UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2023
OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 Commission File Number: 814-00659 

PROSPECT CAPITAL CORPORATION

(Exact name of registrant as specified in its charter)

Maryland			43-2048643
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
10 East 40th Street, 42nd Floor
New York, New York			10016
(Address of principal executive offices)			(Zip Code)
Registrant's telephone number, including area code: (212) 448-0702

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Trading symbols			Name of each exchange on which registered
Common Stock, $0.001 par value			PSEC			NASDAQ Global Select Market
5.35% Series A Fixed Rate Cumulative Perpetual Preferred Stock, par value $0.001			PSEC PRA			New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

ý

Accelerated filer

o

Non-accelerated filer

o

Smaller reporting company

o

Emerging growth company

o

(Do not check if a smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o    No ý

As of May 8, 2023, there were 402,169,399 shares of the registrant’s common stock, $0.001 par value per share, outstanding.

---

Table of Contents

						Page
			Forward-Looking Statements			3
PART I			FINANCIAL INFORMATION
Item 1.			Financial Statements
			Consolidated Statements of Assets and Liabilities as of March 31, 2023 (unaudited) and June 30, 2022			4
			Consolidated Statements of Operations for the three and nine months ended March 31, 2023 and March 31, 2022 (unaudited)			5
			Consolidated Statements of Changes in Net Assets and Temporary Equity for the three and nine months ended March 31, 2023 and March 31, 2022 (unaudited)			6
			Consolidated Statements of Cash Flows for the nine months ended March 31, 2023 and March 31, 2022 (unaudited)			8
			Consolidated Schedules of Investments as of March 31, 2023 (unaudited) and June 30, 2022			9
			Notes to Consolidated Financial Statements (unaudited)			45
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			113
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			142
Item 4.			Controls and Procedures			144
PART II			OTHER INFORMATION
Item 1.			Legal Proceedings			145
Item 1A.			Risk Factors			145
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			148
Item 3.			Defaults Upon Senior Securities			148
Item 4.			Mine Safety Disclosures			148
Item 5.			Other Information			149
Item 6.			Exhibits			154
			Signatures

---

FORWARD-LOOKING STATEMENTS

This report contains information that may constitute “forward-looking statements.” Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will,” “should,” “could,” “may,” “plan” and similar expressions identify forward-looking statements, which generally are not historical in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future—including statements relating to volume growth, share of sales and earnings per share growth, and statements expressing general views about future operating results—are forward-looking statements. Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those described in Part II, “Item 1A. Risk Factors” and elsewhere in this report and in our Annual Report on Form 10-K for the year ended June 30, 2022, and those described from time to time in reports that we have filed or in the future may file with the Securities and Exchange Commission.

The forward-looking statements contained in this report involve a number of risks and uncertainties, including statements concerning:

•our, or our portfolio companies’, future operating results;

•our business prospects and the prospects of our portfolio companies;

•the return or impact of current or future investments that we expect to make;

•our contractual arrangements and relationships with third parties;

•the dependence of our future success on the general economy and its impact on the industries in which we invest;

•the impact of global events outside of our control, including the consequences of the ongoing conflict between Russia and Ukraine, on our and our portfolio companies’ business and the global economy;

•uncertainty surrounding inflation and the financial stability of the United States, Europe, and China;

•the financial condition of, and ability of our current and prospective portfolio companies to, achieve their objectives;

•difficulty in obtaining financing or raising capital, especially in the current credit and equity environment, and the impact of a protracted decline in the liquidity of credit markets on our and our portfolio companies’ business;

•the level, duration and volatility of prevailing interest rates and credit spreads, magnified by the current turmoil in the credit markets;

•the phase-out and the cessation of the London Interbank Offered Rate (“LIBOR”) and the use of the Secured Overnight Financing Rate (“SOFR”) as a replacement rate on our operating results;

•adverse developments in the availability of desirable loan and investment opportunities whether they are due to competition, regulation or otherwise;

•a compression of the yield on our investments and the cost of our liabilities, as well as the level of leverage available to us;

•the impact of changes in laws or regulations governing our operations or the operations of our portfolio companies;

•our regulatory structure and tax treatment, including our ability to operate as a business development company and a regulated investment company;

•the adequacy of our cash resources and working capital;

•the timing of cash flows, if any, from the operations of our portfolio companies;

•the ability of our investment adviser to locate suitable investments for us and to monitor and administer our investments;

•the timing, form and amount of any dividend distributions;

•authoritative generally accepted accounting principles or policy changes from such standard-setting bodies as the Financial Accounting Standards Board, the Securities and Exchange Commission, Internal Revenue Service, the NASDAQ Global Select Market, the New York Stock Exchange LLC, and other authorities that we are subject to, as well as their counterparts in any foreign jurisdictions where we might do business; and

•any of the other risks, uncertainties and other factors we identify herein or in our Annual Report on Form 10-K for the year ended June 30, 2022.

3

---

PART I

Item 1. Financial Statements

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(in thousands, except share and per share data)

			March 31, 2023						June 30, 2022
			(Unaudited)
Assets
Investments at fair value:
Control investments (amortized cost of $2,884,591 and $2,732,906, respectively)			$	3,480,094					$	3,438,317
Affiliate investments (amortized cost of $8,996 and $242,101, respectively)			7,944						393,264
Non-control/non-affiliate investments (amortized cost of $4,671,607 and $4,221,824, respectively)			4,104,739						3,770,929
Total investments at fair value (amortized cost of $7,565,194 and $7,196,831, respectively)(Note 3)			7,592,777						7,602,510
Cash and cash equivalents (restricted cash of $4,442 and $4,197, respectively)			65,092						35,364
Receivables for:
Interest, net			27,029						12,925
Other			1,063						745
Deferred financing costs on Revolving Credit Facility (Note 4)			14,842						10,801
Due from broker			400						—
Prepaid expenses			329						1,078
Due from Affiliate (Note 13)			1						—
Total Assets			7,701,533						7,663,423
Liabilities
Revolving Credit Facility (Notes 4 and 8)			888,405						839,464
Public Notes (less unamortized discount and debt issuance costs of $18,265 and $22,281,   respectively) (Notes 6 and 8)			1,062,975						1,343,178
Prospect Capital InterNotes® (less unamortized debt issuance costs of $6,817 and $7,122,    respectively) (Notes 7 and 8)			348,647						340,442
Convertible Notes (less unamortized debt issuance costs of $1,802 and $2,477, respectively) (Notes 5 and 8)			154,366						214,192
Due to Prospect Capital Management (Note 13)			59,542						58,100
Dividends payable			24,219						23,657
Interest payable			19,989						26,669
Accrued expenses			5,595						3,309
Due to Prospect Administration (Note 13)			10,128						2,281
Other liabilities			613						932
Total Liabilities			2,574,479						2,852,224
Commitments and Contingencies (Note 3)
Preferred Stock, par value $0.001 per share (447,900,000 and 227,900,000 shares of preferred stock authorized, with 72,000,000 and 60,000,000 as Series A1, 72,000,000 and 60,000,000 as Series M1, 72,000,000 and 60,000,000 as Series M2, 20,000,000 and 20,000,000 as Series AA1, 20,000,000 and 20,000,000 as Series MM1, 1,000,000 and 1,000,000 as Series A2, 6,900,000 and 6,900,000 as Series A, 72,000,000 and 0 as Series A3, 72,000,000 and 0 as Series M3, 20,000,000 and 0 as Series AA2, and 20,000,000 and 0 as Series MM2, each as of March 31, 2023 and June 30, 2022; 31,091,585 and 20,794,645 Series A1 shares issued and outstanding; 3,922,740 and 2,626,238 Series M1 shares issued and outstanding; 0 and 0 Series M2 shares issued and outstanding; 0 and 0 Series AA1 shares issued and outstanding; 0 and 0 Series MM1 shares issued and outstanding; 164,000 and 187,000 Series A2 shares issued and outstanding; 6,000,000 and 6,000,000 Series A shares issued and outstanding; 15,058,173 and 0 Series A3 shares issued and outstanding; 1,816,637 and 0 Series M3 shares issued and outstanding; 0 and 0 Series AA2 shares issued and outstanding; and 0 and 0 Series MM2 shares issued and outstanding as of March 31, 2023 and June 30, 2022, respectively) at carrying value plus cumulative accrued and unpaid dividends (Note 9)			1,327,760						692,076
Net Assets Applicable to Common Shares			$	3,799,294					$	4,119,123
Components of Net Assets Applicable to Common Shares and Net Assets, respectively
Common stock, par value $0.001 per share (1,552,100,000 and 1,772,100,000 common shares authorized; 400,833,873 and 393,164,437 issued and outstanding, respectively) (Note 9)			401						393
Paid-in capital in excess of par (Note 9 and 12)			4,103,778						4,050,370
Total distributable (loss) earnings (Note 12)			(304,885)						68,360
Net Assets Applicable to Common Shares			$	3,799,294					$	4,119,123
Net Asset Value Per Common Share (Note 16)			$	9.48					$	10.48

See notes to consolidated financial statements.

4

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(Unaudited)

			Three Months Ended March 31,												Nine Months Ended March 31,
			2023						2022						2023						2022
Investment Income
Interest income:
Control investments			$	64,496					$	53,095					$	187,579					$	166,036
Affiliate investments			—						6,745						15,034						23,497
Non-control/non-affiliate investments			109,601						65,037						287,735						182,698
Structured credit securities			24,039						17,612						72,982						58,702
Total interest income			198,136						142,489						563,330						430,933
Dividend income:
Control investments			800						5,197						3,157						12,134
Affiliate investments			—						95						1,374						95
Non-control/non-affiliate investments			1,128						14						2,515						48
Total dividend income			1,928						5,306						7,046						12,277
Other income:
Control investments			14,768						26,571						50,463						55,306
Affiliate investments			—						19						133						3,961
Non-control/non-affiliate investments			288						7,046						9,738						23,804
Total other income (Note 10)			15,056						33,636						60,334						83,071
Total Investment Income			215,120						181,431						630,710						526,281
Operating Expenses
Base management fee (Note 13)			38,980						36,426						116,176						102,472
Income incentive fee (Note 13)			20,561						19,967						64,692						59,296
Interest and credit facility expenses			37,517						29,235						109,170						86,952
Allocation of overhead from Prospect Administration (Note 13)			9,773						4,126						16,490						10,891
Audit, compliance and tax related fees			1,495						994						4,032						1,940
Directors’ fees			131						131						393						360
Other general and administrative expenses			4,483						3,547						11,607						10,439
Total Operating Expenses			112,940						94,426						322,560						272,350
Net Investment Income			102,180						87,005						308,150						253,931
Net Realized and Net Change in Unrealized (Losses) Gains from Investments
Net realized (losses) gains
Control investments			(800)						5,298						(2,512)						5,304
Affiliate investments			—						—						16,143						—
Non-control/non-affiliate investments			(31,413)						(7,552)						(52,723)						(17,386)
Net realized losses			(32,213)						(2,254)						(39,092)						(12,082)
Net change in unrealized (losses) gains
Control investments			(41,162)						96,162						(109,909)						352,558
Affiliate investments			—						(11,610)						(89,034)						26,016
Non-control/non-affiliate investments			(117,761)						(4,066)						(179,153)						19,766
Net change in unrealized (losses) gains			(158,923)						80,486						(378,096)						398,340
Net Realized and Net Change in Unrealized (Losses) Gains from Investments			(191,136)						78,232						(417,188)						386,258
Net realized losses on extinguishment of debt			(58)						(941)						(138)						(10,149)
Net (Decrease) Increase in Net Assets Resulting from Operations			(89,014)						164,296						(109,176)						630,040
Preferred stock dividends			19,933						7,139						49,347						16,748
Net (Decrease) Increase in Net Assets Resulting from Operations applicable to Common Stockholders			$	(108,947)					$	157,157					$	(158,523)					$	613,292
Basic and diluted earnings per common share (Note 11)
Basic			$	(0.27)					$	0.40					$	(0.40)					$	1.57
Diluted			$	(0.27)					$	0.38					$	(0.40)					$	1.50
Weighted-average shares of common stock outstanding (Note 11)
Basic			399,732,263						391,091,485						397,233,468						389,981,608
Diluted			399,732,263						432,808,120						397,233,468						419,914,712

See notes to consolidated financial statements.

5

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS AND TEMPORARY EQUITY

(in thousands, except share data)

(Unaudited)

						Preferred Stock Classified as Temporary Equity												Common Stock
Three Months Ended March 31, 2023						Shares						Carrying Value						Shares						Par						Paid-in capital in excess of par(1)						Distributable earnings (loss)(1)						Total Net Assets
Balance as of December 31, 2022(1)						52,669,005						$	1,207,553					398,852,478						$399						$	4,089,950					$	(123,958)					$	3,966,391
Net Increase (Decrease) in Net Assets and Temporary Equity Resulting from Operations:
Net investment income																																				102,180						102,180
Net realized losses																																				(32,271)						(32,271)
Net change in unrealized losses																																				(158,923)						(158,923)
Distributions to Shareholders(1)
Distributions from earnings (Note 16)																																				(91,942)						(91,942)
Capital Transactions
Issuance of preferred stock						5,539,836						123,915
Shares issued through reinvestment of dividends						16,826						420						1,399,596						1						9,757												9,758
Conversion of preferred stock to common stock						(172,533)						(4,101)						581,799						1						4,100												4,101
Net decrease in preferred dividend accrual												(27)																														—
Tax reclassifications of net assets (Note 12)																														(29)						29						—
Total increase (decrease) for the three months ended March 31, 2023						5,384,129						120,207						1,981,395						2						13,828						(180,927)						(167,097)
Balance as of March 31, 2023						58,053,134						$	1,327,760					400,833,873						$	401					$	4,103,778					$	(304,885)					$	3,799,294

						Preferred Stock Classified as Temporary Equity												Common Stock
Three Months Ended March 31, 2022						Shares						Carrying Value						Shares						Par						Paid-in capital in excess of par(1)						Distributable earnings (loss)(1)						Total Net Assets
Balance as of December 31, 2021(1)						18,457,557						$	440,661					390,584,255						$	391					4,030,760						108,977						4,140,128
Net Increase in Net Assets and Temporary Equity Resulting from Operations:
Net investment income																																				87,005						87,005
Net realized losses																																				(3,195)						(3,195)
Net change in unrealized gains																																				80,486						80,486
Distributions to Shareholders(1)
Distributions from earnings (Note 16)																																				(77,578)						(77,578)
Capital Transactions
Issuance of Preferred Stock						5,504,190						124,221
Shares issued through reinvestment of dividends						4,270						107						1,120,220						1						9,049												9,050
Conversion of preferred stock to common stock						(4,600)						(112)						13,661												115												115
Net increase in preferred dividend accrual												7
Tax reclassifications of net assets (Note 12)																														20						(20)						—
Total increase for the three months ended March 31, 2022						5,503,860						124,223						1,133,881						1						9,184						86,698						95,883
Balance as of March 31, 2022						23,961,417						$	564,884					391,718,136						$	392					$	4,039,944					$	195,675					$	4,236,011

(1) See Note 2 and Note 12 within the accompanying notes to consolidated financial statements for further discussion on tax reclassification of net assets and tax basis components of dividends.

See notes to consolidated financial statements.

6

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS AND TEMPORARY EQUITY (CONTINUED)

(in thousands, except share data)

(Unaudited)

						Preferred Stock Classified as Temporary Equity												Common Stock
Nine Months Ended March 31, 2023						Shares						Carrying Value						Shares						Par						Paid-in capital in excess of par(1)						Distributable earnings (loss)(1)						Total Net Assets
Balance as of June 30, 2022(1)						29,607,882						$	692,076					393,164,437						$393						$	4,050,370					$	68,360					$	4,119,123
Net Increase (Decrease) in Net Assets and Temporary Equity Resulting from Operations:
Net investment income																																				308,150						308,150
Net realized losses																																				(39,230)						(39,230)
Net change in unrealized losses																																				(378,096)						(378,096)
Distributions to Shareholders(1)
Distributions from earnings (Note 16)																																				(264,098)						(264,098)
Return of capital to common stockholders (Note 12)																																										—
Capital Transactions
Issuance of preferred stock						28,965,017						647,715
Shares issued through reinvestment of dividends						37,621						939						5,859,102						6						40,442												40,448
Conversion of preferred stock to common stock						(557,386)						(12,994)						1,810,034						2						12,992												12,994
Net increase in preferred dividend accrual												24
Tax reclassifications of net assets (Note 12)																														(29)						29						—
Conversion of Convertible Notes to common stock																		300												3												3
Total increase (decrease) for the nine months ended March 31, 2023						28,445,252						635,684						7,669,436						8						53,408						(373,245)						(319,829)
Balance as of March 31, 2023						58,053,134						$	1,327,760					400,833,873						$	401					$	4,103,778					$	(304,885)					$	3,799,294

						Preferred Stock Classified as Temporary Equity												Preferred Stock						Common Stock
Nine Months Ended March 31, 2022						Shares						Carrying Value						Liquidation Value						Shares						Par						Paid-in capital in excess of par(1)						Distributable earnings (loss)(1)						Total Net Assets
Balance as of June 30, 2021						—						$	—					$	137,040					388,419,573						$	388					$	4,018,659					$	(210,570)					$	3,945,517
Net Increase in Net Assets and Temporary Equity Resulting from Operations:
Net investment income																																										253,931						253,931
Net realized losses																																										(22,231)						(22,231)
Net change in unrealized gains																																										398,340						398,340
Distributions to Shareholders(1)
Distributions from earnings(Note 16)																																										(223,775)						(223,775)
Return of capital to common stockholders(Note 12)																																				(3,695)												(3,695)
Capital Transactions
Transfer of preferred stock to temporary equity(2)						5,796,528						144,914						(144,914)																														(144,914)
Issuance of Preferred Stock						18,166,948						430,621						7,866																		(13,239)												(5,373)
Transfer of preferred stock issuance costs to temporary equity(3)						—						(11,970)																								11,970												11,970
Shares issued through reinvestment of dividends						8,292						208						8						3,268,814						4						25,970												25,982
Conversion of preferred stock to common stock						(10,351)						(256)												29,749												259												259
Net increase in preferred dividend accrual												1,367
Tax reclassification of net assets (Note 12)																																				20						(20)						—
Total increase (decrease) for the nine months ended March 31, 2022						23,961,417						564,884						(137,040)						3,298,563						4						21,285						406,245						290,494
Balance as of March 31, 2022(1)						23,961,417						$	564,884					$	—					391,718,136						$	392					$	4,039,944					$	195,675					$	4,236,011

(1) See Note 2 and Note 12 within the accompanying notes to consolidated financial statements for further discussion on tax reclassification of net assets and tax basis components of dividends.

(2) Preferred Stock issued prior to our 5.35% Series A Preferred Stock issuance transferred to temporary equity. Refer to Note 9 within the accompanying notes to the consolidated financial statements for further discussion.

(3) Preferred stock issuance costs include offering costs and underwriting costs related to the issuance of preferred stock. During the nine months ended March 31, 2022, we have reclassified all preferred stock issuance costs related to preferred stock issued as temporary equity following our reclassification of preferred stock during the three months ended September 30, 2021. Refer to Note 9 within the accompanying notes to the consolidated financial statements for further discussion.

See notes to consolidated financial statements.

7

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, except share data)

(Unaudited)

			Nine Months Ended March 31,
			2023						2022
Operating Activities
Net (decrease) increase in net assets resulting from operations			$	(109,176)					$	630,040
Net realized losses on extinguishment of debt			138						10,149
Net realized losses on investments			39,092						12,082
Net change in unrealized losses (gains) on investments			378,096						(398,340)
Amortization of discounts (accretion of premiums), net			(5,345)						62,435
Accretion of original issue discount			2,304						2,063
Amortization of deferred financing costs			5,255						6,242
Payment-in-kind interest			(97,952)						(61,030)
Structuring fees			(8,705)						(16,437)
Change in operating assets and liabilities:
Payments for purchases of investments			(597,552)						(1,767,402)
Proceeds from sale of investments and collection of investment principal			302,099						940,539
Decrease in due to broker			—						(14,854)
Increase in due to Prospect Capital Management			1,442						7,787
Increase in interest receivable, net			(14,104)						(394)
Decrease in interest payable			(6,680)						(7,858)
Increase (decrease) in accrued expenses			2,286						(1,734)
(Increase) decrease in due from broker			(400)						8,496
Decrease in other liabilities			(319)						(144)
Increase in other receivables			(318)						(160)
Increase in due from affiliate			(1)						—
Decrease in prepaid expenses			749						773
Increase (decrease) in due to Prospect Administration			7,847						(1,980)
Net Cash Used In Operating Activities			(101,244)						(589,727)
Financing Activities
Borrowings under Revolving Credit Facility (Note 4)			1,224,900						1,627,051
Principal payments under Revolving Credit Facility (Note 4)			(1,175,959)						(1,284,548)
Issuances of Public Notes, net of original issue discount (Note 6)			—						294,798
Redemptions of Public Notes (Note 6)			(284,218)						(69,319)
Redemptions of Convertible Notes, net (Note 5)			(60,501)						(51,872)
Issuances of Prospect Capital InterNotes® (Note 7)			13,333						155,909
Redemptions of Prospect Capital InterNotes®, net (Note 7)			(5,433)						(323,846)
Financing costs paid and deferred			(6,742)						(11,206)
Proceeds from issuance of preferred stock, net of underwriting costs			657,479						429,433
Offering costs from issuance of preferred stock			(9,764)						(4,184)
Dividends paid and distributions to stockholders			(222,123)						(199,697)
Net Cash Provided by Financing Activities			130,972						562,519
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash			29,728						(27,208)
Cash, Cash Equivalents and Restricted Cash at beginning of period			35,364						63,610
Cash, Cash Equivalents and Restricted Cash at End of Period			$	65,092					$	36,402
Supplemental Disclosures
Cash paid for interest			$	108,291					$	86,505
Non-Cash Financing Activities
Value of common shares issued through reinvestment of dividends			$	41,386					$	26,083

See notes to consolidated financial statements.

8

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF MARCH 31, 2023 (Unaudited)

(in thousands, except share data)

																					March 31, 2023 (Unaudited)
Portfolio Company			Industry			Investments(1)(37)			Acquisition Date(44)			Coupon/Yield			Floor			Legal Maturity			Principal Value			Amortized Cost			Fair Value(2)			% of Net Assets
Control Investments (greater than 25.00% voting control)(40)
CP Energy Services Inc. (20)			Energy Equipment & Services			First Lien Term Loan			10/1/2017			14.16% (3ML+ 9.00%)			1.00			4/4/2027			$51,303			$51,303			$51,303			1.3%			(10)(39)
						First Lien Term Loan			4/5/2022			14.16% (3ML+ 9.00%)			1.00			4/4/2027			6,591			6,591			6,591			0.2%			(10)(39)
						First Lien Term Loan			1/6/2023			14.16% (3ML + 9.00%)			1.00			4/4/2027			10,322			10,322			10,322			0.3%			(10)(39)
						First Lien Term Loan A to Spartan Energy Services, LLC			10/20/2014			12.84% (1ML+ 8.00%)			1.00			12/31/2025			31,603			31,603			31,603			0.8%			(10)(39)
						Series A Preferred Units to Spartan Energy Holdings, Inc. (10,000 shares)			9/25/2020			15.00%			—			N/A			—			26,193			3,615			0.1%			(16)
						Series B Convertible Preferred Stock (790 shares)			10/30/2015			16.00%			—			N/A			—			63,225			12,980			0.3%			(16)
						Common Stock (102,924 shares)			8/2/2013						—			N/A			—			86,240			—			—%			(16)
																								275,477			116,414			3.0%
Credit Central Loan Company, LLC (21)			Consumer Finance			First Lien Term Loan			12/28/2012			5.00% plus 5.00% PIK			—			6/30/2025			75,815			74,479			75,815			2.0%			(14)(39)
						Class A Units (14,867,312 units)			12/28/2012						—			N/A			—			19,331			—			—%			(14)(16)
						Preferred Class P Shares (11,520,481 units)			7/1/2022			12.75%			—			N/A			—			11,520			210			—%			(14)
						Net Revenues Interest (25% of Net Revenues)			1/28/2015						—			N/A			—			—			—			—%			(14)(16)
																								105,330			76,025			2.0%
Echelon Transportation, LLC			Aerospace & Defense			First Lien Term Loan			3/31/2014			8.57% (1ML+ 4.00%)			2.00			3/31/2024			56,600			56,600			56,600			1.5%			(10)(39)
						Membership Interest(100%)			3/31/2014						—			N/A			—			22,738			—			—%			(16)
						Preferred Units(32,842,586 shares)			1/31/2022						—			N/A			—			32,843			4,272			0.1%			(16)
																								112,181			60,872			1.6%
First Tower Finance Company LLC (23)			Consumer Finance			First Lien Term Loan to First Tower, LLC			6/24/2014			10.00% plus 5.00% PIK			—			2/18/2025			384,085			384,085			384,085			10.1%			(14)(39)
						Class A Units(95,709,910 units)			6/14/2012						—			N/A			—			31,146			224,347			5.8%			(14)(16)
																								415,231			608,432			15.9%
Freedom Marine Solutions, LLC (24)			Energy Equipment & Services			Membership Interest(100%)			11/9/2006						—			N/A			—			46,142			13,186			0.3%			(16)
																								46,142			13,186			0.3%
InterDent, Inc.			Health Care Providers & Services			First Lien Term Loan A/B			8/1/2018			19.49% (1ML+ 14.65%)			2.00			9/5/2025			14,249			14,249			14,249			0.4%			(3) (10)
						First Lien Term Loan A			8/3/2012			10.34% (1ML+ 5.50%)			1.00			9/5/2025			96,773			96,773			96,773			2.5%			(3) (10)
						First Lien Term Loan B			8/3/2012			12.00% PIK			—			9/5/2025			177,717			177,717			177,717			4.7%			(39)
						Common Stock(99,900 shares)			5/3/2019						—			N/A			—			45,118			163,013			4.3%			(16)
																								333,857			451,752			11.9%
Kickapoo Ranch Pet Resort			Diversified Consumer Services			Membership Interest (100%)			8/26/2019						—			N/A			—			2,378			3,242			0.1%
																								2,378			3,242			0.1%
MITY, Inc. (25)			Commercial Services & Supplies			First Lien Term Loan A			9/19/2013			12.16% (3ML+ 7.00%)			3.00			4/30/2025			32,074			32,074			32,074			0.8%			(3) (10)(39)
						First Lien Term Loan B			6/23/2014			12.16% (3ML+ 7.00%) plus 10.00% PIK			3.00			4/30/2025			18,744			18,744			18,744			0.5%			(10)(39)
						Unsecured Note to Broda Enterprises ULC			9/19/2013			10.00%			—			1/1/2028			5,326			7,200			7,200			0.2%			(14)
						Common Stock (42,053 shares)			9/19/2013						—			N/A			—			27,349			4,857			0.1%			(16)
																								85,367			62,875			1.6%

See notes to consolidated financial statements.

9

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF MARCH 31, 2023 (Unaudited)

(in thousands, except share data)

																					March 31, 2023 (Unaudited)
Portfolio Company			Industry			Investments(1)(37)			Acquisition Date(44)			Coupon/Yield			Floor			Legal Maturity			Principal Value			Amortized Cost			Fair Value(2)			% of Net Assets
Control Investments (greater than 25.00% voting control)(40)
National Property REIT Corp. (26)			Equity Real Estate Investment Trusts (REITs) / Online Lending / Structured Finance			First Lien Term Loan A			12/31/2018			6.60% (3ML+ 1.44%) plus 3.53% PIK			3.00			12/31/2023			$473,847			$473,847			$473,847			12.5%			(10)(39)
						First Lien Term Loan B			12/31/2018			7.16% (3ML+ 2.00%) plus 5.50% PIK			3.00			12/31/2023			21,580			21,580			21,580			0.6%			(10)(39)
						First Lien Term Loan C			10/31/2019			15.16%(3ML+ 10.00%%) plus 2.25% PIK			1.00			12/31/2023			200,600			200,600			200,600			5.3%			(10)(39)
						First Lien Term Loan D			6/19/2020			5.66% (3ML+ 0.50%) plus 2.50% PIK			3.00			12/31/2023			183,425			183,425			183,425			4.8%			(10)(39)
						First Lien Term Loan E			11/14/2022			7.16% (3ML + 2.00%) plus 7.00% PIK			5.00			12/31/2023			13,384			13,384			13,384			0.4%			(10)(39)
						Residual Profit Interest			12/31/2018						—			N/A			—			—			55,332			1.5%			(35)
						Common Stock (3,350,519 shares)			12/31/2013						—			N/A			—			15,430			646,505			16.9%			(16)(45)
																								908,266			1,594,673			42.0%
Nationwide Loan Company LLC (27)			Consumer Finance			First Lien Term Loan			6/18/2014			10.00% plus 10.00% PIK			—			6/18/2023			21,855			21,855			21,855			0.6%			(14)(39)
						Class A Units (38,550,460 units)			1/31/2013						—			N/A			—			20,846			25,868			0.7%			(14)
																								42,701			47,723			1.3%
NMMB, Inc. (28)			Media			First Lien Term Loan			12/30/2019			13.66% (3ML+ 8.50%)			2.00			3/31/2027			29,723			29,723			29,723			0.8%			(3) (10)
						Common Stock(21,418 shares)			12/30/2019						—			N/A			—			—			74,664			2.0%
																								29,723			104,387			2.8%
Pacific World Corporation (36)			Personal Products			First Lien Revolving Line of Credit - $26,000 Commitment			9/26/2014			12.09% PIK (1ML+ 7.25%)			1.00			9/26/2025			29,534			29,534			29,534			0.8%			(10)(15)(39)
						First Lien Term Loan A			12/31/2014			10.09% PIK (1ML+ 5.25%)			1.00			9/26/2025			57,883			57,883			43,958			1.2%			(10)(39)
						Convertible Preferred Equity(339,338 shares)			6/15/2018			6.50% PIK			—			N/A			—			189,294			—			—%			(16)
						Common Stock (6,778,414 shares)			9/29/2017						—			N/A			—			—			—			—%			(16)
																								276,711			73,492			2.0%
R-V Industries, Inc.			Machinery			First Lien Term Loan			12/15/2020			14.16% (3ML+ 9.00%)			1.00			12/15/2028			33,622			33,622			33,622			0.9%			(3) (10)
						Common Stock (745,107 shares)			6/26/2007						—			N/A			—			6,866			33,027			0.9%			(16)
																								40,488			66,649			1.8%
Universal Turbine Parts, LLC (34)			Trading Companies & Distributors			First Lien Delayed Draw Term Loan - $6,965 Commitment			2/28/2019			12.59% (1ML+ 7.75%)			2.50			4/5/2025			3,117			3,117			3,117			0.1%			(10)(15)
						First Lien Term Loan A			7/22/2016			10.91% (3ML+ 5.75%)			1.00			4/5/2025			29,575			29,575			29,575			0.8%			(10)
						Preferred Units (59,051,156 units)			3/31/2021						—			N/A			—			32,500			9,849			0.3%			(16)
						Common Stock (10,000 units)			12/10/2018						—			N/A			—			—			—			—%			(16)
																								65,192			42,541			1.2%
USES Corp. (30)			Commercial Services & Supplies			First Lien Term Loan			12/30/2020			13.84% (1ML + 9.00%)			1.00			7/29/2024			2,000			2,000			1,953			0.1%			(10)
						First Lien Equipment Term Loan			8/3/2022			13.84% (1ML + 9.00%)			1.00			7/29/2024			6,530			6,530			6,376			0.2%			(10)(39)
						First Lien Term Loan A			3/31/2014			9.00% PIK			—			7/29/2024			64,624			30,651			7,938			0.2%			(9)
						First Lien Term Loan B			3/31/2014			15.50% PIK			—			7/29/2024			101,840			35,568			—			—%			(9)
						Common Stock (268,962 shares)			6/15/2016						—			N/A			—			—			—			—%			(16)
																								74,749			16,267			0.5%
Valley Electric Company, Inc. (31)			Construction & Engineering			First Lien Term Loan to Valley Electric Co. of Mt. Vernon, Inc.			12/31/2012			10.16% (3ML+ 5.00%) plus 2.50% PIK			3.00			12/31/2024			10,452			10,452			10,452			0.3%			(3) (10)(39)
						First Lien Term Loan			6/24/2014			8.00% plus 10.00% PIK			—			6/23/2024			34,997			34,997			34,997			0.8%			(3) (39)
						First Lien Term Loan B			3/28/2022			8.00% plus 4.50% PIK			—			6/23/2024			13,296			13,296			13,296			0.3%			(3) (39)
						Consolidated Revenue Interest (2.00%)			6/22/2018						—			N/A			—			—			1,107			—%			(12)
						Common Stock (50,000 shares)			12/31/2012						—			N/A			—			12,053			81,712			2.2%
																								70,798			141,564			3.6%
Total Control Investments (Level 3)																								$2,884,591			$3,480,094			91.6%

See notes to consolidated financial statements.

10

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF MARCH 31, 2023 (Unaudited)

(in thousands, except share data)

																					March 31, 2023 (Unaudited)
Portfolio Company			Industry			Investments(1)(37)			Acquisition Date(44)			Coupon/Yield			Floor			Legal Maturity			Principal Value			Amortized Cost			Fair Value(2)			% of Net Assets
Affiliate Investments (5.00% to 24.99% voting control)(41)
Nixon, Inc. (32)			Textiles, Apparel & Luxury Goods			Common Stock (857 units)			5/12/2017						—			N/A			$	—		$	—		$	—		—		%	(16)
																								—			—			—		%
RGIS Services, LLC			Commercial Services & Supplies			Membership Interest (5.27%)			6/25/2020						—			N/A			—			8,996			7,944			0.2		%
																								8,996			7,944			0.2		%
Total Affiliate Investments (Level 3)																								$	8,996		$	7,944		0.2		%

See notes to consolidated financial statements.

11

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF MARCH 31, 2023 (Unaudited)

(in thousands, except share data)

																					March 31, 2023 (Unaudited)
Portfolio Company			Industry			Investments(1)(37)			Acquisition Date(44)			Coupon/Yield			Floor			Legal Maturity			Principal Value			Amortized Cost			Fair Value(2)			% of Net Assets
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
8th Avenue Food & Provisions, Inc.			Food Products			Second Lien Term Loan			9/21/2018			12.59% (1ML+ 7.75%)			—			10/1/2026			$	32,133		$	31,995		$	27,671		0.7		%	(8)(10)
																								31,995			27,671			0.7		%
ABG Intermediate Holdings 2 LLC			Textiles, Apparel & Luxury Goods			Second Lien Term Loan			12/20/2021			10.91% (1M SOFR+ 6.00%)			0.50			12/20/2029			9,000			8,943			8,850			0.2		%	(3)(8)(10)
																								8,943			8,850			0.2		%
Apidos CLO XI			Structured Finance			Subordinated Structured Note			12/6/2012			Residual Interest, current yield 12.02%			—			4/17/2034			67,783			39,043			29,387			0.8		%	(5) (14)
																								39,043			29,387			0.8		%
Apidos CLO XII			Structured Finance			Subordinated Structured Note			3/15/2013			Residual Interest, current yield 14.59%			—			4/15/2031			52,202			34,013			30,971			0.8		%	(5) (14)
																								34,013			30,971			0.8		%
Apidos CLO XV			Structured Finance			Subordinated Structured Note			9/13/2013			Residual Interest, current yield 13.73%			—			4/21/2031			48,515			35,087			31,092			0.8		%	(5) (14)
																								35,087			31,092			0.8		%
Apidos CLO XXII			Structured Finance			Subordinated Structured Note			9/16/2015			Residual Interest, current yield 17.41%			—			4/21/2031			35,855			29,568			26,350			0.7		%	(5) (14)
																								29,568			26,350			0.7		%
Atlantis Health Care Group (Puerto Rico), Inc.			Health Care Providers & Services			First Lien Revolving Line of Credit - $3,000 Commitment			2/21/2013			13.91% (3ML+ 8.75%)			2.00			4/22/2024			—			—			—			—		%	(10)(15)
						First Lien Term Loan			2/21/2013			13.91% (3ML+ 8.75%)			2.00			4/22/2024			61,204			61,204			59,441			1.6		%	(3) (10)
																								61,204			59,441			1.6		%
Aventiv Technologies, LLC (f/k/a Securus Technologies Holdings, Inc.)			Communications Equipment			First Lien Term Loan			8/2/2019			9.66% (3ML+ 4.50%)			1.00			11/1/2024			9,619			9,237			6,905			0.2		%	(3)(8)(10)(47)
						Second Lien Term Loan			6/20/2017			13.08% (3ML+ 8.25%)			1.00			11/1/2025			50,662			50,597			37,250			1.0		%	(3)(8)(10)
																								59,834			44,155			1.2		%
B. Riley Financial, Inc.			Diversified Financial Services			Senior Unsecured Bond			10/18/2022			6.75%			0.00			5/31/2024			5,799			5,799			5,509			0.1		%	(8)(47)
																								5,799			5,509			0.1%
Barings CLO 2018-III			Structured Finance			Subordinated Structured Note			10/9/2014			Residual Interest, current yield 0.00%			—			7/20/2029			83,098			33,395			17,222			0.4		%	(5) (14)(17)
																								33,395			17,222			0.4		%
Barracuda Parent, LLC			IT Services			Second Lien Term Loan			8/15/2022			11.68% (3M SOFR+ 7.00%)			0.50			8/15/2030			20,000			19,450			19,424			0.5		%	(8)(10)
																								19,450			19,424			0.5		%
BCPE North Star US Holdco 2, Inc.			Food Products			Second Lien Delayed Draw Term Loan - $5,185 Commitment			6/7/2021			12.41% (3ML+ 7.25%)			0.75			6/11/2029			5,185			5,137			4,888			0.1		%	(8)(10)(15)
						Second Lien Term Loan			6/7/2021			12.41% (3ML+ 7.25%)			0.75			6/11/2029			94,815			94,186			89,381			2.4		%	(3)(8)(10)
																								99,323			94,269			2.5		%
BCPE Osprey Buyer, Inc.			Health Care Technology			First Lien Revolving Line of Credit - $4,239 Commitment			10/18/2021			10.50% (3ML+ 5.75%)			0.75			8/21/2026			942			942			922			—		%	(8)(10)(15)
						First Lien Term Loan			10/18/2021			10.67% (3ML+ 5.75%)			0.75			8/23/2028			64,188			64,188			62,837			1.7		%	(8)(10)
						Second Lien Delayed Draw Term Loan - $22,609 Commitment			10/18/2021			10.67% (3ML+ 5.75%)			0.75			8/23/2028			—			—			—			—		%	(8)(10)(15)
																								65,130			63,759			1.7		%
Belnick, LLC (d/b/a The Ubique Group)			Household Durables			First Lien Term Loan			1/20/2022			12.66% (3ML+ 7.50%)			1.00			1/20/2027			89,672			89,672			89,672			2.4		%	(3) (10)
																								89,672			89,672			2.4		%
Broder Bros., Co.			Textiles, Apparel & Luxury Goods			First Lien Term Loan			12/4/2017			11.16% (3ML+ 6.00%)			1.00			12/4/2025			159,562			159,562			158,967			4.2		%	(3) (10)
																								159,562			158,967			4.2		%
Burgess Point Purchaser Corporation			Automobile Components			Second Lien Term Loan			7/25/2022			13.91% (1M SOFR+ 9.00%)			0.75			7/25/2030			30,000			30,000			30,000			0.8		%	(8)(10)
																								30,000			30,000			0.8		%

See notes to consolidated financial statements.

12

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF MARCH 31, 2023 (Unaudited)

(in thousands, except share data)

																					March 31, 2023 (Unaudited)
Portfolio Company			Industry			Investments(1)(37)			Acquisition Date(44)			Coupon/Yield			Floor			Legal Maturity			Principal Value			Amortized Cost			Fair Value(2)			% of Net Assets
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
California Street CLO IX Ltd.			Structured Finance			Subordinated Structured Note			4/19/2012			Residual Interest, current yield 11.71%			—			7/16/2032			$	58,914		$	43,492		$	29,908		0.8		%	(5) (14)
																								43,492			29,908			0.8		%
Capstone Logistics Acquisition, Inc.			Commercial Services & Supplies			Second Lien Term Loan			11/12/2020			13.66% (1M SOFR+ 8.75%)			1.00			11/13/2028			8,500			8,276			8,500			0.2		%	(3)(8)(10)
																								8,276			8,500			0.2		%
Carlyle C17 CLO Limited			Structured Finance			Subordinated Structured Note			1/24/2013			Residual Interest, current yield 14.38%			—			4/30/2031			24,870			15,100			13,438			0.4		%	(5) (14)
																								15,100			13,438			0.4		%
Carlyle Global Market Strategies CLO 2014-4-R, Ltd.			Structured Finance			Subordinated Structured Note			4/7/2017			Residual Interest, current yield 14.83%			—			7/15/2030			25,534			18,231			16,370			0.4		%	(5) (14)
																								18,231			16,370			0.4		%
Carlyle Global Market Strategies CLO 2016-3, Ltd.			Structured Finance			Subordinated Structured Note			8/9/2016			Residual Interest, current yield 11.25%			—			7/20/2034			32,200			30,940			25,661			0.6		%	(5) (14)
																								30,940			25,661			0.6		%
Cent CLO 21 Limited			Structured Finance			Subordinated Structured Note			5/15/2014			Residual Interest, current yield 0.00%			—			7/29/2030			49,552			31,706			17,405			0.5		%	(5) (14)(17)
																								31,706			17,405			0.5		%
CIFC Funding 2013-III-R, Ltd.			Structured Finance			Subordinated Structured Note			8/2/2013			Residual Interest, current yield 15.32%			—			4/24/2031			44,100			27,423			22,308			0.6		%	(5) (14)
																								27,423			22,308			0.6		%
CIFC Funding 2013-IV, Ltd.			Structured Finance			Subordinated Structured Note			10/22/2013			Residual Interest, current yield 16.84%			—			4/28/2031			45,500			32,066			29,428			0.8		%	(5) (14)
																								32,066			29,428			0.8		%
CIFC Funding 2014-IV-R, Ltd.			Structured Finance			Subordinated Structured Note			8/5/2014			Residual Interest, current yield 15.20%			—			10/17/2030			50,142			34,660			27,622			0.7		%	(5) (14)
																								34,660			27,622			0.7		%
CIFC Funding 2016-I, Ltd.			Structured Finance			Subordinated Structured Note			12/9/2016			Residual Interest, current yield 16.22%			—			10/21/2031			34,000			32,479			29,259			0.8		%	(5) (14)
																								32,479			29,259			0.8		%
Collections Acquisition Company, Inc.			Diversified Financial Services			First Lien Term Loan			12/3/2019			13.31% (3ML+ 8.15%)			2.50			6/3/2024			36,597			36,597			36,597			1.0		%	(3) (10)
																								36,597			36,597			1.0		%
Columbia Cent CLO 27 Limited			Structured Finance			Subordinated Structured Note			12/18/2013			Residual Interest, current yield 14.16%			—			10/25/2028			48,978			32,229			28,306			0.7		%	(5) (14)
																								32,229			28,306			0.7		%
CP IRIS Holdco I, Inc. (48)			Building Products			Second Lien Term Loan			10/1/2021			11.84% (1ML+ 7.00%)			0.50			10/1/2029			35,000			35,000			33,849			0.9		%	(3)(8)(10)
																								35,000			33,849			0.9		%
Curo Group Holdings Corp.			Consumer Finance			First Lien Term Loan			7/30/2021			7.50%			—			8/1/2028			47,000			47,026			19,400			0.5		%	(8)(14)(47)
																								47,026			19,400			0.5		%
DRI Holding Inc.			Commercial Services & Supplies			First Lien Term Loan			12/21/2021			10.09% (1ML+ 5.25%)			0.50			12/21/2028			33,990			32,820			33,479			0.9		%	(3)(8)(10)
						Second Lien Term Loan			12/21/2021			12.84% (1ML+ 8.00%)			0.50			12/21/2029			145,000			145,000			141,772			3.7		%	(3) (10)
																								177,820			175,251			4.6		%
DTI Holdco, Inc.			Professional Services			First Lien Term Loan			4/26/2022			9.43%(3M SOFR+ 4.75%)			0.75			4/26/2029			18,408			18,086			17,503			0.5		%	(8)(10)(47)
						Second Lien Term Loan			4/26/2022			12.43% (3M SOFR+ 7.75%)			0.75			4/26/2030			75,000			75,000			71,998			1.9		%	(8)(10)
																								93,086			89,501			2.4		%
Dukes Root Control Inc.			Commercial Services & Supplies			First Lien Revolving Line of Credit - $4,464 Commitment			12/8/2022			11.56% (6M SOFR + 6.50%)			1.00			12/8/2028			357			262			357			—%			(8)(10)(15)
						First Lien Delayed Draw Term Loan - $8,929 Commitment			12/8/2022			11.56% (6M SOFR + 6.50%)			1.00			12/8/2028			—			—			—			—%			(8)(10)(15)
						First Lien Term Loan			12/8/2022			11.56% (6M SOFR + 6.50%)			1.00			12/8/2028			36,516			35,643			36,516			1.0%			(3)(8)(10)

See notes to consolidated financial statements.

13

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF MARCH 31, 2023 (Unaudited)

(in thousands, except share data)

																					March 31, 2023 (Unaudited)
Portfolio Company			Industry			Investments(1)(37)			Acquisition Date(44)			Coupon/Yield			Floor			Legal Maturity			Principal Value			Amortized Cost			Fair Value(2)			% of Net Assets
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
																								35,905			36,873			1.0%
Easy Gardener Products, Inc.			Household Durables			Class A Units of EZG Holdings, LLC (200 units)			6/11/2020						—			N/A			$	—		$	313		$	—		—		%	(16)
						Class B Units of EZG Holdings, LLC(12,525 units)			6/11/2020						—			N/A			—			1,688			—			—		%	(16)
																								2,001			—			—		%
Engine Group, Inc. (7)			Media			First Lien Term Loan			11/17/2020			16.00% (PRIME+ 8.00%)			1.00			11/17/2023			3,546			3,546			2,112			0.1		%	(8)(9)
						Class B Common Units(1,039,554 units)			11/17/2020						—			N/A			—			26,991			—			—		%	(8)(16)
																								30,537			2,112			0.1		%
Engineered Machinery Holdings, Inc.			Machinery			Incremental Amendment No. 2 Second Lien Term Loan			5/6/2021			11.66% (3ML+ 6.50%)			0.75			7/18/2025			5,000			4,986			5,000			0.1		%	(3)(8)(10)
						Incremental Amendment No. 3 Second Lien Term Loan			8/6/2021			11.16% (3ML+ 6.00%)			0.75			5/21/2029			5,000			5,000			4,939			0.1		%	(3)(8)(10)
																								9,986			9,939			0.2		%
Enseo Acquisition, Inc.			IT Services			First Lien Term Loan			6/2/2021			13.16% (3ML+ 8.00%)			1.00			6/2/2026			54,038			54,038			52,698			1.4		%	(3) (10)
																								54,038			52,698			1.4		%
Eze Castle Integration, Inc.			IT Services			First Lien Delayed Draw Term Loan - $1,786 Commitment			7/15/2020			13.82% (3ML+ 9.00%) plus 1.00% PIK			1.50			7/15/2025			893			893			874			—		%	(10)(15)(39)
						First Lien Term Loan			7/15/2020			13.82% (3ML+ 9.00%) plus 1.00% PIK			1.50			7/15/2025			46,608			46,608			45,594			1.2		%	(3)(10)(39)
																								47,501			46,468			1.2		%
Faraday Buyer, LLC			Electrical Equipment			First Lien Delayed Draw Term Loan - $5,833 Commitment			10/11/2022			11.86% (6M SOFR + 7.00%)			1.00			10/11/2028			—			—			—			—		%	(8)(10)(15)
						First Lien Term Loan			10/11/2022			11.86% (6M SOFR + 7.00%)			1.00			10/11/2028			64,167			64,167			64,167			1.7		%	(3)(8)(10)
																								64,167			64,167			1.7		%
First Brands Group, LLC			Automobile Components			First Lien Term Loan			3/24/2021			10.25% (6M SOFR+ 5.00%)			1.00			3/30/2027			22,354			22,267			21,930			0.6		%	(3)(8)(10)
						Second Lien Term Loan			3/24/2021			13.60% (6ML+ 8.50%)			1.00			3/30/2028			37,000			36,633			36,472			1.0		%	(3)(8)(10)
																								58,900			58,402			1.6		%
Forta, LLC (f/k/a Help/Systems Holdings, Inc.)			Software			Second Lien Term Loan			11/14/2019			11.66% (1M SOFR+ 6.75%)			0.75			11/19/2027			52,500			52,336			48,691			1.3		%	(3)(8)(10)
																								52,336			48,691			1.3		%
Galaxy XV CLO, Ltd.			Structured Finance			Subordinated Structured Note			2/13/2013			Residual Interest, current yield 8.68%			—			10/15/2030			50,524			33,305			24,543			0.5		%	(5) (14)
																								33,305			24,543			0.5		%
Galaxy XXVII CLO, Ltd.			Structured Finance			Subordinated Structured Note			9/30/2013			Residual Interest, current yield 19.69%			—			5/16/2031			24,575			16,429			13,686			0.4		%	(5) (14)
																								16,429			13,686			0.4		%
Galaxy XXVIII CLO, Ltd.			Structured Finance			Subordinated Structured Note			5/30/2014			Residual Interest, current yield 16.47%			—			7/15/2031			39,905			27,415			19,609			0.5		%	(5) (14)
																								27,415			19,609			0.5		%
Halcyon Loan Advisors Funding 2012-1 Ltd.			Structured Finance			Subordinated Structured Note			8/7/2012			Residual Interest, current yield 0.00%			—			8/15/2023			23,188			3,704			1			—		%	(5) (14)(17)
																								3,704			1			—		%
Halcyon Loan Advisors Funding 2014-2 Ltd.			Structured Finance			Subordinated Structured Note			4/14/2014			Residual Interest, current yield 0.00%			—			4/28/2025			41,163			21,322			25			—		%	(5) (14)(17)
																								21,322			25			—		%
Halcyon Loan Advisors Funding 2015-3 Ltd.			Structured Finance			Subordinated Structured Note			7/23/2015			Residual Interest, current yield 0.00%			—			10/18/2027			39,598			29,557			139			—		%	(5) (14)(17)
																								29,557			139			—		%
HarbourView CLO VII-R, Ltd.			Structured Finance			Subordinated Structured Note			6/5/2015			Residual Interest, current yield 5.06%			—			7/18/2031			19,025			13,448			7,271			0.2		%	(5) (14)
																								13,448			7,271			0.2		%

See notes to consolidated financial statements.

14

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF MARCH 31, 2023 (Unaudited)

(in thousands, except share data)

																					March 31, 2023 (Unaudited)
Portfolio Company			Industry			Investments(1)(37)			Acquisition Date(44)			Coupon/Yield			Floor			Legal Maturity			Principal Value			Amortized Cost			Fair Value(2)			% of Net Assets
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
The Hiller Companies, LLC (49)			Commercial Services & Supplies			First Lien Term Loan			10/11/2022			11.89% (3M SOFR + 7.00%)			1.00			9/15/2028			$	20,000		$	20,000		$	20,000		0.5		%	(3)(8)(10)
																								20,000			20,000			0.5%
Interventional Management Services, LLC			Health Care Providers & Services			First Lien Revolving Line of Credit - $5,000 Commitment			2/22/2021			14.16% (3ML+ 9.00%)			1.00			2/22/2025			5,000			5,000			5,000			0.1		%	(10)(15)
						First Lien Term Loan			2/22/2021			14.16% (3ML+ 9.00%)			1.00			2/20/2026			67,328			67,328			67,328			1.8		%	(3) (10)
																								72,328			72,328			1.9		%
Jefferson Mill CLO Ltd.			Structured Finance			Subordinated Structured Note			6/26/2015			Residual Interest, current yield 10.49%			—			10/20/2031			23,594			18,172			13,576			0.4		%	(5) (14)
																								18,172			13,576			0.4		%
K&N HoldCo, LLC			Automobile Components			Class A Common Units (84,553 units)			2/14/2023						—			N/A			—			25,697			1,188			—		%	(8)(16)
																								25,697			1,188			—		%
KM2 Solutions LLC			IT Services			First Lien Term Loan			12/17/2020			14.05% (3M SOFR+ 9.00%)			1.00			12/17/2025			23,738			23,738			23,194			0.6		%	(3) (10)
																								23,738			23,194			0.6		%
LCM XIV Ltd.			Structured Finance			Subordinated Structured Note			6/25/2013			Residual Interest, current yield 8.70%			—			7/21/2031			49,934			25,333			19,545			0.5		%	(5) (14)
																								25,333			19,545			0.5		%
LGC US FINCO, LLC			Machinery			First Lien Term Loan			1/17/2020			11.34% (1ML+ 6.50%)			1.00			12/20/2025			30,154			29,696			28,602			0.8		%	(3)(8)(10)
																								29,696			28,602			0.8		%
Magnate Worldwide, LLC			Air Freight & Logistics			First Lien Delayed Draw Term Loan - $2,357 Commitment			3/11/2022			10.23% (3ML+ 5.50%)			0.75			12/30/2028			—			—			—			—		%	(8)(10)(15)
						First Lien Term Loan			3/11/2022			10.23% (3ML+ 5.50%)			0.75			12/30/2028			30,186			30,186			30,186			0.8		%	(3)(8)(10)
						Second Lien Term Loan			12/30/2021			13.66% (3ML+ 8.50%)			0.75			12/30/2029			95,000			95,000			95,000			2.5		%	(3)(8)(10)
																								125,186			125,186			3.3		%
Mamba Purchaser, Inc.			Health Care Providers & Services			Second Lien Term Loan			9/29/2021			11.34% (1ML+ 6.50%)			0.50			10/14/2029			23,000			22,857			23,000			0.6		%	(3)(8)(10)
																								22,857			23,000			0.6		%
Medical Solutions Holdings, Inc. (4)			Health Care Providers & Services			Second Lien Term Loan			11/1/2021			11.99% (3M SOFR+ 7.00%)			0.50			11/1/2029			54,463			54,426			54,463			1.4		%	(3)(8)(10)
																								54,426			54,463			1.4		%
Mountain View CLO 2013-I Ltd.			Structured Finance			Subordinated Structured Note			4/17/2013			Residual Interest, current yield 0.00%			—			10/15/2030			43,650			22,848			14,745			0.4		%	(5) (14)(17)
																								22,848			14,745			0.4		%
Mountain View CLO IX Ltd.			Structured Finance			Subordinated Structured Note			5/13/2015			Residual Interest, current yield 14.28%			—			7/15/2031			47,829			24,439			20,639			0.5		%	(5) (14)
																								24,439			20,639			0.5		%
Nexus Buyer LLC			Capital Markets			Second Lien Term Loan			11/5/2021			11.09% (1ML+ 6.25%)			0.50			11/5/2029			42,500			42,500			38,265			1.0		%	(8)(10)
																								42,500			38,265			1.0		%
NH Kronos Buyer, Inc.			Pharmaceuticals			First Lien Term Loan			12/7/2022			11.30% (3M SOFR + 6.25%)			1.00			11/1/2028			74,766			74,766			74,766			2.0		%	(3)(8)(10)
																								74,766			74,766			2.0		%
Octagon Investment Partners XV, Ltd.			Structured Finance			Subordinated Structured Note			1/24/2013			Residual Interest, current yield 5.90%			—			7/19/2030			42,064			28,163			22,333			0.6		%	(5) (14)
																								28,163			22,333			0.6		%
Octagon Investment Partners 18-R Ltd.			Structured Finance			Subordinated Structured Note			8/12/2015			Residual Interest, current yield 15.45%			—			4/16/2031			46,016			21,475			17,746			0.5		%	(5) (14)
																								21,475			17,746			0.5		%
OneTouchPoint Corp			Professional Services			First Lien Term Loan			2/19/2021			13.16% (3ML+ 8.00%)			1.00			2/19/2026			38,880			38,880			38,477			1.0		%	(3) (10)
																								38,880			38,477			1.0		%

See notes to consolidated financial statements.

15

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF MARCH 31, 2023 (Unaudited)

(in thousands, except share data)

																					March 31, 2023 (Unaudited)
Portfolio Company			Industry			Investments(1)(37)			Acquisition Date(44)			Coupon/Yield			Floor			Legal Maturity			Principal Value			Amortized Cost			Fair Value(2)			% of Net Assets
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
PeopleConnect Holdings, LLC (11)			Interactive Media & Services			First Lien Term Loan			1/22/2020			13.41% (3ML+ 8.25%)			1.75			1/22/2025			$	211,754		$	211,754		$	211,754		5.6		%	(3) (10)
																								211,754			211,754			5.6		%
PetVet Care Centers, LLC (f/k/a Pearl Intermediate Parent LLC)			Health Care Providers & Services			Second Lien Term Loan			2/1/2018			11.09% (1ML+ 6.25%)			—			2/15/2026			16,000			15,953			15,509			0.4		%	(3)(8)(10)
																								15,953			15,509			0.4		%
PGX Holdings, Inc. (6)			Diversified Consumer Services			First Lien Term Loan			7/21/2021			12.91% (3M SOFR + 7.75%)			1.50			7/21/2026			70,639			70,639			70,639			1.9%			(8)(10)
						Second Lien Delayed Draw Term Loan - $30,000 Commitment			12/28/2022			12.00% PIK			—			12/31/2025			—			—			—			—%			(15)
						Second Lien Term Loan			7/21/2021			12.00% PIK			—			7/27/2027			179,986			179,986			114,017			3.0%			(39)
						Class B of PGX TopCo LLC (999 Non-Voting Units)			5/27/2020						—			N/A			—			—			—			—%			(16)
																								250,625			184,656			4.9%
PlayPower, Inc.			Leisure Products			First Lien Term Loan			5/7/2019			10.25% (3M SOFR+ 7.50%)			—			5/10/2026			5,808			5,779			5,123			0.1		%	(3)(8)(10)
																								5,779			5,123			0.1		%
Precisely Software Incorporated (f/k/a Vision Solutions, Inc.) (29)			IT Services			Second Lien Term Loan			4/23/2021			12.07% (3ML+ 7.25%)			0.75			4/23/2029			80,000			79,302			67,796			1.8		%	(3)(8)(10)
																								79,302			67,796			1.8		%
Preventics, Inc. (d/b/a Legere Pharmaceuticals) (46)			Health Care Providers & Services			First Lien Term Loan			11/12/2021			15.66% (3ML+ 10.50%)			1.00			11/12/2026			9,173			9,173			9,063			0.2		%	(3) (10)
						Series A Convertible Preferred Stock (320 units)			11/12/2021			8.00%			—			N/A			—			127			131			—		%	(16)
						Series C Convertible Preferred Stock (3,575 units)			11/12/2021			8.00%			—			N/A			—			1,419			1,461			—		%	(16)
																								10,719			10,655			0.2		%
Raisin Acquisition Co, Inc.			Pharmaceuticals			First Lien Revolving Line of Credit - $3,583 Commitment			6/17/2022			12.38% (3M SOFR+ 7.00%)			1.00			12/13/2026			—			—			—			—		%	(8)(10)(15)
						First Lien Delayed Draw Term Loan - $1,554 Commitment			6/17/2022			12.16% (3M SOFR+ 7.00%)			1.00			12/13/2026			1,523			1,489			1,485			—		%	(8)(10)(15)
						First Lien Term Loan			6/17/2022			12.38% (3M SOFR+ 7.00%)			1.00			12/13/2026			24,365			23,740			23,754			0.6		%	(3)(8)(10)
																								25,229			25,239			0.6		%
RC Buyer, Inc.			Automobile Components			Second Lien Term Loan			7/26/2021			11.34% (1ML+ 6.50%)			0.75			7/30/2029			20,000			19,921			19,117			0.5		%	(3)(8)(10)
																								19,921			19,117			0.5		%
Reception Purchaser, LLC			Air Freight & Logistics			First Lien Term Loan			4/28/2022			10.83% (1M SOFR+ 6.00%)			0.75			3/24/2028			62,890			61,911			62,600			1.6		%	(3)(8)(10)
																								61,911			62,600			1.6		%
Redstone Holdco 2 LP (22)			IT Services			Second Lien Term Loan			4/16/2021			12.56% (3ML+ 7.75%)			0.75			4/27/2029			50,000			49,322			41,358			1.1		%	(3)(8)(10)
																								49,322			41,358			1.1		%
Research Now Group, Inc. & Survey Sampling International LLC			Professional Services			First Lien Term Loan			12/8/2017			10.31% (3ML+ 5.50%)			1.00			12/20/2024			9,500			9,359			8,345			0.2		%	(3)(8)(10)
						Second Lien Term Loan			12/8/2017			14.31% (3ML+ 9.50%)			1.00			12/20/2025			50,000			48,826			39,838			1.0		%	(3)(8)(10)
																								58,185			48,183			1.2		%
Rising Tide Holdings, Inc.			Diversified Consumer Services			First Lien Term Loan			3/23/2023			13.39% PIK (3M SOFR+ 8.25%)			0.75			6/1/2029			11,983			11,849			11,812			0.3		%	(8)(10)(39)(50)
						Second Lien Term Loan			3/23/2023			13.39% PIK (3M SOFR + 8.25%)			0.75			6/1/2029			11,763			11,630			—			—		%	(8)(9)(10)
																								23,479			11,812			0.3		%

See notes to consolidated financial statements.

16

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF MARCH 31, 2023 (Unaudited)

(in thousands, except share data)

																					March 31, 2023 (Unaudited)
Portfolio Company			Industry			Investments(1)(37)			Acquisition Date(44)			Coupon/Yield			Floor			Legal Maturity			Principal Value			Amortized Cost			Fair Value(2)			% of Net Assets
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
The RK Logistics Group, Inc.			Commercial Services & Supplies			First Lien Term Loan			3/24/2022			15.66% (3ML+ 10.50%)			1.00			3/24/2027			5,925			5,925			5,925			0.2		%	(3) (10)
						Class A Common Units(263,000 units)			3/24/2022						—			N/A			—			263			2,049			0.1		%	(16)
						Class B Common Units(1,237,000 units)			3/24/2022						—			N/A			—			1,237			9,636			0.3		%	(16)
																								7,425			17,610			0.6		%
RME Group Holding Company			Media			First Lien Term Loan A			5/4/2017			10.66% (3ML+ 5.50%)			1.00			5/6/2024			23,131			23,131			23,131			0.6		%	(3) (10)
						First Lien Term Loan B			5/4/2017			16.16% (3ML+ 11.00%)			1.00			5/6/2024			21,302			21,302			21,302			0.6		%	(3) (10)
																								44,433			44,433			1.2		%
Romark WM-R Ltd.			Structured Finance			Subordinated Structured Note			4/11/2014			Residual Interest, current yield 13.57%			—			4/21/2031			27,725			19,992			15,337			0.4		%	(5) (14)
																								19,992			15,337			0.4		%
Rosa Mexicano			Hotels, Restaurants & Leisure			First Lien Revolving Line of Credit - $500 Commitment			3/29/2018			12.66% (3ML+ 7.50%)			1.25			5/29/2024			235			235			223			—		%	(10)(15)
						First Lien Term Loan			3/29/2018			12.66% (3ML+ 7.50%)			1.25			5/29/2024			22,161			22,161			21,006			0.6		%	(10)
																								22,396			21,229			0.6		%
SEOTownCenter, Inc.			IT Services			First Lien Term Loan			1/31/2022			13.16% (3ML+ 8.00%)			1.00			1/31/2027			51,350			51,350			49,608			1.3		%	(3) (10)
																								51,350			49,608			1.3		%
Shearer’s Foods, LLC			Food Products			Second Lien Term Loan			9/15/2020			12.60% (1ML+ 7.75%)			1.00			9/23/2028			4,000			3,931			4,000			0.1		%	(3)(8)(10)
																								3,931			4,000			0.1		%
ShiftKey, LLC			Health Care Technology			First Lien Term Loan			6/21/2022			11.91% (3M SOFR+ 5.75%)			1.00			6/21/2027			64,513			64,030			64,513			1.7		%	(3) (10)
																								64,030			64,513			1.7		%
Shutterfly, LLC			Internet & Direct Marketing Retail			2021 Refinancing First Lien Term Loan B			7/1/2021			9.84% (1ML+ 5.00%)			0.75			9/25/2026			20,090			20,022			13,880			0.4		%	(3)(8)(10)
																								20,022			13,880			0.4		%
Sorenson Communications, LLC			Diversified Telecommunication Services			First Lien Term Loan			3/12/2021			10.34% (1ML+ 5.50%)			0.75			3/17/2026			32,052			31,694			31,797			0.8		%	(3)(8)(10)
																								31,694			31,797			0.8		%
Southern Veterinary Partners			Health Care Providers & Services			Second Lien Term Loan			10/2/2020			12.59% (1ML+ 7.75%)			1.00			10/5/2028			8,000			7,944			7,741			0.2		%	(3)(8)(10)
																								7,944			7,741			0.2		%
Spectrum Holdings III Corp			Health Care Equipment & Supplies			Second Lien Term Loan			1/26/2018			11.84% (1ML+ 7.00%)			1.00			1/31/2026			7,500			7,487			6,810			0.2		%	(8)(10)
																								7,487			6,810			0.2		%
Staples, Inc.			Distributors			First Lien Term Loan			11/18/2019			9.81% (3ML+ 5.00%)			—			4/16/2026			8,706			8,663			8,094			0.2		%	(3)(8)(10)(47)
																								8,663			8,094			0.2		%
Strategic Materials Holding Corp.			Household Durables			Second Lien Term Loan			10/27/2017			12.56% (3ML+ 7.75%)			1.00			11/1/2025			7,000			6,977			5,064			0.1		%	(8)(10)
																								6,977			5,064			0.1		%
Stryker Energy, LLC			Energy Equipment & Services			Overriding Royalty Interest			12/4/2006						—			N/A			—			—			—			—		%	(13)
																								—			—			—		%
Symphony CLO XIV, Ltd.			Structured Finance			Subordinated Structured Note			5/6/2014			Residual Interest, current yield 0.00%			—			7/14/2026			49,250			23,941			8,046			0.2		%	(5) (14)(17)
																								23,941			8,046			0.2		%
Symphony CLO XV, Ltd.			Structured Finance			Subordinated Structured Note			10/17/2014			Residual Interest, current yield 8.97%			—			1/19/2032			63,830			41,644			28,051			0.7		%	(5) (14)
																								41,644			28,051			0.7		%

See notes to consolidated financial statements.

17

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF MARCH 31, 2023 (Unaudited)

(in thousands, except share data)

																					March 31, 2023 (Unaudited)
Portfolio Company			Industry			Investments(1)(37)			Acquisition Date(44)			Coupon/Yield			Floor			Legal Maturity			Principal Value			Amortized Cost			Fair Value(2)			% of Net Assets
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
Town & Country Holdings, Inc.			Distributors			First Lien Term Loan			1/26/2018			12.00% PIK			—			2/27/2026			$	169,940		$	169,940		$	169,940		4.5		%	(39)
						First Lien Term Loan			11/17/2022			12.00% PIK			—			2/27/2026			14,636			14,636			14,636			0.4		%	(39)
						Class W Interests of Town & Country Housewares Group, LP(188,105 Non-Voting Interests)			8/31/2022			4.00%			—			N/A			—			—			15			—		%	(16)
						Class B of Town & Country TopCo LLC (999 Non-Voting Units)			11/17/2022						—			N/A			—			—			38,355			1.0		%	(16)
																								184,576			222,946			5.9		%
TPS, LLC			Machinery			First Lien Term Loan			11/30/2020			14.16% (3ML+ 9.00%) plus 1.50% PIK			1.00			11/30/2025			23,393			23,393			23,393			0.6		%	(3) (10)(39)
																								23,393			23,393			0.6		%
United Sporting Companies, Inc. (18)			Distributors			Second Lien Term Loan			9/28/2012			13.25% (1ML+ 11.00%) plus 2.00% PIK			2.25			11/16/2019			130,140			89,178			7,017			0.2		%	(9)(10)
																								89,178			7,017			0.2		%
Upstream Newco, Inc.			Health Care Providers & Services			Second Lien Term Loan			11/20/2019			13.66% (3ML+ 8.50%)			—			11/20/2027			22,000			21,881			20,965			0.6		%	(3)(8)(10)
																								21,881			20,965			0.6		%
USG Intermediate, LLC			Leisure Products			First Lien Revolving Line of Credit - $3,000 Commitment			4/15/2015			14.09% (1ML+ 9.25%)			1.00			2/9/2027			3,000			3,000			3,000			0.1		%	(10)(15)
						First Lien Term Loan B			4/15/2015			16.59% (1ML+ 11.75%)			1.00			2/9/2027			50,966			50,966			50,966			1.3		%	(3) (10)
						Equity			4/15/2015						—			N/A			—			1			—			—		%	(16)
																								53,967			53,966			1.4		%
VC GB Holdings I Corp			Household Durables			Second Lien Term Loan			6/30/2021			11.59% (1ML+ 6.75%)			0.50			7/23/2029			23,000			22,818			21,965			0.6		%	(3)(8)(10)
																								22,818			21,965			0.6		%
ViaPath Technologies. (f/k/a Global Tel*Link Corporation)			Diversified Telecommunication Services			First Lien Term Loan			8/7/2019			9.08% (3M SOFR+ 4.25%)			—			11/29/2025			9,647			9,473			9,110			0.2		%	(3)(8)(10)
						Second Lien Term Loan			11/20/2018			14.83% (3M SOFR+ 10.00%)			—			11/29/2026			122,670			121,903			116,672			3.1		%	(3)(8)(10)
																								131,376			125,782			3.3		%
Victor Technology, LLC			Commercial Services & Supplies			First Lien Term Loan			12/3/2021			12.66% (3ML+ 7.50%)			1.00			12/3/2028			29,625			29,625			27,827			0.7		%	(3) (10)
																								29,625			27,827			0.7		%
Voya CLO 2012-4, Ltd.			Structured Finance			Subordinated Structured Note			11/5/2012			Residual Interest, current yield 0.91%			—			10/15/2030			40,613			27,041			21,546			0.5		%	(5) (14)
																								27,041			21,546			0.5		%
Voya CLO 2014-1, Ltd.			Structured Finance			Subordinated Structured Note			2/5/2014			Residual Interest, current yield 4.58%			—			4/18/2031			40,773			24,228			17,409			0.5		%	(5) (14)
																								24,228			17,409			0.5		%
Voya CLO 2016-3, Ltd.			Structured Finance			Subordinated Structured Note			9/30/2016			Residual Interest, current yield 10.49%			—			10/20/2031			28,100			23,533			19,211			0.5		%	(5) (14)
																								23,533			19,211			0.5		%
Voya CLO 2017-3, Ltd.			Structured Finance			Subordinated Structured Note			6/13/2017			Residual Interest, current yield 13.87%			—			4/20/2034			44,885			51,611			40,238			1.1		%	(5) (14)
																								51,611			40,238			1.1		%
VT Topco, Inc.			Commercial Services & Supplies			Second Lien Term Loan			8/14/2018			11.59% (1ML+ 6.75%)			—			8/17/2026			12,000			11,939			11,683			0.3		%	(3)(8)(10)
						2021 Second Lien Term Loan			7/30/2021			11.59% (1ML+ 6.75%)			0.75			8/17/2026			20,250			20,136			19,715			0.5		%	(3)(8)(10)
																								32,075			31,398			0.8		%
WatchGuard Technologies, Inc.			IT Services			First Lien Term Loan			8/17/2022			10.11% (6M SOFR+ 5.25%)			0.75			6/30/2029			34,913			34,913			34,264			0.9		%	(8)(10)
																								34,913			34,264			0.9		%

See notes to consolidated financial statements.

18

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF MARCH 31, 2023 (Unaudited)

(in thousands, except share data)

																					March 31, 2023 (Unaudited)
Portfolio Company			Industry			Investments(1)(37)			Acquisition Date(44)			Coupon/Yield			Floor			Legal Maturity			Principal Value			Amortized Cost			Fair Value(2)			% of Net Assets
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
Wellful Inc. (f/k/a KNS Acquisition Corp.)			Food & Staples Retailing			First Lien Term Loan			5/26/2022			11.17% (1M SOFR+ 6.25%)			0.75			4/21/2027			$	13,785		$	12,994		$	13,244		0.3		%	(8)(10)
						Incremental First Lien Term Loan			7/21/2022			11.17% (1M SOFR+ 6.25%)			0.75			4/21/2027			14,813			14,244			14,231			0.4		%	(8)(10)
																								27,238			27,475			0.7		%
Wellpath Holdings, Inc. (f/k/a CCS-CMGC Holdings, Inc.)			Health Care Providers & Services			First Lien Term Loan			5/13/2019			10.33% (3ML+ 5.50%)			—			10/1/2025			14,278			14,154			13,577			0.4		%	(3)(8)(10)
						Second Lien Term Loan			9/25/2018			13.83% (3ML+ 9.00%)			—			10/1/2026			37,000			36,688			33,526			0.9		%	(3)(8)(10)
																								50,842			47,103			1.3		%
Total Non-Control/Non-Affiliate Investments (Level 3)																								$	4,671,607		$	4,104,739		108.0		%
Total Portfolio Investments (Level 3)																								$	7,565,194		$	7,592,777		199.8		%

See notes to consolidated financial statements.

19

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF JUNE 30, 2022

(in thousands, except share data)

																					June 30, 2022
Portfolio Company			Industry			Investments(1)(38)			Acquisition Date(44)			Coupon/Yield			Floor			Legal Maturity			Principal Value			Amortized Cost			Fair Value(2)			% of  Net Assets
LEVEL 3 PORTFOLIO INVESTMENTS
Control Investments (greater than 25.00% voting control)(42)
CP Energy Services Inc. (20)			Energy Equipment & Services			First Lien Term Loan			10/1/2017			13.25% (3ML+ 11.00%)			1.00			4/4/2027			$	46,698		$	46,698		$	46,698		1.1%			(10)(39)
						First Lien Term Loan			4/5/2022			11.25% (3ML+ 8.00%)			1.00			4/4/2027			6,000			6,000			6,000			0.1%			(10)
						First Lien Term Loan A to Spartan Energy Services, LLC			10/20/2014			9.67% (1ML+ 8.00%)			1.00			12/31/2022			26,648			26,648			26,648			0.6%			(10)(39)
						Series A Preferred Units to Spartan Energy Holdings, Inc. (10,000 shares)			9/25/2020									N/A						26,193			21,793			0.5%			(16)
						Series B Convertible Preferred Stock (790 shares)			10/30/2015									N/A						63,225			11,562			0.3%			(16)
						Common Stock (102,924 shares)			8/2/2013									N/A						86,240			—			—%			(16)
																								255,004			112,701			2.6%
Credit Central Loan Company, LLC (21)			Consumer Finance			First Lien Term Loan			12/28/2012			10.00% plus 10.00%PIK			—			6/30/2025			75,832			73,902			75,832			1.9%			(14)(39)
						Class A Units (14,867,312 units)			12/28/2012									N/A						19,331			1,103			—%			(14)(16)
						Net Revenues Interest (25% of Net Revenues)			1/28/2015									N/A						—			—			—%			(14)(16)
																								93,233			76,935			1.9%
Echelon Transportation, LLC			Aerospace & Defense			First Lien Term Loan			3/31/2014			6.00% (1ML+ 4.00%)			2.00			3/31/2024			53,209			53,209			53,209			1.3%			(10)
						Membership Interest (100%)			3/31/2014									N/A						22,738			—			—%			(16)
						Preferred Units (32,842,586 shares)			1/31/2022									N/A						32,843			12,557			0.3%			(16)
																								108,790			65,766			1.6%
First Tower Finance Company LLC (23)			Consumer Finance			First Lien Term Loan to First Tower, LLC			6/24/2014			10.00% plus 12.00% PIK			—			2/18/2025			356,225			356,225			356,225			8.7%			(14)(39)
						Class A Units (95,709,910 units)			6/14/2012									N/A						31,146			251,058			6.1%			(14)(16)
																								387,371			607,283			14.8%
Freedom Marine Solutions, LLC (24)			Energy Equipment & Services			Membership Interest (100%)			11/9/2006									N/A						45,492			13,899			0.3%			(16)
																								45,492			13,899			0.3%
InterDent, Inc.			Health Care Providers & Services			First Lien Term Loan A/B			8/1/2018			16.65% (1ML+ 14.65%)			2.00			9/5/2025			14,249			14,249			14,249			0.3%			(10)
						First Lien Term Loan A			8/3/2012			7.17% (1ML+ 5.50%)			1.00			9/5/2025			96,773			96,773			96,773			2.4%			(3) (10)
						First Lien Term Loan B			8/3/2012			12.00% PIK			—			9/5/2025			162,426			162,426			162,426			3.9%			(39)
						Common Stock (99,900 shares)			5/3/2019									N/A						45,118			132,746			3.2%			(16)
																								318,566			406,194			9.8%
Kickapoo Ranch Pet Resort			Diversified Consumer Services			Membership Interest (100%)			8/26/2019									N/A						2,378			3,833			0.1%
																								2,378			3,833			0.1%
MITY, Inc. (25)			Commercial Services & Supplies			First Lien Term Loan A			9/19/2013			10.00% (3ML+ 7.00%)			3.00			4/30/2025			32,210			32,210			32,210			0.8%			(10)(39)
						First Lien Term Loan B			6/23/2014			10.00% (3ML+ 7.00%) plus 10.00% PIK			3.00			4/30/2025			18,711			18,711			18,711			0.5%			(10)(39)
						Unsecured Note to Broda Enterprises ULC			9/19/2013			10.00%			—			1/1/2028			7,200			7,200			7,200			0.2%			(14)
						Common Stock (42,053 shares)			9/19/2013									N/A						27,349			1,878			—%			(16)
																								85,470			59,999			1.5%

See notes to consolidated financial statements.

20

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF JUNE 30, 2022

(in thousands, except share data)

																					June 30, 2022
Portfolio Company			Industry			Investments(1)(38)			Acquisition Date(44)			Coupon/Yield			Floor			Legal Maturity			Principal Value			Amortized Cost			Fair Value(2)			% of  Net Assets
LEVEL 3 PORTFOLIO INVESTMENTS
Control Investments (greater than 25.00% voting control)(42)
National Property REIT Corp. (26)			Equity Real Estate Investment Trusts (REITs) / Online Lending / Structured Finance			First Lien Term Loan A			12/31/2018			4.44% (3ML+ 1.44%) plus 3.53% PIK			3.00			12/31/2023			$	448,061		$	448,061		$	448,061		10.9%			(10)(39)
						First Lien Term Loan B			12/31/2018			5.00% (3ML+ 2.00%) plus 5.50% PIK			3.00			12/31/2023			29,080			29,080			29,080			0.7%			(10)(39)
						First Lien Term Loan C			10/31/2019			12.25% (3ML+ 10.00%) plus 2.25% PIK			1.00			12/31/2023			186,800			186,800			186,800			4.5%			(10)(39)
						First Lien Term Loan D			6/19/2020			3.50% (3ML+ 0.50%) plus 2.50% PIK			3.00			12/31/2023			183,425			183,425			183,425			4.5%			(10)(39)
						Residual Profit Interest			12/31/2018									N/A						—			60,749			1.5%			(35)
						Common Stock (3,334,895 shares)			12/31/2013									N/A						15,830			707,622			17.3%			(45)
																								863,196			1,615,737			39.4%
Nationwide Loan Company LLC (27)			Consumer Finance			First Lien Term Loan			6/18/2014			10.00% plus 10.00% PIK			—			6/18/2022			20,260			20,260			20,260			0.5%			(14)(39)
						Class A Units (38,550,460 units)			1/31/2013									N/A						20,846			30,140			0.7%			(14)
																								41,106			50,400			1.2%
NMMB, Inc. (28)			Media			First Lien Term Loan			12/30/2019			10.75% (3ML+ 8.50%)			2.00			3/31/2027			29,723			29,723			29,723			0.7%			(3) (10)
						Common Stock (21,418 shares)			12/30/2019									N/A						—			80,220			2.0%
																								29,723			109,943			2.7%
Pacific World Corporation (36)			Personal Products			First Lien Revolving Line of Credit - $26,000 Commitment			9/26/2014			8.92% PIK (1ML+ 7.25%)			1.00			9/26/2025			26,743			26,743			26,743			0.6%			(10)(15)(39)
						First Lien Term Loan A			12/31/2014			6.92% PIK (1ML+ 5.25%)			1.00			9/26/2025			44,358			44,358			32,436			0.8%			(10)(39)
						Convertible Preferred Equity (323,235 shares)			6/15/2018									N/A						189,295			—			—%			(16)
						Common Stock (6,778,414 shares)			9/29/2017									N/A						—			—			—%			(16)
																								260,396			59,179			1.4%
R-V Industries, Inc.			Machinery			First Lien Term Loan			12/15/2020			11.25% (3ML+ 9.00%)			1.00			12/15/2028			33,622			33,622			33,622			0.8%			(3) (10)
						Common Stock (745,107 shares)			6/26/2007									N/A						6,866			23,301			0.6%
																								40,488			56,923			1.4%
Universal Turbine Parts, LLC (34)			Trading Companies & Distributors			First Lien Delayed Draw Term Loan - $6,965 Commitment			2/28/2019			10.25% (1ML+ 7.75%)			2.50			4/5/2024			3,141			3,141			3,141			0.1%			(10)(15)
						First Lien Term Loan A			7/22/2016			8.00% (3ML+ 5.75%)			1.00			4/5/2024			29,575			29,575			28,006			0.7%			(10)
						Preferred Units (55,383,218 units)			3/31/2021									N/A						32,500			—			—%			(16)
						Common Stock (10,000 units)			12/10/2018									N/A						—			—			—%			(16)
																								65,216			31,147			0.8%
USES Corp. (30)			Commercial Services & Supplies			First Lien Term Loan A			3/31/2014			9.00% PIK			—			7/29/2024			60,362			30,651			20,395			0.5%			(9)
						First Lien Term Loan B			3/31/2014			15.50% PIK			—			7/29/2024			90,576			35,567			—			—%			(9)
						First Lien Term Loan			12/30/2020			10.67% (1ML+ 9.00%)			1.00			7/29/2024			2,000			2,000			2,000			—%			(10)
						Common Stock (268,962 shares)			6/15/2016									N/A						—			—			—%			(16)
																								68,218			22,395			0.5%
Valley Electric Company, Inc. (31)			Construction & Engineering			First Lien Term Loan to Valley Electric Co. of Mt. Vernon, Inc.			12/31/2012			8.00% (3ML+ 5.00%) plus 2.50% PIK			3.00			12/31/2024			10,452			10,452			10,452			0.3%			(3) (10)(39)
						First Lien Term Loan			6/24/2014			8.00% plus 10.00% PIK			—			6/23/2024			33,301			33,301			33,301			0.8%			(39)
						First Lien Term Loan B			3/28/2022			8.00% plus 4.50% PIK			—			6/23/2024			13,000			13,000			13,000			0.3%			(39)
						Consolidated Revenue Interest (2.00%)			6/22/2018									N/A						—			1,781			—%			(12)
						Common Stock (50,000 shares)			12/31/2012									N/A						11,506			87,449			2.1%
																								68,259			145,983			3.5%
Total Control Investments (Level 3)																								$	2,732,906		$	3,438,317		83.5%

See notes to consolidated financial statements.

21

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF JUNE 30, 2022

(in thousands, except share data)

																					June 30, 2022
Portfolio Company			Industry			Investments(1)(38)			Acquisition Date(44)			Coupon/Yield			Floor			Legal Maturity			Principal Value			Amortized Cost			Fair Value(2)			% of  Net Assets
LEVEL 3 PORTFOLIO INVESTMENTS
Affiliate Investments (5.00% to 24.99% voting control)(43)
Nixon, Inc. (32)			Textiles, Apparel & Luxury Goods			Common Stock (857 units)			5/12/2017									N/A						$	—		$	—		—%			(16)
																								—			—			—%
PGX Holdings, Inc. (6)			Diversified Consumer Services			First Lien Term Loan			7/21/2021			9.25% (6ML+ 7.75%)			1.50			7/21/2026			71,382			71,382			71,382			1.7%			(3)(8)(10)
						Second Lien Term Loan			7/21/2021			13.42% (1ML+ 11.75%)			1.50			7/27/2027			153,931			153,931			153,931			3.7%			(3) (10)
						Common Stock (40,780,359 shares)			5/27/2020									N/A						—			114,940			2.8%			(16)
																								225,313			340,253			8.2%
RGIS Services, LLC			Commercial Services & Supplies			First Lien Term Loan			6/25/2020			9.17% (1ML+ 7.50%)			1.00			6/25/2025			3,680			3,680			3,680			0.1%			(8)(10)
						Membership Interest (5.27%)			6/25/2020									N/A						10,303			13,324			0.3%
																								13,983			17,004			0.4%
Targus Cayman HoldCo Limited (33)			Textiles, Apparel & Luxury Goods			Common Stock (7,383,395 shares)			2/12/2016									N/A						2,805			36,007			0.9%			(16)
																								2,805			36,007			0.9%
Total Affiliate Investments (Level 3)																								$	242,101		$	393,264		9.5%

See notes to consolidated financial statements.

22

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF JUNE 30, 2022

(in thousands, except share data)

																					June 30, 2022
Portfolio Company			Industry			Investments(1)(38)			Acquisition Date(44)			Coupon/Yield			Floor			Legal Maturity			Principal Value			Amortized Cost			Fair Value(2)			% of  Net Assets
LEVEL 3 PORTFOLIO INVESTMENTS
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
8th Avenue Food & Provisions, Inc.			Food Products			Second Lien Term Loan			9/21/2018			9.42% (1ML+ 7.75%)			—			10/1/2026			$	32,133		$	31,966		$	27,668		0.7		%	(3)(8)(10)
																								31,966			27,668			0.7		%
ABG Intermediate Holdings 2 LLC			Textiles, Apparel & Luxury Goods			Second Lien Term Loan			12/20/2021			7.63% (1M SOFR+ 6.00%)			0.80			12/20/2029			9,000			8,937			8,666			0.2		%	(3)(8)(10)
																								8,937			8,666			0.2		%
AmeriLife Holdings, LLC			Insurance			Second Lien Term Loan			3/18/2020			9.56% (1ML+ 8.50%)			1.00			3/18/2028			22,280			21,966			22,280			0.5		%	(3)(8)(10)
																								21,966			22,280			0.5		%
Apidos CLO XI			Structured Finance			Subordinated Structured Note			12/6/2012			Residual Interest, current yield 10.09%			—			4/17/2034			67,782			37,155			29,691			0.7		%	(5) (14)
																								37,155			29,691			0.7		%
Apidos CLO XII			Structured Finance			Subordinated Structured Note			3/15/2013			Residual Interest, current yield 6.72%			—			4/15/2031			52,203			33,580			28,847			0.7		%	(5) (14)
																								33,580			28,847			0.7		%
Apidos CLO XV			Structured Finance			Subordinated Structured Note			9/13/2013			Residual Interest, current yield 7.45%			—			4/21/2031			48,515			34,910			28,370			0.7		%	(5) (14)
																								34,910			28,370			0.7		%
Apidos CLO XXII			Structured Finance			Subordinated Structured Note			9/16/2015			Residual Interest, current yield 10.78%			—			4/21/2031			35,855			28,563			25,318			0.6		%	(5) (14)
																								28,563			25,318			0.6		%
Atlantis Health Care Group (Puerto Rico), Inc.			Health Care Providers & Services			First Lien Revolving Line of Credit - $3,000 Commitment			2/21/2013			11.00% (3ML+ 8.75%)			2.00			4/22/2024			—			—			—			—		%	(10)(15)
						First Lien Term Loan			2/21/2013			11.00% (3ML+ 8.75%)			2.00			4/22/2024			61,815			61,815			61,815			1.5		%	(3) (10)
																								61,815			61,815			1.5		%
Aventiv Technologies, LLC (f/k/a Securus Technologies Holdings, Inc.)			Communications Equipment			First Lien Term Loan			8/2/2019			6.75% (3ML+ 4.50%)			1.00			11/1/2024			9,695			9,202			8,962			0.2		%	(3)(8)(10)(47)
						Second Lien Term Loan			6/20/2017			9.49% (3ML+ 8.25%)			1.00			11/1/2025			50,662			50,578			48,594			1.2		%	(3)(8)(10)
																								59,780			57,556			1.4		%
Barings CLO 2018-III			Structured Finance			Subordinated Structured Note			10/9/2014			Residual Interest, current yield 0.00%			—			7/20/2029			83,097			36,316			24,262			0.6		%	(5) (14)(17)
																								36,316			24,262			0.6		%
BCPE North Star US Holdco 2, Inc.			Food Products			Second Lien Delayed Draw Term Loan - $5,185 Commitment			6/7/2021			9.50% (3ML+ 7.25%)			0.75			6/10/2023			—			—			—			—		%	(8)(10)(15)
						Second Lien Term Loan			6/7/2021			9.50% (3ML+ 7.25%)			0.75			6/11/2029			94,815			94,110			94,815			2.3		%	(3)(8)(10)
																								94,110			94,815			2.3		%
BCPE Osprey Buyer, Inc.			Health Care Technology			First Lien Revolving Line of Credit - $4,239 Commitment			10/18/2021			7.25% (3ML+ 5.75%)			0.75			8/21/2026			—			—			—			—		%	(8)(10)(15)
						Second Lien Delayed Draw Term Loan - $22,609 Commitment			10/18/2021			7.25% (3ML+ 5.75%)			0.75			8/23/2028			—			—			—			—		%	(8)(10)(15)
						First Lien Term Loan			10/18/2021			7.25% (3ML+ 5.75%)			0.75			8/23/2028			64,675			64,675			64,675			1.6		%	(8)(10)
																								64,675			64,675			1.6		%
Belnick, LLC			Household Durables			First Lien Term Loan			1/20/2022			10.25% (3ML+ 8.00%)			1.00			1/20/2027			91,406			91,406			91,406			2.2		%	(3) (10)
																								91,406			91,406			2.2		%
Broder Bros., Co.			Textiles, Apparel & Luxury Goods			First Lien Term Loan			12/4/2017			7.39% (6ML+ 6.00%)			1.00			12/4/2025			166,686			166,686			166,686			4.0		%	(3) (10)
																								166,686			166,686			4.0		%
California Street CLO IX Ltd.			Structured Finance			Subordinated Structured Note			4/19/2012			Residual Interest, current yield 10.82%			—			7/16/2032			58,914			42,472			30,078			0.7		%	(5) (14)
																								42,472			30,078			0.7		%
Candle-Lite Company, LLC			Household Products			First Lien Term Loan A			1/23/2018			7.10% (3ML+ 5.50%)			1.25			4/30/2023			9,987			9,987			9,987			0.2		%	(3) (10)
						First Lien Term Loan B			1/23/2018			11.10% (3ML+ 9.50%)			1.25			4/30/2023			10,949			10,949			10,949			0.3		%	(3) (10)
																								20,936			20,936			0.5		%

See notes to consolidated financial statements.

23

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF JUNE 30, 2022

(in thousands, except share data)

																					June 30, 2022
Portfolio Company			Industry			Investments(1)(38)			Acquisition Date(44)			Coupon/Yield			Floor			Legal Maturity			Principal Value			Amortized Cost			Fair Value(2)			% of  Net Assets
LEVEL 3 PORTFOLIO INVESTMENTS
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
Capstone Logistics Acquisition, Inc.			Commercial Services & Supplies			Second Lien Term Loan			11/12/2020			10.42% (1ML+ 8.75%)			1.00			11/13/2028			$	8,500		$	8,246		$	8,500		0.2		%	(3)(8)(10)
																								8,246			8,500			0.2		%
Carlyle C17 CLO Limited			Structured Finance			Subordinated Structured Note			1/24/2013			Residual Interest, current yield 12.57%			—			4/30/2031			24,870			14,756			13,159			0.3		%	(5) (14)
																								14,756			13,159			0.3		%
Carlyle Global Market Strategies CLO 2014-4-R, Ltd.			Structured Finance			Subordinated Structured Note			4/7/2017			Residual Interest, current yield 10.02%			—			7/15/2030			25,533			18,342			15,294			0.4		%	(5) (14)
																								18,342			15,294			0.4		%
Carlyle Global Market Strategies CLO 2016-3, Ltd.			Structured Finance			Subordinated Structured Note			8/9/2016			Residual Interest, current yield 11.18%			—			7/20/2034			32,200			29,777			26,223			0.6		%	(5) (14)
																								29,777			26,223			0.6		%
Cent CLO 21 Limited			Structured Finance			Subordinated Structured Note			5/15/2014			Residual Interest, current yield 0.00%			—			7/29/2030			49,552			33,984			26,391			0.6		%	(5) (14)(17)
																								33,984			26,391			0.6		%
CIFC Funding 2013-III-R, Ltd.			Structured Finance			Subordinated Structured Note			8/2/2013			Residual Interest, current yield 9.36%			—			4/24/2031			44,100			26,776			20,566			0.5		%	(5) (14)
																								26,776			20,566			0.5		%
CIFC Funding 2013-IV, Ltd.			Structured Finance			Subordinated Structured Note			10/22/2013			Residual Interest, current yield 13.43%			—			4/28/2031			45,500			30,747			28,087			0.7		%	(5) (14)
																								30,747			28,087			0.7		%
CIFC Funding 2014-IV-R, Ltd.			Structured Finance			Subordinated Structured Note			8/5/2014			Residual Interest, current yield 14.17%			—			10/17/2030			50,143			32,368			27,115			0.7		%	(5) (14)
																								32,368			27,115			0.7		%
CIFC Funding 2016-I, Ltd.			Structured Finance			Subordinated Structured Note			12/9/2016			Residual Interest, current yield 14.47%			—			10/21/2031			34,000			30,444			29,000			0.7		%	(5) (14)
																								30,444			29,000			0.7		%
Collections Acquisition Company, Inc.			Diversified Financial Services			First Lien Term Loan			12/3/2019			10.65% (3ML+ 8.15%)			2.50			6/3/2024			36,878			36,878			36,878			0.9		%	(3) (10)
																								36,878			36,878			0.9		%
Columbia Cent CLO 27 Limited			Structured Finance			Subordinated Structured Note			12/18/2013			Residual Interest, current yield 15.76%			—			10/25/2028			48,977			29,834			28,052			0.7		%	(5) (14)
																								29,834			28,052			0.7		%
CP IRIS Holdco I, Inc. (48)			Building Products			Second Lien Term Loan			10/1/2021			8.67% (1ML+ 7.00%)			0.50			10/1/2029			35,000			35,000			34,697			0.8		%	(3)(8)(10)
																								35,000			34,697			0.8		%
Curo Group Holdings Corp.			Consumer Finance			First Lien Term Loan			7/30/2021			7.50%			—			8/1/2028			47,000			47,029			30,550			0.7		%	(8)(14)(47)
																								47,029			30,550			0.7		%
DRI Holding Inc.			Commercial Services & Supplies			First Lien Term Loan			12/21/2021			6.92% (1ML+ 5.25%)			0.50			12/21/2028			24,938			24,840			24,563			0.6		%	(3)(8)(10)
						Second Lien Term Loan			12/21/2021			9.67% (1ML+ 8.00%)			0.50			12/21/2029			145,000			145,000			143,550			3.5		%	(3) (10)
																								169,840			168,113			4.1		%
DTI Holdco, Inc.			Professional Services			First Lien Term Loan			4/26/2022			6.28% (1M SOFR+ 4.75%)			0.75			4/26/2029			18,500			18,139			18,440			0.4		%	(8)(10)
						Second Lien Term Loan			4/26/2022			9.28% (1M SOFR+ 7.75%)			0.75			4/26/2030			75,000			75,000			75,000			1.8		%	(8)(10)
																								93,139			93,440			2.2		%
Dunn Paper, Inc.			Paper & Forest Products			Second Lien Term Loan			8/26/2016			10.31% (3ML+ 9.25%)			1.00			8/26/2023			11,500			11,445			4,952			0.1		%	(8)(9)(10)
																								11,445			4,952			0.1		%
Easy Gardener Products, Inc.			Household Durables			Class A Units of EZG Holdings, LLC (200 units)			6/11/2020									N/A						313			781			—		%	(16)
						Class B Units of EZG Holdings, LLC (12,525 units)			6/11/2020									N/A						1,688			2,832			0.1		%	(16)
																								2,001			3,613			0.1		%

See notes to consolidated financial statements.

24

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF JUNE 30, 2022

(in thousands, except share data)

																					June 30, 2022
Portfolio Company			Industry			Investments(1)(38)			Acquisition Date(44)			Coupon/Yield			Floor			Legal Maturity			Principal Value			Amortized Cost			Fair Value(2)			% of  Net Assets
LEVEL 3 PORTFOLIO INVESTMENTS
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
Engine Group, Inc. (7)			Media			First Lien Term Loan			11/17/2020			6.42% (1ML+ 4.75%)			1.00			11/17/2023			$	3,551		$	3,551		$	3,400		0.1		%	(8)(10)
						Class B Common Units (1,039,554 units)			11/17/2020									N/A						26,991			—			—		%	(8)(16)
																								30,542			3,400			0.1		%
Engineered Machinery Holdings, Inc.			Machinery			Incremental Amendment No. 2 Second Lien Term Loan			5/6/2021			8.75% (3ML+ 6.50%)			0.75			5/21/2029			5,000			4,982			4,897			0.1		%	(3)(8)(10)
						Incremental Amendment No. 3 Second Lien Term Loan			8/6/2021			8.25% (3ML+ 6.00%)			0.75			5/21/2029			5,000			5,000			4,772			0.1		%	(3)(8)(10)
																								9,982			9,669			0.2		%
Enseo Acquisition, Inc.			IT Services			First Lien Term Loan			6/2/2021			10.25% (3ML+ 8.00%)			1.00			6/2/2026			54,450			54,450			54,450			1.3		%	(3) (10)
																								54,450			54,450			1.3		%
Excelitas Technologies Corp. (f/k/a/ EXC Holdings III Corp.)			Technology Hardware, Storage & Peripherals			Second Lien Term Loan			11/17/2017			8.50% (3ML+ 7.50%)			1.00			12/1/2025			12,500			12,447			12,398			0.3		%	(3)(8)(10)
																								12,447			12,398			0.3		%
Eze Castle Integration, Inc.			IT Services			First Lien Delayed Draw Term Loan - $1,786 Commitment			7/15/2020			10.00% (3ML+ 8.50%)			1.50			7/15/2025			—			—			—			—		%	(10)(15)
						First Lien Term Loan			7/15/2020			10.00% (3ML+ 8.50%)			1.50			7/15/2025			46,740			46,740			46,740			1.1		%	(3) (10)
																								46,740			46,740			1.1		%
First Brands Group			Auto Components			First Lien Term Loan			3/24/2021			6.29% (3M SOFR+ 5.00%)			1.00			3/30/2027			22,525			22,388			22,210			0.5		%	(3)(8)(10)
						Second Lien Term Loan			3/24/2021			9.74% (3ML+ 8.50%)			1.00			3/30/2028			37,000			36,503			37,000			0.9		%	(3)(8)(10)
																								58,891			59,210			1.4		%
Galaxy XV CLO, Ltd.			Structured Finance			Subordinated Structured Note			2/13/2013			Residual Interest, current yield 12.12%			—			10/15/2030			50,525			33,868			26,924			0.8		%	(5) (14)
																								33,868			26,924			0.8		%
Galaxy XXVII CLO, Ltd.			Structured Finance			Subordinated Structured Note			9/30/2013			Residual Interest, current yield 11.34%			—			5/16/2031			24,575			15,963			11,898			0.3		%	(5) (14)
																								15,963			11,898			0.3		%
Galaxy XXVIII CLO, Ltd.			Structured Finance			Subordinated Structured Note			5/30/2014			Residual Interest, current yield 7.95%			—			7/15/2031			39,905			27,017			17,407			0.4		%	(5) (14)
																								27,017			17,407			0.4		%
Halcyon Loan Advisors Funding 2012-1 Ltd.			Structured Finance			Subordinated Structured Note			8/7/2012			Residual Interest, current yield 0.00%			—			8/15/2023			23,188			3,704			6			—		%	(5) (14)(17)
																								3,704			6			—		%
Halcyon Loan Advisors Funding 2013-1 Ltd.			Structured Finance			Subordinated Structured Note			3/8/2013			Residual Interest, current yield 0.00%			—			4/15/2025			40,400			19,984			22			—		%	(5) (14)(17)
																								19,984			22			—		%
Halcyon Loan Advisors Funding 2014-1 Ltd.			Structured Finance			Subordinated Structured Note			2/7/2014			Residual Interest, current yield 0.00%			—			4/20/2026			24,500			11,822			37			—		%	(5) (14)(17)
																								11,822			37			—		%
Halcyon Loan Advisors Funding 2014-2 Ltd.			Structured Finance			Subordinated Structured Note			4/14/2014			Residual Interest, current yield 0.00%			—			4/28/2025			41,164			21,321			53			—		%	(5) (14)(17)
																								21,321			53			—		%
Halcyon Loan Advisors Funding 2015-3 Ltd.			Structured Finance			Subordinated Structured Note			7/23/2015			Residual Interest, current yield 0.00%			—			10/18/2027			39,598			29,557			234			—		%	(5) (14)(17)
																								29,557			234			—		%
HarbourView CLO VII-R, Ltd.			Structured Finance			Subordinated Structured Note			6/5/2015			Residual Interest, current yield 0.00%			—			7/18/2031			19,025			13,024			6,585			0.3		%	(5) (14)(17)
																								13,024			6,585			0.3		%

See notes to consolidated financial statements.

25

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF JUNE 30, 2022

(in thousands, except share data)

																					June 30, 2022
Portfolio Company			Industry			Investments(1)(38)			Acquisition Date(44)			Coupon/Yield			Floor			Legal Maturity			Principal Value			Amortized Cost			Fair Value(2)			% of  Net Assets
LEVEL 3 PORTFOLIO INVESTMENTS
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
Help/Systems Holdings, Inc.			Software			Second Lien Term Loan			11/14/2019			7.56%(3M SOFR+ 6.75%)			0.75			11/19/2027			$	52,500		$	52,295		$	52,500		1.3		%	(3)(8)(10)
																								52,295			52,500			1.3		%
Interventional Management Services, LLC			Health Care Providers & Services			First Lien Revolving Line of Credit - $5,000 Commitment			2/22/2021			11.25% (3ML+ 9.00%)			1.00			2/22/2025			5,000			5,000			4,964			0.1		%	(10)(15)
						First Lien Term Loan			2/22/2021			11.25% (3ML+ 9.00%)			1.00			2/20/2026			68,385			68,385			67,897			1.6		%	(3) (10)
																								73,385			72,861			1.7		%
Jefferson Mill CLO Ltd.			Structured Finance			Subordinated Structured Note			6/26/2015			Residual Interest, current yield 5.45%			—			10/20/2031			23,594			18,172			12,879			0.4		%	(5) (14)
																								18,172			12,879			0.4		%
K&N Parent, Inc.			Auto Components			Second Lien Term Loan			10/19/2016			11.00% (3ML+ 8.75%)			1.00			10/21/2024			25,887			25,697			24,337			0.6		%	(8)(10)
																								25,697			24,337			0.6		%
KM2 Solutions LLC			IT Services			First Lien Term Loan			12/17/2020			10.25% (3ML+ 8.00%)			1.00			12/17/2025			23,925			23,925			23,925			0.6		%	(3) (10)
																								23,925			23,925			0.6		%
KNS Acquisition Corp.			Food & Staples Retailing			First Lien Term Loan			5/26/2022			8.50% (3ML+ 6.25%)			0.75			4/21/2027			9,937			9,262			9,440			0.2		%	(8)(10)
																								9,262			9,440			0.2		%
LCM XIV Ltd.			Structured Finance			Subordinated Structured Note			6/25/2013			Residual Interest, current yield 7.15%			—			7/21/2031			49,934			25,787			19,385			0.5		%	(5) (14)
																								25,787			19,385			0.5		%
LGC US FINCO, LLC			Machinery			First Lien Term Loan			1/17/2020			8.17% (1ML+ 6.50%)			1.00			12/20/2025			30,638			30,053			29,609			0.7		%	(3)(8)(10)
																								30,053			29,609			0.7		%
Magnate Worldwide, LLC			Air Freight & Logistics			First Lien Delayed Draw Term Loan - $2,357 Commitment			3/11/2022			7.75% (3ML+ 5.50%)			0.75			12/30/2028			—			—			—			—		%	(8)(10)(15)
						First Lien Term Loan			3/11/2022			7.75% (3ML+ 5.50%)			0.75			12/30/2028			30,490			30,490			30,490			0.7		%	(3)(8)(10)
						Second Lien Term Loan			12/30/2021			10.75% (3ML+ 8.50%)			0.75			12/30/2029			95,000			95,000			95,000			2.3		%	(3)(8)(10)
																								125,490			125,490			3.0		%
Mamba Purchaser, Inc.			Health Care Providers & Services			Second Lien Term Loan			9/29/2021			8.10% (1ML+ 6.50%)			0.50			10/14/2029			23,000			22,840			23,000			0.6		%	(3)(8)(10)
																								22,840			23,000			0.6		%
Medical Solutions Holdings, Inc. (50)			Health Care Providers & Services			Second Lien Term Loan			11/1/2021			9.88% (6ML+ 7.00%)			0.50			11/1/2029			53,518			53,504			53,518			1.3		%	(3)(8)(10)
																								53,504			53,518			1.3		%
Medusind Acquisition, Inc. (19)			Health Care Providers & Services			First Lien Term Loan			9/30/2019			8.81% (3ML+ 6.50%)			1.00			4/8/2024			23,635			23,488			23,635			0.6		%	(3) (10)
																								23,488			23,635			0.6		%
Mountain View CLO 2013-I Ltd.			Structured Finance			Subordinated Structured Note			4/17/2013			Residual Interest, current yield 2.05%			—			10/15/2030			43,650			25,461			15,560			0.4		%	(5) (14)
																								25,461			15,560			0.4		%
Mountain View CLO IX Ltd.			Structured Finance			Subordinated Structured Note			5/13/2015			Residual Interest, current yield 10.29%			—			7/15/2031			47,830			25,333			22,510			0.6		%	(5) (14)
																								25,333			22,510			0.6		%
Nexus Buyer LLC			Capital Markets			Second Lien Term Loan			11/5/2021			7.44% (1ML+ 6.25%)			0.50			11/5/2029			42,500			42,500			41,574			1.0		%	(8)(10)
																								42,500			41,574			1.0		%
Octagon Investment Partners XV, Ltd.			Structured Finance			Subordinated Structured Note			1/24/2013			Residual Interest, current yield 8.63%			—			7/19/2030			42,064			29,613			24,235			0.7		%	(5) (14)
																								29,613			24,235			0.7		%
Octagon Investment Partners 18-R Ltd.			Structured Finance			Subordinated Structured Note			8/12/2015			Residual Interest, current yield 11.27%			—			4/16/2031			46,016			22,064			17,161			0.5		%	(5) (14)
																								22,064			17,161			0.5		%

See notes to consolidated financial statements.

26

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF JUNE 30, 2022

(in thousands, except share data)

																					June 30, 2022
Portfolio Company			Industry			Investments(1)(38)			Acquisition Date(44)			Coupon/Yield			Floor			Legal Maturity			Principal Value			Amortized Cost			Fair Value(2)			% of  Net Assets
LEVEL 3 PORTFOLIO INVESTMENTS
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
OneTouchPoint Corp			Professional Services			First Lien Term Loan			2/19/2021			10.25% (3ML+ 8.00%)			1.00			2/19/2026			$	39,488		$	39,488		$	39,488		1.0		%	(3) (10)
																								39,488			39,488			1.0		%
PeopleConnect Holdings, LLC (11)			Interactive Media & Services			First Lien Term Loan			1/22/2020			10.50% (3ML+ 8.25%)			1.75			1/22/2025			233,204			233,204			233,204			5.7		%	(3) (10)
																								233,204			233,204			5.7		%
PetVet Care Centers, LLC (f/k/a Pearl Intermediate Parent LLC)			Health Care Providers & Services			Second Lien Term Loan			2/1/2018			7.92% (1ML+ 6.25%)			—			2/15/2026			16,000			15,941			15,950			0.4		%	(3)(8)(10)
																								15,941			15,950			0.4		%
PlayPower, Inc.			Leisure Products			First Lien Term Loan			5/7/2019			7.75% (3ML+ 5.50%)			—			5/10/2026			5,841			5,805			5,548			0.1		%	(3)(8)(10)
																								5,805			5,548			0.1		%
Preventics, Inc. (d/b/a Legere Pharmaceuticals) (46)			Health Care Providers & Services			First Lien Term Loan			11/12/2021			12.75% (3ML+ 10.50%)			1.00			11/12/2026			9,243			9,243			9,243			0.2		%	(3) (10)
						Series A Convertible Preferred Stock (320 units)			11/12/2021									N/A						127			148			—		%	(16)
						Series C Convertible Preferred Stock (3,575 units)			11/12/2021									N/A						1,419			1,659			—		%	(16)
																								10,789			11,050			0.2		%
Raisin Acquisition Co, Inc.			Pharmaceuticals			First Lien Revolving Line of Credit			6/17/2022			8.75% (3ML+ 7.00%)			1.00			12/13/2026			—			—			—			—		%	(10)(15)
						First Lien Delayed Draw Term Loan			6/17/2022			9.26% (3ML+ 7.00%)			1.00			12/13/2026			1,550			1,509			1,527			—		%	(10)(15)
						First Lien Term Loan			6/17/2022			8.75% (3ML+ 7.00%)			1.00			12/13/2026			24,801			24,048			24,435			0.6		%	(3) (10)
																								25,557			25,962			0.6		%
RC Buyer, Inc.			Auto Components			Second Lien Term Loan			7/26/2021			8.75% (3ML+ 6.50%)			0.75			7/30/2029			20,000			19,911			19,989			0.5		%	(3)(8)(10)
																								19,911			19,989			0.5		%
Reception Purchaser, LLC			Air Freight & Logistics			First Lien Term Loan			4/28/2022			8.20% (3M SOFR+ 6.00%)			0.75			3/24/2028			53,366			52,587			52,924			1.3		%	(3)(8)(10)
																								52,587			52,924			1.3		%
Redstone Holdco 2 LP (22)			IT Services			Second Lien Term Loan			4/16/2021			8.97% (3ML+ 7.75%)			0.75			4/27/2029			50,000			49,240			48,506			1.2		%	(3)(8)(10)
																								49,240			48,506			1.2		%
Research Now Group, Inc. & Survey Sampling International LLC			Professional Services			First Lien Term Loan			12/8/2017			6.50% (6ML+ 5.50%)			1.00			12/20/2024			9,550			9,355			8,929			0.2		%	(3)(8)(10)(47)
						Second Lien Term Loan			12/8/2017			10.50% (6ML+ 9.50%)			1.00			12/20/2025			50,000			48,496			49,200			1.2		%	(3)(8)(10)
																								57,851			58,129			1.4		%
Rising Tide Holdings, Inc.			Diversified Consumer Services			Second Lien Term Loan			5/26/2021			9.92% (1ML+ 8.25%)			0.75			6/1/2029			23,000			22,702			21,583			0.5		%	(3)(8)(10)
																								22,702			21,583			0.5		%
The RK Logistics Group, Inc.			Commercial Services & Supplies			First Lien Term Loan			3/24/2022			12.75% (3ML+ 10.50%)			1.00			3/24/2027			15,652			15,652			15,808			0.4		%	(3) (10)
						Class A Common Units (263,000 units)			3/24/2022									N/A						263			—			—		%	(16)
						Class B Common Units (1,237,000 units)			3/24/2022									N/A						1,237			3,457			0.1		%	(16)
																								17,152			19,265			0.5		%
RME Group Holding Company			Media			First Lien Term Loan A			5/4/2017			7.75% (3ML+ 5.50%)			1.00			5/6/2024			25,988			25,988			25,988			0.6		%	(3) (10)
						First Lien Term Loan B			5/4/2017			13.25% (3ML+ 11.00%)			1.00			5/6/2024			21,809			21,809			21,809			0.5		%	(3) (10)
																								47,797			47,797			1.1		%
Romark WM-R Ltd.			Structured Finance			Subordinated Structured Note			4/11/2014			Residual Interest, current yield 6.65%			—			4/21/2031			27,725			20,448			14,616			0.4		%	(5) (14)
																								20,448			14,616			0.4		%
Rosa Mexicano			Hotels, Restaurants & Leisure			First Lien Revolving Line of Credit - $500 Commitment			3/29/2018			9.75% (3ML+ 7.50%)			1.25			5/29/2023			382			382			371			—		%	(10)(15)
						First Lien Term Loan			3/29/2018			9.75% (3ML+ 7.50%)			1.25			5/29/2023			22,977			22,977			22,280			0.5		%	(10)
																								23,359			22,651			0.5		%

See notes to consolidated financial statements.

27

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF JUNE 30, 2022

(in thousands, except share data)

																					June 30, 2022
Portfolio Company			Industry			Investments(1)(38)			Acquisition Date(44)			Coupon/Yield			Floor			Legal Maturity			Principal Value			Amortized Cost			Fair Value(2)			% of  Net Assets
LEVEL 3 PORTFOLIO INVESTMENTS
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
SEOTownCenter, Inc.			IT Services			First Lien Term Loan			1/31/2022			10.25% (3ML+ 8.00%)			1.00			1/31/2027			$	51,740		$	51,740		$	51,740		1.3		%	(3) (10)
																								51,740			51,740			1.3		%
Shearer’s Foods, LLC			Food Products			Second Lien Term Loan			9/15/2020			9.42% (1ML+ 7.75%)			1.00			9/23/2028			5,000			4,922			4,953			0.1		%	(3)(8)(10)
																								4,922			4,953			0.1		%
ShiftKey, LLC			Health Care Technology			First Lien Term Loan			6/21/2022			7.96% (3M SOFR+ 5.75%)			1.00			6/21/2027			25,000			25,000			25,000			0.6		%	(10)
																								25,000			25,000			0.6		%
Shutterfly, LLC			Internet & Direct Marketing Retail			2021 Refinancing First Lien Term Loan B			7/1/2021			7.25% (3ML+ 5.00%)			0.75			9/25/2026			20,295			20,212			17,454			0.4		%	(3)(8)(10)(47)
																								20,212			17,454			0.4		%
Sorenson Communications, LLC			Diversified Telecommunication Services			First Lien Term Loan			3/12/2021			7.75% (3ML+ 5.50%)			0.75			3/17/2026			35,194			34,746			34,965			0.8		%	(3)(8)(10)
																								34,746			34,965			0.8		%
Southern Veterinary Partners			Health Care Providers & Services			Second Lien Term Loan			10/2/2020			9.42% (1ML+ 7.75%)			1.00			10/5/2028			8,000			7,937			7,911			0.2		%	(3)(8)(10)
																								7,937			7,911			0.2		%
Spectrum Holdings III Corp			Health Care Equipment & Supplies			Second Lien Term Loan			1/26/2018			8.67% (1ML+ 7.00%)			1.00			1/31/2026			7,500			7,483			6,966			0.2		%	(3)(8)(10)
																								7,483			6,966			0.2		%
Staples, Inc.			Distributors			First Lien Term Loan			11/18/2019			6.29% (3ML+ 5.00%)			—			4/16/2026			8,774			8,720			7,921			0.2		%	(3)(8)(10)(47)
																								8,720			7,921			0.2		%
Strategic Materials			Household Durables			Second Lien Term Loan			10/27/2017			9.04% (3ML+ 7.75%)			1.00			11/1/2025			7,000			6,971			5,737			0.1		%	(8)(10)
																								6,971			5,737			0.1		%
Stryker Energy, LLC			Energy Equipment & Services			Overriding Royalty Interest			12/4/2006									N/A						—			—			—		%	(13)
																								—			—			—		%
Sudbury Mill CLO Ltd.			Structured Finance			Subordinated Structured Note			11/14/2013			Residual Interest, current yield 0.00%			—			1/19/2026			28,200			—			—			—		%	(5) (14)(17)
																								—			—			—		%
Symphony CLO XIV, Ltd.			Structured Finance			Subordinated Structured Note			5/6/2014			Residual Interest, current yield 0.00%			—			7/14/2026			49,250			24,723			14,392			0.3		%	(5) (14)(17)
																								24,723			14,392			0.3		%
Symphony CLO XV, Ltd.			Structured Finance			Subordinated Structured Note			10/17/2014			Residual Interest, current yield 7.65%			—			1/19/2032			63,831			42,037			28,429			0.7		%	(5) (14)
																								42,037			28,429			0.7		%
Town & Country Holdings, Inc.			Distributors			First Lien Term Loan			1/26/2018			10.75% (3ML+ 8.50%)			1.50			1/26/2023			166,080			166,080			166,080			4.0		%	(3) (10)(39)
																								166,080			166,080			4.0		%
TPS, LLC			Machinery			First Lien Term Loan			11/30/2020			11.25% (3ML+ 9.00%) plus 1.50%PIK			1.00			11/30/2025			28,257			28,257			28,257			0.7		%	(3) (10)(39)
																								28,257			28,257			0.7		%
United Sporting Companies, Inc. (18)			Distributors			Second Lien Term Loan			9/28/2012			13.25% (1ML+ 11.00%) plus 2.00% PIK			2.25			11/16/2019			144,692			103,730			6,107			0.1		%	(9)(10)
																								103,730			6,107			0.1		%
Upstream Newco, Inc.			Health Care Providers & Services			Second Lien Term Loan			11/20/2019			10.17% (1ML+ 8.50%)			—			11/20/2027			22,000			21,861			22,000			0.5		%	(3)(8)(10)
																								21,861			22,000			0.5		%

See notes to consolidated financial statements.

28

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS AS OF JUNE 30, 2022

(in thousands, except share data)

																					June 30, 2022
Portfolio Company			Industry			Investments(1)(38)			Acquisition Date(44)			Coupon/Yield			Floor			Legal Maturity			Principal Value			Amortized Cost			Fair Value(2)			% of  Net Assets
LEVEL 3 PORTFOLIO INVESTMENTS
Non-Control/Non-Affiliate Investments (less than 5.00% voting control)
USG Intermediate, LLC			Leisure Products			First Lien Revolving Line of Credit - $3,000 Commitment			4/15/2015			10.92% (1ML+ 9.25%)			1.00			2/9/2027			$	3,000		$	3,000		$	3,000		0.1		%	(10)(15)
						First Lien Term Loan B			4/15/2015			13.42% (1ML+ 11.75%)			1.00			2/9/2027			30,209			30,209			30,209			0.7		%	(3) (10)
						Equity			4/15/2015									N/A						1			—			—		%	(16)
																								33,210			33,209			0.8		%
VC GB Holdings I Corp			Household Durables			Second Lien Term Loan			6/30/2021			9.63% (6ML+ 6.75%)			0.50			7/23/2029			23,000			22,797			21,896			0.5		%	(3)(8)(10)
																								22,797			21,896			0.5		%
Venio LLC (48)			Professional Services			First Lien Term Loan			2/19/2014			1.00% PIK			—			2/19/2020			14,554			14,554			12,199			0.3		%	(39)
																								14,554			12,199			0.3		%
ViaPath Technologies.			Diversified Telecommunication Services			First Lien Term Loan			8/7/2019			5.92% (1ML+ 4.25%)			—			11/29/2025			9,698			9,474			9,125			0.2		%	(3)(8)(10)
						Second Lien Term Loan			11/20/2018			11.63% (1M SOFR+ 10.00%)			—			11/29/2026			122,670			121,746			122,266			3.0		%	(3)(8)(10)
																								131,220			131,391			3.2		%
Victor Technology, LLC			Commercial Services & Supplies			First Lien Term Loan			12/3/2021			9.75%(3ML+ 7.50%)			1.00			12/3/2028			29,850			29,850			29,850			0.7		%	(3) (10)
																								29,850			29,850			0.7		%
Vision Solutions, Inc. (29)			IT Services			Second Lien Term Loan			4/23/2021			8.43% (1ML+ 7.25%)			0.75			4/23/2029			80,000			79,216			78,320			1.9		%	(3)(8)(10)
																								79,216			78,320			1.9		%
Voya CLO 2012-4, Ltd.			Structured Finance			Subordinated Structured Note			11/5/2012			Residual Interest, current yield 3.74%			—			10/15/2030			40,613			28,996			22,424			0.5		%	(5) (14)
																								28,996			22,424			0.5		%
Voya CLO 2014-1, Ltd.			Structured Finance			Subordinated Structured Note			2/5/2014			Residual Interest, current yield 0.00%			—			4/18/2031			40,773			26,014			16,336			0.4		%	(5) (14)(17)
																								26,014			16,336			0.4		%
Voya CLO 2016-3, Ltd.			Structured Finance			Subordinated Structured Note			9/30/2016			Residual Interest, current yield 7.08%			—			10/20/2031			28,100			23,495			18,811			0.5		%	(5) (14)
																								23,495			18,811			0.5		%
Voya CLO 2017-3, Ltd.			Structured Finance			Subordinated Structured Note			6/13/2017			Residual Interest, current yield 12.14%			—			4/20/2034			44,885			49,276			41,072			1.1		%	(5) (14)
																								49,276			41,072			1.1		%
VT Topco, Inc.			Commercial Services & Supplies			Second Lien Term Loan			8/14/2018			8.42% (1ML+ 6.75%)			—			8/17/2026			12,000			11,926			11,847			0.3		%	(3)(8)(10)
						2021 Second Lien Term Loan			7/30/2021			8.67% (1ML+ 7.00%)			0.75			8/17/2026			20,250			20,110			19,992			0.5		%	(3)(8)(10)
																								32,036			31,839			0.8		%
Wellpath Holdings, Inc. (f/k/a CCS-CMGC Holdings, Inc.)			Health Care Providers & Services			First Lien Term Loan			5/13/2019			7.07% (3ML+ 5.50%)			—			10/1/2025			14,389			14,229			14,193			0.3		%	(3)(8)(10)
						Second Lien Term Loan			9/25/2018			10.57% (3ML+ 9.00%)			—			10/1/2026			37,000			36,621			36,464			0.9		%	(3)(8)(10)
																								50,850			50,657			1.2		%
Total Non-Control/Non-Affiliate Investments (Level 3)																								$	4,221,824		$	3,770,929		91.6		%
Total Portfolio Investments (Level 3)																								$	7,196,831		$	7,602,510		184.6		%

See notes to consolidated financial statements.

29

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)

(in thousands, except share data)

Endnote Explanations as of March 31, 2023 (Unaudited) and June 30, 2022

(1)The terms “Prospect,” “the Company,” “we,” “us” and “our” mean Prospect Capital Corporation and its subsidiaries unless the context specifically requires otherwise. The securities in which Prospect has invested were acquired in transactions that were exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). These securities may be resold only in transactions that are exempt from registration under the Securities Act.

(2)Fair value is determined by or under the direction of our Board of Directors. Unless otherwise indicated by endnote 47 below, all of our investments are valued using significant unobservable inputs. In accordance with ASC 820, such investments are classified as Level 3 within the fair value hierarchy. See Notes 2 and 3 within the accompanying notes to consolidated financial statements for further discussion.

(3)Security, or a portion thereof, is held by Prospect Capital Funding LLC (“PCF”), our wholly owned subsidiary and a bankruptcy remote special purpose entity, and is pledged as collateral for the Revolving Credit Facility and such security is not available as collateral to our general creditors (see Note 4). The fair value of the investments held by PCF at March 31, 2023 and June 30, 2022 were $2,559,175 and $2,638,042, respectively, representing 33.7% and 34.7% of our total investments, respectively.

(4)Medical Solutions Holdings, Inc. and Medical Solutions, LLC are joint borrowers on the Second Lien Term Loan.

(5)This investment is in the equity class of the collateralized loan obligation (“CLO”) security, which is referred to as “Subordinated Structured Note,” or “SSN”. The SSN investments are entitled to recurring distributions which are generally equal to the excess cash flow generated from the underlying investments after payment of the contractual payments to debt holders and fund expenses. The current estimated yield, calculated using amortized cost, is based on the current projections of this excess cash flow taking into account assumptions which have been made regarding expected prepayments, losses and future reinvestment rates. These assumptions are periodically reviewed and adjusted. Ultimately, the actual yield may be higher or lower than the estimated yield if actual results differ from those used for the assumptions.

(6)On December 28, 2022, we provided $15,000 of additional Second Lien Term Loans and $30,000 of Second Lien Delayed Draw Term Loan commitments to PGX Holdings, Inc. (“PGX”). Also as of December 28, 2022, we contributed our existing equity interest in PGX to PGX TopCo LLC, an entity in which we own 100% of the Class B non-voting shares. Given the only equity we hold in the PGX structure is non-voting, we classify our investment in the PGX structure as non-control/non-affiliate as of December 31, 2022.

(7)Engine Group, Inc., EMX Digital, Inc. (f/k/a Clearstream.TV, Inc.), and Engine International, Inc., are joint borrowers on the first lien term loan.

(8)Syndicated investment which was originated by a financial institution and broadly distributed.

(9)Investment on non-accrual status as of the reporting date (See Note 2).

(10)Certain variable rate securities in our portfolio bear interest at a rate determined by a publicly disclosed base rate plus a basis point spread. The 1-Month LIBOR, or “1ML”, was 4.86% as of March 31, 2023 and 1.79% as of June 30, 2022. The 3-Month LIBOR, or “3ML”, was 5.19% as of March 31, 2023 and 2.29% as of June 30, 2022. The 6-Month LIBOR, or “6ML”, was 5.31% as of March 31, 2023 and 2.94% as of June 30, 2022. The 1-Month Secured Overnight Financing Rate or “1M SOFR”, was 4.80% as of March 31, 2023 and 1.69% as of June 30, 2022. The 3-Month Secured Overnight Financing Rate or “3M SOFR”, was 4.91% as of March 31, 2023 and 2.12% as of June 30, 2022. The 6-Month Secured Overnight Financing Rate or “6M SOFR” was 4.90% as of March 31, 2023. The PRIME Rate or “PRIME” was 8.00% as of March 31, 2023

(11)PeopleConnect Holdings, Inc. and Pubrec Holdings, Inc. are joint borrowers.

(12)The consolidated revenue interest is equal to the lesser of (i) 2.0% of consolidated revenue for the twelve-month period ending on the last day of the prior fiscal quarter (or portion thereof) and (ii) 25% of the amount of interest accrued on the Notes at the cash interest rate for such fiscal quarter (or portion thereof).

(13)The overriding royalty interests held receive payments at the stated rates based upon operations of the borrower.

(14)Investment has been designated as an investment not “qualifying” under Section 55(a) of the Investment Company Act of 1940 (the “1940 Act”). Under the 1940 Act, we may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of our total assets. As of March 31, 2023 and June 30, 2022, our qualifying

See notes to consolidated financial statements.

30

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)

(in thousands, except share data)

Endnote Explanations as of March 31, 2023 (Unaudited) and June 30, 2022 (Continued)

assets, as a percentage of total assets, stood at 81.08% and 80.64%, respectively. We monitor the status of these assets on an ongoing basis.

(15)Undrawn committed revolvers and delayed draw term loans to our portfolio companies incur commitment and unused fees ranging from 0.00% to 7.25%. As of March 31, 2023 and June 30, 2022, we had $54,133 and $43,934, respectively, of undrawn revolver and delayed draw term loan commitments to our portfolio companies.

(16)Represents non-income producing security that has not paid a dividend in the year preceding the reporting date.

(17)The effective yield has been estimated to be 0% as expected future cash flows are anticipated to not be sufficient to repay the investment at cost. If the expected investment proceeds increase, there is a potential for future investment income from the investment. Distributions, once received, will be recognized as return of capital, and when called, any remaining unamortized investment costs will be written off if the actual distributions are less than the amortized investment cost. To the extent that the cost basis of the SSN is fully recovered, any future distributions will be recorded as realized gains.

(18)Ellett Brothers, LLC, Evans Sports, Inc., Jerry’s Sports, Inc., Simmons Gun Specialties, Inc., Bonitz Brothers, Inc., and Outdoor Sports Headquarters, Inc. are joint borrowers on the second lien term loan. United Sporting Companies, Inc. (“USC”) is a parent guarantor of this debt investment, and is 100% owned by SportCo Holdings, Inc. (“SportCo”). In June 2019, USC filed for Chapter 11 bankruptcy and began liquidating its remaining assets.

(19)Medusind Acquisition, Inc., Medusind Intermediate, Inc., Medusind Solutions Inc. and Medusind Inc. are joint borrowers.

(20)CP Holdings of Delaware LLC (“CP Holdings”), a consolidated entity in which we own 100% of the membership interests, owns 99.8% of CP Energy Services Inc. (“CP Energy”) as of March 31, 2023 and June 30, 2022. CP Energy owns directly or indirectly 100% of each of CP Well Testing, LLC; Wright Foster Disposals, LLC; Foster Testing Co., Inc.; ProHaul Transports, LLC; and Wright Trucking, Inc. We report CP Energy as a separate controlled company. In June 2019, CP Energy purchased a controlling interest in the common equity of Spartan Energy Holdings, Inc. (“Spartan Holdings”), which owns 100% of Spartan Energy Services, LLC (“Spartan”), a portfolio company of Prospect with $31,603 in first lien term loans (the “Spartan Term Loans”) due to us as of March 31, 2023. As a result of CP Energy’s purchase, and given Prospect’s controlling interest in CP Energy, our Spartan Term Loans are presented as control investments under CP Energy. Spartan remains the direct borrower and guarantor to Prospect for the Spartan Term Loans. In September 2020, we made a new $26,193 Series A preferred stock investment in Spartan Energy Holdings, Inc., which equates to 100% of the Series A non-voting non-convertible preferred stock outstanding. In September 2020, Spartan Energy Services, LLC fully repaid the $26,193 Senior Secured Term Loan B receivable to us at par. We recorded a realized gain of $2,832 in our Consolidated Statement of Operations for the quarter ended September 30, 2020 as a result of this transaction.

(21)Credit Central Holdings of Delaware, LLC (“Credit Central Delaware”), a consolidated entity in which we own 100% of the membership interests, owns 99.8% and 99.0% of Credit Central Loan Company, LLC (f/k/a Credit Central Holdings, LLC (“Credit Central”)) as of March 31, 2023 and June 30, 2022, respectively. Credit Central owns 100% of each of Credit Central, LLC; Credit Central South, LLC; Credit Central of Texas, LLC; and Credit Central of Tennessee, LLC, the operating companies. We report Credit Central as a separate controlled company. Effective December 10, 2021, Credit Central’s term loan lenders were granted a first priority security interest on certain assets of Credit Central and our investment became classified as a First Lien Term Loan.

(22)Redstone Holdco 2 LP is the parent borrower on the second lien term loan. Redstone Buyer, LLC, Redstone Intermediate (Archer) HoldCo LLC, Redstone Intermediate (FRI) HoldCo LLC, Redstone Intermediate (NetWitness) HoldCo, LLC, and Redstone Intermediate (SecurID) HoldCo, LLC are joint borrowers on the Second Lien Term Loan.

(23)First Tower Holdings of Delaware LLC (“First Tower Delaware”), a consolidated entity in which we own 100% of the membership interests, owns 80.10% of the voting interest and 78.06% of the fully-diluted economic interest of First Tower Finance Company LLC (“First Tower Finance”). First Tower Finance owns 100% of First Tower, LLC, the operating company. We report First Tower Finance as a separate controlled company. Effective March 17, 2021, the First Tower, LLC lenders were granted a first priority security interest in First Tower Finance’s assets and our investment became classified as a First Lien Term Loan. Effective June 30, 2021, we increased our investment in our first lien term loan in the aggregate principal amount of $50,000 and the proceeds were returned to us as a distribution on our equity investment in First Tower, LLC.

See notes to consolidated financial statements.

31

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)

(in thousands, except share data)

Endnote Explanations as of March 31, 2023 (Unaudited) and June 30, 2022 (Continued)

(24)Energy Solutions Holdings Inc., a consolidated entity in which we own 100% of the equity, owns 100% of Freedom Marine Solutions, LLC (“Freedom Marine”), which owns Vessel Company, LLC, Vessel Company II, LLC and Vessel Company III, LLC. We report Freedom Marine as a separate controlled company.

(25)MITY Holdings of Delaware Inc. (“MITY Delaware”), a consolidated entity in which we own 100% of the common stock, owns 100% of the equity of MITY, Inc. (f/k/a MITY Enterprises, Inc.) (“MITY”). MITY owns 100% of each of MITY-Lite, Inc. (“Mity-Lite”); Broda Enterprises USA, Inc.; and Broda Enterprises ULC (“Broda Canada”). We report MITY as a separate controlled company. Our subordinated unsecured note issued and outstanding to Broda Canada is denominated in Canadian Dollars (“CAD”). As of March 31, 2023 and June 30, 2022, the principal balance of this note was CAD 7,371. In accordance with ASC 830, Foreign Currency Matters (“ASC 830”), this note was remeasured into our functional currency, US Dollars (USD), and is presented on our Consolidated Schedule of Investments in USD. We formed a separate legal entity domiciled in the United States, MITY FSC, Inc., (“MITY FSC”) in which Prospect owns 100% of the equity. MITY FSC does not have material operations. This entity earns commission payments from MITY-Lite based on its sales to foreign customers, and distributes it to its shareholder.

(26)NPH Property Holdings, LLC (“NPH”), a consolidated entity in which we own 100% of the membership interests, owns 100% of the common equity of National Property REIT Corp. (“NPRC”) (f/k/a National Property Holdings Corp.), a property REIT which holds investments in several real estate properties. Additionally, NPRC invests in online consumer loans and rated secured structured notes through American Consumer Lending Limited (“ACLL”) and National General Lending Limited (“NGL”), respectively, its wholly owned subsidiaries. We report NPRC as a separate controlled company. See Note 3 for further discussion of the investments held by NPRC.

(27)Nationwide Acceptance Holdings LLC (“Nationwide Holdings”), a consolidated entity in which we own 100% of the membership interests, owns 94.48% of Nationwide Loan Company LLC, the operating company, as of March 31, 2023 and June 30, 2022. We report Nationwide Loan Company LLC as a separate controlled company. Prospect has a first priority security interest in the assets of Nationwide.

(28)NMMB Holdings, Inc. (“NMMB Holdings”), a consolidated entity in which we own 100% of the equity, owns 90.42% of the fully diluted equity of NMMB, Inc. (“NMMB”) as of March 31, 2023 and June 30, 2022. NMMB owns 100% of Refuel Agency, Inc., which owns 100% of Armed Forces Communications, Inc. We report NMMB as a separate controlled company.

(29)Vision Solutions, Inc. and Precisely Software Incorporate are joint borrowers on the Second Lien Term Loan.

(30)Prospect owns 99.96% of the equity of USES Corp. as of March 31, 2023 and June 30, 2022.

(31)Valley Electric Holdings I, Inc., a consolidated entity in which we own 100% of the common stock, owns 100% of Valley Electric Holdings II, Inc. (“Valley Holdings II”), another consolidated entity. Valley Holdings II owns 94.99% of Valley Electric Company, Inc. (“Valley Electric”). Valley Electric owns 100% of the equity of VE Company, Inc., which owns 100% of the equity of Valley Electric Co. of Mt. Vernon, Inc. We report Valley Electric as a separate controlled company.

(32)As of March 31, 2023 and June 30, 2022, Prospect owns 8.57% of the equity in Encinitas Watches Holdco, LLC, the parent company of Nixon, Inc.

(33)Prospect owns 9.19% of the equity in Targus Cayman HoldCo Limited (“Targus”), the parent company of Targus International LLC (“Targus International”), as of June 30, 2022.

(34)UTP Holdings Group, Inc. (“UTP Holdings”) owns all of the voting stock of Universal Turbine Parts, LLC (“UTP”) and has appointed a Board of Directors to UTP Holdings, consisting of three employees of the Investment Advisor. UTP Holdings owns UTP. UTP Holdings is a wholly-owned holding company controlled by Prospect and therefore Prospect’s investment in UTP is classified as a control investment.

(35)As of March 31, 2023 and June 30, 2022, the residual profit interest includes both (i) 8.33% of New TLA, TLD and TLE residual profit and (ii) 100% of TLC residual profits, with both calculated quarterly in arrears.

(36)Prospect owns 100% of the preferred equity of Pacific World Corporation (“Pacific World”), which represents a 99.97% ownership interest of Pacific World as of March 31, 2023 and as of June 30, 2022. As a result, Prospect’s investment in Pacific World is classified as a control investment.

(37)The following shows the composition of our investment portfolio at cost by control designation, investment type and by industry as of March 31, 2023:

See notes to consolidated financial statements.

32

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)

(in thousands, except share data)

Endnote Explanations as of March 31, 2023 (Unaudited) and June 30, 2022 (Continued)

See notes to consolidated financial statements.

33

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)

(in thousands, except share data)

Endnote Explanations as of March 31, 2023 (Unaudited) and June 30, 2022 (Continued)

Industry			1st Lien Term Loan			2nd Lien Term Loan			Subordinated Structured Notes			Unsecured Debt			Equity (B)			Cost Total
Control Investments
Aerospace & Defense			$	56,600		$	—		$	—		$	—		$	55,581		$	112,181
Commercial Services & Supplies			125,567			—			—			7,200			27,349			160,116
Construction & Engineering			58,745			—			—			—			12,053			70,798
Consumer Finance			480,419			—			—			—			82,843			563,262
Diversified Consumer Services			—			—			—			—			2,378			2,378
Energy Equipment & Services			99,819			—			—			—			221,800			321,619
Equity Real Estate Investment Trusts (REITs)			670,656			—			—			—			15,430			686,086
Health Care Providers & Services			288,739			—			—			—			45,118			333,857
Machinery			33,622			—			—			—			6,866			40,488
Media			29,723			—			—			—			—			29,723
Online Lending			21,580			—			—			—			—			21,580
Personal Products			87,417			—			—			—			189,294			276,711
Trading Companies & Distributors			32,692			—			—			—			32,500			65,192
Structured Finance			200,600			—			—			—			—			200,600
Total Control Investments			$	2,186,179		$	—		$	—		$	7,200		$	691,212		$	2,884,591
Affiliate Investments
Commercial Services & Supplies			$	—		$	—		$	—		$	—		$	8,996		$	8,996
Total Affiliate Investments			$	—		$	—		$	—		$	—		$	8,996		$	8,996
Non-Control/Non-Affiliate Investments
Air Freight & Logistics			$	92,097		$	95,000		$	—		$	—		$	—		$	187,097
Automobile Components			22,267			86,554			—			—			25,697			134,518
Building Products			—			35,000			—			—			—			35,000
Capital Markets			—			42,500			—			—			—			42,500
Commercial Services & Supplies			124,275			185,351			—			—			1,500			311,126
Communications Equipment			9,237			50,597			—			—			—			59,834
Consumer Finance			47,026			—			—			—			—			47,026
Distributors			193,239			89,178			—			—			—			282,417
Diversified Consumer Services			82,488			191,616			—			—			—			274,104
Diversified Financial Services			36,597			—			—			5,799			—			42,396
Diversified Telecommunication Services			41,167			121,903			—			—			—			163,070
Electrical Equipment			64,167			—			—			—			—			64,167
Food & Staples Retailing			27,238			—			—			—			—			27,238
Food Products			—			135,249			—			—			—			135,249
Health Care Equipment & Supplies			—			7,487			—			—			—			7,487
Health Care Providers & Services			156,859			159,749			—			—			1,546			318,154
Health Care Technology			129,160			—			—			—			—			129,160
Hotels, Restaurants & Leisure			22,396			—			—			—			—			22,396
Household Durables			89,672			29,795			—			—			2,001			121,468
Interactive Media & Services			211,754			—			—			—			—			211,754
Internet & Direct Marketing Retail			20,022			—			—			—			—			20,022
IT Services			211,540			148,074			—			—			—			359,614
Leisure Products			59,745			—			—			—			1			59,746
Machinery			53,089			9,986			—			—			—			63,075
Media			47,979			—			—			—			26,991			74,970
Pharmaceuticals			99,995			—			—			—			—			99,995
Professional Services			66,325			123,826			—			—			—			190,151
Software			—			52,336			—			—			—			52,336
Textiles, Apparel & Luxury Goods			159,562			8,943			—			—			—			168,505
Structured Finance (A)			—			—			967,032			—			—			967,032
Total Non-Control/Non-Affiliate			$	2,067,896		$	1,573,144		$	967,032		$	5,799		$	57,736		$	4,671,607
Total Portfolio Investment Cost			$	4,254,075		$	1,573,144		$	967,032		$	12,999		$	757,944		$	7,565,194

See notes to consolidated financial statements.

34

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)

(in thousands, except share data)

Endnote Explanations as of March 31, 2023 (Unaudited) and June 30, 2022 (Continued)

The following table shows the composition of our investment portfolio at fair value by control designation, investment type and by industry as of March 31, 2023:

Industry			1st Lien Term Loan			2nd Lien Term Loan			Subordinated Structured Notes			Unsecured Debt			Equity (B)			Fair Value Total			Fair Value % of Net Assets Applicable to Common Stock
Control Investments
Aerospace & Defense			$	56,600		$	—		$	—		$	—		$	4,272		$	60,872		1.6		%
Commercial Services & Supplies			67,085			—			—			7,200			4,857			79,142			2.1		%
Construction & Engineering			58,745			—			—			—			82,819			141,564			3.7		%
Consumer Finance			481,755			—			—			—			250,425			732,180			19.3		%
Diversified Consumer Services			—			—			—			—			3,242			3,242			0.1		%
Energy Equipment & Services			99,819			—			—			—			29,781			129,600			3.4		%
Equity Real Estate Investment Trusts (REITs)			670,656			—			—			—			701,837			1,372,493			36.1		%
Health Care Providers & Services			288,739			—			—			—			163,013			451,752			11.9		%
Machinery			33,622			—			—			—			33,027			66,649			1.8		%
Media			29,723			—			—			—			74,664			104,387			2.7		%
Online Lending			21,580			—			—			—			—			21,580			0.6		%
Personal Products			73,492			—			—			—			—			73,492			1.9		%
Trading Companies & Distributors			32,692			—			—			—			9,849			42,541			1.1		%
Structured Finance (A)			200,600			—			—			—			—			200,600			5.3		%
Total Control Investments			$	2,115,108		$	—		$	—		$	7,200		$	1,357,786		$	3,480,094		91.6		%
Fair Value % of Net Assets			55.7		%	—		%	—		%	0.2		%	35.7		%	91.6		%
Affiliate Investments
Commercial Services & Supplies			$	—		$	—		$	—		$	—		$	7,944		$	7,944		0.2		%
Total Affiliate Investments			$	—		$	—		$	—		$	—		$	7,944		$	7,944		0.2		%
Fair Value % of Net Assets			—		%	—		%	—		%	—		%	0.2		%	0.2		%
Non-Control/Non-Affiliate Investments
Air Freight & Logistics			$	92,786		$	95,000		$	—		$	—		$	—		$	187,786		4.9		%
Automobile Components			21,930			85,589			—			—			1,188			108,707			2.9		%
Building Products			—			33,849			—			—			—			33,849			0.9		%
Capital Markets			—			38,265			—			—			—			38,265			1.0		%
Commercial Services & Supplies			124,104			181,670			—			—			11,685			317,459			8.4		%
Communications Equipment			6,905			37,250			—			—			—			44,155			1.2		%
Consumer Finance			19,400			—			—			—			—			19,400			0.5		%
Distributors			192,670			7,017			—			—			38,370			238,057			6.3		%
Diversified Consumer Services			82,451			114,017			—			—			—			196,468			5.1		%
Diversified Financial Services			36,597			—			—			5,509			—			42,106			1.1		%
Diversified Telecommunication Services			40,907			116,672			—			—			—			157,579			4.1		%
Electrical Equipment			64,167			—			—			—			—			64,167			1.7		%
Food & Staples Retailing			27,475			—			—			—			—			27,475			0.7		%
Food Products			—			125,940			—			—			—			125,940			3.3		%
Health Care Equipment & Supplies			—			6,810			—			—			—			6,810			0.1		%
Health Care Providers & Services			154,409			155,204			—			—			1,592			311,205			8.2		%
Health Care Technology			128,272			—			—			—			—			128,272			3.4		%
Hotels, Restaurants & Leisure			21,229			—			—			—			—			21,229			0.6		%
Household Durables			89,672			27,029			—			—			—			116,701			3.1		%
Interactive Media & Services			211,754			—			—			—			—			211,754			5.6		%
Internet & Direct Marketing Retail			13,880			—			—			—			—			13,880			0.4		%
IT Services			206,232			128,578			—			—			—			334,810			8.8		%
Leisure Products			59,089			—			—			—			—			59,089			1.6		%
Machinery			51,995			9,939			—			—			—			61,934			1.6		%
Media			46,545			—			—			—			—			46,545			1.2		%
Pharmaceuticals			100,005			—			—			—			—			100,005			2.6		%

See notes to consolidated financial statements.

35

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)

(in thousands, except share data)

Endnote Explanations as of March 31, 2023 (Unaudited) and June 30, 2022 (Continued)

Industry			1st Lien Term Loan			2nd Lien Term Loan			Subordinated Structured Notes			Unsecured Debt			Equity (B)			Fair Value Total			Fair Value % of Net Assets Applicable to Common Stock
Professional Services			64,325			111,836			—			—			—			176,161			4.6		%
Software			—			48,691			—			—			—			48,691			1.3		%
Textiles, Apparel & Luxury Goods			158,967			8,850			—			—			—			167,817			4.4		%
Structured Finance (A)			—			—			698,423			—			—			698,423			18.4		%
Total Non-Control/Non-Affiliate			$	2,015,766		$	1,332,206		$	698,423		$	5,509		$	52,835		$	4,104,739		108.0		%
Fair Value % of Net Assets			53.0		%	35.1		%	18.4		%	0.1		%	1.4		%	108.0		%
Total Portfolio			$	4,130,874		$	1,332,206		$	698,423		$	12,709		$	1,418,565		$	7,592,777		199.8		%
Fair Value % of Net Assets			108.7		%	35.1		%	18.4		%	0.3		%	37.3		%	199.8		%

(A) Our SSN investments do not have industry concentrations and as such have been separated in the tables above.

(B) Equity, unless specifically stated otherwise, includes our investments in preferred stock, common stock, membership interests, net profits interests, net operating income interests, net revenue interests, overriding royalty interests, escrows receivable, and warrants.

(38)The following table shows the composition of our investment portfolio at cost by control designation, investment type and by industry as of June 30, 2022:

Industry			1st Lien Term Loan			2nd Lien Term Loan			Subordinated Structured Notes			Unsecured Debt			Equity (B)			Cost Total
Control Investments
Aerospace & Defense			$	53,209		$	—		$	—		$	—		$	55,581		$	108,790
Commercial Services & Supplies			119,139			—			—			7,200			27,349			153,688
Construction & Engineering			56,753			—			—			—			11,506			68,259
Consumer Finance			450,387			—			—			—			71,323			521,710
Diversified Consumer Services			—			—			—			—			2,378			2,378
Energy Equipment & Services			79,346			—			—			—			221,150			300,496
Equity Real Estate Investment Trusts (REITs)			631,486			—			—			—			15,830			647,316
Health Care Providers & Services			273,448			—			—			—			45,118			318,566
Machinery			33,622			—			—			—			6,866			40,488
Media			29,723			—			—			—			—			29,723
Online Lending			29,080			—			—			—			—			29,080
Personal Products			71,101			—			—			—			189,295			260,396
Trading Companies & Distributors			32,716			—			—			—			32,500			65,216
Structured Finance (A)			186,800			—			—			—			—			186,800
Total Control Investments			$	2,046,810		$	—		$	—		$	7,200		$	678,896		$	2,732,906
Affiliate Investments
Commercial Services & Supplies			$	3,680		$	—		$	—		$	—		$	10,303		$	13,983
Diversified Consumer Services			71,382			153,931			—			—			—			225,313
Textiles, Apparel & Luxury Goods			—			—			—			—			2,805			2,805
Total Affiliate Investments			$	75,062		$	153,931		$	—		$	—		$	13,108		$	242,101
Non-Control/Non-Affiliate Investments
Air Freight & Logistics			$	83,077		$	95,000		$	—		$	—		$	—		$	178,077
Auto Components			22,388			82,111			—			—			—			104,499
Building Products			—			35,000			—			—			—			35,000
Capital Markets			—			42,500			—			—			—			42,500
Commercial Services & Supplies			70,342			185,282			—			—			1,500			257,124
Communications Equipment			9,202			50,578			—			—			—			59,780
Consumer Finance			47,029			—			—			—			—			47,029
Distributors			174,800			103,730			—			—			—			278,530
Diversified Consumer Services			—			22,702			—			—			—			22,702
Diversified Financial Services			36,878			—			—			—			—			36,878
Diversified Telecommunication Services			44,220			121,746			—			—			—			165,966
Food & Staples Retailing			9,262			—			—			—			—			9,262
Food Products			—			130,998			—			—			—			130,998
Health Care Equipment & Supplies			—			7,483			—			—			—			7,483
Health Care Providers & Services			182,160			158,704			—			—			1,546			342,410
Health Care Technology			89,675			—			—			—			—			89,675

See notes to consolidated financial statements.

36

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)

(in thousands, except share data)

Endnote Explanations as of March 31, 2023 (Unaudited) and June 30, 2022 (Continued)

Industry			1st Lien Term Loan			2nd Lien Term Loan			Subordinated Structured Notes			Unsecured Debt			Equity (B)			Cost Total
Hotels, Restaurants & Leisure			23,359			—			—			—			—			23,359
Household Durables			91,406			29,768			—			—			2,001			123,175
Household Products			20,936			—			—			—			—			20,936
Insurance			—			21,966			—			—			—			21,966
Interactive Media & Services			233,204			—			—			—			—			233,204
Internet & Direct Marketing Retail			20,212			—			—			—			—			20,212
IT Services			176,855			128,456			—			—			—			305,311
Leisure Products			39,014			—			—			—			1			39,015
Machinery			58,310			9,982			—			—			—			68,292
Media			51,348			—			—			—			26,991			78,339
Paper & Forest Products			—			11,445			—			—			—			11,445
Pharmaceuticals			25,557			—			—			—			—			25,557
Professional Services			81,536			123,496			—			—			—			205,032
Software			—			52,295			—			—			—			52,295
Technology Hardware, Storage & Peripherals			—			12,447			—			—			—			12,447
Textiles, Apparel & Luxury Goods			166,686			8,937			—			—			—			175,623
Structured Finance			—			—			997,703			—			—			997,703
Total Non-Control/Non-Affiliate			$	1,757,456		$	1,434,626		$	997,703		$	—		$	32,039		$	4,221,824
Total Portfolio Investment Cost			$	3,879,328		$	1,588,557		$	997,703		$	7,200		$	724,043		$	7,196,831

The following table shows the composition of our investment portfolio at fair value by control designation, investment type and by industry as of June 30, 2022:

Industry			1st Lien Term Loan			2nd Lien Term Loan			Subordinated Structured Notes			Unsecured Debt			Equity (B)			Fair Value Total			Fair Value % of Net Assets
Control Investments
Aerospace & Defense			$	53,209		$	—		$	—		$	—		$	12,557		$	65,766		1.6		%
Commercial Services & Supplies			73,316			—			—			7,200			1,878			82,394			2.0		%
Construction & Engineering			56,753			—			—			—			89,230			145,983			3.5		%
Consumer Finance			452,317			—			—			—			282,301			734,618			17.8		%
Diversified Consumer Services			—			—			—			—			3,833			3,833			0.1		%
Energy Equipment & Services			79,346			—			—			—			47,254			126,600			3.1		%
Equity Real Estate Investment Trusts (REITs)			631,486			—			—			—			768,371			1,399,857			34.0		%
Health Care Providers & Services			273,448			—			—			—			132,746			406,194			9.9		%
Machinery			33,622			—			—			—			23,301			56,923			1.4		%
Media			29,723			—			—			—			80,220			109,943			2.7		%
Online Lending			29,080			—			—			—			—			29,080			0.7		%
Personal Products			59,179			—			—			—			—			59,179			1.4		%
Trading Companies & Distributors			31,147			—			—			—			—			31,147			0.8		%
Structured Finance (A)			186,800			—			—			—			—			186,800			4.5		%
Total Control Investments			$	1,989,426		$	—		$	—		$	7,200		$	1,441,691		$	3,438,317		83.5		%
Fair Value % of Net Assets			48.3		%	—		%	—		%	0.2		%	35.0		%	83.5		%
Affiliate Investments
Commerical Sevices & Supplies			$	3,680		$	—		$	—		$	—		$	13,324		$	17,004		0.4		%
Diversified Consumer Services			71,382			153,931			—			—			114,940			340,253			8.2		%
Textiles, Apparel & Luxury Goods			—			—			—			—			36,007			36,007			0.9		%
Total Affiliate Investments			$	75,062		$	153,931		$	—		$	—		$	164,271		$	393,264		9.5		%
Fair Value % of Net Assets			1.8		%	3.7		%	—		%	—		%	4.0		%	9.5		%
Non-Control/Non-Affiliate Investments
Air Freight & Logistics			$	83,414		$	95,000		$	—		$	—		$	—		$	178,414		4.3		%
Auto Components			22,210			81,326			—			—			—			103,536			2.5		%
Commercial Services & Supplies			70,221			183,889			—			—			3,457			257,567			6.3		%
Communications Equipment			8,962			48,594			—			—			—			57,556			1.4		%
Building Products			—			34,697			—			—			—			34,697			0.8		%
Capital Markets			—			41,574			—			—			—			41,574			1.0		%

See notes to consolidated financial statements.

37

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)

(in thousands, except share data)

Endnote Explanations as of March 31, 2023 (Unaudited) and June 30, 2022 (Continued)

Industry			1st Lien Term Loan			2nd Lien Term Loan			Subordinated Structured Notes			Unsecured Debt			Equity (B)			Fair Value Total			Fair Value % of Net Assets
Consumer Finance			30,550			—			—			—			—			30,550			0.7		%
Distributors			174,001			6,107			—			—			—			180,108			4.4		%
Diversified Consumer Services			—			21,583			—			—			—			21,583			0.5		%
Diversified Financial Services			36,878			—			—			—			—			36,878			0.9		%
Diversified Telecommunication Services			44,090			122,266			—			—			—			166,356			4.0		%
Food & Staples Retailing			9,440			—			—			—			—			9,440			0.2		%
Food Products			—			127,436			—			—			—			127,436			3.1		%
Health Care Equipment & Supplies			—			6,966			—			—			—			6,966			0.2		%
Health Care Providers & Services			181,747			158,843			—			—			1,807			342,397			8.4		%
Health Care Technology			89,675			—			—			—			—			89,675			2.2		%
Hotels, Restaurants & Leisure			22,651			—			—			—			—			22,651			0.5		%
Household Durables			91,406			27,633			—			—			3,613			122,652			3.0		%
Household Products			20,936			—			—			—			—			20,936			0.5		%
Insurance			—			22,280			—			—			—			22,280			0.5		%
Interactive Media & Services			233,204			—			—			—			—			233,204			5.8		%
Internet & Direct Marketing Retail			17,454			—			—			—			—			17,454			0.4		%
IT Services			176,855			126,826			—			—			—			303,681			7.4		%
Leisure Products			38,757			—			—			—			—			38,757			0.9		%
Machinery			57,866			9,669			—			—			—			67,535			1.6		%
Media			51,197			—			—			—			—			51,197			1.2		%
Paper & Forest Products			—			4,952			—			—			—			4,952			0.1		%
Pharmaceuticals			25,962			—			—			—			—			25,962			0.6		%
Professional Services			79,056			124,200			—			—			—			203,256			4.9		%
Software			—			52,500			—			—			—			52,500			1.3		%
Technology Hardware, Storage & Peripherals			—			12,398			—			—			—			12,398			0.3		%
Textiles, Apparel & Luxury Goods			166,686			8,666			—			—			—			175,352			4.4		%
Structured Finance			—			—			711,429			—			—			711,429			17.3		%
Total Non-Control/Non-Affiliate			$	1,733,218		$	1,317,405		$	711,429		$	—		$	8,877		$	3,770,929		91.6		%
Fair Value % of Net Assets			42.1		%	32.0		%	17.3		%	—		%	0.2		%	91.6		%
Total Portfolio			$	3,797,706		$	1,471,336		$	711,429		$	7,200		$	1,614,839		$	7,602,510		184.6		%
Fair Value % of Net Assets			92.2		%	35.7		%	17.3		%	0.2		%	39.2		%	184.6		%

(A) Our SSN investments do not have industry concentrations and as such have been separated in the tables above.

(B) Equity, unless specifically stated otherwise, includes our investments in preferred stock, common stock, membership interests, net profits interests, net operating income interests, net revenue interests, overriding royalty interests, escrows receivable, and warrants.

See notes to consolidated financial statements.

38

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)

(in thousands, except share data)

Endnote Explanations as of March 31, 2023 (Unaudited) and June 30, 2022 (Continued)

(39)The interest rate on these investments, excluding those on non-accrual, contains a paid in kind (“PIK”) provision, whereby the issuer has either the option or the obligation to make interest payments with the issuance of additional securities. The interest rate in the schedule represents the current interest rate in effect for these investments.

The following table provides additional details on these PIK investments, including the maximum annual PIK interest rate allowed under the existing credit agreements, as of and for three months ended March 31, 2023:

Security Name			PIK Rate - Capitalized			PIK Rate - Paid as cash			Maximum Current PIK Rate
CP Energy Services Inc. - First Lien Term Loan			14.16%			—%			14.16%			(A)
CP Energy Services Inc. - First Lien Term Loan			14.16%			—%			14.16%			(A)
CP Energy Services Inc. - First Lien Term Loan			14.16%			—%			14.16%			(A)
CP Energy Services Inc. - First Lien Term Loan A to Spartan Energy Services, LLC			12.84%			—%			—%			(B)
Credit Central Loan Company, LLC - First Lien Term Loan			10.00%			—%			5.00%			(C)
Echelon Transportation, LLC - First Lien Term Loan			8.57%			—%			—%			(D)
Eze Castle Integration, Inc. - First Lien Term Loan			1.00%			—%			1.00%
Eze Castle Integration, Inc. - Delayed Draw Term Loan			1.00%			—%			1.00%
First Tower Finance Company LLC - First Lien Term Loan			11.09%			3.91%			5.00%			(E)
InterDent, Inc. - First Lien Term Loan B			12.00%			—%			12.00%
MITY, Inc. - First Lien Term Loan A			5.94%			6.22%			—%			(F)
MITY, Inc. - First Lien Term Loan B			14.48%			7.68%			10.00%			(F)
National Property REIT Corp. - First Lien Term Loan A			—%			3.53%			3.53%
National Property REIT Corp. - First Lien Term Loan B			—%			5.50%			5.50%
National Property REIT Corp. - First Lien Term Loan C			—%			2.25%			2.25%
National Property REIT Corp. - First Lien Term Loan D			—%			2.50%			2.50%
National Property REIT Corp. - First Lien Term Loan E			7.00%			—%			7.00%
Nationwide Loan Company LLC - First Lien Term Loan			10.00%			—%			10.00%
Pacific World Corporation - First Lien Revolving Line of Credit			12.09%			—%			12.09%			(G)
Pacific World Corporation - First Lien Term Loan A			10.09%			—%			10.09%
PGX Holdings, Inc. - Second Lien Term Loan			12.00%			—%			12.00%			(H)
Rising Tide Holdings, Inc. - First Lien Term Loan			N/A			N/A			N/A			(I)
Town & Country Holdings, Inc. - First Lien Term Loan			12.00%			—%			12.00%			(J)
Town & Country Holdings, Inc. - First Lien Term Loan			12.00%			—%			12.00%			(J)
TPS, LLC - First Lien Term Loan			1.50%			—%			1.50%
USES Corp. - First Lien Equipment Term Loan			13.84%			—%			13.84%			(K)
Valley Electric Co. of Mt. Vernon, Inc. - First Lien Term Loan			—%			2.50%			2.50%
Valley Electric Company, Inc. - First Lien Term Loan			10.00%			—%			10.00%
Valley Electric Company, Inc. - First Lien Term Loan B			4.50%			—%			4.50%

(A) On January 6, 2023, the CP Energy Services, Inc. Amendment No. 16 to Loan Agreement was amended to allow interest accruing in cash to be payable in kind resulting in a maximum current PIK rate of 14.16%.

(B) On August 22, 2022, the Spartan Energy Services, LLC Twenty-Fifth Amendment to Amended and Restated Senior Secured Loan Agreement was amended to allow interest accruing in cash to be payable in kind resulting in a maximum current PIK rate of 12.84%.

(C) On September 30, 2022, the Credit Central Senior Subordinated Loan Agreement was amended to allow interest accruing in cash to be payable in kind resulting in a maximum current PIK rate of 10.00%.

(D) On January 31, 2022, the Echelon Fifth Amendment and Restated Credit Agreement was amended to remove the PIK rate and to allow the

interest accruing in cash to be payable in kind resulting in a maximum current PIK rate of 8.57%.

(E) On December 30, 2022, the First Tower Finance Company LLC Amendment No. 15 was amended to reduce the PIK rate to 5.00% and allow the interest accruing in cash to be payable in kind resulting in a maximum current PIK rate of 15.00%.

(F) On March 23, 2021, the Mity Amendment No. 1 and Waiver to Note Purchase Agreement was amended to allow Senior Secured Note A and Senior Secured Note B interest accruing in cash to be payable in kind resulting in a maximum current TLA PIK rate of 12.16% and TLB PIK rate of 22.16%..

(G) Effective as of December 29, 2021, the Pacific World Corporation Amendment No. 8 was amended to allow the Revolving Line of Credit interest accruing in cash to be payable in kind resulting in a maximum current rate of 12.09%.

(H) On December 28, 2022, the PGX Holdings, Inc. Second Lien Term Loan was amended to a fixed PIK rate of 12.00%

(I) Next PIK payment/capitalization date is May 31, 2023.

(J) On November 17, 2022, the Town & Country Holdings, Inc. Eighth Amendment to Loan Agreement was amended to a fixed PIK rate of 12.00%.

(K) On March 28, 2023, the USES Corp. First Lien Equipment Term loan was amended to allow interest accruing in cash to be payable in kind resulting in a maximum current PIK rate of 13.84%.

See notes to consolidated financial statements.

39

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)

(in thousands, except share data)

Endnote Explanations as of March 31, 2023 (Unaudited) and June 30, 2022 (Continued)

The following table provides additional details on these PIK investments, including the maximum annual PIK interest rate allowed under the existing credit agreements, as of and for three months ended June 30, 2022:    

Security Name			PIK Rate - Capitalized			PIK Rate - Paid as cash			Maximum Current PIK Rate
CP Energy Services Inc. - First Lien Term Loan			13.25%			—%			13.25%			(A)
CP Energy Services Inc. - First Lien Term Loan A to Spartan Energy Services, LLC			9.67%			—%			9.67%			(B)
Credit Central Loan Company, LLC - First Lien Term Loan			12.92%			7.08%			10.00%			(C)
First Tower Finance Company LLC - First Lien Term Loan			8.72%			3.28%			12.00%
InterDent, Inc. - First Lien Term Loan B			12.00%			—%			12.00%
MITY, Inc. - First Lien Term Loan A			3.30%			6.70%			—%			(D)
MITY, Inc. - First Lien Term Loan B			6.59%			13.41%			10.00%			(D)
National Property REIT Corp. - First Lien Term Loan A			—%			3.53%			3.53%
National Property REIT Corp. - First Lien Term Loan B			—%			5.50%			5.50%
National Property REIT Corp. - First Lien Term Loan C			—%			2.25%			2.25%
National Property REIT Corp. - First Lien Term Loan D			—%			2.50%			2.50%
Nationwide Loan Company LLC - First Lien Term Loan			—%			10.00%			10.00%
Pacific World Corporation - Revolving Line of Credit			8.92%			—%			8.92%			(E)
Pacific World Corporation - First Lien Term Loan A			6.92%			—%			6.92%
Town & Country Holdings, Inc. - First Lien Term Loan			N/A			N/A			N/A			(F)
TPS, LLC - First Lien Term Loan			1.50%			—%			1.50%
Valley Electric Co. of Mt. Vernon, Inc. - First Lien Term Loan			—%			2.50%			2.50%
Valley Electric Company, Inc. - First Lien Term Loan			—%			10.00%			10.00%
Valley Electric Company, Inc. - First Lien Term Loan B			—%			4.50%			4.50%			(G)
Venio LLC - First Lien Term Loan			1.00%			—%			1.00%

(A) Effective March 31, 2022, the CP Energy Fourteenth Amendment to Loan Agreement was amended to allow 100% of the June 30, 2022 interest accruing in cash to be payable in kind resulting in a current PIK rate capitalized of 13.25%.

(B) On October 28, 2021, the Spartan Energy Services, LLC Twenty-Second Amendment to Amended and Restated Senior Secured Loan Agreement was amended to allow interest accruing in cash to be payable in kind resulting in maximum current PIK rate of 9.67%.

(C) On December 17, 2018, the Credit Central Senior Subordinated Loan Agreement was amended to allow interest accruing in cash to be payable in kind resulting in a maximum current PIK rate of 20.00%.

(D) On March 23, 2021, the Mity Amendment No. 1 and Waiver to Note Purchase Agreement was amended to allow Senior Secured Note A and Senior Secured Note B interest accruing in cash to be payable in kind resulting in a maximum current TLA PIK rate of 10% and TLB PIK rate of 20.00%.

(E) Effective as of December 29, 2021, the Pacific World Corporation Amendment No. 8 was amended to allow the Revolving Line of Credit interest accruing in cash to be payable in kind resulting in a maximum current rate of 8.92%

(F) On December 31, 2021, the Town & Country Holdings, Inc. Seventh Amendment to Loan Agreement was amended to allow the First Lien Term Loan interest accruing in cash to be payable in kind resulting in a maximum current PIK rate of 8.125%. As of June 30, 2022 there is no longer interest accruing as payable in kind.

(G) On March 28, 2022, the Valley Electric Company, Inc. Loan Agreement was amended to allow interest accruing at a maximum current PIK rate of 4.50%.

See notes to consolidated financial statements.

40

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)

(in thousands, except share data)

Endnote Explanations as of March 31, 2023 (Unaudited) and June 30, 2022 (Continued)

(40)As defined in the 1940 Act, we are deemed to “Control” these portfolio companies because we own more than 25% of the portfolio company’s outstanding voting securities. Transactions during the nine months ended March 31, 2023 with these controlled investments were as follows:

Controlled Companies			Fair Value at June 30, 2022			Gross Additions (Cost)(A)			Gross Reductions (Cost)(B)			Net unrealized gains (losses)			Fair Value at March 31, 2023			Interest income			Dividend income			Other income			Net realized gains (losses)
CP Energy Services Inc.			$	64,260		$	15,518		$	—		$	1,418		$	81,196		$	5,525		$	—		$	—		$	—
CP Energy - Spartan Energy Services, Inc.			48,441			4,955			—			(18,178)			35,218			2,459			—			—			—
Credit Central Loan Company, LLC			76,935			12,097			—			(13,007)			76,025			5,878			—			123			—
Echelon Transportation, LLC			65,766			3,391			—			(8,285)			60,872			2,860			—			—			—
First Tower Finance Company LLC			607,283			28,847			(987)			(26,711)			608,432			48,636			—			—			—
Freedom Marine Solutions, LLC			13,899			650			—			(1,363)			13,186			—			—			—			—
InterDent, Inc.			406,194			15,291			—			30,267			451,752			23,865			—			—			—
Kickapoo Ranch Pet Resort			3,833			—			—			(591)			3,242			—			100			—			—
MITY, Inc.			59,999			2,166			(2,269)			2,979			62,875			5,989			—			—			(2)
National Property REIT Corp.			1,615,737			135,922			(90,852)			(66,134)			1,594,673			67,804			—			49,735			—
Nationwide Loan Company LLC			50,400			1,595			—			(4,272)			47,723			3,191			—			—			—
NMMB, Inc.			109,943			—			—			(5,556)			104,387			2,727			2,510			—			(2,510)
Pacific World Corporation			59,179			16,315			—			(2,002)			73,492			5,613			—			105			—
R-V Industries, Inc.			56,923			—			—			9,726			66,649			3,265			—			—			—
Universal Turbine Parts, LLC			31,147			—			(24)			11,418			42,541			2,364			—			—			—
USES Corp.			22,395			6,531			—			(12,659)			16,267			722			—			—			—
Valley Electric Company, Inc.			145,983			1,992			548			(6,959)			141,564			6,681			547			500			—
Total			$	3,438,317		$	245,270		$	(93,584)		$	(109,909)		$	3,480,094		$	187,579		$	3,157		$	50,463		$	(2,512)

(A) Gross additions include increases in the cost basis of the investments resulting from new portfolio investments, OID accretion and PIK interest, and any transfer of investments.

(B) Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investments repayments or sales, impairments, and any transfer of investments.

(41)As defined in the 1940 Act, we are deemed to be an “Affiliated company” of these portfolio companies because we own more than 5% of the portfolio company’s outstanding voting securities. Transactions during the nine months ended March 31, 2023 with these affiliated investments were as follows:

Affiliated Companies			Fair Value at June 30, 2022			Gross Additions (Cost)(A)			Gross Reductions (Cost)(B)			Net unrealized gains (losses)			Fair Value at March 31, 2023			Interest income			Dividend income			Other income			Net realized gains (losses)
Nixon, Inc.			—			—			—			—			—			—			—			—			—
PGX Holdings, Inc. (C)			340,253			—			(288,494)			(51,759)			—			15,003			—			133			—
RGIS Services, LLC			17,004			—			(4,987)			(4,073)			7,944			31			1,374			—			—
Targus Cayman HoldCo Limited			36,007			—			(2,805)			(33,202)			—			—			—			—			16,143
Total			$	393,264		$	—		$	(296,286)		$	(89,034)		$	7,944		$	15,034		$	1,374		$	133		$	16,143

(A) Gross additions include increases in the cost basis of the investments resulting from new portfolio investments, PIK interest, and any transfer of investments.

(B) Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investments repayments or sales, impairments, and any transfer of investments.

(C) The investment was transferred to non-control investment classification at $287,751, the fair market value of the investment at the beginning of the three month period ended December 31, 2022.

See notes to consolidated financial statements.

41

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)

(in thousands, except share data)

Endnote Explanations as of March 31, 2023 (Unaudited) and June 30, 2022 (Continued)

(42)As defined in the 1940 Act, we are deemed to “Control” these portfolio companies because we own more than 25% of the portfolio company’s outstanding voting securities. Transactions during the year ended June 30, 2022 with these controlled investments were as follows:

Portfolio Company			Fair Value at June 30, 2021			Gross Additions (Cost)(A)			Gross Reductions (Cost)(B)			Net unrealized gains (losses)			Fair Value at June 30, 2022			Interest income			Dividend income			Other income			Net realized gains (losses)
CP Energy Services Inc.			$	44,621		$	11,277		$	—		$	8,362		$	64,260		$	5,424		$	—		$	—		$	—
CP Energy - Spartan Energy Services, LLC			26,866			10,992			—			10,583			48,441			1,884			—			6			—
Credit Central Loan Company, LLC			78,023			9,599			(1,295)			(9,392)			76,935			15,106			—			—			—
Echelon Transportation LLC			84,240			10,646			—			(29,120)			65,766			7,695			—			—			—
First Tower Finance Company LLC			592,356			42,669			(11,153)			(16,589)			607,283			74,501			—			7,898			—
Freedom Marine Solutions, LLC			11,717			1,000			—			1,182			13,899			—			—			—			—
InterDent, Inc.			412,339			36,123			(246)			(42,022)			406,194			26,517			—			200			—
Kickapoo Ranch Pet Resort			3,833			—			—			—			3,833			—			25			—			—
MITY, Inc.			49,680			4,956			—			5,363			59,999			7,317			—			—			12
National Property REIT Corp.			1,189,755			410,867			(301,382)			316,497			1,615,737			63,818			—			69,772			—
Nationwide Loan Company LLC			47,993			—			—			2,407			50,400			4,108			2,650			405			—
NMMB, Inc.			46,888			25,000			(13,021)			51,076			109,943			1,206			8,383			450			3,946
Pacific World Corporation			71,097			11,151			—			(23,069)			59,179			4,779			—			—			—
R-V Industries, Inc.			49,693			5,000			—			2,230			56,923			3,051			441			125			—
Universal Turbine Parts, LLC			27,106			—			(33)			4,074			31,147			2,354			—			—			—
USES Corp.			33,815			—			—			(11,420)			22,395			203			—			—			—
Valley Electric Company, Inc.			149,695			13,022			(14,698)			(2,036)			145,983			7,531			3,150			926			—
Total			$	2,919,717		$	592,302		$	(341,828)		$	268,126		$	3,438,317		$	225,494		$	14,649		$	79,782		$	3,958

(A) Gross additions include increases in the cost basis of the investments resulting from new portfolio investments, PIK interest, and any transfer of investments.

(B) Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investments repayments or sales, impairments, and any transfer of investments.

(43)As defined in the 1940 Act, we are deemed to be an “Affiliated company” of these portfolio companies because we own more than 5% of the portfolio company’s outstanding voting securities. Transactions during the year ended June 30, 2022 with these affiliated investments were as follows:

Portfolio Company			Fair Value at June 30, 2021			Gross Additions (Cost)(A)			Gross Reductions (Cost)(B)			Net unrealized gains (losses)			Fair Value at June 30, 2022			Interest income			Dividend income			Other income			Net realized gains (losses)
Nixon, Inc.			$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
PGX Holdings, Inc.			$	313,089		$	229,984		$	(190,825)		$	(11,995)		$	340,253		$	30,032		$	—		$	4,032		$	—
RGIS Services, LLC			$	17,440		$	—		$	—		$	(436)		$	17,004		$	317		$	256		$	—		$	—
Targus Cayman HoldCo Limited			$	26,205		$	—		$	—		$	9,802		$	36,007		$	—		$	—		$	—		$	—
			356,734			229,984			(190,825)			(2,629)			393,264			30,349			256			4,032			—

(A)    Gross additions include increases in the cost basis of the investments resulting from new portfolio investments, PIK interest, and any transfer of investments.

(B)    Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investments repayments or sales, impairments, and any transfer of investments.

See notes to consolidated financial statements.

42

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)

(in thousands, except share data)

Endnote Explanations as of March 31, 2023 (Unaudited) and June 30, 2022 (Continued)

(44)Acquisition date represents the date of PSEC's initial investment. Follow-on acquisitions have occurred on the following dates to arrive at PSEC's current investment (excluding effects of capitalized PIK interest, premium/original issue discount amortization/accretion, and partial repayments) (See endnote 45 for NPRC equity follow-on acquisitions):

Portfolio Company			Investment			Follow-On Acquisition Dates			Follow-On Acquisitions (Excluding initial investment cost)
8th Avenue Food & Provisions, Inc.			Second Lien Term Loan			11/17/2020, 9/17/2021			7,051
Amerilife Group, LLC			Second Lien Term Loan			9/3/2020, 12/2/2020, 6/10/2021			12,060
Apidos CLO XI			Subordinated Structured Note			11/2/2016, 4/8/2021			7,559
Apidos CLO XII			Subordinated Structured Note			1/26/2018			4,070
Apidos CLO XV			Subordinated Structured Note			3/29/2018			6,480
Apidos CLO XXII			Subordinated Structured Note			2/24/2020			1,912
Atlantis Health Care Group (Puerto Rico), Inc.			First Lien Revolving Line of Credit			4/15/2013, 5/21/2013, 3/11/2014, 6/26/2017, 9/29/2017, 10/12/2017, 10/31/2017			7,500
Atlantis Health Care Group (Puerto Rico), Inc.			First Lien Term Loan			12/9/2016			42,000
Barings CLO 2018-III			Subordinated Structured Note			5/18/2018			9,255
BCPE North Star US Holdco 2, Inc.			Second Lien Delayed Draw Term Loan			10/28/2022			5,133
BCPE North Star US Holdco 2, Inc.			Second Lien Term Loan			12/30/2021			65,000
BCPE Osprey Buyer, Inc.			First Lien Revolving Line of Credit			2/22/2023			942
Belnick, LLC			First Lien Term Loan			6/27/2022			5,000
Broder Bros., Co.			First Lien Term Loan			1/29/2019, 2/28/2019, 9/10/2021, 9/30/2021			25,370
California Street CLO IX Ltd.			Subordinated Structured Note			9/6/2016, 10/17/2016			6,842
Cent CLO 21 Limited			Subordinated Structured Note			7/12/2018			1,024
CIFC Funding 2014-IV-R, Ltd.			Subordinated Structured Note			10/12/2018, 12/20/2021			2,860
Collections Acquisition Company, Inc.			First Lien Term Loan			1/13/2022			6,900
Columbia Cent CLO 27 Limited			Subordinated Structured Note			12/2/2021			7,815
CP Energy Services Inc.			First Lien Term Loan A to Spartan Energy Services, LLC			4/9/2021, 1/10/2022, 2/10/2023			14,681
CP Energy Services Inc.			Common Stock			10/11/2013, 12/26/2013, 4/6/2018, 12/31/2019			69,586
Credit Central Loan Company, LLC			Class A Units			12/28/2012, 3/28/2014, 6/26/2014, 9/28/2016, 8/21/2019			11,975
Credit Central Loan Company, LLC			Class P Units			1/27/2023			1,540
Credit Central Loan Company, LLC			First Lien Term Loan			6/26/2014, 9/28/2016, 12/16/2022, 1/27/2023			45,995
Curo Group Holdings Corp.			First Lien Term Loan			8/31/2021, 11/18/2021, 1/12/2022			17,033
DRI Holding, Inc.			First Lien Term Loan			4/26/2022, 7/21/2022			12,999
DRI Holding, Inc.			Second Lien Term Loan			5/18/2022			10,000
Echelon Transportation, LLC			Membership Interest			3/31/2014, 9/30/2014, 12/9/2016			22,488
Echelon Transportation, LLC			First Lien Term Loan			11/14/2018, 7/9/2019, 5/5/2020, 10/9/2020, 1/21/2021, 3/18/2021			5,465
Eze Castle Integration, Inc. (f/k/a/ H.I.G. ECI Merger Sub, Inc.)			First Lien Delayed Draw Term Loan			10/7/2022			893
First Brands Group			First Lien Term Loan			4/27/2022			5,955
First Brands Group			Second Lien Term Loan			5/12/2022			4,938
First Tower Finance Company LLC			Class A Units			12/30/2013, 6/24/2014, 12/15/2015, 11/21/2016, 3/9/2018			39,885
First Tower Finance Company LLC			First Lien Term Loan to First Tower, LLC			12/15/2015, 3/9/2018, 3/24/2022			43,047
Freedom Marine Solutions, LLC			Membership Interest			10/1/2009, 12/22/2009, 1/13/2010, 3/30/2010, 5/13/2010, 2/14/2011, 4/28/2011, 7/7/2011, 10/20/2011, 10/30/2015, 1/7/2016, 4/11/2016, 8/11/2016, 1/30/2017, 4/20/2017, 6/13/2017, 8/30/2017, 1/17/2018, 2/15/2018, 5/8/2018, 10/31/2018, 5/14/2021, 4/18/2022, 2/15/2023			42,118
Galaxy XV CLO, Ltd.			Subordinated Structured Note			8/21/2015, 3/10/2017			9,161
Galaxy XXVII CLO, Ltd.			Subordinated Structured Note			6/11/2015			1,460
Help/Systems Holdings, Inc.			Second Lien Term Loan			5/11/2021, 10/14/2021			54,649
InterDent, Inc.			First Lien Term Loan A			2/11/2014, 4/21/2014, 11/25/2014, 12/23/2014, 7/14/2021, 3/28/2022			93,903
InterDent, Inc.			First Lien Term Loan B			2/11/2014, 4/21/2014, 11/25/2014, 12/23/2014			76,125
Interventional Management Services, LLC			First Lien Revolving Line of Credit			2/25/2021, 11/17/2021			5,000
Jefferson Mill CLO Ltd.			Subordinated Structured Note			9/21/2018			2,047

See notes to consolidated financial statements.

43

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF INVESTMENTS (CONTINUED)

(in thousands, except share data)

Endnote Explanations as of March 31, 2023 (Unaudited) and June 30, 2022 (Continued)

Portfolio Company			Investment			Follow-On Acquisition Dates			Follow-On Acquisitions (Excluding initial investment cost)
K&N Parent, Inc.			Second Lien Term Loan			8/14/2018, 9/5/2018, 9/7/2018, 9/10/2018, 9/24/2018, 11/12/2020			13,111
Kickapoo Ranch Pet Resort			Membership Interest			10/21/2019, 12/4/2019			28
LCM XIV Ltd.			Subordinated Structured Note			9/25/2015, 5/18/2018			9,422
LGC US FINCO, LLC			First Lien Term Loan			3/2/2022			2,095
Magnate Worldwide, LLC			First Lien Delayed Draw Term Loan			10/26/2022			1,126
Mamba Purchaser, Inc.			Second Lien Term Loan			5/4/2022, 5/10/2022			17,860
Medical Solutions Holdings, Inc.			Second Lien Term Loan			5/4/2022, 9/22/2022			1,423
MITY, Inc.			Common Stock			6/23/2014			7,200
MITY, Inc.			First Lien Term Loan A			1/17/2017, 3/23/2021			10,650
MITY, Inc.			First Lien Term Loan B			1/17/2017, 6/3/2019			11,000
Nationwide Loan Company LLC			Class A Units			3/28/2014, 6/18/2014, 9/30/2014, 6/29/2015, 3/31/2016, 8/31/2016, 5/31/2017, 10/31/2017			20,469
Nationwide Loan Company LLC			First Lien Term Loan			12/28/2015, 8/31/2016			1,999
National Property REIT Corp.			First Lien Term Loan A			4/3/2020, 5/15/2020, 6/10/2020, 7/29/2020, 8/14/2020, 9/15/2020,10/15/2020, 10/30/2020, 11/10/2020, 11/13/2020, 11/19/2020, 12/11/2020, 1/27/2021, 2/25/2021, 3/11/2021, 5/14/2021, 6/14/2021, 6/25/2021, 8/16/2021, 11/15/2021, 11/26/2021, 12/1/2021, 12/28/2021, 1/14/2022, 2/15/2022, 3/17/2022, 3/28/2022, 4/1/2022, 4/7/2022, 5/24/2022, 6/6/2022, 7/5/2022, 8/31/2022, 10/6/2022, 1/10/2023, 2/28/2023			565,519
National Property REIT Corp.			First Lien Term Loan B			12/8/2021, 12/17/2021, 1/13/2022, 2/8/2022, 2/14/2022, 2/17/2022, 2/24/2022			28,880
National Property REIT Corp.			First Lien Term Loan C			10/23/2019, 1/23/2020, 3/31/2020, 4/8/2020, 8/4/2020, 12/7/2021, 1/7/2022, 2/2/2022, 5/12/2022, 5/19/2022, 6/6/2022, 8/1/2022, 9/15/2022, 9/19/2022, 10/21/2022			243,600
NMMB, Inc.			First Lien Term Loan			12/30/2019, 3/28/2022			40,100
Octagon Investment Partners XV, Ltd.			Subordinated Structured Note			4/27/2015, 8/3/2015, 6/27/2017			10,516
Octagon Investment Partners 18-R Ltd.			Subordinated Structured Note			3/23/2018			8,908
Pacific World Corporation			First Lien Revolving Line of Credit			10/21/2014, 12/19/2014, 4/7/2015, 4/22/2015, 8/12/2016, 10/18/2016, 2/7/2017, 2/21/2017, 4/26/2017, 10/11/2017, 10/17/2017, 1/16/2018, 12/27/2018, 3/15/2019, 7/2/2019, 8/15/2019, 9/1/2021, 10/19/2021, 9/6/2022			41,325
Pacific World Corporation			Convertible Preferred Equity			4/3/2019, 4/29/2019, 6/3/2019, 10/4/2019, 11/12/2019, 12/20/2019, 1/7/2020, 3/5/2020, 12/30/2021			22,600
Pacific World Corporation			First Lien Term Loan A			12/22/2022			10,500
PeopleConnect Holdings, LLC			First Lien Term Loan			10/21/2021			82,005
PetVet Care Centers, LLC (f/k/a Pearl Intermediate Parent LLC)			Second Lien Term Loan			11/22/2021, 5/10/2022			10,950
PGX Holdings, Inc.			First Lien Term Loan			11/16/2021, 5/25/2022			25,000
PGX Holdings, Inc.			Second Lien Term Loan			12/28/2022			15,000
Reception Purchaser, LLC			First Lien Term Loan			7/29/2022, 9/22/2022			9,655
Redstone Holdco 2 LP			Second Lien Term Loan			9/10/2021			17,903
Romark WM-R Ltd.			Subordinated Structured Note			3/29/2018			5,125
Rosa Mexicano			First Lien Revolving Line of Credit			3/27/2020			500
R-V Industries, Inc.			First Lien Term Loan			3/4/2022			5,000
R-V Industries, Inc.			Common Stock			12/27/2016			1,854
Securus Technologies Holdings, Inc.			Second Lien Term Loan			11/13/2017, 11/24/2017, 8/6/2018, 8/24/2018, 3/18/2019			22,750
Shiftkey, LLC			First Lien Term Loan			8/26/2022, 9/14/2022, 9/23/2022			39,450
Shutterfly, LLC			2021 Refinancing First Lien Term Loan B			9/17/2021			3,969
Sorenson Communications, LLC			First Lien Term Loan			5/12/2022, 5/19/2022			19,675
Symphony CLO XV, Ltd.			Subordinated Structured Note			12/7/2018			2,655
Town & Country Holdings, Inc.			First Lien Term Loan			7/13/2018, 7/16/2018			105,000
United Sporting Companies, Inc.			Second Lien Term Loan			3/7/2013			58,650
Universal Turbine Parts, LLC			First Lien Delayed Draw Term Loan			10/24/2019, 2/7/2020, 2/26/2020, 4/5/2021			3,216
USES Corp.			First Lien Term Loan A			6/15/2016, 6/29/2016, 2/22/2017, 4/27/2017, 5/4/2017, 8/30/2017, 10/11/2017, 12/11/2018, 8/30/2019			14,100
USG Intermediate, LLC			First Lien Revolving Line of Credit			7/2/2015, 9/23/2015, 9/14/2017, 8/21/2019, 9/17/2020, 9/18/2021, 5/19/2022			10,700

See notes to consolidated financial statements.

44

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands, except share and per share data)

Portfolio Company			Investment			Follow-On Acquisition Dates			Follow-On Acquisitions (Excluding initial investment cost)
USG Intermediate, LLC			First Lien Term Loan B			8/24/2017, 7/30/2021, 2/9/2022, 8/17/2022			57,975
Valley Electric Company, Inc.			Common Stock			12/31/2012, 6/24/2014			18,502
Valley Electric Company, Inc.			First Lien Term Loan			6/30/2014, 8/31/2018, 3/28/2022			18,129
ViaPath Technologies (f/k/a Global Tel*Link Corporation)			Second Lien Term Loan			4/10/2019, 8/22/2019, 9/20/2019, 9/14/2021, 9/17/2021, 12/17/2021, 2/7/2022			96,743
Vision Solutions, Inc.			Second Lien Term Loan			5/28/2021, 6/24/2021, 6/3/2022			59,333
Voya CLO 2014-1, Ltd.			Subordinated Structured Note			3/29/2018			3,943
VT Topco, Inc.			Second Lien Term Loan			5/2/2022, 5/12/2022			4,941
VT Topco, Inc.			2021 Second Lien Term Loan			4/27/2022, 5/12/2022			6,939
Wellful Inc.			First Lien Term Loan			7/28/2022			3,860
Wellpath Holdings, Inc.			First Lien Term Loan			10/8/2019, 10/8/2021			9,592
Wellpath Holdings, Inc.			Second Lien Term Loan			8/20/2019			1,993

(45)Since Prospect's initial common equity investment in NPRC on December 31, 2013, we have made numerous additional follow-on investments that have been used to invest in new and existing properties as well as online consumer loans and rated secured structured notes. These follow-on acquisitions are summarized by fiscal year below (excluding effects of return of capital distributions). Details of specific transactions are included in the respective fiscal year Form 10-K filing (refer to endnote 44 for NPRC term loan follow-on investments):

Fiscal Year			Follow-On Investments (NPRC Common Stock, excluding cost of initial investment)
2014			$	4,555
2015			68,693
2016			93,857
2017			116,830
2018			137,024
2019			11,582
2020			19,800
2022			15,620
2023			3,600

(46)Prospect owns 38.95% of the preferred stock of Legere Pharmaceutical Holdings, Inc. (“Legere”), which represents 4.98% voting interest in Legere. Legere is the parent company of the borrower, Preventics, Inc. (d/b/a Legere Pharmaceuticals).

(47)This investment represents a Level 1 or Level 2 security in the ASC 820 table as of March 31, 2023. See Notes 2 and 3 within the accompanying notes to consolidated financial statements for further discussion.

(48)CP Iris Holdco I, Inc. and CP Iris Holdco II, Inc. are joint borrowers on the Second Lien Term Loan.

(49)Investment represents a unitranche loan with characteristics of a traditional first lien senior secured loan, but which pursuant to an agreement among lenders is divided among unaffiliated lenders into “first out” and “last out” tranches yielding different interest rates. Our investment is the “last out” tranche of such unitranche loan, subject to payment priority in favor of a first out tranche held by an unaffiliated lender.

(50)The Company has entered into an intercreditor agreement that entitles the Company to the “last out” tranche of the first lien secured loans, whereby the “first out” tranche will receive priority as to the “last out” tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the “first out” lenders and the Consolidated Schedule of Investments above reflects such higher rate.

45

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

Note 1. Organization

In this report, the terms “Prospect”, “the Company”, “we”, “us” and “our” mean Prospect Capital Corporation and its subsidiaries unless the context specifically requires otherwise.

Prospect is a financial services company that primarily lends to and invests in middle market privately-held companies. We are a closed-end investment company incorporated in Maryland. We have elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940 (the “1940 Act”). As a BDC, we have elected to be treated as a regulated investment company (“RIC”), under Subchapter M of the Internal Revenue Code of 1986 (the “Code”). We were organized on April 13, 2004, and were funded in an initial public offering completed on July 27, 2004.

On May 15, 2007, we formed a wholly owned subsidiary Prospect Capital Funding LLC (“PCF”), a Delaware limited liability company and a bankruptcy remote special purpose entity, which holds certain of our portfolio loan investments that are used as collateral for the revolving credit facility at PCF. Our wholly owned subsidiary Prospect Small Business Lending, LLC (“PSBL”) was formed on January 27, 2014, and purchased small business whole loans from online small business loan originators, including On Deck Capital, Inc. (“OnDeck”). On September 30, 2014, we formed a wholly-owned subsidiary Prospect Yield Corporation, LLC (“PYC”) and effective October 23, 2014, PYC holds a portion of our collateralized loan obligations (“CLOs”), which we also refer to as subordinated structured notes (“SSNs”). Each of these subsidiaries have been consolidated since operations commenced.

We consolidate certain of our wholly owned and substantially wholly owned holding companies formed by us in order to facilitate our investment strategy. The following companies are included in our consolidated financial statements and are collectively referred to as the “Consolidated Holding Companies”: CP Holdings of Delaware LLC (“CP Holdings”); Credit Central Holdings of Delaware, LLC; Energy Solutions Holdings Inc.; First Tower Holdings of Delaware LLC (“First Tower Delaware”); MITY Holdings of Delaware Inc.; Nationwide Acceptance Holdings LLC; NMMB Holdings, Inc. (“NMMB Holdings”); NPH Property Holdings, LLC (“NPH”); Prospect Opportunity Holdings I, Inc. (“POHI”); SB Forging Company, Inc. (“SB Forging”); STI Holding, Inc.; UTP Holdings Group Inc. (“UTP Holdings”); Valley Electric Holdings I, Inc. (“Valley Holdings I”); and Valley Electric Holdings II, Inc. (“Valley Holdings II”).

We are externally managed by our investment adviser, Prospect Capital Management L.P. (“Prospect Capital Management” or the “Investment Adviser”). Prospect Administration LLC (“Prospect Administration” or the “Administrator”), a wholly-owned subsidiary of the Investment Adviser, provides administrative services and facilities necessary for us to operate.

Our investment objective is to generate both current income and long-term capital appreciation through debt and equity investments. We invest primarily in senior and subordinated debt and equity of private companies in need of capital for acquisitions, divestitures, growth, development, recapitalizations and other purposes. We work with the management teams or financial sponsors to identify investments with historical cash flows, asset collateral or contracted pro forma cash flows for investment.

Note 2. Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) pursuant to the requirements for reporting on Form 10-Q, ASC 946, Financial Services—Investment Companies (“ASC 946”), and Articles 6, 10 and 12 of Regulation S-X. Under the 1940 Act, ASC 946, and the regulations pursuant to Article 6 of Regulation S-X, we are precluded from consolidating any entity other than another investment company or an operating company which provides substantially all of its services to benefit us. Our consolidated financial statements include the accounts of Prospect, PCF, PSBL, PYC, and the Consolidated Holding Companies. All intercompany balances and transactions have been eliminated in consolidation. The financial results of our non-substantially wholly-owned holding companies and operating portfolio company investments are not consolidated in the financial statements. Any operating companies owned by the Consolidated Holding Companies are not consolidated.

46

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents consist of cash and highly liquid investments with an original maturity of three months or less at the date of purchase. Cash, cash equivalents, and restricted cash are carried at cost, which approximates fair value.

All cash and restricted cash balances are maintained with high credit quality financial institutions which are members of the Federal Deposit Insurance Corporation (“FDIC”). Cash and restricted cash held at financial institutions, at times, has exceeded the FDIC insured limit. The Company has not incurred any losses on these accounts, and the credit risk exposure is mitigated by the financial strength of the banking institutions where the amounts are held.

Restricted cash relates to a contractual requirement for our Revolving Credit Facility to maintain a minimum cash balance in a reserve account. The contractual requirement is based upon our outstanding borrowing on our Revolving Credit Facility.

Reclassifications

Certain reclassifications have been made in the presentation of prior consolidated financial statements and accompanying notes to conform to the presentation as of and for the nine months ended March 31, 2023. Refer to Note 12. Income Taxes.

Use of Estimates

The preparation of the consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of income, expenses, and gains and losses during the reported period. Changes in the economic environment, financial markets, creditworthiness of the issuers of our investment portfolio and any other parameters used in determining these estimates could cause actual results to differ, and these differences could be material.

Investment Classification

We are a non-diversified company within the meaning of the 1940 Act. As required by the 1940 Act, we classify our investments by level of control. As defined in the 1940 Act, “Control Investments” are those where there is the ability or power to exercise a controlling influence over the management or policies of a company. Control is generally deemed to exist when a company or individual possesses a beneficial ownership of more than 25% of the voting securities of an investee company. Under the 1940 Act, “Affiliate Investments” are defined by a lesser degree of influence and are deemed to exist through owning, controlling, or holding with power to vote, 5% or more of the outstanding voting securities of another person. “Non-Control/Non-Affiliate Investments” are those that are neither Control Investments nor Affiliate Investments.

As a BDC, we must not acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). As of March 31, 2023 and June 30, 2022, our qualifying assets as a percentage of total assets, stood at 81.08% and 80.64%, respectively.

Investment Transactions

Investments are recognized when we assume an obligation to acquire a financial instrument and assume the risks for gains or losses related to that instrument. Specifically, we record all security transactions on a trade date basis. We determine the fair value of our investments on a quarterly basis (as discussed in Investment Valuation below), with quarter over quarter fluctuations in fair value reflected as a net change in unrealized gains (losses) from investments in the Consolidated Statement of Operations.

Investments are derecognized when we assume an obligation to sell a financial instrument and forego the risks for gains or losses related to that instrument. Realized gains or losses on the sale of investments are calculated using the specific identification method. Amounts for investments traded but not yet settled are reported in Due to Broker or Due from Broker, in the Consolidated Statements of Assets and Liabilities. As of March 31, 2023, we have no assets going through foreclosure.

Foreign Currency

Foreign currency amounts are translated into US Dollars (USD) on the following basis:

i.fair value of investment securities, other assets and liabilities—at the spot exchange rate on the last business day of the period; and

47

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

ii.purchases and sales of investment securities, income and expenses—at the rates of exchange prevailing on the respective dates of such investment transactions, income or expenses.

We do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in fair values of investments held or disposed of during the period. Such fluctuations are included within the net realized and net change in unrealized gains or losses from investments in the Consolidated Statements of Operations.

Investment Risks

Our investments are subject to a variety of risks. Those risks include the following:

Market Risk

Market risk represents the potential loss that can be caused by a change in the fair value of the financial instrument.

Credit Risk

Credit risk represents the risk that we would incur if the counterparties failed to perform pursuant to the terms of their agreements with us.

Liquidity Risk

Liquidity risk represents the possibility that we may not be able to rapidly adjust the size of our investment positions in times of high volatility and financial stress at a reasonable price.

Interest Rate Risk

Interest rate risk represents a change in interest rates, which could result in an adverse change in the fair value of an interest-bearing financial instrument.

Prepayment Risk

Many of our debt investments allow for prepayment of principal without penalty. Downward changes in interest rates may cause prepayments to occur at a faster than expected rate, thereby effectively shortening the maturity of the security and making us less likely to fully earn all of the expected income of that security and reinvesting in a lower yielding instrument.

Structured Credit Related Risk

CLO investments may be riskier and less transparent to us than direct investments in underlying companies. CLOs typically will have no significant assets other than their underlying senior secured loans. Therefore, payments on CLO investments are and will be payable solely from the cash flows from such senior secured loans. 

Foreign Currency

Investments denominated in foreign currencies and foreign currency transactions may involve certain considerations and risks not typically associated with those of domestic origin. These risks include, but are not limited to, currency fluctuations and revaluations and future adverse political, social and economic developments, which could cause investments in foreign markets to be less liquid and prices more volatile than those of comparable U.S. companies or U.S. government securities.

Other Risks

Political developments, including civil conflicts and war, sanctions or other measures by the United States or other governments, natural disasters, public health crises and other events outside the Company's control can directly or indirectly have a material adverse impact on the Company and our portfolio companies.

48

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

Investment Valuation

As a BDC, and in accordance with the 1940 Act, we fair value our investment portfolio on a quarterly basis, with any unrealized gains and losses reflected in net increase (decrease) in net assets resulting from operations on our Consolidated Statement of Operations. To value our investments, we follow the guidance of ASC 820, Fair Value Measurement (“ASC 820”), that defines fair value, establishes a framework for measuring fair value in conformity with GAAP, and requires disclosures about fair value measurements. In accordance with ASC 820, the fair value of our investments is defined as the price that we would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market in which that investment is transacted.

ASC 820 classifies the inputs used to measure these fair values into the following hierarchy:

Level 1: Quoted prices in active markets for identical assets or liabilities, accessible by us at the measurement date.

Level 2: Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices.

Level 3: Unobservable inputs for the asset or liability.

In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each investment.

Our Board of Directors has established procedures for the valuation of our investment portfolio. These procedures are detailed below.

Investments for which market quotations are readily available are valued at such market quotations.

For most of our investments, market quotations are not available. With respect to investments for which market quotations are not readily available or when such market quotations are deemed not to represent fair value, due to factors such as volume and frequency of price quotes, our Board of Directors has approved a multi-step valuation process each quarter, as described below.

1.Each portfolio company or investment is reviewed by our investment professionals with independent valuation firms engaged by our Board of Directors.

2.The independent valuation firms prepare independent valuations for each investment based on their own independent assessments and issue their report.

3.The Audit Committee of our Board of Directors reviews and discusses with the independent valuation firms the valuation reports, and then makes a recommendation to the Board of Directors of the value for each investment.

4.The Board of Directors discusses valuations and determines the fair value of each investment in our portfolio in good faith based on the input of the Investment Adviser, the respective independent valuation firm and the Audit Committee.

Our non-CLO investments that are classified as Level 3 are valued utilizing a yield technique, enterprise value (“EV”) technique, net asset value technique, asset recovery technique, discounted cash flow technique, or a combination of techniques, as appropriate. The yield technique uses loan spreads for loans and other relevant information implied by market data involving identical or comparable assets or liabilities. Under the EV technique, the EV of a portfolio company is first determined and allocated over the portfolio company’s securities in order of their preference relative to one another (i.e., “waterfall” allocation). To determine the EV, we typically use a market (multiples) valuation approach that considers relevant and applicable market trading data of guideline public companies, transaction metrics from precedent merger and acquisitions transactions, and/or a discounted cash flow technique. The net asset value technique, an income approach, is used to derive a value of an underlying investment (such as real estate property) by dividing a relevant earnings stream by an appropriate capitalization rate. For this purpose, we consider capitalization rates for similar properties as may be obtained from guideline public companies and/or relevant transactions. The asset recovery technique is intended to approximate the net recovery value of an investment based on, among other things, assumptions regarding liquidation proceeds based on a hypothetical liquidation of a portfolio company’s assets. The discounted cash flow technique converts future cash flows or earnings to a range of fair values from which a single

49

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

estimate may be derived utilizing an appropriate discount rate. The fair value measurement is based on the net present value indicated by current market expectations about those future amounts.

In applying these methodologies, additional factors that we consider in valuing our investments may include, as we deem relevant: security covenants, call protection provisions, and information rights; the nature and realizable value of any collateral; the portfolio company’s ability to make payments; the principal markets in which the portfolio company does business; publicly available financial ratios of peer companies; the principal market; and enterprise values, among other factors.

Our investments in CLOs are classified as Level 3 fair value measured securities under ASC 820 and are valued using a discounted multi-path cash flow model. The CLO structures are analyzed to identify the risk exposures and to determine an appropriate call date (i.e., expected maturity). These risk factors are sensitized in the multi-path cash flow model using Monte Carlo simulations, which is a simulation used to model the probability of different outcomes, to generate probability-weighted (i.e., multi-path) cash flows from the underlying assets and liabilities. These cash flows are discounted using appropriate market discount rates, and relevant data in the CLO market as well as certain benchmark credit indices are considered, to determine the value of each CLO investment.  In addition, we generate a single-path cash flow utilizing our best estimate of expected cash receipts, and assess the reasonableness of the implied discount rate that would be effective for the value derived from the multi-path cash flows. We are not responsible for and have no influence over the asset management of the portfolios underlying the CLO investments we hold, as those portfolios are managed by non-affiliated third-party CLO collateral managers. The main risk factors are default risk, prepayment risk, interest rate risk, downgrade risk, and credit spread risk.

Convertible Notes

We have recorded the Convertible Notes at their contractual amounts and at issuance, we determined that the embedded conversion options in the Convertible Unsecured Notes are not required to be separately accounted for as a derivative under ASC 815, Derivatives and Hedging. The adoption of ASU 2020-06 (defined below under Recent Accounting Pronouncements) did not impact the accounting for the Convertible Notes. See Note 5 for further discussion on our Convertible Notes outstanding.

Revenue Recognition

Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Original issue discounts and market discounts are capitalized and accreted into interest income over the respective terms of the applicable loans using the effective interest method or straight-line, as applicable, and adjusted only for material amendments or prepayments. Upon a prepayment of a loan, prepayment premiums, original issue discount, or market discounts are recorded as interest income.

Loans are placed on non-accrual status when there is reasonable doubt that principal or interest will be collected. Unpaid accrued interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans are either applied to the cost basis or interest income, depending upon management’s judgment of the collectability of the loan receivable. Non-accrual loans are restored to accrual status when past due principal and interest is paid and in management’s judgment, is likely to remain current and future principal and interest collections when due are probable. Interest received and applied against cost while a loan is on non-accrual, and PIK interest capitalized but not recognized while on non-accrual, is recognized prospectively on the effective yield basis through maturity of the loan when placed back on accrual status, to the extent deemed collectible by management. As of March 31, 2023, approximately 0.2% of our total assets at fair value are in non-accrual status.

Some of our loans and other investments may have contractual payment-in-kind (“PIK”) interest or dividends. PIK income computed at the contractual rate is accrued into income and reflected as receivable up to the capitalization date. PIK investments offer issuers the option at each payment date of making payments in cash or in additional securities. When additional securities are received, they typically have the same terms, including maturity dates and interest rates as the original securities issued. On these payment dates, we capitalize the accrued interest (reflecting such amounts in the basis as additional securities received). PIK generally becomes due at maturity of the investment or upon the investment being called by the issuer. At the point that we believe PIK is not fully expected to be realized, the PIK investment will be placed on non-accrual status. When a PIK investment is placed on non-accrual status, the accrued, uncapitalized interest or dividends are reversed from the related receivable through interest or dividend income, respectively. We do not reverse previously capitalized PIK interest or dividends. Upon capitalization, PIK is subject to the fair value estimates associated with their related investments. PIK investments on non-accrual status are restored to accrual status if we believe that PIK is expected to be realized.

50

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

Interest income from investments in Subordinated Structured Notes (typically preferred shares, income notes or subordinated notes of CLO funds) and “equity” class of security of securitized trust is recorded based upon an estimation of an effective yield to expected maturity utilizing assumed cash flows in accordance with ASC 325-40, Beneficial Interests in Securitized Financial Assets. We monitor the expected cash inflows from our CLO and securitized trust equity investments, including the expected residual payments, and the effective yield is determined and updated periodically.

ASC Topic 606 Revenue from Contracts with Customers (“ASC Topic 606”) does not apply to the above revenue associated with financial instruments and interest income.

Other income consists of structuring fees, amendment fees, overriding royalty interests, revenue receipts related to net profit interests, deal deposits, administrative agent fees, and other miscellaneous receipts, which are recognized as revenue when received. Structuring fees, and certain other amendment or advisory fees, are derived from us providing specific transaction or advisory related services to our portfolio companies. We evaluate and make conclusions on the appropriateness of taking fees immediately into revenue in accordance with ASC Topic 606. Our fees are generally earned in response to us providing advisory assistance to our portfolio companies for capital structuring services (amendments where applicable). These fees are generated from new originations as well as from follow-on investments and amendments to existing portfolio companies. These fees are fixed based on contractual terms, are generally only available to us as a result of PSEC’s investments, are paid at the closing, are generally non-recurring and non-refundable and are recognized as revenue upon completion of our performance obligations (closing of transaction, execution of amendments, etc.). See Note 10 Other Income.

Dividend income is recorded on the ex-dividend date. Each distribution received from limited liability company (“LLC”) and limited partnership (“LP”) investments is evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, the Company will not record distributions from equity investments in LLCs and LPs as dividend income unless there are sufficient current or accumulated tax-basis earnings and profits in the LLC or LP prior to the distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment.

For the three months ended March 31, 2023 and March 31, 2022, the Company recorded dividend income of $1,928 and $5,306, respectively, and return of capital distributions of $0 and $28,208, respectively.

For the nine months ended March 31, 2023 and March 31, 2022, the Company recorded dividend income of $7,046 and $12,277, respectively, and return of capital distributions of $4,760 and $28,208, respectively.

Federal and State Income Taxes

We have elected to be treated as a RIC and intend to continue to comply with the requirements of the Code applicable to RICs. We are required to distribute at least 90% of our investment company taxable income and intend to distribute (or retain through a deemed distribution) all of our investment company taxable income and net capital gain to stockholders; therefore, we have made no provision for income taxes. The character of income and gains that we will distribute is determined in accordance with income tax regulations that may differ from GAAP. Book and tax basis differences relating to stockholder dividends and distributions and other permanent book and tax differences are reclassified to paid-in capital.

If we do not distribute (or are not deemed to have distributed) at least 98% of our annual ordinary income and 98.2% of our capital gains in the calendar year earned, we will generally be required to pay an excise tax equal to 4% of the amount by which 98% of our annual ordinary income and 98.2% of our capital gains exceed the distributions from such taxable income for the year. To the extent that we determine that our estimated current year annual taxable income will be in excess of estimated current year dividend distributions from such taxable income, we accrue excise taxes, if any, on estimated excess taxable income. As of March 31, 2023, we do not expect to have any excise tax due for the 2023 calendar year. Thus, we have not accrued any excise tax for this period.

If we fail to satisfy the annual distribution requirement or otherwise fail to qualify as a RIC in any taxable year, we would be subject to tax on all of our taxable income at regular corporate income tax rates. We would not be able to deduct distributions to stockholders, nor would we be required to make distributions. Distributions would generally be taxable to our individual and other non-corporate taxable stockholders as ordinary dividend income eligible for the reduced maximum rate applicable to qualified dividend income to the extent of our current and accumulated earnings and profits, provided certain holding period and other requirements are met. Subject to certain limitations under the Code, corporate distributions would be eligible for the dividends-received deduction. To qualify again to be taxed as a RIC in a subsequent year, we would be required to distribute to our stockholders our accumulated earnings and profits attributable to non-RIC years. In addition, if we failed to qualify as a RIC for a period greater than two taxable years, then, in order to qualify as a RIC in a subsequent year, we would be required to elect to recognize and pay tax on any net built-in gain (the excess of aggregate gain, including items of income, over aggregate

51

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

loss that would have been realized if we had been liquidated) or, alternatively, be subject to taxation on such built-in gain recognized for a period of five years.

We follow ASC 740, Income Taxes (“ASC 740”). ASC 740 provides guidance for how uncertain tax positions should be recognized, measured, presented, and disclosed in the consolidated financial statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing our tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. As of March 31, 2023, we did not record any unrecognized tax benefits or liabilities. Management’s determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors including, but not limited to, an on-going analysis of tax laws, regulations and interpretations thereof. Although we file both federal and state income tax returns, our major tax jurisdiction is federal. Our federal tax returns for the tax years ended August 31, 2019 and thereafter remain subject to examination by the Internal Revenue Service.

Dividends and Distributions to Common Shareholders

Dividends and distributions to common stockholders are recorded on the ex-dividend date. The amount, if any, to be paid as a monthly dividend or distribution is approved by our Board of Directors quarterly and is generally based upon our management’s estimate of our future taxable earnings. Net realized capital gains, if any, are distributed at least annually.

Our distributions may exceed our earnings, and therefore, portions of the distributions that we make may be a return of the money originally invested and represent a return of capital distribution to shareholders for tax purposes.

Financing Costs

We record origination expenses related to our Revolving Credit Facility as deferred financing costs. These expenses are deferred and amortized as part of interest expense using the straight-line method over the stated life of the obligation for our Revolving Credit Facility. Debt issuance costs and origination discounts related to our Convertible Notes and Public Notes are presented net against the outstanding principal of the respective instrument and amortized as part of interest expense using the effective interest method over the stated life of the respective instrument. Debt issuance costs and origination discounts related to our Prospect Capital InterNotes® (collectively, with our Convertible Notes and Public Notes, our “Unsecured Notes”) are net against the outstanding principal amount of our Prospect Capital InterNotes® and are amortized as part of interest expense using the straight-line method over the stated maturity of the respective note. In the event that we modify or extinguish our debt before maturity, we follow the guidance in ASC 470-50, Modification and Extinguishments (“ASC 470-50”). For modifications to or exchanges of our Revolving Credit Facility, any unamortized deferred costs relating to lenders who are not part of the new lending group are expensed. For extinguishments of our Unsecured Notes, any unamortized deferred costs are deducted from the carrying amount of the debt in determining the gain or loss from the extinguishment.

Unamortized deferred financing costs are presented as a direct deduction to the respective Unsecured Notes (see Notes 5, 6, and 7).

We may record registration expenses related to shelf filings as prepaid expenses. These expenses consist principally of the Securities and Exchange Commission (“SEC”) registration fees, legal fees and accounting fees incurred. These prepaid expenses are charged to capital upon the receipt of proceeds from an equity offering or charged to expense if no offering is completed. As of March 31, 2023 and June 30, 2022, there are no prepaid expenses related to registration expenses and all amounts incurred have been expensed.

Per Share Information

In accordance with ASC 946, senior equity securities, such as preferred stock, are not considered in the calculation of net asset value per share. Net asset value per share also excludes the effects of assumed conversion of outstanding convertible securities, regardless of whether their conversion would have a diluting effect. Therefore, our net asset value is presented on the basis of per common share outstanding as of the applicable period end.

52

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

We compute earnings per common share in accordance with ASC 260, Earnings Per Share (“ASC 260”). Basic earnings per common share is calculated by dividing the net increase (decrease) in net assets resulting from operations applicable to common stockholders by the weighted average number of shares of common stock outstanding. Diluted earnings per share gives effect to all dilutive potential common shares outstanding using the if-converted method for our Convertible Preferred Stock and Convertible Notes (together, “convertible instruments”). Diluted earnings per share excludes all dilutive potential common shares if their effect is anti-dilutive.

Preferred Stock

In accordance with ASC 480-10-S99-3A, the Company’s Preferred Stock (as defined in “Note 9. Equity Offerings, Offering Expenses, and Distributions”) has been classified in temporary equity on the Statement of Assets and Liabilities beginning the period ended September 30, 2021 due to the possibility of a Change of Control triggering event that could lead to redemption outside of the Company’s control. The Preferred Stock issued as temporary equity is recorded net of offering costs and issuance costs. 5.50% Preferred Stock issued prior to the issuance of our 5.35% Series A Preferred Stock has a carrying value on our Consolidated Statement of Assets and Liabilities equal to liquidation value per share. Accrued and unpaid dividends relating to the Preferred Stock are included in the preferred stock carrying value on the Statement of Assets and Liabilities. Dividends declared on the Preferred Stock are included in preferred stock dividends on the Statement of Operations.

Recent Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform. The amendments in ASU 2020-04 provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The standard is effective as of March 12, 2020 through December 31, 2024, as updated by ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 in December 2022. The Company did not utilize the optional expedients and exceptions provided by ASU 2020-04 during the nine months ended March 31, 2023. The Company has concluded that this guidance will not have a material impact on its consolidated financial statements.

On July 1, 2022, we adopted, ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for convertible instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, after adoption, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share. We adopted ASU 2020-06 using the modified retrospective transition method. As a result, we are now required to calculate diluted earnings per share using the if-converted method for our convertible instruments. The Company’s adoption of this guidance did not have a material impact on the Company’s financial position, results of operations or cash flows. See Note 11. Net Increase (Decrease) in Net Assets per Common Share for additional information on the effects of the adoption of ASU 2020-06.

In December 2020, the SEC adopted Rule 2a-5 under the 1940 Act. Rule 2a-5 establishes a consistent, principles-based framework for boards of directors to use in creating their own specific processes in order to determine fair values in good faith. The effective date for compliance with Rule 2a-5 was September 8, 2022. Adoption of Rule 2a-5 did not have a significant impact on the Company’s financial statements and disclosures as our board of directors has chosen to continue to determine fair value in good faith.

In June 2022, the FASB issued ASU 2022-03, which amends Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”). ASU 2022-03 clarifies guidance for fair value measurement of an equity security subject to a contractual sale restriction and establishes new disclosure requirements for such equity securities. ASU 2022-03 is effective for fiscal years beginning after December 15, 2023 and for interim periods within those fiscal years, with early adoption permitted. The Company has concluded that this guidance will not have a material impact on its consolidated financial statements.

53

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

Note 3. Portfolio Investments

At March 31, 2023, we had investments in 127 long-term portfolio investments and CLOs, which had an amortized cost of $7,565,194 and a fair value of $7,592,777. At June 30, 2022, we had investments in 129 long-term portfolio investments and CLOs, which had an amortized cost of $7,196,831 and a fair value of $7,602,510.

The original cost basis of debt placement and equity securities acquired, including follow-on investments for existing portfolio companies, payment-in-kind interest, and structuring fees, totaled $704,209 and $1,844,869 during the nine months ended March 31, 2023 and March 31, 2022, respectively. Debt repayments and considerations from sales of equity securities of approximately $341,191 and $952,621 were received during the nine months ended March 31, 2023 and March 31, 2022, respectively.

Throughout the remainder of this footnote, we aggregate our portfolio investments by type of investment, which may differ slightly from the nomenclature used by the constituent instruments defining the rights of holders of the investment, as disclosed on our Consolidated Schedules of Investments (“SOI”). The following investments are included in each category:

•First Lien Revolving Line of Credit includes our debt investments in first lien revolvers as well as our debt investments in delayed draw term loans.

•First Lien Debt includes our debt investments listed on the SOI such as first lien term loans (including “unitranche” loans, which are loans that combine both senior and subordinated debt and “last out” loans which are loans that have a secondary payment priority behind “first out” first-lien loans).

•1.5 Lien Debt includes our debt investments listed on the SOI as 1.5 lien term loans.

•Second Lien Revolving Line of Credit includes our debt investments in second lien revolvers as well as our debt investments in delayed draw term loans.

•Second Lien Debt includes our debt investments listed on the SOI as second lien term loans.

•Third Lien Debt includes our debt investments listed on the SOI as third lien term loans.

•Unsecured Debt includes our debt investments listed on the SOI as unsecured.

•Subordinated Structured Notes includes our investments in the “equity” security class of CLO funds such as income notes, preference shares, and subordinated notes.

•Equity, unless specifically stated otherwise, includes our investments in preferred stock, common stock, membership interests, net profits interests, net operating income interests, net revenue interests, overriding royalty interests, escrows receivable, and warrants.

The following table shows the composition of our investment portfolio as of March 31, 2023 and June 30, 2022:

			March 31, 2023												June 30, 2022
			Cost						Fair Value						Cost						Fair Value
First Lien Revolving Line of Credit			$	44,472					$	44,512					$	39,775					$	39,746
First Lien Debt (1)			4,209,603						4,086,362						3,839,553						3,757,960
Second Lien Revolving Line of Credit			5,137						4,888						—						—
Second Lien Debt			1,568,007						1,327,318						1,588,557						1,471,336
Unsecured Debt			12,999						12,709						7,200						7,200
Subordinated Structured Notes			967,032						698,423						997,703						711,429
Equity			757,944						1,418,565						724,043						1,614,839
Total Investments			$	7,565,194					$	7,592,777					$	7,196,831					$	7,602,510

(1) First lien debt includes a loan that the Company classifies as “unitranche”. The total amortized cost and fair value of the unitranche loan were $20,000 and $20,000, respectively, as of March 31, 2023. As of June 30, 2022, none of the Company’s first lien debt was classified as unitranche.

54

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

The following table shows the fair value of our investments disaggregated into the three levels of the ASC 820 valuation hierarchy as of March 31, 2023:

			Level 1						Level 2						Level 3						Total
First Lien Revolving Line of Credit			$	—					$	—					$	44,512					$	44,512
First Lien Debt(1)			—						51,902						4,034,460						4,086,362
Second Lien Revolving Line of Credit			—						—						4,888						4,888
Second Lien Debt			—						—						1,327,318						1,327,318
Unsecured Debt			5,509						—						7,200						12,709
Subordinated Structured Notes			—						—						698,423						698,423
Equity			—						—						1,418,565						1,418,565
Total Investments			$	5,509					$	51,902					$	7,535,366					$	7,592,777

(1) First lien debt includes a loan that the Company classifies as “unitranche”. The total amortized cost and fair value of the unitranche loan were $20,000 and $20,000, respectively, as of March 31, 2023.

The following table shows the fair value of our investments disaggregated into the three levels of the ASC 820 valuation hierarchy as of June 30, 2022:

			Level 1						Level 2						Level 3						Total
First Lien Revolving Line of Credit			$	—					$	—					$	39,746					$	39,746
First Lien Debt			—						73,816						3,684,144						3,757,960
Second Lien Debt			—						—						1,471,336						1,471,336
Unsecured Debt			—						—						7,200						7,200
Subordinated Structured Notes			—						—						711,429						711,429
Equity			—						—						1,614,839						1,614,839
Total Investments			$	—					$	73,816					$	7,528,694					$	7,602,510

The following tables show the aggregate changes in the fair value of our Level 3 investments during the nine months ended March 31, 2023:

			Fair Value Measurements Using Unobservable Inputs (Level 3)
			Control  Investments						Affiliate  Investments						Non-Control/  Non-Affiliate  Investments						Total
Fair value as of June 30, 2022			$	3,438,317					$	393,264					$	3,697,113					$	7,528,694
Net realized (losses) gains on investments			(2,512)						16,143						(52,812)						(39,181)
Net change in unrealized losses			(109,909)						(89,034)						(165,503)						(364,446)
Net realized and unrealized losses			(112,421)						(72,891)						(218,315)						(403,627)
Purchases of portfolio investments			172,021						—						428,437						600,458
Payment-in-kind interest			72,653						—						25,299						97,952
Accretion of discounts and premiums, net			596						—						4,601						5,197
Repayments and sales of portfolio investments			(91,072)						(24,678)						(186,047)						(301,797)
Transfers within Level 3(1)			—						(287,751)						287,751						—
Transfers out of Level 3(1)			—						—						(17,699)						(17,699)
Transfers into Level 3(1)			—						—						26,188						26,188
Fair value as of March 31, 2023			$	3,480,094					$	7,944					$	4,047,328					$	7,535,366

55

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

			First Lien Revolving Line of Credit						First Lien Debt(2)						Second Lien Revolving Line of Credit						Second Lien Debt						Unsecured Debt						Subordinated Structured Notes						Equity						Total
Fair value as of June 30, 2022			$	39,746					$	3,684,144					$	—					$	1,471,336					$	7,200					$	711,429					$	1,614,839					$	7,528,694
Net realized (losses) gains on investments			—						(14,554)						—						(8,791)						(2)						(29,466)						13,632						(39,181)
Net change in unrealized gains (losses)			69						(28,288)						(249)						(123,468)						—						17,665						(230,175)						(364,446)
Net realized and unrealized gains (losses)			69						(42,842)						(249)						(132,259)						(2)						(11,801)						(216,543)						(403,627)
Purchases of portfolio investments			3,718						522,365						5,133						27,774						—						—						41,468						600,458
Payment-in-kind interest			2,295						83,855						—						11,802						—						—						—						97,952
Accretion of discounts and premiums, net			36						2,372						4						1,654						—						1,131						—						5,197
Repayments and sales of portfolio investments			(1,352)						(223,923)						—						(52,989)						2						(2,336)						(21,199)						(301,797)
Transfers out of Level 3(1)			—						(17,699)						—						—						—						—						—						(17,699)
Transfers into Level 3(1)			—						26,188						—						—						—						—						—						26,188
Fair value as of March 31, 2023			$	44,512					$	4,034,460					$	4,888					$	1,327,318					$	7,200					$	698,423					$	1,418,565					$	7,535,366

    

(1)Transfers are assumed to have occurred at the beginning of the quarter during which the asset was transferred. During the nine months ended March 31, 2023 two of our first lien notes transferred out of Level 2 to Level 3 because inputs to the valuation became unobservable. During the nine months ended March 31, 2023 one of our first lien notes transferred out of Level 3 to Level 2 because inputs to the valuation became observable.

(2) First lien debt includes a loan that the Company classifies as “unitranche”. The total amortized cost and fair value of the unitranche loan were $20,000 and $20,000, respectively, as of March 31, 2023.

56

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

The following tables show the aggregate changes in the fair value of our Level 3 investments during the nine months ended March 31, 2022:

			Fair Value Measurements Using Unobservable Inputs (Level 3)
			Control  Investments						Affiliate  Investments						Non-Control/  Non-Affiliate  Investments						Total
Fair value as of June 30, 2021			$	2,919,717					$	356,734					$	2,885,433					$	6,161,884
Net realized gains (losses) on investments			5,304						—						(16,958)						(11,654)
Net change in unrealized gains			352,558						26,016						30,038						408,612
Net realized and unrealized gains			357,862						26,016						13,080						396,958
Purchases of portfolio investments			379,248						222,931						1,114,231						1,716,410
Payment-in-kind interest			56,168						27						4,835						61,030
Accretion (amortization) of discounts and premiums, net			439						2,026						(68,464)						(65,999)
Repayments and sales of portfolio investments			(334,929)						(190,082)						(385,223)						(910,234)
Transfers into Level 3(2)			—						—						20,505						20,505
Transfers out of Level 3(2)			—						—						(9,600)						(9,600)
Fair Value as of March 31, 2022			$	3,378,505					$	417,652					$	3,574,797					$	7,370,954

			Revolving Line of Credit						First Lien Debt									1.5 Lien Debt												Second Lien Debt						Third Lien Debt						Unsecured Debt						Subordinated Structured Notes						Equity						Total
Fair value as of June 30, 2021			$	27,503					$	3,104,139								$	18,164											$	944,123					$	3,950					$	3,715					$	756,109					$	1,304,181					$	6,161,884
Net realized (losses) gains on investments			—						(385)									—												—						—						10						(16,573)						5,294						(11,654)
Net change in unrealized (losses) gains			(2)						(26,884)									—												(13,597)						—						2,004						46,619						400,472						408,612
Net realized and unrealized (losses) gains			(2)						(27,269)									—												(13,597)						—						2,014						30,046						405,766						396,958
Purchases of portfolio investments			9,000						886,132									—												794,594						—						—						9,518						17,166						1,716,410
Payment-in-kind interest			1,349						57,926									—												1,755						—						—						—						—						61,030
Accretion (amortization) of discounts and premiums, net			—						6,079									—												1,929						—						—						(74,007)						—						(65,999)
Repayments and sales of portfolio investments			(1,636)						(574,467)									(18,164)												(285,671)						(3,950)						(10)						7,167						(33,503)						(910,234)
Transfers within Level 3(1)			—						38,748									—												(69,893)						—						—						—						31,145						—
Transfers into Level 3(2)			—						20,505									—												—						—						—						—						—						20,505
Transfers out of Level 3(2)			—						(9,600)									—												—						—						—						—						—						(9,600)
Fair value as of March 31, 2022			$	36,214					$	3,502,193								$	—											$	1,373,240					$	—					$	5,719					$	728,833					$	1,724,755					$	7,370,954

(1) Transfers are assumed to have occurred at the beginning of the quarter during which the asset was transferred.

(2) Transfers are assumed to have occurred at the beginning of the quarter during which the asset was transferred. During the three months ended December 31, 2021 one of our first lien notes transferred out of Level 2 to Level 3 because inputs to the valuation became unobservable. During the three months ended March 31, 2022 one of our first lien notes transferred out of Level 3 to Level 2 because inputs to the valuation became observable.

The net change in unrealized (losses) gains on the investments that use Level 3 inputs was $(373,373) and $407,396 for investments still held as of March 31, 2023 and March 31, 2022, respectively.

The following table shows industries that comprise of greater than 10% of our portfolio at fair value as of March 31, 2023 and June 30, 2022:

			March 31, 2023																		June 30, 2022
			Cost						Fair Value						% of Portfolio						Cost						Fair Value						% of Portfolio
Equity Real Estate Investment Trusts (REITs)			$	686,086					$	1,372,493					18.1		%				$	647,316					$	1,399,857					18.4		%
Health Care Providers & Services			652,011						762,957						10.0		%				660,976						748,591						9.8		%
Consumer Finance			610,288						751,580						9.9		%				568,739						765,168						10.1		%
All Other Industries			5,616,809						4,705,747						62.0		%				5,319,800						4,688,894						61.7		%
Total			$	7,565,194					$	7,592,777					100.0		%				$	7,196,831					$	7,602,510					100.0		%

57

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

As of March 31, 2023 investments in California comprised 10.4% of our investments at fair value, with a cost of $926,519 and a fair value of $788,558. As of June 30, 2022 investments in California comprised 10.1% of our investments at fair value, with a cost of $880,210 and a fair value of $768,646.

58

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

The ranges of unobservable inputs used in the fair value measurement of our Level 3 investments as of March 31, 2023 were as follows:

Unobservable Input

Asset Category

Fair Value

Primary Valuation Approach or Technique

Input

Range

Weighted Average (5)

First Lien Debt

$

1,694,725

Discounted cash flow (Yield analysis)

Market yield

8.6%

to

20.0%

12.5%

First Lien Debt

678,915

Enterprise value waterfall (Market approach)

EBITDA multiple

6.3x

to

11.3x

9.5x

First Lien Debt

70,639

Enterprise value waterfall (Market approach)

EBITDA multiple

7.0x

to

9.0x

8.0x

Enterprise value waterfall (Discounted cash flow)

Discount rate

12.3%

to

50.0%

31.1%

First Lien Debt

201,390

Enterprise value waterfall (Market approach)

Revenue multiple

0.5x

to

1.7x

1.1x

First Lien Debt

56,600

Enterprise value waterfall (Discounted cash flow)

Discount rate

6.5%

to

8.5%

7.5%

First Lien Debt (1)

21,580

Enterprise value waterfall

Loss-adjusted discount rate

7.6%

to

12.8%

8.3%

Projected loss rates

0.2%

to

36.9%

8.3%

First Lien Debt (2)

200,600

Enterprise value waterfall

Discount rate (3)

10.4%

to

16.8%

12.5%

First Lien Debt

459,900

Enterprise value waterfall (Market approach)

Tangible book value multiple

1.9x

to

2.8x

2.5x

Earnings multiple

6.3x

to

8.8x

7.7x

First Lien Debt

21,855

Enterprise value waterfall (Market approach)

Tangible book value multiple

1.0x

to

1.5x

1.3x

First Lien Debt

670,656

Discounted cash flow

Discount Rate

6.3%

to

9.8%

7.0%

First Lien Debt

2,112

Asset recovery analysis

Recoverable amount

n/a

n/a

Second Lien Debt

1,211,172

Discounted cash flow (Yield analysis)

Market yield

10.4%

to

35.0%

15.1%

Second Lien Debt

7,017

Asset recovery analysis

Recoverable amount

n/a

n/a

Second Lien Debt

114,017

Enterprise value waterfall (Market approach)

EBITDA multiple

7.0x

to

9.0x

8.0x

Enterprise value waterfall (Discounted cash flow)

Discount rate

12.3%

to

50.0%

31.1%

Unsecured Debt

7,200

Enterprise value waterfall (Market approach)

EBITDA multiple

6.3x

to

7.3x

6.8x

Subordinated Structured Notes

698,423

Discounted cash flow

Discount rate (3)

2.8%

to

37.2%

23.0%

Preferred Equity

18,187

Enterprise value waterfall (Market approach)

Revenue multiple

0.7x

to

1.7x

1.3x

Preferred Equity

9,864

Enterprise value waterfall (Market approach)

EBITDA multiple

8.3x

to

10.0x

9.5x

Preferred Equity

4,271

Enterprise value waterfall (Discounted cash flow)

Discount rate

6.5%

to

8.5%

7.5%

Common Equity/Interests/Warrants

416,445

Enterprise value waterfall (Market approach)

EBITDA multiple

4.8x

to

11.3x

9.3x

Common Equity/Interests/Warrants (2)

37,209

Enterprise value waterfall

Discount rate (3)

10.4%

to

16.8%

12.5%

Common Equity/Interests/Warrants (4)

55,332

Discounted cash flow

Discount rate

6.3%

to

9.8%

7.0%

Common Equity/Interests/Warrants

224,557

Enterprise value waterfall (Market approach)

Tangible book value multiple

1.9x

to

2.8x

2.6x

Earnings multiple

6.3x

to

8.8x

7.7x

Common Equity/Interests/Warrants

25,868

Enterprise value waterfall (Market approach)

Tangible book value multiple

1.0x

to

1.5x

1.3x

Common Equity/Interests/Warrants

609,297

Discounted cash flow

Discount rate

6.3%

to

9.8%

7.0%

Common Equity/Interests/Warrants

4,349

Enterprise value waterfall (Discounted cash flow)

Discount Rate

13.5%

to

30.0%

22.2%

59

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

Unobservable Input

Asset Category

Fair Value

Primary Valuation Approach or Technique

Input

Range

Weighted Average (5)

Common Equity/Interests/Warrants

13,186

Asset recovery analysis

Recoverable amount

n/a

n/a

Total Level 3 Investments

$

7,535,366

(1)Represents the fair value of online consumer loans held by NPRC (see National Property REIT Corp section below) through its wholly owned subsidiary, American Consumer Lending Limited (“ACLL”), and valued using a discounted cash flow valuation technique.

(2)Represents the fair value of rated secured structured notes held by NPRC through its wholly owned subsidiary, National General Lending Limited (“NGL”), and valued using a discounted cash flow valuation technique.

(3)Represents the implied discount rate based on our internally generated single-cash flow model that is derived from the fair value estimated by the corresponding multi-path cash flow model utilized by the independent valuation firm.

(4)Represents Residual Profit Interests in Real Estate Investments.

(5)The weighted average information is generally derived by assigning each disclosed unobservable input a proportionate weight based on the fair value of the related investment. For the Loss-adjusted discount rate and Projected loss rate unobservable inputs of investments represented in (1), the weighted average is determined based on the purchase yield of recently issued loans within each respective term-grade cohort.

60

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

The ranges of unobservable inputs used in the fair value measurement of our Level 3 investments as of June 30, 2022 were as follows:

Unobservable Input

Asset Category

Fair Value

Primary Valuation Approach or Technique

Input

Range

Weighted Average (5)

First Lien Debt

$

1,722,265

Discounted cash flow (Yield analysis)

Market yield

8.1%

to

16.9%

11.7%

First Lien Debt

528,312

Enterprise value waterfall (Market approach)

EBITDA multiple

6.0x

to

10.5x

9.0x

First Lien Debt

108,222

Enterprise value waterfall (Market approach)

Revenue multiple

0.5x

to

1.2x

0.9x

First Lien Debt

53,209

Enterprise value waterfall (Discounted cash flow)

Discount rate

8.8%

to

10.8%

9.8%

First Lien Debt

12,199

Asset recovery analysis

Recoverable amount

n/a

n/a

First Lien Debt (1)

29,080

Enterprise value waterfall

Loss-adjusted discount rate

5.6%

to

9.4%

8.1%

Projected loss rates

—%

to

1.6%

—%

First Lien Debt (2)

186,800

Enterprise value waterfall

Discount rate (3)

9.2%

to

14.8%

11.1%

First Lien Debt

432,057

Enterprise value waterfall (Market approach)

Tangible book value multiple

2.2x

to

3.0x

2.7x

Earnings multiple

4.8x

to

7.5x

7.0x

First Lien Debt

20,260

Enterprise value waterfall (Market approach)

Tangible book value multiple

1.3x

to

1.5x

1.4x

First Lien Debt

631,486

Enterprise value waterfall (NAV analysis)

Capitalization Rate

3.3%

to

7.5%

4.5%

Second Lien Debt

1,460,277

Discounted cash flow (Yield analysis)

Market yield

9.6%

to

25.0%

13.0%

Second Lien Debt

4,952

Enterprise value waterfall (Market approach)

Revenue multiple

0.8x

to

1.0x

0.9x

Second Lien Debt

6,107

Asset recovery analysis

Recoverable amount

n/a

n/a

Unsecured Debt

7,200

Enterprise value waterfall (Market approach)

Revenue multiple

0.5x

to

0.6x

0.5x

Subordinated Structured Notes

711,429

Discounted cash flow

Discount rate (3)

6.9%

to

30.5%

18.7%

Preferred Equity

33,355

Enterprise value waterfall (Market approach)

Revenue multiple

0.8x

to

1.5x

1.2x

Preferred Equity

1,807

Enterprise value waterfall (Market approach)

EBITDA multiple

3.8x

to

4.8x

4.3x

Preferred Equity

12,557

Enterprise value waterfall (Market approach)

Discount rate

8.8%

to

10.8%

9.8%

Common Equity/Interests/Warrants

493,322

Enterprise value waterfall (Market approach)

EBITDA multiple

1.8x

to

10.5x

8.8x

Common Equity/Interests/Warrants

3,613

Enterprise value waterfall (Market approach)

Revenue multiple

0.4x

to

1.0x

0.5x

Common Equity/Interests/Warrants (1)

8,994

Enterprise value waterfall

Loss-adjusted discount rate

5.6%

to

9.4%

8.1%

Projected loss rates

—%

to

1.6%

—%

Common Equity/Interests/Warrants (2)

30,386

Enterprise value waterfall

Discount rate (3)

9.2%

to

14.8%

11.1%

Common Equity/Interests/Warrants (4)

60,749

Enterprise value waterfall (NAV analysis)

Capitalization Rate

3.3%

to

7.5%

4.5%

Common Equity/Interests/Warrants

252,161

Enterprise value waterfall (Market approach)

Tangible book value multiple

2.2x

to

3.0x

2.8x

Earnings multiple

4.8x

to

7.5x

7.0x

Common Equity/Interests/Warrants

30,140

Enterprise value waterfall (Market approach)

Tangible book value multiple

1.3x

to

1.5x

1.4x

Common Equity/Interests/Warrants

668,242

Enterprise value waterfall (NAV analysis)

Capitalization Rate

3.3%

to

7.5%

4.5%

Common Equity/Interests/Warrants

5,614

Enterprise value waterfall (Discounted cash flow)

Discount rate

12.5%

to

30.0%

21.2%

Common Equity/Interests/Warrants

13,899

Asset recovery analysis

Recoverable amount

n/a

n/a

Total Level 3 Investments

$

7,528,694

61

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

(1)Represents the fair value of online consumer loans held by NPRC through its wholly owned subsidiary, American Consumer Lending Limited (“ACLL”), and valued using a discounted cash flow valuation technique.

(2)Represents the fair value of rated secured structured notes held by NPRC through its wholly owned subsidiary, National General Lending Limited (“NGL”), and valued using a discounted cash flow valuation technique.

(3)Represents the implied discount rate based on our internally generated single-cash flow model that is derived from the fair value estimated by the corresponding multi-path cash flow model utilized by the independent valuation firm.

(4)Represents Residual Profit Interests in Real Estate Investments.

(5)The weighted average information is generally derived by assigning each disclosed unobservable input a proportionate weight based on the fair value of the related investment. For the Loss-adjusted discount rate and Projected loss rate unobservable inputs of investments represented in (1), the weighted average is determined based on the purchase yield of recently issued loans within each respective term-grade cohort.

Investments for which market quotations are readily available must be valued at such market quotations. In order to validate market quotations, management and the independent valuation firm look at a number of factors to determine if the quotations are representative of fair value, including the source and nature of the quotations. These investments are classified as Level 1 or Level 2 in the fair value hierarchy.

The fair value of debt investments specifically classified as Level 2 in the fair value hierarchy are generally valued by an independent pricing agent or more than one principal market maker, if available, otherwise a principal market maker or a primary market dealer. We generally value over-the-counter securities by using the prevailing bid and ask prices from dealers during the relevant period end, which were provided by an independent pricing agent and screened for validity by such service.

In determining the range of values for debt instruments where market quotations are not readily available, and are therefore classified as Level 3 in the fair value hierarchy, except CLOs and debt investments in controlling portfolio companies, management and the independent valuation firm estimated corporate and security credit ratings and identified corresponding yields to maturity for each loan from relevant market data. A discounted cash flow technique was then applied using the appropriate yield to maturity as the discount rate, to determine a range of values. In determining the range of values for debt investments of controlled companies and equity investments, the enterprise value was determined by applying a market approach such as using earnings before interest, taxes, depreciation and amortization (“EBITDA”) multiples, net income and/or book value multiples for similar guideline public companies and/or similar recent investment transactions and/or an income approach, such as the discounted cash flow technique. The enterprise value technique may also be used to value debt investments which are credit impaired. For stressed debt and equity investments, asset recovery analysis was used.

In determining the range of values for our investments in CLOs, the independent valuation firm uses a discounted multi-path cash flow model. The valuations were accomplished through the analysis of the CLO deal structures to identify the risk exposures from the modeling point of view as well as to determine an appropriate call date (i.e., expected maturity). These risk factors are sensitized in the multi-path cash flow model using Monte Carlo simulations to generate probability-weighted (i.e., multi-path) cash flows for the underlying assets and liabilities. These cash flows are discounted using appropriate market discount rates, and relevant data in the CLO market and certain benchmark credit indices are considered, to determine the value of each CLO investment. In addition, we generate a single-path cash flow utilizing our best estimate of expected cash receipts, and assess the reasonableness of the implied discount rate that would be effective for the value derived from the corresponding multi-path cash flow model.

Our portfolio consists of residual interests and debt investments in CLOs, which involve a number of significant risks. CLOs are typically very highly levered (10 - 14 times), and therefore the residual interest tranches that we invest in are subject to a higher degree of risk of total loss. In particular, investors in CLO residual interests indirectly bear risks of the underlying loan investments held by such CLOs. We generally have the right to receive payments only from the CLOs, and generally do not have direct rights against the underlying borrowers or the entity that sponsored the CLOs. While the CLOs we target generally enable the investor to acquire interests in a pool of senior loans without the expenses associated with directly holding the same investments, the prices of indices and securities underlying our CLOs will rise or fall. These prices (and, therefore, the prices of the CLOs) will be influenced by the same types of political and economic events that affect issuers of securities and capital markets generally. The failure by a CLO investment in which we invest to satisfy financial covenants, including with respect to adequate collateralization and/or interest coverage tests, could lead to a reduction in its payments to us. In the event that a CLO fails certain tests, holders of debt senior to us would be entitled to additional payments that would, in turn, reduce the payments we would otherwise be entitled to receive. Separately, we may incur expenses to the extent necessary to seek recovery upon

62

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

default or to negotiate new terms with a defaulting CLO or any other investment we may make. If any of these occur, it could materially and adversely affect our operating results and cash flows.

The interests we have acquired in CLOs are generally thinly traded or have only a limited trading market. CLOs are typically privately offered and sold, even in the secondary market. As a result, investments in CLOs may be characterized as illiquid securities. In addition to the general risks associated with investing in debt securities, CLO residual interests carry additional risks, including, but not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii) the quality of the collateral may decline in value or default; (iii) our investments in CLO tranches will likely be subordinate to other senior classes of note tranches thereof; and (iv) the complex structure of the security may not be fully understood at the time of investment and may produce disputes with the CLO investment or unexpected investment results. Our net asset value may also decline over time if our principal recovery with respect to CLO residual interests is less than the cost of those investments. Our CLO investments and/or the CLOs’ underlying senior secured loans may prepay more quickly than expected, which could have an adverse impact on our value. These investments are classified as Level 3 in the fair value hierarchy.

An increase in LIBOR would materially increase the CLO’s financing costs. Since most of the collateral positions within the CLOs have LIBOR floors, there may not be corresponding increases in investment income (if LIBOR increases but stays below the LIBOR floor rate of such investments) resulting in materially smaller distribution payments to the residual interest investors.

We hold more than a 10% interest in certain foreign corporations that are treated as controlled foreign corporations (“CFC”) for U.S. federal income tax purposes (including our residual interest tranche investments in CLOs). Therefore, we are treated as receiving a deemed distribution (taxable as ordinary income) each year from such foreign corporations in an amount equal to our pro rata share of the corporation’s income for that tax year (including both ordinary earnings and capital gains). We are required to include such deemed distributions from a CFC in our taxable income and we are required to distribute at least 90% of such income to maintain our RIC status, regardless of whether or not the CFC makes an actual distribution during such year.

If we acquire shares in “passive foreign investment companies” (“PFICs”) (including residual interest tranche investments in CLOs that are PFICs), we may be subject to federal income tax on a portion of any “excess distribution” or gain from the disposition of such shares even if such income is distributed as a taxable dividend to our stockholders. Certain elections may be available to mitigate or eliminate such tax on excess distributions, but such elections (if available) will generally require us to recognize our share of the PFIC’s income for each year regardless of whether we receive any distributions from such PFICs. We must nonetheless distribute such income to maintain our status as a RIC.

Legislation known as FATCA and regulations thereunder impose a withholding tax of 30% on payments of U.S. source interest and dividends, to certain non-U.S. entities, including certain non-U.S. financial institutions and investment funds, unless such non-U.S. entity complies with certain reporting requirements regarding its United States account holders and its United States owners. Most CLOs in which we invest will be treated as non-U.S. financial entities for this purpose, and therefore will be required to comply with these reporting requirements to avoid the 30% withholding. If a CLO in which we invest fails to properly comply with these reporting requirements, it could reduce the amounts available to distribute to residual interest and junior debt holders in such CLO vehicle, which could materially and adversely affect our operating results and cash flows.

If we are required to include amounts in income prior to receiving distributions representing such income, we may have to sell some of our investments at times and/or at prices management would not consider advantageous, raise additional debt or equity capital or forgo new investment opportunities for this purpose.

The significant unobservable input used to value our investments based on the yield technique and discounted cash flow technique is the market yield (or applicable discount rate) used to discount the estimated future cash flows expected to be received from the underlying investment, which includes both future principal and interest/dividend payments. Increases or decreases in the market yield (or applicable discount rate) would result in a decrease or increase, respectively, in the fair value measurement. Management and the independent valuation firms consider the following factors when selecting market yields or discount rates: risk of default, rating of the investment and comparable company investments, and call provisions.

63

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

The significant unobservable inputs used to value our investments based on the EV analysis may include market multiples of specified financial measures such as EBITDA, net income, or book value of identified guideline public companies, implied valuation multiples from precedent M&A transactions, and/or discount rates applied in a discounted cash flow technique. The independent valuation firm identifies a population of publicly traded companies with similar operations and key attributes to that of the portfolio company. Using valuation and operating metrics of these guideline public companies and/or as implied by relevant precedent transactions, a range of multiples of the latest twelve months EBITDA, or other measure such as net income or book value, is typically calculated. The independent valuation firm utilizes the determined multiples to estimate the portfolio company’s EV generally based on the latest twelve months EBITDA of the portfolio company (or other meaningful measure). Increases or decreases in the multiple would result in an increase or decrease, respectively, in EV which would result in an increase or decrease in the fair value measurement of the debt of controlled companies and/or equity investment, as applicable. In certain instances, a discounted cash flow analysis may be considered in estimating EV, in which case, discount rates based on a weighted average cost of capital and application of the capital asset pricing model may be utilized.

The significant unobservable input used to value our private REIT investments based on the discounted cash flow analysis is the discount rate and terminal capitalization rate applied to projected cash flows of the underlying properties. Increases or decreases in the discount rate and terminal capitalization rate would result in a decrease or increase, respectively, in the fair value measurement.

Changes in market yields, discount rates, capitalization rates or EBITDA multiples, each in isolation, may change the fair value measurement of certain of our investments. Generally, an increase in market yields, discount rates or capitalization rates, or a decrease in EBITDA (or other) multiples may result in a decrease in the fair value measurement of certain of our investments.

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of our investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that we may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than the value at which we have recorded it.

In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected in the currently assigned valuations.

Changes in Valuation Techniques

During the nine months ended March 31, 2023, the valuation methodology for DTI Holdco, Inc. (“Epiq”) for the First Lien Term Loan changed from the yield method to market quotes, which were more active in the current period. As a result of a the quoted prices of the First Lien Term Loan, the fair value of our investment in Epiq First Lien Term Loan decreased to $17,503 as of March 31, 2023, a discount of $583 from its amortized cost, compared to the $301 unrealized appreciation recorded at June 30, 2022.

During the nine months ended March 31, 2023, the valuation methodology for Engine Group, Inc. (“Engine”) for the First Lien Term Loan and Warrants changed from the yield method and Current Value Method (“CVM”), respectively, to the Liquidation Analysis, due to a deterioration in the company’s operational performance. As a result, our investment in Engine decreased to $2,112 as of March 31, 2022, a discount of $28,425 from its amortized cost, compared to the $27,142 unrealized discount recorded at June 30, 2022.

During the nine months ended March 31, 2023, the valuation methodology for National Property REIT Corp. (“NPRC”) for the real estate portfolio changed from the direct capitalization method to the discounted cash flow method, due to a reduction in collaborative capitalization rate market data. Our investment in NPRC for the real estate portfolio was valued at $1,372,493 as of March 31, 2023, a premium of $686,407 from its amortized cost, compared to the $752,541 unrealized appreciation recorded at June 30, 2022.

During the nine months ended March 31, 2023, the valuation methodology for PGX Holdings, Inc. (“PGX”) for the First and Second Lien Term Loans changed from the yield method to the CVM method, due to a restructuring of the equity ownership during the current period. Leading into March 2023, PGX was undergoing a litigation process commenced by the Consumer Financial Protection Bureau regarding the legality of PGX’s billing practices when using telemarketing to acquire new business. Due to recent rulings issued by the courts in these legal proceedings, PGX determined it needed to move away from a telemarketing model to an online model to attract new customers. As a result of this material change to PGX’s business model (which will take time to develop) and other impacts from the court rulings, our investment in PGX First and Second Lien Term

64

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

Loans decreased to $184,656 as of March 31, 2023, a discount of $65,969. The fair value at June 30, 2022 equaled its amortized cost.

During the nine months ended March 31, 2023, the valuation methodology for Research Now Group, Inc. & Survey Sampling International LLC (“Research Now”) for the First Lien Term Loan changed from relying solely on market quotes to a combination of market quotes and the yield method since market quotes were less active in the current period. As a result of this change and a public credit rating downgrade, the fair value of our investment in Research Now First Lien Term Loan decreased to $8,345 as of March 31, 2023, a discount of $1,014 from its amortized cost, compared to the $426 unrealized discount recorded at June 30, 2022.

During the nine months ended March 31, 2023, the valuation methodology for Rising Tide Holdings, Inc. (“West Marine”) changed from the yield approach to the CVM method, given the decline in company performance and increase in net leverage. As a result, the fair value of our investment in West Marine decreased to $11,812 as of March 31, 2023, a discount of $11,669 to its amortized cost, compared to the unrealized discount of $1,119 recorded at June 30, 2022.

During the nine months ended March 31, 2023, the valuation methodology for Shutterfly, LLC (“Shutterfly”) changed from market quotes to a combination of market quotes and the yield method, due to a decrease in average liquidity of market quotes. As a result of a decrease in observed market quotes and a public credit rating downgrade, the fair value of our investment in Shutterfly decreased to $13,880 as of March 31, 2023, a discount of $6,142 from its amortized cost, compared to the $2,758 unrealized discount recorded at June 30, 2022.

During the nine months ended March 31, 2023, the valuation methodology for Town & Country Holdings, Inc. (“Town & Country”) for the First Lien Term Loan changed from the yield method to the CVM method, due to a restructuring of the equity ownership during the current period. As a result, our investment in Town & Country First Lien Term Loan is $169,940 as of March 31, 2023, which is equal to its amortized cost. The fair value at June 30, 2022 also equaled its amortized cost.

During the nine months ended March 31, 2023, the valuation methodology for Vision Solutions, Inc (“Precisely”) changed from a combination of the yield method, market quotes, and inclusion of the price observed in a minority equity transaction for the Precisely investment itself (given the recency and inclusion of outside investors in the transaction at June 30, 2022) to a combination of the yield method and market quotes, since the noted transaction was no longer relevant. As a result of a decrease in the quoted price of the Second Lien Term Loan, the fair value of our investment in Precisely decreased to $67,796 as of March 31, 2023, a discount of $11,506 from its amortized cost, compared to the $896 unrealized discount recorded at June 30, 2022.

Credit Quality Indicators and Undrawn Commitments

As of March 31, 2023, $4,429,384 of our loans to portfolio companies, at fair value, bear interest at floating rates and have LIBOR or SOFR floors ranging from 0.0% - 5.0%. As of March 31, 2023, $1,046,405 of our loans to portfolio companies, at fair value, bear interest at fixed rates ranging from 6.8% to 20.0%. As of June 30, 2022, $4,544,854 of our loans to portfolio companies, at fair value, bore interest at floating rates and have LIBOR floors ranging from 0.0% to 3.0%. As of June 30, 2022, $731,388 of our loans to portfolio companies, at fair value, bore interest at fixed rates ranging from 1.0% to 22.0%

As of March 31, 2023 and June 30, 2022, the cost basis of our loans on non-accrual status amounted to $170,573 and $181,393 respectively, with fair value of $17,067 and $31,454, respectively. The fair values of these investments represent approximately 0.2% and 0.4% of our total assets at fair value as of March 31, 2023 and June 30, 2022, respectively.

Undrawn committed revolvers and delayed draw term loans to our portfolio companies incur commitment and unused fees ranging from 0.00% to 7.25%. As of March 31, 2023 and June 30, 2022, we had $54,133 and $43,934, respectively, of undrawn revolver and delayed draw term loan commitments to our portfolio companies. The fair value of our undrawn committed revolvers and delayed draw term loans was zero as of March 31, 2023 and June 30, 2022 as they were all floating rate instruments that repriced frequently.

National Property REIT Corp.

Prospect owns 100% of the equity of NPH Property Holdings, LLC (“NPH”), a consolidated holding company which owns 100% of the common equity of NPRC.

NPRC is a Maryland corporation and a qualified REIT for federal income tax purposes. NPRC was formed to hold for investment, operate, finance, lease, manage, and sell a portfolio of real estate assets and engage in any and all other activities as may be necessary, incidental or convenient to carry out the foregoing. NPRC acquires real estate assets, including, but not limited to, industrial, commercial, and multi-family properties. NPRC may acquire real estate assets directly or through joint ventures by making a majority equity investment in a property-owning entity (“JV”). Additionally, through its wholly-owned subsidiaries, NPRC invests in online consumer loans and rated secured structured notes (“RSSN”).

65

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

During the nine months ended March 31, 2023, we received partial repayments of $86,852 of our loans previously outstanding with NPRC and its wholly owned subsidiaries and $4,000 as a return of capital on our equity investment in NPRC. During the nine months ended March 31, 2023, we provided $132,071 of debt financing and $3,600 of equity financing to NPRC to invest in real estate property, to provide working capital, and to fund purchases of rated secured structured notes.

The online consumer loan investments held by certain of NPRC’s wholly owned subsidiaries are unsecured obligations of individual borrowers that are issued in amounts ranging from $1 to $50, with fixed terms ranging from 60 months to 84 months. As of March 31, 2023, the outstanding investment in online consumer loans by certain of NPRC’s wholly-owned subsidiaries was comprised of 106 individual loans, residual interest in two securitizations, and one corporate bond, and had an aggregate fair value of $21,181. The average outstanding individual loan balance is approximately $3 and the loans mature on dates ranging from April 1, 2023 to April 11, 2025 with a weighted-average outstanding term of 12 months as of March 31, 2023. Fixed interest rates range from 9.0% to 36.0% with a weighted-average current interest rate of 17.0%. As of March 31, 2023, our investment in NPRC and its wholly-owned subsidiaries relating to online consumer lending had a fair value of $21,580.

As of March 31, 2023, based on outstanding principal balance, 43.3% of the online consumer loan portfolio held by certain of NPRC’s wholly-owned subsidiaries was invested in super prime loans (borrowers with a Fair Isaac Corporation (“FICO”) score, of 720 or greater), 44.2% of the portfolio in prime loans (borrowers with a FICO score of 660 to 719) and 12.5% of the portfolio in near prime loans (borrowers with a FICO score of 580 to 659, a portion of which are considered sub-prime).

Loan Type						Outstanding Principal Balance						Fair Value						Interest Rate Range												Weighted Average Interest Rate*
Super Prime						$	135					$	132					9.0%			-			20.5%						12.3%
Prime						138						133						13.5%			-			25.0%						19.1%
Near Prime						39						32						23.3%			-			36.0%						26.1%

*Weighted by outstanding principal balance of the online consumer loans.

The rated secured structured note investments held by certain of NPRC’s wholly owned subsidiaries are subordinated debt interests in broadly syndicated loans managed by established collateral management teams with many years of experience in the industry. As of March 31, 2023, the outstanding investment in rated secured structured notes by certain of NPRC’s wholly owned subsidiaries was comprised of 94 investments with a fair value of $425,903 and face value of $448,235. The average outstanding note is approximately $4,768 with an expected maturity date ranging from April 2026 to October 2033 and weighted-average expected maturity of 6 years as of March 31, 2023. Coupons range from three-month LIBOR (“3ML”) plus 5.20% to 9.23% with a weighted-average coupon of 3ML + 6.93%. As of March 31, 2023, our investment in NPRC and its wholly-owned subsidiaries relating to rated secured structured notes had a fair value of $200,600.

As of March 31, 2023, based on outstanding notional balance, 12.6% of the portfolio was invested in Single - B rated tranches and 87.4% of the portfolio in BB rated tranches.

As of March 31, 2023, our investment in NPRC and its wholly owned subsidiaries had an amortized cost of $908,266 and a fair value of $1,594,673, including our investment in online consumer lending and rated secured structured notes as discussed above. The fair value of $1,372,493 related to NPRC’s real estate portfolio was comprised of forty-eight multi-family properties, eight student housing properties, four senior living properties, and three commercial properties. The following table shows the location, acquisition date, purchase price, and mortgage outstanding due to other parties for each of the properties held by NPRC as of March 31, 2023:

No.						Property Name						City						Acquisition Date						Purchase Price						Mortgage Outstanding
1						Filet of Chicken						Forest Park, GA						10/24/2012						$	7,400					$	—
2						Arlington Park Marietta, LLC						Marietta, GA						5/8/2013						14,850						13,492
3						Taco Bell, OK						Yukon, OK						6/4/2014						1,719						—
4						Taco Bell, MO						Marshall, MO						6/4/2014						1,405						—
5						Abbie Lakes OH Partners, LLC						Canal Winchester, OH						9/30/2014						12,600						14,877
6						Kengary Way OH Partners, LLC						Reynoldsburg, OH						9/30/2014						11,500						15,040
7						Lakeview Trail OH Partners, LLC						Canal Winchester, OH						9/30/2014						26,500						28,691
8						Lakepoint OH Partners, LLC						Pickerington, OH						9/30/2014						11,000						16,328
9						Sunbury OH Partners, LLC						Columbus, OH						9/30/2014						13,000						16,558
10						Heatherbridge OH Partners, LLC						Blacklick, OH						9/30/2014						18,416						23,656

66

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

No.						Property Name						City						Acquisition Date						Purchase Price						Mortgage Outstanding
11						Jefferson Chase OH Partners, LLC						Blacklick, OH						9/30/2014						13,551						18,426
12						Goldenstrand OH Partners, LLC						Hilliard, OH						10/29/2014						7,810						11,229
13						SSIL I, LLC						Aurora, IL						11/5/2015						34,500						25,028
14						Vesper Tuscaloosa, LLC						Tuscaloosa, AL						9/28/2016						54,500						42,032
15						Vesper Iowa City, LLC						Iowa City, IA						9/28/2016						32,750						24,239
16						Vesper Corpus Christi, LLC						Corpus Christi, TX						9/28/2016						14,250						10,545
17						Vesper Campus Quarters, LLC						Corpus Christi, TX						9/28/2016						18,350						13,841
18						Vesper College Station, LLC						College Station, TX						9/28/2016						41,500						31,302
19						Vesper Kennesaw, LLC						Kennesaw, GA						9/28/2016						57,900						49,852
20						Vesper Statesboro, LLC						Statesboro, GA						9/28/2016						7,500						7,480
21						Vesper Manhattan KS, LLC						Manhattan, KS						9/28/2016						23,250						14,679
22						9220 Old Lantern Way, LLC						Laurel, MD						1/30/2017						187,250						153,580
23						7915 Baymeadows Circle Owner, LLC						Jacksonville, FL						10/31/2017						95,700						90,290
24						8025 Baymeadows Circle Owner, LLC						Jacksonville, FL						10/31/2017						15,300						15,704
25						23275 Riverside Drive Owner, LLC						Southfield, MI						11/8/2017						52,000						54,411
26						23741 Pond Road Owner, LLC						Southfield, MI						11/8/2017						16,500						18,852
27						150 Steeplechase Way Owner, LLC						Largo, MD						1/10/2018						44,500						36,608
28						Olentangy Commons Owner LLC						Columbus, OH						6/1/2018						113,000						92,876
29						Villages of Wildwood Holdings LLC						Fairfield, OH						7/20/2018						46,500						58,393
30						Falling Creek Holdings LLC						Richmond, VA						8/8/2018						25,000						25,374
31						Crown Pointe Passthrough LLC						Danbury, CT						8/30/2018						108,500						89,400
32						Lorring Owner LLC						Forestville, MD						10/30/2018						58,521						47,680
33						Hamptons Apartments Owner, LLC						Beachwood, OH						1/9/2019						96,500						79,520
34						5224 Long Road Holdings, LLC						Orlando, FL						6/28/2019						26,500						21,200
35						Druid Hills Holdings LLC						Atlanta, GA						7/30/2019						96,000						79,104
36						Bel Canto NPRC Parcstone LLC						Fayetteville, NC						10/15/2019						45,000						42,793
37						Bel Canto NPRC Stone Ridge LLC						Fayetteville, NC						10/15/2019						21,900						21,545
38						Sterling Place Holdings LLC						Columbus, OH						10/28/2019						41,500						34,196
39						SPCP Hampton LLC						Dallas, TX						11/2/2020						36,000						38,843
40						Palmetto Creek Holdings LLC						North Charleston, SC						11/10/2020						33,182						25,865
41						Valora at Homewood Holdings LLC						Homewood, AL						11/19/2020						81,250						63,844
42						NPRC Fairburn LLC						Fairburn, GA						12/14/2020						52,140						43,900
43						NPRC Grayson LLC						Grayson, GA						12/14/2020						47,860						40,500
44						NPRC Taylors LLC						Taylors, SC						1/27/2021						18,762						14,075
45						Parkside at Laurel West Owner LLC						Spartanburg, SC						2/26/2021						57,005						42,025
46						Willows at North End Owner LLC						Spartanburg, SC						2/26/2021						23,255						19,000
47						SPCP Edge CL Owner LLC						Webster, TX						3/12/2021						34,000						25,496
48						Jackson Pear Orchard LLC						Ridgeland, MS						6/28/2021						50,900						42,975
49						Jackson Lakeshore Landing LLC						Ridgeland, MS						6/28/2021						22,600						17,955
50						Jackson Reflection Pointe LLC						Flowood, MS						6/28/2021						45,100						33,203
51						Jackson Crosswinds LLC						Pearl, MS						6/28/2021						41,400						38,601
52						Elliot Apartments Norcross, LLC						Norcross, GA						11/30/2021						128,000						102,301
53						Orlando 442 Owner, LLC (West Vue Apartments)						Orlando, FL						12/30/2021						97,500						73,000
54						NPRC Wolfchase LLC						Memphis, TN						3/18/2022						82,100						60,000
55						NPRC Twin Oaks LLC						Hattiesburg. MS						3/18/2022						44,850						34,242
56						NPRC Lancaster LLC						Birmingham, AL						3/18/2022						37,550						28,650
57						NPRC Rutland LLC						Macon, GA						3/18/2022						29,750						22,768
58						Southport Owner LLC (Southport Crossing)						Indianapolis, IN						3/29/2022						48,100						36,075
59						TP Cheyenne, LLC						Cheyenne, WY						5/26/2022						27,500						17,656
60						TP Pueblo, LLC						Pueblo, CO						5/26/2022						31,500						20,166
61						TP Stillwater, LLC						Stillwater, OK						5/26/2022						26,100						15,328
62						TP Kokomo, LLC						Kokomo, IN						5/26/2022						20,500						12,753

67

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

No.						Property Name						City						Acquisition Date						Purchase Price						Mortgage Outstanding
63						Terraces at Perkins Rowe JV LLC						Baton Rouge, LA						11/14/2022						41,400						29,566
																								$	2,672,726					$	2,237,608

Unconsolidated Significant Subsidiaries

Our investments are generally in small and mid-sized companies in a variety of industries. In accordance with Regulation S-X 3-09 and Regulation S-X 4-08(g), we must determine which of our unconsolidated controlled portfolio companies are considered “significant subsidiaries,” if any, as defined in Rule 1-02(w)(2) for BDC’s and closed end investment companies. Regulation S-X 3-09 requires separate audited financial statements of an unconsolidated subsidiary in an annual report. Regulation S-X 4-08(g) requires summarized financial information in an annual report.

Pursuant to Regulation S-X 10-01(b), Interim Financial Statements, summarized interim income statement information is required for an unconsolidated subsidiary within a quarterly report if the unconsolidated subsidiary would otherwise require separate audited financial statements within an annual report pursuant to Regulation S-X 3-09.

As of March 31, 2023, InterDent, Inc. (“InterDent”) was deemed to be a significant subsidiary. The following table shows summarized income statement information for InterDent for the periods included in this quarterly report:

			Three Months Ended March 31,												Nine Months Ended March 31,
Summary Statement of Operations			2023						2022						2023						2022
Total revenue			$	81,838					$	80,104					$	247,068					$	234,690
Operating expenses			82,436						77,140						240,740						231,628
Other expenses (including tax expense)			8,430						7,438						20,276						20,212
Net (loss)			$	(9,028)					$	(4,474)					$	(13,948)					$	(17,150)

During the three months ended March 31, 2023, NPRC was deemed to be a significant subsidiary. The following table shows summarized income statement information for NPRC for the periods included in this quarterly report:

			Three Months Ended March 31,												Nine Months Ended March 31,
Summary Statement of Operations			2023						2022						2023						2022
Total income			$	100,769					$	104,120					$	313,223					$	630,858
Operating expenses			48,980						39,541						157,176						131,242
Operating income			51,789						64,579						156,047						499,616
Interest expense			(65,797)						(59,607)						(201,646)						(175,038)
Depreciation and amortization			(23,094)						(28,154)						(81,033)						(83,201)
Fair value adjustment			3,130						(2,274)						(3,435)						960
Net (loss) income			$	(33,972)					$	(25,456)					$	(130,067)					$	242,337

68

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

Note 4. Revolving Credit Facility

On May 15, 2007, we formed our wholly owned subsidiary, Prospect Capital Funding LLC (“PCF”), a Delaware limited liability company and a bankruptcy remote special purpose entity, which holds certain of our portfolio loan investments that are used as collateral for the revolving credit facility at PCF. Since origination of the revolving credit facility, we have renegotiated the terms and extended the commitments of the revolving credit facility several times. Most recently, effective September 15, 2022, we completed an extension and upsizing of the revolving credit facility (the “2022 Facility” or the “Revolving Credit Facility”). The lenders have extended commitments of $1,777,500 as of March 31, 2023. The 2022 Facility includes an accordion feature which allows commitments to be increased up to $2,000,000 in the aggregate. The extension and upsizing of the Revolving Credit Facility extended the maturity date to September 15, 2027 and the revolving period through September 15, 2026, followed by an additional one-year amortization period, with distributions allowed to Prospect after the completion of the revolving period. During such one-year amortization period, all principal payments on the pledged assets will be applied to reduce the balance. At the end of the one-year amortization period, the remaining balance will become due.

The Revolving Credit Facility contains restrictions pertaining to the geographic and industry concentrations of funded loans, maximum size of funded loans, interest rate payment frequency of funded loans, maturity dates of funded loans and minimum equity requirements, among other items. The Revolving Credit Facility also contains certain requirements relating to portfolio performance, including required minimum portfolio yield and limitations on delinquencies and charge-offs, violation of which could result in the early termination of the Revolving Credit Facility. As of March 31, 2023, we were in compliance with the applicable covenants of the Revolving Credit Facility.

Interest on borrowings under the 2022 Facility is one-month SOFR plus 205 basis points. Additionally, the lenders charge a fee on the unused portion of the credit facility equal to either 40 basis points if more than 60% of the credit facility is drawn, 70 basis points if more than 35% and an amount less than or equal to 60% of the credit facility is drawn, or 150 basis points if an amount less than or equal to 35% of the credit facility is drawn. The 2022 Facility requires us to pledge assets as collateral in order to borrow under the credit facility.

For the nine months ended March 31, 2023 and March 31, 2022, the average stated interest rate (i.e., rate in effect plus the spread) and average outstanding borrowings for the Revolving Credit Facility were as follows:

			Three Months Ended March 31,												Nine Months Ended March 31,
			2023						2022						2023						2022
Average stated interest rate			6.61%						2.14%						5.44		%				2.14		%
Average outstanding balance			839,694						737,280						926,518						546,080

As of March 31, 2023 and June 30, 2022, we had $609,101 and $660,536, respectively, available to us for borrowing under the Revolving Credit Facility, net of $888,405 and $839,464 outstanding borrowings as of the respective balance sheet dates. As of March 31, 2023, the investments, including cash and cash equivalents, used as collateral for the Revolving Credit Facility had an aggregate fair value of $2,577,544, which represents 33.7% of our total investments, including cash and cash equivalents. These assets are held and owned by PCF, a bankruptcy remote special purpose entity, and, as such, these investments are not available to our general creditors. As additional eligible investments are transferred to PCF and pledged under the Revolving Credit Facility, PCF will generate additional availability up to the current commitment amount of $1,777,500. The release of any assets from PCF requires the approval of the facility agent.

In connection with the origination and amendments of the Revolving Credit Facility, we incurred $25,047 of fees, all of which are being amortized over the term of the facility. As of March 31, 2023 and June 30, 2022, $14,842 and $10,801, respectively, of the fees remain to be amortized and is reflected as deferred financing costs on the Consolidated Statements of Assets and Liabilities.

During the three months ended March 31, 2023 and March 31, 2022, we recorded $16,157 and $6,452, respectively, of interest costs, unused fees and amortization of financing costs on the Revolving Credit Facility as interest expense. During the nine months ended March 31, 2023 and March 31, 2022, we recorded $43,653 and $16,153, respectively, of interest costs, unused fees and amortization of financing costs on the Revolving Credit Facility as interest expense.

69

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

Note 5. Convertible Notes

2022 Notes

On April 11, 2017, we issued $225,000 aggregate principal amount of convertible notes that matured on July 15, 2022 (the “Original 2022 Notes”), unless previously converted or repurchased in accordance with their terms. The Original 2022 Notes bore interest at a rate of 4.95% per year, payable semi-annually on January 15 and July 15 each year, beginning July 15, 2017. Total proceeds from the issuance of the Original 2022 Notes, net of underwriting discounts and offering costs, were $218,010. On May 18, 2018, we issued an additional $103,500 aggregate principal amount of convertible notes that matured on July 15, 2022 (the “Additional 2022 Notes,” and together with the Original 2022 Notes, the “2022 Notes”), unless previously converted or repurchased in accordance with their terms. The Additional 2022 Notes were a further issuance of, and were fully fungible and ranked equally in right of payment with, the Original 2022 Notes and bore interest at a rate of 4.95% per year, payable semi-annually on January 15 and July 15 each year, beginning July 15, 2018. Total proceeds from the issuance of the Additional 2022 Notes, net of underwriting discounts and offering costs, were $100,749.

During the nine months ended March 31, 2022, we commenced a tender offer to purchase for cash up to $60,000 aggregate principal outstanding amount of the 2022 Notes at the purchase price of 102.50%, plus accrued and unpaid interest. As a result, $50,554 aggregate principal amount of the 2022 Notes were validly tendered and accepted and we recognized a realized loss of $1,584 from the extinguishment of debt in the amount of the difference between the reacquisition price and the net carrying amount of the 2022 Notes, net of the proportionate amount of unamortized debt issuance costs.

On July 14, 2022, we converted $3 in outstanding principal amount of the 2022 Notes to 300 shares of common stock at a rate of 100.2305 shares of common stock per $1 principal amount, together with cash in lieu of fractional shares, in accordance with a Holder Conversion Notice.

As of June 30, 2022, the outstanding principal amount of the 2022 Notes was $60,501. On July 15, 2022 we repaid the remaining outstanding principal amount of $60,498 of the 2022 Notes, plus interest, at maturity.

Following the maturity of the 2022 Notes during the nine months ended March 31, 2023, none of the 2022 Notes remained outstanding.

2025 Notes

On March 1, 2019, we issued $175,000 aggregate principal amount of senior convertible notes that mature on March 1, 2025 (the “2025 Notes”), unless previously converted or repurchased in accordance with their terms. We granted the underwriters a 13-day over-allotment option to purchase up to an additional $26,250 aggregate principal amount of the 2025 Notes. The underwriters fully exercised the over-allotment option on March 11, 2019 and we issued $26,250 aggregate principal amount of 2025 Notes at settlement on March 13, 2019. The 2025 Notes bear interest at a rate of 6.375% per year, payable semi-annually on March 1 and September 1 each year, beginning September 1, 2019. Total proceeds from the issuance of the 2025 Notes, net of underwriting discounts and offering costs, were $198,674.

As of March 31, 2023 and June 30, 2022, the outstanding aggregate principal amount of the 2025 Notes were $156,168 and $156,168, respectively.

Certain key terms related to the convertible features for the 2025 Notes are listed below:

												2025 Notes
Initial conversion rate(1)												110.7420
Initial conversion price												$	9.03
Conversion rate at March 31, 2023(1)(2)												110.7420
Conversion price at March 31, 2023(2)(3)												$	9.03
Last conversion price calculation date												3/1/2023
Dividend threshold amount (per share)(4)												$	0.060000

(1)Conversion rates denominated in shares of common stock per $1 principal amount of the Convertible Notes converted. 

(2)Represents conversion rate and conversion price, as applicable, taking into account certain de minimis adjustments that will be made on the conversion date.

(3)The conversion price will increase only if the current monthly dividends (per share) exceed the dividend threshold amount (per share).

70

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

(4)The conversion rate is increased if monthly cash dividends paid to common shares exceed the monthly dividend threshold amount, subject to adjustment. Current dividend rates are at or below the minimum dividend threshold amount for further conversion rate adjustments for all bonds.

Interest accrues from the date of the original issuance of the Convertible Notes or from the most recent date to which interest has been paid or duly provided. Upon conversion, the holder will receive a separate cash payment with respect to the notes surrendered for conversion representing accrued and unpaid interest to, but not including, the conversion date. Any such payment will be made on the settlement date applicable to the relevant conversion on the Convertible Notes. If a holder converts the Convertible Notes after a record date for an interest payment but prior to the corresponding interest payment date, the holder will receive shares of our common stock based on the conversion formula described above, a cash payment representing accrued and unpaid interest through the record date in the normal course and a separate cash payment representing accrued and unpaid interest from the record date to the conversion date.

No holder of Convertible Notes will be entitled to receive shares of our common stock upon conversion to the extent (but only to the extent) that such receipt would cause such converting holder to become, directly or indirectly, a beneficial owner (within the meaning of Section 13(d) of the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder) of more than 5.0% of the shares of our common stock outstanding at such time. The 5.0% limitation shall no longer apply following the effective date of any fundamental change. We will not issue any shares in connection with the conversion or redemption of the Convertible Notes which would equal or exceed 20% of the shares outstanding at the time of the transaction in accordance with NASDAQ rules.

Subject to certain exceptions, holders may require us to repurchase, for cash, all or part of their Convertible Notes upon a fundamental change at a price equal to 100% of the principal amount of the Convertible Notes being repurchased plus any accrued and unpaid interest up to, but excluding, the fundamental change repurchase date. In addition, upon a fundamental change that constitutes a non-stock change of control we will also pay holders an amount in cash equal to the present value of all remaining interest payments (without duplication of the foregoing amounts) on such Convertible Notes through and including the maturity date.

In connection with the issuance of the Convertible Notes, we recorded a discount of $3,369 and debt issuance costs of $2,090 which are being amortized over the terms of the Convertible Notes. As of March 31, 2023 and June 30, 2022, $1,103 and $1,511 of the original issue discount and $699 and $966, respectively, of the debt issuance costs remain to be amortized and is included as a reduction within Convertible Notes on the Consolidated Statement of Assets and Liabilities.

During the three months ended March 31, 2023 and March 31, 2022, we recorded $2,711 and $3,550, respectively, of interest costs and amortization of financing costs on the Convertible Notes as interest expense. During the nine months ended March 31, 2023 and March 31, 2022, we recorded $8,266 and $11,333, respectively, of interest costs and amortization of financing costs on the Convertible Notes as interest expense.

Note 6. Public Notes

2023 Notes

On March 15, 2013, we issued $250,000 aggregate principal amount of unsecured notes that mature on March 15, 2023 (the “Original 2023 Notes”). The Original 2023 Notes bear interest at a rate of 5.875% per year, payable semi-annually on March 15 and September 15 of each year, beginning September 15, 2013. Total proceeds from the issuance of the Original 2023 Notes, net of underwriting discounts and offering costs, were $243,641. On June 20, 2018, we issued an additional $70,000 aggregate principal amount of unsecured notes that mature on March 15, 2023 (the “Additional 2023 Notes”, and together with the Original 2023 Notes, the “2023 Notes”). The Additional 2023 Notes were a further issuance of, and are fully fungible and rank equally in right of payment with, the Original 2023 Notes and bear interest at a rate of 5.875% per year, payable semi-annually on March 15 and September 15 of each year, beginning September 15, 2018. Total proceeds from the issuance of the Additional 2023 Notes, net of underwriting discounts, were $69,403.

71

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

On September 19, 2022, we commenced a tender offer to purchase for cash any and all of the $284,219 then outstanding aggregate principal amount of the 2023 Notes at a price of 98.00%, plus accrued and unpaid interest (“2023 Notes September Tender Offer”). On September 23, 2022, $347 aggregate principal amount of the 2023 Notes were validly tendered and accepted. On October 17, 2022, we commenced a tender offer to purchase for cash any and all of the $283,872 then outstanding aggregate principal amount of the 2023 Notes at a price of 98.50%, plus accrued and unpaid interest (“2023 Notes October Tender Offer”). On October 26, 2022, $1,508 aggregate principal amount of the 2023 Notes were validly tendered and accepted. On November 14, 2022, we commenced a tender offer to purchase for cash any and all of the $282,364 then outstanding aggregate principal amount of the 2023 Notes at a price of 98.75%, plus accrued and unpaid interest (“2023 Notes November Tender Offer”). On November 23, 2022, $249 aggregate principal amount of the 2023 Notes were validly tendered and accepted. As a result of 2023 Notes September, October, and November Tender Offers during the six months ended December 31, 2022, $2,104 aggregate principal amount of the 2023 Notes were validly tendered and accepted, and we recognized a realized loss of $30 from the extinguishment of debt in the amount of the difference between the reacquisition price and the net carrying amount of the 2023 Notes, net of the proportionate amount of unamortized debt issuance costs.

As of June 30, 2022, the outstanding aggregate principal amount of the 2023 Notes was $284,219. On March 15, 2023 we repaid the remaining outstanding principal amount of $282,115 of the 2023 Notes, plus interest, at maturity.

Following the maturity of the 2023 Notes during the nine months ended March 31, 2023, none of the 2023 Notes remained outstanding.

6.375% 2024 Notes

On October 1, 2018, we issued $100,000 aggregate principal amount of unsecured notes that mature on January 15, 2024 (the “6.375% 2024 Notes”). The 6.375% 2024 Notes bear interest at a rate of 6.375% per year, payable semi-annually on January 15 and July 15 of each year, beginning January 15, 2019. Total proceeds from the issuance of the 6.375% 2024 Notes, net of underwriting discounts and offering costs, were $98,985.

During the nine months ended March 31, 2022, we commenced a tender offer to purchase for cash any and all of the $81,389 aggregate principal amount of the 6.375% 2024 Notes at a purchase price of 107.75%, plus accrued and unpaid interest. As a result, $149 aggregate principal amount of the 6.375% 2024 Notes were validly tendered and accepted, and we recognized a loss of $12 from the extinguishment of debt in the amount of the difference between the reacquisition price and the net carrying amount of the 6.375% 2024 Notes, net of the proportionate amount of unamortized debt issuance costs.

As of March 31, 2023 and June 30, 2022, the outstanding aggregate principal amount of the 6.375% 2024 Notes were $81,240 and $81,240, respectively.

2029 Notes

On December 5, 2018, we issued $50,000 aggregate principal amount of unsecured notes that mature on June 15, 2029 (the “2029 Notes”). The 2029 Notes bear interest at a rate of 6.875% per year, payable quarterly on March 15, June 15, September 15, and December 15 of each year, beginning March 19, 2019. Total proceeds from the issuance of the 2029 Notes, net of underwriting discounts and offering costs, were $48,057. On February 9, 2019, we entered into an ATM program with B. Riley FBR, Inc., BB&T Capital Markets, and Comerica Securities, Inc., through which we could sell, by means of ATM offerings, up to $100,000 in aggregate principal amount of our existing 2029 Notes (“2029 Notes ATM” or “2029 Notes Follow-on Program”). The 2029 Notes are listed on the NYSE and trade thereon under the ticker “PBC.” During the year ended June 30, 2019, we issued an additional $19,170 aggregate principal amount under the 2029 Notes ATM, for net proceeds of $18,523, after commissions and offering costs. On December 30, 2021, we redeemed $69,170 of the aggregate principal amount of the 2029 Notes. The transaction resulted in our recognizing a loss of $2,044 during the three months ended December 31, 2021. Following the redemption, none of the 2029 Notes remained outstanding.

2026 Notes

72

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

On January 22, 2021, we issued $325,000 aggregate principal amount of unsecured notes that mature on January 22, 2026 (the “Original 2026 Notes”). The Original 2026 Notes bear interest at a rate of 3.706% per year, payable semi-annually on July 22, and January 22 of each year, beginning on July 22, 2021. Total proceeds from the issuance of the 2026 Notes, net of underwriting discounts and offering costs, were $317,720. On February 19, 2021, we issued an additional $75,000 aggregate principal amount of unsecured notes that mature on January 22, 2026 (the “Additional 2026 Notes”, and together with the Original 2026 Notes, the “2026 Notes”). The Additional 2026 Notes were a further issuance of, and are fully fungible and rank equally in right of payment with, the Original 2026 Notes and bear interest at a rate of 3.706% per year, payable semi-annually on July 22 and January 22 of each year, beginning July 22, 2021. Total proceeds from the issuance of the Additional 2026 Notes, net of underwriting discounts and offering costs, were $74,061. As of March 31, 2023 and June 30, 2022, the outstanding aggregate principal amount of the 2026 Notes were $400,000 and $400,000, respectively.

3.364% 2026 Notes

On May 27, 2021, we issued $300,000 aggregate principal amount of unsecured notes that mature on November 15, 2026 (the “3.364% 2026 Notes”). The 3.364% 2026 Notes bear interest at a rate of 3.364% per year, payable semi-annually on November 15, and May 15 of each year, beginning on November 15, 2021. Total proceeds from the issuance of the 3.364% 2026 Notes, net of underwriting discounts and offering costs, were $293,283. As of March 31, 2023 and June 30, 2022, the outstanding aggregate principal amount of the 3.364% 2026 Notes were $300,000 and $300,000, respectively.

3.437% 2028 Notes

On September 30, 2021, we issued $300,000 aggregate principal amount of unsecured notes that mature on October 15, 2028 (the “3.437% 2028 Notes”). The 3.437% 2028 Notes bear interest at a rate of 3.437% per year, payable semi-annually on April 15 and October 15 of each year, beginning on April 15, 2022. Total proceeds from the issuance of the 3.437% 2028 Notes, net of underwriting discounts and offering costs, were $291,798. As of March 31, 2023 and June 30, 2022, the outstanding aggregate principal amount of the 3.437% 2028 Notes were $300,000 and $300,000, respectively.

The 2023 Notes, the 6.375% 2024 Notes, the 2026 Notes, the 3.364% 2026 Notes, and the 3.437% 2028 Notes (collectively, the “Public Notes”) are direct unsecured obligations and rank equally with all of our unsecured indebtedness from time to time outstanding.

In connection with the issuance of the Public Notes we recorded a discount of $13,417 and debt issuance costs of $13,491, which are being amortized over the term of the notes. As of March 31, 2023 and June 30, 2022, $9,341 and $11,234 of the original issue discount and $8,924 and $11,047, respectively, of the debt issuance costs remain to be amortized and are included as a reduction within Public Notes on the Consolidated Statement of Assets and Liabilities.

During the three months ended March 31, 2023 and March 31, 2022, we recorded $14,878 and $15,581, respectively, of interest costs and amortization of financing costs on the Public Notes as interest expense. During the nine months ended March 31, 2023 and March 31, 2022, we recorded $46,097 and $46,336, respectively, of interest costs and amortization of financing costs on the Public Notes as interest expense.

73

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

Note 7. Prospect Capital InterNotes® 

On February 13, 2020, we entered into a selling agent agreement with InspereX LLC (formerly known as “Incapital LLC”) (the “Selling Agent Agreement”), authorizing the issuance and sale from time to time of up to $1,000,000 of Prospect Capital InterNotes® (collectively with previously authorized selling agent agreements, the “InterNotes® Offerings”). On February 8, 2023, our Board of Directors reauthorized $1,000,000 of Prospect Capital InterNotes® for sale under the Selling Agent Agreement. Additional agents may be appointed by us from time to time in connection with the InterNotes® Offering and become parties to the Selling Agent Agreement. We have, from time to time, repurchased certain notes issued through the InterNotes® Offerings and, therefore, as of March 31, 2023, $355,464 aggregate principal amount of Prospect Capital InterNotes® were outstanding.

These notes are direct unsecured obligations and rank equally with all of our unsecured indebtedness from time to time outstanding. Each series of notes will be issued by a separate trust. These notes bear interest at fixed interest rates and offer a variety of maturities no less than twelve months from the original date of issuance.

During the nine months ended March 31, 2023, we issued $13,333 aggregate principal amount of Prospect Capital InterNotes® for net proceeds of $13,153. These notes were issued with stated interest rates ranging from 4.50% to 5.95% with a weighted average interest rate of 5.41%. These notes will mature between October 15, 2025 and March 15, 2033. The following table summarizes the Prospect Capital InterNotes® issued during the nine months ended March 31, 2023:

Tenor at Origination (in years)						Principal Amount						Interest Rate Range						Weighted Average Interest Rate						Maturity Date Range
3						$	6,539					5.00% – 5.75%						5.50%						October 15, 2025 – March 15, 2026
5						2,635						4.50% – 5.50%						4.50%						July 15, 2027 – October 15, 2027
6						1,933						5.75%						5.75%						December 15, 2028 – March 15, 2029
10						2,226						5.95%						5.95%						December 15, 2032 – March 15, 2033
						$	13,333

During the nine months ended March 31, 2022, we issued $155,909 aggregate principal amount of our Prospect Capital InterNotes® for net proceeds of $152,441. These notes were issued with stated interest rates ranging from 2.25% to 4.63% with a weighted average interest rate of 3.48%. These notes mature between February 15, 2025 and March 15, 2052. The following table summarizes the Prospect Capital InterNotes® issued during the nine months ended March 31, 2022:

Tenor at Origination (in years)						Principal Amount						Interest Rate Range						Weighted Average Interest Rate						Maturity Date Range
3						$	1,499					2.50		%				2.50%						February 15, 2025 – March 15, 2025
5						58,068						2.25% – 4.50%						3.26%						July 15, 2026 – March 15, 2027
7						20,929						2.75% – 4.25%						3.02%						July 15, 2028 – February 15, 2029
10						22,435						3.15% – 4.50%						3.38%						July 15, 2031 – March 15, 2032
12						2,422						3.70		%				3.70%						July 15, 2033
15						15,041						3.50% – 4.50%						3.84%						July 15, 2036 – February 15, 2037
30						35,515						4.00% – 4.63%						4.06%						July 15, 2051 – March 15, 2052
						$	155,909

During the nine months ended March 31, 2023, we repaid $5,433 aggregate principal amount of Prospect Capital InterNotes® at par in accordance with the Survivor’s Option of the InterNotes®. As a result of these transactions, we recorded a loss in the amount of the unamortized debt issuance costs. The net loss on the extinguishment of Prospect Capital InterNotes® in the nine months ended March 31, 2023 was $138.

74

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

The following table summarizes the Prospect Capital InterNotes® outstanding as of March 31, 2023:

Tenor at Origination (in years)						Principal Amount						Interest Rate Range						Weighted Average Interest Rate						Maturity Date Range
3						$	8,700					1.50% – 5.75%						4.68%						January 15, 2024 – March 15, 2026
5						97,050						2.25% – 5.50%						3.30%						January 15, 2026 – October 15, 2027
6						16,790						3.00% – 5.75%						3.32%						June 15, 2027 – March 15, 2029
7						28,912						2.75% – 4.25%						3.17%						January 15, 2028 – February 15, 2029
8						3,486						3.40% – 3.50%						3.45%						June 15, 2029 – July 15, 2029
10						79,222						3.15% – 5.95%						3.94%						August 15, 2029 – March 15, 2033
12						14,491						3.70% – 4.00%						3.95%						June 15, 2033 – July 15, 2033
15						14,647						3.50% – 4.50%						3.84%						July 15, 2036 – February 15, 2037
18						3,030						4.50% – 5.00%						4.80%						January 15, 2031 – April 15, 2031
20						1,597						5.75%						5.75%						November 15, 2032
25						7,835						6.25% – 6.50%						6.37%						November 15, 2038 – May 15, 2039
30						79,704						4.00% – 6.63%						5.31%						November 15, 2042 – March 15, 2052
Principal Outstanding						$	355,464
Less Discounts
Unamortized Debt Issuance						(6,817)
Carrying Amount						$	348,647

75

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

During the nine months ended March 31, 2022, we repaid $1,223 aggregate principal amount of Prospect Capital InterNotes® at par in accordance with the Survivor’s Option, as defined in the InterNotes® Offering prospectus. In order to replace short maturity debt with longer-term debt, we redeemed $322,623 aggregate principal amount of Prospect Capital InterNotes® at par with a weighted average interest rate of 5.45%. As a result of these transactions, we recorded a loss in the amount of the unamortized debt issuance costs. The net loss on the extinguishment of Prospect Capital InterNotes® in the nine months ended March 31, 2022 was $6,403.

The following table summarizes the Prospect Capital InterNotes® outstanding as of June 30, 2022:

Tenor at Origination (in years)						Principal Amount						Interest Rate Range						Weighted Average Interest Rate						Maturity Date Range
3						$	2,161					1.50% - 2.50%						2.19%						January 15, 2024 – March 15, 2025
5						95,134						2.25% - 4.50%						3.27%						January 15, 2026 – June 15, 2027
6						15,057						3.00%						3.00%						June 15, 2027 – July 15, 2027
7						29,252						2.75% - 4.25%						3.17%						January 15, 2028 – February 15, 2029
8						3,511						3.40% - 3.50%						3.45%						June 15, 2029 – July 15, 2029
10						77,434						3.15% - 4.50%						3.85%						August 15, 2029 – May 15, 2032
12						15,066						3.70% - 4.00%						3.95%						June 15, 2033 – July 15, 2033
15						15,041						3.50% - 4.50%						3.84%						July 15, 2036 – February 15, 2037
18						3,085						4.50% - 5.00%						4.73%						January 15, 2031 – April 15, 2031
20						1,597						5.75%						5.75%						November 15, 2032
25						8,036						6.25% - 6.50%						6.37%						November 15, 2038 – May 15, 2039
30						82,190						4.00% - 6.63%						5.29%						November 15, 2042 – March 15, 2052
Principal Outstanding						$	347,564
Less Discounts
Unamortized debt issuance						(7,122)
Carrying Amount						$	340,442

During the three months ended March 31, 2023 and March 31, 2022, we recorded $3,771 and $3,652, respectively, of interest costs and amortization of financing costs on the Prospect Capital InterNotes® as interest expense. During the nine months ended March 31, 2023 and March 31, 2022, we recorded $11,154 and $13,130, respectively, of interest costs and amortization of financing costs on the Prospect Capital InterNotes® as interest expense.

Note 8. Fair Value and Maturity of Debt Outstanding 

As of March 31, 2023, our asset coverage ratio stood at 306.2% based on the outstanding principal amount of our senior securities representing indebtedness of $2,481,277 and our asset coverage ratio on our senior securities that are stock was 193.2%. As of June 30, 2022, our asset coverage ratio stood at 273.3% based on the outstanding principal amount of our senior securities representing indebtedness of $2,769,156 and our asset coverage ratio on our senior securities that are stock was 215.6%. Refer to Note 9, Equity Offerings, Offering Expenses and Distributions for additional discussion on our senior securities that are stock.

Information about our senior securities is shown in the following table as of the end of each of the last ten fiscal years and as of March 31, 2023 (All figures in this item are in thousands except per unit data):

						Total Amount Outstanding(1)						Asset Coverage per Unit(2)						Involuntary Liquidating Preference per Unit						Average Market Value per Unit(3)
Credit Facility
Fiscal 2023 (as of March 31, 2023)						$	888,405					$	8,552					—						—
Fiscal 2022 (as of June 30, 2022)						839,464						9,015						—						—
Fiscal 2021 (as of June 30, 2021)						356,937						17,408						—						—
Fiscal 2020 (as of June 30, 2020)						237,536						22,000						—						—
Fiscal 2019 (as of June 30, 2019)						167,000						34,298						—						—

76

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

Fiscal 2018 (as of June 30, 2018)						37,000						155,503						—						—
Fiscal 2017 (as of June 30, 2017)						—						—						—						—
Fiscal 2016 (as of June 30, 2016)						—						—						—						—
Fiscal 2015 (as of June 30, 2015)						368,700						18,136						—						—
Fiscal 2014 (as of June 30, 2014)						92,000						69,470						—						—
Fiscal 2013 (as of June 30, 2013)						124,000						34,996						—						—
2015 Notes(4)
Fiscal 2015 (as of June 30, 2015)						$	150,000					$	2,241					—						—
Fiscal 2014 (as of June 30, 2014)						150,000						2,305						—						—
Fiscal 2013 (as of June 30, 2013)						150,000						2,578						—						—
2016 Notes(5)
Fiscal 2016 (as of June 30, 2016)						$	167,500					$	2,269					—						—
Fiscal 2015 (as of June 30, 2015)						167,500						2,241						—						—
Fiscal 2014 (as of June 30, 2014)						167,500						2,305						—						—
Fiscal 2013 (as of June 30, 2013)						167,500						2,578						—						—
2017 Notes(6)
Fiscal 2017 (as of June 30, 2017)						$	50,734					$	2,251					—						—
Fiscal 2016 (as of June 30, 2016)						129,500						2,269						—						—
Fiscal 2015 (as of June 30, 2015)						130,000						2,241						—						—
Fiscal 2014 (as of June 30, 2014)						130,000						2,305						—						—
Fiscal 2013 (as of June 30, 2013)						130,000						2,578						—						—
2018 Notes(7)
Fiscal 2017 (as of June 30, 2017)						$	85,419					$	2,251					—						—
Fiscal 2016 (as of June 30, 2016)						200,000						2,269						—						—
Fiscal 2015 (as of June 30, 2015)						200,000						2,241						—						—
Fiscal 2014 (as of June 30, 2014)						200,000						2,305						—						—
Fiscal 2013 (as of June 30, 2013)						200,000						2,578						—						—
2019 Notes(9)
Fiscal 2018 (as of June 30, 2018)						$	101,647					$	2,452					—						—
Fiscal 2017 (as of June 30, 2017)						200,000						2,251						—						—
Fiscal 2016 (as of June 30, 2016)						200,000						2,269						—						—
Fiscal 2015 (as of June 30, 2015)						200,000						2,241						—						—
Fiscal 2014 (as of June 30, 2014)						200,000						2,305						—						—
Fiscal 2013 (as of June 30, 2013)						200,000						2,578						—						—
5.00% 2019 Notes(10)
Fiscal 2018 (as of June 30, 2018)						$	153,536					$	2,452					—						—
Fiscal 2017 (as of June 30, 2017)						300,000						2,251						—						—
Fiscal 2016 (as of June 30, 2016)						300,000						2,269						—						—
Fiscal 2015 (as of June 30, 2015)						300,000						2,241						—						—
Fiscal 2014 (as of June 30, 2014)						300,000						2,305						—						—
2020 Notes(13)
Fiscal 2019 (as of June 30, 2019)						$	224,114					$	2,365					—						—
Fiscal 2018 (as of June 30, 2018)						392,000						2,452						—						—
Fiscal 2017 (as of June 30, 2017)						392,000						2,251						—						—
Fiscal 2016 (as of June 30, 2016)						392,000						2,269						—						—
Fiscal 2015 (as of June 30, 2015)						392,000						2,241						—						—

77

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

Fiscal 2014 (as of June 30, 2014)						400,000						2,305						—						—
6.95% 2022 Notes(8)
Fiscal 2014 (as of June 30, 2014)						$	100,000					$	2,305					—						$	1,038
Fiscal 2013 (as of June 30, 2013)						100,000						2,578						—						1,036
2022 Notes
Fiscal 2022 (as of June 30, 2022)						$	60,501					$	2,733					—						—
Fiscal 2021 (as of June 30, 2021)						111,055						2,740						—						—
Fiscal 2020 (as of June 30, 2020)						258,240						2,408						—						—
Fiscal 2019 (as of June 30, 2019)						328,500						2,365						—						—
Fiscal 2018 (as of June 30, 2018)						328,500						2,452						—						—
Fiscal 2017 (as of June 30, 2017)						225,000						2,251						—						—
2023 Notes(11)(18)
Fiscal 2022 (as of June 30, 2022)						284,219						2,733						—						—
Fiscal 2021 (as of June 30, 2021)						284,219						2,740						—						—
Fiscal 2020 (as of June 30, 2020)						319,145						2,408						—						—
Fiscal 2019 (as of June 30, 2019)						318,863						2,365						—						—
Fiscal 2018 (as of June 30, 2018)						318,675						2,452						—						—
Fiscal 2017 (as of June 30, 2017)						248,507						2,251						—						—
Fiscal 2016 (as of June 30, 2016)						248,293						2,269						—						—
Fiscal 2015 (as of June 30, 2015)						248,094						2,241						—						—
Fiscal 2014 (as of June 30, 2014)						247,881						2,305						—						—
Fiscal 2013 (as of June 30, 2013)						247,725						2,578						—						—
2024 Notes(14)
Fiscal 2020 (as of June 30, 2020)						$	233,788					$	2,408					—						$	959
Fiscal 2019 (as of June 30, 2019)						234,443						2,365						—						1,002
Fiscal 2018 (as of June 30, 2018)						199,281						2,452						—						1,029
Fiscal 2017 (as of June 30, 2017)						199,281						2,251						—						1,027
Fiscal 2016 (as of June 30, 2016)						161,364						2,269						—						951
6.375% 2024 Notes(11)
Fiscal 2023 (as of March 31, 2023)						$	81,240					$	3,062					—						—
Fiscal 2022 (as of June 30, 2022)						81,240						2,733						—						—
Fiscal 2021 (as of June 30, 2021)						81,389						2,740						—						—
Fiscal 2020 (as of June 30, 2020)						99,780						2,408						—						—
Fiscal 2019 (as of June 30, 2019)						99,726						2,365						—						—
2025 Notes
Fiscal 2023 (as of March 31, 2023)						$	156,168					$	3,062					—						—
Fiscal 2022 (as of June 30, 2022)						156,168						2,733						—						—
Fiscal 2021 (as of June 30, 2021)						156,168						2,740						—						—
Fiscal 2020 (as of June 30, 2020)						201,250						2,408						—						—
Fiscal 2019 (as of June 30, 2019)						201,250						2,365						—						—
2026 Notes
Fiscal 2023 (as of March 31, 2023)						$	400,000					$	3,062					—						—
Fiscal 2022 (as of June 30, 2022)						400,000						2,733						—						—
Fiscal 2021 (as of June 30, 2021)						400,000						2,740						—						—
3.364% 2026 Notes

78

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

Fiscal 2023 (as of March 31, 2023)						$	300,000					$	3,062					—						—
Fiscal 2022 (as of June 30, 2022)						300,000						2,733						—						—
Fiscal 2021 (as of June 30, 2021)						300,000						2,740						—						—
3.437% 2028 Notes
Fiscal 2023 (as of March 31, 2023)						$	300,000					$	3,062					—						—
Fiscal 2022 (as of June 30, 2022)						300,000						2,733						—						—
2028 Notes(15)
Fiscal 2020 (as of June 30, 2020)						$	70,761					$	2,408					—						$	950
Fiscal 2019 (as of June 30, 2019)						70,761						2,365						—						984
Fiscal 2018 (as of June 30, 2018)						55,000						2,452						—						1,004
2029 Notes(16)
Fiscal 2021 (as of June 30, 2021)						$	69,170					$	2,740					—						$	1,028
Fiscal 2020 (as of June 30, 2020)						69,170						2,408						—						970
Fiscal 2019 (as of June 30, 2019)						69,170						2,365						—						983
Prospect Capital InterNotes®
Fiscal 2023 (as of March 31, 2023)						$	355,464					$	3,062					—						—
Fiscal 2022 (as of June 30, 2022)						347,564						2,733						—						—
Fiscal 2021 (as of June 30, 2021)						508,711						2,740						—						—
Fiscal 2020 (as of June 30, 2020)						680,229						2,408						—						—
Fiscal 2019 (as of June 30, 2019)						707,699						2,365						—						—
Fiscal 2018 (as of June 30, 2018)						760,924						2,452						—						—
Fiscal 2017 (as of June 30, 2017)						980,494						2,251						—						—
Fiscal 2016 (as of June 30, 2016)						908,808						2,269						—						—
Fiscal 2015 (as of June 30, 2015)						827,442						2,241						—						—
Fiscal 2014 (as of June 30, 2014)						785,670						2,305						—						—
Fiscal 2013 (as of June 30, 2013)						363,777						2,578						—						—
6.50% Preferred Stock
Fiscal 2023 (as of March 31, 2023)						$	421,870					$	48					$	25					$	—
5.50% Preferred Stock
Fiscal 2023 (as of March 31, 2023)						$	879,458					$	48					$	25					—
Fiscal 2022 (as of June 30, 2022)						590,197						54						25						—
Fiscal 2021 (as of June 30, 2021)						137,040						65						25						—
5.35% Preferred Stock
Fiscal 2023 (as of March 31, 2023)						$	150,000					$	48					$	25					$	15.96
Fiscal 2022 (as of June 30, 2022)						150,000						54						$	25					21.08
All Senior Securities(11)(12)
Fiscal 2023 (as of March 31, 2023)						$	3,932,605					$	1,932					—						—
Fiscal 2022 (as of June 30, 2022)						3,509,353						2,156						—						—
Fiscal 2021 (as of June 30, 2021)						2,404,689						2,584						—						—
Fiscal 2020 (as of June 30, 2020)						2,169,899						2,408						—						—
Fiscal 2019 (as of June 30, 2019)						2,421,526						2,365						—						—
Fiscal 2018 (as of June 30, 2018)						2,346,563						2,452						—						—
Fiscal 2017 (as of June 30, 2017)						2,681,435						2,251						—						—
Fiscal 2016 (as of June 30, 2016)						2,707,465						2,269						—						—
Fiscal 2015 (as of June 30, 2015)						2,983,736						2,241						—						—
Fiscal 2014 (as of June 30, 2014)						2,773,051						2,305						—						—

79

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

Fiscal 2013 (as of June 30, 2013)						1,683,002						2,578						—						—

(1)     Except as noted, the total amount of each class of senior securities outstanding at the end of the year/period presented (in 000’s).

(2)The asset coverage ratio for a class of secured senior securities representing indebtedness is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by secured senior securities representing indebtedness. The asset coverage ratio for a class of unsecured senior securities representing indebtedness is inclusive of all senior securities representing indebtedness. With respect to the senior securities represented by indebtedness, this asset coverage ratio is multiplied by $1,000 to determine the Asset Coverage Per Unit. The asset coverage ratio for a class of senior securities representing preferred stock is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by the sum of all senior securities representing indebtedness and the involuntary liquidation preference of senior securities representing preferred stock (the “Total Asset Coverage Ratio”). With respect to the Preferred Stock, the Asset Coverage Per Unit figure is expressed in terms of a dollar amount per share of outstanding Preferred Stock (based on a per share liquidation preference of $25). The rows reflecting “All Senior Securities” reflect the Total Asset Coverage Ratio as the asset coverage ratio, and express Asset Coverage Per Unit as per $1,000 of indebtedness or per $1,000 of Preferred Stock liquidation preference.

(3)This column is inapplicable, except for the 6.95% 2022 Notes, the 2024 Notes, the 2028 Notes, the 2029 Notes, and the 5.35% Preferred Stock. The average market value per unit is calculated as an average of quarter-end prices. With respect to the senior securities represented by indebtedness, the market value is shown per $1,000 of indebtedness.

(4)We repaid the outstanding principal amount of the 2015 Notes on December 15, 2015.

(5)We repaid the outstanding principal amount of the 2016 Notes on August 15, 2016.

(6)We repaid the outstanding principal amount of the 2017 Notes on October 15, 2017.

(7)We repaid the outstanding principal amount of the 2018 Notes on March 15, 2018.

(8)We redeemed the 6.95% 2022 Notes on May 15, 2015.

(9)We repaid the outstanding principal amount of the 2019 Notes on January 15, 2019.

(10)We redeemed the 5.00% 2019 Notes on September 26, 2018.

(11)For the fiscal years ended June 30, 2020 or prior, the 2023 Notes and 6.375% 2024 Notes are presented net of unamortized discount.

(12)While we do not consider commitments to fund under revolving arrangements to be Senior Securities, if we were to elect to treat such unfunded commitments, which were $54,133 as of March 31, 2023 as Senior Securities for purposes of Section 18 of the 1940 Act, our asset coverage per unit would be $1,906.

(13)We repaid the outstanding principal amount of the 2020 Notes on April 15, 2020.

(14)We redeemed the 2024 Notes on February 16, 2021.

(15)We redeemed the 2028 Notes on June 15, 2021.

(16)We redeemed the 2029 Notes on December 30, 2021.

(17)We redeemed the 2022 Notes on July 15, 2022.

(18)We redeemed the 2023 Notes on March 15, 2023.

The following table shows our outstanding debt as of March 31, 2023:

						Principal Outstanding						Unamortized Discount & Debt Issuance Costs						Net Carrying Value						Fair Value						Effective Interest Rate
Revolving Credit Facility						$	888,405					$	14,842					$	888,405		(1)			$	888,405		(2)			1M SOFR +			2.05%			(5)
2025 Notes						156,168						1,802						154,366						153,833			(3)			6.63%						(6)
Convertible Notes						156,168												154,366						153,833
6.375%			2024 Notes			81,240						161						81,079						81,065			(3)			6.57%						(6)
2026 Notes						400,000						5,720						394,280						354,504			(3)			3.98%						(6)
3.364%			2026 Notes			300,000						5,059						294,941						252,930			(3)			3.60%						(6)
3.437%			2028 Notes			300,000						7,325						292,675						230,055			(3)			3.64%						(6)
Public Notes						1,081,240												1,062,975						918,554
Prospect Capital InterNotes®						355,464						6,817						348,647						314,017			(4)			5.76%						(7)
Total						$	2,481,277											$	2,454,393					$	2,274,809

(1)Net Carrying Value excludes deferred financing costs associated with the Revolving Credit Facility. See Note 2 for accounting policy details.

80

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

(2)The fair value of the Revolving Credit Facility is equal to its carrying value as the Company has the ability to repay the outstanding principal at par value at any time. The fair value is categorized as Level 2 under ASC 820.

(3)We use available market quotes to estimate the fair value of the Convertible Notes and Public Notes. The fair value of these debt obligations are categorized as Level 1 under ASC 820.

(4)The fair value of Prospect Capital InterNotes® is estimated by discounting remaining payments using current Treasury rates plus spread based on observable market inputs. The fair value of these debt obligations are categorized as Level 2 under ASC 820.

(5)Represents the rate on drawn down and outstanding balances. Deferred debt issuance costs are amortized on a straight-line method over the stated life of the obligation.

(6)The effective interest rate is equal to the effect of the stated interest, the accretion of original issue discount and amortization of debt issuance costs.

(7)For the Prospect Capital InterNotes®, the rate presented is the weighted average effective interest rate. Interest expense and deferred debt issuance costs, which are amortized on a straight-line method over the stated life of the obligation which approximates level yield, are weighted against the average year-to-date principal balance.

The following table shows our outstanding debt as of June 30, 2022:

						Principal Outstanding						Unamortized Discount & Debt Issuance Costs						Net Carrying Value						Fair Value						Effective Interest Rate
Revolving Credit Facility						$	839,464					$	10,801					$	839,464		(1)			$	839,464		(2)			1ML +			2.05		%	(5)
2022 Notes						60,501						18						60,483						60,753			(3)			5.63%						(6)
2025 Notes						156,168						2,459						153,709						158,094			(3)			6.63%						(6)
Convertible Notes						216,669												214,192						218,847
2023 Notes						284,219						600						283,619						286,101			(3)			6.07%						(6)
6.375%						81,240						299						80,941						82,084			(3)			6.57%						(6)
2026 Notes						400,000						7,134						392,866						355,316			(3)			3.98%						(6)
3.364%			2026 Notes			300,000						6,026						293,974						254,931			(3)			3.60%						(6)
3.437%			2028 Notes			300,000						8,222						291,778						229,866			(3)			3.64%						(6)
Public Notes						1,365,459												1,343,178						1,208,298
Prospect Capital InterNotes®						347,564						7,122						340,442						285,822			(4)			5.71%						(7)
Total						$	2,769,156											$	2,737,276					$	2,552,431

(1)Net Carrying Value excludes deferred financing costs associated with the Revolving Credit Facility. See Note 2 for accounting policy details.

(2)The fair value of the Revolving Credit Facility is equal to its carrying value as the Company has the ability to repay the outstanding principal at par value at any time. The fair value is categorized as Level 2 under ASC 820.

(3)We use available market quotes to estimate the fair value of the Convertible Notes and Public Notes. The fair value of these debt obligations are categorized as Level 1 under ASC 820.

(4)The fair value of Prospect Capital InterNotes® is estimated by discounting remaining payments using current Treasury rates plus spread based on observable market inputs. The fair value of these debt obligations are categorized as Level 2 under ASC 820.

(5)Represents the rate on drawn down and outstanding balances. Deferred debt issuance costs are amortized on a straight-line method over the stated life of the obligation.

(6)The effective interest rate is equal to the effect of the stated interest, the accretion of original issue discount and amortization of debt issuance costs.

(7)For the Prospect Capital InterNotes®, the rate presented is the weighted average effective interest rate. Interest expense and deferred debt issuance costs, which are amortized on a straight-line method over the stated life of the obligation which approximates level yield, are weighted against the average year-to-date principal balance.

81

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

The following table shows the contractual maturities by fiscal year of our Revolving Credit Facility, Convertible Notes, Public Notes and Prospect Capital InterNotes® as of March 31, 2023:

			Payments Due by Fiscal Year ending June 30,
			Total						Remainder of 2023						2024						2025						2026						2027						After 5 Years
Revolving Credit Facility			$	888,405					$	—					$	—					$	—					$	—					$	—					$	888,405
Convertible Notes			156,168						—						—						156,168						—						—						—
Public Notes			1,081,240						—						81,240						—						400,000						300,000						300,000
Prospect Capital InterNotes®			355,464						—						662						1,499						36,657						74,632						242,014
Total Contractual Obligations			$	2,481,277					$	—					$	81,902					$	157,667					$	436,657					$	374,632					$	1,430,419

We may from time to time seek to cancel or purchase our outstanding debt through cash purchases and/or exchanges, in open market purchases, privately negotiated transactions or otherwise. The amounts involved may be material. In addition, we may from time to time enter into additional debt facilities, increase the size of existing facilities or issue additional debt securities, including secured debt, unsecured debt and/or debt securities convertible into common stock. Any such purchases or exchanges of outstanding debt would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors.

Note 9. Equity Offerings, Offering Expenses, and Distributions

On February 13, 2020, we filed a registration statement on Form N-2 (File No. 333-236415) that was effective upon filing pursuant to Rule 462(e) under the Securities Act as permitted under the Small Business Credit Availability Act. The registration statement permits us to issue, through one or more transactions, an indeterminate amount of securities, consisting of common stock, preferred stock, debt securities, subscription rights to purchase our securities, warrants representing rights to purchase our securities or separately tradable units combining two or more of our securities.

Preferred Stock

On August 3, 2020, we entered into a Dealer Manager Agreement with Preferred Capital Securities, LLC (“PCS”), amended on June 9, 2022, October 7, 2022 and February 10, 2023, pursuant to which PCS has agreed to serve as the Company’s agent, principal distributor and dealer manager for the Company’s offering of up to 72,000,000 shares, par value $0.001 per share, of preferred stock, with a liquidation preference of $25.00 per share. Such preferred stock will initially be issued in multiple series, including the 5.50% Series A1 Preferred Stock (“Series A1 Preferred Stock”), the 5.50% Series M1 Preferred Stock (“Series M1 Preferred Stock”), the 5.50% Series M2 Preferred Stock (“Series M2 Preferred Stock”), the 6.50% Series A3 Preferred Stock (“Series A3 Preferred Stock”), and the 6.50% Series M3 Preferred Stock (“Series M3 Preferred Stock”). In connection with such offering, on August 3, 2020, June 9, 2022, October 11, 2022 and February 10, 2023 we filed Articles Supplementary with the State Department of Assessments and Taxation of Maryland (“SDAT”), reclassifying and designating 120,000,000, 60,000,000, 120,000,000, and 60,000,000 shares, respectively, of the Company’s authorized and unissued shares of common stock into shares of preferred stock as “Convertible Preferred Stock.”

On October 30, 2020, and amended on February 18, 2022 and October 7, 2022, we entered into a Dealer Manager Agreement with InspereX LLC, pursuant to which InspereX LLC has agreed to serve as the Company’s agent and dealer manager for the Company’s offering of up to 10,000,000 shares, par value $0.001 per share, of preferred stock, with a liquidation preference of $25.00 per share. Such preferred stock will initially be issued in multiple series, including the 5.50% Series AA1 Preferred Stock (the “Series AA1 Preferred Stock”), the 5.50% Series MM1 Preferred Stock (the “Series MM1 Preferred Stock”), the 6.50% Series AA2 Preferred Stock (the “Series AA2 Preferred Stock”), and the 6.50% Series MM2 Preferred Stock (the “Series MM2 Preferred Stock” and together with the Series M1 Preferred Stock, the Series M2 Preferred Stock, the Series M3 Preferred Stock, and the Series MM1 Preferred Stock, the “Series M Preferred Stock”, and the Series MM2 Preferred Stock, together with the Series AA2 Preferred Stock, the Series A3 Preferred Stock and the Series M3 Preferred Stock, the “6.50% Preferred Stock”). In connection with such offering, on October 30, 2020, February 17, 2022, and October 11, 2022, we filed Articles Supplementary with the SDAT, reclassifying and designating an additional 80,000,000 shares of the Company’s authorized and unissued shares of common stock into shares of preferred stock as Convertible Preferred Stock. On May 19, 2021, we entered into an Underwriting Agreement with UBS Securities LLC, relating to the offer and sale of 187,000 shares, par value $0.001 per share, of 5.50% Series A2 Preferred Stock, with a liquidation preference of $25.00 per share (the “Series A2 Preferred Stock”, and together with the Series A1 Preferred Stock, Series M1 Preferred Stock, Series M2 Preferred Stock, Series AA1 Preferred Stock, and Series MM1 Preferred Stock, the “5.50% Preferred Stock”). The issuance of the Series A2 Preferred Stock settled on May 26, 2021. In connection with such offering, on May 19, 2021, we filed Articles Supplementary

82

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

with the SDAT, reclassifying and designating an additional 1,000,000 shares of the Company’s authorized and unissued shares of common stock into shares of preferred stock as Convertible Preferred Stock.

In connection with the offerings of the 5.50% Preferred Stock and the 6.50% Preferred Stock, we adopted and amended, respectively, a preferred stock dividend reinvestment plan (the “Preferred Stock Plan” or the “Preferred Stock DRIP”), pursuant to which holders of the 5.50% Preferred Stock and the 6.50% Preferred Stock will have dividends on their 5.50% Preferred Stock and 6.50% Preferred Stock automatically reinvested in additional shares of such 5.50% Preferred Stock and 6.50% Preferred Stock at a price per share of $25.00, if they elect.

Each series of 5.50% Preferred Stock and 6.50% Preferred Stock ranks (with respect to the payment of dividends and rights upon liquidation, dissolution or winding up) (a) senior to our common stock, (b) on parity with each other series of our preferred stock, and (c) junior to our existing and future secured and unsecured indebtedness. See Note 8, Fair Value and Maturity of Debt Outstanding for further discussion on our senior securities.

At any time prior to the listing of the 5.50% Preferred Stock and the 6.50% Preferred Stock on a national securities exchange, shares of the 5.50% Preferred Stock and the 6.50% Preferred Stock are convertible, at the option of the holder of the 5.50% Preferred Stock and the 6.50% Preferred Stock (the “Holder Optional Conversion”). We will settle any Holder Optional Conversion by paying or delivering, as the case may be, (A) any portion of the Settlement Amount (as defined below) that we elect to pay in cash and (B) a number of shares of our common stock at a conversion rate equal to (1) (a) the Settlement Amount, minus (b) any portion of the Settlement Amount that we elect to pay in cash, divided by (2) the arithmetic average of the daily volume weighted average price of shares of our common stock over each of the five consecutive trading days ending on the Holder Conversion Exercise Date (such arithmetic average, the “5-day VWAP”). For the Series A1 Preferred Stock, the Series A3 Preferred Stock, the Series AA1 Preferred Stock, the Series AA2 Preferred Stock and the Series A2 Preferred Stock, “Settlement Amount” means (A) $25.00 per share (the “Stated Value”), plus (B) unpaid dividends accrued to, but not including, the Holder Conversion Exercise Date, minus (C) the applicable Holder Optional Conversion Fee for the respective Holder Conversion Deadline. For the Series M Preferred Stock, “Settlement Amount” means (A) the Stated Value, plus (B) unpaid dividends accrued to, but not including, the Holder Conversion Exercise Date, minus (C) the applicable Series M Clawback, if any. “Series M Clawback”, if applicable, means an amount equal to the aggregate amount of all dividends, whether paid or accrued, on such share of Series M Stock in the three full months prior to the Holder Conversion Exercise Date. Subject to certain limited exceptions, we will not pay any portion of the Settlement Amount in cash (other than cash in lieu of fractional shares of our common stock) until the five year anniversary of the date on which a share of 5.50% Preferred Stock or 6.50% Preferred Stock has been issued. Beginning on the five year anniversary of the date on which a share of 5.50% Preferred Stock or 6.50% Preferred Stock is issued, we may elect to settle all or a portion of any Holder Optional Conversion in cash without limitation or restriction. The right of holders to convert a share of 5.50% Preferred Stock or 6.50% Preferred Stock will terminate upon the listing of such share on a national securities exchange.

Subject to certain limited exceptions allowing earlier redemption, beginning on the earlier of the five year anniversary of the date on which a share of 5.50% Preferred Stock or 6.50% Preferred Stock has been issued, or, for listed shares of 5.50% Preferred Stock and 6.50% Preferred Stock, five years from the earliest date on which any series that has been listed was first issued (the earlier of such dates, the “Redemption Eligibility Date”), such share of 5.50% Preferred Stock or 6.50% Preferred Stock may be redeemed at any time or from time to time at our option (the “Issuer Optional Redemption”), at a redemption price of 100% of the Stated Value of the shares of 5.50% Preferred Stock or 6.50% Preferred Stock to be redeemed plus unpaid dividends accrued to, but not including, the date fixed for redemption.

Subject to certain limitations, each share of 5.50% Preferred Stock and 6.50% Preferred Stock may be converted at our option (the “Issuer Optional Conversion”). We will settle any Issuer Optional Conversion by paying or delivering, as the case may be, (A) any portion of the IOC Settlement Amount (as defined below) that we elect to pay in cash and (B) a number of shares of our common stock at a conversion rate equal to (1) (a) the IOC Settlement Amount, minus (b) any portion of the IOC Settlement Amount that we elect to pay in cash, divided by (2) the 5-day VWAP, subject to our ability to obtain or maintain any stockholder approval that may be required under the 1940 Act to permit us to sell our common stock below net asset value if the 5-day VWAP represents a discount to our net asset value per share of common stock. For the 5.50% Preferred Stock and 6.50% Preferred Stock, “IOC Settlement Amount” means (A) the Stated Value, plus (B) unpaid dividends accrued to, but not including, the date fixed for conversion. In connection with an Issuer Optional Conversion, we will use commercially reasonable efforts to obtain or maintain any stockholder approval that may be required under the 1940 Act to permit us to sell our common stock below net asset value. If we do not have or obtain any required stockholder approval under the 1940 Act to sell our common stock below net asset value and the 5-day VWAP is at a discount to our net asset value per share of common stock, we will settle any conversions in connection with an Issuer Optional Conversion by paying or delivering, as the case may be, (A) any portion of the IOC Settlement Amount that we elect to pay in cash and (B) a number of shares of our common stock at a conversion rate equal to (1) (a) the IOC Settlement Amount, minus (b) any portion of the IOC Settlement Amount that we

83

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

elect to pay in cash, divided by (2) the NAV per share of common stock at the close of business on the business day immediately preceding the date of conversion. We will not pay any portion of the IOC Settlement Amount from an Issuer Optional Conversion in cash (other than cash in lieu of fractional shares of our common stock) until the Redemption Eligibility Date. Beginning on the Redemption Eligibility Date, we may elect to settle any Issuer Optional Conversion in cash without limitation or restriction. In the event that we exercise an Issuer Optional Conversion with respect to any shares of 5.50% Preferred Stock and 6.50% Preferred Stock, the holder of such 5.50% Preferred Stock or 6.50% Preferred Stock may instead elect a Holder Optional Conversion with respect to such 5.50% Preferred Stock or 6.50% Preferred Stock provided that the date of conversion for such Holder Optional Conversion would occur prior to the date of conversion for an Issuer Optional Conversion.

On July 12, 2021, we entered into an underwriting agreement by and among us, Prospect Capital Management L.P., Prospect Administration LLC, and Morgan Stanley & Co. LLC, RBC Capital Markets, LLC and UBS Securities LLC, as representatives of the underwriters, relating to the offer and sale of 6,000,000 shares, or $150,000 in aggregate liquidation preference, of our 5.35% Series A Fixed Rate Cumulative Perpetual Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock” or “5.35% Preferred Stock”), at a public offering price of $25.00 per share. Pursuant to the Underwriting Agreement, we also granted the underwriters a 30-day option to purchase up to an additional 900,000 shares of Series A Preferred Stock solely to cover over-allotments. The offer settled on July 19, 2021, and no additional shares of the Series A Preferred Stock were issued pursuant to the option. In connection with such offering, on July 15, 2021, we filed Articles Supplementary with SDAT, reclassifying and designating 6,900,000 shares of the Company’s authorized and unissued shares of Common Stock into shares of Series A Preferred Stock.

The Series A Preferred Stock ranks (with respect to the payment of dividends and rights upon liquidation, dissolution or winding up) (a) senior to our common stock, (b) on parity with each other series of our preferred stock, and (c) junior to our existing and future secured and unsecured indebtedness. See Note 8, Fair Value and Maturity of Debt Outstanding for further discussion on our senior securities.

Subject to certain limited exceptions allowing earlier redemption, at any time after the close of business on July 19, 2026 (any such date, an “Optional Redemption Date”), at our sole option, we may redeem the Series A Preferred Stock in whole or, from time to time, in part, out of funds legally available for such redemption, at a price per share equal to the liquidation preference of $25.00 per share, plus an amount equal to all unpaid dividends on such shares (whether or not earned or declared, but excluding interest thereon) accumulated up to, but excluding, the date fixed for redemption. We may also redeem the Series A Preferred Stock at any time, in whole or, from time to time, in part, including prior to the Optional Redemption Date, pro rata, based on liquidation preference, with all other series of our then outstanding preferred stock, in the event that our Board determines to redeem any series of our preferred stock, in whole or, from time to time, in part, because such redemption is deemed necessary by the Board to comply with the asset coverage requirements of the 1940 Act or for us to maintain RIC status.

In the event of a Change of Control Triggering Event (as defined below), we may, at our option, exercise our special optional redemption right to redeem the Series A Preferred Stock, in whole or in part, within 120 days after the first date on which such Change of Control Triggering Event has occurred by paying the liquidation preference, plus an amount equal to all unpaid dividends on such shares (whether or not earned or declared, but excluding interest thereon) accumulated up to, but excluding, the date fixed for such redemption. To the extent that we exercise our optional redemption right or our special optional redemption right relating to the Series A Preferred Stock, the holders of Series A Preferred Stock will not be permitted to exercise the conversion right described below in respect of their shares called for redemption.

Except to the extent that we have elected to exercise our optional redemption right or our special optional redemption right by providing notice of redemption prior to the Change of Control Conversion Date (as defined below), upon the occurrence of a Change of Control Triggering Event, each holder of Series A Preferred Stock will have the right to convert some or all of the Series A Preferred Stock held by such holder on the Change of Control Conversion Date into a number of our shares of common stock per Series A Preferred Stock to be converted equal to the lesser of:

•the quotient obtained by dividing (i) the sum of the Liquidation Preference per share plus an amount equal to all unpaid dividends thereon (whether or not earned or declared, but excluding interest thereon) accumulated up to, but excluding, the Change of Control Conversion Date (unless the Change of Control Conversion Date is after a Record Date for a Series A Preferred Stock dividend payment and prior to the corresponding Series A Preferred Stock dividend payment date, in which case no additional amount for such accrued and unpaid dividends will be included in this sum) by (ii) the Common Stock Price (as defined below); and

•6.03865, subject to certain adjustments,

84

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

subject, in each case, to provisions for the receipt of alternative consideration upon conversion as described in the applicable prospectus supplement.

If we have provided or provide a redemption notice with respect to some or all of the Series A Preferred Stock, holders of any Series A Preferred Stock that we have called for redemption will not be permitted to exercise their Change of Control Conversion Right in respect of any of their Series A Preferred Stock that have been called for redemption, and any Series A Preferred Stock subsequently called for redemption that have been tendered for conversion will be redeemed on the applicable date of redemption instead of converted on the Change of Control Conversion Date.

For purposes of the foregoing discussion of a redemption upon the occurrence of a Change of Control Triggering Event, the following definitions are applicable:

“Change of Control Triggering Event” means the occurrence of any of the following:

•the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation and other than an Excluded Transaction) in one or a series of related transactions, of all or substantially all of the assets of the Company and its Controlled Subsidiaries taken as a whole to any “person” or “group” (as those terms are used in Section 13(d)(3) of the Exchange Act) (other than to any Permitted Holders); provided that, for the avoidance of doubt, a pledge of assets pursuant to any of our secured debt instruments or the secured debt instruments of our Controlled Subsidiaries shall not be deemed to be any such sale, lease, transfer, conveyance or disposition; or

•the consummation of any transaction (including, without limitation, any merger or consolidation and other than an Excluded Transaction) the result of which is that any “person” or “group” (as those terms are used in Section 13(d)(3) of the Exchange Act) (other than any Permitted Holders) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of our outstanding Voting Stock, measured by voting power rather than number of shares.

Notwithstanding the foregoing, the consummation of any of the transactions referred to in the bullet points above will not be deemed a Change of Control Triggering Event if we or the acquiring or surviving consolidated entity has or continues to have a class of common securities (or ADRs representing such securities) listed on the NYSE, the NYSE American or NASDAQ, or listed or quoted on an exchange or quotation system that is a successor to the NYSE, the NYSE American or NASDAQ, or is otherwise listed or quoted on a national securities exchange.

The “Change of Control Conversion Date” is the date the shares of Series A Preferred Stock are to be converted, which will be a business day selected by us that is no fewer than 20 days nor more than 35 days after the date on which we provide the notice described above to the holders of Series A Preferred Stock.

The “Common Stock Price” will be (i) if the consideration to be received in the Change of Control Triggering Event by the holders of our common stock is solely cash, the amount of cash consideration per share of our common stock or (ii) if the consideration to be received in the Change of Control Triggering Event by holders of our common stock is other than solely cash (x) the average of the closing sale prices per share of our common stock (or, if no closing sale price is reported, the average of the closing bid and ask prices or, if more than one in either case, the average of the average closing bid and the average closing ask prices) for the ten consecutive trading days immediately preceding, but not including, the effective date of the Change of Control Triggering Event as reported on the principal U.S. securities exchange on which our common stock is then traded, or (y) the average of the last quoted bid prices for our common stock in the over-the-counter market as reported by OTC Markets Group Inc. or similar organization for the ten consecutive trading days immediately preceding, but not including, the effective date of the Change of Control Triggering Event, if our common stock is not then listed for trading on a U.S. securities exchange.

“Controlled Subsidiary” means any of our subsidiaries, 50% or more of the outstanding equity interests of which are owned by us and our direct or indirect subsidiaries and of which we possess, directly or indirectly, the power to direct or cause the direction of the management or policies, whether through the ownership of voting equity interests, by agreement or otherwise.

“Excluded Transaction” means (i) any transaction that does not result in any reclassification, conversion, exchange or cancellation of all or substantially all of the outstanding shares of our Voting Stock; (ii) any changes resulting from a subdivision or combination or a change solely in par value; (iii) any transaction where the shares of our Voting Stock outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the Voting Stock of the surviving “person” (as that term is used in Section 13(d)(3) of the Exchange Act) or any direct or indirect parent company of the surviving “person” (as that term is used in Section 13(d)(3) of the Exchange Act) immediately after giving effect to such transaction; (iv) any transaction if (A) we become a direct or indirect wholly-owned subsidiary of a holding company and (B)(1) the direct or indirect holders of the Voting Stock of such holding company immediately following that

85

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

transaction are substantially the same as the holders of our Voting Stock immediately prior to that transaction or (2) immediately following that transaction no “person” (as that term is used in Section 13(d)(3) of the Exchange Act) is the beneficial owner, directly or indirectly, of more than 50% of the Voting Stock of such holding company; or (v) any transaction primarily for the purpose of changing our jurisdiction of incorporation or form of organization.

“Permitted Holders” means (i) us, (ii) one or more of our Controlled Subsidiaries and (iii) Prospect Capital Management or any affiliate of Prospect Capital Management that is organized under the laws of a jurisdiction located in the United States of America and in the business of managing or advising clients.

“Voting Stocks” as applied to stock of any person, means shares, interests, participations or other equivalents in the equity interest (however designated) in such person having ordinary voting power for the election of the directors (or the equivalent) of such person, other than shares, interests, participations or other equivalents having such power only by reason of the occurrence of a contingency.

Except as provided above in connection with a Change of Control Triggering Event, the Series A Preferred Stock is not convertible into or exchangeable for any other securities or property.

For so long as the Series A Preferred Stock is outstanding, we will not exercise any option we have to convert any other series of our outstanding preferred stock to common stock, including the Issuer Optional Conversion, or any other security ranking junior to such preferred stock. As a result, and in accordance with ASC 480, we have presented our 5.50% Preferred Stock, 6.50% Preferred Stock, and Series A Preferred Stock within temporary equity on our Consolidated Statement of Assets and Liabilities as of March 31, 2023 and June 30, 2022.

Shares of the 5.50% Preferred Stock and 6.50% Preferred Stock will pay a monthly dividend, when and if declared by the Board, at a fixed annual rate of 5.50% and 6.50%, respectively, per annum of the Stated Value of $25.00 per share (computed on the basis of a 360-day year consisting of twelve 30-day months), payable in cash or through the issuance of additional 5.50% Preferred Stock and 6.50% Preferred Stock through the 5.50% Preferred Stock DRIP and 6.50% Preferred Stock DRIP, respectively.

Shares of the Series A Preferred Stock will pay a quarterly dividend, when and if declared by the Board, at a fixed annual rate of 5.35% per annum of the Stated Value of $25.00 per share (computed on the bases of a 360-day year consisting of twelve 30-day months), payable in cash.

During the nine months ended March 31, 2023 and March 31, 2022, we distributed approximately $35,057 and $11,078, respectively, to our 5.50% Preferred Stock holders. During the nine months ended March 31, 2023, we distributed approximately $8,246 to our 6.50% Preferred Stock holders. During the nine months ended March 31, 2023 and March 31, 2022, we distributed approximately $6,018 and $4,302 to our 5.35% Series A Preferred Stock holders.

Our distributions to our 5.50% Preferred Stock holders, 6.50% Preferred Stock holders, and 5.35% Series A Preferred Stock holders for the nine months ended March 31, 2023 and March 31, 2022, are summarized in the following table:

86

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

Declaration Date						Record Date						Payment Date						Amount ($ per share), before pro ration for partial periods						Amount Distributed
5.50% Preferred Stock holders
5/7/2021						7/21/2021						8/2/2021						$	0.114583					$	680
5/7/2021						8/18/2021						9/1/2021						0.114583						786
8/24/2021						9/15/2021						10/1/2021						0.114583						941
8/24/2021						10/20/2021						11/1/2021						0.114583						1,054
8/24/2021						11/17/2021						12/1/2021						0.114583						1,197
11/5/2021						12/15/2021						1/3/2022						0.114583						1,296
11/5/2021						1/19/2022						2/1/2022						0.114583						1,498
11/5/2021						2/16/2022						3/1/2022						0.114583						1,688
2/7/2022						3/23/2022						4/1/2022						0.114583						1,938
Distributions for the nine months ended March 31, 2022																								$	11,078
5/6/2022						7/20/2022						8/1/2022						$	0.114583					$	3,104
5/6/2022						8/17/2022						9/1/2022						0.114583						3,721
8/23/2022						9/21/2022						10/3/2022						0.114583						3,928
8/23/2022						10/19/2022						11/1/2022						0.114583						4,077
8/23/2022						11/16/2022						12/1/2022						0.114583						4,056
11/8/2022						12/21/2022						1/3/2023						0.114583						4,051
11/8/2022						1/18/2023						2/1/2023						0.114583						4,045
11/8/2022						2/15/2023						3/1/2023						0.114583						4,039
2/8/2023						3/22/2023						4/3/2023						0.114583						4,036
Distributions for the nine months ended March 31, 2023																								$	35,057
6.50% Preferred Stock holders
11/8/2022						11/16/2022						12/1/2022						$	0.135417					$	978
11/8/2022						12/21/2022						1/3/2023						0.135417						1,433
11/8/2022						1/18/2023						2/1/2023						0.135417						1,675
11/8/2022						2/15/2023						3/1/2023						0.135417						1,959
2/8/2023						3/22/2023						4/3/2023						0.135417						2,201
Distributions for the nine months ended March 31, 2023																								$	8,246
5.35% Preferred Stock holders
8/24/2021						10/20/2021						11/1/2021						$	0.382674					$	2,296
11/5/2021						1/19/2022						2/1/2022						0.334375						$	2,006
Distributions for the nine months ended March 31, 2022																								$	4,302
5/6/2022						7/20/2022						8/1/2022						$	0.334375					$	2,006
8/23/2022						10/19/2022						11/1/2022						0.334375						2,006
11/8/2022						1/18/2023						2/1/2023						$	0.334375					2,006
Distributions for the nine months ended March 31, 2023																								$	6,018

The above table includes dividends paid during the nine months ended March 31, 2023. It does not include distributions previously declared to the 5.50% Preferred Stock holders, 6.50% Preferred Stock holders, and 5.35% Series A Preferred Stock holders of record for any future dates, as those amounts are not yet determinable. The following dividends were previously declared and will be recorded and paid subsequent to March 31, 2023:

87

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

•$0.114583 per share (before pro ration for partial period holders of record) for 5.50% Preferred Stock holders of record on April 19, 2023 with a payment date of May 1, 2023.

•$0.114583 per share (before pro ration for partial period holders of record) for 5.50% Preferred Stock holders of record on May 17, 2023 with a payment date of June 1, 2023.

•$0.135417 per share (before pro ration for partial period holders of record) for 6.50% Preferred Stock holders of record on April 19, 2023 with a payment date of May 1, 2023.

•$0.135417 per share (before pro ration for partial period holders of record) for 6.50% Preferred Stock holders of record on May 17, 2023 with a payment date of June 1, 2023.

•$0.334375 per share (before pro ration for partial period holders of record) for 5.35% Series A Preferred Stock holders of record on April 19, 2023 with a payment date of May 1, 2023.

As of March 31, 2023, we have accrued approximately $28 and $1,338 in dividends that have not yet been paid for our 6.50% Preferred Stock holders and 5.35% Series A Preferred Stock holders, respectively.

The following table shows our outstanding Preferred Stock as of March 31, 2023:

Series						Maximum Offering Size (Shares)						Maximum Aggregate Liquidation Preference of Offering						Inception to Date Preferred Shares Issued via Offering						Inception to Date Liquidation Preference of Shares Issued via Offering						Preferred Stock Shares Outstanding						Liquidation Preference of Shares Outstanding
Series A1						72,000,000			(1)			$	1,800,000		(1)			31,448,021						$	786,201					31,091,585			(4)			$	777,290
Series M1						72,000,000			(1)			1,800,000			(1)			4,110,318						102,758						3,922,740			(4)			98,068
Series M2						72,000,000			(1)			1,800,000			(1)			—						—						—						—
Series A3						72,000,000			(1)			1,800,000			(1)			15,058,892						376,472						15,058,173			(4)			376,454
Series M3						72,000,000			(1)			1,800,000			(1)			1,825,723						45,643						1,816,637			(4)			45,416
Series AA1						10,000,000			(2)			250,000			(2)			—						—						—						—
Series MM1						10,000,000			(2)			250,000			(2)			—						—						—						—
Series AA2						10,000,000			(2)			250,000			(2)			—						—						—						—
Series MM2						10,000,000			(2)			250,000			(2)			—						—						—						—
Series A2						187,000						4,675						187,000						4,675						164,000						4,100
Series A						6,000,000						150,000						6,000,000						150,000						6,000,000						150,000
Total						88,187,000			(3)			$	2,204,675		(3)			58,629,954						$	1,465,749					58,053,134			(5)			$	1,451,328

(1) The maximum offering of 72,000,000 shares and $1,800,000 aggregate liquidation preference is for any combination of Series A1, Series M1, Series M2, Series A3, and Series M3 shares.
(2) The maximum offering of 10,000,000 shares and $250,000 aggregate liquidation preference is for any combinations of Series AA1, Series MM1, Series AA2, and Series MM2.
(3) The authorized maximum offering size of Preferred Stock as of March 31, 2023 is 88,187,000 shares, par value $0.001 per share, with an aggregate liquidation preference of $2,204,675, a liquidation preference of $25.00 per share. The totals referenced in the above table are in light of the combined maximum offering amounts for the various series of shares identified in footnote 1 and footnote 2 and the table columns are not intended to foot.
(4) Preferred Stock shares outstanding is calculated as shares issued under the respective offering program, net of additional shares issued through the Preferred Stock DRIP and net of Preferred Stock conversions to common stock through the Holder Optional Redemption and Optional Redemption Upon Death of Holder. Refer to subsequent tables for respective fiscal year activity.
(5) Does not foot due to rounding.

The following table shows our outstanding Preferred Stock as of June 30, 2022:

88

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

Series						Maximum Offering Size (Shares)						Maximum Aggregate Liquidation Preference of Offering						Inception to Date Preferred Shares Issued via Offering						Inception to Date Liquidation Preference of Shares Issued						Preferred Stock Shares Outstanding						Liquidation Preference of Shares Outstanding
Series A1						60,000,000			(1)			$	1,500,000		(1)			20,837,185						$	520,930					20,794,645			(4)			$	519,866
Series M1						60,000,000			(1)			1,500,000			(1)			2,640,752						66,019						2,626,238			(4)			65,656
Series M2						60,000,000			(1)			1,500,000			(1)			—						—						—						—
Series AA1						10,000,000			(2)			250,000			(2)			—						—						—						—
Series MM1						10,000,000			(2)			250,000			(2)			—						—						—						—
Series A2						187,000						4,675						187,000						4,675						187,000						4,675
Series A						6,000,000						150,000						6,000,000						150,000						6,000,000						150,000
Total						76,187,000			(3)			$	1,904,675		(3)			29,664,937						$	741,624					29,607,882			(5)			$	740,197

(1) The maximum offering of 60,000,000 shares and $1,500,000 aggregate liquidation preference is for any combinations of Series A1, Series M1, and Series M2 shares.
(2) The maximum offering of 10,000,000 shares and $250,000 aggregate liquidation preference is for any combinations of Series AA1 and Series MM1.
(3) The authorized maximum offering size of Preferred Stock as of June 30, 2022 is 76,187,000 shares, par value $0.001 per share, with an aggregate liquidation preference of $1,904,675, a liquidation preference of $25.00 per share. The totals referenced in the above table are in light of the combined maximum offering amounts for the various series of shares identified in footnote 1 and footnote 2 and the table columns are not intended to foot.
(4) Preferred Stock shares outstanding is calculated as shares issued under the respective offering program, net of additional shares issued through the Preferred Stock DRIP and Preferred Stock converted to common stock through the Holder Optional Redemption and Optional Redemption Upon Death of Holder. Refer to subsequent tables for respective fiscal year activity.
(5) Does not foot due to rounding.

Preferred Stock issued prior to the issuance of our 5.35% Series A Preferred Stock has a carrying value equal to liquidation value per share on our Consolidated Statements of Assets and Liabilities. Subsequent issuances of our Preferred Stock classified as temporary equity are recorded net of issuance costs. The carrying value is inclusive of cumulative accrued and unpaid dividends as of March 31, 2023.

Series A1, Series M1, Series A3, and Series M3 shares outstanding are net of dividend reinvestments paid and conversions to common stock in accordance with their liquidation features. The following tables show such activity during the nine months ended March 31, 2023:

Series						June 30, 2022 Shares Outstanding						Shares Issued						Shares issued through Preferred Stock DRIP						Shares Converted to Common(1)						March 31, 2023 Shares Outstanding
Series A1						20,794,645						10,610,836						33,947						(347,842)						31,091,585
Series M1						2,626,238						1,469,566						901						(173,966)						3,922,740			(2)
Series A3						—						15,058,892						2,554						(3,273)						15,058,173
Series M3						—						1,825,723						219						(9,305)						1,816,637
Series A2						187,000						—						—						(23,000)						164,000
Series A						6,000,000						—						—						—						6,000,000
Total						29,607,882			(2)			28,965,017			(3)			37,621						(557,386)						58,053,134			(2)

(1)Convert to common shares via Holder Optional Redemptions and Optional Redemption Upon Death of Holder.

(2)Does not foot or crossfoot due to fractional share rounding.

(3)During the nine months ended March 31, 2023, we issued 28,965,017 shares of Preferred Stock for net proceeds of $647,715 with a liquidation value of $724,125.

The following tables show such activity during the nine months ended March 31, 2022:

Series						June 30, 2021 Shares Outstanding						Shares Issued						Shares issued through Preferred Stock DRIP						Shares Converted to Common(1)						March 31, 2022 Shares Outstanding
Series A1						5,163,926						11,230,210						8,428						(8,350)						16,394,214
Series M1						130,666						1,251,361						176						(2,000)						1,380,203
Series A2						187,000						—						—						—						187,000
Series A						—						6,000,000						—						—						6,000,000
Total						5,481,592						18,481,571			(2)			8,604						(10,350)						23,961,417

89

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

(1)Convert to common shares via Holder Optional Redemptions and Optional Redemption Upon Death of Holder.

(2)During the nine months ended March 31, 2022, we issued 18,481,571 shares of Preferred Stock for net proceeds of $425,250 with a liquidation value of $462,039.

Common Stock

Our common stockholders’ equity accounts as of March 31, 2023 and June 30, 2022 reflect cumulative shares issued, net of shares previously repurchased, as of those respective dates. Our common stock has been issued through public offerings, a registered direct offering, the exercise of over-allotment options on the part of the underwriters, our common stock dividend reinvestment plan in connection with the acquisition of certain controlled portfolio companies and in connection with our 5.50% and 6.50% Preferred Stock Holder Optional Conversion and Optional Redemptions Following Death of a Holder. When our common stock is issued, the related offering expenses have been charged against paid-in capital in excess of par. All underwriting fees and offering expenses were borne by us.

On August 24, 2011, our Board of Directors approved a share repurchase plan (the “Repurchase Program”) under which we may repurchase up to $100,000 of our common stock at prices below our net asset value per share. Prior to any repurchase, we are required to notify stockholders of our intention to purchase our common stock.

We did not repurchase any shares of our common stock under the Repurchase Program for the nine months ended March 31, 2023 and March 31, 2022. As of March 31, 2023, the approximate dollar value of shares that may yet be purchased under the Repurchase Program is $65,860.

Excluding common stock dividend reinvestments and shares issued in connection with the 5.50% and 6.50% Preferred Stock Holder Optional Conversion and Optional Redemption Upon Death of Holder, during the nine months ended March 31, 2023 and March 31, 2022, we did not issue any shares of our common stock.

On February 9, 2016, we amended our common stock dividend reinvestment plan that provided for reinvestment of our dividends or distributions on behalf of our stockholders, unless a stockholder elects to receive cash, to add the ability of stockholders to purchase additional common shares by making optional cash investments. Under the revised dividend reinvestment and direct common stock repurchase plan, stockholders may elect to purchase additional common shares through our transfer agent in the open market or in negotiated transactions.

On April 17, 2020, our Board of Directors approved further amendments to our common stock dividend reinvestment plan, effective May 21, 2020, that principally provide for the number of newly-issued shares of our common stock to be credited to a stockholder’s account shall be determined by dividing the total dollar amount of the distribution payable to such common stockholder by 95% of the market price per share of our common stock at the close of regular trading on the Nasdaq Global Select Market on the date fixed by the Board of Directors for such distribution (which shall be the last business day before the payment date).

On June 10, 2022, at a special meeting of stockholders, our stockholders authorized us to sell shares of our common stock (during the next 12 months) at a price or prices below our net asset value per share at the time of sale in one or more offerings, subject to certain conditions as set forth in the proxy statement relating to the special meeting (including that the number of shares sold on any given date does not exceed 25% of its outstanding common stock immediately prior to such sale).

On March 13, 2023, we filed a notice of meeting and definitive proxy statement in connection with a special meeting of our stockholders that is scheduled to be held on June 9, 2023 for the purpose of asking our stockholders to vote on a proposal to authorize us, with approval of our Board of Directors, to sell shares of our common stock (during the next 12 months) at a price or prices below our then current net asset value per share in one or more offerings subject to certain conditions as set forth in the proxy statement relating to the special meeting (including that the number of shares sold on any given date does not exceed 25% of our outstanding common stock immediately prior to such sale).

During the nine months ended March 31, 2023 and March 31, 2022, we distributed approximately $214,751 and $210,722, respectively, to our common stockholders. The following table summarizes our distributions to common stockholders declared and payable for the nine months ended March 31, 2023 and March 31, 2022:

90

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

Declaration Date						Record Date						Payment Date						Amount Per Share						Amount Distributed (in thousands)
5/7/2021						7/28/2021						8/19/2021						$	0.06					$	23,325
5/7/2021						8/27/2021						9/23/2021						0.06						23,348
8/24/2021						9/28/2021						10/21/2021						0.06						23,370
8/24/2021						10/27/2021						11/18/2021						0.06						23,392
11/5/2021						11/26/2021						12/23/2021						0.06						23,413
11/5/2021						12/29/2021						1/20/2022						0.06						23,435
11/5/2021						1/27/2022						2/17/2022						0.06						23,457
2/7/2022						2/24/2022						3/22/2022						0.06						23,479
2/7/2022						3/29/2022						4/20/2022						0.06						23,503
Total declared and payable for the nine months ended March 31, 2022																								$	210,722
5/6/2022						7/27/2022						8/18/2022						$	0.06					$	23,635
5/6/2022						8/29/2022						9/21/2022						0.06						23,670
8/23/2022						9/28/2022						10/20/2022						0.06						23,767
8/23/2022						10/27/2022						11/17/2022						0.06						23,857
11/8/2022						11/28/2022						12/20/2022						0.06						23,888
11/8/2022						12/28/2022						1/19/2023						0.06						23,925
11/8/2022						1/27/2023						2/16/2023						0.06						23,965
2/8/2023						2/24/2023						3/22/2023						0.06						24,003
2/8/2023						3/29/2023						4/19/2023						0.06						24,041
Total declared and payable for the nine months ended March 31, 2023																								$	214,751

Dividends and distributions to common stockholders are recorded on the ex-dividend date. As such, the table above includes distributions with record dates during nine months ended March 31, 2023 and March 31, 2022. It does not include distributions previously declared to common stockholders of record on any future dates, as those amounts are not yet determinable. The following dividends were previously declared and will be recorded and payable subsequent to March 31, 2023:

•$0.06 per share for April 2023 holders of record on April 26, 2023 with a payment date of May 18, 2023.

During the nine months ended March 31, 2023 and March 31, 2022, we issued 5,859,102 and 3,268,814 shares of our common stock, respectively, in connection with the common stock dividend reinvestment plan.

During the nine months ended March 31, 2023, Prospect officers and directors purchased 1,379,324 shares of our common stock, or 0.34% of total outstanding shares as of March 31, 2023, both through the open market transactions and shares issued in connection with our common stock dividend reinvestment plan.

As of March 31, 2023, we have reserved 17,294,357 shares of our common stock for issuance upon conversion of the Convertible Notes (see Note 5) and 1,000,000,000 shares of our common stock for issuance upon conversion of the 5.50% Preferred Stock and the 6.50% Preferred Stock.

91

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

Note 10. Other Income

Other income consists of structuring fees, amendment fees, overriding royalty interests, revenue receipts related to net profit interests, deal deposits, administrative agent fees, and other miscellaneous and sundry cash receipts. The following table shows income from such sources during the three and nine months ended March 31, 2023 and March 31, 2022:

			Three Months Ended March 31,												Nine Months Ended March 31,
			2023						2022						2023						2022
Structuring and amendment fees (refer to Note 3)			$	145					$	10,149					$	9,875					$	38,963
Royalty and net revenue interests			14,740						23,285						50,027						43,579
Administrative agent fees			171						202						432						529
Total other income			$	15,056					$	33,636					$	60,334					$	83,071

Note 11. Net Increase (Decrease) in Net Assets per Common Share

Basic earnings per share is calculated by dividing the net increase (decrease) in net assets resulting from operations, less preferred dividends, by the weighted average number of common shares outstanding. Diluted earnings per share gives effect to all dilutive potential common shares outstanding using the if-converted method for the 5.50% Preferred Stock, for the 6.50% Preferred Stock (Refer to Note 9) and, beginning on July 1, 2022, for the 2025 Notes (Refer to Note 5).

Subsequent to the adoption of ASU 2020-06 on July 1, 2022, for the purpose of calculating diluted net increase in net assets resulting from operations applicable to common stockholders per share for the three and nine months ended March 31, 2023, the Company utilized the if-converted method, which assumes full share settlement for the aggregate value of the 2025 Notes, the 5.50% Preferred Stock, and the 6.50% Preferred Stock. Under the allowed modified retrospective method, diluted net increase in net assets resulting from operations applicable to common stockholders per share for prior periods were not restated to reflect the impact of ASU 2020-06. Diluted earnings per share excludes all dilutive potential common shares if their effect is anti-dilutive.

During the nine months ended March 31, 2023, conversion of our convertible instruments has an anti-dilutive effect and therefore, conversion is not assumed.

The following information sets forth the computation of basic and diluted earnings per common share during the three and nine months ended March 31, 2023 and March 31, 2022:

			For the Three Months Ended March 31,												For the Nine Months Ended March 31,
			2023						2022						2023						2022
Net (decrease) increase in net assets resulting from operations - basic			$	(108,947)					$	157,157					$	(158,523)					$	613,292
Adjustment for dividends on Convertible Preferred Stock			—						7,139						—						16,748
Adjustment for interest on Convertible Notes			—						—						—						—
Net (decrease) increase in net assets resulting from operations - diluted			$	(108,947)					$	164,296					$	(158,523)					$	630,040
Weighted average common shares outstanding - basic			399,732,263						391,091,485						397,233,468						389,981,608
Assumed conversion of Convertible Preferred Stock			—						41,716,635						—						29,933,104
Assumed conversion of Convertible Notes			—						—						—						—
Weighted average shares of common stock outstanding - diluted			399,732,263						432,808,120						397,233,468						419,914,712
Earnings (loss) per share - basic			$	(0.27)					$	0.40					$	(0.40)					$	1.57
Earnings (loss) per share - diluted			$	(0.27)					$	0.38					$	(0.40)					$	1.50

92

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

Note 12. Income Taxes

While our fiscal year end for financial reporting purposes is June 30 of each year, our tax year end is August 31 of each year. The information presented in this footnote is based on our tax year end for each period presented, unless otherwise specified.

For income tax purposes, dividends paid and distributions made to stockholders are reported as ordinary income, capital gains, non-taxable return of capital, or a combination thereof. The tax character of dividends paid to common stockholders during the tax years ended August 31, 2022, 2021, and 2020 were as follows:

						Tax Year Ended August 31,
						2022						2021						2020
Ordinary income						$	231,984					$	251,171					$	169,041
Capital gain						49,719						—						—
Return of capital						—						25,784						96,720
Total common dividends paid to stockholders						$	281,703		(1)			$	276,955					$	265,761

(1) Final determination of tax character will not be final until we file our return for the tax year ended August 31, 2022.

The Company began issuing shares of Preferred Stock and declaring dividends on shares Preferred Stock outstanding during the tax year ended August 31, 2021. The tax character of dividends paid to preferred stockholders during the tax years ended August 31, 2022 and August 31, 2021 were as follows:

						Tax Year Ended August 31, 2022						Tax Year Ended August 31, 2021
Ordinary income						$	22,551					$	2,391
Capital gain						6,476						—
Return of capital						—						—
Total preferred dividends paid to stockholders						$	29,027		(2)			$	2,391

(2) Final determination of tax character will not be final until we file our return for the tax year ended August 31, 2022.

As of August 25, 2021 when our prior Form 10-K was filed for the year ended June 30, 2021, we estimated our distributions for the fiscal year then ended to be $265,593 of distributions of ordinary income and $12,263 of our distributions to be return of capital. Subsequent to our filing date, we obtained more information from our underlying investments as to the character of the distributions for the tax year ended August 31, 2021, which resulted in changes to distributions previously disclosed in our Form 10-K filing. As a result of the change, our total distributable loss on our Consolidated Statement of Assets and Liabilities for the year ended June 30, 2021 changed from $232,659 to $210,570, with $22,089 being reclassified to distributions from capital. The remaining reclassification of tax distributions classified as return of capital for the tax year ended August 31, 2021 have been adjusted in the fiscal year ended June 30, 2022. This adjustment resulted in an increase to distributable earnings of $3,695 for the three months ended September 30, 2021.

We generate certain types of income that may be exempt from U.S. withholding tax when distributed to non-U.S. stockholders. Under IRC Section 871(k), a RIC is permitted to designate distributions of qualified interest income and short-term capital gains as exempt from U.S. withholding tax when paid to non-U.S. stockholders with proper documentation. For the 2023 calendar year, 62.41% of our taxable ordinary dividends as of March 31, 2023 qualified as interest related dividends which are exempt from U.S. withholding tax applicable to non-U.S. stockholders. This percentage is based on the best estimates available at the time of this filing. The final percentage will be determined with the filing of Form 1099-DIV.

We generate income that may be beneficial to shareholders that face interest expense limitations. Under IRC Section 163(j), a RIC is permitted to designate distributions attributable to net business interest income as section 163(j) interest dividends. For the 2023 calendar year 96.07% of our taxable ordinary dividends as of March 31, 2023 qualified as section 163(j) interest dividends. This percentage is based on the best estimates available at the time of this filing. The final percentage will be determined with the filing of Form 1099-DIV.

We generate dividend income that may be beneficial to certain U.S. corporate shareholders. Under IRC Sections 243 and 854, a RIC is permitted to designate ordinary dividends as eligible for the 50% dividends received deduction. For the 2023 calendar year 1.21% of our taxable ordinary dividends as of March 31, 2023 qualified for the deduction under sections 243 and 854. This

93

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

percentage is based on the best estimates available at the time of this filing. The final percentage will be determined with the filing of Form 1099-DIV.

For the tax year ending August 31, 2022, the tax character of dividends paid to stockholders through August 31, 2022 is expected to be ordinary income and capital gains however due to the difference between our fiscal and tax year ends, the final determination of the tax character of dividends between ordinary income and capital gains will not be made until we file our tax return for the tax year ending August 31, 2022.

Taxable income generally differs from net increase in net assets resulting from operations for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses, and generally excludes net unrealized gains or losses, as unrealized gains or losses are generally not included in taxable income until they are realized. The following reconciles the net increase in net assets resulting from operations to taxable income for the tax years ended August 31, 2022, 2021, and 2020:

						Tax Year Ended August 31,
						2022						2021						2020
Net increase (decrease) in net assets resulting from operations						$	735,343					$	428,106					$	(78,949)
Net realized losses on investments						22,375						16,173						10,139
Net unrealized (gains) losses on investments						(405,414)						(143,654)						328,997
Other temporary book-to-tax differences						(65,664)						(47,330)						(91,368)
Permanent differences						30						(20)						57
Taxable income before deductions for distributions						$	286,670		(3)			$	253,275					$	168,876

(3) Final determination of permanent differences will not be final until we file our return for the tax year ended August 31, 2022.

Capital losses in excess of capital gains earned in a tax year may generally be carried forward and used to offset capital gains, subject to certain limitations. As of August 31, 2022, we had no capital loss carryforwards available for use in later tax years. While our ability to utilize losses in the future depends upon a variety of factors that cannot be known in advance, some of the Company’s capital loss carryforwards may become permanently unavailable due to limitations by the Code.

For the tax year ended August 31, 2022, we had $32,134 of undistributed ordinary income in excess of cumulative distributions and no capital gain in excess of cumulative distributions.

As of March 31, 2023, the cost basis of investments for tax purposes was $7,792,689 resulting in an estimated net unrealized loss of $199,912. As of March 31, 2023, the gross unrealized gains and losses were $1,332,087 and $1,531,999, respectively. As of June 30, 2022, the cost basis of investments for tax purposes was $7,214,493 resulting in an estimated net unrealized gain of $388,017. As of June 30, 2022, the gross unrealized gains and losses were $1,506,944 and $1,118,927, respectively. Due to the difference between our fiscal year end and tax year end, the cost basis of our investments for tax purposes as of March 31, 2023 and June 30, 2022 was calculated based on the book cost of investments as of March 31, 2023 and June 30, 2022, respectively, with cumulative book-to-tax adjustments for investments through August 31, 2022 and 2021, respectively.

In general, we may make certain adjustments to the classification of net assets as a result of permanent book-to-tax differences, which may include merger-related items, differences in the book and tax basis of certain assets and liabilities, and nondeductible federal excise taxes, among other items. During the tax year ended August 31, 2022, we increased overdistributed net investment income by $30 and decreased capital in excess of par value by $30. During the tax year ended August 31, 2021, we decreased overdistributed net investment income by $20 and increased capital in excess of par value by $20. Due to the difference between our fiscal and tax year end, the reclassifications for the taxable year ended August 31, 2022 have been recorded in the fiscal year ending June 30, 2023 and the reclassifications for the taxable year ended August 31, 2021 were recorded in the fiscal year ended June 30, 2022.

94

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

Note 13. Related Party Agreements and Transactions

Investment Advisory Agreement

We have entered into an investment advisory and management agreement with the Investment Adviser (the “Investment Advisory Agreement”) under which the Investment Adviser, subject to the overall supervision of our Board of Directors, manages the day-to-day operations of, and provides investment advisory services to, us. Under the terms of the Investment Advisory Agreement, the Investment Adviser: (i) determines the composition of our portfolio, the nature and timing of the changes to our portfolio and the manner of implementing such changes, (ii) identifies, evaluates and negotiates the structure of the investments we make (including performing due diligence on our prospective portfolio companies), and (iii) closes and monitors investments we make.

The Investment Adviser’s services under the Investment Advisory Agreement are not exclusive, and it is free to furnish similar services to other entities so long as its services to us are not impaired. For providing these services the Investment Adviser receives a fee from us, consisting of two components: a base management fee and an incentive fee. The base management fee is calculated at an annual rate of 2.00% on our total assets. For services currently rendered under the Investment Advisory Agreement, the base management fee is payable quarterly in arrears. The base management fee is calculated based on the average value of our gross assets at the end of the two most recently completed calendar quarters and appropriately adjusted for any share issuances or repurchases during the current calendar quarter. The total gross base management fee incurred to the favor of the Investment Adviser was $38,980 and $36,426 during the three months ended March 31, 2023 and March 31, 2022, respectively. The total gross base management fee incurred to the favor of the Investment Advisor was $116,176 and $102,472 during the nine months ended March 31, 2023 and March 31, 2022, respectively.

The incentive fee has two parts. The first part, the income incentive fee, is calculated and payable quarterly in arrears based on our pre-incentive fee net investment income for the immediately preceding calendar quarter. For this purpose, pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees and other fees that we receive from portfolio companies) accrued during the calendar quarter, minus our operating expenses for the quarter (including the base management fee, expenses payable under the Administration Agreement described below, and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with payment-in-kind interest and zero coupon securities), accrued income that we have not yet received in cash. Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital gains or losses. Pre-incentive fee net investment income, expressed as a rate of return on the value of our net assets at the end of the immediately preceding calendar quarter, is compared to a “hurdle rate” of 1.75% per quarter (7.00% annualized).

The net investment income used to calculate this part of the incentive fee is also included in the amount of the gross assets used to calculate the 2.00% base management fee. We pay the Investment Adviser an income incentive fee with respect to our pre-incentive fee net investment income in each calendar quarter as follows: 

•No incentive fee in any calendar quarter in which our pre-incentive fee net investment income does not exceed the hurdle rate;

•100.00% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 125.00% of the quarterly hurdle rate in any calendar quarter (8.75% annualized assuming a 7.00% annualized hurdle rate); and

•20.00% of the amount of our pre-incentive fee net investment income, if any, that exceeds 125.00% of the quarterly hurdle rate in any calendar quarter (8.75% annualized assuming a 7.00% annualized hurdle rate).

These calculations are appropriately prorated for any period of less than three months and adjusted for any share issuances or repurchases during the current quarter.

95

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

The second part of the incentive fee, the capital gains incentive fee, is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, as of the termination date), and equals 20.00% of our realized capital gains for the calendar year, if any, computed net of all realized capital losses and unrealized capital depreciation at the end of such year. In determining the capital gains incentive fee payable to the Investment Adviser, we calculate the aggregate realized capital gains, aggregate realized capital losses and aggregate unrealized capital depreciation, as applicable, with respect to each investment that has been in our portfolio. For the purpose of this calculation, an “investment” is defined as the total of all rights and claims which may be asserted against a portfolio company arising from our participation in the debt, equity, and other financial instruments issued by that company. Aggregate realized capital gains, if any, equal the sum of the differences between the aggregate net sales price of each investment and the aggregate amortized cost basis of such investment when sold or otherwise disposed. Aggregate realized capital losses equal the sum of the amounts by which the aggregate net sales price of each investment is less than the aggregate amortized cost basis of such investment when sold or otherwise disposed. Aggregate unrealized capital depreciation equals the sum of the differences, if negative, between the aggregate valuation of each investment and the aggregate amortized cost basis of such investment as of the applicable calendar year-end. At the end of the applicable calendar year, the amount of capital gains that serves as the basis for our calculation of the capital gains incentive fee involves netting aggregate realized capital gains against aggregate realized capital losses on a since-inception basis and then reducing this amount by the aggregate unrealized capital depreciation. If this number is positive, then the capital gains incentive fee payable is equal to 20.00% of such amount, less the aggregate amount of any capital gains incentive fees paid since inception.

The total income incentive fee incurred was $20,561 and $19,967 during the three months ended March 31, 2023 and March 31, 2022, respectively. The fees incurred for the nine months ended March 31, 2023 and March 31, 2022 were $64,692 and $59,296, respectively. No capital gains incentive fee was incurred during the nine months ended March 31, 2023 and March 31, 2022.

Administration Agreement

We have also entered into an administration agreement (the “Administration Agreement”) with Prospect Administration under which Prospect Administration, among other things, provides (or arranges for the provision of) administrative services and facilities for us. For providing these services, we reimburse Prospect Administration for our allocable portion of overhead incurred by Prospect Administration in performing its obligations under the Administration Agreement, including rent and our allocable portion of the costs of our Chief Financial Officer and Chief Compliance Officer and her staff, including the internal legal staff. Under this agreement, Prospect Administration furnishes us with office facilities, equipment and clerical, bookkeeping and record keeping services at such facilities. Prospect Administration also performs, or oversees the performance of, our required administrative services, which include, among other things, being responsible for the financial records that we are required to maintain and preparing reports to our stockholders and reports filed with the SEC. In addition, Prospect Administration assists us in determining and publishing our net asset value, overseeing the preparation and filing of our tax returns and the printing and dissemination of reports to our stockholders, and generally oversees the payment of our expenses and the performance of administrative and professional services rendered to us by others. Under the Administration Agreement, Prospect Administration also provides on our behalf managerial assistance to certain portfolio companies (see Managerial Assistance section below). The Administration Agreement may be terminated by either party without penalty upon 60 days’ written notice to the other party. Prospect Administration is a wholly-owned subsidiary of the Investment Adviser.

The Administration Agreement provides that, absent willful misfeasance, bad faith or negligence in the performance of its duties or by reason of the reckless disregard of its duties and obligations, Prospect Administration and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with it are entitled to indemnification from us for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from the rendering of Prospect Administration’s services under the Administration Agreement or otherwise as administrator for us. Our payments to Prospect Administration are reviewed quarterly by our Board of Directors.

The allocation of net overhead expense from Prospect Administration was $9,773 and $4,126 for the three months ended March 31, 2023 and March 31, 2022, respectively. Prospect Administration received estimated payments of $918 and $807 directly from our portfolio companies and certain funds managed by the Investment Adviser for legal, tax, and other administrative services during the three months ended March 31, 2023 and March 31, 2022, respectively. We were given a credit for these payments as a reduction of the administrative services cost payable by us to Prospect Administration. Had Prospect Administration not received these payments, Prospect Administration’s charges for its administrative services would have increased by this amount.

96

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

The allocation of net overhead expense from Prospect Administration was $16,490 and $10,891 for the nine months ended March 31, 2023 and March 31, 2022, respectively. Prospect Administration received estimated payments of $1,808 and $4,869 directly from our portfolio companies and certain funds managed by the Investment Adviser for legal, tax, and other administrative services during the nine months ended March 31, 2023 and March 31, 2022, respectively. In addition, we were given a credit in the amount of $1,212 for legal expense incurred on behalf of our portfolio companies that were remitted to Prospect Administration during the nine months ended March 31, 2023.

Managerial Assistance

As a BDC, we are obligated under the 1940 Act to make available to certain of our portfolio companies significant managerial assistance. “Making available significant managerial assistance” refers to any arrangement whereby we provide significant guidance and counsel concerning the management, operations, or business objectives and policies of a portfolio company. We are also deemed to be providing managerial assistance to all portfolio companies that we control, either by ourselves or in conjunction with others. The nature and extent of significant managerial assistance provided by us to controlled and non-controlled portfolio companies will vary according to the particular needs of each portfolio company. Examples of such activities include (i) advice on recruiting, hiring, management and termination of employees, officers and directors, succession planning and other human resource matters; (ii) advice on capital raising, capital budgeting, and capital expenditures; (iii) advice on advertising, marketing, and sales; (iv) advice on fulfillment, operations, and execution; (v) advice on managing relationships with unions and other personnel organizations, financing sources, vendors, customers, lessors, lessees, lawyers, accountants, regulators and other important counterparties; (vi) evaluating acquisition and divestiture opportunities, plant expansions and closings, and market expansions; (vii) participating in audit committee, nominating committee, board and management meetings; (viii) consulting with and advising board members and officers of portfolio companies (on overall strategy and other matters); and (ix) providing other organizational, operational, managerial and financial guidance.

Prospect Administration arranges for the provision of such managerial assistance on our behalf. When doing so, Prospect Administration utilizes personnel of our Investment Adviser. We, on behalf of Prospect Administration, may invoice portfolio companies receiving and paying for managerial assistance, and we remit to Prospect Administration its cost of providing such services, including the charges deemed appropriate by our Investment Adviser for providing such managerial assistance. No income is recognized by Prospect.

During the three months ended March 31, 2023 and March 31, 2022, we received payments of $2,316 and $2,276, respectively, from our portfolio companies for managerial assistance and subsequently remitted these amounts to Prospect Administration. During the nine months ended March 31, 2023 and March 31, 2022, we received payments of $7,008 and $5,946, respectively, from our portfolio companies for managerial assistance and subsequently remitted these amounts to Prospect Administration.

Co-Investments

On January 13, 2020, (amended on August 2, 2022), we received an exemptive order from the SEC (the “Order”), which superseded a prior co-investment exemptive order granted on February 10, 2014, that gave us the ability to negotiate terms other than price and quantity of co-investment transactions with other funds managed by the Investment Adviser or certain affiliates, including Priority Income Fund, Inc. and Prospect Floating Rate and Alternative Income Fund, Inc. (f/k/a Prospect Sustainable Income Fund, Inc.), where co-investing would otherwise be prohibited under the 1940 Act, subject to the conditions included therein. 

Under the terms of the relief permitting us to co-invest with other funds managed by our Investment Adviser or its affiliates, a “required majority” (as defined in Section 57(o) of the 1940 Act) of our independent directors must make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the proposed transaction, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching of us or our stockholders on the part of any person concerned and (2) the transaction is consistent with the interests of our stockholders and is consistent with our investment objective and strategies. In certain situations where a co-investment with one or more funds managed by the Investment Adviser or its affiliates is not covered by the Order, such as when there is an opportunity to invest in different securities of the same issuer, the personnel of the Investment Adviser or its affiliates will need to decide which fund will proceed with the investment. Such personnel will make these determinations based on policies and procedures, which are designed to reasonably ensure that investment opportunities are allocated fairly and equitably among affiliated funds over time and in a manner that is consistent with applicable laws, rules and regulations. Moreover, except in certain circumstances, when relying on the Order, we will be unable to invest in any issuer in which one or more funds managed by the Investment Adviser or its affiliates has previously invested.

97

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

We reimburse CLO investment valuation services fees initially incurred by Priority Income Fund, Inc. During the three months ended March 31, 2023 and March 31, 2022, we recognized expenses that were reimbursed for valuation services of $22 and $28, respectively. During the nine months ended March 31, 2023 and March 31, 2022, we recognized expenses that were reimbursed for valuation services of $67 and $88, respectively. Conversely, Priority Income Fund, Inc. and Prospect Floating Rate and Alternative Income Fund, Inc. (f/k/a Prospect Sustainable Income Fund, Inc.) reimburse us for software fees, expenses which were initially incurred by Prospect.

Note 14. Transactions with Controlled Companies

The descriptions below detail the transactions which Prospect Capital Corporation (“Prospect”) has entered into with each of our controlled companies. Certain of the controlled entities discussed below were consolidated effective July 1, 2014 (see Note 1). As such, transactions with these Consolidated Holding Companies are presented on a consolidated basis.

CP Energy Services Inc.

Prospect owns 100% of the equity of CP Holdings of Delaware LLC (“CP Holdings”), a Consolidated Holding Company. CP Holdings owns 99.8% of the equity of CP Energy Services, Inc. (“CP Energy”), and the remaining equity is owned by CP Energy management. CP Energy owns directly or indirectly 100% of each of CP Well; Wright Foster Disposals, LLC; Foster Testing Co., Inc.; ProHaul Transports, LLC; and Wright Trucking, Inc. CP Energy provides oilfield flowback services and fluid hauling and disposal services through its subsidiaries. In June 2019, CP Energy purchased a controlling interest in the common equity of Spartan Energy Holdings, Inc. (“Spartan Holdings”), which owns 100% of Spartan Energy Services, LLC (“Spartan”) a portfolio company of Prospect with $31,603 in first lien term loans (the “Spartan Term Loans”) due to us as of March 31, 2023. As a result of CP Energy’s purchase, and given Prospect’s controlling interest in CP Energy, our Spartan Term Loans are presented as control investments under CP Energy beginning June 30, 2019. Spartan remains the direct borrow and guarantor to Prospect for the Spartan Term Loans.

In December 2019, Wolf Energy Holdings, Inc. (“Wolf Energy Holdings”), our Consolidated Holding Company that previously owned 100% of Appalachian Energy LLC (“AEH”); Wolf Energy Services Company, LLC (“Wolf Energy Services”); and Wolf Energy, LLC (collectively our previously controlled membership interest and net profit interest investments in “Wolf Energy”), merged with and into CP Energy, with CP Energy continuing as the surviving entity. CP Energy acquired 100% of our equity investment in Wolf Energy, which is reflected in our valuation of the CP Energy common stock beginning December 31, 2019.

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Interest Income
Interest Income from CP Energy			$	2,248					$	1,321					$	5,525					$	3,901
Interest Income from Spartan			959						561						2,459						1,284
Total Interest Income			$	3,207					$	1,882					$	7,984					$	5,185
Other Income
Administrative Agent			$	—					$	—					$	—					$	6
Total Other Income			$	—					$	—					$	—					$	6
Reimbursement of Legal, Tax, etc. (1)			216						—						237						—

1) Paid from CP Energy to PA as reimbursement for legal, tax, and portfolio level accounting services provided directly to CP Energy (No direct income recognized by Prospect, but we were given a credit for these payments as a reduction to the administrative services payable by Prospect to PA).

98

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Additions			$	12,500					$	9,681					$	12,500					$	9,681
Interest Income Capitalized as PIK
CP Energy			$	3,996					$	1,320					$	5,517					$	3,901
Spartan			1,225						558						2,456						921
Total Interest Income Capitalized as PIK			$	5,221					$	1,878					$	7,973					$	4,822

			As of
			March 31, 2023						June 30, 2022
Interest Receivable (2)			$	38					$	26
Other Receivables (3)			179						171

(2) Interest income recognized but not yet paid.

(3) Represents amounts due from CP Energy and Spartan to Prospect for reimbursement of expenses paid by Prospect on behalf of CP Energy and Spartan.

Credit Central Loan Company, LLC

Prospect owns 100% of the equity of Credit Central Holdings of Delaware, LLC (“Credit Central Delaware”), a Consolidated Holding Company. Credit Central Delaware owns 99.81% of the equity of Credit Central Loan Company, LLC (f/k/a Credit Central Holdings, LLC) (“Credit Central”), with entities owned by Credit Central management owning the remaining equity. Credit Central owns 100% of each of Credit Central, LLC; Credit Central South, LLC; Credit Central of Texas, LLC; and Credit Central of Tennessee, LLC. Credit Central is a branch-based provider of installment loans.

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Interest Income			$	2,065					$	3,781					$	5,878					$	11,182
Other Income
Structuring Fee			$	62					$	—					$	123					$	—
Total Other Income			$	62					$	—					$	123					$	—
Managerial Assistance (1)			175						175						525						525
Reimbursement of Legal, Tax, etc.(2)			12						—						69						1

(1) No income recognized by Prospect. MA payments were paid from Credit Central to Prospect and subsequently remitted to PA.
(2) Paid from Credit Central to PA as reimbursement for legal, tax, and portfolio level accounting services provided directly to Credit Central (No direct income recognized by Prospect, but we were given a credit for these payments as a reduction to the administrative services payable by Prospect to PA.)

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Additions			$	3,080					$	—					$	6,200					$	—
Accreted Original Issue Discount			$	210					$	155					$	594					$	439
Interest Income Capitalized as PIK			2,457						3,007						5,303						6,564

99

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

			As of
			March 31, 2023						June 30, 2022
Interest Receivable (3)			$	21					$	42
Other Receivables (4)			2						7

(3) Interest income recognized but not yet paid.

(4) Represents amounts due from Credit Central to Prospect for reimbursement of expenses paid by Prospect on behalf of Credit Central.

Echelon Transportation LLC (f/k/a Echelon Aviation LLC)

Prospect owns 100% of the membership interests of Echelon Transportation LLC (“Echelon”). Echelon owns 60.7% of the equity of AerLift Leasing Limited (“AerLift”).

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Interest Income			$	1,099					$	1,431					$	2,860					$	6,888
Managerial Assistance (1)			63						63						188						188
Reimbursement of Legal, Tax, etc.(2)			77						—						89						102

(1) No income recognized by Prospect. MA payments were paid from Echelon to Prospect and subsequently remitted to PA.
(2) Paid from Echelon to PA as reimbursement for legal, tax, and portfolio level accounting services provided directly to Echelon (No direct income recognized by Prospect, but we were given a credit for these payments as a reduction to the administrative services payable by Prospect to PA).

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Interest Income Capitalized as PIK			$	1,803					$	5,542					$	3,391					$	10,646

			As of
			March 31, 2023						June 30, 2022
Interest Receivable (3)			$	808					$	1,339
Other Receivables (4)			7						2

(3) Interest income recognized but not yet paid.

(4) Represents amounts due from Echelon to Prospect for reimbursement of expenses paid by Prospect on behalf of Echelon.

Energy Solutions Holdings Inc.

Prospect owns 100% of the equity of Energy Solutions Holdings Inc. (f/k/a Gas Solutions Holdings Inc.) (“Energy Solutions”), a Consolidated Holding Company. Energy Solutions owns 100% of each of Change Clean Energy Company, LLC (f/k/a Change Clean Energy Holdings, LLC) (“Change Clean”); Freedom Marine Solutions, LLC (f/k/a Freedom Marine Services Holdings, LLC) (“Freedom Marine”); and Yatesville Coal Company, LLC (f/k/a Yatesville Coal Holdings, LLC) (“Yatesville”). Change Clean owns 100% of each of Change Clean Energy, LLC and Down East Power Company, LLC, and 50.1% of BioChips LLC. Freedom Marine owns 100% of each of Vessel Company, LLC (f/k/a Vessel Holdings, LLC) (“Vessel”); Vessel Company II, LLC (f/k/a Vessel Holdings II, LLC) (“Vessel II”); and Vessel Company III, LLC (f/k/a Vessel Holdings III, LLC) (“Vessel III”). Yatesville owns 100% of North Fork Collieries, LLC.

Energy Solutions owns interests in companies operating in the energy sector. These include companies operating offshore supply vessels, ownership of a non-operating biomass electrical generation plant and several coal mines. Energy Solutions subsidiaries formerly owned interests in gathering and processing business in east Texas.

Transactions between Prospect and Freedom Marine are separately discussed below under “Freedom Marine Solutions, LLC.”

100

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

First Tower Finance Company LLC

Prospect owns 100% of the equity of First Tower Holdings of Delaware LLC (“First Tower Delaware”), a Consolidated Holding Company. First Tower Delaware holds 80.10% of the voting interest of First Tower Finance Company LLC (“First Tower Finance”), resulting in a 78.06% ownership of First Tower Finance. First Tower Finance owns 100% of First Tower, LLC (“First Tower”), a multiline specialty finance company.

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Interest Income			$	14,273					$	18,180					$	48,636					$	54,959
Other Income
Structuring Fee			$	—					$	664					$	—					$	7,898
Total Other Income			$	—					$	664					$	—					$	7,898
Managerial Assistance (1)			$	600					$	600					$	1,800					$	1,800

(1) No income recognized by Prospect. MA payments were paid from First Tower to Prospect and subsequently remitted to PA.

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Additions			$	—					$	22,123					$	—					$	22,123
Interest Income Capitalized as PIK			$	14,085					$	5,554					28,847						12,804
Repayment of Loan Receivable			987						9,992						987						11,151

			As of
			March 31, 2023						June 30, 2022
Interest Receivable (2)			$	160					$	218
Other Receivables (3)			6						6

(2) Interest income recognized but not yet paid.

(3) Represents amounts due from First Tower to Prospect for reimbursement of expenses paid by Prospect on behalf of First Tower.

Freedom Marine Solutions, LLC

As discussed above, Prospect owns 100% of the equity of Energy Solutions, a Consolidated Holding Company. Energy Solutions owns 100% of Freedom Marine. Freedom Marine owns 100% of each of Vessel, Vessel II, and Vessel III.

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Additions (1)			$	650					$	—					$	650					$	—

(1) During the quarter ended March 31, 2023, Prospect provided $650 of equity funding to support growth in Freedom Marine’s loan portfolio.

			As of
			March 31, 2023						June 30, 2022
Other Receivables			$	4					$	6

101

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

InterDent, Inc.

During the year ended June 30, 2018, Prospect exercised its rights and remedies under its loan documents to exercise the shareholder voting rights in respect of the stock of InterDent, Inc. (“InterDent”) and to appoint a new Board of Directors of InterDent, all the members of which are our Investment Adviser’s professionals. As a result, Prospect’s investment in InterDent is classified as a control investment.

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Interest Income			$	8,287					$	6,604					$	23,865					$	19,537
Other Income
Structuring Fee			$	—					$	200					$	—					$	200
Total Other Income			$	—					$	200					$	—					$	200
Managerial Assistance (1)			366						366						1,097						731
Reimbursement of Legal, Tax, etc.(2)			—						—						—						1,443

(1) No income recognized by Prospect. MA payments were paid from InterDent to Prospect and subsequently remitted to PA.
(2) Paid from InterDent to PA as reimbursement for legal, tax, and portfolio level accounting services provided directly to InterDent (No direct income recognized by Prospect, but we were given a credit for these payments as a reduction to the administrative services payable by Prospect to PA).

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Additions			$	—					$	10,000					$	—					$	17,778
Interest Income Capitalized as PIK			5,232						4,592						15,291						13,563
Repayment of Loan Receivable			—						—						—						246

			As of
			March 31, 2023						June 30, 2022
Interest Receivable (3)			$	95					$	80
Other Receivables (4)			2						16

(3) Interest income recognized but not yet paid.

(4) Represents amounts due from InterDent to Prospect for reimbursement of expenses paid by Prospect on behalf of InterDent.

Kickapoo Ranch Pet Resort

Prospect owns 100% of the membership interest of Kickapoo Ranch Pet Resort (“Kickapoo”). Kickapoo is a luxury pet boarding facility.

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Dividend Income			$	—					$	—					$	100					$	—

102

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

			As of
			March 31, 2023						June 30, 2022
Other Receivables (1)			$	8					$	8

(1) Represents amounts due from Kickapoo to Prospect for reimbursement of expenses paid by Prospect on behalf of Kickapoo

MITY, Inc.

Prospect owns 100% of the equity of MITY Holdings of Delaware Inc. (“MITY Delaware”), a Consolidated Holding Company.

MITY Delaware owns 100% of the equity of MITY, Inc. (f/k/a MITY Enterprises, Inc.) (“MITY”). MITY owns 100% of each of MITY-Lite, Inc. (“MITY-Lite”); Broda USA, Inc. (f/k/a Broda Enterprises USA, Inc.) (“Broda USA”); and Broda Enterprises ULC (“Broda Canada”). MITY is a designer, manufacturer and seller of multipurpose room furniture and specialty healthcare seating products.

During the three months ended December 31, 2016, Prospect formed a separate legal entity, MITY FSC, Inc., (“MITY FSC”) in which Prospect owns 100% of the equity. MITY FSC does not have material operations. This entity earns commission payments from MITY-Lite based on its sales to foreign customers, and distributes it to its shareholder. We recognize such commission, if any, as other income.

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Interest Income			$	1,935					$	1,844					$	5,989					$	5,421
Managerial Assistance (1)			75						75						225						75
Reimbursement of Legal, Tax, etc.(2)			—						—						—						10
Realized (Loss) Gain			(1)						4						(2)						10

(1) No income recognized by Prospect. MA payments were paid from MITY to Prospect and subsequently remitted to PA.
(2) Paid from Mity to PA as reimbursement for legal, tax, and portfolio level accounting services provided directly to Mity (No direct income recognized by Prospect, but we were given a credit for these payments as a reduction to the administrative services payable by Prospect to PA).

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Interest Income Capitalized as PIK			$	1,136					$	1,107					$	2,166					$	4,383
Repayment of Loan Receivable			666						—						2,269						—

			As of
			March 31, 2023						June 30, 2022
Interest Receivable (3)			$	24					$	81
Other Receivables (4)			9						6

(3) Interest income recognized but not yet paid.

(4) Represents amounts due from MITY to Prospect for reimbursement of expenses paid by Prospect on behalf of MITY.

National Property REIT Corp.

Prospect owns 100% of the equity of NPH Property Holdings, LLC (“NPH”), a consolidated holding company. NPH owns 100% of the common equity of National Property REIT Corp. (“NPRC”).

NPRC is a Maryland corporation and a qualified REIT for federal income tax purposes. In order to qualify as a REIT, NPRC issued 125 shares of Series A Cumulative Non-Voting Preferred Stock to 125 accredited investors. The preferred stockholders are entitled to receive cumulative dividends semi-annually at an annual rate of 12.5% and do not have the ability to participate in the management or operation of NPRC.

103

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

NPRC was formed to hold for investment, operate, finance, lease, manage, and sell a portfolio of real estate assets and engage in any and all other activities as may be necessary, incidental or convenient to carry out the foregoing. NPRC acquires real estate assets, including, but not limited to, industrial, commercial, and multi-family properties. NPRC may acquire real estate assets directly or through joint ventures by making a majority equity investment in a property-owning entity (the “JV”). Additionally, through its wholly owned subsidiaries, NPRC invests in online consumer loans and rated secured structured notes (“RSSN”).

Effective June 19, 2020, we amended and restated the terms of our credit agreement with NPRC, as part of the amendment we increased our investment through a new Term Loan D first lien note in the aggregate principal amount of $183,425 and the proceeds were returned to us as a return of capital, reducing our equity investment in NPRC. We received structuring fees of $3,669 as a result of the amendment.

During the nine months ended March 31, 2023, we received partial repayments of $86,852 of our loans previously outstanding with NPRC and its wholly owned subsidiaries and $4,000 as a return of capital on our equity investment in NPRC. During the nine months ended March 31, 2023, we provided $132,071 of debt financing and $3,600 of equity financing to NPRC to fund purchases of real estate properties, to provide working capital, and to fund purchases of rated secured structured notes.

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Interest Income			$	24,748					$	13,880					$	67,804					$	46,441
Other Income
Structuring Fee			$	—					$	1,593					$	261					$	2,815
Residual Profit Interest			14,540						23,112						49,474						43,052
Total Other Income			$	14,540					$	24,705					$	49,735					$	45,867
Managerial Assistance (1)			$	525					$	525					$	1,575					$	1,575
Reimbursement of Legal, Tax, etc.(2)			9						585						868						3,296

(1) No income recognized by Prospect. MA payments were paid from NPRC to Prospect and subsequently remitted to PA.

(2) Paid from NPRC to PA as reimbursement for legal, tax, and portfolio level accounting services provided directly to NPRC (No direct income recognized by Prospect, but we were given a credit for these payments as a reduction to the administrative services payable by Prospect to PA).

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Additions			$	27,600					$	164,811					$	135,671					$	280,167
Interest Income Capitalized as PIK			232						—						251						—
Repayment of Loan Receivable			14,000						10,000						86,852						289,882
Return of Capital			—						—						4,000						—

			As of
			March 31, 2023						June 30, 2022
Interest Receivable (3)			$	—					$	83
Other Receivables (4)			5						7

(3) Interest income recognized but not yet paid.

(4) Represents amounts due from NPRC to Prospect for reimbursement of expenses paid by Prospect on behalf of NPRC.

Nationwide Loan Company LLC

Prospect owns 100% of the membership interests of Nationwide Acceptance Holdings LLC (“Nationwide Holdings”), a Consolidated Holding Company. Nationwide Holdings owns 94.48% of the equity of Nationwide Loan Company LLC (“Nationwide”), with members of Nationwide management owning the remaining 5.52% of the equity.

On March 24, 2020, Prospect received distributions of $1,500 that were paid from Nationwide Holdings to Prospect and were recognized as a return of capital by Prospect.

104

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Interest Income			$	1,073					$	1,013					$	3,191					$	3,084
Dividend Income (1)			—						400						—						2,150
Managerial Assistance (2)			100						100						300						300
Reimbursement of Legal, Tax, etc. (3)			—						—						—						9

(1) All dividends were paid from earnings and profits of Nationwide.

(2) No income recognized by Prospect. MA payments were paid from Nationwide to Prospect and subsequently remitted to PA.
(3) Paid from Nationwide to PA as reimbursement for legal, tax, and portfolio level accounting services provided directly to Nationwide (No direct income recognized by Prospect, but we were given a credit for these payments as a reduction to the administrative services payable by Prospect to PA).

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Interest Income Capitalized as PIK			$	719					$	—					$	1,595					$	—

			As of
			March 31, 2023						June 30, 2022
Interest Receivable (4)			$	12					$	11
Other Receivables (5)			12						9

(4) Interest income recognized but not yet paid.

(5) Represents amounts due from Nationwide to Prospect for reimbursement of expenses paid by Prospect on behalf of Nationwide.

NMMB, Inc.

Prospect owns 100% of the equity of NMMB Holdings, Inc. (“NMMB Holdings”), a Consolidated Holding Company. NMMB Holdings owns 90.42% of the fully-diluted equity of NMMB, Inc. (f/k/a NMMB Acquisition, Inc.) (“NMMB”) as of March 31, 2023 and June 30, 2022, respectively, with NMMB management owning the remaining equity. NMMB owns 100% of Refuel Agency, Inc. (“Refuel Agency”). Refuel Agency owns 100% of Armed Forces Communications, Inc. (“Armed Forces”). NMMB is an advertising media buying business.

On December 30, 2019, NMMB executed a dividend recapitalization whereby Prospect invested $15,100 of a first lien term loan to repay NMMB’s existing term loan, provide a shareholder distribution, and pay fees and expenses. As part of the recapitalization, Prospect converted its Series A and Series B preferred securities into 92.42% common equity and received a dividend distribution of $2,797.

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Interest Income			$	983					$	133					$	2,727					$	394
Dividend Income (1)			800						3,988						2,510						7,034
Other Income
Structuring Fee			$	—					$	450					$	—					$	450
Total Other Income			$	—					$	450					$	—					$	450
Managerial Assistance (2)			100						100						300						300
Realized Loss			(799)						5,294						(2,510)						5,294
Reimbursement of Legal, Tax, etc. (3)			—						26						—						26

(1) All dividends were paid from earnings and profits of NMMB.

(2) No income recognized by Prospect. MA payments were paid from NMMB to Prospect and subsequently remitted to PA.

105

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

(3) Paid from NMMB to PA as reimbursement for legal, tax, and portfolio level accounting services provided directly to NMMB (No direct income recognized by Prospect, but we were given a credit for these payments as a reduction to the administrative services payable by Prospect to PA).

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Additions			$	—					$	25,000					$	—					$	25,000
Repayment of loan receivable
Repayment from NMMB			$	—					$	12,907					$	—					$	12,983
Total Repayment of Loan Receivable (4)			$	—					$	12,907					$	—		0			$	12,983

(4) During the nine months ended March 31, 2022, Prospect received partial repayments totaling $12,983, respectively, for our First Lien Notes outstanding with NMMB, Inc.

			As of
			March 31, 2023						June 30, 2022
Interest Receivable (5)			$	11					$	9
Other Receivables (6)			3						5

(5) Interest income recognized but not yet paid.

(6) Represents amounts due from NMMB to Prospect for reimbursement of expenses paid by Prospect on behalf of NMMB.

Pacific World Corporation

Prospect owns 100% of the preferred equity of Pacific World Corporation (“Pacific World”), which represents a 99.97% ownership interest of Pacific World as of March 31, 2023 and June 30, 2022, respectively. As a result, Prospect’s investment in Pacific World is classified as a control investment.

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Interest Income			$	2,251					$	1,185					$	5,613					$	3,507
Other Income
Structuring Fee			$	—					$	—					$	105					$	—
Total Other Income			$	—					$	—					$	105					$	—

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Additions (1)			$	—					$	—					$	11,000					$	6,500
Interest Income Capitalized as PIK			2,014						1,194						5,315						3,363

(1) During the nine months ended March 31, 2022, Prospect provided $4,000 of debt financing and $2,500 of equity financing to Pacific World to fund working capital needs.

			As of
			March 31, 2023						June 30, 2022
Interest Receivable (2)			$	27					$	16
Other Receivables (3)			126						109

106

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

(2) Interest income recognized but not yet paid.

(3) Represents amounts due from Pacific World to Prospect for reimbursement of expenses paid by Prospect on behalf of Pacific World.

R-V Industries, Inc.

Prospect owns 87.75% of the fully-diluted equity of R-V Industries, Inc. (“R-V”), with R-V management owning the remaining 12.25% of the equity. On December 15, 2020 we restructured our $28,622 Senior Subordinated Note with R-V into a $28,622 First Lien Note. No realized gain or loss was recorded as a result of the transaction.

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Interest Income			$	1,151					$	753					$	3,265					$	2,184
Dividend Income (1)			—						—						—						441
Other Income
Advisory Fee			$	—					$	125					$	—					$	125
Total Other Income			$	—					$	125					$	—					$	125
Managerial Assistance (2)			45						45						135						135
Reimbursement of Legal, Tax, etc.(3)			—						42						—						46

(1) All dividends were paid from earnings and profits of R-V.
(2) No income recognized by Prospect. MA payments were paid from R-V to Prospect and subsequently remitted to PA.

(3) Paid from R-V to PA as reimbursement for legal, tax, and portfolio level accounting services provided directly to R-V (No direct income recognized by Prospect, but we were given a credit for these payments as a reduction to the administrative services payable by Prospect to PA).

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Additions			$	—					$	5,000					$	—					$	5,000

			As of
			March 31, 2023						June 30, 2022
Interest Receivable (4)			$	13					$	11
Other Receivables (5)			—						2

(4) Interest income recognized but not yet paid.

(5) Represents amounts due from R-V to Prospect for reimbursement of expenses paid by Prospect on behalf of R-V.

Universal Turbine Parts, LLC

On December 10, 2018, UTP Holdings Group, Inc. (“UTP Holdings”) purchased all of the voting stock of Universal Turbine Parts, LLC (“UTP”) and appointed a new Board of Directors to UTP Holdings, consisting of three employees of the Investment Advisor. At the time UTP Holdings acquired UTP, UTP Holdings (f/k/a Harbortouch Holdings of Delaware) was a wholly-owned holding company controlled by Prospect and therefore Prospect’s investment in UTP is classified as a control investment.

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Interest Income			$	871					$	580					$	2,364					$	1,766
Managerial Assistance (1)			3						3						8						8

(1) No income recognized by Prospect. MA payments were paid from UTP to Prospect and subsequently remitted to PA.

107

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Repayment of Loan Receivable			$	8					$	8					$	24					$	24

			As of
			March 31, 2023						June 30, 2022
Interest Receivable (2)			$	10					$	7
Other Receivables (3)			—						17

(2) Interest income recognized but not yet paid.

(3) Represents amounts due from UTP to Prospect for reimbursement of expenses paid by Prospect on behalf of UTP.

USES Corp.

On June 15, 2016, we provided additional $1,300 debt financing to USES Corp. (“United States Environmental Services” or “USES”) and its subsidiaries in the form of additional Term Loan A debt and, in connection with such Term Loan A debt financing, USES issued to us 99,900 shares of its common stock. On June 29, 2016, we provided additional $2,200 debt financing to USES and its subsidiaries in the form of additional Term Loan A debt and, in connection with such Term Loan A debt financing, USES issued to us 169,062 shares of its common stock. As a result of such debt financing and recapitalization, as of June 29, 2016, we held 268,962 shares of USES common stock representing a 99.96% common equity ownership interest in USES. As such, USES became a controlled company on June 30, 2016.

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Interest Income			$	286					$	50					$	722					$	152

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Additions			$	—					$	—					$	6,000					$	—
Interest Income Capitalized as PIK			287						—						531						—

			As of
			March 31, 2023						June 30, 2022
Interest Receivable (1)			$	3					$	1
Other Receivables (2)			62						62

(1) Interest income recognized but not yet paid.

(2) Represents amounts due from USES to Prospect for reimbursement of expenses paid by Prospect on behalf of USES.

Valley Electric Company, Inc.

Prospect owns 100% of the common stock of Valley Electric Holdings I, Inc. (“Valley Holdings I”), a Consolidated Holding Company. Valley Holdings I owns 100% of Valley Electric Holdings II, Inc. (“Valley Holdings II”), a Consolidated Holding Company. Valley Holdings II owns 94.99% of Valley Electric Company, Inc. (“Valley Electric”), with Valley Electric management owning the remaining 5.01% of the equity. Valley Electric owns 100% of the equity of VE Company, Inc., which owns 100% of the equity of Valley Electric Co. of Mt. Vernon, Inc. (“Valley”), a leading provider of specialty electrical services in the state of Washington and among the top 50 electrical contractors in the United States.

108

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Interest Income
Interest Income from Valley			$	319					$	274					$	1,173					$	834
Interest Income from Valley Electric			1,948						1,505						5,508						4,502
Total Interest Income			$	2,267					$	1,779					$	6,681					$	5,336
Dividend Income (1)			$	—					$	809					$	547					$	2,509
Other Income
Structuring Fee			$	—					$	260					$	—					$	260
Residual Profit Interest			167						167						500						500
Total Other Income			$	167					$	427					$	500					$	760
Managerial Assistance (2)			$	150					$	150					$	450					$	450

(1) All dividends were paid from earnings and profits.
(2) No income recognized by Prospect. MA payments were paid from Valley Electric to Prospect and subsequently remitted to PA.

			Three Months Ended												Nine Months Ended
			March 31, 2023						March 31, 2022						March 31, 2023						March 31, 2022
Additions			$	—					$	13,000					$	—					$	13,000
Interest Income Capitalized as PIK			1,992						22						1,992						22
Repayment of loan receivable			—						15,339						(548)						15,339

			As of
			March 31, 2023						June 30, 2022
Interest Receivable (3)			$	24					$	19
Other Receivables (4)			8						5

(3) Interest income recognized but not yet paid.

(4) Represents amounts due from Valley Electric to Prospect for reimbursement of expenses paid by Prospect on behalf of Valley Electric.

Note 15. Litigation

From time to time, we may become involved in various investigations, claims and legal proceedings that arise in the ordinary course of our business. These matters may relate to intellectual property, employment, tax, regulation, contract or other matters. The resolution of such matters as may arise will be subject to various uncertainties and, even if such claims are without merit, could result in the expenditure of significant financial and managerial resources.

We are not aware of any material legal proceedings as of March 31, 2023.

109

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

Note 16. Financial Highlights

The following is a schedule of financial highlights for the nine months ended March 31, 2023 and March 31, 2022:

			Three Months Ended March 31,												Nine Months Ended March 31,
			2023						2022						2023						2022
Per Share Data
Net asset value per common share at beginning of period			$	9.94					$	10.60					$	10.48					$	9.81
Net investment income(1)			0.26						0.22						0.78						0.65
Net realized and change in unrealized (losses) gains(1)			(0.48)						0.20						(1.05)						0.96
Net increase (decrease) from operations			(0.22)						0.42						(0.27)						1.61
Distributions of net investment income to preferred stockholders			(0.05)						(0.01)			(11)			(0.12)						(0.03)			(11)
Distributions of capital gains to preferred stockholders			—						(0.01)			(11)			—			(10)			(0.01)			(11)
Total distributions to preferred stockholders			(0.05)						(0.02)						(0.12)						(0.04)
Net increase (decrease) from operations applicable to common stockholders			(0.27)						0.40						(0.40)			(5)			1.57
Distributions of net investment income to common stockholders			(0.18)			(4)			(0.13)			(11)			(0.52)			(4)			(0.48)			(11)
Distributions of capital gains to common stockholders			—						(0.05)			(11)			(0.02)						(0.05)			(11)
Return of Capital to common stockholders			—			(4)			—						—			(4)			(0.01)
Total distributions to common stockholders			(0.18)						(0.18)						(0.54)						(0.54)
Common stock transactions(2)			(0.01)						(0.01)						(0.07)						(0.03)
Offering costs from issuance of preferred stock			—						—						—						(0.03)
Reclassification of preferred stock issuance costs(6)			—						—						—						0.03
Net asset value per common share at end of period			$	9.48					$	10.81		(5)			$	9.48		(5)			$	10.81
Per common share market value at end of period			$	6.96					$	8.28					$	6.96					$	8.28
Total return based on market value(3)			2.16		%				0.66		%				7.53		%				5.61		%
Total return based on net asset value(3)			(2.14		%)				4.27		%				(2.31		%)				17.92		%
Shares of common stock outstanding at end of period			400,833,873						391,718,136						400,833,873						391,718,136
Weighted average shares of common stock outstanding			399,732,263						391,091,485						397,233,468						389,981,608
Ratios/Supplemental Data
Net assets at end of period			$	3,799,294					$	4,236,011					$	3,799,294					$	4,236,011
Portfolio turnover rate			1.19		%				2.56		%				4.47		%				14.08		%
Annualized ratio of operating expenses to average net assets applicable to common shares(8)			11.63		%				9.02		%				10.85		%				9.01		%
Annualized ratio of net investment income to average net assets applicable to common shares(8)			10.53		%				8.31		%				10.37		%				8.40		%

110

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

The following is a schedule of financial highlights for each of the five years ended in the period ended June 30, 2022:

			Year Ended June 30,
			2022						2021						2020						2019						2018
Per Share Data
Net asset value per common share at beginning of year			$	9.81					$	8.18					$	9.01					$	9.35					$	9.32
Net investment income(1)			0.88						0.75						0.72						0.85						0.79
Net realized and change in unrealized gains (losses)(1)			0.61						1.77						(0.76)						(0.46)						0.04
Net increase (decrease) from operations			1.49						2.51			(5)			(0.04)						0.39						0.83
Distributions of net investment income to preferred stockholders			(0.05)			(11)			—			(10)			—						—						—
Distributions of capital gains to preferred stockholders			(0.01)			(11)			—						—						—						—
Total distributions to preferred stockholders			(0.06)						—						—						—						—
Net increase (decrease) from operations applicable to common stockholders			1.43						2.51						(0.04)						0.39						0.83
Distributions of net investment income to common stockholders			(0.60)			(11)			(0.63)			(9)			(0.49)			(7)			(0.72)						(0.77)
Distributions of capital gains to common stockholders			(0.11)			(11)			—						—						—						—
Return of capital to common stockholders			(0.01)						(0.09)			(9)			(0.23)			(7)			—						—
Total distributions to common stockholders			(0.72)						(0.72)						(0.72)						(0.72)						(0.77)
Common stock transactions(2)			(0.05)						(0.11)						(0.07)						(0.01)						(0.03)			(4)
Offering costs from issuance of preferred stock			(0.03)						(0.04)						—						—						—
Reclassification of preferred stock issuance costs(6)			0.03						—						—						—						—
Net asset value per common share at end of year			$	10.48		(5)			$	9.81		(5)			$	8.18					$	9.01					$	9.35
Per share market value at end of year			$	6.99					$	8.39					$	5.11					$	6.53					$	6.71
Total return based on market value(3)			(8.59		%)				85.53		%				(11.35		%)				8.23		%				(7.42		%)
Total return based on net asset value(3)			17.21		%				35.52		%				2.84		%				7.17		%				12.39		%
Shares of common stock outstanding at end of year			393,164,437						388,419,573						373,538,499						367,131,025						364,409,938
Weighted average shares of common stock outstanding			390,571,648						382,705,106						368,094,299						365,984,541						361,456,075
Ratios/Supplemental Data
Net assets at end of year			$	4,119,123					$	3,945,517					$	3,055,861					$	3,306,275					$	3,407,047
Portfolio turnover rate			15.92		%				14.64		%				16.46		%				10.86		%				30.70		%
Ratio of operating expenses to average net assets applicable to common shares(8)			9.00		%				9.98		%				11.37		%				11.65		%				11.08		%
Ratio of net investment income to average net assets applicable to common shares(8)			8.44		%				8.24		%				8.44		%				9.32		%				8.57		%

(1)Per share data amount is based on the basic weighted average number of common shares outstanding for the year/period presented (except for dividends to stockholders which is based on actual rate per share).

(2)Common stock transactions include the effect of our issuance of common stock in public offerings (net of underwriting and offering costs), shares issued in connection with our common stock dividend reinvestment plan, common shares issued to acquire investments, common shares repurchased below net asset value pursuant to our Repurchase Program, and common shares issued pursuant to the Holder Optional Conversion of our 5.50% Preferred Stock.

(3)Total return based on market value is based on the change in market price per common share between the opening and ending market prices per share in each period and assumes that common stock dividends are reinvested in accordance with our common stock dividend reinvestment plan. Total return based on net asset value is based upon the change in net asset value per common share between the opening and ending net asset values per common share in each period and assumes that dividends are reinvested in accordance with our common stock dividend reinvestment plan. For periods less than a year, total return is not annualized.

(4)Not finalized for the respective fiscal period. Refer to Note 12.

(5)Does not foot due to rounding.

111

---

PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(Continued)

(in thousands, except share and per share data)

(6)Preferred stock issuance costs include offering costs and underwriting costs related to the issuance of preferred stock. During the three months ended December 31, 2021, we have reclassified all preferred stock issuance costs related to preferred stock issued as temporary equity following our reclassification of preferred stock during the three months ended September 30, 2021. Refer to Note 9 within the accompanying notes to the consolidated financial statements for further discussion.

(7)The amounts reflected for the respective fiscal periods were updated based on tax information received subsequent to our Form 10-K filing for the year ended June 30, 2020 and our Form 10-Q filing for September 30, 2020. Certain reclassifications have been made in the presentation of prior period amounts. See Note 2 and Note 12 within the accompanying notes to the consolidated financial statements for further discussion.

(8)The amounts reflected for the respective fiscal periods do not reflect the effect of dividend payments to preferred shareholders.

(9)The amounts reflected for the respective fiscal periods were updated based on tax information received subsequent to our Form 10-K filing for the year ended June 30, 2021 and our Form 10-Q filing for December 31, 2021. Certain reclassifications have been made in the presentation of prior period amounts. See Note 2 and Note 12 within the accompanying notes to the consolidated financial statements for further discussion.

(10)Amount is less than $0.01.

(11)The amounts reflected for the respective fiscal periods were updated based on tax information received subsequent to our Form 10-K filing for the year ended June 30, 2022 and our Form 10-Q filing for December 31, 2022. Certain reclassifications have been made in the presentation of prior period amounts. See Note 2 and Note 12 within the accompanying notes to the consolidated financial statements for further discussion.

Note 17. Selected Quarterly Financial Data (Unaudited)

The following table sets forth selected financial data for each quarter within the three years ended June 30, 2023:

						Investment  Income												Net Investment  Income												Net Realized and  Unrealized (Losses) Gains												Net Increase (Decrease) in  Net Assets from Operations Applicable to Common Stockholders
Quarter Ended						Total						Per Share (1)						Total						Per Share (1)						Total						Per Share (1)						Total						Per Share (1)
September 30, 2020						$	142,880					$	0.38					$	57,545					$	0.15					$	110,201					$	0.30					$	167,746					$	0.45
December 31, 2020						172,292						0.45						81,561						0.21						224,406						0.60						305,921						0.80
March 31, 2021						159,456						0.41						73,402						0.19						173,006						0.45						246,008						0.64
June 30, 2021						157,339						0.41						73,229						0.19						170,457						0.44						242,421						0.62
September 30, 2021						$	169,474					$	0.44					$	81,369					$	0.21					$	130,762					$	0.34					$	209,724					$	0.54
December 31, 2021						175,376						0.45						85,557						0.22						168,056						0.43						246,411						0.63
March 31, 2022						181,431						0.46						87,005						0.22						77,291						0.20						157,157						0.40
June 30, 2022						184,623						0.47						89,969						0.23						(137,425)						(0.35)						(56,643)						(0.14)
September 30, 2022						$	202,674					$	0.51					$	99,266					$	0.25					$	(191,705)					$	(0.49)					$	(105,199)					$	(0.27)
December 31, 2022						212,916						0.54						106,704						0.27						(34,427)						(0.09)						55,623						0.14
March 31, 2023						215,120						0.54						102,180						0.26						(191,194)						(0.48)						(108,947)						(0.27)

(1)Per share amounts are calculated using the basic weighted average number of common shares outstanding for the period presented and does not reflect the assumed conversion of dilutive securities (basic earnings per common share). The sum of the quarterly per share amounts above will not necessarily equal the per share amounts for the fiscal year.

112

---

Note 18. Subsequent Events

Management has evaluated subsequent events through the date of issuance of these financial statements and has determined that there are no subsequent events outside the ordinary scope of business that require adjustment to, or disclosure in, the financial statements other than those disclosed below.

On May 9, 2023, we announced the declaration of monthly dividends for our 5.50% Preferred Stock for holders of record on the following dates based on an annual rate equal to 5.50% of the Stated Value of $25.00 per share as set forth in the Articles Supplementary for the Preferred Stock, from the date of issuance or, if later from the most recent dividend payment date (the first business day of the month, with no additional dividend accruing in July as a result), as follows:

Monthly Cash 5.50% Preferred Shareholder Distribution			Record Date			Payment Date			Monthly Amount ($ per share), before pro ration for partial periods
June 2023			6/21/2023			7/3/2023			$0.114583
July 2023			7/19/2023			8/1/2023			$0.114583
August 2023			8/16/2023			9/1/2023			$0.114583

On May 9, 2023, we announced the declaration of monthly dividends for our 6.50% Preferred Stock for holders of record on the following dates based on an annual rate equal to 6.50% of the Stated Value of $25.00 per share as set forth in the Articles Supplementary for the Preferred Stock, from the date of issuance or, if later from the most recent dividend payment date (the first business day of the month, with no additional dividend accruing in July as a result), as follows:

Monthly Cash 6.50% Preferred Shareholder Distribution			Record Date			Payment Date			Monthly Amount ($ per share), before pro ration for partial periods
June 2023			6/21/2023			7/3/2023			$0.135417
July 2023			7/19/2023			8/1/2023			$0.135417
August 2023			8/16/2023			9/1/2023			$0.135417

On May 9, 2023, we announced the declaration of quarterly dividends for our 5.35% Preferred Stock for holders of record on the following dates based on an annual rate equal to 5.35% of the Stated Value of $25.00 per share as set forth in the Articles Supplementary for the 5.35% Preferred Stock, from the date of issuance or, if later from the most recent dividend payment date, as follows:

Quarterly Cash 5.35% Preferred Shareholder Distribution			Record Date			Payment Date			Amount ($ per share)
May 2023 - July 2023			7/19/2023			8/1/2023			$0.334375

On May 9, 2023, we announced the declaration of monthly dividends on our common stock as follows:

Monthly Cash Common Shareholder Distribution			Record Date			Payment Date			Amount ($ per share)
May 2023			5/26/2023			6/21/2023			$0.0600
June 2023			6/28/2023			7/20/2023			$0.0600
July 2023			7/27/2023			8/22/2023			$0.0600
August 2023			8/29/2023			9/20/2023			$0.0600

113

---

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

(All figures in this item are in thousands except share, per share and other data.)

The following discussion should be read in conjunction with our consolidated financial statements and related notes and other financial information appearing elsewhere in this Quarterly Report. In addition to historical information, the following discussion and other parts of this Quarterly Report contain forward-looking information that involves risks and uncertainties. Our actual results may differ significantly from any results expressed or implied by these forward-looking statements due to the factors discussed in Part II, “Item 1A. Risk Factors” and “Forward-Looking Statements” appearing elsewhere herein.

Overview

The terms “Prospect”, “the Company”, “we”, “us” and “our” mean Prospect Capital Corporation and its subsidiaries unless the context specifically requires otherwise.

Prospect is a financial services company that primarily lends to and invests in middle market privately-held companies. We are a closed-end investment company incorporated in Maryland. We have elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940 (the “1940 Act”). As a BDC, we have elected to be treated as a regulated investment company (“RIC”), under Subchapter M of the Internal Revenue Code of 1986 (the “Code”). We were organized on April 13, 2004, and were funded in an initial public offering completed on July 27, 2004.

On May 15, 2007, we formed a wholly owned subsidiary Prospect Capital Funding LLC (“PCF”), a Delaware limited liability company and a bankruptcy remote special purpose entity, which holds certain of our portfolio loan investments that are used as collateral for the revolving credit facility at PCF. Our wholly owned subsidiary Prospect Small Business Lending, LLC (“PSBL”) was formed on January 27, 2014, and purchased small business whole loans from online small business loan originators, including On Deck Capital, Inc. (“OnDeck”). On September 30, 2014, we formed a wholly-owned subsidiary Prospect Yield Corporation, LLC (“PYC”) and effective October 23, 2014, PYC holds a portion of our collateralized loan obligations (“CLOs”), which we also refer to as subordinated structured notes (“SSNs”). Each of these subsidiaries have been consolidated since operations commenced.

We consolidate certain of our wholly owned and substantially wholly owned holding companies formed by us in order to facilitate our investment strategy. The following companies are included in our consolidated financial statements and are collectively referred to as the “Consolidated Holding Companies”: CP Holdings of Delaware LLC (“CP Holdings”); Credit Central Holdings of Delaware, LLC (“Credit Central Delaware”); Energy Solutions Holdings Inc.; First Tower Holdings of Delaware LLC (“First Tower Delaware”); MITY Holdings of Delaware Inc. (“MITY Delaware”); Nationwide Acceptance Holdings LLC; NMMB Holdings, Inc. (“NMMB Holdings”); NPH Property Holdings, LLC (“NPH”); Prospect Opportunity Holdings I, Inc. (“POHI”); SB Forging Company, Inc. (“SB Forging”); STI Holding, Inc.; UTP Holdings Group Inc. (“UTP Holdings”); Valley Electric Holdings I, Inc. (“Valley Holdings I”); and Valley Electric Holdings II, Inc. (“Valley Holdings II”).

We are externally managed by our investment adviser, Prospect Capital Management L.P. (“Prospect Capital Management” or the “Investment Adviser”). Prospect Administration LLC (“Prospect Administration”), a wholly-owned subsidiary of the Investment Adviser, provides administrative services and facilities necessary for us to operate.

Our investment objective is to generate both current income and long-term capital appreciation through debt and equity investments. We invest primarily in senior and subordinated secured debt and equity of private companies in need of capital for acquisitions, divestitures, growth, development, recapitalizations and other purposes. We work with the management teams or financial sponsors to seek investments with historical cash flows, asset collateral or contracted pro-forma cash flows.

We currently have four primary strategies that guide our origination of investment opportunities: (1) lending to companies, including companies controlled by private equity sponsors and not controlled by private equity sponsors, and including both directly-originated loans and syndicated loans, (2) lending to companies and purchasing controlling equity positions in such companies, including both operating companies and financial services companies, (3) purchasing controlling equity positions and lending to real estate companies, and (4) investing in structured credit. We may also invest in other strategies and opportunities from time to time that we view as attractive. We continue to evaluate other origination strategies in the ordinary course of business with no specific top-down allocation to any single origination strategy.

114

---

Lending to Companies - We make directly-originated, agented loans to companies, including companies which are controlled by private equity sponsors and companies that are not controlled by private equity sponsors (such as companies that are controlled by the management team, the founder, a family or public shareholders). This debt can take the form of first lien, second lien, unitranche or unsecured loans. These loans typically have equity subordinate to our loan position. We may also purchase selected equity co-investments in such companies. In addition to directly-originated, agented loans, we also invest in senior and secured loans syndicated loans and high yield bonds that have been sold to a club or syndicate of buyers, both in the primary and secondary markets. These investments are often purchased with a long term, buy-and-hold outlook, and we often look to provide significant input to the transaction by providing anchoring orders. Historically, this strategy has comprised approximately 40%-60% of our portfolio.

Lending to Companies and Purchasing Controlling Equity Positions in Such Companies - This strategy involves purchasing senior and secured yield-producing debt and controlling equity positions in operating companies across various industries. We believe this strategy provides enhanced certainty of closure to sellers and the opportunity for management to continue on in their current roles. These investments are often structured in tax-efficient partnerships, enhancing returns. Historically, this strategy has comprised approximately 15%-25% of our portfolio.

Purchasing Controlling Equity Positions and Lending to Real Estate Companies - We purchase debt and controlling equity positions in tax-efficient real estate investment trusts (“REIT” or “REITs”). The real estate investments of National Property REIT Corp. (“NPRC”) are in various classes of developed and occupied real estate properties that generate current yields, including multi-family properties, and student housing. NPRC seeks to identify properties that have historically significant occupancy rates and recurring cash flow generation. NPRC generally co-invests with established and experienced property management teams that manage such properties after acquisition. Additionally, NPRC makes investments in rated secured structured notes (primarily debt of structured credit). NPRC also purchases loans originated by certain consumer loan facilitators. It purchases each loan in its entirety (i.e., a “whole loan”). The borrowers are consumers, and the loans are typically serviced by the facilitators of the loans. Historically, this overall investment strategy has comprised approximately 10%-20% of our business.

Investing in Structured Credit - We make investments in structured credit, often taking a significant position in subordinated structured notes (equity) and rated secured structured notes (debt). The underlying portfolio of each structured credit investment is diversified across approximately 100 to 200 broadly syndicated loans and does not have direct exposure to real estate, mortgages, or consumer-based credit assets. The structured credit portfolios in which we invest are managed by established collateral management teams with many years of experience in the industry. Historically, this overall strategy has comprised approximately 10%-20% of our portfolio.

We invest primarily in first and second lien secured loans and unsecured debt, which in some cases includes an equity component. First and second lien secured loans generally are senior debt instruments that rank ahead of unsecured debt of a given portfolio company. These loans also have the benefit of security interests on the assets of the portfolio company, which may rank ahead of or be junior to other security interests. Our investments in structured credit are subordinated to senior loans and are generally unsecured. We invest in debt and equity positions of structured credit which are a form of securitization in which the cash flows of a portfolio of loans are pooled and passed on to different classes of owners in various tranches. Our structured credit investments are derived from portfolios of corporate debt securities which are generally risk rated from BB to B.

We hold many of our control investments in a two-tier structure consisting of a holding company and one or more related operating companies for tax purposes. These holding companies serve various business purposes including concentration of management teams, optimization of third-party borrowing costs, improvement of supplier, customer, and insurance terms, and enhancement of co-investments by the management teams. In these cases, our investment, which is generally equity in the holding company, the holding company’s equity investment in the operating company and any debt from us directly to the operating company structure represents our total exposure for the investment. As of March 31, 2023, as shown in our Consolidated Schedule of Investments, the cost basis and fair value of our investments in controlled companies was $2,884,591 and $3,480,094, respectively. This structure gives rise to several of the risks described in our public documents and highlighted elsewhere in this Quarterly Report. We consolidate all wholly owned and substantially wholly owned holding companies formed by us for the purpose of holding our controlled investments in operating companies. There is no significant effect of consolidating these holding companies as they hold minimal assets other than their investments in the controlled operating companies. Investment company accounting prohibits the consolidation of any operating companies.

On June 10, 2022, at a special meeting of stockholders, our stockholders authorized us to sell shares of our common stock (during the next 12 months) at a price or prices below our net asset value per share at the time of sale in one or more offerings, subject to certain conditions as set forth in the proxy statement relating to the special meeting (including that the number of shares sold on any given date does not exceed 25% of its outstanding common stock immediately prior to such sale).

115

---

On March 13, 2023, we filed a notice of meeting and definitive proxy statement in connection with a special meeting of our stockholders that is scheduled to be held on June 9, 2023 for the purpose of asking our stockholders to vote on a proposal to authorize us, with approval of our Board of Directors, to sell shares of our common stock (during the next 12 months) at a price or prices below our then current net asset value per share in one or more offerings subject to certain conditions as set forth in the proxy statement relating to the special meeting (including that the number of shares sold on any given date does not exceed 25% of our outstanding common stock immediately prior to such sale).

Third Quarter Highlights

Investment Transactions

We seek to be a long-term investor with our portfolio companies. During the three months ended March 31, 2023, we acquired $10,000 of new investments, completed follow-on investments in existing portfolio companies totaling approximately $33,830, funded $942 of revolver advances, and recorded PIK interest of $46,926, resulting in gross investment originations of $91,698. During the three months ended March 31, 2023, we received full repayments totaling $29,164, received $31,806 in sales, received $1,223 of revolver paydowns, and received $51,804 in partial prepayments, scheduled principal amortization payments, and return of capital distributions, resulting in net repayments of $113,997.

Debt Issuances and Redemptions

On March 15, 2023, we repaid the remaining outstanding principal amount of $282,115 of the 2023 Notes, plus interest, at maturity.

During the three months ended March 31, 2023, we repaid $2,438 aggregate principal amount of Prospect Capital InterNotes® at par in accordance with the Survivor’s Option, as defined in the InterNotes® Offering prospectus. As a result of these transactions, we recorded a loss in the amount of the unamortized debt issuance costs. The net loss on the extinguishment of Prospect Capital InterNotes® in the three months ended March 31, 2023 was $58.

During the three months ended March 31, 2023, we issued $7,857 aggregate principal amount of Prospect Capital InterNotes® with a weighted average stated interest rate of 5.68%, to extend our borrowing base. The newly issued notes mature between January 15, 2026 and March 15, 2033 and generated net proceeds of $7,742.

During the three months ended March 31, 2023, we increased total commitments to the Revolving Credit Facility by $76,000 to $1,777,500 in the aggregate.

Equity Issuances

On January 19, 2023, February 16, 2023, and March 22, 2023, we issued 458,461, 448,326, and 492,809 shares of our common stock in connection with the dividend reinvestment plan, respectively.

During the three months ended March 31, 2023, 65,968 shares of our Series A1 Preferred Stock, 23,000 shares of our Series A2 Preferred Stock, 460 shares of our Series A3 Preferred Stock, 74,400 shares of our Series M1 Preferred Stock, and 8,705 shares of our Series M3 Preferred Stock were converted to 581,799 shares of our common stock, in connection with Holder Optional Conversions and Optional Redemptions Following Death of a Holder.

During the three months ended March 31, 2023, we issued 4,871,732 shares of our Series A3 Preferred Stock for net proceeds of $109,614 and 668,104 shares of our Series M3 Preferred Stock for net proceeds of $16,202, each excluding offering costs and preferred stock dividend reinvestment.

In connection with our Preferred Stock Dividend Reinvestment Plan, we issued additional Series A1 Preferred Stock, Series A3 Preferred Stock, Series M1 Preferred Stock, and Series M3 Preferred Stock of 4,408, 5,970, and 6,448 shares throughout January, February and March 2023.

On March 13, 2023, we filed a notice of meeting and definitive proxy statement in connection with a special meeting of our stockholders that is scheduled to be held on June 9, 2023 for the purpose of asking our stockholders to vote on a proposal to authorize us, with approval of our Board of Directors, to sell shares of our common stock (during the next 12 months) at a price or prices below our then current net asset value per share in one or more offerings subject to certain conditions as set forth in the proxy statement relating to the special meeting (including that the number of shares sold on any given date does not exceed 25% of our outstanding common stock immediately prior to such sale).

116

---

Investment Holdings

At March 31, 2023, we have $7,592,777, or 199.8%, of our net assets applicable to common shares invested in 127 long-term portfolio investments and CLOs.

Our annualized current yield was 13.4% and 11.1% as of March 31, 2023 and June 30, 2022, respectively, across all performing interest bearing investments, excluding equity investments and non-accrual loans. Our annualized current yield was 10.9% and 8.7% as of March 31, 2023 and June 30, 2022, respectively, across all investments. In many of our portfolio companies we hold equity positions, ranging from minority interests to majority stakes, which we expect over time to contribute to our investment returns. Some of these equity positions include features such as contractual minimum internal rates of returns, preferred distributions, flip structures and other features expected to generate additional investment returns, as well as contractual protections and preferences over junior equity, in addition to the yield and security offered by our cash flow and collateral debt protections.

We are a non-diversified company within the meaning of the 1940 Act. As required by the 1940 Act, we classify our investments by level of control. As defined in the 1940 Act, “Control Investments” are those where there is the ability or power to exercise a controlling influence over the management or policies of a company. Control is generally deemed to exist when a company or individual possesses a beneficial ownership of 25% or more of the voting securities of an investee company. Under the 1940 Act, “Affiliate Investments” are defined by a lesser degree of influence and are deemed to exist through owning, controlling, or holding with power to vote, 5% or more of the outstanding voting securities of another person. “Non-Control/Non-Affiliate Investments” are those that are neither Control Investments nor Affiliate Investments.

As of March 31, 2023, we own controlling interests in the following portfolio companies: CP Energy Services Inc. (“CP Energy”); Credit Central Loan Company, LLC (“Credit Central”); Echelon Transportation, LLC (“Echelon”); First Tower Finance Company LLC (“First Tower Finance”); Freedom Marine Solutions, LLC (“Freedom Marine”); InterDent, Inc. (“InterDent”); Kickapoo Ranch Pet Resort (“Kickapoo”); MITY, Inc. (“MITY”); NPRC; Nationwide Loan Company LLC (“Nationwide”); NMMB, Inc. (“NMMB”); Pacific World Corporation (“Pacific World”); R-V Industries, Inc. (“R-V”); Universal Turbine Parts, LLC (“UTP”); USES Corp. (“United States Environmental Services” or “USES”); and Valley Electric Company, Inc. (“Valley Electric”). In June 2019, CP Energy purchased a controlling interest of the common equity of Spartan Energy Holdings, Inc. (“Spartan Holdings”), which owns 100% of Spartan Energy Services, LLC (“Spartan”), a portfolio company of Prospect with $31,603 in senior secured term loans (the “Spartan Term Loan A”) due to us as of March 31, 2023. As a result of CP Energy’s purchase, and given Prospect’s controlling interest in CP Energy, we report our investments in Spartan as control investment. Spartan remains the direct borrower and guarantor to Prospect for the Spartan Term Loan A.

As of March 31, 2023, we also own affiliated interests in Nixon, Inc. (“Nixon”) and RGIS Services, LLC, (“RGIS”).

The following shows the composition of our investment portfolio by level of control as of March 31, 2023 and June 30, 2022:

			March 31, 2023															June 30, 2022
Level of Control			Cost			% of Portfolio			Fair Value			% of Portfolio						Cost			% of Portfolio			Fair Value			% of Portfolio
Control Investments			$	2,884,591		38.1		%	$	3,480,094		45.8		%				$	2,732,906		38.0		%	$	3,438,317		45.2		%
Affiliate Investments			8,996			0.1		%	7,944			0.1		%				242,101			3.4		%	393,264			5.2		%
Non-Control/Non-Affiliate Investments			4,671,607			61.8		%	4,104,739			54.1		%				4,221,824			58.6		%	3,770,929			49.6		%
Total Investments			$	7,565,194		100.0		%	$	7,592,777		100.0		%				$	7,196,831		100.0		%	$	7,602,510		100.0		%

117

---

The following shows the composition of our investment portfolio by type of investment as of March 31, 2023 and June 30, 2022:

			March 31, 2023															June 30, 2022
Type of Investment			Cost			% of Portfolio			Fair Value			% of Portfolio						Cost			% of Portfolio			Fair Value			% of Portfolio
First Lien Revolving Line of Credit			$	44,472		0.6		%	$	44,512		0.6		%				$	39,775		0.6		%	$	39,746		0.5		%
First Lien Debt			4,209,603			55.6		%	4,086,362			53.8		%				3,839,553			53.3		%	3,757,960			49.4		%
Second Lien Revolving Line of Credit			5,137			0.1		%	4,888			0.1		%				—			—		%	—			—		%
Second Lien Debt			1,568,007			20.7		%	1,327,318			17.5		%				1,588,557			22.1		%	1,471,336			19.4		%
Unsecured Debt			12,999			0.2		%	12,709			0.2		%				7,200			0.1		%	7,200			0.1		%
Subordinated Structured Notes			967,032			12.8		%	698,423			9.2		%				997,703			13.9		%	711,429			9.4		%
Preferred Stock			357,121			4.7		%	32,533			0.4		%				345,602			4.8		%	47,719			0.6		%
Common Stock			194,557			2.6		%	1,053,818			13.9		%				197,215			2.7		%	1,187,620			15.6		%
Membership Interest			206,266			2.7		%	275,775			3.6		%				181,226			2.5		%	316,970			4.2		%
Participating Interest			—			—		%	56,439			0.7		%				—			—		%	62,530			0.8		%
Total Investments			$	7,565,194		100.0		%	$	7,592,777		100.0		%				$	7,196,831		100.0		%	$	7,602,510		100.0		%

(1)Participating Interest includes our participating equity investments, such as net profits interests, net operating income interests, net revenue interests, and overriding royalty interests.

The following shows our investments in interest bearing securities by type of investment as of March 31, 2023 and June 30, 2022:

			March 31, 2023															June 30, 2022
Type of Investment			Cost			% of Portfolio			Fair Value			% of Portfolio						Cost			% of Portfolio			Fair Value			% of Portfolio
First Lien Debt and First Lien Revolving Line of Credit			$	4,254,075		62.5		%	$	4,130,874		66.9		%				$	3,879,328		59.9		%	$	3,797,706		63.4		%
Second Lien Debt and Second Lien Revolving Line of Credit			1,573,144			23.1		%	1,332,206			21.6		%				1,588,557			24.5		%	1,471,336			24.6		%
Unsecured			12,999			0.2		%	12,709			0.2		%				7,200			0.1		%	7,200			0.1		%
Subordinated Structured Notes			967,032			14.2		%	698,423			11.3		%				997,703			15.5		%	711,429			11.9		%
Total Interest Bearing Investments			$	6,807,250		100.0		%	$	6,174,212		100.0		%				$	6,472,788		100.0		%	$	5,987,671		100.0		%

118

---

The following shows the composition of our investment portfolio by industry as of March 31, 2023 and June 30, 2022:

			March 31, 2023															June 30, 2022
Industry			Cost			% of Portfolio			Fair Value			% of Portfolio						Cost			% of Portfolio			Fair Value			% of Portfolio
Aerospace & Defense			$	112,181		1.5		%	$	60,872		0.8		%				$	108,790		1.5		%	$	65,766		0.9		%
Air Freight & Logistics			187,097			2.5		%	187,786			2.5		%				178,077			2.5		%	178,414			2.3		%
Automobile Components			134,518			1.8		%	108,707			1.4		%				104,499			1.5		%	103,536			1.4		%
Building Products			35,000			0.5		%	33,849			0.4		%				35,000			0.5		%	34,697			0.5		%
Capital Markets			42,500			0.6		%	38,265			0.5		%				42,500			0.6		%	41,574			0.5		%
Commercial Services & Supplies			480,238			6.2		%	404,545			5.3		%				424,795			5.9		%	356,965			4.7		%
Communications Equipment			59,834			0.8		%	44,155			0.6		%				59,780			0.8		%	57,556			0.8		%
Construction & Engineering			70,798			0.9		%	141,564			1.9		%				68,259			0.9		%	145,983			1.9		%
Consumer Finance			610,288			8.1		%	751,580			9.9		%				568,739			7.9		%	765,168			10.1		%
Distributors			282,417			3.7		%	238,057			3.1		%				278,530			3.9		%	180,108			2.4		%
Diversified Consumer Services			276,482			3.7		%	199,710			2.6		%				250,393			3.5		%	365,669			4.8		%
Diversified Financial Services			42,396			0.6		%	42,106			0.6		%				36,878			0.5		%	36,878			0.5		%
Diversified Telecommunication Services			163,070			2.2		%	157,579			2.1		%				165,966			2.3		%	166,356			2.2		%
Electrical Equipment			64,167			0.8		%	64,167			0.8		%				—			—		%	—			—		%
Energy Equipment & Services			321,619			4.2		%	129,600			1.7		%				300,496			4.2		%	126,600			1.7		%
Equity Real Estate Investment Trusts (REITs)			686,086			9.1		%	1,372,493			18.1		%				647,316			9.0		%	1,399,857			18.3		%
Food & Staples Retailing			27,238			0.4		%	27,475			0.4		%				9,262			0.1		%	9,440			0.1		%
Food Products			135,249			1.8		%	125,940			1.7		%				130,998			1.8		%	127,436			1.7		%
Health Care Equipment & Supplies			7,487			0.1		%	6,810			0.1		%				7,483			0.1		%	6,966			0.1		%
Health Care Providers & Services			652,011			8.6		%	762,957			10.0		%				660,976			9.2		%	748,591			9.8		%
Health Care Technology			129,160			1.7		%	128,272			1.7		%				89,675			1.2		%	89,675			1.2		%
Hotels, Restaurants & Leisure			22,396			0.3		%	21,229			0.3		%				23,359			0.3		%	22,651			0.3		%
Household Durables			121,468			1.6		%	116,701			1.5		%				123,175			1.7		%	122,652			1.6		%
Household Products			—			—		%	—			—		%				20,936			0.3		%	20,936			0.3		%
Insurance			—			—		%	—			—		%				21,966			0.3		%	22,280			0.3		%
Interactive Media & Services			211,754			2.8		%	211,754			2.8		%				233,204			3.2		%	233,204			3.1		%
Internet & Direct Marketing Retail			20,022			0.3		%	13,880			0.2		%				20,212			0.3		%	17,454			0.2		%
IT Services			359,614			4.8		%	334,810			4.4		%				305,311			4.2		%	303,681			4.0		%
Leisure Products			59,746			0.8		%	59,089			0.8		%				39,015			0.5		%	38,757			0.5		%
Machinery			103,563			1.4		%	128,583			1.7		%				108,780			1.5		%	124,458			1.6		%
Media			104,693			1.4		%	150,932			2.0		%				108,062			1.5		%	161,140			2.1		%
Online Lending			21,580			0.3		%	21,580			0.3		%				29,080			0.4		%	29,080			0.4		%
Paper & Forest Products			—			—		%	—			—		%				11,445			0.2		%	4,952			0.1		%
Personal Products			276,711			3.6		%	73,492			1.0		%				260,396			3.6		%	59,179			0.8		%
Pharmaceuticals			99,995			1.3		%	100,005			1.3		%				25,557			0.4		%	25,962			0.3		%
Professional Services			190,151			2.5		%	176,161			2.3		%				205,032			2.8		%	203,256			2.7		%
Software			52,336			0.7		%	48,691			0.6		%				52,295			0.7		%	52,500			0.7		%
Technology Hardware, Storage & Peripherals			—			—		%	—			—		%				12,447			0.2		%	12,398			0.2		%
Textiles, Apparel & Luxury Goods			168,505			2.2		%	167,817			2.2		%				178,428			2.5		%	211,359			2.8		%
Trading Companies & Distributors			65,192			0.9		%	42,541			0.6		%				65,216			0.9		%	31,147			0.4		%
Subtotal			6,397,562			84.7		%	6,693,754			88.2		%				6,012,328			83.4		%	6,704,281			88.3		%
Structured Finance(1)			1,167,632			15.3		%	899,023			11.8		%				1,184,503			16.6		%	898,229			11.7		%
Total Investments			$	7,565,194		100.0		%	$	7,592,777		100.0		%				$	7,196,831		100.0		%	$	7,602,510		100.0		%

(1) Our SSN investments do not have industry concentrations and as such have been separated in the tables above. As of March 31, 2023 and June 30, 2022, Structured Finance includes 200,600 and $186,800, respectively, of senior secured debt investments held through our investment in NPRC and its wholly-owned subsidiary.

119

---

Portfolio Investment Activity

Our origination efforts are focused primarily on secured lending to non-control investments to reduce the risk in the portfolio by investing primarily in first lien loans and second lien loans, though we also continue to close select equity investments. For information regarding investment activity for the nine months ended March 31, 2023 and March 31, 2022 are presented below:

			Nine months ended March 31,
			2023						2022
Investments in portfolio companies
Investments in new portfolio companies			$	348,473					$	997,817
Follow-on investments in existing portfolio companies (1)			248,933						777,022
Revolver advances			8,851						9,000
PIK interest (2)			97,952						61,030
Total investments in portfolio companies			$	704,209					$	1,844,869
Investments by portfolio composition
First Lien Debt			$	610,230					$	1,021,834
Second Lien Debt			82,390						796,351
Subordinated Structured Notes			—						9,518
Unsecured Debt			5,799						—
Equity			5,790						17,166
Total investments by portfolio composition			$	704,209					$	1,844,869
Investments repaid or sold
Partial repayments (3)			$	186,731					$	401,201
Full repayments			103,052						545,333
Investments sold			50,056						4,451
Revolver paydowns			1,352						1,636
Total investments repaid or sold			$	341,191					$	952,621
Investments repaid or sold by portfolio composition
First Lien Debt			$	240,044					$	592,601
1.5 Lien Debt			—						18,164
Second Lien Debt			61,777						300,292
Third Lien Debt			—						3,950
Subordinated Structured Notes			31,805						9,406
Equity			7,565						28,208
Total investments repaid or sold by portfolio composition			$	341,191					$	952,621
Weighted average interest rates for new investments by portfolio composition (4)
First Lien Debt			11.34		%				8.30		%
Second Lien Debt			13.02		%				9.54		%

    (1) Includes follow-on investments in existing portfolio companies and refinancings, if any.

(2) During the nine months ended March 31, 2023, approximately $96,654 of PIK interest capitalized was accrued as interest income and the remaining $1,298 was included due to the timing of interest payment dates and resulting capitalization occurring during the prior year. During the nine months ended March 31, 2022, approximately $56,824 of PIK interest capitalized was accrued as interest income and the remaining $4,206 was included due to the timing of interest payment dates and resulting capitalization occurring during the prior year.

    (3) Includes partial prepayments of principal, scheduled amortization payments and refinancings, if any.

120

---

(4) Weighted average interest rates for new investments by portfolio composition is calculated with the current rate at the end of the period. In addition, Revolving Line of Credit and Delayed Draw Term Loans are excluded from the calculation.

Investment Valuation

Investments for which market quotations are readily available must be valued at such market quotations. In order to validate market quotations, management and the independent valuation firm look at a number of factors to determine if the quotations are representative of fair value, including the source and nature of the quotations. These investments are classified as Level 1 or Level 2 in the fair value hierarchy.

The fair value of debt investments specifically classified as Level 2 in the fair value hierarchy are generally valued by an independent pricing agent or more than one principal market maker, if available, otherwise a principal market maker or a primary market dealer. We generally value over-the-counter securities by using the prevailing bid and ask prices from dealers during the relevant period end, which were provided by an independent pricing agent and screened for validity by such service.

In determining the range of values for debt instruments where market quotations are not readily available, and are therefore classified as Level 3 in the fair value hierarchy, except CLOs and debt investments in controlling portfolio companies, management and the independent valuation firm estimated corporate and security credit ratings and identified corresponding yields to maturity for each loan from relevant market data. A discounted cash flow technique was then applied using the appropriate yield to maturity as the discount rate, to determine a range of values. In determining the range of values for debt investments of controlled companies and equity investments, the enterprise value was determined by applying a market approach such as using earnings before interest, taxes, depreciation and amortization (“EBITDA”) multiples, net income and/or book value multiples for similar guideline public companies and/or similar recent investment transactions and/or an income approach, such as the discounted cash flow technique. The enterprise value technique may also be used to value debt investments which are credit impaired. For stressed debt and equity investments, asset recovery analysis was used.

In determining the range of values for our investments in CLOs, the independent valuation firm uses a discounted multi-path cash flow model. The valuations were accomplished through the analysis of the CLO deal structures to identify the risk exposures from the modeling point of view as well as to determine an appropriate call date (i.e., expected maturity). These risk factors are sensitized in the multi-path cash flow model using Monte Carlo simulations, which are simulations used to model the probability of different outcomes, to generate probability-weighted (i.e., multi-path) cash flows for the underlying assets and liabilities. These cash flows are discounted using appropriate market discount rates, and relevant data in the CLO market and certain benchmark credit indices are considered, to determine the value of each CLO investment. In addition, we generate a single-path cash flow utilizing our best estimate of expected cash receipts, and assess the reasonableness of the implied discount rate that would be effective for the value derived from the corresponding multi-path cash flow model.

With respect to our online consumer and SME lending initiative, we invest primarily in marketplace loans through marketplace lending platforms.  We do not conduct loan origination activities ourselves. Therefore, our ability to purchase consumer and SME loans, and our ability to grow our portfolio of consumer and SME loans, are directly influenced by the business performance and competitiveness of the marketplace loan origination business of the marketplace lending platforms from which we purchase consumer and SME loans. In addition, our ability to analyze the risk-return profile of consumer and SME loans is significantly dependent on the marketplace platforms’ ability to effectively evaluate a borrower’s credit profile and likelihood of default. If we are unable to effectively evaluate borrowers’ credit profiles or the credit decisioning and scoring models implemented by each platform, we may incur unanticipated losses which could adversely impact our operating results.

The Board of Directors looked at several factors in determining where within the range to value the asset including: recent operating and financial trends for the asset, independent ratings obtained from third parties, comparable multiples for recent sales of companies within the industry and discounted cash flow models for our investments in CLOs. The composite of all these various valuation techniques, applied to each investment, was a total valuation of $7,592,777.

Our portfolio companies are generally lower middle-market companies, outside of the financial sector, with less than $100,000 of annual EBITDA. We believe our investment portfolio has experienced less volatility than others because we believe there are more buy and hold investors who own these less liquid investments.

121

---

Control Company Investments

Control investments offer increased risk and reward over straight debt investments. Operating results and changes in market multiples can result in dramatic changes in values from quarter to quarter. Significant downturns in operations can further result in our looking to recoveries on sales of assets rather than the enterprise value of the investment. Equity positions in our portfolio are susceptible to potentially significant changes in value, both increases as well as decreases, due to changes in operating results and market multiples. Our controlled companies discussed below experienced such changes and we recorded corresponding fluctuations in valuations during the nine months ended March 31, 2023.

CP Energy Services, Inc.

Prospect owns 100% of the equity of CP Holdings, a Consolidated Holding Company. CP Holdings owns 99.8% of the equity of CP Energy, and the remaining equity is owned by CP Energy management. CP Energy provides oilfield flowback services and fluid hauling and disposal services through its subsidiaries.

In June 2019, CP Energy purchased a controlling interest in the common equity of Spartan Energy Holdings, Inc. (“Spartan Holdings”), which owns 100% of Spartan Energy Services, LLC (“Spartan”) a portfolio company of Prospect with $31,603 in first lien term loans (the “Spartan Term Loans”) due to us as of March 31, 2023. As a result of CP Energy’s purchase, and given Prospect’s controlling interest in CP Energy, our Spartan Term Loans are presented as control investments under CP Energy beginning June 30, 2019. Spartan remains the direct borrow and guarantor to Prospect for the Spartan Term Loans.

The fair value of our investment in CP Energy was $116,414 as of March 31, 2023, which is a discount of $159,063 from its amortized cost, compared to a fair value of $112,701 as of June 30, 2022, representing a discount of $142,303 to its amortized cost. The increase in discount to amortized cost resulted from increased debt in the capital structure, offset by improved performance and increased activity in the oil and gas industry.

Credit Central Loan Company, LLC

Prospect owns 100% of the equity of Credit Central Delaware, a consolidated holding company. Credit Central Delaware owns 99.82% of Credit Central, with entities owned by Credit Central management owning the remaining 0.18% of the equity. Credit Central is a branch-based provider of installment loans.

The fair value of our investment in Credit Central decreased to $76,025 as of March 31, 2023, which represents a discount of $29,305 from its amortized cost, compared to a fair value of $76,935 as of June 30, 2022, representing a discount of $16,298 to its amortized cost basis. The increase in discount to amortized cost resulted from a decline in financial performance and increased cost basis from the issuance of Preferred Class P Shares in the current period.

First Tower Finance Company LLC

Prospect owns 100% of the equity of First Tower Delaware, a consolidated holding company. First Tower Delaware owns 78.06% of First Tower Finance. First Tower Finance owns 100% of First Tower, LLC (“First Tower”), a multiline specialty finance company.

The fair value of our investment in First Tower was $608,432 as of March 31, 2023, representing a premium of $193,201 to its amortized cost basis compared to a fair value of $607,283 as of June 30, 2022, a premium of $219,912 to its amortized cost. The decrease in premium to amortized cost resulted from a decline in financial performance and increased debt in the capital structure.

InterDent, Inc.

During the year ended June 30, 2018, Prospect exercised its rights and remedies under its loan documents to exercise the shareholder voting rights in respect of the stock of InterDent and to appoint a new Board of Directors of InterDent, all the members of which are our Investment Adviser’s professionals. As a result, Prospect’s investment in InterDent is classified as a control investment. InterDent is a dental support organization (“DSO”). InterDent provides business and administrative support services to a regionally-diversified set of dental practices so that dentists can focus on delivering high-quality clinical care and patient satisfaction.

The fair value of our investment in InterDent increased to $451,752 as of March 31, 2023, a premium of $117,895 to its amortized cost basis compared to a fair value of $406,194 as of June 30, 2022, a premium of $87,628 to its amortized cost. The increase in premium to amortized cost was driven by an increase in financial performance.

National Property REIT Corp.

122

---

NPRC is a Maryland corporation and a qualified REIT for federal income tax purposes. NPRC is held for purposes of investing, operating, financing, leasing, managing and selling a portfolio of real estate assets and engages in any and all other activities that may be necessary, incidental, or convenient to perform the foregoing. NPRC acquires real estate assets, including, but not limited to, industrial, commercial, and multi-family properties, self-storage, and student housing properties. NPRC may acquire real estate assets directly or through joint ventures by making a majority equity investment in a property-owning entity. Additionally, through its wholly owned subsidiaries, NPRC invests in online consumer loans and RSSNs. As of March 31, 2023, we own 100% of the fully-diluted common equity of NPRC.

During the nine months ended March 31, 2023, we received partial repayments of $86,852 of our loans previously outstanding with NPRC and its wholly owned subsidiaries and $4,000 as a return of capital on our equity investment in NPRC. During the nine months ended March 31, 2023, we provided $132,071 of debt financing and $3,600 of equity financing to NPRC to invest in real estate property, to provide working capital, and to fund purchases of rated secured structured notes.

The online consumer loan investments held by certain of NPRC’s wholly owned subsidiaries are unsecured obligations of individual borrowers that are issued in amounts ranging from $1 to $50, with fixed terms ranging from 60 months to 84 months. As of March 31, 2023, the outstanding investment in online consumer loans by certain of NPRC’s wholly-owned subsidiaries was comprised of 106 individual loans, residual interest in two securitizations, and one high yield corporate bond, and had an aggregate fair value of $21,181. The average outstanding individual loan balance is approximately $3 and the loans mature on dates ranging from April 1, 2023 to April 11, 2025 with a weighted-average outstanding term of 12 months as of March 31, 2023. Fixed interest rates range from 9.0% to 36.0% with a weighted-average current interest rate of 17.0%. As of March 31, 2023, our investment in NPRC and its wholly-owned subsidiaries relating to online consumer lending had a fair value of $21,580.

As of March 31, 2023, based on outstanding principal balance, 43.3% of the online consumer loan portfolio held by certain of NPRC’s wholly-owned subsidiaries was invested in super prime loans (borrowers with a Fair Isaac Corporation (“FICO”) score, of 720 or greater), 44.2% of the portfolio in prime loans (borrowers with a FICO score of 660 to 719) and 12.5% of the portfolio in near prime loans (borrowers with a FICO score of 580 to 659, a portion of which are considered sub-prime).

Loan Type						Outstanding Principal Balance						Fair Value						Interest Rate Range												Weighted Average Interest Rate*
Super Prime						$	135					$	132					9.0%			-			20.5%						12.3%
Prime						138						$	133					13.5%			-			25.0%						19.1%
Near Prime						39						$	32					23.3%			-			36.0%						26.1%

*Weighted by outstanding principal balance of the online consumer loans.

The rated secured structured note investments held by certain of NPRC’s wholly owned subsidiaries are subordinated debt interests in broadly syndicated loans managed by established collateral management teams with many years of experience in the industry. As of March 31, 2023, the outstanding investment in rated secured structured notes by certain of NPRC’s wholly owned subsidiaries was comprised of 94 investments with a fair value of $425,903 and face value of $448,235. The average outstanding note is approximately $4,768 with an expected maturity date ranging from April 2026 to October 2033 and weighted-average expected maturity of 6 years as of March 31, 2023. Coupons range from three-month LIBOR (“3ML”) plus 5.20% to 9.23% with a weighted-average coupon of 3ML + 6.93%. As of March 31, 2023, our investment in NPRC and its wholly-owned subsidiaries relating to rated secured structured notes had a fair value of $200,600.

As of March 31, 2023, based on outstanding notional balance, 12.6% of the portfolio was invested in Single - B rated tranches and 87.4% of the portfolio in BB rated tranches.

As of March 31, 2023, our investment in NPRC and its wholly owned subsidiaries had an amortized cost of $908,266 and a fair value of $1,594,673, including our investment in online consumer lending and rated secured structured notes as discussed above. The fair value of $1,372,493 related to NPRC’s real estate portfolio was comprised of forty-eight multi-family properties, eight student housing properties, four senior living properties, and three commercial properties. The following table shows the location, acquisition date, purchase price, and mortgage outstanding due to other parties for each of the properties held by NPRC as of March 31, 2023:

No.						Property Name						City						Acquisition Date						Purchase Price						Mortgage Outstanding
1						Filet of Chicken						Forest Park, GA						10/24/2012						$	7,400					$	—
2						Arlington Park Marietta, LLC						Marietta, GA						5/8/2013						14,850						13,492
3						Taco Bell, OK						Yukon, OK						6/4/2014						1,719						—
4						Taco Bell, MO						Marshall, MO						6/4/2014						1,405						—

123

---

No.						Property Name						City						Acquisition Date						Purchase Price						Mortgage Outstanding
5						Abbie Lakes OH Partners, LLC						Canal Winchester, OH						9/30/2014						12,600						14,877
6						Kengary Way OH Partners, LLC						Reynoldsburg, OH						9/30/2014						11,500						15,040
7						Lakeview Trail OH Partners, LLC						Canal Winchester, OH						9/30/2014						26,500						28,691
8						Lakepoint OH Partners, LLC						Pickerington, OH						9/30/2014						11,000						16,328
9						Sunbury OH Partners, LLC						Columbus, OH						9/30/2014						13,000						16,558
10						Heatherbridge OH Partners, LLC						Blacklick, OH						9/30/2014						18,416						23,656
11						Jefferson Chase OH Partners, LLC						Blacklick, OH						9/30/2014						13,551						18,426
12						Goldenstrand OH Partners, LLC						Hilliard, OH						10/29/2014						7,810						11,229
13						SSIL I, LLC						Aurora, IL						11/5/2015						34,500						25,028
14						Vesper Tuscaloosa, LLC						Tuscaloosa, AL						9/28/2016						54,500						42,032
15						Vesper Iowa City, LLC						Iowa City, IA						9/28/2016						32,750						24,239
16						Vesper Corpus Christi, LLC						Corpus Christi, TX						9/28/2016						14,250						10,545
17						Vesper Campus Quarters, LLC						Corpus Christi, TX						9/28/2016						18,350						13,841
18						Vesper College Station, LLC						College Station, TX						9/28/2016						41,500						31,302
19						Vesper Kennesaw, LLC						Kennesaw, GA						9/28/2016						57,900						49,852
20						Vesper Statesboro, LLC						Statesboro, GA						9/28/2016						7,500						7,480
21						Vesper Manhattan KS, LLC						Manhattan, KS						9/28/2016						23,250						14,679
22						9220 Old Lantern Way, LLC						Laurel, MD						1/30/2017						187,250						153,580
23						7915 Baymeadows Circle Owner, LLC						Jacksonville, FL						10/31/2017						95,700						90,290
24						8025 Baymeadows Circle Owner, LLC						Jacksonville, FL						10/31/2017						15,300						15,704
25						23275 Riverside Drive Owner, LLC						Southfield, MI						11/8/2017						52,000						54,411
26						23741 Pond Road Owner, LLC						Southfield, MI						11/8/2017						16,500						18,852
27						150 Steeplechase Way Owner, LLC						Largo, MD						1/10/2018						44,500						36,608
28						Olentangy Commons Owner LLC						Columbus, OH						6/1/2018						113,000						92,876
29						Villages of Wildwood Holdings LLC						Fairfield, OH						7/20/2018						46,500						58,393
30						Falling Creek Holdings LLC						Richmond, VA						8/8/2018						25,000						25,374
31						Crown Pointe Passthrough LLC						Danbury, CT						8/30/2018						108,500						89,400
32						Lorring Owner LLC						Forestville, MD						10/30/2018						58,521						47,680
33						Hamptons Apartments Owner, LLC						Beachwood, OH						1/9/2019						96,500						79,520
34						5224 Long Road Holdings, LLC						Orlando, FL						6/28/2019						26,500						21,200
35						Druid Hills Holdings LLC						Atlanta, GA						7/30/2019						96,000						79,104
36						Bel Canto NPRC Parcstone LLC						Fayetteville, NC						10/15/2019						45,000						42,793
37						Bel Canto NPRC Stone Ridge LLC						Fayetteville, NC						10/15/2019						21,900						21,545
38						Sterling Place Holdings LLC						Columbus, OH						10/28/2019						41,500						34,196
39						SPCP Hampton LLC						Dallas, TX						11/2/2020						36,000						38,843
40						Palmetto Creek Holdings LLC						North Charleston, SC						11/10/2020						33,182						25,865
41						Valora at Homewood Holdings LLC						Homewood, AL						11/19/2020						81,250						63,844
42						NPRC Fairburn LLC						Fairburn, GA						12/14/2020						52,140						43,900
43						NPRC Grayson LLC						Grayson, GA						12/14/2020						47,860						40,500
44						NPRC Taylors LLC						Taylors, SC						1/27/2021						18,762						14,075
45						Parkside at Laurel West Owner LLC						Spartanburg, SC						2/26/2021						57,005						42,025
46						Willows at North End Owner LLC						Spartanburg, SC						2/26/2021						23,255						19,000
47						SPCP Edge CL Owner LLC						Webster, TX						3/12/2021						34,000						25,496
48						Jackson Pear Orchard LLC						Ridgeland, MS						6/28/2021						50,900						42,975
49						Jackson Lakeshore Landing LLC						Ridgeland, MS						6/28/2021						22,600						17,955
50						Jackson Reflection Pointe LLC						Flowood, MS						6/28/2021						45,100						33,203
51						Jackson Crosswinds LLC						Pearl, MS						6/28/2021						41,400						38,601
52						Elliot Apartments Norcross, LLC						Norcross, GA						11/30/2021						128,000						102,301
53						Orlando 442 Owner, LLC (West Vue Apartments)						Orlando, FL						12/30/2021						97,500						73,000
54						NPRC Wolfchase LLC						Memphis, TN						3/18/2022						82,100						60,000
55						NPRC Twin Oaks LLC						Hattiesburg. MS						3/18/2022						44,850						34,242
56						NPRC Lancaster LLC						Birmingham, AL						3/18/2022						37,550						28,650
57						NPRC Rutland LLC						Macon, GA						3/18/2022						29,750						22,768

124

---

No.						Property Name						City						Acquisition Date						Purchase Price						Mortgage Outstanding
58						Southport Owner LLC (Southport Crossing)						Indianapolis, IN						3/29/2022						48,100						36,075
59						TP Cheyenne, LLC						Cheyenne, WY						5/26/2022						27,500						17,656
60						TP Pueblo, LLC						Pueblo, CO						5/26/2022						31,500						20,166
61						TP Stillwater, LLC						Stillwater, OK						5/26/2022						26,100						15,328
62						TP Kokomo, LLC						Kokomo, IN						5/26/2022						20,500						12,753
63						Terraces at Perkins Rowe JV LLC						Baton Rouge, LA						11/14/2022						41,400						29,566
																								$	2,672,726					$	2,237,608

The fair value of our investment in NPRC increased to $1,594,673 as of March 31, 2023, a premium of $686,407 from its amortized cost basis compared to a fair value of $1,615,737 as of June 30, 2022, representing a premium of $752,541. The decrease in premium is primarily driven by a decrease in like-for-like property values due to a rise in discount rates and terminal capitalization rates, partially offset by an increase in market interest rates and growth in net operating income in our real estate portfolio.

Universal Turbine Parts, LLC

On December 10, 2018, UTP Holdings purchased all of the voting stock of UTP and appointed a new Board of Directors to UTP Holdings, consisting of three employees of the Investment Advisor. At the time UTP Holdings acquired UTP, UTP Holdings (f/ k/a Harbortouch Holdings of Delaware) was a wholly-owned holding company controlled by Prospect and therefore Prospect’s investment in UTP is classified as a control investment as of June 30, 2019.

The fair value of our investment in UTP increased to $42,541 as of March 31, 2023, a discount of $22,651 from its amortized cost basis, compared to a fair value of $31,147 as of June 30, 2022, representing a discount of $34,069 to it amortized cost. The decrease in discount to amortized cost was driven by an increase in financial performance.

USES Corp.

Prospect owns 99.96% of the equity of USES Corp. as of March 31, 2023 and June 30, 2022. USES provides industrial, environmental, and maritime services in the Gulf States region.

The fair value of our investment in USES decreased to $16,267 as of March 31, 2023, a discount of $58,482 from its amortized cost basis, compared to a fair value of $22,395 as of June 30, 2022, representing a discount of $45,823 to it amortized cost. The increase in discount to amortized cost resulted from a decline in financial performance.

Our controlled investments, including those discussed above, are valued at $595,503 above their amortized cost as of March 31, 2023.

Affiliate and Non-Control Company Investments

We hold two affiliate investments at March 31, 2023 (Nixon, Inc. and RGIS Services, LLC, (“RGIS”)) with a total fair value of $7,944, a discount of $1,052 from their combined amortized cost. We held four affiliate investments at June 30, 2022 (Nixon, Inc., RGIS, Targus Cayman HoldCo Limited (“Targus”), and PGX Holdings, Inc. (“PGX”)) with a total fair value of $393,264, representing a $151,163 premium to its amortized cost. The decrease in premium is primarily driven by our equity sale of Targus and the restructuring of PGX, which drove a transfer of PGX’s investment classification from affiliate to non-control/non-affiliate as of March 31, 2023.

With the non-control/non-affiliate investments, generally, there is less volatility related to our total investments because our equity positions tend to be smaller than with our control/affiliate investments, and debt investments are generally not as susceptible to large swings in value as equity investments. For debt investments, the fair value is generally limited on the high side to each loan’s par value, plus any prepayment premium that could be imposed. As of March 31, 2023, our non-control/non-affiliate portfolio is valued at a discount to amortized cost primarily due to our CLO investment portfolio, which is valued at a $268,609 discount to amortized cost. Additionally, as of March 31, 2023, five of our non-control/ non-affiliate investments, United Sporting Companies, Inc. (“USC”), PGX, Engine Group, Inc. (“Engine”), Curo Group Holdings Corp. (“Curo”), and K&N (“K&N Parent, Inc.), are valued at discounts to amortized cost of $82,161, $65,969,$28,425, $27,626, and $24,509, respectively. Of these five investments, PGX experienced a significant change in value during the current period. Leading into March 2023, PGX was undergoing a litigation process commenced by the Consumer Financial Protection Bureau regarding the legality of PGX’s billing practices when using telemarketing to acquire new business. Due to recent rulings issued by the courts in these legal proceedings, PGX determined it needed to move away from a telemarketing model to an online model to attract new customers. As a result of this material change to PGX’s business model (which will take time to develop) and other impacts from the court rulings, our investment in PGX decreased.

125

---

Our largest non-control/non-affiliate investment is Town & Country Holdings, Inc. (“Town & Country”), which is valued at $38,370 above its amortized cost and represents approximately 5.9% of our Net Asset Value as of March 31, 2023. Town & Country is a supplier of home textiles and accessories to retailers throughout North America.

Capitalization

Our investment activities are capital intensive and the availability and cost of capital is a critical component of our business. We capitalize our business with a combination of debt and equity. Our debt as of March 31, 2023 consists of: a Revolving Credit Facility availing us of the ability to borrow debt subject to borrowing base determinations; Convertible Notes which we issued in March 2019; Public Notes which we issued in March 2013, October 2018, January 2021, May 2021 and September 2021; and Prospect Capital InterNotes® which we issue from time to time. As of March 31, 2023, our equity capital is comprised of common and preferred equity.

The following table shows our outstanding debt as of March 31, 2023:

						Principal Outstanding						Unamortized Discount & Debt Issuance Costs						Net Carrying Value						Fair Value						Effective Interest Rate
Revolving Credit Facility						$	888,405					$	14,842					$	888,405					$	888,405					1M SOFR +			2.05%
2025 Notes						156,168						1,802						154,366						153,833						6.63%
Convertible Notes						156,168												154,366						153,833
6.375%			2024 Notes			81,240						161						81,079						81,065						6.57%
2026 Notes						400,000						5,720						394,280						354,504						3.98%
3.364%			2026 Notes			300,000						5,059						294,941						252,930						3.60%
3.437%			2028 Notes			300,000						7,325						292,675						230,055						3.64%
Public Notes						1,081,240												1,062,975						918,554
Prospect Capital InterNotes®						355,464						6,817						348,647						314,017						5.76%
Total						$	2,481,277											$	2,454,393					$	2,274,809

The following table shows our outstanding debt as of June 30, 2022:

						Principal Outstanding						Unamortized Discount & Debt Issuance Costs						Net Carrying Value						Fair Value						Effective Interest Rate
Revolving Credit Facility						$	839,464					$	10,801					$	839,464					$	839,464					1ML +			2.05		%
2022 Notes						60,501						18						60,483						60,753						5.63%
2025 Notes						156,168						2,459						153,709						158,094						6.63%
Convertible Notes						216,669												214,192						218,847
2023 Notes						284,219						600						283,619						286,101						6.07%
6.375%			2024 Notes			81,240						299						80,941						82,084						6.57%
2026 Notes						400,000						7,134						392,866						355,316						3.98%
3.364%			2026 Notes			300,000						6,026						293,974						254,931						3.60%
3.437%			2028 Notes			300,000						8,222						291,778						229,866						3.64%
Public Notes						1,365,459												1,343,178						1,208,298
						0
Prospect Capital InterNotes®						347,564						7,122						340,442						285,822						5.71%
Total						$	2,769,156											$	2,737,276					$	2,552,431

126

---

The following table shows the contractual maturities by fiscal year of our Revolving Credit Facility, Convertible Notes, Public Notes and Prospect Capital InterNotes® as of March 31, 2023:

			Payments Due by Fiscal Year ending June 30,
			Total						Remainder of 2023						2024						2025						2026						2027						After 5 Years
Revolving Credit Facility			$	888,405					$	—					$	—					$	—					$	—					$	—					$	888,405
Convertible Notes			156,168						—						—						156,168						—						—						—
Public Notes			1,081,240						—						81,240						—						400,000						300,000						300,000
Prospect Capital InterNotes®			355,464						—						662						1,499						36,657						74,632						242,014
Total Contractual Obligations			$	2,481,277					$	—					$	81,902					$	157,667					$	436,657					$	374,632					$	1,430,419

We may from time to time seek to cancel or purchase our outstanding debt through cash purchases and/or exchanges, in open market purchases, privately negotiated transactions or otherwise. The amounts involved may be material. In addition, we may from time to time enter into additional debt facilities, increase the size of existing facilities or issue additional debt securities, including secured debt, unsecured debt and/or debt securities convertible into common stock. Any such purchases or exchanges of outstanding debt would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors.

Historically, we have funded a portion of our cash needs through borrowings from banks, issuances of senior securities, including secured, unsecured and convertible debt securities, or issuances of common equity. For flexibility, we maintain a universal shelf registration statement that allows for the public offering and sale of our debt securities, common stock, preferred stock, subscription rights, and warrants and units to purchase such securities up to an indeterminate amount. We may from time to time issue securities pursuant to the shelf registration statement or otherwise pursuant to private offerings. The issuance of debt or equity securities will depend on future market conditions, funding needs and other factors and there can be no assurance that any such issuance will occur or be successful.

Each of our Convertible Notes, Public Notes and Prospect Capital InterNotes® (collectively, our “Unsecured Notes”) are our general, unsecured obligations and rank equal in right of payment with all of our existing and future unsecured indebtedness and will be senior in right of payment to any of our subordinated indebtedness that may be issued in the future. The Unsecured Notes are effectively subordinated to our existing secured indebtedness, such as our credit facility, and future secured indebtedness to the extent of the value of the assets securing such indebtedness and structurally subordinated to any existing and future liabilities and other indebtedness of any of our subsidiaries.

Revolving Credit Facility

On May 15, 2007, we formed our wholly owned subsidiary, Prospect Capital Funding LLC (“PCF”), a Delaware limited liability company and a bankruptcy remote special purpose entity, which holds certain of our portfolio loan investments that are used as collateral for the revolving credit facility at PCF. Since origination of the revolving credit facility, we have renegotiated the terms and extended the commitments of the revolving credit facility several times. Most recently, effective September 15, 2022, we completed an extension and upsizing of the revolving credit facility (the “2022 Facility” or the “Revolving Credit Facility”). The lenders have extended commitments of $1,777,500 as of March 31, 2023. The 2022 Facility includes an accordion feature which allows commitments to be increased up to $2,000,000 in the aggregate. The extension and upsizing of the Revolving Credit Facility extends the maturity date to September 15, 2027 and the revolving period through September 15, 2026, followed by an additional one-year amortization period, with distributions allowed to Prospect after the completion of the revolving period. During such one-year amortization period, all principal payments on the pledged assets will be applied to reduce the balance. At the end of the one-year amortization period, the remaining balance will become due.

As of March 31, 2023 and June 30, 2022, we had $609,101 and $660,536, respectively, available to us for borrowing under the Revolving Credit Facility, net of $888,405 and $839,464 outstanding borrowings as of the respective balance sheet dates. Refer to Note 4. Revolving Credit Facility within our consolidated financial statements for additional details.

Convertible Notes

On April 11, 2017, we issued $225,000 aggregate principal amount of convertible notes that mature on July 15, 2022 (the “Original 2022 Notes”), unless previously converted or repurchased in accordance with their terms. The Original 2022 Notes bear interest at a rate of 4.95% per year, payable semi-annually on January 15 and July 15 each year, beginning July 15, 2017. Total proceeds from the issuance of the Original 2022 Notes, net of underwriting discounts and offering costs, were $218,010. On May 18, 2018, we issued an additional $103,500 aggregate principal amount of convertible notes that mature on July 15,

127

---

2022 (the “Additional 2022 Notes,” and together with the Original 2022 Notes, the “2022 Notes”), unless previously converted or repurchased in accordance with their terms. The Additional 2022 Notes were a further issuance of, and are fully fungible and rank equally in right of payment with, the Original 2022 Notes and bear interest at a rate of 4.95% per year, payable semi-annually on January 15 and July 15 each year, beginning July 15, 2018. Total proceeds from the issuance of the Additional 2022 Notes, net of underwriting discounts and offering costs, were $100,749.

As of June 30, 2022, the outstanding principal amount of the 2022 Notes was $60,501. Following maturity during the nine months ended March 31, 2023, none of the 2022 Notes remain outstanding.

On March 1, 2019, we issued $175,000 aggregate principal amount of senior convertible notes that mature on March 1, 2025 (the “2025 Notes”), unless previously converted or repurchased in accordance with their terms. We granted the underwriters a 13-day over-allotment option to purchase up to an additional $26,250 aggregate principal amount of the 2025 Notes. The underwriters fully exercised the over-allotment option on March 11, 2019 and we issued $26,250 aggregate principal amount of 2025 Notes at settlement on March 13, 2019. The 2025 Notes bear interest at a rate of 6.375% per year, payable semi-annually on March 1 and September 1 each year, beginning September 1, 2019. Total proceeds from the issuance of the 2025 Notes, net of underwriting discounts and offering costs, were $198,674.

As of March 31, 2023 and June 30, 2022, the outstanding principal amount of the 2025 Notes were $156,168 and $156,168, respectively. Refer to Note 5. Convertible Notes within our consolidated financial statements for additional details.

Public Notes

On March 15, 2013, we issued $250,000 aggregate principal amount of unsecured notes that mature on March 15, 2023 (the “Original 2023 Notes”). The Original 2023 Notes bear interest at a rate of 5.875% per year, payable semi-annually on March 15 and September 15 of each year, beginning September 15, 2013. Total proceeds from the issuance of the Original 2023 Notes, net of underwriting discounts and offering costs, were $243,641. On June 20, 2018, we issued an additional $70,000 aggregate principal amount of unsecured notes that mature on March 15, 2023 (the “Additional 2023 Notes”, and together with the Original 2023 Notes, the “2023 Notes”). The Additional 2023 Notes were a further issuance of, and are fully fungible and rank equally in right of payment with, the Original 2023 Notes and bear interest at a rate of 5.875% per year, payable semi-annually on March 15 and September 15 of each year, beginning September 15, 2018. Total proceeds from the issuance of the Additional 2023 Notes, net of underwriting discounts, were $69,403.

Following the maturity of the 2023 Notes during the nine months ended March 31, 2023, none of the 2023 Notes remained outstanding.

On October 1, 2018, we issued $100,000 aggregate principal amount of unsecured notes that mature on January 15, 2024 (the “6.375% 2024 Notes”). The 6.375% 2024 Notes bear interest at a rate of 6.375% per year, payable semi-annually on January 15 and July 15 of each year, beginning January 15, 2019. Total proceeds from the issuance of the 6.375% 2024 Notes, net of underwriting discounts and offering costs, were $98,985.

As of March 31, 2023 and June 30, 2022, the outstanding aggregate principal amount of the 6.375% 2024 Notes was $81,240 and $81,240, respectively.

On January 22, 2021, we issued $325,000 aggregate principal amount of unsecured notes that mature on January 22, 2026 (the “Original 2026 Notes”). The Original 2026 Notes bear interest at a rate of 3.706% per year, payable semi-annually on July 22, and January 22 of each year, beginning on July 22, 2021. Total proceeds from the issuance of the 2026 Notes, net of underwriting discounts and offering costs, were $317,720. On February 19, 2021, we issued an additional $75,000 aggregate principal amount of unsecured notes that mature on January 22, 2026 (the “Additional 2026 Notes”, and together with the Original 2026 Notes, the “2026 Notes”). The Additional 2026 Notes were a further issuance of, and are fully fungible and rank equally in right of payment with, the Original 2026 Notes and bear interest at a rate of 3.706% per year, payable semi-annually on July 22 and January 22 of each year, beginning July 22, 2021. Total proceeds from the issuance of the Additional 2026 Notes, net of underwriting discounts and offering costs, were $74,061.

As of March 31, 2023 and June 30, 2022, the outstanding aggregate principal amount of the 2026 Notes was $400,000 and $400,000, respectively.

128

---

On May 27, 2021, we issued $300,000 aggregate principal amount of unsecured notes that mature on November 15, 2026 (the “3.364% 2026 Notes”). The 3.364% 2026 Notes bear interest at a rate of 3.364% per year, payable semi-annually on November 15, and May 15 of each year, beginning on November 15, 2021. Total proceeds from the issuance of the 3.364% 2026 Notes, net of underwriting discounts and offering costs, were $293,283.

As of March 31, 2023 and June 30, 2022, the outstanding aggregate principal amount of the 3.364% 2026 Notes was $300,000 and $300,000, respectively.

On September 30, 2021, we issued $300,000 aggregate principal amount of unsecured notes that mature on October 15, 2028 (the “3.437% 2028 Notes”). The 3.437% 2028 Notes bear interest at a rate of 3.437% per year, payable semi-annually on April 15 and October 15 of each year, beginning on April 15, 2022. Total proceeds from the issuance of the 3.437% 2028 Notes, net of underwriting discounts and offering costs, were $291,798.

As of March 31, 2023 and June 30, 2022, the outstanding aggregate principal amount of the 3.437% 2028 Notes was $300,000 and $300,000, respectively.

The 2023 Notes, the 6.375% 2024 Notes, 2026 Notes, the 3.364% 2026 Notes, and the 3.437% 2028 Notes (collectively, the “Public Notes”) are direct unsecured obligations and rank equally with all of our unsecured indebtedness from time to time outstanding. Refer to Note 6. Public Notes within our consolidated financial statements for additional details.

Prospect Capital InterNotes®

On February 13, 2020, we entered into a new selling agent agreement with InspereX LLC (formerly known as “Incapital LLC”)(the “Selling Agent Agreement”), authorizing the issuance and sale from time to time of up to $1,000,000 of Prospect Capital InterNotes® (collectively with previously authorized selling agent agreements, the “InterNotes® Offerings”). Additional agents may be appointed by us from time to time in connection with the InterNotes® Offering and become parties to the Selling Agent Agreement.

We have, from time to time, repurchased certain notes issued through the InterNotes® Offerings and, therefore, as of March 31, 2023 and June 30, 2022, the aggregate principal amount of Prospect Capital InterNotes® outstanding were $355,464 and $347,564, respectively. Refer to Note 7. Prospect Capital InterNotes® within our consolidated financial statements for additional details.

Net Asset Value Applicable to Common Stockholders

During the nine months ended March 31, 2023, our net asset value applicable to common shares decreased by $319,829 or $1.00 per common share. The decrease was primarily attributable to a decrease in net realized and net change in unrealized losses of $417,326, or $1.05 per basic weighted average common share. During the nine months ended March 31, 2023, net investment income of $308,150, or $0.78 per basic weighted average common share exceeded distributions to common and preferred stockholders of $264,098, or $0.66 per basic weighted average common share, resulting in a net increase of $0.12 per basic weighted average common share. The increase was partially offset by $0.06 of dilution per common share related to common stock issuances through our dividend reinvestment program for the nine months ended March 31, 2023. The following table shows the calculation of net asset value per common share as of March 31, 2023 and June 30, 2022:

						March 31, 2023						June 30, 2022
Net assets available to common stockholders						$	3,799,294					$	4,119,123
Shares of common stock issued and outstanding						400,833,873						393,164,437
Net asset value per common share						$	9.48					$	10.48

129

---

Results of Operations

Operating results for the three and nine months ended March 31, 2023 and March 31, 2022 were as follows:

			Three Months Ended March 31,												Nine Months Ended March 31,
			2023						2022						2023						2022
Investment income			$	215,120					$	181,431					$	630,710					$	526,281
Operating expenses			112,940						94,426						322,560						272,350
Net investment income			102,180						87,005						308,150						253,931
Net realized (losses) from investments			(32,213)						(2,254)						(39,092)						(12,082)
Net change in unrealized (losses) gains from investments			(158,923)						80,486						(378,096)						398,340
Net realized (losses) on extinguishment of debt			(58)						(941)						(138)						(10,149)
Net (decrease) increase in net assets resulting from operations			(89,014)						164,296						(109,176)						630,040
Preferred stock dividend			19,933						7,139						49,347						16,748
Net (Decrease) Increase in Net Assets Resulting from Operations applicable to Common Stockholders			$	(108,947)					$	157,157					$	(158,523)					$	613,292

        

While we seek to maximize gains and minimize losses, our investments in portfolio companies can expose our capital to risks greater than those we may anticipate. These companies typically do not issue securities rated investment grade, and have limited resources, limited operating history, and concentrated product lines or customers. These are generally private companies with limited operating information available and are likely to depend on a small core of management talents. Changes in any of these factors can have a significant impact on the value of the portfolio company. These changes, along with those discussed in Investment Valuation above, can cause significant fluctuations in our net change in unrealized gains (losses) from investments, and therefore our net increase (decrease) in net assets resulting from operations applicable to common stockholders, quarter over quarter.

Investment Income

We generate revenue in the form of interest income on the debt securities that we own, dividend income on any common or preferred stock that we own, and fees generated from the structuring of new deals. Our investments, if in the form of debt securities, will typically have a term of one to ten years and bear interest at a fixed or floating rate. To the extent achievable, we will seek to collateralize our investments by obtaining security interests in our portfolio companies’ assets. We also may acquire minority or majority equity interests in our portfolio companies, which may pay cash or in-kind dividends on a recurring or otherwise negotiated basis. In addition, we may generate revenue in other forms including prepayment penalties and possibly consulting fees. Any such fees generated in connection with our investments are recognized as earned.

Investment income consists of interest income, including accretion of loan origination fees and prepayment penalty fees, dividend income and other income, including settlement of net profits interests, overriding royalty interests and structuring fees.

130

---

The following table describes the various components of investment income and the related levels of debt investments:

			Three Months Ended March 31,												Nine Months Ended March 31,
			2023						2022						2023						2022
Interest income			$	198,136					$	142,489					$	563,330					$	430,933
Dividend income			1,928						5,306						7,046						12,277
Other income			15,056						33,636						60,334						83,071
Total investment income			$	215,120					$	181,431					$	630,710					$	526,281
Average debt principal of performing interest bearing investments(1)			$	7,205,384					$	6,371,203					$	7,114,627					$	6,052,339
Weighted average interest rate earned on performing interest bearing investments(1)			11.00		%				8.95		%				10.40		%				9.35		%
Average debt principal of all interest bearing investments(2)			$	7,520,238					$	6,658,993					$	7,432,964					$	6,335,575
Weighted average interest rate earned on all interest bearing investments(2)			10.54		%				8.56		%				9.96		%				8.94		%

(1) Excludes equity investments and non-accrual loans.

(2) Excludes equity investments.

The average interest earned on interest bearing performing assets increased to 11.00% for the three months ended March 31, 2023 from 8.95% for the three months ended March 31, 2022. The average interest earned on all interest bearing assets increased to 10.54% for the three months ended March 31, 2023 from 8.56% for the three months ended March 31, 2022. The weighted average interest rate earned on our portfolio increased by 2.05%, primarily due to an increase in the weighted average interest rate earned on our portfolio primarily due to LIBOR/SOFR rates rising above our floors amongst our interest-bearing investments, for which interest income increased to $172,759 from $123,976, for the three months ended March 31, 2023 and 2022, respectively. The weighted average interest rate also increased for our structured credit investments which was due to an increase in income to $24,039 from $17,612, for the three months ended March 31, 2023 and 2022, respectively which was caused by a decrease in the reinvestment price.

The average interest earned on interest bearing performing assets increased to 10.40% for the nine months ended March 31, 2023 from 9.35% for the nine months ended March 31, 2022. The average interest earned on all interest bearing assets increased to 9.96% for the nine months ended March 31, 2023 from 8.94% for the nine months ended March 31, 2022. The weighted average interest rate earned on our portfolio increased by 1.05%, primarily due to a increase in the weighted average interest rate earned on our portfolio primarily due to LIBOR/SOFR rates rising above our floors amongst our interest-bearing investments, for which interest income increased to $485,563 from $355,077, for the nine months ended March 31, 2023 and 2022, respectively. This was partially offset by a decline in early repayments, which caused an increase in accelerated income and prepayment premium income in the prior year, resulting in a decline in interest income to $4,785 from $17,154, for the nine months ended March 31, 2023 and 2022, respectively. The weighted average interest rate also increased for our structured credit investments which was due to an increase in income to $72,982 from $58,702, for the nine months ended March 31, 2023 and 2022, respectively which was caused by a decrease in the reinvestment price.

Investment income is also generated from dividends and other income which is less predictable than interest income. The following table describes dividend income earned for the three and nine months ended March 31, 2023 and March 31, 2022, respectively:

			Three Months Ended March 31,												Nine Months Ended March 31,
			2023						2022						2023						2022
Dividend income
NMMB, Inc.			$	800					$	3,988					$	2,510					$	7,034
Valley Electric Company, Inc.			—						809						547						2,509
RGIS Services, LLC			—						—						1,374						—
Nationwide Loan Company LLC			—						400						—						2,150
R-V Industries, Inc.			—						—						—						441
Other, net			1,128						109						2,615						143
Total dividend income			$	1,928					$	5,306					$	7,046					$	12,277

131

---

Other income is comprised of structuring fees, amendment fees, royalty interests, settlement of net profits interests, settlement of residual profits interests, administrative agent fees and other miscellaneous and sundry cash receipts. The following table describes other income earned for the three and nine months ended March 31, 2023 and March 31, 2022, respectively:

			Three Months Ended March 31,															Nine Months Ended March 31,
			2023						2022									2023						2022
Structuring and amendment fees
NH Kronos Buyer, Inc.			$	—					$	—								$	2,063					$	—
Faraday Buyer, LLC			—						—									2,012						$	—
WatchGuard Technologies, Inc.			—						—									2,275						—
Burgess Point Purchaser Corporation			—						—									1,200						—
USG Intermediate, LLC			—						687									600						687
PGX Holdings, Inc.			—						—									—						3,779
Magnate Worldwide, LLC			—						666									—						3,516
PeopleConnect Intermediate, LLC			—						—									—						2,495
Broder			—						—									—						2,239
DRI Holding Inc.			—						—									—						2,238
BCPE Osprey Buyer, Inc.			—						—									—						1,812
Belnick, LLC			—						1,750									—						1,750
BCPE North Star US Holdco 2, Inc.			—						—									—						1,463
National Property REIT Corp.			—						1,593									—						2,815
Global Tel*Link			—						1,500									—						1,500
SEOTownCenter, Inc.			—						1,040									—						1,040
First Tower Finance Company LLC			—						664									—						7,898
Victor Technology, LLC			—						—									—						600
Medical Solutions Holdings, Inc.			—						—									—						530
Other, net			145						2,249									1,725						4,601
Total structuring and amendment fees			$	145					$	10,149								$	9,875					$	38,963
Royalty and residual profit interests
National Property REIT Corp.			$	14,540					$	23,112								$	49,474					$	43,052
Other, net			200						173									553						527
Total royalty and net revenue interests			$	14,740					$	23,285								$	50,027					$	43,579
Administrative agent fees
Other, net			$	171					$	202								$	432					$	529
Total administrative agent fees			$	171					$	202								$	432					$	529
Total other income			$	15,056					$	33,636								$	60,334					$	83,071

Other income for the three months ended March 31, 2023 decreased by $18,580 compared to the three months ended March 31, 2022 primarily due to a $10,004 decrease in structuring and amendment fees from less origination activity and transaction related services that would qualify as structuring and amendment fee income. The remaining decrease in other income during the three months ended March 31, 2023 is driven by a $8,572 decline in residual profit interest from NPRC as a result of fluctuations in real estate activity.

Other income for the nine months ended March 31, 2023 decreased by $22,737 compared to the nine months ended March 31, 2022 primarily due to a $29,088 decrease in structuring and amendment fees from less origination activity and transaction related services that would qualify as structuring and amendment fee income. This decrease is partially offset by a $6,422 increase in residual profit interests from NPRC as a result of increased real estate activity during the nine months ended March 31, 2023 compared to the prior year period.

Income recognized from dividend income, prepayment premium from early repayments, structuring fees and amendment fees related to specific loan positions is considered to be non-recurring income. For the three months ended March 31, 2023 and March 31, 2022, we recognized $2,073 and $15,524 of non-recurring income, respectively. The $13,451 decrease in non-recurring income during three months ended March 31, 2023 is primarily due to the $10,004 decrease in structuring and amendment fees discussed above. The remaining decline in the three months ended March 31, 2023 non-recurring income compared to the prior period is due to decreases of $3,378 in dividend income and $69 in prepayment premium income.

132

---

Income recognized from dividend income, prepayment premium from early repayments, structuring fees and amendment fees related to specific loan positions is considered to be non-recurring income. For the nine months ended March 31, 2023 and March 31, 2022, we recognized $17,491 and $56,823 of non-recurring income, respectively. The $39,332 decrease in non-recurring income during nine months ended March 31, 2023 is primarily due to the $29,088 decrease in structuring and amendment fees due to decreases in origination activity and transaction related services that would qualify as structuring and amendment fee income. The remaining decline in the nine months ended March 31, 2023 non-recurring income compared to the prior period is due decreases of $5,231 in dividend income and a decrease of $5,013 in prepayment premium income.

Operating Expenses

Our primary operating expenses consist of investment advisory fees (base management and income incentive fees), borrowing costs, legal and professional fees, overhead-related expenses and other operating expenses. These expenses include our allocable portion of overhead under the Administration Agreement with Prospect Administration under which Prospect Administration provides administrative services and facilities for us. Our investment advisory fees compensate the Investment Adviser for its work in identifying, evaluating, negotiating, closing and monitoring our investments. We bear all other costs and expenses of our operations and transactions.

The following table describes the various components of our operating expenses:

			Three Months Ended March 31,												Nine Months Ended March 31,
			2023						2022						2023						2022
Base management fee			$	38,980					$	36,426					$	116,176					$	102,472
Income incentive fee			20,561						19,967						64,692						59,296
Interest and credit facility expenses			37,517						29,235						109,170						86,952
Allocation of overhead from Prospect Administration			9,773						4,126						16,490						10,891
Audit, compliance and tax related fees			1,495						994						4,032						1,940
Directors’ fees			131						131						393						360
Other general and administrative expenses			4,483						3,547						11,607						10,439
Total operating expenses			$	112,940					$	94,426					$	322,560					$	272,350

Total gross and net base management fee was $38,980 and $36,426 for the three months ended March 31, 2023 and March 31, 2022, respectively. The increase in total gross base management fee is directly related to an increase in average total assets.

Total gross base management fee was $116,176 and $102,472 for the nine months ended March 31, 2023 and March 31, 2022, respectively. The increase in total gross base management fee is directly related to a increase in average total assets.

For the three months ended March 31, 2023 and March 31, 2022, we incurred $20,561 and $19,967 of income incentive fees, respectively. This increase was driven by a corresponding increase in pre-incentive fee net investment income (net of preferred stock dividends) to $102,808 for the three months ended March 31, 2023 from $99,833 for the three months ended March 31, 2022. No capital gains incentive fee has yet been incurred pursuant to the Investment Advisory Agreement.

For the nine months ended March 31, 2023 and March 31, 2022, we incurred $64,692 and $59,296 of income incentive fees, respectively. This increase was driven by a corresponding increase in pre-incentive fee net investment income (net of preferred stock dividends) to $323,495 for the nine months ended March 31, 2023 from $296,479 for the nine months ended March 31, 2022. No capital gains incentive fee has yet been incurred pursuant to the Investment Advisory Agreement.

During the three months ended March 31, 2023 and March 31, 2022, we incurred $37,517 and $29,235 respectively, of interest and credit facility expenses related to our Revolving Credit Facility, Convertible Notes, Public Notes and Prospect Capital InterNotes® (collectively, our “Notes”). During the nine months ended March 31, 2023 and March 31, 2022, we incurred $109,170 and $86,952, respectively, of interest expenses related to our Notes. These expenses are related directly to the leveraging capacity put into place for each of those periods and the levels of indebtedness actually undertaken in those periods.

The table below describes the various expenses of our Notes and the related indicators of leveraging capacity and indebtedness during these years:

133

---

			Three Months Ended March 31,												Nine Months Ended March 31,
			2023						2022						2023						2022
Interest on borrowings			$	33,489					$	25,131					$	98,555					$	74,668
Amortization of deferred financing costs			1,773						2,137						5,255						6,242
Accretion of discount on unsecured debt			765						744						2,304						2,063
Facility commitment fees			1,490						1,223						3,056						3,979
Total interest and credit facility expenses			$	37,517					$	29,235					$	109,170					$	86,952
Average principal debt outstanding			$	2,658,938					$	2,657,523					$	2,782,599					$	2,469,905
Annualized weighted average stated interest rate on borrowings(1)			5.04		%				3.78		%				4.72		%				4.03		%
Annualized weighted average interest rate on borrowings(2)			5.64		%				4.40		%				5.23		%				4.69		%

(1)Includes only the stated interest expense.

(2)Includes the stated interest expense, amortization of deferred financing costs, accretion of discount on Public Notes and commitment fees on the undrawn portion of our Revolving Credit Facility.

Interest expense was $33,489 and $25,131 for the three months ended March 31, 2023 and March 31, 2022, respectively. The weighted average stated interest rate on borrowings (excluding amortization, accretion and undrawn facility fees) was 5.04% and 3.78% for the three months ended March 31, 2023, and March 31, 2022, respectively. The weighted average interest rate on borrowings was 5.64% and 4.40% for the three months ended March 31, 2023 and March 31, 2022, respectively. Both increases are primarily due to an increase of interest expense from increased LIBOR/SOFR rates for our Revolving Credit Facility partially before offset by a decrease of interest expense from repurchases of our Convertible Notes and 2023 Notes.

Interest expense was $98,555 and $74,668 for the nine months ended March 31, 2023 and March 31, 2022, respectively. The weighted average stated interest rate on borrowings (excluding amortization, accretion and undrawn facility fees) was 4.72% and 4.03% for the nine months ended March 31, 2023 and March 31, 2022, respectively. The weighted average interest rate on borrowings was 5.23% and 4.69% for the nine months ended March 31, 2023 and March 31, 2022, respectively. Both increases are primarily due to an increase of interest expense from increased LIBOR/SOFR rates for our Revolving Credit Facility partially before offset by a decrease of interest expense from redemptions of our Prospect Capital InterNotes® and issuances of these notes at lower rates, as well as repurchases of our Convertible Notes, June 2029 Baby Bond, and 2023 Notes.

The allocation of net overhead expense from Prospect Administration was $9,773 and $4,126 for the three months ended March 31, 2023 and March 31, 2022, respectively. Prospect Administration received estimated payments of $918 and $807 directly from our portfolio companies, and certain funds managed by the Investment Adviser for legal, tax, and other administrative services during the three months ended March 31, 2023 and March 31, 2022, respectively. We were given a credit for these payments as a reduction of the administrative services cost payable by us to Prospect Administration. Had Prospect Administration not received these payments, Prospect Administration’s charges for its administrative services would have increased by this amount. The $5,647 increase in the allocated net overhead expense for the three months ended March 31, 2023 compared to the prior year period is primarily due to increased managerial assistance and administrative allocations.

The allocation of net overhead expense from Prospect Administration was $16,490 and $10,891 for the nine months ended March 31, 2023 and March 31, 2022, respectively. Prospect Administration received estimated payments of $1,808 and $4,869 directly from our portfolio companies, and certain funds managed by the Investment Adviser for legal, tax, and other administrative services during the nine months ended March 31, 2023 and March 31, 2022, respectively. In addition, we were given a credit in the amount of $1,212 for legal expenses incurred on behalf of our portfolio companies that were remitted to Prospect Administration during the nine months ended March 31, 2023. The $5,599 increase in the allocated net overhead expense for the nine months ended March 31, 2023 compared to the prior year period is primarily due to increased managerial assistance and administrative allocations.

Total operating expenses, excluding investment advisory fees, interest and credit facility expenses, and allocation of overhead from Prospect Administration (“Other Operating Expenses”), net of any expense reimbursements, were $6,109 and $4,672 for the three months ended March 31, 2023 and March 31, 2022, respectively. The increase was primarily attributable to an increase in audit, compliance and tax related fees as well as other general and administrative expenses.

Total operating expenses, excluding investment advisory fees, interest and credit facility expenses, and allocation of overhead from Prospect Administration (“Other Operating Expenses”), net of any expense reimbursements, were $16,032 and $12,739

134

---

for the nine months ended March 31, 2023 and March 31, 2022, respectively. The increase was primarily attributable to an increase in audit, compliance and tax related fees as well as other general and administrative expenses.

Net Realized Gains (Losses)

The following table details net realized gains (losses) from investments for the three months ended March 31, 2023 and March 31, 2022:

			Three Months Ended March 31,
Portfolio Company			2023						2022
NMMB Inc.			$	(799)					$	5,294
Strategic Materials Holding Corp.			(82)						—
Halcyon Loan Advisors Funding 2013-1 Ltd.			(19,979)						—
Halcyon Loan Advisors Funding 2014-1 Ltd.			(11,425)						—
Sudbury Mill CLO, Ltd.			—						516
Brookside Mill CLO			—						(7,683)
Dunn Paper, Inc.			—						(385)
Other, net			72						4
Net realized (losses) gains			$	(32,213)					$	(2,254)

The following table details net realized gains (losses) from investments for the nine months ended March 31, 2023 and March 31, 2022:

			Nine Months Ended March 31,
Portfolio Company			2023						2022
Venio LLC			$	(14,472)					$	—
Dunn Paper, Inc.			(8,791)						(385)
NMMB Inc.			(2,510)						5,294
Strategic Materials Holding Corp.			(82)
Targus Group International, Inc.			16,143						—
Halcyon Loan Advisors Funding 2013-1 Ltd.			(19,979)
Halcyon Loan Advisors Funding 2014-1 Ltd.			(11,425)
Sudbury Mill CLO, Ltd.			1,065						(8,890)
Voya CLO 2012-2, Ltd.			433						—
Voya CLO 2012-3, Ltd.			440						—
Brookside Mill CLO			—						(7,683)
Other, net			86						(418)
Net realized (losses)			$	(39,092)					$	(12,082)

Net Realized Loss from Extinguishment of Debt

During the three months ended March 31, 2023 and March 31, 2022, we recorded a net realized loss from the extinguishment of debt of $58 and $941, respectively. During the nine months ended March 31, 2023 and March 31, 2022, we recorded a net realized loss from the extinguishment of debt of $138 and $10,149, respectively. Refer to Capitalization for additional discussion.

135

---

Change in Unrealized Gains (Losses)

The following table details net change in unrealized (losses) gains for our portfolio for the nine months ended March 31, 2023 and March 31, 2022, respectively:

			Three Months Ended March 31,												Nine Months Ended March 31,
			2023						2022						2023						2022
Control investments			$	(41,162)					$	96,162					$	(109,909)					$	352,558
Affiliate investments			—						(11,610)						(89,034)						26,016
Non-control/non-affiliate investments			(117,761)						(4,066)						(179,153)						19,766
Net change in unrealized gains (losses)			$	(158,923)					$	80,486					$	(378,096)					$	398,340

The following table reflects net change in unrealized gains (losses) on investments for the three months ended March 31, 2023:

									Net Change in Unrealized Gains (Losses)
Subordinated Structured Notes									$	28,946
InterDent, Inc.									20,534
R-V Industries, Inc.									6,520
USES Corp.									(10,380)
CP Energy Services Inc.									(14,455)
National Property REIT Corp.									(17,563)
Other, net									(20,276)
First Tower Finance Company LLC									(28,034)
PGX Holdings, Inc.									(124,215)
Net change in unrealized losses									$	(158,923)

The following table reflects net change in unrealized gains (losses) on investments for the three months ended March 31, 2022:

									Net Change in Unrealized Gains (Losses)
National Property REIT Corp.									$	149,967
CP Energy Services Inc.									31,164
Subordinated Structured Notes									18,874
Other, net									4,367
Curo Group Holdings Corp.									(6,254)
Credit Central Loan Company, LLC									(6,531)
K&N Parent, Inc.									(8,110)
Pacific World Corporation									(9,258)
NMMB, Inc.									(10,540)
PGX Holdings, Inc.									(12,636)
Echelon Transportation, LLC									(17,588)
InterDent, Inc.									(52,969)
Net change in unrealized gains									$	80,486

The following table reflects net change in unrealized gains (losses) on investments for the nine months ended March 31, 2023:

136

---

									Net Change in Unrealized Gains (Losses)
Town & Country Holdings, Inc.									$	38,370
InterDent, Inc.									30,267
Subordinated Structured Notes									17,665
United Sporting Companies, Inc.									15,462
Universal Turbine Parts, LLC									11,418
R-V Industries, Inc.									9,726
The RK Logistics Group, Inc.									8,072
Dunn Paper, Inc.									6,493
Valley Electric Company, Inc.									(6,959)
Redstone Holdco 2 LP									(7,232)
Echelon Transportation, LLC									(8,285)
Research Now Group, Inc. & Survey Sampling International LLC									(10,279)
Rising Tide Holdings, Inc.									(10,548)
Precisely Software Incorporated (f/k/a Vision Solutions, Inc.)									(10,610)
Curo Group Holdings Corp.									(11,147)
USES Corp.									(12,659)
Credit Central Loan Company, LLC									(13,007)
Securus Technologies Holdings, Inc.									(13,455)
CP Energy Services Inc.									(16,760)
K&N HoldCo, LLC									(23,149)
First Tower Finance Company LLC									(26,711)
Targus Cayman HoldCo Limited									(33,202)
Other, net									(64,523)
National Property REIT Corp.									(66,134)
PGX Holdings, Inc.									(180,909)
Net change in unrealized losses									$	(378,096)

The following table reflects net change in unrealized gains (losses) on investments for the nine months ended March 31, 2022:

									Net Change in Unrealized Gains (Losses)
National Property REIT Corp.									$	348,536
Subordinated Structured Notes									46,619
CP Energy Services Inc.									32,471
First Tower Finance Company LLC									29,024
NMMB, Inc.									21,363
PGX Holdings, Inc.									14,189
Targus Cayman HoldCo Limited									10,331
MITY, Inc.									6,432
R-V Industries, Inc.									4,062
Other, net									(5,257)
USES Corp.									(7,899)
K&N Parent, Inc.									(8,189)
Curo Group Holdings Corp.									(8,565)
Pacific World Corporation									(24,173)
Echelon Transportation, LLC									(26,927)
InterDent, Inc.									(33,677)
Net change in unrealized gains									$	398,340

137

---

Financial Condition, Liquidity and Capital Resources

For the nine months ended March 31, 2023 and March 31, 2022, our operating activities used $101,244 and $589,727 of cash, respectively. The $488,483 decrease is primarily driven by a $1,169,850 decrease in originations offset by a $638,440 decrease in repayments for the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022. There were no investing activities for the nine months ended March 31, 2023 and March 31, 2022. Financing activities provided $130,972 and $562,519 of cash during the nine months ended March 31, 2023 and March 31, 2022, respectively, which included dividend payments of $222,123 and $199,697, respectively. The $431,547 decrease in cash provided by our financing activities is primarily driven by a $636,051 decrease in net debt issuances, offset by a $228,046 increase in issuance of preferred stock, for the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022.

Our primary uses of funds have been to continue to invest in portfolio companies, through both debt and equity investments, repay outstanding borrowings and to make cash distributions to our stockholders.

Our primary sources of funds have historically been issuances of debt and equity. We have and may continue to fund a portion of our cash needs through repayments and opportunistic sales of our existing investment portfolio. We may also securitize a portion of our investments in unsecured or senior secured loans or other assets. Our objective is to put in place such borrowings in order to enable us to expand our portfolio. During the nine months ended March 31, 2023, we borrowed 1,224,900 and we made repayments totaling 1,175,959 under the Revolving Credit Facility. As of March 31, 2023, our outstanding balance on the Revolving Credit Facility was $888,405. As of March 31, 2023, we had, net of unamortized discount and debt issuance costs, $154,366 outstanding on the Convertible Notes, $1,062,975 outstanding on the Public Notes and $348,647 outstanding on the Prospect Capital InterNotes® (See “Capitalization” above).

Undrawn committed revolvers and delayed draw term loans to our portfolio companies incur commitment and unused fees ranging from 0.00% to 7.25%. As of March 31, 2023 and June 30, 2022, we had $54,133 and $43,934, respectively, of undrawn revolver and delayed draw term loan commitments to our portfolio companies. The fair value of our undrawn committed revolvers and delayed draw term loans was zero as of March 31, 2023 and June 30, 2022, as they were all floating rate instruments that repriced frequently.

On February 13, 2020, we filed a registration statement on Form N-2 (File No. 333-236415) that was effective upon filing pursuant to Rule 462(e) under the Securities Act as permitted under the Small Business Credit Availability Act. The registration statement permits us to issue, through one or more transactions, an indeterminate amount of securities, consisting of common stock, preferred stock, debt securities, subscription rights to purchase our securities, warrants representing rights to purchase our securities or separately tradable units combining two or more of our securities.

Preferred Stock

On August 3, 2020, we entered into a Dealer Manager Agreement with Preferred Capital Securities, LLC (“PCS”), as amended on June 9, 2022, October 7, 2022, and February 10 2023, pursuant to which PCS has agreed to serve as the Company’s agent, principal distributor and dealer manager for the Company’s offering of up to 72,000,000 shares, par value $0.001 per share, of preferred stock, with a liquidation preference of $25.00 per share. Such preferred stock will initially be issued in multiple series, including the 5.50% Series A1 Preferred Stock (“Series A1 Preferred Stock”), the 5.50% Series M1 Preferred Stock (“Series M1 Preferred Stock”), the 5.50% Series M2 Preferred Stock (“Series M2 Preferred Stock”), the 6.50% Series A3 Preferred Stock (“Series A3 Preferred Stock”), and the 6.50% Series M3 Preferred Stock (“Series M3 Preferred Stock”). In connection with such offering, on August 3, 2020, June 9, 2022 and Octoebr 11, 2022, we filed Articles Supplementary with the State Department of Assessments and Taxation of Maryland (“SDAT”), reclassifying and designating 120,000,000, 60,000,000, 120,000,000, and 60,000,000 shares, respectively, of the Company’s authorized and unissued shares of common stock into shares of preferred stock as “Convertible Preferred Stock.”

On October 30, 2020, and as amended on February 18, 2022, October 7, 2022, and February 10 2023, we entered into a Dealer Manager Agreement with InspereX LLC, pursuant to which InspereX LLC has agreed to serve as the Company’s agent and dealer manager for the Company’s offering of up to 10,000,000 shares, par value $0.001 per share, of preferred stock, with a liquidation preference of $25.00 per share. Such preferred stock will initially be issued in multiple series, including the 5.50% Series AA1 Preferred Stock (the “Series AA1 Preferred Stock”), the 5.50% Series MM1 Preferred Stock (the “Series MM1 Preferred Stock”), the 6.50% Series AA2 Preferred Stock (the “Series AA2 Preferred Stock”), and the 6.50% Series MM2 Preferred Stock (the “Series MM2 Preferred Stock” and together with the Series M1 Preferred Stock, the Series M2 Preferred Stock, and the Series M3 Preferred Stock, the “Series M Preferred Stock” and the Series MM2 Preferred Stock, together with the Series AA2 Preferred Stock, the Series A3 Preferred Stock and the Series M3 Preferred Stock, the “6.50% Preferred Stock”). In connection with such offering, on October 30, 2020, February 17, 2022 and October 11, 2022, we filed Articles Supplementary with the SDAT, reclassifying and designating an additional 80,000,000 shares of the Company’s authorized and

138

---

unissued shares of common stock into shares of preferred stock as Convertible Preferred Stock. On May 19, 2021, we entered into an Underwriting Agreement with UBS Securities LLC, relating to the offer and sale of 187,000 shares, par value $0.001 per share, of 5.50% Series A2 Preferred Stock, with a liquidation preference of $25.00 per share (the “Series A2 Preferred Stock”, and together with the Series A1 Preferred Stock, Series M1 Preferred Stock, Series M2 Preferred Stock, Series AA1 Preferred Stock, and Series MM1 Preferred Stock, the “5.50% Preferred Stock”). The issuance of the Series A2 Preferred Stock settled on May 26, 2021. In connection with such offering, on May 19, 2021, we filed Articles Supplementary with the SDAT, reclassifying and designating an additional 1,000,000 shares of the Company’s authorized and unissued shares of common stock into shares of preferred stock as Convertible Preferred Stock.

In connection with the offerings of the 5.50% Preferred Stock and the 6.50% Preferred Stock, we adopted and amended, respectively, a preferred stock dividend reinvestment plan (the “Preferred Stock Plan” or the “Preferred Stock DRIP”), pursuant to which holders of the 5.50% Preferred Stock and the 6.50% Preferred Stock will have dividends on their 5.50% Preferred Stock and 6.50% Preferred Stock automatically reinvested in additional shares of such 5.50% Preferred Stock and 6.50% Preferred Stock, at a price per share of $25.00, if they elect.

Each series of 5.50% Preferred Stock and 6.50% Preferred Stock ranks (with respect to the payment of dividends and rights upon liquidation, dissolution or winding up) (a) senior to our common stock, (b) on parity with each other series of our preferred stock, and (c) junior to our existing and future secured and unsecured indebtedness. See Note 8, Fair Value and Maturity of Debt Outstanding for further discussion on our senior securities.

At any time prior to the listing of the 5.50% Preferred Stock and 6.50% Preferred Stock on a national securities exchange, shares of the 5.50% Preferred Stock are convertible, at the option of the holder of the 5.50% Preferred Stock and the 6.50% Preferred Stock (the “Holder Optional Conversion”). We will settle any Holder Optional Conversion by paying or delivering, as the case may be, (A) any portion of the Settlement Amount (as defined below) that we elect to pay in cash and (B) a number of shares of our common stock at a conversion rate equal to (1) (a) the Settlement Amount, minus (b) any portion of the Settlement Amount that we elect to pay in cash, divided by (2) the arithmetic average of the daily volume weighted average price of shares of our common stock over each of the five consecutive trading days ending on the Holder Conversion Exercise Date (such arithmetic average, the “5-day VWAP”). For the Series A1 Preferred Stock, the Series A3 Preferred Stock, the Series AA1 Preferred Stock, the Series AA2 Preferred Stock and the Series A2 Preferred Stock, “Settlement Amount” means (A) $25.00 per share (the “Stated Value”), plus (B) unpaid dividends accrued to, but not including, the Holder Conversion Exercise Date, minus (C) the applicable Holder Optional Conversion Fee for the respective Holder Conversion Deadline. For the Series M Preferred Stock, “Settlement Amount” means (A) the Stated Value, plus (B) unpaid dividends accrued to, but not including, the Holder Conversion Exercise Date, minus (C) the applicable Series M Clawback, if any. “Series M Clawback”, if applicable, means an amount equal to the aggregate amount of all dividends, whether paid or accrued, on such share of Series M Stock in the three full months prior to the Holder Conversion Exercise Date. Subject to certain limited exceptions, we will not pay any portion of the Settlement Amount in cash (other than cash in lieu of fractional shares of our common stock) until the five year anniversary of the date on which a share of 5.50% Preferred Stock or 6.50% Preferred Stock has been issued. Beginning on the five year anniversary of the date on which a share of 5.50% Preferred Stock is issued, we may elect to settle all or a portion of any Holder Optional Conversion in cash without limitation or restriction. The right of holders to convert a share of 5.50% Preferred Stock or 6.50% Preferred Stock will terminate upon the listing of such share on a national securities exchange.

Subject to certain limited exceptions allowing earlier redemption, beginning on the earlier of the five year anniversary of the date on which a share of 5.50% Preferred Stock or 6.50% Preferred Stock has been issued, or, for listed shares of 5.50% Preferred Stock, five years from the earliest date on which any series that has been listed was first issued (the earlier of such dates, the “Redemption Eligibility Date”), such share of 5.50% Preferred Stock or 6.50% Preferred Stock may be redeemed at any time or from time to time at our option (the “Issuer Optional Redemption”), at a redemption price of 100% of the Stated Value of the shares of 5.50% Preferred Stock or 6.50% Preferred Stock to be redeemed plus unpaid dividends accrued to, but not including, the date fixed for redemption.

Subject to certain limitations, each share of 5.50% Preferred Stock or 6.50% Preferred Stock may be converted at our option (the “Issuer Optional Conversion”). We will settle any Issuer Optional Conversion by paying or delivering, as the case may be, (A) any portion of the IOC Settlement Amount (as defined below) that we elect to pay in cash and (B) a number of shares of our common stock at a conversion rate equal to (1) (a) the IOC Settlement Amount, minus (b) any portion of the IOC Settlement Amount that we elect to pay in cash, divided by (2) the 5-day VWAP, subject to our ability to obtain or maintain any stockholder approval that may be required under the 1940 Act to permit us to sell our common stock below net asset value if the 5-day VWAP represents a discount to our net asset value per share of common stock. For the 5.50% Preferred Stock and 6.50% Preferred Stock, “IOC Settlement Amount” means (A) the Stated Value, plus (B) unpaid dividends accrued to, but not including, the date fixed for conversion. In connection with an Issuer Optional Conversion, we will use commercially reasonable efforts to obtain or maintain any stockholder approval that may be required under the 1940 Act to permit us to sell

139

---

our common stock below net asset value. If we do not have or obtain any required stockholder approval under the 1940 Act to sell our common stock below net asset value and the 5-day VWAP is at a discount to our net asset value per share of common stock, we will settle any conversions in connection with an Issuer Optional Conversion by paying or delivering, as the case may be, (A) any portion of the IOC Settlement Amount that we elect to pay in cash and (B) a number of shares of our common stock at a conversion rate equal to (1) (a) the IOC Settlement Amount, minus (b) any portion of the IOC Settlement Amount that we elect to pay in cash, divided by (2) the NAV per share of common stock at the close of business on the business day immediately preceding the date of conversion. We will not pay any portion of the IOC Settlement Amount from an Issuer Optional Conversion in cash (other than cash in lieu of fractional shares of our common stock) until the Redemption Eligibility Date. Beginning on the Redemption Eligibility Date, we may elect to settle any Issuer Optional Conversion in cash without limitation or restriction. In the event that we exercise an Issuer Optional Conversion with respect to any shares of 5.50% Preferred Stock, the holder of such 5.50% Preferred Stock may instead elect a Holder Optional Conversion with respect to such 5.50% Preferred Stock or 6.50% Preferred Stock provided that the date of conversion for such Holder Optional Conversion would occur prior to the date of conversion for an Issuer Optional Conversion.

On July 12, 2021, we entered into an underwriting agreement by and among us, Prospect Capital Management L.P., Prospect Administration LLC, and Morgan Stanley & Co. LLC, RBC Capital Markets, LLC and UBS Securities LLC, as representatives of the underwriters, relating to the offer and sale of 6,000,000 shares, or $150,000 in aggregate liquidation preference, of our 5.35% Series A Fixed Rate Cumulative Perpetual Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock” or “5.35% Preferred Stock”), at a public offering price of $25.00 per share. Pursuant to the Underwriting Agreement, we also granted the underwriters a 30-day option to purchase up to an additional 900,000 shares of Series A Preferred Stock solely to cover over-allotments. The offer settled on July 19, 2021, and no additional shares of the Series A Preferred Stock were issued pursuant to the option. In connection with such offering, on July 15, 2021, we filed Articles Supplementary with SDAT, reclassifying and designating 6,900,000 shares of the Company’s authorized and unissued shares of Common Stock into shares of Series A Preferred Stock.

The Series A Preferred Stock ranks (with respect to the payment of dividends and rights upon liquidation, dissolution or winding up) (a) senior to our common stock, (b) on parity with each other series of our preferred stock, and (c) junior to our existing and future secured and unsecured indebtedness. See Note 8, Fair Value and Maturity of Debt Outstanding for further discussion on our senior securities.

Subject to certain limited exceptions allowing earlier redemption, at any time after the close of business on July 19, 2026 (any such date, an “Optional Redemption Date”), at our sole option, we may redeem the Series A Preferred Stock in whole or, from time to time, in part, out of funds legally available for such redemption, at a price per share equal to the liquidation preference of $25.00 per share, plus an amount equal to all unpaid dividends on such shares (whether or not earned or declared, but excluding interest thereon) accumulated up to, but excluding, the date fixed for redemption. We may also redeem the Series A Preferred Stock at any time, in whole or, from time to time, in part, including prior to the Optional Redemption Date, pro rata, based on liquidation preference, with all other series of our then outstanding preferred stock, in the event that our Board determines to redeem any series of our preferred stock, in whole or, from time to time, in part, because such redemption is deemed necessary by the Board to comply with the asset coverage requirements of the 1940 Act or for us to maintain RIC status.

In the event of a Change of Control Triggering Event (as defined below), we may, at our option, exercise our special optional redemption right to redeem the Series A Preferred Stock, in whole or in part, within 120 days after the first date on which such Change of Control Triggering Event has occurred by paying the liquidation preference, plus an amount equal to all unpaid dividends on such shares (whether or not earned or declared, but excluding interest thereon) accumulated up to, but excluding, the date fixed for such redemption. To the extent that we exercise our optional redemption right or our special optional redemption right relating to the Series A Preferred Stock, the holders of Series A Preferred Stock will not be permitted to exercise the conversion right described below in respect of their shares called for redemption.

Except to the extent that we have elected to exercise our optional redemption right or our special optional redemption right by providing notice of redemption prior to the Change of Control Conversion Date (as defined below), upon the occurrence of a Change of Control Triggering Event, each holder of Series A Preferred Stock will have the right to convert some or all of the Series A Preferred Stock held by such holder on the Change of Control Conversion Date into a number of our shares of common stock per Series A Preferred Stock to be converted equal to the lesser of:

•the quotient obtained by dividing (i) the sum of the Liquidation Preference per share plus an amount equal to all unpaid dividends thereon (whether or not earned or declared, but excluding interest thereon) accumulated up to, but excluding, the Change of Control Conversion Date (unless the Change of Control Conversion Date is after a Record Date for a Series A Preferred Stock dividend payment and prior to the corresponding Series A Preferred Stock dividend payment date, in which case no additional amount for such accrued and unpaid dividends will be included in this sum) by (ii) the Common Stock Price (as defined below); and

•6.03865, subject to certain adjustments,

140

---

subject, in each case, to provisions for the receipt of alternative consideration upon conversion as described in the applicable prospectus supplement.

If we have provided or provide a redemption notice with respect to some or all of the Series A Preferred Stock, holders of any Series A Preferred Stock that we have called for redemption will not be permitted to exercise their Change of Control Conversion Right in respect of any of their Series A Preferred Stock that have been called for redemption, and any Series A Preferred Stock subsequently called for redemption that have been tendered for conversion will be redeemed on the applicable date of redemption instead of converted on the Change of Control Conversion Date.

For purposes of the foregoing discussion of a redemption upon the occurrence of a Change of Control Triggering Event, the following definitions are applicable:

“Change of Control Triggering Event” means the occurrence of any of the following:

•the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation and other than an Excluded Transaction) in one or a series of related transactions, of all or substantially all of the assets of the Company and its Controlled Subsidiaries taken as a whole to any “person” or “group” (as those terms are used in Section 13(d)(3) of the Exchange Act) (other than to any Permitted Holders); provided that, for the avoidance of doubt, a pledge of assets pursuant to any of our secured debt instruments or the secured debt instruments of our Controlled Subsidiaries shall not be deemed to be any such sale, lease, transfer, conveyance or disposition; or

•the consummation of any transaction (including, without limitation, any merger or consolidation and other than an Excluded Transaction) the result of which is that any “person” or “group” (as those terms are used in Section 13(d)(3) of the Exchange Act) (other than any Permitted Holders) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of our outstanding Voting Stock, measured by voting power rather than number of shares.

Notwithstanding the foregoing, the consummation of any of the transactions referred to in the bullet points above will not be deemed a Change of Control Triggering Event if we or the acquiring or surviving consolidated entity has or continues to have a class of common securities (or ADRs representing such securities) listed on the NYSE, the NYSE American or NASDAQ, or listed or quoted on an exchange or quotation system that is a successor to the NYSE, the NYSE American or NASDAQ, or is otherwise listed or quoted on a national securities exchange.

The “Change of Control Conversion Date” is the date the shares of Series A Preferred Stock are to be converted, which will be a business day selected by us that is no fewer than 20 days nor more than 35 days after the date on which we provide the notice described above to the holders of Series A Preferred Stock.

The “Common Stock Price” will be (i) if the consideration to be received in the Change of Control Triggering Event by the holders of our common stock is solely cash, the amount of cash consideration per share of our common stock or (ii) if the consideration to be received in the Change of Control Triggering Event by holders of our common stock is other than solely cash (x) the average of the closing sale prices per share of our common stock (or, if no closing sale price is reported, the average of the closing bid and ask prices or, if more than one in either case, the average of the average closing bid and the average closing ask prices) for the ten consecutive trading days immediately preceding, but not including, the effective date of the Change of Control Triggering Event as reported on the principal U.S. securities exchange on which our common stock is then traded, or (y) the average of the last quoted bid prices for our common stock in the over-the-counter market as reported by OTC Markets Group Inc. or similar organization for the ten consecutive trading days immediately preceding, but not including, the effective date of the Change of Control Triggering Event, if our common stock is not then listed for trading on a U.S. securities exchange.

“Controlled Subsidiary” means any of our subsidiaries, 50% or more of the outstanding equity interests of which are owned by us and our direct or indirect subsidiaries and of which we possess, directly or indirectly, the power to direct or cause the direction of the management or policies, whether through the ownership of voting equity interests, by agreement or otherwise.

“Excluded Transaction” means (i) any transaction that does not result in any reclassification, conversion, exchange or cancellation of all or substantially all of the outstanding shares of our Voting Stock; (ii) any changes resulting from a subdivision or combination or a change solely in par value; (iii) any transaction where the shares of our Voting Stock outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the Voting Stock of the surviving “person” (as that term is used in Section 13(d)(3) of the Exchange Act) or any direct or indirect parent company of the surviving “person” (as that term is used in Section 13(d)(3) of the Exchange Act) immediately after giving effect to such transaction; (iv) any transaction if (A) we become a direct or indirect wholly-owned subsidiary of a holding company and (B)(1) the direct or indirect holders of the Voting Stock of such holding company immediately following that transaction are substantially the same as the holders of our Voting Stock immediately prior to that transaction or (2) immediately following that transaction no “person” (as that term is used in Section 13(d)(3) of the Exchange Act) is the beneficial owner, directly or indirectly, of more than 50% of the Voting Stock of such holding company; or (v) any transaction primarily for the purpose of changing our jurisdiction of incorporation or form of organization.

141

---

“Permitted Holders” means (i) us, (ii) one or more of our Controlled Subsidiaries and (iii) Prospect Capital Management or any affiliate of Prospect Capital Management that is organized under the laws of a jurisdiction located in the United States of America and in the business of managing or advising clients.

“Voting Stocks” as applied to stock of any person, means shares, interests, participations or other equivalents in the equity interest (however designated) in such person having ordinary voting power for the election of the directors (or the equivalent) of such person, other than shares, interests, participations or other equivalents having such power only by reason of the occurrence of a contingency.

Except as provided above in connection with a Change of Control Triggering Event, the Series A Preferred Stock is not convertible into or exchangeable for any other securities or property.

For so long as the Series A Preferred Stock is outstanding, we will not exercise any option we have to convert any other series of our outstanding preferred stock to common stock, including the Issuer Optional Conversion, or any other security ranking junior to such preferred stock. As a result, and in accordance with ASC 480, we have presented both our 5.50% Preferred Stock and Series A Preferred Stock within temporary equity on our Consolidated Statement of Assets and Liabilities as of September 30, 2022.

We determined the estimated value as of March 31, 2023 of our 5.50% Preferred Stock and 6.50% Preferred Stock, with a $25.00 stated value per share. We engaged a third-party valuation service to assist in our determination based on the calculation resulting from the total equity on our Consolidated Statements of Assets and Liabilities in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 (the “Form 10-Q”), which was prepared in accordance with U.S. generally accepted accounting principles in the United States of America, adjusted for the fair value of our investments (i.e. from our Consolidated Schedule of Investments) and total liabilities, divided by the number of shares of our Preferred Stock outstanding. Based on this methodology and because the result from the calculation above is greater than the $25.00 per share stated value of our 5.50% Preferred Stock and 6.50% Preferred Stock, the estimated value of our 5.50% Preferred Stock and 6.50% Preferred Stock as of March 31, 2023 is $25.00 per share.

Common Stock

Our common stockholders’ equity accounts as of March 31, 2023 and June 30, 2022 reflect cumulative shares issued, net of shares repurchased, as of those respective dates. Our common stock has been issued through public offerings, a registered direct offering, the exercise of over-allotment options on the part of the underwriters, our dividend reinvestment plan and in connection with the acquisition of certain controlled portfolio companies and in connection with our 5.50%     and 6.50% Preferred Stock Holder Optional Conversion and Optional Redemption Following Death of a Holder. When our common stock is issued, the related offering expenses have been charged against paid-in capital in excess of par. All underwriting fees and offering expenses were borne by us.

We did not repurchase any shares of our common stock for the nine months ended March 31, 2023 or March 31, 2022. As of March 31, 2023, the approximate dollar value of shares that may yet be purchased under the Repurchase Program is $65,860.

On June 10, 2022, at a special meeting of stockholders, our stockholders authorized us to sell shares of our common stock (during the next 12 months) at a price or prices below our net asset value per share at the time of sale in one or more offerings, subject to certain conditions as set forth in the proxy statement relating to the special meeting (including that the number of shares sold on any given date does not exceed 25% of its outstanding common stock immediately prior to such sale).

Recent Developments

On May 9, 2023, we announced the declaration of monthly dividends for our 5.50% Preferred Stock for holders of record on the following dates based on an annual rate equal to 5.50% of the Stated Value of $25.00 per share as set forth in the Articles Supplementary for the Preferred Stock, from the date of issuance or, if later from the most recent dividend payment date (the first business day of the month, with no additional dividend accruing in July as a result), as follows:

Monthly Cash 5.50% Preferred Shareholder Distribution			Record Date			Payment Date			Monthly Amount ($ per share), before pro ration for partial periods
June 2023			6/21/2023			7/3/2023			$0.114583
July 2023			7/19/2023			8/1/2023			$0.114583
August 2023			8/16/2023			9/1/2023			$0.114583

142

---

On May 9, 2023, we announced the declaration of monthly dividends for our 6.50% Preferred Stock for holders of record on the following dates based on an annual rate equal to 6.50% of the Stated Value of $25.00 per share as set forth in the Articles Supplementary for the Preferred Stock, from the date of issuance or, if later from the most recent dividend payment date (the first business day of the month, with no additional dividend accruing in July as a result), as follows:

Monthly Cash 6.50% Preferred Shareholder Distribution			Record Date			Payment Date			Monthly Amount ($ per share), before pro ration for partial periods
June 2023			6/21/2023			7/3/2023			$0.135417
July 2023			7/19/2023			8/1/2023			$0.135417
August 2023			8/16/2023			9/1/2023			$0.135417

On May 9, 2023, we announced the declaration of quarterly dividends for our 5.35% Preferred Stock for holders of record on the following dates based on an annual rate equal to 5.35% of the Stated Value of $25.00 per share as set forth in the Articles Supplementary for the 5.35% Preferred Stock, from the date of issuance or, if later from the most recent dividend payment date, as follows:

Quarterly Cash 5.35% Preferred Shareholder Distribution			Record Date			Payment Date			Amount ($ per share)
May 2023 - July 2023			7/19/2023			8/1/2023			$0.334375

On May 9, 2023, we announced the declaration of monthly dividends on our common stock as follows:

Monthly Cash Common Shareholder Distribution			Record Date			Payment Date			Amount ($ per share)
May 2023			5/26/2023			6/21/2023			$0.0600
June 2023			6/28/2023			7/20/2023			$0.0600
July 2023			7/27/2023			8/22/2023			$0.0600
August 2023			8/29/2023			9/20/2023			$0.0600

Critical Accounting Estimates

For discussion of critical accounting policies and estimates, refer to our Annual Report on Form 10-K for the year ended June 30, 2022.

Recent Accounting Pronouncements

For discussion of recent accounting pronouncements, refer to Note 2 within the accompanying notes to the consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are subject to financial market risks, including changes in interest rates and equity price risk. Uncertainty with respect to the economic effects of rising interest rates in response to inflation, the war in Russia and Ukraine and the ongoing geopolitical uncertainty has introduced significant volatility in the financial markets, and the effects of this volatility could materially impact our market risks, including those listed below. Concerning these risks and their potential impact on our business and our operating results, see Part I, Item 1A. Risk Factors, “Risks Relating to Our Business” in our Annual Report on Form 10-K.

Interest rate sensitivity refers to the change in our earnings that may result from changes in the level of interest rates impacting some of the loans in our portfolio which have floating interest rates. Additionally, because we fund a portion of our investments with borrowings, our net investment income is affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. See Part I, Item 1A. Risk Factors, “Risks Relating to Our Business - Changes in interest rates may affect our cost of capital and net investment income” in our Annual Report on Form 10-K.

Our debt investments may be based on floating rates or fixed rates. For our floating rate loans the rates are determined from the LIBOR, EURO Interbank Offer Rate, the Federal Funds Rate, Secured Overnight Financing Rate (“SOFR”) or the Prime Rate. The floating interest rate loans may be subject to a LIBOR or SOFR floor. Our loans typically have durations of one, two, three, six or twelve months after which they reset to current market interest rates. As of March 31, 2023, 83.05% of the interest earning investments in our portfolio, at fair value, bore interest at floating rates.

143

---

Interest on borrowings under the Revolving Credit Facility are based on a floating rate of one-month SOFR plus 205 basis points with no minimum SOFR floor and an outstanding balance of $888,405 as of March 31, 2023. Lender fees charged on the unused portion of the Revolving Credit Facility, the Convertible Notes, Public Notes, and Prospect Capital InterNotes® bear interest at fixed rates.

On March 5, 2021, the FCA announced that (i) 24 LIBOR settings would cease to exist immediately after December 31, 2021 (all seven euro LIBOR settings; all seven Swiss franc LIBOR settings; the Spot Next, 1-week, 2-month, and 12-month Japanese yen LIBOR settings; the overnight, 1-week, 2-month, and 12-month sterling LIBOR settings; and the 1-week and 2-month US dollar LIBOR settings); (ii) the overnight and 12-month US LIBOR settings would cease to exist after June 30, 2023; and (iii) the FCA would consult on whether the remaining nine LIBOR settings should continue to be published on a synthetic basis for a certain period using the FCA’s proposed new powers that the UK government is legislating to grant to them.

The following table shows the approximate annual impact on net investment income of base rate changes in interest rates (considering interest rate flows for floating rate instruments, excluding our investments in Subordinated Structured Notes) to our loan portfolio and outstanding debt as of March 31, 2023, assuming no changes in our investment and borrowing structure:

(in thousands) Basis Point Change						Increase (Decrease) in Interest Income						(Increase) Decrease in Interest Expense									Increase (Decrease) in Net Investment Income						Increase (Decrease) in Net Investment Income (1)
Up 300 basis points						$	138,268					$	(26,652)								$	111,616					$	89,293
Up 200 basis points						$	92,734					$	(17,768)								$	74,966					$	59,973
Up 100 basis points						$	47,200					$	(8,884)								$	38,316					$	30,653
Down 100 basis points						$	(43,759)					$	42,643								$	(1,116)					$	(893)
Down 200 basis points						$	(89,159)					$	42,643								$	(46,516)					$	(37,213)
Down 300 basis points						$	(128,332)					$	42,643								$	(85,689)					$	(68,551)

(1)Includes the impact of income incentive fees. See Note 13 in the accompanying Consolidated Financial Statements for more information on income incentive fees.

As of March 31, 2023, one, three, and six month LIBOR were 4.86%, 5.19% and 5.31%, respectively. As of March 31, 2023 the one, three, and six month SOFR were 4.80%, 4.91%, and 4.90% respectively.

We may hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts subject to the requirements of the 1940 Act. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in the benefits of higher interest rates with respect to our portfolio of investments. During the period ended March 31, 2023, we did not engage in hedging activities.

144

---

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of March 31, 2023, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the 1934 Act). Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that due to the material weaknesses in the Company’s internal control over financial reporting described in our Annual Report on Form 10-K, our disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives.

Notwithstanding the material weaknesses, management believes that the financial statements included in this Quarterly Report on Form 10-Q present fairly in all material respects the Company’s financial condition, results of its operations, changes in its net assets and temporary equity and its cash flows for the periods presented.

Changes in Internal Control Over Financial Reporting

We have begun the process of, and we are focused on, enhancing effective internal control measures to improve our internal control over financial reporting and remediate the material weaknesses. Our internal control remediation efforts include the following:

•Enhancing existing controls that address the completeness and accuracy of underlying data used in the performance of management review controls over the valuation of CLOs;

•Enhancing policies and procedures to retain adequate documentary evidence for certain management review controls over the valuation of CLOs, including precision of review and evidence of review procedures performed to demonstrate effective operation of such controls;

•Enhancing policies and procedures to adequately demonstrate a commitment to improving our overall control environment and develop proper monitoring controls around timely evaluation and communication of internal control deficiencies to those parties responsible for taking corrective action, including senior management and the board of directors, as appropriate.

We believe our planned actions to enhance our processes and controls will address the material weaknesses, but these actions are subject to ongoing management evaluation, and we will need a period of execution to demonstrate remediation. We are committed to the continuous improvement of our internal control over financial reporting and will continue to diligently review our internal control over financial reporting.

There were no other changes in our internal control over financial reporting during the quarter ended March 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

145

---

PART II

Item 1. Legal Proceedings

(All figures in this item are in thousands except share, per share and other data.)

From time to time, we may become involved in various investigations, claims and legal proceedings that arise in the ordinary course of our business. These matters may relate to intellectual property, employment, tax, regulation, contract or other matters. The resolution of such matters as may arise will be subject to various uncertainties and, even if such claims are without merit, could result in the expenditure of significant financial and managerial resources.

We are not aware of any material legal proceedings as of March 31, 2023.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed below and the risk factors in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended June 30, 2022, which could materially affect our business, financial condition or future results. The risks described in this report and in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results. (All figures in this item are in thousands except share, per share and other data.)

Risks Relating to Our Investments

Investments in covenant-lite loans may expose us to different and increased risks.

Although we generally expect the transaction documentation of some portion of our investments to include covenants and other structural protections, a significant portion of our investments may be composed of so-called “covenant-lite loans.” Generally, covenant-lite loans do not have certain maintenance covenants that would require the issuer to maintain debt service or other financial ratios. Ownership of covenant-lite loans may expose us to different risks, including with respect to liquidity, price volatility and ability to restructure loans, than is the case with loans that have financial maintenance covenants. As a result, our exposure to losses from these loans may be increased. In addition, in the current economic environment, the market prices of covenant-lite loans may be depressed.

Risks Relating to Our Securities

Senior securities, including debt and preferred equity, expose us to additional risks, including the typical risks associated with leverage and could adversely affect our business, financial condition and results of operations.

We use our revolving credit facility to leverage our portfolio and we expect in the future to borrow from and issue senior debt securities to banks and other lenders and may securitize certain of our portfolio investments. We also have the Unsecured Notes outstanding and have launched a convertible preferred share offering program, which are forms of leverage and are senior in payment rights to our common stock.

Business development companies are generally able to issue senior securities such that their asset coverage, as defined in the 1940 Act, equals at least 200% of gross assets less all liabilities and indebtedness not represented by senior securities, after each issuance of senior securities. In March 2018, the Small Business Credit Availability Act added Section 61(a)(2) to the 1940 Act, a successor provision to Section 61(a)(1) referenced therein, which reduces the asset coverage requirement applicable to business development companies from 200% to 150% so long as the business development company meets certain disclosure requirements and obtains certain approvals. On May 5, 2020, the Company's stockholders voted to approve the application of the reduced asset coverage requirements in Section 61(a)(2) to the Company effective as of May 6, 2020. As a result of the stockholder approval, effective May 6, 2020, the asset coverage ratio under the 1940 Act applicable to the Company decreased to 150% from 200%. In other words, under the 1940 Act, the Company is now able to borrow $2 for investment purposes for every $1 of investor equity, as opposed to borrowing $1 for investment purposes for every $1 of investor equity. As a result, the Company will be able to incur additional indebtedness in the future and investors in the Company may face increased investment risk. In addition, the Company’s management fee payable to the Investment Adviser is based on the Company's average adjusted gross assets, which includes leverage and, as a result, if the Company incurs additional leverage, management fees paid to the Investment Adviser would increase.

With certain limited exceptions, as a BDC, we are only allowed to borrow amounts or otherwise issue senior securities such that our asset coverage, as defined in the 1940 Act, is at least 150% after such borrowing or other issuance. The amount of leverage

146

---

that we employ will depend on the Investment Adviser’s and our Board of Directors’ assessment of market conditions and other factors at the time of any proposed borrowing. There is no assurance that a leveraging strategy will be successful. Leverage involves risks and special considerations for stockholders, any of which could adversely affect our business, financial condition and results of operations, including the following:

•A likelihood of greater volatility in the net asset value and market price of our common stock;

•Diminished operating flexibility as a result of asset coverage or investment portfolio composition requirements required by lenders or investors that are more stringent than those imposed by the 1940 Act;

•The possibility that investments will have to be liquidated at less than full value or at inopportune times to comply with debt covenants or to pay interest or dividends on the leverage;

•Increased operating expenses due to the cost of leverage, including issuance and servicing costs;

•Convertible or exchangeable securities, such as the Convertible Notes outstanding or those issued in the future (including the Preferred Stock (as defined herein)) may have rights, preferences and privileges more favorable than those of our common stock including, the case of the Preferred Stock, the statutory right under the 1940 Act to vote, as a separate class, on the election of two of our directors and approval of certain fundamental transactions in certain circumstances;

•Subordination to lenders’ superior claims on our assets as a result of which lenders will be able to receive proceeds available in the case of our liquidation before any proceeds will be distributed to our stockholders;

•Difficulty meeting our payment and other obligations under the Unsecured Notes and our other outstanding debt or preferred equity;

•The occurrence of an event of default if we fail to comply with the financial and/or other restrictive covenants contained in our debt agreements, including the credit agreement and each indenture governing the Unsecured Notes, which event of default could result in all or some of our debt becoming immediately due and payable;

•Reduced availability of our cash flow to fund investments, acquisitions and other general corporate purposes, and limiting our ability to obtain additional financing for these purposes;

•The risk of increased sensitivity to interest rate increases on our indebtedness with variable interest rates, including borrowings under our amended senior credit facility; and

•Reduced flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, the industry in which we operate and the general economy.

For example, the amount we may borrow under our revolving credit facility is determined, in part, by the fair value of our investments. If the fair value of our investments declines, we may be forced to sell investments at a loss to maintain compliance with our borrowing limits. Other debt facilities we may enter into in the future may contain similar provisions. Any such forced sales would reduce our net asset value and also make it difficult for the net asset value to recover. The Investment Adviser and our Board of Directors in their best judgment nevertheless may determine to use leverage if they expect that the benefits to our stockholders of maintaining the leveraged position will outweigh the risks.

•In addition, our ability to meet our payment and other obligations of the Preferred Stock, the Unsecured Notes and our credit facility depends on our ability to generate significant cash flow in the future. This, to some extent, is subject to general economic, financial, competitive, legislative and regulatory factors as well as other factors that are beyond our control. We cannot provide assurance that our business will generate cash flow from operations, or that future borrowings will be available to us under our existing credit facility or otherwise, in an amount sufficient to enable us to meet our payment obligations under the Preferred Stock, the Unsecured Notes and our other debt and to fund other liquidity needs. If we are not able to generate sufficient cash flow to service our debt and preferred equity obligations, we may need to refinance or restructure our debt or preferred equity, including the Unsecured Notes, sell assets, reduce or delay capital investments, or seek to raise additional capital. If we are unable to implement one or more of these alternatives, we may not be able to meet our payment obligations under the Preferred Stock, the Unsecured Notes and our other debt.

147

---

Illustration.   The following tables illustrate the effect of leverage on returns from an investment in our common stock assuming various annual returns, net of interest expense. The calculations in the tables below are hypothetical and actual returns may be higher or lower than those appearing below.

The below calculation assumes (i) $8.4 billion in total assets, (ii) an average cost of funds of 5.52% (including preferred dividend payments), (iii) $2.5 billion in debt outstanding, (iv) $0.9 billion in liquidation preference of 5.50% Preferred Stock outstanding, (v) $0.15 billion in 5.35% Preferred Stock outstanding, (vi) $1.2 billion in liquidation preference of 6.50% Preferred Stock outstanding, and (vi) $3.7 billion of common stockholders’ equity.

Assumed Return on Our Portfolio (net of expenses)			(10)%			(5)%			0%			5%			10%
Corresponding Return to Common Stockholder(1)			(29.7)%			(18.4)%			(7.0)%			4.3%			15.7%

The below calculation assumes (i) $8.4 billion in total assets, (ii) an average cost of funds of 5.09% (including preferred dividend payments), (iii) $2.5 billion in debt outstanding, (iv) $0.15 billion in 5.35% Preferred Stock outstanding, and (v) $5.8 billion of common stockholders’ equity.

Assumed Return on Our Portfolio (net of expenses)			(10)%			(5)%			0%			5%			10%
Corresponding Return to Common Stockholder(2)			(16.8)%			(9.5)%			(2.3)%			5.0%			12.2%

(1) Assumes no conversion of 5.50% Preferred Stock and 6.50% Preferred Stock to common stock.

(2) Assumes the conversion of $0.9 billion in 5.50% Preferred Stock and $1.2 billion in 6.50% Preferred Stock at a conversion rate based on the 5-day VWAP of our common stock on March 31, 2023, which was $6.89, and a Holder Optional Conversion Fee (as defined in the prospectus supplement relating to the applicable offering) of 9.00% on Series A1 Preferred Stock, Series A3 Preferred Stock, and Series AA2 Preferred Stock of the maximum public offering price disclosed within the applicable prospectus supplements. The actual 5-day VWAP of our common stock on a Holder Conversion Exercise Date may be more or less than $6.89, which may result in more or less shares of common stock issued.

The assumed portfolio return is required by regulation of the SEC and is not a prediction of, and does not represent, our projected or actual performance. Actual returns may be greater or less than those appearing in the table.

Pursuant to SEC regulations, this table is calculated as of March 31, 2023. As a result, it has not been updated to take into account any changes in assets or leverage since March 31, 2023.

General Risk Factors

We may experience fluctuations in our quarterly results.

We could experience fluctuations in our quarterly operating results due to a number of factors, including the level of structuring fees received, the interest or dividend rates payable on the debt or equity securities we hold, the default rate on debt securities, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets, and general economic conditions. As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods.

The U.S. and global capital markets are subject to systemic risk that could adversely affect our business, financial condition and results of operations.

Issuers, national and regional banks, financial institutions and other participants in the U.S. and global capital markets are closely interrelated as a result of credit, trading, clearing, technology and other relationships. A significant adverse development (such as a bank run, insolvency, bankruptcy or default) with one or more national or regional banks, financial institutions or other participants in the financial or capital markets may spread to others and lead to significant concentrated or market-wide problems (such as defaults, liquidity problems, impairment charges, additional bank runs and/or losses) for other participants in these markets. Future developments, including actions taken by the U.S. Department of Treasury, FDIC, Federal Reserve Board, and systemic risk in the U.S. and global banking sectors and broader economies in general, are difficult to assess and quantify, and the form and magnitude of such developments or other actions of the U.S. Department of Treasury, FDIC and Federal Reserve Board may remain unknown for significant periods of time and could have an adverse effect on the Company.

For example, in response to the rapidly declining financial condition of regional banks Silicon Valley Bank (“SVB”) and Signature Bank (“Signature”), the California Department of Financial Protection and Innovation (the “CDFPI”) and the New York State Department of Financial Services (the “NYSDFS”) closed SVB and Signature on March 10, 2023 and March 12, 2023, respectively, and the Federal Deposit Insurance Corporation (“FDIC”) was appointed as receiver for SVB and Signature. Similarly, on May 1, 2023 the FDIC announced that the CDFPI had closed First Republic Bank, the FDIC had seized its assets and JP Morgan Chase had agreed to purchase First Republic’s assets at auction. Although the U.S. Department of the Treasury, the Federal Reserve and the FDIC have taken measures to stabilize the financial system, uncertainty and liquidity concerns in

148

---

the broader financial services industry remain. Additionally, should there be additional systemic pressure on the financial system and capital markets, we cannot assure you of the response of any government or regulator, and any response may not be as favorable to industry participants as the measures currently being pursued. In addition, highly publicized issues related to the U.S. and global capital markets in the past have led to significant and widespread investor concerns over the integrity of the capital markets. The current situation related to SVB and Signature could in the future lead to further rules and regulations for public companies, banks, financial institutions and other participants in the U.S. and global capital markets, and complying with the requirements of any such rules or regulations may be burdensome. Even if not adopted, evaluating and responding to any such proposed rules or regulations could results in increased costs and require significant attention from our Investment Adviser.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

149

---

Item 5. Other Information

Our common stock is traded on the NASDAQ Global Select Market under the symbol “PSEC.”

The following table sets forth, for the quarterly reporting periods indicated, the net asset value per common share of our common stock and the high and low sales prices for our common stock, as reported on the NASDAQ Global Select Market. Our common stock historically has traded at prices both above and below its net asset value. There can be no assurance, however, that such premium or discount, as applicable, to net asset value will be maintained. See also “Item 1A. Risk Factors” in Part I of our Annual Report on Form 10-K for the year ended June 30, 2022 for additional information about the risks and uncertainties we face.

																		Stock Price																								Premium (Discount) of High to NAV						Premium (Discount) of Low to NAV
						NAV(1)												High(2)												Low(2)
Year Ended June 30, 2021
First quarter						$			8.40									$			5.17									$			4.69									(38.5)		%				(44.2)		%
Second quarter									8.96												5.60												4.95									(37.5)		%				(44.8)		%
Third quarter									9.38												7.98												5.51									(14.9)		%				(41.3)		%
Fourth quarter									9.81												9.22												7.62									(6.0)		%				(22.3)		%
Year Ended June 30, 2022
First quarter						$			10.12									$			8.46									$			7.69									(16.4)		%				(24.0)		%
Second quarter									10.60												9.00												7.83									(15.1)		%				(26.1)		%
Third quarter									10.81												8.89												7.86									(17.8)		%				(27.3)		%
Fourth quarter									10.48												8.48												6.68									(19.1)		%				(36.3)		%
Twelve Months Ending June 30, 2023
First quarter						$			10.01									$			8.18									$			6.11									(18.3)		%				(39.0)		%
Second quarter									9.94												7.82												6.39									(21.3)		%				(35.7)		%
Third quarter									9.48												7.66												6.67									(19.2)		%				(29.6)		%

(1) Net asset value per common share is determined as of the last day in the relevant quarter and therefore may not reflect the net asset value per common share on the date of the high or low sales price. The NAVs shown are based on outstanding shares of our common stock at the end of each period.

(2) The High/Low Stock Price is calculated as of the closing price on a given day in the applicable quarter.

As of May 8, 2023, we had approximately 172 stockholders of record.

The below table sets forth each class of our outstanding securities as of May 8, 2023:

Title of Class						Amount Authorized						Amount Held by Registrant or for its Account						Amount Outstanding
Common Stock						1,552,100,000						—						402,169,399
Preferred Stock						447,900,000						—						59,947,840
2025 Notes						$	201,250					—						$	156,168
6.375% 2024 Notes						$	100,000					—						$	81,240
2026 Notes						$	400,000					—						$	400,000
3.364% 2026 Notes						$	300,000					—						$	300,000
3.437% 2028 Notes						$	300,000					—						$	300,000
Prospect Capital InterNotes®						$	1,000,000					—						$	358,099

Recent Sales of Common Stock Below Net Asset Value

At our 2009, 2010, 2011, 2012 and 2013 annual meeting of stockholders, and at special meetings of stockholders held on June 12, 2020, June 11, 2021, and June 10, 2022 our stockholders approved our ability to sell shares of our common stock at a price or prices below our NAV per common share at the time of sale in one or more offerings. The current approval to sell shares of our common stock below our NAV per common share is valid until June 10, 2023 and subject to certain conditions as set forth in the proxy statement relating to the special meeting (including that the number of shares sold on any given date does not

150

---

exceed 25% of our outstanding common stock immediately prior to such sale). Accordingly, we may make offerings of our common stock without any limitation on the total amount of dilution to stockholders. Our prospectus supplement and accompanying prospectus relating to this offering contains additional information about these offerings. Pursuant to the authority granted by our stockholders and the approval of our Board of Directors, we have made the following offerings:

Date of Offering			Price Per Share to Investors			Shares Issued			Estimated Net Asset Value per Common Share(1)			Percentage Dilution
June 15, 2020 to June 22, 2020(2)			$5.29 - $5.40			1,158,222			$7.93 - 7.94			0.10%

(1) The data for sales of common shares below NAV pursuant to our equity distribution agreements are estimates based on our last reported NAV prior to the respective period adjusted for capital events occurring during the period since the last calculated NAV. All amounts presented are approximations based on the best available data at the time of issuance.

(2) At the market offering. Dates of offering represent the sales dates of the stock. The settlement dates are two business days later than the sale dates.

On March 13, 2023, we filed a notice of meeting and definitive proxy statement in connection with a special meeting of our stockholders that is scheduled to be held on June 9, 2023 for the purpose of asking our stockholders to vote on a proposal to authorize us, with approval of our Board of Directors, to sell shares of our common stock (during the next 12 months) at a price or prices below our then current net asset value per share in one or more offerings subject to certain conditions as set forth in the proxy statement relating to the special meeting (including that the number of shares sold on any given date does not exceed 25% of our outstanding common stock immediately prior to such sale).

151

---

FEES AND EXPENSES

The following tables are intended to assist you in understanding the costs and expenses that an investor in shares of common stock will bear directly or indirectly. We caution you that some of the percentages indicated in the table below are estimates and may vary. These tables are based on our assets and common stock outstanding as of March 31, 2023, except that we assume that we have issued $0.9 billion in 5.50% Preferred Stock paying dividends of 5.50% per annum, $1.2 billion in 6.50% Preferred Stock paying dividends of 6.50% per annum, in addition to our $0.15 billion of 5.35% Preferred Stock paying dividends of 5.35% per annum, and that we have borrowed $1.8 billion under our credit facility, which is the maximum amount available under the credit facility with the current levels of other debt, in addition to our other indebtedness of $1.6 billion. Except where the context suggests otherwise, any reference to fees or expenses paid by “you” or “us” or that “we” will pay fees or expenses, the Company will pay such fees and expenses out of our net assets and, consequently, you will indirectly bear such fees or expenses as an investor in the Company’s common stock. However, you will not be required to deliver any money or otherwise bear personal liability or responsibility for such fees or expenses.

Stockholder transaction expenses:			A1 and A3 Shares						M1, M2, and M3 Shares						AA1 Shares, MM1 Shares, AA2 Shares, and MM2 Shares
Sales Load (as a percentage of offering price)			10.00%			(1)			3.00%			(2)			5.00%			(3)
Offering expenses borne by the Company (as a percentage of offering price)			(4)						(4)						(5)
Preferred Stock Dividend reinvestment plan expenses (6)			None						None						None
Total stockholder transaction expenses (as a percentage of offering price):			11.5%						4.5%						6.0%
Annual expenses (as a percentage of net assets attributable to common stock):
Management fees (7)			4.97%
Incentive fees payable under Investment Advisory Agreement (20% of realized capital gains and 20% of pre-incentive fee net investment income) (8)			2.31%
Total advisory fees			7.28%
Total interest expenses (9)			5.29%
Other expenses (10)			1.17%
Total annual expenses (8)(10)(11)			13.74%
Dividends on Preferred Stock(12)			3.57%
Total annual expenses after dividends on Preferred Stock (13)			17.31%

Example

The following table demonstrates the projected dollar amount of cumulative expenses we would pay out of net assets and that you would indirectly bear over various periods with respect to a hypothetical investment in our common stock. In calculating the following expense amounts, we have assumed we have issued $0.9 billion in 5.50% Preferred Stock paying dividends of 5.50% per annum, $1.2 billion in 6.50% Preferred Stock paying dividends of 6.50% per annum, $0.15 billion in 5.35% Preferred Stock paying dividends of 5.35% per annum, we have borrowed $1.8 billion available under our line of credit, in addition to our other indebtedness of $1.6 billion, and that our annual operating expenses would remain at the levels set forth in the table above and that we would pay the costs shown in the table above.

						1 Year						3 Years						5 Years						10 Years
Ongoing Preferred Stock Offerings(1) - You would pay the following expenses on a $1,000 investment in shares of our common stock, assuming a 5% annual return on our portfolio*						$	200					$	442					$	637					$	978
Ongoing Preferred Stock Offerings(1) - You would pay the following expenses on a $1,000 investment in shares of our common stock, assuming a 5% annual return on our portfolio**						$	210					$	463					$	663					$	1,001

* Assumes that we will not realize any capital gains computed net of all realized capital losses and unrealized capital depreciation on our portfolio.

152

---

** Assumes no unrealized capital depreciation or realized capital losses and 5% annual return on our portfolio resulting entirely from net realized capital gains (and therefore subject to the capital gains incentive fee).

While the example assumes, as required by the SEC, a 5% annual return on our portfolio, our performance will vary and may result in a return greater or less than 5%. The income incentive fee under our Investment Advisory Agreement with Prospect Capital Management is unlikely to be material assuming a 5% annual return on our portfolio and is not included in the example. If we achieve sufficient returns on our portfolio, including through the realization of capital gains, to trigger an incentive fee of a material amount, our distributions to our common stockholders and our expenses would likely be higher. In addition, while the example assumes reinvestment of all dividends and other distributions at NAV, common stockholders that participate in our common stock dividend reinvestment plan will receive a number of shares of our common stock determined by dividing the total dollar amount of the distribution payable to a participant by 95% of the market price per share of our common stock at the close of trading on the valuation date for the distribution.

This example and the expenses in the table above should not be considered a representation of our future expenses. Actual expenses (including the cost of debt, if any, and other expenses) may be greater or less than those shown.

(1)    Includes up to a 7.0% selling commission on the $25.00 per share (the “Stated Value”) paid by the Company and a dealer manager fee equal to 3.0% of the Stated Value paid by the Company. Reductions in selling commissions will be reflected in reduced public offering prices as described in the “Plan of Distribution” section of the applicable prospectus supplement and the net proceeds to us will not be impacted by such reductions; therefore, we will bear a reduction in net proceeds to us up to 7.0% of the Stated Value on all A Shares although the selling commission compensation paid by us to our dealer manager may represent less than 7.0% of the Stated Value. We may, through the Holder Optional Conversion Fee, recoup a portion of the Sales Load if stockholders exercise a Holder Optional Conversion (as defined in the prospectus supplement relating to the applicable offering) of their Preferred Stock prior to the 5-year anniversary of the original issue date. The Holder Optional Conversion Fee is 9.00% of the maximum public offering price disclosed herein prior to the first anniversary of the issuance of such Preferred Stock, 8.00% of the maximum public offering price disclosed herein on or after the first anniversary but prior to the second anniversary, 7.00% of the maximum public offering price disclosed herein on or after the second anniversary but prior to the third anniversary, 6.00% of the maximum public offering price disclosed herein on or after the third anniversary but prior to the fourth anniversary, 5.00% of the maximum public offering price disclosed herein on or after the fourth anniversary but prior to the fifth anniversary and 0.00% on or after the fifth anniversary.

(2)    Includes a dealer manager fee equal to 3.0% of the Stated Value paid by the Company.

(3)     Includes up to a 4.875% selling commission on the $25.00 per share (the “Stated Value”) paid by the Company and a dealer manager fee equal to 0.125% of the Stated Value paid by the Company. For the AA1 Shares and AA2 Shares we may, through the Holder Optional Conversion Fee, recoup a portion of the Sales Load if stockholders exercise a Holder Optional Conversion (as defined in the prospectus supplement relating to the applicable offering) of their Preferred Stock prior to the 5-year anniversary of the original issue date. The Holder Optional Conversion Fee is 9.00% of the maximum public offering price disclosed herein prior to the first anniversary of the issuance of such Preferred Stock, 8.00% of the maximum public offering price disclosed herein on or after the first anniversary but prior to the second anniversary, 7.00% of the maximum public offering price disclosed herein on or after the second anniversary but prior to the third anniversary, 6.00% of the maximum public offering price disclosed herein on or after the third anniversary but prior to the fourth anniversary, 5.00% of the maximum public offering price disclosed herein on or after the fourth anniversary but prior to the fifth anniversary and 0.00% on or after the fifth anniversary.

(4)    The selling commission and dealer manager fee, when combined with organization and offering expenses (including due diligence expenses and fees for establishing servicing arrangements for new stockholder accounts), are not expected to exceed 11.5% of the gross offering proceeds. Our Board of Directors may, in its discretion, authorize the Company to incur underwriting and other offering expenses in excess of 11.5% of the gross offering proceeds. In no event will the combined selling commission, dealer manager fee and offering expenses exceed FINRA’s limit on underwriting and other offering expenses.

(5)    The selling commission and dealer manager fee, when combined with organization and offering expenses (including due diligence expenses), are not expected to exceed 6.0% of the gross offering proceeds. Our Board of Directors may, in its discretion, authorize the Company to incur underwriting and other offering expenses in excess of 6.0% of the gross offering proceeds. In no event will the combined selling commission, dealer manager fee and offering expenses exceed FINRA’s limit on underwriting and other offering expenses.

153

---

(6)    The expenses of the Preferred DRIP are included in “other expenses.” See “Capitalization” in the applicable prospectus supplement.

(7)    Our base management fee is 2% of our gross assets (which include any amount borrowed, i.e., total assets without deduction for any liabilities, including any borrowed amounts for non-investment purposes, for which purpose we have not and have no intention of borrowing). Although no plans are in place to borrow the full amount under our line of credit, assuming that we borrowed $1.8 billion, the 2% management fee of gross assets equals approximately 4.97% of net assets.

(8)    Based on our net investment income and realized capital gains, less realized and unrealized capital losses, earned on our portfolio for the six months ended March 31, 2023, all of which consisted of an income incentive fee. This historical amount has been adjusted to reflect the issuance of 82,187,000 shares of combined 5.50% Preferred Stock and 6.50% Preferred Stock. The capital gain incentive fee is paid without regard to pre-incentive fee income. For a more detailed discussion of the calculation of the two-part incentive fee, see “Management Services-Investment Advisory Agreement” in the applicable prospectus.

(9)    As of March 31, 2023, we had $1.6 billion outstanding of Unsecured Notes (as defined below) in various maturities, ranging from January 15, 2024 to March 15, 2052, and interest rates, ranging from 1.50% to 6.625%, some of which are convertible into shares of the Company’s common stock at various conversion rates.

(10)    “Other expenses” are based on estimated amounts for the current fiscal year. The amount shown above represents annualized expenses during our six months ended March 31, 2023 representing all of our estimated recurring operating expenses (except fees and expenses reported in other items of this table) that are deducted from our operating income and reflected as expenses in our Statement of Operations. The estimate of our overhead expenses, including payments under an administration agreement with Prospect Administration, or the Administration Agreement is based on our projected allocable portion of overhead and other expenses incurred by Prospect Administration in performing its obligations under the Administration Agreement. See “Business-Management Services-Administration Agreement” in the applicable prospectus.

(11)    If all 82,187,000 shares of combined 5.50% Preferred Stock and 6.50% Preferred Stock were converted into common stock and assuming all the Series A1, Series A3, and Series AA2 Preferred Stock pay a Holder Optional Conversion Fee of 9.00% of the maximum public offering price disclosed within the applicable prospectus supplement and are converted at a conversion rate based on the 5-day VWAP of our common stock on March 31, 2023, which was $6.89, then management fees would be 3.21%, incentive fees payable under our Investment Advisory Agreement would be 1.49%, total advisory fees would be 4.70%, total interest expenses would be 3.41%, other expenses would be 0.75%, and total annual expenses would be 8.86% of net assets attributable to our common stock. The actual 5-day VWAP of our common stock on a conversion date may be more or less than $6.89, which may result in fees that are higher or lower than those described herein. These figures are based on the same assumptions described in the other notes to this fee table.

(12)    Based on the 5.50% per annum dividend rate applicable to the A1 Shares, M1 Shares, M2 Shares, AA1 Shares, MM1 Shares, and A2 Shares. Also based on the 5.35% per annum dividend rate applicable to the A Shares. Also based on the 6.50% per annum dividend rate applicable to the A3 Shares, M3 Shares, AA2 Shares, and MM2 Shares. Other series of preferred stock, including other series of preferred stock being sold in different offerings, may bear different annual dividend rates. No dividend will be paid on shares of Preferred Stock after they have been converted to shares of common stock.

(13)     The indirect expenses associated with the Company’s investments in collateralized loan obligations are not included in the fee table presentation, but if such expenses were included in the fee table presentation then the Company’s total annual expenses would have been 14.34%, or 17.91% after dividends on Preferred Stock.

154

---

Financial Highlights

The financial highlights for each of the five years ended in the period ended June 30, 2022 are presented within Note 16. Financial Highlights within our consolidated financial statements. The following is a schedule of financial highlights for each of the fiscal years ended June 30, 2017, June 30, 2016, June 30, 2015, June 30, 2014, and June 30, 2013:

			Year Ended June 30,
			2017						2016						2015						2014						2013
Per Share Data
Net asset value at beginning of year			$	9.62					$	10.31					$	10.56					$	10.72					$	10.83
Net investment income(1)			0.85						1.04						1.03						1.19						1.57
Net realized and change in unrealized (losses)(1)			(0.15)						(0.75)						(0.05)						(0.13)						(0.50)
Net increase from operations			0.70						0.29						0.98						1.06						1.07
Distributions of net investment income			(1.00)						(1.00)						(1.19)						(1.32)						(1.28)
Common stock transactions(2)			—			(4)			0.02						(0.04)						0.10						0.10
Net asset value at end of year			$	9.32					$	9.62					$	10.31					$	10.56					$	10.72
Per share market value at end of year			$	8.12					$	7.82					$	7.37					$	10.63					$	10.80
Total return based on market value(3)			16.80		%				21.84		%				(20.84		%)				10.88		%				6.24		%
Total return based on net asset value(3)			8.98		%				7.15		%				11.47		%				10.97		%				10.91		%
Shares of common stock outstanding at end of year			360,076,933						357,107,231						359,090,759						342,626,637						247,836,965
Weighted average shares of common stock outstanding			358,841,714						356,134,297						353,648,522						300,283,941						207,069,971
Ratios/Supplemental Data
Net assets at end of year			$	3,354,952					$	3,435,917					$	3,703,049					$	3,618,182					$	2,656,494
Portfolio turnover rate			23.65		%				15.98		%				21.89		%				15.21		%				29.24		%
Ratio of operating expenses to average net assets			11.57		%				11.95		%				11.66		%				11.11		%				11.50		%
Ratio of net investment income to average net assets			8.96		%				10.54		%				9.87		%				11.18		%				14.86		%

(1)Per share data amount is based on the weighted average number of common shares outstanding for the year/period presented (except for dividends to shareholders which is based on actual rate per share).

(2)Common stock transactions include the effect of our issuance of common stock in public offerings (net of underwriting and offering costs), shares issued in connection with our dividend reinvestment plan, shares issued to acquire investments and shares repurchased below net asset value pursuant to our Repurchase Program.

(3)Total return based on market value is based on the change in market price per share between the opening and ending market prices per share in each period and assumes that dividends are reinvested in accordance with our dividend reinvestment plan. Total return based on net asset value is based upon the change in net asset value per share between the opening and ending net asset values per share in each period and assumes that dividends are reinvested in accordance with our dividend reinvestment plan.

(4)Amount is less than $0.01.

Item 6. Exhibits

The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC (according to the number assigned to them in Item 601 of Regulation S-K):

Exhibit No.
3.1			Articles of Amendment and Restatement(1)
3.2			Amended and Restated Bylaws(2)
3.3			Articles of Amendment(3)
3.4			Articles Supplementary to the Articles of Amendment and Restatement of Prospect Capital Corporation (4)
3.5			Articles Supplementary to the Articles of Amendment and Restatement of Prospect Capital Corporation (5)

155

---

Exhibit No.
3.6			Certificate of Correction to the Articles Supplementary of Prospect Capital Corporation(6)
3.7			Articles Supplementary to the Articles of Amendment and Restatement of Prospect Capital Corporation (7)
3.8			Articles Supplementary to the Articles of Amendment and Restatement of Prospect Capital Corporation (8)
3.9			Certificate of Correction to the Articles Supplementary of Prospect Capital Corporation(9)
3.10			Articles Supplementary to the Articles of Amendment and Restatement of Prospect Capital Corporation(10)
3.11			Articles Supplementary to the Articles of Amendment and Restatement of Prospect Capital Corporation(12)
3.12			Articles Supplementary to the Articles of Amendment and Restatement of Prospect Capital Corporation(15)
3.13			Articles Supplementary to the Articles of Amendment and Restatement of Prospect Capital Corporation(16)
3.14			Articles Supplementary to the Articles of Amendment and Restatement of Prospect Capital Corporation(25)
4.1			One Thousand One Hundred Ninety-Sixth Supplemental Indenture dated as of January 6, 2023, to the U.S. Bank Indenture, and Form of 5.500% Prospect Capital InterNote® due 2026(17)
4.2			One Thousand One Hundred Ninety-Seventh Supplemental Indenture dated as of January 6, 2023, to the U.S. Bank Indenture, and Form of 5.750% Prospect Capital InterNote® due 2029(17)
4.3			One Thousand One Hundred Ninety-Eighth Supplemental Indenture dated as of January 6, 2023, to the U.S. Bank Indenture, and Form of 5.950% Prospect Capital InterNote® due 2033(17)
4.4			One Thousand One Hundred Ninety-Ninth Supplemental Indenture dated as of January 12, 2023, to the U.S. Bank Indenture, and Form of 5.500% Prospect Capital InterNote® due 2026(18)
4.5			One Thousand Two Hundredth Supplemental Indenture dated as of January 12, 2023, to the U.S. Bank Indenture, and Form of 5.750% Prospect Capital InterNote® due 2029(18)
4.6			One Thousand Two Hundred First Supplemental Indenture dated as of January 12, 2023, to the U.S. Bank Indenture, and Form of 5.950% Prospect Capital InterNote® due 2033(18)
4.7			One Thousand Two Hundred Second Supplemental Indenture dated as of January 20, 2023, to the U.S. Bank Indenture, and Form of 5.500% Prospect Capital InterNote® due 2026(19)
4.8			One Thousand Two Hundred Third Supplemental Indenture dated as of January 20, 2023, to the U.S. Bank Indenture, and Form of 5.750% Prospect Capital InterNote® due 2029(19)
4.9			One Thousand Two Hundred Fourth Supplemental Indenture dated as of January 20, 2023, to the U.S. Bank Indenture, and Form of 5.950% Prospect Capital InterNote® due 2033(19)
4.10			One Thousand Two Hundred Fifth Supplemental Indenture dated as of January 26, 2023, to the U.S. Bank Indenture, and Form of 5.500% Prospect Capital InterNote® due 2026(20)
4.11			One Thousand Two Hundred Sixth Supplemental Indenture dated as of January 26, 2023, to the U.S. Bank Indenture, and Form of 5.750% Prospect Capital InterNote® due 2029(20)
4.12			One Thousand Two Hundred Seventh Supplemental Indenture dated as of January 26, 2023, to the U.S. Bank Indenture, and Form of 5.950% Prospect Capital InterNote® due 2033(20)
4.13			One Thousand Two Hundred Eighth Supplemental Indenture dated as of February 2, 2023, to the U.S. Bank Indenture, and Form of 5.500% Prospect Capital InterNote® due 2026(21)
4.14			One Thousand Two Hundred Ninth Supplemental Indenture dated as of February 2, 2023, to the U.S. Bank Indenture, and Form of 5.750% Prospect Capital InterNote® due 2029(21)
4.15			One Thousand Two Hundred Tenth Supplemental Indenture dated as of February 2, 2023, to the U.S. Bank Indenture, and Form of 5.950% Prospect Capital InterNote® due 2033(21)
4.16			One Thousand Two Hundred Eleventh Supplemental Indenture dated as of February 9, 2023, to the U.S. Bank Indenture, and Form of 5.500% Prospect Capital InterNote® due 2026(22)
4.17			One Thousand Two Hundred Twelfth Supplemental Indenture dated as of February 9, 2023, to the U.S. Bank Indenture, and Form of 5.750% Prospect Capital InterNote® due 2029(22)
4.18			One Thousand Two Hundred Thirteenth Supplemental Indenture dated as of February 9, 2023, to the U.S. Bank Indenture, and Form of 5.950% Prospect Capital InterNote® due 2033(22)
4.19			One Thousand Two Hundred Fourteenth Supplemental Indenture dated as of February 24, 2023, to the U.S. Bank Indenture, and Form of 5.500% Prospect Capital InterNote® due 2026(26)
4.2			One Thousand Two Hundred Fifteenth Supplemental Indenture dated as of February 24, 2023, to the U.S. Bank Indenture, and Form of 5.750% Prospect Capital InterNote® due 2029(26)
4.21			One Thousand Two Hundred Sixteenth Supplemental Indenture dated as of February 24, 2023, to the U.S. Bank Indenture, and Form of 5.950% Prospect Capital InterNote® due 2033(26)
4.22			One Thousand Two Hundred Seventeenth Supplemental Indenture dated as of March 2, 2023, to the U.S. Bank Indenture, and Form of 5.500% Prospect Capital InterNote® due 2026(27)
4.23			One Thousand Two Hundred Eighteenth Supplemental Indenture dated as of March 2, 2023, to the U.S. Bank Indenture, and Form of 5.750% Prospect Capital InterNote® due 2029(27)
4.24			One Thousand Two Hundred Nineteenth Supplemental Indenture dated as of March 2, 2023, to the U.S. Bank Indenture, and Form of 5.950% Prospect Capital InterNote® due 2033(27)

156

---

Exhibit No.
4.25			One Thousand Two Hundred Twentieth Supplemental Indenture dated as of March 9, 2023, to the U.S. Bank Indenture, and Form of 5.500% Prospect Capital InterNote® due 2026(28)
4.26			One Thousand Two Hundred Twenty-First Supplemental Indenture dated as of March 9, 2023, to the U.S. Bank Indenture, and Form of 5.750% Prospect Capital InterNote® due 2029(28)
4.27			One Thousand Two Hundred Twenty-Second Supplemental Indenture dated as of March 9, 2023, to the U.S. Bank Indenture, and Form of 5.950% Prospect Capital InterNote® due 2033(28)
4.28			One Thousand Two Hundred Twenty-Third Supplemental Indenture dated as of March 16, 2023, to the U.S. Bank Indenture, and Form of 5.500% Prospect Capital InterNote® due 2026(29)
4.29			One Thousand Two Hundred Twenty-Fourth Supplemental Indenture dated as of March 16, 2023, to the U.S. Bank Indenture, and Form of 5.750% Prospect Capital InterNote® due 2029(29)
4.30			One Thousand Two Hundred Twenty-Fifth Supplemental Indenture dated as of March 16, 2023, to the U.S. Bank Indenture, and Form of 5.950% Prospect Capital InterNote® due 2033(29)
4.31			One Thousand Two Hundred Twenty-Sixth Supplemental Indenture dated as of March 23, 2023, to the U.S. Bank Indenture, and Form of 5.500% Prospect Capital InterNote® due 2026(30)
4.32			One Thousand Two Hundred Twenty-Seventh Supplemental Indenture dated as of March 23, 2023, to the U.S. Bank Indenture, and Form of 5.750% Prospect Capital InterNote® due 2029(30)
4.33			One Thousand Two Hundred Twenty-Eighth Supplemental Indenture dated as of March 23, 2023, to the U.S. Bank Indenture, and Form of 5.950% Prospect Capital InterNote® due 2033(30)
4.34			One Thousand Two Hundred Twenty-Ninth Supplemental Indenture dated as of March 30, 2023, to the U.S. Bank Indenture, and Form of 5.500% Prospect Capital InterNote® due 2026(31)
4.35			One Thousand Two Hundred Thirtieth Supplemental Indenture dated as of March 30, 2023, to the U.S. Bank Indenture, and Form of 5.750% Prospect Capital InterNote® due 2029(31)
4.36			One Thousand Two Hundred Thirty-First Supplemental Indenture dated as of March 30, 2023, to the U.S. Bank Indenture, and Form of 5.950% Prospect Capital InterNote® due 2033(31)
10.1			Amendment No. 2 to Amended and Restated Dealer Manager Agreement, dated October 7, 2022, between the Company, Preferred Capital Securities, LLC(13)
10.2			Amendment No. 1 to Amended and Restated Dealer Manager Agreement, dated October 7, 2022, by and among the Company, Prospect Capital Management L.P., Prospect Administration LLC, InspereX LLC and the Agents named therein and added from time to time(14)
10.3			Amendment No. 3 to Amended and Restated Dealer Manager Agreement, dated February 10, 2023, between the Company, Preferred Capital Securities, LLC(24)
10.4			Amended and Restated Preferred Stock Dividend Reinvestment Plan(26)
11			Computation of Per Share Earnings (included in the notes to the financial statements contained in this report)
12			Computation of Ratios (included in the notes to the financial statements contained in this report)
31.1			Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended*
31.2			Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended*
32.1			Certification of Chief Executive Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)*
32.2			Certification of Chief Financial Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)*
101.INS			Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH			Inline XBRL Taxonomy Extension Schema Document.
101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104			Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

________________________

*			Filed herewith.
(1)			Incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K, filed on May 9, 2014.
(2)			Incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K, filed on December 11, 2015.
(3)			Incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K, filed on August 4, 2020.
(4)			Incorporated by reference to Exhibit 3.2 of the Registrant’s Form 8-K, filed on August 4, 2020.
(5)			Incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K, filed on November 4, 2020.
(6)			Incorporated by reference to Exhibit 3.2 of the Registrant’s Form 8-K, filed on November 4, 2020.
(7)			Incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed on May 26, 2021.

157

---

(8)			Incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed on July 19, 2021.
(9)			Incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed on July 19, 2021.
(10)			Incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K, filed on February 23, 2022.
(11)			Incorporated by reference to Exhibit 10.1 of the Registrant’s Form 8-K, filed on February 23, 2022.
(12)			Incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed on June 9, 2022.
(13)			Incorporated by reference to Exhibit 1.1 of the Registrant’s Form 8-K, filed on October 12, 2022.
(14)			Incorporated by reference to Exhibit 1.1 of the Registrant’s Form 8-K, filed on October 12, 2022.
(15)			Incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K, filed on October 12, 2022.
(16)			Incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K, filed on October 12, 2022.
(17)			Incorporated by reference from the Registrant's Post-Effective Amendment No. 130 to the Registration Statement on Form N-2, filed on December 30, 2022.
(18)			Incorporated by reference from the Registrant's Post-Effective Amendment No. 131 to the Registration Statement on Form N-2, filed on January 6, 2023.
(19)			Incorporated by reference from the Registrant's Post-Effective Amendment No. 132 to the Registration Statement on Form N-2, filed on January 12, 2023.
(20)			Incorporated by reference from the Registrant's Post-Effective Amendment No. 133 to the Registration Statement on Form N-2, filed on January 20, 2023.
(21)			Incorporated by reference from the Registrant's Post-Effective Amendment No. 134 to the Registration Statement on Form N-2, filed on January 26, 2023.
(22)			Incorporated by reference from the Registrant's Post-Effective Amendment No. 135 to the Registration Statement on Form N-2, filed on February 2, 2023.
(23)			Incorporated by reference from the Registrant's Post-Effective Amendment No. 136 to the Registration Statement on Form N-2, filed on February 9, 2023.
(24)			Incorporated by reference to Exhibit 1.1 of the Registrant’s Form 8-K, filed on February 13, 2023.
(25)			Incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K, filed on February 13, 2023.
(26)			Incorporated by reference to Exhibit 99.1 of the Registrant’s Form 8-K, filed on February 13, 2023.
(27)			Incorporated by reference from the Registrant's Post-Effective Amendment No. 2 to the Registration Statement on Form N-2, filed on February 24, 2023.
(28)			Incorporated by reference from the Registrant's Post-Effective Amendment No. 3 to the Registration Statement on Form N-2, filed on March 2, 2023.
(29)			Incorporated by reference from the Registrant's Post-Effective Amendment No. 4 to the Registration Statement on Form N-2, filed on March 9, 2023.
(30)			Incorporated by reference from the Registrant's Post-Effective Amendment No. 5 to the Registration Statement on Form N-2, filed on March 16, 2023.
(31)			Incorporated by reference from the Registrant's Post-Effective Amendment No. 6 to the Registration Statement on Form N-2, filed on March 23, 2023.
(32)			Incorporated by reference from the Registrant's Post-Effective Amendment No. 7 to the Registration Statement on Form N-2, filed on March 30, 2023.

    

---

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

									PROSPECT CAPITAL CORPORATION
May 9, 2023						By:			/s/ JOHN F. BARRY III
Date									John F. Barry III
									Chairman of the Board and Chief Executive Officer
May 9, 2023						By:			/s/ KRISTIN L. VAN DASK
Date									Kristin L. Van Dask
									Chief Financial Officer