1287750--2/28/2006--ARES_CAPITAL

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{investment, property, distribution}

{tax, income, asset}

{acquisition, growth, future}

{stock, price, operating}

{cost, contract, operation}

{competitive, industry, competition}

{personnel, key, retain}

{regulation, change, law}

{control, financial, internal}

{operation, international, foreign}

{interest, director, officer}

{loan, real, estate}

RISK FACTORS THAT MAY AFFECT FUTURE RESULTS We are a new company with a limited operating history. Our investment adviser and the members of its investment committee have limited experience managing a BDC. A failure on our part to maintain our status as a BDC would significantly reduce our operating flexibility. The Company may not replicate Ares historical success. We are dependent upon Ares Capital Management s key personnel for our future success and upon their access to Ares investment professionals. Our financial condition and results of operation will depend on our ability to manage future growth effectively. Our ability to grow will depend on our ability to raise capital. 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 BDC affect our ability to, and the way in which we, raise additional capital. If our primary investments are deemed not to be qualifying assets, we could lose our status as a BDC or be precluded from investing according to our current business plan. We borrow money, which magnifies the potential for gain or loss on amounts invested and may increase the risk of investing with us. We will be exposed to risks associated with changes in interest rates. Many of our portfolio investments are not publicly traded and, as a result, there will be 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 that could impact our investment returns. Our investment adviser s liability is limited under the investment management agreement, and we will indemnify our investment adviser against certain liabilities, which may lead our investment adviser to act in a riskier manner on our behalf than it would when acting for its own account. We may be obligated to pay our manager incentive compensation even if we incur a loss. Changes in laws or regulations governing our operations, or changes in the interpretation thereof, and any failure by us to comply with laws or regulations governing our operations may adversely affect our business. Our ability to enter into transactions with our affiliates is restricted.

Full 10-K form ▸

1287750--2/28/2006--ARES_CAPITAL_CORP