PSEC 10-K & 10-Q changes, risk factors and insider trading

Our previously outstanding 6.375% convertible notes due 2025, which matured during the fiscal year ended June 30, 2025, are referred to as the “2025 Notes” or the “Convertible Notes”. Our previously outstanding 3.706% unsecured notes due 2026, which were redeemed during the fiscal year ended June 30, 2025, are referred to as the “2026 Notes”. Our $300.0$264.5 million of 3.364% unsecured notes due 2026 are referred to as the “3.364% 2026 Notes”. Our $300.0$654.7 million of 3.437% unsecured notes due 2028 are referred to as the “3.437% 2028 Notes”. Our $182.2 million of 5.50% unsecured notes due 2030 are referred to as the “5.50% 2030 Notes”, and collectively with the 2026 Notes, and the 3.364% 2026 NotesNotes, areand the 3.437% 2028 Notes, as the “Public Notes” for the purposes of these risk factors.. Any corporate notes issued pursuant to our medium term notes program with InspereX LLC are referred to as “Prospect Capital InterNotes®”. The Convertible Notes, Public Notes,Notes and Prospect Capital InterNotes® are collectively referred to as the “Unsecured Notes” for purposes of these risk factors..

•Trade negotiations and relatedother government actions may create regulatory uncertainty for the portfolio companies and our investment strategy and adversely affect the profitability of the portfolio companies.

Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. Although generally decelerating, inflation remains above the U.S. Federal Reserve’s target levels. Despite multiple federal fund rate decreases overAlthough the courseFederal ofReserve 2024,held interest rates havesteady remainedthrough elevated,much of 2025 before reducing rates in September, October and December 2025, rates remain elevated relative to the interest rate environment prior to the inflationary spike in 2022-2023, and it remains difficult to predict the full impact of recent and any future changes with therespect U.S.to Federalinterest Reserverates indicatingor in early 2025 an expectation of slower rate decreases moving forward.inflation. If inflation increases, the real value of our common stock and distributions therefore may decline. In addition, during any periods of rising inflation, the interest rates of debt securities we issue would likely increase, which would tend to further reduce returns to common stockholder; likewise, as interest rates increase, the value of our debt investments would decrease, though this effect can be less pronounced for floating rate instruments. This could also lead to decreased asset coverage for our outstanding debt and preferred stock. Inflation rates may change frequently and significantly as a result of various factors, including unexpected shifts in the domestic or global economy and changes in economic policies, and our investments may not keep pace with inflation, which may result in losses to our stockholders. This risk is greater for fixed-income instruments with longer maturities.

From time to time, capital markets may experience periods of disruption and instability, which may be evidenced by a lack of liquidity in debt capital markets, write-offs in the financial services sector, the re-pricing of credit risk, the failure of certain financial institutions, or worsening of general economic condition, any of which could materially and adversely impact the broader financial and credit markets and reduce the availability of debt and equity capital for the market as a whole and financial services firms in particular. There can be no assurance these market conditions will not occur or worsen in the future, including economic and political events in or affecting the world’s major economies, such as the ongoing war between Russia and Ukraine in Europe and conflictsamong Israel, Iran, Hamas and other militant groups in the Middle East.East, including the joint U.S.-Israeli strikes on Iran in February 2026, political unrest in South America and recent U.S. military action overseas. Sanctions imposed by the U.S. and other countries in connection with hostilities between Russia and Ukraine and the tensions between China and Taiwan have caused additional financial market volatility and affected the global economy. Concerns over future increasesinflation in inflation,volatility, economic recession, as well as interest rate volatility and fluctuations in oil and gas prices resulting from global production and demand levels, aschanges wellregarding immigration and work permit policies and other political and security concerns may not abate, which may cause the debt and equity capital markets, and as geopoliticala tension,result, haveour exacerbatedbusiness, marketto volatility.be adversely affected both within and outside of regions experiencing ongoing conflict. Market uncertainty and volatility have also been magnified as a result of the 2024 U.S. presidential and congressional elections and resulting uncertainties regarding actual and potential shifts in U.S. and foreign, trade, economic and other policies, including with respect to treaties and tariffs. In addition to impacting the capital markets, global economic, political and market conditions could have a significant adverse effect on our business, financial condition and results of operations.

Equity capital may be difficult to raise during such periods of adverse or volatile market conditions because subject to some limited exceptions, as a BDC, we are generally not able to issue additional shares of our common stock at a price less than net asset value without general approval by our stockholders, which we currently have until JuneJuly 17,7, 2026,2027, and approval of the specific issuance by our Board of Directors. In addition, our ability to incur indebtedness or issue preferred stock is limited by applicable regulations such that our asset coverage, as defined in the 1940 Act, must equal at least 150% immediately after each time we incur indebtedness or issue preferred stock. The debt capital that may be available, if at all, may be at a higher cost and on less favorable terms and conditions in the future. Any inability to raise capital could have a negative effect on 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 2023, the financial markets recently experienced volatility in connection with concerns that some banks, especially small and regional banks, may have significant investment-related losses that might make it difficult to find demands to withdraw deposits and other liquidity needs. This and similar developments 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 resultsresult in increased costs and require significant attention from our Investment Adviser.

The current global financial market situation, as well as various social and political circumstances in the U.S. and around the world (including wars and other forms of conflict, terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes, adverse effects of climate crisis and global health epidemics), may contribute to increased market volatility and economic uncertainties or deterioration in the U.S. and worldwide, which could adversely affect our business, financial condition or results of operations. Additionally, the U.S. government’s credit and deficit concerns, the ongoing war between Russia and Ukraine, conflicts in the Middle East, including the United States’ and Israel’s war with Iran, and the trade tensions between the U.S. and other countries could cause further volatility in interest rates, which may negatively impact our and our portfolio companies' ability to access the debt markets on favorable terms.

The occurrence of global events similar to those in recent years, such as the Russia-Ukraine war and more recently the ongoing conflictconflicts in the Middle East, the United States’ and Israel’s war with Iran, instability in Iran, Iraq, Afghanistan, Pakistan, Egypt, Libya, Syria, and North Korea, political unrest in South America and recent U.S. military action overseas, new and ongoing pandemics, epidemics or outbreaks of infectious diseases in certain parts of the world, natural/environmental disasters in certain parts of the world, terrorist attacks in the U.S. and around the world, trade or tariff arrangements, social and political discord, debt crises, sovereign debt downgrades, increasingly strained relations between the United States and a number of foreign countries including traditional allies, such as certain European countries, and historical adversaries, such as North Korea, Iran, China and Russia, and the international community generally, new and continued political unrest in various countries, continued changes in the balance of political power among and within the branches of the U.S. government, and government shutdowns, among others, may result in market volatility, may have long-term effects on the United States and worldwide financial markets, and may cause further economic uncertainties in the United States and worldwide.

Trade negotiations and relatedother government actions may create regulatory uncertainty for the portfolio companies and our investment strategy and adversely affect the profitability of the portfolio companies.

In recent years, the U.S. government has indicated its intent to alter its approach to international trade policy and in some cases to renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements and treaties with foreign countries, and has made proposals and taken actions related thereto. For example, the U.S. government has imposed, and may in the future further increase, tariffs on certain foreign goods, including from China, such as steel and aluminum. Some foreign governments, including China, have instituted retaliatory tariffs on certain U.S. goods. Most recently, the current U.S. presidential administration has imposed or sought to impose significant increases to tariffs on goods imported into the U.S., including from China, Canada and Mexico. Tariffs on imported goods could further increase costs, decrease margins, reduce the competitiveness of products and services offered by current and future portfolio companies and adversely affect the revenues and profitability of portfolio companies whose businesses rely on goods imported from such impacted jurisdictions.

We need additional capital to fund growth in our investments. A reduction in the availability of new capital could limit our ability to grow. We must distribute at least 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, to our stockholders to maintain our status as a RIC for U.S. federal income tax purposes. As a result, such earnings are not available to fund investment originations. We have sought additional capital by borrowing from financial institutions and issuing debt or equity securities and may in the future issue additional debt securities or additional equity securities. If we fail to obtain funds from such sources or from other sources to fund our investments, we could be limited in our ability to grow, which may have an adverse effect on the value of our common stock. In addition, as a BDC, we generally may not borrow money or issue debt securities or issue preferred stock unless immediately thereafter our ratio of total assets to total borrowings and other senior securities is at least 150%. This may restrict our ability to obtain additional leverage in certain circumstances.

Our business operations rely upon secure information technology systems for data processing, storage and reporting. We are dependent on the effectiveness of the information and cybersecurity policies, procedures and capabilities maintained by our Investment Adviser and other service providers to protect their computer and telecommunications systems and the data that reside on or are transmitted through them. Our portfolio companies similarly are dependent on the effectiveness of the information and cybersecurity policies that they and their service providers maintain. Despite careful security and controls design, implementation and updating, our information technology systems could become subject to cyber-attacks and unauthorized access, such as physical and electronic break-ins or unauthorized tampering. Cyber-attacks include, but are not limited to, gaining unauthorized access to digital systems (e.g., through “hacking” or malicious software coding) for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruption. Cyber-attacks may also be carried out in a manner that does not require gaining unauthorized access, such as causing denial-of-service attacks on websites (i.e., efforts to make network services unavailable to intended users). Network, system, application and data breaches could result in operational disruptions or information misappropriation, which could have a material adverse effect on our business, results of operations and financial condition. Like other companies, we may experience threats to our data and systems, including malware and computer virus attacks, unauthorized access, system failures and disruptions. Moreover, the increased use of mobile and cloud technologies could heighten these and other operational risks as certain aspects of the security of such technologies may be complex and unpredictable. Reliance on mobile or cloud technology or any failure by mobile technology and cloud service providers to adequately safeguard their systems and prevent cyber-attacks could disrupt our operations, the operations of a portfolio company or the operations of our or their service providers and result in misappropriation, corruption or loss of personal, confidential or proprietary information or the inability to conduct ordinary business operations. In addition, there is a risk that encryption and other protective measures may be circumvented, particularly to the extent that new computing technologies increase the speed and computing power available.available, and the risk of cyber and data security threats to us, our affiliates and our portfolio companies is exacerbated with the advancement of artificial intelligence, which malicious third parties are using to create new, sophisticated and more frequent attacks. There have been a number of recent highly publicized cases of companies reporting the unauthorized disclosure of client or customer information, as well as cyber-attacks involving the dissemination, theft and destruction of corporate information or other assets, as a result of failure to follow procedures by employees or contractors or as a result of actions by third parties, including actions by terrorist organizations and hostile foreign governments. If one or more of these cyber-attacks occurs, it could potentially jeopardize the confidential, proprietary and other information processed and stored in, and transmitted through, our computer systems and networks, or otherwise cause interruptions or malfunctions in our operations, which could result in damage to our reputation, financial losses, litigation, increased costs, regulatory penalties and/or customer dissatisfaction or loss.

We and our portfolio companies are subject to risks associated with artificial intelligence and machine learning technology.intelligence.

ArtificialAI intelligenceTechnologies and machinetheir learning technologycurrent and itspotential future applications, including in the private investment and financial sectors, as well as the legal and regulatory frameworks within which they operate, continue to developrapidly rapidly,evolve, and it is impossiblenot possible to predict the full extent of current or future risks thatrelated may arise from such developments.thereto.

As a BDC regulated under provisions of the 1940 Act, we are not generally able to issue and sell our common stock at a price below the current net asset value per share without stockholder approval. If our common stock trades at a discount to net asset value, this restriction could adversely affect our ability to raise capital. We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the current net asset value of our common stock in certain circumstances, one of which is if (i)(1) the holders of a majority of our shares (or, if less, at least 67% of a quorum consisting of a majority of our shares) and a similar majority of the holders of our shares who are not affiliated persons of us approve the sale of our common stock at a price that is less than the current net asset value (which has currently occurred and is effective through JuneJuly 17,7, 20262027), and (2) a majority of our Directors who have no financial interest in the transaction and a majority of our independent Directors (a) determine that such sale is in our and our stockholders’ best interests and (b) in consultation with any underwriter or underwriters of the offering, make a good faith determination as of a time either immediately prior to the first solicitation by us or on our behalf of firm commitments to purchase such shares, or immediately prior to the issuance of such shares, that the price at which such shares are to be sold is not less than a price which closely approximates the market value of such shares, less any distributing commission or discount or (ii) a majority of the number of the beneficial holders of our common stock entitled to vote at our annual meeting, without regard to whether a majority of such shares are voted in favor of the proposal, approve the sale of our common stock at a price that is less than the current net asset value per share.

The below calculation assumes (i) $7.1$7.3 billion in total assets, (ii) an average cost of funds of 5.83%5.84% (including preferred dividend payments), (iii) $2.1$1.9 billion in debt outstanding, (iv) $0.7$0.6 billion in liquidation preference of preferred stock paying a 5.50% annual dividend outstanding, (v) $0.13$0.6 billion in liquidation preference of preferred stock paying a 6.50% annual dividend outstanding, (vi) $0.5 billion in liquidation preference of preferred stock paying a 5.35% annual dividend outstanding, (vi) $0.7 billion in liquidation preference of preferred stock paying a 6.50% annual dividend outstanding, (vii) $0.2 billion in liquidation preference of the Floating Rate Preferred outstandingStock paying a 6.50% annual dividend (based on the floating rate as of August 20,17, 20252026), outstanding, (viii) $0.45$0.8 billion in liquidation preference of preferred stock paying a 7.50% annual dividend outstanding and (ix) $3.0$2.8 billion of common stockholders’ equity.

The below calculation assumes (i) $7.1$7.3 billion in total assets, (ii) an average cost of funds of 5.76%5.78% (including preferred dividend payments), (iii) $2.1$1.9 billion in debt outstanding, (iv) $0.13$0.5 billion in liquidation preference of preferred stock paying a 5.35% annual dividend outstanding, (v) $0.2 billion in liquidation preference of the Floating Rate Preferred outstandingStock paying a 6.50% annual dividend (based on the floating rate as of August 20,17, 20252026), outstanding, (vi) $0.45$0.8 billion in liquidation preference of preferred stock paying a 7.50% annual dividend outstanding and (vii) $4.2$3.7 billion of common stockholders’ equity.

Certain provisions of the Public Notes could make it more difficult or more expensive for a third party to acquire us. Upon the occurrence of certain transactions constituting a fundamental change, holders of the Public Notes will have the right, at their option, to require us to repurchase all of their notes or any portion of the principal amount of such notes in integral multiples of $1,000.notes. These provisions could discourage an acquisition of us by a third party.

The PublicUnsecured Notes present other risks to holders of our preferred stock.

Our obligations to pay dividends or make distributions and, upon liquidation of the Company, liquidation payments in respect of our preferred stock is subordinate to our obligations to make any principal and interest payments due and owing with respect to our outstanding PublicUnsecured Notes. Accordingly, our PublicUnsecured Notes have the effect of creating special risks for our preferred stockholders that would not be present in a capital structure that did not include such securities.

On August 3, 2020, we entered into a Dealer Manager Agreement with Preferred Capital Securities, LLC (“PCS”) (the “Original Dealer Manager Agreement”), amended and restated on February 25, 2021 and further amended on June 9, 2022, October 7, 2022, February 10, 2023, December 29, 2023, October 17, 2024, and December 27, 20242024, and February 10, 2026 (as so amended, the “Amended and Restated Dealer Manager Agreement”), 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 90,000,000105,858,302 shares, par value $0.001 per share, of preferred stock, with a $2,250,000,000$2,646,457,550 aggregate liquidation preference. Under the Amended and Restated Dealer Manager Agreement, the preferred stock may be issued in multiple series, including the Series A1 Preferred Stock, the Series A3 Preferred Stock, the Series A4 Preferred Stock, the Series A5 Preferred Stock, the Series M1 Preferred Stock, the Series M2 Preferred Stock, the Series M3 Preferred Stock, the Series M4 Preferred Stock, and the Series M5 Preferred Stock. However, as disclosed in the Supplement No. 1 dated September 6, 2024 and Supplement No. 3 dated December 27, 2024 to the Prospectus Supplement dated December 29, 2023, the Company is no longer offering the Series A1 Preferred Stock, the Series M1 Preferred Stock, the Series M2 Preferred Stock, the Series A3 Preferred Stock, the Series M3 Preferred Stock, and the Floating Rate Preferred Stock and, as a result, any additional preferred stock offered under such offering will be only in any combination of our 7.50% Preferred Stock, which are not convertible. The Company may offer any future series of preferred stock, provided that the aggregate number of shares issued across all series of preferred stock under the Amended and Restated Dealer Manager Agreement shall not exceed 90,000,000105,858,302 shares.

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 (“InspereX Dealer Manager Agreement”), 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 5.50% Series AA1 Preferred Stock, 5.50% Series MM1 Preferred Stock, 6.50% Series AA2 Preferred Stock and 6.50% Series MM2 Preferred Stock with a liquidation preference of $25.00 per share; however as disclosed in the Supplement No. 2 dated September 6, 2024 to the Prospectus Supplement dated February 10, 2023, the Company is no longer offering the 5.50% Series AA1 Preferred Stock, the 5.50% Series MM1 Preferred Stock, the 6.50% Series AA2 Preferred Stock and the 6.50% Series MM2 Preferred Stock. TheOn CompanyOctober may30, offer2020, anyFebruary future17, series2022, and October 11, 2022, we filed Articles Supplementary with the SDAT, reclassifying and designating an additional 80,000,000 shares of preferred stock, provided that the aggregateCompany’s numberauthorized and unissued shares of common stock into shares issued across all series of preferred stock offeredas pursuantconvertible topreferred stock. On May 6, 2026, we filed Articles Supplementary with the InspereXSDAT, Dealerreclassifying Managerand Agreementdesignating shall80,000,000 notauthorized exceedbut 10,000,000unissued shares.shares of Series AA1 Preferred Stock, Series MM1 Preferred Stock, Series AA2 Preferred Stock and Series MM2 Preferred Stock as additional shares of common stock. As a result of such reclassification and designation, we no longer have any authorized shares of Series AA1 Preferred Stock, Series MM1 Preferred Stock, Series AA2 Preferred Stock or Series MM2 Preferred Stock.

At any time prior to the listing of the 5.50% Preferred Stock or 6.50% Preferred Stock on a national securities exchange, shares of the 5.50% Preferred Stock and 6.50% Preferred Stock will be convertible, at the option of the holder of the 5.50% Preferred Stock or 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”),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. Shares of the Floating Rate Preferred Stock and 7.50% Preferred Stock do not have a Holder Optional Conversion feature.

OnAt a special meeting of stockholders held on June 12,17, 2020, June 11, 2021, June 10, 2022, June 9, 2023, and June 10, 2024,2025, we obtained stockholder approval under Section 63 of the 1940 Act to issue shares of common stock below net asset value until June 10,17, 2025.2026. On JuneJuly 17,7, 20252026, at a special meeting of our stockholders, our stockholders again authorized us to issue shares of our common stock below net asset value during the next 12 months until JuneJuly 17,7, 2026.2027. We believe that pursuant to this approval any shares of 5.50% Preferred Stock or 6.50% Preferred Stock issued prior to JuneJuly 17,7, 20262027 may be converted into shares of common stock pursuant to the Issuer Optional Conversion using the 5-day VWAP to determine the conversion rate at any time, including after JuneJuly 17,7, 2026.2027. We believe any shares of 5.50% Preferred Stock or 6.50% Preferred Stock issued after JuneJuly 17,7, 20262027 may be converted into shares of common stock pursuant to the Issuer Optional Conversion using the 5-day VWAP to determine the conversion rate only if we have obtained stockholder approval for the period in which such shares of 5.50% Preferred Stock or 6.50% Preferred Stock were issued (assuming the 5-day VWAP results in a price below net asset value).

The price of our common stock may fluctuate significantly during the period used to calculate any 5-day VWAP with respect to the 5.50% Preferred Stock and 6.50% Preferred Stock,Stock and until settlement of any conversion, and this may make it difficult for holders of the 5.50% Preferred Stock and 6.50% Preferred Stock to resell the 5.50% Preferred Stock and 6.50% Preferred Stock or common stock issuable upon conversion of the 5.50% Preferred Stock and 6.50% Preferred Stock when such holder wants or at prices such holder finds attractive.

The price of our common stock on the Nasdaq Global Select Market constantly changes. We expect that the market price of our common stock will continue to fluctuate. Because the 5.50% Preferred Stock and 6.50% Preferred Stock are convertible into our common stock based on the 5-day VWAP, volatility or declining prices for our common stock during the period used to determine the 5-day VWAP or during the period between when a holder delivers a Holder Conversion Notice and the related Holder Conversion Exercise Date,Date (or the date on which a holder receives the shares of common stock issued upon conversion of their 5.50% Preferred Stock or 6.50% Preferred Stock) or the period between when we deliver a Corporation Conversion Notice and the related Corporation Conversion Exercise Date (or the date on which a holder receives the shares of common stock issued upon conversion of their 5.50% Preferred Stock or 6.50% Preferred Stock), could have a similar effect on the conversion value of the 5.50% Preferred Stock and 6.50% Preferred Stock or the trading price thereof whenStock, and ifthis may make it difficult for holders of the 5.50% Preferred Stock and 6.50% Preferred Stock areto everresell listed.the 5.50% Preferred Stock and 6.50% Preferred Stock or common stock issuable upon conversion of the 5.50% Preferred Stock and 6.50% Preferred Stock when such holder wants or at prices such holder finds attractive.

For the Series M4 Preferred Stock and Series M5 Preferred Stock, “HOR Settlement Amount” means (A) the stated value, plus (B) unpaid dividends accrued to, but not including, the Holder Redemption Exercise Date, but if a holder of Series M4 Preferred Stock or Series M5 Preferred Stock exercises a Holder Optional Redemption within the first twenty-four months of issuance of such Series M4 Preferred Stock or Series M5 Preferred Stock, the HOR Settlement Amount payable to such holder will be reduced by (i) during the first twelve months of issuance of such Series M4 Preferred Stock or Series M5 Preferred Stock, the aggregate amount of all dividends, whether paid or accrued, on such Series M4 Preferred Stock or Series M5 Preferred Stock, respectively, in the six-month period prior to the Holder Redemption Exercise Date, and (ii) during the second twelve months of issuance of such Series M4 Preferred Stock or Series M5 Preferred Stock, the aggregate amount of all dividends, whether paid or accrued, on such Series M4 Preferred Stock or Series M5 Preferred Stock in the three-month period prior to the Holder Redemption Exercise Date (such amount, the “Series M4 Shares Clawback” and “Series M5 Shares Clawback,” respectively). We are permitted to waive the Series M4 Shares Clawback and Series M5 Shares Clawback through public announcement of the terms and duration of such waiver. Any such waiver would apply to any holder of Preferred Stock qualifying for the waiver and exercising a Holder Optional Redemption during the pendency of the term of such waiver. Although we have retained the right to waive the Series M4 Shares Clawback and Series M5 Shares Clawback in the manner described above, we are not required to establish any such waivers and we may never establish any such waivers.

Additionally, the issuance of the 5.50% Preferred Stock and 6.50% Preferred Stock could result in our failure to comply with the Nasdaq Global Select Market’s listing standards. The Nasdaq Global Select Market’s listing standards that may be affected by the issuance of the 5.50% Preferred Stock and 6.50% Preferred Stock include voting rights rules, bid price requirements, listing of additional shares rules, change in control rules and the Nasdaq Global Select Market’s discretionary authority rules. Failure to comply with any of these rules could result in the delisting of the Company’s common stock from the Nasdaq Global Select Market or impact the ability to list the 5.50% Preferred Stock and 6.50% Preferred Stock on a national securities exchange.

OurAs of August 19, 2026, our charter currently authorizesauthorized us to issue approximately 689.83.2 millionbillion shares of common stock, and after reflecting the reclassification of 847.9which approximately 524.8 million shareswere of common stock as Preferred Stock.outstanding. Although the Board of Directors can increase the amount of our authorized common stock and reclassify authorized but unissued preferred stock as common stock without stockholder approval, if they did not do so for any reason and our 5-day VWAP fell below approximately $1.95$0.45 per share of common stock (assuming all 53,784,43748,381,408 outstanding shares of the 5.50% Preferred Stock and 6.50% Preferred Stock available pursuant to the respective offerings as of August 25,19, 2025 converted), we would be required to settle any conversion of 5.50% Preferred Stock and 6.50% Preferred Stock in cash (to the extent we had cash available) or list the 5.50% Preferred Stock and 6.50% Preferred Stock on a national securities exchange and the value of our shares of 5.50% Preferred Stock and 6.50% Preferred Stock would then equal their market price, which may be less than $25.00 per share.

Upon the occurrence of a Change of Control Triggering Event (as defined in the applicable prospectus supplement), holders of 5.35% Preferred Stock will have the right to convert some or all of their 5.35% Preferred Stock into our common stock (or equivalent value of alternative consideration). Upon such a conversion, the holders will be limited to a maximum number of shares of our common stock equal to the Share Cap (as defined in the applicable prospectus supplement) multiplied by the number of shares of 5.35% Preferred Stock converted. Notwithstanding that we generally may not redeem the 5.35% Preferred Stock prior to July 19, 2026, weWe have a special optional redemption right to redeem the 5.35% Preferred Stock in the event of a Change of Control Triggering Event, and holders of 5.35% Preferred Stock will not have the right to convert any shares that we have elected to redeem prior to the “Change of Control Conversion Date” (i.e., the date the shares of 5.35% 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 notice). In addition, those features of the 5.35% Preferred Stock may have the effect of inhibiting a third party from making an acquisition proposal for the Company or of delaying, deferring or preventing a change of control of the Company under circumstances that otherwise could provide the holders of our common stock and Preferred Stock with the opportunity to realize a premium over the then-current market price or that stockholders may otherwise believe is in their best interest.

In addition to regulatory restrictions that restrict our ability to raise capital, our credit facility containsand the deed of trust governing our 5.50% 2030 Notes (the “Deed of Trust”) contain various covenants which, if not complied with, could accelerate repayment under our credit facility or the facility,Deed of Trust, thereby materially and adversely affecting our liquidity, financial condition and results of operations.

The agreement governing our credit facility requires us or Prospect Capital Funding LLC (“PCF”) to comply with certain financial and operational covenants. These covenants include:

•Restrictions on the level of indebtedness that we are permitted to incur in relation to the value of our assets;

•Maintenance of a minimum level of our stockholders’ equity.equity (common equity plus preferred equity);

As of June 30, 2025,2026, we were in compliance with these covenants. However, our continued compliance with these covenants depends on many factors, some of which are beyond our control. Accordingly, there are no assurances that we will continue to comply with the covenants in our credit facility.facility or the Deed of Trust. Failure to comply with these covenants would result in a default under thisour credit facility or the Deed of Trust, as applicable, which, if we were unable to obtain a waiver from the lenders thereunder,under our credit facility or the bondholders of the 5.50% 2030 Notes, as applicable, could result in an acceleration of repayments under our credit facility or the facilityDeed of Trust, as applicable, which could in turn result in defaults under other indebtedness or agreements, and thereby have a material adverse impact on our business, financial condition and results of operations.

The Unsecured Notes mature at various dates from OctoberJuly 15, 20252026 to March 15, 2052. If we are unable to refinance the Unsecured Notes or find a new source of borrowing on acceptable terms, we will be required to pay down the amountsprincipal amount outstanding at maturity underof the facilityUnsecured during the one-year term-out periodNotes through one or more of the following: (1) borrowing additional funds under our then current credit facility, (2) issuance of additional common stock or (3) possible liquidation of some or all of our loans and other assets, any of which could have a material adverse effect on our results of operations and financial position. In addition, our stock price could decline significantly; we would be restricted in our ability to acquire new investments and, in connection with our year-end audit, our independent registered accounting firm could raise an issue as to our ability to continue as a going concern.

Under the 1940 Act, when our common stock is trading below its net asset value per share, we will not be able to issue additional shares of our common stock at its market price without first obtaining approval for such issuance from our stockholders and our independent directors. On JuneJuly 17,7, 2025,2026, at a special meeting of stockholders, our stockholders reauthorized us to sell shares of our common stock (during the following 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).

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 19401940, as amended (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, as amended (the “Code”). We were organized on April 13, 2004, and were funded in an initial public offering completed on July 27, 2004.

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”: Belnick Holdings of Delaware, LLC (“Belnick Delaware”); 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”); NPH Holdco LLC (“NPH Holdco”); Prospect Opportunity Holdings I, Inc. (“POHI”); R-V Holdings of Delaware, LLC (“R-V Holdings”); 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”); and Victor Holdings of Delaware, LLC (“Victor Holdings”).

On JuneJuly 17,7, 2025,2026, 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).

Our previously outstanding 6.375% convertible notes due 2025, which matured during the fiscal year ended June 30, 2025, are referred to as the “2025 Notes” or the “Convertible Notes”. Our previously outstanding 3.706% unsecured notes due 2026, which were redeemed during the fiscal year ended June 30, 2025, are referred to as the “2026 Notes”. Our $300.0$264.5 million of 3.364% unsecured notes due 2026 are referred to as the “3.364% 2026 Notes”. Our $300.0$254.7 million of 3.437% unsecured notes due 2028 are referred to as the “3.437% 2028 Notes”. Our $182.2 million of 5.50% unsecured notes due 2030 are referred to as the “5.50% 2030 Notes”, and collectively with the 2026 Notes, and the 3.364% 2026 NotesNotes, areand the 3.437% 2028 Notes, as the “Public Notes”. Any corporate notes issued pursuant to our medium term notes program with InspereX LLC are referred to as “Prospect Capital InterNotes®”. The Convertible Notes, Public Notes,Notes and Prospect Capital InterNotes® are collectively referred to as the “Unsecured Notes”.

We seek to be a long-term investor with our portfolio companies. During the three months ended June 30, 20252026 we acquired $181,383$97,170 of new investments, completed follow-on investments in existing portfolio companies totaling approximately $59,644,$27,644, funded $12,500$20,800 of revolver advances, and recorded PIK interest of $17,332,$20,707, resulting in gross investment originations of $270,859.$166,321. During the three months ended June 30, 20252026 we received full repayments totaling $53,000,$21,432, received $315,601 in sales, received $4,563$35 of revolver paydowns, received $0 in sales, and received $72,162$24,360 in partial prepayments, scheduled principal amortization payments, and return of capital distributions, resulting in repayments of approximately $445,326.$45,827.

During the three months ended June 30, 20252026 we issued $5,733$6,917 aggregate principal amount of Prospect Capital InterNotes® with a weighted average stated interest rate of 7.53%,7.01%, to extend our borrowing base. The newly issued notes mature between April 15, 20282029 and JulyJune 15, 20322033 and generated net proceeds of $5,652.$6,832.

During the three months ended June 30, 2025,2026 we commencedrepurchased a tender offer to purchase for cash any and all of the$677 aggregate principal amount of ourthe outstanding3.364% 2026 Notes at a purchaseweighted average price of 99.00%,99.02%, including commissions, plus accrued and unpaid interest. As a result, $135,731 aggregate principal amount of the 2026 Notes were validly tendered and accepted, and we recognized a net realized gain of $874$6 from the extinguishment of debt in the amount of the difference between the reacquisition price and the net carrying amount of the tenderedrepurchased 3.364% 2026 Notes During the three months ended June 30, 2026, we repurchased $25,001 aggregate principal amount of the 3.437% 2028 Notes at a weighted average price of 93.44%, including commissions, plus accrued and unpaid interest. As a result, we recognized a net realized gain of $1,517 from the extinguishment of debt in the amount of the difference between the reacquisition price and the net carrying amount of the repurchased 3.437% 2028 Notes.

During the three months ended June 30, 20252026 we issued 616,374626,888 shares of Series A5 Preferred Stock for net proceeds of $13,868,$14,103, and 164,21888,489 shares of Series M5 Preferred Stock for net proceeds of $3,992,$2,146, and 65,692 shares of Series A Preferred Stock for net proceeds of $1,098 each excluding offering costs and preferred stock dividend reinvestment.

AtAs of June 30, 2025,2026, we have $6,673,516,$6,342,558, or 223.3%,216.5%, of our net assets applicable to common sharesshares, invested in 9791 portfolio investmentscompanies and CLOs.other portfolio investments.

As of June 30, 2025,2026, we own controlling interests in the following portfolio companies: Belnick, LLC (“Belnick”); 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”); QC Holdings TopCo, LLC (“QC Holdings”); R-V Industries, Inc. (“R-V”); Universal Turbine Parts, LLC (“UTP”); USESStrategic Chemical Solutions Corp. (“Unitedf/k/a StatesUSES Environmental Services” or “USES”Corp.); and Valley Electric Company, Inc. (“Valley Electric”); and Victor Technology, LLC (“Victor”). 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 $51,477$61,429 and $41,177$51,477 in first lien term loans (the “Spartan Term Loan A”) due to us as of June 30, 20252026 and June 30, 2024,2025, respectively. As a result of CP Energy’s purchase, and given Prospect’s controlling interest in CP Energy, we report our investments in Spartan as a control investment. Spartan remains the direct borrower and guarantor to Prospect for the Spartan Term Loan A.

Our current origination efforts are focused primarily on secured lending to non-controlmiddle market investments to reducemitigate thedownside risk in the portfolio by investing primarily in first lien loans and second lien loans, though we also continue to invest in select equity investments. For information regarding investment activity for the year ended June 30, 2023,2024, see the Company’s Form 10-K for the fiscal year ended June 30, 2024.2025.

Our gross investment activity for the yearyears ended June 30, 20252026 and June 30, 20242025 are presented below:

On March 31, 2025, Prospect exercised certain rights and remedies under its loan documents to exercise voting rights in respect of the equity of Belnick, LLCBelnick and certain of its subsidiaries (“Belnick”) to, among other things, appoint new officers, all of whom are our Investment Adviser’s professionals. As a result, Prospect’s investment in Belnick is classified as a control investment. Belnick is a provider of high-volume, value-oriented furniture and furnishings to a broad range of residential and commercial end markets.

The fair value of our investment in CP EnergyBelnick was $122,189$108,565 as of June 30, 2025, which is2026, a discountpremium of $202,132$8,808 fromto its amortized cost,cost basis, compared to a fair value of $110,206$51,166 as of June 30, 2024, representing2025, a discount of $188,641$37,086 to its amortized cost. The increase in discountpremium to amortized cost primarily resulted from increasedan debtimprovement in thefinancial capitalperformance structure.and resolution of tariff refund receivables.

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

The fair value of our investment in First Tower was $960,778 as of June 30, 2026, a premium of $469,368 to its amortized cost basis, compared to a fair value of $760,518 as of June 30, 2025, a premium of $277,200 to its amortized cost basis compared to a fair value of $605,928 as of June 30, 2024, a premium of $149,790 to its amortized cost.basis. The increase in premium to amortized cost resulted from an improvement in financial performanceperformance, higher projected performance, and an expansion of comparable company trading multiples.

Prospect owns 100% of the equity of InterDent, Inc.InterDent. 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 was $340,451 as of June 30, 2026, a discount of $89,490 to its amortized cost basis, compared to a fair value of $338,781 as of June 30, 2025, a discount of $55,244 to its amortized cost basis compared to a fair value of $463,883 as of June 30, 2024, a premium of $102,337 to its amortized cost.basis. The increase in discount to amortized cost resulted from a decline in financial performance and increased debt in the capital structure.

NPRC is a Maryland corporation and a qualified REIT for federal income tax purposes. NPRC iswas heldformed to hold for purposesinvestment, ofoperate, investing,finance, operating,lease, financing, leasing, managingmanage, and sellingsell a portfolio of real estate assets and engagesengage in any and all other activities thatas may be necessary, incidental,incidental or convenient to performcarry out the foregoing. NPRC acquires real estate assets, including, but not limited to, industrial, commercial, and multi-family properties,multi-family, 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 June 30, 20252026 and June 30, 2024,2025, we own 100% of the fully-diluted common equity of NPRC.

The fair value of our investment in NPRC was $1,300,972$1,081,596 as of June 30, 2025,2026, a premium of $378,325$184,707 from its amortized cost basis, compared to a fair value of $1,696,462$1,300,972 as of June 30, 2024, representing2025, a premium of $588,151.$378,325 to its amortized cost. The decrease in premium to amortized cost was primarily driven by a declinesoftening in marketcash interestflow rates,projections across NPRC’s real estate portfolio, an increase in discount and terminal capitalization rates, and higher leverage within the capital structure. These effects were partially offset by growth in net operating income across our real estate portfolio. Additionally, the unwinding of the National General Lending Limited (“NGL”) and NMF portfolios resulted in debt repayments of $211,130 and a change in unrealized losses of $36,980.

The sixnine months ended DecemberMarch 31, 20252026 have been characterized by volatility and uncertainty in global markets, driven by investor concerns over inflation, elevated interest rates, ongoing political and regulatory uncertainty, including shifts in U.S. trade policy and the imposition of new tariffs, as well as geopolitical instability stemming from the conflicts in Ukraine and the Middle East.

The below calculation assumes (i) $6.8$7.0 billion in total assets, (ii) an average cost of funds of 5.70%5.87% (including preferred dividend payments), (iii) $1.9$1.8 billion in debt outstanding, (iv) $0.7 billion in liquidation preference of preferred stock paying a 5.50% annual dividend outstanding, (v) $0.6 billion in liquidation preference of preferred stock paying a 6.50% annual dividend outstanding, (vi) $0.13 billion in liquidation preference of preferred stock paying a 5.35% annual dividend outstanding, (vii) $0.2 billion in liquidation preference of the Floating Rate Preferred Stock paying a 6.50% annual dividend (based on the floating rate as of FebruaryMay 4,1, 2026) outstanding, (viii) $0.45$0.8 billion in liquidation preference of preferred stock paying a 7.50% annual dividend outstanding and (ix) $3.0$2.9 billion of common stockholders’ equity.

The below calculation assumes (i) $6.7$7.0 billion in total assets, (ii) an average cost of funds of 5.56%5.81% (including preferred dividend payments), (iii) $1.9$1.8 billion in debt outstanding, (iv) $0.13 billion in liquidation preference of preferred stock paying a 5.35% annual dividend outstanding, (v) $0.2 billion in liquidation preference of the Floating Rate Preferred Stock paying a 6.50% annual dividend (based on the floating rate as of FebruaryMay 4,1, 2026) outstanding, (vi) $0.45$0.8 billion in liquidation preference of preferred stock paying a 7.50% annual dividend outstanding and (vii) $4.0$3.8 billion of common stockholders’ equity.

Pursuant to SEC regulations, this table is calculated as of DecemberMarch 31, 2025.2026. As a result, it has not been updated to take into account any changes in assets or leverage since DecemberMarch 31, 2025.2026.

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”: Belnick Holdings of Delaware, LLC (“Belnick Delaware”); 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”); and Victor Holdings of Delaware, LLC (“Victor Holdings”).

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 DecemberMarch 31, 2025,2026, as shown in our Consolidated Schedule of Investments, the cost basis and fair value of our investments in controlled companies was $3,364,482$3,310,666 and $3,695,903,$3,679,145, 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.

SecondThird Quarter Highlights

We seek to be a long-term investor with our portfolio companies. During the three months ended DecemberMarch 31, 20252026 we acquired $13,290$8,300 of new investments, completed follow-on investments in existing portfolio companies totaling approximately $37,818,$80,637, funded $9,322$6,869 of revolver advances, and recorded PIK interest of $20,004,$19,470, resulting in gross investment originations of $80,434.$115,276. During the three months ended DecemberMarch 31, 20252026 we received full repayments totaling $17,200,$146,250, received $14,176$8,568 of revolver paydowns, received $14,563 in sales, and received $47,890$52,861 in partial prepayments, scheduled principal amortization payments, and return of capital distributions, resulting in repayments of approximately $79,266. There were no sales of investments during the three months ended December 31, 2025.$222,242.

During the three months ended DecemberMarch 31, 20252026 we repaid $2,386$3,521 aggregate principal amount of Prospect Capital InterNotes® at par in accordance with the Survivor’s Option, as defined in the InterNotes® Offering prospectus. During the three months ended December 31, 2025, we also redeemed $20,658 aggregate principal amount of Prospect Capital InterNotes® at par with a weighted average interest rate of 6.41%. 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 DecemberMarch 31, 20252026 was $119.$86.

During the three months ended DecemberMarch 31, 20252026 we issued $9,491$5,523 aggregate principal amount of Prospect Capital InterNotes® with a weighted average stated interest rate of 6.32%,6.76%, to extend our borrowing base. The newly issued notes mature between OctoberJanuary 15, 20282029 and JanuaryApril 15, 2033 and generated net proceeds of $9,372.$5,436.

On OctoberJanuary 22, 2025,2026, NovemberFebruary 18,19, 20252026 and DecemberMarch 18,20, 20252026 we issued 828,162,840,928, 839,173,804,914, and 969,998928,532 shares of our common stock in connection with the dividend reinvestment plan, respectively.

During the three months ended DecemberMarch 31, 2025,2026, 446,904454,925 shares of our Series A1 Preferred Stock, 253,842283,920 shares of our Series A3 Preferred Stock, 27,77085,820 shares of our Series M1 Preferred Stock, and 157,744186,105 shares of our Series M3 Preferred Stock were converted to 7,908,1948,992,783 shares of our common stock, in connection with Holder Optional Conversions and Optional Redemptions Following Death of a Holder, resulting in a loss from redemption of preferred stock of $1,388.$1,678.

During the three months ended DecemberMarch 31, 20252026 we issued 709,071556,736 shares of Series A5 Preferred Stock for net proceeds of $15,954,$12,527, and 163,585178,248 shares of Series M5 Preferred Stock for net proceeds of $3,968,$4,323, 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 A4 Preferred Stock, Series A5 Preferred Stock, Series M1 Preferred Stock, Series M3 Preferred Stock, Series M4 Preferred Stock, and Series M5 Preferred Stock of 13,472,13,306, 13,394,13,247, and 13,41913,391 throughout October,January, November,February, and December,March, respectively.

As of DecemberMarch 31, 2025,2026, we have $6,441,536,$6,302,465, or 217.7%,213.4%, of our net assets applicable to common shares invested in 9189 portfolio investments and CLOs.

Our annualized current yield was 10.9%10.5% and 12.2% as of DecemberMarch 31, 20252026 and June 30, 2025, respectively, across all performing interest bearing investments, excluding equity investments and non-accrual loans. Our annualized current yield was 8.3%7.9% and 9.6% as of DecemberMarch 31, 20252026 and June 30, 2025, 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.

As of DecemberMarch 31, 2025,2026, we own controlling interests in the following portfolio companies: Belnick, LLC (Belnick); 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”); USESStrategic Chemical Solutions Corp. (“Unitedf/k/a StatesUSES Environmental Services” or “USES”Corp.); 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 $56,251$60,529 and $51,477 in first lien term loans (the “Spartan Term Loan A”) due to us as of DecemberMarch 31, 20252026 and June 30, 2025, respectively. 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 DecemberMarch 31, 2025,2026, 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 DecemberMarch 31, 20252026 and June 30, 2025:

The following shows the composition of our investment portfolio by type of investment as of DecemberMarch 31, 20252026 and June 30, 2025:

The following shows our investments in interest bearing securities, including non-accrual investments, by type of investment as of DecemberMarch 31, 20252026 and June 30, 2025:

The following shows the composition of our investment portfolio by industry as of DecemberMarch 31, 20252026 and June 30, 2025:

Our gross investment activity for the sixnine months ended DecemberMarch 31, 2026 and March 31, 2025 and December 31, 2024 are presented below:

(2) Approximately $30,560$47,615 and $53,343$72,869 was accrued as PIK interest income during the sixnine months ended DecemberMarch 31, 20252026 and DecemberMarch 31, 2024,2025, respectively.

Key developments in the Company’s portfolio during the sixnine months ended DecemberMarch 31, 20252026 are as follows:

On September 30, 2025, the PeopleConnect Holdings, Inc loan agreement was amended, extending the maturity date of First Lien Term Loan to July 22, 2026 On November 14, 2025, the Belnick, LLC (d/b/a The Ubique Group) loan agreement was amended, extending the maturity date of the First Lien Term Loan to May 14, 2029.

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 sixnine months ended DecemberMarch 31, 2025.2026.

The fair value of our investment in Belnick was $76,264$104,035 as of DecemberMarch 31, 2025,2026, a discountpremium of $17,711$7,229 to its amortized cost basis compared to a fair value of $51,166 as of June 30, 2025, a discount of $37,086 to its amortized cost. The decrease in discountpremium to amortized cost resulted from an improvement in financial performance.performance and expected tariff refunds.

The fair value of our investment in First Tower was $901,020$952,349 as of DecemberMarch 31, 2025,2026, a premium of $420,538$471,867 to its amortized cost basis compared to a fair value of $760,518 as of June 30, 2025, a premium of $277,200 to its amortized cost. The increase in premium to amortized cost resulted from an improvement in financial performanceperformance, higher projected performance, and an expansion of comparable company trading multiples.

The fair value of our investment in InterDent was $337,872$339,156 as of DecemberMarch 31, 2025,2026, a discount of $75,828$82,568 to its amortized cost basis compared to a fair value of $338,781 as of June 30, 2025, a discount of $55,244 to its amortized cost. The increase in discount to amortized cost resulted from a decline in financial performance and increased debt in the capital structure.

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 DecemberMarch 31, 20252026 and June 30, 2025, we own 100% of the fully-diluted common equity of NPRC.

During the sixnine months ended DecemberMarch 31, 2025,2026, we provided $25,568$31,772 of debt financing to NPRC to fund real estate capital expenditures and provide working capital.

During the sixnine months ended DecemberMarch 31, 2024,2026, we received partial repayments of $76,756$71,177 of our loans previously outstanding with NPRC and its wholly owned subsidiary.

As of DecemberMarch 31, 2025,2026, our investment in NPRC and its wholly owned subsidiaries had an amortized cost of $903,670$883,242 and a fair value of $1,173,262.$1,112,198, The fair value of $1,164,472primarily related to NPRC’s real estate portfolio. The real estate portfolio was comprised of forty-four multi-family properties, fourthree student housing properties, four senior living properties, and two 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 DecemberMarch 31, 20252026:

The fair value of our investment in NPRC was $1,173,262$1,112,198 as of DecemberMarch 31, 2025,2026, a premium of $269,592$228,956 from its amortized cost basis, compared to a fair value of $1,300,972 as of June 30, 2025, a premium of $378,325 to its amortized cost. The decrease in premium to amortized cost was primarily driven by a softening in cash flow projections across NPRC’s real estate portfolio, an increase in discount and terminal capitalization rates, and higher leverage within the capital structure.

The fair value of our investment in QC Holdings was $95,672$95,331 as of DecemberMarch 31, 2025,2026, a premium of $16,680$14,670 to its amortized cost compared to a fair value of $77,286 as of June 30, 2025, equal to its amortized cost. The increase in premium to amortized cost resulted from an improvement in financial performance.

The fair value of our investment in Pacific World was $107,626$114,455 as of DecemberMarch 31, 2025,2026, a discount of $244,625$241,864 to its amortized cost compared to a fair value of $107,970 as of June 30, 2025, a discount of $228,143 to its amortized cost. The increase in discount to amortized cost resulted from increased debt in the capital structure and lower projected performance.structure.

The fair value of our investment in R-V was $102,664$91,709 as of DecemberMarch 31, 2025,2026, a premium of $39,476$28,521 to its amortized cost compared to a fair value of $105,577 as of June 30, 2025, a premium of $51,389 to its amortized cost. The decrease in premium to amortized cost was primarily driven by Prospect’s incremental investment to R-V made in connection with a dividend recapitalization.

Prospect owns 99.96% of the equity of Strategic Chemical Solutions Corp. (f/k/a USES Corp.) as of DecemberMarch 31, 20252026 and June 30, 2025. Strategic Chemical Solutions Corp. (f/k/a USES Corp.) provides industrial, environmental, and maritime services in the Gulf States region.