SAT · Saratoga Investment Corp. 8 % Notes 2026-31.08.31

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, and proceeds from the sale or repayment of portfolio investments. Net cash provided by operating activities declined significantly to a use of $88.0M for FY2026, compared to $197.5M provided in FY2025. This reversal reflects aggressive investment deployment and timing-related capital structure actions — not deterioration in underlying income generation. The decline in operating cash flow was driven by a decline in company performance, overall market conditions and capital structure changes.

Management Discussion and Analysis

This decrease in operating cash flow was primarily due to the recognition of reserved Knowland PIK interest recognized last year — a non-cash item that reversed in the current period and affected the comparative cash flow statement. We have identified investment valuation, revenue recognition and the recognition of capital gains incentive fee expense as our most critical accounting estimates. As a regulated investment company (RIC), we intend to distribute to our stockholders substantially all of our operating taxable income in order to satisfy the distribution requirement applicable to RICs under the Code. We bear all other costs and expenses of our operations and transactions, including those relating to advisory and administrative services previously provided by GSCP (NJ), L.P. We will need to raise additional capital in the future in order to continue to make investments in accordance with our business and investing strategy and to pursue new business opportunities.