1278752--6/12/2006--APOLLO_INVESTMENT

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RISKS RELATING TO OUR BUSINESS AND STRUCTURE We are a relatively new company with limited operating history. Our investment adviser and its senior management have limited experience managing a business development company. 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. 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 business development company affect our ability to, and the way in which we, raise additional capital. We currently use debt 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. 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 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 quarterly results. There are significant potential conflicts of interest which could impact our investment returns. Changes in laws or regulations governing our operations may adversely affect our business. RISKS RELATED TO OUR INVESTMENTS We may not realize gains from our equity investments. 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. 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 Apollo Investment Management 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. 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 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. The market price of our securities may fluctuate significantly. We may allocate the net proceeds from future offerings in ways with which you may not agree. Sales of substantial amounts of our securities may have an adverse effect on the market price of our securities.

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1278752--6/12/2006--APOLLO_INVESTMENT_CORP