1278752--5/29/2008--APOLLO_INVESTMENT

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RISKS RELATING TO OUR BUSINESS AND STRUCTURE We can offer no assurance that we will be able to replicate our own success or the success of Apollo s private funds and our investment returns could be substantially lower than the returns achieved by those private funds. We are dependent upon Apollo Investment Management s key personnel for our future success and upon their access to Apollo s investment professionals and partners. Our financial condition and results of operation depend on our ability to manage future growth effectively. We operate in a highly competitive market for investment opportunities. Any failure on our part to maintain our status as a BDC would reduce our operating flexibility. We will be subject to corporate-level income tax if we are unable to qualify as a RIC. We may have difficulty paying our required distributions if we recognize income before or without receiving cash representing such income. Regulations governing our operation as a BDC affect our ability to, and the way in which we raise additional capital. We currently use borrowed funds to make investments and are exposed to the typical risks associated with leverage. We fund a portion of our investments with borrowed money, which magnifies the potential for gain or loss on amounts invested and may increase the risk of investing in us. We may in the future determine to fund a portion of our investments with preferred stock, which would magnify the potential for gain or loss and the risks of investing in us in the same way as our borrowings. Changes in interest rates may affect our cost of capital and net investment income. We need to raise additional capital to grow because we must distribute most of our income. Many of our portfolio investments are recorded at fair value as determined in good faith by or under the direction of our board of directors and, as a result, there is uncertainty as to the value of our portfolio investments. The lack of liquidity in our investments may adversely affect our business. We may experience fluctuations in our periodic results. There are significant potential conflicts of interest which could adversely affect our investment returns. We are currently analyzing the effect on our financial position, including our net asset value and results of operations, of the adoption of Statement of Financial Accounting Standards No. 157, Fair Value Measurements, issued by the Financial Accounting Standards Board. 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. Changes in laws or regulations governing our operations may adversely affect our business. Provisions of the Maryland General Corporation Law and of our charter and bylaws could deter takeover attempts and have an adverse impact on the price of our common stock. RISKS RELATED TO OUR INVESTMENTS We may not realize gains from our equity investments. Our ability to invest in public companies may be limited in certain circumstances. Our portfolio is concentrated in a limited number of portfolio companies, which subject us to a risk of significant loss if any of these companies defaults on its obligations under any of its debt securities. Our investments in prospective portfolio companies may be risky, and you could lose all or part of your investment. Economic recessions or downturns could impair our portfolio companies and harm our operating results. Our failure to make follow-on investments in our portfolio companies could impair the value of our portfolio. When we do not hold controlling equity interests in our portfolio companies, we may not be in a position to exercise control over our portfolio companies or to prevent decisions by management of our portfolio companies that could decrease the value of our investments. An investment strategy focused primarily on privately-held companies presents certain challenges, including the lack of available information about these companies, a dependence on the talents and efforts of only a few key portfolio company personnel and a greater vulnerability to economic downturns. Our portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies. Our incentive fee may induce AIM to make certain investments, including speculative investments. Our investments in foreign securities may involve significant risks in addition to the risks inherent in U.S. investments. Hedging transactions may expose us to additional risks. RISKS RELATED TO ISSUANCE OF OUR PREFERRED STOCK If we issue preferred stock, the net asset value and market value of our common stock may become more volatile. Holders of any preferred stock we might issue would have the right to elect members of the board of directors and class voting rights on certain matters. RISKS RELATING TO AN INVESTMENT IN OUR COMMON STOCK Investing in our securities may involve an above average degree of risk. There is a risk that investors in our equity securities may not receive dividends or that our dividends may not grow over time and that investors in our debt securities may not receive all of the interest income to which they are entitled. Our shares may trade at discounts from net asset value or at premiums that are unsustainable over the long term. The market price of our securities may fluctuate significantly. We may allocate the net proceeds from this offering in ways with which you may not agree. We may be unable to invest the net proceeds raised from offerings on acceptable terms, which would harm our financial condition and operating results. Sales of substantial amounts of our securities may have an adverse effect on the market price of our securities.

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1278752--5/29/2008--APOLLO_INVESTMENT_CORP