Saratoga Investment Corp.

Consolidated Statements of Assets and Liabilities

As of

November 30, 2010

February 28, 2010

(unaudited)

ASSETS

Investments at fair value

Non-control/non-affiliate investments (amortized cost of $95,792,289 and $117,678,275, respectively)

$                        68,176,984

$                     72,674,847

Control investments (cost of $28,414,863 and $29,233,097, respectively)

23,037,967

16,698,303

Total investments at fair value (amortized cost of $124,207,152 and $146,911,372, respectively)

91,214,951

89,373,150

Cash and cash equivalents

4,571,926

3,352,434

Cash and cash equivalents, securitization accounts

3,407,260

225,424

Outstanding interest rate cap at fair value (cost of $131,000 and $131,000, respectively)

22,352

42,147

Interest receivable, (net of reserve of $579,291 and $2,120,309, respectively)

2,017,807

3,473,961

Deferred credit facility financing costs, net

1,805,799

-

Management fee receivable

231,838

327,928

Other assets

266,245

140,272

Total assets

$                      103,538,178

$                     96,935,316

LIABILITIES

Revolving credit facility

$                        15,750,000

$                     36,992,222

Payable for unsettled trades

1,614,000

-

Dividend payable

1,179,800

-

Management and incentive fees payable

1,868,744

3,071,093

Accounts payable and accrued expenses

885,297

1,111,081

Interest and credit facility fees payable

152,448

267,166

Due to manager

310,000

15,602

Total liabilities

$                        21,760,289

$                     41,457,164

NET ASSETS

Common stock, par value $.001 and $.001 per share, respectively, 100,000,000 common shares

authorized, 3,277,077 and 1,694,011* common shares issued and outstanding, respectively

$                                 3,277

$                              1,694

Capital in excess of par value

153,768,680

128,339,497

Distribution in excess of net investment income

(10,223,021)

(2,846,135)

Accumulated net realized loss from investments and derivatives

(28,670,200)

(12,389,830)

Net unrealized depreciation on investments and derivatives

(33,100,847)

(57,627,074)

Total Net Assets

81,777,889

55,478,152

Total liabilities and Net Assets

$                      103,538,178

$                     96,935,316

NET ASSET VALUE PER SHARE*

$                                 24.95

$                              32.75

*Net Asset Value per share  and end of period shares outstanding for the year ended February 28, 2010 has been adjusted to reflect a one-for-ten reverse stock split in August 2010.

See accompanying notes to consolidated financial statements.

Saratoga Investment Corp.

Consolidated Statements of Operations

For the three months ended
November 30

For the nine months ended
November 30

2010

2009

2010

2009

(unaudited)

(unaudited)

(unaudited)

(unaudited)

INVESTMENT INCOME

Interest from investments

Non-control/Non-affiliate investments

$                         3,639,216

$                         2,593,082

$                         7,006,161

$                         8,566,587

Control investments

941,281

368,374

2,410,803

1,686,088

    Total interest income

4,580,497

2,961,456

9,416,964

10,252,675

Interest from cash and cash equivalents

2,460

2,752

3,642

22,934

Management fee income

508,674

511,236

1,523,530

1,549,167

Other income

-

54,699

71,192

155,111

Total investment income

5,091,631

3,530,143

11,015,328

11,979,887

EXPENSES

Interest and credit facility financing expenses

618,810

1,126,162

2,188,078

3,174,603

Base management fees

424,044

462,755

1,258,875

1,515,813

Professional fees

381,096

714,789

3,138,221

1,396,567

Administrator expenses

240,000

171,861

568,562

515,583

Incentive management fees

1,173,144

-

1,173,144

322,183

Insurance

170,684

220,059

536,934

649,535

Directors fees and expenses

48,000

71,989

320,844

217,125

General & administrative

100,961

65,298

306,558

191,223

Expenses before expense waiver and reimbursement

3,156,739

2,832,913

9,491,216

7,982,632

Expense reimbursement

-

(171,861)

(258,562)

(515,583)

Waiver of deferred incentive management fees

-

-

(2,636,146)

-

Total expenses net of expense waiver and reimbursement

3,156,739

2,661,052

6,596,508

7,467,049

NET INVESTMENT INCOME

1,934,892

869,091

4,418,820

4,512,838

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

Net realized loss from investments

(13,731,107)

(549,864)

(16,280,370)

(1,579,812)

Net unrealized appreciation/(depreciation) on investments

15,107,701

8,825,100

24,546,024

(4,562,979)

Net unrealized appreciation/(depreciation) on derivatives

(1,366)

(16,754)

(19,797)

33,080

Net gain/(loss) on investments

1,375,228

8,258,482

8,245,857

(6,109,711)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

$                         3,310,120

$                         9,127,573

$                       12,664,677

$                       (1,596,873)

WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE*

$                                  1.20

$                                10.08

$                                  5.86

$                                (1.87)

WEIGHTED AVERAGE COMMON STOCK OUTSTANDING - BASIC AND DILUTED*

2,752,914

905,171

2,162,832

854,298

*Earnings per share and Weighted average shares outstanding for the three and nine months ended November 30, 2009 have been adjusted to reflect a one-for-ten reverse stock split in August 2010.

See accompanying notes to consolidated financial statements.

Contact: Richard Petrocelli

Saratoga Investment Corp.

212-906-7800

Roland Tomforde

Broadgate Consultants

212-232-2222