1287032--8/30/2010--PROSPECT_CAPITAL

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{tax, income, asset}

{investment, property, distribution}

{loss, insurance, financial}

{acquisition, growth, future}

{stock, price, operating}

{condition, economic, financial}

Our financial condition and results of operations will depend on our ability to manage our future growth effectively. Most 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. Changes in interest rates may affect our cost of capital and net investment income. Potential conflicts of interest could impact our investment returns. Our incentive fee could induce Prospect Capital Management to make speculative investments. A failure on our part to maintain our status as a business development company would significantly reduce our operating flexibility. Our common stock may trade at a discount to our net asset value per share. We may have difficulty paying our required distributions if we recognize income before or without receiving cash representing such income. We may not realize gains or income from our investments. Economic recessions or downturns could impair our portfolio companies and harm our operating results. We may not be in a position to control a portfolio investment when we are a debt or minority equity investor and its management may make decisions that could decrease the value of our investment. We may expose ourselves to risks if we engage in hedging transactions. The market price of our securities may fluctuate significantly. We may in the future choose to pay dividends in our own stock, in which case our shareholders may be required to pay tax in excess of the cash they receive.

Full 10-K form ▸

1287032--8/30/2010--PROSPECT_CAPITAL_CORP