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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 29, 2020  ☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period
from to Commission File No. 814-00732   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

Trading Symbol(s)

Name of each exchange on which
registeredCommon Stock, par value $0.001 per share

SAR

The New York Stock Exchange6.25% Notes due 2025

SAF

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 (§ 232.405 of this chapter) 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 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.  Large accelerated filer

☐

Accelerated filer

☒Non-accelerated filer

☐

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 has filed a report on and attestation to its managements assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ 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 30, 2019 was approximately $175.9 million based upon a closing price of
$25.16 reported for such date by the New York Stock Exchange. The number of outstanding common shares of the registrant as of May 6, 2020
was 11,217,545. 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, Saratoga Investment Corp. SBIC LP and Saratoga Investment Corp. SBIC II LP, 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 and the impact of the coronavirus (COVID-19) pandemic thereon;  

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;  

pandemics or other serious public health events, such as the recent global outbreak of COVID-19;  

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, including our and their ability to achieve
our respective objectives as a result of the current COVID-19 pandemic;  

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
and the impact of the COVID-19 pandemic thereon;  

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) subsidiaries, and to continue to qualify to be taxed as a regulated investment company (RIC);  2




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

the adequacy of our cash resources and working capital;  

the timing of cash flows, if any, from the operations of our portfolio companies and the impact of the COVID-19
pandemic thereon;  

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


29Item 1B. Unresolved Staff Comments


55Item 2. Properties


55Item 3. Legal Proceedings


55Item 4. Mine Safety Disclosures


55PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters
 and Issuer Purchase of Equity Securities


56Item 6. Selected Consolidated Financial Data


67Item 7. Managements Discussion and Analysis of Financial Condition and Results
 of Operations


68Item 7A. Quantitative and Qualitative Disclosures About Market
Risk


100Item 8. Consolidated Financial Statements and Supplementary
Data


101Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
 Disclosure


102Item 9A. Controls and Procedures


102Item 9B. Other Information


102PART IIIItem 10. Directors, Executive Officers and Corporate
Governance


103Item 11. Executive Compensation


105Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters


106Item 13. Certain Relationships and Related Transactions, and Director Independence


108Item 14. Principal Accounting Fees and Services


108PART IVItem 15. Exhibits, Consolidated Financial Statement Schedules


110Item 16. Form 10-K
Summary


113Signatures


114  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 invest in mezzanine debt and make equity investments in middle market companies. Mezzanine debt is typically unsecured and subordinated to senior debt of the
portfolio company. While our primary focus is to generate current 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 29, 2020, we had total assets of
$530.9 million and investments in 35 portfolio companies, including an 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 $22.6 million as of February 29, 2020 and investments in the Class F-R-2 Notes and Class G-R-2 Notes tranches of the Saratoga CLO and an investment in Saratoga Investment Corp. CLO 2013-1 Warehouse 2, Ltd, which
as of February 29, 2020 had fair values of $2.5 million, $7.4 million and $2.2 million, respectively. The overall portfolio composition as of February 29, 2020 consisted of 71.3% of first lien term loans, 15.1% of second lien
term loans, 0.9% of unsecured term loans, 6.7% of structured finance securities and 6.0% of equity interests. As of February 29, 2020, the weighted average yield on all of our investments, including our investment in the subordinated notes of
Saratoga CLO, Class F-R-2 Notes and Class G-R-2 Notes tranches of the Saratoga
CLO and Saratoga Investment Corp. CLO 2013-1 Warehouse 2, Ltd was approximately 9.3%. 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 29, 2020, our total return based on market value was 9.28% and our total return based on net asset value per share was 26.22%. As of February 28, 2019, our total
return based on market value was 16.11% and our total return based on net asset value was 13.33%. 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 29, 2020, 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 29, 2020, was composed of $528.4 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 U.S. federal income taxes on any net ordinary income or capital gains that we timely
distribute to our stockholders if we meet certain source-of-income, annual distribution and asset-diversification requirements. In addition, we have two wholly-owned subsidiaries that are licensed as a small business investment
company (SBIC) and regulated by the Small Business Administration (SBA). On March 28, 2012, our wholly-owned subsidiary, Saratoga Investment Corp. SBIC LP (SBIC LP), received an SBIC license from the SBA. On
August 14, 2019, our wholly-owned subsidiary, Saratoga Investment Corp. SBIC II LP (SBIC II LP), also received an SBIC license from the SBA. The new license will provide up to $175.0 million in additional long-term capital in
the form of SBA-guaranteed debentures. The SBIC LP and SBIC II LP are regulated by the SBA. As a result of the 2016 omnibus spending bill signed into law in December 2015, the maximum amount of SBA-guaranteed debentures that affiliated SBIC funds can have outstanding was increased from $225.0 million to $350.0 million. Our wholly-owned SBIC subsidiaries are able to borrow funds from the SBA
against regulatory capital (which approximates equity capital) that is paid in and is subject to customary regulatory requirements including but not limited to an examination by the SBA. With this license approval, Saratoga will grow its SBA
relationship from $150.0 million to $325.0 million of committed capital. See Item 1. BusinessSmall Business Investment Company Regulations. We received exemptive relief from the U.S. Securities and Exchange Commission (SEC) to permit us to exclude the debt of SBIC LP
and SBIC II LP guaranteed by the SBA from the definition of senior securities in the asset coverage test under the 1940 Act. This allows the Company increased flexibility under the asset coverage test by permitting it to borrow up to
$325.0 million more than it would otherwise be able to absent the receipt of this exemptive relief. The Company has established
wholly-owned subsidiaries, SIA-Avionte, Inc., SIA-GH, Inc., SIA-HT, Inc., SIA-MAC, Inc., SIA-TG, Inc., SIA-TT, Inc., SIA-Vector, Inc. and SIA-VR, 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. During the fiscal year ended February 29, 2020, the Company sold its interest in
SIA-Easy Ice, LLC. See Managements Discussion and Analysis for additional discussion. 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.  6




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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. As noted above, on March 28, 2012, our wholly-owned subsidiary, SBIC LP, received an SBIC license from the SBA and on August 14, 2019,
our wholly-owned subsidiary, SBIC II LP, also 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
32, 30, 33 and 23 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, 2019, 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.  7




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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  

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. On July 9, 2019, our board of directors approved the renewal of the
Administration Agreement for an additional one-year term and determined to increase the cap on the payment or reimbursement of expenses by the Company from $2.0 million to $2.225 million effective
August 1, 2019. 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 invest in mezzanine debt and make equity investments in middle market companies. Mezzanine debt is
typically unsecured and subordinated to senior debt of the portfolio company. 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 29, 2020, 81.3% 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 29, 2020, 25.0% of our interest-only loans provided for contractual PIK interest, which represents contractual interest added to a loan balance and due at the end of such loans term, and 77.9% of such investments elected to pay a
portion of interest due in PIK. In addition, 93.2% of our debt investments at February 29, 2020, 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.  9




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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. 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.  10




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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. On February 11, 2020, we entered into an unsecured loan agreement (CLO 2013-1 Warehouse 2 Loan) with Saratoga Investment Corp.
CLO 2013-1 Warehouse 2, Ltd (CLO 2013-1 Warehouse 2), a wholly-owned subsidiary of Saratoga CLO, pursuant to which CLO 2013-1 Warehouse 2 may borrow from time to time up to $20.0 million from the Company in order to provide capital necessary to support warehouse activities. The
CLO 2013-1 Warehouse 2 Loan, which expires on August 20, 2021, bears interest at an annual rate of 3M USD LIBOR + 7.5%. At February 29, 2020, the aggregate fair value of our investments in
Saratoga Investment Corp. CLO 2013-1 Warehouse 2, Ltd, Class F-R-2, Class G-R-2 Notes and subordinated notes of the Saratoga CLO was $2.2 million, $2.5 million, $7.4 million and $22.6 million, respectively. 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.  11




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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%. 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 securities issued by the Saratoga CLO do not have any external credit enhancement features that would minimize the potential
losses to the subordinated notes. 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 29, 2020, the Saratoga CLO portfolio consisted of $528.4 million in aggregate principal amount of primarily senior
secured first lien term loans. At February 29, 2020, 99.2% of the Saratoga CLO portfolio consisted of such loans to 254 borrowers with an average exposure to each borrower of $2.0 million. The weighted average maturity of the portfolio is
4.96 years. In addition, Saratoga CLO held $9.1 million in cash at February 29, 2020. 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;  12




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

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.  

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:  13




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

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. 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.  14




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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. In order to maintain our qualification as a RIC, we must, for each fiscal year, timely 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 a non-deductible 4% U.S. federal excise tax 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 that we recognized for preceding years, but were not distributed during
such years and on which we paid no federal income tax. For the 2019 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 2020 calendar year and/or portion of the capital gains in excess of capital losses realized during the one-year period ending October 31, 2020, if any, and, if we do so, we would expect to incur
U.S. federal excise taxes as a result. For the 2019 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 and a revenue procedure issued by the Internal
Revenue Service (IRS), a RIC may treat a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder may elect to receive his or her entire distribution in either cash or stock of the RIC, subject to
a limitation that the aggregate amount of cash to be distributed to all stockholders must be at least 20% of the aggregate declared distribution. If too many stockholders elect to receive their distributions in cash, the cash available for
distribution must be allocated among the stockholders electing to receive cash (with the balance of the distribution paid in stock). In no event will any stockholder, electing to receive cash, receive the lesser of (a) the portion of the
distribution such shareholder has elected to receive in cash or (b) an amount equal to his or her entire distribution times the percentage limitation on cash available for distribution. If these and certain other requirements are met, for U.S.
federal income tax purposes, the amount of the dividend paid in stock will be equal to the amount of cash that could have been received instead of stock. Taxable stockholders receiving such distributions will be required to include the full amount
of the dividend as ordinary income (or as long-term capital gain or qualified dividend income to the extent such distribution is properly reported as such) to the extent of our current and accumulated earnings and profits for U.S. federal income tax
purposes. As a result of receiving distributions in the form of our common stock, a U.S. stockholder may be required to pay tax with respect to such distributions in excess of any cash received. 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.  15




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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. 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.  16




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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. 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  17




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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%  

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.  18




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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 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  19




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

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. Subsequent to then, our board of directors approved the renewal of the Management Agreement
annually for an additional one-year term at an in-person meeting, with the last approval granted on July 9, 2019. 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;  20




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

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. 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.  21




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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. On July 9, 2019, our board of directors approved the renewal of the Administration Agreement for an additional
one-year term and determined to increase the cap on the payment or reimbursement of expenses by the Company from $2.0 million to $2.225 million effective August 1, 2019. 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.  22




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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. 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;  23




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(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. 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.  24




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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. 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. 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.  25




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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. 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.  26




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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. We and Saratoga Investment Advisors are each required to adopt and implement written
policies and procedures reasonably designed to prevent violation of the federal securities laws, review these policies and procedures annually for their adequacy and the effectiveness of their implementation, and designate a chief compliance officer
to be responsible for administering the policies and procedures. The New York Stock Exchange (NYSE) 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 to third parties
permitting 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. On August 14, 2019, our wholly-owned
subsidiary, SBIC II LP, also received an SBIC license from the SBA.  27




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The SBIC licenses allows our SBIC LP and SBIC II 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 and SBIC II LP are subject to
regulation and oversight by the SBA, including requirements with respect to maintaining certain minimum financial ratios and other covenants. Receipt of an SBIC license does not assure that SBIC LP or SBIC II LP will receive SBA-guaranteed debenture funding, which is dependent upon SBIC LP and SBIC II LP continuing to be in compliance with SBA regulations and policies. The SBA, as a creditor, will have a superior claim to SBIC LP and
SBIC II LPs assets over our stockholders and debtholders in the event we liquidate SBIC LP or SBIC II LP or the SBA exercises its remedies under the SBA-guaranteed debentures issued by SBIC LP or SBIC II LP upon an event of default. We received exemptive relief from the SEC to permit it to exclude the debt of SBIC LP and SBIC II 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 $325.0 million more than it would otherwise be able to absent the receipt of
this exemptive relief. On April 16, 2018, as permitted by the Small Business Credit Availability Act, which was signed into law on March 23, 2018, 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. Our wholly-owned SBIC subsidiaries may 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. With this license approval, Saratoga will grow its SBA relationship from $150.0 million to
$325.0 million of committed capital. 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. As of February 29, 2020, we have funded SBIC LP with an aggregate total of $75.0 million of equity capital
and have $150.0 million of SBA guaranteed debentures outstanding and have funded SBIC II LP with an aggregate total of $50.0 million of equity capital and do not have any 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 and SBIC II LP may borrow to a maximum
of $150.0 million and $175.0 million, respectively, which is up to twice its potential regulatory capital. 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.  28




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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. 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 U.S. and
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 U.K. 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. For information about
risks related to the potential impact that volatile market conditions may have on our 6.25% Notes due 2025 (the 2025 Notes), see Risks Relating to Our 2025 NotesPublic health threats may affect the market for the 2025 Notes,
impact the businesses in which we invest and affect our business, operating results and financial condition. 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.  29




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The U.S. Presidential Administration may make substantial changes to financial regulation, as well as
fiscal and tax policies that may adversely affect our business. The Republican Party currently controls the executive branch and
the Senate portion of the legislative branch of government, which we believe 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 duration of the effects related to 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. The current U.S. presidential administration has called for significant changes to U.S. trade, healthcare, immigration, foreign and
government regulatory policy. In this regard, there is significant uncertainty with respect to legislation, regulation and government policy at the federal level, as well as the state and local levels. Recent events have created a climate of
heightened uncertainty and introduced new and difficult-to-quantify macroeconomic and political risks with potentially
far-reaching implications. There has been a corresponding meaningful increase in the uncertainty surrounding interest rates, inflation, foreign exchange rates, trade volumes and fiscal and monetary policy. To
the extent the U.S. Congress or the current administration implements changes to U.S. policy, those changes may impact, among other things, the U.S. and global economy, international trade and relations, unemployment, immigration, corporate taxes,
healthcare, the U.S. regulatory environment, inflation and other areas. Although we cannot predict the impact, if any, of these changes to business, they could adversely affect our business, financial condition, operating results and cash flows.
Until we know what policy changes are made and how those changes impact business and the business of our competitors over the long term, we will not know if, overall, we will benefit from them or be negatively affected by them. 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. Downgrades by rating agencies to the U.S. governments credit and
deficit levels 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. 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
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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. The United Kingdom formally left the European Union on January 31, 2020 and immediately
entered a transition period set to expire on December 31, 2020. Brexit has 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. The implications of the United Kingdoms withdrawal from the European Union are unclear at present. 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. The Chinese capital markets have also experienced periods of instability over the past several
years. The current political climate has also intensified concerns about a potential trade war between the U.S. and China in connection with each countrys recent or proposed tariffs on the other countrys products. These market and
economic disruptions, the potential trade war with China and the impact of public health epidemics like the coronavirus currently affecting China and the wider global community may have a material adverse impact on the ability of our portfolio
companies to fulfill their end customers orders due to supply chain delays, limited access to key commodities or technologies or other events that impact their manufacturers or their suppliers. Such events have affected, and may in the future
affect, the global and U.S. capital markets, and our business, financial condition or results of operations. 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. 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
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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 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. 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
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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 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 29, 2020, there were no outstanding borrowings under the Credit Facility. As of February 29, 2020, we had issued
$150.0 million in SBA-guaranteed debentures 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. On December 21, 2019 and February 7, 2020, the Company redeemed $50.0 million and $24.5 million, respectively, in aggregate principal amount of
the $74.5 million in aggregate principal amount of issued and outstanding 2023 Notes. 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 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. 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 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.  33




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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. Changes relating
to the LIBOR calculation process may adversely affect the value of our portfolio of LIBOR-indexed, floating-rate debt securities. 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. Further, the borrowings of the senior secured revolving credit facility
entered into with Madison Capital Funding LLC (the Credit Facility) typically use LIBOR as a reference rate. In the recent
past, concerns have been publicized that some of the member banks surveyed by the British Bankers Association (BBA) in connection with the calculation of LIBOR across a range of maturities and currencies may have been
under-reporting or otherwise manipulating the inter-bank lending rate applicable to them in order to profit on their derivative positions or to avoid an appearance of capital insufficiency or adverse reputational or other consequences that may have
resulted from reporting inter-bank lending rates higher than those they actually submitted. A number of BBA member banks entered into settlements with their regulators and law enforcement agencies with respect to alleged manipulation of LIBOR, and
investigations by regulators and governmental authorities in various jurisdictions are ongoing. Actions by the ICE Benchmark
Administration, regulators or law enforcement agencies as a result of these or future events, may result in changes to the manner in which LIBOR is determined. Potential changes, or uncertainty related to such potential changes may adversely affect
the market for LIBOR-based securities, including our portfolio of LIBOR-indexed, floating-rate debt securities. In addition, any further changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or
decrease in reported LIBOR, which could have an adverse impact on the market for LIBOR-based securities or the value of our portfolio of LIBOR-indexed, floating-rate debt securities, loans, and other financial obligations or extensions of credit
held by or due to us. On July 27, 2017, the U.K. 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 LIBOR will cease to exist or if new methods of calculating LIBOR will be established such that it continues to exist after 2021. We
have exposure to LIBOR, including in financial instruments that mature after 2021. Our exposure arises from the value of our portfolio of LIBOR-indexed, floating-rate debt securities. In the United States, the Federal Reserve Board and the Federal Reserve Bank of New York, 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 Federal Reserve Bank of New York began publishing SOFR 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.  34




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The elimination of LIBOR or any other changes or reforms to the determination or supervision
of LIBOR could have an adverse impact on the market for or value of any LIBOR-indexed, floating-rate debt securities, loans, and other financial obligations or extensions of credit held by or due to us or on our overall financial condition or
results of operations. 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 with the new
standard that is established. In the event that the LIBOR Rate is no longer available or published on a current basis or no longer made available or used for determining the interest rate of loans, our administrative agent that manages our loans
will generally select a comparable successor rate; provided that (i) to the extent a comparable or successor rate is approved by the administrative agent, the approved rate shall be applied in a manner consistent with market practice; and
(ii) to the extent such market practice is not administratively feasible for the administrative agent, such approved rate shall be applied as otherwise reasonably determined by the administrative agent. 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;  35




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

disease pandemics or other serious public health events, such as the recent global outbreak of COVID-19 (more commonly known as the Coronavirus);  

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. Events outside of our control, including public health crises such as the ongoing COVID-19 pandemic, may negatively affect our results of operations and financial performance. The continuing spread of an infectious respiratory illness caused by a novel strain of coronavirus (known as
COVID-19) has caused volatility, severe market dislocations and liquidity constraints in many markets, including securities the Company holds, and may adversely affect the Companys investments and
operations. The outbreak was first detected in December 2019 and subsequently spread globally. On March 11, 2020, the World Health Organization declared COVID-19 as a pandemic, and on March 13,
2020 the United States declared a national emergency with respect to COVID-19. The transmission of COVID-19 and efforts to contain its spread have resulted in
travel restrictions and disruptions, closed international borders, enhanced health screenings at ports of entry and elsewhere, disruption of and delays in healthcare service preparation and delivery, quarantines, event and service cancellations or
interruptions, disruptions to business operations (including staff reductions), supply chains and consumer activity, as well as general concern and uncertainty that has negatively affected the economic environment. These disruptions have led to
instability in the market place, including stock market losses and overall volatility. The impact of COVID-19, and other infectious illness outbreaks, epidemics or pandemics that may arise in the future, could
adversely affect the economies of many nations or the entire global economy, the financial performance of individual issuers, borrowers and sectors and the health of the markets generally in potentially significant and unforeseen ways. In addition,
the impact of infectious illnesses, such as COVID-19, in emerging market countries may be greater due to generally less established healthcare systems. This crisis or other public health crises may exacerbate
other pre-existing political, social and economic risks in certain countries or globally. The
foregoing could lead to a significant economic downturn or recession, increased market volatility, a greater number of market closures, higher default rates and adverse effects on the values and liquidity of securities or other assets. Such impacts,
which may vary across asset classes, may adversely affect the performance of the Companys investments, the Company and your investment in the Company. In certain cases, an exchange or market may close or issue trading halts on either specific
securities or even the entire market, which may result in the Company being, among other things, unable to buy or sell certain securities or financial instruments or to accurately price their investments. The Company and the Investment Adviser have in place business continuity plans reasonably designed to ensure that they maintain normal
business operations, and that the Company, its portfolio and assets are protected. As a result, the transition of the Investment Advisers whole team to remote work took place smoothly and enables the team to maintain normal functionality to
complete operational requirements in supporting the Company. However, in the event of a pandemic or an outbreak, such as COVID-19, there can be no assurance that the Company, the Investment Adviser and service
providers, or the Companys portfolio companies, will be able to maintain normal business operations for an extended period of time or will not lose the services of key personnel on a temporary or long-term basis due to illness or other
reasons. A pandemic or disease could also impair the information technology and other operational systems upon which the Investment Adviser relies and could otherwise disrupt the ability of the Companys service providers to perform essential
tasks. Governmental authorities and regulators throughout the world, such as the U.S. Federal Reserve, have in the past responded to
major economic disruptions with changes to fiscal and monetary policy, including but not limited to, direct capital infusions, new monetary programs and dramatically lower interest rates. Certain of those policy changes, such as the passage of the
Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27, 2020, are being implemented in response to the COVID-19 pandemic. Such policy changes may adversely affect the value, volatility and
liquidity of dividend and interest paying securities. The effect of recent efforts undertaken by the U.S. Federal Reserve to address the economic impact of the COVID-19 pandemic, such as the reduction of the
federal funds target rate, and other monetary and fiscal actions that may be taken by the U.S. federal government to stimulate the U.S. economy, are not yet fully known. The duration of the COVID-19 outbreak
and its full impacts are unknown, resulting in a high degree of uncertainty for potentially extended periods of time. Further, the
operational and financial performance of the portfolio companies in which we make investments may be significantly impacted by COVID-19, which may in turn impact the valuation of our investments. As of February 29, 2020, the Company valued its
portfolio investments in conformity with U.S. generally accepted accounting principles (U.S. GAAP) based on the facts and circumstances known by the Company at that time, or reasonably expected to be known at that time. As a result, any
impairment to the financial condition of our portfolio companies caused by the global disruptions related to COVID-19 that ensued after February 29, 2020, such as widespread quarantines and disruptions to business operations, were not able to be
accounted for in the Companys portfolio valuations as of February 29, 2020. Due to the overall volatility that the COVID-19 pandemic has caused during the months that followed our February 29, 2020 fair value determination, any current and
future fair value analysis conducted in conformity with U.S. GAAP could result in a lower fair value of our portfolio.  36




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If COVID-19 continues to spread in the United
States, we expect to experience disruptions that could adversely impact our business. It is unknown how long these disruptions could continue, were they to occur. The outbreak of COVID-19 may also have a
material adverse impact on the ability of our portfolio companies to fulfill their end customers orders due to supply chain delays, limited access to key commodities or technologies or other events that impact their manufacturers or their
suppliers. Such events have affected, and may in the future affect our business, financial condition or results of operations. As the global outbreak of COVID-19 continues to rapidly evolve, the extent to
which COVID-19 may impact our business will depend on future developments, which are highly uncertain and cannot be predicted. We are currently operating in a period of capital markets disruption and economic uncertainty. The U.S. capital markets have experienced extreme volatility and disruption following the global outbreak of
COVID-19 that began in December 2019. Some economists and major investment banks have expressed concern that the continued spread of the virus globally could lead to a world-wide economic downturn. Disruptions
in the capital markets have increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets. These and future market disruptions and/or illiquidity would be expected
to have an adverse effect on our business, financial condition, results of operations and cash flows. Unfavorable economic conditions also would be expected to 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 have limited and could continue to limit our investment originations, limit our ability to grow and have a material negative impact on our operating results and the fair values of our debt
and equity investments. 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. We and our service providers are currently impacted by quarantines and similar measures being enacted by governments in response to COVID-19, which are
obstructing the regular functioning of business workforces (including requiring employees to work from external locations and their homes). Accordingly, the risks described above are heightened under current conditions. 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.  37




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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. Legislation that took effect in 2018 would allow us to incur additional leverage. The 1940 Act generally prohibits 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, our stockholders 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. federal 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 timely distributed to our stockholders, provided that we satisfy certain source-of-income, annual 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.  38




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The annual distribution requirement is satisfied if we timely 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 or are prohibited from making distributions, we may be subject to corporate-level U.S. federal income tax. The asset-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 corporate-level 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 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 income
taxes, we intend to distribute to our stockholders between 90% and 100% of our annual taxable income and capital gains, 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 to pay down outstanding indebtedness.  39




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Because original issue discount will be included in the Companys investment
company taxable income for the year of the accrual, we may be requested to make distributions to shareholders to satisfy the annual distribution requirement applicable to RICs, even where we have not received any corresponding cash amount. As
a result, we may have difficulty meeting the annual distribution requirement necessary to maintain favorable tax treatment. If we are not able to obtain cash from other sources, and choose not to make a qualifying share distribution, we may become
subject to corporate-level income tax. Additionally, because investments with a deferred payment feature may have the effect of deferring a portion of the borrowers payment obligation until maturity of the debt investment, it may be difficult
for us to identify and address developing problems with borrowers in terms of their ability to repay us. 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.  40




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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. 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.  41




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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 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. 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.  42




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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 29, 2020, 81.3% 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 29, 2020, 25.0% of our interest-only loans provided for contractual PIK interest, which represents contractual interest added to a loan balance and
due at the end of such loans term, and 77.9% of such investments elected to pay a portion of interest due in PIK. As of February 29, 2020, 19.4% 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. 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.  43




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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
29, 2020, our investment in the subordinated notes of Saratoga CLO, a collateralized loan obligation fund, had a fair value of $22.6 million and constituted 4.6% of our portfolio. This investment constitutes a first loss position in a portfolio
that, as of February 29, 2020, was composed of $528.4 million in aggregate principal amount of primarily senior secured first lien term loans and $9.1 million in uninvested cash. In addition, as of February 29, 2020, we also own
$2.5 million in aggregate principal of the F-R-2 Notes with a fair value of $2.5 million and $7.5 million in aggregate principal of the G-R-2 Notes with a fair value of $7.4 million in the Saratoga CLO, that only rank senior to the subordinated notes. As of February 29, 2020, our investment in CLO 2013-1 Warehouse 2, a wholly-owned subsidiary of Saratoga CLO, had a fair value of $2.2 million. 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. Saratoga CLOs investments are exposed to leveraged credit risk. Generally, Saratoga CLO is in a subordinated position with respect to realized losses on the senior secured loans underlying its investments.
The leveraged nature of collateralized loan obligation funds, in particular, magnifies the adverse impact of senior secured loan defaults. A collateralized loan obligation funds investments represent a leveraged investment with respect to the
underlying senior secured loans. Therefore, changes in the market value of such funds investments could be greater than the change in the market value of the underlying senior secured loans, which are subject to credit, liquidity and interest
rate risk. As a result, there is the potential for interruption and deferral of cash flow from Saratoga CLOs investments. If certain minimum collateral value ratios and/or interest coverage ratios are not met by Saratoga CLO, primarily due to
senior secured loan defaults, then cash flow that otherwise would have been available to pay distributions to Saratoga CLO on its investments may instead be used to redeem any senior notes or to purchase additional senior secured loans, until the
ratios again exceed the minimum required levels or any senior notes are repaid in full. This could result in an elimination, reduction or deferral in the distribution and/or principal paid to the senior debtholders of Saratoga CLO, which would
adversely impact its returns. 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 $528.4 million aggregate principal amount of debt, as of February 29, 2020 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 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. 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.  44




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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. 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 U.S. federal income 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 may be 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 may be 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 29, 2020, Saratoga CLOs investments in the banking, finance, insurance & real estate industry represented approximately 17.6% 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 business service
represented approximately 9.1% 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 debt compliance ratios 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 debt compliance ratios, 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. Downgrades by rating agencies of broadly syndicated loans could adversely impact the financial performance of Saratoga CLO and its ability to pay equity
distributions and subordinated management fees to the Company in the future. Ratings agencies have recently undergone reviews of
CLO tranches and their broadly syndicated loans in light of the COVID-19 pandemics adverse impact on the economic market. Such reviews have, in some cases, resulted in downgrades of broadly syndicated loans. Such downgrades of broadly
syndicated loans, as well as downgrades of broadly syndicated loans in the future, could adversely impact the financial performance of Saratoga CLO, thereby limiting Saratoga CLOs ability to pay equity distributions and subordinated management
fees to the Company in the future. The full extent of downgrades by ratings agencies of broadly syndicated loans is currently unknown, thereby resulting in a high degree of uncertainty with respect to Saratoga CLOs financial performance and
ability to pay equity distributions and subordinated management fees to the Company in the future. 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.  45




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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 U.S. federal income tax purposes even though we have not received any cash
payments in respect of such income;  

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
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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. 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.  47




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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. On August 14, 2019, our
wholly-owned subsidiary, SBIC II LP, also received an SBIC license from 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 subsidiaries 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 subsidiaries fail 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 subsidiaries are our wholly-owned subsidiaries. We
do not have any prior experience managing a SBIC. Our lack of experience in complying with SBA regulations may hinder our ability to take advantage of our SBIC subsidiaries 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. 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
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As of February 29, 2020, our investments in the business services industry represented
approximately 58.8% of the fair value of our portfolio and our investments in the education industry represented approximately 15.9% 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, and the financial results of our portfolio companies in
the Software-as-a-Service industry could materially adversely affect our financial results. 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 and on their ability to repay
their debt. Because our SAAS portfolio companies are generally investments that are underwritten and 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. They are also subject to the risks that their customers have financial difficulties that make them unable or unwilling to pay for the software and services that drive a portfolio companys recurring revenue
projections. There is often less collateral securing our loans to these companies as compared to our other portfolio companies, which could impair our ability to be repaid if the portfolio companies default on their obligations or otherwise
encounter financial difficulties. For these reasons, our financial results could be materially adversely affected if our portfolio companies in the SAAS industry encounter financial difficulty and fail to repay their obligations. As of February 29,
2020, our current total investments in SAAS companies were $256.0 million, or 52.7% of total investments. 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
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We may 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 in the future, 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 and a revenue procedure issued by the IRS, a RIC may treat a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder may elect to receive his or
her entire distribution in either cash or stock of the RIC, subject to a limitation that the aggregate amount of cash to be distributed to all stockholders must be at least 20% (which has been temporarily reduced to 10% for distributions declared on
or after April 1, 2020, and on or before December 31, 2020) of the aggregate declared distribution. If too many stockholders elect to receive their distributions in cash, we must allocate the cash available for distribution among the shareholders
electing to receive cash (with the balance of the distribution paid in shares of our common 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. Due to the COVID-19 pandemic or other disruptions in the economy, we may reduce or defer our dividends and choose to
incur US federalincome orexcise tax in order preserve cash and maintain flexibility. As a BDC, we are not required to make any distributions to shareholders other than in connection with our election to be taxed as a RIC under
subchapter M of the Code. In order to maintain our tax treatment as a RIC, we must distribute to shareholders for each taxable year at least 90% of our investment company taxable income (i.e., net ordinary income plus realized net short-term capital
gains in excess of realized net long-term capital losses). We also have the option to keep net long-term capital gains as undistributed by classifying the net long-term capital gain as a deemed dividend and incurring federal income tax. If we
qualify for taxation as a RIC, we generally will not be subject to corporate-level US federal income tax on our investment company taxable income and net capital gains (i.e., realized net long-term capital gains in excess of realized net short-term
capital losses) that we timely distribute to shareholders. We will be subject to a 4% US federal excise tax on undistributed earnings of a RIC unless we distribute each calendar year at least the sum of (i) 98.0% of our ordinary income for the
calendar year, (ii) 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 (iii) 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. Under the Code, we may satisfy certain of our RIC distributions with dividends
paid after the end of the current calendar year. In particular, if we pay a distribution in January of the following year that was declared in October, November, or December of the current year and is payable to shareholders of record in the current
year, the dividend will be treated for all US federal tax purposes as if it were paid on December 31 of the current year. In addition, under the Code, we may pay dividends, referred to as spillover dividends, that are paid during the
following taxable year that will allow us to maintain our qualification for taxation as a RIC and eliminate our liability for corporate-level U.S. federal income tax. Under these spillover dividend procedures, because our taxable year ends on
February 28 or 29, we may defer distribution of income earned during the current taxable year until February of the following taxable year. For example, we may defer distributions of income earned during the year ended February 28, 2021 until as
late as February 28, 2022. If we choose to carry-over this distribution of income in the form of a spillover dividend, we will incur the 4% U.S. federal excise tax on some or all of the distribution. Due to the COVID-19 pandemic or other disruptions in the economy, we anticipate that we may take certain actions with respect to the timing
and amounts of our distributions in order to preserve cash and maintain flexibility. For example, we anticipate that we may not be able to increase our dividends. In addition, we may reduce our dividends and/or defer our dividends to the following
taxable year. If we defer our dividends, we may choose to utilize the spillover dividend rules discussed above and incur the 4% U.S. federal excise tax on such amounts. To further preserve cash, we may combine these reductions or deferrals of
dividends with one or more distributions that are payable partially in our stock as discussed above under We may 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. In
addition, if any of these spillover dividends are in the form of long-term capital gains, we may elect to not distribute these gains by classifying them as deemed dividends and paying federal income tax on them. 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.  50




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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.  51




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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. Risks Related to Our 2025 Notes The 2025 Notes are
unsecured and therefore are effectively subordinated to any secured indebtedness we have incurred or may incur in the future. The
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 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 2025 Notes.  52




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The 2025 Notes are structurally subordinated to the indebtedness and other liabilities of our
subsidiaries. The 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 2025 Notes and the 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 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 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 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 2025 Notes. As of February 29, 2020, 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 29, 2020, 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 2025 Notes. The indenture under which the 2025 Notes are issued contains limited protection for holders of the 2025 Notes. The indenture under which the 2025 Notes are issued offers limited protection to holders of the 2025 Notes. The terms of the
indenture and the 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 2025 Notes. In particular, the terms of the indenture and the 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 2025 Notes, (2) any indebtedness or other obligations that would be secured and therefore rank effectively senior in right of payment to the 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 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 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. In addition, the indenture does not require us to offer to purchase the 2025 Notes in connection with a change of
control or any other event. Furthermore, the terms of the indenture and the 2025 Notes do not protect holders of the 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.  53




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##### Table of Contents

Our ability to recapitalize, incur additional debt and take a number of other actions that
are not limited by the terms of the 2025 Notes may have important consequences for you as a holder of the 2025 Notes, including making it more difficult for us to satisfy our obligations with respect to the 2025 Notes or negatively affecting the
trading value of the 2025 Notes. Other debt we issue or incur in the future could contain more protections for its holders than the
indenture and the 2025 Notes, including additional covenants and events of default. For example, the indenture under which the 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 2025 Notes. An active trading market for the 2025 Notes may not develop or be sustained, which could limit the market price of the 2025 Notes or the ability to sell
them. Although 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 2025 Notes or that the 2025 Notes will be able to be sold. At various times, the 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 2025 Notes, or that the 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 2025 Notes may be harmed. At the same time, the trading market for the 2025 Notes may also be very volatile, and many of the risk factors related to our common stock
and outlined in Risks related to common stock could also be applicable to the 2025 Notes. Public health threats may affect the market
for the 2025 Notes, impact the businesses in which we invest and affect our business, operating results and financial condition. Public health threats, such as COVID-19 or any other illness, may disrupt the operations of the businesses in which we invest. Such threats can
create economic and political uncertainties and can contribute to global economic instability. A public health threat poses the risk that our portfolio companies may have significantly reduced or be prevented from conducting business activities for
an unknown period of time, including shutdowns that may be requested or mandated by governmental authorities. We cannot estimate the impact that a public health threat could have on our portfolio companies, but it could disrupt their businesses and
their ability to make interest or dividend payments and decrease the overall value of our investments which adversely impact our business, financial condition or results of operations. Additionally, as a result of the volatile market conditions that
may result from public health threats, such as COVID-19 or any other illness, we cannot provide any assurance that the 2025 Notes will trade at a favorable price. We may choose to redeem the 2025 Notes when prevailing interest rates are relatively low. On or after August 31, 2021, we may choose to redeem the 2025 Notes, from time to time, especially when prevailing interest rates are
lower than the rate borne by the 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 2025 Notes being redeemed. Our redemption right also may adversely impact your ability to sell the 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 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 2025 Notes and substantially decrease the market value
of the 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 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 2025
Notes, which could further limit our ability to repay our debt, including the 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. Because the Credit Facility has, and any future credit facilities will likely have, customary cross-default provisions, if the indebtedness under the 2025 Notes, the Credit Facility or under any future credit facility is accelerated, we may be unable to repay or finance the amounts due.  54




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##### Table of Contents

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 and Saratoga Investment
Corp. SBIC II LP, are currently subject to any material legal proceedings. ITEM 4. MINE SAFETY DISCLOSURES None.  55




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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. The following table lists the high and low closing sales prices for the Companys common stock and such closing sales prices percentage of premium or
discount to the net asset value (NAV) for the two most recent fiscal years and the current fiscal year to date.  Price RangeFiscal Year Ending February 28, 2021

NAV(1)


High


Low


Percentageof HighClosingSales Priceas aPremium(Discount)to NAV(2)


Percentageof LowClosingSales Priceas aPremium(Discount)to NAV(2)First Quarter through May 5, 2020

$
*


$
24.97


$
8.40



*



*Fiscal Year Ended February 29, 2020First Quarter

$
24.06


$
25.60


$
22.27



6.4
%


(7.4
)%Second Quarter

$
24.47


$
25.50


$
23.31



4.2
%


(4.7
)%Third Quarter

$
25.30


$
26.23


$
24.00



3.7
%


(5.1
)%Fourth Quarter

$
27.13


$
28.35


$
22.91



4.5
%


(15.5
)%Fiscal Year Ended February 28, 2019First Quarter

$
23.06


$
22.94


$
20.02



(0.5
)%


(13.2
)%Second Quarter

$
23.16


$
27.74


$
23.05



19.8
%


(0.5
)%Third Quarter

$
23.13


$
24.70


$
20.50



6.8
%


(11.4
)%Fourth Quarter

$
23.62


$
23.40


$
18.96



(0.9
)%


(19.7
)%  *
Net asset value has not yet been calculated for this period. (1)
Net asset value 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 sales prices. (2)
Calculated as the respective high or low closing sales price divided by the quarter end net asset value and
subtracting 1. 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, January 8, 2019 and January 7, 2020, the Companys
board of directors extended the open market share repurchase plan for another year to October 15, 2018, January 15, 2020 and January 15, 2021, respectively, each time leaving the number of shares unchanged at 600,000 shares of its
common stock. On May 4, 2020, the Board of Directors increased the share repurchase plan to 1.3 million shares of common stock. As of February 29, 2020, 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.  56




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##### Table of Contents

As shown in the table below, as of February 29, 2020, 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 29, 2020










218,491



381,509Total


218,491


$
16.87 Holders The last reported closing sale price of our common stock on May 5, 2020 was $14.45 per share, which represents a discount of approximately
46.7% to the NAV reported as of February 29, 2020. As of May 5, 2020, there were 11 holders of record of our common stock.  57




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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, 2019 and 2020:  Date Declared

Record Date


Payment Date


Amountper Share(2)


PercentagePaid inCashFiscal Year Ended 2009:May 22, 2008


May 30, 2008



June 13, 2008


$
3.90



20.0
%August 19, 2008


August 29, 2008



September 15, 2008



3.90



20.0
%December 8, 2008


December 18, 2008



December 29, 2008



2.50



20.0
%Total









$
10.30Fiscal Year Ended 2010:November 13, 2009


November 25, 2009



December 31, 2009


$
18.25
(1)


20.0
%Total









$
18.25Fiscal Year Ended 2011:November 12, 2010


November 19, 2010



December 29, 2010


$
4.40
(1)


20.0
%Total









$
4.40Fiscal Year Ended 2012:November 15, 2011


November 25, 2011



December 30, 2011


$
3.00
(1)


20.0
%Total









$
3.00Fiscal Year Ended 2013:November 9, 2012


November 20, 2012



December 31, 2012


$
4.25
(1)


20.0
%Total









$
4.25Fiscal Year Ended 2014:October 30, 2013


November 13, 2013



December 27, 2013


$
2.65
(1)


20.0
%Total









$
2.65Fiscal Year Ended 2015:September 24, 2014


November 3, 2014



November 28, 2014


$
0.18
(1)


66.9
%September 24, 2014


February 2, 2015



February 27, 2015



0.22
(1)


66.2
%Total









$
0.40Fiscal Year Ended 2016:April 9, 2015


May 4, 2015



May 29, 2015


$
0.27
(1)


61.3
%May 14, 2015


May 26, 2015



June 5, 2015



1.00
(1)


61.7
%July 8, 2015


August 3, 2015



August 31, 2015



0.33
(1)


65.7
%October 7, 2015


November 2, 2015



November 30, 2015



0.36
(1)


56.3
%January 12, 2016


February 1, 2016



February 29, 2016



0.40
(1)


61.6
%Total









$
2.36Fiscal Year Ended 2017:March 31, 2016


April 15, 2016



April 27, 2016


$
0.41
(1)


62.7
%July 7, 2016


July 29, 2016



August 9, 2016



0.43
(1)


61.5
%August 8, 2016


August 24, 2016



September 5, 2016



0.20
(1)


63.3
%October 5, 2016


October 31, 2016



November 9, 2016



0.44
(1)


60.0
%January 12, 2017


January 31, 2017



February 9, 2017



0.45
(1)


60.5
%Total









$
1.93Fiscal Year Ended 2018:February 28, 2017


March 15, 2017



March 28, 2017


$
0.46
(1)


76.7
%May 30, 2017


June 15, 2017



June 27, 2017



0.47
(1)


81.2
%August 28, 2017


September 15, 2017



September 26, 2017



0.48
(1)


76.4
%November 29, 2017


December 15, 2017



December 27, 2017



0.49
(1)


82.4
%Total









$
1.90Fiscal Year Ended 2019:February 26, 2018


March 14, 2018



March 26, 2018


$
0.50
(1)


83.9
%May 30, 2018


June 15, 2018



June 27, 2018



0.51
(1)


84.0
%August 28, 2018


September 17, 2018



September 27, 2018



0.52
(1)


85.1
%November 27, 2018


December 17, 2018



January 2, 2019



0.53
(1)


85.4
%Total









$
2.06Fiscal Year Ended 2020:February 26, 2019


March 14, 2019



March 28, 2019


$
0.54
(1)


84.0
%May 28, 2019


June 13, 2019



June 27, 2019



0.55
(1)


83.5
%August 27, 2019


September 13, 2019



September 26, 2019



0.56
(1)


84.8
%January 7, 2020


January 24, 2020



February 6, 2020



0.56
(1)


85.5
%Total









$
2.21  (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.  58




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##### Table of Contents

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 2019, 2018 and 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 2020 calendar year and/or portion of the capital gains in excess of capital losses
realized during the one-year period ending October 31, 2020, if any, and, if we do so, we would expect to incur federal excise taxes as a result. In accordance with certain applicable provisions of the Code and the Treasury regulations and a revenue procedure issued by the IRS, a RIC may
treat a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder may elect to receive his or her entire distribution in either cash or stock of the RIC subject to a limitation that the aggregate amount of
cash to be distributed to all stockholders must be at least 20% of the aggregate declared distribution. If too many stockholders elect to receive cash, the cash available for distribution must be allocated among the shareholders electing to receive
cash (with the balance of the distribution paid in stock). In no event will any stockholder, electing to receive cash, receive the lesser of (a) the portion of the distribution such shareholder has elected to receive in cash or (b) an
amount equal to his or her entire distribution times the percentage limitation on cash available for distribution. If these and certain other requirements are met, for U.S. federal income tax purposes, the amount of the dividend paid in stock will
be equal to the amount of cash that could have been received instead of stock. Taxable stockholders receiving such distributions (whether received in cash, our stock, or a combination thereof) will be required to include the full amount of the
dividend as ordinary income (or as long-term capital gain or qualified dividend income to the extent such distribution is properly reported as such) to the extent of our current and accumulated earnings and profits for U.S. federal income tax
purposes. On January 8, 2020, the Company declared a dividend of $0.56 per share, which was paid on February 6, 2020, to common
stockholders of record on January 24, 2020. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to the Companys DRIP. Based on shareholder elections, the dividend consisted
of approximately $5.4 million in cash and 35,682 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based
on a price of $25.44 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on January 24, 27, 28, 29, 30, 31 and February 3, 4, 5 and 6, 2020. On August 27, 2019, the Company declared a dividend of $0.56 per share, which was paid on September 26, 2019, to common stockholders
of record on September 13, 2019. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to the Companys DRIP. Based on shareholder elections, the dividend consisted of
approximately $4.5 million in cash and 34,575 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on
a price of $23.34 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on September 13, 16, 17, 18, 19, 20, 23, 24, 25 and 26, 2019.  59




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##### Table of Contents

On May 28, 2019, the Company declared a dividend of $0.55 per share, which was paid on
June 27, 2019, to common stockholders of record on June 13, 2019. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to the Companys DRIP. Based on shareholder
elections, the dividend consisted of approximately $3.6 million in cash and 31,545 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the
stock portion was calculated based on a price of $22.65 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on June 14, 17, 18, 19, 20, 21, 24, 25, 26 and 27, 2019. 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 95.0% of the volume weighted average trading price per share of the common stock on March 15, 18, 19, 20, 21, 22, 25, 26, 27 and 28, 2019. 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 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. 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 95.0% of the volume weighted average trading price per share of the common stock on December 13, 14, 15, 18, 19, 20, 21, 22, 26 and 27, 2017.  60




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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 95.0% of the volume weighted average trading price per share of the common stock on September 13, 14, 15, 18, 19, 20, 21, 22, 25 and 26, 2017. 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 95.0% of the volume weighted average trading price per share of the common stock on June 14, 15, 16, 19, 20, 21, 22, 23, 26 and 27, 2017. 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 95.0% of the volume weighted average trading price per share of the common stock on March 15, 16, 17, 20, 21, 22, 23, 24, 27 and 28, 2017. 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 95.0% of the volume weighted average trading price per share of the common stock on January 27, 30, 31 and February 1, 2, 3, 6, 7, 8 and 9, 2017. 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 95.0% of the volume weighted average trading price per share of the common stock on October 27, 28, 31 and November 1, 2, 3, 4, 7, 8 and 9, 2016. 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 95.0% of the volume weighted average trading price per share of the common stock on August 22, 23, 24, 25, 26, 29, 30, 31 and September 1 and 2, 2016. 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 95.0% of the volume weighted average trading price per share of the common stock on July 27, 28, 29 and August 1, 2, 3, 4, 5, 8 and 9, 2016.  61




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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 95.0% of the volume weighted average trading price per share of the common stock on April 14, 15, 18, 19, 20, 21, 22, 25, 26 and 27, 2016. 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 95.0% of the volume weighted average trading price per share of the common stock on February 16, 17, 18, 19, 22, 23, 24, 25, 26 and 29, 2016. 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 95.0% of the volume weighted average trading price per share of the common stock on November 16, 17, 18, 19, 20, 23, 24, 25, 27 and 30, 2015. 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 95.0% of the volume weighted average trading price per share of the common stock on August 18, 19, 20, 21, 24, 25, 26, 27, 28 and 31, 2015. 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 95.0% of the volume weighted average trading price per share of the common stock on May 22, 26, 27, 28, 29 and June 1, 2, 3, 4 and 5, 2015. 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 95.0% of the volume weighted average trading price per share of the common stock on May 15, 18, 19, 20, 21, 22, 26, 27, 28 and 29, 2015.  62




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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 95.0% of the volume weighted average trading price per share of the common stock on February 13, 17, 18, 19, 20, 23, 24, 25, 26 and 27, 2015. 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 95.0% of the volume weighted average trading price per share of the common stock on November 14, 17, 18, 19, 20, 21, 24, 25, 26 and 28, 2014. 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.  63




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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 29, 2020. 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 Outstanding Securities and Debt The following table shows our outstanding classes of securities and debt as of February 29, 2020.  (a)

(b)


(c)


(d)Title of Class

Amount Authorized


Amount Held by us orfor Our Account


AmountOutstandingExclusive ofAmountsShown Under (c)Securities:Common Stock


100,000,000



11,217,545



88,782,455Debt:Credit Facility

$
45,000,000


$



$
45,000,000SBA Debentures

$
325,000,000
(1)

$
150,000,000


$
175,000,0002025 Notes

$
60,000,000


$
60,000,000


$
  (1)
For more information regarding our limitations as to SBA debenture issuances, see Item 1.
BusinessSmall Business Investment Company Regulations.  64




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Fees and Expenses The following table is intended to assist you in understanding the costs and expenses that an investor will bear directly or indirectly. We
caution you that some of the percentages indicated in the table below are estimates and may vary. Except where the context suggests otherwise, whenever this report contains a reference to fees or expenses paid by you, us or
Saratoga Investment Corp., or that we will pay fees or expenses, stockholders will indirectly bear such fees or expenses as investors in Saratoga Investment Corp.  Stockholder transaction expenses (as a percentage of offering price):Sales load paid



%(1)Offering expenses borne by us



%(2)Dividend reinvestment plan expenses



(3)Total stockholder transaction expenses paid



%Annual estimated expenses (as a percentage of average net assets attributable to common
stock):Management fees


3.0
%(4)Incentive fees payable under the Management Agreement


1.9
%(5)Interest payments on borrowed funds


4.9
%(6)Other expenses


2.1
%(7)Total annual expenses


11.9
%(8)  (1)
In the event that the shares of common stock are sold to or through underwriters, a corresponding prospectus
supplement will disclose the applicable sales load. (2)
The prospectus supplement corresponding to each offering will disclose the applicable offering expenses and
total stockholder transaction expenses. (3)
The expenses associated with the administration of our dividend reinvestment plan are included in Other
expenses. The participants in the dividend reinvestment plan will pay a pro rata share of brokerage commissions incurred with respect to open market purchases, if any, made by the administrator under the plan. (4)
Our base management fee under the Management Agreement with Saratoga Investment Advisors is based on our gross
assets, which is defined as our total assets, including those acquired using borrowings for investment purposes, but excluding cash and cash equivalents. See Investment Advisory and Management Agreement. The fact that our base management
fee is payable based upon our gross assets, rather than our net assets (i.e., total assets after deduction of any liabilities, including borrowings) means that our base management fee as a percentage of net assets attributable to common stock will
increase when we utilize leverage. (5)
The incentive fee consists of two parts. The first part is calculated and payable quarterly in arrears and
equals 20% of our pre-incentive fee net investment income for the immediately preceding quarter, subject to a preferred return, or hurdle, and a catch up feature.
For this purpose, 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 by us during the fiscal quarter, minus our operating expenses for the quarter (including the base management fee, expenses payable
under the administration agreement described below, and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). 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% 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 year, if any, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, 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% of 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. We estimate this as zero for purposes of this table as these fees are hard to predict, as they are based on capital gains and losses. See
Investment Advisory and Management Agreement.  65




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##### Table of Contents

(6)
We may borrow funds from time to time to make investments to the extent we determine that the economic
situation is conducive to doing so. The 4.9% figure in the table includes all expected borrowing costs that we expect to incur over the next twelve months in connection with the secured revolving credit facility we have with Madison Capital Funding
LLC. The costs associated with our outstanding borrowings are indirectly borne by our stockholders. We do not expect to issue any preferred stock during the next twelve months and, therefore, have not included the cost of issuing and servicing
preferred stock in the table. In addition, all of the commitment fees, interest expense, amortized financing costs of our Credit Facility, SBA debentures and the 2025 Notes, and the fees and expenses of issuing and servicing any other borrowings or
leverage that we expect to incur during the next twelve months are included in the table and expense example presentation below. 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 the Company 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. See Business Development Company Regulations and Risk FactorsRisks Related to Our Business and StructureRecent legislation allows us to incur
additional leverage. (7)
Other expenses are based on estimated amounts for the current fiscal year and include our overhead
expenses, including payments under our administration agreement based on our allocable portion of overhead and other expenses incurred by Saratoga Investment Advisors in performing its obligations under the administration agreement. See
Administration Agreement. (8)
This figure includes all of the fees and expenses of our wholly-owned subsidiaries, Saratoga
Investment Corp SBIC, LP and Saratoga Investment Funding LLC. Furthermore, this table reflects all of the fees and expenses borne by us with respect to our investment in Saratoga CLO. Example The following example
demonstrates the projected dollar amount of total cumulative expenses over various periods with respect to a hypothetical investment in our common stock. In calculating the following expense amounts, we have assumed that we would have no additional
leverage and our annual operating expenses would remain at the levels set forth in the table above. In the event that shares are sold to or through underwriters, a corresponding prospectus supplement will restate this example to reflect the
applicable sales load and offering expenses.  1Year


3Years


5years


10yearsYou would pay the following expenses on a $1,000 investment, assuming a 5% annual return on
portfolio

$
132


$
416


$
730


$
1,661 This example and the expenses in the table above should not be considered a representation of our future
expenses, and actual expenses (including the cost of debt, if any, and other expenses) may be greater or less than those shown. The
foregoing table is to assist you in understanding the various costs and expenses that an investor in our common stock will bear directly or indirectly. While the example assumes, as required by the SEC, a 5% annual return, our performance will vary
and may result in a return greater or less than 5%. The example assumes that the 5% annual return is generated entirely through the realization of capital gains on our assets and, as a result, triggers the payment of an incentive fee on such capital
gains under the Management Agreement. The pre-incentive fee net investment income under the Management Agreement, which, assuming a 5% annual return, would either not be payable or have an
insignificant impact on the expense amounts shown above, is not included in the example. If we achieve sufficient returns on our investments, including through the realization of capital gains, to trigger an incentive fee of a material amount, our
expenses, and returns to our investors, would be higher. While the example assumes reinvestment of all dividends and distributions at net
asset value, participants in our dividend reinvestment plan will receive a number of shares of our common stock, determined by dividing the total dollar amount of the dividend payable to a participant by either (i) the greater of (x) the
net asset value of our common stock or (y) 95% of the market price per share of our common stock at the close of trading on the payment date fixed by our board of directors in the event that we use newly issued shares to satisfy the share
requirements of the dividend reinvestment plan or (ii) the average purchase price, including any brokerage charges or other charges, of all shares of common stock purchased by the administrator of the dividend reinvestment plan in the event
that shares are purchased in the open market to satisfy the share requirements of the dividend reinvestment plan, which may be at, above or below net asset value.  66




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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 29, 2020,
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. ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA The following selected financial and other data as of and for the years ended February 29, 2020, February 28, 2019, February 28,
2018, February 28, 2017 and February 29, 2016 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 29,2020


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 29,2016Consolidated Statements of Operations Data:Investment income:Interest from investments

$
48,047


$
43,297


$
35,110


$
29,348


$
26,871Management fee, incentive fee and other income


10,401



4,411



3,505



3,809



3,179Total investment income


58,448



47,708



38,615



33,157



30,050Operating expenses:Interest and debt financing expenses


14,683



13,126



10,939



9,888



8,456Base management and incentive management fees(1)


22,263



11,770



10,180



7,846



6,761Administrator expenses


2,131



1,896



1,646



1,367



1,175General and administrative and other expenses


3,548



3,641



3,133



2,896



2,866Income/excise tax expense (benefit)


962



(1,027
)


(15
)


45



114Total operating expenses


43,587



29,406



25,883



22,042



19,372Loss on extinguishment of debt


1,583











1,455



Net investment income


13,278



18,302



12,732



9,660



10,678Realized and unrealized gain (loss) on investments:Net realized gain (loss) from investments


42,877



4,874



(5,878
)


12,368



226Net change in unrealized appreciation (depreciation) on investments


(771
)


(2,900
)


10,825



(10,641
)


741Net change in provision for deferred taxes on unrealized (appreciation) depreciation on
investments


355



(1,767
)










Total net gain on investments


42,461



207



4,947



1,727



967Net increase in net assets resulting from operations

$
55,739


$
18,509


$
17,679


$
11,387


$
11,645As of and forthe Year EndedFebruary 29,2020


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 29,2016Per Share:Adoption of ASC 606(2)

$



$
(0.01
)

$



$



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


5.98



2.63



2.93



1.98



2.09Net investment income per sharebasic and diluted(3)


1.42



2.60



2.11



1.68



1.91Net realized and unrealized gain (loss) per sharebasic and diluted(3)


4.56



0.03



0.82



0.30



0.18Dividends declared per common share(4)


2.21



2.06



1.90



1.93



2.36Issuance of common stock above net asset value(5)






0.15











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


(0.26
)


(0.05
)


(0.04
)


(0.14
)


(0.37
)Net asset value per share

$
27.13


$
23.62


$
22.96


$
21.97


$
22.06Total return based on market value(7)


9.28
%


16.11
%


5.28
%


80.83
%


4.27
%Total return based on net asset value(8)


26.22
%


13.33
%


14.45
%


12.62
%


11.10
%Consolidated Statements of Assets and Liabilities Data:Investment assets at fair value

$
485,632


$
402,020


$
342,694


$
292,661


$
283,996Total assets


530,866



470,672



360,336



318,651



295,047Total debt outstanding, net of discount and/or deferred financing costs


204,879



277,151



206,486



181,476



160,749Total net assets


304,287



180,875



143,691



127,295



125,150Net asset value per common share

$
27.13


$
23.62


$
22.96


$
21.97


$
22.06Common shares outstanding at end of year


11,217,545



7,657,156



6,257,029



5,794,600



5,672,227Other Data:Investments funded

$
204,643


$
187,708


$
107,697


$
126,935


$
109,191Principal collections related to investment repayments or sales

$
167,253


$
135,728


$
66,312


$
121,159


$
68,174Number of investments at year end


74



58



56



53



59Weighted average yield of income producing debt investmentsNon-control/Non-affiliate(9)


9.72
%


10.93
%


11.11
%


10.66
%


10.82
%Weighted average yield on income producing debt investmentsAffiliate(9)


11.55
%


13.56
%


13.06
%


12.17
%


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


11.23
%


13.67
%


16.97
%


11.64
%


16.40
%  (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 29, 2020, February 28, 2019, February 28, 2018, February 28,
2017 and February 29, 2016, amounts are calculated using weighted average common shares outstanding of 9,319,192, 7,046,686, 6,024,040, 5,740,450, and 5,582,453, 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)
Represents the dilutive effect of issuing common stock below net asset value per share during the period in
connection with the satisfaction of the Companys annual RIC distribution requirement and may include the impact of the different share amounts used for different items (weighted average basic common shares outstanding for the corresponding
year and actual common shares outstanding at the end of the year) in the per common share data calculation and rounding impacts. See 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.  67




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##### Table of Contents

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 and the impact of the COVID-19 pandemic thereon;  

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;  

pandemics or other serious public health events, such as the recent global outbreak of COVID-19;  

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, including our and their ability to achieve
our respective objectives as a result of the current COVID-19 pandemic;  

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
and the impact of the COVID-19 pandemic thereon;  

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) subsidiaries, 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 and the impact of the COVID-19
pandemic thereon;  

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.  68




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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 U.S. Securities and Exchange Commission (the SEC), including annual reports on Form 10-K, quarterly reports on Form
10-Q and current reports on Form 8-K. The following analysis of our financial condition and results of operations should be read in
conjunction with our consolidated financial statements and the related notes thereto contained elsewhere in this annual report on Form 10-K. OVERVIEW We are a Maryland corporation that has elected to be 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 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.  69




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##### Table of Contents

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). On August 14, 2019, our wholly-owned subsidiary, Saratoga Investment Corp. SBIC II LP (SBIC II LP), also received an SBIC license from the 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. The 2023 Notes were listed on the NYSE under the trading symbol SAB with a par value of $25.00 per
share. On December 21, 2019 and February 7, 2020, the Company redeemed $50.0 million and $24.5 million, respectively, in aggregate principal amount of the $74.5 million in aggregate principal amount of issued and outstanding
2023 Notes. On March 16, 2017, we entered into an equity distribution agreement with Ladenburg Thalmann & Co. Inc., through
which we may offer for sale, from time to time, up to $30.0 million of our common stock through an ATM offering. Subsequent to this, BB&T Capital Markets and B. Riley FBR, Inc. were also added to the agreement. On July 9, 2019, the
amount of the common stock to be offered through this offering was increased to $70.0 million, and on October 8, 2019, the amount of the common stock to be offered was increased to $130.0 million. As of February 29, 2020, the
Company sold 3,922,018 shares for gross proceeds of $97.1 million at an average price of $24.77 for aggregate net proceeds of $95.9 million (net of transaction costs). For the year ended February 29, 2020, the Company sold 3,427,346
shares for gross proceeds of $85.9 million at an average price of $25.06 for aggregate net proceeds of $84.7 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.  70




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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 expired 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 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 31, 2021, may be redeemed in whole or in part at any time or from time to time at our option. The net proceeds from the offering
were used for general corporate purposes in accordance with our investment objective and strategies. Financing costs of $1.6 million related to the 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 29, 2020, 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. On August 14, 2019, our wholly-owned subsidiary, Saratoga Investment Corp. SBIC II LP (SBIC II LP), also received an SBIC
license from the SBA. The new license will provide up to $175.0 million in additional long-term capital in the form of SBA debentures. On February 11, 2020, the Company entered into an unsecured loan agreement
(CLO 2013-1 Warehouse 2 Loan) with Saratoga Investment Corp. CLO 2013-1 Warehouse 2, Ltd
(CLO 2013-1 Warehouse 2), a wholly-owned subsidiary of Saratoga CLO, pursuant to which CLO 2013-1 Warehouse 2 may borrow from time
to time up to $20.0 million from the Company in order to provide capital necessary to support warehouse activities. The CLO 2013-1 Warehouse 2 Loan, which expires on August 20, 2021, bears
interest at an annual rate of 3M USD LIBOR + 7.5%. COVID-19 On March 11, 2020, the World Health Organization declared the novel coronavirus (COVID-19)
as a pandemic, and on March 13, 2020 the United States declared a national emergency with respect to COVID-19. The outbreak of COVID-19 has severely impacted global
economic activity and caused significant volatility and negative pressure in financial markets. The global impact of the outbreak has been rapidly evolving and many countries, including the United States, have reacted by instituting quarantines,
mandating business and school closures and restricting travel. Such actions are creating disruption in global supply chains and adversely impacting a number of industries. The outbreak could have a continued adverse impact on economic and market
conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19. Nevertheless, COVID-19 presents material uncertainty and risks with respect to the underlying value of the Companys portfolio companies, the Companys business, financial condition, results of operations and cash
flows, such as the potential negative impact to financing arrangements, company decisions to delay, defer and/or modify the character of dividends in order to preserve liquidity, increased costs of operations, changes in law and/or regulation, and
uncertainty regarding government and regulatory policy. We have evaluated subsequent events from February 29, 2020 through May 6, 2020.
However, as the discussion in this Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations relates to the Companys financial statements for the fiscal year end February 29, 2020, the
analysis contained herein may not fully account for impacts relating to the COVID-19 pandemic. In that regard, for example, as of February 29, 2020, the Company valued its portfolio investments in
conformity with U.S. GAAP based on the facts and circumstances known by the Company at that time, or reasonably expected to be known at that time. Due to the overall volatility that the COVID-19 pandemic has
caused during the months that followed our February 29, 2020 valuation, any valuations conducted now or in the future in conformity with U.S. GAAP could result in a lower fair value of our portfolio. The potential impact to our results going
forward will depend to a large extent on future developments and new information that may emerge regarding the duration and severity of COVID-19 and the actions taken by authorities and other entities to
contain the coronavirus or treat its impact, all of which are beyond our control. Accordingly, the Company cannot predict the extent to which its financial condition and results of operations will be affected at this time. 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.  71




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##### Table of Contents

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, FairValueMeasurementsand 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 or its liabilities are to be transferred at the balance sheet date in the principal market to independent market participants, or in the absence of a principal market, in the most advantageous market, which may be
a hypothetical market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact. Investments for which market quotations are readily available are fair valued at such market quotations obtained from independent third-party pricing services and market makers subject to any decision by our board of directors to approve a fair value determination to reflect significant events affecting the value of these investments. We value
investments for which market quotations are not readily available at fair value as approved, in good faith, by our board of directors based on input from Saratoga Investment Advisors, the audit committee of our board of directors and a third party
independent valuation firm. 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. We use a third-party independent valuation
firm to value our investment in the subordinated notes of Saratoga CLO and the Class F-R-2 Notes and
Class G-R-2 Notes tranches of the Saratoga CLOs every quarter. In addition, all our investments are subject to the following valuation process:  

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

Our board of directors discusses the valuations and approves the fair value of each investment, in good faith,
based on the input of Saratoga Investment Advisors, independent valuation firm (to the extent applicable) and the audit committee of our board of directors. 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.  72




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##### Table of Contents

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. 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.  73




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##### Table of Contents

On February 11, 2020, the Company entered into an unsecured loan agreement (CLO 2013-1 Warehouse 2 Loan) with Saratoga Investment Corp. CLO 2013-1 Warehouse 2, Ltd
(CLO 2013-1 Warehouse 2), a wholly-owned subsidiary of Saratoga CLO, pursuant to which CLO 2013-1 Warehouse 2 may borrow from time
to time up to $20.0 million from the Company in order to provide capital necessary to support warehouse activities. The CLO 2013-1 Warehouse 2 Loan, which expires on August 20, 2021, bears
interest at an annual rate of 3M USD LIBOR + 7.5%. During the year ended February 29, 2020, the maximum amount invested by us in CLO 2013-1 Warehouse 2 amounted to $2.5 million. As of
February 29, 2020, the fair value of our investment in CLO 2013-1 Warehouse 2 was $2.2 million. The Saratoga CLO remains effectively 100% owned and managed by Saratoga Investment Corp. We receive a base management fee of 0.10% per annum
and a subordinated management fee of 0.40% per annum of the outstanding principal amount of Saratoga CLOs assets, paid quarterly to the extent of available proceeds. Prior to the second refinancing and the issuance of the 2013-1 Amended CLO Notes, we received a base management fee of 0.25% per annum and a subordinated management fee of 0.25% per annum of the outstanding principal amount of Saratoga CLOs assets, paid quarterly
to the extent of available proceeds. Following the third refinancing and the issuance of the
2013-1 Reset CLO Notes on December 14, 2018, we are no longer entitled to an incentive management fee equal to 20.0% of excess cash flow to the extent the Saratoga CLO subordinated notes receive an
internal rate of return paid in cash equal to or greater than 12.0%. Interest income on our investment in Saratoga CLO is recorded using
the effective interest method in accordance with the provisions of 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. ASC 606 In May 2014, the
FASB issued ASU 2014-09, Revenue from Contractswith 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;  74




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##### Table of Contents



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)). 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.  75




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##### Table of Contents

The terms of the investment advisory and management agreement with Saratoga Investment
Advisors, our current investment adviser, are substantially similar to the terms of the investment advisory and management agreement we had entered into with GSCP (NJ), L.P., our former investment adviser, except for the following material
distinctions in the fee terms:  

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

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

We will no longer have deferral rights regarding incentive fees in the event that the distributions to
stockholders and change in net assets is less than 7.5% for the preceding four fiscal quarters. Capital Gains Incentive Fee The Company records an expense accrual relating to the capital gains incentive fee payable by the Company to its Manager when the
unrealized gains on its investments exceed all realized capital losses on its investments given the fact that a capital gains incentive fee would be owed to the Manager if 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 for the period. 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 statement and disclosures. SEC Disclosure Update and Simplification In March 2019, the SEC adopted the final rule under SEC Release No. 33-10618,Fast Act
Modernization and Simplification of Regulation S-K, amending certain disclosure requirements. The amendments are intended to simplify certain disclosure requirements and to provide for a consistent set of
rules to govern incorporating information by reference and hyperlinking, improve readability and navigability of disclosure documents, and discourage repetition and disclosure of immaterial information. The Company has adopted the final rule, as
applicable under SEC Release No. 33-10618 and determined the effect of the adoption of the simplification rules on financial statements will be limited to the modification and removal of certain
disclosures.  76




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##### Table of Contents

Portfolio and investment activity Investment Portfolio Overview  February 29,2020


February 28,2019


February 28,2018($ in millions)Number of investments(1)


74



58



55Number of portfolio companies(2)


35



31



30Average investment per portfolio company(2)

$
12.9


$
11.8


$
10.9Average investment size(1)

$
6.3


$
6.5


$
6.0Weighted average maturity(3)


3.1 yrs



3.6yrs



3.5yrsNumber of industries


9



8



10Non-performing or delinquent investments (fair
value)

$
2.1


$
5.7


$
9.5Fixed rate debt (% of interest earning portfolio)(3)

$
29.7(6.8
%)

$
55.7(16.3
%)

$
82.5(26.5
%)Fixed rate debt (weighted average current coupon)(3)


9.3
%


10.4
%


12.2
%Floating rate debt (% of interest earning portfolio)(3)

$
404.4(93.2
%)

$
285.0(83.7
%)

$
229.3(73.5
%)Floating rate debt (weighted average current spread overLIBOR)(3)(4)


8.0
%


8.6
%


8.8
%  (1)
Excludes our investment in the subordinated notes of Saratoga CLO. (2)
At February 29, 2020, 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 and loan to Saratoga
Investment Corp. CLO 2013-1 Warehouse 2, Ltd. 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, 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 29, 2020, we invested $204.6 million in new or existing portfolio companies and had
$167.3 million in aggregate amount of exits and repayments resulting in net investments of $37.3 million for the year. 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. Portfolio Composition Our portfolio composition at February 29, 2020, February 28, 2019 and February 28, 2018 at fair value was as follows:  February 29, 2020


February 28, 2019


February 28, 2018Percentageof TotalPortfolio


WeightedAverageCurrentYield


Percentageof TotalPortfolio


WeightedAverageCurrentYield


Percentageof TotalPortfolio


WeightedAverageCurrentYieldSyndicated loans



%



%



%



%


1.2
%


5.9
%First lien term loans


71.3



9.6



50.5



10.9



57.6



11.1Second lien term loans


15.1



10.7



31.3



11.7



27.7



11.9Unsecured term loans


0.9



9.3



0.5



0.0







Structured finance securities


6.7



11.4



8.8



14.6



4.8



21.2Equity interests


6.0







8.9



3.1



8.7



3.6Total


100.0
%


9.3
%


100.0
%


10.7
%


100.0
%


11.1
%  77




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##### Table of Contents

At February 29, 2020, our investment in the subordinated notes of Saratoga CLO, a
collateralized loan obligation fund, had a fair value of $22.6 million and constituted 4.6% of our portfolio. This investment constitutes a first loss position in a portfolio that, as of February 29, 2020 and February 28, 2019, was
composed of $528.4 million and $510.3 million, respectively, in aggregate principal amount of primarily senior secured first lien term loans. In addition, as of February 29, 2020, we also own $2.5 million in aggregate principal
of the F-R-2 Notes and $7.5 million in aggregate principal of the G-R-2 Notes in the
Saratoga CLO, that only rank senior to the subordinated notes. At February 29, 2020, our investment in CLO 2013-1 Warehouse 2, a wholly-owned subsidiary of Saratoga CLO, had a fair value of
$2.2 million and constituted 0.5% of our portfolio. 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 29, 2020, $494.2 million or 98.6% 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 $1.4 million. 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 investment were in default with a fair value of $0.01 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 29, 2020 and February 28, 2019 was as follows: Saratoga Investment Corp.  February 29, 2020


February 28, 2019Color Score

InvestmentsatFair Value


Percentageof Total  Portfolio


InvestmentsatFair Value


Percentageof Total  Portfolio($ in thousands)Green

$
429,784



88.5
%

$
336,061



83.6
%Yellow


2,141



0.5



4,600



1.1Red


2,137



0.4



6



0.0N/A(1)


51,570



10.6



61,353



15.3Total

$
485,632



100.0
%

$
402,020



100.0
%  (1)
Comprised of our investment in the subordinated notes of Saratoga CLO and equity interests. The change in reserve from $0.6 million as of February 28, 2019 to $1.2 million as of February 29,
2020 primarily related to the increase in reserve for the year for our investment in Roscoe Medical, Inc. and My Alarm Center, LLC, offset by the decrease in reserve for the year from the sale of M/C Acquisition, L.L.C.  78




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##### Table of Contents

The CMR distribution of Saratoga CLO investments at February 29, 2020 and
February 28, 2019 was as follows: Saratoga CLO  February 29, 2020


February 28, 2019Color Score

InvestmentsatFair Value


Percentageof Total  Portfolio


InvestmentsatFair Value


Percentageof Total  Portfolio($ in thousands)Green

$
456,767



91.1
%

$
462,171



92.7
%Yellow


37,446



7.5



28,839



5.8Red


6,787



1.4



7,379



1.5N/A(1)


0



0.0



16



0.0Total

$
501,000



100.0
%

$
498,405



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 29, 2020 and February 28, 2019: Saratoga Investment Corp.  February 29, 2020


February 28, 2019InvestmentsAtFair Value


Percentageof TotalPortfolio


InvestmentsAtFair Value


Percentageof TotalPortfolio($ in thousands)Business Services

$
285,356



58.8
%

$
252,676



62.8
%Education


77,341



15.9



48,076



12.0Healthcare Services


69,072



14.2



57,342



14.3Structured Finance Securities(1)


34,675



7.1



35,328



8.8Property Management


11,503



2.4







Metals


3,130



0.7



2,827



0.7Food and Beverage


2,141



0.4



2,100



0.5Consumer Services


1,997



0.4



3,166



0.8Consumer Products


417



0.1



505



0.1Total

$
485,632



100.0
%

$
402,020



100.0
%  (1)
At February 29, 2020, comprised of our investment in the subordinated notes, Class F-R-2 Notes and Class G-R-2 Notes of Saratoga CLO and Saratoga Investment Corp.
CLO 2013-1 Warehouse 2, Ltd. 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.  79




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##### Table of Contents

The following table shows Saratoga CLOs portfolio composition by industry grouping at
fair value at February 29, 2020 and February 28, 2019: Saratoga CLO  February 29, 2020


February 28, 2019InvestmentsatFair Value


Percentageof TotalPortfolio


InvestmentsatFair Value


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

$
87,957



17.6
%

$
74,638



15.0
%Services: Business


45,735



9.1



36,575



7.3Healthcare & Pharmaceuticals


39,978



8.0



39,242



7.9High Tech Industries


32,897



6.6



38,886



7.8Services: Consumer


28,327



5.6



24,712



5.0Telecommunications


28,317



5.6



28,156



5.6Aerospace & Defense


25,093



5.0



16,836



3.4Beverage Food & Tobacco


21,637



4.3



23,436



4.7Media: Advertising Printing & Publishing


19,808



4.0



31,799



6.4Hotel Gaming & Leisure


16,883



3.4



15,373



3.1Containers Packaging & Glass


15,753



3.1



10,033



2.0Consumer goods: Non-durable


15,700



3.1



15,528



3.1Chemicals Plastics & Rubber


14,689



2.9



15,841



3.2Retail


14,538



2.9



23,018



4.6Automotive


13,820



2.8



13,373



2.7Consumer goods: Durable


11,674



2.3



6,324



1.3Capital Equipment


9,551



1.9



9,638



1.9Media: Broadcasting & Subscription


7,959



1.6



10,410



2.1Construction & Building


7,617



1.5



13,293



2.7Utilities: Oil & Gas


7,306



1.5



2,953



0.6Transportation: Cargo


7,054



1.4



11,137



2.2Forest Products & Paper


5,385



1.1



4,555



0.9Utilities: Electric


4,752



1.0



2,941



0.6Metals & Mining


4,112



0.8



5,048



1.0Energy: Oil & Gas


3,559



0.7



763



0.1Energy: Electricity


3,357



0.7



5,059



1.0Media: Diversified & Production


2,711



0.5



13,086



2.6Wholesale


1,928



0.4







Transportation: Consumer


1,914



0.4



4,773



1.0Environmental Industries


989



0.2



979



0.2Total

$
501,000



100.0
%

$
498,405



100.0
%  80




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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 29, 2020 and February 28, 2019.
The geographic composition is determined by the location of the corporate headquarters of the portfolio company.  February 29, 2020


February 28, 2019InvestmentsatFair Value


Percentageof TotalPortfolio


InvestmentsatFair Value


Percentageof TotalPortfolio($ in thousands)Southeast

$
165,353



34.0
%

$
130,604



32.5
%West


99,390



20.5



10,777



2.7Midwest


75,528



15.5



116,388



29.0Southwest


61,456



12.7



50,236



12.5Northeast


18,047



3.7



19,061



4.7Northwest


9,981



2.1



8,636



2.1Other(1)


55,877



11.5



66,318



16.5Total

$
485,632



100.0
%

$
402,020



100.0
%  (1)
At February 29, 2020, comprised of our investment in the subordinated notes, Class F-R-2 Notes and Class G-R-2 Notes of Saratoga CLO, Saratoga Investment Corp.
CLO 2013-1 Warehouse 2, Ltd and foreign investments. 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 and foreign
investments. Results of operations Operating results for the fiscal years ended February 29, 2020, February 28, 2019 and February 28, 2018 were as follows:  For the Year EndedFebruary 29,2020


February 28,2019


February 28,2018($ in thousands)Total investment income

$
58,448


$
47,708


$
38,615Total operating expenses


43,587



29,406



25,883Loss on extinguishment of debt


1,583







Net investment income


13,278



18,302



12,732Net realized gains (losses) from investments


42,877



4,874



(5,878
)Net change in unrealized appreciation (depreciation) on investments


(771
)


(2,900
)


10,825Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments


355



(1,767
)


Net increase in net assets resulting from operations

$
55,739


$
18,509


$
17,679  81




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##### Table of Contents

Investment income The composition of our investment income for the fiscal years ended February 29, 2020, February 28, 2019 and February 28, 2018
were as follows:  For the Year EndedFebruary 29,2020


February 28,2019


February 28,2018($ in thousands)Interest from investments

$
48,047


$
43,297


$
35,110Interest from cash and cash equivalents


536



65



28Management fee income


2,504



1,722



1,509Incentive fee income






633



591Structuring and advisory fee income


5,286



1,355



825Other income


2,075



636



552Total investment income

$
58,448


$
47,708


$
38,615 For the fiscal year ended February 29, 2020, total investment income increased $10.7 million, or 22.5%
compared to the fiscal year ended February 28, 2019. Interest income from investments increased $4.7 million, or 11.0%, to $48.0 million for the year ended February 29, 2020 from $43.3 million for the fiscal year ended February 28,
2019. This reflects an increase of 20.8% in total investments to $485.6 million at February 29, 2020 from $402.0 million at February 28, 2019. At February 29, 2020, the weighted average current yield on investments was 9.3%
compared to 10.7% at February 28, 2019, which offset some of the interest income increase. 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 29, 2020 and February 28, 2019, total PIK income was $4.4 million and $4.2 million,
respectively. This increase was primarily due to the increase in investment in Easy Ice, LLC, which primarily generated PIK interest income. The Company sold its interest in Easy Ice, LLC during the year ended February 29, 2020. 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. Following the third refinancing of the CLO on December 14, 2018, the Company is no longer entitled to receive the incentive fee. For the
years 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 fiscal year ended February 29, 2020, February 28, 2019 and February 28, 2018, total structuring and advisory fee income
was $5.3 million, $1.4 million and $0.8 million, respectively. Structuring and advisory fee income represents fee income earned and received performing certain investment and advisory activities during the closing of new investments. For the fiscal year ended February 29, 2020, February 28, 2019 and February 28, 2018, other income was $2.1 million,
$0.6 million and $0.6 million, respectively. Other income includes dividends received, origination fees and prepayment income fees and is recorded in the consolidated statements of operations when earned.  82




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Operating expenses The composition of our operating expenses for the years ended February 29, 2020, February 28, 2019 and February 28, 2018 were as
follows:  For the Year EndedFebruary 29,2020


February 28,2019


February 28,2018($ in thousands)Interest and debt financing expenses

$
14,683


$
13,126


$
10,939Base management fees


8,099



6,879



5,846Incentive management fees


14,164



4,891



4,334Professional fees


1,684



1,849



1,591Administrator expenses


2,131



1,896



1,646Insurance


260



253



260Directors fees and expenses


278



291



197General and administrative and other expenses


1,326



1,248



1,085Income tax benefit


962



(1,027
)


Excise tax expense (credit)










(15
)Total operating expenses

$
43,587


$
29,406


$
25,883 For the year ended February 29, 2020, total operating expenses increased $14.2 million, or 48.2% compared
to the year ended February 28, 2019. 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 29, 2020, the increase in interest and debt financing expenses is primarily attributable to an increase in
the average outstanding borrowings of the 2025 Notes, partially offset by a decrease in the average outstanding borrowings of the 2023 Notes, which were redeemed during the fiscal year. On December 21, 2019 and February 7, 2020, the
Company redeemed $50.0 million and $24.5 million, respectively, in aggregate principal amount of the $74.5 million in aggregate principal amount of issued and outstanding 2023 Notes. Total average outstanding debt increased from $249.3 million for the year ended February 28, 2019 to $273.8 million for the
year ended February 29, 2020. For the year ended February 29, 2020, the weighted average interest rate on our outstanding indebtedness was 4.71% compared to the 4.62% for the year ended February 28, 2019. The increase in weighted
average interest rate was primarily driven by an increase of $34.5 million in the average outstanding borrowings from the issuance of the 2025 Notes, which carry a fixed rate 6.25% interest rate. The average outstanding borrowings of the 2023
Notes decreased $11.3 million from $74.5 million for the year ended February 28, 2019 to $63.2 million for the year ended February 29, 2020. As noted above, the 2023 Notes were redeemed during the fiscal year ended
February 29, 2020. At February 29, 2020 and February 28, 2019, the SBA debentures represented 71.4% and 52.7% of overall debt, respectively. 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 year ended February 29, 2020, base management fees increased $1.2 million, or
17.7% compared to the fiscal year ended February 28, 2019. 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 $393.1 million as of February
28, 2019 to $462.8 million as of February 29, 2020.  83




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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 29, 2020, incentive
management fees increased $9.3 million, or 189.6% compared to the fiscal year ended February 28, 2019. The first part of the incentive management fees increased this year from $4.6 million for the year ended February 28, 2019 to
$5.8 million for the year ended February 29, 2020, 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 increased from $0.3 million for the fiscal year ended February 28, 2019 to $8.4 million for the fiscal year ended February 29, 2020, reflecting the net realized and unrealized gain on
investments this year, primarily related to our Censis Technologies, Inc. and Easy Ice, LLC investments and also including the impact of the deferred taxes on unrealized appreciation. 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 gain on investments this year, including the impact of the deferred taxes on unrealized appreciation. For the year ended February 29, 2020, professional fees decreased $0.2 million, or 8.9% compared to the fiscal year ended
February 28, 2019. This decrease primarily relates to decreased legal and accounting fees this year, as the shelf registration statement last year led to higher fees. 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. 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 29, 2020, administrator expenses increased $0.2 million, or 12.4% compared to the fiscal year ended
February 28, 2019, which reflects an increase to the cap on the payment or reimbursement of expenses by the Company from $2.0 million to $2.225 million, effective August 1, 2019. 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. As discussed above, the increase in interest and debt financing expenses for the years ended February 29, 2020, February 28, 2019
and February 28, 2018 is primarily attributable to an increase in the average amount of outstanding debt as compared to the prior years. For the fiscal years ended February 29, 2020, February 28, 2019 and February 28, 2018, the average borrowings outstanding under
the Credit Facility was approximately $0.6 million, $3.4 million and $7.1 million, respectively, and the average weighted average interest rate on the outstanding borrowing under the Credit Facility was 6.66%, 7.10% and 6.02%,
respectively. For the fiscal years ended February 29, 2020, February 28, 2019 and February 28, 2018, the average borrowings
outstanding of SBA debentures was $150.0 million, $146.0 million and $130.1 million, respectively. For the years ended February 29, 2020, February 28, 2019 and February 28, 2018, the weighted average interest rate on
the outstanding borrowings of the SBA debentures was 3.23%, 3.20% and 3.14%, respectively. During the year ended February 29, 2020
and February 28, 2019, the average dollar amount of our 6.25% fixed-rate 2025 Notes outstanding was $60.0 million and $25.5 million, respectively. As discussed above, during the fourth quarter of 2020 fiscal year, the Company redeemed $74.45 million in aggregate principal amount of
issued and outstanding 2023 Notes. During the years ended February 29, 2020, 2019 and 2018, the average dollar amount of our 6.75% fixed-rate 2023 Notes outstanding was $63.2 million,
$74.5 million and $74.5 million, respectively.  84




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For the years ended February 29, 2020, February 28, 2019 and February 28,
2018, we recognized income tax expense (benefit) of $1.0 million, $(1.0) million and $0.0 million, respectively. This relates to net deferred federal and state income tax expense (benefit) with respect to operating gains and losses and
income derived from equity investments held in the taxable blockers. Net realized gains (losses) on sales of investments For the fiscal year ended February 29, 2020, the Company had $167.3 million of sales, repayments, exits or restructurings
resulting in $42.9 million of net realized gains. The most significant realized gains and losses during the year ended February 29, 2020 were as follows (dollars in thousands): Fiscal year ended February 29, 2020  Issuer

Asset Type

Gross        Proceeds


Cost


NetRealized            GainEasy Ice, LLC

Equity Interests

$
41,928


$
10,703


$
31,225Censis Technologies, Inc.

Equity Interests


12,280



999



11,281 The $31.2 million and $11.3 million of net realized gains was from the sales of the equity positions
in Easy Ice, LLC and Censis Technologies, Inc., respectively. 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):  85




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##### Table of Contents

Fiscal year ended February 28, 2019Issuer

Asset Type


Gross          Proceeds


Cost


NetRealized            GainHMN Holdco, LLC


Equity Interests


$
642


$
62


$
580HMN Holdco, LLC


Equity Interests



4,539



438



4,101 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


NetRealizedGain            (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 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. Net change in unrealized appreciation (depreciation) on investments For the year ended February 29, 2020, our investments had a net change in unrealized depreciation of $0.8 million versus a net change in
unrealized depreciation of $2.9 million for the year ended February 28, 2019. The most significant cumulative changes in unrealized appreciation (depreciation) for the year ended February 29, 2020, were the following (dollars in
thousands): Fiscal year ended February 29, 2020  Issuer

Asset Type

Cost


FairValue


TotalUnrealizedAppreciation(Depreciation)


YTD Change inUnrealizedAppreciation(Depreciation)Easy Ice, LLC

Second Term Lien Loan & Equity Interests

$



$



$



$
(3,817
)GreyHeller LLC

First Term Lien Loan & Equity Interests


7,821



9,982



2,161



1,331Netreo Holdings, LLC

First Term Lien Loan & Equity Interests


8,273



12,029



3,756



1,655 The $3.8 million net change in unrealized depreciation in our investment in Easy Ice, LLC was driven by
the completion of a sales transaction. In recognizing a realized gain as a result of the sale, unrealized appreciation was adjusted to zero, which resulted in a $3.8 million change in unrealized depreciation for the year. The $1.3 million net change in unrealized appreciation in our investment GreyHeller LLC was driven by increased operating margins and an
increase in overall financial performance. The $1.7 million net change in unrealized appreciation in our investment in Netreo
Holdings, LLC was driven by growth and improved financial performance.  86




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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 net change in unrealized appreciation (depreciation) for the year ended
February 28, 2019, were the following (dollars in thousands): 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 FinanceSecurities


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. Changes in net assets resulting from operations For the fiscal years ended February 29, 2020, February 28, 2019 and February 28, 2018, we recorded a net increase in net assets
resulting from operations of $55.7 million, $18.5 million and $17.7 million, respectively. Based on 9,319,192 weighted average common shares outstanding as of February 29, 2020, our per share net increase in net assets resulting from
operations was $5.98 for the fiscal year ended February 29, 2020. This compares to a per share net increase in net assets resulting from operations of $2.63 for the fiscal year ended February 28, 2019 (based on 7,046,686 weighted average
common shares outstanding as of February 28, 2019), and 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).  87




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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, in accordance with certain applicable provisions of the Code and the Treasury regulations and a revenue procedure issued by
the Internal Revenue Service (IRS), a RIC may treat a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder may elect to receive his or her entire distribution in either cash or stock of the
RIC subject to a limitation that the aggregate amount of cash to be distributed to all stockholders must be at least 20% of the aggregate declared distribution. We may rely on the revenue procedure in future periods to satisfy our RIC distribution
requirement. Also, as a BDC, we generally are required to meet a coverage ratio of total assets, less liabilities and indebtedness not
represented by senior securities, to total senior securities, which include all of our borrowings and any outstanding preferred stock, of at least 200.0%, 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 607.1% as of February 29, 2020 and
234.5% as of February 28, 2019. 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 April 24, 2020. 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.  88




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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
subsidiaries) 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%.  

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.  89




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##### Table of Contents

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%;  

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.  90




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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;  

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%. On April 24, 2020, we entered
into a fourth amendment to the Credit Facility with Madison Capital Funding LLC to, among other things:  

permit certain amendments related to the Paycheck Protection Program (Permitted PPP Amendment) to
Loan Asset Documents;  

exclude certain debt and interest amounts allowed by the Permitted PPP Amendments from certain calculations
related to Net Leverage Ratio, Interest Coverage Ratio and EBITDA; and  

exclude such Permitted PPP Amendments from constituting a Material Modification. As of February 29, 2020, 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, 2019, we had no outstanding borrowings under the Credit Facility and $150.0 million of SBA-guaranteed debentures outstanding. Our borrowing base
under the Credit Facility at February 29, 2020 and February 28, 2019 was $35.6 million and $30.6 million, respectively. Our
asset coverage ratio, as defined in the 1940 Act, was 607.1% as of February 29, 2020 and 234.5% as of February 28, 2019.  91




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SBA-guaranteed debentures In addition, we, through two wholly-owned subsidiaries, sought and obtained licenses 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 and on August 14, 2019, our
wholly-owned subsidiary, Saratoga Investment Corp. SBIC II LP, also received a license. 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 subsidiaries to obtain leverage by
issuing SBA-guaranteed debentures. SBA-guaranteed debentures are non-recourse, interest only debentures with interest payable semi-annually and have a ten-year maturity. The principal amount of SBA-guaranteed debentures is not required to be paid prior to maturity but may be prepaid at any time without penalty. The interest rate of SBA-guaranteed debentures is
fixed on a semi-annual basis at a market-driven spread over U.S. Treasury Notes with 10-year maturities. SBA regulations previously limited 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. This maximum has been increased by SBA regulators for new licenses to $175.0 million of
SBA debentures when it has at least $87.5 million in regulatory capital. The new license will provide up to $175.0 million in additional long-term capital in the form of SBA-guaranteed debentures.
The SBIC LP and SBIC II LP are regulated by the SBA. As a result of the 2016 omnibus spending bill signed into law in December 2015, the maximum amount of SBA-guaranteed debentures that affiliated SBIC funds
can have outstanding was increased from $225.0 million to $350.0 million. Our wholly-owned SBIC subsidiaries are able to borrow funds from the SBA against regulatory capital (which approximates equity capital) that is paid in and is
subject to customary regulatory requirements including but not limited to an examination by the SBA. With this license approval, Saratoga will grow its SBA relationship from $150.0 million to $325.0 million of committed capital. We received exemptive relief from the SEC to permit us to exclude the debt of our SBIC subsidiaries guaranteed by the SBA from the definition
of senior securities in the asset coverage test under the 1940 Act. This allows us increased flexibility under the asset coverage test by permitting us to borrow up to $325.0 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 Investment Company Act, as amended. The 150.0% asset coverage ratio became effective on April 16, 2019. As of February 29, 2020, our SBIC LP subsidiary had $75.0 million in regulatory capital and $150.0 million SBA-guaranteed debentures outstanding and our SBIC II LP subsidiary had $50.0 million in regulatory capital and did not have any SBA-guaranteed debentures
outstanding. 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.  92




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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. On December 21, 2019 and February 7, 2020, the Company redeemed $50.0 million and $24.5 million, respectively, in aggregate principal amount of the
$74.5 million in aggregate principal amount of issued and outstanding 2023 Notes and are no longer listed on the NYSE. 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 31, 2021, may be redeemed in whole or in part at any time or from time to time at our option. The net proceeds from the offering were used for general corporate purposes in accordance with our investment objective and
strategies. Financing costs of $1.6 million related to the 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. 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 29, 2020, the total 2025 Notes outstanding was $60.0 million. In connection with the issuance of the 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).  93




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

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 2025 Notes and the Trustee, for the period of time during which the 2025 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. At February 29, 2020 and February 28, 2019, the fair value of total cash and cash equivalents, cash and cash equivalents in reserve
accounts and total investments by major category are as follows:  February 29, 2020


February 28, 2019Fair Value


Percentage of Total


Fair Value


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

$
24,599



4.7
%

$
30,799



6.6
%Cash and cash equivalents, reserve accounts


14,851



2.8



31,295



6.7First lien term loans


346,233



66.0



202,846



43.7Second lien term loans


73,570



14.0



125,786



27.1Unsecured term loans


4,346



0.8



2,100



0.5Structured finance securities


32,470



6.2



35,328



7.6Equity interests


29,013



5.5



35,960



7.8Total

$
525,082



100.0
%

$
464,114



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. Subsequent to this, BB&T Capital Markets and B. Riley FBR, Inc. were also added to the agreement. On July 11, 2019, the amount of the common
stock to be offered through this offering was increased to $70.0 million, and on October 8, 2019, the amount of the common stock to be offered was increased to $130.0 million. For the year ended February 29, 2020, the Company
sold 3,427,346 shares for gross proceeds of $85.9 million at an average price of $25.06 for aggregate net proceeds of $84.7 million (net of transaction costs) and as of February 29, 2020, the Company sold 3,922,018 shares for gross
proceeds of $97.1 million at an average price of $24.77 for aggregate net proceeds of $95.9 million (net of transaction costs).  94




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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, January 8, 2019 and January 7, 2020,
the Companys board of directors extended the open market share repurchase plan for another year to October 15, 2018, January 15, 2020 and January 15, 2021, respectively, each time leaving the number of shares unchanged at
600,000 shares of its common stock. On May 4, 2020, the Board of Directors increased the share repurchase plan to 1.3 million shares of common stock. As of February 29, 2020, 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 January 7, 2020, the Company
declared a dividend of $0.56 per share, which was paid on February 6, 2020, to common stockholders of record on January 24, 2020. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock,
pursuant to the Companys DRIP. Based on shareholder elections, the dividend consisted of approximately $5.4 million in cash and 35,682 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend
payment. The number of shares of common stock comprising the stock portion was calculated based on a price of $25.44 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on January 24, 27,
28, 29, 30, 31 and February 3, 4, 5 and 6, 2020. On August 27, 2019, the Company declared a dividend of $0.56 per share, which
was paid on September 26, 2019, to common stockholders of record on September 13, 2019. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to the Companys DRIP. Based
on shareholder elections, the dividend consisted of approximately $4.5 million in cash and 34,575 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock
comprising the stock portion was calculated based on a price of $23.34 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on September 13, 16, 17, 18, 19, 20, 23, 24, 25 and 26, 2019. On May 28, 2019, our board of directors declared a dividend of $0.55 per share, which was paid on June 27, 2019, to common
stockholders of record as of June 13, 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
$3.6 million in cash and 31,545 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of
$22.65 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on June 14, 17, 18, 19, 20, 21, 24, 25, 26 and 27, 2019. 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 95.0% of the volume weighted average trading price per share of the common stock on March 15, 18, 19, 20, 21, 22, 25, 26, 27 and 28, 2019. 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.  95




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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 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. 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 95.0% of the volume weighted average trading price per share of the common stock on December 13, 14, 15, 18, 19, 20, 21, 22, 26 and 27, 2017. 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 95.0% of the volume weighted average trading price per share of the common stock on September 13, 14, 15, 18, 19, 20, 21, 22, 25 and 26, 2017. 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 95.0% of the volume weighted average trading price per share of the common stock on June 14, 15, 16, 19, 20, 21, 22, 23, 26 and 27, 2017. 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 95.0% of the volume weighted average trading price per share of the common stock on March 15, 16, 17, 20, 21, 22, 23, 24, 27 and 28, 2017. 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 95.0% of the volume weighted average trading price per share of the common stock on January 27, 30, 31 and February 1, 2, 3, 6, 7, 8 and 9, 2017.  96




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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 95.0% of the volume weighted average trading price per share of the common stock on October 27, 28, 31 and November 1, 2, 3, 4, 7, 8 and 9, 2016. 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 95.0% of the volume weighted average trading price per share of the common stock on August 22, 23, 24, 25, 26, 29, 30, 31 and September 1 and 2, 2016. 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 95.0% of the volume weighted average trading price per share of the common stock on July 27, 28, 29 and August 1, 2, 3, 4, 5, 8 and 9, 2016. 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 95.0% of the volume weighted average trading price per share of the common stock on April 14, 15, 18, 19, 20, 21, 22, 25, 26 and 27, 2016. 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 95.0% of the volume weighted average trading price per share of the common stock on February 16, 17, 18, 19, 22, 23, 24, 25, 26 and 29, 2016. 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 95.0% of the volume weighted average trading price per share of the common stock on November 16, 17, 18, 19, 20, 23, 24, 25, 27 and 30, 2015. 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 95.0% of the volume weighted average trading price per share of the common stock on August 18, 19, 20, 21, 24, 25, 26, 27, 28 and 31, 2015.  97




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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 95.0% of the volume weighted average trading price per share of the common stock on May 22, 26, 27, 28, 29 and June 1, 2, 3, 4, and 5, 2015. 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 95.0% of the volume weighted average trading price per share of the common stock on May 15, 18, 19, 20, 21, 22, 26, 27, 28 and 29, 2015. 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 95.0% of the volume weighted average trading price per share of the common stock on February 13, 17, 18, 19, 20, 23, 24, 25, 26 and 27, 2015. 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 95.0% of the volume weighted average trading price per share of the common stock on November 14, 17, 18, 19, 20, 21, 24, 25, 26 and 28, 2014. 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.  98




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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 at February 29, 2020:  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











79,000



71,0002025 Notes


60,000















60,000Total Long-Term Debt Obligations

$
210,000


$



$



$
79,000


$
131,000  99




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Off-balance sheet arrangements At February 29, 2020 and February 28, 2019, the Companys off-balance sheet arrangements
consisted of $64.1 million and $4.5 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 29, 2020 and February 28, 2019 is shown in the table below (dollars in thousands):  February 29, 2020


February 28, 2019At Companys discretioninMotionNow, Inc.

$
3,000


$
Omatic Software, LLC


1,000



1,000Passageways, Inc.


5,000



PDDS Buyer, LLC


5,000



Saratoga Investment Corp. CLO 2013-1 Warehouse 2,
Ltd


17,500



Top Gun Pressure Washing, LLC


5,000



Village Realty Holdings LLC


10,000



Total


46,500



1,000At portfolio companys discretionsatisfaction of certain financial and
nonfinancial covenants requiredArbiterSports, LLC

$
1,000


$
Axiom Purchaser, Inc.


1,000



1,000CoConstruct, LLC


3,500



Davisware, LLC


2,000



Destiny Solutions Inc.






1,500GDS Holdings US, Inc.






1,000GoReact


2,000



HemaTerra Holding Company, LLC


4,000



Passageways, Inc.


3,000



Village Realty Holdings LLC


1,124



17,624



3,500Total

$
64,124


$
4,500 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. In addition, U.S. and global capital markets and credit markets have experienced a higher level of stress due to the global COVID-19 pandemic, which has resulted in
an increase in the level of volatility across such markets and a general decline in value of the securities held by us. 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 29, 2020, we had $210.0 million of borrowings outstanding. There were no borrowings outstanding under the revolving credit facility as of February 29,
2020. In connection with the COVID-19 pandemic, the U.S. Federal Reserve and other central banks have reduced certain interest rates and LIBOR has decreased. A prolonged reduction in interest rates will reduce our gross investment income and could
result in a decrease in our net investment income if such decreases in LIBOR are not offset by a corresponding increase in the spread over LIBOR that we earn on any portfolio investments, a decrease in our operating expenses, including with respect
to our income incentive fee, or a decrease in the interest rate of our floating interest rate liabilities tied to LIBOR.  100




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We have analyzed the potential impact of changes in interest rates on interest income from
investments. Assuming that our investments as of February 29, 2020 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 $2.7 million to our interest income. Conversely, a hypothetical change of a 1.0% decrease in interest rates would cause a corresponding decrease of approximately $0.8 million to our
interest income. Changes in interest rates would have no impact to our current interest and debt financing expense, as all our borrowings
except for our credit facility are fixed rate, and our credit facility is currently undrawn. 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. 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 29, 2020.  Basis      
  Point        Change

Increase(Decrease) inInterest        Income


(Increase)Decreasein Interest        Expense


Increase(Decrease) in NetInvestmentIncome


Increase(Decrease) in NetInvestmentIncome per Share($ in thousands)-100

$
(815
)

$



$
(815
)

$
(0.09
)-50


(746
)






(746
)


(0.08
)-25


(408
)






(408
)


(0.04
)25


467







467



0.0550


1,086







1,086



0.12100


2,672







2,672



0.29200


6,672







6,672



0.72300


10,713







10,713



1.15400


14,754







14,754



1.58 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.  101




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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. 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 29, 2020. Attestation Report of the Registered Public Accounting Firm Our internal control over financial reporting as of February 29, 2020 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.  102




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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


60


Chairman of the Board and Chief Executive Officer


2010



2021Michael J. Grisius


56


President and Director


2011



2020Independent DirectorsSteven M. Looney


70


Director


2007



2022Charles S. Whitman III


78


Director


2007



2022G. Cabell Williams


66


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 29 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.  103




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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 a Partner, Senior Manager and Director of
Farragut Capital Partners, which is a Mezzanine Fund based out of Chevy Chase, Maryland. 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


44


Chief Financial Officer, Chief Compliance Officer, Treasurer and Secretary Henri J. SteenkampMr. Steenkamp, 44 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.  104




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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. Code of Business Conduct and Ethics We have adopted a Code of Business Conduct and Ethics which applies to, among others, our executive officers, including our principal executive
officer and principal financial officer, as well as every officer, director and employee of the Company. Requests for copies should be sent in writing to Saratoga Investment Corp., 535 Madison Avenue, New York, New York 10022. The Companys
Code of Business Conduct and Ethics is also available on our website at www.saratogainvestmentcorp.com. If we make any substantive amendment to, or grant a waiver from, a provision of our Code of Business Conduct and Ethics, we will promptly
disclose the nature of the amendment or waiver on our website at www.saratogainvestmentcorp.com. Practices and Policies Regarding Hedging, Speculative Trading and Pledging of Securities Our insider trading policy generally prohibits the Companys and our Investment Advisers directors, officers and employees from
engaging in any short-term trading, short sales and other speculative transactions involving our securities, including buying or selling puts or calls or other derivative securities based on our securities. In addition, such persons are generally
prohibited under our insider trading policy from entering into hedging or monetization transactions or similar arrangements, as well as pledging our securities in a margin account or as collateral for a loan, except in limited circumstances that are
pre-approved by our chief compliance officer. Nomination of Directors There have been no material changes to the procedures by which stockholders may recommend nominees to our board of directors implemented since
the filing of our Proxy Statement for our 2018 Annual Meeting of Stockholders. Audit Committee The current members of the audit committee are Steven M. Looney (Chairman), Charles S. 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.  105




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##### Table of Contents

The following table sets forth information concerning total compensation earned by or paid
to each of our directors during the fiscal year ended February 29, 2020:  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


91,000



91,000G. Cabell Williams


91,000



91,000  (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 2020, 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 5,
2020, 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 11,217,545 shares of common stock outstanding as of May 5, 2020.
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.  106




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##### Table of Contents

Name of Beneficial Owners

Number of Shares ofCommon StockBeneficially Owned


Percent of        ClassInterested DirectorsChristian L. Oberbeck


1,525,246
(1)


13.6
%Michael J. Grisius


153,725



1.4
%Executive OfficerHenri J. Steenkamp


11,048



*Independent DirectorsSteven M. Looney


2,508



*Charles S. Whitman III


3,183



*G. Cabell Williams


52,193



*All Directors and Executive Officers as a Group


1,747,903



15.6
%Owners of 5% or more of our common stockBlack Diamond Capital Management, L.L.C.(2)


848,800



7.6
%Elizabeth Oberbeck(3)


549,183



4.9
%Thomas V. Inglesby


354,236



3.2
%  *
Less than 1.0% Mr. Oberbeck and Inglesby are affiliates who make up 16.8% of the ownership of SAR.  (1)
Includes 725,435 shares of common stock directly held by Mr. Oberbeck, 217,774 shares of common stock held
by CLO Partners LLC, an entity wholly owned by Mr. Oberbeck, 31,843 shares of common stock directly held by Mr. Oberbecks children, for which Mr. Oberbeck retains the voting rights, 1,011 shares of common stock directly held by
Mr. Oberbecks wife, for which Mr. Oberbeck retains the voting rights, and 549,183 shares of common stock directly held by Elizabeth Oberbeck. See footnote 3 below. (2)
Based on information included in Amendment No. 9 to Schedule 13G filed by Black Diamond Capital
Management, L.L.C. with the SEC on February 14, 2020. 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.  107




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##### Table of Contents

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. 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 29, 2020 and February 28, 2019, the Company incurred the following fees for services provided by
Ernst & Young LLP, including expenses:  Fiscal Year Ended


Fiscal Year EndedFebruary 29, 2020


February 28, 2019Audit Fees

$
647,000


$
725,000Tax Fees


42,000



41,200Total Fees

$
689,000


$
766,200 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 29, 2020


February 28, 2019CLO Audit Fees

$
65,000


$
65,000Tax Services for Companys Subsidiaries






All Other Fees


28,000



26,000Total Fees

$
93,000


$
91,000  108




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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.  109




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##### Table of Contents

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 29, 2020 and February 28, 2019 Consolidated Statements of Operations for the years ended February 29, 2020, February 28, 2019 and February 28, 2018 Consolidated Schedules of Investments as of February 29, 2020 and February 28, 2019 Consolidated Statements of Changes in Net Assets for the years ended February 29, 2020, February 28, 2019 and February 28, 2018 Consolidated Statements of Cash Flows for the years ended February 29, 2020, February 28, 2019 and February 28, 2018 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:  110




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##### Table of Contents

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).4.10

Description of Securities.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).  111




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##### Table of Contents

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).10.6

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 FBR Capital Markets 
& Co. (incorporated by reference to Saratoga Investment Corp.s Post-Effective Amendment No. 3 to Saratoga Investment Corp.s Registration Statement on Form N-2, File No. 333-216344, filed on January 11, 2018).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).10.16

Amendment No. 4 to the Equity Distribution Agreement dated July 
11, 2019, by and among Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Ladenburg Thalmann and Co. Inc., BB&T Capital Markets, a division of BB&T Securities, LLC, and B. Riley FBR, Inc. (incorporated by reference to Post-Effective Amendment
 No. 5 to the registrants Registration Statement on Form N-2, File No. 333-227116, filed on July 12, 2019).10.17

Amendment No. 5 to the Equity Distribution Agreement dated October 
10, 2019, by and among Saratoga Investment Corp., Saratoga Investment Advisors, LLC, Ladenburg Thalmann and Co. Inc., BB&T Capital Markets, a division BB&T Securities, LLC, and B. Riley FBR, Inc. (incorporated by reference to Saratoga Investment
 Corp.s Current Report on Form 8-K filed on October 10, 2019).10.18

Amendment No. 4 to Credit, Security and Management Agreement, dated April 24, 2020, by and among Saratoga Investment Funding LLC, Saratoga
 Investment Corp., Saratoga Investment Advisors, LLC, Madison Capital Funding LLC and U.S. Bank National Association (incorporated by reference to Saratoga Investment Corp.s Current Report on Form 8-K filed on April 29, 2020).  112




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##### Table of Contents

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 Subsidiaries23.1*

Consent of Ernst & Young LLP for Saratoga Investment Corp.23.2*

Consent of Ernst & Young Ltd. for Saratoga Investment Corp. CLO 2013-1, Ltd.23.3*

Consent of Ernst & Young LLP for Saratoga Investment Corp. CLO 2013-1, Ltd.31.1*

Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 193431.2*

Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 193432.1*

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)  *
Filed herewith ITEM 16. FORM 10-K SUMMARY None.  113




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##### Table of Contents

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 6, 2020



By:

/s/ CHRISTIAN L. OBERBECKChristian L. OberbeckChief Executive OfficerBy:

/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 6, 2020Christian L. Oberbeck

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

Member of the Board of Directors

May 6, 2020Michael J. Grisius/s/ HENRI J. STEENKAMP

Chief Financial Officer (Principal Accounting Officer and

May 6, 2020Henri J. Steenkamp

Principal Financial Officer)/s/ STEVEN M. LOONEY

Member of the Board of Directors

May 6, 2020Steven M. Looney/s/ CHARLES S. WHITMAN III

Member of the Board of Directors

May 6, 2020Charles S. Whitman III/s/ G. CABELL WILLIAMS

Member of the Board of Directors

May 6, 2020Cabell Williams  114




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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 29, 2020 and
 February 28, 2019


F-4Consolidated Statements of Operations for the years ended February 29, 2020, February
 28, 2019 and February 28, 2018


F-5Consolidated Statements of Changes in Net Assets for the years ended February
 29, 2020, February 28, 2019 and February 28, 2018


F-6Consolidated Statements of Cash Flows for the years ended February 29, 2020, February
 28, 2019 and February 28, 2018


F-7Consolidated Schedules of Investments as of February 29, 2020 and February 28,
 2019


F-8Notes to Consolidated Financial Statements


F-15  F-1




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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 29, 2020 and February 28, 2019, the related
consolidated statements of operations, changes in net assets, and cash flows for each of the three years in the period ended February 29, 2020, and the related notes (collectively referred to as the consolidated financial
statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at February 29, 2020 and February 28, 2019, 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 29, 2020, 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 29, 2020, 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 6, 2020 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 U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. 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 29, 2020 and February 28, 2019 by correspondence with the portfolio companies, custodians and debt agents. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Ernst & Young LLP We have served as the Companys
auditor since 2006. New York, New York May 6, 2020  F-2




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##### Table of Contents

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 29, 2020, 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 29, 2020,
based onthe COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the 2020 consolidated financial statements of the Company and our report dated May 6, 2020 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 Annual 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 6, 2020  F-3




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##### Table of Contents

Saratoga Investment Corp. Consolidated Statements of Assets and Liabilities  February 29,2020


February 28,2019ASSETSInvestments at fair valueNon-control/Non-affiliate
investments (amortized cost of $418,006,725 and $307,136,188, respectively)

$
420,442,928


$
306,511,427Affiliate investments (amortized cost of $23,998,917 and $18,514,716, respectively)


18,485,854



11,463,081Control investments (amortized cost of $44,293,619 and $76,265,189, respectively)


46,703,192



84,045,212Total investments at fair value (amortized cost of $486,299,261 and $401,916,093,
respectively)


485,631,974



402,019,720Cash and cash equivalents


24,598,905



30,799,068Cash and cash equivalents, reserve accounts


14,851,447



31,295,326Interest receivable (net of reserve of $1,238,049 and $647,210, respectively)


4,810,456



3,746,604Due from affiliate (See Note 6)






1,673,747Management fee receivable


272,207



542,094Other assets


701,007



595,543Total assets

$
530,865,996


$
470,672,102LIABILITIESRevolving credit facility

$



$
Deferred debt financing costs, revolving credit facility


(512,628
)


(605,189
)SBA debentures payable


150,000,000



150,000,000Deferred debt financing costs, SBA debentures payable


(2,561,495
)


(2,396,931
)2023 Notes payable






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






(1,919,620
)2025 Notes payable


60,000,000



60,000,000Deferred debt financing costs, 2025 notes payable


(2,046,735
)


(2,377,551
)Base management and incentive fees payable


15,800,097



6,684,785Deferred tax liability


1,347,363



739,716Accounts payable and accrued expenses


1,713,157



1,615,443Interest and debt fees payable


2,234,042



3,224,671Directors fees payable


61,500



62,000Due to manager


543,842



319,091Total liabilities

$
226,579,143


$
289,796,915Commitments and contingencies (See Note 8)NET ASSETSCommon stock, par value $.001, 100,000,000 common shares authorized, 11,217,545 and 7,657,156
common shares issued and outstanding, respectively

$
11,218


$
7,657Capital in excess of par value


289,476,991



203,552,800Total distributable earnings (loss)


14,798,644



(22,685,270
)Total net assets


304,286,853



180,875,187Total liabilities and net assets

$
530,865,996


$
470,672,102NET ASSET VALUE PER SHARE

$
27.13


$
23.62 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 29,2020


February 28,2019


February 28,2018INVESTMENT INCOMEInterest from investmentsInterest income:Non-control/Non-affiliate
investments

$
36,252,113


$
33,329,539


$
26,648,380Affiliate investments


1,230,578



963,289



886,948Control investments


6,175,120



4,785,044



4,768,534Payment-in-kind
interest income:Non-control/Non-affiliate
investments


816,041



780,112



984,305Affiliate investments


167,836



150,284



80,460Control investments


3,405,307



3,288,902



1,741,334Total interest from investments


48,046,995



43,297,170



35,109,961Interest from cash and cash equivalents


536,053



64,024



27,495Management fee income


2,503,804



1,722,180



1,509,317Incentive fee income






633,232



591,368Structuring and advisory fee income*


5,286,475



1,355,393



824,795Other income*


2,074,864



635,964



552,042Total investment income


58,448,191



47,707,963



38,614,978OPERATING EXPENSESInterest and debt financing expenses


14,682,611



13,125,718



10,938,654Base management fees


8,098,995



6,879,324



5,846,400Incentive management fees


14,163,776



4,891,004



4,333,983Professional fees


1,684,089



1,849,424



1,590,798Administrator expenses


2,131,250



1,895,833



1,645,833Insurance


259,981



253,141



259,571Directors fees and expenses


277,500



290,500



197,500General & administrative


1,326,457



1,224,462



1,058,009Income tax expense (benefit)


961,995



(1,027,118
)


Excise tax credit










(14,738
)Other expense






23,466



27,310Total operating expenses


43,586,654



29,405,754



25,883,320Loss on extinguishment of debt


1,583,266







NET INVESTMENT INCOME


13,278,271



18,302,209



12,731,658REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTSNet realized gain (loss) from investments:Non-control/Non-affiliate
investments


11,651,990



4,874,305



(5,877,734
)Control investments


31,225,165







166Net realized gain (loss) from investments


42,877,155



4,874,305



(5,877,568
)Net change in unrealized appreciation (depreciation) on investments:Non-control/Non-affiliate
investments


3,060,964



(5,152,206
)


6,178,457Affiliate investments


1,538,572



(853,588
)


818,323Control investments


(5,370,450
)


3,105,485



3,828,275Net change in unrealized appreciation (depreciation) on investments


(770,914
)


(2,900,309
)


10,825,055Net change in provision for deferred taxes on unrealized (appreciation) depreciation on
investments


354,349



(1,766,835
)


Net realized and unrealized gain on investments


42,460,590



207,161



4,947,487NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

$
55,738,861


$
18,509,370


$
17,679,145WEIGHTED AVERAGEBASIC AND DILUTED EARNINGS PER COMMON SHARE

$
5.98


$
2.63


$
2.93WEIGHTED AVERAGE COMMON SHARES OUTSTANDINGBASIC AND DILUTED


9,319,192



7,046,686



6,024,040  *
Certain prior year amounts have been reclassified to conform to current year presentation. 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 29, 2020


February 28, 2019


February 28, 2018INCREASE FROM OPERATIONS:Net investment income

$
13,278,271


$
18,302,209


$
12,731,658Net realized gain (loss) from investments


42,877,155



4,874,305



(5,877,568
)Net change in unrealized appreciation (depreciation) on investments


(770,914
)


(2,900,309
)


10,825,055Net change in provision for deferred taxes on unrealized (appreciation) depreciation on
investments


354,349



(1,766,835
)


Net increase in net assets resulting from operations


55,738,861



18,509,370



17,679,145DECREASE FROM SHAREHOLDER DISTRIBUTIONS:Total distributions to shareholders(a)


(20,097,580
)


(14,188,588
)


(11,375,577
)Net decrease in net assets from shareholder distributions


(20,097,580
)


(14,188,588
)


(11,375,577
)CAPITAL SHARE TRANSACTIONS:Proceeds from issuance of common stock


85,904,441



32,150,157



7,838,351Stock dividend distribution


3,096,492



2,175,893



2,362,814Offering costs


(1,230,548
)


(1,397,712
)


(108,143
)Net increase in net assets from capital share transactions


87,770,385



32,928,338



10,093,022Total increase in net assets


123,411,666



37,249,120



16,396,590Net assets at beginning of period, as previously reported


180,875,187



143,691,367



127,294,777Cumulative effect of the adoption of ASC 606 (See Note 2)






(65,300
)


Net assets at beginning of period, as adjusted


180,875,187



143,626,067



127,294,777Net assets at end of period(b)

$
304,286,853


$
180,875,187


$
143,691,367  (a)
Distributions from net investment income and from net realized gains are no longer required to be separately
disclosed. For the year ended February 28, 2018, total distributions represented distributions from net investment income of $11,375,577. (b)
Parenthetical disclosure of accumulated undistributed net investment income is no longer required. For the year
ended February 28, 2018, end of period net assets included accumulated distributions in excess of net investment income of $27,862,543. See accompanying notes to consolidated financial statements.  F-6




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##### Table of Contents

Saratoga Investment Corp. Consolidated Statements of Cash Flows  For the year endedFebruary 29,2020


February 28,2019


February 28,2018Operating activitiesNET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

$
55,738,861


$
18,509,370


$
17,679,145ADJUSTMENTS TO RECONCILE NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS TO NET CASH USED IN
OPERATING ACTIVITIES:Payment-in-kind
and other adjustments to cost


(3,045,533
)


(4,149,105
)


(2,664,627
)Net accretion of discount on investments


(1,069,710
)


(1,222,735
)


(1,035,501
)Amortization of deferred debt financing costs


1,340,299



1,187,613



990,035Loss on extinguishment of debt


1,583,266







Income tax expense (benefit)


961,995



(1,027,118
)


Net realized (gain) loss from investments


(42,877,155
)


(4,874,305
)


5,877,568Net change in unrealized (appreciation) depreciation on investments


770,914



2,900,309



(10,825,055
)Net change in provision for deferred taxes on unrealized appreciation (depreciation) on
investments


(354,349
)


1,766,835



Proceeds from sales and repayments of investments


167,252,601



135,727,976



66,312,032Purchases of investments


(204,643,371
)


(187,707,807
)


(107,697,157
)(Increase) decrease in operating assets:Interest receivable


(1,063,852
)


(699,479
)


247,325Due from affiliate


1,673,747



(1,673,747
)


Management and incentive fee receivable


269,887



(309,070
)


(61,918
)Cumulative effect of the adoption of ASC 606 (See Note 2)






(65,300
)


Other assets


(128,982
)


(89,865
)


(273,897
)Receivable from unsettled trades










253,041Increase (decrease) in operating liabilities:Base management and incentive fees payable


9,115,312



907,841



(37,748
)Accounts payable and accrued expenses


97,714



691,131



215,458Interest and debt fees payable


(990,629
)


220,317



240,117Directors fees payable


(500
)


18,500



(8,000
)Due to manager


224,751



(91,280
)


12,866NET CASH USED IN OPERATING ACTIVITIES


(15,144,734
)


(39,979,919
)


(30,776,316
)Financing activitiesBorrowings on debt


20,200,000



45,590,000



59,800,000Paydowns on debt


(20,200,000
)


(33,250,000
)


(34,800,000
)Issuance of notes






60,000,000



Repayments of notes


(74,450,500
)






Payments of deferred debt financing costs


(755,136
)


(2,878,120
)


(1,277,266
)Proceeds from issuance of common stock


85,897,846



32,150,157



7,838,351Payments of cash dividends


(17,001,088
)


(12,012,695
)


(9,012,763
)Payments of offering costs


(1,190,430
)


(1,302,520
)


(82,483
)NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES


(7,499,308
)


88,296,822



22,465,839NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS, RESERVE
ACCOUNTS


(22,644,042
)


48,316,903



(8,310,477
)CASH AND CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS, RESERVE ACCOUNTS, BEGINNING OF
PERIOD


62,094,394



13,777,491



22,087,968CASH AND CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS, RESERVE ACCOUNTS, END OF PERIOD

$
39,450,352


$
62,094,394


$
13,777,491Supplemental information:Interest paid during the period

$
14,332,943


$
11,717,786


$
9,708,503Cash paid for taxes


18,390



66,295



208,164Supplemental non-cash information:Payment-in-kind
interest income

$
3,045,533


$
4,149,105


$
2,664,627Net accretion of discount on investments


1,069,710



1,222,735



1,035,501Amortization of deferred debt financing costs


1,340,299



1,187,613



990,035Stock dividend distribution


3,096,492



2,175,893



2,362,814 See accompanying notes to consolidated financial statements.  F-7




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##### Table of Contents

Saratoga Investment Corp. Consolidated Schedule of Investments February 29, 2020  Company

Industry

Investment Interest Rate/Maturity

Original AcquisitionDate

Principal/Number of Shares


Cost


FairValue (c)


% ofNet AssetsNon-control/Non-affiliate investments138.2% (b)Apex Holdings Software Technologies, LLC

Business Services

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

9/21/2016

$
18,000,000


$
17,951,463


$
17,589,600



5.8%Apex Holdings Software Technologies, LLC

Business Services

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

10/1/2018

$
1,500,000



1,491,938



1,465,800



0.5%ArbiterSports, LLC

Business Services

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

2/21/2020

$
26,000,000



25,765,288



25,740,000



8.6%Arbiter Sports, LLC (j)

Business Services

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

2/21/2020

$












0.0%Avionte Holdings, LLC (h)

Business Services

Class A Units

1/8/2014


100,000



100,000



922,337



0.3%CLEO Communications Holding, LLC

Business Services

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

3/31/2017

$
13,791,686



13,773,206



14,048,211



4.6%CLEO Communications Holding, LLC

Business Services

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

3/31/2017

$
20,041,560



19,919,746



20,414,333



6.7%CoConstruct, LLC

Business Services

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

7/5/2019

$
4,200,000



4,161,917



4,284,000



1.4%CoConstruct, LLC (j)

Business Services

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

7/5/2019

$












0.0%Davisware, LLC

Business Services

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

9/6/2019

$
3,000,000



2,971,896



2,970,000



1.0%Davisware, LLC (j)

Business Services

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

9/6/2019

$












0.0%Destiny Solutions Inc. (d)

Business Services

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

5/16/2018

$
36,000,000



35,686,318



35,888,400



11.8%Destiny Solutions Inc. (h), (i)

Business Services

Limited Partner Interests

5/16/2018


2,342



2,468,464



2,805,839



0.9%Emily Street Enterprises, L.L.C.

Business Services

Senior Secured Note(3M USD LIBOR+8.50%), 10.00% Cash, 4/22/2020

12/28/2012

$
3,300,000



3,299,987



3,300,000



1.1%Emily Street Enterprises, L.L.C. (h)

Business Services

Warrant Membership InterestsExpires 12/28/2022

12/28/2012


49,318



400,000



499,464



0.2%Erwin, Inc. (d)

Business Services

Second Lien Term Loan(3M USD LIBOR+11.50%), 12.96% Cash/1.00% PIK, 8/28/2021

2/29/2016

$
16,049,804



15,990,286



16,049,804



5.3%FMG Suite Holdings, LLC (d)

Business Services

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

5/16/2018

$
23,000,000



22,863,835



23,000,000



7.6%GDS Holdings US, Inc. (d)

Business Services

First Lien Term Loan(3M USD LIBOR+7.00%), 8.50% Cash, 8/23/2023

8/23/2018

$
7,500,000



7,444,170



7,650,000



2.5%GDS Holdings US, Inc. (d)

Business Services

Delayed Draw Term Loan(3M USD LIBOR+7.00%), 8.50% Cash, 8/23/2023

8/23/2018

$
1,000,000



990,526



1,020,000



0.3%GDS Software Holdings, LLC (h)

Business Services

Common Stock Class A Units

8/23/2018


250,000



250,000



421,291



0.1%Identity Automation Systems (h)

Business Services

Common Stock Class A Units

8/25/2014


232,616



232,616



860,269



0.4%Identity Automation Systems (d)

Business Services

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

8/25/2014

$
15,422,500



15,389,090



15,524,289



5.1%inMotionNow, Inc.

Business Services

First Lien Term Loan(3M USD LIBOR+7.25), 9.75% Cash, 5/15/2024

5/15/2019

$
12,200,000



12,094,364



12,200,000



4.1%inMotionNow, Inc. (j)

Business Services

Delayed Draw Term Loan(3M USD LIBOR+7.25) 9.75% Cash, 5/15/2024

5/15/2019

$
2,000,000



1,981,329



2,000,000



0.0%Knowland Group, LLC

Business Services

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

11/9/2018

$
15,000,000



15,000,000



14,893,500



4.9%National Waste Partners (d)

Business Services

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

2/13/2017

$
9,000,000



8,959,602



9,000,000



3.0%Omatic Software, LLC

Business Services

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

5/29/2018

$
5,500,000



5,459,192



5,554,999



1.9%Omatic Software, LLC (j)

Business Services

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

5/29/2018

$












0.0%Passageways, Inc.

Business Services

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

7/5/2018

$
5,000,000



4,961,214



5,034,500



1.7%Passageways, Inc. (j)

Business Services

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

1/3/2020

$
2,000,000



1,991,001



2,013,800



0.7%Passageways, Inc. (h)

Business Services

Series A Preferred Stock

7/5/2018


2,027,205



1,000,000



2,042,180



0.8%Vector Controls Holding Co., LLC (d)

Business Services

First Lien Term Loan10.50% (9.00% Cash/1.50% PIK), 3/6/2022

3/6/2013

$
7,849,846



7,849,846



7,928,345



2.6%Vector Controls Holding Co., LLC (h)

Business Services

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

5/31/2015


343







2,850,231



0.9%Total Business Services






250,447,294



257,971,192



84.8%Targus Holdings, Inc. (h)

Consumer Products

Common Stock

12/31/2009


210,456



1,589,630



417,619



0.1%Total Consumer Products






1,589,630



417,619



0.1%My Alarm Center, LLC (k)

Consumer Services

Preferred Equity Class A Units8.00% PIK

7/14/2017


2,227



2,357,879







0.0%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 (h)

Consumer Services

Preferred Equity Class Z Units

9/12/2018


676



712,343



1,997,158



0.6%My Alarm Center, LLC (h)

Consumer Services

Common Stock

7/14/2017


96,224











0.0%Total Consumer Services






4,867,102



1,997,158



0.6% See accompanying notes to consolidated financial statements.  F-8




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##### Table of Contents

Company

Industry

Investment Interest Rate/Maturity

Original AcquisitionDate

Principal/Number of Shares


Cost


FairValue (c)


% ofNet AssetsC2 Educational Systems (d)

Education

First Lien Term Loan(3M USD LIBOR+7.00%), 8.50% Cash, 5/31/2020

5/31/2017

$
16,000,000



15,981,853



16,000,000



5.3%EMS LINQ, Inc.

Education

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

8/9/2019

$
14,925,000



14,780,293



14,823,510



4.8%GoReact

Education

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

1/17/2020

$
5,000,000



4,930,819



4,950,000



1.6%GoReact (j)

Education

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

1/17/2020

$












0.0%Kev Software Inc. (a)

Education

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

9/13/2018

$
21,231,923



21,086,573



21,202,198



7.0%Texas Teachers of Tomorrow, LLC (h), (i)

Education

Common Stock

12/2/2015


750,000



750,000



703,910



0.2%Texas Teachers of Tomorrow, LLC (d)

Education

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

6/28/2019

$
19,661,200



19,483,213



19,661,200



6.5%Total Education






77,012,751



77,340,818



25.4%TMAC Acquisition Co., LLC

Food and Beverage

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

3/1/2018

$
2,261,017



2,261,017



2,140,880



0.7%Total Food and Beverage






2,261,017



2,140,880



0.7%Axiom Parent Holdings, LLC (h)

Healthcare Services

Common Stock Class A Units

6/19/2018


400,000



400,000



428,706



0.1%Axiom Purchaser, Inc. (d)

Healthcare Services

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

6/19/2018

$
10,000,000



9,936,612



9,944,000



3.3%Axiom Purchaser, Inc. (d), (j)

Healthcare Services

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

6/19/2018

$
3,000,000



2,977,619



2,983,200



1.0%ComForCare Health Care

Healthcare Services

First Lien Term Loan(3M USD LIBOR+7.50%), 8.96% Cash, 1/31/2022

1/31/2017

$
15,000,000



14,929,216



15,099,000



5.0%HemaTerra Holding Company, LLC

Healthcare Services

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

4/15/2019

$
6,000,000



5,944,473



6,120,000



2.0%HemaTerra Holding Company, LLC (j)

Healthcare Services

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

4/15/2019

$
10,000,000



9,912,295



10,200,000



3.4%TRC HemaTerra, LLC (h)

Healthcare Services

Class D Membership Interests

4/15/2019


2,000,000



2,000,000



2,259,190



0.7%Ohio Medical, LLC (h)

Healthcare Services

Common Stock

1/15/2016


5,000



500,000



416,550



0.1%Ohio Medical, LLC

Healthcare Services

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

1/15/2016

$
7,300,000



7,274,482



7,300,000



2.4%PDDS Buyer, LLC

Healthcare Services

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

7/15/2019

$
12,000,000



11,888,585



12,184,800



4.0%PDDS Buyer, LLC (j)

Healthcare Services

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

7/15/2019

$












0.0%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



4,200,000



2,136,960



0.7%Total Healthcare Services






70,471,359



69,072,406



22.7% See accompanying notes to consolidated financial statements.  F-9




---

##### Table of Contents

Village Realty Holdings LLC

Property Management

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

10/8/2019

$
7,250,000



7,180,560



7,264,500



2.4
%Village Realty Holdings LLC (j)

Property Management

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

10/8/2019

$
3,876,322



3,838,783



3,884,075



1.4
%V Rental Holdings LLC (h)

Property Management

Class A-1 Membership Units

10/8/2019


116,700



338,229



354,280



0.1
%Total Property Management






11,357,572



11,502,855



3.9
%Sub Total
Non-control/Non-affiliate investments










418,006,725



420,442,928



138.2
%Affiliate investments6.0% (b)Top Gun Pressure Washing, LLC (f)

Business Services

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

8/12/2019

$
5,000,000



4,952,729



5,024,500



1.7
%Top Gun Pressure Washing, LLC (f), (j)

Business Services

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

8/12/2019

$












0.0
%TG Pressure Washing Holdings, LLC (f), (h)

Business Services

Preferred Equity

8//12/2019


350,000



350,000



350,000



0.1
%GreyHeller LLC (f)

Business Services

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

11/17/2016

$
7,000,000



6,971,109



7,000,000



2.2
%GreyHeller LLC (f), (h)

Business Services

Series A Preferred Units

11/17/2016


850,000



850,000



2,981,503



1.0
%Total Business Services






13,123,838



15,356,003



5.0
%Elyria Foundry Company, L.L.C. (f), (h)

Metals

Common Stock

7/30/2010


60,000



9,685,028



1,939,800



0.6
%Elyria Foundry Company, L.L.C. (d), (f)

Metals

Second Lien Term Loan 15.00% PIK, 8/10/2022

7/30/2010

$
1,190,051



1,190,051



1,190,051



0.4
%Total Metals








10,875,079



3,129,851



1.0
%Sub Total Affiliate investments












23,998,917



18,485,854



6.0
%Control investments15.4% (b)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

$
5,162,734



5,123,191



5,265,989



1.7
%Netreo Holdings, LLC (g), (h)

Business Services

Common Stock Class A Unit

7/3/2018


3,150,000



3,150,000



6,762,672



2.3
%Total Business Services






8,273,191



12,028,661



4.0
%Saratoga Investment Corp. CLO 2013-1, Ltd. (a), (e),
(g)

Structured Finance Securities

Other/Structured Finance Securities 10.97%, 1/20/2030

1/22/2008

$
69,500,000



23,520,428



22,557,240



7.4
%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%), 10.21%, 1/20/2030

12/14/2018

$
2,500,000



2,500,000



2,478,000



0.8
%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%), 11.46%, 1/20/2030

12/14/2018

$
7,500,000



7,500,000



7,434,750



2.4
%Saratoga Investment Corp. CLO 2013-1 Warehouse 2, Ltd. (a),
(g), (j)

Structured Finance Securities

Unsecured Loan (3M USD LIBOR+7.50%), 8.96%, 8/20/2021

2/18/2020

$
2,500,000



2,500,000



2,204,541



0.8
%Total Structured Finance Securities






36,020,428



34,674,531



11.4
%Sub Total Control investments












44,293,619



46,703,192



15.4
%TOTAL INVESTMENTS159.6% (b)











$
486,299,261


$
485,631,974



159.6
%Number ofShares


Cost


Fair Value


% of    Net AssetsCash and cash equivalents and cash and cash equivalents, reserve accounts13.0%
(b)U.S. Bank Money Market (l)








39,450,352


$
39,450,352


$
39,450,352



13.0
%Total cash and cash equivalents and cash and cash equivalents, reserve
accounts




39,450,352


$
39,450,352


$
39,450,352



13.0
%  (a)
Represents a non-qualifying investment as defined under
Section 55(a) of the Investment Company Act of 1940, as amended. As of February 29, 2020, non-qualifying assets represent 11.5% of the Companys portfolio at fair value. As a BDC, the Company
can only invest 30% of its portfolio in non-qualifying assets. (b)
Percentages are based on net assets of $304,286,853 as of February 29, 2020. (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 10.97% interest
rate in the table above represents the effective interest rate currently earned on the investment cost and is based on the current cash interest and other income generated by the investment. (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 29, 2020 in which the issuer was an Affiliate are as follows:  Company

Purchases


Sales


Total Interest fromInvestments


ManagementFee Income


Net RealizedGain (Loss) fromInvestments


Net Change inUnrealizedAppreciation(Depreciation)GreyHeller LLC

$



$



$
961,322


$



$



$
1,331,201Elyria Foundry Company, L.L.C.










167,835











135,600Top Gun Pressure Washing, LLC


4,950,000







269,257











71,771TG Pressure Washing Holdings, LLC


350,000



















Total

$
5,300,000


$



$
1,398,414


$



$



$
1,538,572  (g)
As defined in the Investment Company Act, we Control this portfolio company because we own more than
25% of the portfolio companys outstanding voting securities. Transactions during the year ended February 29, 2020 in which the issuer was both an Affiliate and a portfolio company that we Control are as follows:  Company

Purchases


Sales


Total Interest fromInvestments


ManagementFee Income


Net RealizedGain (Loss) fromInvestments


Net Change inUnrealizedAppreciation(Depreciation)Easy Ice, LLC

$



$
(65,219,080
)

$
3,335,320


$



$
31,225,165


$
(3,816,610
)Easy Ice Masters, LLC






(4,169,121
)


382,066











(51,436
)Netreo Holdings, LLC










578,617











1,654,603Saratoga Investment Corp. CLO 2013-1, Ltd.










4,058,715



2,503,804







(2,840,298
)Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-R-2 Notes










280,689











(5,500
)Saratoga Investment Corp. CLO 2013-1, Ltd. Class G-R-2 Notes










937,378











(15,750
)Saratoga Investment Corp. CLO 2013-1 Warehouse 2, Ltd
(j)


2,500,000







7,642











(295,459
)Total

$
2,500,000


$
(69,388,201
)

$
9,580,427


$
2,503,804


$
31,225,165


$
(5,370,450
)  (h)
Non-income producing at February 29, 2020. (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 29, 2020. (see Note 8 to the
consolidated financial statements). (k)
As of February 29, 2020, the investment was on non-accrual status.
The fair value of these investments was approximately $2.1 million, which represented 0.4% of the Companys portfolio (see Note 2 to the consolidated financial statements). (l)
Included within cash and cash equivalents and cash and cash equivalents, reserve accounts in the Companys
consolidated statements of assets and liabilities as of February 29, 2020. LIBORLondon Interbank Offered Rate 1M USD LIBORThe 1 month USD LIBOR rate as of February 29, 2020 was 1.52%. 3M USD LIBORThe 3 month USD LIBOR rate as of February 29, 2020 was 1.46%. PIKPayment-in-Kind (see Note 2 to the consolidated financial statements). See accompanying notes to consolidated financial statements.  F-10




---

##### Table of Contents

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

Industry

Investment Interest Rate/Maturity

OriginalAcquisitionDate


Principal/Number ofShares


Cost


Fair Value (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 InterestsExpires 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
% See accompanying notes to consolidated
financial statements.  F-11




---

##### Table of Contents

Company

Industry

Investment Interest Rate/Maturity

OriginalAcquisitionDate


Principal/Number ofShares


Cost


Fair Value (c)


% ofNet AssetsNational 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 Units8.00% 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 Units25.00% 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 Note12.00% 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-12




---

##### Table of Contents

Company

Industry

Investment Interest Rate/Maturity

OriginalAcquisitionDate


Principal/Number ofShares


Cost


Fair Value(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 Unit


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 andIncentive FeeIncome


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:  See accompanying notes to
consolidated financial statements. F-13




---

##### Table of Contents

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-14




---

##### Table of Contents

SARATOGA INVESTMENT CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS February 29, 2020 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-TG, Inc., SIA-TT, Inc., SIA-Vector, Inc. and SIA-VR, Inc., which are structured as Delaware entities, or tax blockers (Taxable Blockers), to hold equity or equity-like investments in portfolio companies organized as limited liability companies, or
LLCs (or other forms of pass through entities). Tax Blockers are consolidated for accounting purposes, but are not consolidated for U.S. federal income tax purposes and may incur U.S. federal income tax expenses as a result of their ownership of
portfolio companies. On December 31, 2019, the Companys second lien term loans in Easy Ice, LLC and Easy Ice Masters, LLC were
repaid at par, and its preferred equity was sold in a change of control transaction. In addition to the second lien term loans of $27.9 million and the preferred equity of $10.7 million being repaid in full including all accrued interest,
the Company also received approximately $35.6 million of additional proceeds, interest and fees. The Company recognized a gain of $31.2 million, which is included in the net realized gain (loss) from investments in the Companys
consolidated statement of operations from the sale. The SIA-Easy Ice, LLC Taxable Blocker was sold as part of this transaction. On February 11, 2020, the Company entered into an unsecured loan agreement
(CLO 2013-1 Warehouse 2 Loan) with Saratoga Investment Corp. CLO 2013-1 Warehouse 2, Ltd.
(CLO 2013-1 Warehouse 2), a wholly-owned subsidiary of Saratoga Investment Corp. CLO 2013-1, Ltd. (Saratoga CLO), pursuant to which
CLO 2013-1 Warehouse 2 may borrow from time to time up to $20.0 million from the Company in order to provide capital necessary to support warehouse activities. The CLO 2013-1 Warehouse 2 Loan, which expires on August 20, 2021, bears interest at an annual rate of 3M USD LIBOR + 7.5%. As of February 29, 2020, the Companys investment in the CLO 2013-1
Warehouse 2 had a fair value of $2.2 million. On March 28, 2012, our wholly-owned subsidiary, Saratoga Investment Corp. SBIC, LP
(SBIC LP), received a Small Business Investment Company (SBIC) license from the Small Business Administration (SBA). On August 14, 2019, our wholly-owned subsidiary, Saratoga Investment Corp. SBIC II LP
(SBIC II LP), also received an SBIC license from the SBA. The new license will provide up to $175.0 million in additional long-term capital in the form of SBA debentures.  F-15




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##### Table of Contents

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, SBIC II LP, SIA-Avionte, Inc., SIA-Easy Ice, LLC, SIA-GH, Inc., SIA-HT, Inc., SIA-MAC, Inc., SIA-TG, Inc., SIA-TT, Inc., SIA-Vector, Inc. and SIA-VR, 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. The Company, SBIC LP and SBIC II LP are all considered to be investment companies for financial reporting purposes and
have applied the guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 946, Financial Services  Investment Companies (ASC 946). There
have been no changes to the Company, SBIC LP or SBIC II LPs status as investment companies during the year ended February 29, 2020. 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 29, 2020, 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 subsidiaries, SBIC LP and SBIC II LP. The statements of cash
flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash and restricted cash equivalents when reconciling the
beginning-of-period and end-of-period total amounts.  F-16




---

##### 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 29,2020


February 28,2019


February 28,2018Cash and cash equivalents

$
24,598,905


$
30,799,068


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


14,851,447



31,295,326



9,849,912Total cash and cash equivalents and cash and cash equivalents, reserve accounts

$
39,450,352


$
62,094,394


$
13,777,491 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 the Manager 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  F-17




---

##### Table of Contents



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. 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 using the effective yield method. The amortized cost of investments represents
the original cost adjusted for the accretion of discounts over the life of the investment and amortization of premiums on investments up to the earliest call date. 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 29, 2020, certain investments in two portfolio companies, including preferred equity interests, were on non-accrual
status with a fair value of approximately $2.1 million, or 0.4% of the fair value of our portfolio. At February 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. 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.  F-18




---

##### Table of Contents

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. 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 it becomes 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. 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-19




---

##### Table of Contents

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. 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 Payment-in-Kind Interest The Company holds debt and preferred equity investments in its portfolio that contain a payment-in-kind
(PIK) interest provision. The PIK interest, which represents contractually deferred interest added to the investment balance that is generally due at maturity, is generally recorded on the accrual basis to the extent such amounts are
expected to be collected. The Company stops accruing PIK interest if it is expected that the issuer will not be able to pay all principal and interest when due. Structuring and Advisory Fee Income Structuring and advisory fee income represents fee income earned and received performing certain investment and advisory activities during the
closing of new investments. Other Income Other income includes dividends received, origination fees and prepayment income fees and is recorded in the consolidated statements of
operations when earned.  F-20




---

##### Table of Contents

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. 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 U.S. GAAP
financial statements and may result in current and deferred federal and state income tax expense with respect to income derived from those investments. Such income, net of applicable income taxes, is not included in the Companys tax-basis net investment income until distributed by the Taxable Blocker, which may result in timing and character differences between the Companys U.S. GAAP and
tax-basis net investment income and realized gains and losses. Income tax expense or benefit from Taxable Blockers related to net investment income are included in total operating expenses, while any expense
or benefit related to federal or state income tax originated for capital gains and losses are included together with the applicable net realized or unrealized gain or loss line item. Deferred tax assets of the Taxable Blockers are reduced by a
valuation allowance when, in the opinion of management, it is more-likely than-not that some portion or all of the deferred tax assets will not be realized.  F-21




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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 29, 2020, the Company did not incur any interest or penalties. Although we file federal and state tax returns, our major tax jurisdiction is
federal. The 2017, 2018 and 2019 federal tax years for the Company remain subject to examination by the IRS. At February 29, 2020 and February 28, 2019, 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. 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 only reflected those realized capital gains net of realized and unrealized losses for the
period. 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 is currently evaluating
the impact these changes will have on the Companys financial statements and disclosures. SEC Disclosure Update and Simplification In March 2019, the U.S. Securities Exchange Commission (the SEC) adopted the final rule under SEC Release No. 33-10618,Fast Act Modernization and Simplification of Regulation S-K, amending certain disclosure requirements. The amendments are intended to simplify
certain disclosure requirements and to provide for a consistent set of rules to govern incorporating information by reference and hyperlinking, improve readability and navigability of disclosure documents, and discourage repetition and disclosure of
immaterial information. The Company has adopted the final rule, as applicable under SEC Release No. 33-10618 and determined the effect of the adoption of the simplification rules on financial
statements will be limited to the modification and removal of certain disclosures.  F-22




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##### Table of Contents

Risk Management In the ordinary course of its business, the Company manages a variety of risks, including market risk and credit risk. Market risk is the risk
of potential adverse changes to the value of investments because of changes in market conditions such as interest rate movements and volatility in investment prices. Credit risk is the risk of default or non-performance by portfolio companies, equivalent to the
investments carrying amount. The Company is also exposed to credit risk related to maintaining all of its cash and cash equivalents, including those in reserve accounts, at a major financial institution and credit risk related to any of its
derivative counterparties. The Company has investments in lower rated and comparable quality unrated high yield bonds and bank loans.
Investments in high yield investments are accompanied by a greater degree of credit risk. The risk of loss due to default by the issuer is significantly greater for holders of high yield securities, because such investments are generally unsecured
and are often subordinated to other creditors of the issuer. 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.  F-23




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##### Table of Contents

The following table presents fair value measurements of investments, by major class, as of
February 29, 2020 (dollars in thousands), according to the fair value hierarchy:  Fair Value MeasurementsLevel 1


Level 2


Level 3


TotalFirst lien term loans

$



$



$
346,233


$
346,233Second lien term loans










73,570



73,570Unsecured term loans










4,346



4,346Structured finance securities










32,470



32,470Equity interests










29,013



29,013Total

$



$



$
485,632


$
485,632 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 The following table provides a reconciliation of the beginning and ending balances for investments that use
Level 3 inputs for the year ended February 29, 2020 (dollars in thousands):  First lienterm loans


Second lienterm loans


Unsecuredterm loans


Structuredfinancesecurities


Equity    interests


TotalBalance as of February 28, 2019

$
202,846


$
125,786


$
2,100


$
35,328


$
35,960


$
402,020Payment-in-kind
and other adjustments to cost


673



2,874



45



4



(550
)


3,046Net accretion of discount on investments


799



271















1,070Net change in unrealized appreciation (depreciation) on investments


2,614



99



(299
)


(2,862
)


(323
)


(771
)Purchases


197,059







2,500







5,084



204,643Sales and repayments


(56,890
)


(55,460
)










(54,903
)


(167,253
)Net realized gain (loss) from investments


(868
)














43,745



42,877Balance as of February 29, 2020

$
346,233


$
73,570


$
4,346


$
32,470


$
29,013


$
485,632Net 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

$
1,546


$
140


$
(299
)

$
(2,863)


$
4,069


$
2,593 Purchases and other adjustments to cost include purchases of new investments at cost, effects of
refinancing/restructuring, accretion/amortization of income from discount/premium on debt securities, and PIK interests. Sales and
repayments represent net proceeds received from investments sold, and principal paydowns received, during the year.  F-24




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##### Table of Contents

Transfers and restructurings, if any, are recognized at the beginning of the period in which
they occur. There were no transfers or restructures in or out of Levels 1, 2, or 3 during the year ended February 29, 2020. 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


Second lienterm loans


Unsecuredterm loans


Structuredfinancesecurities


Equity    interests


TotalBalance as of February 28, 2018

$
4,106


$
197,359


$
95,075


$



$
16,374


$
29,780


$
342,694Payment-in-kind
and other adjustments to cost






611



2,570











969



4,150Net accretion of discount on investments


73



851



298















1,222Net change in unrealized appreciation (depreciation) on investments


(73
)


412



(1,690
)


(116
)


(767
)


(666
)


(2,900
)Purchases






89,218



47,844



20,000



24,269



6,377



187,708Sales 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 Transfers and restructurings, if any, are recognized at the beginning of the period in which they occur. There
were no transfers or restructures in or out of Levels 1, 2, or 3 during the year ended February 29, 2019. The valuation techniques and
significant unobservable inputs used in recurring Level 3 fair value measurements of assets as of February 29, 2020 were as follows (dollars in thousands):  Fair Value


Valuation Technique


Unobservable Input


Range

Weighted Average*First lien term loans

$
346,233



Market Comparables



Market Yield (%)


7.8% - 12.5%


9.7%EBITDA Multiples (x)


0.0x


0.0xSecond lien term loans


73,570



Market Comparables



Market Yield (%)


9.5% - 85.1%


13.0%EBITDA Multiples (x)


5.0x


5.0xUnsecured term loans


4,346



Market Comparables



Market Yield (%)


18.3% - 21.3%


19.8%EBITDA Multiples (x)


5.2x


5.2xStructured finance securities


32,470



Discounted Cash Flow



Discount Rate (%)


9.25% - 16.00%


14.2%Recovery Rate (%)


35.0% - 70.0%


70.0%Prepayment Rate (%)


20.0%


20.0%Equity interests


29,013



Market Comparables



EBITDA Multiples (x)


4.0x - 14.0x


6.5xRevenue Multiples (x)


1.0x - 40.7x


7.3xTotal

$
485,632  *
The weighted average in the table above is calculated based on each investments fair value weighting,
using the applicable unobservable input.  F-25




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##### Table of Contents

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 (%)


15.0%


15.0%EBITDA Multiples (x)


4.8x


4.8xStructured finance securities


35,328



Discounted Cash Flow



Discount Rate (%)


9.0% - 15.0%


13.6%Recovery Rate (%)


35.0% - 70.0%


70.0%Prepayment Rate (%)


20.0%


20.0%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. For investments utilizing a market comparables valuation technique, a
significant increase (decrease) in the market yield, in isolation, would result in a significantly lower (higher) fair value measurement, and a significant increase (decrease) in any of the earnings before interest, tax, depreciation and
amortization (EBITDA) or revenue valuation multiples, in isolation, would result in a significantly higher (lower) fair value measurement. For investments utilizing a discounted cash flow valuation technique, a significant increase
(decrease) in the discount rate, and prepayment rate, in isolation, would result in a significantly lower (higher) fair value measurement while a significant increase (decrease) in recovery rate, in isolation, would result in a significantly higher
(lower) fair value measurement. For investments utilizing a market quote in deriving a value, a significant increase (decrease) in the market quote, in isolation, would result in a significantly higher (lower) fair value measurement. The composition of our investments as of February 29, 2020 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

$
343,100



70.5
%

$
346,233



71.3
%Second lien term loans


75,478



15.5



73,570



15.1Unsecured term loans


4,761



1.0



4,346



0.9Structured finance securities


33,521



6.9



32,470



6.7Equity interests


29,439



6.1



29,013



6.0Total

$
486,299



100.0
%

$
485,632



100.0
%  F-26




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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
% 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. 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 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. 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 a valuation for our investment in
Saratoga CLO at February 29, 2020. The inputs at February 29, 2020 for the valuation model include:  

Default rate: 2.0%  

Recovery rate: 35-70%  

Discount rate: 16.0%  F-27




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##### Table of Contents



Prepayment rate: 20.0%  

Reinvestment rate / price: L+360bps / $99.75 Investment Concentration Set forth is a
brief description of each portfolio company in which the fair value of our investment represents greater than 5% of our total assets as of February 29, 2020. CLEO Communications Holding, LLC CLEO
Communications Holding, LLC (Cleo) is a provider of technology enabled data communication and integration platform for daily business transactions. Cleos platform allows for the automation of business-to-business transaction information for customers operating in the retail, manufacturing, logistics and the healthcare verticals. The platform also allows for internal
application-to-application communication, allowing customers core enterprise software applications to easily share and transfer data. Destiny Solutions Inc. Destiny Solutions
provides a SaaS-based student lifecycle management (SLM) software solution used by higher education institutions to manage their continuing education (CE) and non-degree educational
programs for non-traditional students who fall outside of the traditional student profile. Traditional students are full-time students working toward an undergraduate, graduate, or
doctorate degree. Destinys software acts as the ERP, CRM, e-commerce platform, and student information management system for non-traditional student
programs. Saratoga Investment Corp. CLO 2013-1, Ltd. The Company has a collateral management agreement with Saratoga CLO, pursuant to which the Company acts as its collateral manager. The Saratoga
CLO invests primarily in senior secured first lien term loans. The Company also holds an investment in the subordinated note and Class F-R-2 and G-R-2 notes of the Saratoga CLO. In addition, the Company entered into an unsecured loan agreement with CLO 2013-1 Warehouse 2, a wholly-owned subsidiary of Saratoga CLO, in
order to provide capital necessary to support warehouse activities. 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 expired on February 7, 2020, bears interest at an annual rate of 3M USD LIBOR + 7.5%. Interest accrued on the investment in the CLO 2013-1 Warehouse Loan is included in interest income on the Companys consolidated statement of operations. During the year ended February 28, 2019, the maximum amount invested by the Company in the CLO 2013-1 Warehouse Loan amounted to $20.0 million and at February 28, 2019, the Company no longer held an investment in the CLO 2013-1 Warehouse Loan. On December 14, 2018, the Company completed a third refinancing and upsize of the Saratoga CLO (the
2013-1 Reset CLO Notes). The third Saratoga CLO refinancing, among other things, extended its reinvestment period to January 2021, and extended its legal maturity date to January 2030. A non-call period ending January 2020 was also added. Following this refinancing, the Saratoga CLO portfolio increased from approximately $300.0 million in aggregate principal amount to approximately
$500.0 million of predominantly senior secured first lien term loans. In addition to refinancing its liabilities, the Company invested an additional $13.8 million in all of the newly issued subordinated notes of the Saratoga CLO and also
purchased $2.5 million in aggregate principal amount of the Class F-R-2 and $7.5 million aggregate principal amount of the
Class G-R-2 notes tranches at par, with a coupon of 3M USD LIBOR plus 8.75% and 3M USD LIBOR plus 10.00%, respectively. As part of this refinancing, the
Company also redeemed our existing $4.5 million aggregate amount of the Class F notes tranche at par and the $20.0 million CLO 2013-Warehouse loan was repaid.  F-28




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##### Table of Contents

On February 11, 2020, the Company entered into an unsecured loan agreement (CLO 2013-1 Warehouse 2 Loan) with CLO 2013-1 Warehouse 2, a wholly-owned subsidiary of Saratoga CLO, pursuant to which CLO 2013-1 Warehouse 2 may borrow from time to time up to $20.0 million from the Company in order to provide capital necessary to support warehouse activities. The
CLO 2013-1 Warehouse 2 Loan, which expires on August 20, 2021, bears interest at an annual rate of 3M USD LIBOR + 7.5%. During the year ended February 29, 2020, the Company invested $2.5 million
in aggregate principal amount of the CLO 2013-1 Warehouse 2 Loan and as of February 29, 2020, the fair value of this investment was $2.2 million. 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. For the years ended February 29, 2020, February 28, 2019 and February 28, 2018,
we accrued management fee income of $2.5 million, $1.7 million and $1.5 million, respectively, and interest income of $4.1 million, $2.9 million and $2.4 million, respectively, from the Saratoga CLO. 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. Prior to the refinancing, incentive fee income of $0.6 million and $0.6 million for the years
ended February 28, 2019 and February 28, 2018, respectively, was recognized related to the Saratoga CLO, reflecting the 12.0% hurdle rate that has been achieved. The incentive fee income from the Saratoga CLO is reported as incentive fee
income on the Companys consolidated statement of operations. See Note 4 for additional information. As of February 29, 2020,
the Company determined that the fair value of its investment in the subordinated notes of Saratoga CLO was $22.6 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 29, 2020, the fair value of its investment in the
Class F-R-2 Notes and G-R-2 Notes of Saratoga CLO was $2.5 million and
$7.4 million, respectively. As of February 29, 2020, Saratoga CLO had investments with a principal balance of $528.4 million and a weighted average spread over LIBOR of 4.0% and had debt with a principal balance of $475.1 million
with a weighted average spread over LIBOR of 2.2%. As 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 29, 2020, the present value of the projected future cash flows of the subordinated notes was approximately $22.9 million, using a 16.0% discount
rate. 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 $60.5 million, management fees of $22.1 million and incentive fees of $1.2 million. In conjunction with the third refinancing of the 2013-1 Reset CLO Notes on December 14, 2018, the Company is no longer entitled to receive an incentive management fee from Saratoga CLO. 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. As of February 28, 2019, the fair value of its investment in the Class F-R-2 Notes and G-R-2 Notes of Saratoga CLO was $2.5 million and $7.5 million, respectively. 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 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 separate audited financial statements of the Saratoga CLO
as of February 29, 2020 and February 28, 2019, pursuant to Rule 3-09 of SEC rules Regulation S-X, and for the years ended February 29, 2020, February 28, 2019 and February 28, 2018, are presented on
page S-1.  F-29




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##### Table of Contents

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 29, 2020 and February 28, 2019, 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, the sale of a blocker corporation, market discount and interest income with respect to the Saratoga
CLO which is consolidated for tax purposes as follows (dollars in thousands):  February 29,2020


February 28,2019Capital in excess of par value

$
(1,843
)

$
(18,350
)Total distributable earnings (loss)


1,843



18,350 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 29, 2020, February 28, 2019 and February 28, 2018 was as follows (dollars in thousands):  February 29, 2020


February 28, 2019


February 28, 2018Ordinary income

$
15,292


$
14,189


$
11,376Capital gains


4,806







Total

$
20,098


$
14,189


$
11,376 For federal income tax purposes, as of February 29, 2020, the aggregate net unrealized depreciation for
all securities was $17.5 million. The aggregate cost of securities for federal income tax purposes was $969.4 million. 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. As of February 29, 2020 and February 28, 2019, 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 loan, write-off of investments, and amortization of organizational expenditures and partnership interests (dollars in thousands).  February 29,2020


February 28,2019Post October loss deferred

$



$
Accumulated capital losses






(14,982
)Other temporary differences


174



991Undistributed ordinary income






751Unrealized appreciation (depreciation)


(17,453
)


(9,257
)Total components of accumulated losses

$
(17,279
)

$
(22,497
)  F-30




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##### Table of Contents

The Company had incurred capital losses of $9.3 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 29, 2020, the Company had net capital gains of $25.9 million. The Company utilized $10.7 million of short-term capital loss
carryovers and $4.3 million of long-term capital loss carryovers during the fiscal year ended February 29, 2020. These prior year losses were deemed to arise on the first day of the Companys fiscal year. As of February 29, 2020, the Company
has no remaining capital loss carryovers. 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 20172020) 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: 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-TG, Inc.,
SIA-TT, Inc., SIA-Vector, Inc., and SIA-VR, Inc., each 100% owned by the Company, are each filing standalone C Corporation tax
returns for federal and state purposes. As separately regarded entities for tax purposes, these entities are taxed at normal corporate rates. For tax purposes, any distributions by the entities to the parent company would generally need to be
distributed to the Companys shareholders. Generally, such distributions of the entities 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. SIA-Easy Ice, LLC was sold during the year ended February 29, 2020 and as part of this transaction, the actual legal
entity (Tax Blocker) that owned the preferred equity was sold. This Tax Blocker was a wholly-owned subsidiary of the Company. For purposes of tax accounting, the Company had an $8.0 million tax basis in the Tax Blocker.  F-31




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##### Table of Contents

Deferred tax assets and liabilities, and related valuation allowances, as
of February 29, 2020, February 28, 2019 and February 28, 2018, were as follows:  February 29,2020


February 28,2019


February 28,2018Total deferred tax assets

$
1,744,879


$
2,533,426


$
Total deferred tax liabilities


(1,412,486
)


(1,766,835
)


Valuation allowance on net deferred tax assets


(1,679,756
)


(1,506,307
)


Net deferrred tax liability

$
(1,347,363
)

$
(739,716
)

$
 As of February 29, 2020, the valuation allowance on deferred tax assets was $1.7 million, which
represents the federal and state tax effect of net operating losses and unrealized losses that we do not believe we will realize through future taxable income. Any adjustments to the Companys valuation allowance will depend on estimates of
future taxable income and will be made in the period such determination is made. Net deferred tax (benefit) expense for the year ended
February 29, 2020 includes $(0.4) million net change in unrealized appreciation (depreciation) on investments and $1.0 million net change in total operating expense, in the consolidated statement of operations, respectively. Net deferred tax (benefit) expense for the year ended February 28, 2019 includes $1.8 million change in unrealized appreciation
(depreciation) on investments and $(1.1) million net change in total operating expense, in the consolidated statement of operations, respectively. Net deferred tax (benefit) expense for the year ended February 28, 2018 includes $0.0 million change in unrealized appreciation
(depreciation) on investments and $0.0 million net change in total operating expense, in the consolidated statement of operations, respectively. Deferred tax temporary differences may include differences for state taxes and joint venture interests. Federal and state income tax provisions (benefits) on investments are as follows:  February 29, 2020


February 28, 2019


February 28, 2018CurrentFederal

$



$



$
State










Net current expense










DeferredFederal


480,415



686,445



State


127,232



53,271



Net deferred expense


607,647



739,716



Net tax provision

$
607,647


$
739,716


$
  F-32




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##### Table of Contents

The Company has federal net operating loss carryforwards of $0.1 million which will expire
starting in 2037, with the remaining net operating loss carryforwards of $3.5 million having an indefinite life. In addition, the Company has state net operating loss carryforwards of $1.7 million, which begin to expire in fiscal year 2028. 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 Investment Advisory and Management Agreement On July 30, 2010, the Company entered into the Management Agreement with our Manager. The initial term of the Management Agreement was two
years, with automatic, one-year renewals at the end of each year, subject to certain approvals by our board of directors and/or the Companys stockholders. On July 9, 2019, 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. Base Management Fee and Incentive Management Fee The base management fee of 1.75% per year is calculated based on the average value of our gross assets (other than cash or cash equivalents,
but including assets purchased with borrowed funds) at the end of the two most recently completed fiscal quarters. The base management fee is paid quarterly following the filing of the most recent 10-Q. The incentive management fee consists of the following two 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. 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 29, 2020, February 28, 2019 and February 28, 2018, the Company incurred $8.1 million, $6.9 million and $5.8 million in base management fees, respectively. For the years ended February 29, 2020,
February 28, 2019 and February 28, 2018, the Company incurred $5.8 million, $4.6 million and $3.4 million in incentive fees related to pre-incentive fee net investment income. For the
years ended February 29, 2020, February 28, 2019 and February 28, 2018, we accrued $8.4 million, $0.3 million and $0.9 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 29, 2020, the base management fees accrual was $2.1 million and the incentive fees accrual
was $13.7 million and is included in base management and incentive fees payable in the accompanying consolidated statements of assets and liabilities. 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.  F-33




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##### Table of Contents

Administration Agreement On July 30, 2010, the Company entered into a separate administration agreement (the Administration Agreement) with our
Manager, pursuant to which our Manager, as our administrator, has agreed to furnish us with the facilities and administrative services necessary to conduct our
day-to-day operations and provide managerial assistance on our behalf to those portfolio companies to which we are required to provide such assistance. The initial term
of the Administration Agreement was two years, with automatic, one-year renewals at the end of each year subject to certain approvals by our board of directors and/or our stockholders. The amount of expenses
payable or reimbursable thereunder by the Company was capped at $1.0 million for the initial two-year term of the Administration Agreement and subsequent renewals. On July 8, 2015, our board of
directors approved the renewal of the Administration Agreement for an additional one-year term and determined to increase the cap on the payment or reimbursement of expenses by the Company thereunder, which
had not been increased since the inception of the agreement, to $1.3 million. On July 7, 2016, our board of directors approved the renewal of the Administration Agreement for an additional one-year
term. On October 5, 2016, our board of directors determined to increase the cap on the payment or reimbursement of expenses by the Company under the Administration Agreement, from $1.3 million to $1.5 million, effective
November 1, 2016. On July 11, 2017, our board of directors approved the renewal of the Administration Agreement for an additional one-year term and determined to increase the cap on the payment or
reimbursement of expenses by the Company from $1.5 million to $1.75 million, effective August 1, 2017. On July 9, 2018, our board of directors approved the renewal of the Administration Agreement for an additional one-year term and determined to increase the cap on the payment or reimbursement of expenses by the Company from $1.75 million to $2.0 million, effective August 1, 2018. On July 9, 2019, our
board of directors approved the renewal of the Administration Agreement for an additional one-year term and determined to increase the cap on the payment or reimbursement of expenses by the Company from
$2.0 million to $2.225 million effective August 1, 2019. For the years ended February 29, 2020, February 28,
2019 and February 28, 2018, we recognized $2.1 million, $1.9 million and $1.6 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 29, 2020, $0.5 million of administrator expenses were accrued and included in due to manager in the accompanying consolidated statements of assets and
liabilities. 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. Saratoga CLO On August 7, 2018, the
Company entered into an unsecured loan agreement with CLO 2013-1 Warehouse, a wholly-owned subsidiary of Saratoga CLO, pursuant to which CLO 2013-1 Warehouse may borrow
from time to time up to $20 million from the Company in order to provide capital necessary to support warehouse activities. The CLO 2013-1 Warehouse Loan, which expired on February 7, 2020, bears
interest at an annual rate of 3M USD LIBOR + 7.5%. On December 14, 2018, the Company completed the third refinancing and issuance of
the 2013-1 Reset CLO Notes. This refinancing, among other things, extended the Saratoga CLO reinvestment period to January 2021, and extended its legal maturity to January 2030. A non-call period ending January 2020 was also 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. During the year ended February 29, 2020, the Company received full payment of $1.7 million from the Saratoga CLO for such transaction costs. 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.  F-34




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##### Table of Contents

For the years ended February 29, 2020, February 28, 2019 and February 28,
2018, we recognized $2.5 million, $1.7 million and $1.5 million in management fee income, respectively, related to the Saratoga CLO. In conjunction with the third refinancing and issuance of the 2013-1 Reset CLO Notes on
December 14, 2018, the Company is no longer entitled to receive an incentive management fee from Saratoga CLO. See Note 4 for additional information. For the years ended February 28, 2019 and February 28, 2018, we recognized incentive
fee income of $0.6 million and $0.6 million, respectively, related to the Saratoga CLO. On February 11, 2020, the Company
entered into an unsecured loan agreement CLO 2013-1 Warehouse 2 Loan with CLO 2013-1 Warehouse 2, a wholly-owned subsidiary of Saratoga CLO, pursuant
to which CLO 2013-1 Warehouse 2 may borrow from time to time up to $20.0 million from the Company in order to provide capital necessary to support warehouse activities. The CLO 2013-1 Warehouse 2 Loan, which expires on August 20, 2021, bears interest at an annual rate of 3M USD LIBOR + 7.5%. During the year ended February 29, 2020, the Company invested $2.5 million in
aggregate principal amount of the CLO 2013-1 Warehouse 2 Loan and as of February 29, 2020, the fair value of this investment was $2.2 million. For the years ended February 29, 2020, February 28, 2019 and February 28, 2018, the Company neither bought nor sold any investments from the
Saratoga CLO. 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 607.1% as of February 29, 2020 and 234.5% as of February 28, 2019. 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) a stock purchase transaction and (ii) a
portion of the funds available to us under the $40.0 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-35




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##### 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 29, 2020 and February 28, 2019, 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 29, 2020, February 28, 2019 and February 28, 2018, we recorded $0.6 million, $0.7 million and $0.8 million of interest expense, respectively, which includes commitment and
administrative agent fees. For the years ended February 29, 2020, February 28, 2019 and February 28, 2018, we recorded
$0.09 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 29, 2020, the average borrowings outstanding and the weighted average interest rate on outstanding borrowings under the Credit
Facility was approximately $0.6 million and 6.66%, respectively. For the fiscal year ended February 28, 2019, the average borrowings outstanding and the weighted average interest rate on outstanding borrowings under the Credit Facility was
approximately $3.4 million and 7.10%, respectively. 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. 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-36




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##### Table of Contents

Our borrowing base under the Credit Facility was $35.6 million, subject to the Credit
Facility cap of $45.0 million at February 29, 2020. For purposes of determining the borrowing base, most assets are assigned the values set forth in our most recent Annual Report on Form 10-K or
Quarterly Report on Form 10-Q filed with the U.S. Securities and Exchange Commission (SEC). Accordingly, the February 29, 2020 borrowing base relies upon the valuations set forth in the Quarterly Report on Form 10-Q for the period
ended November 30, 2019, as filed with the SEC on January 8, 2020. 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 Our
wholly-owned SBIC subsidiaries are able to borrow funds from the SBA against regulatory capital (which approximates equity capital) that is paid in and is subject to customary regulatory requirements including but not limited to an examination by
the SBA. On August 14, 2019, the Companys wholly-owned subsidiary, SBIC II LP, received an SBIC license from the SBA. The new
license provides up to $175.0 million in additional long-term capital in the form of SBA debentures. As a result of the 2016 omnibus spending bill signed into law in December 2015, the maximum amount of
SBA-guaranteed debentures that affiliated SBIC funds can have outstanding was increased from $225.0 million to $350.0 million. With this license approval, Saratoga will grow its SBA relationship
from $150.0 million to $325.0 million of committed capital. As of February 29, 2020, we have funded SBIC LP with an
aggregate total of $75.0 million of equity capital and have $150.0 million of SBA-guaranteed debentures outstanding and have funded SBIC II LP with an aggregate total of $50.0 million of equity
capital and do not have any 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 and SBIC II LP may borrow to a maximum of $150.0 million and $175.0 million, respectively, which is up to twice its potential regulatory capital. SBICs are designed to stimulate the flow of private equity capital to eligible small businesses. Under SBA regulations, SBICs may make loans to
eligible small businesses and invest in the equity securities of small businesses. Under present SBA regulations, eligible small businesses include businesses that have a tangible net worth not exceeding $19.5 million and have average annual
fully taxed net income not exceeding $6.5 million for the two most recent fiscal years. In addition, an SBIC must devote 25.0% of its investment activity to smaller concerns as defined by the SBA. 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 and SBIC II LP are subject to
regulation and oversight by the SBA, including requirements with respect to maintaining certain minimum financial ratios and other covenants. Receipt of an SBIC license does not assure that SBIC II LP will receive
SBA-guaranteed debenture funding, which is dependent upon SBIC II LP continuing to be in compliance with SBA regulations and policies. The SBA, as a creditor, will have a superior claim to SBIC LP and SBIC II
LP assets over our stockholders and debtholders in the event we liquidate SBIC LP and SBIC II LP or the SBA exercises its remedies under the SBA-guaranteed debentures issued by SBIC LP and SBIC II LP upon an event of default. The Company received exemptive relief from the SEC to permit it to exclude the debt of our SBIC subsidiaries guaranteed by the SBA from the
definition of senior securities in the asset coverage test under the 1940 Act. This allows the Company increased flexibility under the asset coverage test by permitting it to borrow up to $325.0 million more than it would otherwise be able to
absent the receipt of this exemptive relief. On April 16, 2018, as permitted by the Small Business Credit Availability Act, which was signed into law on March 23, 2018, the non-interested board of directors of the Company approved of the
Company becoming subject to a minimum asset coverage ratio of 150.0% from 200% under Sections 18(a)(1) and 18(a)(2) of the Investment Company Act, as amended. The 150.0% asset coverage ratio became effective on April 16, 2019. At February 29, 2020 and February 28, 2019, there was $150.0 million and $150.0 million outstanding of SBA debentures, respectively.
The carrying amount of the amount outstanding of SBA debentures approximates its fair value, which is based on a waterfall analysis showing adequate collateral coverage and would be classified as a Level 3 liability within the fair value
hierarchy. Financing costs of $5.0 million and $0.7 million related to the SBA debentures issued by SBIC LP and SBIC II LP, respectively, have been capitalized and are being amortized over the term of the commitment and drawdown.  F-37




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##### Table of Contents

For the years ended February 29, 2020, February 28, 2019 and February 28,
2018, we recorded $4.8 million, $4.7 million and $4.1 million of interest expense related to the SBA debentures, respectively. For the years ended February 29, 2020, February 28, 2019 and February 28, 2018, 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 29, 2020, February 28, 2019 and February 28, 2018 on the outstanding borrowings of the SBA debentures
was 3.23%, 3.20% and 3.14%, respectively. During the years ended February 29, 2020 and February 28, 2019, the average dollar amount of SBA debentures outstanding was $150.0 million and $146.0 million, respectively. In December 2015, the 2016 omnibus spending bill approved by Congress and signed into law by the President increased the amount of
SBA-guaranteed debentures that affiliated SBIC funds can have outstanding from $225.0 million to $350.0 million, subject to SBA approval. SBA regulations previously limited the amount of
SBA-guaranteed debentures that an SBIC may issue to $150.0 million when it has at least $75.0 million in regulatory capital but this has increased to $175.0 million for new licenses when it has
at least $87.5 million in regulatory capital. Affiliated SBICs are permitted to issue up to a combined maximum amount of $350.0 million in SBA-guaranteed debentures when they have at least
$175.0 million in combined regulatory capital. 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. As of February 28, 2019, the carrying amount and fair value of the 2023 Notes was $74.5 million and $76.4 million, respectively. On December 21, 2019 and February 7, 2020, the Company redeemed $50.0 million and $24.5 million, respectively, in
aggregate principal amount of the $74.5 million in aggregate principal amount of issued and outstanding 2023 Notes. Upon the extinguishment of the 2023 Notes, the remaining unamortized deferred debt financing costs of $1.6 million
(including underwriting commissions and net of issuance premiums), was recorded within loss on debt extinguishment in the consolidated statements of operations for the year ended February 29, 2020 when the related 2023 Notes were extinguished.
The 2023 Notes were listed on the NYSE under the trading symbol SAB with a par value of $25.00 per share, and have been delisted following the redemption. 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 cost related to the 2023 Notes. Interest expense and amortization of deferred financing cost are reported as interest and debt
financing expense on the consolidated statements of operations. During the years ended February 28, 2019 and February 28, 2018, the average dollar amount of 2023 Notes outstanding was $74.5 million and $74.5 million,
respectively. 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 31, 2021, may be redeemed in whole or in part at any time or from time to time at our option. The net
proceeds from the offering were used for general corporate purposes in accordance with our investment objective and strategies. Financing costs of $1.6 million related to the 2025 Notes have been capitalized and are being amortized over the
term of the 2025 Notes.  F-38




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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 29, 2020, 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 29, 2020, the carrying amount and fair value of the 2025 Notes was $60.0 million and $60.6 million, respectively. The fair value of the
2025 Notes, which are publicly traded, is based upon closing market quotes as of the measurement date and would be classified as a Level 1 liability within the fair value hierarchy. For the year ended February 29, 2020 and February 28, 2019, we recorded $3.7 million and $1.6 million, respectively, of
interest expense and $0.4 million and $0.2 million, respectively, of amortization of deferred financing costs related to the 2025 Notes. Interest expense and amortization of deferred financing cost are reported as interest and debt
financing expense on the consolidated statements of operations. For the year ended February 29, 2020 and February 28, 2019, the average dollar amount of 2025 Notes outstanding was $60 million and $25 million, respectively. As noted above, on December 21, 2019 and February 7, 2020, the Company redeemed $50.0 million and $24.5 million,
respectively, in aggregate principal amount of the $74.5 million in aggregate principal amount of issued and outstanding 2023 Notes. As of February 28, 2019, the carrying amount and fair value of the 2023 Notes was $74.5 million and
$76.4 million, respectively. Senior Securities Information about our senior securities is shown in the following table as of February 28/29 for the fiscal years indicated in the table,
unless otherwise noted. See Managements Discussion and Analysis of Financial Condition and Results of OperationsFinancial condition, liquidity and capital resources for more detailed information regarding the senior
securities.  F-39




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##### Table of Contents

SENIOR SECURITIES (dollar amounts in thousands, except per share data)  Class and Year(1)(2)

TotalAmountOutstandingExclusive ofTreasurySecurities(3)


AssetCoverageperUnit(4)


InvoluntaryLiquidatingPreferenceperShare(5)


AverageMarketValueperShare(6)(in thousands)Credit Facility with Madison Capital FundingFiscal year 2020 (as of February 29, 2020)

$



$
6,071







N/AFiscal year 2019 (as of February 28, 2019)

$



$
2,345







N/AFiscal year 2018 (as of February 28, 2018)

$



$
2,930







N/AFiscal year 2017 (as of February 28, 2017)

$



$
2,710







N/AFiscal year 2016 (as of February 29, 2016)

$



$
3,025







N/AFiscal year 2015 (as of February 28, 2015)

$
9,600


$
3,117







N/AFiscal year 2014 (as of February 28, 2014)

$



$
3,348







N/AFiscal year 2013 (as of February 28, 2013)

$
24,300


$
5,421







N/AFiscal year 2012 (as of February 29, 2012)

$
20,000


$
5,834







N/AFiscal year 2011 (as of February 28, 2011)

$
4,500


$
20,077







N/AFiscal year 2010 (as of February 28, 2010)

$



$








N/AFiscal year 2009 (as of February 28, 2009)

$



$








N/AFiscal year 2008 (as of February 29, 2008)

$



$








N/AFiscal year 2007 (as of February 28, 2007)

$



$








N/A7.50% Notes due 2020(7)Fiscal year 2017 (as of February 28, 2017)

$



$








N/AFiscal year 2016 (as of February 29, 2016)

$
61,793


$
3,025






$
25.24
(8)Fiscal year 2015 (as of February 28, 2015)

$
48,300


$
3,117






$
25.46
(8)Fiscal year 2014 (as of February 28, 2014)

$
48,300


$
3,348






$
25.18
(8)Fiscal year 2013 (as of February 28, 2013)

$



$








N/AFiscal year 2012 (as of February 29, 2012)

$



$








N/AFiscal year 2011 (as of February 28, 2011)

$



$








N/AFiscal year 2010 (as of February 28, 2010)

$



$








N/AFiscal year 2009 (as of February 28, 2009)

$



$








N/AFiscal year 2008 (as of February 29, 2008)

$



$








N/AFiscal year 2007 (as of February 28, 2007)

$



$








N/A6.75% Notes due 2023(9)Fiscal year 2020 (as of February 29, 2020)

$



$








N/AFiscal year 2019 (as of February 28, 2019)

$
74,451


$
2,345






$
25.74
(10)Fiscal year 2018 (as of February 28, 2018)

$
74,451


$
2,930






$
26.05
(10)Fiscal year 2017 (as of February 28, 2017)

$
74,451


$
2,710






$
25.89
(10)6.25% Notes due 2025Fiscal year 2020 (as of February 29, 2020)

$
60,000


$
6,071






$
25.75
(11)Fiscal year 2019 (as of February 28, 2019)

$
60,000


$
2,345






$
24.97
(11)  (1)
We have excluded our SBA-guaranteed debentures from this
table because the SEC has granted us exemptive relief that permits us to exclude such debentures from the definition of senior securities in the 200% asset coverage ratio we are required to maintain under the 1940 Act. See Managements
Discussion and Analysis of Financial Condition and Results of OperationsFinancial Condition, Liquidity and Capital Resources. (2)
This table does not include the senior securities of our predecessor entity, GSC Investment Corp., relating to
a revolving securitized credit facility with Deutsche Bank, in light of the fact that the Company was under different management during the time that such credit facility was outstanding. (3)
Total amount of senior securities outstanding at the end of the period presented. (4)
Asset coverage per unit is the ratio of our total assets, less all liabilities and indebtedness not represented
by senior securities, to the aggregate amount of senior securities representing indebtedness. Asset coverage per unit is expressed in terms of dollar amounts per $1,000 of indebtedness, calculated on a total basis. (5)
The amount to which such class of senior security would be entitled upon the involuntary liquidation of the
issuer in preference to any security junior to it. The  indicates information which the Securities and Exchange Commission expressly does not require to be disclosed for certain types of senior securities. (6)
Not applicable for credit facility because not registered for public trading. (7)
On January 13, 2017, the Company redeemed in full its 2020 Notes. The Company used a portion of the net
proceeds from the 2023 Notes offering, which was completed in December 2016, to redeem the 2020 Notes in full. (8)
Based on the average daily trading price of the 2020 Notes on the NYSE. (9)
On December 21, 2019 and February 7, 2020, the Company redeemed $50.0 million and
$24.5 million, respectively, in aggregate principal amount of the $74.5 million in aggregate principal amount of issued and outstanding 2023 Notes. (10)
Based on the average daily trading price of the 2023 Notes on the NYSE. (11)
Based on the average daily trading price of the 2025 Notes on the NYSE.  F-40




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##### Table of Contents

Note 8. Commitments and Contingencies Contractual Obligations The following
table shows our payment obligations for repayment of debt and other contractual obligations at February 29, 2020:  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











79,000



71,0002025 Notes


60,000















60,000Total Long-Term Debt Obligations

$
210,000


$



$



$
79,000


$
131,000 Off-Balance Sheet Arrangements At February 29, 2020 and February 28, 2019, the Companys off-balance sheet arrangements
consisted of $64.1 million and $4.5 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 29, 2020 and February 28, 2019 is shown in the table below (dollars in thousands):  February 29, 2020


February 28, 2019At Companys discretioninMotionNow, Inc.

$
3,000


$
Omatic Software, LLC


1,000



1,000Passageways, Inc.


5,000



PDDS Buyer, LLC


5,000



Saratoga Investment Corp. CLO 2013-1 Warehouse 2,
Ltd


17,500



Top Gun Pressure Washing, LLC


5,000



Village Realty Holdings LLC


10,000



Total


46,500



1,000At portfolio companys discretion - satisfaction of certain financial and nonfinancial
covenants requiredArbiterSports, LLC


1,000



Axiom Purchaser, Inc.


1,000



1,000CoConstruct, LLC


3,500



Davisware, LLC


2,000



Destiny Solutions Inc.






1,500GDS Holdings US, Inc.






1,000GoReact


2,000



HemaTerra Holding Company, LLC


4,000



Passageways, Inc.


3,000



Village Realty Holdings LLC


1,124



17,624



3,500Total

$
64,124


$
4,500  F-41




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##### Table of Contents

Note 9. Directors Fees The independent directors each 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 29, 2020, February 28, 2019 and February 28, 2018, we incurred $0.3 million, $0.3 million and
$0.2 million for directors fees and expenses, respectively. As of February 29, 2020 and February 28, 2019, $0.06 million and $0.06 million in directors fees and expenses were accrued and unpaid, respectively. As
of February 29, 2020, 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. 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, January 8, 2019 and January 7, 2020, the Companys board of directors extended the
open market share repurchase plan for another year to October 15, 2018, January 15, 2020 and January 15, 2021, respectively, each time leaving the number of shares unchanged at 600,000 shares of its common stock. On May 4, 2020,
the Board of Directors increased the share repurchase plan to 1.3 million shares of common stock. As of February 29, 2020, 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.  F-42




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##### Table of Contents

On March 16, 2017, we entered into an equity distribution agreement with Ladenburg
Thalmann & Co. Inc., through which we may offer for sale, from time to time, up to $30.0 million of our common stock through an ATM offering. Subsequent to this, BB&T Capital Markets and B. Riley FBR, Inc. were also added to the
agreement. On July 11, 2019, the amount of the common stock to be offered was increased to $70.0 million, and on October 8, 2019, the amount of the common stock to be offered was increased to $130.0 million. As of
February 29, 2020, the Company sold 3,922,018 shares for gross proceeds of $97.1 million at an average price of $24.77 for aggregate net proceeds of $95.9 million (net of transaction costs). For the year ended February 29, 2020,
the Company sold 3,427,346 shares for gross proceeds of $85.9 million at an average price of $25.06 for aggregate net proceeds of $84.7 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-43




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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 29, 2020, February 28, 2019 and February 28, 2018, as shown in the tables below:  For the Year Ended February 29, 2020Common Stock


Capital inExcess


TotalDistributableShares


Amount


of Par Value


Earnings (Loss)


Net AssetsBalance at February 28, 2019


7,657,156


$
7,657


$
203,552,800


$
(22,685,270
)

$
180,875,187Increase (Decrease) from Operations:Net investment income














3,680,788



3,680,788Net realized gain (loss) from investments


















Net change in unrealized appreciation (depreciation) on investments














3,989,130



3,989,130Net change in provision for deferred taxes on unrealized (appreciation) depreciation on
investments














(20,930
)


(20,930
)Decrease from Shareholder Distributions:Distributions of investment income  net














(4,176,132
)


(4,176,132
)Capital Share Transactions:Proceeds from issuance of common stock


76,448



77



1,772,557







1,772,634Stock dividend distribution


31,240



31



667,358







667,389Repurchases of common stock


















Offering costs










(4,365
)






(4,365
)Balance at May 31, 2019


7,764,844


$
7,765


$
205,988,350


$
(19,212,414
)

$
186,783,701Increase (Decrease) from Operations:Net investment income














4,956,074



4,956,074Net realized gain (loss) from investments














1,870,089



1,870,089Net change in unrealized appreciation (depreciation) on investments














1,457,872



1,457,872Net change in provision for deferred taxes on unrealized (appreciation) depreciation on
investments














(704,263
)


(704,263
)Decrease from Shareholder Distributions:Distributions of investment income  net














(4,336,226
)


(4,336,226
)Capital Share Transactions:Proceeds from issuance of common stock


1,371,667



1,371



34,101,012







34,102,383Stock dividend distribution


31,545



32



714,497







714,529Repurchases of common stock


















Offering costs










(507,592
)






(507,592
)Balance at August 31, 2019


9,168,056


$
9,168


$
240,296,267


$
(15,968,868
)

$
224,336,567Increase (Decrease) from Operations:Net investment income














4,575,303



4,575,303Net realized gain (loss) from investments














10,739,678



10,739,678Net change in unrealized appreciation (depreciation) on investments














(536,151
)


(536,151
)Net change in provision for deferred taxes on unrealized (appreciation) depreciation on
investments














(1,061,608
)


(1,061,608
)Decrease from Shareholder Distributions:Distributions of investment income  net














(5,323,383
)


(5,323,383
)Capital Share Transactions:Proceeds from issuance of common stock


1,952,367



1,951



49,351,357







49,353,308Stock dividend distribution


34,575



36



806,857







806,893Repurchases of common stock


















Offering costs










(710,257
)






(710,257
)Balance at November 30, 2019


11,154,998


$
11,155


$
289,744,224


$
(7,575,029
)

$
282,180,350Increase (Decrease) from Operations:Net investment income














66,106



66,106Net realized gain (loss) from investments














30,267,388



30,267,388Net change in unrealized appreciation (depreciation) on investments














(5,681,765
)


(5,681,765
)Net change in provision for deferred taxes on unrealized (appreciation) depreciation on
investments














2,141,150



2,141,150Decrease from Shareholder Distributions:Distributions of investment income  net














(6,261,839
)


(6,261,839
)Capital Share Transactions:Proceeds from issuance of common stock


26,865



27



676,089







676,116Stock dividend distribution


35,682



36



907,645







907,681Repurchases of common stock


















Offering costs










(8,334
)






(8,334
)Tax reclassification of stockholders equity in accordance with generally accepted accounting
principles










(1,842,633
)


1,842,633



Balance at February 29, 2020


11,217,545


$
11,218


$
289,476,991


$
14,798,644


$
304,286,853  F-44




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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. The following information sets forth the computation of the weighted average basic and diluted net
increase in net assets resulting from operations per share for the years ended February 29, 2020, February 28, 2019 and February 28, 2018 (dollars in thousands except share and per share amounts):  Basic and Diluted

February 29,2020


February 28,2019


February 28,2018Net increase in net assets resulting from operations

$
55,739


$
18,509


$
17,679Weighted average common shares outstanding


9,319,192



7,046,686



6,024,040Weighted average earnings per common share

$
5.98


$
2.63


$
2.93 Note 12. Dividend On January 7, 2020, the Company declared a dividend of $0.56 per share, which was paid on February 6, 2020, to common stockholders of
record on January 24, 2020. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to the Companys DRIP. Based on shareholder elections, the dividend consisted of approximately
$5.4 million in cash and 35,682 newly issued shares of common stock, or 0.3% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of
$25.44 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on January 24, 27, 28, 29, 30, 31 and February 3, 4, 5 and 6, 2020. On August 27, 2019, the Company declared a dividend of $0.56 per share, which was paid on September 26, 2019, to common stockholders
of record on September 13, 2019. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to the Companys DRIP. Based on shareholder elections, the dividend consisted of
approximately $4.5 million in cash and 34,575 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on
a price of $23.34 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on September 13, 16, 17, 18, 19, 20, 23, 24, 25 and 26, 2019. On May 28, 2019, the Company declared a dividend of $0.55 per share, which was paid on June 27, 2019, to common stockholders of
record on June 13, 2019. Shareholders had the option to receive payment of the dividend in cash, or receive shares of common stock, pursuant to the Companys DRIP. Based on shareholder elections, the dividend consisted of approximately
$3.6 million in cash and 31,545 newly issued shares of common stock, or 0.4% of our outstanding common stock prior to the dividend payment. The number of shares of common stock comprising the stock portion was calculated based on a price of
$22.65 per share, which equaled 95.0% of the volume weighted average trading price per share of the common stock on June 14, 17, 18, 19, 20, 21, 24, 25, 26 and 27, 2019. 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 95.0% of the volume weighted average trading price per share of the common stock on March 15, 18, 19, 20, 21, 22, 25, 26, 27 and 28, 2019. 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.  F-45




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##### Table of Contents

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. 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 95.0% of the volume weighted average trading price per share of the common stock on December 13, 14, 15, 18, 19, 20, 21, 22, 26 and 27, 2017. 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 95.0% of the volume weighted average trading price per share of the common stock on September 13, 14, 15, 18, 19, 20, 21, 22, 25 and 26, 2017. 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
95.0% of the volume weighted average trading price per share of the common stock on June 14, 15, 16, 19, 20, 21, 22, 23, 26 and 27, 2017. 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 95.0% of the volume weighted average trading price per share of the common stock on March 15, 16, 17, 20, 21, 22, 23, 24, 27 and 28, 2017.  F-46




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##### Table of Contents

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 95.0% of the volume weighted average trading price per share of the common stock on January 27, 30, 31 and February 1, 2, 3, 6, 7, 8 and 9, 2017. 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 95.0% of the volume weighted average trading price per share of the common stock on October 27, 28, 31 and November 1, 2, 3, 4, 7, 8 and 9, 2016. 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 95.0% of the volume weighted average trading price per share of the common stock on August 22, 23, 24, 25, 26, 29, 30, 31 and September 1 and 2, 2016. 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
95.0% of the volume weighted average trading price per share of the common stock on July 27, 28, 29 and August 1, 2, 3, 4, 5, 8 and 9, 2016. 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 95.0% of the volume weighted average trading price per share of the common stock on April 14, 15, 18, 19, 20, 21, 22, 25, 26 and 27, 2016. 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 95.0% of the volume weighted average trading price per share of the common stock on February 16, 17, 18, 19, 22, 23, 24, 25, 26 and 29, 2016. 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 95.0% of the volume weighted average trading price per share of the common stock on November 16, 17, 18, 19, 20, 23, 24, 25, 27 and 30, 2015.  F-47




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##### Table of Contents

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 95.0% of the volume weighted average trading price per share of the common stock on August 18, 19, 20, 21, 24, 25, 26, 27, 28 and 31, 2015. 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 95.0% of the volume weighted average trading price per share of the common stock on May 22, 26, 27, 28, 29 and June 1, 2, 3, 4, and 5, 2015. 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 95.0% of the volume weighted average trading price per share of the common stock on May 15, 18, 19, 20, 21, 22, 26, 27, 28 and 29, 2015. 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 95.0% of the volume
weighted average trading price per share of the common stock on February 13, 17, 18, 19, 20, 23, 24, 25, 26 and 27, 2015. 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 95.0% of the volume weighted average trading price per share of the common stock on November 14, 17, 18, 19, 20, 21, 24, 25, 26 and 28, 2014. 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.  F-48




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##### Table of Contents

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. 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.  F-49




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##### Table of Contents

The following tables summarize dividends declared for the years ended February 29,
2020, February 28, 2019, February 28, 2018, February 28, 2017 and February 29, 2016 (dollars in thousands except for share amounts):  Date Declared

Record Date


Payment Date


Amount    per Share


Total    Amount*January 7, 2020


January 24, 2020



February 6, 2020


$
0.56


$
6,262August 27, 2019


September 13, 2019



September 26, 2019



0.56



5,323May 28, 2019


June 13, 2019



June 27, 2019



0.55



4,336February 26, 2019


March 14, 2019



March 28, 2019



0.54



4,176Total dividends declared









$
2.21


$
20,097  Date Declared

Record Date


Payment Date


Amount    per Share


Total    Amount*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


$
14,189Date Declared

Record Date


Payment Date


Amount    per Share


Total    Amount*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


Amount    per Share


Total    Amount*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


Amount    per Share


Total    Amount*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


$
13,045  *
Total amount is calculated based on the number of shares outstanding at the date of record.  F-50




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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 29, 2020, February 28, 2019, February 28, 2018,
February 28, 2017 and February 29, 2016:  Per share data

February 29,2020


February 28,2019


February 28,2018


February 28,2017


February 29,2016Net asset value at beginning of period

$
23.62


$
22.96


$
21.97


$
22.06


$
22.70Adoption of ASC 606






(0.01
)










Net asset value at beginning of period, as adjusted


23.62



22.95



21.97



22.06



22.70Net investment income(1)


1.42



2.60



2.11



1.68



1.91Net realized and unrealized gains (losses) on investments(1)


4.56



0.03



0.82



0.30



0.18Net increase in net assets resulting from operations


5.98



2.63



2.93



1.98



2.09Distributions declared from net investment income


(2.21
)


(2.06
)


(1.90
)


(1.93
)


(2.36
)Total distributions to stockholders


(2.21
)


(2.06
)


(1.90
)


(1.93
)


(2.36
)Issuance of common stock above net asset value(2)






0.15











Dilution(3)


(0.26
)


(0.05
)


(0.04
)


(0.14
)


(0.37
)Net asset value at end of period

$
27.13


$
23.62


$
22.96


$
21.97


$
22.06Net assets at end of period

$
304,286,853


$
180,875,187


$
143,691,367


$
127,294,777


$
125,149,875Shares outstanding at end of period


11,217,545



7,657,156



6,257,029



5,794,600



5,672,227Per share market value at end of period

$
22.91


$
23.04


$
21.86


$
22.74


$
14.22Total return based on market value(4)


9.28
%


16.11
%


5.28
%


80.83
%


4.27
%Total return based on net asset value(5)


26.22
%


13.33
%


14.45
%


12.62
%


11.10
%Ratio/Supplemental data:Ratio of net investment income to average net assets


5.63
%


11.22
%


9.37
%


7.57
%


8.52
%Expenses:Ratio of operating expenses to average net assets


6.25
%


6.98
%


7.81
%


7.21
%


6.93
%Ratio of loss on extinguishment of debt to average net assets


0.67
%










1.14
%


Ratio of incentive management fees to average net assets


6.01
%


3.00
%


3.19
%


2.31
%


1.78
%Ratio of interest and debt financing expenses to average net assets


6.23
%


8.05
%


8.05
%


7.75
%


6.75
%Ratio of total expenses to average net assets


19.16
%


18.03
%


19.05
%


18.41
%


15.46
%Portfolio turnover rate(6)


36.82
%


35.26
%


19.73
%


43.76
%


26.22
%Asset coverage ratio per unit(7)


6,071



2,345



2,930



2,710



3,025Average 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



N/A


$
25.242023 Notes


N/A


$
25.74


$
26.05


$
25.89



N/A2025 Notes

$
25.75


$
24.97



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 and may include the impact of the different share amounts used for different items (weighted average basic common shares outstanding for the corresponding
year and actual common shares outstanding at the end of the year) in the per common share data calculation and rounding impacts. See Note 12, Dividend. (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-51




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##### Table of Contents

Note 14. Selected Quarterly Data (Unaudited)  2020($ in thousands, except per share numbers)

Qtr 4


Qtr 3


Qtr 2


Qtr 1Total investment income

$
17,613


$
14,196


$
13,888


$
12,751Net investment income


66



4,575



4,956



3,681Net realized and unrealized gain (loss)


26,727



9,142



2,624



3,968Net increase in net assets resulting from operations


26,793



13,717



7,580



7,649Net investment income per common share

$
0.01


$
0.46


$
0.59


$
0.48Net realized and unrealized gain (loss) per common share

$
2.39


$
0.91


$
0.32


$
0.51Dividends declared per common share

$
0.56


$
0.56


$
0.55


$
0.54Net asset value per common share

$
27.13


$
25.30


$
24.47


$
24.062019($ 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


$
21.69  F-52




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##### Table of Contents

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: COVID-19 We evaluated subsequent events from February 29, 2020 through May 6, 2020. On March 11, 2020, the World Health Organization declared the novel
coronavirus (COVID-19) as a pandemic, and on March 13, 2020 the United States declared a national emergency with respect to COVID-19. The outbreak of COVID-19 has severely impacted global economic activity and caused significant
volatility and negative pressure in financial markets. The global impact of the outbreak has been rapidly evolving and many countries, including the United States, have reacted by instituting quarantines, mandating business and school closures and
restricting travel. Such actions are creating disruption in global supply chains and adversely impacting a number of industries. The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global
economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19. Nevertheless, COVID-19 presents material uncertainty and risks with respect to the underlying value of
the Companys portfolio companies, the Companys business, financial condition, results of operations and cash flows, such as the potential negative impact to financing arrangements, company decisions to delay, defer and/or modify the
character of dividends in order to preserve liquidity, increased costs of operations, changes in law and/or regulation, and uncertainty regarding government and regulatory policy. As of February 29, 2020, the Company valued its portfolio investments in conformity with U.S. GAAP based on the facts and circumstances known
by the Company at that time, or reasonably expected to be known at that time. Due to the overall volatility that the COVID-19 pandemic has caused during the months that followed our February 29, 2020 valuation, any valuations conducted now or in the
future in conformity with U.S. GAAP could result in a lower fair value of our portfolio. The potential impact to our results will depend
to a large extent on future developments and new information that may emerge regarding the duration and severity of COVID-19 and the actions taken by authorities and other entities to contain the coronavirus or treat its impact, all of which are
beyond our control. Accordingly, the Company cannot predict the extent to which its financial condition and results of operations will be affected at this time. Credit Facility On April 24, 2020, we
entered into a fourth amendment to the Credit Facility with Madison Capital Funding LLC to, among other things:  

permit certain amendments related to the Paycheck Protection Program (Permitted PPP Amendment) to
Loan Asset Documents;  

exclude certain debt and interest amounts allowed by the Permitted PPP Amendments from certain calculations
related to Net Leverage Ratio, Interest Coverage Ratio and EBITDA; and  

exclude such Permitted PPP Amendments from constituting a Material Modification.  F-53




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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 29, 2020 and February
 28, 2019


S-3Statements of Operations for the years ended February 29, 2020, February 28,
 2019 and February 28, 2018


S-4Statements of Changes in Net Assets for the years ended February 29, 2020,
 February 28, 2019 and February 28, 2018


S-5Statements of Cash Flows for the years ended February 29, 2020, February 28,
 2019 and February 28, 2018


S-6Schedules of Investments as of February 29, 2020 and February 28,
2019


S-7Notes to Financial Statements


S-16 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




---

##### 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 statements of assets and liabilities, including the schedule of investments, as of February 29, 2020 and February 28, 2019, and the related statements of operations,
changes in net assets and cash flows for the years ended February 29, 2020 and February 28, 2019, 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 29, 2020 and February 28, 2019, and the results of its
operations, changes in its net assets and its cash flows for the years ended February 29, 2020 and February 28, 2019 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 year ended February 28, 2018 was
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 6, 2020  S-2




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##### Table of Contents

Saratoga Investment Corp. CLO 2013-1, Ltd. Statements of Assets and Liabilities  February 29, 2020


February 28, 2019ASSETSInvestments at fair valueLoans at fair value (amortized cost of $523,438,207 and $506,145,483, respectively)

$
500,999,677


$
498,389,369Equities at fair value (amortized cost of $2,566,752 and $3,531,218, respectively)


257



15,691Total investments at fair value (amortized cost of $526,004,959 and $509,676,701,
respectively)


500,999,934



498,405,060Cash and cash equivalents


9,081,041



18,495,653Receivable from open trades


10,419,700



7,855,309Interest receivable (net of reserve of $307,705 and $168,443, respectively)


1,294,523



2,104,495Prepaid expenses and other assets


84,526



Total assets

$
521,879,724


$
526,860,517LIABILITIESInterest payable

$
2,090,188


$
4,963,472Payable from open trades


36,673,471



26,232,247Accrued base management fee


54,441



108,419Accrued subordinated management fee


217,766



433,675Due to affiliate






1,673,747Accounts payable and accrued expenses


81,822



1,221,110Loan payable, related party (See Note 7)


2,500,000



Loan payable, third party


2,600,000



Saratoga Investment Corp. CLO 2013-1, Ltd. Notes:Class 
A-1FL-R-2 Senior Secured Floating Rate Notes


255,000,000



255,000,000Class 
A-1FXD-R-2 Senior Secured Fixed Rate Notes


25,000,000



25,000,000Class-A-2-R-2 Senior Secured Floating Rate Notes


40,000,000



40,000,000Class B-R-2
Senior Secured Floating Rate Notes


59,500,000



59,500,000Class C-R-2
Deferrable Mezzanine Floating Rate Notes


22,500,000



22,500,000Discount on
Class C-R-2 Notes


(530,448
)


(585,059
)Class D-R-2
Deferrable Mezzanine Floating Rate Notes


31,000,000



31,000,000Discount on
Class D-R-2 Notes


(965,259
)


(1,064,636
)Class 
E-1-R-2 Deferrable Mezzanine Floating Rate Notes


27,000,000



27,000,000Class E-2-R-2 Deferrable Mezzanine Fixed Rate Notes






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


2,500,000



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


7,500,000



7,500,000Deferred debt financing costs


(2,340,764
)


(2,465,897
)Subordinated Notes


69,500,000



69,500,000Discount on Subordinated Notes


(22,899,324
)


(25,256,892
)Total liabilities

$
556,981,893


$
544,760,186Commitments and contingencies (See Note 6)NET ASSETSOrdinary equity, par value $1.00, 250 ordinary shares authorized, 250 and 250 issued and
outstanding, respectively

$
250


$
250Total distributable earnings (loss)


(35,102,419
)


(17,899,919
)Total net assets (deficit)


(35,102,169
)


(17,899,669
)Total liabilities and net assets

$
521,879,724


$
526,860,517 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 29, 2020


February 28, 2019


February 28, 2018INVESTMENT INCOMEInterest from investments

$
32,413,402


$
23,413,966


$
17,435,371Interest from cash and cash equivalents


98,964



25,848



14,644Other income


416,089



623,032



415,428Total investment income


32,928,455



24,062,846



17,865,443EXPENSESInterest and debt financing expenses


28,511,147



19,612,756



13,896,547Base management fee


500,761



344,436



301,863Subordinated management fee


2,003,043



1,377,744



1,207,454Incentive fees






567,932



591,368Professional fees


322,170



345,407



216,672Trustee expenses


194,169



181,492



160,883Miscellaneous fee expense


71,096



98,496



95,314Loss on extinguishment of debt






1,199,851



Total expenses


31,602,386



23,728,114



16,470,101NET INVESTMENT INCOME


1,326,069



334,732



1,395,342REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:Net realized gain (loss) on investments


(4,795,185
)


(1,344,711
)


619,531Net change in unrealized appreciation (depreciation) on investments


(13,733,384
)


(5,644,371
)


(286,416
)Net realized and unrealized gain (loss) on investments


(18,528,569
)


(6,989,082
)


333,115NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

$
(17,202,500
)

$
(6,654,350
)

$
1,728,457 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 29,2020


February 28,2019


February 28,2018INCREASE (DECREASE) FROM OPERATIONS:Net investment income

$
1,326,069


$
334,732


$
1,395,342Net realized gain (loss) from investments


(4,795,185
)


(1,344,711
)


619,531Net change in unrealized appreciation (depreciation) on investments


(13,733,384
)


(5,644,371
)


(286,416
)Net increase (decrease) in net assets resulting from operations


(17,202,500
)


(6,654,350
)


1,728,457Total increase (decrease) in net assets


(17,202,500
)


(6,654,350
)


1,728,457Net assets at beginning of period


(17,899,669
)


(11,245,319
)


(12,973,776
)Net assets at end of period

$
(35,102,169
)

$
(17,899,669
)

$
(11,245,319
) 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 29,2020


February 28,2019


February 28,2018Operating activitiesNET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

$
(17,202,500
)

$
(6,654,350
)

$
1,728,457ADJUSTMENTS TO RECONCILE NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS TO NET CASH USED IN
OPERATING ACTIVITIES:Paid-in-kind
interest income and other adjustments to cost


386,212



(178,424
)


(350,309
)Net accretion of discount on investments


(1,623,059
)


(725,719
)


(1,294,300
)Amortization of discount and deferred financing costs on debt


2,751,310



1,140,966



177,011Loss on extinguishment of debt






1,199,851



Net realized (gain) loss from investments


4,795,185



1,344,711



(619,531
)Net change in unrealized (appreciation) depreciation on investments


13,733,384



5,644,371



286,416Proceeds from sale and redemption of investments


210,110,101



179,863,573



150,035,021Purchase of investments


(229,996,697
)


(378,523,269
)


(161,426,952
)(Increase) decrease in operating assets:Interest receivable


809,972



(450,567
)


(210,063
)Receivable from open trades


(2,564,391
)


4,540,262



(10,890,571
)Prepaid expenses and other assets


(84,526
)






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


(2,873,284
)


3,773,044



158,971Payable for open trades


10,441,224



1,760,889



15,039,806Accrued base management fee


(53,978
)


74,874



(676
)Accrued subordinated management fee


(215,909
)


299,496



(2,706
)Accrued incentive fee






(65,300
)


65,300Due to affiliate


(1,673,747
)


1,673,747



Accounts payable and accrued expenses


(1,139,288
)


1,221,110



NET CASH USED IN OPERATING ACTIVITIES


(14,399,991
)


(184,060,735
)


(7,298,077
)Financing activitiesBorrowings on debt


5,100,000



482,078,750



Paydowns on debt






(282,400,000
)


Deferred debt financing costs


(114,621
)


(2,892,182
)


21,342NET CASH PROVIDED BY FINANCING ACTIVITIES


4,985,379



196,786,568



21,342NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


(9,414,612
)


12,725,833



(7,276,735
)CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD


18,495,653



5,769,820



13,046,555CASH AND CASH EQUIVALENTS, END OF PERIOD

$
9,081,041


$
18,495,653


$
5,769,820Supplemental Information:Interest paid during the period

$
28,633,121


$
14,698,746


$
13,560,565Supplemental non-cash information:Paid-in-kind
interest income and other adjustments to cost

$
(386,212
)

$
178,424


$
350,309Net accretion of discount on investments


1,623,059



725,719



1,294,300Amortization of deferred debt financing costs


2,751,310



1,140,966



177,011 See accompanying notes to financial statements.  S-6




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##### Table of Contents

Saratoga Investment Corp. CLO 2013-1 Ltd. Schedule of Investments February 29, 2020  Issuer Name

Industry

Asset Name

AssetType

Reference Rate/Spread

LIBORFloor


CurrentRate(All In)


MaturityDate


Principal/Number of Shares


Cost


FairValueEducation Management II LLC

Services: Consumer

Education Management II A-2 Preferred Shares

Equity

   0.00%


0.00
%


0.00
%






18,975


$
1,897,538


$
190Education Management II LLC

Services: Consumer

Education Management II A-1 Preferred Shares

Equity

   0.00%


0.00
%


0.00
%






6,692



669,214



671011778 B.C. Unlimited Liability Company

Beverage Food & Tobacco

Term Loan B4

Loan

1M USD LIBOR + 1.75%


0.00
%


3.27
%


11/19/2026


$
500,000.00



498,790



491,66524 Hour Fitness Worldwide Inc.

Services: Consumer

Term Loan (5/18)

Loan

1M USD LIBOR +  3.50%


0.00
%


5.02
%


5/30/2025



2,959,950



2,949,872



1,943,710ABB Con-Cise Optical Group LLC

Consumer goods: Non-durable

Term Loan B

Loan

1M USD LIBOR +  5.00%


1.00
%


6.52
%


6/15/2023



2,081,927



2,062,239



1,969,149ADMI Corp.

Services: Consumer

Term Loan B

Loan

1M USD LIBOR +  2.75%


0.00
%


4.27
%


4/30/2025



1,970,000



1,962,286



1,924,848Advantage Sales & Marketing Inc.

Services: Business

First Lien Term Loan

Loan

1M USD LIBOR +  3.25%


1.00
%


4.77
%


7/23/2021



2,371,131



2,370,010



2,286,173Advantage Sales & Marketing Inc.

Services: Business

Term Loan B Incremental

Loan

1M USD LIBOR +  3.25%


1.00
%


4.77
%


7/23/2021



489,950



485,523



470,352Advisor Group Holdings Inc

Banking Finance Insurance & Real Estate

Term Loan (7/19)

Loan

1M USD LIBOR +  5.00%


0.00
%


6.52
%


7/31/2026



500,000



498,753



486,875Aegis Toxicology Sciences Corporation

Healthcare & Pharmaceuticals

Term Loan

Loan

3M USD LIBOR +  5.50%


1.00
%


6.96
%


5/9/2025



3,950,000



3,919,494



3,695,225Agiliti Health Inc.

Healthcare & Pharmaceuticals

Term Loan (1/19)

Loan

1M USD LIBOR +  3.00%


0.00
%


4.52
%


1/5/2026



496,250



496,250



486,325Agrofresh Inc.

Beverage Food & Tobacco

Term Loan

Loan

1M USD LIBOR +  4.75%


1.00
%


6.27
%


7/30/2021



2,889,487



2,886,790



2,677,601AI Convoy Bidco Limited

Aerospace & Defense

AI Convoy Bidco T/L B (USD)

Loan

3M USD LIBOR +  3.50%


1.00
%


4.96
%


1/29/2027



1,500,000



1,492,500



1,483,125AI Mistral (Luxembourg) Subco Sarl

High Tech Industries

Term Loan

Loan

1M USD LIBOR +  3.00%


1.00
%


4.52
%


3/11/2024



486,250



486,250



384,138AIS Holdco LLC

Services: Business

Term Loan

Loan

3M USD LIBOR +  5.00%


0.00
%


6.46
%


8/15/2025



2,421,875



2,411,617



2,228,125Alchemy US Holdco 1 LLC

Metals & Mining

Term Loan

Loan

1M USD LIBOR +  5.50%


0.00
%


7.02
%


10/10/2025



1,950,000



1,925,236



1,945,125Alion Science and Technology Corporation

Aerospace & Defense

Term Loan B (1st Lien)

Loan

1M USD LIBOR +  4.50%


1.00
%


6.02
%


8/19/2021



3,377,293



3,373,263



3,373,071Allen Media LLC

Media: Advertising Printing & Publishing

Allen Media T/L B (1/20)

Loan

3M USD LIBOR +  5.50%


0.00
%


6.96
%


2/10/2027



3,000,000



2,985,000



2,936,250Altisource S.a r.l.

Banking Finance Insurance & Real Estate

Term Loan B (03/18)

Loan

3M USD LIBOR +  4.00%


1.00
%


5.46
%


4/3/2024



1,454,005



1,446,493



1,353,141Altra Industrial Motion Corp.

Capital Equipment

Term Loan

Loan

1M USD LIBOR +  2.00%


0.00
%


3.52
%


10/1/2025



1,767,163



1,763,366



1,748,943American Dental Partners Inc.

Healthcare & Pharmaceuticals

Term Loan B

Loan

3M USD LIBOR +  4.25%


1.00
%


5.71
%


3/24/2023



990,000



982,019



982,575American Greetings Corporation

Media: Advertising Printing & Publishing

Term Loan

Loan

1M USD LIBOR +  4.50%


1.00
%


6.02
%


4/5/2024



4,889,524



4,886,331



4,788,702American Residential Services LLC

Services: Consumer

Term Loan B

Loan

1M USD LIBOR +  4.00%


1.00
%


5.52
%


6/30/2022



3,925,767



3,916,564



3,896,324AmeriLife Group LLC

Banking Finance Insurance & Real Estate

AmeriLife T/L

Loan

3M USD LIBOR +  4.00%


0.00
%


5.46
%


2/5/2027



838,710



836,613



832,419AmeriLife Group LLC(a)

Banking Finance Insurance & Real Estate

Unfunded Commitment

Loan

3M USD LIBOR +  4.00%


0.00
%


4.00
%


2/5/2027











Amex GBT (2/20) T/L

Banking Finance Insurance & Real Estate

Term Loan

Loan

3M USD LIBOR +  4.00%


0.00
%


5.46
%


2/26/2027



2,993,363



2,933,496



2,926,012Amex GBT 2/20 D/T/L(a)

Banking Finance Insurance & Real Estate

Unfunded Commitment

Loan

3M USD LIBOR +  4.00%


0.00
%


5.46
%


2/26/2027











Amynta Agency Borrower Inc.

Banking Finance Insurance & Real Estate

Term Loan

Loan

1M USD LIBOR +  4.50%


0.00
%


6.02
%


2/28/2025



3,462,357



3,425,731



3,224,320Anastasia Parent LLC

Consumer goods: Non-durable

Term Loan

Loan

1M USD LIBOR +  3.75%


0.00
%


5.27
%


8/11/2025



987,500



983,508



759,141Anchor Glass Container Corporation

Containers Packaging & Glass

Term Loan (07/17)

Loan

3M USD LIBOR +  2.75%


1.00
%


4.21
%


12/7/2023



485,063



483,537



354,789Api Group DE Inc

Services: Business

Term Loan B

Loan

1M USD LIBOR +  2.50%


0.00
%


4.02
%


10/1/2026



1,000,000



995,123



990,000APLP Holdings Limited Partnership

Utilities

APLP Holdings T/L B (Atlantic Power)

Loan

1M USD LIBOR +  2.75%


1.00
%


4.27
%


4/13/2023



2,000,000



2,000,000



1,977,500Aramark Services Inc.

Services: Consumer

Term Loan

Loan

1M USD LIBOR +  1.75%


0.00
%


3.27
%


1/15/2027



1,500,000



1,498,209



1,484,070Arctic Glacier U.S.A. Inc.

Beverage Food & Tobacco

Term Loan (3/18)

Loan

1M USD LIBOR +  3.50%


1.00
%


5.02
%


3/20/2024



3,350,967



3,332,339



3,225,306Aretec Group Inc.

Banking Finance Insurance & Real Estate

Term Loan (10/18)

Loan

1M USD LIBOR +  4.25%


0.00
%


5.77
%


10/1/2025



1,980,000



1,975,743



1,937,093ASG Technologies Group Inc.

High Tech Industries

Term Loan

Loan

1M USD LIBOR +  3.50%


1.00
%


5.02
%


7/31/2024



488,775



487,107



476,556AssetMark Financial Holdings Inc.

Banking Finance Insurance & Real Estate

Term Loan

Loan

3M USD LIBOR +  3.00%


0.00
%


4.46
%


11/14/2025



1,237,500



1,235,582



1,228,219Astoria Energy LLC

Energy: Electricity

Term Loan

Loan

1M USD LIBOR +  4.00%


1.00
%


5.52
%


12/24/2021



1,391,552



1,385,662



1,384,595Asurion LLC

Banking Finance Insurance & Real Estate

Term Loan B-4 (Replacement)

Loan

1M USD LIBOR +  3.00%


0.00
%


4.52
%


8/4/2022



1,876,925



1,872,057



1,853,069Asurion LLC

Banking Finance Insurance & Real Estate

Term Loan B6

Loan

1M USD LIBOR +  3.00%


0.00
%


4.52
%


11/3/2023



492,773



489,808



485,381Athenahealth Inc.

Healthcare & Pharmaceuticals

Term Loan B

Loan

1M USD LIBOR +  4.50%


0.00
%


6.02
%


2/11/2026



1,985,000



1,950,006



1,970,113Avaya Inc.

Telecommunications

Term Loan B

Loan

1M USD LIBOR +  4.25%


0.00
%


5.77
%


12/16/2024



3,169,156



3,138,355



3,010,698Avison Young (Canada) Inc.

Services: Business

Term Loan

Loan

3M USD LIBOR +  5.00%


0.00
%


6.46
%


1/30/2026



3,476,222



3,418,777



3,406,697B&G Foods Inc.

Beverage Food & Tobacco

Term Loan

Loan

1M USD LIBOR +  2.50%


0.00
%


4.02
%


10/10/2026



249,375



248,169



246,881Ball Metalpack Finco LLC

Containers Packaging & Glass

Term Loan

Loan

3M USD LIBOR +  4.50%


0.00
%


5.96
%


7/31/2025



3,944,937



3,928,266



3,432,096Bausch Health Companies Inc.

Healthcare & Pharmaceuticals

Term Loan B (05/18)

Loan

1M USD LIBOR +  3.00%


0.00
%


4.52
%


6/2/2025



25,355



25,274



25,161Berry Global Inc.

Chemicals Plastics & Rubber

Term Loan Y

Loan

1M USD LIBOR +  2.00%


0.00
%


3.52
%


7/1/2026



4,987,500



4,981,754



4,897,974Blount International Inc.

Forest Products & Paper

Term Loan B (09/18)

Loan

1M USD LIBOR +  3.75%


1.00
%


5.27
%


4/12/2023



3,453,781



3,450,952



3,432,195Blucora Inc.

Services: Consumer

Term Loan (11/17)

Loan

2M USD LIBOR +  3.00%


1.00
%


4.50
%


5/22/2024



955,900



953,639



946,341Bombardier Recreational Products Inc.

Consumer goods: Durable

Term Loan (1/20)

Loan

1M USD LIBOR +  2.00%


0.00
%


3.52
%


5/24/2027



995,000



985,847



978,214Boxer Parent Company Inc.

Services: Business

Term Loan

Loan

1M USD LIBOR +  4.25%


0.00
%


5.77
%


10/2/2025



2,475,000



2,454,363



2,374,070Bracket Intermediate Holding Corp.

Healthcare & Pharmaceuticals

Term Loan

Loan

3M USD LIBOR +  4.25%


0.00
%


5.71
%


9/5/2025



987,500



983,437



987,500Broadstreet Partners Inc.

Banking Finance Insurance & Real Estate

Term Loan B3

Loan

1M USD LIBOR +  3.25%


0.00
%


4.77
%


1/27/2027



2,024,614



2,022,736



2,002,687Brookfield WEC Holdings Inc.

Energy: Electricity

Term Loan 1/20

Loan

1M USD LIBOR +  3.00%


0.75
%


4.52
%


8/1/2025



497,487



496,370



488,627Buckeye Partners L.P.

Utilities: Oil & Gas

Term Loan

Loan

1M USD LIBOR +  2.75%


0.00
%


4.27
%


11/2/2026



1,000,000



995,334



989,170BW Gas & Convenience Holdings LLC

Beverage Food & Tobacco

Term Loan

Loan

1M USD LIBOR +  6.25%


0.00
%


7.77
%


11/18/2024



3,000,000



2,884,283



2,992,500Calceus Acquisition Inc.

Consumer goods: Non-durable

Term Loan B

Loan

1M USD LIBOR +  5.50%


0.00
%


7.02
%


2/12/2025



975,000



964,353



964,031Callaway Golf Company

Retail

Term Loan B

Loan

1M USD LIBOR +  4.50%


0.00
%


6.02
%


1/2/2026



697,500



684,758



696,196CareerBuilder LLC

Services: Business

Term Loan

Loan

1M USD LIBOR +  6.75%


1.00
%


8.27
%


7/31/2023



2,266,211



2,232,341



2,223,720CareStream Health Inc.

High Tech Industries

Term Loan

Loan

1M USD LIBOR +  6.25%


1.00
%


7.77
%


2/28/2021



2,362,278



2,356,691



2,263,062Casa Systems Inc.

Telecommunications

Term Loan

Loan

1M USD LIBOR +  4.00%


1.00
%


5.52
%


12/20/2023



1,455,000



1,446,052



1,236,750Castle US Holding Corporation

High Tech Industries

Term Loan B (USD)

Loan

1M USD LIBOR +  3.75%


0.00
%


5.27
%


1/27/2027



500,000



497,509



475,000CCS-CMGC Holdings Inc.

Healthcare & Pharmaceuticals

Term Loan

Loan

3M USD LIBOR +  5.50%


0.00
%


6.96
%


10/1/2025



2,475,000



2,453,876



2,338,875Cengage Learning Inc.

Media: Advertising Printing & Publishing

Term Loan

Loan

1M USD LIBOR +  4.25%


1.00
%


5.77
%


6/7/2023



1,447,458



1,435,195



1,329,447  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/Number of Shares


Cost


FairValueCenturyLink Inc.

Telecommunications

Term Loan B (1/20)

Loan

1M USD LIBOR +  2.25%


0.00
%


3.77
%


3/15/2027



3,000,000



2,996,438



2,922,180Citadel Securities LP

Banking Finance Insurance & Real Estate

Term Loan (2/20)

Loan

1M USD LIBOR +  2.75%


0.00
%


4.27
%


2/27/2026



992,500



991,371



983,816Clarios Global LP

Automotive

Term Loan B

Loan

1M USD LIBOR +  3.50%


0.00
%


5.02
%


4/30/2026



1,496,250



1,482,216



1,451,991Compass Power Generation L.L.C.

Utilities: Electric

Term Loan B (08/18)

Loan

1M USD LIBOR +  3.50%


1.00
%


5.02
%


12/20/2024



1,891,221



1,886,758



1,855,761Compuware Corporation

High Tech Industries

Term Loan (08/18)

Loan

1M USD LIBOR +  4.00%


0.00
%


5.52
%


8/22/2025



495,000



493,979



493,763Concordia International Corp.

Healthcare & Pharmaceuticals

Term Loan

Loan

3M USD LIBOR +  5.50%


1.00
%


6.96
%


9/6/2024



1,183,650



1,131,380



1,088,224Connect U.S. Finco LLC

Telecommunications

Delayed Draw Term Loan B

Loan

1M USD LIBOR +  4.50%


1.00
%


6.02
%


12/11/2026



2,000,000



1,984,055



1,980,000Consolidated Communications Inc.

Telecommunications

Term Loan B

Loan

1M USD LIBOR +  3.00%


1.00
%


4.52
%


10/5/2023



1,475,404



1,464,720



1,395,481Coral-US
Co-Borrower LLC

Telecommunications

Term Loan B-5

Loan

1M USD LIBOR +  2.25%


0.00
%


3.77
%


1/31/2028



2,000,000



2,000,000



1,976,660Covia Holdings Corporation

Metals & Mining

Term Loan

Loan

3M USD LIBOR +  4.00%


1.00
%


5.46
%


6/2/2025



985,000



985,000



711,663CPI Acquisition Inc

Banking Finance Insurance & Real Estate

Term Loan B (1st Lien)

Loan

6M USD LIBOR +  4.50%


1.00
%


5.90
%


8/17/2022



1,436,782



1,427,762



1,089,957Crown Subsea Communications Holding Inc

Construction & Building

Term Loan

Loan

1M USD LIBOR +  6.00%


0.00
%


7.52
%


11/3/2025



1,655,837



1,640,398



1,649,627CSC Holdings LLC

Media: Broadcasting & Subscription

Term Loan B (03/17)

Loan

1M USD LIBOR +  2.25%


0.00
%


3.77
%


7/17/2025



1,974,620



1,952,260



1,941,308CSC Holdings LLC

Media: Broadcasting & Subscription

Term Loan B-5

Loan

1M USD LIBOR +  2.50%


0.00
%


4.02
%


4/15/2027



500,000



500,000



492,500CSC Holdings LLC

Media: Broadcasting & Subscription

Term Loan B

Loan

1M USD LIBOR +  2.25%


0.00
%


3.77
%


1/15/2026



495,000



493,968



486,031Cushman & Wakefield U.S. Borrower LLC

Construction & Building

Term Loan

Loan

1M USD LIBOR +  2.75%


0.00
%


4.27
%


8/21/2025



3,945,050



3,928,487



3,874,789Daseke Companies Inc.

Transportation: Cargo

Replacement Term Loan

Loan

1M USD LIBOR +  5.00%


1.00
%


6.52
%


2/27/2024



1,955,694



1,946,628



1,867,688DaVita Inc.

High Tech Industries

Term Loan B-1

Loan

1M USD LIBOR +  1.75%


0.00
%


3.27
%


8/12/2026



997,500



995,133



985,859Dealer Tire LLC

Automotive

Dealer Tire T/L B-1

Loan

1M USD LIBOR +  4.25%


0.00
%


5.77
%


12/12/2025



3,000,000



2,992,500



2,977,500Delek US Holdings Inc.

Utilities: Oil & Gas

Term Loan B

Loan

1M USD LIBOR +  2.25%


0.00
%


3.77
%


3/31/2025



6,446,003



6,379,073



6,317,083Dell International L.L.C.

High Tech Industries

Term Loan B-1

Loan

1M USD LIBOR +  2.00%


0.75
%


3.52
%


9/19/2025



3,814,430



3,809,967



3,766,292Delta 2 (Lux) SARL

Hotel Gaming & Leisure

Term Loan B

Loan

1M USD LIBOR +  2.50%


1.00
%


4.02
%


2/1/2024



1,318,289



1,315,922



1,275,445DHX Media Ltd.

Media: Broadcasting & Subscription

Term Loan

Loan

1M USD LIBOR +  4.25%


1.00
%


5.77
%


12/29/2023



279,282



278,012



267,413Diamond Sports Group LLC

Media: Broadcasting & Subscription

Term Loan

Loan

1M USD LIBOR +  3.25%


0.00
%


4.77
%


8/24/2026



997,500



992,773



907,725Digital Room Holdings Inc.

Media: Advertising Printing & Publishing

Term Loan

Loan

1M USD LIBOR +  5.00%


0.00
%


6.52
%


5/21/2026



2,985,000



2,944,957



2,790,975Dole Food Company Inc.

Beverage Food & Tobacco

Term Loan B

Loan

1M USD LIBOR +  2.75%


1.00
%


4.27
%


4/8/2024



468,750



467,304



461,522DRW Holdings LLC

Banking Finance Insurance & Real Estate

Term Loan B

Loan

1M USD LIBOR +  4.25%


0.00
%


5.77
%


11/27/2026



5,000,000



4,950,804



4,962,500DynCorp International Inc.

Aerospace & Defense

Term Loan B

Loan

1M USD LIBOR +  6.00%


1.00
%


7.52
%


8/18/2025



2,962,500



2,879,096



2,925,469Eagletree-Carbide Acquisition Corp.

Consumer goods: Durable

Term Loan

Loan

3M USD LIBOR +  4.25%


1.00
%


5.71
%


8/28/2024



4,927,385



4,901,606



4,804,200EIG Investors Corp.

High Tech Industries

Term Loan (06/18)

Loan

3M USD LIBOR +  3.75%


1.00
%


5.21
%


2/9/2023



2,199,416



2,186,449



2,160,926Encapsys LLC

Chemicals Plastics & Rubber

Term Loan B2

Loan

1M USD LIBOR +  3.25%


1.00
%


4.77
%


11/7/2024



497,428



492,831



491,832Endo Luxembourg Finance Company I S.a.r.l.

Healthcare & Pharmaceuticals

Term Loan B (4/17)

Loan

1M USD LIBOR +  4.25%


0.75
%


5.77
%


4/29/2024



3,937,025



3,914,795



3,766,985Energy Acquisition LP

Capital Equipment

Term Loan (6/18)

Loan

3M USD LIBOR +  4.25%


0.00
%


5.71
%


6/26/2025



1,970,000



1,957,901



1,811,179Envision Healthcare Corporation

Healthcare & Pharmaceuticals

Term Loan B (06/18)

Loan

1M USD LIBOR +  3.75%


0.00
%


5.27
%


10/10/2025



4,950,000



4,939,709



3,966,188EyeCare Partners LLC

Healthcare & Pharmaceuticals

EyeCare Partners T/L B

Loan

1M USD LIBOR +  3.75%


0.00
%


5.27
%


2/5/2027



1,621,622



1,619,618



1,583,789EyeCare Partners LLC(a)

Healthcare & Pharmaceuticals

EyeCare Partners Delayed Draw Term Loan

Loan

1M USD LIBOR +  3.75%


0.00
%


5.27
%


2/5/2027











FinCo I LLC

Banking Finance Insurance & Real Estate

2018 Term Loan B

Loan

1M USD LIBOR +  2.00%


0.00
%


3.52
%


12/27/2022



360,538



359,905



356,752First Eagle Holdings Inc.

Banking Finance Insurance & Real Estate

Refinancing Term Loan

Loan

3M USD LIBOR +  2.50%


0.00
%


3.96
%


2/1/2027



5,450,000



5,426,720



5,338,275Fitness International LLC

Services: Consumer

Term Loan B (4/18)

Loan

1M USD LIBOR +  3.25%


0.00
%


4.77
%


4/18/2025



1,330,058



1,322,900



1,312,103Franklin Square Holdings L.P.

Banking Finance Insurance & Real Estate

Term Loan

Loan

1M USD LIBOR +  2.25%


0.00
%


3.77
%


8/1/2025



4,443,748



4,414,007



4,421,530Froneri International Ltd

Beverage Food & Tobacco

Term Loan B-2

Loan

1M USD LIBOR +  2.25%


0.00
%


3.77
%


1/29/2027



2,000,000



1,995,162



1,962,500Fusion Connect Inc.

Telecommunications

Exit Term Loan (1/20)

Loan

3M USD LIBOR +  9.50%


2.00
%


11.50
%


1/14/2025



1,500,000



1,470,716



1,495,005Fusion Connect Inc.

Telecommunications

Take Back 2nd Out Term Loan

Loan

6M USD LIBOR +  8.00%


2.00
%


10.00
%


7/14/2025



757,724



737,560



527,883GBT Group Services B.V.

Hotel Gaming & Leisure

Term Loan

Loan

3M USD LIBOR +  2.50%


0.00
%


3.96
%


8/13/2025



4,443,750



4,442,729



4,410,422GC EOS Buyer Inc.

Automotive

Term Loan B (06/18)

Loan

1M USD LIBOR +  4.50%


0.00
%


6.02
%


8/1/2025



2,962,500



2,940,820



2,888,438General Nutrition Centers Inc.

Retail

Term Loan B2

Loan

3M USD LIBOR +  8.75%


0.75
%


10.21
%


3/4/2021



930,446



929,986



856,010General Nutrition Centers Inc.

Retail

FILO Term Loan

Loan

1M USD LIBOR +  7.00%


0.00
%


8.52
%


1/3/2023



585,849



584,748



583,505Genesee & Wyoming Inc.

Transportation: Cargo

Term Loan (11/19)

Loan

3M USD LIBOR +  2.00%


0.00
%


3.46
%


12/30/2026



1,500,000



1,492,771



1,489,380GEO Group Inc. The

Banking Finance Insurance & Real Estate

Term Loan Refinance

Loan

1M USD LIBOR +  2.00%


0.75
%


3.52
%


3/25/2024



2,000,000



1,911,214



1,846,260GI Chill Acquisition LLC

Services: Business

Term Loan

Loan

3M USD LIBOR +  4.00%


0.00
%


5.46
%


8/6/2025



2,468,750



2,458,492



2,450,234GI Revelation Acquisition LLC

Services: Business

Term Loan

Loan

1M USD LIBOR +  5.00%


0.00
%


6.52
%


4/16/2025



1,231,867



1,226,730



1,155,652Gigamon Inc.

Services: Business

Term Loan B

Loan

1M USD LIBOR +  4.25%


1.00
%


5.77
%


12/27/2024



2,960,000



2,937,550



2,952,600Global Tel*Link Corporation

Telecommunications

Term Loan B

Loan

1M USD LIBOR +  4.25%


0.00
%


5.77
%


11/28/2025



3,039,750



3,039,750



2,886,668Go Wireless Inc.

Telecommunications

Term Loan

Loan

1M USD LIBOR +  6.50%


1.00
%


8.02
%


12/22/2024



3,202,597



3,161,265



3,005,093Goodyear Tire & Rubber Company The

Chemicals Plastics & Rubber

Second Lien Term Loan

Loan

1M USD LIBOR +  2.00%


0.00
%


3.52
%


3/7/2025



2,000,000



2,000,000



1,950,000Greenhill & Co. Inc.

Banking Finance Insurance & Real Estate

Term Loan B

Loan

1M USD LIBOR +  3.25%


0.00
%


4.77
%


4/12/2024



3,661,538



3,624,459



3,644,769Grosvenor Capital Management Holdings LLLP

Banking Finance Insurance & Real Estate

Term Loan B

Loan

1M USD LIBOR +  2.75%


1.00
%


4.27
%


3/28/2025



898,530



894,831



898,530Guidehouse LLP

Aerospace & Defense

Term Loan

Loan

1M USD LIBOR +  4.50%


0.00
%


6.02
%


5/1/2025



3,964,937



3,941,954



3,895,550Harland Clarke Holdings Corp.

Media: Advertising Printing & Publishing

Term Loan

Loan

3M USD LIBOR +  4.75%


1.00
%


6.21
%


11/3/2023



1,723,072



1,715,720



1,356,919HD Supply Waterworks Ltd.

Construction & Building

Term Loan

Loan

3M USD LIBOR +  2.75%


1.00
%


4.21
%


8/1/2024



488,750



487,883



481,419Helix Acquisition Holdings Inc.

Capital Equipment

Term Loan (2019 Incremental)

Loan

3M USD LIBOR +  3.75%


0.00
%


5.21
%


9/30/2024



2,977,500



2,925,219



2,754,188Helix Gen Funding LLC

Energy: Electricity

Term Loan B (02/17)

Loan

1M USD LIBOR +  3.75%


1.00
%


5.27
%


6/3/2024



264,030



263,694



253,799HLF Financing SaRL LLC

Consumer goods: Non-durable

Term Loan B (08/18)

Loan

1M USD LIBOR +  2.75%


0.00
%


4.27
%


8/18/2025



3,950,000



3,935,111



3,883,364Holley Purchaser Inc.

Automotive

Term Loan B

Loan

3M USD LIBOR +  5.00%


0.00
%


6.46
%


10/24/2025



2,475,000



2,454,070



2,301,750Hudson River Trading LLC

Banking Finance Insurance & Real Estate

Term Loan B (01/20)

Loan

1M USD LIBOR +  3.00%


0.00
%


4.52
%


2/18/2027



6,000,000



5,975,621



5,955,000Hyperion Refinance S.a.r.l.

Banking Finance Insurance & Real Estate

Tem Loan (12/17)

Loan

1M USD LIBOR +  3.50%


1.00
%


5.02
%


12/20/2024



1,709,781



1,701,824



1,691,623ICH US Intermediate Holdings II Inc.

Healthcare & Pharmaceuticals

Term Loan B

Loan

3M USD LIBOR +  5.75%


1.00
%


7.21
%


12/24/2026



5,000,000



4,803,288



4,875,000Idera Inc.

High Tech Industries

Term Loan B

Loan

1M USD LIBOR +  4.00%


1.00
%


5.52
%


6/28/2024



2,939,742



2,919,274



2,917,694Informatica LLC

High Tech Industries

Term Loan B (02/20)

Loan

1M USD LIBOR +  3.25%


0.00
%


4.77
%


2/25/2027



500,000



497,500



489,375Inmar Inc.

Services: Business

Term Loan B

Loan

3M USD LIBOR +  4.00%


1.00
%


5.46
%


5/1/2024



3,457,043



3,377,774



3,320,939Innophos Holdings Inc

Chemicals Plastics & Rubber

Term Loan B

Loan

1M USD LIBOR +  3.75%


0.00
%


5.27
%


2/4/2027



500,000



497,521



496,250  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/Number of Shares


Cost


Fair ValueION Media Networks Inc.

Media: Broadcasting & Subscription

Term Loan B

Loan

1M USD LIBOR +  3.00%


0.00
%


4.52
%


12/18/2024



997,500



992,818



982,538Isagenix International LLC

Beverage Food & Tobacco

Term Loan

Loan

3M USD LIBOR +  5.75%


1.00
%


7.21
%


6/16/2025



2,796,876



2,750,718



1,118,750Jefferies Finance LLC / JFIN Co-Issuer Corp

Banking Finance Insurance & Real Estate

Term Loan

Loan

1M USD LIBOR +  3.25%


0.00
%


4.77
%


6/3/2026



3,229,359



3,211,489



3,172,846Jill Holdings LLC

Retail

Term Loan (1st Lien)

Loan

3M USD LIBOR +  5.00%


1.00
%


6.46
%


5/9/2022



1,800,290



1,796,697



1,458,235JP Intermediate B LLC

Consumer goods: Non-durable

Term Loan

Loan

3M USD LIBOR +  5.50%


1.00
%


6.96
%


11/20/2025



4,687,500



4,640,380



2,499,984KAR Auction Services Inc.

Automotive

Term Loan B (09/19)

Loan

1M USD LIBOR +  2.25%


0.00
%


3.77
%


9/19/2026



249,375



248,789



247,505Kindred Healthcare Inc.

Healthcare & Pharmaceuticals

Kindred Healthcare T/L (6/18)

Loan

1M USD LIBOR +  5.00%


0.00
%


6.52
%


7/2/2025



2,000,000



1,980,000



1,975,000Lakeland Tours LLC

Hotel Gaming & Leisure

Term Loan B

Loan

3M USD LIBOR +  4.25%


1.00
%


5.71
%


12/16/2024



2,457,482



2,450,618



2,248,596Lannett Company Inc.

Healthcare & Pharmaceuticals

Term Loan B

Loan

1M USD LIBOR +  5.38%


1.00
%


6.89
%


11/25/2022



2,379,293



2,356,101



2,343,175Learfield Communications LLC

Media: Advertising Printing & Publishing

Initial Term Loan (A-L Parent)

Loan

1M USD LIBOR +  3.25%


1.00
%


4.77
%


12/1/2023



485,000



483,577



439,531Lifetime Brands Inc.

Consumer goods: Non-durable

Term Loan B

Loan

1M USD LIBOR +  3.50%


1.00
%


5.02
%


2/28/2025



2,992,386



2,955,090



2,857,728Lighthouse Network LLC

Banking Finance Insurance & Real Estate

Term Loan B

Loan

1M USD LIBOR +  4.50%


1.00
%


6.02
%


12/2/2024



4,129,092



4,115,428



4,123,930Lightstone Holdco LLC

Energy: Electricity

Term Loan B

Loan

1M USD LIBOR +  3.75%


1.00
%


5.27
%


1/30/2024



1,322,520



1,320,692



1,164,651Lightstone Holdco LLC

Energy: Electricity

Term Loan C

Loan

1M USD LIBOR +  3.75%


1.00
%


5.27
%


1/30/2024



74,592



74,493



65,688Lindblad Expeditions Inc.

Hotel Gaming & Leisure

US 2018 Term Loan

Loan

1M USD LIBOR +  3.25%


0.00
%


4.77
%


3/27/2025



394,000



393,227



390,060Lindblad Expeditions Inc.

Hotel Gaming & Leisure

Cayman Term Loan

Loan

1M USD LIBOR +  3.25%


0.00
%


4.77
%


3/27/2025



98,500



98,307



97,515Liquidnet Holdings Inc.

Banking Finance Insurance & Real Estate

Term Loan B

Loan

1M USD LIBOR +  3.25%


1.00
%


4.77
%


7/15/2024



2,131,268



2,126,212



2,093,970LPL Holdings Inc.

Banking Finance Insurance & Real Estate

Term Loan B1

Loan

1M USD LIBOR +  1.75%


0.00
%


3.27
%


11/11/2026



1,245,213



1,242,233



1,243,133Marriott Ownership Resorts Inc.

Hotel Gaming & Leisure

Term Loan (11/19)

Loan

1M USD LIBOR +  1.75%


0.00
%


3.27
%


3/12/2026



1,500,000



1,500,000



1,432,500Match Group Inc.

Services: Consumer

Term Loan (1/20)

Loan

3M USD LIBOR +  1.75%


0.00
%


3.21
%


2/5/2027



250,000



249,377



248,438McAfee LLC

Services: Business

Term Loan B

Loan

1M USD LIBOR +  3.75%


0.00
%


5.27
%


9/30/2024



3,159,418



3,131,317



3,136,165McDermott International (Americas) Inc.(b)

Construction & Building

Term Loan B

Loan

3M USD LIBOR +  5.00%


1.00
%


6.46
%


5/12/2025



1,965,000



1,933,938



1,126,928McGraw-Hill Global Education Holdings LLC

Media: Advertising Printing & Publishing

Term Loan

Loan

1M USD LIBOR +  4.00%


1.00
%


5.52
%


5/4/2022



956,813



954,867



897,807Meredith Corporation

Media: Advertising Printing & Publishing

Term Loan B2

Loan

1M USD LIBOR +  2.50%


0.00
%


4.02
%


1/31/2025



578,738



577,724



572,227Messer Industries GMBH

Chemicals Plastics & Rubber

Term Loan B

Loan

3M USD LIBOR +  2.50%


0.00
%


3.96
%


3/2/2026



2,977,500



2,970,753



2,917,950Michaels Stores Inc.

Retail

Term Loan B

Loan

1M USD LIBOR +  2.50%


1.00
%


4.02
%


1/30/2023



2,599,163



2,590,493



2,393,387Midwest Physician Administrative Services LLC

Healthcare & Pharmaceuticals

Term Loan (2/18)

Loan

1M USD LIBOR +  2.75%


0.75
%


4.27
%


8/15/2024



970,910



967,282



951,492Milk Specialties Company

Beverage Food & Tobacco

Term Loan (2/17)

Loan

1M USD LIBOR +  4.00%


1.00
%


5.52
%


8/16/2023



3,899,905



3,848,164



3,696,798MKS Instruments Inc.

High Tech Industries

Term Loan B6

Loan

1M USD LIBOR +  1.75%


0.00
%


3.27
%


2/2/2026



887,425



879,526



875,001MLN US HoldCo LLC

Telecommunications

Term Loan

Loan

1M USD LIBOR +  4.50%


0.00
%


6.02
%


11/28/2025



990,000



988,165



932,144MRC Global (US) Inc.

Metals & Mining

Term Loan B2

Loan

1M USD LIBOR +  3.00%


0.00
%


4.52
%


9/20/2024



490,000



489,047



477,750NAI Entertainment Holdings LLC

Hotel Gaming & Leisure

Term Loan B

Loan

1M USD LIBOR +  2.50%


1.00
%


4.02
%


5/8/2025



870,833



869,104



855,594Natgasoline LLC

Chemicals Plastics & Rubber

Term Loan

Loan

6M USD LIBOR +  3.50%


0.00
%


4.90
%


11/14/2025



495,000



492,907



491,288National Mentor Holdings Inc.

Healthcare & Pharmaceuticals

Term Loan

Loan

1M USD LIBOR +  4.00%


0.00
%


5.52
%


3/9/2026



1,881,215



1,864,059



1,871,809National Mentor Holdings Inc.

Healthcare & Pharmaceuticals

Term Loan C

Loan

1M USD LIBOR +  4.00%


0.00
%


5.52
%


3/9/2026



104,662



103,730



104,139NeuStar Inc.

Telecommunications

Term Loan B4 (03/18)

Loan

1M USD LIBOR +  3.50%


1.00
%


5.02
%


8/8/2024



2,962,121



2,918,947



2,688,125NeuStar Inc.

Telecommunications

Term Loan B-5

Loan

1M USD LIBOR +  4.50%


1.00
%


6.02
%


8/8/2024



992,500



975,477



959,311Nexstar Broadcasting Inc.

Media: Broadcasting & Subscription

Term Loan

Loan

1M USD LIBOR +  2.75%


0.00
%


4.27
%


9/18/2026



249,375



248,222



247,298NMI Holdings Inc.

Banking Finance Insurance & Real Estate

Term Loan

Loan

1M USD LIBOR +  4.75%


1.00
%


6.27
%


5/23/2023



3,454,906



3,457,271



3,420,357NorthPole Newco S.a r.l

Aerospace & Defense

Term Loan

Loan

3M USD LIBOR +  7.00%


0.00
%


8.46
%


3/3/2025



4,812,500



4,371,041



4,162,813Novetta Solutions LLC

Aerospace & Defense

Term Loan

Loan

1M USD LIBOR +  5.00%


1.00
%


6.52
%


10/17/2022



1,919,870



1,911,097



1,878,478Novetta Solutions LLC

Aerospace & Defense

Second Lien Term Loan

Loan

1M USD LIBOR +  8.50%


1.00
%


10.02
%


10/16/2023



1,000,000



994,137



973,750NPC International Inc.(b)

Beverage Food & Tobacco

Term Loan

Loan

3M USD LIBOR +  3.50%


1.00
%


4.96
%


4/19/2024



487,500



487,124



237,544Octave Music Group Inc. The

Services: Business

Term Loan B

Loan

2M USD LIBOR +  5.25%


1.00
%


6.75
%


5/29/2025



5,000,000



4,950,000



4,937,500Office Depot Inc.

Retail

Term Loan B

Loan

1M USD LIBOR +  5.25%


1.00
%


6.77
%


11/8/2022



2,456,367



2,445,611



2,464,547Owens & Minor Distribution Inc.

Healthcare & Pharmaceuticals

Term Loan B

Loan

1M USD LIBOR +  4.50%


0.00
%


6.02
%


4/30/2025



492,500



484,678



413,700Patriot Container Corp.

Environmental Industries

Term Loan (3/18)

Loan

1M USD LIBOR +  3.50%


1.00
%


5.02
%


3/20/2025



500,000



497,500



492,500PCI Gaming Authority

Hotel Gaming & Leisure

Term Loan

Loan

1M USD LIBOR +  2.50%


0.00
%


4.02
%


5/29/2026



878,269



874,086



871,682Peraton Corp.

Aerospace & Defense

Term Loan

Loan

2M USD LIBOR +  5.25%


1.00
%


6.75
%


4/29/2024



2,447,449



2,437,345



2,386,263PGX Holdings Inc.

Services: Consumer

Term Loan

Loan

1M USD LIBOR +  5.25%


1.00
%


6.77
%


9/29/2020



3,564,650



3,555,767



1,782,325PI UK Holdco II Limited

Services: Business

Term Loan B1 (PI UK Holdco II)

Loan

1M USD LIBOR +  3.25%


1.00
%


4.77
%


1/3/2025



1,473,750



1,467,204



1,449,802Pixelle Specialty Solutions LLC

Forest Products & Paper

Term Loan

Loan

1M USD LIBOR +  6.50%


1.00
%


8.02
%


10/31/2024



2,000,000



1,960,340



1,953,120Plastipak Packaging Inc

Containers Packaging & Glass

Plastipak Packaging T/L B (04/18)

Loan

1M USD LIBOR +  2.50%


0.00
%


4.02
%


10/15/2024



2,944,583



2,921,203



2,885,691Playtika Holding Corp.

High Tech Industries

Trm Loan B (12/19)

Loan

1M USD LIBOR +  6.00%


1.00
%


7.52
%


12/10/2024



4,000,000



3,922,736



3,988,760Polymer Process Holdings Inc

Containers Packaging & Glass

Term Loan

Loan

1M USD LIBOR +  6.00%


0.00
%


7.52
%


4/30/2026



2,985,000



2,930,303



2,921,569Presidio Inc.

Services: Business

Term Loan B (1/20)

Loan

3M USD LIBOR +  3.50%


0.00
%


4.96
%


1/22/2027



500,000



498,787



495,000Prime Security Services Borrower LLC

Services: Consumer

Term Loan (Protection One/ADT)

Loan

1M USD LIBOR +  3.25%


1.00
%


4.77
%


9/23/2026



2,992,500



2,975,658



2,905,717Priority Payment Systems Holdings LLC

High Tech Industries

Term Loan

Loan

1M USD LIBOR +  5.00%


1.00
%


6.52
%


1/3/2023



2,472,719



2,462,039



2,404,720Project Accelerate Parent LLC

Services: Business

Term Loan

Loan

1M USD LIBOR +  4.25%


1.00
%


5.77
%


1/2/2025



1,965,000



1,957,491



1,940,438Prometric Holdings Inc.

Services: Consumer

Term Loan

Loan

1M USD LIBOR +  3.00%


1.00
%


4.52
%


1/29/2025



491,288



489,418



473,478Pug LLC

Services: Consumer

Pug T/L B (02/20)

Loan

1M USD LIBOR +  3.50%


0.00
%


5.02
%


2/12/2027



1,500,000



1,492,500



1,395,000Rackspace Hosting Inc.

High Tech Industries

Term Loan B

Loan

3M USD LIBOR +  3.00%


1.00
%


4.46
%


11/3/2023



1,476,064



1,467,715



1,403,486Radio Systems Corporation

Consumer goods: Durable

Term Loan

Loan

2M USD LIBOR +  2.75%


1.00
%


4.25
%


5/2/2024



1,462,500



1,462,500



1,449,703Radiology Partners Inc.

Healthcare & Pharmaceuticals

Term Loan

Loan

2M USD LIBOR +  4.25%


0.00
%


5.75
%


7/9/2025



1,432,727



1,426,403



1,413,386Research Now Group Inc.

Media: Advertising Printing & Publishing

Term Loan

Loan

3M USD LIBOR +  5.50%


1.00
%


6.96
%


12/20/2024



3,927,406



3,816,352



3,868,494Resolute Investment Managers Inc.

Banking Finance Insurance & Real Estate

Term Loan (10/17)

Loan

3M USD LIBOR +  3.25%


1.00
%


4.71
%


4/29/2022



2,680,466



2,681,757



2,673,765Rexnord LLC

Capital Equipment

Term Loan (11/19)

Loan

1M USD LIBOR +  1.75%


0.00
%


3.27
%


8/21/2024



862,069



862,069



858,431Reynolds Consumer Products Inc.

Containers Packaging & Glass

Reynolds Consumer Products T/L

Loan

3M USD LIBOR +  1.75%


0.00
%


3.21
%


2/4/2027



1,500,000



1,498,128



1,483,875RGIS Services LLC

Services: Business

Term Loan

Loan

3M USD LIBOR +  7.50%


1.00
%


8.96
%


3/31/2023



482,554



477,839



421,994Robertshaw US Holding Corp.

Consumer goods: Durable

Term Loan B

Loan

1M USD LIBOR +  3.25%


1.00
%


4.77
%


2/28/2025



982,500



980,484



884,250Rocket Software Inc.

High Tech Industries

Term Loan (11/18)

Loan

1M USD LIBOR +  4.25%


0.00
%


5.77
%


11/28/2025



3,970,000



3,953,381



3,817,393  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 of Shares


Cost


Fair ValueRussell Investments US Institutional Holdco Inc.

Banking Finance Insurance & Real Estate

Term Loan B

Loan

1M USD LIBOR + 2.75%


1.00
%


4.27
%


6/1/2023



5,637,965



5,554,276



5,553,396Sahara Parent Inc.

High Tech Industries

Term Loan B (11/18)

Loan

3M USD LIBOR + 6.25%


0.00
%


7.71
%


8/16/2024



1,955,250



1,938,956



1,877,040Sally Holdings LLC

Retail

Term Loan (Fixed)

Loan

1M USD LIBOR + 0.00%


0.00
%


0.00
%


7/5/2024



1,000,000



996,778



980,000Sally Holdings LLC

Retail

Term Loan B

Loan

1M USD LIBOR + 2.25%


0.00
%


3.77
%


7/5/2024



768,409



765,606



753,041Savage Enterprises LLC

Energy: Oil & Gas

Term Loan

Loan

1M USD LIBOR + 4.00%


0.00
%


5.52
%


8/1/2025



3,284,831



3,247,280



3,270,049SCS Holdings I Inc.

High Tech Industries

Term Loan 1/20

Loan

1M USD LIBOR + 3.50%


0.00
%


5.02
%


7/1/2026



1,990,000



1,985,537



1,976,329Seadrill Operating LP

Energy: Oil & Gas

Term Loan B

Loan

3M USD LIBOR + 6.00%


1.00
%


7.46
%


2/21/2021



905,168



891,491



288,359Shutterfly Inc.

Media: Advertising Printing & Publishing

Term Loan B

Loan

3M USD LIBOR + 6.00%


1.00
%


7.46
%


9/25/2026



870,968



829,352



827,968SMB Shipping Logistics LLC

Transportation: Consumer

Term Loan B

Loan

3M USD LIBOR + 4.00%


1.00
%


5.46
%


2/2/2024



1,947,873



1,946,123



1,913,785SMG US Midco 2 Inc.

Services: Business

Term Loan (01/20)

Loan

1M USD LIBOR + 2.50%


0.00
%


4.02
%


1/23/2025



500,000



500,000



495,000Snacking Investment BidCo Pty Limited

Beverage Food & Tobacco

Term Loan

Loan

1M USD LIBOR + 4.00%


1.00
%


5.52
%


12/18/2026



1,000,000



990,193



987,500Sothebys

Services: Business

Term Loan

Loan

1M USD LIBOR + 5.50%


1.00
%


7.02
%


1/15/2027



3,324,994



3,258,223



3,315,285SP PF Buyer LLC

Consumer goods: Durable

Term Loan B

Loan

1M USD LIBOR + 4.50%


0.00
%


6.02
%


12/19/2025



1,985,000



1,911,678



1,801,388SRAM LLC

Consumer goods: Durable

Term Loan

Loan

1M USD LIBOR + 2.75%


1.00
%


4.27
%


3/15/2024



1,769,661



1,762,426



1,756,388SS&C European Holdings S.A.R.L.

Services: Business

Term Loan B4

Loan

1M USD LIBOR + 1.75%


0.00
%


3.27
%


4/16/2025



199,839



199,466



196,841SS&C Technologies Inc.

Services: Business

Term Loan B-5

Loan

1M USD LIBOR + 1.75%


0.00
%


3.27
%


4/16/2025



493,682



492,653



486,000SS&C Technologies Inc.

Services: Business

Term Loan B3

Loan

1M USD LIBOR + 1.75%


0.00
%


3.27
%


4/16/2025



280,056



279,525



275,855Staples Inc.

Wholesale

Term Loan (03/19)

Loan

1M USD LIBOR + 5.00%


0.00
%


6.52
%


4/16/2026



1,960,188



1,960,188



1,928,334Stats Intermediate Holdings LLC

Hotel Gaming & Leisure

Term Loan

Loan

6M USD LIBOR + 5.25%


0.00
%


6.65
%


7/10/2026



2,000,000



1,953,068



1,920,000Steak N Shake Operations Inc.

Beverage Food & Tobacco

Term Loan

Loan

1M USD LIBOR + 3.75%


1.00
%


5.27
%


3/19/2021



824,991



823,352



662,740STG-Fairway Holdings LLC

Services: Business

STG Fairway T/L (First Advantage) (Fastball Merger

Loan

1M USD LIBOR + 3.50%


0.00
%


5.02
%


1/29/2027



500,000



497,500



496,040Sybil Software LLC

High Tech Industries

Term Loan B (4/18)

Loan

3M USD LIBOR + 2.25%


1.00
%


3.71
%


9/29/2023



263,565



262,651



261,918Teneo Holdings LLC

Banking Finance Insurance & Real Estate

Term Loan

Loan

1M USD LIBOR + 5.25%


1.00
%


6.77
%


7/11/2025



2,493,750



2,401,489



2,381,531Tenneco Inc

Capital Equipment

Term Loan B

Loan

1M USD LIBOR + 3.00%


0.00
%


4.52
%


10/1/2025



1,485,000



1,472,625



1,386,619Ten-X LLC

Banking Finance Insurance & Real Estate

Term Loan

Loan

1M USD LIBOR + 4.00%


1.00
%


5.52
%


9/30/2024



1,960,000



1,958,142



1,927,327Terex Corporation

Capital Equipment

Term Loan

Loan

1M USD LIBOR + 2.75%


0.75
%


4.27
%


1/31/2024



992,500



988,635



991,567TGG TS Acquisition Company

Media: Diversified & Production

Term Loan (12/18)

Loan

1M USD LIBOR + 6.50%


0.00
%


8.02
%


12/15/2025



2,766,667



2,639,073



2,711,333The Edelman Financial Center LLC

Banking Finance Insurance & Real Estate

Term Loan B (06/18)

Loan

1M USD LIBOR + 3.25%


0.00
%


4.77
%


7/21/2025



1,237,500



1,232,467



1,211,203The Knot Worldwide Inc

Services: Consumer

Term Loan

Loan

1M USD LIBOR + 4.50%


0.00
%


6.02
%


12/19/2025



3,960,000



3,952,856



3,890,700Thor Industries Inc.

Automotive

Term Loan (USD)

Loan

2M USD LIBOR + 3.75%


0.00
%


5.25
%


2/2/2026



2,031,203



2,018,102



2,000,735Tivity Health Inc.

Healthcare & Pharmaceuticals

Term Loan B

Loan

1M USD LIBOR + 5.25%


0.00
%


6.77
%


3/6/2026



2,334,338



2,281,664



2,209,288Tivity Health Inc.

Healthcare & Pharmaceuticals

Term Loan A

Loan

1M USD LIBOR + 4.25%


0.00
%


5.77
%


3/8/2024



1,600,000



1,586,231



1,504,000Transdigm Inc.

Aerospace & Defense

Term Loan G (02/20)

Loan

1M USD LIBOR + 2.25%


0.00
%


3.77
%


8/22/2024



4,106,293



4,111,126



4,013,901Travel Leaders Group LLC

Hotel Gaming & Leisure

Term Loan B (08/18)

Loan

1M USD LIBOR + 4.00%


0.00
%


5.52
%


1/25/2024



2,462,500



2,458,773



2,410,172TRC Companies Inc.

Services: Business

Term Loan

Loan

1M USD LIBOR + 3.50%


1.00
%


5.02
%


6/21/2024



3,376,818



3,366,553



3,250,188TRC Companies Inc.

Services: Business

Term Loan B

Loan

1M USD LIBOR + 5.00%


1.00
%


6.52
%


6/21/2024



997,500



982,926



980,044Trico Group LLC

Containers Packaging & Glass

Incremental Term Loan

Loan

3M USD LIBOR + 7.00%


1.00
%


8.46
%


2/2/2024



4,758,359



4,645,140



4,675,088Truck Hero Inc.

Transportation: Cargo

First Lien Term Loan

Loan

1M USD LIBOR + 3.75%


0.00
%


5.27
%


4/22/2024



2,927,444



2,910,795



2,874,984Trugreen Limited Partnership

Services: Consumer

Term Loan (03/19)

Loan

1M USD LIBOR + 3.75%


1.00
%


5.27
%


3/19/2026



981,396



972,628



981,396Twin River Worldwide Holdings Inc.

Hotel Gaming & Leisure

Term Loan B

Loan

1M USD LIBOR + 2.75%


0.00
%


4.27
%


5/11/2026



995,000



990,418



971,060United Natural Foods Inc.

Beverage Food & Tobacco

Term Loan B

Loan

1M USD LIBOR + 4.25%


0.00
%


5.77
%


10/22/2025



3,465,000



3,270,106



2,875,950Univar Solutions Inc.

Chemicals Plastics & Rubber

Term Loan B3 (11/17)

Loan

1M USD LIBOR + 2.25%


0.00
%


3.77
%


7/1/2024



1,627,723



1,621,989



1,603,307Univision Communications Inc.

Media: Broadcasting & Subscription

Term Loan

Loan

1M USD LIBOR + 2.75%


1.00
%


4.27
%


3/15/2024



2,746,369



2,735,251



2,634,565URS Holdco Inc.

Transportation: Cargo

Term Loan (10/17)

Loan

1M USD LIBOR + 5.75%


1.00
%


7.27
%


8/30/2024



984,169



973,856



821,778US Ecology Inc.

Environmental Industries

Term Loan B

Loan

1M USD LIBOR + 2.50%


0.00
%


4.02
%


11/2/2026



500,000



498,859



496,250VeriFone Systems Inc.

Banking Finance Insurance & Real Estate

Term Loan (7/18)

Loan

3M USD LIBOR + 4.00%


0.00
%


5.46
%


8/20/2025



5,431,250



5,403,194



5,214,000Verra Mobility Corp.

Construction & Building

Term Loan B1 (02/20)

Loan

1M USD LIBOR + 3.25%


0.00
%


4.77
%


2/28/2025



491,250



489,331



483,881VFH Parent LLC

Banking Finance Insurance & Real Estate

Term Loan B

Loan

1M USD LIBOR + 3.50%


0.00
%


5.02
%


3/2/2026



3,801,266



3,787,581



3,793,663Victory Capital Holdings Inc.

Banking Finance Insurance & Real Estate

Term Loan B (01/20)

Loan

1M USD LIBOR + 2.50%


0.00
%


4.02
%


7/1/2026



422,273



418,485



415,939Virtus Investment Partners Inc.

Banking Finance Insurance & Real Estate

Term Loan B

Loan

1M USD LIBOR + 2.25%


0.75
%


3.77
%


6/3/2024



3,218,500



3,217,979



3,213,479Vistra Operations Company LLC

Utilities: Electric

2018 Incremental Term Loan

Loan

1M USD LIBOR + 1.75%


0.00
%


3.27
%


12/31/2025



927,500



926,595



919,094Vizient Inc.

Healthcare & Pharmaceuticals

Term Loan B-6

Loan

1M USD LIBOR + 2.00%


0.00
%


3.52
%


5/6/2026



496,250



495,208



491,600VS Buyer T/L (Veeam Software)

High Tech Industries

Term Loan

Loan

3M USD LIBOR + 3.25%


0.00
%


4.71
%


2/28/2027



1,000,000



1,000,000



986,250Weight Watchers International Inc.

Services: Consumer

Term Loan B

Loan

3M USD LIBOR + 4.75%


0.75
%


6.21
%


11/29/2024



1,670,130



1,645,266



1,665,955West Corporation

Telecommunications

Term Loan B

Loan

1M USD LIBOR + 3.50%


1.00
%


5.02
%


10/10/2024



2,961,172



2,889,546



2,319,573West Corporation

Telecommunications

Term Loan B (Olympus Merger)

Loan

1M USD LIBOR + 4.00%


1.00
%


5.52
%


10/10/2024



1,237,374



1,164,156



981,002Western Dental Services Inc.

Retail

Term Loan (12/18)

Loan

1M USD LIBOR + 5.25%


1.00
%


6.77
%


6/30/2023



2,438,722



2,424,403



2,444,819Western Digital Corporation

High Tech Industries

Term Loan B-4

Loan

1M USD LIBOR + 1.75%


0.00
%


3.27
%


4/29/2023



903,135



885,248



892,975Winter Park Intermediate Inc.

Automotive

Term Loan

Loan

1M USD LIBOR + 4.75%


0.00
%


6.27
%


4/4/2025



1,984,953



1,966,855



1,951,864Wirepath LLC

Consumer goods: Non-durable

Term Loan

Loan

3M USD LIBOR + 4.00%


1.00
%


5.46
%


8/5/2024



2,955,118



2,931,790



2,766,730WP CityMD Bidco LLC

Services: Consumer

Term Loan B

Loan

3M USD LIBOR + 4.50%


1.00
%


5.96
%


8/13/2026



3,500,000



3,467,362



3,476,375YS Garments LLC

Retail

Term Loan

Loan

1W USD LIBOR + 6.00%


1.00
%


7.57
%


8/9/2024



1,937,500



1,921,365



1,908,438Zekelman Industries Inc

Metals & Mining

Term Loan (01/20)

Loan

1M USD LIBOR + 2.25%


0.00
%


3.77
%


1/19/2027



1,000,000



1,000,000



977,500Zep Inc.

Chemicals Plastics & Rubber

Term Loan

Loan

3M USD LIBOR + 4.00%


1.00
%


5.46
%


8/12/2024



2,443,750



2,434,999



1,840,461Zest Acquisition Corp.

Healthcare & Pharmaceuticals

Term Loan

Loan

1M USD LIBOR + 3.50%


0.00
%


5.02
%


3/14/2025



982,500



978,750



934,603$
526,004,959


$
500,999,934Number ofShares


Cost


Fair ValueCash and cash equivalentsU.S. Bank Money Market (c)






















9,081,041


$
9,081,041


$
9,081,041Total cash and cash equivalents






















9,081,041


$
9,081,041


$
9,081,041  See accompanying notes to
financial statements. S-4




---

##### Table of Contents

(a)
All or a portion of this investment has an unfunded commitment as of February 29, 2020 (see Note 6 in
Notes to financial statements). (b)
As of February 29, 2020, the investment was in default and on
non-accrual status. (c)
Included within cash and cash equivalents in Saratoga CLOs Statements of Assets and Liabilities as of
February 29, 2020. LIBORLondon Interbank Offered Rate 1W USD LIBORThe 1 week USD LIBOR rate as of February 29, 2020 was 1.57%. 1M USD LIBORThe 1 month USD LIBOR rate as of February 29, 2020 was 1.52%. 2M USD LIBORThe 2 month USD LIBOR rate as of February 29, 2020 was 1.50%. 3M USD LIBORThe 3 month USD LIBOR rate as of February 29, 2020 was 1.46%. 6M USD LIBORThe 6 month USD LIBOR rate as of February 29, 2020 was 1.40%. PrimeThe Prime Rate as of February 29, 2020 was 4.75%. See accompanying notes to financial statements.   S-11




---

##### 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/Numberof Shares


Cost


FairValueEducation 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-12




---

##### Table of Contents

Issuer Name

Industry

Asset Name

AssetType

Reference Rate/Spread

LIBORFloor


CurrentRate(All In)


MaturityDate


Principal/Numberof Shares


Cost


FairValueCompuware 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 Canada / ERM US)

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-13




---

##### Table of Contents

Issuer Name

Industry

Asset Name

AssetType

Reference Rate/Spread

LIBORFloor


CurrentRate(All In)


MaturityDate


Principal/Numberof Shares


Cost


FairValueKUEHG 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-14




---

##### Table of Contents

Issuer Name

Industry

Asset Name


AssetType


Reference Rate/Spread

LIBORFloor


CurrentRate(All In)


MaturityDate


Principal/Number of Shares


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


IncrementalTerm 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 LienTerm 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


2018IncrementalTerm 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-15




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##### 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 29, 2020, Saratoga Investment Corp. owned 100% of the
Class F-R-2 Notes, Class G-R-2 Notes and the Subordinated Notes of the CLO. On February 11, 2020, Saratoga Investment Corp. CLO 2013-1 Warehouse 2, Ltd (CLO 2013-1 Warehouse 2), a wholly-owned subsidiary of Saratoga CLO entered into an unsecured loan agreement (CLO 2013-1 Warehouse 2
Loan) with Saratoga Investment Corp. (the Company), pursuant to which CLO 2013-1 Warehouse 2 may borrow from time to time up to $20.0 million from the Company in order to
provide capital necessary to support warehouse activities. The CLO 2013-1 Warehouse 2 Loan, which expires on August 20, 2021, bears interest at an annual rate of 3M USD LIBOR + 7.5%. 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.  S-16




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##### Table of Contents

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 29, 2020. 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 29, 2020 and February 28, 2019, cash and cash equivalents amounted to $9.1 million and $18.5 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.  S-17




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##### Table of Contents

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. 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. As of February 29, 2020 and February 28, 2019, included in deferred debt financing costs of $2.3 million and $2.5 million,
respectively, 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. 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. 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 29, 2020, February 28, 2019 and February 28, 2018, the Issuer paid $0.2 million, $0.2 million and
$0.2 million, respectively, for trustee services provided and is included on the statements of operations.  S-18




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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 29, 2020, February 28, 2019 and February 28, 2018, $4.6 million, $2.0 million and $3.3 million of payments to the Subordinated Notes were included in
interest and debt financing expenses on the statements of operations, respectively. For the years ended February 29, 2020 and February 28, 2019, $2.4 million and $0.5 million, respectively, 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. 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 is currently evaluating
the impact these changes will have on the Issuers financial statements and disclosures. SEC Disclosure Update and Simplification In March 2019, the U.S. Securities Exchange Commission (the SEC) adopted the final rule under SEC Release No. 33-10618,Fast Act Modernization and Simplification of Regulation S-K, amending certain disclosure requirements. The amendments are intended to simplify
certain disclosure requirements and to provide for a consistent set of rules to govern incorporating information by reference and hyperlinking, improve readability and navigability of disclosure documents, and discourage repetition and disclosure of
immaterial information. The Company has adopted the final rule, as applicable under SEC Release No. 33-10618 and determined the effect of the adoption of the simplification rules on financial
statements will be limited to the modification and removal of certain disclosures. 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.  S-19




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##### Table of Contents

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). The following table presents fair value measurements of investments, by major class, as of February 29, 2020, according to the fair value
hierarchy:  Fair Value MeasurementsLevel 1


Level 2


Level 3


TotalTerm loans

$



$
386,695,515


$
114,304,162


$
500,999,677Equity interests






257







257Total

$



$
386,695,772


$
114,304,162


$
500,999,934  S-20




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##### Table of Contents

The following table presents fair value 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 provides a reconciliation of the beginning and ending balances for investments that use
Level 3 inputs for the year ended February 29, 2020:  Term Loans


Equity Interests


TotalBalance as of February 28, 2019

$
96,991,665


$



$
96,991,665Payment-in-kind
and other adjustments to cost


(1,283,130
)






(1,283,130
)Net accretion of discount on investments


181,304







181,304Net change in unrealized appreciation (depreciation) on investments


(3,066,649
)






(3,066,649
)Purchases


47,743,825







47,743,825Sales and repayments


(32,647,696
)






(32,647,696
)Net realized gain (loss) from investments


200,062







200,062Transfers in (1)


36,803,366







36,803,366Transfers out (2)


(30,618,585
)






(30,618,585
)Balance as of February 29, 2020

$
114,304,162


$



$
114,304,162Net 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

$
(3,263,424
)

$



$
(3,263,424
)  (1)
The Issuers investment in Level 3 investments were classified as such during the year ended
February 29, 2020, 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 29, 2020, as the number of observable market quotes for these investments increased.  S-21




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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, 2019:  Term Loans


Equity Interests


TotalBalance as of February 28, 2018

$
45,361,411


$
4,364


$
45,365,775Payment-in-kind
and other adjustments to cost










Net accretion of discount on investments


122,911







122,911Net change in unrealized appreciation (depreciation) on investments


(847,562
)


1,893,174



1,045,612Purchases


51,664,346







51,664,346Sales and repayments


(18,867,427
)






(18,867,427
)Net realized gain (loss) 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. 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 unputs used in recurring Level 3 fair value measurements of assets as of
February 29, 2020 were as follows:  Fair Value


Valuation Technique

Unobservable Inputs

Weighted Average*Term loans

$
114,304,162


Market Comparables

Third-Party Bid


40.00% - 100.25%Total

$
114,304,162 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 weighted average in the tables above is calculated based on each investments fair value weighting,
using the applicable unobservable input.  S-22




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##### Table of Contents

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. 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 2013-1 CLO 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.  S-23




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##### Table of Contents

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-24




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##### Table of Contents

The table below sets forth certain information for each outstanding class of loans and notes issued,
pursuant to the loan agreements and Indenture at February 29, 2020.  Description

Interest Rate


Maturity


Principal Amount


AmountOutstanding


WeightedAverageInterest RateLoan payable, related party


LIBOR + 7.50%



August 20, 2021


$
20,000,000
(1)

$
2,500,000



9.17
%Loan payable, third party


LIBOR + 1.25%



August 11, 2021



80,000,000
(1)


2,600,000



2.89
%Saratoga Investment Corp. CLO 2013-1, Ltd. Notes:Class 
A-1FL-R-2 Senior Secured Floating Rate Notes


LIBOR + 1.25%



January 20, 2030



255,000,000



255,000,000



3.60
%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



4.11
%Class B-R-2
Senior Secured Floating Rate Notes


LIBOR + 2.30%



January 20, 2030



59,500,000



59,500,000



4.66
%Class C-R-2
Deferrable Mezzanine Floating Rate Notes


LIBOR + 2.75%



January 20, 2030



22,500,000



22,500,000



5.12
%Class D-R-2
Deferrable Mezzanine Floating Rate Notes


LIBOR + 3.75%



January 20, 2030



31,000,000



31,000,000



6.13
%Class 
E-1-R-2 Deferrable Mezzanine Floating Rate Notes


LIBOR + 5.87%(2)



January 20, 2030



27,000,000



27,000,000



8.27
%Class F-R-2
Deferrable Junior Floating Rate Notes


LIBOR + 8.75%



January 20, 2030



2,500,000



2,500,000



11.16
%Class G-R-2
Deferrable Junior Floating Rate Notes


LIBOR + 10.00%



January 20, 2030



7,500,000



7,500,000



12.42
%Subordinated Notes


N/A



January 20, 2030



69,500,000



69,500,000



N/A$
639,500,000


$
544,600,000  Description

Interest Rate


Maturity


Notional Amount


AmountOutstanding


WeightedAverageInterest RateSaratoga Investment Corp. CLO 2013-1, Ltd. Notes:Class 
E-2-R-2 Deferrable Mezzanine Fixed Rate Notes(3)


0.00%



January 20, 2030



$27,000,000


$
27,000,000



0.00
%  (1)
Represents total loan commitment. (2)
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. (3)
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 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-1-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  S-25




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##### Table of Contents

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  S-26




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##### Table of Contents

The following table shows the fair value of the Issuers debt outstanding as of
February 29, 2020:  Debt Security

February 29, 2020Loan payable, related party

$
2,204,541Loan payable, third party


2,600,000Saratoga Investment Corp. CLO 2013-1, Ltd. Notes:Class 
A-1FL-R-2 Senior Secured Floating Rate Notes


254,996,329Class 
A-1FXD-R-2 Senior Secured Fixed Rate Notes


25,011,552Class 
A-2-R-2 Senior Secured Floating Rate Notes


39,999,222Class B-R-2
Senior Secured Floating Rate Notes


59,498,460Class C-R-2
Deferrable Mezzanine Floating Rate Notes


22,499,284Class D-R-2
Deferrable Mezzanine Floating Rate Notes


30,998,536Class 
E-1-R-2 Deferrable Mezzanine Floating Rate Notes


27,126,547Class F-R-2
Deferrable Junior Floating Rate Notes


2,478,000Class G-R-2
Deferrable Junior Floating Rate Notes


7,434,750Subordinated Notes


22,557,240$
497,404,461 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-1-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 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. As of February 29, 2020, 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, $0.5 million, $1.0 million, $0.0 million, $0.0 million and $0.0 million,
respectively. 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. For the year ended February 28, 2019, costs associated with the 2013-1 Amended
CLO Notes of $0.9 million in remaining unamortized deferred debt financing costs and $0.3 million in unamortized discount, were recognized as additional amortization expense when the related notes were extinguished and recorded within loss
on extinguishment of debt in the statement of operations. As of February 29, 2020, remaining capitalized financing costs of
$2.3 million related to the 2013-1 Reset CLO Notes are being amortized over the term of the 2013-1 Reset CLO Notes. On February 11, 2020, CLO 2013-1 Warehouse 2, a wholly-owned subsidiary of Saratoga CLO
entered into CLO 2013-1 Warehouse 2 Loan with the Company, pursuant to which CLO 2013-1 Warehouse 2 may borrow from time to time up to
$20.0 million from the Company in order to provide capital necessary to support warehouse activities. The CLO 2013-1 Warehouse 2 Loan, which expires on August 20, 2021, bears interest at an
annual rate of 3M USD LIBOR + 7.5%. On February 11, 2020, CLO 2013-1 Warehouse 2,
a wholly-owned subsidiary of Saratoga CLO entered into a loan payable with a third party, pursuant to which CLO 2013-1 Warehouse 2 may borrow from time to time up to $80 million in order to
provide capital necessary to support warehouse activities. The loan payable, which expires on August 11, 2021, bears interest at an annual rate of 3M USD LIBOR + 1.25% through November 11, 2020 and 3M USD LIBOR + 1.75% thereafter. For the
year ended February 29, 2020, the Saratoga CLO recognized interest expense of $0.001 million related to the loan payable, with a loan payable balance of $2.6 million as of February 29, 2020.  S-27




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##### Table of Contents

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 29, 2020 and February 28, 2019, 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 29, 2020, February 28, 2019 and February 28, 2018. 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 29, 2020, February 28, 2019 and February 28,
2018. 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
29, 2020 and February 28, 2019, 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 29, 2020 and February 28, 2019, the Issuer had $1.0 million and $1.3 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 29, 2020, February 28, 2019 and
February 28, 2018, the Issuer neither bought nor sold investments from related parties. 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 in the Issuers statement of operations. On February 11, 2020,
CLO 2013-1 Warehouse 2, a wholly-owned subsidiary of Saratoga CLO entered into CLO 2013-1 Warehouse 2 Loan with the Company, pursuant to which CLO 2013-1 Warehouse 2 may borrow from time to time up to $20.0 million from the Company in order to provide capital necessary to support warehouse activities. The
CLO 2013-1 Warehouse 2 Loan, which expires on August 20, 2021, bears interest at an annual rate of 3M USD LIBOR + 7.5%. For the year ended February 29, 2020, the Saratoga CLO recognized
interest expense of $0.01 million related to the CLO 2013-1 Warehouse 2 Loan, with an unsecured loan balance of $2.5 million as of February 29, 2020. 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 29, 2020, February 28, 2019 and February 28, 2018,
$4.6 million, $2.0 million and $3.3 million of payments to the Subordinated Notes were included in interest and debt financing expenses in the statements of operations, respectively. For the years ended February 29, 2020 and
February 28, 2019, $2.4 million and $0.5 million, respectively, 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 29, 2020, 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 years ended
February 29, 2020 and February 28, 2019, payments for the Class F-R-2 Notes and
Class G-R-2 Notes totaling $1.2 million and $0.3 million, respectively, are included in interest and debt financing expenses in the Issuers
statement of operations.  S-28




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##### Table of Contents

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 29, 2020 and February 28, 2019, net assets (deficit) were
$(35.1) million and $(17.9) million, respectively. These amounts include accumulated losses of $17.9 million and $11.2 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-29




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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 29, 2020, February 28, 2019 and February 28, 2018, as shown in the tables below:  For the Year Ended February 29, 2020Common Stock


Capital inExcess


TotalDistributable


Net AssetsShares


Amount


of Par Value


Earnings (Loss)


(Deficit)Balance at February 28, 2019


250


$
250


$



$
(17,899,919
)

$
(17,899,669
)Increase (Decrease) from Operations:Net investment income (loss)














1,125,944



1,125,944Net realized gain (loss) from investments














(943,934
)


(943,934
)Net change in unrealized appreciation (depreciation) on investments














(2,205,995
)


(2,205,995
)Balance at May 31, 2019


250



250







(19,923,904
)


(19,923,654
)Increase (Decrease) from Operations:Net investment income (loss)














775,988



775,988Net realized gain (loss) from investments














(1,218,364
)


(1,218,364
)Net change in unrealized appreciation (depreciation) on investments














(2,174,060
)


(2,174,060
)Balance at August 31, 2019


250



250







(22,540,340
)


(22,540,090
)Increase (Decrease) from Operations:Net investment income (loss)














(712,398
)


(712,398
)Net realized gain (loss) from investments


















Net change in unrealized appreciation (depreciation) on investments














(7,516,752
)


(7,516,752
)Balance at November 30, 2019


250



250







(30,769,490
)


(30,769,240
)Increase (Decrease) from Operations:Net investment income (loss)














136,535



136,535Net realized gain (loss) from investments














(2,632,887
)


(2,632,887
)Net change in unrealized appreciation (depreciation) on investments














(1,836,577
)


(1,836,577
)Balance at February 29, 2020


250


$
250


$



$
(35,102,419
)

$
(35,102,169
)  S-30




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##### Table of Contents

For the Year Ended February 28, 2019Common Stock


Capital inExcess


TotalDistributable


Net AssetsShares


Amount


of Par Value


Earnings (Loss)


(Deficit)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
)  S-31




---

##### Table of Contents

For the Year Ended February 28, 2018Common Stock


Capital inExcess


TotalDistributable


Net AssetsShares


Amount


of Par Value


Earnings(Loss)


(Deficit)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
)  S-32




---

##### Table of Contents

9. Financial Highlights The following is a schedule of financial highlights for the years ended February 29, 2020, February 28, 2019, February 28, 2018,
February 28, 2017 and February 29, 2016:  February 29,2020


February 28,2019


February 28,2018


February 28,2017


February 29,2016Average subordinated notes capital balance(1)

$
20,177,254


$
18,900,592


$
17,262,714


$
15,113,353


$
18,382,072Ratio and supplemental data:Total return(2)


(46.85
)%


(22.41
)%


32.73
%


162.55
%


(49.59
)%Net investment income (loss)(3)


6.57
%


1.77
%


8.08
%


(34.62
)%


0.57
%Total expenses(3)


156.62
%


125.54
%


95.41
%


141.14
%


79.34
%Base management fee(3)


2.48
%


1.82
%


1.75
%


3.87
%


4.07
%Subordinated management fee(3)


9.93
%


7.29
%


6.99
%


6.04
%


4.07
%  (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 29, 2020 through May 6, 2020, 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, other than the following: COVID-19 We evaluated subsequent events from February 29, 2020 through May 6, 2020. On March 11, 2020, the World Health Organization declared the novel
coronavirus (COVID-19) as a pandemic, and on March 13, 2020 the United States declared a national emergency with respect to COVID-19. The outbreak of COVID-19 has severely impacted global economic activity and caused significant
volatility and negative pressure in financial markets. The global impact of the outbreak has been rapidly evolving and many countries, including the United States, have reacted by instituting quarantines, mandating business and school closures and
restricting travel. Such actions are creating disruption in global supply chains and adversely impacting a number of industries. The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global
economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19. Nevertheless, COVID-19 presents material uncertainty and risks with respect to the underlying value of
the Issuers portfolio companies, the Issuers business, financial condition, results of operations and cash flows, such as the potential negative impact to financing arrangements, company decisions to delay, defer and/or modify the
character of dividends in order to preserve liquidity, increased costs of operations, changes in law and/or regulation, and uncertainty regarding government and regulatory policy. As of February 29, 2020, the Issuer valued its portfolio investments in conformity with U.S. GAAP based on the facts and circumstances known
by the Issuer at that time, or reasonably expected to be known at that time. Due to the overall volatility that the COVID-19 pandemic has caused during the months that followed our February 29, 2020 valuation, any valuations conducted now or in the
future in conformity with U.S. GAAP could result in a lower fair value of our portfolio. The potential impact to our results will depend
to a large extent on future developments and new information that may emerge regarding the duration and severity of COVID-19 and the actions taken by authorities and other entities to contain the coronavirus or treat its impact, all of which are
beyond our control. Accordingly, the Issuer cannot predict the extent to which its financial condition and results of operations will be affected at this time.  S-33