on our business. The debt capital that will be available to us in the future, if at all, may be at a higher cost and on less favorable terms and conditions than what we currently
experience including being at a higher cost due to a rising rate environment. If we are unable to raise or refinance debt, then our equity investors may not benefit from the potential for increased returns on equity resulting from leverage and we
may be limited in our ability to make new commitments or to fund existing commitments to our portfolio companies. Significant changes or
volatility in the capital markets may also have a negative effect on the valuations of our investments. While most of our investments are not publicly traded, applicable accounting standards require us to assume as part of our valuation process that
our investments are sold in a principal market to market participants (even if we plan on holding an investment through its maturity). Significant changes in the capital markets may also affect the pace of our investment activity and the potential
for liquidity events involving our investments. Thus, the illiquidity of our investments may make it difficult for us to sell such investments to access capital if required, and as a result, we could realize significantly less than the value at
which we have recorded our investments if we were required to sell them for liquidity purposes. An inability to raise or access capital could have a material adverse effect on our business, financial condition or results of operations. The Republican Party currently controls the executive branch and the Senate portion of the legislative branch of government, which increases
the likelihood that legislation may be adopted that could significantly affect the regulation of U.S. financial markets. Areas subject to potential change, amendment or repeal include the Dodd-Frank Act and the authority of the Federal Reserve and
the Financial Stability Oversight Council. The United States may also potentially withdraw from or renegotiate various trade agreements and take other actions that would change current trade policies of the United States. We cannot predict which, if
any, of these actions will be taken or, if taken, their effect on the financial stability of the United States. Such actions could have a significant adverse effect on our business, financial condition and results of operations. We cannot predict
the effects of these or similar events in the future on the U.S. economy and securities markets or on our investments. We monitor developments and seek to manage our investments in a manner consistent with achieving our investment objective, but
there can be no assurance that we will be successful in doing so.  29




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Uncertainty about the financial stability of the United States, China and several countries in Europe
could have a significant adverse effect on our business, financial condition and results of operations. Due to federal budget
deficit concerns, Standard & Poors Financial Services LLC (S&P) downgraded the federal governments credit rating from AAA to AA+ for the first time in history on August 5, 2011. Further, Moodys
Investor Services, Inc. (Moodys) and Fitch Ratings Inc. (Fitch) had warned that they may downgrade the federal governments credit rating under certain circumstances. Further downgrades or warnings by S&P or
other rating agencies, and the United States governments credit and deficit concerns in general, could cause interest rates and borrowing costs to rise, which may negatively impact both the perception of credit risk associated with our debt
portfolio and our ability to access the debt markets on favorable terms. In addition, a decreased U.S. government credit rating could create broader financial turmoil and uncertainty, which may weigh heavily on our financial performance and the
value of our common stock. Deterioration in the economic conditions in the Eurozone and globally, including instability in financial
markets, may pose a risk to our business. In recent years, financial markets have been affected at times by a number of global macroeconomic and political events, including the following: large sovereign debts and fiscal deficits of several
countries in Europe and in emerging markets jurisdictions, levels of non-performing loans on the balance sheets of European banks, the potential effect of any European country leaving the Eurozone, the
potential effect of the United Kingdom leaving the European Union, the potential effect of Scotland leaving the United Kingdom, and market volatility and loss of investor confidence driven by political events, including the general elections in the
United Kingdom in June 2017 and in Germany in September 2017 and referenda in the United Kingdom in June 2016 and Italy in December 2016. Market and economic disruptions have affected, and may in the future affect, consumer confidence levels and
spending, personal bankruptcy rates, levels of incurrence and default on consumer debt and home prices, among other factors. We cannot assure you that market disruptions in Europe, including the increased cost of funding for certain governments and
financial institutions, will not impact the global economy, and we cannot assure you that assistance packages will be available, or if available, be sufficient to stabilize countries and markets in Europe or elsewhere affected by a financial crisis.
To the extent uncertainty regarding any economic recovery in Europe negatively impacts consumer confidence and consumer credit factors, our business, financial condition and results of operations could be significantly and adversely affected. In the
second quarter of 2015, stock prices in China experienced a significant drop, resulting primarily from continued sell-off of shares trading in Chinese markets. In August 2015, Chinese authorities sharply
devalued Chinas currency. In June 2016, the United Kingdom held a referendum in which voters approved an exit from the European Union (Brexit), and, subsequently, on March 29, 2017, the U.K. government began the formal process
of leaving the European Union, which is set to occur on March 29, 2019. Brexit created political and economic uncertainty and instability in the global markets (including currency and credit markets), and especially in the United Kingdom and
the European Union, and this uncertainty and instability may last indefinitely. Because the U.K. Parliament rejected Prime Minister Theresa Mays proposed Brexit deal with the European Union in January 2019, there is increased uncertainty on
the outcome of Brexit. There is also continued concern about national-level support for the euro and the accompanying coordination of fiscal and wage policy among European Economic and Monetary Union member countries. These market conditions have
historically and could again have a material adverse effect on debt and equity capital markets in the United States and Europe, which could have a materially negative impact on our business, financial condition and results of operations. We and
other companies in the financial services sector may have to access, if available, alternative markets for debt and equity capital. In
the second quarter of 2015, stock prices in China experienced a significant drop, resulting primarily from continued sell-off of shares trading in Chinese markets. In addition, in August 2015, Chinese
authorities sharply devalued Chinas currency. Since then, the Chinese capital markets have continued to experience periods of instability. These market and economic disruptions have affected, and may in the future affect, the U.S. capital
markets, which could adversely affect our business, financial condition or results of operations. The Federal Reserve raised the Federal
Funds Rate in December 2015, in December 2016, in March 2017, in June 2017 and again in December 2017, and has announced its intention to continue to raise the federal funds rate over time. These developments, along with the United States
governments credit and deficit concerns, the European sovereign debt crisis and the economic slowdown in China, could cause interest rates to be volatile, which may negatively impact our ability to access the debt markets on favorable terms. We may be obligated to pay Saratoga Investment Advisors incentive fees even if we incur a net loss, or there is a decline in the value of our
portfolio. Saratoga Investment Advisors is entitled to incentive fees for each fiscal quarter in an amount equal to a percentage
of the excess of our investment income for that quarter (before deducting incentive compensation, but net of operating expenses and certain other items) above a threshold return for that quarter. Our
pre-incentive fee net investment income, for incentive compensation purposes, excludes realized and unrealized capital gains or losses that we may incur in the fiscal quarter, even if such capital gains or
losses result in a net gain or loss on our consolidated statements of operations for that quarter. Thus, we may be required to pay Saratoga Investment Advisors incentive fees for a fiscal quarter even if there is a decline in the value of our
portfolio or we incur a net loss for that quarter.  30




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Under the terms of the Management Agreement, we may have to pay incentive fees to Saratoga Investment
Advisors in connection with the sale of an investment that is sold at a price higher than the fair value of such investment on May 31, 2010, even if we incur a loss on the sale of such investment. Incentive fees on capital gains paid to Saratoga Investment Advisors under the Management Agreement equals 20.0% of our incentive fee
capital gains, which equals our realized capital gains on a cumulative basis from May 31, 2010 through the end of the fiscal year, if any, computed net of all realized capital losses and unrealized capital depreciation on a cumulative
basis on each investment in the Companys portfolio, less the aggregate amount of any previously paid capital gain incentive fee. Under the Management Agreement, the capital gains portion of the incentive fee is based on realized gains and
realized and unrealized losses from May 31, 2010. Therefore, realized and unrealized losses incurred prior to such time will not be taken into account when calculating the capital gains portion of the incentive fee, and Saratoga Investment
Advisors will be entitled to 20.0% of the incentive fee capital 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 will equal the fair value
of such investments as of such date. See our Form 10-Q for the quarter ended May 31, 2010 that was filed with the SEC on July 15, 2010 for the fair value and other information related to our
investments as of such date. As a result, we may be required to pay incentive fees to Saratoga Investment Advisors on the sale of an investment even if we incur a realized loss on such investment, so long as the investment is sold for an amount
greater than its fair value as of May 31, 2010. The way in which the base management and incentive fees under the Management Agreement is
determined may encourage Saratoga Investment Advisors to take actions that may not be in our best interests. The incentive fee
payable by us to our Investment Adviser may create an incentive for it to make investments on our behalf that are risky or more speculative than would be the case in the absence of such compensation arrangement, which could result in higher
investment losses, particularly during cyclical economic downturns. The way in which the incentive fee payable to our Investment Adviser is determined, which is calculated separately in two components as a percentage of the income (subject to a
hurdle rate) and as a percentage of the realized gain on invested capital, may encourage our Investment Adviser to use leverage to increase the return on our investments or otherwise manipulate our income so as to recognize income in quarters where
the hurdle rate is exceeded. Moreover, we pay Saratoga Investment Advisors a base management fee based on our total assets, including any investments made with borrowings, which may create an incentive for it to cause us to incur more leverage than
is prudent, or not to repay our outstanding indebtedness when it may be advantageous for us to do so, in order to maximize its compensation. Under certain circumstances, the use of leverage may increase the likelihood of default, which would
disfavor the holders of our securities. The incentive fee payable by us to our Investment Adviser also may create an incentive for our
Investment Adviser to invest on our behalf in instruments that have a deferred interest feature. Under these investments, we would accrue the interest over the life of the investment but would not receive the cash income from the investment until
the end of the investments term, if at all. Our net investment income used to calculate the income portion of our incentive fee, however, includes accrued interest. Thus, a portion of the incentive fee would be based on income that we have not
yet received in cash and may never receive in cash if the portfolio company is unable to satisfy such interest payment obligation to us. Consequently, while we may make incentive fee payments on income accruals that we may not collect in the future
and with respect to which we do not have a claw back right against our Investment Adviser per se, the amount of accrued income written off in any period will reduce the income in the period in which such
write-off was taken and may thereby reduce such periods incentive fee payment. In addition,
Saratoga Investment Advisors receives a quarterly income incentive fee based, in part, on our pre-incentive fee net investment income, if any, for the immediately preceding calendar quarter. This income
incentive fee is subject to a fixed quarterly hurdle rate before providing an income incentive fee return to Saratoga Investment Advisors. This fixed hurdle rate was determined when then current interest rates were relatively low on a historical
basis. Thus, if interest rates rise, it would become easier for our investment income to exceed the hurdle rate and, as a result, more likely that Saratoga Investment Advisors will receive an income incentive fee than if interest rates on our
investments remained constant or decreased. However, if we repurchase our outstanding debt securities, including our 6.75% Notes due 2023 (the 2023 Notes) and 6.25% Notes due 2025 (the 2025 Notes) and such repurchase results
in our recording a net gain or loss on the extinguishment of debt for financial reporting and tax purposes, such net gain or loss will not be included in our pre-incentive fee net investment income for
purposes of determining the income incentive fee payable to our Investment Adviser under the Management Agreement.  31




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Moreover, our Investment Adviser receives the incentive fee based, in part, upon net capital
gains realized on our investments. Unlike the portion of the incentive fee based on income, there is no performance threshold applicable to the portion of the incentive fee based on net capital gains. As a result, our Investment Adviser may have a
tendency to invest more in investments that are likely to result in capital gains as compared to income producing securities. Such a practice could result in our investing in more speculative securities than would otherwise be the case, which could
result in higher investment losses, particularly during economic downturns. Our board of directors will seek to ensure that Saratoga
Investment Advisors is acting in our best interests and that any conflict of interest faced by Saratoga Investment Advisors in its capacity as our Investment Adviser does not negatively impact us. The base management fee we pay to Saratoga Investment Advisors may induce it to influence our leverage, which may be contrary to our interest. We pay Saratoga Investment Advisors a quarterly base management fee based on the value of our total assets (including any assets
acquired with leverage). Accordingly, Saratoga Investment Advisors has an economic incentive to increase our leverage. Our board of directors monitors the conflicts presented by this compensation structure by approving the amount of leverage that we
incur. If our leverage is increased, we will be exposed to increased risk of loss, bear the increase cost of issuing and servicing such senior indebtedness, and will be subject to any additional covenant restrictions imposed on us in an indenture or
other instrument or by the applicable lender. We employ leverage, which magnifies the potential for gain or loss on amounts invested and may
increase the risk of investing in us. Borrowings, also known as leverage, magnify the potential for gain or loss on amounts
invested and, therefore, increase the risks associated with investing in us. We borrow from and issue senior debt securities to banks and other lenders that is secured by a lien on our assets. Holders of these senior securities have fixed dollar
claims on our assets that are superior to the claims of the holders of our securities. Leverage is generally considered a speculative investment technique. Any increase in our income in excess of interest payable on our outstanding indebtedness
would cause our net income to increase more than it would have had we not incurred leverage, while any decrease in our income would cause net income to decline more sharply than it would have had we not incurred leverage. Such a decline could
negatively affect our ability to make common stock distributions or scheduled debt payments, including with respect to the 2023 Notes and 2025 Notes. There can be no assurance that our leveraging strategy will be successful. Our outstanding indebtedness imposes, and additional debt we may incur in the future will likely impose, financial and operating covenants
that restrict our business activities, including limitations that could hinder our ability to finance additional loans and investments or to make the distributions required to maintain our status as a RIC. A failure to add new debt facilities or
issue additional debt securities or other evidences of indebtedness in lieu of or in addition to existing indebtedness could have a material adverse effect on our business, financial condition or results of operations. As of February 28, 2019, there were no outstanding borrowings under the Credit Facility. As of February 28, 2019, we had issued
$150.0 million in SBA-guaranteed debentures, $74.5 million in aggregate principal amount of the 2023 Notes and $60.0 million in aggregate principal amount of 2025 Notes. On January 13,
2017, we redeemed the $61.8 million of outstanding 2020 Notes using the proceeds from the issuance of the 2023 Notes, leaving $9.8 million in net proceeds from the 2023 Notes offering. We may incur additional indebtedness in the future,
including, but not limited to, borrowings under the Credit Facility or the issuance of additional debt securities in one or more public or private offerings, although there can be no assurance that we will be successful in doing so. Our ability to
service our debt depends largely on our financial performance and is subject to prevailing economic conditions and competitive pressures. The amount of leverage that we employ at any particular time will depend on our managements and our board
of directors assessment of market and other factors at the time of any proposed borrowing. Saratoga Investment Advisors liability is
limited under the Management Agreement and we will indemnify Saratoga Investments Advisors against certain liabilities, which may lead it to act in a riskier manner on our behalf than it would when acting for its own account. Saratoga Investment Advisors has not assumed any responsibility to us other than to render the services described in the Management Agreement.
Pursuant to the Management Agreement, Saratoga Investment Advisors and its officers and employees are not liable to us for their acts under the Management Agreement absent willful misfeasance, bad faith, gross negligence or reckless disregard in the
performance of their duties. We have agreed to indemnify, defend and protect Saratoga Investment Advisors and its officers and employees with respect to all damages, liabilities, costs and expenses resulting from acts of Saratoga Investment Advisors
not arising out of willful misfeasance, bad faith, gross negligence or reckless disregard in the performance of their duties under the Management Agreement. These protections may lead Saratoga Investment Advisors to act in a riskier manner when
acting on our behalf than it would when acting for its own account.  32




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Substantially all of our assets are subject to security interests under our Credit Facility or claims
of the SBA with respect to SBA-guaranteed debentures we may issue and if we default on our obligations thereunder, we may suffer adverse consequences, including the foreclosure on our assets. Substantially all of our assets are pledged as collateral under the Credit Facility or are subject to a superior claim over the holders of our
common stock, 2023 Notes or the 2025 Notes by the SBA pursuant to the SBA-guaranteed debentures. If we default on our obligations under the Credit Facility or the
SBA-guaranteed debentures, Madison Capital Funding and/or the SBA may have the right to foreclose upon and sell, or otherwise transfer, the collateral subject to their security interests or superior claim. In
such event, we may be forced to sell our investments to raise funds to repay our outstanding borrowings in order to avoid foreclosure and these forced sales may be at times and at prices we would not consider advantageous. Moreover, such
deleveraging of our company could significantly impair our ability to effectively operate our business in the manner in which we have historically operated. In addition, if Madison Capital Funding exercises its right to sell the assets pledged under the Credit Facility, such sales may be completed
at distressed sale prices, thereby diminishing or potentially eliminating the amount of cash available to us after repayment of the amounts outstanding under the Credit Facility. We are exposed to risks associated with changes in interest rates including potential effects on our cost of capital and net investment income. General interest rate fluctuations and changes in credit spreads on floating rate loans may have a substantial negative impact on
our investments and investment opportunities and, accordingly, may have a material adverse effect on our rate of return on invested capital. In addition, an increase in interest rates would make it more expensive to use debt to finance our
investments. Decreases in credit spreads on debt that pays a floating rate of return would have an impact on the income generation of our floating rate assets. Trading prices for debt that pays a fixed rate of return tend to fall as interest rates
rise. Trading prices tend to fluctuate more for fixed rate securities that have longer maturities. Although we have no policy governing the maturities of our investments, under current market conditions we expect that we will invest in a portfolio
of debt generally having maturities of up to ten years. This means that we will be subject to greater risk (other things being equal) than an entity investing solely in shorter-term securities. Because we may borrow to fund our investments, a portion of our net investment income may be dependent upon the difference between the
interest rate at which we borrow funds and the interest rate at which we invest these funds. A portion of our investments will have fixed interest rates, while a portion of our borrowings will likely have floating interest rates. As a result, a
significant change in market interest rates could have a material adverse effect on our net investment income. In periods of rising interest rates, our cost of funds could increase, which would reduce our net investment income. We may hedge against
such interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts, subject to applicable legal requirements, including without limitation, all necessary registrations (or exemptions from
registration) with the Commodity Futures Trading Commission. These activities may limit our ability to participate in the benefits of lower interest rates with respect to the hedged borrowings. Adverse developments resulting from changes in interest
rates or hedging transactions could have a material adverse effect on our business, financial condition and results of operations. The interest
rates of our floating-rate loans to our portfolio companies that extend beyond 2021 might be subject to change based on recent regulatory changes. LIBOR, the London Interbank Offered Rate, is the basic rate of interest used in lending transactions between banks on the London interbank
market and is widely used as a reference for setting the interest rate on loans globally. We typically use LIBOR as a reference rate in floating-rate loans we extend to portfolio companies such that the interest due to us pursuant to a term loan
extended to a portfolio company is calculated using LIBOR. The terms of our debt investments generally include minimum interest rate floors which are calculated based on LIBOR. On July 27, 2017, the United Kingdoms Financial Conduct Authority, which regulates LIBOR, announced that it intends to stop
persuading or compelling banks to submit LIBOR rates after 2021. It is unclear if at that time whether LIBOR will cease to exist or if new methods of calculating LIBOR will be established such that it continues to exist after 2021. The U.S. Federal
Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, is considering replacing U.S. dollar LIBOR with a new index calculated by short term repurchase agreements,
backed by Treasury securities, called the Secured Overnight Financing Rate (SOFR). The first publication of SOFR was released in April 2018. Whether or not SOFR attains market traction as a LIBOR replacement remains a question and the
future of LIBOR at this time is uncertain. If LIBOR ceases to exist, we may need to renegotiate the credit agreements extending beyond 2021 with our portfolio companies that utilize LIBOR as a factor in determining the interest rate to replace LIBOR
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There are significant potential conflicts of interest which could adversely impact our investment
returns. Our executive officers and directors, and the members of our Investment Adviser, serve or may serve as officers,
directors or principals of entities that operate in the same or a related line of business as we do or of investment funds managed by our affiliates. Accordingly, they may have obligations to investors in those entities, the fulfillment of which
might not be in the best interests of us or our stockholders. For example, Christian L. Oberbeck, our chief executive officer and managing member of our Investment Adviser, is the managing partner of Saratoga Partners, a middle market private equity
investment firm. In addition, the principals of our Investment Adviser may manage other funds which may from time to time have overlapping investment objectives with those of us and accordingly invest in, whether principally or secondarily, asset
classes similar to those targeted by us. If this should occur, the principals of our Investment Adviser will face conflicts of interest in the allocation of investment opportunities to us and such other funds. Although our investment professionals
will endeavor to allocate investment opportunities in a fair and equitable manner, we and our common stockholders could be adversely affected in the event investment opportunities are allocated among us and other investment vehicles managed or
sponsored by, or affiliated with, our executive officers, directors and Investment Adviser, and the members of our Investment Adviser. Changes in
laws or regulations governing our operations, or changes in the interpretation thereof, and any failure by us to comply with laws or regulations governing our operations may adversely affect our business. We are subject to regulation at the local, state and federal levels. These laws and regulations, as well as their interpretation, may be
changed from time to time. Any change in these laws or regulations, or their interpretation, or any failure by us to comply with these laws or regulations may adversely affect our business. Changes to United States tariff and import/export regulations may have a negative effect on our portfolio companies and, in turn, harm us. There has been on-going discussion and commentary regarding potential significant changes to United
States trade policies, treaties and tariffs. The current administration, along with Congress, has created significant uncertainty about the future relationship between the United States and other countries with respect to the trade policies,
treaties and tariffs. These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and,
in particular, trade between the impacted nations and the United States. Any of these factors could depress economic activity and restrict our portfolio companies access to suppliers or customers and have a material adverse effect on their
business, financial condition and results of operations, which in turn would negatively impact us. We are dependent on information systems and
systems failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to pay dividends. Our business is dependent on our and third parties communications and information systems. Any failure or interruption of those systems,
including as a result of the termination of an agreement with any third-party service providers, could cause delays or other problems in our activities. Our financial, accounting, data processing, backup or other operating systems and facilities may
fail to operate properly or become disabled or damaged as a result of a number of factors including events that are wholly or partially beyond our control and adversely affect our business. There could be:  

sudden electrical or telecommunications outages;  

natural disasters such as earthquakes, tornadoes and hurricanes;  

disease pandemics;  

events arising from local or larger scale political or social matters, including terrorist acts; and  

cyber-attacks. These events, in turn, could have a material adverse effect on our operating results and negatively affect the market price of our common
stock and our ability to pay dividends to our stockholders.  34




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Cybersecurity risks and cyber incidents may adversely affect our business by causing a disruption to
our operations, a compromise or corruption of our confidential information and/or damage to our business relationships, all of which could negatively impact our business, results of operations or financial condition. Our business operations rely upon secure information technology systems for data processing, storage and reporting. Despite careful security
and controls design, implementation and updating, our information technology systems could become subject to cyber- attacks and cyber incidents. A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity or
availability of our information resources. These incidents may be an intentional attack or an unintentional event and could involve gaining unauthorized access to our information systems for purposes of misappropriating assets, stealing confidential
information, corrupting data or causing operational disruption. The result of these incidents may include disrupted operations, misstated or unreliable financial data, liability for stolen information, misappropriation of assets, increased
cybersecurity protection and insurance costs, litigation and damage to our business relationships. Any such attack could result in significant losses, reputational damage, litigation, regulatory fines or penalties, or otherwise adversely affect our
business, financial condition or results of operations. In addition, we may be required to expend significant additional resources to modify our protective measures and to investigate and remediate vulnerabilities or other exposures arising from
operational and security risks. We face risks posed to our information systems, both internal and those provided to us by third-party service providers. We, our Adviser and its affiliates have implemented processes, procedures and internal controls
to help mitigate cybersecurity risks and cyber intrusions, but these measures, as well as our increased awareness of the nature and extent of a risk of a cyber-incident, may be ineffective and do not guarantee that a cyber- incident will not occur
or that our financial results, operations or confidential information will not be negatively impacted by such an incident. Third parties
with which we do business (including those that provide services to us) may also be sources or targets of cybersecurity or other technological risks. We outsource certain functions and these relationships allow for the storage and processing of our
information and assets, as well as certain investor, counterparty, employee and borrower information. While we engage in actions to reduce our exposure resulting from outsourcing, ongoing threats may result in unauthorized access, loss, exposure or
destruction of data, or other cybersecurity incidents, with increased costs and other consequences, including those described above. Privacy and information security laws and regulation changes, and compliance with those changes, may also result in
cost increases due to system changes and the development of new administrative processes. Regulations governing our operation as a BDC will affect
our ability to raise additional capital. Our business requires a substantial amount of additional capital. We may acquire
additional capital from the issuance of senior securities or other indebtedness or the issuance of additional shares of our common stock. However, we may not be able to raise additional capital in the future on favorable terms or at all. We may
issue debt securities or preferred securities, which we refer to collectively as senior securities, and we may borrow money from banks or other financial institutions, up to the maximum amount permitted by the 1940 Act. We are generally permitted to incur indebtedness or issue senior securities in amounts such that our asset coverage, as defined in the 1940
Act, equals at least 150% after each issuance of senior securities. Compliance with these requirements may unfavorably limit our investment opportunities and reduce our ability in comparison to other companies to profit from favorable spreads
between the rates at which we can borrow and the rates at which we can lend. As a business development company, therefore, we may need to issue equity more frequently than our privately-owned competitors, which may lead to greater stockholder
dilution. With respect to stock that is a senior security, we must make provisions to prohibit any dividend distribution to our stockholders or the repurchase of certain of our securities, unless we meet the applicable asset coverage ratios at the
time of the dividend distribution or repurchase. If the value of our assets declines, we may be unable to satisfy the asset coverage test. If that happens, we may be required to liquidate a portion of our investments and repay a portion of our
indebtedness at a time when such sales may be disadvantageous in order to make dividend distributions or repurchase certain of our securities. We are not generally able to issue and sell our common stock at a price below net asset value per share. We may, however, sell our common
stock, or issue warrants, options or rights to acquire our common stock, at a price below the current net asset value of the common stock if our board of directors determines that such sale is in our best interests and the best interests of our
stockholders, and the holders of a majority of our outstanding voting securities have approved such issuances within the prior year. In any such case, the price at which our securities are to be issued and sold may not be less than a price which, in
the determination of our board of directors, closely approximates the market value of such securities (less any commission or discount). If our common stock trades at a discount to net asset value, this restriction could adversely affect our ability
to raise capital. We do not currently have stockholder approval of issuances below net asset value.  35




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Recent legislation allows us to incur additional leverage. The 1940 Act previously prohibited us from incurring indebtedness unless immediately after such borrowing we have an asset coverage for total
borrowings of at least 200% (i.e., the amount of debt may not exceed 50% of the value of our assets). However, the Small Business Credit Availability Act, which was signed into law on March 23, 2018, has modified the 1940 Act by allowing a BDC
to increase the maximum amount of leverage it may incur from an asset coverage ratio of 200% to an asset coverage ratio of 150%, if certain requirements are met. Under the legislation, we were allowed to increase our leverage capacity once the
majority of our independent directors approved an increase in our leverage capacity, with such approval becoming effective after one year. On April 16, 2018, our non-interested board of directors approved
of our becoming subject to a minimum asset coverage ratio of 150% under Sections 18(a)(1) and 18(a)(2) of the 1940 Act. The 150% asset coverage ratio became effective on April 16, 2019. We are required to make certain disclosures on our website
and in SEC filings regarding, among other things, the receipt of approval to increase our leverage, our leverage capacity and usage, and risks related to leverage. Leverage magnifies the potential for loss on investments in our indebtedness and on invested equity capital. As we use leverage to partially
finance our investments, you will experience increased risks of investing in our securities. If the value of our assets increases, then leveraging would cause the net asset value attributable to our common stock to increase more sharply than it
would have had we not leveraged. Conversely, if the value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not leveraged our business. Similarly, any increase in our income
in excess of interest payable on the borrowed funds would cause our net investment income to increase more than it would without the leverage, while any decrease in our income would cause net investment income to decline more sharply than it would
have had we not borrowed. Such a decline could negatively affect our ability to pay common stock dividends, scheduled debt payments or other payments related to our securities. Leverage is generally considered a speculative investment technique. See
Risk FactorsRisks Related to Our Business and StructureWe employ leverage, which magnifies the potential for gain or loss on amounts invested and may increase the risk of investing in us. The agreement governing our Credit Facility contains various covenants that, among other things, limits our discretion in operating our business and
provides for certain minimum financial covenants. The agreement governing the Credit Facility contains customary default
provisions such as the termination or departure of certain key persons of Saratoga Investment Advisors, a material adverse change in our business and the failure to maintain certain minimum loan quality and performance standards. An
event of default under the facility would result, among other things, in termination of the availability of further funds under the facility and an accelerated maturity date for all amounts outstanding under the facility, which would likely disrupt
our business and, potentially, the portfolio companies whose loans we financed through the facility. This could reduce our revenues and, by delaying any cash payment allowed to us under the facility until the lender has been paid in full, reduce our
liquidity and cash flow and impair our ability to grow our business and maintain our status as a RIC. Each loan origination under the
facility is subject to the satisfaction of certain conditions. We cannot assure you that we will be able to borrow funds under the facility at any particular time or at all. We will be subject to corporate-level U.S. income tax if we fail to qualify as a RIC. We intend to maintain our qualification as a RIC under the Code. As a RIC, we do not pay U.S. federal income taxes on our income (including
realized gains) that is distributed to our stockholders, provided that we satisfy certain source of income, distribution and asset diversification requirements. The source of income requirement is satisfied if we derive at least 90.0% of our annual gross income from interest, dividends, payments with
respect to certain securities loans, gains from the sale or other disposition of securities or options thereon or foreign currencies, or other income derived with respect to our business of investing in such securities or currencies, and net income
from interests in qualified publicly traded partnerships, as defined in the Code. The annual distribution requirement is
satisfied if we distribute to our stockholders on an annual basis an amount equal to at least 90.0% of our ordinary net taxable income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, reduced by
deductible expenses. We are subject to certain asset coverage ratio requirements under the 1940 Act and covenants under our borrowing agreements that could, under certain circumstances, restrict us from making the required distributions. In such
case, if we are unable to obtain cash from other sources, we may be subject to corporate-level U.S. income tax.  36




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The diversification requirements will be satisfied if we diversify our holdings so that at
the end of each quarter of the taxable year: (i) at least 50.0% of the value of our assets consists of cash, cash equivalents, U.S. government securities, securities of other regulated investment companies, and other securities if such other
securities of any one issuer do not represent more than 5.0% of the value of our assets or more than 10% of the outstanding voting securities of the issuer; and (ii) no more than 25.0% of the value of our assets is invested in the securities,
other than U.S. government securities or securities of other regulated investment companies, of one issuer or of two or more issuers that are controlled, as determined under applicable tax rules, by us and that are engaged in the same or similar or
related trades or businesses or in certain publicly traded partnerships. Failure to meet these tests may result in our having to
(i) dispose of certain investments quickly or (ii) raise additional capital to prevent the loss of our RIC qualification. Because most of our investments will be in private companies, any such dispositions could be made at disadvantageous
prices and may result in substantial losses. If we raise additional capital to satisfy the asset diversification requirements, it could take us time to invest such capital. During this period, we will invest the additional capital in temporary
investments, such as cash and cash equivalents, which we expect will earn yields substantially lower than the interest income that we anticipate receiving in respect of investments in leveraged loans and mezzanine debt. If we fail to qualify as a RIC for any reason, all of our taxable income will be subject to U.S. federal income tax at regular corporate
rates. The resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution to our common stockholders or payment of our outstanding indebtedness including the 2023 Notes and 2025 Notes. Such a
failure would have a material adverse effect on our results of operations and financial condition. Because we intend to distribute between 90% and
100% of our income to our stockholders in connection with our election to be treated as a RIC, we will continue to need additional capital to finance our growth. If additional funds are unavailable or not available on favorable terms, our ability to
grow will be impaired. In order to qualify for the tax benefits available to RICs and to minimize corporate-level U.S. federal
taxes, we intend to distribute to our stockholders between 90% and 100% of our annual taxable income, except that we may retain certain net capital gains for investment and treat such amounts as deemed distributions to our stockholders. If we elect
to treat any amounts as deemed distributions, we must pay U.S. federal income taxes at the corporate rate on such deemed distributions on behalf of our stockholders. As a result of these requirements, we will likely need to raise capital from other
sources to grow our business. 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 includes all of our borrowings and
any outstanding preferred stock, of at least 150% as of April 16, 2019; These requirements limit the amount that we may borrow. Because we will continue to need capital to grow our investment portfolio, these limitations may prevent us from
incurring debt and require us to raise additional equity at a time when it may be disadvantageous to do so. While we expect to be able to
borrow and to issue additional debt and equity securities, we cannot assure you that debt and equity financing will be available to us on favorable terms, or at all. Also, as a BDC, we generally are not permitted to issue equity securities priced
below net asset value without stockholder approval. If additional funds are not available to us, we could be forced to curtail or cease new investment activities, and our net asset value and share price could decline. We may have difficulty paying our required distributions if we recognize income before or without receiving cash in respect of such income. For U.S. federal income tax purposes, we may be required to recognize taxable income in circumstances in which we do not receive a
corresponding payment in cash. For example, we may on occasion hold debt obligations that are treated under applicable tax rules as having original issue discount (such as debt instruments with PIK or, in certain cases, increasing interest rates or
issued with warrants) and we must include in income each year a portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by us in the same taxable year. We
may also have to include in income other amounts that we have not yet received in cash, such as deferred loan origination fees that are paid after origination of the loan or are paid in non-cash compensation
such as warrants or stock. In addition, we may be required to accrue for U.S. federal income tax purposes amounts attributable to our investment in Saratoga CLO, a collateralized loan obligation fund, that may differ from the distributions paid in
respect of our investment in the subordinated notes of such collateralized loan obligation fund because of the factors set forth above or because distributions on the subordinated notes are contractually required to be diverted for reinvestment or
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Because any original issue discount or other amounts accrued will be included in our
investment company taxable income for the year of accrual, we may be required to make a distribution to our stockholders in order to satisfy the annual distribution requirement, even though we will not have received any corresponding cash amount. As
a result, we may have difficulty meeting the annual distribution requirement necessary to obtain and maintain RIC tax treatment under the Code. We may have to sell some of our investments at times and/or at prices we would not consider advantageous,
raise additional debt or equity capital or forgo new investment opportunities for this purpose. If we are not able to obtain cash from other sources, we may fail to qualify for RIC tax treatment and thus become subject to U.S. federal
corporate-level income tax. The Tax Cuts and Jobs Act of 2017 (the Tax Bill) was enacted in the U.S. on December 22,
2017. Effective January 1, 2018, the Tax Bill lowered the federal tax rate from 34% to 21%. The Tax Bill and future regulatory actions pertaining to it could adversely impact the industry and our own results of operations by increasing taxation
of certain activities and structures in our industry. We are unable to predict all of the ultimate impacts of the Tax Bill and other proposed tax reform regulations and legislation on our business and results of operations. While we currently
estimate that the near term economic impact of the Tax Bill to us will be minimal, uncertainty regarding the impact of the Tax Bill remains, as a result of factors including future regulatory and rulemaking processes, the prospects of additional
corrective or supplemental legislation, potential trade or other litigation and other factors. Further, it is possible that other legislation could be introduced and enacted in the future that would have an adverse impact on us. For the year ended
February 28, 2018, we did not record provisional amounts for the enactment-date effects of the Tax Bill by applying the guidance in Staff Accounting Bulletin No. 118 (SAB 118) regarding application of FASB ASC Topic 740, Income
Taxes, because we had not yet completed our enactment-date accounting for these effects. We applied the guidance in SAB 118 when accounting for the enactment-date effects of the Tax Bill for the year ended February 28, 2019. At
February 28, 2019, we have now completed our accounting for all of the enactment-date income tax effects of the Tax Bill as currently presented. Our ability to enter into transactions with our affiliates is restricted. Because we have elected to be treated as a BDC, we are prohibited under the 1940 Act from participating in certain transactions with certain of
our affiliates without the prior approval of our independent directors and, in some cases, the SEC. Any person that owns, directly or indirectly, 5.0% or more of our outstanding voting securities is our affiliate for purposes of the 1940 Act and we
are generally prohibited from buying or selling any securities (other than any security of which we are the issuer) from or to such affiliate, absent the prior approval of our independent directors. The 1940 Act also prohibits certain
joint transactions with certain of our affiliates, which could include investments in the same portfolio company, without prior approval of our independent directors and, in some cases, the SEC. If a person acquires more than 25.0% of
our voting securities, we are prohibited from buying or selling any security (other than any security of which we are the issuer) from or to such person or certain of that persons affiliates, or entering into prohibited joint transactions with
such person, absent the prior approval of the SEC. Similar restrictions limit our ability to transact business with our officers, directors or Investment Adviser or their affiliates. As a result of these restrictions, we may be prohibited from
buying or selling any security (other than any security of which we are the issuer) from or to any portfolio company of a private equity fund managed by our Investment Adviser without the prior approval of the SEC, which may limit the scope of
investment opportunities that would otherwise be available to us. We operate in a highly competitive market for investment opportunities. A number of entities compete with us to make the types of investments that we make in private middle market companies. We compete
with other BDCs, public and private funds (including SBICs), commercial and investment banks, commercial financing companies, insurance companies, high-yield investors, hedge funds, and, to the extent they provide an alternative form of financing,
private equity funds. Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than us. Some competitors may have a lower cost of funds and access to funding sources that are not
available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments that could allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, many of our
competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC. As a result of this competition, we may not be able to take advantage of attractive investment opportunities from time to time, and we cannot assure
you that we will be able to identify and make investments that meet our investment objective. We do not seek to compete primarily based
on the interest rates we offer and we believe that some of our competitors may make loans with interest rates that are comparable to or lower than the rates we offer. We may lose investment opportunities if we do not match our competitors pricing, terms and structure. If we match our competitors
pricing, terms and structure, we may experience decreased net interest income and increased risk of credit loss. As a result of operating in such a competitive environment, we may make investments that are on better terms to our portfolio companies
than we originally anticipated, which may impact our return on these investments.  38




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Economic recessions or downturns could impair the ability of our portfolio companies to repay loans
and harm our operating results. Many of our portfolio companies may be susceptible to economic slowdowns or recessions and may be
unable to repay our debt investments during these periods. Therefore, our non-performing assets are likely to increase and the value of our portfolio is likely to decrease during these periods. Adverse
economic conditions also may decrease the value of collateral securing some of our debt investments and the value of our equity investments. Economic slowdowns or recessions could lead to financial losses in our portfolio and a decrease in revenues,
net income and assets. Unfavorable economic conditions also could increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events could prevent us from adding to our
investment portfolio, cause us to receive a reduced level of interest income from our portfolio companies and/or reduce the fair market value of our investments. Any of the foregoing events could adversely affect our distributable income and have a
material adverse effect on our operating results. We are a non-diversified investment company within the
meaning of the 1940 Act, and therefore we are not limited with respect to the proportion of our assets that may be invested in securities of a single issuer. We are classified as a non-diversified investment company within the meaning of the 1940 Act, which
means that we are not limited by the 1940 Act with respect to the proportion of our assets that we may invest in securities of a single issuer. Although we seek to maintain a diversified portfolio in accordance with our business strategies, to the
extent that we assume large positions in the securities of a small number of issuers, our net asset value may fluctuate to a greater extent than that of a diversified investment company as a result of changes in the financial condition or the
markets assessment of the issuer. We may also be more susceptible to any single economic or regulatory occurrence than a diversified investment company. Beyond our RIC asset diversification requirements, we do not have fixed guidelines for
diversification, and our investments could be concentrated in relatively few portfolio companies. Our financial condition and results of operations
depend on our ability to manage future investments effectively. Our ability to achieve our investment objective depends on our
ability to acquire suitable investments and monitor and administer those investments, which depends, in turn, on Saratoga Investment Advisors ability to identify, invest in and monitor companies that meet our investment criteria. Accomplishing this result on a cost-effective basis is largely a function of Saratoga Investment Advisors structuring of the investment
process and its ability to provide competent, attentive and efficient service to us. Our executive officers and the officers and employees of Saratoga Investment Advisors have substantial responsibilities in connection with their roles at Saratoga
Partners as well as responsibilities under the Management Agreement. They may also be called upon to provide managerial assistance to our portfolio companies. These demands on their time, which will increase as the number of investments grow, may
distract them or slow the rate of investment. In order to grow, Saratoga Investment Advisors may need to hire, train, supervise and manage new employees. However, we cannot assure you that any such employees will contribute to the work of Saratoga
Investment Advisors. Any failure to manage our future growth effectively could have a material adverse effect on our business and financial condition. We may experience fluctuations in our quarterly and annual results. We could experience fluctuations in our quarterly operating results due to a number of factors, including the interest rate payable on the debt
investments we make, the default rate on such investments, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, changes in our portfolio composition, the degree to which we encounter
competition in our markets and general economic conditions. As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods. In addition, any of these factors could negatively
impact our ability to achieve our investment objectives, which may cause the net asset value of our common stock to decline.  39




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Substantially all of our portfolio investments are recorded at fair value as approved in good faith by
our board of directors; such valuations are inherently uncertain and may be materially higher or lower than the values that we ultimately realize upon the disposal of such investments. Substantially all of our portfolio is, and we expect will continue to be, comprised of investments that are not publicly traded. The value of
investments that are not publicly traded may not be readily determinable. We value these investments quarterly at fair value as approved in good faith by our board of directors. Saratoga Investment Advisors may utilize the services of an independent
valuation firm to aid it in determining fair value of investments for which market quotations are not readily available. The types of factors that may be considered in valuing our investments include the nature and realizable value of any
collateral, the portfolio companys ability to make payments and its earnings, the markets in which the portfolio company does business, market yield trend analysis, comparison to publicly traded companies, discounted cash flow and other
relevant factors. Because such valuations, and particularly valuations of private investments and private companies, are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations of fair value
may differ materially from the values that would have been used if a ready market for these investments existed. Our net asset value could be materially affected if the determinations regarding the fair value of our investments were materially
higher or lower than the values that we ultimately realize upon the disposal of such investments. If we make unsecured debt investments, we may
lack adequate protection in the event our portfolio companies become distressed or insolvent and will likely experience a lower recovery than more senior debtholders in the event our portfolio companies default on their indebtedness. We make unsecured debt investments in portfolio companies. Unsecured debt investments are unsecured and junior to other indebtedness of the
portfolio company. As a consequence, the holder of an unsecured debt investment may lack adequate protection in the event the portfolio company becomes distressed or insolvent and will likely experience a lower recovery than more senior debtholders
in the event the portfolio company defaults on its indebtedness. In addition, unsecured debt investments of middle- market companies are often highly illiquid and in adverse market conditions may experience steep declines in valuation even if they
are fully performing. If we invest in the securities and other obligations of distressed or bankrupt companies, such investments may be subject to
significant risks, including lack of income, extraordinary expenses, uncertainty with respect to satisfaction of debt, lower-than expected investment values or income potentials and resale restrictions. We are authorized to invest in the securities and other obligations of distressed or bankrupt companies. At times, distressed debt obligations
may not produce income and may require us to bear certain extraordinary expenses (including legal, accounting, valuation and transaction expenses) in order to protect and recover our investment. Therefore, to the extent we invest in distressed debt,
our ability to achieve current income may be diminished which may affect our ability to make distributions on our common stock or make interest and principal payments of the 2023 Notes and the 2025 Notes. We also will be subject to significant uncertainty as to when and in what manner and for what value the distressed debt we invest in will
eventually be satisfied (e.g., through a liquidation of the obligors assets, an exchange offer or plan of reorganization involving the distressed debt securities or a payment of some amount in satisfaction of the obligation). In addition, even
if an exchange offer is made or plan of reorganization is adopted with respect to distressed debt held by us, there can be no assurance that the securities or other assets received by us in connection with such exchange offer or plan of
reorganization will not have a lower value or income potential than may have been anticipated when the investment was made. Moreover, any
securities received by us upon completion of an exchange offer or plan of reorganization may be restricted as to resale. As a result of our participation in negotiations with respect to any exchange offer or plan of reorganization with respect to an
issuer of distressed debt, we may be restricted from disposing of such securities if we are in possession of material non-public information relating to the issuer. Second priority liens on collateral securing loans that we make to our portfolio companies may be subject to control by senior creditors with first
priority liens. If there is a default, the value of the collateral may not be sufficient to repay in full both the first priority creditors and us. Certain loans that we make to portfolio companies will be secured on a second priority basis by the same collateral securing senior secured
debt of such companies. The first priority liens on the collateral will secure the portfolio companys obligations under any outstanding senior debt and may secure certain other future debt that may be permitted to be incurred by the company
under the agreements governing the loans. The holders of obligations secured by the first priority liens on the collateral will generally control the liquidation of and be entitled to receive proceeds from any realization of the collateral to repay
their obligations in full before us. In addition, the value of the collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. There can be no assurance that the proceeds, if
any, from the sale or sales of all of the collateral would be sufficient to satisfy the loan obligations secured by the second priority liens after payment in full of all obligations secured by the first priority liens on the collateral. If such
proceeds are not sufficient to repay amounts outstanding under the loan obligations secured by the second priority liens, then we, to the extent not repaid from the proceeds of the sale of the collateral, will only have an unsecured claim against
the companys remaining assets, if any.  40




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The rights we may have with respect to the collateral securing the loans we make to our
portfolio companies with senior debt outstanding may also be limited pursuant to the terms of one or more intercreditor agreements that we enter into with the holders of senior debt. Under such an intercreditor agreement, at any time that
obligations that have the benefit of the first priority liens are outstanding, any of the following actions that may be taken with respect to the collateral will be at the direction of the holders of the obligations secured by the first priority
liens: the ability to cause the commencement of enforcement proceedings against the collateral; the ability to control the conduct of such proceedings; the approval of amendments to collateral documents; releases of liens on the collateral; and
waivers of past defaults under collateral documents. We may not have the ability to control or direct such actions, even if our rights are adversely affected. A majority of our debt investments are not required to make principal payments until the maturity of such debt securities and are generally riskier than
other types of loans. As of February 28, 2019, 77.4% of our debt portfolio consisted of interest-only loans,
which are structured such that the borrower makes only interest payments throughout the life of the loan and makes a large, balloon payment at the end of the loan term. The ability of a borrower to make or refinance a balloon payment may
be affected by a number of factors, including the financial condition of the borrower, prevailing economic conditions, interest rates, and collateral values. If the interest-only loan borrower is unable to make or refinance a balloon payment, we may
experience greater losses than if the loan were structured as amortizing. We may be exposed to higher risks with respect to our investments that
include PIK interest, particularly our investments in interest- only loans. To the extent our portfolio investments permit PIK
interest and our portfolio companies elect to pay PIK interest, we will be exposed to higher risks, including the following:  

Because PIK interest results in an increase in the size of the loan balance of the underlying loan, our exposure
to potential loss increases when we receive PIK interest;  

PIK instruments may have higher yields, which reflect the payment deferral and credit risk associated with these
instruments;  

PIK accruals may create uncertainty about the source of our distributions to stockholders;  

PIK instruments may have unreliable valuations because their continuing accruals require continuing judgments
about the collectability of the deferred payments and the value of the collateral. To the extent our investments are
structured as interest-only loans, PIK interest will increase the size of the balloon payment due at the end of the loan term. PIK interest payments on such loans may increase the probability and magnitude of a loss on our investment, particularly
with respect to our interest-only loans. As of February 28, 2019, 30.3% of our interest-only loans provided for contractual PIK interest, which represents contractual interest added to a loan balance and due at the end of such loans term,
and 72.5% of such investments elected to pay a portion of interest due in PIK. As of February 28, 2019, 3.0% of the Companys interest- only loans are loans that pay contractual PIK interest only. The lack of liquidity in our investments may adversely affect our business. We primarily make investments in private companies. A portion of these securities may be subject to legal and other restrictions on resale,
transfer, pledge or other disposition or will otherwise be less liquid than publicly traded securities. The illiquidity of our investments may make it difficult for us to sell such investments if the need arises. In addition, if we are required to
liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value at which we have previously recorded our investments. In addition, we may face other restrictions on our ability to liquidate an investment in a
business entity to the extent that we or our Investment Adviser has or could be deemed to have material non-public information regarding such business entity.  41




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The debt securities in which we invest are subject to credit risk and prepayment risk. An issuer of a debt security may be unable to make interest payments and repay principal. We could lose money if the issuer of a debt
obligation is, or is perceived to be, unable or unwilling to make timely principal and/or interest payments, or to otherwise honor its obligations. Substantially all of the debt investments held in our portfolio hold a
non-investment grade rating by one or more rating agencies or, if not rated, would be rated below investment grade if rated, which are often referred to as junk. Certain debt instruments may contain call or redemption provisions which would allow the issuer thereof to prepay principal prior to the debt
instruments stated maturity. This is known as prepayment risk. Prepayment risk is greater during a falling interest rate environment as issuers can reduce their cost of capital by refinancing higher interest debt instruments with lower
interest debt instruments. An issuer may also elect to refinance their debt instruments with lower interest debt instruments if the credit standing of the issuer improves. To the extent debt securities in our portfolio are called or redeemed, we may
receive less than we paid for such security and we may be forced to reinvest in lower yielding securities or debt securities of issuers of lower credit quality. 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. At February 28, 2019, our investment in the
subordinated notes of Saratoga CLO, a collateralized loan obligation fund, had a fair value of $25.4 million and constituted 6.3% of our portfolio. This investment constitutes a first loss position in a portfolio that, as of February 28,
2019, was composed of $510.3 million in aggregate principal amount of primarily senior secured first lien term loans and $18.5 million in uninvested cash. In addition, as of February 28, 2019, we also own $2.5 million of the F-R-2 Notes and $7.5 million of the G-R-2 Notes in the Saratoga CLO, that only rank senior
to the subordinated notes. A first loss position means that we will suffer the first economic losses if the value of Saratoga CLO decreases. First loss positions typically carry a higher risk and earn a higher yield. Interest payments generated from
this portfolio will be used to pay the administrative expenses of Saratoga CLO and interest on the debt issued by Saratoga CLO before paying a return on the subordinated notes. Principal payments will be similarly applied to pay administrative
expenses of Saratoga CLO and for reinvestment or repayment of Saratoga CLO debt before paying a return on, or repayment of, the subordinated notes. In addition, 80.0% of our fixed management fee and 100.0% our incentive management fee for acting as
the collateral manager of Saratoga CLO is subordinated to the payment of interest and principal on Saratoga CLO debt. Any losses on the portfolio will accordingly reduce the cash flow available to pay these management fees and provide a return on,
or repayment of, our investment. Depending on the amount and timing of such losses, we may experience smaller than expected returns and, potentially, the loss of our entire investment. As the manager of the portfolio of Saratoga CLO, we will have some ability to direct the composition of the portfolio, but our discretion is
limited by the terms of the debt issued by Saratoga CLO which may limit our ability to make investments that we feel are in the best interests of the subordinated notes, and the availability of suitable investments. The performance of Saratoga
CLOs portfolio is also subject to many of the same risks sets forth in this Annual Report with respect to portfolio investments in leveraged loans. In the event that a bankruptcy court orders the substantive consolidation of us with Saratoga CLO, the creditors of Saratoga CLO, including the holders
of $510.3 million aggregate principal amount of debt, as of February 28, 2019 issued by Saratoga CLO, would have claims against the consolidated bankruptcy estate, which would include our assets. We believe that we have observed and will observe certain formalities and operating procedures that are generally recognized requirements for
maintaining our separate existence and that our assets and liabilities can be readily identified as distinct from those of Saratoga CLO. However, we cannot assure you that a bankruptcy court would agree in the event that we or Saratoga CLO became a
debtor in connection with a bankruptcy proceeding. If a bankruptcy court concludes that substantive consolidation of us with Saratoga CLO is warranted, the creditors of Saratoga CLO, including the holders of $510.3 million aggregate principal
amount of debt, as of February 28, 2019 issued by Saratoga CLO, would have claims against the consolidated bankruptcy estate. Substantive consolidation means that our assets are placed in a single bankruptcy estate with those of Saratoga CLO,
rather than kept separate, and that the creditors of Saratoga CLO have a claim against that single estate (including our assets), as opposed to retaining their claims against only Saratoga CLO.  42




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Our investments in Saratoga CLO have a different risk profile than would direct investments made by
us, including less information available and fewer rights regarding repayment compared to companies we invest in directly as well as complicated accounting and tax implications. Due to our investments in the Saratoga CLO being primarily broadly syndicated loans, there may be less information available to us on those
companies as compared to most investments that we make directly. For example, we will typically have fewer rights relating to how such companies manage their cash flow to repay debt, the inclusion of protective covenants, default penalties, lien
protection, change of control provisions and board observation rights in deal terms, and our general ability to oversee the companys operations. Our investment in Saratoga CLO is also subject to the risk of leverage associated with the debt
issued by Saratoga CLO and the repayment priority of senior debt holders in Saratoga CLO. The accounting and tax implications of such
investments are complicated. In particular, reported earnings from the equity tranche investment of Saratoga CLO are recorded under U.S. generally accepted accounting principles (U.S. GAAP) based upon an effective yield calculation.
Current taxable earnings on these investments, however, will generally not be determinable until after the end of the fiscal year of Saratoga CLO that ends within the Companys fiscal year, even though the investment is generating cash flow. In
general, the tax treatment of investment in Saratoga CLO may result in higher distributable earnings in the early years and a capital loss at maturity, while for reporting purposes the totality of cash flows are reflected in a constant yield to
maturity. The senior loan portfolio of Saratoga CLO is concentrated in a limited number of industries or borrowers, which may subject Saratoga CLO,
and in turn us, to a risk of significant loss if there is a downturn in a particular industry in which Saratoga CLO is concentrated. Saratoga CLO has senior loan portfolios that are concentrated in a limited number of industries or borrowers. A downturn in any particular
industry or borrower in which Saratoga CLO is heavily invested may subject Saratoga CLO, and in turn us, to a risk of significant loss and could significantly impact the aggregate returns we realize. If an industry in which Saratoga CLO is heavily
invested suffers from adverse business or economic conditions, a material portion of our investment in Saratoga CLO could be affected adversely, which, in turn, could adversely affect our financial position and results of operations. For example, as
of February 28, 2019, Saratoga CLOs investments in the banking, finance, insurance & real estate industry represented approximately 15.0% of the fair value of Saratoga CLOs portfolio. Companies in the banking, finance,
insurance & real estate industry are subject to general economic downturns and business cycles and will often suffer reduced revenues and rate pressures during periods of economic uncertainty. In addition, investments in the
healthcare & pharmaceuticals industry represented approximately 7.9% of the fair value of Saratoga CLOs portfolio. Changes in healthcare or other laws and regulations applicable to the businesses of some of the companies in which
Saratoga CLO invests may occur that could increase their compliance and other costs of doing business, require significant systems enhancements, or render their products or services less profitable or obsolete, any of which could have a material
adverse effect on their results of operations. There has also been an increased political and regulatory focus on healthcare laws in recent years, and new legislation could have a material effect on the business and operations of companies in which
Saratoga CLO invests. Failure by Saratoga CLO to satisfy certain financial covenants may entitle senior debtholders to additional payments, which
may harm our operating results by reducing payments we would otherwise be entitled to receive from Saratoga CLO. The failure by
Saratoga CLO to satisfy certain financial covenants, specifically those with respect to adequate collateralization and/or interest coverage tests, could lead to a reduction in its payments to us. In the event that Saratoga CLO failed these certain
tests, senior debt holders may be entitled to additional payments that would, in turn, reduce the payments we would otherwise be entitled to receive. Separately, we may incur expenses to the extent necessary to seek recovery upon default or to
negotiate new terms, which may include the waiver of certain financial covenants, with Saratoga CLO or any other investment we may make. If any of these occur, it could materially and adversely affect our operating results and cash flows. Available information about privately held companies is limited. We invest primarily in privately-held companies. Generally, little public information exists about these companies, and we are required to rely
on the ability of our Investment Advisers investment professionals to obtain adequate information to evaluate the potential returns from investing in these companies. These companies and their financial information are not subject to the
Sarbanes- Oxley Act of 2002 and other rules that govern public companies. If we are unable to uncover all material information about these companies, we may not make a fully informed investment decision, and we may lose money on our investments. When we are a debt or minority equity investor in a portfolio company, we may not be in a position to control the entity, and its management may
make decisions that could decrease the value of our investment. We make both debt and minority equity investments; therefore, we
are subject to the risk that a portfolio company may make business decisions with which we disagree, and the stockholders and management of such company may take risks or otherwise act in ways that do not serve our interests. As a result, a
portfolio company may make decisions that could decrease the value of our portfolio holdings.  43




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Our portfolio companies may incur debt or issue equity securities that rank equally with, or senior
to, our investments in such companies. Our portfolio companies usually will have, or may be permitted to incur, other debt, or
issue other equity securities that rank equally with, or senior to, our investments. By their terms, such instruments may provide that the holders are entitled to receive payment of dividends, interest or principal on or before the dates on which we
are entitled to receive payments in respect of our investments. These debt instruments will usually prohibit the portfolio companies from paying interest on or repaying our investments in the event and during the continuance of a default under such
debt. Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company, holders of securities ranking senior to our investment in that portfolio company would typically be entitled to receive payment in
full before we receive any distribution in respect of our investment. After repaying such holders, the portfolio company may not have any remaining assets to use for repaying its obligation to us. In the case of debtor ranking equally with our
investments, we would have to share on an equal basis any distributions with other holders in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company. There may be circumstances where our debt investments could be subordinated to claims of other creditors or we could be subject to lender liability
claims. If one of our portfolio companies were to go bankrupt, even though we may have structured our interest as senior debt,
depending on the facts and circumstances, including the extent to which we actually provided managerial assistance to that portfolio company, a bankruptcy court might re-characterize our debt holding and
subordinate all or a portion of our claim to that of other creditors. In addition, lenders can be subject to lender liability claims for actions taken by them where they become too involved in the borrowers business or exercise control over
the borrower. It is possible that we could become subject to a lenders liability claim, including as a result of actions taken if we actually render significant managerial assistance. Investments in equity securities involve a substantial degree of risk. We purchase common stock and other equity securities. Although equity securities have historically generated higher average total returns than
fixed-income securities over the long-term, equity securities also have experienced significantly more volatility in those returns and in recent years have significantly underperformed relative to fixed-income securities. The equity securities we
acquire may fail to appreciate and may decline in value or become worthless and our ability to recover our investment will depend on our portfolio companys success. Investments in equity securities involve a number of significant risks,
including:  

any equity investment we make in a portfolio company could be subject to further dilution as a result of the
issuance of additional equity interests and to serious risks as a junior security that will be subordinate to all indebtedness or senior securities in the event that the issuer is unable to meet its obligations or becomes subject to a bankruptcy
process;  

to the extent that the portfolio company requires additional capital and is unable to obtain it, we may not
recover our investment in equity securities; and  

in some cases, equity securities in which we invest will not pay current dividends, and our ability to realize a
return on our investment, as well as to recover our investment, will be dependent on the success of our portfolio companies. Even if the portfolio companies are successful, our ability to realize the value of our investment may be dependent on the
occurrence of a liquidity event, such as a public offering or the sale of the portfolio company. It is likely to take a significant amount of time before a liquidity event occurs or we can sell our equity investments. In addition, the equity
securities we receive or invest in may be subject to restrictions on resale during periods in which it could be advantageous to sell. There are special risks associated with investing in preferred securities, including:  

preferred securities may include provisions that permit the issuer, at its discretion, to defer distributions for
a stated period without any adverse consequences to the issuer. If we own a preferred security that is deferring its distributions, we may be required to report income for tax purposes even though we have not received any cash payments in respect of
such income;  44




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

preferred securities are subordinated with respect to corporate income and liquidation payments, and are
therefore subject to greater risk than debt;  

preferred securities may be substantially less liquid than many other securities, such as common securities or
U.S. government securities; and  

preferred security holders generally have no voting rights with respect to the issuing company, subject to
limited exceptions. Our investments in foreign debt, including that of emerging market issuers, may involve significant risks in
addition to the risks inherent in U.S. investments. Although there are limitations on our ability to invest in foreign debt, we
may, from time to time, invest in debt of foreign companies, including the debt of emerging market issuers. Investing in foreign companies may expose us to additional risks not typically associated with investing in U.S. companies. These risks
include changes in exchange control regulations, political and social instability, expropriation, imposition of foreign taxes, less liquid markets and less available information than is generally the case in the United States, higher transaction
costs, less government supervision of exchanges, brokers and issuers, less developed bankruptcy laws, difficulty in enforcing contractual obligations, lack of uniform accounting and auditing standards and greater price volatility. Investments in the debt of emerging market issuers may subject us to additional risks such as inflation, wage and price controls, and the
imposition of trade barriers. Furthermore, economic conditions in emerging market countries are, to some extent, influenced by economic and securities market conditions in other emerging market countries. Although economic conditions are different
in each country, investors reaction to developments in one country can have effects on the debt of issuers in other countries. Although most of our investments will be U.S. dollar-denominated, our investments that are denominated in a foreign currency will be subject
to the risk that the value of a particular currency will change in relation to one or more other currencies. Among the factors that may affect currency values are trade balances, the level of short-term interest rates, differences in relative values
of similar assets in different currencies, long-term opportunities for investment and capital appreciation, and political developments. We may employ hedging techniques to minimize these risks, but we cannot assure you that we will fully hedge
against these risks or that such strategies will be effective. As a result, a change in currency exchange rates may adversely affect our profitability. We may expose ourselves to risks if we engage in hedging transactions. We may utilize instruments such as forward contracts, currency options and interest rate swaps, caps, collars and floors to seek to hedge
against fluctuations in the relative values of our portfolio positions from changes in currency exchange rates and market interest rates. Use of these hedging instruments may expose us to counter-party credit risk. Hedging against a decline in the
values of our portfolio positions does not eliminate the possibility of fluctuations in the values of such positions or prevent losses if the values of such positions decline. However, such hedging can establish other positions designed to gain from
those same developments, thereby offsetting the decline in the value of such portfolio positions. Such hedging transactions may also limit the opportunity for gain if the values of the portfolio positions should increase. Moreover, it may not be
possible to hedge against an exchange rate or interest rate fluctuation that is generally anticipated at an acceptable price. The success
of our hedging transactions will depend on our ability to correctly predict movements in currencies and interest rates. Therefore, while
we may enter into such transactions to seek to reduce currency exchange rate and interest rate risks, unanticipated changes in currency exchange rates or interest rates may result in poorer overall investment performance than if we had not engaged
in any such hedging transactions. In addition, the degree of correlation between price movements of the instruments used in a hedging strategy and price movements in the portfolio positions being hedged may vary. Moreover, for a variety of reasons,
we may not seek to establish a perfect correlation between such hedging instruments and the portfolio holdings being hedged. Any such imperfect correlation may prevent us from achieving the intended hedge and expose us to risk of loss. In addition,
it may not be possible to hedge fully or perfectly against currency fluctuations affecting the value of securities denominated in non-U.S. currencies because the value of those securities is likely to
fluctuate as a result of factors not entirely related to currency fluctuations. To the extent we engage in hedging transactions, we also face the risk that counterparties to the derivative instruments we hold may default, which may expose us to
unexpected losses from positions where we believed that our risk had been appropriately hedged.  45




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Our board of directors may change our investment objective, operating policies and strategies without
prior notice or stockholder approval, the effects of which may be adverse. Our board of directors has the authority to modify or
waive our current investment objective, operating policies and strategies without prior notice and without stockholder approval. We cannot predict the effect any changes to our current operating policies and strategies would have on our business,
financial condition, and value of our common stock. However, the effects might be adverse, which could negatively impact our ability to pay dividends and cause you to lose all or part of your investment. We have limited experience in managing a SBIC and any failure to comply with SBA regulations, resulting from our lack of experience or otherwise, could
have an adverse effect on our operations. On March 28, 2012, our wholly-owned subsidiary, Saratoga Investment Corp. SBIC, LP,
received a license from the SBA to operate as an SBIC under Section 301(c) of the Small Business Investment Act of 1958 and is regulated by the SBA. The SBA places certain limitations on the financing terms of investments by SBICs in portfolio companies and prohibits SBICs from providing
funds for certain purposes or to businesses in a few prohibited industries. Compliance with SBIC requirements may cause our SBIC subsidiary to forego attractive investment opportunities that are not permitted under SBA regulations. Further, SBA regulations require that an SBIC be periodically examined and audited by the SBA to determine its compliance with the relevant
SBA regulations. The SBA prohibits, without prior SBA approval, a change of control of an SBIC or transfers that would result in any person (or a group of persons acting in concert) owning 10% or more of a class of capital stock of an
SBIC. If our SBIC subsidiary fails to comply with applicable SBA regulations, the SBA could, depending on the severity of the violation, limit or prohibit its use of debentures, declare outstanding debentures immediately due and payable, and/or
limit it from making new investments. In addition, the SBA can revoke or suspend a license for willful or repeated violation of, or willful or repeated failure to observe, any provision of the Small Business Investment Act of 1958 or any rule or
regulation promulgated thereunder. These actions by the SBA would, in turn, negatively affect us because our SBIC subsidiary is our wholly-owned subsidiary. We do not have any prior experience managing an SBIC. Our lack of experience in complying
with SBA regulations may hinder our ability to take advantage of our SBIC subsidiarys access to SBA-guaranteed debentures. Any failure to comply with SBA regulations could have an adverse effect on our operations. Our investments may be risky, and you could lose all or part of your investment. Substantially all of our debt investments hold a non-investment grade rating by one or more rating
agencies (which non- investment grade debt is commonly referred to as high yield and junk debt) or, where not rated by any rating agency, would be below investment grade or
junk, if rated. A below investment grade or junk rating means that, in the rating agencys view, there is an increased risk that the obligor on such debt will be unable to pay interest and repay principal on its debt in
full. We also invest in debt that defers or pays PIK interest. To the extent interest payments associated with such debt are deferred, such debt will be subject to greater fluctuations in value based on changes in interest rates, such debt could
produce taxable income without a corresponding cash payment to us, and since we generally do not receive any cash prior to maturity of the debt, the investment will be of greater risk. In addition, private middle market companies in which we invest are exposed to a number of significant risks, including:  

limited financial resources and an inability to meet their obligations, which may be accompanied by a
deterioration in the value of any collateral and a reduction in the likelihood of us realizing any guarantees we may have obtained in connection with our investment;  

shorter operating histories, narrower product lines and smaller market shares than larger businesses, which tend
to render them more vulnerable to competitors actions and market conditions, as well as general economic downturns;  

dependence on the management talents and efforts of a small group of persons; the death, disability, resignation
or termination of one or more of which could have a material adverse impact on the company and, in turn, on us;  

less predictable operating results and, possibly, substantial additional capital requirements to support their
operations, finance expansion or maintain their competitive position; and  

difficulty accessing the capital markets to meet future capital needs. In addition, our executive officers, directors and our Investment Adviser may, in the ordinary course of business, be named as defendants in
litigation arising from our investments in the portfolio companies.  46




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Our portfolio may continue to be concentrated in a limited number of industries, which may subject us
to a risk of significant loss if there is a downturn in a particular industry in which a number of our investments are concentrated. Our portfolio may continue to be concentrated in a limited number of industries. A downturn in any particular industry in which we are invested
could significantly impact the aggregate returns we realize. As of February 28, 2019, our investments in the business services
industry represented approximately 62.8% of the fair value of our portfolio and our investments in the healthcare industry represented approximately 14.3% of the fair value of our portfolio. In addition, we may from time to time invest a relatively
significant percentage of our portfolio in industries we do not necessarily target. If an industry in which we have significant investments suffers from adverse business or economic conditions, as these industries have to varying degrees, a material
portion of our investment portfolio could be affected adversely, which, in turn, could adversely affect our financial position and results of operations. A number of our portfolio companies are in the
Software-as-a-Service industry and such companies are subject to additional risks that are unique to that industry. A number of our portfolio companies are in the
Software-as-a-Service (SAAS) industry and such companies are subject to additional risks that are unique to the SAAS
industry. For example, such portfolio companies may be subject to consumer protection laws that are enforced by regulators such as the Federal Trade Commission (FTC) and private parties, and include statutes that regulate the collection
and use of information for marketing purposes. Any new legislation or regulations regarding the Internet, mobile devices, software sales or export and/or the cloud or SAAS industry, and/or the application of existing laws and regulations to the
Internet, mobile devices, software sales or export and/or the cloud or SAAS industry, could create new legal or regulatory burdens on our portfolio companies that could have a material adverse effect on their respective operations. As a result, our
SAAS portfolio companies may incur significant operating losses and negative cash flows because of their respective life cycles, resulting in an adverse impact on their operations. Because our SAAS portfolio companies are generally investments that
are valued on recurring revenue rather than EBITDA, the fair value determinations of such companies are inherently uncertain and may fluctuate over short periods of time. We cannot predict how tax reform legislation will affect us, our investments, or our stockholders, and any such legislation could adversely affect our
business. Legislative or other actions relating to taxes could have a negative effect on the Company. The rules dealing with U.S.
federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department. In 2017, the U.S. House of Representatives and U.S. Senate passed tax reform legislation, which the
President signed into law. Such legislation makes many changes to the Code, including significant changes to the taxation of business entities, the deductibility of interest expense, and the tax treatment of capital investment. We cannot predict
with certainty how these changes in the tax laws might affect the Company, investors, or the Companys portfolio investments. New legislation and any U.S. Treasury regulations, administrative interpretations or court decisions interpreting such
legislation could significantly and negatively affect the Companys ability to qualify for tax treatment as a RIC or the U.S. federal income tax consequences to the Company and its investors of such qualification, or could have other adverse
consequences. Investors are urged to consult with their tax advisor regarding tax legislative, regulatory, or administrative developments and proposals and their potential effect on an investment in the Companys securities. Risks Related to Our Common Stock Investing in our
common stock may involve an above average degree of risk. The investments we make in accordance with our investment objective may
result in a higher amount of risk than alternative investment options and volatility or loss of principal. Our investments in portfolio companies may be highly speculative and aggressive, and therefore, an investment in our common stock may not be
suitable for someone with lower risk tolerance.  47




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##### Table of Contents

We may continue to choose to pay dividends in our own stock, in which case you may be required to pay
tax in excess of the cash you receive. We have in the past, and may continue to, distribute taxable dividends that are payable to
our stockholders in part through the issuance of shares of our common stock. For example, on October 30, 2013, our board of directors declared a dividend of $2.65 per share to shareholders payable in cash or shares of our common stock. Under
certain applicable provisions of the Code and the Treasury regulations, distributions payable in cash or in shares of stock at the election of stockholders are treated as taxable dividends. The IRS has issued a revenue procedure indicating that this
rule will apply where the total amount of cash to be distributed is not less than 20.0% of the total distribution. Under this revenue procedure, if too many stockholders elect to receive their distributions in cash, each such stockholder would
receive a pro rata share of the total cash to be distributed and would receive the remainder of their distribution in shares of stock. If we decide to make any distributions consistent with this revenue procedure that are payable in part in our
stock, taxable stockholders receiving such dividends will be required to include the full amount of the dividend (whether received in cash, our stock, or a combination thereof) as ordinary income (or as long-term capital gain to the extent such
distribution is properly reported as a capital gain dividend) to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes. As a result, a U.S. stockholder may be required to pay tax with respect to such
dividends in excess of any cash received. If a U.S. stockholder sells the stock it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the
market price of our stock at the time of the sale. Furthermore, with respect to non-U.S.
stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock. If a significant number of our stockholders determine to sell shares of our
stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our stock. On September 24,
2014, we announced the recommencement of quarterly dividends to our stockholders. We have adopted a DRIP that provides for reinvestment of our dividend distributions on behalf of our stockholders unless a stockholder elects to receive cash. As a
result, if our board of directors authorizes, and we declare, a cash dividend, then our stockholders who have not opted out of the DRIP by the dividend record date will have their cash dividends automatically reinvested into additional
shares of our common stock, rather than receiving the cash dividends. We have the option to satisfy the share requirements of the DRIP through the issuance of new shares of common stock or through open market purchases of common stock by the DRIP
plan administrator. The market price of our common stock may fluctuate significantly. The market price and liquidity of the market for our common stock may be significantly affected by numerous factors, some of which are beyond
our control and may not be directly related to our operating performance. These factors include:  

significant volatility in the market price and trading volume of securities of BDCs or other companies in our
sector, which are not necessarily related to the operating performance of these companies;  

changes in regulatory policies, accounting pronouncements or tax rules, particularly with respect to RICs, BDCs
or SBICs;  

loss of RIC qualification;  

changes in the value of our portfolio of investments;  

any shortfall in revenue or net income or any increase in losses from levels expected by investors or securities
analysts;  

departure of any of Saratoga Investment Advisors key personnel;  

operating performance of companies comparable to us;  

general economic trends and other external factors; or  

loss of a major funding source. Our business and operation could be negatively affected if we become subject to any securities litigation or shareholder activism, which could cause us
to incur significant expense, hinder execution of investment strategy and impact our stock price. In the past, following periods
of volatility in the market price of a companys securities, securities class action litigation has often been brought against that company. Shareholder activism, which could take many forms or arise in a variety of situations, has been
increasing in the BDC space recently. While we are currently not subject to any securities litigation or shareholder activism, due to the potential volatility of our stock price and for a variety of other reasons, we may in the future become the
target of securities litigation or shareholder activism. Securities litigation and shareholder activism, including potential proxy contests, could result in substantial costs and divert managements and our board of directors attention
and resources from our business. Additionally, such securities litigation and shareholder activism could give rise to perceived uncertainties as to our future, adversely affect our relationships with service providers and make it more difficult to
attract and retain qualified personnel. Also, we may be required to incur significant legal fees and other expenses related to any securities litigation and activist shareholder matters. Further, our stock price could be subject to significant
fluctuation or otherwise be adversely affected by the events, risks and uncertainties of any securities litigation and shareholder activism.  48




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##### Table of Contents

There is a risk that you may not receive distributions or that our distributions may not grow over
time. As a BDC for 1940 Act purposes and a RIC for U.S. federal income tax purposes, we intend to make distributions out of assets
legally available for distribution to our stockholders once such distributions are authorized by our board of directors and declared by us. We cannot assure you that we will achieve investment results that will allow us to make a specified level of
cash distributions or periodically increase our dividend rate. In addition, due to the asset coverage test that is applicable to us as a BDC, and provisions contained in the agreements governing our borrowings, we may be limited in our ability to
make distributions. Further, if we invest a greater amount of assets in equity securities that do not pay current dividends, it could reduce the amount available for distribution. Provisions of our governing documents and the Maryland General Corporation Law could deter future takeover attempts and have an adverse impact on the
price of our common stock. We are governed by our charter and bylaws, which we refer to as our governing documents. Our governing documents and the Maryland General Corporation Law contain provisions that may have the effect of delaying, deferring or
preventing a future transaction or change in control of us that might involve a premium price for our stockholders or otherwise be in their best interest. Our charter provides for the classification of our board of directors into three classes of directors, serving staggered three-year terms,
which may render a change of control of us or removal of our incumbent management more difficult. Furthermore, any and all vacancies on our board of directors will be filled generally only by the affirmative vote of a majority of the remaining
directors in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy will serve for the remainder of the full term until a successor is elected and qualifies. Our board of directors is authorized to create and issue new series of shares, to classify or reclassify any unissued shares of stock into one
or more classes or series, including preferred stock and, without stockholder approval, to amend our charter to increase or decrease the number of shares of stock that we have authority to issue, which could have the effect of diluting a
stockholders ownership interest. Prior to the issuance of shares of stock of each class or series, including any reclassified series, our board of directors is required by our governing documents to set the terms, preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each class or series of shares of stock. Our governing documents also provide that our board of directors has the exclusive power to adopt, alter or repeal any provision of our
bylaws, and to make new bylaws. The Maryland General Corporation Law also contains certain provisions that may limit the ability of a third party to acquire control of us, such as:  

The Maryland Business Combination Act, which, subject to certain limitations, prohibits certain business
combinations between us and an interested stockholder (defined generally as any person who beneficially owns 10% or more of the voting power of the common stock or an affiliate thereof) for five years after the most recent date on which
the stockholder becomes an interested stockholder and, thereafter, imposes special minimum price provisions and special stockholder voting requirements on these combinations; and  

The Maryland Control Share Acquisition Act, which provides that control shares of a Maryland
corporation (defined as shares of common stock which, when aggregated with other shares of common stock controlled by the stockholder, entitles the stockholder to exercise one of three increasing ranges of voting power in electing directors)
acquired in a control share acquisition (defined as the direct or indirect acquisition of ownership or control of control shares) have no voting rights except to the extent approved by stockholders by the affirmative vote of
at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares of common stock. In addition, the provisions of the Maryland Business Combination Act will not apply, however, if our board of directors adopts a resolution
that any business combination between us and any other person will be exempt from the provisions of the Maryland Business Combination Act. Although our board of directors has adopted such a resolution, there can be no assurance that this resolution
will not be altered or repealed in whole or in part at any time. If the resolution is altered or repealed, the provisions of the Maryland Business Combination Act may discourage others from trying to acquire control of us.  49




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##### Table of Contents

As permitted by Maryland law, our bylaws contain a provision exempting from the Maryland
Control Share Acquisition Act any and all acquisitions by any person of our common stock. Although our bylaws include such a provision, such a provision may also be amended or eliminated by our board of directors at any time in the future, subject
to obtaining confirmation from the SEC that it does not object to us being subject to the Maryland Control Share Acquisition Act. Our common stock
may trade at a discount to our net asset value per share. Common stock of BDCs, as
closed-end investment companies, frequently trade at a discount to net asset value. Our common stock has traded at a discount to our net asset value since shortly after our initial public offering. The risk
that our common stock may continue to trade at a discount to our net asset value is separate and distinct from the risk that our net asset value per share may decline. Stockholders may incur dilution if we sell shares of our common stock in one or more offerings at prices below the then current net asset value per
share of our common stock. The 1940 Act prohibits us from selling shares of our common stock at a price below the current net
asset value per share of such stock, with certain exceptions. One such exception is prior stockholder approval of issuances below net asset value provided that our board of directors makes certain determinations. We do not currently have stockholder
approval of issuances below net asset value. If we were to sell shares of our common stock below net asset value per share, such sales
would result in an immediate dilution to the net asset value per share. This dilution would occur as a result of the sale of shares at a price below the then current net asset value per share of our common stock and a proportionately greater
decrease in a stockholders interest in our earnings and assets and voting interest in us than the increase in our assets resulting from such issuance. Because the number of shares of common stock that could be so issued and the timing of any issuance is not currently known, the actual
dilutive effect cannot be predicted. The issuance of subscription rights, warrants or convertible debt that are exchangeable for our common stock,
will cause your economic interest and voting power in us to be diluted as a result of our offering of any such securities. Stockholders who do not fully exercise rights, warrants or convertible debt issued to them in any offering of subscription rights, warrants or
convertible debt to purchase our common stock should expect that they will, at the completion of the offering, own a smaller proportional economic interest and have diminished voting power in us than would otherwise be the case if they fully
exercised their rights, warrants or convertible debt. We cannot state precisely the amount of any such dilution in share ownership or voting power because we do not know what proportion of the common stock would be purchased as a result of any such
offering. In addition, if the subscription price, warrant price or convertible debt price is less than our net asset value per share of
common stock at the time of such offering, then our stockholders would experience an immediate dilution of the aggregate net asset value of their shares as a result of the offering. The amount of any such decrease in net asset value is not
predictable because it is not known at this time what the subscription price, warrant price, convertible debt price or net asset value per share will be on the expiration date of such offering or what proportion of our common stock will be purchased
as a result of any such offering. The risk of dilution is greater if there are multiple rights offerings. However, our board of directors will make a good faith determination that any offering of subscription rights, warrants or convertible debt
would result in a net benefit to existing stockholders. Finally, our common stockholders will bear all costs and expenses incurred by us
in connection with any proposed offering of subscription rights, warrants or convertible debt that are exchangeable for our common stock, whether or not such offering is actually completed by us.  50




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Risks Related to Our 2023 and 2025 Notes The 2023 and 2025 Notes are unsecured and therefore are effectively subordinated to any secured indebtedness we have incurred or may incur in the future. The 2023 and 2025 Notes are not secured by any of our assets or any of the assets of our subsidiaries, including our wholly-owned
subsidiaries. As a result, the 2023 and 2025 Notes are effectively subordinated to all of our existing and future secured indebtedness (including indebtedness that is initially unsecured to which we subsequently grant security), to the extent of the
value of the assets securing such indebtedness. In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our existing or future secured indebtedness may assert rights against the assets pledged to secure that
indebtedness in order to receive full payment of their indebtedness before the assets may be used to pay other creditors, including the holders of the 2023 and 2025 Notes. The 2023 and 2025 Notes are structurally subordinated to the indebtedness and other liabilities of our subsidiaries. The 2023 and 2025 Notes are obligations exclusively of Saratoga Investment Corp., and not of any of our subsidiaries. None of our subsidiaries
is a guarantor of the 2023 and 2025 Notes and the 2023 and 2025 Notes are not required to be guaranteed by any subsidiary we may acquire or create in the future, including indebtedness under the Credit Facility. Any assets of our subsidiaries are
not directly available to satisfy the claims of our creditors, including holders of the 2023 and 2025 Notes. Except to the extent we are a creditor with recognized claims against our subsidiaries, all claims of creditors of our subsidiaries will
have priority over our equity interests in such entities (and therefore the claims of our creditors, including holders of the 2023 and 2025 Notes) with respect to the assets of such entities. Even if we are recognized as a creditor of one or more of
these entities, our claims would still be effectively subordinated to any security interests in the assets of any such entity and to any indebtedness or other liabilities of any such entity senior to our claims. Consequently, the 2023 and 2025 Notes
are structurally subordinated to all indebtedness and other liabilities of any of our subsidiaries and portfolio companies with respect to which we hold equity investments. In addition, our subsidiaries and these entities may incur substantial
indebtedness in the future, all of which would be structurally senior to the 2023 and 2025 Notes. As of February 28, 2019, there were no outstanding borrowings under the Credit Facility and we had the ability to borrow up to $45.0 million
under the Credit Facility, subject to certain conditions. As of February 28, 2019, we had $150.0 million in SBA- guaranteed debentures outstanding. The indebtedness under the Credit Facility and to SBA-guaranteed debentures is structurally senior to the 2023 and 2025 Notes. The indenture under which the 2023
and 2025 Notes are issued contains limited protection for holders of the 2023 and 2025 Notes. The indenture under which the 2023
and 2025 Notes are issued offers limited protection to holders of the 2023 and 2025 Notes. The terms of the indenture and the 2023 and 2025 Notes do not restrict our or any of our subsidiaries ability to engage in, or otherwise be a party to,
a variety of corporate transactions, circumstances or events that could have a material adverse impact on your investment in the 2023 and 2025 Notes. In particular, the terms of the indenture and the 2023 and 2025 Notes do not place any restrictions
on our or our subsidiaries ability to:  

issue securities or otherwise incur additional indebtedness or other obligations, including (1) any
indebtedness or other obligations that would be equal in right of payment to the 2023 and 2025 Notes, (2) any indebtedness or other obligations that would be secured and therefore rank effectively senior in right of payment to the 2023 and 2025
Notes to the extent of the values of the assets securing such debt, (3) indebtedness of ours that is guaranteed by one or more of our subsidiaries and which therefore is structurally senior to the 2023 and 2025 Notes and (4) securities,
indebtedness or obligations issued or incurred by our subsidiaries or the portfolio companies with respect to which we hold an equity investment that would be senior to our equity interests in those entities and therefore rank structurally senior to
the 2023 and 2025 Notes with respect to the assets of these entities, in each case other than an incurrence of indebtedness or other obligation that would cause a violation of Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940
Act or any successor provisions (whether or not we are subject thereto), but giving effect, in each case, to any exemptive relief granted to us by the SEC. Currently, these provisions generally prohibit us from making additional borrowings,
including through the issuance of additional debt or the sale of additional debt securities, unless our asset coverage, as defined in the 1940 Act, equals at least 200% after such borrowings, or, once the approval we received from our independent
directors becomes effective on April 16, 2019, 150% (after deducting the amount of such dividend, distribution or purchase price, as the case may be);  

sell assets (other than certain limited restrictions on our ability to consolidate, merge or sell all or
substantially all of our assets);  

enter into transactions with affiliates;  

create liens (including liens on the shares of our subsidiaries) or enter into sale and leaseback transactions;  

make investments; or  

create restrictions on the payment of dividends or other amounts to us from our subsidiaries.  51




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##### Table of Contents

In addition, the indenture does not require us to offer to purchase the 2023 and 2025 Notes
in connection with a change of control or any other event. Furthermore, the terms of the indenture and the 2023 and 2025 Notes do not
protect holders of the 2023 and 2025 Notes in the event that we experience changes (including significant adverse changes) in our financial condition, results of operations or credit ratings, if any, as they do not require that we adhere to any
financial tests or ratios or specified levels of net worth, revenues, income, cash flow, or liquidity. Our ability to recapitalize, incur
additional debt and take a number of other actions that are not limited by the terms of the 2023 and 2025 Notes may have important consequences for you as a holder of the 2023 and 2025 Notes, including making it more difficult for us to satisfy our
obligations with respect to the 2023 and 2025 Notes or negatively affecting the trading value of the 2023 and 2025 Notes. Other debt we
issue or incur in the future could contain more protections for its holders than the indenture and the 2023 and 2025 Notes, including additional covenants and events of default. For example, the indenture under which the 2023 and 2025 Notes are
issued does not contain cross-default provisions that are contained in the Credit Facility. The issuance or incurrence of any such debt with incremental protections could affect the market for and trading levels and prices of the 2023 and 2025
Notes. An active trading market for the 2023 and 2025 Notes may not develop or be sustained, which could limit the market price of the 2023 and
2025 Notes or the ability to sell them. Although the 2023 Notes are listed on the NYSE under the symbol SAB and
the 2025 Notes are listed on the NYSE under the symbol SAF, we cannot provide any assurances that an active trading market will develop or be maintained for the 2023 and 2025 Notes or that the 2023 and 2025 Notes will be able to be sold.
At various times, the 2023 and 2025 Notes may trade at a discount from their initial offering price depending on prevailing interest rates, the market for similar securities, our credit ratings, if any, general economic conditions, our financial
condition, performance and prospects and other factors. Accordingly, we cannot provide any assurance that a liquid trading market will develop for the 2023 and 2025 Notes, or that the 2023 and 2025 Notes will be able to be sold at a particular time
or at a favorable price. To the extent an active trading market does not develop, the liquidity and trading price for the 2023 and 2025 Notes may be harmed. We may choose to redeem the 2023 and 2025 Notes when prevailing interest rates are relatively low. On or after December 21, 2019 and August 31, 2021, we may choose to redeem the 2023 Notes and 2025 Notes, respectively, from time to
time, especially when prevailing interest rates are lower than the rate borne by the 2023 and 2025 Notes. If prevailing rates are lower at the time of redemption, you would not be able to reinvest the redemption proceeds in a comparable security at
an effective interest rate as high as the interest rate on the 2023 and 2025 Notes being redeemed. Our redemption right also may adversely impact your ability to sell the 2023 and 2025 Notes as the optional redemption date or period approaches. If we default on our obligations to pay our other indebtedness, we may not be able to make payments on the 2023 and 2025 Notes. Any default under the agreements governing our indebtedness, including a default under the Credit Facility or other indebtedness to which we
may be a party that is not waived by the required lenders, and the remedies sought by the holders of such indebtedness could make us unable to pay principal, premium, if any, and interest on the 2023 and 2025 Notes and substantially decrease the
market value of the 2023 and 2025 Notes. If we are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on our indebtedness, or if we
otherwise fail to comply with the various covenants, including financial and operating covenants, in the instruments governing our indebtedness, we could be in default under the terms of the agreements governing such indebtedness, including the 2023
and 2025 Notes. In the event of such default, the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest, the lender under the Credit Facility or other
debt we may incur in the future could elect to terminate its commitment, cease making further loans and institute foreclosure proceedings against our assets, and we could be forced into bankruptcy or liquidation. In addition, any such default may
constitute a default under the 2023 and 2025 Notes, which could further limit our ability to repay our debt, including the 2023 and 2025 Notes. If our operating performance declines, we may in the future need to seek to obtain waivers from the
lender under the Credit Facility or other debt that we may incur in the future to avoid being in default. If we breach our covenants under the Credit Facility or other debt and seek a waiver, we may not be able to obtain a waiver from the required
lenders. If this occurs, we would be in default under the Credit Facility or other debt, the lender could exercise its rights as described above, and we could be forced into bankruptcy or liquidation. If we are unable to repay debt, lenders having
secured obligations could proceed against the collateral securing the debt.  52




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##### Table of Contents

Because the Credit Facility has, and any future credit facilities will likely have,
customary cross-default provisions, if the indebtedness under the 2023 and 2025 Notes, the Credit Facility or under any future credit facility is accelerated, we may be unable to repay or finance the amounts due. ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 2.
PROPERTIES We do not own any real estate or other physical properties important to our operations, however, an affiliate of our
Investment Adviser leases office space for our executive offices at 535 Madison Avenue, New York, New York 10022. ITEM 3. LEGAL PROCEEDINGS Neither we nor our wholly-owned subsidiaries, Saratoga Investment Funding LLC and Saratoga Investment Corp. SBIC LP, are currently subject to
any material legal proceedings. ITEM 4. MINE SAFETY DISCLOSURES None.  53




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##### Table of Contents

PART II ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Price range of common stock Our
common stock is traded on the New York Stock Exchange under the symbol SAR. Prior to July 30, 2010, our common stock traded on the New York Stock Exchange under the symbol GNV. The following table sets forth, for the two
most recent fiscal years and the current fiscal year, the net asset value (NAV) at each period end and the range of high and low sales prices of our common stock as reported on the New York Stock Exchange. The net asset value per share
and high and low sales prices listed below reflect the 1:10 reverse stock split that occurred on August 12, 2010.  Market PriceFiscal Year Ended February 28, 2018

NAV(1)


High


LowFirst Quarter

$
21.69


$
23.60


$
20.54Second Quarter

$
22.37


$
22.53


$
20.28Third Quarter

$
22.58


$
22.72


$
20.65Fourth Quarter

$
22.96


$
22.70


$
19.65Market PriceFiscal Year Ended February 28, 2019

NAV(1)


High


LowFirst Quarter

$
23.06


$
22.94


$
20.02Second Quarter

$
23.16


$
27.74


$
23.05Third Quarter

$
23.13


$
24.70


$
20.50Fourth Quarter

$
23.62


$
23.40


$
18.96Market PriceFiscal Year Ending February 29, 2020

NAV(1)


High


LowFirst Quarter through May 10, 2019

$
*


$
25.60


$
22.27  *
Not determinable at the time of filing. (1)
NAV per share is determined as of the last day in the relevant quarter and therefore may not reflect the net
asset value per share on the date of the high and low closing sales prices. The net asset values shown are based on outstanding shares at the end of each period. On September 24, 2014, we announced the approval of an open market share repurchase plan that allows us to repurchase up to 200,000
shares of our common stock at prices below its NAV as reported in our then most recently published consolidated financial statements. On October 7, 2015, our board of directors extended the open market share repurchase plan for another year and
increased the number of shares we are permitted to repurchase at prices below our NAV, as reported in our then most recently published consolidated financial statements, to 400,000 shares of our common stock. On October 5, 2016, our board of
directors extended the open market share repurchase plan for another year to October 15, 2017 and increased the number of shares we are permitted to repurchase at prices below our NAV, as reported in our then most recently published
consolidated financial statements, to 600,000 shares of its common stock. On October 10, 2017 and January 8, 2019, the Companys board of directors extended the open market share repurchase plan for another year to October 15,
2018 and January 15, 2020, respectively, each time leaving the number of shares unchanged at 600,000 shares of its common stock.  54




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##### Table of Contents

As shown in the table below, as of February 28, 2019, we had purchased 218,491 shares
of common stock pursuant to this repurchase plan.  Period

Total Number ofShares (or Units)Purchased


AveragePrice per Share(or Unit)


Total Number of Shares(or Units) Purchased asPart of PubliclyAnnounced Plans orPrograms


Maximum Number (orApproximate Dollar Value) ofShares (or Units) that May 
YetBe Purchased Under the Plansor ProgramsMarch 1. 2015 through November 30, 2015


2,500


$
15.59



2,500



397,500December 1, 2015 through December 31, 2015





$




2,500



397,500January 1, 2016 through January 31, 2016


4,200


$
13.86



6,700



393,300February 1, 2016 through February 29, 2016


18,717


$
13.86



25,417



374,583March 1, 2016 through March 31, 2016


16,282


$
14.57



41,699



358,301April 1, 2016 through April 30, 2016


7,858


$
16.22



49,557



350,443May 1, 2016 through May 31, 2016


21,357


$
16.29



70,914



329,086June 1, 2016 through June 30, 2016


8,310


$
16.50



79,224



320,776July 1, 2016 through July 31, 2016


19,212


$
17.31



98,436



301,564August 1, 2016 through August 31, 2016


40,058


$
17.44



138,494



261,506September 1, 2016 through September 30, 2016


40,221


$
18.04



178,715



221,285October 1, 2016 through October 31, 2016


27,076


$
18.10



205,791



394,209November 1, 2016 through November 30, 2016


8,600


$
18.24



214,391



385,609December 1, 2016 through December 31, 2016


4,100


$
18.57



218,491



381,509January 1, 2017 through February 28, 2019










218,491



381,509Total


218,491


$
16.87 Holders The last reported price for our common stock on May 10, 2019 was $24.98 per share. As of May 10, 2019, there were 15 holders of
record of our common stock.  55




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##### Table of Contents

Dividend Policy The following table summarizes our dividends or distributions declared during fiscal 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018
and 2019:  Date Declared

Record Date


Payment Date


Amount        per Share(2)Fiscal Year Ended 2009:May 22, 2008


May 30, 2008



June 13, 2008


$
3.90August 19, 2008


August 29, 2008



September 15, 2008



3.90December 8, 2008


December 18, 2008



December 29, 2008



2.50Total









$
10.30Fiscal Year Ended 2010:November 13, 2009


November 25, 2009



December 31, 2009


$
18.25
(1)Total









$
18.25Fiscal Year Ended 2011:November 12, 2010


November 19, 2010



December 29, 2010


$
4.40
(1)Total









$
4.40Fiscal Year Ended 2012:November 15, 2011


November 25, 2011



December 30, 2011


$
3.00
(1)Total









$
3.00Fiscal Year Ended 2013:November 9, 2012


November 20, 2012



December 31, 2012


$
4.25
(1)Total









$
4.25Fiscal Year Ended 2014:October 30, 2013


November 13, 2013



December 27, 2013


$
2.65
(1)Total









$
2.65Fiscal Year Ended 2015:September 24, 2014


November 3, 2014



November 28, 2014


$
0.18
(1)September 24, 2014


February 2, 2015



February 27, 2015



0.22
(1)Total









$
0.40Fiscal Year Ended 2016:April 9, 2015


May 4, 2015



May 29, 2015


$
0.27
(1)May 14, 2015


May 26, 2015



June 5, 2015



1.00
(1)July 8, 2015


August 3, 2015



August 31, 2015



0.33
(1)October 7, 2015


November 2, 2015



November 30, 2015



0.36
(1)January 12, 2016


February 1, 2016



February 29, 2016



0.40
(1)Total









$
2.36Fiscal Year Ended 2017:March 31, 2016


April 15, 2016



April 27, 2016


$
0.41
(1)July 7, 2016


July 29, 2016



August 9, 2016



0.43
(1)August 8, 2016


August 24, 2016



September 5, 2016



0.20
(1)October 5, 2016


October 31, 2016



November 9, 2016



0.44
(1)January 12, 2017


January 31, 2017



February 9, 2017



0.45
(1)Total









$
1.93Fiscal Year Ended 2018:February 28, 2017


March 15, 2017



March 28, 2017


$
0.46
(1)May 30, 2017


June 15, 2017



June 27, 2017



0.47
(1)August 28, 2017


September 15, 2017



September 26, 2017



0.48
(1)November 29, 2017


December 15, 2017



December 27, 2017



0.49
(1)Total









$
1.90Fiscal Year Ended 2019:February 26, 2018


March 14, 2018



March 26, 2018


$
0.50
(1)May 30, 2018


June 15, 2018



June 27, 2018



0.51
(1)August 28, 2018


September 17, 2018



September 27, 2018



0.52
(1)November 27, 2018


December 17, 2018



January 2, 2019



0.53
(1)Total









$
2.06  (1)
This dividend was paid by a combination of shares of common stock and cash. Please see the discussion
immediately following this table for more detail about the composition of this dividend. (2)
In each case, all of our distributions have been paid from our earnings and there has not been any return of
capital to investors.  56




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Our distributions, if any, will be determined by our board of directors and paid out of
assets legally available for distribution. Any such distributions generally will be taxable to our stockholders, including to those stockholders who receive additional shares of our common stock pursuant to our dividend reinvestment plan. Prior to
January 2009, we paid quarterly dividends to our stockholders. However, in January 2009, we suspended the practice of paying quarterly dividends to our stockholders and thereafter, paid five annual dividend distributions (December 2013, 2012, 2011,
2010 and 2009) to our stockholders since such time, which distributions were made with a combination of cash and the issuance of shares of our common stock as discussed more fully below. On September 24, 2014, we announced the recommencement of quarterly dividends to our stockholders. We have adopted a dividend
reinvestment plan (DRIP) that provides for reinvestment of our dividend distributions on behalf of our stockholders unless a stockholder elects to receive cash. As a result, if our board of directors authorizes, and we declare, a cash
dividend, then our stockholders who have not opted out of the DRIP by the dividend record date will have their cash dividends automatically reinvested into additional shares of our common stock, rather than receiving the cash dividends.
We have the option to satisfy the share requirements of the DRIP through the issuance of new shares of common stock or through open market purchases of common stock by the DRIP plan administrator. We are prohibited from making distributions that cause us to fail to maintain the asset coverage ratios stipulated by the 1940 Act, subject to
certain exceptions, or that violate our debt covenants. In order to maintain tax treatment as a RIC, we must for each fiscal year
distribute an amount equal to at least 90.0% of our ordinary net taxable income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, reduced by deductible expenses. In addition, we will be subject to
federal excise taxes to the extent we do not distribute during the calendar year at least (1) 98.0% of our ordinary income for the calendar year, (2) 98.2% of our capital gains in excess of capital losses for the
one-year period ending on October 31 of the calendar year and (3) any ordinary income and net capital gains for preceding years that were not distributed during such years and on which we paid no
federal income tax. For the 2018 calendar year, the Company made distributions sufficient such that we did not incur any federal excise taxes. For the 2017 calendar year, the Company made distributions sufficient such that we did not incur any
federal excise taxes. For the 2014, 2015 and 2016 calendar years, our distributions were insufficient such that we incurred federal excise taxes. We may elect to withhold from distribution a portion of our ordinary income for the 2019 calendar year
and/or portion of the capital gains in excess of capital losses realized during the one-year period ending October 31, 2019, if any, and, if we do so, we would expect to incur federal excise taxes as a
result. Pursuant to a revenue procedure (Revenue Procedure 2010-12), or the Revenue Procedure,
issued by the IRS, the IRS indicated that it would treat distributions from certain publicly traded RICs (including BDCs) that were paid part in cash and part in stock as dividends that would satisfy the RICs annual distribution requirements
and qualify for the dividends paid deduction for federal income tax purposes. In order to qualify for such treatment, the Revenue Procedure required that at least 10.0% of the total distribution be payable in cash and that each stockholder have a
right to elect to receive its entire distribution in cash. If too many stockholders elected to receive cash, each stockholder electing to receive cash must receive a proportionate share of the cash to be distributed (although no stockholder electing
to receive cash may receive less than 10.0% of such stockholders distribution in cash). This Revenue Procedure applied to distributions declared on or before December 31, 2012 with respect to taxable years ending on or before
December 31, 2011. Although this Revenue Procedure is no longer available and did not apply to our distributions for our fiscal year
ended February 28, 2019, the revenue procedure was based upon certain applicable provisions of the Code and the Treasury regulations pursuant to which distributions payable in cash or in shares of stock at the election of stockholders are
treated as taxable dividends. Consistent with these provisions, the IRS has issued private letter rulings concluding that a RIC may treat a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder may elect
to receive his or her entire distribution in either cash or stock of the RIC subject to a limitation on the aggregate amount of cash to be distributed to all stockholders, which limitation must be at least 20.0% of the aggregate declared
distribution. On September 24, 2014, we announced the approval of an open market share repurchase plan that allows it to repurchase
up to 200,000 shares of our common stock at prices below our NAV as reported in its then most recently published consolidated financial statements, which was subsequently increased to 400,000 shares of our common stock. On October 5, 2016, our
board of directors extended the open market share repurchase plan for another year to October 15, 2017 and increased the number of shares we are permitted to repurchase at prices below our NAV, as reported in its then most recently published
consolidated financial statements, to 600,000 shares of our common stock. On October 10, 2017 and January 8, 2019, the Companys board of directors extended the open market share repurchase plan for another year to October 15,
2018 and January 15, 2020, respectively, each time leaving the number of shares unchanged at 600,000 shares of its common stock. As of February 28, 2019, we purchased 218,491 shares of common stock, at the average price of $16.87 for
approximately $3.7 million pursuant to this repurchase plan.  57




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On February 26, 2019, our board of directors declared a dividend of $0.54 per share,
which was paid on March 28, 2019, to common stockholders of record as of March 14, 2019. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder
elections, the dividend consisted of approximately $3.5 million in cash and 31,240 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the
stock portion was calculated based on a price of $21.36 per share, which equaled the volume weighted average trading price per share of the common stock on March 15, 18, 19, 20, 21, 22, 25, 26, 27 and 28, 2019. On November 27, 2018, the Company declared a dividend of $0.53 per share, which was paid on January 2, 2019, to common stockholders
of record on December 17, 2018. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to the Companys DRIP. 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. On August 28, 2018, our board of directors declared a dividend of $0.52 per share, which was paid on September 27, 2018, to common
stockholders of record as of September 17, 2018. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of
approximately $3.3 million in cash and 25,862 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. On May 30, 2018, our board of directors declared a dividend of $0.51 per share, which was paid on June 27, 2018, to common
stockholders of record as of June 15, 2018. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately
$2.7 million in cash and 21,562 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. On February 26, 2018, our board of directors declared a dividend of $0.50 per share, which was paid on March 26, 2018, to common
stockholders of record as of March 14, 2018. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. 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 the volume weighted average trading price per share of the common stock on March 13, 14, 15, 16, 19, 20, 21, 22, 23 and 26, 2018. On November 29, 2017, our board of directors declared a dividend of $0.49 per share, which was paid on December 27, 2017, to common
stockholders of record on December 15, 2017. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of
approximately $2.5 million in cash and 25,435 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on
a price of $21.14 per share, which equaled the volume weighted average trading price per share of the common stock on December 13, 14, 15, 18, 19, 20, 21, 22, 26 and 27, 2017. On August 28, 2017, our board of directors declared a dividend of $0.48 per share, which was paid on September 26, 2017, to common
stockholders of record on September 15, 2017. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of
approximately $2.2 million in cash and 33,551 newly issued shares of common stock, or 0.6% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on
a price of $20.19 per share, which equaled 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.  58




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On May 30, 2017, our board of directors declared a dividend of $0.47 per share, which
was paid on June 27, 2017, to common stockholders of record on June 15, 2017. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections,
the dividend consisted of approximately $2.3 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 the volume weighted average trading price per share of the common stock on June 14, 15, 16, 19, 20, 21, 22, 23, 26 and 27, 2017. On February 28, 2017, our board of directors declared a dividend of $0.46 per share, which was paid on March 28, 2017, to common
stockholders of record as of March 15, 2017. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of
approximately $2.0 million in cash and 29,096 newly issued shares of common stock, or 0.5% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on
a price of $21.38 per share, which equaled the volume weighted average trading price per share of the common stock on March 15, 16, 17, 20, 21, 22, 23, 24, 27 and 28, 2017. On January 12, 2017, our board of directors declared a dividend of $0.45 per share, which was paid on February 9, 2017, to common
stockholders of record as of January 31, 2017. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of
approximately $1.6 million in cash and 50,453 newly issued shares of common stock, or 0.9% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on
a price of $20.25 per share, which equaled the volume weighted average trading price per share of the common stock on January 27, 30, 31 and February 1, 2, 3, 6, 7, 8 and 9, 2017. On October 5, 2016, our board of directors declared a dividend of $0.44 per share, which was paid on November 9, 2016, to common
stockholders of record as of October 31, 2016. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of
approximately $1.5 million in cash and 58,548 newly issued shares of common stock, or 1.0% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on
a price of $17.12 per share, which equaled the volume weighted average trading price per share of the common stock on October 27, 28, 31 and November 1, 2, 3, 4, 7, 8 and 9, 2016. On August 8, 2016, our board of directors declared a special dividend of $0.20 per share, which was paid on September 5, 2016, to
common stockholders of record as of August 24, 2016. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of
approximately $0.7 million in cash and 24,786 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on
a price of $17.06 per share, which equaled the volume weighted average trading price per share of the common stock on August 22, 23, 24, 25, 26, 29, 30, 31 and September 1 and 2, 2016. On July 7, 2016, our board of directors declared a dividend of $0.43 per share, which was paid on August 9, 2016, to common
stockholders of record as of July 29, 2016. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. 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 the volume weighted average trading price per share of the common stock on July 27, 28, 29 and August 1, 2, 3, 4, 5, 8 and 9, 2016. On March 31, 2016, our board of directors declared a dividend of $0.41 per share, which was paid on April 27, 2016, to common
stockholders of record on April 15, 2016. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately
$1.5 million in cash and 56,728 newly issued shares of common stock, or 1.0% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of
$15.43 per share, which equaled 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.  59




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On January 12, 2016, our board of directors declared a dividend of $0.40 per share,
which was paid on February 29, 2016, to all stockholders of record on February 1, 2016. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder
elections, the dividend consisted of approximately $1.4 million in cash and 66,765 newly issued shares of common stock, or 1.2% of 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 the volume weighted average trading price per share of the common stock on February 16, 17, 18, 19, 22, 23, 24, 25, 26 and 29, 2016. On October 7, 2015, our board of directors declared a dividend of $0.36 per share, which was paid on November 30, 2015, to common
stockholders of record on November 2, 2015. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately
$1.1 million in cash and 61,029 newly issued shares of common stock, or 1.1% of 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 the volume weighted average trading price per share of the common stock on November 16, 17, 18, 19, 20, 23, 24, 25, 27 and 30, 2015. On July 8, 2015, our board of directors declared a dividend of $0.33 per share, which was paid on August 31, 2015, to common
stockholders of record on August 3, 2015. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately
$1.1 million in cash and 47,861 newly issued shares of common stock, or 0.9% of 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 the volume weighted average trading price per share of the common stock on August 18, 19, 20, 21, 24, 25, 26, 27, 28 and 31, 2015. On May 14, 2015, our board of directors declared a special dividend of $1.00 per share, which was paid on June 5, 2015, to common
stockholders of record on May 26, 2015. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately
$3.4 million in cash and 126,230 newly issued shares of common stock, or 2.3% of 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 the volume weighted average trading price per share of the common stock on May 22, 26, 27, 28, 29 and June 1, 2, 3, 4 and 5, 2015. On April 9, 2015, our board of directors declared a dividend of $0.27 per share, which was paid on May 29, 2015, to common
stockholders of record on May 4, 2015. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately
$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 the volume weighted average trading price per share of the common stock on May 15, 18, 19, 20, 21, 22, 26, 27, 28 and 29, 2015. On September 24, 2014, our board of directors declared a dividend of $0.22 per share, which was paid on February 27, 2015, to common
stockholders of record on February 2, 2015. Shareholders have the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of
approximately $0.8 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 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. On September 24, 2014, our board of directors declared a dividend of $0.18 per share, which was paid on November 28, 2014, to common
stockholders of record on November 3, 2014. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately
$0.6 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 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.  60




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On October 30, 2013, our board of directors declared a dividend of $2.65 per share,
which was paid on December 27, 2013, to common stockholders of record on November 13, 2013. Shareholders had the option to receive payment of the dividend in cash, shares of common stock, or a combination of cash and shares of common
stock, provided that the aggregate cash payable to all shareholders was limited to approximately $2.5 million or $0.53 per share. 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. On November 9, 2012, our board of directors declared a
dividend of $4.25 per share, which was paid on December 31, 2012, to common stockholders of record on November 20, 2012. Shareholders had the option to receive payment of the dividend in cash, shares of common stock, or a combination of
cash and shares of common stock, provided that the aggregate cash payable to all shareholders was limited to approximately $3.3 million or $0.85 per share. Based on shareholder elections, the dividend consisted of $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. On November 15, 2011, our board of directors
declared a dividend of $3.00 per share, which was paid on December 30, 2011, to common stockholders of record on November 25, 2011. Shareholders had the option to receive payment of the dividend in cash, shares of common stock, or a
combination of cash and shares of common stock, provided that the aggregate cash payable to all shareholders was limited to $2.0 million or $0.60 per share. 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 $13.12 per share, which equaled the volume weighted average
trading price per share of the common stock on December 20, 21 and 22, 2011. On November 12, 2010, we declared a dividend of
$4.40 per share, which was paid on December 29, 2010. Stockholders had the option to receive payment of the dividend in cash, shares of common stock, or a combination of cash and shares of common stock, provided that the aggregate cash payable
to all shareholders was limited to $1.2 million or $0.44 per share. 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. On November 13, 2009, we declared a dividend of $18.25 per share, which was paid on December 31, 2009. Stockholders had the option
to receive payment of the dividend in cash, shares of common stock, or a combination of cash and shares of common stock, provided that the aggregate cash payable to all stockholders was limited to $2.1 million or $0.25 per share. Based on
shareholder elections, the dividend consisted of $2.1 million in cash and 864,872.5 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 stockholders 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.  61




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Performance Graph The following graph compares the return on our common stock with that of the Standard & Poors 500 Stock Index and the NASDAQ
Financial 100 index, for the period from March 23, 2007, the date our common stock began trading, through February 28, 2019. The graph assumes that, on March 23, 2007, a person invested $100 in each of our common stock, the
Standard & Poors 500 Stock Index and the NASDAQ Financial 100 index. The graph measures total shareholder return, which takes into account both changes in stock price and dividends. It assumes that dividends paid are reinvested in
like securities.  LOGO Sales of unregistered securities Not applicable. Issuer purchases of equity
securities We did not make any purchases of our common stock in the open market during the years ended February 28, 2019 and
February 28, 2018. During the year ended February 28, 2017, we purchased 193,074 shares of our common stock in the open market.  62




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ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA The following selected financial and other data as of and for the years ended February 28, 2019, February 28, 2018, February 28,
2017, February 29, 2016 and February 28, 2015 are derived from our consolidated financial statements which have been audited by Ernst & Young LLP, an independent registered public accounting firm, whose report thereon is included
within this Annual Report. The data should be read in conjunction with our consolidated financial statements and notes thereto, which are included elsewhere in this Annual Report, and Part II. Item 7. Managements Discussion and Analysis
of Financial Condition and Results of Operations. SARATOGA INVESTMENT CORP. SELECTED CONSOLIDATED FINANCIAL DATA (dollar amounts in thousands, except share and per share numbers)  As of and forthe Year EndedFebruary 28,2019


As of and forthe Year EndedFebruary 28,2018


As of and forthe Year EndedFebruary 28,2017


As of and forthe Year EndedFebruary 29,2016


As of and forthe Year EndedFebruary 28,2015Consolidated Statements of Operations Data:Investment income:Interest from investments

$
43,297


$
35,110


$
29,348


$
26,871


$
24,684Management fee, incentive fee and other income


4,411



3,505



3,809



3,179



2,691Total investment income


47,708



38,615



33,157



30,050



27,375Operating expenses:Interest and debt financing expenses


13,126



10,939



9,888



8,456



7,375Base management and incentive management fees(1)


11,770



10,180



7,846



6,761



6,704Administrator expenses


1,896



1,646



1,367



1,175



1,000General and administrative and other expenses


3,641



3,133



2,896



2,866



2,328Income/excise tax expense (benefit)


(1,027
)


(15
)


45



114



294Total operating expenses


29,406



25,883



22,042



19,372



17,701Loss on extinguishment of debt










1,455







Net investment income


18,302



12,732



9,660



10,678



9,674Realized and unrealized gain (loss) on investments:Net realized gain (loss) from investments


4,874



(5,878
)


12,368



226



3,276Net change in unrealized appreciation (depreciation) on investments


(2,900
)


10,825



(10,641
)


741



(1,943
)Net change in provision for deferred taxes on unrealized (appreciation) depreciation on
investments


(1,767
)














Total net gain on investments


207



4,947



1,727



967



1,333Net increase in net assets resulting from operations

$
18,509


$
17,679


$
11,387


$
11,645


$
11,007As of and forthe Year EndedFebruary 28,2019


As of and for theYear EndedFebruary 28,2018


As of and for theYear EndedFebruary 28,2017


As of and for theYear EndedFebruary 29,2016


As of and forthe Year EndedFebruary 28,2015Per Share:Adoption of ASC 606(2)

$
(0.01
)

$



$



$



$
Earnings per common sharebasic and diluted(3)


2.63



2.93



1.98



2.09



2.04Net investment income per sharebasic and diluted(3)


2.60



2.11



1.68



1.91



1.80Net realized and unrealized gain (loss) per sharebasic and diluted(3)


0.03



0.82



0.30



0.18



0.24Dividends declared per common share(4)


2.06



1.90



1.93



2.36



0.40Issuance of common stock above net asset value(5)


0.15















Dilutive impact of dividends paid in stock on net asset value per share(6)


(0.05
)


(0.04
)


(0.14
)


(0.37
)


(0.02
)Net asset value per share

$
23.62


$
22.96


$
21.97


$
22.06


$
22.70Total return based on market value(7)


16.11
%


5.28
%


80.83
%


4.27
%


1.63
%Total return based on net asset value(8)


13.33
%


14.45
%


12.62
%


11.10
%


10.09
%Consolidated Statements of Assets and Liabilities Data:Investment assets at fair value

$
402,020


$
342,694


$
292,661


$
283,996


$
240,538Total assets


470,672



360,336



318,651



295,047



263,560Total debt outstanding, net of discount and/or deferred financing costs


277,151



206,486



181,476



160,749



132,117Total net assets


180,875



143,691



127,295



125,150



122,599Net asset value per common share

$
23.62


$
22.96


$
21.97


$
22.06


$
22.70Common shares outstanding at end of year


7,657,156



6,257,029



5,794,600



5,672,227



5,401,899Other Data:Investments funded

$
187,708


$
107,697


$
126,935


$
109,191


$
104,872Principal collections related to investment repayments or sales

$
135,728


$
66,312


$
121,159


$
68,174


$
73,257Number of investments at year end


58



56



53



59



64Weighted average yield of income producing debt investmentsNon-control/Non-affiliate(9)


10.93
%


11.11
%


10.66
%


10.82
%


10.63
%Weighted average yield on income producing debt investmentsAffiliate(9)


13.56
%


13.06
%


12.17
%






Weighted average yield on income producing debt investmentsControl(9)


13.67
%


16.97
%


11.64
%


16.40
%


25.22
%  (1)
See Note 6 to the consolidated financial statements contained elsewhere herein. (2)
See Note 2 to the consolidated financial statements contained elsewhere herein. (3)
For the years ended February 28, 2019, February 28, 2018, February 28, 2017, February 29,
2016 and February 28, 2015, amounts are calculated using weighted average common shares outstanding of 7,046,686, 6,024,040, 5,740,450, 5,582,453 and 5,385,049, respectively. (4)
Calculated using the shares outstanding at the ex-dividend date. (5)
The continuous issuance of common stock may cause an incremental increase in net asset value per share due to
the sale of shares at the then prevailing public offering price and the receipt of net proceeds per share by the Company in excess of net asset value per share on each subscription closing date. The per share data was derived by computing
(i) the sum of (A) the number of shares issued in connection with subscriptions and/or distribution reinvestment on each share transaction date multiplied by (B) the differences between the net proceeds per share and the net asset
value per share on each share transaction date, divided by (ii) the total shares outstanding during the period. (6)
Dilutive effect of the issuance of shares of common stock below net asset value per share in connection with
the satisfaction of the Companys annual RIC distribution requirement. See Price Range of Common StockDividend Policy. (7)
Total investment return is calculated assuming a purchase of common shares at the current market value on the
first day and a sale at the current market value on the last day of the periods reported. Dividends and distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the Companys DRIP. Total
investment return does not reflect brokerage commissions. (8)
Total investment return is calculated assuming a purchase of common shares at the current net asset value on
the first day and a sale at the current net asset value on the last day of the periods reported. Dividends and distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the Companys DRIP.
Total investment return does not reflect brokerage commissions. (9)
The weighted average yield on income producing investments is higher than what investors in the Company will
realize because it does not reflect the Companys expenses and any sales load paid by investors.  63




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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 Investment Adviser;  

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 prospects of our portfolio companies;  

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 status, including our ability to operate as a business development company
(BDC), or to operate our small business investment company (SBIC) subsidiary, and to continue to qualify to be taxed as a regulated investment company (RIC);  

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 interest rate volatility on our results, particularly because we use leverage as part of our
investment strategy;  

the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions
of government agencies relating to us or our investment adviser;  

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 Investment Adviser to attract and retain highly talented professionals; and  

the ability of our Investment Adviser to locate suitable investments for us and to monitor and effectively
administer our investments.  64




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##### Table of Contents

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 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 treated as a BDC under the Investment Company Act of 1940, as amended (the1940 Act). Our investment objective is to create attractive risk-adjusted returns by generating current income and long-term capital
appreciation from our investments. We invest primarily in senior and unitranche leveraged loans and mezzanine debt issued by private U.S. middle market companies, which we define as companies having earnings before interest, tax, depreciation and
amortization (EBITDA) of between $2 million and $50 million, both through direct lending and through participation in loan syndicates. We may also invest up to 30.0% of the portfolio in opportunistic investments in order to
seek to enhance returns to stockholders. Such investments may include investments in distressed debt, which may include securities of companies in bankruptcy, foreign debt, private equity, securities of public companies that are not thinly traded
and structured finance vehicles such as collateralized loan obligation funds. Although we have no current intention to do so, to the extent we invest in private equity funds, we will limit our investments in entities that are excluded from the
definition of investment company under Section 3(c)(1) or Section 3(c)(7) of the 1940 Act, which includes private equity funds, to no more than 15.0% of its net assets. We have elected and qualified to be treated as a RIC under
Subchapter M of the Internal Revenue Code of 1986, as amended (the Code). Corporate History and Recent Developments 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 (SIA) to replace GSCP (NJ), L.P. as our investment adviser and changed our name to Saratoga Investment Corp. As a result of the event of default under a revolving securitized credit facility with Deutsche Bank we previously had in place, in December
2008 we engaged the investment banking firm of Stifel, Nicolaus & Company to evaluate strategic transaction opportunities and consider alternatives for us. On April 14, 2010, GSC Investment Corp. entered into a stock purchase agreement
with Saratoga Investment Advisors and certain of its affiliates and an assignment, assumption and novation agreement with Saratoga Investment Advisors, pursuant to which GSC Investment Corp. assumed certain rights and obligations of Saratoga
Investment Advisors under a debt commitment letter Saratoga Investment Advisors received from Madison Capital Funding LLC, which indicated Madison Capital Fundings willingness to provide GSC Investment Corp. with a $40.0 million senior
secured revolving credit facility, subject to the satisfaction of certain terms and conditions. In addition, GSC Investment Corp. and GSCP (NJ), L.P. entered into a termination and release agreement, to be effective as of the closing of the
transaction contemplated by the stock purchase agreement, pursuant to which GSCP (NJ), L.P., among other things, agreed to waive any and all accrued and unpaid deferred incentive management fees up to and as of the closing of the transaction
contemplated by the stock purchase agreement but continued to be entitled to receive the base management fees earned through the date of the closing of the transaction contemplated by the stock purchase agreement.  65




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On July 30, 2010, the transactions contemplated by the stock purchase agreement with
Saratoga Investment Advisors and certain of its affiliates were completed, the private sale of 986,842 shares of our common stock for $15.0 million in aggregate purchase price to Saratoga Investment Advisors and certain of its affiliates
closed, the Company entered into the Credit Facility, and the Company began doing business as Saratoga Investment Corp. We used the net
proceeds from the private sale transaction and a portion of the funds available to us under the Credit Facility to pay the full amount of principal and accrued interest, including default interest, outstanding under our revolving securitized credit
facility with Deutsche Bank. The revolving securitized credit facility with Deutsche Bank was terminated in connection with our payment of all amounts outstanding thereunder on July 30, 2010. On August 12, 2010, we effected a one-for-ten reverse
stock split of our outstanding common stock. As a result of the reverse stock split, every ten shares of our common stock were converted into one share of our common stock. Any fractional shares received as a result of the reverse stock split were
redeemed for cash. The total cash payment in lieu of shares was $230. Immediately after the reverse stock split, we had 2,680,842 shares of our common stock outstanding. In January 2011, we registered for public resale of the 986,842 shares of our common stock issued to Saratoga Investment Advisors and certain
of its affiliates. On March 28, 2012, our wholly-owned subsidiary, Saratoga Investment Corp. SBIC, LP (SBIC LP),
received an SBIC license from the Small Business Administration (SBA). In May 2013, we issued $48.3 million in aggregate
principal amount of our 7.50% fixed-rate unsecured notes due 2020 (the 2020 Notes) for net proceeds of $46.1 million after deducting underwriting commissions of $1.9 million and offering costs of $0.3 million. The proceeds
included the underwriters full exercise of their overallotment option. The 2020 Notes were listed on the NYSE under the trading symbol SAQ with a par value of $25.00 per share. The 2020 Notes were redeemed in full on
January 13, 2017. On May 29, 2015, we entered into a Debt Distribution Agreement with Ladenburg Thalmann & Co. through
which we may offer for sale, from time to time, up to $20.0 million in aggregate principal amount of the 2020 Notes through an At-the-Market (ATM)
offering. Prior to the 2020 Notes being redeemed in full, the Company sold 539,725 bonds with a principal of $13.5 million at an average price of $25.31 for aggregate net proceeds of $13.4 million (net of transaction costs). On December 21, 2016, we issued $74.5 million in aggregate principal amount of our 6.75% fixed-rate unsecured notes due 2023 (the
2023 Notes) for net proceeds of $71.7 million after deducting underwriting commissions of approximately $2.3 million and offering costs of approximately $0.5 million. The issuance included the exercise of substantially all
of the underwriters option to purchase an additional $9.8 million aggregate principal amount of 2023 Notes within 30 days. Interest on the 2023 Notes is paid quarterly in arrears on March 15, June 15, September 15 and
December 15, at a rate of 6.75% per year, beginning March 30, 2017. The 2023 Notes mature on December 20, 2023, and commencing December 21, 2019, may be redeemed in whole or in part at any time or from time to time at our option.
The 2023 Notes are listed on the NYSE under the trading symbol SAB with a par value of $25.00 per share. 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. As of February 28,
2019, the Company sold 494,672 shares for gross proceeds of $11.2 million at an average price of $22.72 for aggregate net proceeds of $11.1 million (net of transaction costs). On July 13, 2018, the Company issued 1,150,000 shares of its common stock priced at $25.00 per share (par value $0.001 per share) at an
aggregate total of $28.75 million. The net proceeds, after deducting underwriting commissions of $1.15 million and offering costs of approximately $0.2 million, amounted to approximately $27.4 million. The Company also granted
the underwriters a 30-day option to purchase up to an additional 172,500 shares of its common stock, which was not exercised. On August 7, 2018, we entered into an unsecured loan agreement (CLO 2013-1 Warehouse
Loan) with Saratoga Investment Corp. CLO 2013-1 Warehouse, Ltd (CLO 2013-1 Warehouse), a wholly-owned subsidiary of Saratoga Investment Corp. CLO 2013-1, Ltd. (Saratoga CLO), pursuant to which CLO 2013-1 Warehouse may borrow from time to time up to $20 million from us in order to provide capital
necessary to support warehouse activities. The CLO 2013-1 Warehouse Loan, which expires on February 7, 2020, bears interest at an annual rate of 3M USD LIBOR + 7.5%. During the year ended
February 28, 2019, the maximum amount invested by us in the CLO 2013-1 Warehouse Loan amounted to $20.0 million.  66




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On August 28, 2018, the Company issued $40.0 million in aggregate principal amount
of our 6.25% fixed-rate notes due 2025 (the 2025 Notes) for net proceeds of $38.7 million after deducting underwriting commissions of approximately $1.3 million. Offering costs incurred were approximately $0.3 million. The
issuance included the full exercise of the underwriters option to purchase an additional $5.0 million aggregate principal amount of 2025 Notes within 30 days. Interest on the 2025 Notes is paid quarterly in arrears on February 28,
May 31, August 31 and November 30, at a rate of 6.25% per year, beginning November 30, 2018. The 2025 Notes mature on August 31, 2025 and commencing August 28, 2021, may be redeemed in whole or in part at any time or
from time to time at our option. The net proceeds from the offering were used for general corporate purposes in accordance with our investment objective and strategies. Financing costs of $1.6 million related to the 2025 Notes have been
capitalized and are being amortized over the term of the 2025 Notes. On December 14, 2018, the Company completed the third
refinancing of the Saratoga CLO (the 2013-1 Reset CLO Notes). This refinancing, among other things, extended the Saratoga CLO reinvestment period to January 2021, and extended its legal maturity to
January 2030. A non-call period of January 2020 was also added. In addition to and as part of the refinancing, the Saratoga CLO has also been upsized from $300 million in assets to approximately
$500 million. As part of this refinancing and upsizing, the Company invested an additional $13.8 million in all of the newly issued subordinated notes of the Saratoga CLO, and purchased $2.5 million in aggregate principal amount of
the Class F-R-2 Notes tranche and $7.5 million in aggregate principal amount of the
Class G-R-2 Notes tranche at par. Concurrently, the existing $4.5 million of Class F notes and $20.0 million CLO
2013-1 Warehouse Loan were repaid. On February 5, 2019, the Company completed a re-opening and up-sizing of its existing 2025 Notes by issuing an additional $20.0 million in aggregate principal amount for net proceeds of $19.2 million after
deducting underwriting commissions of approximately $0.6 million and discount of $0.2 million. Offering costs incurred were approximately $0.2 million. The issuance included the full exercise of the underwriters option to
purchase an additional $2.5 million aggregate principal amount of 2025 Notes within 30 days. Interest rate, interest payment dates and maturity remain unchanged from the existing 2025 Notes issued in August 2018. The net proceeds from this
offering were used for general corporate purposes in accordance with our investment objective and strategies. The financing costs and discount of $1.0 million related to the 2025 Notes have been capitalized and are being amortized over the term
of the 2025 Notes. At February 28, 2019, the total 2025 Notes outstanding was $60.0 million. The 2025 Notes are listed on the
NYSE under the trading symbol SAF with a par value of $25.00 per share. Critical Accounting Policies 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 the Companys 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 follows. Investment Valuation The Company accounts for its investments at fair value in accordance with the Financial Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements and Disclosures(ASC 820). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy
based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 820 requires the Company to assume that its investments are to be sold 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.  67




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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. Determinations of fair value may involve subjective judgments and estimates. The types of factors that may be considered in determining the fair value of our investments include the nature and realizable value of
any collateral, the portfolio companys ability to make payments, market yield trend analysis, the markets in which the portfolio company does business, comparison to publicly traded companies, discounted cash flow and other relevant factors. 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. 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 flow model that utilizes prepayment, re-investment and loss assumptions based on historical experience and projected performance, economic factors, the characteristics of the underlying cash flow, and comparable yields for equity interests in
collateralized loan obligation funds similar to Saratoga CLO, when available, as determined by SIA and recommended to our board of directors. Specifically, we use Intex cash flow models, or an appropriate substitute, to form the basis for the
valuation of our investment in Saratoga CLO. The models use a set of assumptions including projected default rates, recovery rates, reinvestment rate and prepayment rates in order to arrive at estimated valuations. The assumptions are based on
available market data and projections provided by third parties as well as management estimates. We use the output from the Intex models (i.e., the estimated cash flows) to perform a discounted cash flow analysis on expected future cash flows to
determine a valuation for our investment in Saratoga CLO. Revenue Recognition Income Recognition Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis to the extent that such
amounts are expected to be collected. The Company stops accruing interest on its investments when it is determined that interest is no longer collectible. Discounts and premiums on investments purchased are accreted/amortized over the life of the
respective investment using the effective yield method. The amortized cost of investments represents the original cost adjusted for the accretion of discounts and amortization of premiums on investments. Loans are generally placed on non-accrual status when there is reasonable doubt that principal or
interest will be collected. Accrued interest is generally reserved when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be
recognized as a reduction in principal depending upon managements judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in
managements judgment, are likely to remain current, although we may make exceptions to this general rule if the loan has sufficient collateral value and is in the process of collection. Payment-in-Kind Interest The Company holds debt and preferred equity investments in its portfolio that contain a payment-in-kind (PIK) interest provision. The PIK interest, which represents contractually deferred interest added to the investment balance that is generally due at maturity, is generally
recorded on the accrual basis to the extent such amounts are expected to be collected. We stop accruing PIK interest if we do not expect the issuer to be able to pay all principal and interest when due.  68




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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 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 August 7, 2018, we entered into an unsecured loan agreement, CLO 2013-1
Warehouse Loan, with Saratoga Investment Corp. CLO 2013-1 Warehouse, Ltd, a wholly-owned subsidiary of Saratoga CLO, pursuant to which CLO 2013-1 Warehouse may borrow
from time to time up to $20 million from us in order to provide capital necessary to support warehouse activities. The CLO 2013-1 Warehouse Loan, which expires on February 7, 2020, bears interest at an
annual rate of 3M USD LIBOR + 7.5%. During the year ended February 28, 2019, the maximum amount invested by us in the CLO 2013-1 Warehouse Loan amounted to $20.0 million. 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. A non-call period of January 2020 was also added. Following this refinancing, the Saratoga CLO
portfolio increased from approximately $300.0 million in aggregate principal amount to approximately $500.0 million of predominantly senior secured first lien term loans. In addition to refinancing its liabilities, 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 LIBOR plus 8.75% and 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. 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 ASC
Topic 325-40, Investments-Other, Beneficial Interests in Securitized Financial Assets(ASC 325-40), based on the anticipated yield and the estimated
cash flows over the projected life of the investment. Yields are revised when there are changes in actual or estimated cash flows due to changes in prepayments and/or re-investments, credit losses or asset
pricing. Changes in estimated yield are recognized as an adjustment to the estimated yield over the remaining life of the investment from the date the estimated yield was changed.  69




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ASC 606 In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers(ASC
606), which supersedes the revenue recognition requirements in Revenue Recognition (ASC 605). Under the new guidance, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that
reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In May 2016, ASU 2016-12 amended ASU 2014-09 and deferred
the effective period for annual periods beginning after December 15, 2017. Management has concluded that the majority of its revenues associated with financial instruments are scoped out of ASC 606, and has concluded that the only significant
impact relates to the timing of the recognition of the CLO incentive fee income. We adopted ASC 606 under the modified retrospective approach using the practical expedient provided for, therefore the presentation of prior periods has not been
adjusted. Expenses Our primary operating expenses include the payment of investment advisory and management fees, professional fees, directors and officers
insurance, fees paid to independent directors and administrator expenses, including our allocable portion of our administrators overhead. Our investment advisory and management fees compensate our Investment Adviser 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 (including the cost and expenses of any independent valuation firm);  

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

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

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

offerings of our common stock and other securities;  

investment advisory and management fees;  

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

transfer agent and custodial fees;  

federal and state registration fees;  

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

federal, state and local taxes;  

independent directors fees and expenses;  

costs of preparing and filing reports or other documents required by governmental bodies (including the U.S.
Securities and Exchange Commission (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)).  70




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##### Table of Contents

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 the Companys portfolio, less the aggregate amount of capital gains incentive fees paid to the investment adviser
through such date. We deferred cash payment of any incentive fee otherwise earned by our former investment adviser if,
during the then most recent four full fiscal quarters ending on or prior to the date such payment was to be made, the sum of (a) our aggregate distributions to our stockholders and (b) our change in net assets (defined as total assets less
liabilities) (before taking into account any incentive fees payable during that period) was less than 7.5% of our net assets at the beginning of such period. These calculations were appropriately pro-rated for
the first three fiscal quarters of operation and adjusted for any share issuances or repurchases during the applicable period. Such incentive fee would become payable on the next date on which such test had been satisfied for the most recent four
full fiscal quarters or upon certain terminations of the investment advisory and management agreement. We commenced deferring cash payment of incentive fees during the quarterly period ended August 31, 2007 and continued to defer such payments
through the quarterly period ended May 31, 2010. As of July 30, 2010, the date on which GSCP (NJ), L.P. ceased to be our investment adviser and administrator, we owed GSCP (NJ), L.P. $2.9 million in fees for services previously
provided to us; of which $0.3 million has been paid by us. GSCP (NJ), L.P. agreed to waive payment by us of the remaining $2.6 million in connection with the consummation of the stock purchase transaction with Saratoga Investment Advisors
and certain of its affiliates described elsewhere in this Annual Report. The terms of the investment advisory and management agreement
with Saratoga Investment Advisors, our current investment adviser, are substantially similar to the terms of the investment advisory and management agreement we had entered into with GSCP (NJ), L.P., our former investment adviser, except for the
following material distinctions in the fee terms:  

The capital gains portion of the incentive fee was reset with respect to gains and losses from May 31, 2010,
and therefore losses and gains incurred prior to such time will not be taken into account when calculating the capital gains fee payable to Saratoga Investment Advisors and, as a result, Saratoga Investment Advisors will be entitled to 20.0% of net
gains that arise after May 31, 2010. In addition, the cost basis for computing realized gains and losses on investments held by us as of May 31, 2010 equal the fair value of such investment as of such date. Under the investment advisory
and management agreement with our former investment adviser, GSCP (NJ), L.P., the capital gains fee was calculated from March 21, 2007, and the gains were substantially outweighed by losses.  

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

We will no longer have deferral rights regarding incentive fees in the event that the distributions to
stockholders and change in net assets is less than 7.5% for the preceding four fiscal quarters.  71




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##### Table of Contents

Capital Gains Incentive Fee The Company records an expense accrual relating to the capital gains incentive fee payable by the Company to its Investment Adviser 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 Investment Adviser if the Company were to liquidate its investment portfolio at such
time. The actual incentive fee payable to the Companys Investment Adviser 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. Regulatory Matters In August 2018, the
SEC issued Final Rule Release No.33-10532, Disclosure Update and Simplification, which in part amends certain disclosure requirements of Regulation S-X that have
become redundant, duplicative, overlapping, outdated, or superseded, in light of other Commission disclosure requirements, U.S. GAAP or changes in the information environment. The amendments are intended to facilitate the disclosure of information
to investors and simplify compliance without significantly altering the total mix of information provided to investors. The effective date for these disclosures was November 5, 2018, effective for the first quarter that begins after the
effective date. Management has adopted these amendments as currently required and these are reflected in the Companys consolidated financial statements and related disclosures. The presentation of certain prior year information has been
adjusted to conform with these amendments. New Accounting Pronouncements In August 2018, FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure
FrameworkChanges to the Disclosure Requirements for Fair Value Measurement(ASU 2018-13). The primary focus of ASU 2018-13 is to improve the
effectiveness of the disclosure requirements for fair value measurements. The changes affect all companies that are required to include fair value measurement disclosures. In general, the amendments in ASU
2018-13 are effective for all entities for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019. An entity is permitted to early adopt the removed or modified
disclosures upon the issuance of ASU 2018-13 and may delay adoption of the additional disclosures, which are required for public companies only, until their effective date. Management has assessed these
changes and does not believe they would have a material impact on the Companys consolidated financial statements and disclosures. In March 2017, the FASB issued ASU 2017-08, Receivables  Nonrefundable Fees and Other Costs
(Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities(ASU 2017-08) which amends the amortization period for certain purchased
callable debt securities held at a premium, shortening such period to the earliest call date. ASU 2017-08 does not require any accounting change for debt securities held at a discount; the discount continues
to be amortized to maturity. ASU 2017-08 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Management has assessed these changes and does not
believe they would have a material impact on the Companys consolidated financial statements and disclosures. In February 2016, the
FASB issued ASU 2016-02, Amendments to the Leases(ASU Topic 842), which will require for all operating leases the recognition of a right-of-use asset and a lease liability, in the statement of financial position. The lease cost will be allocated over the lease term on a straight-line basis. This guidance is effective for annual and
interim periods beginning after December 15, 2018. Management is currently evaluating the impact these changes will have on the Companys consolidated financial statements and disclosures.  72




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##### Table of Contents

Portfolio and investment activity Investment Portfolio Overview  February 28,2019


February 28,2018


February 28,2017($ in millions)Number of investments(1)


58



55



52Number of portfolio companies(2)


31



30



28Average investment per portfolio company(2)

$
11.8


$
10.9


$
9.7Average investment size(l)

$
6.5


$
6.0


$
5.4Weighted average maturity(3)


3.6yrs



3.5yrs



3.8yrsNumber of industries


8



10



10Non-performing or delinquent investments (fair value)

$
5.7


$
9.5


$
8.4Fixed rate debt (% of interest earning portfolio)(3)

$
55.7(16.3
%)

$
82.5(26.5
%)

$
44.2(16.9
%)Fixed rate debt (weighted average current coupon)(3)


10.4
%


12.2
%


11.4
%Floating rate debt (% of interest earning portfolio)(3)

$
285.0(83.7
%)

$
229.3(73.5
%)

$
217.6(83.1
%)Floating rate debt (weighted average current spread over LIBOR)(3)(4)


8.6
%


8.8
%


9.3
%  (1)
Excludes our investment in the subordinated notes of Saratoga CLO. (2)
At February 28, 2019, excludes our investment in the subordinated notes of Saratoga CLO, Class F-R-2 Notes and
Class G-R-2 Notes tranches of Saratoga CLO. At February 28, 2018 and February 28, 2017, excludes our investment in the subordinated notes of Saratoga CLO and Class F Notes tranche of Saratoga CLO. (3)
Excludes our investment in the subordinated notes of Saratoga CLO and equity interests. (4)
Calculation uses either 1-month or 3-month LIBOR, depending on the contractual terms, and after factoring in
any existing LIBOR floors. During the fiscal year ended February 28, 2019, we invested $187.7 million in new
or existing portfolio companies and had $135.7 million in aggregate amount of exits and repayments resulting in net investments of $52.0 million for the year. During the fiscal year ended February 28, 2018, we invested $107.7 million in new or existing portfolio companies and had
$66.3 million in aggregate amount of exits and repayments resulting in net investments of $41.4 million for the year. During
the fiscal year ended February 28, 2017, we invested $126.9 million in new or existing portfolio companies and had $121.2 million in aggregate amount of exits and repayments resulting in net investments of $5.7 million for the
year. Portfolio Composition Our portfolio composition at February 28, 2019, February 28, 2018 and February 28, 2017 at fair value was as follows:  February 28, 2019


February 28, 2018


February 28, 2017Percentageof TotalPortfolio


WeightedAverageCurrentYield


Percentageof TotalPortfolio


WeightedAverageCurrentYield


Percentageof TotalPortfolio


WeightedAverageCurrentYieldSyndicated loans



%



%


1.2
%


5.9
%


3.4
%


5.3
%First lien term loans


50.5



10.9



57.6



11.1



54.3



10.5Second lien term loans


31.3



11.7



27.7



11.9



30.0



11.7Unsecured term loans


0.5



















Structured finance securities


8.8



14.6



4.8



21.2



5.3



12.7Equity interests


8.9



3.1



8.7



3.6



7.0



0.4Total


100.0
%


10.7
%


100.0
%


11.1
%


100.0
%


10.9
%  73




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##### Table of Contents

At February 28, 2019, our investment in the subordinated notes of Saratoga CLO, a
collateralized loan obligation fund, had a fair value of $25.4 million and constituted 6.3% of our portfolio. This investment constitutes a first loss position in a portfolio that, as of February 28, 2019 and February 28, 2018, was
composed of $510.3 million and $310.4 million, respectively, in aggregate principal amount of primarily senior secured first lien term loans. In addition, as of February 28, 2019, we also own $2.5 million of the F-R-2 Notes and $7.5 million of the G-R-2 Notes in the Saratoga CLO, that only rank senior
to the subordinated notes. This investment is subject to unique risks. (See Part 1. Item 1A. Risk FactorsOur investment in Saratoga CLO constitutes a leveraged investment in a portfolio of predominantly senior secured first lien term
loans and is subject to additional risks and volatility). 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, 2019, $491.0 million or 98.5% of the Saratoga CLO portfolio investments in terms of market value had a CMR (as defined below) color rating of green or yellow and two Saratoga CLO portfolio investments
were in default with a fair value of $0.01 million. At February 28, 2018, $299.6 million or 98.0% of the Saratoga CLO portfolio investments in terms of market value had a CMR (as defined below) color rating of green or yellow and
three Saratoga CLO portfolio investment were in default with a fair value of $1.8 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. Portfolio CMR distribution The CMR distribution of our investments at February 28, 2019 and February 28, 2018 was as follows: Saratoga Investment Corp.  February 28, 2019


February 28, 2018Color Score

InvestmentsatFair Value


Percentageof Total  Portfolio


InvestmentsatFair Value


Percentageof Total  Portfolio($ in thousands)Green

$
336,061



83.6
%

$
291,509



85.0
%Yellow


4,600



1.1



9,522



2.8Red


6



0.0



8



0.0N/A(l)


61,353



15.3



41,655



12.2Total

$
402,020



100.0
%

$
342,694



100.0
%  (1)
Comprised of our investment in the subordinated notes of Saratoga CLO and equity interests. The change in reserve from $1.8 million as of February 28, 2018 to $0.6 million as of February 28,
2019 primarily related to the decrease in reserve for the year from the sale and restructuring of TM Restaurant Group L.L.C.  74




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##### Table of Contents

The CMR distribution of Saratoga CLO investments at February 28, 2019 and February 28, 2018
was as follows: Saratoga CLO  February 28, 2019


February 28, 2018Color Score

InvestmentsatFair Value


Percentageof Total  Portfolio


InvestmentsatFair Value


Percentageof Total  Portfolio($ in thousands)Green

$
462,171



92.7
%

$
275,412



90.1
%Yellow


28,839



5.8



24,230



7.9Red


7,379



1.5



6,181



2.0N/A(l)


16



0.0



7



0.0Total

$
498,405



100.0
%

$
305,830



100.0
%  (1)
Comprised of Saratoga CLOs equity interests. Portfolio composition by industry grouping at fair value The following table shows our portfolio composition by industry grouping at fair value at February 28, 2019 and February 28,
2018: Saratoga Investment Corp.  February 28, 2019


February 28, 2018InvestmentsAtFair Value


Percentageof Total  Portfolio


InvestmentsAtFair Value


Percentageof Total  Portfolio($ in thousands)Business Services

$
252,676



62.8
%

$
190,886



55.7
%Healthcare Services


57,342



14.3



44,179



12.9Education


48,076



12.0



26,778



7.8Structured Finance Securities(l)


35,328



8.8



16,374



4.8Consumer Services


3,166



0.8



17,199



5.0Metals


2,827



0.7



4,313



1.3Food and Beverage


2,100



0.5



9,522



2.8Consumer Products


505



0.1



434



0.1Media










18,159



5.3Building Products










14,850



4.3Total

$
402,020



100.0
%

$
342,694



100.0
%  (1)
At February 28, 2019, comprised of our investment in the subordinated notes, Class F-R-2 Notes and Class G-R-2
Notes of Saratoga CLO. At February 28, 2018, comprised of our investment in the subordinated notes and Class F Notes of Saratoga CLO.  75




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##### Table of Contents

The following table shows Saratoga CLOs portfolio composition by industry grouping at
fair value at February 28, 2019 and February 28, 2018: Saratoga CLO  February 28, 2019


February 28, 2018*InvestmentsatFair Value


Percentageof TotalPortfolio


InvestmentsatFair Value


Percentageof TotalPortfolio($ in thousands)Banking Finance Insurance & Real Estate

$
74,638



15.0
%

$
31,892



10.4
%Healthcare & Pharmaceuticals


39,242



7.9



22,976



7.5High Tech Industries


38,886



7.8



34,482



11.3Services: Business


36,575



7.3



36,272



11.9Media: Advertising Printing & Publishing


31,799



6.4



15,603



5.1Telecommunications


28,156



5.6



18,741



6.1Services: Consumer


24,712



5.0



18,768



6.1Beverage Food & Tobacco


23,436



4.7



10,083



3.3Retail


23,018



4.6



19,463



6.4Aerospace & Defense


16,836



3.4



10,632



3.5Chemicals Plastics & Rubber


15,841



3.2



13,384



4.4Consumer goods: Non-durable


15,528



3.1



2,896



0.9Hotel Gaming & Leisure


15,373



3.1



5,121



1.7Automotive


13,373



2.7



9,134



3.0Construction & Building


13,293



2.7



3,442



1.1Media: Diversified & Production


13,086



2.6



7,142



2.3Transportation: Cargo


11,137



2.2



5,012



1.6Media: Broadcasting & Subscription


10,410



2.1



11,137



3.6Containers Packaging & Glass


10,033



2.0



4,495



1.5Capital Equipment


9,638



1.9



6,378



2.1Consumer goods: Durable


6,324



1.3



5,370



1.8Energy: Electricity


5,059



1.0



1,905



0.6Metals & Mining


5,048



1.0



2,254



0.7Transportation: Consumer


4,773



1.0



1,991



0.7Forest Products & Paper


4,555



0.9



2,913



1.0Utilities: Oil & Gas


2,953



0.6







Utilities: Electric


2,941



0.6



976



0.3Environmental Industries


979



0.2







Energy: Oil & Gas


763



0.1



835



0.3Utilities: Water










2,533



0.8Total

$
498,405



100.0
%

$
305,830



100.0
%  *
Certain reclassifications have been made to previously reported industry groupings to show results on a
consistent basis across periods.  76




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##### Table of Contents

Portfolio composition by geographic location at fair value The following table shows our portfolio composition by geographic location at fair value at February 28, 2019 and February 28, 2018.
The geographic composition is determined by the location of the corporate headquarters of the portfolio company.  February 28, 2019


February 28, 2018InvestmentsatFair Value


Percentageof TotalPortfolio


InvestmentsatFair Value


Percentageof TotalPortfolio($ in thousands)Southeast

$
130,604



32.5
%

$
155,240



45.3
%Midwest


116,388



29.0



101,604



29.6Southwest


50,236



12.5



21,855



6.4Northeast


19,061



4.7



35,234



10.3West


10,777



2.7



4,540



1.3Northwest


8,636



2.1



7,847



2.3Other(1)


66,318



16.5



16,374



4.8Total

$
402,020



100.0
%

$
342,694



100.0
%  (1)
At February 28, 2019, comprised of our investment in the subordinated notes, Class F-R-2 Notes and Class G-R-2
Notes tranches of Saratoga CLO and foreign investments. At February 28, 2018, comprised of our investment in the subordinated notes, Class F Notes tranche of Saratoga CLO and foreign investments. Results of operations Operating results
for the fiscal years ended February 28, 2019, February 28, 2018 and February 28, 2017 were as follows:  For the Year EndedFebruary 28,2019


February 28,2018


February 28,2017($ in thousands)Total investment income

$
47,708


$
38,615


$
33,157Total operating expenses


29,406



25,883



22,042Loss on extinguishment of debt










1,455Net investment income


18,302



12,732



9,660Net realized gains (losses) from investments


4,874



(5,878
)


12,368Net change in unrealized appreciation (depreciation) on investments


(2,900
)


10,825



(10,641
)Net change in provision for deferred taxes on unrealized
(appreciation) depreciation on investments


(1,767
)






Net increase in net assets resulting from operations

$
18,509


$
17,679


$
11,387  77




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##### Table of Contents

Investment income The composition of our investment income for the fiscal years ended February 28, 2019, February 28, 2018 and February 28, 2017
were as follows:  For the Year EndedFebruary 28,2019


February 28,2018


February 28,2017($ in thousands)Interest from investments

$
43,297


$
35,110


$
29,348Management fee income


1,722



1,509



1,499Incentive fee income


633



591



Interest from cash and cash equivalents and other income


2,056



1,405



2,310Total investment income

$
47,708


$
38,615


$
33,157 For the fiscal year ended February 28, 2019, total investment income increased $9.1 million, or
23.5% compared to the fiscal year ended February 28, 2018. Interest income from investments increased $8.2 million, or 23.3%, to $43.3 million for the year ended February 28, 2019 from $35.1 million for the fiscal year ended
February 28, 2018. This reflects an increase of 17.3% in total investments to $402.0 million at February 28, 2019 from $342.7 million at February 28, 2018. At February 28, 2019, the weighted average current yield on
investments was 10.7% compared to 11.1% at February 28, 2018, which offset some of the increase. For the fiscal year ended
February 28, 2018, total investment income increased $5.5 million, or 16.5% compared to the fiscal year ended February 28, 2017. Interest income from investments increased $5.8 million, or 19.6%, to $35.1 million for the
year ended February 28, 2018 from $29.3 million for the fiscal year ended February 28, 2017. This reflects an increase of 17.1% in total investments to $342.7 million at February 28, 2018 from $292.7 million at
February 28, 2017, as well as the weighted average current yield increasing from 10.9% to 11.1%. For the fiscal year ended
February 28, 2019 and February 28, 2018, total PIK income was $4.2 million and $2.8 million, respectively. This increase was primarily due to the increase in investment in Easy Ice, LLC, which primarily generates PIK interest
income. For the fiscal year ended February 28, 2018 and February 28, 2017, total PIK income was $2.8 million, and
$0.7 million, respectively. This increase was primarily due to the increase in investment in Easy Ice, LLC, which primarily generates PIK interest income. For the year ended February 28, 2019 and February 28, 2018, incentive fee income of $0.6 million and $0.6 million,
respectively, was recognized related to the Saratoga CLO, reflecting the 12.0% hurdle rate that has been achieved. For the year ended February 28, 2017, we did not accrue any amounts related to the incentive management fee from Saratoga CLO as
the 12.0% hurdle rate had not yet been achieved. Following the third refinancing of the CLO on December 14, 2018, the Company is no longer entitled to receive the incentive fee.  78




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##### Table of Contents

Operating expenses The composition of our operating expenses for the years ended February 28, 2019, February 28, 2018 and February 28, 2017 were as
follows:  For the Year EndedFebruary 28,2019


February 28,2018


February 28,2017($ in thousands)Interest and debt financing expenses

$
13,126


$
10,939


$
9,888Base management fees


6,879



5,846



4,899Incentive management fees


4,891



4,334



2,948Professional fees


1,849



1,591



1,243Administrator expenses


1,896



1,646



1,367Insurance


253



260



276Directors fees and expenses


291



197



235General and administrative and other expenses


1,248



1,085



1,141Income tax benefit


(1,027
)






Excise tax expense (credit)






(15
)


45Total operating expenses

$
29,406


$
25,883


$
22,042 For the year ended February 28, 2019, total operating expenses increased $3.5 million, or 13.6%
compared to the year ended February 28, 2018. For the year ended February 28, 2018, total operating expenses increased $3.8 million, or 17.4% compared to the year ended February 28, 2017. For the years ended February 28, 2019 and February 28, 2018, the increase in interest and debt financing expenses is primarily
attributable to an increase in total outstanding debt. The increase is primarily attributable to an increase in average outstanding debt from $212.1 million for the year ended February 28, 2018 to $249.3 million for the year ended
February 28, 2019. For the year ended February 28, 2019, the weighted average interest rate on our outstanding indebtedness was 4.62% compared to the 4.50% for the year ended February 28, 2018. The increase in weighted average
interest rate was primarily driven by the issuance of the 2025 Notes which carry a fixed rate of 6.25%, versus the SBA debentures that carry a lower interest rate. At February 28, 2019 and February 28, 2018, the SBA debentures represented
52.7% and 64.9% of overall debt, respectively. For the years ended February 28, 2018 and February 28, 2017, the increase in
interest and debt financing expenses is primarily attributable to an increase in outstanding SBA debentures. Our SBA debentures increased from $112.7 million at February 28, 2017 to $137.7 million at February 28, 2018. For the
year ended February 28, 2018, the weighted average interest rate on our outstanding indebtedness was 4.50% compared to the 4.76% for the fiscal year ended February 28, 2017. The decrease in weighted average interest rate was primarily
driven by an increase in SBA debentures that carry a lower interest rate as well as the notes payable interest rate decreasing from 7.50% to 6.75% following the refinancing of the 2020 Notes. SBA debentures increased from 60.2% of overall debt as
February 28, 2017 to 64.9% as of February 28, 2018, primarily due to the increase in outstanding SBA debentures. For the year
ended February 28, 2019, base management fees increased $1.0 million, or 17.7% compared to the fiscal year ended February 28, 2018. The increase in base management fees results from the 17.7% increase in the average value of our total
assets, less cash and cash equivalents, from $334.1 million as of February 28, 2018 to $393.1 million as of February 28, 2019. For the year ended February 28, 2018, base management fees increased $0.9 million, or 19.3%
compared to the fiscal year ended February 28, 2017. The increase in base management fees results from the 15.4% increase in the average value of our total assets, less cash and cash equivalents, from $289.4 million as of February 28,
2017 to $334.1 million as of February 28, 2018. For the year ended February 28, 2019, incentive management fees increased
$0.6 million, or 12.9% compared to the fiscal year ended February 28, 2018. The first part of the incentive management fees increased this year from $3.4 million for the year ended February 28, 2018 to $4.6 million for the
year ended February 28, 2019, as higher average total assets of 17.7% has led to increased net investment income above the hurdle rate pursuant to the investment advisory and management agreement. The incentive management fees related to
capital gains decreased from $0.9 million for the fiscal year ended February 28, 2018 to $0.3 million for the fiscal year ended February 28, 2019, reflecting the net realized and unrealized loss on investments this year,
including the impact of the deferred taxes on unrealized appreciation.  79




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For the year ended February 28, 2018, incentive management fees increased
$1.4 million, or 47.0% compared to the fiscal year ended February 28, 2017. The first part of the incentive management fees increased this year from $2.8 million for the year ended February 28, 2017 to $3.4 million for the
year ended February 28, 2018, as higher average total assets of 15.4% has led to increased net investment income above the hurdle rate pursuant to the investment advisory and management agreement. In addition, the incentive management fees
related to capital gains also increased from $0.1 million for the fiscal year ended February 28, 2017 to $0.9 million for the fiscal year ended February 28, 2018, reflecting the realized and unrealized gains earned this year. For the year ended February 28, 2019, professional fees increased $0.3 million, or 16.3% compared to the fiscal year ended
February 28, 2018. For the year ended February 28, 2018, professional fees increased $0.3 million, or 27.9% compared to the fiscal year ended February 28, 2017. This increase primarily relates to increased legal, valuation and
accounting fees, including additional cost related to the Sarbanes-Oxley Act implementation. For the year ended February 28, 2019,
administrator expenses increased $0.3 million, or 15.2% compared to the fiscal year ended February 28, 2018, which reflects an increase to the cap on the payment or reimbursement of expenses by the Company from $1.75 million to
$2.0 million, effective August 1, 2018. For the year ended February 28, 2018, administrator expenses increased $0.3 million, or 20.4% compared to the fiscal year ended February 28, 2017, which reflects an increase to the cap
on the payment or reimbursement of expenses by the Company from $1.5 million to $1.75 million, effective August 1, 2017. As discussed above, the increase in interest and debt financing expenses for the years ended February 28, 2019, February 28, 2018
and February 28, 2017 is primarily attributable to an increase in the amount of outstanding debt as compared to the prior years. For the fiscal year ended February 28, 2019, the average borrowings outstanding under the Credit Facility was
approximately $3.4 million and the weighted average interest rate on the outstanding borrowings under the Credit Facility was 7.10%. For the fiscal year ended February 28, 2018, the average borrowings outstanding under the Credit Facility
was approximately $7.1 million and the weighted average interest rate on the outstanding borrowings under the Credit Facility was 6.02%. For the fiscal year ended February 28, 2017, there were no outstanding borrowings under the Credit
Facility. For the fiscal years ended February 28, 2019, February 28, 2018 and February 28, 2017, the average borrowings outstanding of SBA debentures was $146.0 million, $130.1 million and $107.6 million, respectively.
For the years ended February 28, 2019, February 28, 2018 and February 28, 2017, the weighted average interest rate on the outstanding borrowings of the SBA debentures was 3.20%, 3.14% and 3.13%, respectively. During the year ended
February 28, 2019, the average dollar amount of our 6.25% fixed-rate 2025 Notes outstanding was $25.2 million. During the years ended February 28, 2019, 2018 and 2017, the average dollar amount of our 6.75% fixed-rate 2023 Notes
outstanding was $74.5 million, $74.5 million and $74.5 million, respectively. During the year ended February 28, 2017, the average dollar amount of our 7.50% fixed-rate 2020 Notes outstanding was $61.8 million. For the years ended February 28, 2019, 2018 and 2017, there were income tax benefits of $1.0 million, $0.0 million and
$0.0 million, respectively. This relates to net deferred federal and state income tax benefits with respect to operating losses and income derived from equity investments held in the taxable blockers. Net realized gains (losses) on sales of investments For the fiscal year ended February 28, 2019, the Company had $135.7 million of sales, repayments, exits or restructurings resulting
in $4.9 million of net realized gains. The most significant realized gains and losses during the year ended February 28, 2019 were as follows (dollars in thousands): Fiscal year ended February 28, 2019  Issuer

Asset Type

Gross        Proceeds


Cost


NetRealized            GainHMN Holdco, LLC

Equity Interests

$
642,019


$
61,647


$
580,372HMN Holdco, LLC

Equity Interests


4,539,322



438,353



4,100,969  80




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For the year ended February 28, 2019, the $4.7 million of net realized gains on
our investments in HMN Holdco, LLC was due to a refinancing transaction that included the sale of our equity position. For the fiscal
year ended February 28, 2018, the Company had $66.3 million of sales, repayments, exits or restructurings resulting in $5.9 million of net realized losses. The most significant realized gains and losses during the year ended
February 28, 2018 were as follows (dollars in thousands): Fiscal year ended February 28, 2018  Issuer

Asset Type

Gross          Proceeds


Cost


NetRealized
Gain(Loss)My Alarm Center, LLC

Second Lien Term Loan

$
2,617


$
10,330


$
(7,713
)Mercury Funding, LLC

Equity Interests


2,631



858



1,773 The $7.7 million of net realized loss on our investment in My Alarm Center, LLC was due to the completion
of a sales transaction, following increasing leverage levels combined with declining market conditions in the sector. The
$1.8 million of net realized gain on our investment in Mercury Funding, LLC was driven by the completion of a sales transaction with a strategic acquirer. For the fiscal year ended February 28, 2017, the Company had $121.2 million of sales, repayments, exits or restructurings resulting
in $12.4 million of net realized gains. The most significant realized gains during the year ended February 28, 2017 were as follows (dollars in thousands): Fiscal year ended February 28, 2017  Issuer

Asset Type

Gross            Proceeds


Cost


NetRealized            GainTake 5 Oil Change, L.L.C.

Common Stock

$
6,505


$
481


$
6,024Legacy Cabinets, Inc.

Common Stock Voting A-1


2,320



221



2,099Legacy Cabinets, Inc.

Common Stock Voting B-1


1,464



139



1,325 The $6.0 million of net realized gain on our investment in Take 5 Oil Change, L.L.C. was due to the
completion of a sales transaction with a strategic acquirer. The $3.4 million of net realized gain on our investments in Legacy
Cabinets, Inc. were due to a period of steadily improving performance, leading up to our sale of shares in Legacy Cabinets, Inc. Net change in unrealized appreciation (depreciation) on investments For the year ended February 28, 2019, our investments had a net change in unrealized depreciation of $2.9 million versus a net change
in unrealized appreciation of $10.8 million for the year ended February 28, 2018. The most significant cumulative changes in unrealized appreciation (depreciation) for the year ended February 28, 2019, were the following (dollars in
thousands):  81




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Fiscal year ended February 28, 2019  Issuer

Asset Type

Cost


FairValue


TotalUnrealizedAppreciation(Depreciation)


YTD Change inUnrealizedAppreciation(Depreciation)Elyria Foundry, L.L.C.

Equity Interests

$
9,685


$
1,804


$
(7,881
)

$
(1,630
)Roscoe Medical, Inc.

Second Lien Term Loan


4,189



2,499



(1,690
)


(1,419
)Netreo Holdings, LLC

Equity Interests


3,150



5,179



2,029



2,029My Alarm Center, LLC

Equity Interests


2,358



1,113



(1,245
)


(1,274
) The $1.6 million net change in unrealized depreciation in our investment in Elyria Foundry, L.L.C. was
driven by changes in oil and gas end markets since year-end and increased labor costs, negatively impacting the Companys performance. The $1.4 million net change in unrealized depreciation in our investment in Roscoe Medical, Inc. was driven by decreased operating
margins and reduced overall financial performance. The $2.0 million net change in unrealized appreciation in our investment in
Netreo Holdings, LLC was driven by growth and improved financial performance. The $1.3 million net change in unrealized depreciation
in our investment in My Alarm Center, LLC was driven by the issuance of new securities senior to existing investments. For the year ended
February 28, 2018, our investments had a net change in unrealized appreciation of $10.8 million versus a net change in unrealized depreciation of $10.6 million for the year ended February 28, 2017. The most significant cumulative
changes in unrealized appreciation for the year ended February 28, 2018, were the following (dollars in thousands): Fiscal year
ended February 28, 2018  Issuer

Asset Type

Cost


FairValue


TotalUnrealizedAppreciation(Depreciation)


YTD Changein UnrealizedAppreciationElyria Foundry Company, L.L.C.

Equity Interests

$
9,685


$
3,434


$
(6,251
)

$
2,553My Alarm Center, LLC

Second Lien Term Loan














2,298Easy Ice, LLC

Equity Interests


8,761



10,760



1,999



1,999Saratoga Investment Corp. CLO 2013-1, Ltd.

Structured Finance Securities


9,296



11,875



2,579



1,948 The $2.6 million of net change in unrealized appreciation in our investment in Elyria Foundry Company,
L.L.C. was driven by a continued increase in oil and gas markets, positively impacting the companys performance. The
$2.3 million of net change in unrealized appreciation in our investment in My Alarm Center, LLC was driven by the completion of a sales transaction. In recognizing this loss as a result of the sale, unrealized depreciation was adjusted to zero,
which resulted in a $2.3 million change in unrealized appreciation for the year. The $2.0 million of net change in unrealized
appreciation in our investment in Easy Ice, LLC was driven by the completion of a strategic acquisition that increased the scale and earnings of the business. The $1.9 million of net change in unrealized appreciation in our investment in Saratoga CLO was driven by continued improved performance
of the Saratoga CLO. For the year ended February 28, 2017, our investments had a net change in unrealized depreciation of
$10.6 million versus a net change in unrealized appreciation of $0.7 million for the year ended February 29, 2016. The most significant cumulative changes in unrealized depreciation for the year ended February 28, 2017, were the
following (dollars in thousands):  82




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Fiscal year ended February 28, 2017  Issuer

Asset Type

Cost


FairValue


TotalUnrealizedDepreciation


YTD Changein UnrealizedDepreciationTake 5 Oil Change, L.L.C.

Common Stock

$



$



$



$
(5,755
)Legacy Cabinets, Inc.

Common Stock Voting A-1














(2,456
)Legacy Cabinets, Inc.

Common Stock Voting B-1














(1,550
)Elyria Foundry Company, L.L.C.

Common Stock


9,217



413



(8,804
)


(1,613
) The $5.8 million of net change in unrealized depreciation in our investment in Take 5 Oil Change, L.L.C.
was driven by the completion of a sales transaction with a strategic acquirer. In realizing this gain as a result of the sale, unrealized appreciation was adjusted to zero, which resulted in a $5.8 million change in unrealized depreciation for
the year. The $4.0 million of net change in unrealized depreciation in our investments in Legacy Cabinets, Inc. were driven by the
completion of a sales transaction. In realizing these gains as a result of the sale, unrealized appreciation was adjusted to zero, which resulted in a $4.0 million change in unrealized depreciation for the year. The $1.6 million of net change in unrealized depreciation in our investment in Elyria Foundry Company, L.L.C. was driven by a decline in
oil and gas end markets since year-end, negatively impacting the companys performance. Changes in net assets resulting from operations For the fiscal years ended February 28, 2019, February 28, 2018 and February 28, 2017, we recorded a net increase in net assets
resulting from operations of $18.5 million, $17.7 million and $11.4 million, respectively. Based on 7,046,686 weighted average common shares outstanding as of February 28, 2019, our per share net increase in net assets resulting
from operations was $2.63 for the fiscal year ended February 28, 2019. This compares to a per share net increase in net assets resulting from operations of $2.93 for the fiscal year ended February 28, 2018 (based on 6,024,040 weighted
average common shares outstanding as of February 28, 2018), and a per share net increase in net assets resulting from operations of $1.98 for the fiscal year ended February 28, 2017 (based on 5,740,450 weighted average common shares
outstanding as of February 28, 2017). 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, future borrowings and future offerings of securities. Although we expect to fund the growth of our investment portfolio through the net proceeds from future equity offerings, including our
dividend reinvestment plan (DRIP), 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 net asset value per share and we are limited in our ability to sell our common stock at a price below net asset value 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 taxable income in
order to satisfy the distribution requirement applicable to RICs under the Code. In satisfying this distribution requirement, we have in the past relied on Internal Revenue Service (IRS) issued private letter rulings concluding that a
RIC may treat a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder may elect to receive his or her entire distribution in either cash or stock of the RIC subject to a limitation on the aggregate amount
of cash to be distributed to all stockholders, which limitation must be at least 20.0% of the aggregate declared distribution. We may rely on these IRS private letter rulings in future periods to satisfy our RIC distribution requirement.  83




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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 200.0%, reduced to 150.0% effective April 16, 2019 following the
approval received from the non-interested board of 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 234.5% as
of February 28, 2019 and 293.0% as of February 28, 2018. 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 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 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. Madison revolving credit facility Below is a summary of the terms of the senior secured revolving credit facility we entered into with Madison Capital Funding LLC (the
Credit Facility) on June 30, 2010, which was most recently amended on May 18, 2017. Availability.The
Company can draw up to the lesser of (i) $40.0 million (the Facility Amount) and (ii) the product of the applicable advance rate (which varies from 50.0% to 75.0% depending on the type of loan asset) and the value, determined
in accordance with the Credit Facility (the Adjusted Borrowing Value), of certain eligible loan assets pledged as security for the loan (the Borrowing Base), in each case less (a) the amount of any undrawn
funding commitments the Company has under any loan asset and which are not covered by amounts in the Unfunded Exposure Account referred to below (the Unfunded Exposure Amount) and outstanding borrowings. Each loan asset held by the
Company as of the date on which the Credit Facility was closed was valued as of that date and each loan asset that the Company acquires 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, 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 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, the Company may not make changes to the payment, amortization, collateral and certain other terms
of the loan assets without the consent of the administrative agent that will either result in subordination of the loan asset or be materially adverse to the lenders. Collateral.The Credit Facility is secured by substantially all of the assets of the Company (other than assets held by our SBIC
subsidiary) and includes the subordinated notes (CLO Notes) issued by Saratoga CLO and the Companys rights under the CLO Management Agreement (as defined below). Interest Rate and Fees.Under the Credit Facility, funds are borrowed from or through certain lenders at the greater of the prevailing
LIBOR rate and 1.00%, plus an applicable margin of 4.75%. At the Companys option, funds may be borrowed based on an alternative base rate, which in no event will be less than 2.00%, and the applicable margin over such alternative base rate is
3.75%. In addition, the Company pays the lenders a commitment fee of 0.75% per year on the unused amount of the Credit Facility for the duration of the Revolving Period (defined below). Accrued interest and commitment fees are payable monthly. The
Company was also obligated to pay certain other fees to the lenders in connection with the closing of the Credit Facility. Revolving
Period and Maturity Date.The Company may make and repay borrowings under the Credit Facility for a period of three years following the closing of the Credit Facility (the Revolving Period). The Revolving Period may be terminated at
an earlier time by the Company or, upon the occurrence of an event of default, by action of the lenders or automatically. All borrowings and other amounts payable under the Credit Facility are due and payable in full five years after the end of the
Revolving Period. Collateral Tests.It is a condition precedent to any borrowing under the Credit Facility that the principal
amount outstanding under the Credit Facility, after giving effect to the proposed borrowings, not exceed the lesser of the Borrowing Base or the Facility Amount (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 Credit Facility, to accrued interest and commitment fees and any breakage costs payable to the lenders under the Credit Facility for the last 6 payment periods must equal at least
175.0%.  84




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##### Table of Contents



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 and the CLO Notes (in each case, subject to certain adjustments) to outstanding borrowings under the Credit Facility plus the Unfunded
Exposure Amount must equal at least 200.0%.  

Weighted Average FMV Test.The aggregate adjusted or weighted value of eligible pledged loan
assets as a percentage of the aggregate outstanding principal balance of eligible pledged loan assets must be equal to or greater than 72.0% and 80.0% during the one-year periods prior to the first
and second anniversary of the closing date, respectively, and 85.0% at all times thereafter. The Credit Facility also
requires payment of outstanding borrowings or replacement of pledged loan assets upon the Companys breach of its representation and warranty that pledged loan assets included in the Borrowing Base are eligible loan assets. Such
payments or replacements must equal the lower of the amount by which the Borrowing Base is overstated as a result of such breach or any deficiency under the Collateral Tests at the time of repayment or replacement. Compliance with the Collateral
Tests is also a condition to the discretionary sale of pledged loan assets by the Company. Priority of Payments.During the
Revolving Period, the priority of payments provisions of the Credit Facility require, after payment of specified fees and expenses and any necessary funding of the Unfunded Exposure Account, that collections of principal from the loan assets and, to
the extent that these are insufficient, collections of interest 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. Similarly, following termination of the Revolving Period, collections of interest are required to be applied, after payment of certain fees and expenses, to cure any deficiencies in the Borrowing Base Test, the Interest
Coverage Ratio and the Overcollateralization Ratio as of the relevant payment date. Reserve Account.The Credit Facility requires
the Company to set aside an amount equal to the sum of accrued interest, commitment fees and administrative agent fees due and payable on the next succeeding three payment dates (or corresponding to three payment periods). If for any monthly period
during which fees and other payments accrue, the aggregate Adjusted Borrowing Value of eligible pledged loan assets which do not pay cash interest at least quarterly exceeds 15.0% of the aggregate Adjusted Borrowing Value of
eligible pledged loan assets, the Company is required to set aside such interest and fees due and payable on the next succeeding six payment dates. Amounts in the reserve account can be applied solely to the payment of administrative
agent fees, commitment fees, accrued and unpaid interest and any breakage costs payable to the lenders. Unfunded Exposure Account.With respect to revolver or delayed draw loan assets, the Company is required to set aside in a designated account (the Unfunded Exposure Account) 100.0% of its outstanding and undrawn funding commitments with respect to such loan
assets. The Unfunded Exposure Account is funded at the time the Company acquires a revolver or delayed draw loan asset and requests a related borrowing under the Credit Facility. The Unfunded Exposure Account is funded through a combination of
proceeds of the requested borrowing and other Company funds, and if for any reason such amounts are insufficient, through application of the priority of payment provisions described above. Operating Expenses.The priority of payments provision of the Credit Facility provides for the payment of certain operating expenses of
the Company out of collections on principal and interest during the Revolving Period and out of collections on interest following the termination of the Revolving Period in accordance with the priority established in such provision. The operating
expenses payable pursuant to the priority of payment provisions is limited to $350,000 for each monthly payment date or $2.5 million for the immediately preceding period of twelve consecutive monthly payment dates. This ceiling can be increased
by the lesser of 5.0% or the percentage increase in the fair market value of all the Companys assets only on the first monthly payment date to occur after each one-year anniversary following the closing
of the Credit Facility. Upon the occurrence of a Manager Event (described below), the consent of the administrative agent is required in order to pay operating expenses through the priority of payments provision. Events of Default.The Credit Facility contains certain negative covenants, customary representations and warranties and affirmative
covenants and events of default. The Credit Facility does not contain grace periods for breach by the Company of certain covenants, including, without limitation, preservation of existence, negative pledge, change of name or jurisdiction and
separate legal entity status of the Company covenants and certain other customary covenants. Other events of default under the Credit Facility include, among other things, the following:  

an Interest Coverage Ratio of less than 150.0%;  85




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

an Overcollateralization Ratio of less than 175.0%;  

the filing of certain ERISA or tax liens;  

the occurrence of certain Manager Events such as:  

failure by Saratoga Investment Advisors and its affiliates to maintain collectively, directly or indirectly, a
cash equity investment in the Company in an amount equal to at least $5.0 million at any time prior to the third anniversary of the closing date;  

failure of the Management Agreement between Saratoga Investment Advisors and the Company to be in full force and
effect;  

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 Madison Capital
Funding 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 Madison Capital Funding appointed within 30 days; or  

occurrence of any event constituting cause under the Collateral Management Agreement between the
Company and Saratoga CLO (the CLO Management Agreement), delivery of a notice under Section 12(c) of the CLO Management Agreement with respect to the removal of the Company as collateral manager or the Company ceases to act as
collateral manager under the CLO Management Agreement. Conditions to Acquisitions and Pledges of Loan Assets.The Credit Facility imposes certain additional conditions to the acquisition and pledge of additional loan assets. Among other things, the Company may not acquire additional loan assets without the prior written consent of the administrative
agent until such time that the administrative agent indicates in writing its satisfaction with Saratoga Investment Advisors policies, personnel and processes relating to the loan assets. Fees and Expenses.The Company paid certain fees and reimbursed Madison Capital Funding LLC for the aggregate amount of all documented,
out-of-pocket costs and expenses, including the reasonable fees and expenses of lawyers, incurred by Madison Capital Funding LLC in connection with the Credit Facility
and the carrying out of any and all acts contemplated thereunder up to and as of the date of closing of the stock purchase transaction with Saratoga Investment Advisors and certain of its affiliates. These amounts totaled $2.0 million. On February 24, 2012, we amended our senior secured revolving credit facility with Madison Capital Funding LLC to, among other things:  

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

extend the period during which we may make and repay borrowings under the Credit Facility from July 30, 2013
to February 24, 2015 (the Revolving Period). The Revolving Period may, upon the occurrence of an event of default, by action of the lenders or automatically, be terminated. All borrowings and other amounts payable under the Credit
Facility are due and payable five years after the end of the Revolving Period; and  

remove the condition that we may not acquire additional loan assets without the prior written consent of the
administrative agent. On September 17, 2014, we entered into a second amendment to the Revolving Facility with
Madison Capital Funding LLC to, among other things:  

extend the commitment termination date from February 24, 2015 to September 17, 2017;  86




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

extend the maturity date of the Revolving Facility from February 24, 2020 to September 17, 2022 (unless
terminated sooner upon certain events);  

reduce the applicable margin rate on base rate borrowings from 4.50% to 3.75%, and on LIBOR borrowings from 5.50%
to 4.75%; and  

reduce the floor on base rate borrowings from 3.00% to 2.25%; and on LIBOR borrowings from 2.00% to 1.25%. On May 18, 2017, we entered into a third amendment to the Credit Facility with Madison Capital Funding LLC to,
among other things:  

extend the commitment termination date from September 17, 2017 to September 17, 2020;  

extend the final maturity date of the Credit Facility from September 17, 2022 to September 17, 2025;  

reduce the floor on base rate borrowings from 2.25% to 2.00%;  

reduce the floor on LIBOR borrowings from 1.25% to 1.00%; and  

reduce the commitment fee rate from 0.75% to 0.50% for any period during which the ratio of advances outstanding
to aggregate commitments, expressed as a percentage, is greater than or equal to 50%. As of February 28, 2019, we
had no outstanding borrowings under the Credit Facility and $150.0 million of SBA-guaranteed debentures outstanding (which are discussed below). As of February 28, 2018, we had no outstanding
borrowings under the Credit Facility and $137.7 million of SBA-guaranteed debentures outstanding. Our borrowing base under the Credit Facility at February 28, 2019 and February 28, 2018 was
$30.6 million and $27.4 million, respectively. Our asset coverage ratio, as defined in the 1940 Act, was 234.5% as of
February 28, 2019 and 293.0% as of February 28, 2018. SBA-guaranteed debentures In addition, we, through a wholly-owned subsidiary, sought and obtained a license from the SBA to operate an SBIC. In this regard,
on March 28, 2012, our wholly-owned subsidiary, Saratoga Investment Corp. SBIC, LP, received a license from the SBA to operate as an SBIC under Section 301(c) of the Small Business Investment Act of 1958. SBICs are designated to stimulate
the flow of private equity capital to eligible small businesses. Under SBA regulations, SBICs may make loans to eligible small businesses and invest in the equity securities of small businesses. The SBIC license allows our SBIC subsidiary to obtain leverage by issuing SBA-guaranteed debentures. SBA-guaranteed debentures are non-recourse, interest only debentures with interest payable semi-annually and have a ten-year maturity.
The principal amount of SBA-guaranteed debentures is not required to be paid prior to maturity but may be prepaid at any time without penalty. The interest rate of
SBA-guaranteed debentures is fixed on a semi-annual basis at a market-driven spread over U.S. Treasury Notes with 10-year maturities. SBA regulations currently limit the amount that our SBIC subsidiary may borrow to a maximum of $150.0 million when it has at least
$75.0 million in regulatory capital, receives a capital commitment from the SBA and has been through an examination by the SBA subsequent to licensing. As of February 28, 2019, our SBIC subsidiary had $75.0 million in regulatory
capital and $150.0 million SBA-guaranteed debentures outstanding. We received exemptive
relief from the SEC to permit us to exclude the debt of our SBIC subsidiary guaranteed by the SBA from the definition of senior securities in the asset coverage test under the 1940 Act. This allows us increased flexibility under the asset coverage
test by permitting us to borrow up to $150.0 million more than we would otherwise be able to absent the receipt of this exemptive relief. On April 16, 2018, as permitted by the Small Business Credit Availability Act, which was signed into
law on March 23, 2018, our non-interested board of directors approved of our becoming subject to a minimum asset coverage ratio of 150.0% from 200% under Sections 18(a)(1) and 18(a)(2) of the 1940 Act.
The 150.0% asset coverage ratio became effective on April 16, 2019. On September 27, 2018, the SBA issued a green
light letter inviting us to file a formal license application for a second SBIC license. If approved, the additional SBIC license would provide the Company with an incremental source of long-term capital by permitting us to issue, subject to
SBA approval, up to $175.0 million of additional SBA-guaranteed debentures in addition to the $150.0 million already approved under the Companys first license. Receipt of a green light letter
from the SBA does not assure an applicant that the SBA will ultimately issue an SBIC license and the Company has received no assurance or indication from the SBA that it will receive an additional SBIC license, or of the timeframe in which it would
receive an additional license, should one ultimately be granted.  87




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Unsecured notes In May 2013, we issued $48.3 million in aggregate principal amount of our 2020 Notes for net proceeds of $46.1 million after
deducting underwriting commissions of $1.9 million and offering costs of $0.3 million. The proceeds included the underwriters full exercise of their overallotment option. Interest on these 2020 Notes is paid quarterly in arrears on
February 15, May 15, August 15 and November 15, at a rate of 7.50% per year, beginning August 15, 2013. The 2020 Notes mature on May 31, 2020 and since May 31, 2016, may be redeemed in whole or in part at any time
or from time to time at our option. In connection with the issuance of the 2020 Notes, we agreed to the following covenants for the period of time during which the 2020 Notes are outstanding:  

we will not violate (whether or not we are subject to) Section 18(a)(1)(A) as modified by
Section 61(a)(1) of the 1940 Act or any successor provisions, but giving effect to any exemptive relief granted to us by the SEC. Currently, these provisions generally prohibit us from making additional borrowings, including through the
issuance of additional debt or the sale of additional debt securities, unless our asset coverage, as defined in the 1940 Act, equals at least 200.0% after such borrowings.  

we will not violate (regardless of whether we are subject to) Section 18(a)(1)(B) as modified by
Section 61(a)(1) of the 1940 Act or any successor provisions, but giving effect to (i) any exemptive relief granted to us by the SEC and (ii) no- action relief granted by the SEC to another BDC
(or to the Company if it determines to seek such similar no-action or other relief) permitting the BDC to declare any cash dividend or distribution notwithstanding the prohibition contained in
Section 18(a) (1)(B) as modified by Section 61(a)(1) of the 1940 Act in order to maintain the BDCs status as a regulated investment company under the Code. Currently these provisions generally prohibit us from declaring any cash
dividend or distribution upon any class of our capital stock, or purchasing any such capital stock if our asset coverage, as defined in the 1940 Act, is below 200.0% at the time of the declaration of the dividend or distribution or the purchase and
after deducting the amount of such dividend, distribution or purchase. The 2020 Notes were redeemed in full on
January 13, 2017 and are no longer listed on the NYSE. On May 29, 2015, we entered into a Debt Distribution Agreement with
Ladenburg Thalmann & Co. through which we may offer for sale, from time to time, up to $20.0 million in aggregate principal amount of the 2020 Notes through an ATM offering. Prior to the 2020 Notes being redeemed in full, the Company
had sold 539,725 bonds with a principal of $13.5 million at an average price of $25.31 for aggregate net proceeds of $13.4 million (net of transaction costs). On December 21, 2016, we issued $74.5 million in aggregate principal amount of our 2023 Notes for net proceeds of $71.7 million
after deducting underwriting commissions of approximately $2.3 million and offering costs of approximately $0.5 million. The issuance included the exercise of substantially all of the underwriters option to purchase an additional
$9.8 million aggregate principal amount of 2023 Notes within 30 days. Interest on the 2023 Notes is paid quarterly in arrears on March 15, June 15, September 15 and December 15, at a rate of 6.75% per year, beginning
March 30, 2017. The 2023 Notes mature on December 30, 2023, and commencing December 21, 2019, may be redeemed in whole or in part at any time or from time to time at our option. The net proceeds from the offering were used to repay
all of the outstanding indebtedness under the 2020 Notes on January 13, 2017, which amounted to $61.8 million, and for general corporate purposes in accordance with our investment objective and strategies. The 2023 Notes are listed on the
NYSE under the trading symbol SAB with a par value of $25.00 per share. On August 28, 2018, the Company issued
$40.0 million in aggregate principal amount of our 6.25% fixed-rate notes due 2025 (the 2025 Notes) for net proceeds of $38.7 million after deducting underwriting commissions of approximately $1.3 million. Offering costs
incurred were approximately $0.3 million. The issuance included the full exercise of the underwriters option to purchase an additional $5.0 million aggregate principal amount of 2025 Notes within 30 days. Interest on the 2025 Notes
is paid quarterly in arrears on February 28, May 31, August 31 and November 30, at a rate of 6.25% per year, beginning November 30, 2018. The 2025 Notes mature on August 31, 2025 and commencing August 28, 2021, may
be redeemed in whole or in part at any time or from time to time at our option. The net proceeds from the offering were used for general corporate purposes in accordance with our investment objective and strategies. Financing costs of
$1.6 million related to the 2025 Notes have been capitalized and are being amortized over the term of the 2025 Notes. The 2025 Notes are listed on the NYSE under the trading symbol SAF with a par value of $25.00 per share.  88




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On February 5, 2019, the Company completed a
re-opening and up-sizing of its existing 2025 Notes by issuing an additional $20.0 million in aggregate principal amount for net proceeds of $19.2 million
after deducting underwriting commissions of approximately $0.6 million and discount of $0.2 million. Offering costs incurred were approximately $0.2 million. The issuance included the full exercise of the underwriters option to
purchase an additional $2.5 million aggregate principal amount of 2025 Notes within 30 days. Interest rate, interest payment dates and maturity remain unchanged from the existing 2025 Notes issued in August 2018. The net proceeds from this
offering were used for general corporate purposes in accordance with our investment objective and strategies. The financing costs and discount of $1.0 million related to the 2025 Notes have been capitalized and are being amortized over the term
of the 2025 Notes. At February 28, 2019, the total 2023 Notes and 2025 Notes outstanding was $74.5 million and
$60.0 million, respectively. In connection with the issuance of the 2023 Notes and 2025 Notes, we agreed to the following covenants
for the period of time during which the notes are outstanding:  

we will not violate (whether or not we are subject to) Section 18(a)(1)(A) as modified by
Section 61(a)(1) of the 1940 Act or any successor provisions, but giving effect to any exemptive relief granted to us by the SEC. These provisions generally prohibit us from making additional borrowings, including through the issuance of
additional debt or the sale of additional debt securities, unless our asset coverage, as defined in the 1940 Act, equals at least 200% after such borrowings, or, if we obtain the required approvals from our independent directors and/or stockholders,
150% (after deducting the amount of such dividend, distribution or purchase price, as the case may be).  

we will not declare any dividend (except a dividend payable in our stock), or declare any other distribution,
upon a class of our capital stock, or purchase any such capital stock, unless, in every such case, at the time of the declaration of any such dividend or distribution, or at the time of any such purchase, we have an asset coverage (as defined in the
1940 Act) of at least 150.0%, as such obligation may be amended or superseded, after deducting the amount of such dividend, distribution or purchase price, as the case may be, and in each case giving effect to (i) any exemptive relief granted
to us by the SEC, and (ii) any SEC no-action relief granted by the SEC to another BDC (or to us if we determine to seek such similar no-action or other relief)
permitting the BDC to declare any cash dividend or distribution notwithstanding the prohibition contained in Section 18(a)(1)(B) as modified by such provisions of Section 61(a) of the 1940 Act as may be applicable to us from time to time,
as such obligation may be amended or superseded, in order to maintain such BDCs status as a regulated investment company under Subchapter M of the Code.  

if, at any time, we are not subject to the reporting requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, or the Exchange Act, to file any periodic reports with the SEC, we agree to furnish to holders of the 2023 Notes and the Trustee, for the period of time during which the 2023 Notes are outstanding, our audited annual
consolidated financial statements, within 90 days of our fiscal year end, and unaudited interim consolidated financial statements, within 45 days of our fiscal quarter end (other than our fourth fiscal quarter). All such financial statements will be
prepared, in all material respects, in accordance with applicable United States generally accepted accounting principles.  89




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At February 28, 2019 and February 28, 2018, the fair value of investments, cash and cash
equivalents and cash and cash equivalents, reserve accounts were as follows:  February 28, 2019


February 28, 2018Fair Value


Percentage of Total


Fair Value


Percentage of Total($ in thousands)Cash and cash equivalents

$
30,799



6.6
%

$
3,928



1.1
%Cash and cash equivalents, reserve accounts


31,295



6.7



9,850



2.8Syndicated loans










4,106



1.1First lien term loans


202,846



43.7



197,359



55.4Second lien term loans


125,786



27.1



95,075



26.7Unsecured term loans


2,100



0.5







Structured finance securities


35,328



7.6



16,374



4.6Equity interests


35,960



7.8



29,780



8.3Total

$
464,114



100.0
%

$
356,472



100.0
% On July 13, 2018, the Company issued 1,150,000 shares of its common stock priced at $25.00 per share (par
value $0.001 per share) at an aggregate total of $28.75 million. The net proceeds, after deducting underwriting commissions of $1.15 million and offering costs of approximately $0.2 million, amounted to approximately
$27.4 million. The Company also granted the underwriters a 30-day option to purchase up to an additional 172,500 shares of its common stock, which was not exercised. 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. As of February 28, 2019, the Company sold 494,672 shares for gross proceeds of $11.2 million at an average price of $22.72 for
aggregate net proceeds of $11.1 million (net of transaction costs). On September 24, 2014, we announced the approval of an open
market share repurchase plan that allows it to repurchase up to 200,000 shares of our common stock at prices below our NAV as reported in its then most recently published consolidated financial statements, which was subsequently increased to 400,000
shares of our common stock. On October 5, 2016, our board of directors extended the open market share repurchase plan for another year to October 15, 2017 and increased the number of shares we are permitted to repurchase at prices below
our NAV, as reported in its then most recently published consolidated financial statements, to 600,000 shares of our common stock. On October 10, 2017 and January 8, 2019, the Companys board of directors extended the open market
share repurchase plan for another year to October 15, 2018 and January 15, 2020, respectively, each time leaving the number of shares unchanged at 600,000 shares of its common stock. As of February 28, 2019, we purchased 218,491
shares of common stock, at the average price of $16.87 for approximately $3.7 million pursuant to this repurchase plan. On
February 26, 2019, our board of directors declared a dividend of $0.54 per share, which was paid on March 28, 2019, to common stockholders of record as of March 14, 2019. Shareholders had the option to receive payment of the dividend
in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately $3.5 million in cash and 31,240 newly issued shares of common stock, or 0.4% of our outstanding common
stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $21.36 per share, which equaled the volume weighted average trading price per share of the common stock on
March 15, 18, 19, 20, 21, 22, 25, 26, 27 and 28, 2019. On November 27, 2018, our board declared a dividend of $0.53 per share
payable on January 2, 2019, to common stockholders of record on December 17, 2018. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to the Companys DRIP. Based on
shareholder elections, the dividend consisted of approximately $3.4 million in cash and 30,796 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. On August 28, 2018, our board of directors declared a dividend of $0.52 per share, which was paid on
September 27, 2018, to common stockholders of record as of September 17, 2018. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections,
the dividend consisted of approximately $3.3 million in cash and 25,862 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.  90




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On May 30, 2018, our board of directors declared a dividend of $0.51 per share, which
was paid on June 27, 2018, to common stockholders of record as of June 15, 2018. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder
elections, the dividend consisted of approximately $2.7 million in cash and 21,562 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. On February 26, 2018, our board of directors declared a dividend of $0.50 per share, which was paid on March 26, 2018, to common
stockholders of record as of March 14, 2018. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. 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 the volume weighted average trading price per share of the common stock on March 13, 14, 15, 16, 19, 20, 21, 22, 23 and 26, 2018. On November 29, 2017, our board of directors declared a dividend of $0.49 per share payable on December 27, 2017, to common
stockholders of record on December 15, 2017. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of
approximately $2.5 million in cash and 25,435 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on
a price of $21.14 per share, which equaled the volume weighted average trading price per share of the common stock on December 13, 14, 15, 18, 19, 20, 21, 22, 26 and 27, 2017. On August 28, 2017, our board of directors declared a dividend of $0.48 per share payable on September 26, 2017, to common
stockholders of record on September 15, 2017. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of
approximately $2.2 million in cash and 33,551 newly issued shares of common stock, or 0.6% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on
a price of $20.19 per share, which equaled the volume weighted average trading price per share of the common stock on September 13, 14, 15, 18, 19, 20, 21, 22, 25 and 26, 2017. On May 30, 2017, our board of directors declared a dividend of $0.47 per share which was paid on June 27, 2017, to common
stockholders of record on June 15, 2017. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately
$2.3 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 the volume weighted average trading price per share of the common stock on June 14, 15, 16, 19, 20, 21, 22, 23, 26 and 27, 2017. On February 28, 2017, our board of directors declared a dividend of $0.46 per share, which was paid on March 28, 2017, to common
stockholders of record as of March 15, 2017. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of
approximately $2.0 million in cash and 29,096 newly issued shares of common stock, or 0.5% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on
a price of $21.38 per share, which equaled 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.  91




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On January 12, 2017, our board of directors declared a dividend of $0.45 per share,
which was paid on February 9, 2017, to common stockholders of record as of January 31, 2017. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on
shareholder elections, the dividend consisted of approximately $1.6 million in cash and 50,453 newly issued shares of common stock, or 0.9% of our outstanding common stock prior to the dividend payment. The number of shares of common stock
comprising the stock portion was calculated based on a price of $20.25 per share, which equaled the volume weighted average trading price per share of the common stock on January 27, 30, 31 and February 1, 2, 3, 6, 7, 8 and 9, 2017. On October 5, 2016, our board of directors declared a dividend of $0.44 per share, which was paid on November 9, 2016, to common
stockholders of record as of October 31, 2016. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of
approximately $1.5 million in cash and 58,548 newly issued shares of common stock, or 1.0% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on
a price of $17.12 per share, which equaled the volume weighted average trading price per share of the common stock on October 27, 28, 31 and November 1, 2, 3, 4, 7, 8 and 9, 2016. On August 8, 2016, our board of directors declared a special dividend of $0.20 per share, which was paid on September 5, 2016, to
common stockholders of record as of August 24, 2016. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of
approximately $0.7 million in cash and 24,786 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on
a price of $17.06 per share, which equaled the volume weighted average trading price per share of the common stock on August 22, 23, 24, 25, 26, 29, 30, 31 and September 1 and 2, 2016. On July 7, 2016, our board of directors declared a dividend of $0.43 per share, which was paid on August 9, 2016, to common
stockholders of record as of July 29, 2016. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. 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 the volume weighted average trading price per share of the common stock on July 27, 28, 29 and August 1, 2, 3, 4, 5, 8 and 9, 2016. On March 31, 2016, our board of directors declared a dividend of $0.41 per share, which was paid on April 27, 2016, to common
stockholders of record as of April 15, 2016. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of
approximately $1.5 million in cash and 56,728 newly issued shares of common stock, or 1.0% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on
a price of $15.43 per share, which equaled the volume weighted average trading price per share of the common stock on April 14, 15, 18, 19, 20, 21, 22, 25, 26 and 27, 2016. On January 12, 2016, our board of directors declared a dividend of $0.40 per share, which was paid on February 29, 2016, to common
stockholders of record as of February 1, 2016. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately
$1.4 million in cash and 66,765 newly issued shares of common stock, or 1.2% of 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 the volume weighted average trading price per share of the common stock on February 16, 17, 18, 19, 22, 23, 24, 25, 26 and 29, 2016. On October 7, 2015, our board of directors declared a dividend of $0.36 per share, which was paid on November 30, 2015, to common
stockholders of record as of November 2, 2015. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of
approximately $1.1 million in cash and 61,029 newly issued shares of common stock, or 1.1% of 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 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.  92




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On July 8, 2015, our board of directors declared a dividend of $0.33 per share, which
was paid on August 31, 2015, to common stockholders of record as of August 3, 2015. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder
elections, the dividend consisted of approximately $1.1 million in cash and 47,861 newly issued shares of common stock, or 0.9% of 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 the volume weighted average trading price per share of the common stock on August 18, 19, 20, 21, 24, 25, 26, 27, 28 and 31, 2015. On May 14, 2015, our board of directors declared a special dividend of $1.00 per share, which was paid on June 5, 2015, to common
stockholders of record on as of May 26, 2015. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of
approximately $3.4 million in cash and 126,230 newly issued shares of common stock, or 2.3% of 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 the volume weighted average trading price per share of the common stock on May 22, 26, 27, 28, 29 and June 1, 2, 3, 4, and 5, 2015. On April 9, 2015, our board of directors declared a dividend of $0.27 per share, which was paid on May 29, 2015, to common
stockholders of record as of May 4, 2015. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately
$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 the volume weighted average trading price per share of the common stock on May 15, 18, 19, 20, 21, 22, 26, 27, 28 and 29, 2015. On September 24, 2014, our board of directors declared a dividend of $0.22 per share, which was paid on February 27, 2015, to common
stockholders of record on February 2, 2015. Shareholders have the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of
approximately $0.8 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 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. Also, on September 24, 2014, our board of directors declared a dividend of $0.18 per share, which was paid on November 28, 2014, to
common stockholders of record on November 3, 2014. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock pursuant to our DRIP. Based on shareholder elections, the dividend consisted of
approximately $0.6 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 the volume weighted average trading price per share of the common stock on November 14, 17, 18, 19, 20, 21, 24, 25, 26 and 28, 2014. On October 30, 2013, our board of directors declared a dividend of $2.65 per share, which was paid on December 27, 2013, to common
stockholders of record as of November 13, 2013. Shareholders had the option to receive payment of the dividend in cash, shares of common stock, or a combination of cash and shares of common stock, provided that the aggregate cash payable to all
shareholders was limited to approximately $2.5 million or $0.53 per share. This dividend was declared in reliance on certain private letter rulings issued by the IRS concluding that a RIC may treat a distribution of its own stock as fulfilling
its RIC distribution requirements if each stockholder may elect to receive his or her entire distribution in either cash or stock of the RIC subject to a limitation on the aggregate amount of cash to be distributed to all stockholders, which
limitation must be at least 20.0% of the aggregate declared distribution. 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. On November 9, 2012, our board of directors declared a dividend of $4.25 per share, which was paid on December 31,
2012, to common stockholders of record as of November 20, 2012. Shareholders had the option to receive payment of the dividend in cash, shares of common stock, or a combination of cash and shares of common stock, provided that the aggregate
cash payable to all shareholders was limited to approximately $3.3 million or $0.85 per share. Based on shareholder elections, the dividend consisted of $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.  93




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On November 15, 2011, our board of directors declared a dividend of $3.00 per share,
which was paid on December 30, 2011, to common stockholders of record as of November 25, 2011. Shareholders had the option to receive payment of the dividend in cash, shares of common stock, or a combination of cash and shares of common
stock, provided that the aggregate cash payable to all shareholders was limited to $2.0 million or $0.60 per share. 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. On November 12, 2010, our board of directors declared a dividend of $4.40 per share to
shareholders payable in cash or shares of our common stock, in accordance with the provisions of the IRS Revenue Procedure 2010-12, which allows a publicly-traded regulated investment company to satisfy its
distribution requirements with a distribution paid partly in common stock provided that at least 10.0% of the distribution is payable in cash. The dividend was paid on December 29, 2010 to common shareholders of record on November 19,
2010. 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. On November 13, 2009, our board of directors declared a dividend of $18.25 per share, which was paid on December 31, 2009, to common
stockholders of record as of November 25, 2009. Shareholders had the option to receive payment of the dividend in cash, shares of common stock, or a combination of cash and shares of common stock, provided that the aggregate cash payable to all
shareholders was limited to $2.1 million or $0.25 per share. Based on shareholder elections, the dividend consisted of $2.1 million in cash and 864,872.5 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. We cannot provide any assurance that these measures will provide sufficient sources of liquidity to support our operations and growth. Contractual obligations The following table shows our payment obligations for repayment of debt and other contractual obligations as of February 28, 2019:  Payment Due by PeriodLong-Term Debt Obligations

Total


Less Than1 Year


1 - 3    Years


3 - 5Years


More Than5 Years($ in thousands)Revolving credit facility

$



$



$



$



$
SBA debentures


150,000











40,000



110,0002023 Notes


74,451











74,451



2025 Notes


60,000















60,000Total Long-Term Debt Obligations

$
284,451


$



$



$
114,451


$
170,000  94




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##### Table of Contents

Off-balance sheet arrangements As of February 28, 2019 and February 28, 2018, the Companys off-balance sheet
arrangements consisted of $4.5 million and $4.9 million, respectively, of unfunded commitments outstanding to provide debt financing to its portfolio companies or to fund limited partnership interests. Such commitments are generally up to
the Companys discretion to approve, or the satisfaction of certain financial and nonfinancial covenants and involve, to varying degrees, elements of credit risk in excess of the amount recognized in the Companys consolidated statements
of assets and liabilities and are not reflected in the Companys consolidated statements of assets and liabilities. A summary of the
unfunded commitments outstanding as of February 28, 2019 and February 28, 2018 is shown in the table below (dollars in thousands):  February 28, 2019


February 28, 2018Axiom Purchaser, Inc.

$
1,000


$
CLEO Communications Holdings, LLC






2,000Destiny Solutions, Inc.


1,500



GDS Holdings US, LLC


1,000



GreyHeller LLC






2,000Omatic Software, LLC


1,000



Pathway Partners Vet Management Company LLC






917Total

$
4,500


$
4,917 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our business activities contain elements of market risk. We consider our principal market risk to be the fluctuation in interest rates.
Managing this risk is essential to our business. Accordingly, we have systems and procedures designed to identify and analyze our risks, to establish appropriate policies and thresholds and to continually monitor this risk and thresholds by means of
administrative and information technology systems and other policies and processes. Interest rate risk is defined as the sensitivity of
our current and future earnings to interest rate volatility, including relative changes in different interest rates, variability of spread relationships, the difference in re-pricing intervals between our
assets and liabilities and the effect that interest rates may have on our cash flows. Changes in the general level of interest rates can affect our net interest income, which is the difference between the interest income earned on interest earning
assets and our interest expense incurred in connection with our interest-bearing debt and liabilities. Changes in interest rates can also affect, among other things, our ability to acquire leveraged loans, high yield bonds and other debt investments
and the value of our investment portfolio. Our investment income is affected by fluctuations in various interest rates, including LIBOR
and the prime rate. A large portion of our portfolio is, and we expect will continue to be, comprised of floating rate investments that utilize LIBOR. Our interest expense is affected by fluctuations in LIBOR only on our revolving credit facility.
At February 28, 2019, we had $284.5 million of borrowings outstanding. There were no borrowings outstanding under the revolving credit facility as of February 28, 2019. We have analyzed the potential impact of changes in interest rates on interest income from investments. Assuming that our investments as of
February 28, 2019 were to remain constant for a full fiscal year and no actions were taken to alter the existing interest rate terms, a hypothetical change of a 1.0% increase in interest rates would cause a corresponding increase of
approximately $2.8 million to our interest income. Conversely, a hypothetical change of a 1.0% decrease in interest rates would cause a corresponding decrease of approximately $2.7 million to our interest income. Although management believes that this measure is indicative of our sensitivity to interest rate changes, it does not adjust for potential
changes in credit quality, size and composition of the assets on the statements of assets and liabilities and other business developments that could magnify or diminish our sensitivity to interest rate changes, nor does it account for divergences in
LIBOR and the commercial paper rate, which have historically moved in tandem but, in times of unusual credit dislocations, have experienced periods of divergence. Accordingly, no assurances can be given that actual results would not materially
differ from the potential outcome simulated by this estimate.  95




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##### Table of Contents

For further information, the following table shows the approximate annualized increase or
decrease in the components of net investment income due to hypothetical base rate changes in interest rates, assuming no changes in our investments and borrowings as of February 28, 2019.  Basis
Point       
 Change

Increase(Decrease) inInterest        Income


(Increase)Decreasein Interest        Expense


Increase(Decrease) in NetInvestmentIncome


Increase(Decrease) in NetInvestmentIncome per Share($ in thousands)-50

$
(1,367
)

$



$
(1,367
)

$
(0.19
)-25


(689
)






(689
)


(0.10
)25


706







706



0.1050


1,418







1,418



0.20100


2,842







2,842



0.40200


5,692







5,692



0.81300


8,541







8,541



1.21400


11,390







11,390



1.62 The table above assumes no defaults or prepayments by portfolio companies over the next twelve months. The
hypothetical results would also be impacted by the changes in the amount of debt outstanding under our Credit Facility (with an increase (decrease) in the debt outstanding under the Credit Facility resulting in an (increase) decrease in the
hypothetical interest expense). ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Our consolidated financial statements are annexed to this Annual Report beginning on page F-1. In
addition, the Financial Statements of Saratoga Investment Corp. CLO 2013-1, Ltd. are annexed to this Annual Report beginning on page S-1. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9A. CONTROLS AND PROCEDURES Evaluation of disclosure controls and procedures As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our
management, including our chief executive officer and our chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934). Based on that evaluation, our chief executive officer and our chief financial officer have concluded that our current disclosure controls and procedures are
effective in facilitating timely decisions regarding required disclosure of any material information relating to us that is required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934. However, in
evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management
necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Managements annual report on internal control over financial reporting The Companys management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in
Rules 13a-15(f) and 15d-15(f) of the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with U.S. GAAP. Internal control over financial reporting includes those policies and procedures that (i) pertain
to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that the transactions are recorded as necessary to permit
preparation of financial statements in accordance with U.S. GAAP, and that the receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements. Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the
degree of compliance with polices or procedures may deteriorate.  96




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##### Table of Contents

Under the supervision and with participation of our Chief Executive Officer and Chief
Financial Officer, the Company conducted an evaluation of the effectiveness of internal control over financial reporting based on the criteria established in Internal ControlIntegrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). Based on the Companys evaluation under the framework in Internal ControlIntegrated Framework (2013), management concluded that the Companys internal control over financial
reporting was effective as of February 28, 2019. Attestation Report of the Registered Public Accounting Firm Our internal control over financial reporting as of February 28, 2019 has been audited by Ernst & Young LLP, an independent
registered public accounting firm, as stated in their report, which is included in the consolidated financial statements of the Company in this Annual Report under the heading Report of Independent Registered Public Accounting Firm. Changes in internal controls over financial reporting There have been no changes in the Companys internal control over financial reporting (as defined in Rule
13a-15(f) of Exchange Act) that occurred during our most recently completed fiscal year that have materially affected, or are reasonably likely to materially affect, the Companys internal control over
financial reporting. ITEM 9B. OTHER INFORMATION None.  97




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##### Table of Contents

PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Director and Executive Officer Information Directors The following table sets
forth the names, ages and positions held by each of our directors, followed by a brief biography of each individual, including the business experience of each individual during the past five years and the specific qualifications that led to the
conclusion that each individual should serve as a director.  Name

Age


Position

DirectorSince


TermExpiresInterested DirectorsChristian L. Oberbeck


59


Chairman of the Board and Chief Executive Officer


2010



2021Michael J. Grisius


55


President and Director


2011



2020Independent DirectorsSteven M. Looney


69


Director


2007



2019Charles S. Whitman III


77


Director


2007



2019G. Cabell Williams


65


Director


2007



2020 Christian L. OberbeckMr. Oberbeck has over 35 years of experience in leveraged
finance, from distressed debt to private equity, and has been involved in originating, structuring, negotiating, consummating, managing and monitoring investments in these businesses. Mr. Oberbeck is the Managing Member of Saratoga Investment
Advisors, LLC, the Companys investment adviser, and the Chairman of the Board and Chief Executive Officer of the Company. Mr. Oberbeck also served as President of the Company until February 2014. Mr. Oberbeck is also the Managing
Partner of Saratoga Partners, a middle market private equity investment firm. Prior to assuming full management responsibility for
Saratoga Partners in 2008, Mr. Oberbeck had co-managed Saratoga Partners since 1995. Mr. Oberbeck joined Dillon Read and Saratoga Partners from Castle Harlan, Inc., a corporate buyout firm which he
had joined at its founding in 1987 and was a Managing Director, leading successful investments in manufacturing and financial services companies. Prior to that, he worked in the Corporate Development Group of Arthur Young and in corporate finance at
Blyth Eastman Paine Webber. Mr. Oberbeck has been a director of numerous middle market companies. Mr. Oberbeck graduated from
Brown University in 1982 with a BS in Physics and a BA in Mathematics. In 1985, he earned an MBA from Columbia University. Mr. Oberbecks qualifications as a director include his extensive experience in the investment and finance industry,
as well as his intimate knowledge of the Companys operations, gained through his service as an executive officer. Michael J.
GrisiusMr. Grisius has over 28 years of experience in leveraged finance, investment management and financial services. He has originated, structured, negotiated, consummated, managed and monitored numerous successful investments
in mezzanine debt, private equity, senior debt, structured products and commercial real estate debt. Mr. Grisius is Chief Investment Officer and a Managing Director of Saratoga Investment Advisors, LLC, the Companys investment adviser,
and was appointed President of the Company in February 2013. Mr. Grisius joined Saratoga Investment Advisors, LLC in July 2011. Prior to joining Saratoga Investment Advisors, Mr. Grisius served as Managing Director at Allied Capital Corporation, where he was an
investment professional for 16 years. At Allied Capital Corporation, Mr. Grisius held several senior positions including co-head of Mezzanine Finance and member of its Management Committee and its
Investment Committee. In 2008, Mr. Grisius was appointed co-chairman of the Allied Capital Corporations Investment Committee. He also had responsibility for structuring and managing Unitranche Fund,
LLC. During his tenure at Allied, Mr. Grisius built and led teams that made investments in subordinated debt, control equity and real estate mortgage debt. Mr. Grisius has served on the board of directors of numerous middle market
companies. Prior to joining Allied Capital Corp., Mr. Grisius worked in leveraged finance at Chemical Bank from 1989 to 1992 and held senior accountant and consultant positions with KPMG LLP from 1985 to 1988. Mr. Grisius graduated with a BS from Georgetown University in 1985 and earned an MBA from Cornell Universitys Johnson Graduate
School of Management in 1990. Mr. Grisius qualifications as a director include his broad experience in leverage finance, investment management, private equity and financial services.  98




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##### Table of Contents

Steven M. LooneyMr. Looney is a Managing Director of Peale
Davies & Co. Inc., a strategic advisory firm specializing in change management, revenue enhancement and business process improvement for middle market enterprises and is a CPA and an attorney. Mr. Looney has served as a consultant and
director to numerous companies in the healthcare, manufacturing and services industries. Between 2000 and 2005, he served as Senior Vice President and Chief Financial Officer of PCCI, Inc., a private IT staffing and outsourcing firm. Between 1992
and 2000, Mr. Looney worked at WH Industries as Chief Financial and Administrative Officer. Mr. Looney is a trustee of Excellent Education for Everyone, a nonprofit organization. Mr. Looney graduated summa cum laude from the
University of Washington with a B.A. degree in accounting and received a J.D. from the University of Washington School of Law where he was a member of the law review. He began his career at the United States Securities and Exchange Commission.
Mr. Looneys qualifications as director include his experience as a Managing Director of Peale Davies & Co. and as Chief Financial and Administrative Officer of WH Industries, as well as his financial, accounting and legal
expertise. Charles S. Whitman IIIMr. Whitman is senior counsel (retired) at Davis Polk & Wardwell LLP.
Mr. Whitman was a partner in Davis Polks Corporate Department for 28 years, representing clients in a broad range of corporate finance matters, including shelf registrations, securities compliance for financial institutions, foreign asset
privatizations, and mergers and acquisitions. From 1971 to 1973, Mr. Whitman served as Executive Assistant to three successive Chairmen of the SEC. Mr. Whitman graduated from Harvard College and graduated magna cum laude from Harvard Law
School with a LL.B. Mr. Whitman also received an LL.M. from Cambridge University in England. Mr. Whitmans qualifications as director include his 28 years of experience representing clients, including AT&T, Exxon Mobil, General
Motors and BP, in securities matters as a partner in Davis Polks corporate department. G. Cabell
WilliamsMr. Williams has served as the Managing General Partner of Williams and Gallagher, a private equity partnership located in Chevy Chase, Maryland since 2004. Mr. Williams is also a Senior Manager, Director of Farragut
Capital Partners which is a Chevy Chase, Maryland based Mezzanine Fund. Since 2011, Mr. Williams has also served as a partner of Farragut Capital Partners, an investment firm based in Fairfax, VA. In 2004, Mr. Williams concluded a 23-year career at Allied Capital Corporation, a business development company based in Washington, DC, which was acquired by Ares Capital Corporation in 2010. While at Allied, Mr. Williams held a variety of
positions, including President, CIO and finally Managing Director following Allieds merger with its affiliates in 1998. From 1991 to 2004, Mr. Williams either led or co-managed the firms
Private Equity Group. For the nine years prior to 1999, Mr. Williams led Allieds Mezzanine investment activities. For 15 years, Mr. Williams served on Allieds Investment Committee where he was responsible for reviewing and
approving all of the firms investments. Prior to 1991, Mr. Williams ran Allieds Minority Small Business Investment Company. He also founded Allied Capital Commercial Corporation, a real estate investment vehicle. Mr. Williams
has served on the board of directors of various public and private companies. Mr. Williams attended The Landon School, and graduated from Mercersburg Academy and Rollins College, receiving a B.S. in Business Administration from the latter.
Mr. Williams qualifications as director include his 28 years of experience managing investment activities at Allied Capital, where he served in a variety of positions, including President, CIO and Managing Director. Executive Officer Who Is Not Also a Director The following table sets forth the name, age and position held by our executive officer who is not also a director, followed by a brief
biography, including the business experience during the past five years.  Name

Age


PositionExecutive OfficerHenri J. Steenkamp


43


Chief Financial Officer, Chief Compliance Officer, Treasurer and Secretary Henri J. SteenkampMr. Steenkamp, 43 years old, had served as the Chief Financial
Officer of MF Global Holdings Ltd., a broker in commodities and derivatives, from April 2011. Prior to that, Mr. Steenkamp held the position of Chief Accounting Officer and Global Controller at MF Global for four years. He joined MF Global,
then Man Financial, in 2006 as Vice President of External Reporting and Accounting Policy. After MF Global filed for bankruptcy protection in October 2011, he continued to serve as Chief Financial Officer of the holding company through January 2013.  99




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##### Table of Contents

Before joining MF Global, Mr. Steenkamp spent eight years with PricewaterhouseCoopers
(PwC), including four years in Transaction Services in its New York office, managing a variety of capital-raising transactions on a global basis. His focus was also on the SEC registration and public company filing process, including
technical accounting. He spent four years with PwC in South Africa, where he served as an auditor primarily for SEC registrants and assisted South African companies as they went public in the U.S. Mr. Steenkamp is a chartered accountant and
holds an honors degree in Finance. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and persons who own 10.0% or more of
our voting stock, to file reports of ownership and changes in ownership of our equity securities with the SEC. Directors, executive officers and 10.0% or more holders are required by SEC regulations to furnish us with copies of all
Section 16(a) forms they file. Based solely on a review of the copies of those forms furnished to us, or written representations that no such forms were required, we believe that our directors, executive officers and 10.0% or more beneficial
owners complied with all Section 16(a) filing requirements during the year ended February 28, 2019. Code of Business Conduct and Ethics We have adopted a Code of Business Conduct and Ethics which applies to, among others, our executive officers, including our principal executive
officer and principal financial officer, as well as every officer, director and employee of the Company. Requests for copies should be sent in writing to Saratoga Investment Corp., 535 Madison Avenue, New York, New York 10022. The Companys
Code of Business Conduct and Ethics is also available on our website at www.saratogainvestmentcorp.com. If we make any substantive
amendment to, or grant a waiver from, a provision of our Code of Business Conduct and Ethics, we will promptly disclose the nature of the amendment or waiver on our website at www.saratogainvestmentcorp.com. Nomination of Directors There have been
no material changes to the procedures by which stockholders may recommend nominees to our board of directors implemented since the filing of our Proxy Statement for our 2018 Annual Meeting of Stockholders. Audit Committee The current members of
the audit committee are Steven M. Looney (Chairman), Charles S. Whitman III and G. Cabell Williams. The board of directors has determined that Mr. Looney is an audit committee financial expert as defined under Item 407 of Regulation
S-K of the Securities Exchange Act of 1934 and that each of Messrs. Whitman and Williams are financially literate as required by NYSE corporate governance standards. All of these members are
independent directors. ITEM 11. EXECUTIVE COMPENSATION Executive Compensation Currently, none of
our executive officers are compensated by us. We currently have no employees, and each of our executive officers is also an employee of Saratoga Investment Advisors. Services necessary for our business are provided by individuals who are employees
of Saratoga Investment Advisors, pursuant to the terms of the Management Agreement and the Administration Agreement. Director Compensation Our independent directors receive an annual fee of $60,000. They also receive $2,500 plus reimbursement of reasonable out-of- pocket expenses incurred in connection with attending each board meeting and receive $1,000 plus reimbursement of reasonable
out- of-pocket expenses incurred in connection with attending each committee meeting. In addition, the chairman of the audit committee receives an annual fee of $10,000
and the chairman of each other committee receives an annual fee of $5,000 for their additional services in these capacities. In addition, we have purchased directors and officers liability insurance on behalf of our directors and
officers. Independent directors have the option to receive their directors fees in the form of our common stock issued at a price per share equal to the greater of net asset value or the market price at the time of payment. No compensation is
paid to directors who are interested persons.  100




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The following table sets forth information concerning total compensation earned by or paid
to each of our directors during the fiscal year ended February 28, 2019:  Fees Earned orPaid in Cash


TotalInterested DirectorsChristian L. Oberbeck(1)

$



$
Michael J. Grisius(1)






Independent DirectorsSteven M. Looney

$
96,000


$
96,000Charles S. Whitman III


88,000



88,000G. Cabell Williams


88,000



88,000  (1)
No compensation was paid to directors who are interested persons of us as defined in the 1940 Act. Compensation Committee Interlocks and Insider Participation The current members of the compensation committee are G. Cabell Williams (Chairman), Steven M. Looney and Charles S. Whitman III. All of these
members are independent directors. The compensation committee is responsible for overseeing the Companys compensation policies generally and making recommendations to the board of directors with respect to incentive compensation and
equity-based plans of the Company that are subject to board of directors approval, evaluating executive officer performance and reviewing the Companys management succession plan, overseeing and setting compensation for the Companys
directors and, as applicable, its executive officers and, as applicable, preparing the report on executive officer compensation that SEC rules require to be included in our Annual Report on Form 10-K.
Currently, none of our executive officers are compensated by the Company and as such the compensation committee is not required to produce a report on executive officer compensation for inclusion in our Annual Report on Form 10-K. During fiscal year 2019, none of the Companys executive officers served on the board of
directors (or a compensation committee thereof or other board committee performing equivalent functions) of any entities that had one or more executive officers serve on the compensation committee or on the board of directors. No current or past
executive officers or employees of the Company or its affiliates serve on the compensation committee. ITEM 12. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table sets forth, as of
May 10, 2019, the beneficial ownership of each current director, the nominees for director, the Companys executive officers, each person known to us to beneficially own 5.0% or more of the outstanding shares of our common stock, and the
executive officers and directors as a group. The percentage ownership is based on 7,764,844 shares of common stock outstanding as of
May 10, 2019. Shares of common stock that are subject to warrants or other convertible securities currently exercisable or exercisable within 60 days thereof, are deemed outstanding for the purposes of computing the percentage ownership of the
person holding these options or convertible securities, but are not deemed outstanding for computing the percentage ownership of any other person. Beneficial ownership is determined under the rules of the SEC and generally includes voting or
investment power with respect to securities. To our knowledge, unless otherwise indicated in the footnotes to this table, the persons and entities named in the table have sole voting and sole investment power with respect to all shares beneficially
owned. Unless otherwise indicated by footnote, the address for each listed individual is Saratoga Investment Corp., 535 Madison Avenue, New York, New York 10022.  101




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##### Table of Contents

Name of Beneficial Owners

Number of Shares ofCommon StockBeneficially Owned


Percent ofClassInterested DirectorsChristian L. Oberbeck


1,596,727
(1)


20.6
%Michael J. Grisius


153,725



2.0
%Executive OfficerHenri J. Steenkamp


9,254



*Independent DirectorsSteven M. Looney


2,508



*Charles S. Whitman III


2,969



*G. Cabell Williams


48,690



*All Directors and Executive Officers as a Group


1,813,873



23.4
%Owners of 5% or more of our common stockBlack Diamond Capital Management, L.L.C.(2)


774,287



10.0
%Elizabeth Oberbeck(3)


624,183



8.0
%Thomas V. Inglesby


354,236



4.6
%  *
Less than 1.0% Mr. Oberbeck and Mr. Inglesby are affiliates who make up 25.1% of the ownership of SAR.  (1)
Includes 614,142 shares of common stock directly held by Mr. Oberbeck, 119,376 shares of common stock held by
Saratoga Investment Advisors, which Mr. Oberbeck controls, 217,774 shares of common stock held by CLO Partners LLC, an entity wholly owned by Mr. Oberbeck, 20,304 shares of common stock directly held by Mr. Oberbecks children, for which Mr.
Oberbeck retains the voting rights, 948 shares of common stock directly held by Mr. Oberbecks wife, for which Mr. Oberbeck retains the voting rights, and 624,183 shares of common stock directly held by Elizabeth Oberbeck. See footnote 3 below. (2)
Based on information included in Amendment No. 8 to Schedule 13G filed by Black Diamond Capital Management,
L.L.C. with the SEC on February 14, 2019. The address of Black Diamond Capital Management, L.L.C. is One Sound Shore Drive, Suite 200, Greenwich, CT 06830. (3)
Based on information included in Amendment No. 3 to Schedule 13D filed jointly by Christian L. Oberbeck,
Elizabeth Oberbeck, Saratoga Investment Advisors and CLO Partners LLC on November 4, 2014. Pursuant to an Agreement Relating to Shares of Common Stock of Saratoga Investment Corp. (the Transfer Agreement), Christian L. Oberbeck
transferred 744,183 shares of common stock beneficially owned by him to Elizabeth Oberbeck. Elizabeth Oberbeck has full ownership rights with respect to the shares, including without limitation, the right to (A) receive any cash and/or stock
dividends and distributions paid on or with respect to the shares and (B) sell the shares in accordance with the provisions of the Transfer Agreement and receive all proceeds therefrom. However, pursuant to the terms of the Transfer Agreement,
Christian L. Oberbeck has retained the right to vote the shares, except that Elizabeth Oberbeck has retained the right to vote the shares on all matters submitted to shareholders with respect to any matter that could give rise to dissenters or other
rights of an objecting shareholder under Maryland General Corporation Law. The Transfer Agreement also contains a right of first refusal that requires Elizabeth Oberbeck to offer Christian L. Oberbeck the opportunity to purchase any shares of Common
Stock owned by her prior to her intended sale of the shares. Any such purchases may be made either directly by Mr. Oberbeck or through entities affiliated with him. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Transactions with Related Persons We have
entered into a Management Agreement with Saratoga Investment Advisors, LLC. We have also entered into a license agreement with Saratoga Investment Advisors, LLC, pursuant to which Saratoga Investment Advisors has agreed to grant us a non- exclusive, royalty-free license to use the name Saratoga. In addition, pursuant to the terms of the Administration Agreement, Saratoga Investment Advisors, LLC provides us with the office facilities
and administrative services necessary to conduct our day- to-day operations. Mr. Oberbeck, our chief executive officer, is the primary investor in and controls
Saratoga Investment Advisors, LLC.  102




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##### Table of Contents

Review, Approval or Ratification of Transactions with Related Persons The Audit Committee of our board is required to review and approve any transactions with related persons (as such term is defined in Item 404
of Regulation S-K). Director Independence In accordance with rules of the NYSE, the board of directors annually determines the independence of each director. No director is considered
independent unless the board of directors has determined that he or she has no material relationship with the Company. The Company monitors the status of its directors and officers through the activities of the Companys Nominating and
Corporate Governance Committee and through a questionnaire to be completed by each director no less frequently than annually, with updates periodically if information provided in the most recent questionnaire has changed. In order to evaluate the materiality of any such relationship, the board of directors uses the definition of director independence set forth
in the NYSE Listed Company Manual. Section 303A.00 of the NYSE Listed Company Manual provides that business development companies, or BDCs, such as the Company, are required to comply with all of the provisions of Section 303A applicable
to domestic issuers other than Sections 303A.02, the section that defines director independence. Section 303A.00 provides that a
director of a BDC shall be considered to be independent if he or she is not an interested person of the Company, as defined in Section 2(a)(19) of the 1940 Act. Section 2(a)(19) of the 1940 Act defines an interested
person to include, among other things, any person who has, or within the last two years had, a material business or professional relationship with the Company. The board of directors has determined that each of the directors is independent and has no relationship with the Company, except as a director
and stockholder of the Company, with the exception of Messrs. Oberbeck and Grisius who are interested persons of the Company due to their positions as officers of the Company and its Investment Adviser. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES Independent Registered Public Accounting Firm For the years ended February 28, 2019 and February 28, 2018, the Company incurred the following fees for services provided by
Ernst & Young LLP, including expenses:  Fiscal Year Ended


Fiscal Year EndedFebruary 28, 2019


February 28, 2018Audit Fees

$
725,000


$
643,500Tax Fees


41,200



40,000Total Fees

$
766,200


$
683,500 In addition to the services listed above, Ernst & Young LLP provided audit services to the
Companys subsidiaries. The following are the related fees:  Fiscal Year Ended


Fiscal Year EndedFebruary 28, 2019


February 28, 2018CLO Audit Fees

$
65,000


$
102,905Tax Services for Companys Subsidiaries






121,990All Other Fees


26,000



27,000Total Fees

$
91,000


$
251,895  103




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##### Table of Contents

Audit Fees. Audit fees include fees for services that normally would be provided by
the accountant in connection with statutory and regulatory filings or engagements and that generally only the independent accountant can provide. In addition to fees for the audit of our annual consolidated financial statements, the audit of the
effectiveness of our internal control over financial reporting and the review of our quarterly consolidated financial statements in accordance with generally accepted auditing standards, this category contains fees for comfort letters, statutory
audits, consents, and assistance with and review of documents filed with the SEC. Audit Related Fees. Audit related fees are
assurance related services that traditionally are performed by the independent accountant, such as attest services that are not required by statute or regulation. Tax Fees. Tax fees include services in conjunction with preparation of the Companys tax return. All Other Fees. Fees for other services would include fees for products and services other than the services reported above. It is the policy of the audit committee to pre-approve all audit, review or attest engagements and
permissible non-audit services to be performed by our independent registered public accounting firm. 2018 fees have been adjusted to conform with 2019 fees presentation.  104




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PART IV ITEM 15. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES The following documents are filed or incorporated by reference as part of this Annual Report: 1. Consolidated Financial Statements The
following consolidated financial statements of the Company are filed herewith: Report of Independent Registered Public Accounting Firm Consolidated Statements of Assets and Liabilities as of February 28, 2019 and February 28, 2018 Consolidated Statements of Operations for the years ended February 28, 2019, February 28, 2018 and February 28, 2017 Consolidated Schedules of Investments as of February 28, 2019 and February 28, 2018 Consolidated Statements of Changes in Net Assets for the years ended February 28, 2019, February 28, 2018 and February 28, 2017 Consolidated Statements of Cash Flows for the years ended February 28, 2019, February 28, 2018 and February 28, 2017 Notes to Consolidated Financial Statements 2. Financial Statement Schedules Reference is made to the Index to Other Financial Statements on page S-1. 3. Exhibits required to be filed by Item 601 of Regulation S-K The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC:  105




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EXHIBIT INDEX  ExhibitNumber

Description3.1(a)

Articles of Incorporation of Saratoga Investment Corp. (incorporated by reference to Saratoga Investment Corp.s Form 10-Q for the quarterly period ended May 31, 2007).3.1(b)

Articles of Amendment of Saratoga Investment Corp. (incorporated by reference to Saratoga Investment Corp.s Current Report on Form 8-K filed August 3, 2010).3.1(c)

Articles of Amendment of Saratoga Investment Corp. (incorporated by reference to Saratoga Investment Corp.s Current Report on Form 8-K filed August 13, 2010).3.2

Second Amended and Restated Bylaws of Saratoga Investment Corp. (incorporated by reference to Saratoga Investment Corp.s Current Report
 on Form 8-K filed on June 14, 2011).4.1

Specimen certificate of Saratoga Investment Corp.s common stock, par value $0.001 per share. (incorporated by reference to Saratoga
 Investment Corp.s Registration Statement on Form N-2, File No. 333-169135, filed on September 1, 2010).4.2

Registration Rights Agreement dated July 
30, 2010 between GSC Investment Corp., GSC CDO III L.L.C., and the investors party thereto (incorporated by reference to Saratoga Investment Corp.s Current Report on Form 8-K filed on August 
3, 2010).4.3

Dividend Reinvestment Plan (incorporated by reference to Saratoga Investment Corp.s Current Report on Form 8-K filed on September 24, 2014).4.4

Form of Indenture by and between the Company and U.S. Bank National Association, as trustee (incorporated by reference to Saratoga Investment
 Corp.s Pre-Effective Amendment No. 2 to the Registration Statement on Form N-2, File No. 333-186323 filed
April 30, 2013).4.5

Form of Second Supplemental Indenture between the Company and U.S. Bank National Association (incorporated by reference to Amendment No. 2
 to Saratoga Investment Corp.s Registration Statement on Form N-2, File No. 333-214182, filed on December 12, 2016).4.6

Form of Global Note (incorporated by reference to Exhibit 4.5 hereto, and Exhibit A therein).4.7

Form of Third Supplemental Indenture between the Company and U.S. Bank National Association (incorporated by reference to Post-Effective Amendment No. 9 to the Registrants Registration Statement on Form N-2, File No. 333-216344, filed on August 28, 2018).4.8

Form of Global Note (incorporated by reference to Exhibit 4.7 hereto, and Exhibit A therein).4.9

Form of Articles Supplementary Establishing and Fixing the Rights and Preferences of Preferred Stock (incorporated by reference to Saratoga
 Investment Corp.s registration statement on Form N-2 Pre-Effective Amendment No. 1, File No. 333-196526, filed
on December 5, 2014).10.1

Investment Advisory and Management Agreement dated July 
30, 2010 between GSC Investment Corp. and Saratoga Investment Advisors, LLC (incorporated by reference to Saratoga Investment Corp.s Current Report on Form 8-K filed on August 3, 2010).10.2

Custodian Agreement dated March 
21, 2007 between GSC Investment LLC and U.S. Bank National Association (incorporated by reference to Saratoga Investment Corp.s Form 10-Q for the quarterly period ended May 31, 2007).10.3

Administration Agreement dated July 
30, 2010 between GSC Investment Corp. and Saratoga Investment Advisors, LLC (incorporated by reference to Saratoga Investment Corp.s Current Report on Form 8-K filed on August 3, 2010).10.4

Trademark License Agreement dated July 
30, 2010 between Saratoga Investment Advisors, LLC and GSC Investment Corp. (incorporated by reference to Saratoga Investment Corp.s Current Report on Form 8-K filed on August 3, 2010).10.5

Credit, Security and Management Agreement dated July 
30, 2010 by and among GSC Investment Funding LLC, Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Madison Capital Funding LLC and U.S. Bank National Association (incorporated by reference to Saratoga Investment Corp.s Current Report
 on Form 8-K filed on August 3, 2010).  106




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##### Table of Contents

ExhibitNumber

Description10.6

Form of Indemnification Agreement between Saratoga Investment Corp. and each officer and director of Saratoga Investment Corp. (incorporated
 by reference to Amendment No. 2 to Saratoga Investment Corp.s Registration Statement on Form N-2 filed on January 12, 2007).10.7

Amendment No. 1 to Credit, Security and Management Agreement dated February 
24, 2012 by and among Saratoga Investment Funding LLC, Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Madison Capital Funding LLC and U.S. Bank National Association (incorporated by reference to Saratoga Investment Corp.s Current Report
on Form 8-K filed on February 29, 2012).10.8

Amended and Restated Indenture, dated as of November 
15, 2016, among Saratoga Investment Corp. CLO 2013-1, Ltd., Saratoga Investment Corp. CLO 2013-1, Inc. and U.S. Bank National Association. (incorporated by reference to Saratoga
 Investment Corp.s Registration Statement on Form N-2, File No. 333-216344, filed on February 28, 2017).10.9

Amended and Restated Collateral Management Agreement, dated October 
17, 2013, by and between Saratoga Investment Corp. and Saratoga Investment Corp. CLO 2013-1, Ltd. (incorporated by reference to Saratoga Investment Corp.s Registration Statement on Form N-2, File No. 333-196526, filed on December 5, 2014).10.10

Amendment No. 2 to Credit, Security and Management Agreement dated September 
17, 2014 by and among Saratoga Investment Funding LLC, Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Madison Capital Funding LLC and U.S. Bank National Association (incorporated by reference to Saratoga Investment Corp.s Current Report
on Form 8-K filed on September 18, 2014).10.11

Amendment No. 3 to Credit, Security and Management Agreement, dated May 
18, 2017, by and among Saratoga Investment Funding LLC, Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Madison Capital Funding LLC and U.S. Bank National Association (incorporated by reference to Saratoga Investment Corp.s Current Report
 on Form 8-K filed on May 18, 2017).10.12

Equity Distribution Agreement dated March 
16, 2017, by and among Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Ladenburg Thalmann and Co. Inc. and BB&T Capital Markets, a division of BB&T Securities, LLC (incorporated by reference to Saratoga Investment Corp.s Post-Effective
 Amendment No. 1 to the Registration Statement on Form N-2, File No. 333-216344, filed on March 16, 2017).10.13

Amendment No. 1 to the Equity Distribution Agreement dated October 
12, 2017 by and among Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Ladenburg Thalmann and Co. Inc., BB&T Capital Markets, a division of BB&T Securities, LLC, and FBR Capital Markets 
& Co. (incorporated by reference to Saratoga Investment Corp.s Post-Effective Amendment No. 2 to the Registration Statement on Form N-2, File No. 
333-216344, filed on October 12, 2017).10.14

Amendment No. 2 to the Equity Distribution Agreement dated January 
11, 2018 by and among Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Ladenburg Thalmann and Co. Inc., BB&T Capital Markets, a division of BB&T Securities, LLC, and B. Riley FBR, Inc. (incorporated by reference to Post-Effective Amendment
No. 3 to Saratoga Investment Corp.s Registration Statement on Form N-2, File No. 333-216344, filed on January 11, 2018).10.15

Amendment No. 3 to the Equity Distribution Agreement dated October 
16, 2018 by and among Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Ladenburg Thalmann and Co. Inc., BB&T Capital Markets, a division of BB&T Securities, LLC, and B. Riley FBR, Inc. (incorporated by reference to Post-Effective Amendment
No. 1 to the registrants Registration Statement on Form N-2, File No. 333-227116, filed on October 16, 2018).11

Computation of Per Share Earnings (included in Note 11 to the consolidated financial statements contained in this report).14

Code of Ethics of the Company adopted under Rule 17j-1 (incorporated by reference to Amendment No.7
to Saratoga Investment Corp.s Registration Statement on Form N-2, File No. 333-138051, filed on March 22, 2007).21.1

List of Subsidiaries and jurisdiction of incorporation/organization: Saratoga Investment Funding LLCDelaware; Saratoga Investment Corp. SBIC, LPDelaware; and Saratoga Investment Corp. GP, LLCDelaware.31.1*

Chief Executive Officer Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 
302 of the Sarbanes-Oxley Act of 2002.31.2*

Chief Financial Officer Certification Pursuant to Rule 13a-14(a) of the Securities Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
 2002.32.1*

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  *
Filed herewith ITEM 16. FORM 10-K SUMMARY None.  107




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SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.  SARATOGA INVESTMENT CORP. Date: May 13, 2019



By:

/s/ CHRISTIAN L. OBERBECKChristian L. OberbeckChief Executive Officer By:

/s/ HENRI J. STEENKAMPHenri J. SteenkampChief Financial Officer and Chief Compliance Officer KNOW ALL PERSONS BY THESE PRESENT, that each person whose signature appears below hereby constitutes and
appoints Christian L. Oberbeck and Henri J. Steenkamp, and each of them (with full power to each of them to act alone), his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name, place, and stead, in any and all capacities, to sign this report and any and all amendments thereto, and to file the same, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about
the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or
their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.  Signature

Title

Date/s/ CHRISTIAN L. OBERBECK

Chairman of the Board of Directors, Chief Executive

May 13, 2019Christian L. Oberbeck

Officer (Principal Executive Officer)/s/ MICHAEL J. GRISIUS

Member of the Board of Directors

May 13, 2019Michael J. Grisius/s/ HENRI J. STEENKAMP

Chief Financial Officer (Principal Accounting Officer and

May 13, 2019Henri J. Steenkamp

Principal Financial Officer)/s/ STEVEN M. LOONEY

Member of the Board of Directors

May 13, 2019Steven M. Looney/s/ CHARLES S. WHITMAN III

Member of the Board of Directors

May 13, 2019Charles S. Whitman III/s/ G. CABELL WILLIAMS

Member of the Board of Directors

May 13, 2019Cabell Williams  108




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##### Table of Contents

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS  PAGEReports of Independent Registered Public Accounting Firm


F-2Consolidated Statements of Assets and Liabilities as of February
28, 2019 and February 28, 2018


F-4Consolidated Statements of Operations for the years ended February 28, 2019, February
 28, 2018 and February 28, 2017


F-5Consolidated Statements of Changes in Net Assets for the years ended February28, 2019, February28, 2018 and February28, 2017


F-6Consolidated Statements of Cash Flows for the years ended February28, 2019, February28, 2018 and February 28, 2017


F-7Consolidated Schedules of Investments as of February 
28, 2019 and February 28, 2018


F-8Notes to Consolidated Financial Statements


F-12  F-1




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##### Table of Contents

Report of Independent Registered Public Accounting Firm The Shareholders and the Board of Directors of Saratoga Investment Corp. Opinion on the financial statements We have audited the
accompanying consolidated statements of assets and liabilities of Saratoga Investment Corp. (the Company), including the consolidated schedules of investments, as of February 28, 2019 and 2018, the related consolidated statements of
operations, changes in net assets, and cash flows for each of the three years in the period ended February 28, 2019, and the related notes (collectively referred to as the financial statements). In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial position of the Company as of February 28, 2019 and 2018, and the results of its operations, changes in its net assets and its cash flows for each of the three years
in the period ended February 28, 2019, in conformity with US generally accepted accounting principles. We also have audited, in accordance with the
standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Companys internal control over financial reporting as of February 28, 2019, based on criteria established in Internal Control-Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated May 13, 2019 expressed an unqualified opinion thereon. Basis for opinion These financial statements are the
responsibility of the Companys management. Our responsibility is to express an opinion on the Companys financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent
with respect to the Company in accordance with the US federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of
investments owned as of February 28, 2019 and 2018, by correspondence with the custodians, debt agents and lenders. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/
Ernst & Young LLP We have served as the Companys auditor since 2006. New York, New York May 13, 2019  F-2




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Saratoga Investment Corp. Opinion on Internal Control over Financial Reporting We
have audited Saratoga Investment Corp.s internal control over financial reporting as of February 28, 2019, based on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework),(the COSO criteria). In our opinion, Saratoga Investment Corp. (the Company) maintained, in all material respects, effective internal control over financial reporting as of February 28, 2019,
based onthe COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the 2019 consolidated financial statements of the Company and our report dated May 13, 2019 expressed an unqualified opinion thereon. Basis for Opinion The Companys management is
responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Managements Report on Internal Control Over
Financial Reporting. Our responsibility is to express an opinion on the Companys internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and
Limitations of Internal Control Over Financial Reporting A companys internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial
reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect
on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP New York, New York May 13, 2019  F-3




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##### Table of Contents

Saratoga Investment Corp. Consolidated Statements of Assets and Liabilities  February 28,2019


February 28,2018ASSETSInvestments at fair valueNon-control/Non-affiliate investments (amortized cost of $307,136,188 and $281,534,277,
respectively)

$
306,511,427


$
286,061,722Affiliate investments (amortized cost of $18,514,716 and $18,358,611, respectively)


11,463,081



12,160,564Control investments (amortized cost of $76,265,189 and $39,797,229, respectively)


84,045,212



44,471,767Total investments at fair value (amortized cost of $401,916,093 and $339,690,117,
respectively)


402,019,720



342,694,053Cash and cash equivalents


30,799,068



3,927,579Cash and cash equivalents, reserve accounts


31,295,326



9,849,912Interest receivable (net of reserve of $647,210 and $1,768,021, respectively)


3,746,604



3,047,125Due from affiliate (See Note 6)


1,673,747



Management and incentive fee receivable


542,094



233,024Other assets


595,543



584,668Total assets

$
470,672,102


$
360,336,361LIABILITIESRevolving credit facility

$



$
Deferred debt financing costs, revolving credit facility


(605,189
)


(697,497
)SBA debentures payable


150,000,000



137,660,000Deferred debt financing costs, SBA debentures payable


(2,396,931
)


(2,611,120
)2023 Notes payable


74,450,500



74,450,500Deferred debt financing costs, 2023 notes payable


(1,919,620
)


(2,316,370
)2025 Notes payable


60,000,000



Deferred debt financing costs, 2025 notes payable


(2,377,551
)


Base management and incentive fees payable


6,684,785



5,776,944Deferred tax liability


739,716



Accounts payable and accrued expenses


1,615,443



924,312Interest and debt fees payable


3,224,671



3,004,354Directors fees payable


62,000



43,500Due to manager


319,091



410,371Total liabilities

$
289,796,915


$
216,644,994Commitments and contingencies (See Note 8)NET ASSETSCommon stock, par value $.001, 100,000,000 common shares authorized, 7,657,156 and 6,257,029
common shares issued and outstanding, respectively

$
7,657


$
6,257Capital in excess of par value


203,552,800



188,975,590Total distributable earnings (loss)


(22,685,270
)


(45,290,480
)Total net assets


180,875,187



143,691,367Total liabilities and net assets

$
470,672,102


$
360,336,361NET ASSET VALUE PER SHARE

$
23.62


$
22.96 Certain prior year numbers have been adjusted to conform with the SEC final rules on disclosure updates and simplification
effective November 5, 2018. See Note 2. See accompanying notes to consolidated financial statements.  F-4




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##### Table of Contents

Saratoga Investment Corp. Consolidated Statements of Operations  For the year endedFebruary 28,2019


February 28,2018


February 28,2017INVESTMENT INCOMEInterest from investmentsInterest income:Non-control/Non-affiliate investments

$
33,329,539


$
26,648,380


$
26,167,951Affiliate investments


963,289



886,948



246,035Control investments


4,785,044



4,768,534



2,281,397Payment-in-kind interest income:Non-control/Non-affiliate investments


780,112



984,305



652,847Affiliate investments


150,284



80,460



Control investments


3,288,902



1,741,334



Total interest from investments


43,297,170



35,109,961



29,348,230Interest from cash and cash equivalents


64,024



27,495



31,151Management fee income


1,722,180



1,509,317



1,499,001Incentive fee income


633,232



591,368



Other income


1,991,357



1,376,837



2,278,770Total investment income


47,707,963



38,614,978



33,157,152OPERATING EXPENSESInterest and debt financing expenses


13,125,718



10,938,654



9,888,127Base management fees


6,879,324



5,846,400



4,898,657Incentive management fees


4,891,004



4,333,983



2,947,543Professional fees


1,849,424



1,590,798



1,243,400Administrator expenses


1,895,833



1,645,833



1,366,667Insurance


253,141



259,571



275,787Directors fees and expenses


290,500



197,500



235,422General & administrative


1,224,462



1,058,009



1,121,594Income tax benefit


(1,027,118
)






Excise tax expense (credit)






(14,738
)


44,770Other expense


23,466



27,310



19,780Total operating expenses


29,405,754



25,883,320



22,041,747Loss on extinguishment of debt










1,454,595NET INVESTMENT INCOME


18,302,209



12,731,658



9,660,810REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTSNet realized gain (loss) from investments:Non-control/Non-affiliate investments


4,874,305



(5,877,734
)


12,368,115Control investments






166



Net realized gain (loss) from investments


4,874,305



(5,877,568
)


12,368,115Net change in unrealized appreciation (depreciation) on investments:Non-control/Non-affiliate investments


(5,152,206
)


6,178,457



(11,687,337
)Affiliate investments


(853,588
)


818,323



(3,141
)Control investments


3,105,485



3,828,275



1,049,034Net change in unrealized appreciation (depreciation) on investments


(2,900,309
)


10,825,055



(10,641,444
)Net change in provision for deferred taxes on unrealized (appreciation) depreciation on
investments


(1,766,835
)






Net realized and unrealized gain (loss) on investments


207,161



4,947,487



1,726,671NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

$
18,509,370


$
17,679,145


$
11,387,481WEIGHTED AVERAGEBASIC AND DILUTED EARNINGS PER COMMON SHARE

$
2.63


$
2.93


$
1.98WEIGHTED AVERAGE COMMON SHARES OUTSTANDINGBASIC AND DILUTED


7,046,686



6,024,040



5,740,450 See accompanying notes to consolidated financial statements.  F-5




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##### Table of Contents

Saratoga Investment Corp. Consolidated Statements of Changes in Net Assets  For the year endedFebruary 28, 2019


February 28, 2018


February 28, 2017INCREASE FROM OPERATIONS:Net investment income

$
18,302,209


$
12,731,658


$
9,660,810Net realized gain (loss) from investments


4,874,305



(5,877,568
)


12,368,115Net change in unrealized appreciation (depreciation) on investments


(2,900,309
)


10,825,055



(10,641,444
)Net change in provision for deferred taxes on unrealized (appreciation) depreciation on
investments


(1,766,835
)






Net increase in net assets resulting from operations


18,509,370



17,679,145



11,387,481DECREASE FROM SHAREHOLDER DISTRIBUTIONS:Total distributions to shareholders (a)


(14,188,588
)


(11,375,577
)


(11,057,075
)Net decrease in net assets from shareholder distributions


(14,188,588
)


(11,375,577
)


(11,057,075
)CAPITAL SHARE TRANSACTIONS:Proceeds from issuance of common stock


32,150,157



7,838,351



Stock dividend distribution


2,175,893



2,362,814



5,147,335Repurchases of common stock










(3,332,839
)Offering costs


(1,397,712
)


(108,143
)


Net increase in net assets from capital share transactions


32,928,338



10,093,022



1,814,496Total increase in net assets


37,249,120



16,396,590



2,144,902Net assets at beginning of period, as previously reported


143,691,367



127,294,777



125,149,875Cumulative effect of the adoption of ASC 606 (See Note 2)


(65,300
)






Net assets at beginning of period, as adjusted


143,626,067



127,294,777



125,149,875Net assets at end of period (b)

$
180,875,187


$
143,691,367


$
127,294,777  (a)
Distributions from net investment income and from net realized gains are no longer required to be separately
disclosed. See Note 2. For the years ended February 28, 2018 and February 28, 2017, total distributions represented distributions from net investment income of $11,375,577 and $11,057,075, respectively. (b)
Parenthetical disclosure of accumulated undistributed net investment income is no longer required. See Note 2.
For the years ended February 28, 2018 and February 28, 2017, end of period net assets included accumulated distributions in excess of net investment income of $27,862,543 and $27,737,348, respectively. See accompanying notes to consolidated financial statements.  F-6




---

##### Table of Contents

Saratoga Investment Corp. Consolidated Statements of Cash Flows  For the year endedFebruary 28,2019


February 28,2018


February 28,2017Operating activitiesNET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

$
18,509,370


$
17,679,145


$
11,387,481ADJUSTMENTS TO RECONCILE NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS TO NET CASH PROVIDED
BY (USED IN) OPERATING ACTIVITIES:Payment-in-kind interest income


(4,149,105
)


(2,664,627
)


(580,268
)Net accretion of discount on investments


(1,222,735
)


(1,035,501
)


(582,186
)Amortization of deferred debt financing costs


1,187,613



990,035



2,487,716Net deferred income taxes


(1,027,118
)






Net realized (gain) loss from investments


(4,874,305
)


5,877,568



(12,368,115
)Net change in unrealized (appreciation) depreciation on investments


2,900,309



(10,825,055
)


10,641,444Net change in provision for deferred taxes on unrealized appreciation (depreciation) on
investments


1,766,835







Proceeds from sales and repayments of investments


135,727,976



66,312,032



121,158,873Purchase of investments


(187,707,807
)


(107,697,157
)


(126,934,895
)(Increase) decrease in operating assets:Interest receivable


(699,479
)


247,325



(98,531
)Due from affiliate


(1,673,747
)






Management and incentive fee receivable


(309,070
)


(61,918
)


(1,090
)Cumulative effect of the adoption of ASC 606 (See Note 2)


(65,300
)






Other assets


(89,865
)


(273,897
)


70,488Receivable from unsettled trades






253,041



46,959Increase (decrease) in operating liabilities:Base management and incentive fees payable


907,841



(37,748
)


220,736Accounts payable and accrued expenses


691,131



215,458



(99,719
)Interest and debt fees payable


220,317



240,117



1,212,168Payable for repurchases of common stock










(20,957
)Directors fees payable


18,500



(8,000
)


20,000Due to manager


(91,280
)


12,866



179,412NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES


(39,979,919
)


(30,776,316
)


6,739,516Financing activitiesBorrowings on debt


45,590,000



59,800,000



9,000,000Paydowns on debt


(33,250,000
)


(34,800,000
)


Issuance of notes


60,000,000







74,450,500Repayments of notes










(61,793,125
)Payments of deferred debt financing costs


(2,878,120
)


(1,277,266
)


(3,225,528
)Proceeds from issuance of common stock


32,150,157



7,838,351



Payments of offering costs


(1,302,520
)


(82,483
)


Repurchases of common stock










(3,332,839
)Payments of cash dividends


(12,012,695
)


(9,012,763
)


(6,785,339
)NET CASH PROVIDED BY FINANCING ACTIVITIES


88,296,822



22,465,839



8,313,669NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS, RESERVE
ACCOUNTS


48,316,903



(8,310,477
)


15,053,185CASH AND CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS, RESERVE ACCOUNTS, BEGINNING OF
PERIOD


13,777,491



22,087,968



7,034,783CASH AND CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS, RESERVE ACCOUNTS, END OF PERIOD

$
62,094,394


$
13,777,491


$
22,087,968Supplemental information:Interest paid during the period

$
11,717,786


$
9,708,503


$
7,642,838Cash paid for taxes


66,295



208,164



144,247Supplemental non-cash information:Payment-in-kind interest income

$
4,149,105


$
2,664,627


$
580,268Net accretion of discount on investments


1,222,735



1,035,501



582,186Amortization of deferred debt financing costs


1,187,613



990,035



2,487,716Stock dividend distribution


2,175,893



2,362,814



5,147,335 See accompanying notes to consolidated financial statements.  F-7




---

##### Table of Contents

Saratoga Investment Corp. Consolidated Schedule of Investments February 28, 2019  Company

Industry

Investment Interest Rate/Maturity

Original
Acquisition Date

Principal/Number of Shares


Cost


FairValue (c)


% ofNet AssetsNon-control/Non-affiliate investments169.5% (b)Apex Holdings Software Technologies, LLC

Business Services

First Lien Term Loan(3M USD LIBOR+8.00%), 10.62% Cash, 9/21/2021

9/21/2016

$
18,000,000


$
17,922,851


$
18,000,000



10.0%Apex Holdings Software Technologies, LLC

Business Services

Delayed Draw Term Loan (3M USD LIBOR+8.00%), 10.62% Cash, 9/21/2021

10/1/2018

$
1,000,000



992,183



1,000,000



0.6%Avionte Holdings, LLC (h)

Business Services

Class A Units

1/8/2014


100,000



100,000



635,781



0.4%CLEO Communications Holding, LLC

Business Services

First Lien Term Loan(3M USD LIBOR+8.00%), 10.62% Cash/2.00% PIK, 3/31/2022

3/31/2017

$
13,514,320



13,437,153



13,514,320



7.5%CLEO Communications Holding, LLC

Business Services

Delayed Draw Term Loan(3M USD LIBOR+8.00%), 10.62% Cash/2.00% PIK, 3/31/2022

3/31/2017

$
12,142,015



12,040,280



12,142,015



6.7%Destiny Solutions Inc. (a)

Business Services

First Lien Term Loan(3M USD LIBOR+7.00%), 9.62% Cash, 5/16/2023

5/16/2018

$
8,500,000



8,426,441



8,489,800



4.7%Destiny Solutions Inc. (a), (j)

Business Services

Delayed Draw Term Loan
(3M USD LIBOR+7.00%), 9.62% Cash, 5/16/2023

5/16/2018

$












0.0%Destiny Solutions Inc. (a), (h), (i)

Business Services

Limited Partner Interests

5/16/2018


999,000



999,000



1,062,440



0.6%Emily Street Enterprises, L.L.C.

Business Services

Senior Secured Note (3M USD LIBOR+8.50%),
11.12% Cash, 1/23/2020

12/28/2012

$
3,300,000



3,299,122



3,314,520



1.8%Emily Street Enterprises, L.L.C. (h)

Business Services

Warrant Membership Interests Expires 12/28/2022

12/28/2012


49,318



400,000



505,509



0.3%Erwin, Inc. (d)

Business Services

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

2/29/2016

$
15,888,102



15,796,316



15,888,102



8.8%FMG Suite Holdings, LLC (d)

Business Services

Second Lien Term Loan(1M USD LIBOR+8.00%), 10.49% Cash, 11/16/2023

5/16/2018

$
23,000,000



22,844,123



23,000,000



12.7%GDS Holdings US, LLC (d)

Business Services

First Lien Term Loan(3M USD LIBOR+7.00%), 9.62% Cash, 8/23/2023

8/23/2018

$
7,500,000



7,430,649



7,495,500



4.0%GDS Holdings US, LLC (j)

Business Services

Delayed Draw Term Loan (3M USD
LIBOR+7.00%), 9.62% Cash, 8/23/2023

8/23/2018

$












0.0%GDS Software Holdings, LLC (h)

Business Services

Common Stock Class A Units

8/23/2018


250,000



250,000



277,139



0.2%Identity Automation Systems (h)

Business Services

Common Stock Class A Units

8/25/2014


232,616



232,616



629,555



0.3%Identity Automation Systems (d)

Business Services

First Lien Term Loan(3M USD LIBOR+9.00%), 11.62% Cash, 3/31/2021

8/25/2014

$
24,100,000



23,991,294



24,100,000



13.3%Knowland Group, LLC

Business Services

Second Lien Term Loan(3M USD LIBOR+8.00%), 10.62% Cash, 5/9/2024

11/9/2018

$
15,000,000



15,000,000



15,000,000



8.3%Microsystems Company

Business Services

Second Lien Term Loan(3M USD LIBOR+8.25%), 10.87% Cash, 7/1/2022

7/1/2016

$
18,000,000



17,889,554



17,881,200



9.9%National Waste Partners (d)

Business Services

Second Lien Term Loan10.00% Cash, 2/13/2022

2/13/2017

$
9,000,000



8,942,155



8,864,100



4.9%Omatic Software, LLC

Business Services

First Lien Term Loan (3M USD LIBOR+8.00%), 10.62% Cash, 5/29/2023

5/29/2018

$
5,500,000



5,451,758



5,537,400



3.1%Omatic Software, LLC (j)

Business Services

Delayed Draw Term Loan(3M
USD LIBOR+8.00%), 10.62% Cash, 5/29/2023

5/29/2018

$












0.0%Passageways, Inc.

Business Services

First Lien Term Loan(3M USD LIBOR+7.75%), 10.37% Cash, 7/5/2023

7/5/2018

$
5,000,000



4,955,204



5,063,500



2.8%Passageways, Inc. (h)

Business Services

Series A Preferred Stock

7/5/2018


2,027,205



1,000,000



1,339,705



0.7%Vector Controls Holding Co., LLC (d)

Business Services

First Lien Term Loan11.50% (9.75% Cash/1.75% PIK), 3/6/2022

3/6/2013

$
9,311,956



9,310,703



9,371,929



5.2%Vector Controls Holding Co., LLC (h)

Business Services

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

5/31/2015


343







2,210,149



1.2%Total Business Services






190,711,402



195,322,664



108.0%Targus Holdings, Inc. (h)

Consumer Products

Common Stock

12/31/2009


210,456



1,713,605



505,094



0.3%Total Consumer Products






1,713,605



505,094



0.3%My Alarm Center, LLC (k)

Consumer Services

Preferred Equity Class A Units 8.00% PIK

7/14/2017


2,227



2,357,879



1,112,543



0.6%My Alarm Center, LLC (h)

Consumer Services

Preferred Equity Class B Units

7/14/2017


1,797



1,796,880







0.0%My Alarm Center, LLC

Consumer Services

Preferred Equity Class Z Units 25.00% PIK

9/12/2018


676



655,987



2,053,514



1.1%My Alarm Center, LLC (h)

Consumer Services

Common Stock

7/14/2017


96,224











0.0%Total Consumer Services






4,810,746



3,166,057



1.7%C2 Educational Systems (d)

Education

First Lien Term Loan(3M USD LIBOR+7.00%), 9.62% Cash, 5/31/2020

5/31/2017

$
16,000,000



15,929,485



16,032,000



8.9%Kev Software Inc. (a)

Education

First Lien Term Loan(1M USD LIBOR+8.63%), 11.12% Cash, 9/13/2023

9/13/2018

$
21,446,929



21,273,211



21,438,351



11.9%M/C Acquisition Corp., L.L.C. (h)

Education

Class A Common Stock

6/22/2009


544,761



30,241







0.0%M/C Acquisition Corp., L.L.C. (k)

Education

First Lien Term Loan1.00% Cash, 3/31/2020

8/10/2004

$
2,315,090



1,189,177



6,260



0.0%Texas Teachers of Tomorrow, LLC (h), (i)

Education

Common Stock

12/2/2015


750,000



750,000



792,165



0.4%Texas Teachers of Tomorrow, LLC

Education

Second Lien Term Loan(3M USD LIBOR+9.75%), 12.37% Cash, 6/2/2021

12/2/2015

$
10,000,000



9,952,251



9,807,000



5.4%Total Education








49,124,365



48,075,776



26.6%TMAC Acquisition Co., LLC (k)

Food and Beverage

Unsecured Term Loan8.00% PIK, 9/01/2023

3/1/2018

$
2,216,427



2,216,427



2,100,286



1.2%Total Food and Beverage






2,216,427



2,100,286



1.2%Axiom Parent Holdings, LLC (h)

Healthcare Services

Common Stock Class A Units

6/19/2018


400,000



400,000



402,990



0.2%Axiom Purchaser, Inc. (d)

Healthcare Services

First Lien Term Loan(3M USD LIBOR+6.00%), 8.62% Cash, 6/19/2023

6/19/2018

$
10,000,000



9,923,962



10,020,000



5.5%Axiom Purchaser, Inc. (j)

Healthcare Services

Delayed Draw Term Loan (3M USD
LIBOR+6.00%), 8.62% Cash, 6/19/2023

6/19/2018

$












0.0%Censis Technologies, Inc.

Healthcare Services

First Lien Term Loan B (1M USD LIBOR+8.30%), 10.79% Cash, 9/27/2023

7/25/2014

$
19,950,000



19,877,861



19,991,895



11.1%Censis Technologies, Inc. (h), (i)

Healthcare Services

Limited Partner Interests

7/25/2014


999



999,000



2,387,705



1.3%ComForCare Health Care

Healthcare Services

First Lien Term Loan(3M USD LIBOR+7.50%), 10.12% Cash, 1/31/2022

1/31/2017

$
15,000,000



14,898,535



15,096,000



8.3%Ohio Medical, LLC (h)

Healthcare Services

Common Stock

1/15/2016


5,000



500,000



208,250



0.1%Ohio Medical, LLC

Healthcare Services

Senior Subordinated Note 12.00% Cash, 7/15/2021

1/15/2016

$
7,300,000



7,263,114



6,735,710



3.8%Roscoe Medical, Inc. (h)

Healthcare Services

Common Stock

3/26/2014


5,081



508,077







0.0%Roscoe Medical, Inc. (k)

Healthcare Services

Second Lien Term Loan11.25% Cash, 3/28/2021

3/26/2014

$
4,200,000



4,189,094



2,499,000



1.4%Total Healthcare Services






58,559,643



57,341,550



31.7%Sub Total
Non-control/Non-affiliate investments










307,136,188



306,511,427



169.5%Affiliate investments6.3% (b)GreyHeller LLC (f)

Business Services

First Lien Term Loan(3M USD LIBOR+11.00%), 13.62% Cash, 11/16/2021

11/17/2016

$
7,000,000



6,956,976



7,140,000



4.0%GreyHeller LLC(f), (h)

Business Services

Series A Preferred Units

11/17/2016


850,000



850,000



1,496,169



0.8%Total Business Services






7,806,976



8,636,169



4.8%Elyria Foundry Company, L.L.C. (f), (h)

Metals

Common Stock

7/30/2010


60,000



9,685,028



1,804,200



1.0%Elyria Foundry Company, L.L.C. (d), (f)

Metals

Second Lien Term Loan15.00% PIK, 8/10/2022

7/30/2010

$
1,022,712



1,022,712



1,022,712



0.5%Total Metals








10,707,740



2,826,912



1.5%Sub Total Affiliate investments












18,514,716



11,463,081



6.3% See accompanying notes to consolidated financial statements.  F-8




---

##### Table of Contents

Company

Industry

Investment Interest Rate/Maturity

OriginalAcquisition Date

Principal/Number of Shares


Cost


FairValue (c)


% ofNet AssetsControl investments46.5% (b)Easy Ice, LLC (g)

Business Services

Preferred Equity 10.00% PIK

2/3/2017


5,080,000


$
9,683,612


$
13,357,444



7.4
%Easy Ice, LLC (d), (g)

Business Services

Second Lien Term Loan 7.03% Cash/5.97% PIK, 2/28/2023

3/29/2013

$
21,184,063



21,126,021



21,268,799



11.8
%Easy Ice Masters, LLC (d), (g)

Business Services

Second Lien Term Loan 7.03% Cash/5.97% PIK, 2/28/2023

10/31/2018

$
3,804,244



3,768,025



3,819,461



2.1
%Netreo Holdings, LLC (g)

Business Services

First Lien Term Loan (3M USD LIBOR +6.25%), 9.00% Cash/2.00% PIK, 7/3/2023

7/3/2018

$
5,067,057



5,021,133



5,092,899



2.8
%Netreo Holdings, LLC (g), (h)

Business Services

Common Stock Class A Units

7/3/2018


3,150,000



3,150,000



5,179,101



2.9
%Total Business Services






42,748,791



48,717,704



27.0
%Saratoga Investment Corp. CLO 2013-1, Ltd. (a), (e), (g)

Structured Finance Securities

Other/Structured Finance Securities 16.67%, 1/20/2030

1/22/2008

$
69,500,000



23,516,398



25,393,508



14.0
%Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-R-2 Note (a), (g)

Structured Finance Securities

Other/Structured Finance Securities (3M USD LIBOR+8.75%), 11.37%, 1/20/2030

12/14/2018

$
2,500,000



2,500,000



2,483,500



1.4
%Saratoga Investment Corp. CLO 2013-1, Ltd. Class G-R-2 Note (a), (g)

Structured Finance Securities

Other/Structured Finance Securities (3M USD LIBOR+10.00%), 12.62%, 1/20/2030

12/14/2018

$
7,500,000



7,500,000



7,450,500



4.1
%Total Structured Finance Securities






33,516,398



35,327,508



19.5
%Sub Total Control investments












76,265,189



84,045,212



46.5
%TOTAL INVESTMENTS222.3% (b)











$
401,916,093


$
402,019,720



222.3
%Number ofShares


Cost


Fair Value


% ofNet AssetsCash and cash equivalents and cash and cash equivalents, reserve accounts34.3%
(b)U.S. Bank Money Market (l)








62,094,394


$
62,094,394


$
62,094,394



34.3
%Total cash and cash equivalents and cash and cash equivalents, reserve
accounts




62,094,394


$
62,094,394


$
62,094,394



34.3
%  (a)
Represents a non-qualifying investment as defined under
Section 55(a) of the Investment Company Act of 1940, as amended. As of February 28, 2019, non-qualifying assets represent 16.5% of the Companys portfolio at fair value. As a BDC, the Company can
only invest 30% of its portfolio in non-qualifying assets. (b)
Percentages are based on net assets of $180,875,187 as of February 28, 2019. (c)
Because there is no readily available market value for these investments, the fair values of these investments
were determined using significant unobservable inputs and approved in good faith by our board of directors. These investments have been included as Level 3 in the Fair Value Hierarchy (see Note 3 to the consolidated financial statements). (d)
These securities are either fully or partially pledged as collateral under a senior secured revolving credit
facility (see Note 7 to the consolidated financial statements). (e)
This investment does not have a stated interest rate that is payable thereon. As a result, the 16.67% interest
rate in the table above represents the effective interest rate currently earned on the investment cost and is based on the current cash interest and other income generated by the investment. (f)
As defined in the Investment Company Act, this portfolio company is an Affiliate as we own between 5.0% and
25.0% of the voting securities. Transactions during the year ended February 28, 2019 in which the issuer was an Affiliate are as follows:  Company

Purchases


Sales


Total Interest fromInvestments


Management andIncentiveFee Income


Net RealizedGain (Loss) fromInvestments


Net Change inUnrealizedAppreciation(Depreciation)GreyHeller LLC

$



$



$
963,289


$



$



$
776,012Elyria Foundry Company, L.L.C.










150,284











(1,629,600
)Total

$



$



$
1,113,573


$



$



$
(853,588
)  (g)
As defined in the Investment Company Act, we Control this portfolio company because we own more than
25% of the portfolio companys outstanding voting securities. Transactions during the year ended February 28, 2019 in which the issuer was both an Affiliate and a portfolio company that we Control are as follows:   Company

Purchases


Sales


Total Interest fromInvestments


Management andIncentiveFee Income


Net RealizedGain (Loss) fromInvestments


Net Change inUnrealizedAppreciation(Depreciation)Easy Ice, LLC

$
1,684,448


$



$
3,424,369


$



$



$
1,720,004Easy Ice Masters, LLC


3,629,682







161,468











51,436Netreo Holdings, LLC


8,100,000







374,843











2,100,867Saratoga Investment Corp. CLO 2013-1, Ltd.


14,268,609



(48,083
)


2,922,372



2,355,412







(701,722
)Saratoga Investment Corp. CLO 2013-1, Ltd. Class F
Note






(4,500,000
)


412,069











900Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-R-2 Notes


2,500,000







61,761











(16,500
)Saratoga Investment Corp. CLO 2013-1, Ltd. Class G-R-2 Notes


7,500,000







205,333











(49,500
)Saratoga Investment Corp. CLO 2013-1 Warehouse,
Ltd.


20,000,000



(20,000,000
)


511,731











Total

$
57,682,739


$
(24,548,083
)

$
8,073,946


$
2,355,412


$



$
3,105,485  (h)
Non-income producing at February 28, 2019. (i)
Includes securities issued by an affiliate of the Company. (j)
All or a portion of this investment has an unfunded commitment as of February 28, 2019. (see Note 8 to the
consolidated financial statements). (k)
As of February 28, 2019, the investment was on non-accrual status. The
fair value of these investments was approximately $5.7 million, which represented 1.4% of the Companys portfolio (see Note 2 to the consolidated financial statements). (l)
Included within cash and cash equivalents and cash and cash equivalents, reserve accounts in the Companys
consolidated statements of assets and liabilities as of February 28, 2019. LIBORLondon Interbank Offered Rate 1M USD LIBORThe 1 month USD LIBOR rate as of February 28, 2019 was 2.49%. 3M USD LIBORThe 3 month USD LIBOR rate as of February 28, 2019 was 2.62%. PIKPayment-in-Kind (see Note 2 to the consolidated financial statements). See accompanying notes to consolidated financial statements.  F-9




---

##### Table of Contents

Saratoga Investment Corp. Consolidated Schedule of Investments February 28, 2018  Company

Industry

Investment Interest Rate/Maturity

OriginalAcquisitionDate


Principal/Number ofShares


Cost


Fair Value (c)


% ofNet AssetsNon-control/Non-affiliate 
investments199.1% (b)Tile Redi Holdings, LLC (d)

Building Products

First Lien Term Loan (3M USD LIBOR+10.00%), 12.02% Cash, 6/16/2022


6/16/2017


$
15,000,000


$
14,865,903


$
14,850,000



10.3
%Total Building Products







14,865,903



14,850,000



10.3
%Apex Holdings Software Technologies, LLC

Business Services

First Lien Term Loan (3M USD LIBOR+8.00%), 10.02% Cash, 9/21/2021


9/21/2016


$
18,000,000



17,886,188



18,000,000



12.5
%Avionte Holdings, LLC (h)

Business Services

Common Stock


1/8/2014



100,000



100,000



449,685



0.3
%CLEO Communications Holding, LLC

Business Services

First Lien Term Loan (3M USD LIBOR+8.00%), 10.02% Cash/2.00% PIK, 3/31/2022


3/31/2017


$
13,243,267



13,128,695



13,243,267



9.2
%CLEO Communications Holding, LLC (j)

Business Services

Delayed Draw Term Loan (3M USD LIBOR+8.00%), 10.02% Cash/2.00% PIK, 3/31/2022


3/31/2017


$
3,026,732



2,999,896



3,026,732



2.1
%Emily Street Enterprises, L.L.C.

Business Services

Senior Secured Note (3M USD LIBOR+8.50%), 10.52% Cash, 1/23/2020


12/28/2012


$
3,300,000



3,298,099



3,316,500



2.3
%Emily Street Enterprises, L.L.C. (h)

Business Services

Warrant Membership Interests Expires 12/28/2022


12/28/2012



49,318



400,000



468,521



0.3
%Erwin, Inc.

Business Services

Second Lien Term Loan (3M USD LIBOR+11.50%), 13.52% Cash/1.00% PIK, 8/28/2021


2/29/2016


$
13,245,008



13,153,253



13,245,008



9.2
%FranConnect LLC (d)

Business Services

First Lien Term Loan (3M USD LIBOR+7.00%), 9.02% Cash, 5/26/2022


5/26/2017


$
14,500,000



14,435,057



14,574,035



10.1
%Help/Systems Holdings, Inc.(Help/Systems, LLC)

Business Services

First Lien Term Loan (3M USD LIBOR+4.50%), 6.52% Cash, 10/8/2021


10/26/2015


$
5,376,934



5,294,119



5,376,934



3.8
%Help/Systems Holdings, Inc.(Help/Systems, LLC)

Business Services

Second Lien Term Loan (3M USD LIBOR+9.50%), 11.52% Cash, 10/8/2022


10/26/2015


$
3,000,000



2,933,255



3,000,000



2.1
%Identity Automation Systems (h)

Business Services

Common Stock Class A Units


8/25/2014



232,616



232,616



673,377



0.5
%Identity Automation Systems

Business Services

First Lien Term Loan (3M USD LIBOR+9.50%), 11.52% Cash, 3/31/2021


8/25/2014


$
17,950,000



17,849,294



17,950,000



12.5
%Knowland Technology Holdings, L.L.C.

Business Services

First Lien Term Loan (3M USD LIBOR+7.75%), 9.77% Cash, 7/20/2021


11/29/2012


$
22,288,730



22,214,703



22,288,731



15.5
%Microsystems Company

Business Services

Second Lien Term Loan (3M USD LIBOR+8.25%), 10.27% Cash, 7/1/2022


7/1/2016


$
18,000,000



17,866,185



18,014,400



12.5
%National Waste Partners (d)

Business Services

Second Lien Term Loan 10.00% Cash, 2/13/2022


2/13/2017


$
9,000,000



8,925,728



9,000,000



6.3
%Vector Controls Holding Co., LLC (d)

Business Services

First Lien Term Loan 13.75% (12.00% Cash/1.75% PIK), 3/6/2022


3/6/2013


$
11,248,990



11,246,851



11,248,991



7.8
%Vector Controls Holding Co., LLC (h)

Business Services

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


5/31/2015



343







1,064,145



0.8
%Total Business Services







151,963,939



154,940,326



107.8
%Targus Holdings, Inc. (h)

Consumer Products

Common Stock


12/31/2009



210,456



1,791,242



433,927



0.3
%Total Consumer Products







1,791,242



433,927



0.3
%My Alarm Center, LLC

Consumer Services

Preferred Equity Class A Units 8.00% PIK


7/14/2017



2,227



2,311,649



2,340,154



1.6
%My Alarm Center, LLC (h)

Consumer Services

Preferred Equity Class B Units


7/14/2017



1,797



1,796,880



1,481,939



1.0
%My Alarm Center, LLC (h)

Consumer Services

Common Stock


7/14/2017



96,224











0.0
%PrePaid Legal Services, Inc. (d)

Consumer Services

First Lien Term Loan (1M USD LIBOR+5.25%), 6.92% Cash, 7/1/2019


7/10/2013


$
2,377,472



2,370,104



2,377,472



1.7
%PrePaid Legal Services, Inc. (d)

Consumer Services

Second Lien Term Loan (1M USD LIBOR+9.00%), 10.67% Cash, 7/1/2020


7/14/2011


$
11,000,000



10,974,817



11,000,000



7.7
%Total Consumer Services







17,453,450



17,199,565



12.0
%C2 Educational Systems (d)

Education

First Lien Term Loan (3M USD LIBOR+8.50%), 10.52% Cash, 5/31/2020


5/31/2017


$
16,000,000



15,875,823



15,977,118



11.1
%M/C Acquisition Corp., L.L.C. (h)

Education

Class A Common Stock


6/22/2009



544,761



30,241







0.0
%M/C Acquisition Corp., L.L.C. (h), (l)

Education

First Lien Term Loan 1.00% Cash, 3/31/2018


8/10/2004


$
2,318,121



1,190,838



8,058



0.0
%Texas Teachers of Tomorrow, LLC (h), (i)

Education

Common Stock


12/2/2015



750,000



750,000



792,681



0.6
%Texas Teachers of Tomorrow, LLC

Education

Second Lien Term Loan (3M USD LIBOR+9.75%), 11.77% Cash, 6/2/2021


12/2/2015


$
10,000,000



9,934,492



10,000,000



7.0
%Total Education







27,781,394



26,777,857



18.7
%TM Restaurant Group L.L.C. (h), (l)

Food and Beverage

First Lien Term Loan 14.50% PIK, 7/17/2017


7/17/2012


$
9,358,694



9,358,694



9,133,149



6.3
%TM Restaurant Group L.L.C. (h), (l)

Food and Beverage

Revolver 14.50% PIK, 7/17/2017


5/1/2017


$
398,645



398,644



389,037



0.3
%Total Food and Beverage







9,757,338



9,522,186



6.6
%Censis Technologies, Inc.

Healthcare Services

First Lien Term Loan B (1M USD LIBOR+10.00%), 11.67% Cash, 7/24/2019


7/25/2014


$
10,350,000



10,279,781



10,350,000



7.2
%Censis Technologies, Inc. (h), (i)

Healthcare Services

Limited Partner Interests


7/25/2014



999



999,000



1,578,840



1.1
%ComForCare Health Care

Healthcare Services

First Lien Term Loan (3M USD LIBOR+8.50%), 10.52% Cash, 1/31/2022


1/31/2017


$
15,000,000



14,869,275



14,955,000



10.4
%Ohio Medical, LLC (h)

Healthcare Services

Common Stock


1/15/2016



5,000



500,000



238,069



0.2
%Ohio Medical, LLC

Healthcare Services

Senior Subordinated Note12.00% Cash, 7/15/2021


1/15/2016


$
7,300,000



7,250,224



6,635,570



4.6
%Pathway Partners Vet Management Company LLC

Healthcare Services

Second Lien Term Loan (1M USD LIBOR+8.00%), 9.67% Cash, 10/10/2025


10/20/2017


$
2,083,333



2,063,158



2,062,500



1.4
%Pathway Partners Vet Management Company LLC (k)

Healthcare Services

Delayed Draw Term Loan(1M USD LIBOR+8.00%), 9.67% Cash, 10/10/2025


10/20/2017


$












0.0
%Roscoe Medical, Inc. (h)

Healthcare Services

Common Stock


3/26/2014



5,081



508,077



352,097



0.3
%Roscoe Medical, Inc.

Healthcare Services

Second Lien Term Loan 11.25% Cash, 9/26/2019


3/26/2014


$
4,200,000



4,171,558



3,900,960



2.7
%Zest Holdings, LLC (d)

Healthcare Services

Syndicated Loan (1M USD LIBOR+4.25%), 5.92% Cash, 8/16/2023


9/10/2013


$
4,105,884



4,033,095



4,105,884



2.9
%Total Healthcare Services







44,674,168



44,178,920



30.8
%HMN Holdco, LLC

Media

First Lien Term Loan 12.00% Cash, 7/8/2021


5/16/2014


$
8,028,824



7,981,971



8,249,617



5.7
%HMN Holdco, LLC

Media

Delayed Draw First Lien Term Loan 12.00% Cash, 7/8/2021


5/16/2014


$
4,800,000



4,764,872



4,938,000



3.4
%HMN Holdco, LLC (h)

Media

Class A Series, Expires 1/16/2025


1/16/2015



4,264



61,647



274,431



0.2
%HMN Holdco, LLC (h)

Media

Class A Warrant, Expires 1/16/2025


1/16/2015



30,320



438,353



1,565,118



1.1
%HMN Holdco, LLC (h)

Media

Warrants to Purchase Limited Liability Company Interests (Common), Expires 5/16/2024


1/16/2015



57,872







2,696,257



1.9
%HMN Holdco, LLC (h)

Media

Warrants to Purchase Limited Liability Company Interests (Preferred), Expires 5/16/2024


1/16/2015



8,139







435,518



0.3
%Total Media







13,246,843



18,158,941



12.6
%Sub Total
Non-control/Non-affiliate investments












281,534,277



286,061,722



199.1
%  F-10




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##### Table of Contents

Company

Industry

Investment Interest Rate/Maturity

OriginalAcquisitionDate


Principal/Number ofShares


Cost


Fair Value (c)


% ofNet AssetsAffiliate investments8.5% (b)GreyHeller LLC (f)

Business Services

First Lien Term Loan (3M USD LIBOR+11.00%), 13.02% Cash, 11/16/2021


11/17/2016


$
7,000,000



6,944,319



7,106,501



5.0
%GreyHeller LLC (f), (k)

Business Services

Delayed Draw Term Loan B (3M USD LIBOR+11.00%), 13.02% Cash, 11/16/2021


11/17/2016


$












0.0
%GreyHeller LLC (f), (h)

Business Services

Series A Preferred Units


11/17/2016



850,000



850,000



740,999



0.5
%Total Business Services







7,794,319



7,847,500



5.5
%Elyria Foundry Company, L.L.C. (f), (h)

Metals

Common Stock


7/30/2010



60,000



9,685,028



3,433,800



2.4
%Elyria Foundry Company, L.L.C. (d), (f)

Metals

Second Lien Term Loan15.00% PIK, 8/10/2022


7/30/2010


$
879,264



879,264



879,264



0.6
%Total Metals







10,564,292



4,313,064



3.0
%Sub Total Affiliate investments














18,358,611



12,160,564



8.5
%Control investments30.9% (b)Easy Ice, LLC (g)

Business Services

Preferred Equity10.00% PIK


2/3/2017



5,080,000



8,761,000



10,760,435



7.5
%Easy Ice, LLC (d), (g)

Business Services

Second Lien Term Loan(3M USD LIBOR+11.00%), 5.44% Cash/7.56% PIK, 2/28/2023


3/29/2013


$
17,337,528



17,240,357



17,337,528



12.0
%Total Business Services







26,001,357



28,097,963



19.5
%Saratoga Investment Corp. CLO 2013-1,Ltd. (a), (e),
(g)

Structured Finance Securities

Other/Structured Finance Securities32.21%, 10/20/2025


1/22/2008


$
30,000,000



9,295,872



11,874,704



8.3
%Saratoga Investment Corp. Class F Note (a), (g)

Structured Finance Securities

Other/Structured Finance Securities(3M USD LIBOR+8.50%), 10.52%, 10/20/2025


10/17/2013


$
4,500,000



4,500,000



4,499,100



3.1
%Total Structured Finance Securities



13,795,872



16,373,804



11.4
%Sub Total Control investments














39,797,229



44,471,767



30.9
%TOTAL INVESTMENTS238.5% (b)













$
339,690,117


$
342,694,053



238.5
%Number ofShares



Cost



Fair Value



% ofNet AssetsCash and cash equivalents and cash and cash equivalents, reserve accounts9.6%
(b)U.S. Bank Money Market (m)








13,777,491


$
13,777,491


$
13,777,491



9.6
%Total cash and cash equivalents and cash and cash equivalents, reserve
accounts






13,777,491


$
13,777,491


$
13,777,491



9.6
%  (a)
Represents a non-qualifying investment as defined under
Section 55(a) of the Investment Company Act of 1940, as amended. Non-qualifying assets represent 4.8% of the Companys portfolio at fair value. As a BDC, the Company can only invest 30% of its
portfolio in non-qualifying assets. (b)
Percentages are based on net assets of $143,691,367 as of February 28, 2018. (c)
Because there is no readily available market value for these investments, the fair values of these investments
were determined using significant unobservable inputs and approved in good faith by our board of directors. These investments have been included as Level 3 in the Fair Value Hierarchy (see Note 3 to the consolidated financial statements). (d)
These securities are either fully or partially pledged as collateral under a senior secured revolving credit
facility (see Note 7 to the consolidated financial statements). (e)
This investment does not have a stated interest rate that is payable thereon. As a result, the 32.21% interest
rate in the table above represents the effective interest rate currently earned on the investment cost and is based on the current cash interest and other income generated by the investment. (f)
As defined in the Investment Company Act, this portfolio company is an Affiliate as we own between 5.0% and
25.0% of the voting securities. Transactions during the year ended February 28, 2018 in which the issuer was an Affiliate are as follows:  Company

Purchases


Sales


Total Interest fromInvestments


Management andIncentiveFee Income


Net RealizedGain (Loss) fromInvestments


Net Change inUnrealizedAppreciationGreyHeller LLC

$



$



$
886,948


$



$



$
56,322Elyria Foundry Company, L.L.C.


800,000







80,460











762,001Total

$
800,000


$



$
967,408


$



$



$
818,323  (g)
As defined in the Investment Company Act, we Control this portfolio company because we own more than
25% of the portfolio companys outstanding voting securities. Transactions during the year ended February 28, 2018 in which the issuer was both an Affiliate and a portfolio company that we Control are as follows:  Company

Purchases


Sales


Total Interest fromInvestments


Management andIncentiveFee Income


Net RealizedGain fromInvestments


Net Change inUnrealizedAppreciation(Depreciation)Easy Ice, LLC

$



$
(10,180,000)


$
3,656,285


$



$
166


$
1,880,768Saratoga Investment Corp. CLO 2013-1, Ltd.










2,429,680



2,100,685







1,947,957Saratoga Investment Corp. Class F Note










423,903











(450)Total

$



$
(10,180,000)


$
6,509,868


$
2,100,685


$
166


$
3,828,275  (h)
Non-income producing at February 28, 2018. (i)
Includes securities issued by an affiliate of the company. (j)
The investment has an unfunded commitment as of February 28, 2018 (see Note 8 to the consolidated financial
statements). (k)
The entire commitment was unfunded at February 28, 2018. As such, no interest is being earned on this
investment (see Note 8 to the consolidated financial statements). (l)
At February 28, 2018, the investment was on non-accrual status. The
fair value of these investments was approximately $9.5 million, which represented 2.8% of the Companys portfolio (see Note 2 to the consolidated financial statements). (m)
Included within cash and cash equivalents and cash and cash equivalents, reserve accounts in the Companys
consolidated statements of assets and liabilities as of February 28, 2018. LIBORLondon Interbank Offered Rate 1M USD LIBORThe 1 month USD LIBOR rate as of February 28, 2018 was 1.67%. 3M USD LIBORThe 3 month USD LIBOR rate as of February 28, 2018 was 2.02%. PIKPayment-in-Kind (see Note 2 to the consolidated financial statements). See accompanying notes to consolidated financial statements.  F-11




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##### Table of Contents

SARATOGA INVESTMENT CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS February 28, 2019 Note 1.
Organization Saratoga Investment Corp. (the Company, we, our and us) is a non-diversified closed end management investment company incorporated in Maryland that has elected to be treated and is regulated as a business development company (BDC) under the Investment Company Act
of 1940 (the 1940 Act). The Company commenced operations on March 23, 2007 as GSC Investment Corp. and completed the initial public offering (IPO) on March 28, 2007. The Company has elected to be treated as a
regulated investment company (RIC) under subchapter M of the Internal Revenue Code (the Code). The Company expects to continue to qualify and to elect to be treated, for tax purposes, as a RIC. The Companys investment
objective is to generate current income and, to a lesser extent, capital appreciation from its investments. GSC Investment, LLC (the
LLC) was organized in May 2006 as a Maryland limited liability company. As of February 28, 2007, the LLC had not yet commenced its operations and investment activities. On March 21, 2007, the Company was incorporated and concurrently therewith the LLC was merged with and into the Company, with the Company
as the surviving entity, in accordance with the procedure for such merger in the LLCs limited liability company agreement and Maryland law. In connection with such merger, each outstanding limited liability company interest of the LLC was
converted into a share of common stock of the Company. On July 30, 2010, the Company changed its name from GSC Investment
Corp. to Saratoga Investment Corp. in connection with the consummation of a recapitalization transaction. The Company
is externally managed and advised by the investment adviser, Saratoga Investment Advisors, LLC (the Manager), pursuant to a management agreement (the Management Agreement). Prior to July 30, 2010, the Company was managed
and advised by GSCP (NJ), L.P. The Company has established wholly-owned subsidiaries,
SIA-Avionte, Inc., SIA-Easy Ice, LLC, SIA-GH, Inc., SIA-HT, Inc., SIA-MAC, Inc., SIA-TT, Inc. and SIA-Vector, Inc., which are structured as Delaware entities, or tax blockers (Taxable
Blockers), to hold equity or equity-like investments in portfolio companies organized as limited liability companies, or LLCs (or other forms of pass through entities). Tax blockers are consolidated for accounting purposes but are not
consolidated for income tax purposes and may incur income tax expense as a result of their ownership of portfolio companies. On
March 28, 2012, our wholly-owned subsidiary, Saratoga Investment Corp. SBIC, LP (SBIC LP), received a Small Business Investment Company (SBIC) license from the Small Business Administration (SBA). On September 27, 2018, the SBA issued a green light letter inviting us to file a formal license application for a second SBIC
license. If approved, the additional SBIC license would provide the Company with an incremental source of long-term capital by permitting us to issue, subject to SBA approval, up to $175.0 million of additional
SBA-guaranteed debentures in addition to the $150.0 million already approved under the Companys first license. Receipt of a green light letter from the SBA does not assure an applicant that the SBA
will ultimately issue an SBIC license and the Company has received no assurance or indication from the SBA that it will receive an additional SBIC license, or of the timeframe in which it would receive an additional license, should one ultimately be
granted. Note 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying
consolidated financial statements have been prepared on the accrual basis of accounting in conformity with U.S. generally accepted accounting principles (U.S. GAAP), are stated in U.S. Dollars and include the accounts of the Company and
its special purpose financing subsidiaries, Saratoga Investment Funding, LLC (previously known as GSC Investment Funding LLC), SBIC LP, SIA-Avionte, Inc., SIA-Easy Ice,
LLC, SIA-GH, Inc., SIA-HT, Inc., SIA-MAC, Inc., SIA-TT, Inc. and SIA-Vector, Inc. All intercompany accounts and transactions have been eliminated in consolidation. All references made to the Company, we, and us herein include Saratoga
Investment Corp. and its consolidated subsidiaries, except as stated otherwise.  F-12




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##### Table of Contents

The Company and SBIC LP are both considered to be investment companies for financial
reporting purposes and have applied the guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 946, Financial Services  Investment Companies
(ASC 946). There have been no changes to the Company or SBIC LPs status as investment companies during the year ended February 28, 2019. Use of Estimates in the Preparation of Financial Statements The preparation of the accompanying consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and income, gains (losses) and expenses during the period reported. Actual results
could differ materially from those estimates. Cash and Cash Equivalents Cash and cash equivalents include short-term, liquid investments in a money market fund. Cash and cash equivalents are carried at cost which
approximates fair value. Per section 12(d)(1)(A) of the 1940 Act, the Company may not invest in another registered investment company such as, a money market fund if such investment would cause the Company to exceed any of the following limitations:  

we were to own more than 3.0% of the total outstanding voting stock of the money market fund;  

we were to hold securities in the money market fund having an aggregate value in excess of 5.0% of the value of
our total assets, except as allowed pursuant to Rule 12d1-1 of Section 12(d)(1) of the 1940 Act which is designed to permit cash sweep arrangements rather than investments directly in
short-term instruments; or  

we were to hold securities in money market funds and other registered investment companies and BDCs having an
aggregate value in excess of 10.0% of the value of our total assets. As of February 28, 2019, the Company did not
exceed any of these limitations. Cash and Cash Equivalents, Reserve Accounts Cash and cash equivalents, reserve accounts include amounts held in designated bank accounts in the form of cash and short- term liquid
investments in money market funds, representing payments received on secured investments or other reserved amounts associated with the Companys $45.0 million senior secured revolving credit facility with Madison Capital Funding LLC. The
Company is required to use these amounts to pay interest expense, reduce borrowings, or pay other amounts in accordance with the terms of the senior secured revolving credit facility. In addition, cash and cash equivalents, reserve accounts also include amounts held in designated bank accounts, in the form of cash and
short-term liquid investments in money market funds, within our wholly-owned subsidiary, SBIC LP. The statements of cash flows explain
the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash and restricted cash equivalents when reconciling the
beginning-of-period and end-of-period total amounts.  F-13




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##### Table of Contents

The following table provides a reconciliation of cash and cash equivalents and cash and cash
equivalents, reserve accounts reported within the consolidated statements of assets and liabilities that sum to the total of the same such amounts shown in the consolidated statements of cash flows:  February 28,2019


February 28,2018


February 28,2017Cash and cash equivalents

$
30,799,068


$
3,927,579


$
9,306,543Cash and cash equivalents, reserve accounts


31,295,326



9,849,912



12,781,425Total cash and cash equivalents and cash and cash equivalents, reserve accounts

$
62,094,394


$
13,777,491


$
22,087,968 Investment Classification The Company classifies its investments in accordance with the requirements of the 1940 Act. Under the 1940 Act, Control Investments
are defined as investments in companies in which we own more than 25.0% of the voting securities or maintain greater than 50.0% of the board representation. Under the 1940 Act, Affiliated Investments are defined as those non-control investments in companies in which we own between 5.0% and 25.0% of the voting securities. Under the 1940 Act, Non-affiliated Investments are defined as
investments that are neither Control Investments nor Affiliated Investments. Investment Valuation The Company accounts for its investments at fair value in accordance with the FASB ASC Topic 820, Fair Value Measurement(ASC
820). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements.
ASC 820 requires the Company to assume that its investments are to be sold or its liabilities are to be transferred at the 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 our Manager, the audit committee of our board of directors and a third party independent valuation firm. Determinations of fair value may
involve subjective judgments and estimates. The types of factors that may be considered in determining the fair value of our investments include the nature and realizable value of any collateral, the portfolio companys ability to make
payments, market yield trend analysis, the markets in which the portfolio company does business, comparison to publicly traded companies, discounted cash flow and other relevant factors. The Company undertakes a multi-step valuation process each quarter when valuing investments for which market quotations are not readily
available, as described below:  

Each investment is initially valued by the responsible investment professionals of Saratoga Investment Advisors
and preliminary valuation conclusions are documented, reviewed 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. In addition, all our investments are subject to the following valuation process:  

The audit committee of our board of directors reviews and approves each preliminary valuation and our Manager and
independent valuation firm (if applicable) will supplement the preliminary valuation to reflect any comments provided by the audit committee; and  

Our board of directors discusses the valuations and approves the fair value of each investment, in good faith,
based on the input of our Manager, independent valuation firm (to the extent applicable) and the audit committee of our board of directors.  F-14




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##### Table of Contents

The Companys investment in Saratoga Investment Corp. CLO 2013-1, Ltd. (Saratoga CLO) is carried at fair value, which is based on a discounted cash flow model that utilizes prepayment, re-investment and loss assumptions
based on historical experience and projected performance, economic factors, the characteristics of the underlying cash flow, and comparable yields for equity interests in collateralized loan obligation funds similar to Saratoga CLO, when available,
as determined by our Manager and recommended to our board of directors. Specifically, we use Intex cash flow models, or an appropriate substitute, to form the basis for the valuation of our investment in Saratoga CLO. The models use a set of
assumptions including projected default rates, recovery rates, reinvestment rates and prepayment rates in order to arrive at estimated valuations. The assumptions are based on available market data and projections provided by third parties as well
as management estimates. The Company uses the output from the Intex models (i.e., the estimated cash flows) to perform a discounted cash flow analysis on expected future cash flows to determine the valuation for our investment in Saratoga CLO. Because such valuations, and particularly valuations of private investments and private companies, are inherently uncertain, they may
fluctuate over short periods of time and may be based on estimates. The determination of fair value may differ materially from the values that would have been used if a ready market for these investments existed. The Companys net asset value
could be materially affected if the determinations regarding the fair value of our investments were materially higher or lower than the values that we ultimately realize upon the disposal of such investments. Derivative Financial Instruments The
Company accounts for derivative financial instruments in accordance with FASB ASC Topic 815, Derivatives and Hedging(ASC 815). ASC 815 requires recognizing all derivative instruments as either assets or liabilities on the
consolidated statements of assets and liabilities at fair value. The Company values derivative contracts at the closing fair value provided by the counterparty. Changes in the values of derivative contracts are included in the consolidated
statements of operations. Investment Transactions and Income Recognition Purchases and sales of investments and the related realized gains or losses are recorded on a trade-date basis. Interest income, adjusted for
amortization of premium and accretion of discount, is recorded on an accrual basis to the extent that such amounts are expected to be collected. The Company stops accruing interest on its investments when it is determined that interest is no longer
collectible. Discounts and premiums on investments purchased are accreted/amortized 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. At February 28, 2019, certain investments in four portfolio companies, including preferred equity interests, were on non-accrual status with a fair value of approximately $5.7 million, or 1.4% of the fair value of our portfolio. At February 28, 2018, certain investments in two portfolio companies were on non-accrual status with a fair value of approximately $9.5 million, or 2.8% of the fair value of our portfolio. Interest income on our investment in Saratoga CLO is recorded using the effective interest method in accordance with the provisions of ASC
Topic 325, Investments-Other, Beneficial Interests in Securitized Financial Assets, (ASC 325), based on the anticipated yield and the estimated cash flows over the projected life of the investment. Yields are revised when there
are changes in actual or estimated cash flows due to changes in prepayments and/or re-investments, credit losses or asset pricing. Changes in estimated yield are recognized as an adjustment to the estimated
yield over the remaining life of the investment from the date the estimated yield was changed. Adoption of ASC 606 In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers(ASC
606), which supersedes the revenue recognition requirements in Revenue Recognition (ASC 605). In May 2016, ASU 2016-12 amended ASU 2014-09 and deferred
the effective period for annual periods beginning after December 15, 2017.  F-15




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##### Table of Contents

Under the new guidance, the Company recognizes revenue in a way that depicts the transfer of
promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Under this standard, revenue is based on a contract with a determinable
transaction price and distinct performance obligations with probable collectability. Revenues cannot be recognized until the performance obligation(s) are satisfied and control is transferred to the customer. Management has concluded that the
majority of its revenues associated with financial instruments are scoped out of ASC 606, and has concluded that the only significant impact relates to the timing of the recognition of the CLO incentive fee income. The adoption of ASC 606 did not
have an impact on the Companys management fee income or investment income. The Company adopted ASC 606 to all applicable contracts
under the modified retrospective approach using the practical expedient provided for within paragraph 606-10-65-1(f)(4);
therefore, the presentation of prior year periods has not been adjusted. The Company recognized the cumulative effect of initially adopting ASC 606 as an adjustment to the opening balance of components of equity as of March 1, 2018. Incentive Fee Income Incentive fee
income is recognized based on the performance of Saratoga CLO during the period, subject to the achievement of minimum return levels in accordance with the terms set out in the investment management agreement between the Company and Saratoga CLO.
Incentive fee income is realized in cash on a quarterly basis. Once realized, such fees are no longer subject to reversal. Upon the
adoption of ASC 606, the Company recognizes incentive fee income only when the amount is realized and no longer subject to reversal. Therefore, the Company no longer recognizes unrealized incentive fee income in the consolidated financial
statements. The adoption of ASC 606 results in the delayed recognition of unrealized incentive fee income in the consolidated financial statements until they become realized at the end of the measurement period and all uncertainties are eliminated,
which is typically quarterly. The Company adopted ASC 606 for incentive fee income using the modified retrospective approach with an
effective date of March 1, 2018. The cumulative effect of the adoption resulted in the reversal of $0.07 million of unrealized incentive fee income and is presented as a reduction to the opening balances of components of equity as of
March 1, 2018. The following table presents the impact of incentive fee income on the consolidated statement of assets and
liabilities upon the adoption of ASC 606 effective March 1, 2018: Consolidated Statement of Assets and Liabilities  February 28, 2018As Reported


Adjustments(1)


As Adjusted forAdoption ofASC 606Management and incentive fee receivable

$
233,024


$
(65,300
)

$
167,724Total assets


360,336,361



(65,300
)


360,271,061Cumulative effect adjustment for Adoption of ASC 606






(65,300
)


(65,300
)Total net assets


143,691,367



(65,300
)


143,626,067NET ASSET VALUE PER SHARE

$
22.96


$
(0.01
)

$
22.95  (1)
Unrealized incentive fee receivable balance as of February 28, 2018. In conjunction with the third refinancing and issuance of the Saratoga CLOs 2013-1 Reset CLO
Notes (the 2013-1 Reset CLO Notes) on December 14, 2018, the Company is no longer entitled to receive an incentive management fee from Saratoga CLO. See Note 4 for additional information.
Prior to the refinancing, the Company received $0.6 million in incentive fees from the Saratoga CLO and is reported as incentive fee income on the Companys consolidated statement of operations for the year ended February 28, 2019.  F-16




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##### Table of Contents

Without the adoption of ASC 606, there was no impact to the consolidated statement of assets
and liabilities as of February 28, 2019. For the year ended February 28, 2019, the impact on the consolidated statement of operations without the adoption of ASC 606 is shown in the table below: Consolidated Statements of Operations  For the Year Ended February 28, 2019As Reported


Adjustments


WithoutAdoption ofASC 606Incentive fee income

$
633,232


$
(65,300
)

$
567,932Total investment income


47,707,963



(65,300
)


47,642,663NET INVESTMENT INCOME


18,302,209



(65,300
)


18,236,909NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS


18,509,370



(65,300
)


18,444,070WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE

$
2.63


$
(0.01
)

$
2.62 Other Income Other income includes dividends received, origination fees, structuring fees and advisory fees, and is recorded in the consolidated statements
of operations when earned. Payment-in-Kind Interest The Company holds debt and preferred equity investments in its portfolio that contain a payment-in-kind (PIK) interest provision. The PIK interest, which represents contractually deferred interest added to the investment balance that is generally due at maturity, is generally
recorded on the accrual basis to the extent such amounts are expected to be collected. We stop accruing PIK interest if we do not expect the issuer to be able to pay all principal and interest when due. Deferred Debt Financing Costs Financing
costs incurred in connection with our credit facility and notes are deferred and amortized using the straight-line method over the life of the respective facility and debt securities. Financing costs incurred in connection with our SBA debentures
are deferred and amortized using the straight-line method over the life of the debentures. The Company presents deferred debt financing
costs on the balance sheet as a contra-liability as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Contingencies In the ordinary course of
business, the Company may enter into contracts or agreements that contain indemnifications or warranties. Future events could occur that lead to the execution of these provisions against the Company. Based on its history and experience, management
feels that the likelihood of such an event is remote. Therefore, the Company has not accrued any liabilities in connection with such indemnifications. In the ordinary course of business, the Company may directly or indirectly be a defendant or plaintiff in legal actions with respect to
bankruptcy, insolvency or other types of proceedings. Such lawsuits may involve claims that could adversely affect the value of certain financial instruments owned by the Company. Income Taxes The Company has elected to
be treated for tax purposes as a RIC under the Code and, among other things, intends to make the requisite distributions to its stockholders which will relieve the Company from federal income taxes. Therefore, no provision has been recorded for
federal income taxes, except as related to the Taxable Blockers when applicable.  F-17




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##### Table of Contents

In order to qualify as a RIC, among other requirements, the Company is required to timely
distribute to its stockholders at least 90.0% of its investment company taxable income, as defined by the Code, for each fiscal tax year. The Company will be subject to a nondeductible U.S. federal excise tax of 4.0% on undistributed income if it
does not distribute at least 98.0% of its ordinary income in any calendar year and 98.2% of its capital gain net income for each one-year period ending on October 31. Depending on the level of taxable income earned in a tax year, the Company may choose to carry forward taxable income in excess of current
year dividend distributions into the next tax year and pay a 4.0% excise tax on such income, as required. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year
dividend distributions for excise tax purposes, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned. In accordance with certain applicable U.S. Treasury regulations and private letter rulings issued by the Internal Revenue Service
(IRS), a RIC may treat a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder may elect to receive his or her entire distribution in either cash or stock of the RIC subject to a limitation on
the aggregate amount of cash to be distributed to all stockholders, which limitation must be at least 20.0% of the aggregate declared distribution. If too many stockholders elect to receive cash, each stockholder electing to receive cash will
receive a pro rata amount of cash (with the balance of the distribution paid in stock). In no event will any stockholder, electing to receive cash, receive less than 20.0% of his or her entire distribution in cash. If these and certain other
requirements are met, for U.S federal income tax purposes, the amount of the dividend paid in stock will be equal to the amount of cash that could have been received instead of stock. The Company may utilize wholly-owned holding companies taxed under Subchapter C of the Code or tax blockers, when making equity investments in
portfolio companies taxed as pass-through entities to meet its source-of-income requirements as a RIC. Taxable Blockers are consolidated in the Companys GAAP
financial statements and may result in current and deferred federal and state income tax expense with respect to income derived from those investments. Such income, net of applicable income taxes, is not included in the Companys tax-basis net investment income until distributed by the Taxable Blocker, which may result in timing and character differences between the Companys GAAP and tax-basis
net investment income and realized gains and losses. Income tax expense or benefit from Taxable Blockers related to net investment income are included in total operating expenses, while any expense or benefit related to federal or state income tax
originated for capital gains and losses are included together with the applicable net realized or unrealized gain or loss line item. Deferred tax assets of the Taxable Blockers are reduced by a valuation allowance when, in the opinion of management,
it is more-likely than-not that some portion or all of the deferred tax assets will not be realized. FASB ASC Topic 740, Income Taxes, (ASC 740), provides guidance for how uncertain tax positions should be recognized,
measured, presented and disclosed in the financial statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Companys tax returns to determine whether the tax positions are more-likely-than-not of being sustained by the applicable tax authority. Tax positions deemed to meet a more-likely-than-not threshold would be
recorded as a tax benefit or expense in the current period. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense on the consolidated statements of operations. During the fiscal year ended
February 28, 2019, the Company did not incur any interest or penalties. Although we file federal and state tax returns, our major tax jurisdiction is federal. The 2016, 2017 and 2018 federal tax years for the Company remain subject to
examination by the IRS. As of February 28, 2019 and February 28, 2018, there were no uncertain tax positions. The Company is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax
benefits will change significantly in the next 12 months. Dividends Dividends to common stockholders are recorded on the ex-dividend date. The amount to be paid out as a
dividend is determined by the board of directors. Net realized capital gains, if any, are generally distributed at least annually, although we may decide to retain such capital gains for reinvestment. We have adopted a dividend reinvestment plan (DRIP) that provides for reinvestment of our dividend distributions on behalf of our
stockholders unless a stockholder elects to receive cash. As a result, if our board of directors authorizes, and we declare, a cash dividend, then our stockholders who have not opted out of the DRIP by the dividend record date will have
their cash dividends automatically reinvested into additional shares of our common stock, rather than receiving the cash dividends. We have the option to satisfy the share requirements of the DRIP through the issuance of new shares of common stock
or through open market purchases of common stock by the DRIP plan administrator.  F-18




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##### Table of Contents

Capital Gains Incentive Fee The Company records an expense accrual on the consolidated statements of operations, relating to the capital gains incentive fee payable on the
consolidated statements of assets and liabilities, by the Company to the Manager when the net realized and unrealized gain on its investments exceed all net realized and unrealized capital losses on its investments given the fact that a capital
gains incentive fee would be owed to the Manager if the Company were to liquidate its investment portfolio at such time. 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 net of realized and unrealized losses for the period. Regulatory Matters In August 2018,
the SEC issued Final Rule Release No.33-10532, Disclosure Update and Simplification, which in part amends certain disclosure requirements of Regulation S-X that
have become redundant, duplicative, overlapping, outdated, or superseded, in light of other Commission disclosure requirements, U.S. GAAP or changes in the information environment. The amendments are intended to facilitate the disclosure of
information to investors and simplify compliance without significantly altering the total mix of information provided to investors. The effective date for these disclosures was November 5, 2018. Management has adopted these amendments as
currently required and these are reflected in the Companys consolidated financial statements and related disclosures. The presentation of certain prior year information has been adjusted to conform with these amendments. New Accounting Pronouncements In August
2018, FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure FrameworkChanges to the Disclosure Requirements for Fair Value Measurement(ASU
2018-13). The primary focus of ASU 2018-13 is to improve the effectiveness of the disclosure requirements for fair value measurements. The changes affect all
companies that are required to include fair value measurement disclosures. In general, the amendments in ASU 2018-13 are effective for all entities for fiscal years and interim periods within those fiscal
years, beginning after December 15, 2019. An entity is permitted to early adopt the removed or modified disclosures upon the issuance of ASU 2018-13 and may delay adoption of the additional disclosures,
which are required for public companies only, until their effective date. Management has assessed these changes and does not believe they would have a material impact on the Companys consolidated financial statements and disclosures. In March 2017, the FASB issued ASU 2017-08, Receivables  Nonrefundable Fees and Other Costs
(Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities(ASU 2017-08) which amends the amortization period for certain purchased
callable debt securities held at a premium, shortening such period to the earliest call date. ASU 2017-08 does not require any accounting change for debt securities held at a discount; the discount continues
to be amortized to maturity. ASU 2017-08 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Management has assessed these changes and does not
believe they would have a material impact on the Companys consolidated financial statements and disclosures. In February 2016, the
FASB issued ASU 2016-02, Amendments to the Leases(ASU Topic 842), which will require for all operating leases the recognition of a right-of-use asset and a lease liability, in the statement of financial position. The lease cost will be allocated over the lease term on a straight-line basis. This guidance is effective for annual and
interim periods beginning after December 15, 2018. Management is currently evaluating the impact these changes will have on the Companys consolidated financial statements and disclosures. Risk Management In the ordinary course
of its business, the Company manages a variety of risks, including market risk and credit risk. Market risk is the risk of potential adverse changes to the value of investments because of changes in market conditions such as interest rate movements
and volatility in investment prices. Credit risk is the risk of default or non-performance by
portfolio companies, equivalent to the investments carrying amount. The Company is also exposed to credit risk related to maintaining all of its cash and cash equivalents, including those in reserve accounts, at a major financial institution
and credit risk related to any of its derivative counterparties.  F-19




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##### Table of Contents

The Company has investments in lower rated and comparable quality unrated high yield bonds
and bank loans. Investments in high yield investments are accompanied by a greater degree of credit risk. The risk of loss due to default by the issuer is significantly greater for holders of high yield securities, because such investments are
generally unsecured and are often subordinated to other creditors of the issuer. Note 3. Investments As noted above, the Company values all investments in accordance with ASC 820. ASC 820 requires enhanced disclosures about assets and
liabilities that are measured and reported at fair value. As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. ASC 820 establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability of inputs
used in measuring investments at fair value. Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices
or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. Based on the observability of the inputs used in the valuation techniques, the Company is required to provide disclosures on fair value
measurements according to the fair value hierarchy. The fair value hierarchy ranks the observability of the inputs used to determine fair values. Investments carried at fair value are classified and disclosed in one of the following three
categories:  

Level 1Valuations based on quoted prices in active markets for identical assets or liabilities that the
Company has the ability to access.  

Level 2 Pricing inputs are other than quoted prices in active markets, which are either directly or
indirectly observable as of the reporting date. Such inputs may be quoted prices for similar assets or liabilities, quoted markets that are not active, or other inputs that are observable or can be corroborated by observable market data for
substantially the full character of the financial instrument, or inputs that are derived principally from, or corroborated by, observable market information. Investments which are generally included in this category include illiquid debt securities
and less liquid, privately held or restricted equity securities, for which some level of recent trading activity has been observed.  

Level 3 Pricing inputs are unobservable for the investment and includes situations where there is
little, if any, market activity for the investment. The inputs may be based on the Companys own assumptions about how market participants would price the asset or liability or may use Level 2 inputs, as adjusted, to reflect specific
investment attributes relative to a broader market assumption. These inputs into the determination of fair value may require significant management judgment or estimation. Even if observable market data for comparable performance or valuation
measures (earnings multiples, discount rates, other financial/valuation ratios, etc.) are available, such investments are grouped as Level 3 if any significant data point that is not also market observable (private company earnings, cash flows,
etc.) is used in the valuation methodology. In addition to using the above inputs in investment valuations, the Company
continues to employ the valuation policy approved by the board of directors that is consistent with ASC 820 and the 1940 Act (see Note 2). Consistent with our valuation policy, we evaluate the source of inputs, including any markets in which our
investments are trading, in determining fair value. The following table presents fair value measurements of investments, by major class, as of February
28, 2019 (dollars in thousands), according to the fair value hierarchy:  Fair Value MeasurementsLevel 1


Level 2


Level 3


TotalFirst lien term loans

$



$



$
202,846


$
202,846Second lien term loans










125,786



125,786Unsecured term loans










2,100



2,100Structured finance securities










35,328



35,328Equity interests










35,960



35,960Total

$



$



$
402,020


$
402,020  F-20




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##### Table of Contents

The following table presents fair value measurements of investments, by major class, as of
February 28, 2018 (dollars in thousands), according to the fair value hierarchy:  Fair Value MeasurementsLevel 1


Level 2


Level 3


TotalSyndicated loans

$



$



$
4,106


$
4,106First lien term loans










197,359



197,359Second lien term loans










95,075



95,075Structured finance securities










16,374



16,374Equity interests










29,780



29,780Total

$



$



$
342,694


$
342,694 The following table provides a reconciliation of the beginning and ending balances for investments that use
Level 3 inputs for the year ended February 28, 2019 (dollars in thousands):  Syndicatedloans


First lienterm loans


Secondlien termloans


Unsecuredterm loans


Structuredfinancesecurities


Equityinterests


TotalBalance as of February 28, 2018

$
4,106


$
197,359


$
95,075


$



$
16,374


$
29,780


$
342,694Net change in unrealized appreciation (depreciation) on investments


(73
)


412



(1,690
)


(116
)


(767
)


(666
)


(2,900
)Purchases and other adjustments to cost


73



90,680



50,712



20,000



24,269



7,346



193,080Sales and repayments


(4,106
)


(85,431
)


(18,311
)


(17,784
)


(4,548
)


(5,548
)


(135,728
)Net realized gain (loss) from investments






(174
)














5,048



4,874Balance as of February 28, 2019

$



$
202,846


$
125,786


$
2,100


$
35,328


$
35,960


$
402,020Net change in unrealized appreciation (depreciation) for the year relating to those Level 3 assets
that were still held by the Company at the end of the year

$



$
905


$
(1,599
)

$
(116
)

$
(768)


$
3,805


$
2,227 Purchases and other adjustments to cost include purchases of new investments at cost, effects of
refinancing/restructuring, accretion/amortization of income from discount/premium on debt securities, and PIK. Sales and repayments
represent net proceeds received from investments sold, and principal paydowns received, during the year. Transfers and restructurings, if
any, are recognized at the beginning of the period in which they occur. There were no restructures in or out of Levels 1, 2, or 3 during the year ended February 28, 2019. The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the year ended
February 28, 2018 (dollars in thousands):  Syndicatedloans


First lienterm loans


Second lienterm loans


Structuredfinancesecurities


Equityinterests


TotalBalance as of February 28, 2017

$
9,823


$
159,097


$
87,750


$
15,450


$
20,541


$
292,661Net change in unrealized appreciation (depreciation) on investments


(82
)


1,790



2,242



1,948



4,927



10,825Purchases and other adjustments to cost


65



93,061



14,982



104



3,185



111,397Sales and repayments


(5,642
)


(14,124
)


(42,023
)


(1,137
)


(3,386
)


(66,312
)Net realized gain (loss) from investments


(58
)


(11
)


(7,713
)


9



1,896



(5,877
)Restructures in










39,837







2,617



42,454Restructures out






(42,454
)














(42,454
)Balance as of February 28, 2018

$
4,106


$
197,359


$
95,075


$
16,374


$
29,780


$
342,694Net change in unrealized appreciation (depreciation) for the year relating to those Level 3 assets
that were still held by the Company at the end of the year

$
(25
)

$
1,867


$
(575
)

$
1,947


$
5,579


$
8,793  F-21




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##### Table of Contents

Restructures in and out for the year ended February 28, 2018 included a restructure of
Easy Ice, LLC of $26.7 million from a first lien term loan to a second lien term loan; a restructure of Mercury Funding, LLCs first lien term loan of $15.8 million to a second lien term loan; and a restructure of My Alarm Center,
LLCs second lien term loan of $2.6 million to an equity interest. The valuation techniques and significant unobservable inputs
used in recurring Level 3 fair value measurements of assets as of February 28, 2019 were as follows (dollars in thousands):  Fair Value


Valuation Technique


Unobservable Input


Range

Weighted Average*First lien term loans

$
202,846



Market Comparables



Market Yield (%)


8.6% - 13.2%


11.0%EBITDA Multiples (x)


3.0x


3.0xSecond lien term loans


125,786



Market Comparables



Market Yield (%)


10.5% - 41.1%


12.8%EBITDA Multiples (x)


5.0x


5.0xUnsecured term loans


2,100



Market Comparables



Market Yield (%)


15.00%


15.0%EBITDA Multiples (x)


4.8x


4.8xStructured finance securities


35,328



Discounted Cash Flow



Discount Rate (%)


9.0% - 15.0%


13.6%Equity interests


35,960



Market Comparables



EBITDA Multiples (x)


4.0x - 14.7x


6.7xRevenue Multiples (x)


0.6x - 39.6x


10.1xTotal

$
402,020  *
The weighted average in the table above is calculated based on each investments fair value weighting,
using the applicable unobservable input. The valuation techniques and signiticant unobservable inputs used in recurring
Level 3 fair value measurements of assets as of February 28, 2018 were as follows (dollars in thousands):  Fair Value


Valuation Technique


Unobservable Input


Range

Weighted Average*Syndicated loans

$
4,106



Market Comparables



Third-Party Bid (%)


100.0%


100.0%First lien term loans


197,359



Market Comparables



Market Yield (%)


7.3% - 13.4%


10.9%EBITDA Multiples (x)


3.0x


3.0xThird-Party Bid (%)


97.6% - 100.1%


98.7%Second lien term loans


95,075



Market Comparables



Market Yield (%)


10.0% - 16.5%


12.2%EBITDA Multiples (x)


5.0x


5.0xThird-Party Bid (%)


100.0%


100.0%Structured finance securities


16,374



Discounted Cash Flow



Discount Rate (%)


8.5% - 15.0%


15.0%Equity interests


29,780



Market Comparables



EBITDA Multiples (x)


4.0x - 14.0x


7.5xRevenue Multiples (x)


0.6x - 39.6x


18.7xTotal

$
342,694  *
The weighted average in the table above is calculated based on each investments fair value weighting,
using the applicable unobservable input. For investments utilizing a market comparables valuation technique, a
significant increase (decrease) in the market yield, in isolation, would result in a significantly lower (higher) fair value measurement, and a significant increase (decrease) in any of the earnings before interest, tax, depreciation and
amortization (EBITDA) or revenue valuation multiples, in isolation, would result in a significantly higher (lower) fair value measurement. For investments utilizing a discounted cash flow valuation technique, a significant increase
(decrease) in the discount rate, in isolation, would result in a significantly lower (higher) fair value measurement. For investments utilizing a market quote in deriving a value, a significant increase (decrease) in the market quote, in isolation,
would result in a significantly higher (lower) fair value measurement.  F-22




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##### Table of Contents

The composition of our investments as of February 28, 2019, at amortized cost and fair
value was as follows (dollars in thousands):  Investments atAmortized Cost


Amortized CostPercentage ofTotal Portfolio


Investments atFair Value


Fair ValuePercentage ofTotal PortfolioFirst lien term loans

$
202,328



50.3
%

$
202,846



50.5
%Second lien term loans


127,793



31.8



125,786



31.3Unsecured term loans


2,217



0.6



2,100



0.5Structured finance securities


33,516



8.3



35,328



8.8Equity interests


36,062



9.0



35,960



8.9Total

$
401,916



100.0
%

$
402,020



100.0
% The composition of our investments as of February 28, 2018, at amortized cost and fair value was as
follows (dollars in thousands):  Investments atAmortized Cost


Amortized CostPercentage ofTotal Portfolio


Investments atFair Value


Fair ValuePercentage ofTotal PortfolioSyndicated loans

$
4,033



1.2
%

$
4,106



1.2
%First lien term loans


197,253



58.1



197,359



57.6Second lien term loans


95,392



28.1



95,075



27.7Structured finance securities


13,796



4.0



16,374



4.8Equity interests


29,216



8.6



29,780



8.7Total

$
339,690



100.0
%

$
342,694



100.0
% For loans and debt securities for which market quotations are not available, we determine their fair value
based on third party indicative broker quotes, where available, or the assumptions that a hypothetical market participant would use to value the security in a current hypothetical sale using a market yield valuation methodology. In applying the
market yield valuation methodology, we determine the fair value based on such factors as market participant assumptions including synthetic credit ratings, estimated remaining life, current market yield and interest rate spreads of similar
securities as of the measurement date. If, in our judgment, the market yield methodology is not sufficient or appropriate, we may use additional methodologies such as an asset liquidation or expected recovery model. For equity securities of portfolio companies and partnership interests, we determine the fair value based on the market approach with value
then attributed to equity or equity like securities using the enterprise value waterfall valuation methodology. Under the enterprise value waterfall valuation methodology, we determine the enterprise fair value of the portfolio company and then
waterfall the enterprise value over the portfolio companys securities in order of their preference relative to one another. To estimate the enterprise value of the portfolio company, we weigh some or all of the traditional market valuation
methods and factors based on the individual circumstances of the portfolio company in order to estimate the enterprise value. The methodologies for performing investments may be based on, among other things: valuations of comparable public
companies, recent sales of private and public comparable companies, discounting the forecasted cash flows of the portfolio company, third party valuations of the portfolio company, considering offers from third parties to buy the company, estimating
the value to potential strategic buyers and considering the value of recent investments in the equity securities of the portfolio company. For non-performing investments, we may estimate the liquidation or
collateral value of the portfolio companys assets and liabilities. We also take into account historical and anticipated financial results.  F-23




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##### Table of Contents

Our investments in Saratoga CLO are carried at fair value, which is based on a discounted
cash flow model that utilizes prepayment, re-investment and loss assumptions based on historical experience and projected performance, economic factors, the characteristics of the underlying cash flow, and
comparable yields for equity interests in collateralized loan obligation funds similar to Saratoga CLO, when available, as determined by our Manager and recommended to our board of directors. Specifically, we use Intex cash flow models, or an
appropriate substitute, to form the basis for the valuations of our investments in Saratoga CLO. The models use a set of assumptions including projected default rates, recovery rates, reinvestment rates and prepayment rates in order to arrive at
estimated valuations. The assumptions are based on available market data and projections provided by third parties as well as management estimates. In connection with the refinancing of the Saratoga CLO liabilities, we ran Intex models based on
assumptions about the refinanced Saratoga CLOs structure, including capital structure, cost of liabilities and reinvestment period. We use the output from the Intex models (i.e., the estimated cash flows) to perform a discounted cash flow
analysis on expected future cash flows to determine the valuations for our investments in Saratoga CLO at February 28, 2019. The significant inputs at February 28, 2019 for the valuation model include:  

Default rate: 2.0%  

Recovery rate: 35-70%  

Discount rate: 15.0%  

Prepayment rate: 20.0%  

Reinvestment rate / price: L+355bps / $99.50 Note 4. Investment in Saratoga Investment Corp. CLO 2013-1, Ltd. (Saratoga CLO) On January 22, 2008, the Company entered into a collateral management agreement with Saratoga CLO, pursuant to which the Company acts as
its collateral manager. The Saratoga CLO was initially refinanced in October 2013 with its reinvestment period extended to October 2016. On November 15, 2016, the Company completed a second refinancing of the Saratoga CLO with its reinvestment
period extended to October 2018. On August 7, 2018, the Company entered into an unsecured loan agreement (CLO 2013-1 Warehouse Loan) with Saratoga Investment Corp. CLO 2013-1 Warehouse, Ltd (CLO 2013-1 Warehouse), a
wholly-owned subsidiary of Saratoga CLO, pursuant to which CLO 2013-1 Warehouse may borrow from time to time up to $20 million from the Company in order to provide capital necessary to support warehouse
activities. The CLO 2013-1 Warehouse Loan, which expires on February 7, 2020, bears interest at an annual rate of 3M USD LIBOR + 7.5%. Interest accrued on the investment in the CLO 2013-1 Warehouse Loan is included in interest income on the Companys consolidated statement of operations. During the year ended February 28, 2019, the maximum amount invested by the Company in the CLO 2013-1 Warehouse Loan amounted to $20.0 million. On December 14, 2018, the Company 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. A
non-call period ending January 2020 was also added. Following this refinancing, the Saratoga CLO portfolio increased from approximately $300.0 million in aggregate principal amount to approximately
$500.0 million of predominantly senior secured first lien term loans. In addition to refinancing its liabilities, the Company invested an additional $13.8 million in all of the newly issued subordinated notes of the Saratoga CLO and also
purchased $2.5 million in aggregate principal amount of the Class F-R-2 and $7.5 million aggregate principal amount of the
Class G-R-2 notes tranches at par, with a coupon of LIBOR plus 8.75% and LIBOR plus 10.00%, respectively. As part of this refinancing, the Company also redeemed our
existing $4.5 million aggregate amount of the Class F notes tranche at par and the $20.0 million CLO 2013-1 Warehouse loan was repaid. The Saratoga CLO remains 100.0% owned and managed by the Company. We receive a base management fee of 0.10% per annum and a subordinated
management fee of 0.40% per annum of the outstanding principal amount of Saratoga CLOs assets, paid quarterly to the extent of available proceeds. Following the third refinancing and the issuance of the
2013-1 Reset CLO Notes on December 14, 2018, we are no longer entitled to an incentive management fee equal to 20.0% of excess cash flow to the extent the Saratoga CLO subordinated notes receive an
internal rate of return paid in cash equal to or greater than 12.0%. For the years ended February 28, 2019, February 28, 2018
and February 28, 2017, we accrued management fee income of $1.7 million, $1.5 million and $1.5 million, respectively, and interest income of $2.9 million, $2.4 million and $1.9 million, respectively, from the
Saratoga CLO. For the years ended February 28, 2019 and February 28, 2018, we recognized $0.6 million and $0.6 million, respectively, related to the incentive management fee from Saratoga CLO. For the year ended February 28,
2017, we did not accrue any amounts related to the incentive management fee from Saratoga CLO as the 12.0% hurdle rate had not yet been achieved.  F-24




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##### Table of Contents

As of February 28, 2019, the Company determined that the fair value of its investment
in the subordinated notes of Saratoga CLO was $25.4 million. The Company determines the fair value of its investment in the subordinated notes of Saratoga CLO based on the present value of the projected future cash flows of the subordinated
notes over the life of Saratoga CLO. As of February 28, 2019, Saratoga CLO had investments with a principal balance of $510.3 million and a weighted average spread over LIBOR of 4.0% and had debt with a principal balance of
$470.0 million with a weighted average spread over LIBOR of 2.3%. As a result, Saratoga CLO earns a spread between the interest income it receives on its investments and the interest expense it pays on its debt and other operating
expenses, which is distributed quarterly to the Company as the holder of its subordinated notes. As of February 28, 2019, the present value of the projected future cash flows of the subordinated notes was approximately $26.6 million, using
a 15.0% discount rate. The Companys total investment in the subordinate notes of Saratoga CLO is $43.8 million, which is comprised of the initial investment of $30.0 million in January 2008 plus the additional investment of
$13.8 million in December 2018, and to date the Company has since received distributions of $55.9 million, management fees of $19.3 million and incentive fees of $1.2 million. As of February 28, 2018, the Company determined that the fair value of its investment in the subordinated notes of Saratoga CLO was
$11.9 million. As of February 28, 2018, Saratoga CLO had investments with a principal balance of $310.4 million and a weighted average spread over LIBOR of 3.9% and had debt with a principal balance of $282.4 million with a
weighted average spread over LIBOR of 2.4%. As of February 28, 2018, the present value of the projected future cash flows of the subordinated notes, was approximately $12.2 million, using a 15.0% discount rate. The separate audited financial statements of the Saratoga CLO as of February 28, 2019 and February 28, 2018, pursuant to Rule 3-09 of SEC rules Regulation S-X, and for the years ended February 28, 2019, February 28, 2018 and February 28, 2017, are presented on page S-1. Note 5. Income Taxes The Company intends to operate so as to qualify to be taxed as a RIC under Subchapter M of the Code and, as such, will not be subject to
federal income tax on the portion of taxable income and gains distributed to stockholders. The Company owns 100.0% of Saratoga CLO, an
exempted company incorporated in the Cayman Islands. For financial reporting purposes, the Saratoga CLO is not included as part of the consolidated financial statements. For federal income tax purposes, the Company has requested and received
approval from the IRS to treat the Saratoga CLO as a disregarded entity. As such, for federal income tax purposes and for purposes of meeting the RIC qualification and diversification tests, the results of operations of the Saratoga CLO are included
with those of the Company to qualify as a RIC, the Company is required to meet certain income and asset diversification tests in addition to distributing at least 90.0% of its investment company taxable income, as defined by the Code. Because
federal income tax regulations differ from U.S. GAAP, distributions as required in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes. Differences between these
distributions and U.S. GAAP financial results may be permanent or temporary in nature. Permanent differences are reclassified among capital accounts in the consolidated financial statements to reflect their tax character. Differences in
classification may also result from the treatment of short-term gains as ordinary income for tax purposes. As of February 28, 2019 and February 28, 2018, the Company reclassified for book purposes amounts arising from permanent book/tax
differences primarily related to expired capital losses, nondeductible excise tax, reversal of blocker income earned, market discount and interest income with respect to the Saratoga CLO which is consolidated for tax purposes as follows (dollars in
thousands):  February 28,2019


February 28,2018Capital in excess of par value

$
(18,350
)

$
(11,601
)Total distributable earnings (loss)


18,350



11,601 For income tax purposes, distributions paid to shareholders are reported as ordinary income, return of
capital, long term capital gains or a combination thereof. The tax character of distributions paid for the years ended February 28, 2019, February 28, 2018 and February 28, 2017 was as follows (dollars in thousands):  F-25




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##### Table of Contents

February 28, 2019


February 28, 2018


February 28, 2017Ordinary income

$
14,189


$
11,376


$
11,057Capital gains










Return of capital










Total

$
14,189


$
11,376


$
11,057 For federal income tax purposes, as of February 28, 2019, the aggregate net unrealized depreciation for
all securities was $9.3 million. The aggregate cost of securities for federal income tax purposes was $874.4 million. For
federal income tax purposes, as of February 28, 2018, the aggregate net unrealized depreciation for all securities was $2.0 million. The aggregate cost of securities for federal income tax purposes was $638.6 million. As of February 28, 2019 and February 28, 2018, the components of accumulated losses on a tax basis as detailed below differ from the
amounts reflected per the Companys consolidated statements of assets and liabilities by temporary book/tax differences primarily arising from the consolidation of the Saratoga CLO for tax purposes, market discount and original issue discount
income, interest income accrual on defaulted bonds, write-off of investments, and amortization of organizational expenditures and partnership interests (dollars in thousands).  February 28,2019


February 28,2018Post October loss deferred

$



$
Accumulated capital losses


(14,982
)


(38,474
)Other temporary differences


991



(649
)Undistributed ordinary income


751



2,351Unrealized appreciation (depreciation)


(9,257
)


(1,980
)Total components of accumulated losses

$
(22,497
)

$
(38,752
) The Company had incurred capital losses of $19.3 million for year ended February 28, 2011 that
expired on February 28, 2019 and incurred capital losses of $13.0 million for the year ended February 28, 2010 that expired as of February 28, 2018. As of February 28, 2019, the Company had a short-term capital loss of $10.7 million and a long-term capital loss of
$4.3 million, available to offset future capital gains. Post RIC-modernization act losses are deemed to arise on the first day of the funds following fiscal year and there is no expiration for these
losses. The Company is subject to a nondeductible U.S. federal excise tax of 4.0% on undistributed income if it does not distribute at
least 98% of its ordinary income in any calendar year and 98.2% of its capital gain net income for each one-year period ending on October 31 of such calendar year. Depending on the level of Investment
Company Taxable Income (ICTI) earned in a tax year, the Company may choose to carry forward ICTI in excess of current year dividend distributions into the next tax year and pay a 4.0% excise tax on such income, as required. To the extent
that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year dividend distributions for excise tax purposes, the Company accrues excise tax, if any, on estimated excess taxable income
as taxable income is earned. Any such carryover ICTI must be distributed before the end of that next tax year through a dividend declared prior to filing the final tax return related to the year which generated such ICTI. Management has analyzed the Companys tax positions taken on federal income tax returns for all open years (fiscal years 20162019)
and has concluded that no provision for uncertain income tax positions is required in the Companys consolidated financial statements. On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the Modernization Act) was enacted, and the
provisions with the Modernization were are effective for the Company for the year ended February 29, 2012. The Modernization Act was the first major piece of legislation affecting RICs since 1986 and it modernized several of the federal income
and excise tax provisions related to RICs. Some highlights of the enacted provisions are as follows:  F-26




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##### Table of Contents

New capital losses may now be carried forward indefinitely and retain the character of the
original loss. Under pre-enactment law, capital losses could be carried forward for eight years, and carried forward as short-term capital, irrespective of the character of the original loss. The Modernization Act contains simplification provisions, which are aimed at preventing disqualification of a RIC for inadvertent
failures of the asset diversification and/or qualifying income tests. Additionally, the Modernization Act exempts RICs from the preferential dividend rule and repealed the 60-day designation requirement for
certain types of pay-through income and gains. Finally, the Modernization Act contains several
provisions aimed at preserving the character of distributions made by a fiscal year RIC during the portion of its taxable year ending after October 31 or December 31, reducing the circumstances under which a RIC might be required to file
amended Forms 1099 to restate previously reported distributions. SIA-Avionte, Inc., SIA-Easy Ice, LLC, SIA-GH Inc., SIA-HT, Inc., SIA-MAC, Inc.,
SIA-TT, Inc., and SIA-Vector, Inc., each 100% owned by the Company, are each filing standalone C Corporation tax returns for federal and state purposes. As separately
regarded entities for tax purposes, these entities are taxed at normal corporate rates. For tax purposes, any distributions by the entities to the parent company would generally need to be distributed to the Companys shareholders. Generally,
such distributions of the entities income to the Companys shareholders will be considered as qualified dividends for tax purposes. The entities taxable net income will differ from U.S. GAAP net income because of deferred tax temporary
differences adjustments arising from net operating losses and unrealized appreciation and deprecation of securities held. Deferred tax assets and liabilities are measured using enacted corporate federal and state tax rates expected to apply to
taxable income in the years in which those net operating losses are utilized and the unrealized gains and losses are realized. Deferred tax assets and deferred tax liabilities are netted off by entity, as allowed. The recoverability of deferred tax
assets is assessed and a valuation allowance is recorded to the extent that it is more likely than not that any portion of the deferred tax asset will not be realized on the basis of a history of operating losses combined with insufficient projected
taxable income or other taxable events in the taxable blockers. Deferred tax assets and liabilities, and related valuation allowances, as
of February 28, 2019, February 28, 2018 and February 28, 2017, were as follows:  February 28,2019


February 28,2018


February 28,2017Total deferred tax assets

$
2,533,426


$



$
Total deferred tax liabilities


(1,766,835
)






Valuation allowance on net deferred tax assets


(1,506,307
)






Net deferred tax liability

$
(739,716
)

$



$
 As of February 28, 2019, the valuation allowance on deferred tax assets was $1.5 million, which
represents the federal and state tax effect of net operating losses and unrealized losses that we do not believe we will realize through future taxable income. Any adjustments to the Companys valuation allowance will depend on estimates of
future taxable income and will be made in the period such determination is made. Net change in unrealized appreciation (depreciation) on
investments reported in the consolidated statement of operations includes $1.8 million, $0 and $0 of net deferred tax (benefit) expense for the years ended February 28, 2019, February 28, 2018 and February 28, 2017, respectively. Deferred tax temporary differences may include differences for state taxes and joint venture interests.  F-27




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##### Table of Contents

Federal and state income tax provisions (benefits) on investments are as follows:  February 28, 2019


February 28, 2018


February 28, 2017CurrentFederal

$



$



$
State










Net current expense










DeferredFederal


686,445







State


53,271







Net deferred expense


739,716







Net tax provision

$
739,716


$



$
 The Company has federal net operating loss carryforwards of $3.3 million which will expire starting in
2036, with the remaining net operating loss carryforwards of $4.4 million having an indefinite life. In addition, the Company has state net operating loss carryforwards of $6.5 million, which begin to expire in 2022. Income tax expense was computed by applying the U.S. federal statutory rate of 21% combined with the weighted average state tax rate
applicable to each taxable blocker based on the states they operate in. Note 6. Agreements and Related Party Transactions On July 30, 2010, the Company entered into the Management Agreement with our Manager. The initial term of the Management Agreement was two
years, with automatic, one-year renewals at the end of each year, subject to certain approvals by our board of directors and/or the Companys stockholders. On July 9, 2018, our board of directors
approved the renewal of the Management Agreement for an additional one-year term. Pursuant to the Management Agreement, our Manager implements our business strategy on a day-to-day basis and performs certain services for us, subject to oversight by our board of directors. Our Manager is responsible for, among other duties, determining investment criteria, sourcing, analyzing
and executing investments transactions, asset sales, financings and performing asset management duties. Under the Management Agreement, we have agreed to pay our Manager a management fee for investment advisory and management services consisting of
a base management fee and an incentive management fee. The base management fee of 1.75% is calculated based on the average value of our
gross assets (other than cash or cash equivalents, but including assets purchased with borrowed funds) at the end of the two most recently completed fiscal quarters. The base management fee is paid quarterly following the filing of the most recent 10-Q. The incentive management fee consists of the following two parts: The first, payable quarterly in arrears, equals 20.0% of our pre-incentive fee net investment income,
expressed as a rate of return on the value of our net assets at the end of the immediately preceding quarter, that exceeds a 1.875% quarterly hurdle rate measured as of the end of each fiscal quarter, subject to a
catch-up provision. Under this provision, in any fiscal quarter, our Manager receives no incentive fee unless our pre-incentive fee net investment income
exceeds the hurdle rate of 1.875%. Our Manager will receive 100.0% of pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than or equal to 2.344% in any fiscal quarter;
and 20.0% of the amount of our pre-incentive fee net investment income, if any, that exceeds 2.344% in any fiscal quarter. There is no accumulation of amounts on the hurdle rate from quarter to quarter, and
accordingly there is no claw back of amounts previously paid if subsequent quarters are below the quarterly hurdle rate, and there is no delay of payment if prior quarters are below the quarterly hurdle rate.  F-28




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##### Table of Contents

The second part of the incentive fee is determined and payable in arrears as of the end of
each fiscal year (or upon termination of the Management Agreement) and equals 20.0% of our incentive fee capital gains, which equals our realized capital gains on a cumulative basis from May 31, 2010 through the end of the fiscal year,
if any, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis on each investment in the Companys portfolio, less the aggregate amount of any previously paid capital gain incentive fee.
Importantly, the capital gains portion of the incentive fee is based on realized gains and realized and unrealized losses from May 31, 2010. Therefore, realized and unrealized losses incurred prior to such time will not be taken into account
when calculating the capital gains portion of the incentive fee, and our Manager will be entitled to 20.0% of incentive fee capital gains that arise after May 31, 2010. In addition, for the purpose of the incentive fee capital gains
calculations, the cost basis for computing realized gains and losses on investments held by us as of May 31, 2010 will equal the fair value of such investments as of such date. For the years ended February 28, 2019, February 28, 2018 and February 28, 2017, the Company incurred $6.9 million,
$5.8 million and $4.9 million in base management fees, respectively. For the years ended February 28, 2019, February 28, 2018 and February 28, 2017, the Company incurred $4.6 million, $3.4 million and
$2.8 million in incentive fees related to pre- incentive fee net investment income. For the years ended February 28, 2019, February 28, 2018 and February 28, 2017, we accrued
$0.3 million, $0.9 million and $0.1 million, respectively, in incentive fees related to capital gains. The accrual is calculated using both realized and unrealized capital gains for the period. The actual incentive fee related to
capital gains will be determined and payable in arrears at the end of the fiscal year and will include only realized capital gains for the period. As of February 28, 2019, the base management fees accrual was $1.9 million and the incentive
fees accrual was $4.8 million and is included in base management and incentive fees payable in the accompanying consolidated statements of assets and liabilities. As of February 28, 2018, the base management fees accrual was
$1.5 million and the incentive fees accrual was $4.3 million and is included in base management and incentive fees payable in the accompanying consolidated statements of assets and liabilities. On July 30, 2010, the Company entered into a separate administration agreement (the Administration Agreement) with our
Manager, pursuant to which our Manager, as our administrator, has agreed to furnish us with the facilities and administrative services necessary to conduct our
day-to-day operations and provide managerial assistance on our behalf to those portfolio companies to which we are required to provide such assistance. The initial term
of the Administration Agreement was two years, with automatic, one-year renewals at the end of each year subject to certain approvals by our board of directors and/or our stockholders. The amount of expenses
payable or reimbursable thereunder by the Company was capped at $1.0 million for the initial two-year term of the Administration Agreement and subsequent renewals. On July 8, 2015, our board of
directors approved the renewal of the Administration Agreement for an additional one-year term and determined to increase the cap on the payment or reimbursement of expenses by the Company thereunder, which
had not been increased since the inception of the agreement, to $1.3 million. On July 7, 2016, our board of directors approved the renewal of the Administration Agreement for an additional one-year
term. On October 5, 2016, our board of directors determined to increase the cap on the payment or reimbursement of expenses by the Company under the Administration Agreement, from $1.3 million to $1.5 million, effective
November 1, 2016. On July 11, 2017, our board of directors approved the renewal of the Administration Agreement for an additional one-year term and determined to increase the cap on the payment or
reimbursement of expenses by the Company from $1.5 million to $1.75 million, effective August 1, 2017. On July 9, 2018, our board of directors approved the renewal of the Administration Agreement for an additional one-year term and determined to increase the cap on the payment or reimbursement of expenses by the Company from $1.75 million to $2.0 million, effective August 1, 2018. For the years ended February 28, 2019, February 28, 2018 and February 28, 2017, we recognized $1.9 million,
$1.6 million and $1.4 million in administrator expenses, respectively, pertaining to bookkeeping, recordkeeping and other administrative services provided to us in addition to our allocable portion of rent and other overhead related
expenses. As of February 28, 2019, $0.3 million of administrator expenses were accrued and included in due to manager in the accompanying consolidated statements of assets and liabilities. As of February 28, 2018, $0.4 million of
administrator expenses were accrued and included in due to manager in the accompanying consolidated statements of assets and liabilities. For the years ended February 28, 2019, February 28, 2018 and February 28, 2017, the Company
neither bought nor sold any investments from the Saratoga CLO. For the years ended February 28, 2019, February 28, 2018 and
February 28, 2017, we recognized $1.7 million, $1.5 million and $1.5 million in management fee income, respectively. For the years ended February 28, 2019, February 28, 2018 and February 28, 2017, we recognized
$0.6 million, $0.6 million and $0.0 million in incentive fee income, respectively. On August 7, 2018, the Company
entered into an unsecured loan agreement with CLO 2013-1 Warehouse, a wholly-owned subsidiary of Saratoga CLO, pursuant to which CLO 2013-1 Warehouse may borrow from
time to time up to $20 million from the Company in order to provide capital necessary to support warehouse activities. The CLO 2013-1 Warehouse Loan, which expires on February 7, 2020, bears interest
at an annual rate of 3M USD LIBOR + 7.5%.  F-29




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##### Table of Contents

On December 14, 2018, the Company completed the third refinancing of the Saratoga CLO. This
refinancing, among other things, extended the Saratoga CLO reinvestment period to January 2021, and extended its legal maturity to January 2030. A non- call period ending January 2020 was also added. In
addition, and as part of the refinancing, the Saratoga CLO has also been upsized from $300 million in assets to approximately $500 million. As part of this refinancing and upsizing, the Company invested an additional $13.8 million in
all of the newly issued subordinated notes of the Saratoga CLO, and purchased $2.5 million in aggregate principal amount of the Class F-R-2 Notes tranche and
$7.5 million in aggregate principal amount of the Class G-R-2 Notes tranche at par. Concurrently, the existing $4.5 million of Class F notes and
$20.0 million CLO 2013-1 Warehouse Loan were repaid. The Company also paid $2.0 million of transaction costs related to the refinancing and upsizing on behalf of the Saratoga CLO, to be reimbursed
from future equity distributions. As of February 28, 2019, there remained an outstanding receivable of $1.7 million for such transaction costs which is presented as due from affiliate on the Companys consolidated statement of assets
and liabilities. During the year ended February 28, 2019, the maximum amount invested by the Company in the CLO 2013-1 Warehouse Loan amounted to $20.0 million, with interest income of $0.5 million recognized related to the CLO 2013-1 Warehouse Loan and is included in interest
from investments on the Companys consolidated statement of operations for the year ended February 28, 2019. Note 7. Borrowings Credit Facility As a BDC, we are
only allowed to employ leverage to the extent that our asset coverage, as defined in the 1940 Act, equals at least 200.0% after giving effect to such leverage, or, if we obtain the required approvals from our independent directors and/or
stockholders, 150.0%. The amount of leverage that we employ at any time depends on our assessment of the market and other factors at the time of any proposed borrowing. Our asset coverage ratio, as defined in the 1940 Act, was 234.5% as of
February 28, 2019 and 293.0% as of February 28, 2018. On April 16, 2018, as permitted by the Small Business Credit Availability Act, which was signed into law on March 23, 2018, our
non-interested board of directors approved of our becoming subject to a minimum asset coverage ratio of 150.0% under Sections 18(a)(1) and 18(a)(2) of the Investment Company Act, as amended. The 150.0% asset
coverage ratio became effective on April 16, 2019. On April 11, 2007, we entered into a $100.0 million revolving
securitized credit facility (the Revolving Facility). On May 1, 2007, we entered into a $25.7 million term securitized credit facility (the Term Facility and, together with the Revolving Facility, the
Facilities), which was fully drawn at closing. In December 2007, we consolidated the Facilities by using a draw under the Revolving Facility to repay the Term Facility. In response to the market wide decline in financial asset prices,
which negatively affected the value of our portfolio, we terminated the revolving period of the Revolving Facility effective January 14, 2009 and commenced a two-year amortization period during which all
principal proceeds from the collateral were used to repay outstanding borrowings. A significant percentage of our total assets had been pledged under the Revolving Facility to secure our obligations thereunder. Under the Revolving Facility, funds
were borrowed from or through certain lenders and interest was payable monthly at the greater of the commercial paper rate and our lenders prime rate plus 4.00% plus a default rate of 2.00% or, if the commercial paper market was unavailable,
the greater of the prevailing LIBOR rates and our lenders prime rate plus 6.00% plus a default rate of 3.00%. On July 30,
2010, we used the net proceeds from (i) the stock purchase transaction and (ii) a portion of the funds available to us under the $45.0 million senior secured revolving credit facility (the Credit Facility) with Madison
Capital Funding LLC, in each case, to pay the full amount of principal and accrued interest, including default interest, outstanding under the Revolving Facility. As a result, the Revolving Facility was terminated in connection therewith.
Substantially all of our total assets, other than those held by SBIC LP, have been pledged under the Credit Facility to secure our obligations thereunder. On February 24, 2012, we amended the Credit Facility to, among other things:  

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

extend the period during which we may make and repay borrowings under the Credit Facility from July 30, 2013
to February 24, 2015 (the Revolving Period). The Revolving Period may, upon the occurrence of an event of default, by action of the lenders or automatically, be terminated. All borrowings and other amounts payable under the Credit
Facility are due and payable five years after the end of the Revolving Period; and  

remove the condition that we may not acquire additional loan assets without the prior written consent of Madison
Capital Funding LLC.  F-30




---

##### Table of Contents

On September 17, 2014, we entered into a second amendment to the Credit Facility to,
among other things:  

extend the commitment termination date from February 24, 2015 to September 17, 2017;  

extend the maturity date of the Credit Facility from February 24, 2020 to September 17, 2022 (unless
terminated sooner upon certain events);  

reduce the applicable margin rate on base rate borrowings from 4.50% to 3.75%, and on LIBOR borrowings from 5.50%
to 4.75%; and  

reduce the floor on base rate borrowings from 3.00% to 2.25%; and on LIBOR borrowings from 2.00% to 1.25%. On May 18, 2017, we entered into a third amendment to the Credit Facility to, among other things:  

extend the commitment termination date from September 17, 2017 to September 17, 2020;  

extend the final maturity date of the Credit Facility from September 17, 2022 to September 17, 2025 (unless
terminated sooner upon certain events);  

reduce the floor on base rate borrowings from 2.25% to 2.00%;  

reduce the floor on LIBOR borrowings from 1.25% to 1.00%; and  

reduce the commitment fee rate from 0.75% to 0.50% for any period during which the ratio of advances outstanding
to aggregate commitments, expressed as a percentage, is greater than or equal to 50%. In addition to any fees or other
amounts payable under the terms of the Credit Facility agreement with Madison Capital Funding LLC, an administrative agent fee per annum equal to $0.1 million is payable in equal monthly installments in arrears. As of February 28, 2019 and February 28, 2018, there were no outstanding borrowings under the Credit Facility. During the applicable
periods, the Company was in compliance with all of the limitations and requirements of the Credit Facility. Financing costs of $3.1 million related to the Credit Facility have been capitalized and are being amortized over the term of the
facility. For the years ended February 28, 2019, February 28, 2018 and February 28, 2017, we recorded $0.7 million, $0.8 million and $0.4 million of interest expense, respectively, which includes commitment and
administrative agent fees. For the years ended February 28, 2019, February 28, 2018 and February 28, 2017, we recorded
$0.1 million, $0.1 million and $0.1 million of amortization of deferred financing costs related to the Credit Facility and Revolving Facility, respectively. Interest expense and amortization of deferred financing costs are reported as
interest and debt financing expense on the consolidated statements of operations. For the fiscal year ended February 28, 2019, the average borrowings outstanding and the weighted average interest rate on outstanding borrowings under the Credit
Facility was approximately $3.4 million and 7.10%, respectively. For the fiscal year ended February 28, 2018, the average borrowings outstanding and the weighted average interest rate on outstanding borrowings under the Credit Facility was
approximately $7.1 million and 6.02%, respectively. For the fiscal year ended February 28, 2017, there were no outstanding borrowings under the Credit Facility. The Credit Facility contains limitations as to how borrowed funds may be used, such as restrictions on industry concentrations, asset size,
weighted average life, currency denomination and collateral interests. The Credit Facility also includes certain requirements relating to portfolio performance, the violation of which could result in the limit of further advances and, in some cases,
result in an event of default, allowing the lenders to accelerate repayment of amounts owed thereunder. The Credit Facility has an eight-year term, consisting of a three-year period (the Revolving Period), under which the Company may
make and repay borrowings, and a final maturity five years from the end of the Revolving Period. Availability on the Credit Facility will be subject to a borrowing base calculation, based on, among other things, applicable advance rates (which vary
from 50.0% to 75.0% of par or fair value depending on the type of loan asset) and the value of certain eligible loan assets included as part of the Borrowing Base. Funds may be borrowed at the greater of the prevailing one-month LIBOR rate and 1.00%, plus an applicable margin of 4.75%. At the Companys option, funds may be borrowed based on an alternative base rate, which in no event will be less than 2.00%, and the
applicable margin over such alternative base rate is 3.75%. In addition, the Company will pay the lenders a commitment fee of 0.75% per year (or 0.50% if the ratio of advances outstanding to aggregate commitments is greater than or equal to 50%) on
the unused amount of the Credit Facility for the duration of the Revolving Period.  F-31




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##### Table of Contents

Our borrowing base under the Credit Facility was $30.6 million, subject to the Credit
Facility cap of $45.0 million at February 28, 2019. For purposes of determining the borrowing base, most assets are assigned the values set forth in our most recent Annual Report on Form 10-K or Quarterly
Report on Form 10-Q filed with the Securities and Exchange Commission (SEC). Accordingly, the February 28, 2019 borrowing base relies upon the valuations set forth in the Quarterly Report on
Form 10-Q for the period ended November 30, 2018, as filed with the SEC on January 9, 2019. The valuations presented in this Annual Report on Form 10-K will
not be incorporated into the borrowing base until after this Annual Report on Form 10-K is filed with the SEC. SBA Debentures SBIC LP is able to
borrow funds from the SBA against regulatory capital (which approximates equity capital) that is paid in and is subject to customary regulatory requirements including but not limited to an examination by the SBA. As of February 28, 2019, we
have funded SBIC LP with $75.0 million of equity capital and have $150.0 million of SBA-guaranteed debentures outstanding. SBA debentures are non-recourse to
us, have a 10-year maturity, and may be prepaid at any time without penalty. The interest rate of SBA debentures is fixed at the time of issuance, often referred to as pooling, at a market-driven spread over 10-year U.S. Treasury Notes. SBA current regulations limit the amount that SBIC LP may borrow to a maximum of $150.0 million, which is up to twice its potential regulatory capital. SBICs are designed to stimulate the flow of private equity capital to eligible small businesses. Under SBA regulations, SBICs may make loans
to eligible small businesses and invest in the equity securities of small businesses. Under present SBA regulations, eligible small businesses include businesses that have a tangible net worth not exceeding $19.5 million and have average annual
fully taxed net income not exceeding $6.5 million for the two most recent fiscal years. In addition, an SBIC must devote 25.0% of its investment activity to smaller concerns as defined by the SBA. A smaller concern is
one that has a tangible net worth not exceeding $6.0 million and has average annual fully taxed net income not exceeding $2.0 million for the two most recent fiscal years. SBA regulations also provide alternative size standard criteria to
determine eligibility, which depend on the industry in which the business is engaged and are based on such factors as the number of employees and gross sales. According to SBA regulations, SBICs may make long-term loans to small businesses, invest
in the equity securities of such businesses and provide them with consulting and advisory services. SBIC LP is subject to regulation and
oversight by the SBA, including requirements with respect to maintaining certain minimum financial ratios and other covenants. Receipt of an SBIC license does not assure that SBIC LP will receive SBA-
guaranteed debenture funding, which is dependent upon SBIC LP continuing to be in compliance with SBA regulations and policies. The SBA, as a creditor, will have a superior claim to SBIC LPs assets over our stockholders and debtholders in the
event we liquidate SBIC LP or the SBA exercises its remedies under the SBA-guaranteed debentures issued by SBIC LP upon an event of default. The Company received exemptive relief from the SEC to permit it to exclude the debt of SBIC LP guaranteed by the SBA from the definition of
senior securities in the 200.0% asset coverage test under the 1940 Act. This allows the Company increased flexibility under the 200.0% asset coverage test by permitting it to borrow up to $150.0 million more than it would otherwise be able to
absent the receipt of this exemptive relief. On April 16, 2018, as permitted by the Small Business Credit Availability Act, which was signed into law on March 23, 2018, the non-interested board of
directors of the Company approved of the Company becoming subject to a minimum asset coverage ratio of 150.0% under Sections 18(a)(1) and 18(a)(2) of the Investment Company Act, as amended. The 150.0% asset coverage ratio became effective on
April 16, 2019. As of February 28, 2019 and February 28, 2018, there was $150.0 million and $137.7 million
outstanding of SBA debentures, respectively. The carrying amount of the amount outstanding of SBA debentures approximates its fair value, which is based on a waterfall analysis showing adequate collateral coverage and would be classified as a
Level 3 liability within the fair value hierarchy. Financing costs of $5.0 million related to the SBA debentures have been capitalized and are being amortized over the term of the commitment and drawdown. For the years ended February 28, 2019, February 28, 2018 and February 28, 2017, we recorded $4.7 million,
$4.1 million and $3.4 million of interest expense related to the SBA debentures, respectively. For the years ended February 28, 2019, February 28, 2018 and February 28, 2017, we recorded $0.5 million, $0.5 million
and $0.5 million of amortization of deferred financing costs related to the SBA debentures, respectively. Interest expense and amortization of deferred financing costs are reported as interest and debt financing expense on the consolidated
statements of operations. The weighted average interest rate during the years ended February 28, 2019, February 28, 2018 and February 28, 2017 on the outstanding borrowings of the SBA debentures was 3.20%, 3.14% and 3.13%,
respectively. During the years ended February 28, 2019 and February 28, 2018, the average dollar amount of SBA debentures outstanding was $146.0 million and $130.1 million, respectively.  F-32




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##### Table of Contents

In December 2015, the 2016 omnibus spending bill approved by Congress and signed into law by
the President increased the amount of SBA-guaranteed debentures that affiliated SBIC funds can have outstanding from $225.0 million to $350.0 million, subject to SBA approval. SBA regulations
currently limit the amount of SBA-guaranteed debentures that an SBIC may issue to $150.0 million when it has at least $75.0 million in regulatory capital. Affiliated SBICs are permitted to issue up
to a combined maximum amount of $350.0 million in SBA-guaranteed debentures when they have at least $175.0 million in combined regulatory capital. On September 27, 2018, the SBA issued a green light letter inviting us to file a formal license application for a second SBIC
license. If approved, the additional SBIC license would provide the Company with an incremental source of long-term capital by permitting us to issue, subject to SBA approval, up to $175.0 million of additional
SBA-guaranteed debentures in addition to the $150.0 million already approved under the Companys first license. Receipt of a green light letter from the SBA does not assure an applicant that the SBA
will ultimately issue an SBIC license and the Company has received no assurance or indication from the SBA that it will receive an additional SBIC license, or of the timeframe in which it would receive an additional license, should one ultimately be
granted. Notes On
May 10, 2013, the Company issued $42.0 million in aggregate principal amount of 7.50% fixed-rate notes due 2020 (the 2020 Notes). The 2020 Notes will mature on May 31, 2020, and since May 31, 2016, may be redeemed in
whole or in part at any time or from time to time at the Companys option. Interest will be payable quarterly beginning August 15, 2013. On May 17, 2013, the Company closed an additional $6.3 million in aggregate principal amount
of the 2020 Notes, pursuant to the full exercise of the underwriters option to purchase additional 2020 Notes. The 2020 Notes were redeemed in full on January 13, 2017. On May 29, 2015, the Company entered into a Debt Distribution Agreement with Ladenburg Thalmann & Co. through which the Company
may offer for sale, from time to time, up to $20.0 million in aggregate principal amount of the 2020 Notes through an At-the-Market (ATM) offering.
Prior to the 2020 Notes being redeemed in full, the Company had sold 539,725 bonds with a principal of $13.5 million at an average price of $25.31 for aggregate net proceeds of $13.4 million (net of transaction costs). On December 21, 2016, the Company issued $74.5 million in aggregate principal amount of our 6.75% fixed-rate notes due 2023 (the
2023 Notes) for net proceeds of $71.7 million after deducting underwriting commissions of approximately $2.3 million and offering costs of approximately $0.5 million. The issuance included the exercise of substantially all
of the underwriters option to purchase an additional $9.8 million aggregate principal amount of 2023 Notes within 30 days. Interest on the 2023 Notes is paid quarterly in arrears on March 15, June 15, September 15 and
December 15, at a rate of 6.75% per year, beginning March 30, 2017. The 2023 Notes mature on December 30, 2023, and commencing December 21, 2019, may be redeemed in whole or in part at any time or from time to time at our option.
The net proceeds from the offering were used to repay all of the outstanding indebtedness under the 2020 Notes, which amounted to $61.8 million, and for general corporate purposes in accordance with our investment objective and strategies. The
2023 Notes are listed on the NYSE under the trading symbol SAB with a par value of $25.00 per share. The remaining unamortized deferred debt financing costs of $1.5 million (including underwriting commissions and net of issuance
premiums), was recorded within loss on debt extinguishment in the consolidated statements of operations in the fourth quarter of the fiscal year ended February 28, 2017, when the related 2020 Notes were extinguished. As of February 28,
2019, $2.8 million of financing costs related to the 2023 Notes have been capitalized and are being amortized over the term of the 2023 Notes. On August 28, 2018, the Company issued $40.0 million in aggregate principal amount of our 6.25% fixed-rate notes due 2025 (the
2025 Notes) for net proceeds of $38.7 million after deducting underwriting commissions of approximately $1.3 million. Offering costs incurred were approximately $0.3 million. The issuance included the full exercise of the
underwriters option to purchase an additional $5.0 million aggregate principal amount of 2025 Notes within 30 days. Interest on the 2025 Notes is paid quarterly in arrears on February 28, May 31, August 31 and
November 30, at a rate of 6.25% per year, beginning November 30, 2018. The 2025 Notes mature on August 31, 2025 and commencing August 28, 2021, may be redeemed in whole or in part at any time or from time to time at our option.
The net proceeds from the offering were used for general corporate purposes in accordance with our investment objective and strategies. Financing costs of $1.6 million related to the 2025 Notes have been capitalized and are being amortized over
the term of the 2025 Notes.  F-33




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##### Table of Contents

On February 5, 2019, the Company completed a
re-opening and up-sizing of its existing 2025 Notes by issuing an additional $20.0 million in aggregate principal amount for net proceeds of $19.2 million
after deducting underwriting commissions of approximately $0.6 million and discount of $0.2 million. Offering costs incurred were approximately $0.2 million. The issuance included the full exercise of the underwriters option to
purchase an additional $2.5 million aggregate principal amount of 2025 Notes within 30 days. Interest rate, interest payment dates and maturity remain unchanged from the existing 2025 Notes issued in August 2018. The net proceeds from this
offering were used for general corporate purposes in accordance with our investment objective and strategies. The financing costs and discount of $1.0 million related to the 2025 Notes have been capitalized and are being amortized over the term
of the 2025 Notes. As of February 28, 2019, the total 2025 Notes outstanding was $60.0 million. The 2025 Notes are listed on
the NYSE under the trading symbol SAF with a par value of $25.00 per share. As of February 28, 2019, the carrying amount
and fair value of the 2025 Notes was $60.0 million and $59.9 million, respectively, and the carrying amount and fair value of the 2023 Notes was $74.5 million and $76.4 million, respectively. The fair value of the 2025 Notes and
2023 Notes, which both are publicly traded, is based upon closing market quotes as of the measurement date and would be classified as a Level 1 liability within the fair value hierarchy. As of February 28, 2018, the carrying amount and
fair value of the 2023 Notes was $74.5 million and $76.5 million, respectively. For the year ended February 28, 2019, we
recorded $1.6 million of interest expense and $0.2 million of amortization of deferred financing costs related to the 2025 Notes. For the year ended February 28, 2019, the average dollar amount of 2025 Notes outstanding was
$25.2 million. For the years ended February 28, 2019 and February 28, 2018, we recorded $5.0 million and $5.0 million, respectively, of interest expense and $0.4 million and $0.4 million, respectively, of
amortization of deferred financing costs related to the 2023 Notes. Interest expense and amortization of deferred financing cost are reported as interest and debt financing expense on the consolidated statements of operations. During the years ended
February 28, 2019 and February 28, 2018, the average dollar amount of 2023 Notes outstanding was $74.5 million and $74.5 million, respectively. For the year ended February 28, 2017, we recorded $1.0 million of interest expense and $0.1 million of amortization of deferred
financing costs related to the 2023 Notes and $4.0 million of interest expense and $0.3 million of amortization of deferred financing costs related to the 2020 Notes. Interest expense and amortization of deferred financing costs are
reported as interest and debt financing expense on the consolidated statements of operations. During the year ended February 28, 2017, the average dollar amount of 2023 Notes and 2020 Notes outstanding was $74.5 million and
$61.8 million, respectively. Note 8. Commitments and Contingencies Contractual obligations The following
table shows our payment obligations for repayment of debt and other contractual obligations as of February 28, 2019:  Payment Due by PeriodLong-Term Debt Obligations

Total


Less Than1 Year


1-3Years


3 - 5Years


More Than5 Years($ in thousands)Revolving credit facility

$



$



$



$



$
SBA debentures


150,000











40,000



110,0002023 Notes


74,451











74,451



2025 Notes


60,000















60,000Total Long-Term Debt Obligations

$
284,451


$



$



$
114,451


$
170,000 Off-balance sheet arrangements As of February 28, 2019 and February 28, 2018, the Companys off-balance sheet
arrangements consisted of $4.5 million and $4.9 million, respectively, of unfunded commitments outstanding to provide debt financing to its portfolio companies or to fund limited partnership interests. Such commitments are generally up to
the Companys discretion to approve, or the satisfaction of certain financial and nonfinancial covenants and involve, to varying degrees, elements of credit risk in excess of the amount recognized in the Companys consolidated statements
of assets and liabilities and are not reflected in the Companys consolidated statements of assets and liabilities.  F-34




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##### Table of Contents

A summary of the unfunded commitments outstanding as of February 28, 2019 and February 28,
2018 is shown in the table below (dollars in thousands):  February 28, 2019


February 28, 2018Axiom Purchaser, Inc.

$
1,000


$
CLEO Communications Holdings, LLC






2,000Destiny Solutions, Inc.


1,500



GDS Holdings US, LLC


1,000



GreyHeller LLC






2,000Omatic Software, LLC


1,000



Pathway Partners Vet Management Company LLC






917Total

$
4,500


$
4,917 Note 9. Directors Fees The independent directors receive an annual fee of $60,000. They also receive $2,500 plus reimbursement of reasonable out- of- pocket expenses incurred in connection with attending each board meeting and receive $1,000 plus reimbursement of reasonable out-of- pocket expenses incurred in connection with attending each committee meeting. In addition, the chairman of the Audit Committee receives an annual fee of $10,000 and the chairman of each other
committee receives an annual fee of $5,000 for their additional services in these capacities. In addition, we have purchased directors and officers liability insurance on behalf of our directors and officers. Independent directors have
the option to receive their directors fees in the form of our common stock issued at a price per share equal to the greater of net asset value or the market price at the time of payment. No compensation is paid to directors who are
interested persons of the Company (as such term is defined in the 1940 Act). For the years ended February 28, 2019, February 28, 2018 and February 28, 2017, we incurred $0.3 million, $0.2 million and
$0.2 million for directors fees and expenses, respectively. As of February 28, 2019 and February 28, 2018, $0.06 million and $0.04 million in directors fees and expenses were accrued and unpaid, respectively. As
of February 28, 2019, we had not issued any common stock to our directors as compensation for their services. Note 10. Stockholders Equity On May 16, 2006, GSC Group, Inc. capitalized the LLC, by contributing $1,000 in exchange for 67 shares, constituting all of the
issued and outstanding shares of the LLC. On March 20, 2007, the Company issued 95,995.5 and 8,136.2 shares of common stock, priced
at $150.00 per share, to GSC Group and certain individual employees of GSC Group, respectively, in exchange for the general partnership interest and a limited partnership interest in GSC Partners CDO III GP, LP, collectively valued at
$15.6 million. At this time, the 6.7 shares owned by GSC Group in the LLC were exchanged for 6.7 shares of the Company. On
March 28, 2007, the Company completed its IPO of 725,000 shares of common stock, priced at $150.00 per share, before underwriting discounts and commissions. Total proceeds received from the IPO, net of $7.1 million in underwriters
discount and commissions, and $1.0 million in offering costs, were $100.7 million. On July 30, 2010, our Manager and its
affiliates purchased 986,842 shares of common stock at $15.20 per share. Total proceeds received from this sale were $15.0 million. On August 12, 2010, we effected a one-for-ten reverse
stock split of our outstanding common stock. As a result of the reverse stock split, every ten shares of our common stock were converted into one share of our common stock. Any fractional shares received as a result of the reverse stock split were
redeemed for cash. The total cash payment in lieu of shares was $230. Immediately after the reverse stock split, we had 2,680,842 shares of our common stock outstanding.  F-35




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##### Table of Contents

On September 24, 2014, the Company announced the approval of an open market share
repurchase plan that allowed it to repurchase up to 200,000 shares of its common stock at prices below its NAV as reported in its then most recently published consolidated financial statements. On October 7, 2015, the Companys board of
directors extended the open market share repurchase plan for another year and increased the number of shares the Company is permitted to repurchase at prices below its NAV, as reported in its then most recently published consolidated financial
statements, to 400,000 shares of its common stock. On October 5, 2016, the Companys board of directors extended the open market share repurchase plan for another year to October 15, 2017 and increased the number of shares the Company
is permitted to repurchase at prices below its NAV, as reported in its then most recently published consolidated financial statements, to 600,000 shares of its common stock. On October 10, 2017 and January 8, 2019, the Companys board
of directors extended the open market share repurchase plan for another year to October 15, 2018 and January 15, 2020, respectively, each time leaving the number of shares unchanged at 600,000 shares of its common stock. As of
February 28, 2019, the Company purchased 218,491 shares of common stock, at the average price of $16.87 for approximately $3.7 million pursuant to this repurchase plan. On March 16, 2017, we entered into an equity distribution agreement with Ladenburg Thalmann & Co. Inc., through which we may
offer for sale, from time to time, up to $30.0 million of our common stock through an ATM offering. As of February 28, 2019, the Company sold 494,672 shares for gross proceeds of $11.2 million at an average price of $22.72 for
aggregate net proceeds of $11.1 million (net of transaction costs). On July 13, 2018, the Company issued 1,150,000 shares of
its common stock priced at $25.00 per share (par value $0.001 per share) at an aggregate total of $28.75 million. The net proceeds, after deducting underwriting commissions of $1.15 million and offering costs of approximately
$0.2 million, amounted to approximately $27.4 million. The Company also granted the underwriters a 30-day option to purchase up to an additional 172,500 shares of its common stock, which was not
exercised.  F-36




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##### Table of Contents

The Company elected early adoption of Rule 3-04/Rule
8-03(a)(5) under Regulation S-X (Note 2). Pursuant to the regulation, the Company has presented a reconciliation of the changes in each significant caption of
stockholders equity for each of the three fiscal years ended February 28, 2019, February 28, 2018 and February 28, 2017, as shown in the tables below:  For the Year Ended February 28, 2019Common Stock


Capital inExcess


TotalDistributableShares


Amount


of Par Value


Earnings (Loss)


Net AssetsBalance at February 28, 2018


6,257,029


$
6,257


$
188,975,590


$
(45,290,480
)

$
143,691,367Cumulative effect of the adoption of ASC 606 (Note 2)














(65,300
)


(65,300
)Balance at March 1, 2018


6,257,029



6,257



188,975,590



(45,355,780
)


143,626,067Increase (Decrease) from Operations:Net investment income














3,927,648



3,927,648Net realized gain (loss) from investments














212,008



212,008Net change in unrealized appreciation (depreciation) on investments














643,205



643,205Net change in provision for deferred taxes on unrealized (appreciation) depreciation on
investments














(940,546
)


(940,546
)Decrease from Shareholder Distributions:Distributions of investment income  net














(3,128,513
)


(3,128,513
)Capital Share Transactions:Proceeds from issuance of common stock


















Stock dividend distribution


25,355



25



504,853







504,878Repurchases of common stock


















Offering costs


















Balance at May 31, 2018


6,282,384



6,282



189,480,443



(44,641,978
)


144,844,747Increase (Decrease) from Operations:Net investment income














5,144,228



5,144,228Net realized gain (loss) from investments














163



163Net change in unrealized appreciation (depreciation) on investment














(2,154,521
)


(2,154,521
)Net change in provision for deferred taxes on unrealized (appreciation) depreciation on
investments














152,546



152,546Decrease from Shareholder Distributions:Distributions of investment income  net














(3,204,014
)


(3,204,014
)Capital Share Transactions:Proceeds from issuance of common stock


1,150,000



1,150



28,748,850







28,750,000Stock dividend distribution


21,563



22



511,523







511,545Repurchases of common stock


















Offering costs










(1,386,667
)






(1,386,667
)Balance at August 31, 2018


7,453,947



7,454



217,354,149



(44,703,576
)


172,658,027Increase (Decrease) from Operations:Net investment income














5,138,941



5,138,941Net realized gain (loss) from investments














(67,164
)


(67,164
)Net change in unrealized appreciation (depreciation) on investment














(1,031,113
)


(1,031,113
)Net change in provision for deferred taxes on unrealized (appreciation) depreciation on
investments














(371,581
)


(371,581
)Decrease from Shareholder Distributions:Distributions of investment income  net














(3,876,050
)


(3,876,050
)Capital Share Transactions:Proceeds from issuance of common stock


10,373



10



241,228







241,238Stock dividend distribution


25,863



26



578,057







578,083Repurchases of common stock


















Offering costs










(1,290
)






(1,290
)Balance at November 30, 2018


7,490,183



7,490



218,172,144



(44,910,543
)


173,269,091Increase (Decrease) from Operations:Net investment income














4,091,392



4,091,392Net realized gain (loss) from investments














4,729,298



4,729,298Net change in unrealized appreciation (depreciation) on investment














(357,880
)


(357,880
)Net change in provision for deferred taxes on unrealized (appreciation) depreciation on
investments














(607,254
)


(607,254
)Decrease from Shareholder Distributions:Distributions of investment income  net














(3,980,011
)


(3,980,011
)Capital Share Transactions:Proceeds from issuance of common stock


136,176



136



3,158,783







3,158,919Stock dividend distribution


30,797



31



581,356







581,387Repurchases of common stock


















Offering costs










(9,755
)






(9,755
)Tax reclassification of stockholders equity in accordance with generally accepted accounting
principles










(18,349,728
)


18,349,728



Balance at February 28, 2019


7,657,156


$
7,657


$
203,552,800


$
(22,685,270
)

$
180,875,187  F-37




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##### Table of Contents

For the Year Ended February 28, 2018Common Stock


Capital
in Excess


TotalDistributableShares


Amount


of Par Value


Earnings (Loss)


Net AssetsBalance at February 28, 2017


5,794,600


$
5,795


$
190,483,931


$
(63,194,949
)

$
127,294,777Increase (Decrease) from Operations:Net investment income














3,504,449



3,504,449Net realized gain (loss) from investments














95,589



95,589Net change in unrealized appreciation (depreciation) on investments














(2,585,951
)


(2,585,951
)Decrease from Shareholder Distributions:Distributions of investment income  net














(2,665,516
)


(2,665,516
)Capital Share Transactions:Proceeds from issuance of common stock


60,779



60



1,367,108







1,367,168Stock dividend distribution


29,096



29



622,059







622,088Repurchases of common stock


















Offering costs










(23,951
)






(23,951
)Balance at May 31, 2017


5,884,475



5,884



192,449,147



(64,846,378
)


127,608,653Increase (Decrease) from Operations:Net investment income














2,891,051



2,891,051Net realized gain (loss) from investments














(5,774,854
)


(5,774,854
)Net change in unrealized appreciation (depreciation) on investments














9,753,662



9,753,662Decrease from Shareholder Distributions:Distributions of investment income  net














(2,792,293
)


(2,792,293
)Capital Share Transactions:Proceeds from issuance of common stock


56,575



57



1,272,188







1,272,245Stock dividend distribution


26,222



26



525,421







525,447Repurchases of common stock


















Offering costs










(24,303
)






(24,303
)Balance at August 31, 2017


5,967,272



5,967



194,222,453



(60,768,812
)


133,459,608Increase (Decrease) from Operations:Net investment income














3,015,511



3,015,511Net realized gain (loss) from investments














20,936



20,936Net change in unrealized appreciation (depreciation) on investments














1,226,543



1,226,543Decrease from Shareholder Distributions:Distributions of investment income  net














(2,865,735
)


(2,865,735
)Capital Share Transactions:Proceeds from issuance of common stock


148,759



149



3,345,720







3,345,869Stock dividend distribution


33,551



34



677,467







677,501Repurchases of common stock


















Offering costs










(34,010
)






(34,010
)Balance at November 30, 2017


6,149,582



6,150



198,211,630



(59,371,557
)


138,846,223Increase (Decrease) from Operations:Net investment income














3,320,647



3,320,647Net realized gain (loss) from investments














(219,239
)


(219,239
)Net change in unrealized appreciation (depreciation) on investments














2,430,801



2,430,801Decrease from Shareholder Distributions:Distributions of investment income  net














(3,052,033
)


(3,052,033
)Capital Share Transactions:Proceeds from issuance of common stock


82,012



82



1,852,987







1,853,069Stock dividend distribution


25,435



25



537,753







537,778Repurchases of common stock


















Offering costs










(25,879
)






(25,879
)Tax reclassification of stockholders equity in accordance with generally accepted accounting
principles










(11,600,901
)


11,600,901



Balance at February 28, 2018


6,257,029


$
6,257


$
188,975,590


$
(45,290,480
)

$
143,691,367  F-38




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##### Table of Contents

For the Year Ended February 28, 2017Common Stock


Capital
in Excess


TotalDistributableShares


Amount


of Par Value


Earnings (Loss)


Net AssetsBalance at February 29, 2016


5,672,227


$
5,672


$
188,714,329


$
(63,570,126
)

$
125,149,875Increase (Decrease) from Operations:Net investment income














2,538,549



2,538,549Net realized gain (loss) from investments














6,102,905



6,102,905Net change in unrealized appreciation (depreciation) on investments














(5,353,867
)


(5,353,867
)Decrease from Shareholder Distributions:Distributions of investment income  net














(2,346,312
)


(2,346,312
)Capital Share Transactions:Proceeds from issuance of common stock


















Stock dividend distribution


123,492



123



1,750,778







1,750,901Repurchases of common stock


(45,497
)


(45
)


(713,138
)






(713,183
)Offering costs


















Balance at May 31, 2016


5,750,222



5,750



189,751,969



(62,628,851
)


127,128,868Increase (Decrease) from Operations:Net investment income














2,603,781



2,603,781Net realized gain (loss) from investments














5,936,750



5,936,750Net change in unrealized appreciation (depreciation) on investments














(3,268,913
)


(3,268,913
)Decrease from Shareholder Distributions:Distributions of investment income  net














(3,616,930
)


(3,616,930
)Capital Share Transactions:Proceeds from issuance of common stock


















Stock dividend distribution


58,168



58



949,392







949,450Repurchases of common stock


(67,580
)


(67
)


(1,169,317
)






(1,169,384
)Offering costs


















Balance at August 31, 2016


5,740,810



5,741



189,532,044



(60,974,163
)


128,563,622Increase (Decrease) from Operations:Net investment income














3,418,874



3,418,874Net realized gain (loss) from investments














260,244



260,244Net change in unrealized appreciation (depreciation) on investments














(2,105,342
)


(2,105,342
)Decrease from Shareholder Distributions:Distributions of investment income  net














(2,508,967
)


(2,508,967
)Capital Share Transactions:Proceeds from issuance of common stock


















Stock dividend distribution


83,334



83



1,425,262







1,425,345Repurchases of common stock


(75,897
)


(76
)


(1,373,970
)






(1,374,046
)Offering costs


















Balance at November 30, 2016


5,748,247



5,748



189,583,336



(61,909,354
)


127,679,730Increase (Decrease) from Operations:Net investment income














1,099,606



1,099,606Net realized gain (loss) from investments














68,216



68,216Net change in unrealized appreciation (depreciation) on investments














86,678



86,678Decrease from Shareholder Distributions:Distributions of investment income  net














(2,584,866
)


(2,584,866
)Capital Share Transactions:Proceeds from issuance of common stock


















Stock dividend distribution


50,453



51



1,021,588







1,021,639Repurchases of common stock


(4,100
)


(4
)


(76,222
)






(76,226
)Offering costs


















Tax reclassification of stockholders equity in accordance with generally accepted accounting
principles










(44,771
)


44,771



Balance at February 28, 2017


5,794,600


$
5,795


$
190,483,931


$
(63,194,949
)

$
127,294,777  F-39




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##### Table of Contents

Note 11. Earnings Per Share In accordance with the provisions of FASB ASC 260, Earnings per Share (ASC 260), basic earnings per share is
computed by dividing earnings available to common shareholders by the weighted average number of shares outstanding during the period. Other potentially dilutive common shares, and the related impact to earnings, are considered when calculating
earnings per share on a diluted basis. Thefollowing information sets forth the computation of the weighted average basic and
diluted net increase in net assets resulting from operations per share for the years ended February 28, 2019, February 28, 2018 and February 28, 2017 (dollars in thousands except share and per share amounts):  Basic and Diluted

February 28,2019


February 28,2018


February 28,2017Net increase in net assets resulting from operations

$
18,509


$
17,679


$
11,387Weighted average common shares outstanding


7,046,686



6,024,040



5,740,450Weighted average earnings per common share

$
2.63


$
2.93


$
1.98 Note 12. Dividend On November 27, 2018, the Company declared a dividend of $0.53 per share, which was paid on January 2, 2019, to common stockholders
of record on December 17, 2018. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to the Companys DRIP. Based on shareholder elections, the dividend consisted of
approximately $3.4 million in cash and 30,797 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on
a price of $18.88 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on December 18, 19, 20, 21, 24, 26, 27, 28, 31, 2018 and January 2, 2019. On August 28, 2018, the Company declared a dividend of $0.52 per share, which was paid on September 27, 2018, to common stockholders
of record as of September 17, 2018. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately
$3.3 million in cash and 25,863 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of
$22.35 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on September 14, 17, 18, 19, 20, 21, 24, 25, 26 and 27, 2018. On May 30, 2018, the Company declared a dividend of $0.51 per share, which was paid on June 27, 2018, to common stockholders of
record as of June 15, 2018. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately
$2.7 million in cash and 21,563 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of
$23.72 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on June 14, 15, 18, 19, 20, 21, 22, 25, 26 and 27, 2018. On February 26, 2018, the Company declared a dividend of $0.50 per share, which was paid on March 26, 2018, to common stockholders of record
as of March 14, 2018. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately $2.6 million in cash and
25,355 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $19.91 per share, which equaled
95.0% of the volume weighted average trading price per share of the common stock on March 13, 14, 15, 16, 19, 20, 21, 22, 23 and 26, 2018.  F-40




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##### Table of Contents

On November 29, 2017, the Company declared a dividend of $0.49 per share, which was
paid on December 27, 2017, to common stockholders of record on December 15, 2017. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant the Companys DRIP. Based on
shareholder elections, the dividend consisted of approximately $2.5 million in cash and 25,435 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock
comprising the stock portion was calculated based on a price of $21.14 per share, which equaled the volume weighted average trading price per share of the common stock on December 13, 14, 15, 18, 19, 20, 21, 22, 26 and 27, 2017. On August 28, 2017, the Company declared a dividend of $0.48 per share, which was paid on September 26, 2017, to common stockholders
of record as of September 15, 2017. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately
$2.2 million in cash and 33,551 newly issued shares of common stock, or 0.6% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of
$20.19 per share, which equaled the volume weighted average trading price per share of the common stock on September 13, 14, 15, 18, 19, 20, 21, 22, 25 and 26, 2017. On May 30, 2017, the Company declared a dividend of $0.47 per share, which was paid on June 27, 2017, to common stockholders of
record as of June 15, 2017. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately
$2.3 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 the volume weighted average trading price per share of the common stock on June 14, 15, 16, 19, 20, 21, 22, 23, 26 and 27, 2017. On February 28, 2017, the Company declared a dividend of $0.46 per share, which was paid on March 28, 2017, to common stockholders
of record as of March 15, 2017. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately
$2.0 million in cash and 29,096 newly issued shares of common stock, or 0.5% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of
$21.38 per share, which equaled the volume weighted average trading price per share of the common stock on March 15, 16, 17, 20, 21, 22, 23, 24, 27 and 28, 2017. On January 12, 2017, the Company declared a dividend of $0.45 per share, which was paid on February 9, 2017, to common stockholders
of record as of January 31, 2017. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately
$1.6 million in cash and 50,453 newly issued shares of common stock, or 0.9% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of
$20.25 per share, which equaled the volume weighted average trading price per share of the common stock on January 27, 30, 31 and February 1, 2, 3, 6, 7, 8 and 9, 2017. On October 5, 2016, the Company declared a dividend of $0.44 per share, which was paid on November 9, 2016, to common stockholders
of record as of October 31, 2016. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately
$1.5 million in cash and 58,548 newly issued shares of common stock, or 1.0% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of
$17.12 per share, which equaled the volume weighted average trading price per share of the common stock on October 27, 28, 31 and November 1, 2, 3, 4, 7, 8 and 9, 2016. On August 8, 2016, the Company declared a special dividend of $0.20 per share, which was paid on September 5, 2016, to common
stockholders of record as of August 24, 2016. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of
approximately $0.7 million in cash and 24,786 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on
a price of $17.06 per share, which equaled 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.  F-41




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##### Table of Contents

On July 7, 2016, the Company declared a dividend of $0.43 per share, which was paid on
August 9, 2016, to common stockholders of record as of July 29, 2016. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. 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 the volume weighted average trading price per share of the common stock on July 27, 28, 29 and August 1, 2, 3, 4, 5, 8 and 9, 2016. On March 31, 2016, the Company declared a dividend of $0.41 per share, which was paid on April 27, 2016, to common stockholders of
record as of April 15, 2016. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately
$1.5 million in cash and 56,728 newly issued shares of common stock, or 1.0% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of
$15.43 per share, which equaled the volume weighted average trading price per share of the common stock on April 14, 15, 18, 19, 20, 21, 22, 25, 26 and 27, 2016. On January 12, 2016, the Company declared a dividend of $0.40 per share, which was paid on February 29, 2016, to common stockholders
of record on February 1, 2016. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately
$1.4 million in cash and 66,765 newly issued shares of common stock, or 1.2% of the Companys 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 the volume weighted average trading price per share of the common stock on February 16, 17, 18, 19, 22, 23, 24, 25, 26 and 29, 2016. On October 7, 2015, the Company declared a dividend of $0.36 per share, which was paid on November 30, 2015, to common stockholders
of record on November 2, 2015. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately
$1.1 million in cash and 61,029 newly issued shares of common stock, or 1.1% of the Companys 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 the volume weighted average trading price per share of the common stock on November 16, 17, 18, 19, 20, 23, 24, 25, 27 and 30, 2015. On July 8, 2015, the Company declared a dividend of $0.33 per share, which was paid on August 31, 2015, to common stockholders of
record on August 3, 2015. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately $1.1 million
in cash and 47,861 newly issued shares of common stock, or 0.9% of the Companys 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 the volume weighted average trading price per share of the common stock on August 18, 19, 20, 21, 24, 25, 26, 27, 28 and 31, 2015. On May 14, 2015, the Company declared a special dividend of $1.00 per share, which was paid on June 5, 2015, to common stockholders
of record on May 26, 2015. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately
$3.4 million in cash and 126,230 newly issued shares of common stock, or 2.3% of the Companys 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 the volume weighted average trading price per share of the common stock on May 22, 26, 27, 28, 29 and June 1, 2, 3, 4, and 5, 2015. On April 9, 2015, the Company declared a dividend of $0.27 per share, which was paid on May 29, 2015, to common stockholders of
record on May 4, 2015. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of approximately $0.9 million in
cash and 33,766 newly issued shares of common stock, or 0.6% of the Companys 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 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.  F-42




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##### Table of Contents

On September 24, 2014, the Company declared a dividend of $0.22 per share, which was
paid on February 27, 2015. Shareholders have the option to receive payment of the dividend in cash, or receive shares of common stock pursuant to the Companys DRIP. Based on shareholder elections, the dividend consisted of approximately
$0.8 million in cash and 26,858 newly issued shares of common stock, or 0.5% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of
$14.97 per share, which equaled 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. On September 24, 2014, the Company declared a dividend of $0.18 per share, which was paid on November 28, 2014. Shareholders had the
option to receive payment of the dividend in cash, or receive shares of common stock pursuant to the Companys DRIP. 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 the volume weighted
average trading price per share of the common stock on November 14, 17, 18, 19, 20, 21, 24, 25, 26 and 28, 2014. On October 30,
2013, the Company declared a dividend of $2.65 per share, which was paid on December 27, 2013. Shareholders had the option to receive payment of the dividend in cash, shares of common stock, or a combination of cash and shares of common stock,
provided that the aggregate cash payable to all shareholders was limited to approximately $2.5 million or $0.53 per share. This dividend was declared in reliance on certain private letter rulings issued by the IRS concluding that a RIC may
treat a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder may elect to receive his or her entire distribution in either cash or stock of the RIC subject to a limitation on the aggregate amount of cash
to be distributed to all stockholders, which limitation must be at least 20.0% of the aggregate declared distribution. 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 number of shares of common stock comprising the stock portion was calculated based on a price of $15.439 per share, which equaled the volume weighted average trading
price per share of the common stock on December 11, 13, and 16, 2013. On November 9, 2012, the Company declared a dividend of
$4.25 per share, which was paid on December 31, 2012. Shareholders had the option to receive payment of the dividend in cash, shares of common stock, or a combination of cash and shares of common stock, provided that the aggregate cash payable
to all shareholders was limited to approximately $3.3 million or $0.85 per share. Based on shareholder elections, the dividend consisted of approximately $3.3 million in cash and 853,455 shares of common stock, or 22.0% of our outstanding
common stock prior to the dividend payment. The amount of cash elected to be received was greater than the cash limit of 20.0% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who
elected to receive cash. 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. On November 15, 2011, the Company declared a dividend of $3.00 per share, which was paid on
December 30, 2011. Shareholders had the option to receive payment of the dividend in cash, shares of common stock, or a combination of cash and shares of common stock, provided that the aggregate cash payable to all shareholders was limited to
approximately $2.0 million or $0.60 per share. Based on shareholder elections, the dividend consisted of approximately $2.0 million in cash and 599,584 shares of common stock, or 18.0% of our outstanding common stock prior to the dividend
payment. The amount of cash elected to be received was greater than the cash limit of 20.0% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash. The number of
shares of common stock comprising the stock portion was calculated based on a price of $13.1171 per share, which equaled the volume weighted average trading price per share of the common stock on December 20, 21 and 22, 2011. On November 12, 2010, the Company declared a dividend of $4.40 per share, which was paid on December 29, 2010. Shareholders had the
option to receive payment of the dividend in cash, shares of common stock, or a combination of cash and shares of common stock, provided that the aggregate cash payable to all shareholders was limited to approximately $1.2 million or $0.44 per
share. Based on shareholder elections, the dividend consisted of approximately $1.2 million in cash and 596,235 shares of common stock, or 22.0% of our outstanding common stock prior to the dividend payment. The amount of cash elected to be
received was greater than the cash limit of 10.0% of the aggregate dividend amount, thus resulting in the payment of a combination of cash and stock to shareholders who elected to receive cash. The number of shares of common stock comprising the
stock portion was calculated based on a price of $17.8049 per share, which equaled the volume weighted average trading price per share of the common stock on December 20, 21 and 22, 2010. The consolidated financial statements for the period
ended November 30, 2010 have been retroactively adjusted to reflect the increase in common stock as a result of the dividend in accordance with the provisions of ASC
505-20-S50 regarding disclosure of a capital structure change after the interim balance sheet but before the release of the financial statements.  F-43




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##### Table of Contents

On November 13, 2009, we declared a dividend of $18.25 per share payable on
December 31, 2009. Shareholders had the option to receive payment of the dividend in cash, shares of common stock, or a combination of cash and shares of common stock, provided that the aggregate cash payable to all shareholders was limited to
$2.1 million or $2.50 per share. Based on shareholder elections, the dividend consisted of $2.1 million in cash and 864,872.5 of newly issued shares of common stock. The following tables summarize dividends declared for the years ended February 28, 2019, February 28, 2018, February 28, 2017, February 29,
2016 and February 28, 2015 (dollars in thousands except for share amounts):  Date Declared

Record Date


Payment Date


Amountper Share


TotalAmount*November 27, 2018


December 17, 2018



January 2, 2019


$
0.53


$
3,980August 28, 2018


September 17, 2018



September 27, 2018



0.52



3,876May 30, 2018


June 15, 2018



June 27, 2018



0.51



3,204February 26, 2018


March 14, 2018



March 26, 2018



0.50



3,129Total dividends declared









$
2.06


$
14,189  Date Declared

Record Date


Payment Date


Amountper Share


TotalAmount*November 29, 2017


December 15, 2017



December 27, 2017


$
0.49


$
3,052August 28, 2017


September 15, 2017



September 26, 2017



0.48



2,866May 30, 2017


June 15, 2017



June 27, 2017



0.47



2,792February 28, 2017


March 15, 2017



March 28, 2017



0.46



2,666Total dividends declared









$
1.90


$
11,376Date Declared

Record Date


Payment Date


Amountper Share


TotalAmount*January 12, 2017


January 31, 2017



February 9, 2017


$
0.45


$
2,585October 5, 2016


October 31, 2016



November 9, 2016



0.44



2,509August 8, 2016


August 24, 2016



September 5, 2016



0.20



1,151July 7, 2016


July 29, 2016



August 9, 2016



0.43



2,466March 31, 2016


April 15, 2016



April 27, 2016



0.41



2,346Total dividends declared









$
1.93


$
11,057Date Declared

Record Date


Payment Date


Amountper Share


TotalAmount*January 12, 2016


February 1, 2016



February 29, 2016


$
0.40


$
2,278October 7, 2015


November 2, 2015



November 30, 2015



0.36



2,028July 8, 2015


August 3, 2015



August 31, 2015



0.33



1,844May 14, 2015


May 26, 2015



June 5, 2015



1.00



5,429April 9, 2015


May 4, 2015



May 29, 2015



0.27



1,466Total dividends declared









$
2.36


$
13,045Date Declared

Record Date


Payment Date


Amountper Share


TotalAmount*September 24, 2014


February 2, 2015



February 27, 2015


$
0.22


$
1,189September 24, 2014


November 3, 2014



November 28, 2014



0.18



968Total dividends declared









$
0.40


$
2,157  *
Total amount is calculated based on the number of shares outstanding at the date of record.  F-44




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##### Table of Contents

Note 13. Financial Highlights The following is a schedule of financial highlights as of and for the years ended February 28, 2019, February 28, 2018, February 28, 2017,
February 29, 2016 and February 28, 2015:  February 28,2019


February 28,2018


February 28,2017


February 29,2016


February 28,2015Per share dataNet asset value at beginning of period

$
22.96


$
21.97


$
22.06


$
22.70


$
21.08Adoption of ASC 606


(0.01
)














Net asset value at beginning of period, as adjusted


22.95



21.97



22.06



22.70



21.08Net investment income(1)


2.60



2.11



1.68



1.91



1.80Net realized and unrealized gains (losses) on investments(1)


0.03



0.82



0.30



0.18



0.24Net increase in net assets resulting from operations


2.63



2.93



1.98



2.09



2.04Distributions declared from net investment income


(2.06
)


(1.90
)


(1.93
)


(2.36
)


(0.40
)Total distributions to stockholders


(2.06
)


(1.90
)


(1.93
)


(2.36
)


(0.40
)Issuance of common stock above net asset value(2)


0.15















Dilution(3)


(0.05
)


(0.04
)


(0.14
)


(0.37
)


(0.02
)Net asset value at end of period

$
23.62


$
22.96


$
21.97


$
22.06


$
22.70Net assets at end of period

$
180,875,187


$
143,691,367


$
127,294,777


$
125,149,875


$
122,598,742Shares outstanding at end of period


7,657,156



6,257,029



5,794,600



5,672,227



5,401,899Per share market value at end of period

$
23.04


$
21.86


$
22.74


$
14.22


$
15.76Total return based on market value(4)


16.11
%


5.28
%


80.83
%


4.27
%


1.63
%Total return based on net asset value(5)


13.33
%


14.45
%


12.62
%


11.10
%


10.09
%Ratio Supplemental data:Ratio of net investment income to average net assets


11.22
%


9.37
%


7.57
%


8.52
%


8.11
%Expenses:Ratio of operating expenses to average net assets


6.98
%


7.81
%


7.21
%


6.93
%


6.52
%Ratio of incentive management fees to average net assets


3.00
%


3.19
%


2.31
%


1.78
%


2.14
%Ratio of interest and debt financing expenses to average net assets


8.05
%


8.05
%


7.75
%


6.75
%


6.19
%Ratio of total expenses to average net assets


18.03
%


19.05
%


18.41
%


15.46
%


14.85
%Portfolio turnover rate(6)


35.26
%


19.73
%


43.76
%


26.22
%


31.28
%Asset coverage ratio per unit(7)


2,345



2,930



2,710



3,025



3,117Average market value per unitCredit Facility(8)


N/A



N/A



N/A



N/A



N/ASBA Debentures(8)


N/A



N/A



N/A



N/A



N/A2020 Notes


N/A



N/A



N/A


$
25.24


$
25.462023 Notes

$
25.74


$
26.05


$
25.89



N/A



N/A2025 Notes

$
24.97



N/A



N/A



N/A



N/A  (1)
Per share amounts are calculated using the weighted average shares outstanding during the period. (2)
The continuous issuance of common stock may cause an incremental increase in net asset value per share due to
the sale of shares at the then prevailing public offering price and the receipt of net proceeds per share by the Company in excess of net asset value per share on each subscription closing date. The per share data was derived by computing (i) the
sum of (A) the number of shares issued in connection with subscriptions and/or distribution reinvestment on each share transaction date multiplied by (B) the differences between the net proceeds per share and the net asset value per share on each
share transaction date, divided by (ii) the total shares outstanding during the period. (3)
Represents the dilutive effect of issuing common stock below net asset value per share during the period in
connection with the satisfaction of the Companys annual RIC distribution requirement. See Note 12, Dividend. (4)
Total investment return is calculated assuming a purchase of common shares at the current market value on the
first day and a sale at the current market value on the last day of the periods reported. Dividends and distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the Companys DRIP. Total
investment return does not reflect brokerage commissions. (5)
Total investment return is calculated assuming a purchase of common shares at the current net asset value on
the first day and a sale at the current net asset value on the last day of the periods reported. Dividends and distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the Companys DRIP.
Total investment return does not reflect brokerage commissions. (6)
Portfolio turnover rate is calculated using the lesser of year-to-date sales or year-to-date purchases over the
average of the invested assets at fair value. (7)
Asset coverage ratio per unit is the ratio of the carrying value of our total consolidated assets, less all
liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness. Asset coverage ratio per unit is expressed in terms of dollar amounts per $1,000 of indebtedness. Asset
coverage ratio per unit does not include unfunded commitments. The inclusion of unfunded commitments in the calculation of the asset coverage ratio per unit would not cause us to be below the required amount of regulatory coverage. (8)
The Credit Facility and SBA Debentures are not registered for public trading.  F-45




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##### Table of Contents

Note 14. Selected Quarterly Data (Unaudited)  2019($ in thousands, except per share numbers)

Qtr 4


Qtr 3


Qtr 2


Qtr 1Total investment income

$
12,984


$
12,833


$
11,403


$
10,488Net investment income


4,091



5,139



5,145



3,927Net realized and unrealized gain (loss)


3,764



(1,470
)


(2,002
)


(85
)Net increase in net assets resulting from operations


7,855



3,669



3,143



3,842Net investment income per common share

$
0.54


$
0.69


$
0.74


$
0.63Net realized and unrealized gain (loss) per common share

$
0.50


$
(0.20
)

$
(0.29
)

$
(0.01
)Dividends declared per common share

$
0.53


$
0.52


$
0.51


$
0.50Net asset value per common share

$
23.62


$
23.13


$
23.16


$
23.062018($ in thousands, except per share numbers)

Qtr 4


Qtr 3


Qtr 2


Qtr 1Total investment income

$
10,128


$
9,526


$
10,254


$
8,707Net investment income


3,321



3,016



2,891



3,504Net realized and unrealized gain (loss)


2,211



1,247



3,979



(2,490
)Net increase in net assets resulting from operations


5,532



4,263



6,870



1,014Net investment income per common share

$
0.53


$
0.50


$
0.49


$
0.60Net realized and unrealized gain (loss) per common share

$
0.35


$
0.21


$
0.67


$
(0.42
)Dividends declared per common share

$
0.49


$
0.48


$
0.47


$
0.46Net asset value per common share

$
22.96


$
22.58


$
22.37


$
21.692017($ in thousands, except per share numbers)

Qtr 4


Qtr 3


Qtr 2


Qtr 1Total investment income

$
8,359


$
8,442


$
8,448


$
7,908Net investment income


1,099



3,419



2,604



2,539Net realized and unrealized gain (loss)


155



(1,845
)


2,668



749Net increase in net assets resulting from operations


1,254



1,574



5,272



3,288Net investment income per common share

$
0.19


$
0.60


$
0.45


$
0.44Net realized and unrealized gain (loss) per common share

$
0.03


$
(0.32
)

$
0.46


$
0.13Dividends declared per common share

$
0.45


$
0.44


$
0.63


$
0.41Net asset value per common share

$
21.97


$
22.21


$
22.39


$
22.11 Note 15. Subsequent Events The Company has evaluated subsequent events through the filing of this Form 10-K and determined that
there have been no events that have occurred that would require adjustments to the Companys consolidated financial statements and disclosures in the consolidated financial statements except for the following: On February 26, 2019, our board of directors declared a dividend of $0.54 per share, which was paid on March 28, 2019, to common
stockholders of record as of March 14, 2019. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to our DRIP. Based on shareholder elections, the dividend consisted of
approximately $3.5 million in cash and 31,240 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on
a price of $21.36 per share, which equaled 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.  F-46




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##### Table of Contents

INDEX TO OTHER FINANCIAL STATEMENTS Saratoga Investment Corp. CLO 2013-1, Ltd.  PAGEReport of Independent Auditors


S-2Statements of Assets and Liabilities as of February 
28, 2019 and February 28, 2018


S-3Statements of Operations for the years ended February 
28, 2019, February 28, 2018 and February 28, 2017


S-4Statements of Changes in Net Assets for the years ended February 
28, 2019, February 28, 2018 and February 28, 2017


S-5Statements of Cash Flows for the years ended February 
28, 2019, February 28, 2018 and February 28, 2017


S-6Schedules of Investments as of February 
28, 2019 and February 28, 2018


S-7Notes to Financial Statements


S-15 IMPORTANT NOTE In accordance with certain SEC rules, Saratoga Investment Corp. (the Company) is providing additional information regarding one of
its portfolio companies, Saratoga Investment Corp. CLO 2013-1, Ltd. (Saratoga CLO). The Company owns 100% of the subordinated notes of the Saratoga CLO. The additional financial information
regarding the Saratoga CLO does not directly impact the Companys financial position, results of operations or cash flows.  S-1




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##### Table of Contents

Report of Independent Auditors The Board of Directors Saratoga Investment Corp. CLO 2013-1, Ltd. We have audited the accompanying financial statements of Saratoga Investment Corp. CLO 2013- 1, Ltd.,
which comprise the statement of assets and liabilities, including the schedule of investments, as of February 28, 2019, and the related statements of operations, changes in net assets and cash flows for the year then ended, and the related
notes to the financial statements. Managements Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in conformity with U.S. generally accepted accounting
principles; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to
express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud
or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used
and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements
referred to above present fairly, in all material respects, the financial position of Saratoga Investment Corp. CLO 2013-1, Ltd. at February 28, 2019, and the results of its operations, changes in its net
assets and its cash flows for the year then ended in conformity with U.S. generally accepted accounting principles. Report of Other Auditors on
February 28, 2018 Financial Statements The financial statements of Saratoga Investment Corp. CLO 2013-1,
Ltd. for the years ended February 28, 2018 and for each of the two years in the period ended February 28, 2018, were audited by other auditors who expressed an unmodified opinion on those statements on May 14, 2018. /s/ Ernst & Young Ltd. Grand Cayman,
Cayman Islands May 13, 2019 A member firm of Ernst
& Young Global Limited  S-2




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##### Table of Contents

Saratoga Investment Corp. CLO 2013-1, Ltd. Statements of Assets and Liabilities  February 28, 2019


February 28, 2018ASSETSInvestments at fair valueLoans at fair value (amortized cost of $506,145,483 and $307,926,355, respectively)

$
498,389,369


$
305,823,704Equities at fair value (amortized cost of $3,531,218 and $3,531,218, respectively)


15,691



6,599Total investments at fair value (amortized cost of $509,676,701 and $311,457,573,
respectively)


498,405,060



305,830,303Cash and cash equivalents


18,495,653



5,769,820Receivable from open trades


7,855,309



12,395,571Interest receivable (net of reserve of $168,443 and $0, respectively)


2,104,495



1,653,928Total assets

$
526,860,517


$
325,649,622LIABILITIESInterest payable

$
4,963,472


$
1,190,428Payable from open trades


26,232,247



24,471,358Accrued base management fee


108,419



33,545Accrued subordinated management fee


433,675



134,179Accrued incentive fee






65,300Due to affiliate


1,673,747



Accounts payable and accrued expenses


1,221,110



Saratoga Investment Corp. CLO 2013-1, Ltd.
Notes:Class A-1 Notes






170,000,000Class 
A-1FL-R-2 Senior Secured Floating Rate Notes


255,000,000



Class 
A-1FXD-R-2 Senior Secured Fixed Rate Notes


25,000,000



Class A-2 Notes






20,000,000Class-A-2-R-2 Senior Secured Floating Rate Notes


40,000,000



Class B Notes






44,800,000Class B-R-2
Senior Secured Floating Rate Notes


59,500,000



Class C Notes






16,000,000Discount on Class C Notes






(68,370
)Class C-R-2
Deferrable Mezzanine Floating Rate Notes


22,500,000



Discount on
Class C-R-2 Notes


(585,059
)


Class D Notes






14,000,000Discount on Class D Notes






(317,409
)Class D-R-2
Deferrable Mezzanine Floating Rate Notes


31,000,000



Discount on
Class D-R-2 Notes


(1,064,636
)


Class E Notes






13,100,000Class 
E-1-R-2 Deferrable Mezzanine Floating Rate Notes


27,000,000



Class 
E-2-R-2 Deferrable Mezzanine Fixed Rate Notes






Class F Notes






4,500,000Class F-R-2
Deferrable Junior Floating Rate Notes


2,500,000



Class G-R-2
Deferrable Junior Floating Rate Notes


7,500,000



Deferred debt financing costs


(2,465,897
)


(1,014,090
)Subordinated Notes


69,500,000



30,000,000Discount on Subordinated Notes


(25,256,892
)


Total liabilities

$
544,760,186


$
336,894,941NET ASSETSOrdinary equity, par value $1.00, 250 ordinary shares authorized, 250 and 250 issued and
outstanding, respectively

$
250


$
250Total distributable earnings (loss)


(17,899,919
)


(11,245,569
)Total net assets (deficit)


(17,899,669
)


(11,245,319
)Total liabilities and net assets

$
526,860,517


$
325,649,622 Certain prior year numbers have been adjusted to conform with the SEC final rules on disclosure updates and simplification
effective November 5, 2018. See Note 2. See accompanying notes to financial statements.  S-3




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##### Table of Contents

Saratoga Investment Corp. CLO 2013-1, Ltd. Statements of Operations  For the year endedFebruary 28, 2019


February 28, 2018


February 28, 2017INVESTMENT INCOMEInterest from investments

$
23,413,966


$
17,435,371


$
15,443,693Interest from cash and cash equivalents


25,848



14,644



11,216Other income


623,032



415,428



643,457Total investment income


24,062,846



17,865,443



16,098,366EXPENSESInterest and debt financing expenses


19,612,756



13,896,547



13,404,313Base management fee


344,436



301,863



585,575Subordinated management fee


1,377,744



1,207,454



913,426Incentive fees


567,932



591,368



Professional fees


345,407



216,672



106,564Trustee expenses


181,492



160,883



128,083Miscellaneous fee expense


98,496



95,314



49,279Loss on extinguishment of debt


1,199,851







6,143,816Total expenses


23,728,114



16,470,101



21,331,056NET INVESTMENT INCOME (LOSS)


334,732



1,395,342



(5,232,690
)REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:Net realized gain (loss) on investments


(1,344,711
)


619,531



358,169Net change in unrealized appreciation (depreciation) on investments


(5,644,371
)


(286,416
)


13,458,113Net realized and unrealized gain (loss) on investments


(6,989,082
)


333,115



13,816,282NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

$
(6,654,350
)

$
1,728,457


$
8,583,592 See accompanying notes to financial statements.  S-4




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##### Table of Contents

Saratoga Investment Corp. CLO 2013-1, Ltd. Statements of Changes in Net Assets  For the year endedFebruary 28,2019


February 28,2018


February 28,2017INCREASE (DECREASE) FROM OPERATIONS:Net investment income (loss)

$
334,732


$
1,395,342


$
(5,232,690
)Net realized gain (loss) from investments


(1,344,711
)


619,531



358,169Net change in unrealized appreciation (depreciation) on investments


(5,644,371
)


(286,416
)


13,458,113Net increase (decrease) in net assets resulting from operations


(6,654,350
)


1,728,457



8,583,592Total increase (decrease) in net assets


(6,654,350
)


1,728,457



8,583,592Net assets at beginning of period


(11,245,319
)


(12,973,776
)


(21,557,368
)Net assets at end of period

$
(17,899,669
)

$
(11,245,319
)

$
(12,973,776
) See accompanying notes to financial statements.  S-5




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##### Table of Contents

Saratoga Investment Corp. CLO 2013-1, Ltd. Statements of Cash Flows  For the year endedFebruary 28,2019


February 28,2018


February 28,2017Operating activitiesNET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

$
(6,654,350
)

$
1,728,457


$
8,583,592ADJUSTMENTS TO RECONCILE NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS TO NET CASH
PROVIDED BY (USED BY) OPERATING ACTIVITIES:Paid-in-kind
interest income


(178,424
)


(350,309
)


(288,557
)Net accretion of discount on investments


(725,719
)


(1,294,300
)


(543,181
)Amortization of discount and deferred financing costs on debt


1,140,966



177,011



829,475Loss on extinguishment of debt


1,199,851







6,143,816Net realized (gain) loss from investments


1,344,711



(619,531
)


(358,169
)Net change in unrealized appreciation (depreciation) on investments


5,644,371



286,416



(13,458,113
)Proceeds from sale and redemption of investments


179,863,573



150,035,021



161,551,546Purchase of investments


(378,523,269
)


(161,426,952
)


(154,519,385
)(Increase) decrease in operating assets:Interest receivable


(450,567
)


(210,063
)


254,697Receivable from open trades


4,540,262



(10,890,571
)


1,186,831Other assets






6,049



(6,049
)Increase (decrease) in operating liabilities:Interest payable


3,773,044



158,971



405,417Payable for open trades


1,760,889



15,039,806



2,307,698Accrued base management fee


74,874



(676
)


(50,787
)Accrued subordinated management fee


299,496



(2,706
)


51,877Accrued incentive fee


(65,300
)


65,300



Due to affiliate


1,673,747







Accounts payable and accrued expenses


1,221,110







NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES


(184,060,735
)


(7,298,077
)


12,090,708Financing activitiesBorrowings on debt


482,078,750







282,320,000Paydowns on debt


(282,400,000
)






(282,457,781
)Deferred debt financing costs


(2,892,182
)


21,342



(1,256,005
)NET CASH PROVIDED (USED IN) BY FINANCING ACTIVITIES


196,786,568



21,342



(1,393,786
)NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


12,725,833



(7,276,735
)


10,696,922CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD


5,769,820



13,046,555



2,349,633CASH AND CASH EQUIVALENTS, END OF PERIOD

$
18,495,653


$
5,769,820


$
13,046,555Supplemental Information:Interest paid during the period

$
14,698,746


$
13,560,565


$
12,169,421Supplemental non-cash information:Paid-in-kind
interest income

$
178,424


$
350,309


$
288,557Net accretion of discount on investments


725,719



1,294,300



543,181Amortization of deferred debt financing costs


1,140,966



177,011



829,475 See accompanying notes to financial statements.  S-6




---

##### Table of Contents

Saratoga Investment Corp. CLO 2013-1 Ltd. Schedule of Investments February 28, 2019  Issuer Name

Industry

Asset Name

AssetType

Reference Rate/Spread

LIBORFloor


CurrentRate(All In)


MaturityDate


Principal/Number ofShares


Cost


Fair ValueEducation Management II LLC

Services: Consumer

A-1 Preferred Shares

Equity
















6,692


$
669,214


$
13,384Education Management II LLC

Services: Consumer

A-2 Preferred Shares

Equity
















18,975



1,897,538



1,670New Millennium Holdco, Inc.

Healthcare & Pharmaceuticals

Common Stock

Equity
















14,813



964,466



63724 Hour Fitness Worldwide Inc.

Services: Consumer

Term Loan (5/18)

Loan

1M USD LIBOR +  3.50%


0.00
%


5.99
%


5/30/2025


$
2,990,000



2,978,426



2,987,518ABB Con-Cise Optical Group LLC

Healthcare & Pharmaceuticals

Term Loan B

Loan

1M USD LIBOR +  5.00%


1.00
%


7.49
%


6/15/2023



2,103,445



2,080,167



2,037,712Achilles Acquisition LLC

Banking Finance Insurance & Real Estate

Term Loan (09/18)

Loan

1M USD LIBOR +  4.00%


0.00
%


6.49
%


10/13/2025



6,000,000



5,985,885



5,962,500Acosta Inc.

Media: Advertising Printing & Publishing

Term Loan B (1st Lien)

Loan

1M USD LIBOR +  3.25%


1.00
%


5.74
%


9/27/2021



1,915,375



1,909,171



957,687ADMI Corp.

Services: Consumer

Term Loan B

Loan

1M USD LIBOR +  3.00%


0.00
%


5.49
%


4/30/2025



1,990,000



1,981,204



1,968,607Advantage Sales & Marketing Inc.

Services: Business

First Lien Term Loan

Loan

1M USD LIBOR +  3.25%


1.00
%


5.74
%


7/23/2021



2,396,156



2,394,791



2,098,889Advantage Sales & Marketing Inc.

Services: Business

Term Loan B Incremental

Loan

1M USD LIBOR +  3.25%


1.00
%


5.74
%


7/23/2021



494,975



487,610



431,247Aegis Toxicology Sciences Corporation

Healthcare & Pharmaceuticals

Term Loan

Loan

3M USD LIBOR +  5.50%


1.00
%


8.11
%


5/9/2025



3,990,000



3,954,925



3,850,350Agiliti Health Inc.

Healthcare & Pharmaceuticals

Delayed Draw Term Loan

Loan

1M USD LIBOR +  3.00%


0.00
%


5.49
%


1/5/2026



500,000



500,000



499,375Agrofresh Inc.

Beverage Food & Tobacco

Term Loan

Loan

3M USD LIBOR +  4.75%


1.00
%


7.36
%


7/30/2021



2,919,744



2,915,422



2,883,247AI Mistral (Luxembourg) Subco Sarl

High Tech Industries

Term Loan

Loan

1M USD LIBOR +  3.00%


1.00
%


5.49
%


3/11/2024



491,250



491,250



455,020AIS Holdco LLC

Services: Business

Term Loan

Loan

3M USD LIBOR +  5.00%


0.00
%


7.61
%


8/15/2025



2,484,375



2,472,344



2,422,266Akorn Inc.

Healthcare & Pharmaceuticals

Term Loan B

Loan

1M USD LIBOR +  5.50%


1.00
%


7.99
%


4/16/2021



398,056



397,485



316,455Albertsons LLC

Retail

Term Loan B7

Loan

1M USD LIBOR +  3.00%


0.75
%


5.49
%


11/17/2025



4,151,511



4,140,731



4,124,733Alchemy US Holdco 1 LLC

Metals & Mining

Term Loan

Loan

6M USD LIBOR +  5.50%


0.00
%


8.19
%


10/10/2025



2,000,000



1,971,432



1,990,000Alera Group Intermediate Holdings Inc.

Banking Finance Insurance & Real Estate

Term Loan B

Loan

1M USD LIBOR +  4.50%


0.00
%


6.99
%


8/1/2025



498,750



497,585



499,997Alion Science and Technology Corporation

Aerospace & Defense

Term Loan B (1st Lien)

Loan

1M USD LIBOR +  4.50%


1.00
%


6.99
%


8/19/2021



3,626,521



3,620,261



3,614,445Allen Media LLC

Media: Diversified & Production

Term Loan B

Loan

3M USD LIBOR +  6.50%


1.00
%


7.50
%


8/30/2023



3,000,000



2,931,901



2,872,500Altisource S.a r.l.

Banking Finance Insurance & Real Estate

Term Loan B (03/18)

Loan

3M USD LIBOR +  4.00%


1.00
%


6.61
%


4/3/2024



1,677,030



1,666,628



1,639,296Altra Industrial Motion Corp.

Capital Equipment

Term Loan

Loan

1M USD LIBOR +  2.00%


0.00
%


4.49
%


10/1/2025



1,955,223



1,950,844



1,930,783American Greetings Corporation

Media: Advertising Printing & Publishing

Term Loan

Loan

1M USD LIBOR +  4.50%


1.00
%


6.99
%


4/5/2024



4,982,450



4,979,868



4,929,536American Residential Services LLC

Services: Consumer

Term Loan B

Loan

1M USD LIBOR +  4.00%


1.00
%


6.49
%


6/30/2022



3,966,883



3,954,749



3,907,380Amynta Agency Borrower Inc.

Banking Finance Insurance & Real Estate

Term Loan

Loan

1M USD LIBOR +  4.00%


0.00
%


6.49
%


2/28/2025



3,497,500



3,455,778



3,410,063Anastasia Parent LLC

Consumer goods: Non-durable

Term Loan

Loan

1M USD LIBOR +  3.75%


0.00
%


6.24
%


8/11/2025



997,500



992,909



944,732Anchor Glass Container Corporation

Containers Packaging & Glass

Term Loan (07/17)

Loan

1M USD LIBOR +  2.75%


1.00
%


5.24
%


12/7/2023



490,038



488,206



392,520AqGen Ascensus Inc.

Services: Consumer

Term Loan

Loan

1M USD LIBOR +  3.50%


1.00
%


5.99
%


12/5/2022



408,906



408,242



405,839Aramark Services Inc.

Services: Consumer

Term Loan B-2

Loan

1M USD LIBOR +  1.75%


0.00
%


4.24
%


3/28/2024



1,294,904



1,294,904



1,287,212Arctic Glacier U.S.A. Inc.

Beverage Food & Tobacco

Term Loan (3/18)

Loan

1M USD LIBOR +  3.50%


1.00
%


5.99
%


3/20/2024



3,350,967



3,329,140



3,283,948Aretec Group Inc.

Banking Finance Insurance & Real Estate

Term Loan (10/18)

Loan

1M USD LIBOR +  4.25%


0.00
%


6.74
%


10/1/2025



2,000,000



1,995,758



1,975,000ASG Technologies Group Inc.

High Tech Industries

Term Loan

Loan

1M USD LIBOR +  3.50%


1.00
%


5.99
%


7/31/2024



493,763



491,798



485,739AssetMark Financial Holdings Inc.

Banking Finance Insurance & Real Estate

Term Loan

Loan

3M USD LIBOR +  3.50%


0.00
%


6.11
%


11/14/2025



2,500,000



2,496,120



2,490,625Astoria Energy LLC

Energy: Electricity

Term Loan

Loan

1M USD LIBOR +  4.00%


1.00
%


6.49
%


12/24/2021



1,406,149



1,397,673



1,407,612Asurion LLC

Banking Finance Insurance & Real Estate

Term Loan B-4 (Replacement)

Loan

1M USD LIBOR +  3.00%


0.00
%


5.49
%


8/4/2022



2,084,268



2,077,055



2,082,788Asurion LLC

Banking Finance Insurance & Real Estate

Term Loan B6

Loan

1M USD LIBOR +  3.00%


0.00
%


5.49
%


11/3/2023



497,955



494,277



497,512Athenahealth Inc.

Healthcare & Pharmaceuticals

Term Loan B

Loan

3M USD LIBOR +  4.50%


0.00
%


7.11
%


2/11/2026



2,000,000



1,960,211



1,988,760Avaya Inc.

Telecommunications

Term Loan B

Loan

2M USD LIBOR +  4.25%


0.00
%


6.82
%


12/16/2024



1,990,000



1,974,743



1,987,015Avolon TLB Borrower 1 US LLC

Capital Equipment

Term Loan B3

Loan

1M USD LIBOR +  2.00%


0.75
%


4.49
%


1/15/2025



913,731



909,648



912,763Ball Metalpack Finco LLC

Containers Packaging & Glass

Term Loan

Loan

1M USD LIBOR +  4.50%


0.00
%


6.99
%


7/31/2025



3,984,987



3,966,751



3,970,044Bausch Health Companies Inc.

Healthcare & Pharmaceuticals

Term Loan B (05/18)

Loan

1M USD LIBOR +  3.00%


0.00
%


5.49
%


6/2/2025



1,752,582



1,745,304



1,752,144Bausch Health Companies Inc.

Healthcare & Pharmaceuticals

Term Loan

Loan

1M USD LIBOR +  2.75%


0.00
%


5.24
%


11/27/2025



481,250



476,571



479,310Blackboard Inc.

High Tech Industries

Term Loan B4

Loan

3M USD LIBOR +  5.00%


1.00
%


7.61
%


6/30/2021



2,932,500



2,919,562



2,818,866Blount International Inc.

Forest Products & Paper

Term Loan B (09/18)

Loan

1M USD LIBOR +  3.75%


1.00
%


6.24
%


4/12/2023



3,488,756



3,485,266



3,484,395Blucora Inc.

High Tech Industries

Term Loan (11/17)

Loan

1M USD LIBOR +  3.00%


1.00
%


5.49
%


5/22/2024



706,667



703,725



704,900Boxer Parent Company Inc.

Services: Business

Term Loan

Loan

3M USD LIBOR +  4.25%


0.00
%


6.86
%


10/2/2025



2,500,000



2,476,591



2,484,150Bracket Intermediate Holding Corp.

Healthcare & Pharmaceuticals

Term Loan

Loan

3M USD LIBOR +  4.25%


0.00
%


6.86
%


9/5/2025



997,500



992,812



985,031Broadstreet Partners Inc.

Banking Finance Insurance & Real Estate

Term Loan B2

Loan

1M USD LIBOR +  3.25%


1.00
%


5.74
%


11/8/2023



1,035,177



1,032,997



1,032,589Brookfield WEC Holdings Inc.

Energy: Electricity

Term Loan

Loan

1M USD LIBOR +  3.75%


0.75
%


6.24
%


8/1/2025



2,000,000



1,990,924



2,001,880Cable & Wireless Communications Limited

Telecommunications

Term Loan B4

Loan

1M USD LIBOR +  3.25%


0.00
%


5.74
%


1/30/2026



2,500,000



2,497,271



2,488,200Cable One Inc.

Media: Broadcasting & Subscription

Term Loan B

Loan

1M USD LIBOR +  1.75%


0.00
%


4.24
%


5/1/2024



492,500



492,049



490,348Calceus Acquisition Inc.

Consumer goods: Non-durable

Term Loan B

Loan

1M USD LIBOR +  5.50%


0.00
%


7.99
%


2/12/2025



1,000,000



987,601



995,420Callaway Golf Company

Retail

Term Loan B

Loan

1M USD LIBOR +  4.50%


0.00
%


6.99
%


1/2/2026



750,000



735,504



753,127Canyon Valor Companies Inc.

Media: Advertising Printing & Publishing

Term Loan B

Loan

3M USD LIBOR +  2.75%


0.00
%


5.36
%


6/16/2023



939,191



936,843



929,019Capital Automotive L.P.

Banking Finance Insurance & Real Estate

First Lien Term Loan

Loan

1M USD LIBOR +  2.50%


1.00
%


4.99
%


3/25/2024



478,053



476,166



470,284CareerBuilder LLC

Services: Business

Term Loan

Loan

3M USD LIBOR +  6.75%


1.00
%


9.36
%


7/31/2023



2,266,211



2,224,216



2,257,713Casa Systems Inc.

Telecommunications

Term Loan

Loan

1M USD LIBOR +  4.00%


1.00
%


6.49
%


12/20/2023



1,470,000



1,459,340



1,451,625CCS-CMGC Holdings Inc.

Healthcare & Pharmaceuticals

Term Loan

Loan

1M USD LIBOR +  5.50%


0.00
%


7.99
%


10/1/2025



2,500,000



2,476,183



2,393,750Cengage Learning Inc.

Media: Advertising Printing & Publishing

Term Loan

Loan

1M USD LIBOR +  4.25%


1.00
%


6.74
%


6/7/2023



1,462,458



1,450,545



1,343,999CenturyLink Inc.

Telecommunications

Term Loan B

Loan

1M USD LIBOR +  2.75%


0.00
%


5.24
%


1/31/2025



3,970,000



3,946,810



3,904,813CEOC LLC

Hotel Gaming & Leisure

Term Loan

Loan

1M USD LIBOR +  2.00%


0.00
%


4.49
%


10/4/2024



990,000



990,000



980,734Charter Communications Operating LLC.

Media: Broadcasting & Subscription

Term Loan (12/17)

Loan

1M USD LIBOR +  2.00%


0.00
%


4.49
%


4/30/2025



1,584,000



1,582,488



1,578,773Compass Power Generation L.L.C.

Utilities: Electric

Term Loan B (08/18)

Loan

1M USD LIBOR +  3.50%


1.00
%


5.99
%


12/20/2024



1,953,052



1,948,283



1,948,775 See accompanying notes to financial statements.  S-7




---

##### Table of Contents

Issuer Name

Industry

Asset Name

AssetType

Reference Rate/Spread

LIBORFloor


CurrentRate(All In)


MaturityDate


Principal/Numberof Shares


Cost


Fair ValueCompuware Corporation

High Tech Industries

Term Loan (08/18)

Loan

1M USD LIBOR +  3.50%


0.00
%


5.99
%


8/22/2025



500,000



498,788



501,250Concordia International Corp.

Healthcare & Pharmaceuticals

Term Loan

Loan

1M USD LIBOR +  5.50%


1.00
%


7.99
%


9/6/2024



1,207,930



1,145,627



1,145,190Consolidated Aerospace Manufacturing LLC

Aerospace & Defense

Term Loan (1st Lien)

Loan

1M USD LIBOR +  3.75%


1.00
%


6.24
%


8/11/2022



2,418,750



2,412,445



2,409,680Consolidated Communications Inc.

Telecommunications

Term Loan B

Loan

1M USD LIBOR +  3.00%


1.00
%


5.49
%


10/5/2023



1,490,574



1,477,850



1,451,133Covia Holdings Corporation

Metals & Mining

Term Loan

Loan

3M USD LIBOR +  3.75%


1.00
%


6.36
%


6/2/2025



995,000



995,000



844,685CPI Acquisition Inc

Banking Finance Insurance & Real Estate

Term Loan B (1st Lien)

Loan

6M USD LIBOR +  4.50%


1.00
%


7.19
%


8/17/2022



1,436,782



1,424,775



894,396Crown Subsea Communications Holding Inc

Construction & Building

Term Loan

Loan

1M USD LIBOR +  6.00%


0.00
%


8.49
%


11/3/2025



4,000,000



3,957,810



3,975,000CSC Holdings LLC

Media: Broadcasting & Subscription

Term Loan B (03/17)

Loan

1M USD LIBOR +  2.25%


0.00
%


4.74
%


7/17/2025



1,994,924



1,970,647



1,967,853CSC Holdings LLC

Media: Broadcasting & Subscription

Term Loan B

Loan

1M USD LIBOR +  2.25%


0.00
%


4.74
%


1/15/2026



500,000



498,804



493,250CT Technologies Intermediate Hldgs Inc

Healthcare & Pharmaceuticals

New Term Loan

Loan

1M USD LIBOR +  4.25%


1.00
%


6.74
%


12/1/2021



1,440,263



1,433,574



1,229,984Cumulus Media New Holdings Inc.

Media: Broadcasting & Subscription

Term Loan

Loan

1M USD LIBOR +  4.50%


1.00
%


6.99
%


5/13/2022



335,864



333,061



329,006Daseke Companies Inc.

Transportation: Cargo

Replacement Term Loan

Loan

1M USD LIBOR +  5.00%


1.00
%


7.49
%


2/27/2024



1,975,651



1,965,011



1,965,772Dealer Tire LLC

Automotive

Term Loan B

Loan

1M USD LIBOR +  5.50%


0.00
%


7.99
%


12/12/2025



3,000,000



2,892,107



3,000,000Delek US Holdings Inc.

Utilities: Oil & Gas

Term Loan B

Loan

1M USD LIBOR +  2.25%


0.00
%


4.74
%


3/31/2025



2,992,462



2,956,032



2,952,572Dell International L.L.C.

High Tech Industries

Term Loan B

Loan

1M USD LIBOR +  2.00%


0.75
%


4.49
%


9/7/2023



3,974,937



3,922,161



3,960,031Delta 2 (Lux) SARL

Hotel Gaming & Leisure

Term Loan B

Loan

1M USD LIBOR +  2.50%


1.00
%


4.99
%


2/1/2024



1,318,289



1,315,251



1,289,036DHX Media Ltd.

Media: Broadcasting & Subscription

Term Loan

Loan

1M USD LIBOR +  3.75%


1.00
%


6.24
%


12/29/2023



332,042



330,546



320,005Digital Room Holdings Inc.

Media: Advertising Printing & Publishing

Term Loan

Loan

1M USD LIBOR +  5.00%


1.00
%


7.49
%


12/29/2023



3,101,339



3,074,510



3,070,325Dole Food Company Inc.

Beverage Food & Tobacco

Term Loan B

Loan

Prime +  2.75%


1.00
%


3.75
%


4/8/2024



481,250



479,436



473,733Drew Marine Group Inc.

Transportation: Consumer

First Lien Term Loan

Loan

1M USD LIBOR +  3.25%


1.00
%


5.74
%


11/19/2020



2,841,040



2,828,735



2,819,732DTZ U.S. Borrower LLC

Construction & Building

Term Loan B

Loan

1M USD LIBOR +  3.25%


0.00
%


5.74
%


8/21/2025



5,985,000



5,957,110



5,936,402Dynatrace LLC

High Tech Industries

Term Loan

Loan

1M USD LIBOR +  3.25%


0.00
%


5.74
%


8/22/2025



1,000,000



1,000,000



994,580Eagletree-Carbide Acquisition Corp.

High Tech Industries

Term Loan

Loan

3M USD LIBOR +  4.25%


1.00
%


6.86
%


8/28/2024



3,967,480



3,948,716



3,927,805Education Management II LLC (a)

Services: Consumer

Term Loan A

Loan

Prime +  5.50%


1.00
%


6.50
%


7/2/2020



423,861



419,105



8,477Education Management II LLC (a)

Services: Consumer

Term Loan B

Loan

Prime +  8.50%


1.00
%


9.50
%


7/2/2020



954,307



945,813



840EIG Investors Corp.

High Tech Industries

Term Loan (06/18)

Loan

3M USD LIBOR +  3.75%


1.00
%


6.36
%


2/9/2023



2,410,685



2,394,658



2,397,282Emerald 2 Ltd. (Eagle US / Emerald Newco / ERM Can

Environmental Industries

Term Loan

Loan

3M USD LIBOR +  4.00%


1.00
%


6.61
%


5/14/2021



988,553



985,300



978,745Emerald Performance Materials LLC

Chemicals Plastics & Rubber

Term Loan

Loan

1M USD LIBOR +  3.50%


1.00
%


5.99
%


7/30/2021



475,777



474,869



469,682Endo Luxembourg Finance Company I S.a.r.l.

Healthcare & Pharmaceuticals

Term Loan B (4/17)

Loan

1M USD LIBOR +  4.25%


0.75
%


6.74
%


4/29/2024



3,977,405



3,952,044



3,978,240Energy Acquisition LP

Capital Equipment

Term Loan (6/18)

Loan

3M USD LIBOR +  4.25%


0.00
%


6.86
%


6/26/2025



1,990,000



1,971,730



1,910,400Envision Healthcare Corporation

Healthcare & Pharmaceuticals

Term Loan B (06/18)

Loan

1M USD LIBOR +  3.75%


0.00
%


6.24
%


10/10/2025



5,000,000



4,988,764



4,807,800Evergreen AcqCo 1 LP

Retail

Term Loan C

Loan

3M USD LIBOR +  3.75%


1.25
%


6.36
%


7/9/2019



935,156



934,453



883,723EWT Holdings III Corp.

Capital Equipment

Term Loan

Loan

1M USD LIBOR +  3.00%


1.00
%


5.49
%


12/20/2024



2,809,641



2,798,064



2,806,129Extreme Reach Inc.

Media: Advertising Printing & Publishing

Term Loan

Loan

1M USD LIBOR +  6.25%


1.00
%


8.74
%


2/7/2020



5,492,555



5,432,541



5,351,836Fastener Acquisition Inc.

Construction & Building

Term Loan B

Loan

3M USD LIBOR +  4.25%


1.00
%


6.86
%


3/28/2025



496,250



493,979



486,325FinCo I LLC

Banking Finance Insurance & Real Estate

2018 Term Loan B

Loan

1M USD LIBOR +  2.00%


0.00
%


4.49
%


12/27/2022



415,611



414,701



412,236First Eagle Holdings Inc.

Banking Finance Insurance & Real Estate

Term Loan B (10/18)

Loan

3M USD LIBOR +  2.75%


0.00
%


5.36
%


12/2/2024



5,000,000



4,973,959



4,987,500Fitness International LLC

Services: Consumer

Term Loan B (4/18)

Loan

1M USD LIBOR +  3.25%


0.00
%


5.74
%


4/18/2025



2,776,214



2,759,824



2,755,392Franklin Square Holdings L.P.

Banking Finance Insurance & Real Estate

Term Loan

Loan

2M USD LIBOR +  2.50%


0.00
%


5.07
%


8/1/2025



4,488,750



4,457,527



4,474,745Fusion Connect Inc.

Telecommunications

Term Loan B

Loan

3M USD LIBOR +  7.50%


1.00
%


10.11
%


5/4/2023



1,925,000



1,857,064



1,732,500GBT Group Services B.V.

Hotel Gaming & Leisure

Term Loan

Loan

3M USD LIBOR + 2.50%


0.00
%


5.11
%


8/13/2025



4,488,750



4,487,571



4,466,306GC EOS Buyer Inc.

Automotive

Term Loan B (06/18)

Loan

1M USD LIBOR +  4.50%


0.00
%


6.99
%


8/1/2025



2,992,500



2,964,056



2,955,094General Nutrition Centers Inc.

Retail

FILO Term Loan

Loan

1M USD LIBOR +  7.00%


0.00
%


9.49
%


1/3/2023



585,849



585,849



593,172General Nutrition Centers Inc.

Retail

Term Loan B2

Loan

Prime +  9.16%


0.75
%


9.91
%


3/4/2021



1,035,789



1,035,789



1,008,341GI Chill Acquisition LLC

Services: Business

Term Loan

Loan

3M USD LIBOR +  4.00%


0.00
%


6.61
%


8/6/2025



2,493,750



2,482,280



2,487,516GI Revelation Acquisition LLC

Services: Business

Term Loan

Loan

1M USD LIBOR +  5.00%


0.00
%


7.49
%


4/16/2025



1,244,373



1,238,702



1,231,930Gigamon Inc.

Services: Business

Term Loan B

Loan

3M USD LIBOR +  4.25%


1.00
%


6.86
%


12/27/2024



1,980,000



1,962,889



1,952,775Global Tel*Link Corporation

Telecommunications

Term Loan B

Loan

1M USD LIBOR +  4.25%


0.00
%


6.74
%


11/28/2025



3,070,455



3,070,455



3,070,455Go Wireless Inc.

Telecommunications

Term Loan

Loan

1M USD LIBOR +  6.50%


1.00
%


8.99
%


12/22/2024



3,380,519



3,331,962



3,250,944GoodRX Inc.

Healthcare & Pharmaceuticals

Term Loan B

Loan

1M USD LIBOR +  3.00%


0.00
%


5.49
%


10/10/2025



3,000,000



2,992,953



2,976,570Goodyear Tire & Rubber Company The

Chemicals Plastics & Rubber

Second Lien Term Loan

Loan

1M USD LIBOR +  2.00%


0.00
%


4.49
%


3/7/2025



2,000,000



2,000,000



1,956,660Grosvenor Capital Management Holdings LLLP

Banking Finance Insurance & Real Estate

Term Loan B

Loan

1M USD LIBOR +  2.75%


1.00
%


5.24
%


3/28/2025



920,941



916,777



916,337Guidehouse LLP

Aerospace & Defense

Term Loan

Loan

1M USD LIBOR +  3.00%


0.00
%


5.49
%


5/1/2025



1,990,000



1,985,566



1,965,125Hargray Communications Group Inc.

Media: Broadcasting & Subscription

Term Loan B

Loan

1M USD LIBOR +  3.00%


1.00
%


5.49
%


5/16/2024



985,000



983,012



973,308Harland Clarke Holdings Corp.

Media: Advertising Printing & Publishing

Term Loan

Loan

3M USD LIBOR +  4.75%


1.00
%


7.36
%


11/3/2023



1,833,245



1,824,008



1,741,583HD Supply Waterworks Ltd.

Construction & Building

Term Loan

Loan

6M USD LIBOR +  3.00%


1.00
%


5.69
%


8/1/2024



493,750



492,687



489,430Helix Gen Funding LLC

Energy: Electricity

Term Loan B (02/17)

Loan

1M USD LIBOR +  3.75%


1.00
%


6.24
%


6/3/2024



264,030



263,460



256,204HLF Financing SaRL LLC

Consumer goods: Non-durable

Term Loan B (08/18)

Loan

1M USD LIBOR +  3.25%


0.00
%


5.74
%


8/18/2025



3,990,000



3,973,021



3,990,000Hoffmaster Group Inc.

Forest Products & Paper

Term Loan B1

Loan

1M USD LIBOR +  4.00%


1.00
%


6.49
%


11/21/2023



1,074,390



1,077,199



1,070,361Holley Purchaser Inc.

Automotive

Term Loan B

Loan

3M USD LIBOR +  5.00%


0.00
%


7.61
%


10/24/2025



2,500,000



2,475,886



2,450,000Hostess Brands LLC

Beverage Food & Tobacco

Cov-Lite Term Loan B

Loan

3M USD LIBOR +  2.25%


0.75
%


4.86
%


8/3/2022



1,467,734



1,464,418



1,448,169Hudson River Trading LLC

Banking Finance Insurance & Real Estate

Term Loan B (10/18)

Loan

1M USD LIBOR +  3.50%


0.00
%


5.99
%


4/3/2025



3,980,025



3,958,223



3,960,125Hyland Software Inc.

High Tech Industries

Term Loan 3

Loan

1M USD LIBOR +  3.50%


0.75
%


5.99
%


7/1/2024



1,586,222



1,584,204



1,588,205Hyperion Refinance S.a.r.l.

Banking Finance Insurance & Real Estate

Tem Loan (12/17)

Loan

1M USD LIBOR +  3.50%


1.00
%


5.99
%


12/20/2024



2,229,370



2,219,751



2,225,647Idera Inc.

High Tech Industries

Term Loan B

Loan

1M USD LIBOR +  4.50%


1.00
%


6.99
%


6/28/2024



1,964,786



1,947,430



1,962,330IG Investments Holdings LLC

Services: Business

Term Loan

Loan

3M USD LIBOR +  3.50%


1.00
%


6.11
%


5/23/2025



3,398,256



3,380,175



3,382,115Inmar Inc.

Services: Business

Term Loan B

Loan

1M USD LIBOR +  3.50%


1.00
%


5.99
%


5/1/2024



3,492,500



3,398,589



3,389,471Isagenix International LLC

Beverage Food & Tobacco

Term Loan

Loan

3M USD LIBOR +  5.75%


1.00
%


8.36
%


6/16/2025



2,950,000



2,895,451



2,787,750Jill Holdings LLC

Retail

Term Loan (1st Lien)

Loan

3M USD LIBOR +  5.00%


1.00
%


7.61
%


5/9/2022



1,859,387



1,854,837



1,830,343JP Intermediate B LLC

Consumer goods: Non-durable

Term Loan

Loan

3M USD LIBOR +  5.50%


1.00
%


8.11
%


11/20/2025



4,937,500



4,883,059



4,702,969Kinetic Concepts Inc.

Healthcare & Pharmaceuticals

1/17 USD Term Loan

Loan

3M USD LIBOR +  3.25%


1.00
%


5.86
%


2/2/2024



2,364,000



2,355,394



2,357,499 See accompanying notes to financial statements.  S-8




---

##### Table of Contents

Issuer Name

Industry

Asset Name

AssetType

Reference Rate/Spread

LIBORFloor


CurrentRate(All In)


MaturityDate


Principal/Numberof Shares


Cost


Fair ValueKUEHG Corp.

Services: Consumer

Term Loan B-3

Loan

3M USD LIBOR +  3.75%


1.00
%


6.36
%


2/21/2025



497,500



496,313



493,023Lakeland Tours LLC

Hotel Gaming & Leisure

Term Loan B

Loan

3M USD LIBOR +  4.00%


1.00
%


6.61
%


12/16/2024



2,482,494



2,474,016



2,458,836Lannett Company Inc.

Healthcare & Pharmaceuticals

Term Loan B

Loan

1M USD LIBOR +  5.38%


1.00
%


7.87
%


11/25/2022



2,546,382



2,513,728



2,338,419Learfield Communications LLC

Media: Advertising Printing & Publishing

Initial Term Loan (A-L Parent)

Loan

1M USD LIBOR +  3.25%


1.00
%


5.74
%


12/1/2023



490,000



488,374



488,775Lighthouse Network LLC

Banking Finance Insurance & Real Estate

Term Loan B

Loan

3M USD LIBOR +  4.50%


1.00
%


7.11
%


12/2/2024



3,415,500



3,402,695



3,402,692Lightstone Holdco LLC

Energy: Electricity

Term Loan B

Loan

1M USD LIBOR +  3.75%


1.00
%


6.24
%


1/30/2024



1,353,009



1,350,840



1,320,199Lightstone Holdco LLC

Energy: Electricity

Term Loan C

Loan

1M USD LIBOR +  3.75%


1.00
%


6.24
%


1/30/2024



74,592



74,478



72,783Lindblad Expeditions Inc.

Hotel Gaming & Leisure

US 2018 Term Loan

Loan

1M USD LIBOR +  3.50%


0.00
%


5.99
%


3/27/2025



398,000



397,117



397,005Lindblad Expeditions Inc.

Hotel Gaming & Leisure

Cayman Term Loan

Loan

1M USD LIBOR +  3.50%


0.00
%


5.99
%


3/27/2025



99,500



99,279



99,251Liquidnet Holdings Inc.

Banking Finance Insurance & Real Estate

Term Loan B

Loan

1M USD LIBOR +  3.25%


1.00
%


5.74
%


7/15/2024



3,154,276



3,144,386



3,150,333LPL Holdings Inc.

Banking Finance Insurance & Real Estate

Incremental Term Loan B

Loan

1M USD LIBOR +  2.25%


0.00
%


4.74
%


9/23/2024



1,723,805



1,720,511



1,708,721McAfee LLC

Services: Business

Term Loan B

Loan

1M USD LIBOR + 3.75%


0.00
%


6.24
%


9/30/2024



2,690,156



2,661,137



2,694,810McDermott International Inc.

Construction & Building

Term Loan B

Loan

1M USD LIBOR +  5.00%


1.00
%


7.49
%


5/12/2025



1,985,000



1,948,934



1,907,625McGraw-Hill Global Education Holdings LLC

Media: Advertising Printing & Publishing

Term Loan

Loan

1M USD LIBOR +  4.00%


1.00
%


6.49
%


5/4/2022



974,920



972,268



897,229MedPlast Holdings Inc.

Healthcare & Pharmaceuticals

Term Loan (06/18)

Loan

3M USD LIBOR +  3.75%


0.00
%


6.36
%


7/2/2025



498,750



496,426



500,620Meredith Corporation

Media: Advertising Printing & Publishing

Term Loan B (10/18)

Loan

1M USD LIBOR +  2.75%


0.00
%


5.24
%


1/31/2025



681,944



680,552



681,563Messer Industries LLC

Chemicals Plastics & Rubber

Term Loan

Loan

3M USD LIBOR +  2.50%


0.00
%


5.11
%


2/5/2026



3,000,000



2,992,500



2,977,500Michaels Stores Inc.

Retail

Term Loan B

Loan

1M USD LIBOR +  2.50%


1.00
%


4.99
%


1/30/2023



2,628,816



2,617,545



2,600,898Midwest Physician Administrative Services LLC

Healthcare & Pharmaceuticals

Term Loan (2/18)

Loan

1M USD LIBOR +  2.75%


0.75
%


5.24
%


8/15/2024



977,985



973,790



958,836Milk Specialties Company

Beverage Food & Tobacco

Term Loan (2/17)

Loan

1M USD LIBOR +  4.00%


1.00
%


6.49
%


8/16/2023



3,969,672



3,905,366



3,946,529MKS Instruments Inc.

High Tech Industries

Term Loan B-5

Loan

1M USD LIBOR +  2.25%


0.00
%


4.74
%


2/2/2026



1,000,000



990,327



998,750MLN US HoldCo LLC

Telecommunications

Term Loan

Loan

1M USD LIBOR +  4.50%


0.00
%


6.99
%


11/28/2025



1,000,000



997,824



992,500MRC Global (US) Inc.

Metals & Mining

Term Loan B2

Loan

1M USD LIBOR +  3.00%


0.00
%


5.49
%


9/20/2024



495,000



493,864



495,000NAI Entertainment Holdings LLC

Hotel Gaming & Leisure

Term Loan B

Loan

1M USD LIBOR +  2.50%


1.00
%


4.99
%


5/8/2025



997,500



995,282



989,600Natgasoline LLC

Chemicals Plastics & Rubber

Term Loan

Loan

3M USD LIBOR +  3.50%


0.00
%


6.11
%


11/14/2025



500,000



497,720



500,625National Mentor Holdings Inc.

Healthcare & Pharmaceuticals

Term Loan

Loan

3M USD LIBOR +  4.25%


0.00
%


6.86
%


2/5/2026



2,000,000



1,980,000



2,005,840Navistar Financial Corporation

Automotive

Term Loan

Loan

1M USD LIBOR +  3.75%


0.00
%


6.24
%


7/30/2025



1,990,000



1,980,604



1,982,538NeuStar Inc.

Telecommunications

Term Loan B4 (03/18)

Loan

1M USD LIBOR +  3.50%


1.00
%


5.99
%


8/8/2024



3,992,424



3,925,243



3,822,746New Media Holdings II LLC

Media: Diversified & Production

Term Loan

Loan

1M USD LIBOR +  6.25%


1.00
%


8.74
%


7/14/2022



5,973,699



5,959,159



5,921,430NMI Holdings Inc.

Banking Finance Insurance & Real Estate

Term Loan

Loan

1M USD LIBOR +  4.75%


1.00
%


7.24
%


5/23/2023



3,489,981



3,494,699



3,489,981Novetta Solutions LLC

Aerospace & Defense

Term Loan

Loan

1M USD LIBOR +  5.00%


1.00
%


7.49
%


10/17/2022



1,939,870



1,928,782



1,898,648Novetta Solutions LLC

Aerospace & Defense

Second Lien Term Loan

Loan

1M USD LIBOR +  8.50%


1.00
%


10.99
%


10/16/2023



1,000,000



993,349



945,000NPC International Inc.

Beverage Food & Tobacco

Term Loan

Loan

2M USD LIBOR +  3.50%


1.00
%


6.07
%


4/19/2024



492,500



492,068



461,719Ocean Bidco Inc.

Banking Finance Insurance & Real Estate

Term Loan

Loan

2M USD LIBOR + 4.75%


1.00
%


7.32
%


3/21/2025



473,186



470,976



464,115OCI Partners LP

Chemicals Plastics & Rubber

Term Loan B (2/18)

Loan

3M USD LIBOR +  4.00%


0.00
%


6.61
%


3/13/2025



3,067,196



3,045,069



3,059,528Office Depot Inc.

Retail

Term Loan B

Loan

1M USD LIBOR +  5.25%


1.00
%


7.74
%


11/8/2022



2,909,851



2,888,913



2,971,685Onex Carestream Finance LP

High Tech Industries

Term Loan

Loan

1M USD LIBOR +  5.75%


1.00
%


8.24
%


2/28/2021



2,834,110



2,822,053



2,780,970Outcomes Group Holdings Inc.

Banking Finance Insurance & Real Estate

Term Loan

Loan

3M USD LIBOR +  3.50%


0.00
%


6.11
%


10/24/2025



500,000



498,833



493,125Owens & Minor Distribution Inc.

Healthcare & Pharmaceuticals

Term Loan B

Loan

1M USD LIBOR +  4.50%


0.00
%


6.99
%


4/30/2025



497,500



488,393



420,800P2 Upstream Acquisition Co.

High Tech Industries

Term Loan

Loan

3M USD LIBOR +  4.00%


1.00
%


6.61
%


10/30/2020



945,558



943,988



929,011Peraton Corp.

Aerospace & Defense

Term Loan

Loan

3M USD LIBOR +  5.25%


1.00
%


7.86
%


4/29/2024



1,970,000



1,962,137



1,915,825PGX Holdings Inc.

Services: Consumer

Term Loan

Loan

1M USD LIBOR +  5.25%


1.00
%


7.74
%


9/29/2020



2,674,370



2,667,939



2,614,197PI UK Holdco II Limited

Services: Business

Term Loan B1 (PI UK Holdco II)

Loan

1M USD LIBOR +  3.50%


1.00
%


5.99
%


1/3/2025



1,488,750



1,481,083



1,473,237Plastipak Packaging Inc.

Containers Packaging & Glass

Term Loan B (04/18)

Loan

1M USD LIBOR +  2.50%


0.00
%


4.99
%


10/15/2024



987,500



983,130



974,100Presidio Inc.

Services: Business

Term Loan B 2017

Loan

3M USD LIBOR +  2.75%


1.00
%


5.36
%


2/2/2024



1,697,600



1,663,332



1,678,078Prime Security Services Borrower LLC

Services: Consumer

Refi Term Loan B-1

Loan

1M USD LIBOR +  2.75%


1.00
%


5.24
%


5/2/2022



1,950,361



1,943,928



1,943,925Priority Payment Systems Holdings LLC

High Tech Industries

Term Loan

Loan

1M USD LIBOR +  5.00%


1.00
%


7.49
%


1/3/2023



1,150,910



1,145,156



1,145,881Priority Payment Systems Holdings LLC

High Tech Industries

Delayed Draw Term Loan

Loan

3M USD LIBOR +  5.00%


1.00
%


7.61
%


1/3/2023











Project Accelerate Parent LLC

Services: Business

Term Loan

Loan

1M USD LIBOR +  4.25%


1.00
%


6.74
%


1/2/2025



1,985,000



1,976,356



1,985,000Prometric Holdings Inc.

Services: Business

Term Loan

Loan

1M USD LIBOR +  3.00%


1.00
%


5.49
%


1/29/2025



496,250



494,124



492,528Quad/Graphics Inc.

Media: Advertising Printing & Publishing

Term Loan B (12/18)

Loan

1M USD LIBOR +  5.00%


0.00
%


7.49
%


2/2/2026



4,500,000



4,434,606



4,483,125Rackspace Hosting Inc.

High Tech Industries

Term Loan B

Loan

3M USD LIBOR +  3.00%


1.00
%


5.61
%


11/3/2023



1,491,203



1,480,810



1,418,969Radio Systems Corporation

Consumer goods: Durable

Term Loan

Loan

1M USD LIBOR +  2.75%


1.00
%


5.24
%


5/2/2024



1,477,500



1,477,500



1,457,184Radiology Partners Inc.

Healthcare & Pharmaceuticals

Term Loan

Loan

3M USD LIBOR +  4.75%


0.00
%


7.36
%


7/9/2025



1,000,000



995,568



1,005,000Research Now Group Inc.

Media: Advertising Printing & Publishing

Term Loan

Loan

1M USD LIBOR +  5.50%


1.00
%


7.99
%


12/20/2024



3,967,481



3,836,608



3,942,684Resolute Investment Managers Inc.

Banking Finance Insurance & Real Estate

Term Loan (10/17)

Loan

3M USD LIBOR +  3.25%


1.00
%


5.86
%


4/29/2022



2,709,661



2,712,126



2,713,049Restaurant Technologies Inc.

Beverage Food & Tobacco

Term Loan (9/18)

Loan

1M USD LIBOR +  3.25%


0.00
%


5.74
%


10/1/2025



1,000,000



997,720



999,380Revspring Inc.

Services: Business

Term Loan B

Loan

3M USD LIBOR +  4.25%


0.00
%


6.86
%


10/10/2025



1,000,000



997,767



985,000Reynolds Group Holdings Inc.

Metals & Mining

Term Loan (01/17)

Loan

1M USD LIBOR +  2.75%


0.00
%


5.24
%


2/6/2023



1,725,912



1,725,912



1,718,369RGIS Services LLC

Services: Business

Term Loan

Loan

3M USD LIBOR +  7.50%


1.00
%


10.11
%


3/31/2023



486,033



480,179



415,558Robertshaw US Holding Corp.

Consumer goods: Durable

Term Loan B

Loan

1M USD LIBOR +  3.50%


1.00
%


5.99
%


2/28/2025



992,500



990,321



929,228Rocket Software Inc.

High Tech Industries

Term Loan (11/18)

Loan

1M USD LIBOR +  4.25%


0.00
%


6.74
%


11/28/2025



4,000,000



3,982,916



4,000,000Rovi Solutions Corporation

Media: Diversified & Production

Term Loan B

Loan

1M USD LIBOR +  2.50%


0.75
%


4.99
%


7/2/2021



1,332,669



1,330,256



1,311,013Russell Investments US Institutional Holdco Inc.

Banking Finance Insurance & Real Estate

Term Loan B

Loan

1M USD LIBOR +  3.25%


1.00
%


5.74
%


6/1/2023



4,184,784



4,064,980



4,142,936Sahara Parent Inc.

High Tech Industries

Term Loan B (11/18)

Loan

1M USD LIBOR +  4.50%


0.00
%


6.99
%


8/16/2024



1,975,050



1,956,153



1,967,031Sally Holdings LLC

Retail

Term Loan B

Loan

1M USD LIBOR +  2.25%


0.00
%


4.74
%


7/5/2024



987,455



983,210



973,877Sally Holdings LLC

Retail

Term Loan (Fixed)

Loan

Fixed 4.50%


0.00
%


4.50
%


7/5/2024



1,000,000



996,030



963,750Savage Enterprises LLC

Transportation: Cargo

Term Loan

Loan

1M USD LIBOR +  4.50%


0.00
%


6.99
%


8/1/2025



3,823,951



3,774,062



3,836,684SCS Holdings I Inc.

High Tech Industries

Term Loan

Loan

1M USD LIBOR +  4.25%


1.00
%


6.74
%


10/31/2022



3,393,482



3,378,749



3,401,966Seadrill Operating LP

Energy: Oil & Gas

Term Loan B

Loan

3M USD LIBOR +  6.00%


1.00
%


8.61
%


2/21/2021



915,243



888,341



763,084SG Acquisition Inc.

Banking Finance Insurance & Real Estate

Term Loan (Safe-Guard)

Loan

3M USD LIBOR +  5.00%


1.00
%


7.61
%


3/29/2024



1,660,000



1,647,194



1,647,550 See accompanying notes to financial statements.  S-9




---

##### Table of Contents

Issuer Name

Industry

Asset Name

AssetType


Reference Rate/Spread

LIBORFloor


CurrentRate(All In)


MaturityDate


Principal/Number ofShares


Cost


Fair ValueShearers Foods LLC

Beverage Food & Tobacco

Term Loan


Loan


1M USD LIBOR + 4.25%


1.00
%


6.74
%


6/30/2021



2,925,531



2,916,771



2,898,704Shutterfly Inc.

Media: Advertising Printing & Publishing

Term Loan B2


Loan


1M USD LIBOR + 2.75%


0.00
%


5.24
%


8/19/2024



3,017,873



2,966,805



2,981,417Sirva Worldwide Inc.

Transportation: Cargo

Term Loan B


Loan


3M USD LIBOR + 5.50%


0.00
%


8.11
%


8/4/2025



2,500,000



2,471,352



2,443,750SMB Shipping Logistics LLC

Transportation: Consumer

Term Loan B


Loan


6M USD LIBOR + 4.00%


1.00
%


6.69
%


2/2/2024



1,969,937



1,968,013



1,953,528SP PF Buyer LLC

Consumer goods: Durable

Term Loan B


Loan


3M USD LIBOR + 4.50%


0.00
%


7.11
%


12/19/2025



2,000,000



1,921,772



1,970,000SRAM LLC

Consumer goods: Durable

Term Loan


Loan


Prime + 2.73%


1.00
%


3.73
%


3/15/2024



1,984,685



1,970,345



1,967,319SS&C Technologies Inc.

Services: Business

Term Loan B3


Loan


1M USD LIBOR + 2.25%


0.00
%


4.74
%


4/16/2025



616,068



614,712



612,815SS&C Technologies Inc.

Services: Business

Term Loan B4


Loan


1M USD LIBOR + 2.25%


0.00
%


4.74
%


4/16/2025



235,988



235,469



234,742SS&C Technologies Inc.

Services: Business

Term Loan B-5


Loan


1M USD LIBOR + 2.25%


0.00
%


4.74
%


4/16/2025



498,743



497,588



496,189SSH Group Holdings Inc.

Consumer goods: Non-durable

Term Loan


Loan


2M USD LIBOR + 4.25%


0.00
%


6.82
%


7/30/2025



1,995,000



1,990,196



1,970,063Staples Inc.

Retail

Term Loan B (07/17)


Loan


1M USD LIBOR + 4.00%


1.00
%


6.49
%


9/12/2024



1,975,000



1,970,996



1,959,240Starfruit US Holdco LLC

Chemicals Plastics & Rubber

Term Loan B


Loan


1M USD LIBOR + 3.25%


0.00
%


5.74
%


10/1/2025



500,000



497,640



496,375Steak N Shake Operations Inc.

Beverage Food & Tobacco

Term Loan


Loan


1M USD LIBOR + 3.75%


1.00
%


6.24
%


3/19/2021



834,991



832,242



638,768Sybil Software LLC

High Tech Industries

Term Loan B (4/18)


Loan


3M USD LIBOR + 2.50%


1.00
%


5.11
%


9/29/2023



677,351



674,400



676,220Tenneco Inc

Capital Equipment

Term Loan B


Loan


1M USD LIBOR + 2.75%


0.00
%


5.24
%


10/1/2025



1,500,000



1,485,848



1,484,070Ten-X LLC

Banking Finance Insurance & Real Estate

Term Loan


Loan


1M USD LIBOR + 4.00%


1.00
%


6.49
%


9/30/2024



1,980,000



1,978,059



1,955,250TGG TS Acquisition Company

Media: Diversified & Production

Term Loan (12/18)


Loan


3M USD LIBOR + 6.50%


0.00
%


9.11
%


12/15/2025



3,000,000



2,854,156



2,981,250The Edelman Financial Center LLC

Banking Finance Insurance & Real Estate

Term Loan B (06/18)


Loan


3M USD LIBOR + 3.25%


0.00
%


5.86
%


7/21/2025



1,250,000



1,244,166



1,247,138Thor Industries Inc.

Automotive

Term Loan (USD)


Loan


1M USD LIBOR + 3.75%


0.00
%


6.24
%


2/2/2026



2,830,276



2,797,635



2,734,754Topgolf International Inc.

Hotel Gaming & Leisure

Term Loan (02/19)


Loan


1M USD LIBOR + 5.50%


0.00
%


7.99
%


2/6/2026



500,000



495,177



499,375Townsquare Media Inc.

Media: Broadcasting & Subscription

Term Loan B (02/17)


Loan


1M USD LIBOR + 3.00%


1.00
%


5.49
%


4/1/2022



881,975



879,219



868,745Transdigm Inc.

Aerospace & Defense

Term Loan G


Loan


1M USD LIBOR + 2.50%


0.00
%


4.99
%


8/22/2024



4,148,194



4,154,661



4,087,381Travel Leaders Group LLC

Hotel Gaming & Leisure

Term Loan B (08/18)


Loan


1M USD LIBOR + 4.00%


0.00
%


6.49
%


1/25/2024



2,487,500



2,482,802



2,493,719TRC Companies Inc.

Services: Business

Term Loan


Loan


1M USD LIBOR + 3.50%


1.00
%


5.99
%


6/21/2024



3,411,364



3,399,559



3,368,722Trico Group LLC

Containers Packaging & Glass

Incremental Term Loan


Loan


Prime + 6.00%


1.00
%


7.00
%


2/2/2024



4,943,750



4,804,906



4,696,562Truck Hero Inc.

Transportation: Cargo

First Lien Term Loan


Loan


1M USD LIBOR + 3.75%


1.00
%


6.24
%


4/22/2024



2,957,469



2,937,874



2,890,926Trugreen Limited Partnership

Services: Consumer

Term Loan B (07/17)


Loan


1M USD LIBOR + 4.00%


1.00
%


6.49
%


4/13/2023



488,813



483,230



490,034Twin River Management Group Inc.

Hotel Gaming & Leisure

Term Loan


Loan


3M USD LIBOR + 3.50%


1.00
%


6.11
%


7/10/2020



713,415



713,888



712,223United Natural Foods Inc.

Beverage Food & Tobacco

Term Loan B


Loan


1M USD LIBOR + 4.25%


0.00
%


6.74
%


10/22/2025



3,500,000



3,278,105



3,119,375Univar USA Inc.

Chemicals Plastics & Rubber

Term Loan B3 (11/17)


Loan


1M USD LIBOR + 2.25%


0.00
%


4.74
%


7/1/2024



4,250,492



4,231,419



4,241,183Univision Communications Inc.

Media: Broadcasting & Subscription

Term Loan


Loan


1M USD LIBOR + 2.75%


1.00
%


5.24
%


3/15/2024



2,746,369



2,733,489



2,557,556UOS LLC

Capital Equipment

Term Loan B


Loan


1M USD LIBOR + 5.50%


1.00
%


7.99
%


4/18/2023



591,247



593,692



594,203UPC Financing Partnership

Media: Broadcasting & Subscription

Term Loan (10/17)


Loan


1M USD LIBOR + 2.50%


0.00
%


4.99
%


1/15/2026



832,911



832,042



831,687VeriFone Systems Inc.

Banking Finance Insurance & Real Estate

Term Loan (7/18)


Loan


3M USD LIBOR + 4.00%


0.00
%


6.61
%


8/20/2025



5,486,250



5,456,319



5,464,689Verra Mobility Corp.

Construction & Building

Term Loan


Loan


1M USD LIBOR + 3.75%


0.00
%


6.24
%


3/3/2025



496,250



494,043



497,903VFH Parent LLC

Banking Finance Insurance & Real Estate

Term Loan B


Loan


3M USD LIBOR + 3.50%


0.00
%


6.11
%


1/30/2026



3,000,000



2,985,000



3,006,570Virtus Investment Partners Inc.

Banking Finance Insurance & Real Estate

Term Loan B


Loan


1M USD LIBOR + 2.25%


0.75
%


4.74
%


6/3/2024



3,836,368



3,834,675



3,820,371Vistra Operations Company LLC

Utilities: Electric

2018 Incremental Term Loan


Loan


1M USD LIBOR + 2.00%


0.00
%


4.49
%


12/31/2025



995,000



993,884



992,095Vizient Inc.

Healthcare & Pharmaceuticals

Term Loan B


Loan


1M USD LIBOR + 2.75%


1.00
%


5.24
%


2/13/2023



296,814



291,350



295,923Wand NewCo 3 Inc.

Automotive

Term Loan B


Loan


1M USD LIBOR + 3.50%


0.00
%


5.99
%


2/5/2026



250,000



247,562



250,625Web.Com Group Inc.

High Tech Industries

Term Loan B (08/18)


Loan


1M USD LIBOR + 3.75%


0.00
%


6.24
%


10/10/2025



500,000



498,856



496,250WeddingWire Inc.

Services: Consumer

Term Loan


Loan


3M USD LIBOR + 4.50%


0.00
%


7.11
%


12/19/2025



4,000,000



3,993,119



3,995,000WEI Sales LLC

Beverage Food & Tobacco

Term Loan B


Loan


1M USD LIBOR + 2.75%


0.00
%


5.24
%


3/31/2025



496,250



495,108



495,009Weight Watchers International Inc.

Services: Consumer

Term Loan B


Loan


3M USD LIBOR + 4.75%


0.75
%


7.36
%


11/29/2024



1,900,000



1,867,434



1,839,827West Corporation

Telecommunications

Term Loan B


Loan


3M USD LIBOR + 3.50%


1.00
%


6.11
%


10/10/2024



4,241,234



4,068,929



4,003,830Western Dental Services Inc.

Retail

Term Loan (12/18)


Loan


1M USD LIBOR + 5.25%


1.00
%


7.74
%


6/30/2023



2,463,734



2,446,863



2,402,141Western Digital Corporation

High Tech Industries

Term Loan B-4


Loan


1M USD LIBOR + 1.75%


0.00
%


4.24
%


4/29/2023



1,299,622



1,266,499



1,274,605Wirepath LLC

Consumer goods: Non-durable

Term Loan


Loan


3M USD LIBOR + 4.00%


1.00
%


6.61
%


8/5/2024



2,985,044



2,957,351



2,925,343Wynn Resorts Limited

Hotel Gaming & Leisure

Term Loan B


Loan


1M USD LIBOR + 2.25%


0.00
%


4.74
%


10/30/2024



1,000,000



997,579



986,500YS Garments LLC

Retail

Term Loan


Loan


1W USD LIBOR +  6.00%


1.00
%


8.41
%


8/9/2024



1,987,500



1,969,194



1,952,719Zep Inc.

Chemicals Plastics & Rubber

Term Loan


Loan


3M USD LIBOR + 4.00%


1.00
%


6.61
%


8/12/2024



2,468,750



2,458,786



2,139,592Zest Acquisition Corp.

Healthcare & Pharmaceuticals

Term Loan


Loan


1M USD LIBOR + 3.50%


0.00
%


5.99
%


3/14/2025



992,500



988,123



918,062$
509,676,701


$
498,405,060Number ofShares


Cost


Fair ValueCash and cash equivalentsU.S. Bank Money Market (b)
























18,495,653


$
18,495,653


$
18,495,653Total cash and cash equivalents
























18,495,653


$
18,495,653


$
18,495,653  (a)
Security is in default as of February 28, 2019. (b)
Included within cash and cash equivalents in Saratoga CLOs Statements of Assets and Liabilities as of
February 28, 2019. LIBORLondon Interbank Offered Rate 1W USD LIBORThe 1 week USD LIBOR rate as of February 28, 2019 was 2.41%. 1M USD LIBORThe 1 month USD LIBOR rate as of February 28, 2019 was 2.49%. 2M USD LIBORThe 2 month USD LIBOR rate as of February 28, 2019 was 2.57%. 3M USD LIBORThe 3 month USD LIBOR rate as of February 28, 2019 was 2.62%. 6M USD LIBORThe 6 month USD LIBOR rate as of February 28, 2019 was 2.69%. PrimeThe Prime Rate as of February 28, 2019 was 5.50%. See accompanying notes to financial statements.  S-10




---

##### Table of Contents

Saratoga Investment Corp. CLO 2013-1 Ltd. Schedule of Investments February 28, 2018  Issuer Name

Industry

Asset Name

AssetType

Reference Rate/Spread

LIBORFloor


CurrentRate(All In)


MaturityDate


Principal/Number ofShares


Cost


Fair ValueEducation Management II, LLC

Leisure Goods/Activities/Movies

A-1 Preferred Shares

Equity
















6,692


$
669,214


$
1,539Education Management II, LLC

Goods/Activities/Movies

A-2 Preferred Shares

Equity
















18,975



1,897,538



4,364New Millennium Holdco, Inc.

Healthcare

Common Stock

Equity
















14,813



964,466



69624 Hour Holdings III, LLC

Goods/Activities/Movies

Term Loan

Loan

3M USD LIBOR  + 3.75%


1.00
%


5.44
%


5/28/2021


$
1,974,768



1,973,979



1,992,047ABB Con-Cise Optical Group, LLC

Healthcare

Term Loan B

Loan

3M USD LIBOR  + 5.00%


1.00
%


6.59
%


6/15/2023



1,975,000



1,955,672



1,979,938Acosta Holdco, Inc.

Business Equipment & Services

Term Loan B1

Loan

1M USD LIBOR  + 3.25%


1.00
%


4.90
%


9/26/2021



1,935,275



1,926,742



1,703,042Advantage Sales & Marketing, Inc.

Business Equipment & Services

Term Loan B2

Loan

3M USD LIBOR  + 3.25%


1.00
%


5.02
%


7/23/2021



500,000



490,000



492,190Advantage Sales & Marketing, Inc.

Business Equipment & Services

Delayed Draw Term Loan

Loan

3M USD LIBOR  + 3.25%


1.00
%


5.02
%


7/23/2021



2,421,181



2,419,247



2,383,362Aegis Toxicology Science Corporation

Healthcare

Term B Loan

Loan

3M USD LIBOR  + 4.50%


1.00
%


6.17
%


2/24/2021



2,438,282



2,339,957



2,412,387Agrofresh, Inc.

Equipment

Term Loan

Loan

3M USD LIBOR  + 4.75%


1.00
%


6.44
%


7/30/2021



1,950,000



1,943,994



1,936,194AI MISTRAL T/L (V. GROUP)

Surface Transport

Term Loan

Loan

3M USD LIBOR  + 3.00%


1.00
%


4.65
%


3/11/2024



496,250



496,250



493,148AI Aqua Merger Inc

Conglomerates

Incremental Term Loan B

Loan

1M USD LIBOR  + 3.50%


1.00
%


5.15
%


12/13/2023



498,750



498,189



499,787AI Aqua Merger Inc

Conglomerates

Term Loan

Loan

1M USD LIBOR  + 3.50%


1.00
%


5.15
%


12/13/2023



2,029,500



2,031,000



2,033,316Akorn, Inc.

Drugs

Term Loan B

Loan

3M USD LIBOR  + 4.25%


1.00
%


5.94
%


4/16/2021



398,056



397,217



394,573Albertsons LLC

Food Products

Term Loan B-4

Loan

1M USD LIBOR  + 2.75%


0.75
%


4.40
%


8/25/2021



2,654,315



2,640,406



2,617,447Alion Science and Technology Corporation

Conglomerates

Term Loan B (First Lien)

Loan

3M USD LIBOR  + 4.50%


1.00
%


6.15
%


8/19/2021



2,826,521



2,817,880



2,826,521ALPHA 3 T/L B1 (ATOTECH)

Chemicals & Plastics

Term Loan B 1

Loan

1M USD LIBOR  + 3.00%


1.00
%


4.69
%


1/31/2024



248,750



248,218



250,367Anchor Glass T/L (11/16)

Containers & Glass Products

Term Loan

Loan

1M USD LIBOR  + 2.75%


1.00
%


4.40
%


12/7/2023



495,013



492,821



495,785APCO Holdings, Inc.

Automotive

Term Loan

Loan

1M USD LIBOR  + 6.00%


1.00
%


7.65
%


1/31/2022



1,833,243



1,796,705



1,778,246Aramark Corporation

Food Products

U.S. Term F Loan

Loan

1M USD LIBOR  + 2.00%


0.00
%


3.65
%


3/28/2024



1,612,143



1,612,143



1,621,219Arctic Glacier U.S.A., Inc.

Food Products

Term Loan B

Loan

1M USD LIBOR  + 4.25%


1.00
%


5.90
%


3/20/2024



496,250



494,091



497,079Argon Medical Devices, Inc.

Healthcare

Term Loan

Loan

3M USD LIBOR  + 3.75%


1.00
%


5.40
%


1/23/2025



1,000,000



997,625



1,003,750ASG Technologies Group, Inc.

Electronics/Electrical

Term Loan

Loan

1M USD LIBOR  + 4.75%


1.00
%


6.40
%


7/31/2024



498,750



496,441



499,373Aspen Dental Management, Inc.

Healthcare

Term Loan Initial

Loan

3M USD LIBOR  + 3.75%


1.00
%


5.52
%


4/29/2022



1,964,792



1,961,139



1,986,896Astoria Energy T/L B

Utilities

Term Loan

Loan

3M USD LIBOR  + 4.00%


1.00
%


5.65
%


12/24/2021



1,436,736



1,425,004



1,439,135Asurion, LLC (fka Asurion Corporation)

Property & Casualty Insurance

Term Loan B4 (First Lien)

Loan

1M USD LIBOR  + 2.75%


0.00
%


4.40
%


8/4/2022



2,373,759



2,363,315



2,384,156Asurion, LLC (fka Asurion Corporation)

Property & Casualty Insurance

Term Loan B6

Loan

1M USD LIBOR  + 2.75%


1.00
%


4.40
%


11/3/2023



518,207



513,568



520,798ATS Consolidated, Inc.

Building & Development

Term Loan

Loan

1M USD LIBOR  + 3.75%


0.00
%


5.40
%


2/21/2025



500,000



497,500



502,500Avantor, Inc.

Chemicals & Plastics

Term Loan

Loan

1M USD LIBOR  + 4.00%


1.00
%


5.65
%


11/21/2024



1,500,000



1,478,028



1,514,370Avaya, Inc.

Telecommunications

Exit Term Loan

Loan

1M USD LIBOR  + 4.75%


1.00
%


6.34
%


12/16/2024



1,000,000



990,313



1,004,220AVOLON TLB BORROWER 1 LUXEMBOURG S.A.R.L.

Equipment Leasing

Term Loan B-2

Loan

3M USD LIBOR  + 2.25%


0.75
%


3.84
%


3/21/2022



995,000



990,660



993,468Blackboard

Conglomerates

Term Loan B4

Loan

3M USD LIBOR  + 5.00%


1.00
%


6.73
%


6/30/2021



2,962,500



2,944,423



2,868,085Blount International, Inc.

Forest products

Term Loan B

Loan

1M USD LIBOR  + 4.25%


1.00
%


5.83
%


4/12/2023



500,000



498,863



506,875Blucora, Inc.

Electronics/Electrical

Term Loan B

Loan

1M USD LIBOR  + 3.00%


1.00
%


4.69
%


5/22/2024



920,000



915,553



924,600BMC Software

Business Equipment & Services

Term Loan B

Loan

1M USD LIBOR  + 3.25%


0.00
%


4.90
%


9/12/2022



584,031



574,236



585,491Brickman Group Holdings, Inc.

Building & Development

Initial Term Loan (First Lien)

Loan

1M USD LIBOR  +  3.00%


1.00
%


4.65
%


12/18/2020



1,420,433



1,412,065



1,427,975Broadstreet Partners, Inc.

Financial Intermediaries

Term Loan B-1

Loan

1M USD LIBOR  + 3.75%


1.00
%


5.40
%


11/8/2023



997,481



995,151



1,006,628Cable & Wireless Communications Ltd.

Telecommunications

Term Loan B4

Loan

1M USD LIBOR  + 3.25%


0.00
%


4.89
%


1/30/2026



2,500,000



2,496,875



2,494,800Cable One, Inc.

Telecommunications

Term Loan B

Loan

3M USD LIBOR  + 2.25%


0.00
%


3.95
%


5/1/2024



497,500



496,959



498,744Caesars Entertainment Corporation

Lodging & Casinos

Term Loan

Loan

1M USD LIBOR  + 2.50%


0.00
%


4.15
%


10/7/2024



1,000,000



1,000,000



1,006,250Canyon Valor Companies, Inc.

Business Equipment & Services

Term Loan B

Loan

1M USD LIBOR  + 3.25%


0.00
%


4.94
%


6/16/2023



997,500



995,006



1,003,116Capital Automotive L.P.

Building & Development

Tranche B-1 Term Loan Facility

Loan

1M USD LIBOR  + 2.50%


1.00
%


4.15
%


3/25/2024



482,931



480,703



485,143Caraustar Industries Inc.

Forest products

Term Loan B

Loan

1M USD LIBOR  + 5.50%


1.00
%


7.19
%


3/14/2022



496,250



495,182



496,950CareerBuilder, LLC

Business Equipment & Services

Term Loan

Loan

3M USD LIBOR  + 6.75%


1.00
%


8.44
%


7/31/2023



2,468,750



2,402,343



2,440,977CASA SYSTEMS T/L

Telecommunications

Term Loan

Loan

2M USD LIBOR  + 4.00%


1.00
%


5.69
%


12/20/2023



1,485,000



1,472,299



1,490,569Catalent Pharma Solutions, Inc

Drugs

Initial Term B Loan

Loan

1M USD LIBOR  + 2.25%


1.00
%


3.90
%


5/20/2024



419,775



418,723



421,219Cengage Learning Acquisitions, Inc.

Publishing

Term Loan

Loan

2M USD LIBOR  + 4.25%


1.00
%


5.84
%


6/7/2023



1,464,371



1,449,727



1,343,970CenturyLink, Inc.

Telecommunications

Term Loan B

Loan

1M USD LIBOR  + 2.75%


0.00
%


4.40
%


1/31/2025



3,000,000



2,993,287



2,946,750CH HOLD (CALIBER COLLISION) T/L

Automotive

Term Loan

Loan

1M USD LIBOR  + 3.00%


0.00
%


4.65
%


2/1/2024



246,674



246,237



247,907Charter Communications Operating, LLC

Cable & Satellite Television

Term Loan

Loan

1M USD LIBOR  + 2.00%


0.00
%


3.65
%


4/30/2025



1,600,000



1,598,246



1,603,200CHS/Community Health Systems, Inc.

Healthcare

Term G Loan

Loan

3M USD LIBOR  + 2.75%


1.00
%


4.73
%


12/31/2019



612,172



603,886



606,705CHS/Community Health Systems, Inc.

Healthcare

Term H Loan

Loan

3M USD LIBOR  + 3.00%


1.00
%


4.98
%


1/27/2021



1,133,925



1,104,984



1,106,870Concordia Healthcare Corporation

Drugs

Term Loan B

Loan

1M USD LIBOR  + 4.25%


1.00
%


5.90
%


10/21/2021



1,930,000



1,860,229



1,723,895Consolidated Aerospace Manufacturing, LLC

Aerospace & Defense

Term Loan (First Lien)

Loan

1M USD LIBOR  + 3.75%


1.00
%


5.40
%


8/11/2022



1,418,750



1,413,829



1,417,870Consolidated Communications, Inc.

Telecommunications

Term Loan B-2

Loan

1M USD LIBOR  + 3.00%


1.00
%


4.65
%


10/5/2023



498,130



495,839



489,502CPI Acquisition Inc.

Financial Intermediaries

Term Loan B (First Lien)

Loan

6M USD LIBOR  + 4.50%


1.00
%


6.36
%


8/17/2022



1,436,782



1,421,670



1,109,196CT Technologies Intermediate Hldgs, Inc

Healthcare

Term Loan

Loan

1M USD LIBOR  + 4.25%


1.00
%


5.90
%


12/1/2021



1,455,188



1,446,213



1,448,829Cumulus Media Holdings Inc.

Radio & Television

Term Loan

Loan

3M USD LIBOR  + 3.25%


1.00
%


4.90
%


12/23/2020



448,889



446,919



385,820Daseke Companies, Inc.

Surface Transport

Term Loan

Loan

1M USD LIBOR  + 5.00%


1.00
%


6.65
%


2/27/2024



1,995,607



1,983,119



2,010,574Dell International L.L.C.

Electronics/Electrical

Term Loan (01/17)

Loan

1M USD LIBOR  + 2.00%


0.75
%


3.65
%


9/7/2023



1,496,250



1,495,193



1,496,130  S-11




---

##### Table of Contents

Issuer Name

Industry

Asset Name

AssetType

Reference Rate/ Spread

LIBORFloor


CurrentRate(All In)


MaturityDate


Principal/Number ofShares


Cost


Fair ValueDelta 2 (Lux) S.a.r.l.

Goods/Activities/Movies

Term Loan B

Loan

1M USD LIBOR  + 2.50%


1.00
%


4.15
%


2/1/2024



1,318,289



1,314,108



1,315,323DEX MEDIA, INC.

Publishing

Term Loan (07/16)

Loan

1M USD LIBOR  + 10.00%


1.00
%


11.65
%


7/29/2021



29,843



29,843



30,664DHX Media Ltd.

Goods/Activities/Movies

Term Loan

Loan

1M USD LIBOR  + 3.75%


1.00
%


5.40
%


12/29/2023



497,500



495,234



498,122Digital Room, Inc.

Publishing

Term Loan

Loan

1M USD LIBOR  + 5.00%


1.00
%


6.65
%


12/29/2023



2,500,000



2,475,000



2,481,250Dole Food Company, Inc.

Food Products

Term Loan B

Loan

2M USD LIBOR  + 2.75%


1.00
%


4.40
%


4/8/2024



493,750



491,561



495,513Drew Marine Group, Inc.

Chemicals & Plastics

Term Loan (First Lien)

Loan

3M USD LIBOR  + 3.25%


1.00
%


4.90
%


11/19/2020



2,863,470



2,844,335



2,856,311DTZ U.S. Borrower, LLC

Building & Development

Term Loan B Add-on

Loan

3M USD LIBOR  + 3.25%


1.00
%


5.23
%


11/4/2021



1,942,632



1,935,162



1,938,591DUKE FINANCE (OM GROUP/VECTRA) T/L

Financial Intermediaries

Term Loan

Loan

1M USD LIBOR  + 4.25%


1.00
%


5.94
%


2/21/2024



1,477,584



1,381,067



1,478,515Eaglepicher Technologies, LLC

Financial Intermediaries

Term Loan B

Loan

1M USD LIBOR  + 4.00%


1.00
%


5.69
%


2/21/2025



500,000



498,750



500,315Eagletree-Carbide Acquisition Corp.

Electronics/Electrical

Term Loan

Loan

3M USD LIBOR  + 4.75%


1.00
%


6.44
%


8/28/2024



1,995,000



1,976,445



2,007,469Education Management II, LLC

Goods/Activities/Movies

Term Loan A

Loan

Prime 5.50%


1.00
%


10.00
%


7/2/2020



423,861



415,813



103,846Education Management II, LLC

Goods/Activities/Movies

Term Loan B (6.50% PIK)

Loan

Prime 2.00%


1.00
%


13.00
%


7/2/2020



954,307



939,748



7,759EIG Investors Corp.

Electronics/Electrical

Term Loan

Loan

3M USD LIBOR  + 4.00%


1.00
%


5.96
%


2/9/2023



473,057



471,875



475,593Emerald 2 Limited

Equipment

Term Loan B1A

Loan

3M USD LIBOR  + 4.00%


1.00
%


5.69
%


5/14/2021



991,629



986,286



988,852Emerald Performance Materials, LLC

Chemicals & Plastics

Term Loan (First Lien)

Loan

1M USD LIBOR  + 3.50%


1.00
%


5.15
%


8/1/2021



480,141



478,874



484,141Endo International plc

Drugs

Term Loan B

Loan

1M USD LIBOR  + 4.25%


0.75
%


5.94
%


4/29/2024



995,000



990,482



992,513Engility Corporation

Aerospace & Defense

Term Loan B-1

Loan

3M USD LIBOR  + 2.75%


0.00
%


4.40
%


8/12/2020



218,750



218,055



220,117Equian, LLC

Healthcare

Term Loan B

Loan

3M USD LIBOR  + 3.25%


1.00
%


5.15
%


5/20/2024



1,990,000



1,980,110



1,998,716Evergreen Acqco 1 LP

Retailers (Except Food & Drug)

New Term Loan

Loan

3M USD LIBOR  + 3.75%


1.25
%


5.49
%


7/9/2019



945,131



942,746



902,940EWT Holdings III Corp. (fka WTG Holdings III Corp.)

Equipment

Term Loan (First Lien)

Loan

1M USD LIBOR  + 3.00%


1.00
%


4.69
%


12/20/2024



2,838,093



2,824,632



2,864,714Extreme Reach, Inc.

Electronics/Electrical

Term Loan B

Loan

3M USD LIBOR  + 6.25%


1.00
%


7.95
%


2/7/2020



2,662,500



2,645,825



2,672,484Federal-Mogul Corporation

Automotive

Tranche C Term Loan

Loan

1M USD LIBOR  + 3.75%


1.00
%


5.40
%


4/15/2021



2,296,974



2,290,825



2,309,424FinCo I LLC

Financial Intermediaries

Term Loan B

Loan

1M USD LIBOR  + 2.75%


0.00
%


4.40
%


6/14/2022



498,580



497,495



503,192First Data Corporation

Financial Intermediaries

First Data T/L Ext (2021)

Loan

1M USD LIBOR  + 2.25%


0.00
%


3.87
%


4/26/2024



1,741,492



1,661,950



1,744,400First Eagle Holdings, Inc.

Financial Intermediaries

Term Loan

Loan

3M USD LIBOR  + 3.00%


0.75
%


4.69
%


12/1/2022



1,471,350



1,462,612



1,483,856Fitness International, LLC

Goods/Activities/Movies

Term Loan B

Loan

1M USD LIBOR  + 3.50%


1.00
%


5.19
%


7/1/2020



1,409,751



1,394,961



1,423,144General Nutrition Centers, Inc.

Retailers (Except Food & Drug)

FILO Term Loan

Loan

1M USD LIBOR  + 7.00%


0.00
%


8.65
%


12/30/2022



585,849



583,668



597,935General Nutrition Centers, Inc.

Retailers (Except Food & Drug)

Term Loan B2

Loan

Prime 10.51%


0.00
%


12.25
%


3/4/2019



1,461,320



1,455,880



1,431,641Gigamon

Business Equipment & Services

Term Loan B

Loan

1M USD LIBOR  + 4.50%


1.00
%


6.15
%


12/27/2024



2,000,000



1,980,289



1,992,500Global Tel*Link Corporation

Telecommunications

Term Loan (First Lien)

Loan

3M USD LIBOR  + 4.00%


1.25
%


5.69
%


5/26/2020



3,116,081



3,110,498



3,128,732GlobalLogic Holdings, Inc.

Business Equipment & Services

Term Loan B

Loan

1M USD LIBOR  + 3.75%


1.00
%


5.44
%


6/20/2022



496,250



491,702



498,731Goodyear Tire & Rubber Company, The

Chemicals & Plastics

Loan (Second Lien)

Loan

1M USD LIBOR  + 2.00%


0.00
%


3.59
%


4/30/2019



1,833,333



1,826,354



1,832,765GoWireless, Inc.

Telecommunications

Term Loan

Loan

3M USD LIBOR  + 6.50%


1.00
%


8.16
%


12/22/2024



2,000,000



1,980,568



2,005,000Grosvenor Capital Management Holdings, LP

Property & Casualty Insurance

Initial Term Loan

Loan

1M USD LIBOR  + 3.00%


1.00
%


4.65
%


8/18/2023



992,443



988,008



996,472Hargray Communications Group, Inc.

Cable & Satellite Television

Term Loan B

Loan

1M USD LIBOR  + 3.00%


1.00
%


4.65
%


2/9/2022



995,000



992,659



996,990Harland Clarke Holdings Corp. (fka Clarke American Corp.)

Publishing

Tranche B-4 Term Loan

Loan

3M USD LIBOR  + 4.75%


1.00
%


6.44
%


11/3/2023



1,943,418



1,931,468



1,961,123HD Supply Waterworks, Ltd.

Industrial Equipment

Term Loan

Loan

6M USD LIBOR  + 3.00%


1.00
%


4.57
%


8/1/2024



498,750



497,642



499,583Heartland Dental, LLC

Healthcare

Term Loan

Loan

3M USD LIBOR  + 4.75%


1.00
%


6.45
%


7/31/2023



2,992,500



2,978,722



3,044,869Helix Acquisition Holdings, Inc.

Industrial Equipment

Term Loan B

Loan

3M USD LIBOR  + 4.00%


1.00
%


5.69
%


9/30/2024



997,500



992,861



1,002,488Helix Gen Funding, LLC

Utilities

Term Loan B

Loan

3M USD LIBOR  + 3.75%


1.00
%


5.44
%


6/3/2024



462,388



460,553



466,263Help/Systems Holdings, Inc.

Business Equipment & Services

Term Loan

Loan

1M USD LIBOR  + 4.50%


1.00
%


6.19
%


10/8/2021



1,342,543



1,296,984



1,346,463Hemisphere Media Holdings, LLC

Cable & Satellite Television

Term Loan B

Loan

3M USD LIBOR  + 3.50%


0.00
%


5.15
%


2/14/2024



2,475,000



2,485,950



2,422,406Herbalife T/L B (HLF Financing)

Food/Drug Retailers

Term Loan B

Loan

1M USD LIBOR  + 5.50%


0.75
%


7.15
%


2/15/2023



1,887,500



1,876,579



1,898,127Highline Aftermarket Acquisition, LLC

Automotive

Term Loan B

Loan

1M USD LIBOR  + 4.25%


1.00
%


6.00
%


3/15/2024



954,698



949,925



957,085Hoffmaster Group, Inc.

Containers & Glass Products

Term Loan

Loan

3M USD LIBOR  + 4.50%


1.00
%


6.19
%


11/21/2023



990,000



993,228



998,663Hostess Brands, LLC

Food Products

Term Loan B (First Lien)

Loan

1M USD LIBOR  + 2.25%


0.75
%


3.90
%


8/3/2022



1,482,559



1,479,227



1,486,532HUB International Limited

Insurance

Term Loan B

Loan

3M USD LIBOR  + 3.00%


1.00
%


4.84
%


10/2/2022



215



215



216Husky Injection Molding Systems Ltd.

Industrial Equipment

Term Loan B

Loan

1M USD LIBOR  + 3.25%


1.00
%


4.90
%


6/30/2021



402,099



400,605



402,855Hyland Software, Inc.

Business Equipment & Services

Term Loan B

Loan

1M USD LIBOR  + 3.25%


0.75
%


4.90
%


7/1/2022



994,987



992,624



1,001,624Hyperion Refinance T/L

Insurance

Term Loan

Loan

1M USD LIBOR  + 3.50%


1.00
%


5.19
%


12/20/2024



2,000,000



1,990,289



2,017,000Idera, Inc.

Business Equipment & Services

Term Loan B

Loan

1M USD LIBOR  + 4.50%


1.00
%


6.15
%


6/28/2024



1,682,535



1,665,834



1,693,051IG Investments Holdings, LLC

Business Equipment & Services

Term Loan

Loan

1M USD LIBOR  + 3.50%


1.00
%


5.19
%


10/29/2021



3,423,936



3,405,707



3,459,613Inmar, Inc.

Business Equipment & Services

Term Loan B

Loan

3M USD LIBOR  + 3.50%


1.00
%


5.15
%


5/1/2024



497,500



492,933



499,520IRB Holding Corp.

Food Service

Term Loan B

Loan

2M USD LIBOR  + 3.25%


1.00
%


4.94
%


2/5/2025



500,000



498,913



504,645J. Crew Group, Inc.

Retailers (Except Food & Drug)

Term B-1 Loan Retired 03/05/2014

Loan

3M USD LIBOR  + 3.22%


1.00
%


4.91
%


3/5/2021



830,284



830,284



573,676J.Jill Group, Inc.

Retailers (Except Food & Drug)

Term Loan (First Lien)

Loan

3M USD LIBOR  + 5.00%


1.00
%


6.77
%


5/9/2022



872,065



869,192



863,344Kinetic Concepts, Inc.

Healthcare

Term Loan F-1

Loan

3M USD LIBOR  + 3.25%


1.00
%


4.94
%


2/2/2024



2,388,000



2,377,873



2,393,373Koosharem, LLC

Business Equipment & Services

Term Loan

Loan

3M USD LIBOR  + 6.50%


1.00
%


8.19
%


5/15/2020



2,905,150



2,893,037



2,865,204Lakeland Tours, LLC

Business Equipment & Services

Term Loan B

Loan

3M USD LIBOR  + 4.00%


1.00
%


5.59
%


12/16/2024



1,847,826



1,843,674



1,868,041Lannett Company, Inc.

Drugs

Term Loan B

Loan

1M USD LIBOR  + 5.38%


1.00
%


7.03
%


11/25/2022



2,700,436



2,656,597



2,693,685PARENT)

Telecommunications

Initial Term Loan (A-L Parent)

Loan

1M USD LIBOR  + 3.25%


1.00
%


4.90
%


12/1/2023



495,000



493,040



499,950Legalzoom.com, Inc.

Business Equipment & Services

Term Loan B

Loan

1M USD LIBOR  + 4.50%


1.00
%


6.09
%


11/21/2024



1,000,000



990,210



1,005,000Lighthouse Network

Financial Intermediaries

Term Loan B

Loan

1M USD LIBOR  + 4.50%


1.00
%


6.15
%


11/29/2024



1,000,000



995,138



1,009,380Lightstone Generation

Utilities

Term Loan B

Loan

1M USD LIBOR  + 3.75%


1.00
%


5.40
%


1/30/2024



912,971



912,971



918,047Lightstone Generation

Utilities

Term Loan C

Loan

1M USD LIBOR  + 3.75%


1.00
%


5.40
%


1/30/2024



57,971



57,971



58,293 See accompanying notes to financial statements.  S-12




---

##### Table of Contents

Issuer Name

Industry

Asset Name

AssetType

Reference Rate/Spread

LIBORFloor


CurrentRate(All In)


MaturityDate


Principal/Number ofShares


Cost


Fair ValueLiquidnet Holdings, Inc.

Financial Intermediaries

Term Loan B

Loan

1M USD LIBOR  +  3.75%


1.00
%


5.40
%


7/15/2024



487,500



482,947



488,719LPL Holdings, Inc.

Financial Intermediaries

Term Loan B (2022)

Loan

3M USD LIBOR  + 2.25%


0.00
%


3.89
%


9/23/2024



1,741,261



1,737,339



1,743,977Mayfield Holdings T/L (FeeCo)

Financial Intermediaries

Term Loan

Loan

1M USD LIBOR  + 4.50%


0.00
%


6.15
%


1/31/2025



500,000



497,500



501,250McAfee, LLC

Electronics/Electrical

Term Loan B

Loan

1M USD LIBOR  + 4.50%


1.00
%


6.15
%


9/30/2024



2,245,000



2,225,301



2,255,821McGraw-Hill Global Education Holdings, LLC

Publishing

Term Loan

Loan

1M USD LIBOR  + 4.00%


1.00
%


5.65
%


5/4/2022



985,000



981,596



969,693Meredith Corporation

Publishing

Term Loan B

Loan

3M USD LIBOR  + 3.00%


0.00
%


4.66
%


1/31/2025



1,000,000



997,611



1,005,470Michaels Stores, Inc.

Retailers (Except Food & Drug)

Term Loan B1

Loan

3M USD LIBOR  + 2.75%


1.00
%


4.40
%


1/30/2023



2,658,469



2,646,849



2,669,927Micro Holding Corporation

Electronics/Electrical

Term Loan

Loan

3M USD LIBOR  + 3.75%


1.00
%


5.34
%


9/13/2024



1,471,995



1,466,585



1,471,627Midas Intermediate Holdco II, LLC

Automotive

Term Loan (Initial)

Loan

1M USD LIBOR  + 2.75%


1.00
%


4.44
%


8/18/2021



241,931



241,246



242,838Midwest Physician Administrative Services LLC

Healthcare

Term Loan

Loan

1M USD LIBOR  + 2.75%


0.75
%


4.35
%


8/15/2024



997,500



992,551



995,635Milk Specialties Company

Food Products

Term Loan

Loan

1M USD LIBOR  + 4.00%


1.00
%


5.69
%


8/16/2023



987,500



979,118



988,734Mister Car Wash T/L

Automotive

Term Loan

Loan

1M USD LIBOR  + 3.25%


1.00
%


4.90
%


8/20/2021



1,583,528



1,578,798



1,592,443MRC Global (US) Inc.

Nonferrous Metals/Minerals

Term Loan B

Loan

1M USD LIBOR  + 3.50%


1.00
%


5.15
%


9/20/2024



500,000



498,823



503,440Navistar, Inc.

Automotive

Term Loan B

Loan

1M USD LIBOR  + 3.50%


1.00
%


5.08
%


11/6/2024



2,000,000



1,990,461



2,005,620NCI Building Systems, Inc.

Building & Development

Term Loan

Loan

1M USD LIBOR  + 2.00%


0.00
%


3.65
%


2/7/2025



500,000



498,814



500,625New Media Holdings II T/L (NEW)

Radio & Television

Term Loan

Loan

2M USD LIBOR  + 6.25%


1.00
%


7.90
%


6/4/2020



5,631,193



5,606,694



5,655,858New Millennium Holdco, Inc.

Drugs

Term Loan

Loan

1M USD LIBOR  + 6.50%


1.00
%


8.15
%


12/21/2020



1,910,035



1,806,090



649,412Novetta Solutions

Aerospace & Defense

Term Loan (200MM)

Loan

3M USD LIBOR  + 5.00%


1.00
%


6.70
%


10/16/2022



1,960,000



1,946,082



1,890,792Novetta Solutions

Aerospace & Defense

Term Loan (2nd Lien)

Loan

3M USD LIBOR  + 8.50%


1.00
%


10.20
%


10/16/2023



1,000,000



992,243



890,000NPC International, Inc.

Food Service

Term Loan (2013)

Loan

1M USD LIBOR  + 3.50%


1.00
%


5.15
%


4/19/2024



497,500



496,902



501,644NXT Capital T/L (11/16)

Financial Intermediaries

Term Loan

Loan

1M USD LIBOR  + 3.50%


1.00
%


5.15
%


11/23/2022



1,238,120



1,233,635



1,256,692Office Depot, Inc.

Retailers (Except Food & Drug)

Term Loan B

Loan

1M USD LIBOR  + 7.00%


1.00
%


8.58
%


11/8/2022



2,500,000



2,430,480



2,527,500Onex Carestream Finance LP

Healthcare

Term Loan (First Lien 2013)

Loan

3M USD LIBOR  + 4.00%


1.00
%


5.69
%


6/7/2019



3,037,274



3,033,839



3,049,939OpenLink International, LLC

Financial Intermediaries

Term B Loan

Loan

3M USD LIBOR  + 6.50%


1.25
%


8.27
%


7/29/2019



2,883,152



2,881,467



2,886,756P.F. Changs China Bistro, Inc.

Food Service

Term B Loan

Loan

6M USD LIBOR  + 5.00%


1.00
%


6.51
%


9/1/2022



1,995,000



1,978,916



1,962,581ULC)

Business Equipment & Services

Term Loan (First Lien)

Loan

6M USD LIBOR  + 4.00%


1.00
%


5.80
%


10/30/2020



955,558



953,277



943,614Peraton

Aerospace & Defense

Term Loan

Loan

1M USD LIBOR  + 5.25%


1.00
%


6.95
%


4/29/2024



1,990,000



1,980,795



2,007,413Petsmart, Inc. (Argos Merger Sub, Inc.)

Retailers (Except Food & Drug)

Term Loan B1

Loan

2M USD LIBOR  + 3.00%


1.00
%


4.57
%


3/11/2022



972,500



968,851



792,344PGX Holdings, Inc.

Financial Intermediaries

Term Loan

Loan

3M USD LIBOR  +  5.25%


1.00
%


6.90
%


9/29/2020



2,754,229



2,743,573



2,664,717PI US HOLDCO II T/L (PAYSAFE)

Financial Intermediaries

Term Loan

Loan

1M USD LIBOR  + 3.50%


1.00
%


5.17
%


12/20/2024



1,000,000



995,000



1,002,080Pike Corporation

Conglomerates

Term Loan B

Loan

1M USD LIBOR  + 3.50%


1.00
%


5.15
%


9/20/2024



497,503



495,186



501,443Ping Identity Corporation

Business Equipment & Services

Term Loan B

Loan

1M USD LIBOR  + 3.75%


1.00
%


5.37
%


1/24/2025



500,000



497,525



501,875Planet Fitness Holdings LLC

Goods/Activities/Movies

Term Loan

Loan

1M USD LIBOR  + 3.00%


0.75
%


4.65
%


3/31/2021



2,368,358



2,363,020



2,392,042Plastipak Packaging, Inc

Containers & Glass Products

Term Loan B

Loan

1M USD LIBOR  + 2.75%


1.00
%


4.45
%


10/14/2024



997,500



992,752



1,002,986Polycom Term Loan (9/16)

Telecommunications

Term Loan

Loan

2M USD LIBOR  + 5.25%


1.00
%


6.90
%


9/27/2023



1,508,167



1,490,507



1,513,506PrePaid Legal Services, Inc.

Conglomerates

Term Loan B

Loan

3M USD LIBOR  + 5.25%


1.25
%


6.90
%


7/1/2019



2,944,950



2,947,124



2,948,631Presidio, Inc.

Electronics/Electrical

Term Loan B 2017

Loan

3M USD LIBOR  + 2.75%


1.00
%


4.45
%


2/2/2024



1,882,977



1,837,433



1,887,289Prestige Brands T/L B4

Drugs

Term Loan B4

Loan

1M USD LIBOR  + 2.75%


0.75
%


4.40
%


1/26/2024



428,171



427,260



430,543Prime Security Services (Protection One)

Electronics/Electrical

Term Loan

Loan

1M USD LIBOR  + 2.75%


1.00
%


4.40
%


5/2/2022



1,970,162



1,961,794



1,985,825Project Accelerate

Business Equipment & Services

Term Loan

Loan

3M USD LIBOR  + 4.25%


1.00
%


5.94
%


1/2/2025



2,000,000



1,990,187



2,020,000Project Leopard Holdings, Inc.

Business Equipment & Services

Term Loan

Loan

1M USD LIBOR  + 4.00%


1.00
%


5.78
%


7/7/2023



498,750



497,506



500,466Prometric

Business Equipment & Services

Term Loan

Loan

3M USD LIBOR  + 3.00%


1.00
%


4.77
%


1/29/2025



500,000



497,522



503,750Rackspace Hosting, Inc.

Telecommunications

Term Loan B

Loan

3M USD LIBOR  + 3.00%


1.00
%


4.79
%


11/3/2023



498,747



497,557



500,059Radio Systems Corporation

Goods/Activities/Movies

Term Loan

Loan

1M USD LIBOR  + 3.50%


1.00
%


5.15
%


5/2/2024



1,492,500



1,492,500



1,498,097Ranpak Holdings, Inc.

Business Equipment & Services

Term Loan

Loan

1M USD LIBOR  + 3.25%


1.00
%


4.90
%


10/1/2021



906,723



904,457



910,694Red Ventures, LLC

Electronics/Electrical

Term Loan

Loan

1M USD LIBOR  + 4.00%


0.00
%


5.65
%


11/8/2024



997,500



987,986



1,003,525Research Now Group, Inc

Electronics/Electrical

Term Loan

Loan

3M USD LIBOR  + 5.50%


1.00
%


7.13
%


12/20/2024



3,000,000



2,853,582



2,966,250Resolute Investment Managers, Inc.

Financial Intermediaries

Term Loan

Loan

3M USD LIBOR  + 3.25%


1.00
%


4.94
%


4/29/2022



722,738



722,738



732,676Reynolds Group Holdings Inc.

Industrial Equipment

Incremental U.S. Term Loan

Loan

1M USD LIBOR  + 2.75%


0.00
%


4.40
%


2/3/2023



1,743,523



1,743,523



1,750,968RGIS Services, LLC

Business Equipment & Services

Term Loan

Loan

1M USD LIBOR  + 7.50%


1.00
%


9.15
%


3/31/2023



496,250



489,372



468,956Robertshaw US Holding Corp.

Industrial Equipment

Term Loan B

Loan

1M USD LIBOR  + 3.50%


1.00
%


5.19
%


2/14/2025



1,000,000



997,500



1,008,750Rovi Solutions Corporation / Rovi Guides, Inc.

Electronics/Electrical

Tranche B-3 Term Loan

Loan

1M USD LIBOR  + 2.50%


0.75
%


4.15
%


7/2/2021



1,447,500



1,443,827



1,455,418Russell Investment Management T/L B

Financial Intermediaries

Term Loan B

Loan

3M USD LIBOR  + 4.25%


1.00
%


5.94
%


6/1/2023



2,217,487



2,120,560



2,229,129Sally Holdings, LLC

Retailers (Except Food & Drug)

Term Loan B1

Loan

1M USD LIBOR  + 2.50%


0.00
%


4.19
%


7/5/2024



1,000,000



995,387



996,670Sally Holdings, LLC

Retailers (Except Food & Drug)

Term Loan (Fixed)

Loan

Fixed 4.50%


0.00
%


4.50
%


7/5/2024



997,500



992,929



1,002,069SBP Holdings LP

Industrial Equipment

Term Loan (First Lien)

Loan

3M USD LIBOR  + 4.00%


1.00
%


5.65
%


3/27/2021



962,500



960,161



943,250SCS Holdings (Sirius Computer)

Business Equipment & Services

Term Loan (First Lien)

Loan

1M USD LIBOR  + 4.25%


1.00
%


5.90
%


10/31/2022



2,266,208



2,236,571



2,282,253Seadrill Operating LP

Oil & Gas

Term Loan B

Loan

3M USD LIBOR  + 3.00%


1.00
%


4.69
%


2/21/2021



967,254



925,524



835,224SG Acquisition, Inc. (Safe Guard)

Insurance

Term Loan

Loan

3M USD LIBOR  + 5.00%


1.00
%


6.69
%


3/29/2024



1,892,500



1,875,697



1,892,500Shearers Foods LLC

Food Products

Term Loan (First Lien)

Loan

3M USD LIBOR  + 3.94%


1.00
%


5.63
%


6/30/2021



967,500



966,193



972,947Sitel Worldwide

Telecommunications

Term Loan

Loan

6M USD LIBOR  + 5.50%


1.00
%


7.25
%


9/18/2021



1,955,000



1,942,489



1,955,978SMB Shipping Logistics T/L B (REP WWEX Acquisition)

Surface Transport

Term Loan B

Loan

6M USD LIBOR  + 4.00%


1.00
%


5.48
%


2/2/2024



1,989,987



1,988,148



1,990,823Sonneborn, LLC

Chemicals & Plastics

Term Loan (First Lien)

Loan

3M USD LIBOR  + 3.75%


1.00
%


5.40
%


12/10/2020



205,858



205,602



206,887Sonneborn, LLC

Chemicals & Plastics

Initial US Term Loan

Loan

3M USD LIBOR  + 3.75%


1.00
%


5.40
%


12/10/2020



1,166,529



1,165,079



1,172,362Sophia, L.P.

Conglomerates

Term Loan (Closing Date)

Loan

3M USD LIBOR  + 3.25%


1.00
%


4.94
%


9/30/2022



1,905,528



1,897,798



1,907,376 See accompanying notes to financial statements.  S-13




---

##### Table of Contents

Issuer Name

Industry

Asset Name

AssetType


Reference Rate/ Spread

LIBORFloor


CurrentRate(All In)


MaturityDate


Principal/Number ofShares


Cost


Fair ValueSRAM, LLC

Industrial Equipment

Term Loan (First Lien)


Loan


2M USD LIBOR  +  3.25%


1.00
%


4.88
%


3/15/2024



2,417,405



2,398,260



2,432,514SS&C Technologies

Business Equipment & Services

Term Loan B3


Loan


N/A 2.50%


0.00
%


4.27
%


2/28/2025



737,000



735,158



740,228SS&C Technologies

Business Equipment & Services

Term Loan B4


Loan


N/A 2.50%


0.00
%


4.27
%


2/28/2025



263,000



262,343



264,152Staples, Inc.

Retailers (Except Food & Drug)

Term Loan B


Loan


3M USD LIBOR  + 4.00%


1.00
%


5.79
%


8/15/2024



1,995,000



1,990,091



1,981,294Steak n Shake Operations, Inc.

Food Service

Term Loan


Loan


1M USD LIBOR  + 3.75%


1.00
%


5.40
%


3/19/2021



844,991



840,948



737,255Sybil Software LLC

Electronics/Electrical

Term Loan B


Loan


3M USD LIBOR  + 2.75%


1.00
%


4.44
%


9/29/2023



950,777



946,662



956,177Syncsort, Inc.

Business Equipment & Services

Term Loan


Loan


3M USD LIBOR  + 5.00%


1.00
%


6.69
%


8/16/2024



1,995,000



1,975,954



1,995,618Ten-X, LLC

Business Equipment & Services

Term Loan


Loan


1M USD LIBOR  + 4.00%


1.00
%


5.65
%


9/30/2024



2,000,000



1,997,922



1,991,260Townsquare Media, Inc.

Radio & Television

Term Loan B


Loan


3M USD LIBOR  + 3.00%


1.00
%


4.65
%


4/1/2022



911,712



908,025



913,991TransDigm, Inc.

Aerospace & Defense

Term Loan G


Loan


1M USD LIBOR  + 2.50%


0.00
%


4.10
%


8/22/2024



4,190,095



4,197,662



4,205,808Travel Leaders Group, LLC

Goods/Activities/Movies

Term Loan B


Loan


3M USD LIBOR  + 4.50%


0.00
%


6.35
%


1/25/2024



1,985,025



1,976,475



2,007,357TRC Companies, Inc.

Business Equipment & Services

Term Loan


Loan


1M USD LIBOR  + 3.50%


1.00
%


5.15
%


6/21/2024



2,992,500



2,978,644



2,999,981TRICO Group

Containers & Glass Products

Term Loan


Loan


3M USD LIBOR  + 6.50%


1.00
%


8.48
%


2/2/2024



3,000,000



2,940,000



2,996,250Truck Hero, Inc. (Tectum Holdings)

Surface Transport

Term Loan B


Loan


3M USD LIBOR  + 4.00%


1.00
%


5.64
%


4/22/2024



2,987,494



2,964,391



3,001,505Trugreen Limited Partnership

Chemicals & Plastics

Term Loan B


Loan


1M USD LIBOR  + 4.00%


1.00
%


5.54
%


4/13/2023



493,763



486,986



498,701Twin River Management Group, Inc.

Lodging & Casinos

Term Loan B


Loan


3M USD LIBOR  + 3.50%


1.00
%


4.83
%


7/10/2020



785,346



786,226



792,218Univar Inc.

Chemicals & Plastics

Term B Loan


Loan


1M USD LIBOR  + 2.50%


0.00
%


4.15
%


7/1/2024



2,546,644



2,534,633



2,558,919Uniti Group, Inc.

Telecommunications

Term Loan B (First Lien)


Loan


1M USD LIBOR  + 3.00%


1.00
%


4.65
%


10/24/2022



1,950,362



1,940,540



1,881,280Univision Communications Inc.

Radio & Television

Replacement First-Lien Term Loan


Loan


1M USD LIBOR  + 2.75%


1.00
%


4.40
%


3/15/2024



2,854,711



2,838,791



2,818,627UOS, LLC (Utility One Source)

Equipment Leasing

Term Loan B


Loan


1M USD LIBOR  + 5.50%


1.00
%


7.15
%


4/18/2023



597,249



595,209



613,673UPC Broadband Holding B.V.

Cable & Satellite Television

Term Loan


Loan


1M USD LIBOR  + 2.50%


0.00
%


4.09
%


1/15/2026



1,000,000



998,817



998,750Valeant Pharmaceuticals International, Inc.

Drugs

Series D2 Term Loan B


Loan


1M USD LIBOR  + 3.50%


0.75
%


5.08
%


4/1/2022



848,566



848,566



858,019Virtus Investment Partners, Inc.

Financial Intermediaries

Term Loan B


Loan


3M USD LIBOR  + 2.50%


0.75
%


4.09
%


6/3/2024



497,500



495,337



499,366Vizient Inc.

Healthcare

Term Loan


Loan


1M USD LIBOR  + 2.75%


1.00
%


4.40
%


2/13/2023



313,725



306,705



315,686Washington Inventory Service

Business Equipment & Services

U.S. Term Loan (First Lien)


Loan


3M USD LIBOR  + 6.00%


0.00
%


7.52
%


6/8/2020



1,111,056



1,122,315



833,292Weight Watchers International, Inc.

Food Service

Term Loan B


Loan


1M USD LIBOR  +  4.75%


0.75
%


6.33
%


11/29/2024



2,000,000



1,960,950



2,022,500Western Dental Services, Inc.

Retailers (Except Food & Drug)

Term Loan B


Loan


1M USD LIBOR  + 4.50%


1.00
%


6.15
%


6/30/2023



2,488,747



2,472,078



2,505,870Western Digital Corporation

Electronics/Electrical

Term Loan B (USD)


Loan


1M USD LIBOR  + 2.00%


0.75
%


3.60
%


4/28/2023



1,309,443



1,272,149



1,315,335Windstream Services, LLC

Telecommunications

Term Loan B6


Loan


1M USD LIBOR  + 4.00%


0.75
%


5.59
%


3/29/2021



886,317



879,389



835,354Wirepath LLC

Home Furnishings

Term Loan


Loan


3M USD LIBOR  + 4.50%


1.00
%


6.17
%


8/5/2024



997,500



997,055



997,500Xerox Business Services T/L B (Conduent)

Business Equipment & Services

Term Loan


Loan


2M USD LIBOR  + 3.00%


0.00
%


4.65
%


12/7/2023



742,500



731,992



748,069ZEP, Inc.

Chemicals & Plastics

Term Loan B


Loan


1M USD LIBOR  + 4.00%


1.00
%


5.77
%


8/12/2024



2,493,750



2,482,111



2,508,289Zest Holdings 1st Lien T/L (2014 Replacement)

Healthcare

Term Loan


Loan


2M USD LIBOR  + 4.25%


1.00
%


5.90
%


8/16/2023



992,500



988,063



991,885$
311,457,573


$
305,830,303Number ofShares


Cost


Fair ValueCash and cash equivalentsU.S. Bank Money Market (a)
























5,769,820


$
5,769,820


$
5,769,820Total cash and cash equivalents
























5,769,820


$
5,769,820


$
5,769,820  (a)
Included within cash and cash equivalents in Saratoga CLOs Statements of Assets and Liabilities as of
February 28, 2018. LIBORLondon Interbank Offered Rate 1M USD LIBORThe 1 month USD LIBOR rate as of February 28, 2018 was 1.67%. 2M USD LIBORThe 2 month USD LIBOR rate as of February 28, 2018 was 1.81%. 3M USD LIBORThe 3 month USD LIBOR rate as of February 28, 2018 was 2.02%. 6M USD LIBORThe 6 month USD LIBOR rate as of February 28, 2018 was 2.22%. PrimeThe Prime Rate as of February 28, 2018 was 4.50%. PIKPayment-in-Kind See accompanying notes to financial statements.  S-14




---

##### Table of Contents

SARATOGA INVESTMENT CORP. CLO 2013-1, LTD. NOTES TO FINANCIAL STATEMENTS 1. Organization and Purpose Saratoga
Investment Corp. CLO 2013-1, Ltd. (the Issuer, we, our, us, CLO and Saratoga CLO), an exempted company with limited liability
incorporated under the laws of the Cayman Islands was formed on November 28, 2007 and commenced operations on January 22, 2008. The Issuer was established to acquire or participate in U.S. dollar-denominated corporate debt obligations. On January 22, 2008, the Issuer issued $400.0 million of notes, consisting of Class A Floating Rate Senior Notes,
Class B Floating Rate Senior Notes, Class C Deferrable Floating Rate Notes, Class D Deferrable Floating Rate Notes, Class E Deferrable Floating Rate Notes (collectively the Secured Notes), and Subordinated Notes. The
notes were issued pursuant to an indenture, dated January 22, 2008 (the Indenture), with U.S. Bank National Association (the Trustee) servicing as the Trustee there under. On October 17, 2013, in a refinancing transaction, the Issuer issued $284.9 million of notes (the
2013-1 CLO Notes), consisting of Class X Floating Rate Senior Notes, Class A-1 Floating Rate Senior Notes,
Class A-2 Floating Rate Senior Notes, Class B Floating Rate Senior Notes, Class C Deferrable Floating Rate Notes, Class D Deferrable Floating Rate Notes, Class E Deferrable Floating
Rate Notes, and Class F Deferrable Floating Rate Notes. The 2013-1 CLO Notes were issued pursuant to the Indenture with the same Trustee. Proceeds of the issuance of the
2013-1 CLO Notes were used, along with existing assets held by the Trustee, to redeem all of the Secured Notes issued in 2008. On November 15, 2016, the Issuer completed the second refinancing and the Issuer issued $282.4 million of notes (the 2013- 1
Amended CLO Notes), consisting of Class A-1 Floating Rate Senior Notes, Class A-2 Floating Rate Senior Notes, Class B Floating Rate Senior Notes,
Class C Deferrable Floating Rate Notes, Class D Deferrable Floating Rate Notes, Class E Deferrable Floating Rate Notes, and Class F Deferrable Floating Rate Notes. The 2013-1 Amended CLO
Notes were issued pursuant to the Indenture with the same Trustee. Proceeds of the issuance of the 2013-1 Amended CLO Notes were used, along with existing assets held by the Trustee, to redeem all of the 2013-1 CLO Notes issued in 2013. On December 14, 2018, in a refinancing transaction, the Issuer
issued $509.5 million of notes (the 2013-1 Reset CLO Notes), consisting of
Class A-1FL-R-2 Floating Rate Senior Notes, Class A-1FXD-R-2 Fixed Rate Senior Notes, Class A-2-R-2 Floating Rate
Senior Notes, Class B-R-2 Floating Rate Senior Notes, Class C-R-2 Deferrable
Mezzanine Floating Rate Notes, Class D-R-2 Deferrable Mezzanine Floating Rate Notes, Class E-1-R-2 Deferrable Mezzanine Floating Rate Notes, Class F-R-2 Deferrable Junior Floating Rate Notes, Class G-R-2 Deferrable Junior Floating Rate Notes, and Subordinated Notes. The 2013-1 Reset CLO Notes were issued pursuant to the
Indenture with the same Trustee. Proceeds of the issuance of the 2013-1 Reset CLO Notes were used along with existing assets held by the Trustee to redeem all of the Secured Notes issued in 2016. As of
February 28, 2019, Saratoga Investment Corp. owned 100% of the Class F-R-2 Notes,
Class G-R-2 Notes and the Subordinated Notes of the CLO. Pursuant to an investment management agreement (the Investment Management Agreement), Saratoga Investment Corp. (the
Investment Manager), provides investment management services to the Issuer, and makes day-to-day investment decisions concerning the assets of the Issuer.
The Investment Manager also performs certain administrative services on behalf of the Issuer under the Investment Management Agreement. The CLO remains 100.0% owned and managed by Saratoga Investment Corp. 2. Significant Accounting Policies Basis of
Presentation The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles
(U.S. GAAP) and are stated in U.S. dollars. The following is a summary of the significant accounting policies followed by the Issuer in the preparation of its financial statements. The Issuer is considered to be an investment company for financial reporting purposes and has applied the guidance in accordance with the
Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 946, Financial ServicesInvestment Companies.There has been no change to the Issuers status as an
investment company during the year ended February 28, 2019.  S-15




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##### Table of Contents

Use of Estimates The preparation of the financial statements in conformity with U.S. GAAP requires the Investment Manager to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the financial statements, including the fair value of investments, and the amounts of income and expenses during the reporting period. Actual results could differ from these
estimates and such differences could be material. Cash and Cash Equivalents The Issuer defines cash and cash equivalents as highly liquid financial instruments with original maturities of three months or less. Cash and
cash equivalents may include investments in money market mutual funds, which are carried at fair value. At February 28, 2019 and February 28, 2018, cash and cash equivalents amounted to $18.5 million and $5.8 million,
respectively, and are swept on an overnight basis into a U.S. Bank money market deposit account held at the Trustee. Valuation of Investments The Issuer accounts for its investments at fair value in accordance with the FASB ASC Topic 820, Fair Value Measurement(ASC
820). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements.
ASC 820 requires the Issuer to assume that its investments are to be sold at the statement of assets and liabilities 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 the Investment Manager to approve a fair value determination to reflect significant events affecting the value of these investments. The Investment Manager values investments for which
market quotations are not readily available at fair value. Determinations of fair value may involve significant judgments and estimates. The types of factors that may be considered in determining the fair value of investments include the nature and
realizable value of any collateral, the portfolio companys ability to make payments, market yield trend analysis, the markets in which the portfolio company does business, comparison to publicly traded companies, discounted cash flow and other
relevant factors. Because such valuations, and particularly valuations of private investments and private companies, are inherently
uncertain, they may fluctuate over short periods of time and may be based on estimates. The determination of fair value may differ materially from the values that would have been used if a ready market for these investments existed. Our net asset
value could be materially affected if the determinations regarding the fair value of our investments were materially higher or lower than the values that are ultimately realized upon the disposal of such investments. Investment Transactions and Income Recognition Purchases and sales of investments and the related realized gains or losses are recorded on a trade-date basis. Interest income, adjusted for
amortization of premium and accretion of discount, is recorded on an accrual basis to the extent that such amounts are expected to be collected. The Issuer 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 amortizations of premium 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 the Investment Manager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.  S-16




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##### Table of Contents

Payment-in-Kind Interest The Issuer holds debt investments in its portfolio that contain a
payment-in-kind (PIK) interest provision. The PIK interest, which represents contractually deferred interest added to the investment balance that is
generally due at maturity, is generally recorded on the accrual basis to the extent such amounts are expected to be collected. We stop accruing PIK interest if we do not expect the issuer to be able to pay all principal and interest when due. Deferred Debt Financing Costs, net The
Issuer presents deferred debt financing costs on the balance sheet as a contra-liability as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Included in deferred debt financing costs of $2.5 million as of February 28, 2019 are structuring fees of the investment bank,
rating agency and legal fees, and other various closing costs associated with the issuance of the 2013-1 Reset CLO Notes on December 14, 2018. Such costs have been capitalized and amortized using an
effective yield method as appropriate, over the life of the related notes. Included in deferred debt financing costs of $1.0 million
as of February 28, 2018 are structuring fees of the investment bank, rating agency fees and legal fees associated with the issuance of the 2013-1 CLO Notes on October 17, 2013. Such costs have been capitalized and amortized using an
effective yield method, over the life of the related notes. Deferred debt financing costs of $1.2 million incurred in connection
with the issuance of the 2013-1 Amended CLO Notes, were expensed when the 2013-1 Amended CLO Notes were extinguished on December 14, 2018. Management Fees The Issuer is externally
managed by the Investment Manager pursuant to the Investment Management Agreement. As compensation for the performance of its obligations under the Investment Management Agreement, the Investment Manager is entitled to receive from the Issuer a base
management fee (the Base Management Fee), a subordinated management fee (the Subordinated Management Fee) and an incentive management fee (the Incentive Management Fee). The Base Management Fee is payable in
arrears quarterly (subject to availability of funds and to the satisfaction of payment obligations on the debt obligations of the Issuer (the Priority of Payments)) and prior to the second refinancing and the issuance of the 2013-1 Amended CLO Notes, was payable in an amount equal to 0.25% per annum of the fee basis amount at the beginning of the Collection period. The Subordinated Management Fee is payable in arrears quarterly (subject
to availability of funds and to the Priority of Payments) and prior to the second refinancing and the issuance of the 2013-1 Amended CLO Notes, was payable in an amount equal to 0.25% per annum of the fee
basis amount at the beginning of the Collection Period. Subsequent to the second refinancing and the issuance of the 2013-1 Amended CLO Notes, the Base Management Fee was changed to be payable in an amount
equal to 0.10% per annum of the fee basis amount at the beginning of the Collection period, and the Subordinated Management Fees was changed to be payable in an amount equal to 0.40% per annum of the fee basis amount at the beginning of the
Collection period. This remained unchanged during the third refinancing and the issuance of the 2013-1 Reset CLO Notes. Prior to the third refinancing of the CLO, the Incentive Management Fee equaled 20.0% of
the remaining interest proceeds and principal proceeds, if any, after the Subordinated Notes have realized the incentive management fee target return of 12.0%, in accordance with the Priority of Payments after making the prior distributions on the
relevant payment date. The investment manager is no longer eligible to receive the incentive fee following the third refinancing of the CLO on December 14, 2018. For the years ended February 28, 2019 and February 28, 2018, Incentive
Management Fees of $0.6 million and $0.6 million, respectively were accrued. For the year ended February 28, 2017, no Incentive Management Fees have been accrued or paid. Expenses The Issuer bears its own
organizational and offering expenses, all expenses related to its investment program and expenses incurred in connection with its operations including, but not limited to, external legal, administrative, trustee, accounting, tax and audit expenses,
costs related to trading, acquiring, monitoring or disposing of investments of the Issuer, and interest and other borrowing expenses, expenses of preparing and distributing reports, financial statements, and litigation or other extraordinary
expenses. The Issuer has retained the Trustee to provide trustee services. Additionally, the Trustee performs loan administration, debt covenant compliance calculations, and monitoring and reporting services. For the years ended February 28,
2019, February 28, 2018 and February 28, 2017, the Issuer paid $0.2 million, $0.2 million and $0.1 million, respectively, for trustee services provided and is included on the statements of operations.  S-17




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##### Table of Contents

Interest Expense The Issuer has issued rated and unrated notes to finance its operations. Interest on debt is calculated by the Trustee for the Issuer. Interest
is accrued and generally paid quarterly. For the years ended February 28, 2019, February 28, 2018 and February 28, 2017, $2.0 million, $3.3 million and $4.7 million of payments to the Subordinated Notes were included in
interest and debt financing expenses on the statements of operations, respectively. For the year ended February 28, 2019, $0.5 million in discount amortization related to the Subordinated Notes is also included in interest and debt
financing expenses on the Issuers statement of operations. Risk Management In the ordinary course of its business, the Issuer manages a variety of risks, including market risk and credit risk. Market risk is the risk
of potential adverse changes to the value of investments because of changes in market conditions such as interest rate movements and volatility in investment prices. Credit risk is the risk of default or non-performance by portfolio companies, equivalent to the
investments carrying amount. The Issuer is also exposed to credit risk related to maintaining all of its cash and cash equivalents,
including those in reserve accounts, at a major financial institution. The Issuer has investments in lower rated and comparable quality
unrated high yield bonds and bank loans. Investments in high yield investments are accompanied by a greater degree of credit risk. The risk of loss due to default by the issuer is significantly greater for holders of high yield securities, because
such investments are generally unsecured and are often subordinated to other creditors of the issuer. Regulatory Matters In August 2018, the SEC issued Final Rule Release No.33-10532, Disclosure Update and
Simplification, which in part amends certain disclosure requirements of Regulation S-X that have become redundant, duplicative, overlapping, outdated, or superseded, in light of other Commission disclosure
requirements, U.S. GAAP or changes in the information environment. The amendments are intended to facilitate the disclosure of information to investors and simplify compliance without significantly altering the total mix of information provided to
investors. The effective date for these disclosures was November 5, 2018, effective for the first quarter that begins after the effective date. Management has adopted these amendments as currently required and these are reflected in the
Issuers financial statements and related disclosures. The presentation of certain prior year information has been adjusted to conform with these amendments. New Accounting Pronouncements In August
2018, FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure FrameworkChanges to the Disclosure Requirements for Fair Value Measurement(ASU
2018-13). The primary focus of ASU 2018-13 is to improve the effectiveness of the disclosure requirements for fair value measurements. The changes affect all
companies that are required to include fair value measurement disclosures. In general, the amendments in ASU 2018-13 are effective for all entities for fiscal years and interim periods within those fiscal
years, beginning after December 15, 2019. An entity is permitted to early adopt the removed or modified disclosures upon the issuance of ASU 2018-13 and may delay adoption of the additional disclosures,
which are required for public companies only, until their effective date. Management has assessed these changes and does not believe they would have a material impact on the Issuers financial statements and disclosures. In March 2017, the FASB issued ASU 2017-08, Receivables  Nonrefundable Fees and Other Costs
(Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities(ASU 2017-08) which amends the amortization period for certain purchased
callable debt securities held at a premium, shortening such period to the earliest call date. ASU 2017-08 does not require any accounting change for debt securities held at a discount; the discount continues
to be amortized to maturity. ASU 2017-08 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Management has assessed these changes and does not
believe they would have a material impact on the Issuers financial statements and disclosures.  S-18




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##### Table of Contents

In February 2016, the FASB issued ASU 2016-02,
Amendments to the Leases(ASU Topic 842), which will require for all operating leases the recognition of a right-of-use asset and a lease liability,
in the statement of financial position. The lease cost will be allocated over the lease term on a straight-line basis. This guidance is effective for annual and interim periods beginning after December 15, 2018. Management is currently
evaluating the impact these changes will have on the Issuers financial statements and disclosures. 3. Fair Value Measurements As noted above, the Issuer values all investments in accordance with ASC 820. ASC 820 requires enhanced disclosures about assets and
liabilities that are measured and reported at fair value. As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. ASC 820 establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability of inputs
used in measuring investments at fair value. Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices
or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. Based on the observability of the inputs used in the valuation techniques, the Issuer is required to provide disclosures on fair value
measurements according to the fair value hierarchy. The fair value hierarchy ranks the observability of the inputs used to determine fair values. Investments carried at fair value are classified and disclosed in one of the following three
categories:  

Level 1Valuations based on quoted prices in active markets for identical assets or liabilities that the
Issuer has the ability to access.  

Level 2Pricing inputs are other than quoted prices in active markets, which are either directly or
indirectly observable as of the reporting date. Such inputs may be quoted prices for similar assets or liabilities, quoted markets that are not active, or other inputs that are observable or can be corroborated by observable market data for
substantially the full character of the financial instrument, or inputs that are derived principally from, or corroborated by, observable market information. Investments which are generally included in this category include illiquid debt securities
and less liquid, privately held or restricted equity securities, for which some level of recent trading activity has been observed.  

Level 3Pricing inputs are unobservable for the investment and includes situations where there is
little, if any, market activity for the investment. The inputs may be based on the Companys own assumptions about how market participants would price the asset or liability or may use Level 2 inputs, as adjusted, to reflect specific
investment attributes relative to a broader market assumption. These inputs into the determination of fair value may require significant management judgment or estimation. Even if observable market data for comparable performance or valuation
measures (earnings multiples, discount rates, other financial/valuation ratios, etc.) are available, such investments are grouped as Level 3 if any significant data point that is not also market observable (private company earnings, cash flows,
etc.) is used in the valuation methodology. In addition to using the above inputs in investment valuations, the Issuer
continues to employ the valuation policy that is consistent with ASC 820 and the Investment Company Act of 1940 (1940 Act).  S-19




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##### Table of Contents

The following table presents fairvalue measurements of investments, by major
class, as of February 28, 2019, according to the fair value hierarchy:  Fair Value MeasurementsLevel 1


Level 2


Level 3


TotalTerm loans

$



$
401,397,704


$
96,991,665


$
498,389,369Equity interests






15,691







15,691Total

$



$
401,413,395


$
96,991,665


$
498,405,060 The following table presents fair value measurements of investments, by major class, as of February 28, 2018,
according to the fair value hierarchy:  Fair Value MeasurementsLevel 1


Level 2


Level 3


TotalTerm loans

$



$
260,462,293


$
45,361,411


$
305,823,704Equity interests






2,235



4,364



6,599Total

$



$
260,464,528


$
45,365,775


$
305,830,303 Transfers into or out of Level 1, 2 or 3 are recognized at the reporting date. The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the year ended
February 28, 2019:  Term Loans


Equity Interests


TotalBalance as of February 28, 2018

$
45,361,411


$
4,364


$
45,365,775Net change in unrealized appreciation (depreciation)


(847,562
)


1,893,174



1,045,612Purchases and other adjustments to cost


51,787,257







51,787,257Sales and repayments


(18,867,427
)






(18,867,427
)Net realized gain from investments


6,845







6,845Transfers in (1)


34,492,314







34,492,314Transfers out (2)


(14,941,173
)


(1,897,538
)


(16,838,711
)Balance as of February 28, 2019

$
96,991,665


$



$
96,991,665Net change in unrealized appreciation (depreciation) for the year relating to those Level 3 assets
that were still held by the Issuer at the end of the year

$
(720,845
)

$



$
(720,845
)  (1)
The Issuers investment in Level 3 investments were classified as such during the year ended February 28,
2019, as market quotes for these investments are only provided by one trading desk. (2)
The Issuers investment in Level 2 investments were classified as such during the year ended February 28,
2019, as the number of observable market quotes for these investments increased.  S-20




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##### Table of Contents

The following table provides a reconciliation of the beginning and ending balances for
investments that use Level 3 inputs for the year February 28, 2018:  Term Loans


Equity Interests


TotalBalance as of February 28, 2017

$
51,209,702


$
22,718


$
51,232,420Net change in unrealized appreciation


54,781



4,117



58,898Purchases and other adjustments to cost


29,566,554







29,566,554Sales and repayments


(25,412,198
)






(25,412,198
)Net realized gain from investments


15,544







15,544Transfers in (1)


8,778,388







8,778,388Transfers out (2)


(18,851,360
)


(22,471
)


(18,873,831
)Balance as of February 28, 2018

$
45,361,411


$
4,364


$
45,365,775Net change in unrealized appreciation (depreciation) for the year relating to those Level 3 assets
that were still held by the Issuer at the end of the year

$
331,993


$
4,117


$
336,110  (1)
The Issuers investment in Level 3 investments were classified as such during the year ended February 28,
2018, as market quotes for these investments are only provided by one trading desk. (2)
The Issuers investment in Level 2 investments were classified as such during the year ended February 28,
2018, as the number of observable market quotes for these investments increased. Purchases and other adjustments to
cost include purchases of new investments at cost, effects of refinancing/restructuring, accretion/amortization of income from discount/premium on debt securities, and PIK. Sales and repayments represent net proceeds received from investments sold, and principal paydowns received, during the period. Significant unobservable inputs used in the fair value measurement of the Level 3 term loans and equity include market quotations
available from multiple dealers. A significant increase (decrease) in the market quote, in isolation, would result in a significantly lower (higher) fair value measurement.  The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements of assets as of February 28, 2019 were as
follows:  Fair Value


Valuation Technique

Unobservable Inputs

Weighted Average*Term loans

$
96,991,665


Market Comparables

Third-Party Bid

94.50%  - 100.50%Total

$
96,991,665 The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements of assets as of
February 28, 2018 were as follows:  Fair Value


Valuation Technique

Unobservable Inputs

Weighted Average*Term loans

$
45,361,411


Market Comparables

Third-Party Bid


89.00% - 102.75%Equity interests


4,364


Market Comparables

Third-Party Bid


0.40%Total

$
45,365,775  *
The weighted average in the tables above is calculated based on each investments fair value weighting,
using the applicable unobservable input. 4. Financing On January 22, 2008, the Issuer issued $400.0 million of notes, consisting of Class A Floating Rate Senior Notes, Class B
Floating Rate Senior Notes, Class C Deferrable Floating Rate Notes, Class D Deferrable Floating Rate Notes, Class E Deferrable Floating Rate Notes (collectively the Secured Notes), and Subordinated Notes. The notes were
issued pursuant to the Indenture.  S-21




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##### Table of Contents

The Secured Notes are limited recourse obligations of the Issuer. The Subordinated Notes are
unsecured, limited recourse debt obligations of the Issuer. On October 17, 2013, the Issuer issued $284.9 million of notes,
consisting of Class X Floating Rate Senior Notes, Class A-1 Floating Rate Senior Notes, Class A-2 Floating Rate Senior Notes, Class B Floating Rate
Senior Notes, Class C Deferrable Floating Rate Notes, Class D Deferrable Floating Rate Notes, Class E Deferrable Floating Rate Notes, and Class F Deferrable Floating Rate Notes. The 2013-1
CLO Notes were issued pursuant to the Indenture with the same Trustee. Proceeds of the issuance of the 2013-1 CLO Notes were used along with existing assets held by the Trustee to redeem all of the Secured
Notes issued in 2008. The Subordinated Notes were not included in the refinancing transaction. On November 15, 2016, the Issuer
issued $282.4 million of the 2013-1 Amended CLO Notes, consisting of Class A-1 Floating Rate Senior Notes, Class A-2 Floating Rate Senior Notes,
Class B Floating Rate Senior Notes, Class C Deferrable Floating Rate Notes, Class D Deferrable Floating Rate Notes, Class E Deferrable Floating Rate Notes, and Class F Deferrable Floating Rate Notes. The 2013-1 CLO Notes were issued pursuant to the Indenture with the same Trustee. Proceeds of the issuance of the 2013-1 Amended CLO Notes were used along with existing assets
held by the Trustee to redeem all of the 2013- 1CLO Notes issued in 2013. The Subordinated Notes were not included in the refinancing transaction. On December 14, 2018, in a refinancing transaction, the Issuer issued $509.5 million of notes consisting of Class A-1FL-R- 2 Floating Rate Senior Notes, Class A-1FXD-R-2 Fixed Rate Senior Notes, Class A-2-R-2 Floating Rate
Senior Notes, Class B- R-2 Floating Rate Senior Notes, Class C-R-2 Deferrable
Mezzanine Floating Rate Notes, Class D-R-2 Deferrable Mezzanine Floating Rate Notes, Class E-1-R-2 Deferrable Mezzanine Floating Rate Notes, Class F-R-2 Deferrable Junior Floating Rate Notes, Class G-R-2 Deferrable Junior Floating Rate Notes, and Subordinated Notes. Proceeds net of issue discounts were used along with existing trust assets to redeem all of the
rated note classes of the 2013-1 Amended CLO Notes. $30.0 million of Subordinated Notes issued in connection with the 2008 CLO Notes and 2013-1 CLO Notes were not
redeemed and remained outstanding. The 2013-1 Reset CLO Notes are limited recourse obligations of
the Issuer. The Subordinated Notes are unsecured, limited recourse debt obligations of the Issuer. The relative order of seniority of
payment of each class of securities is, as follows: first, Class A-1FL-R-2 Notes, second, Class A-1FXD-R-2 Notes, third
Class A-2-R-2 Notes, fourth,
Class B-R-2 Notes, fifth, Class C-R-2 Notes, sixth, Class D-R-2 Notes, seventh, Class E-1-R-2
Notes, eighth, Class F-R-2 Notes, ninth, Class G-R-2, and tenth the
Subordinated Notes, with (a) each class of securities (other than the Subordinated Notes) in such list being senior to each other class of securities that follows such class of securities in such list and (b) each class of securities in
such list being subordinate to each other class of securities that precedes such class of securities in such list. The Subordinated Notes are subordinated to the 2013-1 Reset CLO Notes and are entitled to
periodic payments from interest proceeds available in accordance with the Priority of Payments.  S-22




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##### Table of Contents

The table below sets forth certain information for each outstanding class of notes issued,
pursuant to the Indenture on December 14, 2018, at February 28, 2019:  Description

Interest Rate


Maturity


Principal Amount


AmountOutstanding


WeightedAverageInterest RateClass 
A-1FL-R-2 Senior Secured Floating Rate Notes


LIBOR +1.25%



January 20, 2030


$
255,000,000


$
255,000,000



4.07
%Class 
A-1FXD-R-2 Senior Secured Fixed Rate Notes


4.19%



January 20, 2030



25,000,000



25,000,000



4.19
%Class 
A-2-R-2 Senior Secured Floating Rate Notes


LIBOR + 1.75%



January 20, 2030



40,000,000



40,000,000



4.57
%Class B-R-2 Senior Secured Floating Rate Notes


LIBOR + 2.30%



January 20, 2030



59,500,000



59,500,000



5.12
%Class C-R-2 Deferrable 
Mezzanine Floating Rate Notes


LIBOR + 2.75%



January 20, 2030



22,500,000



22,500,000



5.57
%Class D-R-2 Deferrable Mezzanine Floating Rate Notes


LIBOR + 3.75%



January 20, 2030



31,000,000



31,000,000



6.57
%Class E-l-R-2 Deferrable Mezzanine Floating Rate Notes


LIBOR + 5.87%*



January 20, 2030



27,000,000



27,000,000



8.69
%Class F-R-2 Deferrable Junior Floating Rate Notes


LIBOR + 8.75%



January 20, 2030



2,500,000



2,500,000



11.55
%Class G-R-2
Deferrable Junior Floating Rate Notes


LIBOR + 10.00%



January 20, 2030



7,500,000



7,500,000



12.80
%Subordinated Notes


N/A



January 20, 2030



69,500,000



69,500,000



N/A$
539,500,000


$
539,500,000  Description

Interest Rate


Maturity


Notional Amount


AmountOutstanding


WeightedAverageInterest RateClass 
E-2-R-2 Deferrable Mezzanine Fixed Rate Notes **


0.00%



January 20, 2030



$27,000,000



$27,000,000



0.00
%  *
The spread in respect of the Class E-1-R-2 Notes will initially be 5.87%, and will step up to 8.00% in January
2022. **
There will be no return of principal on the Class E-2-R-2 Notes. The notional amount of the Class E-2-R-2 Notes
will at all times be equal to the sum of the notional amount of the Class E-1-R-2 Notes and the amount of deferred interest, if any, on the Class E-2-R-2 Notes. The interest rate in respect of the Class E-2-R-2 Notes will initially be 0.00%, and
will step up to 2.00% in January 2022. The table below sets forth certain information for each outstanding class of
notes issued, pursuant to the Indenture on November 15, 2016, at February 28, 2018:  Description

Interest Rate


Maturity


Principal Amount


AmountOutstanding


WeightedAverageInterest RateClass A-1 Floating Rate Senior Notes


LIBOR + 1.55
%


October 20, 2025


$
170,000,000


$
170,000,000



2.87
%Class A-2 Floating Rate Senior Notes


LIBOR + 1.75
%


October 20, 2025



20,000,000



20,000,000



3.08
%Class B Floating Rate Senior Notes


LIBOR + 2.70
%


October 20, 2025



44,800,000



44,800,000



4.04
%Class C Deferrable Floating Rate Notes


LIBOR + 3.36
%


October 20, 2025



16,000,000



16,000,000



4.81
%Class D Deferrable Floating Rate Notes


LIBOR + 4.70
%


October 20, 2025



14,000,000



14,000,000



6.08
%Class E Deferrable Floating Rate Notes


LIBOR + 6.65
%


October 20, 2025



13,100,000



13,100,000



8.06
%Class F Deferrable Floating Rate Notes


LIBOR + 8.50
%


October 20, 2025



4,500,000



4,500,000



9.94
%Subordinated Notes


N/A



October 20, 2025



30,000,000



30,000,000



N/A$
312,400,000


$
312,400,000 The table below sets forth certain information for each outstanding class of notes issued, pursuant to the
Indenture on November 15, 2016, at February 28, 2017:  Description

Interest Rate


Maturity


Principal Amount


AmountOutstanding


WeightedAverageInterest RateClass A-l Floating Rate Senior Notes


LIBOR + 1.55
%


October 20, 2025


$
170,000,000


$
170,000,000



2.10
%Class A-2 Floating Rate Senior Notes


LIBOR + 1.75
%


October 20, 2025



20,000,000



20,000,000



2.30
%Class B Floating Rate Senior Notes


LIBOR + 2.70
%


October 20, 2025



44,800,000



44,800,000



2.96
%Class C Deferrable Floating Rate Notes


LIBOR + 3.36
%


October 20, 2025



16,000,000



16,000,000



3.78
%Class D Deferrable Floating Rate Notes


LIBOR + 4.70
%


October 20, 2025



14,000,000



14,000,000



4.64
%Class E Deferrable Floating Rate Notes


LIBOR + 6.65
%


October 20, 2025



13,100,000



13,100,000



5.98
%Class F Deferrable Floating Rate Notes


LIBOR + 8.50
%


October 20, 2025



4,500,000



4,500,000



7.45
%Subordinated Notes


N/A



October 20, 2025



30,000,000



30,000,000



N/A$
312,400,000


$
312,400,000  S-23




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##### Table of Contents

The following table shows each outstanding class of notes issued, pursuant to the Indenture,
at fair value at February 28, 2019:  Debt Security

February 28, 2019Class A-1FL-R-2 Senior Secured Floating Rate Notes

$
254,987,128Class A-1FXD-R-2 Senior Secured Fixed Rate Notes


25,018,718Class A-2-R-2 Senior Secured Floating Rate Notes


39,997,452Class B-R-2 Senior Secured Floating Rate Notes


59,495,241Class C-R-2 Deferrable Mezzanine Floating Rate Notes


22,497,870Class D-R-2 Deferrable Mezzanine Floating Rate Notes


30,995,916Class E-l-R-2 Deferrable Mezzanine Floating Rate Notes


27,109,023Class F-R-2 Deferrable Junior Floating Rate Notes


2,483,500Class G-R-2 Deferrable Junior Floating Rate Notes


7,450,500Subordinated Notes


25,393,508$
495,428,856 The following table shows each outstanding class of notes issued, pursuant to the Indenture, at fair value at
February 28, 2018:  Debt Security

February 28, 2018Class A-l Floating Rate Senior Notes

$
170,737,343Class A-2 Floating Rate Senior Notes


20,138,214Class B Floating Rate Senior Notes


45,373,111Class C Deferrable Floating Rate Notes


16,180,199Class D Deferrable Floating Rate Notes


14,153,208Class E Deferrable Floating Rate Notes


13,128,862Class F Deferrable Floating Rate Notes


4,499,100Subordinated Notes


11,874,704$
296,084,741 These notes are fair valued based on a discounted cash flow model, specifically using Intex cash flow models,
to form the basis for the valuation and would be classified as Level 3 liabilities within the fair value hierarchy. The Indenture
provides that payments on the Subordinated Notes shall rank subordinate in priority of payment to payments due on all classes of 2013-1 Reset CLO Notes and subordinate in priority of payment to the payment of
fees and expenses. Distributions on the Subordinated Notes are limited to the assets of the Issuer remaining after payment of all of the liabilities of the Issuer that rank senior in priority of payment to the Subordinated Notes. To the extent that
the proceeds from the collateral are not sufficient to make distributions on the Subordinated Notes the Issuer will have no further obligation in respect of the Subordinated Notes. Interest proceeds and, after the 2013-1 Reset CLO Notes have been paid in full, principal proceeds, in
each case will be distributed to the holders of the Subordinated Notes in accordance with the Indenture. Distributions, if any, on the
Subordinated Notes will be payable quarterly on the 20th day of each January, April, July and October of each calendar year or, if any such day is not a business day, on the next succeeding business day (each, a Payment Date), commencing
on the first Payment Date, and on April January 20, 2030 (or if any such day is not a business day, the next succeeding business day) (the Stated Redemption Date) (if not redeemed prior to such date) sequentially in order of
seniority. At the Stated Redemption Date, the Subordinated Notes will be redeemed after payment in full of all of the 2013-1 Reset CLO Notes and the payment of all administrative and other fees and expenses.
The failure to pay interest proceeds or principal proceeds to the holders of the Subordinated Notes will not be an event of default under the Indenture.  S-24




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##### Table of Contents

In May of 2009, the Issuer defaulted on its Class E overcollateralization ratio of
105.10%, at which point, $4.0 million of interest proceeds were used to repay the Class E Notes through November 2009. Interest on the Class C, Class D, and Class E Notes was deferred and repaid in January of 2010 upon the
Issuers return to compliance. Distributions to the Subordinated Notes resumed in April of 2010. As of February 28, 2019, the
remaining unamortized discount on the Class A-1FL-R-21 Notes, Class A-1FXD-R-2 Notes, Class A-2-R-2
Notes, Class B-R-2 Notes, Class C-R-2 Notes, Class D-R-2 Notes, Class E-1-R-2 Notes, Class F-R-2 Notes, and Class G-R-2 Notes were $0.0 million, $0.0 million, $0.0 million,
$0.0 million, $0.6 million, $1.1 million, $0.0 million, $0.0 million and $0.0 million, respectively. As of
February 28, 2018, the remaining unamortized discount on the Class A-1 Notes, Class A-2 Notes, Class B Notes, Class C Notes, Class D Notes,
Class E Notes, and Class F Notes were $0.0 million, $0.0 million, $0.0 million, $0.1 million, $0.3 million, $0.0 million and $0.0 million, respectively. The remaining unamortized deferred debt financing costs, on the 2013-1 Amended CLO Notes, of
$0.9 million, and unamortized discount on the 2013-1 Amended CLO Notes of $0.3 million, were recognized as additional amortization expense when the related notes were extinguished and recorded within
loss on extinguishment of debt in the statements of operations. As of February 28, 2019, $0.1 million of financing costs related to the 2013-1 Amended CLO Notes remain capitalized and are being
amortized over the term of the 2013-1 Reset CLO Notes. 5. Income Tax Under the current laws, the Issuer is not subject to net income taxation in the United States or the Cayman Islands. Accordingly, no provision
for income taxes has been made in the accompanying financial statements. Pursuant to ASC Topic 740, Accounting for Uncertainty in
Income Taxes, the Issuer adopted the provisions of the FASB relating to accounting for uncertainty in income taxes which clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position must meet before
being recognized in the financial statements and applies to all open tax years as of the effective date. The Investment Manager has analyzed such tax positions for uncertain tax positions for tax years that may be open (20162019). The Issuer
identifies its major tax jurisdictions as U.S. Federal, state and foreign jurisdictions where the Issuer makes investments. As of February 28, 2019 and February 28, 2018, there was no impact to the financial statements as a result of the
Issuers accounting for uncertainty in income taxes. The Issuer does not have any unrecognized tax benefits or liabilities for the years ended February 28, 2019, February 28, 2018 and February 28, 2017. Also, the Issuer
recognizes interest and, if applicable, penalties for any uncertain tax positions, as a component of income tax expense. No interest or penalty expense was recorded by the Issuer for the years ended February 28, 2019, February 28, 2018 and
February 28, 2017. 6. Commitments and Contingencies In the ordinary course of its business, the Issuer may enter into contracts or agreements that contain indemnifications or warranties. Future
events could occur that lead to the execution of these provisions against the Issuer. Based on its history and experience, the Investment Manager feels that the likelihood of such an event is remote. Therefore, the Issuer has not accrued any
liabilities in connection with such indemnifications. In the ordinary course of business, the Issuer may directly or indirectly be a
defendant or plaintiff in legal actions with respect to bankruptcy, insolvency or other types of proceedings. Such lawsuits may involve claims that could adversely affect the value of certain financial instruments owned by the Issuer. As of
February 28, 2019 and February 28, 2018, the Issuer is not subject to any material legal proceedings. Therefore, the Issuer has not accrued any liabilities in connection with such indemnifications. The terms of Collateralized Debt Investments may require the Issuer to provide funding for any unfunded portion of a Collateralized Debt
Investment at the request of the borrower. At February 28, 2019 and February 28, 2018, the Issuer had $1.3 million and $0.2 million of unfunded commitments outstanding, respectively. 7. Related-Party Transactions In the
ordinary course of business and as permitted per the terms of the Indenture, the Issuer may acquire or sell investments to or from related parties at the fair value at such time. For the years ended February 28, 2019, February 28, 2018 and
February 28, 2017, the Issuer neither bought nor sold investments from related parties.  S-25




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##### Table of Contents

On August 7, 2018, the Company entered into an unsecured loan agreement with CLO 2013-1
Warehouse, a wholly-owned subsidiary of Saratoga CLO, pursuant to which CLO 2013-1 Warehouse may borrow from time to time up to $20 million from the Company in order to provide capital necessary to support warehouse activities. The CLO 2013-1
Warehouse Loan, which expires on February 7, 2020, bears interest at an annual rate of 3M USD LIBOR + 7.5%. As of February 28, 2019, the CLO 2013-1 Warehouse Loan was repaid in full, with interest expense of $0.5 million recognized and included in
the interest and debt financing expenses on the Statement of Operations. The Subordinated Notes are wholly-owned by the Investment
Manager. The Subordinated Notes do not have a stated coupon rate, but are entitled to residual cash flows from the CLOs investments after all of the other tranches of debt and certain other fees and expenses are paid. For the years ended
February 28, 2019, February 28, 2018 and February 28, 2017, $2.0 million, $3.3 million and $4.7 million of payments to the Subordinated Notes were included in interest and debt financing expenses in the statements of
operations, respectively. For the year ended February 28, 2019, $0.5 million in discount amortization related to the Subordinated Notes is also included in interest and debt financing expenses on the Issuers statement of operations.
In addition to refinancing its liabilities, at February 28, 2019, the Investment Manager holds aggregate principal amounts of $2.5 million in Class F-R-2 Notes
and $7.5 million in Class G-R-2 Notes of the CLO tranches with a coupon of LIBOR plus 8.75% and LIBOR plus 10.00%, respectively. For the year ended February
28, 2019, payments for the Class F-R-2 Notes and Class G-R-2 Notes totaling
$0.3 million are included in interest expense in the Issuers statement of operations. 8. Shareholders Capital Capital contributions and distributions shall be made at such time and in such amounts as determined by the Investment Manager and the
Indenture. The majority holder of the Subordinated Notes has various control rights over the CLO, including the ability to call the CLO
prior to its legal maturity, replace the Investment Manager under certain circumstances, and refinance any of the outstanding debt tranches. The voting structure of the Subordinated Notes may require either majority or unanimous approval depending
upon the issue. The authorized share capital of the Issuer consists of 50,000 ordinary shares, 250 of which are owned by Maples Finance
Limited and are held under the terms of a declaration of trust. As of February 28, 2019 and February 28, 2018, net assets
(deficit) were $(17.9) million and $(11.2) million, respectively. These amounts include accumulated losses of $11.2 million and $13.0 million, respectively, which includes cumulative net investment income or loss, cumulative amounts of
gains and losses realized from investment transactions, net unrealized appreciation or depreciation of investments, as well as the cumulative effect of accounting mismatches between investments accounted for at fair value and amortized cost or
accrual-basis assets and liabilities as discussed in Significant Accounting Policies, above. The Issuers investments continue to generate sufficient liquidity to satisfy its obligations on periodic payment dates as well as comply with all
performance criteria as of the statements of assets and liabilities date.  S-26




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##### Table of Contents

The Issuer elected early adoption of Rule 3-04/Rule 8-03(a)(5) under Regulation S-X. Pursuant to the regulation, the Issuer has presented a reconciliation of the changes in each significant caption of stockholders equity
for each of the three fiscal years ended February 28, 2019, February 28, 2018 and February 28, 2017, as shown in the tables below:  For the Year Ended February 28, 2019Common Stock


Capitalin Excess


TotalDistributable


Net Assets(Deficit)Shares


Amount


of Par Value


Earnings (Loss)Balance at February 28, 2018


250


$
250


$



$
(11,245,569
)

$
(11,245,319
)Increase (Decrease) from Operations:Net investment income (loss)














474,449



474,449Net realized gain (loss) from investments














(1,157,929
)


(1,157,929
)Net change in unrealized appreciation (depreciation) on investments














(110,177
)


(110,177
)Balance at May 31, 2018


250



250







(12,039,226
)


(12,038,976
)Increase (Decrease) from Operations:Net investment income (loss)














191,126



191,126Net realized gain (loss) from investments














2,237



2,237Net change in unrealized appreciation (depreciation) on investments














(440,254
)


(440,254
)Balance at August 31, 2018


250



250







(12,286,117
)


(12,285,867
)Increase (Decrease) from Operations:Net investment income (loss)














472,125



472,125Net realized gain (loss) from investments














11,948



11,948Net change in unrealized appreciation (depreciation) on investments














(4,467,273
)


(4,467,273
)Balance at November 30, 2018


250



250







(16,269,317
)


(16,269,067
)Increase (Decrease) from Operations:Net investment income (loss)














(802,968
)


(802,968
)Net realized gain (loss) from investments














(200,967
)


(200,967
)Net change in unrealized appreciation (depreciation) on investments














(626,667
)


(626,667
)Balance at February 28, 2019


250


$
250


$



$
(17,899,919
)

$
(17,899,669
)  For the Year Ended February 28, 2018Common Stock


Capitalin Excess


TotalDistributable


Net Assets(Deficit)Shares


Amount


of Par Value


Earnings (Loss)Balance at February 28, 2017


250


$
250


$



$
(12,974,026
)

$
(12,973,776
)Increase (Decrease) from Operations:Net investment income (loss)














(86,168
)


(86,168
)Net realized gain (loss) from investments














293,858



293,858Net change in unrealized appreciation (depreciation) on investments














(47,767
)


(47,767
)Balance at May 31, 2017


250



250







(12,814,103
)


(12,813,853
)Increase (Decrease) from Operations:Net investment income (loss)














267,831



267,831Net realized gain (loss) from investments














475,486



475,486Net change in unrealized appreciation (depreciation) on investments














(1,311,081
)


(1,311,081
)Balance at August 31, 2017


250



250







(13,381,867
)


(13,381,617
)Increase (Decrease) from Operations:Net investment income (loss)














52,984



52,984Net realized gain (loss) from investments














260,872



260,872Net change in unrealized appreciation (depreciation) on investments














(202,856
)


(202,856
)Balance at November 30, 2017


250



250







(13,270,867
)


(13,270,617
)Increase (Decrease) from Operations:Net investment income (loss)














1,160,695



1,160,695Net realized gain (loss) from investments














(410,685
)


(410,685
)Net change in unrealized appreciation (depreciation) on investments














1,275,288



1,275,288Balance at February 28, 2018


250


$
250


$



$
(11,245,569
)

$
(11,245,319
)   For the Year Ended February 28, 2017Common Stock


Capitalin Excess


TotalDistributable


Net Assets(Deficit)Shares


Amount


of Par Value


Earnings (Loss)Balance at February 29, 2016


250


$
250


$



$
(21,557,618
)

$
(21,557,368
)Increase (Decrease) from Operations:Net investment income (loss)














84,332



84,332Net realized gain (loss) from investments














55,557



55,557Net change in unrealized appreciation (depreciation) on investments














9,320,673



9,320,673Balance at May 31, 2016


250



250







(12,097,056
)


(12,096,806
)Increase (Decrease) from Operations:Net investment income (loss)














(75,900
)


(75,900
)Net realized gain (loss) from investments














165,854



165,854Net change in unrealized appreciation (depreciation) on investments














467,724



467,724Balance at August 31, 2016


250



250







(11,539,378
)


(11,539,128
)Increase (Decrease) from Operations:Net investment income (loss)














(5,782,625
)


(5,782,625
)Net realized gain (loss) from investments














130,337



130,337Net change in unrealized appreciation (depreciation) on investments














926,507



926,507Balance at November 30, 2016


250



250







(16,265,159
)


(16,264,909
)Increase (Decrease) from Operations:Net investment income (loss)














541,503



541,503Net realized gain (loss) from investments














6,421



6,421Net change in unrealized appreciation (depreciation) on investments














2,743,209



2,743,209Balance at February 28, 2017


250


$
250


$



$
(12,974,026
)

$
(12,973,776
)  S-27




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##### Table of Contents

9. Financial Highlights The following is a schedule of financial highlights for the years ended February 28, 2019, February 28, 2018, February 28, 2017,
February 29, 2016 and February 28, 2015:  February 28,2019


February 28,2018


February 28,2017


February 29,2016


February 28,2015Average subordinated notes capital balance(1)

$
18,900,592


$
17,262,714


$
15,113,353


$
18,382,072


$
25,077,372Ratio and supplemental data:Total Return(2)


(22.41
)%


32.73
%


162.55
%


(49.59
)%


5.34
%Net investment income (loss)(3)


1.77
%


8.08
%


(34.62
)%


0.57
%


3.17
%Total expenses(3)


125.54
%


95.41
%


141.14
%


79.34
%


49.79
%Base management fee(3)


1.82
%


1.75
%


3.87
%


4.07
%


3.03
%Subordinated management fee(3)


7.29
%


6.99
%


6.04
%


4.07
%


3.03
%  (1)
Subordinated notes capital balance is calculated based on the sum of the subordinated notes outstanding
amount and total net assets, net of ordinary equity. (2)
Total return is calculated based on a time-weighted rate of return methodology. Quarterly rates of return are
compounded to derive the total return reflected above. Total return is calculated for the subordinated notes capital taken as a whole and assumes the purchase of the subordinated notes capital on the first day of the period and the sale
of the last day of the period. (3)
Calculated based on the average subordinated notes capital balance. 10. Subsequent Events The Investment
Manager has evaluated events or transactions that have occurred since February 28, 2019 through May 13, 2019, the date the financial statements were available for issuance. The Investment Manager has determined that there are no material
events that would require the disclosure in the financial statements.  S-28