CION Investment (CION) 10-Q 2015 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q 

[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period endedMarch 31, 2015

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number000-54755 

CĪON Investment Corporation

(Exact name of registrant as specified in its charter)

Maryland	45-3058280
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
3 Park Avenue, 36th Floor New York, New York	10016
(Address of principal executive offices)	(Zip Code)

(212) 418-4700

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed from last report)

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 [x] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

Yes [  ] No [  ]

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

Large accelerated filer [  ]	Accelerated filer [  ]
Non-accelerated filer [x] (Do not check if a smaller reporting company)	Smaller reporting company [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  

 Yes [  ] No [x]

The number of shares of the registrant’s common stock, $0.001 par value, outstanding as of May 8, 2015 was 71,372,505.

CĪON INVESTMENT CORPORATION

TABLE OF CONTENTS

FORM 10-Q

	Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements	1
Consolidated Balance Sheets	1
Consolidated Statements of Operations	2
Consolidated Statements of Changes in Net Assets	3
Consolidated Statements of Cash Flows	4
Consolidated Schedule of Investments	5
Notes to Consolidated Financial Statements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3. Quantitative and Qualitative Disclosures About Market Risk	55
Item 4. Controls and Procedures	56
PART II – OTHER INFORMATION
Item 1. Legal Proceedings	57
Item 1A. Risk Factors	57
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	57
Item 3. Defaults Upon Senior Securities	57
Item 4. Mine Safety Disclosures	57
Item 5. Other Information	57
Item 6. Exhibits	58
Signatures	60

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CĪON Investment Corporation

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

		March 31,		December 31,
		2015		2014
		(unaudited)
Assets
Investments, at fair value (amortized cost of $466,026
and $363,564, respectively)		$	465,840	$	361,914
Cash			4,216		9,474
Due from counterparty(1)			169,538		128,388
Receivable for common stock purchased			-		1,459
Interest receivable on investments			2,055		2,184
Receivable due on investment sold			3,261		-
Unrealized appreciation on total return swap(1)			1,640		-
Receivable due on total return swap(1)			6,261		4,557
Prepaid expenses and other assets			426		125
	Total assets	$	653,237	$	508,101
Liabilities and Shareholders' Equity
Liabilities
Payable for investments purchased		$	37,441	$	4,106
Shareholders' distributions payable(3)			4,402		-
Accounts payable and accrued expenses			690		515
Commissions payable for common stock purchased ($218 to CĪON Securities, LLC)			-		597
Accrued management fees			2,760		1,031
Accrued administrative services expense			441		570
Accrued recoupment of expense reimbursements from IIG(2)			837		-
Due to IIG - offering, organizational and other costs(4)			99		484
Unrealized depreciation on total return swap(1)			-		4,409
Accrued capital gains incentive fee(5)			1,454		-
	Total liabilities		48,124		11,712
Commitments and contingencies (Note 4 and Note 10)
Shareholders' Equity
Common stock, $0.001 par value; 500,000,000 shares authorized;
64,734,704 and 53,818,629 shares issued and outstanding, respectively			65		54
Capital in excess of par value			605,048		502,394
Accumulated distributions in excess of net investment income			(1,454)		-
Accumulated net unrealized depreciation on investments			(186)		(1,650)
Accumulated net unrealized appreciation (depreciation) on total return swap(1)			1,640		(4,409)
	Total shareholders' equity		605,113		496,389
Total liabilities and shareholders' equity		$	653,237	$	508,101
Net asset value per share of common stock at end of period		$	9.35	$	9.22
(1) See Note 7 for a discussion of the Company’s total return swap agreement.
(2) See Note 4 for a discussion of expense reimbursements from ICON Investment Group, LLC, or IIG, and recoupment of expense reimbursements.
(3) See Note 5 for a discussion of the sources of distributions paid by the Company.
(4) See Note 2 for a discussion of offering, organizational and other costs submitted to the Company for reimbursement by IIG and its affiliates.
(5) See Note 2 and Note 4 for a discussion of the methodology employed by the Company in calculating the capital gains incentive fee.

See accompanying notes to consolidated financial statements.

1

CĪON Investment Corporation

Consolidated Statements of Operations

(in thousands, except share and per share amounts)

		Three Months Ended March 31,
		2015		2014
		(unaudited)		(unaudited)
Investment income
Interest income		$	8,444	$	2,200
Fee and other income			470		-
Total investment income			8,914		2,200
Operating expenses
Management fees			2,760		909
Administrative services expense			454		415
Capital gains incentive fee(1)			1,454		525
Offering, organizational and other costs - IIG(2)			-		592
General and administrative(3)			1,278		1,058
Total expenses			5,946		3,499
Expense reimbursements from IIG(4)			-		(1,049)
Recoupment of expense reimbursements from IIG(4)			837		-
Net operating expenses			6,783		2,450
Net investment income (loss)			2,131		(250)
Realized and unrealized gains
Net realized gain on investments			575		174
Net change in unrealized appreciation on investments			1,464		611
Net realized gain on total return swap(5)			6,607		2,963
Net change in unrealized appreciation on total return swap(5)			6,049		1,208
Total net realized and unrealized gains			14,695		4,956
Net increase in net assets resulting from operations		$	16,826	$	4,706
Per share information—basic and diluted
Net increase in net assets per share resulting from operations		$	0.29	$	0.24
Weighted average shares of common stock outstanding			58,939,554		19,995,555
(1)	See Note 2 and Note 4 for a discussion of the methodology employed by the Company in calculating the capital gains incentive fee.
(2)	See Note 2 for a discussion of offering, organizational and other costs submitted to the Company for reimbursement by IIG and its affiliates.
(3)	See Note 9 for details of the Company's general and administrative expenses.
(4)	See Note 4 for a discussion of expense reimbursements from IIG and recoupment of expense reimbursements.
(5)	See Note 7 for a discussion of the Company’s total return swap agreement.

See accompanying notes to consolidated financial statements.

2

CĪON Investment Corporation

Consolidated Statements of Changes in Net Assets

(in thousands, except share and per share amounts)

			Three Months Ended March 31,
			2015		2014
			(unaudited)		(unaudited)
Changes in net assets from operations:
	Net investment income (loss)		$	2,131	$	(250)
	Net realized gain on investments			575		174
	Net change in unrealized appreciation on investments			1,464		611
	Net realized gain on total return swap(1)			6,607		2,963
	Net change in unrealized appreciation on total return swap(1)			6,049		1,208
		Net increase in net assets resulting from operations		16,826		4,706
Changes in net assets from shareholders' distributions:(2)
	Net investment income			(2,131)		-
	Net realized gain on total return swap
	Net interest and other income from TRS portfolio			(6,408)		(2,360)
	Net gain on TRS loan sales			(199)		(603)
	Net realized gain on investments			(575)		(174)
	Distributions in excess of net investment income(3)			(1,454)		(177)
		Net decrease in net assets from shareholders' distributions		(10,767)		(3,314)
Changes in net assets from capital share transactions:
	Issuance of common stock, net of issuance costs of $10,016 and $7,750, respectively			99,715		77,173
	Reinvestment of shareholder distributions			3,410		2,334
	Repurchase of common stock			(460)		-
		Net increase in net assets resulting from capital share transactions		102,665		79,507
Total increase in net assets				108,724		80,899
Net assets at beginning of period				496,389		144,571
Net assets at end of period			$	605,113	$	225,470
Net asset value per share of common stock at end of period			$	9.35	$	9.40
Shares of common stock outstanding at end of period				64,734,704		23,991,865
Undistributed (distributions in excess of) net investment income at end of period(3)			$	(1,454)	$	40
(1)		See Note 7 for a discussion of the Company’s total return swap agreement.
(2)		This table presents changes in net assets from shareholders` distributions on a GAAP basis. See Note 5 for a discussion of the sources of distributions paid by the Company.
(3)		Distributions in excess of net investment income represent unearned capital gains incentive fees, which reduce GAAP basis net investment income available for distributions but does not reduce tax basis net investment income.  This tax-related adjustment represents additional distributions for tax purposes.

See accompanying notes to consolidated financial statements.

3

CĪON Investment Corporation

Consolidated Statements of Cash Flows

(in thousands)

		Three Months Ended March 31,
		2015		2014
		(unaudited)		(unaudited)
Operating activities:
Net increase in net assets resulting from operations		$	16,826	$	4,707
Adjustments to reconcile net increase in net assets resulting from
operations to net cash used in operating activities:
	Net accretion of discount on investments		(204)		(46)
	Proceeds from principal repayment of investments		1,118		5,289
	Purchase of investments		(115,528)		(66,997)
	(Increase) decrease in short term investments, net		(22,838)		380
	Proceeds from sale of investments		35,565		13,166
	Net realized gain on investments		(575)		(174)
	Net unrealized appreciation on investments		(1,464)		(611)
	Net unrealized appreciation on total return swap(1)		(6,049)		(1,208)
	Increase in due from counterparty(1)		(41,150)		(27,665)
	Increase in accrued reimbursement of expense support(2)		837		546
	(Increase) decrease in prepaid expenses and other assets		(301)		53
	Decrease (increase) in interest receivable on investments		129		(275)
	Increase in receivable due on investment sold		(3,261)		(6,357)
	Increase in receivable due on total return swap(1)		(1,704)		(1,008)
	Increase in payable for investments purchased		33,335		4,105
	Increase in accrued capital gains incentive fee on unrealized appreciation		1,454		387
	Increase in accounts payable and accrued expenses		146		56
	Decrease in accrued administrative services expense		(129)		-
	Increase in accrued management fees		1,729		-
	Increase in due to IIG - other(3)		-		379
	(Decrease) increase in due to IIG - offering, organizational and other costs(3)		(385)		41
Net cash used in operating activities			(102,449)		(75,232)
Financing activities:
	Gross proceeds from issuance of common stock		111,190		84,924
	Commissions and dealer manager fees paid		(10,584)		(7,751)
	Repurchase of common stock		(460)		-
	Shareholders' distributions paid(4)		(2,955)		(1,876)
Net cash provided by financing activities			97,191		75,297
Net (decrease) increase in cash			(5,258)		65
Cash, beginning of period			9,474		450
Cash, end of period		$	4,216	$	515
Supplemental non-cash financing activities:
	Reinvestment of shareholders` distributions	$	3,410	$	2,334
	Shareholders' distributions payable	$	4,402	$	-
(1)	See Note 7 for a discussion of the Company’s total return swap agreement.
(2)	See Note 4 for a discussion of expense reimbursements from IIG and recoupment of expense reimbursements.
(3)	See Note 2 for a discussion of offering, organizational and other costs submitted to the Company for reimbursement by IIG and its affiliates.
(4)	See Note 5 for a discussion of the sources of distributions paid by the Company.

See accompanying notes to consolidated financial statements.

4

CĪON Investment Corporation

Consolidated Schedule of Investments (unaudited)

March 31, 2015

(in thousands)

Portfolio Company(a)		Index Rate(b)	Industry	Principal/Par Amount		Amortized Cost		Fair Value(c)
Senior Secured First Lien Debt - 13.3%
	Accruent, LLC, L+625, 1.00% LIBOR Floor, 11/25/2019	3 Month LIBOR	High Tech Industries	$	2,985	$	2,979	$	2,985
	ECI Acquisition Holdings, Inc., L+625, 1.00% LIBOR Floor, 3/11/2019(d)	3 Month LIBOR	High Tech Industries		8,710		8,670		8,710
	F+W Media, Inc., L+650, 1.25% LIBOR Floor, 6/30/2019	3 Month LIBOR	Media: Diversified & Production		11,123		10,721		10,845
	Ignite Restaurant Group, Inc., L+700, 1.00% LIBOR Floor, 2/13/2019	3 Month LIBOR	Beverage, Food & Tobacco		14,925		14,727		14,776
	Infogroup Inc., L+600, 1.50% LIBOR Floor, 5/26/2018	3 Month LIBOR	Media: Advertising, Printing & Publishing		10,829		10,317		10,233
	Nathan’s Famous, Inc., 10.00%, 3/15/2020(g)	None	Beverage, Food & Tobacco		6,000		6,000		6,307
	SK Spice S.Á.R.L, L+825, 1.25% LIBOR Floor, 9/30/2018(g)	3 Month LIBOR	Chemicals, Plastics & Rubber		1,753		1,727		1,763
	Smile Brands Group, Inc., L+625, 1.25% LIBOR Floor, 8/16/2019	6 Month LIBOR	Healthcare & Pharmaceuticals		4,859		4,778		4,434
	Sprint Industrial Holdings, LLC, L+575, 1.25% LIBOR Floor, 5/14/2019	3 Month LIBOR	Energy: Oil & Gas		1,438		1,426		1,359
	Studio Movie Grill Holdings, LLC, L+725, 1.00% LIBOR Floor, 9/10/2018(d)	1 Month LIBOR	Hotel, Gaming & Leisure		15,943		15,781		15,943
	TOPPS Company, Inc., L+600, 1.25% LIBOR Floor, 10/2/2018	3 Month LIBOR	Consumer Goods: Non-Durable		705		695		697
	US Joiner Holding Company, L+600, 1.00% LIBOR Floor, 4/16/2020	3 Month LIBOR	Capital Equipment		2,618		2,584		2,611
Total Senior Secured First Lien Debt							80,405		80,663
Senior Secured Second Lien Debt - 49.2%
	Access CIG, LLC, L+875, 1.00% LIBOR Floor, 10/17/2022	3 Month LIBOR	Services: Business		6,400		6,029		6,048
	ALM Media, LLC, L+800, 1.00% LIBOR Floor, 7/30/2021	3 Month LIBOR	Media: Advertising, Printing & Publishing		10,344		10,153		10,137
	American Residential Services LLC, L+800, 1.00% LIBOR Floor, 12/31/2021	3 Month LIBOR	Construction & Building		3,700		3,666		3,644
	AmWINS Group, LLC, L+850, 1.00% LIBOR Floor, 9/4/2020(h)	3 Month LIBOR	Banking, Finance, Insurance & Real Estate		750		757		752
	Blue Ribbon, LLC, L+825, 1.00% LIBOR Floor, 11/13/2022	3 Month LIBOR	Beverage, Food & Tobacco		15,000		14,848		14,813
	Drew Marine Group, Inc., L+700, 1.00% LIBOR Floor, 5/19/2021(g)	3 Month LIBOR	Chemicals, Plastics & Rubber		5,000		5,003		4,925
	EISI LLC, L+850, 1.00% LIBOR Floor, 9/23/2020	3 Month LIBOR	High Tech Industries		20,000		19,650		19,800
	Elements Behavioral Health, Inc., L+875, 1.00% LIBOR Floor, 2/11/2020	3 Month LIBOR	Healthcare & Pharmaceuticals		5,000		4,957		4,965
	Emerald 3 Limited, L+700, 1.00% LIBOR Floor, 5/16/2022(g)	3 Month LIBOR	Environmental Industries		5,000		4,954		4,850
	Flexera Software LLC, L+700, 1.00% LIBOR Floor, 4/2/2021	3 Month LIBOR	High Tech Industries		833		815		821
	Fram Group Holdings Inc., L+900, 1.50% LIBOR Floor, 1/29/2018	1 Month LIBOR	Automotive		90		89		88
	GCA Services Group, Inc., L+800, 1.25% LIBOR Floor, 11/1/2020	6 Month LIBOR	Services: Consumer		800		797		802
	Genex Holdings, Inc., L+775, 1.00% LIBOR Floor, 5/30/2022	3 Month LIBOR	Services: Business		9,910		9,846		9,712
	Global Tel*Link Corporation, L+775, 1.25% LIBOR Floor, 11/23/2020	3 Month LIBOR	Telecommunications		9,500		9,486		9,280
	GTCR Valor Companies, Inc., L+850, 1.00% LIBOR Floor, 11/30/2021	3 Month LIBOR	High Tech Industries		5,000		4,957		4,825
	H.D. Vest, Inc., L+825, 1.25% LIBOR Floor, 6/18/2019	3 Month LIBOR	Banking, Finance, Insurance & Real Estate		17,500		17,419		17,371
	Hilex Poly Co. LLC, L+875, 1.00% LIBOR Floor, 6/5/2022(h)	3 Month LIBOR	Containers, Packaging & Glass		12,409		12,161		12,440
	Institutional Shareholder Services Inc., L+750, 1.00% LIBOR Floor, 4/30/2022	3 Month LIBOR	Services: Business		5,860		5,834		5,772
	Landslide Holdings, Inc., L+725, 1.00% LIBOR Floor, 2/25/2021	3 Month LIBOR	Services: Business		9,830		9,838		9,535
	Lanyon Solutions, Inc., L+850, 1.00% LIBOR Floor, 11/15/2021	3 Month LIBOR	High Tech Industries		2,273		2,263		2,205
	Learfield Communications, Inc., L+775, 1.00% LIBOR Floor, 10/9/2021	3 Month LIBOR	Media: Broadcasting & Subscription		1,417		1,405		1,421
	Mergermarket USA, Inc., L +650, 1.00% LIBOR Floor, 2/4/2022	3 Month LIBOR	Services: Business		2,000		1,991		1,830
	Mitchell International, Inc., L+750, 1.00% LIBOR Floor, 10/11/2021(h)	1 Month LIBOR	High Tech Industries		4,000		3,974		3,990
	MSC.Software Corporation, L+750, 1.00% LIBOR Floor, 5/29/2021	3 Month LIBOR	High Tech Industries		7,820		7,763		7,703
	Navex Global, Inc., L+875, 1.00% LIBOR Floor, 11/18/2022	6 Month LIBOR	High Tech Industries		8,000		7,844		7,920
	Pelican Products, Inc., L+825, 1.00% LIBOR Floor, 4/11/2021(h)	3 Month LIBOR	Chemicals, Plastics & Rubber		2,969		2,984		2,954
	Pike Corporation, L+850, 1.00% LIBOR Floor, 6/22/2022(h)	1 Month LIBOR	Energy: Electricity		10,000		9,833		9,975
	PODS, LLC, L+825, 1.00% LIBOR Floor, 2/2/2023(h)	3 Month LIBOR	Services: Consumer		9,984		9,924		10,059
	PSC Industrial Holdings Corp., L+825, 1.00% LIBOR Floor, 12/5/2021	1 Month LIBOR	Services: Business		10,000		9,805		9,975
	Securus Technologies Holdings, Inc., L+775, 1.25% LIBOR Floor, 4/30/2021	3 Month LIBOR	Telecommunications		4,500		4,475		4,444
	SI Organization, Inc., L+800, 1.00% LIBOR Floor, 5/23/2020	3 Month LIBOR	Services: Business		1,511		1,497		1,534
	SMG, L+825, 1.00% LIBOR Floor, 2/27/2021	3 Month LIBOR	Hotel, Gaming & Leisure		6,220		6,220		6,251
	Survey Sampling International, LLC, L+900, 1.00% LIBOR Floor, 12/16/2021	1 Month LIBOR	Services: Business		15,000		14,708		14,737
	TASC, Inc., 12.00%, 5/23/2021(g)	None	Services: Business		7,332		7,105		7,790
	Telecommunications Management, LLC, L+800, 1.00% LIBOR Floor, 10/30/2020(h)	3 Month LIBOR	Media: Broadcasting & Subscription		1,106		1,089		1,090
	TMK Hawk Parent, Corp., L+750, 1.00% LIBOR Floor, 10/1/2022	3 Month LIBOR	Beverage, Food & Tobacco		15,000		14,855		15,000
	TransFirst Inc., L+800, 1.00% LIBOR Floor, 11/11/2022	6 Month LIBOR	Banking, Finance, Insurance & Real Estate		7,087		7,019		7,126
	U.S. Renal Care, Inc., L+900, 1.25% LIBOR Floor, 1/3/2020(h)	3 Month LIBOR	Healthcare & Pharmaceuticals		3,486		3,527		3,525
	Vestcom International, Inc., L+775, 1.00% LIBOR Floor, 9/30/2022	3 Month LIBOR	Services: Business		15,000		14,931		14,850
	Wand Intermediate I LP, L+725, 1.00% LIBOR Floor, 9/19/2022	6 Month LIBOR	Automotive		14,000		13,905		14,070

See accompanying notes to consolidated financial statements.

5

CĪON Investment Corporation

Consolidated Schedule of Investments (unaudited) (continued)

March 31, 2015

(in thousands)

Portfolio Company(a)		Index Rate(b)	Industry	Principal/Par Amount		Amortized Cost		Fair Value(c)
	Winebow Holdings, Inc., L+750, 1.00% LIBOR Floor, 1/2/2022(h)	1 Month LIBOR	Beverage, Food & Tobacco		7,488		7,339		7,001
	WP CPP Holdings, LLC, L+775, 1.00% LIBOR Floor, 4/30/2021	3 Month LIBOR	Aerospace & Defense		1,435		1,429		1,428
Total Senior Secured Second Lien Debt						297,144		297,458
Collateralized Securities and Structured Products - Debt - 4.7%
	Deutsche Bank AG Frankfurt CRAFT 2013-1A Class Credit Linked Note, L+925, 4/17/2020(g)	3 Month LIBOR	Diversified Financials		2,000		2,034		1,980
	Deutsche Bank AG Frankfurt CRAFT 2013-1X Class Credit Linked Note, L+925, 4/17/2020(g)	3 Month LIBOR	Diversified Financials		610		619		604
	Deutsche Bank AG Frankfurt CRAFT 2014-1 Class Credit Linked Note, L+965, 5/15/2019(g)	3 Month LIBOR	Diversified Financials		5,400		5,400		5,388
	Great Lakes CLO 2014-1, Ltd. Class E Notes, L+525, 4/15/2025(f)(g)	3 Month LIBOR	Diversified Financials		5,000		4,533		4,478
	Ivy Hill Middle Market Credit Fund VII, Ltd. Class E Notes, L+565, 10/20/2025(f)(g)	3 Month LIBOR	Diversified Financials		2,000		1,862		1,837
	JFIN CLO 2014, Ltd. Class E Notes, L+500, 4/20/2025(f)(g)	3 Month LIBOR	Diversified Financials		2,500		2,312		2,194
	JPMorgan Chase Bank, N.A. Credit Link Note, L+1225, 12/20/2021(g)	3 Month LIBOR	Diversified Financials		5,000		5,000		4,953
	NXT Capital CLO 2014-1, LLC Class E Notes, L+550, 4/23/2026(f)(g)	3 Month LIBOR	Diversified Financials		7,500		7,018		6,813
Total Collateralized Securities and Structured Products - Debt							28,778		28,247
Collateralized Securities and Structured Products - Equity - 4.3%
	APIDOS CLO XVI Subordinated Notes, 12.24% Estimated Yield, 1/19/2025(g)(h)	(e)	Diversified Financials		9,000		6,005		6,005
	CENT CLO 19 Limited Subordinated Notes, 11.80% Estimated Yield, 10/29/2025(g)(h)	(e)	Diversified Financials		2,000		1,534		1,534
	Dryden XXIII Senior Loan Fund Subordinated Notes, 12.09% Estimated Yield, 7/17/2023(g)(h)	(e)	Diversified Financials		9,250		6,752		6,753
	Galaxy XV CLO LTD Class A Subordinated Notes, 12.45% Estimated Yield, 4/15/2025(g)(h)	(e)	Diversified Financials		4,000		2,872		2,872
	Ivy Hill Middle Market Credit Fund IX, Ltd. Subordinated Notes, 15.00% Estimated Yield, 10/18/2025(g)	(e)	Diversified Financials		8,146		7,444		7,413
	Ivy Hill Middle Market Credit Fund VII, Ltd. Subordinated Notes, 15.00% Estimated Yield, 10/20/2025(g)	(e)	Diversified Financials		2,000		1,904		1,707
Total Collateralized Securities and Structured Products - Equity							26,511		26,284
Short Term Investments - 5.5%(i)
	First American Treasury Obligations Fund, Class Z Shares(j)				33,188		33,188		33,188
Total Short Term Investments							33,188		33,188
TOTAL INVESTMENTS - 77.0%						$	466,026	$	465,840
OTHER ASSETS IN EXCESS OF LIABILITIES - 23.0%								$	139,273
NET ASSETS - 100%								$	605,113
TOTAL RETURN SWAP - 0.3%				Notional Amount				Unrealized Appreciation
	Citibank TRS Facility (see Note 7)			$	593,494			$	1,640

(a)	All of the Company's debt investments are issued by eligible U.S. portfolio companies, as defined in the Investment Company Act of 1940, as amended, or the 1940 Act, except for investments specifically identified as non-qualifying per note (g) below. The Company does not control and is not an affiliate of any of the portfolio companies in its investment portfolio. Unless specifically identified, investments do not contain a paid-in-kind, or PIK, interest provision.
(b)	The 1, 3 and 6 month London Interbank Offered Rate, or LIBOR, rates were 0.18%, 0.27% and 0.40%, respectively, as of March 31, 2015.  The actual LIBOR rate for each loan listed may not be the applicable LIBOR rate as of March 31, 2015, as the loan may have been priced or repriced based on a LIBOR rate prior to or subsequent to March 31, 2015.
(c)	Fair value determined by the Company’s board of directors (see Note 8).
(d)	As discussed in Note 10, the Company is committed, upon the satisfaction of certain conditions, to fund an additional $1,207 and $4,010 as of March 31, 2015 to ECI Acquisition Holdings, Inc. and Studio Movie Grill Holdings, LLC, respectively.  As of May 8, 2015, the Company is committed, upon the satisfaction of certain conditions, to fund an additional $1,207 and $3,540 to ECI Acquisition Holdings, Inc. and Studio Movie Grill Holdings, LLC, respectively.
(e)	The CLO subordinated notes are considered equity positions in the CLO vehicles and are not rated. Equity investments are entitled to recurring distributions, which are generally equal to the remaining cash flow of the payments made by the underlying vehicle's securities less contractual payments to debt holders and expenses. The estimated yield indicated is based upon a current projection of the amount and timing of these recurring distributions and the estimated amount of repayment of principal upon termination. Such projections are periodically reviewed and adjusted, and the estimated yield may not ultimately be realized.
(f)	Great Lakes CLO 2014-1 Class E Notes, Ivy Hill Middle Market Credit Fund VII Class E Notes and NXT Capital CLO 2014-1 Class E Notes were rated Ba2 on Moody's credit scale as of March 31, 2015. JFIN CLO 2014 Class E Notes were rated BB on S&P's credit scale as of March 31, 2015.
(g)	The investment is not a qualifying asset under the 1940 Act. A business development company may not acquire any asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of that company’s total assets as defined under Section 55 of the 1940 Act. As of March 31, 2015, 87.3% of the Company’s total assets represented qualifying assets. In addition, as described in Note 7, the Company calculates its compliance with the qualifying asset test on a “look through” basis by treating each loan underlying the total return swap as either a qualifying asset or non-qualifying asset based on whether the obligor is an eligible portfolio company. On this basis, 83.3% of the Company’s total assets represented qualifying assets as of March 31, 2015.
(h)	Position or portion thereof unsettled as of March 31, 2015.
(i)	Short term investments represent an investment in a fund that invests in highly liquid investments with average original maturity dates of three months or less.
(j)	Effective yield as of March 31, 2015 is <0.01%.

See accompanying notes to consolidated financial statements.

6

CĪON Investment Corporation

Consolidated Schedule of Investments

December 31, 2014

(in thousands)

Portfolio Company(a)		Index Rate(b)	Industry	Principal/Par Amount		Amortized Cost		Fair Value(c)
Senior Secured First Lien Debt - 13.9%
	Accruent, LLC, L+625, 1.00% LIBOR Floor, 11/25/2019	3 Month LIBOR	High Tech Industries	$	2,993	$	2,986	$	2,993
	ECI Acquisition Holdings, Inc., L+625, 1.00% LIBOR Floor, 3/11/2019(d)	3 Month LIBOR	High Tech Industries		8,214		8,170		8,214
	F+W Media, Inc., L+650, 1.25% LIBOR Floor, 6/30/2019	3 Month LIBOR	Media: Diversified & Production		6,443		6,220		6,298
	Ignite Restaurant Group, Inc., L+700, 1.00% LIBOR Floor, 2/13/2019	3 Month LIBOR	Beverage, Food & Tobacco		14,963		14,753		14,814
	Infogroup Inc., L+600, 1.50% LIBOR Floor, 5/26/2018	3 Month LIBOR	Media: Advertising, Printing & Publishing		10,828		10,281		10,098
	SK Spice S.Á.R.L, L+825, 1.25% LIBOR Floor, 9/30/2018(g)	3 Month LIBOR	Chemicals, Plastics & Rubber		1,758		1,730		1,745
	Smile Brands Group, Inc., L+625, 1.25% LIBOR Floor, 8/16/2019	3 Month LIBOR	Healthcare & Pharmaceuticals		4,871		4,782		4,746
	Sprint Industrial Holdings, LLC, L+575, 1.25% LIBOR Floor, 5/14/2019	3 Month LIBOR	Energy: Oil & Gas		1,442		1,429		1,377
	Studio Movie Grill Holdings, LLC, L+725, 1.00% LIBOR Floor, 9/10/2018(d)	3 Month LIBOR	Hotel, Gaming & Leisure		13,588		13,401		13,452
	TOPPS Company, Inc., L+600, 1.25% LIBOR Floor, 10/2/2018	3 Month LIBOR	Consumer Goods: Non-Durable		1,611		1,586		1,571
	US Joiner Holding Company, L+600, 1.00% LIBOR Floor, 4/16/2020	3 Month LIBOR	Capital Equipment		3,955		3,901		3,896
Total Senior Secured First Lien Debt						69,239		69,204
Senior Secured Second Lien Debt - 49.4%
	Access CIG, LLC, L+875, 1.00% LIBOR Floor, 10/17/2022	1 Month LIBOR	Services: Business		6,400		6,018		6,048
	ALM Media, LLC, L+800, 1.00% LIBOR Floor, 7/30/2021	3 Month LIBOR	Media: Advertising, Printing & Publishing		10,344		10,149		10,137
	American Residential Services LLC, L+800, 1.00% LIBOR Floor, 12/31/2021	3 Month LIBOR	Construction & Building		3,700		3,663		3,626
	Blue Ribbon, LLC, L+825, 1.00% LIBOR Floor, 11/13/2022	1 Month LIBOR	Beverage, Food & Tobacco		8,000		7,900		7,900
	Drew Marine Group, Inc., L+700, 1.00% LIBOR Floor, 5/19/2021(g)	3 Month LIBOR	Chemicals, Plastics & Rubber		5,000		5,003		4,975
	EISI LLC, L+850, 1.00% LIBOR Floor, 9/23/2020	3 Month LIBOR	High Tech Industries		20,000		19,663		19,800
	Elements Behavioral Health, Inc., L+875, 1.00% LIBOR Floor, 2/11/2020	3 Month LIBOR	Healthcare & Pharmaceuticals		5,000		4,955		4,970
	Emerald 3 Limited, L+700, 1.00% LIBOR Floor, 5/16/2022(g)	3 Month LIBOR	Environmental Industries		5,000		4,952		4,850
	Fram Group Holdings Inc., L+900, 1.50% LIBOR Floor, 1/29/2018	1 Month LIBOR	Automotive		90		88		88
	GCA Services Group, Inc., L+800, 1.25% LIBOR Floor, 11/1/2020	3 Month LIBOR	Services: Consumer		800		797		792
	Genex Holdings, Inc., L+775, 1.00% LIBOR Floor, 5/30/2022	1 Month LIBOR	Services: Business		9,910		9,856		9,637
	Global Tel*Link Corporation, L+775, 1.25% LIBOR Floor, 11/23/2020	3 Month LIBOR	Telecommunications		9,500		9,484		9,369
	GTCR Valor Companies, Inc., L+850, 1.00% LIBOR Floor, 11/30/2021	3 Month LIBOR	High Tech Industries		5,000		4,955		4,850
	H.D. Vest, Inc., L+800, 1.25% LIBOR Floor, 6/18/2019	3 Month LIBOR	Banking, Finance, Insurance & Real Estate		854		846		848
	Hilex Poly Co. LLC, L+875, 1.00% LIBOR Floor, 6/5/2022	3 Month LIBOR	Containers, Packaging & Glass		10,000		9,751		9,800
	Institutional Shareholder Services Inc., L+750, 1.00% LIBOR Floor, 4/30/2022	3 Month LIBOR	Services: Business		5,860		5,834		5,772
	Landslide Holdings, Inc., L+725, 1.00% LIBOR Floor, 2/25/2021	3 Month LIBOR	Services: Business		9,830		9,842		9,535
	Lanyon Solutions, Inc., L+850, 1.00% LIBOR Floor, 11/15/2021	3 Month LIBOR	High Tech Industries		2,273		2,263		2,216
	Learfield Communications, Inc., L+775, 1.00% LIBOR Floor, 10/9/2021	3 Month LIBOR	Media: Broadcasting & Subscription		1,417		1,405		1,410
	Mergermarket USA, Inc., L+650, 1.00% LIBOR Floor, 2/4/2022	3 Month LIBOR	Services: Business		2,000		1,990		1,895
	MSC.Software Corporation, L+750, 1.00% LIBOR Floor, 5/29/2021	3 Month LIBOR	High Tech Industries		7,820		7,761		7,664
	Navex Global, Inc., L+875, 1.00% LIBOR Floor, 11/18/2022	3 Month LIBOR	Services: Business		8,000		7,841		7,880
	Pelican Products, Inc., L+825, 1.00% LIBOR Floor, 4/11/2021	3 Month LIBOR	Chemicals, Plastics & Rubber		2,441		2,459		2,387
	Pike Corporation, L+850, 1.00% LIBOR Floor, 6/22/2022	1 Month LIBOR	Energy: Electricity		6,000		5,850		5,932
	PSC Industrial Holdings Corp., L+825, 1.00% LIBOR Floor, 12/5/2021	1 Month LIBOR	Services: Business		10,000		9,800		9,850
	Securus Technologies Holdings, Inc., L+775, 1.25% LIBOR Floor, 4/30/2021	3 Month LIBOR	Telecommunications		4,500		4,472		4,444
	SI Organization, Inc., L+800, 1.00% LIBOR Floor, 5/23/2020	3 Month LIBOR	Services: Business		1,511		1,497		1,496
	SMG, L+825, 1.00% LIBOR Floor, 2/27/2021	3 Month LIBOR	Hotel, Gaming & Leisure		6,220		6,220		6,251
	Survey Sampling International, LLC, L+900, 1.00% LIBOR Floor, 12/16/2021	3 Month LIBOR	Services: Business		15,000		14,701		14,738
	TASC, Inc., 12.00%, 5/23/2021(h)	3 Month LIBOR	Services: Business		7,332		7,099		7,497
	Telecommunications Management, LLC, L+800, 1.00% LIBOR Floor, 10/30/2020	3 Month LIBOR	Media: Broadcasting & Subscription		675		671		667
	TMK Hawk Parent, Corp., L+750, 1.00% LIBOR Floor, 10/1/2022	3 Month LIBOR	Beverage, Food & Tobacco		15,000		14,852		14,925
	TransFirst Inc., L+800, 1.00% LIBOR Floor, 11/11/2022	3 Month LIBOR	Banking, Finance, Insurance & Real Estate		7,087		7,016		7,019
	U.S. Renal Care, Inc., L+900, 1.25% LIBOR Floor, 1/3/2020	3 Month LIBOR	Healthcare & Pharmaceuticals		486		492		487
	Vestcom International, Inc., L+775, 1.00% LIBOR Floor, 9/30/2022	6 Month LIBOR	Services: Business		15,000		14,927		14,775
	Wand Intermediate I LP, L+725, 1.00% LIBOR Floor, 9/19/2022	3 Month LIBOR	Automotive		14,000		13,899		14,035
	Winebow Holdings, Inc., L+750, 1.00% LIBOR Floor, 1/2/2022	1 Month LIBOR	Beverage, Food & Tobacco		5,488		5,494		5,323
	WP CPP Holdings, LLC, L+775, 1.00% LIBOR Floor, 4/30/2021	3 Month LIBOR	Aerospace & Defense		1,435		1,429		1,370
Total Senior Secured Second Lien Debt						245,894		245,258

See accompanying notes to consolidated financial statements.

7

CĪON Investment Corporation

Consolidated Schedule of Investments (continued)

December 31, 2014

(in thousands)

Portfolio Company(a)		Index Rate(b)	Industry	Principal/Par Amount		Amortized Cost		Fair Value(c)
Collateralized Securities and Structured Products - Debt - 5.6%
	Deutsche Bank AG Frankfurt CRAFT 2013-1A Class Credit Linked Note, L+925, 4/17/2020(g)	3 Month LIBOR	Diversified Financials		2,000		2,035		1,999
	Deutsche Bank AG Frankfurt CRAFT 2013-1X Class Credit Linked Note, L+925, 4/17/2020(g)	3 Month LIBOR	Diversified Financials		610		620		610
	Deutsche Bank AG Frankfurt CRAFT 2014-1 Class Credit Linked Note, L+965, 5/15/2019(g)	3 Month LIBOR	Diversified Financials		5,400		5,400		5,400
	Great Lakes CLO 2014-1, Ltd. Class E Notes, L+525, 4/15/2025(f)(g)	3 Month LIBOR	Diversified Financials		5,000		4,522		4,325
	Ivy Hill Middle Market Credit Fund VII, Ltd. Class E Notes, L+565, 10/20/2025(f)(g)	3 Month LIBOR	Diversified Financials		2,000		1,860		1,815
	JFIN CLO 2014, Ltd. Class E Notes, L+500, 4/20/2025(f)(g)	3 Month LIBOR	Diversified Financials		2,500		2,308		2,168
	JPMorgan Chase Bank, N.A. Credit Link Note, L+1,225, 12/20/2021(g)	3 Month LIBOR	Diversified Financials		5,000		5,000		5,048
	NXT Capital CLO 2014-1, LLC, Class E Notes, L+550, 4/23/2026(f)(g)	3 Month LIBOR	Diversified Financials		7,500		7,007		6,600
Total Collateralized Securities and Structured Products - Debt						28,752		27,965
Collateralized Securities and Structured Products - Equity - 1.8%
	Ivy Hill Middle Market Credit Fund IX, Ltd. Subordinated Notes, 14% Estimated Yield, 10/18/2025(g)	(e)	Diversified Financials		8,146		7,427		7,413
	Ivy Hill Middle Market Credit Fund VII, Ltd. Subordinated Notes, 14% Estimated Yield, 10/20/2025(g)	(e)	Diversified Financials		2,000		1,902		1,724
Total Collateralized Securities and Structured Products - Equity						9,329		9,137
Short Term Investments - 2.1%(i)
	First American Treasury Obligations Fund, Class Z Shares(j)				10,350		10,350		10,350
Total Short Term Investments							10,350		10,350
TOTAL INVESTMENTS - 72.9%						$	363,564	$	361,914
OTHER ASSETS IN EXCESS OF LIABILITIES - 27.1%								$	134,475
NET ASSETS - 100%								$	496,389
TOTAL RETURN SWAP - (0.9%)				Notional Amount				Unrealized Depreciation
	Citibank TRS Facility (see Note 7)			$	431,979			$	(4,409)

(a)	All of the Company's debt investments are issued by eligible U.S. portfolio companies, as defined in the Investment Company Act of 1940, as amended, or the 1940 Act, except for investments specifically identified as non-qualifying per note (g) below. The Company does not control and is not an affiliate of any of the portfolio companies in its investment portfolio. Unless specifically identified, investments do not contain a paid-in-kind, or PIK, interest provision.
(b)	The 1, 3 and 6 month London Interbank Offered Rate, or LIBOR, rates were 0.17%, 0.26% and 0.36%, respectively, as of December 31, 2014.  The actual LIBOR rate for each loan listed may not be the applicable LIBOR rate as of December 31, 2014, as the loan may have been priced or repriced based on a LIBOR rate prior to or subsequent to December 31, 2014.
(c)	Fair value determined by the Company’s board of directors (see Note 8).
(d)	As discussed in Note 10, the Company is committed, upon the satisfaction of certain conditions, to fund an additional $1,724 and $6,388 as of December 31, 2014 to ECI Acquisition Holdings, Inc. and Studio Movie Grill Holdings, LLC, respectively.  As of March 25, 2015, the Company is committed, upon the satisfaction of certain conditions,  to fund an additional $1,207 and $4,245 to ECI Acquisition Holdings, Inc. and Studio Movie Grill Holdings, LLC, respectively.
(e)	The CLO subordinated notes are considered equity positions in the CLO vehicles and are not rated. Equity investments are entitled to recurring distributions, which are generally equal to the remaining cash flow of the payments made by the underlying vehicle's securities less contractual payments to debt holders and expenses. The estimated yield indicated is based upon a current projection of the amount and timing of these recurring distributions and the estimated amount of repayment of principal upon termination. Such projections are periodically reviewed and adjusted, and the estimated yield may not ultimately be realized.
(f)	Great Lakes CLO 2014-1 Class E Notes, Ivy Hill Middle Market Credit Fund VII Class E Notes and NXT Capital CLO 2014-1 Class E Notes were rated Ba2 on Moody's credit scale as of December 31, 2014. JFIN CLO 2014 Class E Notes were rated BB on S&P's credit scale as of December 31, 2014.
(g)	The investment is not a qualifying asset under the 1940 Act. A business development company may not acquire any asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of that company’s total assets as defined under Section 55 of the 1940 Act. As of December 31, 2014, 89.3% of the Company’s total assets represented qualifying assets. In addition, as described in Note 7, the Company calculates its compliance with the qualifying asset test on a “look through” basis by treating each loan underlying the total return swap as either a qualifying asset or non-qualifying asset based on whether the obligor is an eligible portfolio company. On this basis, 86.8% of the Company’s total assets represented qualifying assets as of December 31, 2014.
(h)	Position or portion thereof unsettled as of December 31, 2014.
(i)	Short term investments represent an investment in a fund that invests in highly liquid investments with average original maturity dates of three months or less.
(j)	Effective yield as of December 31, 2014 is <0.01%.

See accompanying notes to consolidated financial statements.

8

CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

Note 1. Organization and Principal Business

CĪON Investment Corporation, or the Company, was incorporated under the general corporation laws of the State of Maryland on August 9, 2011. On December 17, 2012, the Company successfully raised gross proceeds from unaffiliated outside investors of at least $2,500, or the minimum offering requirement, and commenced operations. The Company is an externally managed, non-diversified closed-end management investment company that has elected to be regulated as a business development company, or BDC, under the 1940 Act. The Company elected to be treated for federal income tax purposes as a regulated investment company, or RIC, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, or the Code.

The Company’s investment objective is to generate current income and, to a lesser extent, capital appreciation for investors. The Company’s portfolio is comprised primarily of investments in senior secured loans, including first lien loans, second lien loans and unitranche loans, and, to a lesser extent, collateralized securities, structured products and other similar securities and long-term subordinated loans, referred to as mezzanine loans, of private and thinly traded U.S. middle-market companies.

The Company is managed by CĪON Investment Management, LLC, or CIM, a registered investment adviser and an affiliate of the Company. CIM oversees the management of the Company’s activities and is responsible for making investment decisions for the Company’s investment portfolio. The Company and CIM have engaged Apollo Investment Management, L.P., or AIM, a subsidiary of Apollo Global Management, LLC, or, together with its subsidiaries, Apollo, a leading global alternative investment manager, to act as the Company’s investment sub-adviser.  On October 31, 2014, the board of directors of the Company, including a majority of the board of directors who are not interested persons, approved the renewal of the investment sub-advisory agreement with AIM for a period of twelve months commencing December 17, 2014.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. For a more complete discussion of significant accounting policies and certain other information, the Company’s interim unaudited consolidated financial statements should be read in conjunction with its audited consolidated financial statements as of December 31, 2014 and for the year then ended included in the Company’s Annual Report on Form 10-K. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year ending December 31, 2015. The consolidated balance sheet and the consolidated schedule of investments as of December 31, 2014 are derived from the 2014 audited consolidated financial statements.

The Company evaluates subsequent events through the date that the consolidated financial statements are issued.

Cash and Cash Equivalents

Cash and cash equivalents include cash in banks and highly liquid investments with original maturity dates of three months or less. The Company’s cash and cash equivalents are held principally at one financial institution and at times may exceed insured limits. The Company periodically evaluates the creditworthiness of this institution and has not experienced any losses on such deposits.

Short Term Investments

Short term investments include an investment in a U.S. Treasury obligations fund, which seeks to provide current income and daily liquidity by purchasing U.S. Treasury securities and repurchase agreements that are collateralized by such securities. The Company had $33,188 and $10,350 of such investments at March 31, 2015 and December 31, 2014, respectively, which are included in investments, at fair value on the accompanying consolidated balance sheets and on the consolidated schedule of investments.

Offering, Organizational and Other Pre-Effective Costs

Offering costs include, among other things, legal fees and other costs pertaining to the preparation of the Company’s registration statement in connection with the continuous public offering of the Company’s shares. Certain offering costs were funded by IIG and its affiliates and there was no liability for these offering costs to the Company until IIG and its affiliates submitted such costs for reimbursement. Upon meeting the minimum offering requirement on December 17, 2012, the Company incurred and capitalized offering costs of $1,000 that were submitted for reimbursement by IIG (see Note 4). These costs were fully amortized over a twelve month period as an adjustment to capital in excess of par value. The remaining offering costs funded by IIG and its affiliates were incurred when IIG and its affiliates submitted such costs for reimbursement during the year ended December 31, 2014.

9

CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

Organizational costs include, among other things, the cost of organizing the Company as a Maryland corporation, including the cost of legal services and other fees pertaining to the organization of the Company. All organizational costs were funded by IIG and its affiliates and there was no liability for these organizational costs to the Company until IIG and its affiliates submitted such costs for reimbursement. The Company incurred these costs when IIG and its affiliates submitted such costs for reimbursement during the year ended December 31, 2014.

The following table summarizes offering, organizational and other costs incurred by IIG and by the Company from January 31, 2012 (Inception) through March 31, 2015:

	Offering, Organizational and Other Costs Incurred by IIG
Period	Organizational Costs		Offering Costs		Other Pre-Effective Costs(5)		Total
Year Ended
December 31, 2012(1)	$	192	$	1,620	$	200	$	2,012
December 31, 2013		-		-		-		-
December 31, 2014		-		-		-		-
Three Months Ended
March 31, 2015		-		-		-		-
Total		192		1,620		200		2,012
Costs submitted for reimbursement by IIG(2)		(192)		(1,620)		(200)		(2,012)
Total Unreimbursed Costs at March 31, 2015	$	-	$	-	$	-	$	-
	Offering, Organizational and Other Costs Incurred by the Company(3)
Period	Organizational Costs		Offering Costs		Other Pre-Effective Costs(5)		Total
Year Ended
December 31, 2012(1)	$	-	$	30	$	-	$	30
December 31, 2013		-		1,787		-		1,787
December 31, 2014		-		2,026		-		2,026
Three Months Ended
March 31, 2015		-		481		-		481
Total		-		4,324		-		4,324
Costs reimbursed by the Company(2)		192		1,620		200		2,012
Total Costs Incurred by the Company	$	192	$	5,944	$	200	$	6,336
Costs paid as of March 31, 2015	$	192	$	5,750	$	200	$	6,142
Costs accrued as of March 31, 2015(4)		-		194		-		194
Total Costs Incurred by the Company	$	192	$	5,944	$	200	$	6,336

(1)	IIG originally incurred all offering, organizational and other costs prior to the commencement of operations on December 17, 2012. Subsequent to the commencement of operations, the Company incurred all offering and organizational costs and such costs, including reimbursement of costs originally incurred by IIG, will not exceed 1.5% of the actual gross proceeds raised from the offering. See Note 4 for actual gross proceeds raised from the offering and the amount of offering and organizational costs that can be paid by the Company.
(2)	Of this amount, $1,000 of costs charged directly to equity were submitted for reimbursement by IIG on December 17, 2012.  Of the remaining amount, $592 and $420 of costs charged directly to operating expense were submitted for reimbursement by IIG during the three months ended March 31, 2014 and December 31, 2014, respectively.
(3)	Offering costs incurred directly by the Company are included in general and administrative expense on the consolidated statements of operations.
(4)	Of this amount, $99 is presented as Due to IIG - offering, organizational and other costs on the consolidated balance sheets. The remainder is included in accounts payable and accrued expenses on the consolidated balance sheets.
(5)	Amounts represent general and administrative expenses, consisting primarily of professional fees and insurance expense, incurred by IIG related to the Company prior to December 17, 2012 and are included in offering, organizational and other costs - IIG in the consolidated statements of operations. For Financial Industry Regulatory Authority, Inc., or FINRA, purposes, these costs are treated as offering and organizational costs and are subject to reimbursement by the Company in accordance with the investment advisory agreement.

10

CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

Income Taxes

The Company elected to be treated for federal income tax purposes as a RIC under Subchapter M of the Code. To qualify and maintain qualification as a RIC, the Company must, among other things, meet certain source of income and asset diversification requirements and distribute to shareholders, for each taxable year, at least 90% of the Company’s “investment company taxable income,” which is generally the Company’s net ordinary income plus the excess, if any, of realized net short-term capital gains over realized net long-term capital losses. If the Company continues to qualify as a RIC and continues to satisfy the annual distribution requirement, the Company will not have to pay corporate level federal income taxes on any income that the Company distributes to its shareholders. The Company intends to make distributions in an amount sufficient to maintain RIC status each year and to avoid any federal income taxes on income. The Company will also be subject to nondeductible federal excise taxes if the Company does not distribute at least 98.0% of net ordinary income, 98.2% of capital gains, if any, and any recognized and undistributed income from prior years for which it paid no federal income taxes.

Book and tax differences relating to permanent differences are reclassified among the Company’s capital accounts, as appropriate. Additionally, the tax character of distributions is determined in accordance with income tax regulations that may differ from GAAP (see Note 5). During the three months ended March 31, 2015 and 2014, the Company declared distributions of $10,767 and $3,314, respectively.

Uncertainty in Income Taxes

The Company evaluates its tax positions to determine if the tax positions taken meet the minimum recognition threshold for the purposes of measuring and recognizing tax liabilities in the consolidated financial statements. Recognition of a tax benefit or liability with respect to an uncertain tax position is required only when the position is “more likely than not” to be sustained assuming examination by the taxing authorities. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the consolidated statements of operations. The Company did not have any uncertain tax positions during the periods presented herein. 

The Company is subject to examination by U.S. federal, New York State, New York City and Maryland income tax jurisdictions for 2012 and 2013.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires the Company 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 revenues and expenses during the reporting period. Actual results may materially differ from those estimates.

11

CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

Valuation of Portfolio Investments

The fair value of the Company’s investments is determined quarterly in good faith by the Company’s board of directors pursuant to its consistently applied valuation procedures and valuation process in accordance with Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosure, or ASC 820. ASC 820 defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a three-tier fair value hierarchy that prioritizes and ranks the level of market price observability of inputs used in measuring investments at fair value. Inputs used to measure these fair values are classified into the following hierarchy:

Level 1	-	Quoted prices in active markets for identical assets or liabilities, accessible by the Company 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. The inputs used in the determination of fair value may require significant management judgment or estimation. Such information may be the result of consensus pricing information or broker quotes that include a disclaimer that the broker would not be held to such a price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by the disclaimer would result in classification as a Level 3 asset, assuming no additional corroborating evidence.

Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

Based on the observability of the inputs used in the valuation techniques, the Company is required to provide disclosures on fair value measurements according to the fair value hierarchy. The level in the fair value hierarchy for each fair value measurement 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. The level assigned to the investment valuations may not be indicative of the risk or liquidity associated with investing in such investments. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may differ materially from the value that would be received upon an actual sale of such investments. 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 that the Company ultimately realizes on these investments to materially differ from the valuations currently assigned.

The Company’s investments, excluding short term investments,consist primarily of debt securities that are traded on a private over-the-counter market for institutional investments. CIM attempts to obtain market quotations from at least two brokers or dealers for each investment (if available, otherwise from a principal market maker or a primary market dealer or other independent pricing service). CIM utilizes mid-market pricing to determine fair value unless a different point within the range is more representative. Because of the private nature of this marketplace (meaning actual transactions are not publicly reported), the Company believes that these valuation inputs result in Level 3 classification within the fair value hierarchy.

Notwithstanding the foregoing, if in the reasonable judgment of CIM, the price of any investment held by the Company and determined in the manner described above does not accurately reflect the fair value of such investment, CIM will value such investment at a price that reflects such investment’s fair value and report such change in the valuation to the board of directors or its designee as soon as practicable. Investments that carry certain restrictions on sale will typically be valued at a discount from the public market value of the investment.

12

CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

Any investments that are not publicly traded or for which a market price is not otherwise readily available are valued at a price that reflects its fair value. With respect to such investments, the investments are reviewed and valued using one or more of the following types of analyses:

i.Market comparable statistics and public trading multiples discounted for illiquidity, minority ownership and other factors for companies with similar characteristics.

ii.Valuations implied by third-party investments in the applicable portfolio companies.

iii.Discounted cash flow analysis, including a terminal value or exit multiple.

Determination of fair value involves subjective judgments and estimates. Accordingly, these notes to the Company’s consolidated financial statements refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on the Company’s consolidated financial statements. Below is a description of factors that the Company’s board of directors may consider when valuing the Company’s equity and debt investments where a market price is not readily available:

·the size and scope of a portfolio company and its specific strengths and weaknesses;

·prevailing interest rates for like securities;

·expected volatility in future interest rates;

·leverage; 

·call features, put features and other relevant terms of the debt;

·the borrower’s ability to adequately service its debt;

·the fair market value of the portfolio company in relation to the face amount of its outstanding debt;

·the quality of collateral securing the Company’s debt investments;

·multiples of earnings before interest, taxes, depreciation and amortization, or EBITDA, cash flows, net income, revenues or, in some cases, book value or liquidation value; and

·other factors deemed applicable.

All of these factors may be subject to adjustment based upon the particular circumstances of a portfolio company or the Company’s actual investment position. For example, adjustments to EBITDA may take into account compensation to previous owners, or acquisition, recapitalization, and restructuring expenses or other related or non-recurring items. The choice of analyses and the weight assigned to such factors may vary across investments and may change within an investment if events occur that warrant such a change.

The discounted cash flow model deemed appropriate by CIM is prepared for the applicable investments and reviewed by the Company’s valuation committee consisting of senior management. Such models are prepared at least quarterly or on an as needed basis. The model uses the estimated cash flow projections for the underlying investments and an appropriate discount rate is determined based on the latest financial information available for the borrower, prevailing market trends, comparable analysis and other inputs. The model, key assumptions, inputs, and results are reviewed by the Company’s valuation committee with final approval from the board of directors.

Consistent with the Company’s valuation policy, the Company evaluates the source of inputs, including any markets in which the Company’s investments are trading, in determining fair value.

The Company periodically benchmarks the broker quotes from the brokers or dealers against the actual prices at which the Company purchases and sells its investments. Based on the results of the benchmark analysis and the experience of the Company’s management in purchasing and selling these investments, the Company believes that these quotes are reliable indicators of fair value. The Company may also use other methods to determine fair value for securities for which it cannot obtain market quotations through brokers or dealers, including the use of an independent valuation firm. The Company periodically benchmarks the valuations provided by an independent valuation firm against the actual prices at which it purchases and sells its investments. The Company’s valuation committee and board of directors review and approve the valuation determinations made with respect to these investments in a manner consistent with the Company’s valuation process.

The value of the total return swap, or TRS, is primarily based on the increase or decrease in the value of the loans underlying the TRS, as determined by the Company. The loans underlying the TRS are valued in the same manner as loans owned by the Company. As in all cases, the level in the fair value hierarchy for each instrument is determined based on the lowest level of inputs that are significant to the fair value measurement. The Company has classified the TRS as Level 3 within the fair value hierarchy based on the lowest level of significant inputs. For additional information on the TRS, see Note 7.

13

CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

Revenue Recognition

Securities transactions are accounted for on the trade date. The Company records interest and dividend income on an accrual basis beginning on the trade settlement date or the ex-dividend date, respectively, to the extent that the Company expects to collect such amounts. Loan origination fees, original issue discounts, and market discounts/premiums are recorded and such amounts are amortized as adjustments to interest income over the respective term of the loan using the effective interest method. Upon the prepayment of a loan or debt security, any unamortized loan origination fees are recorded as interest income. The Company records prepayment premiums on loans and debt securities as interest income when it receives such amounts. In addition, the Company may generate revenue in the form of commitment, structuring or diligence fees, monitoring fees, fees for providing managerial assistance and possibly consulting fees and performance-based fees. Any such fees generated in connection with investments are recognized when earned.

The Company may have investments in its investment portfolio that contain a PIK interest provision. Any PIK interest would be added to the principal balance of such investments and is recorded as income, if the portfolio company valuation indicates that such PIK interest is collectible. In order to maintain RIC status, substantially all of this income must be paid out to shareholders in the form of distributions, even if the Company has not collected any cash. For the three months ended March 31, 2015 and 2014, the Company did not record any PIK interest from its investments.

Loans and debt securities, including those that are individually identified as being impaired under Accounting Standards Codification 310,Receivables, or ASC 310, are generally placed on nonaccrual status immediately if, in the opinion of management, principal or interest is not likely to be paid in accordance with the terms of the debt agreement, or when principal or interest is past due 90 days or more. Interest accrued but not collected at the date a loan or security is placed on nonaccrual status is reversedagainst interest income. Interest income is recognized on nonaccrual loans or debt securities only to the extent received in cash. How­ever, where there is doubt regarding the ultimate collectibility ofprincipal, cash receipts, whether designated as principal or interest, are thereafter applied to reduce the carrying value of the loan or debt security. Loans or securities are restored to accrual status only when interest and principal payments are brought current and future payments are reasonably assured.

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation

Gains or losses on the sale of investments are calculated by using the weighted-average method. The Company measures realized gains or losses by the difference between the net proceeds from the repayment or sale and the weighted-average amortized cost of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized upfront fees and prepayment penalties. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.

Derivative Instrument

The Company’s only derivative instrument is the TRS. The Company marks its derivative to market through net change in unrealized appreciation on total return swap in the consolidated statements of operations. For additional information on the TRS, see Note 7.

14

CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

Capital Gains Incentive Fee

Pursuant to the terms of the investment advisory agreement the Company entered into with CIM, the incentive fee on capital gains earned on liquidated investments of the Company’s investment portfolio during operations is determined and payable in arrears as of the end of each calendar year. Such fee equals 20% of the Company’s incentive fee capital gains (i.e., the Company’s realized capital gains on a cumulative basis from inception, calculated as of the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis), less the aggregate amount of any previously paid capital gains incentive fees. On a cumulative basis and to the extent that all realized capital losses and unrealized capital depreciation exceed realized capital gains as well as the aggregate realized net capital gains for which a fee has previously been paid, the Company would not be required to pay CIM a capital gains incentive fee. On a quarterly basis, the Company accrues for the capital gains incentive fee by calculating such fee as if it were due and payable as of the end of such period.

CIM has not taken any incentive fees with respect to the Company`s TRS to date. For purposes of computing the capital gains incentive fee, CIM will become entitled to a capital gains incentive fee only upon the termination or disposition of the TRS, at which point all net gains and losses of the underlying loans constituting the reference assets of the TRS will be realized. Any unrealized gains on the TRS are reflected in total assets on the Company`s consolidated balance sheets and included in the computation of the base management fee.

While the investment advisory agreement with CIM neither includes nor contemplates the inclusion of unrealized gains in the calculation of the capital gains incentive fee, pursuant to an interpretation of the American Institute for Certified Public Accountants, or AICPA, Technical Practice Aid for investment companies, the Company accrues capital gains incentive fees on unrealized gains. This accrual reflects the incentive fees that would be payable to CIM if the Company’s entire investment portfolio was liquidated at its fair value as of the balance sheet date even though CIM is not entitled to an incentive fee with respect to unrealized gains unless and until such gains are actually realized.

Net Increase in Net Assets per Share

Net increase in net assets per share is calculated based upon the daily weighted average number of shares of common stock outstanding during the reporting period.

Distributions

Distributions to shareholders are recorded as of the record date. The amount to be paid as a distribution is determined by the board of directors on a monthly basis. Net realized capital gains, if any, are distributed at least annually.

Note 3. Share Transactions

The following table summarizes transactions with respect to shares of the Company’s common stock during the three months ended March 31, 2015 and 2014:

		Three Months Ended March 31,
		2015				2014
		Shares		Amount		Shares		Amount
Gross shares/proceeds from the offering			10,602,475	$	109,731		8,232,851	$	84,924
Reinvestment of distributions			362,547		3,410		248,836		2,334
Total gross shares/proceeds			10,965,022		113,141		8,481,687		87,258
Sales commissions and dealer manager fees			-		(10,016)		-		(7,750)
	Net shares/proceeds from the offering		10,965,022		103,125		8,481,687		79,508
Share repurchase program			(48,947)		(460)		-		-
	Net shares/proceeds from share transactions		10,916,075	$	102,665		8,481,687	$	79,508

15

CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

During the three months ended March 31, 2015 and 2014, the Company sold 10,965,022 and 8,481,687 shares, respectively, at an average price per share of $10.32 and $10.29, respectively.

Reinvestment of shareholder distributions and share repurchases are included in the gross proceeds from the Company’s offering for purposes of determining the total amount of offering and organizational costs that can be paid by the Company (see Note 4).

As of March 31, 2015, the Company sold 64,734,704 shares of common stock for net proceeds of $663,808 at an average price per share of $10.25. The net proceeds include gross proceeds received from reinvested shareholder distributions of $18,950, for which the Company issued 2,014,344 shares of common stock, and gross proceeds paid for shares of common stock tendered for repurchase of $945, for which the Company repurchased 100,487 shares of common stock.

During the period from April 1, 2015 to May 8, 2015, the Company sold 6,637,801 shares of common stock for net proceeds of $68,186 at an average price per share of $10.27. The net proceeds include gross proceeds received from reinvested shareholder distributions of $4,319, for which the Company issued 459,295 shares of common stock, and gross proceeds paid for shares of common stock tendered for repurchase of $398, for which the Company repurchased 42,288 shares of common stock.

Since commencing its continuous public offering on July 2, 2012 and through May 8, 2015, the Company sold 71,372,505 shares of common stock for net proceeds of $731,994 at an average price per share of $10.26. The net proceeds include gross proceeds received from reinvested shareholder distributions of $23,269, for which the Company issued 2,473,639 shares of common stock, and gross proceeds paid for shares of common stock tendered for repurchase of $1,343, for which the Company repurchased 142,775 shares of common stock.

On December 28, 2012, January 31, 2013, March 14, 2013, May 15, 2013, August 15, 2013, and February 4, 2014, the Company’s board of directors increased the public offering price per share of common stock under the Company’s offering to $10.04, $10.13, $10.19, $10.24, $10.32 and $10.45 per share, respectively, to ensure that the associated offering price per share, net of sales commissions and dealer manager fees, equaled or exceeded the net asset value per share on each subsequent subscription closing date and distribution reinvestment date.

Share Repurchase Program

Beginning in the first quarter of 2014, the Company began offering, and on a quarterly basis thereafter it intends to continue offering, to repurchase shares on such terms as may be determined by the Company’s board of directors in its complete and absolute discretion unless, in the judgment of the independent directors of the Company’s board of directors, such repurchases would not be in the best interests of the Company’s shareholders or would violate applicable law.

The Company currently limits the number of shares to be repurchased during any calendar year to the number of shares it can repurchase with the proceeds it receives from the issuance of shares pursuant to its second amended and restated distribution reinvestment plan. At the discretion of the Company’s board of directors, it may also use cash on hand, cash available from borrowings and cash from liquidation of investments as of the end of the applicable period to repurchase shares. In addition, the Company limits the number of shares to be repurchased in any calendar year to 15% of the weighted average number of shares outstanding in the prior calendar year, or 3.75% in each quarter, though the actual number of shares that it offers to repurchase may be less in light of the limitations noted above. The Company offers to repurchase such shares at a price equal to 90% of the offering price in effect on each date of repurchase.

Any periodic repurchase offers are subject in part to the Company’s available cash and compliance with the BDC and RIC qualification and diversification rules promulgated under the 1940 Act and the Code, respectively. While the Company conducts quarterly tender offers as described above, it is not required to do so and may suspend or terminate the share repurchase program at any time, upon 30 days’ notice.

The following table summarizes the share repurchases completed during the three months ended March 31, 2015:

Three Months Ended	Repurchase Date	Shares Repurchased	Percentage of Shares Tendered That Were Repurchased	Repurchase Price Per Share		Aggregate Consideration for Repurchased Shares
March 31, 2015	January 7, 2015	48,947	100%	$	9.41	$	460
Total		48,947				$	460

16

CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

Note 4. Transactions with Related Parties

For the three months ended March 31, 2015 and 2014, fees and other expenses incurred by the Company related to CIM and its affiliates were as follows:

				Three Months Ended March 31,
Entity		Capacity	Description	2015		2014(3)
CĪON Securities, LLC		Dealer manager	Dealer manager fees(1)	$	3,251	$	2,513
CIM		Investment adviser	Management fees(2)		2,760		909
CIM		Investment adviser	Incentive fees(2)		1,454		525
ICON Capital, LLC		Administrative services provider	Administrative services expense(2)		454		415
IIG		Sponsor	Reimbursement of offering, organizational and other costs(2)		-		592
IIG		Sponsor	Recoupment of expense support(2)		837		-
				$	8,756	$	4,954
(1)	Amounts charged directly to equity.
(2)	Amounts charged directly to operations.
(3)	For the three months ended March 31, 2014, all management fees, $1 of administrative services expense, and $139 of incentive fees were supported pursuant to the expense support and conditional reimbursement agreement.

The Company has entered into certain agreements with CIM’s affiliate, CĪON Securities, LLC, formerly known as ICON Securities, LLC, or CĪON Securities, whereby the Company pays certain fees and reimbursements. CĪON Securities is entitled to receive a 3% dealer manager fee from gross offering proceeds from the sale of the Company’s shares. The selling dealers are entitled to receive a sales commission of up to 7% of gross offering proceeds. Such costs are charged against capital in excess of par value when incurred. Since commencing its continuous public offering on July 2, 2012 and through May 8, 2015, the Company paid or accrued sales commissions of $42,716 to the selling dealers and dealer manager fees of $20,758 to CĪON Securities.

The Company has entered into an investment advisory agreement with CIM. On October 31, 2014, the board of directors of the Company, including a majority of the board of directors who are not interested persons, approved the renewal of the investment advisory agreement for a period of twelve months commencing December 17, 2014. Pursuant to the investment advisory agreement, CIM is paid an annual base management fee equal to 2.0% of the average value of the Company’s gross assets, less cash and cash equivalents, and an incentive fee based on the Company’s performance, as described below. The incentive fee consists of two parts. The first part, which is referred to as the subordinated incentive fee on income, is calculated and payable quarterly in arrears based on “pre-incentive fee net investment income” for the immediately preceding quarter and is subject to a hurdle rate, measured quarterly and expressed as a rate of return on adjusted capital, as defined in the investment advisory agreement, equal to 1.875% per quarter, or an annualized rate of 7.5%. The second part of the incentive fee, which is referred to as the incentive fee on capital gains, is described in Note 2. Refer to Note 7 for a discussion of CIM’s entitlement to receive incentive fees and accrual of the incentive fee on capital gains with respect to the TRS.

The Company accrues the capital gains incentive fee based on net realized gains and unrealized appreciation; however, under the terms of the investment advisory agreement, the fee payable to CIM is based on net realized gains and unrealized depreciation and no such fee is payable with respect to unrealized appreciation unless and until such appreciation is actually realized. For the three months ended March 31, 2015 and 2014, the Company recorded capital gains incentive fees related to unrealized appreciation of $1,454 and $386, respectively.

At March 31, 2015, the Company’s liability for capital gains incentive fees was $1,454, which represents capital gains incentive fees related to unrealized appreciation. With respect to the TRS, CIM will become entitled to a capital gains incentive fee only upon the termination or disposition of the TRS, at which point all net gains and losses of the underlying loans constituting the reference assets of the TRS will be realized. See Note 2 and Note 7 for an additional discussion of CIM’s entitlement to receive incentive fees and accrual of the incentive fee on capital gains with respect to the TRS.

The Company entered into an administration agreement with CIM’s affiliate, ICON Capital, LLC, or ICON Capital, pursuant to which ICON Capital furnishes the Company with administrative services including accounting, investor relations and other administrative services necessary to conduct its day-to-day operations. On October 31, 2014, the board of directors of the Company, including a majority of the board of directors who are not interested persons, approved the renewal of the administration agreement for a period of twelve months commencing December 17, 2014. ICON Capital is reimbursed for administrative expenses it incurs on the Company’s behalf in performing its obligations, provided that such reimbursement will be for the lower of ICON Capital’s actual costs or the amount that the Company would be required to pay for comparable administrative services in the same geographic location. Such costs will be reasonably allocated to the Company on the basis of assets, revenues, time records or other reasonable methods. The Company will not reimburse ICON Capital for any services for which it receives a separate fee or for rent, depreciation, utilities, capital equipment or other administrative items allocated to a person with a controlling interest in ICON Capital.

17

CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

                Under the terms of the investment advisory agreement, CIM and certain of its affiliates, which includes IIG, are entitled to receive reimbursement of up to 1.5% of the gross proceeds raised until all offering and organizational costs have been reimbursed. The Company’s payment of offering and organizational costs will not exceed 1.5% of the actual gross proceeds raised from the offering (without giving effect to any potential reimbursements from IIG and its affiliates). If the Company sells the maximum number of shares at its latest public offering price of $10.45 per share, the Company estimates that it may incur up to approximately $15,675 of expenses. Previously, the Company interpreted “raised” to mean all gross proceeds that the Company expected to raise through the completion of the offering of its shares, which could be as late as December 31, 2015, rather than actual gross proceeds raised through the date of reimbursement. Consistent with such application and since the Company believed it would raise at least $100,000 through the completion of the offering of its shares, upon commencement of operations on December 17, 2012, the Company issued 111,111 shares of the Company’s common stock at $9.00 per share to IIG in lieu of payment of $1,000 for offering and organizational costs submitted for reimbursement. The transactions satisfied an independent obligation of IIG to invest $1,000 in the Company’s shares. Through that date, the Company had raised gross proceeds from unaffiliated outside investors of $2,639 and from affiliated investors of $2,000, which, applying 1.5% of actual proceeds raised through the date of reimbursement, would have resulted in CIM being entitled to $70.

With respect to the payment of offering and organizational costs, the Company will continue to interpret the 1.5% limit based on actual gross proceeds raised at the time of such reimbursement.  In addition, the Company will not issue any of its shares or other securities for services or for property other than cash or securities except as a dividend or distribution to its security holders or in connection with a reorganization.  Consistent with this interpretation, on May 30, 2013, IIG paid the Company $1,000, plus interest accrued at a rate of 7% per year.

From inception through March 31, 2015, IIG and its affiliates incurred offering, organizational and other pre-effective costs of $2,012. Of these costs, $1,812 represented offering and organizational costs, all of which have been submitted to the Company for reimbursement. The Company paid $450 in October 2013, $550 in March 2014, $592 in May 2014 and $420 in March 2015.  No additional material offering, organizational or other pre-effective costs have been incurred by IIG or its affiliates subsequent to March 31, 2015.

As of March 31, 2015, the Company raised gross proceeds of $663,808, of which it can pay up to $9,957 in offering and organizational costs (which represents 1.5% of the actual gross proceeds raised). Through March 31, 2015, the Company paid $6,142 of such costs, leaving an additional $3,815 that can be paid. As of May 8, 2015, the Company raised gross proceeds of $731,994, of which it can pay up to $10,980 in offering and organizational costs (which represents 1.5% of the actual gross offering proceeds raised). Through May 8, 2015, the Company paid $6,368 of such costs, leaving an additional $4,612 that can be paid.

On January 30, 2013, the Company entered into the expense support and conditional reimbursement agreement with IIG, whereby IIG agreed to reimburse the Company for expenses in an amount that is sufficient to: (1) ensure that no portion of the Company’s distributions to shareholders will be paid from its offering proceeds or borrowings, and/or (2) reduce the Company’s operating expenses until it has achieved economies of scale sufficient to ensure that it bears a reasonable level of expense in relation to its investment income. Pursuant to the expense support and conditional reimbursement agreement, the Company has a conditional obligation to reimburse IIG for any amounts funded by IIG under such agreement if, during any fiscal quarter occurring within three years of the date on which IIG funded such amount, the sum of the Company’s net investment income for tax purposes, net capital gains and the amount of any dividends and other distributions paid to the Company on account of investments in portfolio companies exceeds the distributions paid by the Company to its shareholders. For the three months ended March 31, 2015, the Company did not receive any expense reimbursements from IIG. For the three months ended March 31, 2014, the total expense reimbursement from IIG was $1,049 relating to certain operating expenses.

On December 13, 2013 and January 16, 2015, the Company and IIG amended the expense support and conditional reimbursement agreement to extend the termination date of such agreement from January 30, 2014 to January 30, 2015 and from January 30, 2015 to December 31, 2015, respectively.

18

CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

The table below presents a summary of all expenses supported by IIG and the associated dates through which such expenses are eligible for reimbursement by the Company for each of the following three month periods.

Three Months Ended	Expense Support Received from IIG		Expense Support Reimbursed to IIG		Unreimbursed Expense Support		Ratio of Operating Expense to Average Net Assets for the Period(1)	Annualized Distribution Rate for the Period(3)	Eligible for Reimbursement through
December 31, 2012	$	117	$	117	$	-	0.93%	0.00%(2)	December 31, 2015
March 31, 2013		819		819		-	2.75%	7.00%	March 31, 2016
June 30, 2013		1,148		523		625	1.43%	7.00%	June 30, 2016
September 30, 2013		1,297		-		1,297	0.49%	7.00%	September 30, 2016
December 31, 2013		695		-		695	0.31%	7.00%	December 31, 2016
March 31, 2014		1,049		-		1,049	0.27%	7.00%	March 31, 2017
June 30, 2014		-		-		-	0.31%	7.00%	June 30, 2017
September 30, 2014		-		-		-	0.13%	7.00%	September 30, 2017
December 31, 2014		831		-		831	0.15%	7.00%	December 31, 2017
March 31, 2015		-		-		-	0.74%	7.00%	March 31, 2018
Total	$	5,956	$	1,459	$	4,497

(1)	Operating expenses include all expenses borne by the Company, except for offering and organizational costs, base management fees, incentive fees, administrative services expenses, other general and administrative expenses owed to CIM and its affiliates, and interest expense.
(2)	The Company did not declare any distributions during the three months ended December 31, 2012.
(3)	Annualized Distribution Rate equals the annualized rate of distributions paid to shareholders based on the amount of the regular cash distributions paid immediately prior to the date the expense support payment obligation was incurred by CIM. Annualized Distribution Rate does not include special cash or stock distributions paid to shareholders.

Pursuant to the expense support and conditional reimbursement agreement, the Company will have a conditional obligation to reimburse IIG for any amounts funded by IIG under such agreement (i) if expense reimbursement amounts funded by IIG exceed operating expenses incurred during any fiscal quarter, (ii) if the sum of the Company’s net investment income for tax purposes, net capital gains and the amount of any dividends and other distributions paid to the Company on account of investments in portfolio companies (to the extent not included in net investment income or net capital gains for tax purposes) exceeds the distributions paid by the Company to shareholders, and (iii) during any fiscal quarter occurring within three years of the date on which IIG funded such amount. The obligation to reimburse IIG for any expense support provided by IIG under such agreement is further conditioned by the following: (i) in the period in which reimbursement is sought, the ratio of operating expenses to average net assets, when considering the reimbursement, cannot exceeded the ratio of operating expenses to average net assets for the period when the expense support was provided; (ii) in the period when reimbursement is sought, the annualized distribution rate cannot fall below the annualized distribution rate for the period when the expense support was provided; and (iii) the expense support can only be reimbursed within three years from the date the expense support was provided.

Reimbursement of such costs will be determined as appropriate to meet the objectives of the expense support and conditional reimbursement agreement. During the three months ended March 31, 2015, the Company recorded obligations to repay expense reimbursements to IIG of $837. During the three months ended March 31, 2014, the Company did not record any obligation to repay expense reimbursements to IIG. The Company may or may not be requested to reimburse any remaining costs in the future.

As of March 31, 2015 and December 31, 2014, the total net liability payable to CIM and its affiliates was $4,144 and $2,303, respectively, which primarily related to fees earned by CIM during the preceding three months of each period.

The Company or IIG may terminate the expense support and conditional reimbursement agreement at any time. IIG has indicated that it expects to continue such reimbursements until it deems that the Company has achieved economies of scale sufficient to ensure that it bears a reasonable level of expenses in relation to its income. If the Company terminates the investment advisory agreement with CIM, the Company may be required to repay IIG all reimbursements funded by IIG within three years of the date of termination. The specific amount of expenses reimbursed by IIG, if any, will be determined at the end of each quarter. There can be no assurance that the expense support and conditional reimbursement agreement will remain in effect or that IIG will reimburse any portion of the Company’s expenses in future quarters.

19

CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

The Company may fund its cash distributions to shareholders from any sources of funds available to the Company, including offering proceeds, borrowings, net investment income from operations, capital gains proceeds from the sale of assets, non-capital gains proceeds from the sale of assets, dividends or other distributions paid to it on account of preferred and common equity investments in portfolio companies and expense reimbursements from IIG, which are subject to recoupment. The Company has not established limits on the amount of funds it may use from available sources to make distributions. A substantial portion of the Company’s distributions have resulted, and future distributions may result, from expense reimbursements from IIG, which are subject to repayment by the Company within three years. The purpose of this arrangement is to avoid such distributions being characterized as a return of capital for tax purposes. Shareholders should understand that any such distributions are not based on the Company’s investment performance, and can only be sustained if the Company achieves positive investment performance in future periods and/or IIG continues to make such expense reimbursements. Shareholders should also understand that the Company’s future repayments will reduce the distributions that they would otherwise receive.  There can be no assurance that the Company will achieve such performance in order to sustain these distributions, or be able to pay distributions at all.  IIG has no obligation to provide expense reimbursements to the Company in future periods.  For the three months ended March 31, 2015, the Company did not receive any expense reimbursements from IIG.  For the three months ended March 31, 2014, if expense reimbursements from IIG were not supported, some or all of the distributions may have been a return of capital for tax purposes.

Because CIM’s senior management team is comprised of substantially the same personnel as the senior management team of the Company’s affiliate, ICON Capital, which is the investment manager to certain equipment finance funds, or equipment funds, such members of senior management provide investment advisory and management services to the equipment funds in addition to the Company. In the event that CIM undertakes to provide investment advisory services to other clients in the future, it will strive to allocate investment opportunities in a fair and equitable manner consistent with the Company’s investment objective and strategies so that the Company will not be disadvantaged in relation to any other client of the investment adviser or its senior management team. However, it is currently possible that some investment opportunities will be provided to the equipment funds or other clients of CIM rather than to the Company.

Indemnifications

The investment advisory agreement, the investment sub-advisory agreement, the administration agreement and the dealer manager agreement each provide certain indemnifications from the Company to the other relevant parties to such agreements.  The Company’s maximum exposure under these agreements is unknown. However, the Company has not experienced claims or losses pursuant to these agreements and believes the risk of loss related to such indemnifications to be remote.

Note 5. Distributions

The Company’s board of directors declared distributions for forty-nine and thirteen record dates during the year ended December 31, 2014 and three months ended March 31, 2015, respectively. Declared distributions are paid monthly.

The following table presents cash distributions per share that were declared during the year ended December 31, 2014 and three months ended March 31, 2015:

	Distributions
Three Months Ended	Per Share		Amount
Fiscal 2014
March 31, 2014 (nine record dates)	$	0.1679	$	3,315
June 30, 2014 (thirteen record dates)		0.1829		5,120
September 30, 2014 (fourteen record dates)		0.1969		7,396
December 31, 2014 (thirteen record dates)		0.1829		8,716
Total distributions for the year ended December 31, 2014	$	0.7306	$	24,547
Fiscal 2015
March 31, 2015 (thirteen record dates)	$	0.1829	$	10,767
Total distributions for the three months ended March 31, 2015	$	0.1829	$	10,767

On, February 1, 2014, the Company changed from semi-monthly closings to weekly closings for the sale of the Company’s shares pursuant to its continuous public offering. As result, the Company’s board of directors authorizes and declares on a monthly basis a weekly distribution amount per share of common stock.

On March 13, 2015, the Company’s board of directors declared four weekly cash distributions of $0.014067 per share, which were paid on April 29, 2015 to shareholders of record on April 7, April 14, April 21, and April 28, 2015. On April 15, 2015 the Company`s board of directors declared four weekly cash distributions of $0.014067 per share, payable on May 27, 2015 to shareholders of record on May 5, May 12, May 19, and May 26, 2015.

20

CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

The Company has adopted an “opt in” distribution reinvestment plan for shareholders. As a result, if the Company makes a distribution, shareholders will receive distributions in cash unless they specifically “opt in” to the second amended and restated distribution reinvestment plan so as to have their cash distributions reinvested in additional shares of the Company’s common stock.

The Company may fund cash distributions to shareholders in the future from any sources of funds available, including offering proceeds, borrowings, net investment income from operations, capital gains proceeds from the sale of assets, non-capital gains proceeds from the sale of assets, dividends or other distributions paid to the Company on account of preferred and common equity investments in portfolio companies and expense reimbursements from IIG. A substantial portion of the Company’s distributions have resulted, and future distributions may result, from expense reimbursements from IIG, which are subject to repayment by the Company. The Company has not established limits on the amount of funds it may use from available sources to make distributions.

The following table reflects the sources of cash distributions on a GAAP basis that the Company has declared on its shares of common stock during the three months ended March 31, 2015 and 2014:

	Three Months Ended March 31,
	2015					2014
Source of Distribution	Per Share		Amount		Percentage	Per Share		Amount		Percentage
Net investment income(1)	$	0.0362	$	2,131	19.8%	$	-	$	-	-
Net realized gain on total return swap
Net interest and other income from TRS portfolio		0.1088		6,408	59.5%		0.1197		2,360	71.3%
Net gain on TRS loan sales		0.0034		199	1.9%		0.0306		603	18.2%
Net realized gain on investments		0.0098		575	5.3%		0.0087		174	5.2%
Distributions in excess of net investment income(2)		0.0247		1,454	13.5%		0.0089		177	5.3%
Total distributions	$	0.1829	$	10,767	100.0%	$	0.1679	$	3,314	100.0%

(1)

Distributions from net investment income includes expense support from IIG of $1,049 related to the three months ended March 31, 2014.

(2)

Distributions in excess of net investment income represent unearned capital gains incentive fees, which reduce GAAP basis net investment income available for distributions but does not reduce tax basis net investment income.  This tax-related adjustment represents additional distributions for tax purposes. On a GAAP basis, distributions in excess of net investment income represent a return of capital.

It is the Company's policy to comply with all requirements of the Code applicable to RICs and to distribute substantially all of its taxable income to its shareholders. In addition, by distributing during each calendar year substantially all of its net investment income, net realized capital gains and certain other amounts, if any, the Company intends not to be subject to a federal excise tax. Accordingly, no federal income tax provision was required.

Income and capital gain distributions are determined in accordance with the Code and federal tax regulations, which may differ from amounts determined in accordance with GAAP. These book/tax differences, which could be material, are primarily due to differing treatments of income and gains on various investments held by the Company. Permanent book/tax differences result in reclassifications to capital in excess of par value, accumulated undistributed net investment income, accumulated undistributed realized gain on investments, and accumulated undistributed realized gain on total return swap. During 2014, the Company did not have any reclassifications as a result of permanent book/tax differences.

The determination of the tax attributes of the Company’s distributions is made annually as of the end of the Company’s fiscal year based upon the Company’s taxable income for the full year and distributions paid for the full year. The tax characteristics of distributions to shareholders are reported to shareholders annually on Form 1099-DIV. All distributions for 2014 were characterized as ordinary income distributions for federal income tax purposes.

21

CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

The tax components of accumulated earnings for the current year will be determined at year end. As of December 31, 2014, the components of accumulated earnings on a tax basis were as follows:

	December 31, 2014
Undistributed net investment income	$	-
Performance-based incentive fee on unrealized gains		-
Net unrealized depreciation on investments and total return swap		(6,059)
	$	(6,059)

As of March 31, 2015, the aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost was $9,399; the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value was $7,945; the net unrealized appreciation was $1,454; and the aggregate cost of securities for Federal income tax purposes was $466,026.

As of December 31, 2014, the aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost was $2,913; the aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value was $8,972; the net unrealized depreciation was $6,059; and the aggregate cost of securities for Federal income tax purposes was $363,564.

Note 6. Investments

The composition of the Company’s investment portfolio as of March 31, 2015 and December 31, 2014 at amortized cost and fair value was as follows:

	March 31, 2015					December 31, 2014
	Amortized Cost(1)		Fair Value		Percentage of Investment Portfolio	Amortized Cost(1)		Fair Value		Percentage of Investment Portfolio
Senior secured first lien debt	$	80,405	$	80,663	18.6%	$	69,239	$	69,204	19.7%
Senior secured second lien debt		297,144		297,458	68.8%		245,894		245,258	69.8%
Collateralized securities and structured products - debt		28,778		28,247	6.5%		28,752		27,965	8.0%
Collateralized securities and structured products - equity		26,511		26,284	6.1%		9,329		9,137	2.5%
Subtotal/total percentage		432,838		432,652	100.0%		353,214		351,564	100.0%
Short term investments(2)		33,188		33,188			10,350		10,350
Total investments	$	466,026	$	465,840		$	363,564	$	361,914

(1)	Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, on the Company’s investments.
(2)	Short term investments represent an investment in a fund that invests in highly liquid investments with average original maturity dates of three months or less.

22

CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

The following tables show the composition of the Company’s investment portfolio by industry classification and geographic dispersion, and the percentage, by fair value, of the total investment portfolio assets in such industries and geographies as of March 31, 2015 and December 31, 2014:

	March 31, 2015			December 31, 2014
Industry Classification	Investments at Fair Value		Percentage of Investment Portfolio	Investments at Fair Value		Percentage of Investment Portfolio
Services: Business	$	81,783	18.9%	$	89,123	25.4%
High Tech Industries		58,959	13.6%		45,737	13.0%
Beverage, Food & Tobacco		57,897	13.4%		42,962	12.2%
Diversified Financials		54,531	12.6%		37,102	10.6%
Banking, Finance, Insurance & Real Estate		25,249	5.8%		7,867	2.2%
Hotel, Gaming & Leisure		22,194	5.1%		19,703	5.6%
Media: Advertising, Printing & Publishing		20,370	4.7%		20,235	5.8%
Automotive		14,158	3.3%		14,123	4.0%
Telecommunications		13,724	3.2%		13,813	3.9%
Healthcare & Pharmaceuticals		12,924	3.0%		10,203	2.9%
Containers, Packaging & Glass		12,440	2.9%		9,800	2.8%
Services: Consumer		10,861	2.5%		792	0.2%
Media: Diversified & Production		10,845	2.5%		6,298	1.8%
Energy: Electricity		9,975	2.3%		5,932	1.7%
Chemicals, Plastics & Rubber		9,642	2.2%		9,107	2.6%
Environmental Industries		4,850	1.1%		4,850	1.4%
Construction & Building		3,644	0.9%		3,626	1.0%
Capital Equipment		2,611	0.6%		3,896	1.1%
Media: Broadcasting & Subscription		2,511	0.6%		2,077	0.6%
Aerospace & Defense		1,428	0.3%		1,370	0.4%
Energy: Oil & Gas		1,359	0.3%		1,377	0.4%
Consumer Goods: Non-Durable		697	0.2%		1,571	0.4%
Subtotal/total percentage		432,652	100.0%		351,564	100.0%
U.S. Treasury Securities		33,188			10,350
Total investments	$	465,840		$	361,914

	March 31, 2015			December 31, 2014
Geographic Dispersion(1)	Investments at Fair Value		Percentage of Investment Portfolio	Investments at Fair Value		Percentage of Investment Portfolio
United States	$	378,349	87.5%	$	314,540	89.4%
Cayman Islands		34,793	8.0%		17,445	5.0%
Germany		7,972	1.9%		8,009	2.3%
Netherlands		4,925	1.1%		4,975	1.4%
United Kingdom		4,850	1.1%		4,850	1.4%
Switzerland		1,763	0.4%		1,745	0.5%
Subtotal/total percentage		432,652	100.0%		351,564	100.0%
U.S. Treasury Securities		33,188			10,350
Total investments	$	465,840		$	361,914

(1) The geographic dispersion is determined by the portfolio company's country of domicile.

23

CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

As of March 31, 2015 and December 31, 2014, there were no delinquent or non-accrual debt investments.

The Company does not “control” and is not an “affiliate” of any of the Company’s portfolio companies, each as defined in the 1940 Act. In general, under the 1940 Act, the Company would be presumed to “control” a portfolio company or issuer if the Company owned 25% or more of its voting securities and would be an “affiliate” of a portfolio company or issuer if the Company owned 5% or more of its voting securities.

The Company’s investment portfolio may contain senior secured investments that are in the form of lines of credit, revolving credit facilities, or unfunded commitments, which may require the Company to provide funding when requested in accordance with the terms of the underlying agreements. As of March 31, 2015 and December 31, 2014, the Company’s unfunded commitments amounted to $15,217 and $23,112, respectively. As of May 8, 2015, the Company’s unfunded commitments amounted to $39,241.  Since these commitments may expire without being drawn upon, unfunded commitments do not necessarily represent future cash requirements or future earning assets for the Company.  Refer to Note 10 for further details on the Company’s unfunded commitments.

Note 7. Total Return Swap

On December 17, 2012, the Company, through its wholly-owned subsidiary, Flatiron Funding, LLC, or Flatiron, entered into a TRS with Citibank, N.A., or Citibank.  Effective December 9, 2013, Flatiron and Citibank amended the TRS to, among other things, increase the maximum aggregate market value of the portfolio of loans subject to the TRS (determined at the time each such loan becomes subject to the TRS) from $150,000 to $225,000, and increase the interest rate payable by Flatiron to Citibank with respect to each loan included in the TRS by increasing the spread over the floating rate index specified for each such loan from 1.25% to 1.35% per year. Flatiron and Citibank further amended the TRS to increase the maximum aggregate market value of the portfolio of loans subject to the TRS to $275,000 effective February 18, 2014, to $325,000 effective April 30, 2014, to $375,000 effective July 30, 2014, to $475,000 effective September 5, 2014, to $600,000 effective January 20, 2015 and to $750,000 effective March 4, 2015. Effective November 18, 2014, Flatiron and Citibank further amended to TRS to extend the termination or call date from December 17, 2014 to December 17, 2015.  The agreements between Flatiron and Citibank, which collectively establish the TRS, are referred to herein as the TRS Agreement.

A TRS is a contract in which one party agrees to make periodic payments to another party based on the change in the market value of the assets underlying the TRS and interest payments in return for periodic payments based on a fixed or variable interest rate. A TRS effectively adds leverage to a portfolio by providing investment exposure to a security or market without owning or taking physical custody of such security or investing directly in such market. Because of the unique structure of a TRS, a TRS typically offers lower financing costs than are offered through more traditional borrowing arrangements.

The TRS with Citibank enables the Company, through its ownership of Flatiron, to obtain the economic benefit of owning the loans subject to the TRS, without actually owning them, in return for an interest-type payment to Citibank. As such, the TRS is analogous to Flatiron borrowing funds to acquire loans and incurring interest expense to a lender.

The obligations of Flatiron under the TRS are non-recourse to the Company and the Company��s exposure under the TRS is limited to the value of the Company’s investment in Flatiron, which generally will equal the value of cash collateral provided by Flatiron under the TRS. Pursuant to the terms of the TRS, Flatiron may select loans with a maximum aggregate market value (determined at the time each such loan becomes subject to the TRS) of $750,000. Flatiron is required to initially cash collateralize a specified percentage of each loan (generally 25% of the market value of such loan) included under the TRS in accordance with margin requirements described in the TRS Agreement. Under the terms of the TRS, Flatiron agreed not to draw upon, or post as collateral, such cash collateral in respect of other financings or operating requirements prior to the termination of the TRS. Neither the cash collateral required to be posted with Citibank nor any other assets of Flatiron are available to pay the debts of the Company.

Each individual loan must meet criteria described in the TRS Agreement, including a requirement that substantially all of the loans be rated by Moody’s and S&P, be part of a loan facility of at least $125 million and have at least two bid quotations from a nationally-recognized pricing service. Under the terms of the TRS, Citibank, as calculation agent, determines whether there has been a failure to satisfy the portfolio criteria in the TRS. If such failure continues for 30 days following the delivery of notice thereof, then Citibank has the right, but not the obligation, to terminate the TRS. Flatiron receives from Citibank all interest and fees payable in respect of the loans included in the TRS. Flatiron pays to Citibank interest at a rate equal to, in respect of each loan included in the TRS, the floating rate index specified for such loan plus 1.35% per year. In addition, upon the termination or repayment of any loan subject to the TRS, Flatiron will either receive from Citibank the appreciation in the value of such loan or pay to Citibank any depreciation in the value of such loan.

Under the terms of the TRS, Flatiron may be required to post additional cash collateral, on a dollar-for-dollar basis, in the event of depreciation in the value of the underlying loans after such value decreases below a specified amount. The limit on the additional collateral that Flatiron may be required to post pursuant to the TRS is equal to the difference between the full notional amount of the loans underlying the TRS and the amount of cash collateral already posted by Flatiron. The amount of collateral required to be posted by Flatiron is determined primarily on the basis of the aggregate value of the underlying loans.

24

CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

The Company has no contractual obligation to post any such additional collateral or to make any interest payments to Citibank on behalf of Flatiron. The Company may, but is not obligated to, increase its investment in Flatiron for the purpose of funding any additional collateral or payment obligations for which Flatiron may become obligated during the term of the TRS. If the Company does not make any such additional investment in Flatiron and Flatiron fails to meet its obligations under the TRS, then Citibank will have the right to terminate the TRS and seize the cash collateral posted by Flatiron under the TRS. In the event of an early termination of the TRS, Flatiron would be required to pay an early termination fee.

Citibank may terminate the TRS on or after December 17, 2015, or the call date. Flatiron may terminate the TRS at any time upon providing no more than 30 days prior notice to Citibank. Any termination prior to the call date will result in payment of an early termination fee to Citibank based on the maximum portfolio amount of the TRS. Under the terms of the TRS, the early termination fee will equal the present value of a stream of monthly payments that would be owed by Flatiron to Citibank for the period from the termination date through and including the call date. Such monthly payments will equal the product of 80% of the maximum portfolio amount, multiplied by 1.35% per year. The Company estimates the early termination fee would have been approximately $5,841 at March 31, 2015. Flatiron may also be required to pay a minimum usage fee in connection with the TRS. As of March 31, 2015 and December 31, 2014, Flatiron owed Citibank a minimum usage fee of $45 and $16, respectively.

The value of the TRS is based on the increase or decrease in the value of the loans underlying the TRS, as determined by the Company. The loans underlying the TRS are valued in the same manner as loans owned by the Company.  As of March 31, 2015 and December 31, 2014, the fair value of the TRS was $1,640 and ($4,409), respectively. The fair value of the TRS is reflected as unrealized depreciation on total return swap and unrealized appreciation on total return swap on the Company’s consolidated balance sheets. The change in value of the TRS is reflected in the Company’s consolidated statements of operations as net change in unrealized appreciation on total return swap. As of March 31, 2015 and December 31, 2014, Flatiron had selected 91 and 69 underlying loans with a total notional amount of $593,494 and $431,979, respectively. For the same periods, Flatiron posted $169,538 and $128,388 in cash collateral held by Citibank (of which only $157,910 and $116,564 was required to be posted), which is reflected in due from counterparty on the Company’s consolidated balance sheets.

Realized gains and losses on the TRS are composed of any gains or losses on loans underlying the TRS as well as net interest and fees earned during the period. Receivable due on the TRS is composed of any amounts due from Citibank that consist of earned but not yet collected net interest and fees and net gains on sales and principal repayments of underlying loans of the TRS. As of March 31, 2015 and December 31, 2014 and for the three months ended March 31, 2015 and 2014, the net receivable and net realized gain on the TRS consisted of the following:

					Net Realized Gain(2)
	Net Receivable(1)				Three Months Ended March 31,
	March 31, 2015		December 31, 2014		2015		2014
Interest and other income from TRS portfolio	$	7,734	$	5,656	$	8,414	$	3,074
Interest and other expense from TRS portfolio		(1,709)		(1,318)		(2,006)		(714)
Net gain on TRS loan sales		236		219		199		603
Total	$	6,261	$	4,557	$	6,607	$	2,963

(1)	Net receivable is reflected in receivable due on total return swap on the Company's consolidated balance sheets.
(2)	Net realized gain is reflected in net realized gain on total return swap on the Company's consolidated statements of operations.

25

CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

In connection with the TRS, Flatiron is required to comply with various covenants and reporting requirements as defined in the TRS Agreement. As of March 31, 2015, Flatiron was in compliance with all covenants and reporting requirements.

CIM has not taken any incentive fees with respect to the Company’s TRS to date. For purposes of computing the capital gains incentive fee, CIM will become entitled to a capital gains incentive fee only upon the termination or disposition of the TRS, at which point all net gains and losses of the underlying loans constituting the reference assets of the TRS will be realized. For purposes of computing the subordinated incentive fee on income, CIM is not entitled to a subordinated incentive fee on income with respect to the TRS. The net unrealized appreciation on the TRS, if any, is reflected in total assets on the Company’s consolidated balance sheets and included in the computation of the base management fee. The base management fee does not include any net unrealized depreciation on the TRS as such amounts are not included in total assets.

While the investment advisory agreement with CIM neither includes nor contemplates the inclusion of unrealized gains in the calculation of the capital gains incentive fee, pursuant to an interpretation of the AICPA Technical Practice Aid for investment companies, the Company accrues capital gains incentive fees on unrealized gains. This accrual reflects the incentive fees that would be payable to CIM if the Company’s entire investment portfolio was liquidated at its fair value as of the balance sheet date even though CIM is not entitled to an incentive fee with respect to unrealized gains unless and until such gains are actually realized.

For purposes of the asset coverage ratio test applicable to the Company as a BDC, the Company treats the outstanding notional amount of the TRS, less the total amount of cash collateral posted by Flatiron under the TRS, as a senior security for the life of that instrument. The Company may, however, accord different treatment to the TRS in the future in accordance with any applicable new rules or interpretations adopted by the staff of the Securities and Exchange Commission, or SEC.

Further, for purposes of Section 55(a) under the 1940 Act, the Company treats each loan underlying the TRS as a qualifying asset if the obligor on such loan is an eligible portfolio company and as a non-qualifying asset if the obligor is not an eligible portfolio company. The Company may, however, accord different treatment to the TRS in the future in accordance with any applicable new rules or interpretations adopted by the staff of the SEC.

26

CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

The following is a summary of the underlying loans subject to the TRS as of March 31, 2015:

Underlying Loans(a)	Index Rate(b)	Industry	Notional Amount		Fair Value(c)		Unrealized Appreciation / (Depreciation)
Senior Secured First Lien Debt
ABG Intermediate Holdings 2 LLC, L+450, 1.00% LIBOR Floor, 5/27/2021	6 Month LIBOR	Retail	$	6,787	$	6,881	$	94
AdvancePierre Foods, Inc., L+450, 1.25% LIBOR Floor, 7/10/2017	6 Month LIBOR	Beverage, Food & Tobacco		3,666		3,702		36
Alion Science and Technology Corp., L+1000, 1.00% LIBOR Floor, 8/18/2019	1 Month LIBOR	Capital Equipment		6,070		6,246		176
ALM Media, LLC, L+450, 1.00% LIBOR Floor, 7/31/2020	3 Month LIBOR	Media: Advertising, Printing & Publishing		8,035		7,931		(104)
American Dental Partners, Inc., L+475, 1.00% LIBOR Floor, 8/29/2021	3 Month LIBOR	Healthcare & Pharmaceuticals		12,375		12,438		63
American Energy - Marcellus, LLC, L+425, 1.00% LIBOR Floor, 8/4/2020	3 Month LIBOR	Energy: Oil & Gas		4,254		3,640		(614)
American Residential Services, LLC, L+450, 1.00% LIBOR Floor, 6/30/2021	3 Month LIBOR	Construction & Building		14,319		14,345		26
American Tire Distributors, Inc., L+425, 1.00% LIBOR Floor, 9/1/2021(d)	Prime	Automotive		3,921		3,962		41
American Tire Distributors, Inc., L+475, 1.00% LIBOR Floor, 6/1/2018	Prime	Automotive		11,912		11,935		23
Aquilex, LLC, L+400, 1.00% LIBOR Floor, 12/31/2020	1 Month LIBOR	Chemicals, Plastics & Rubber		1,948		1,933		(15)
Azure Midstream Energy, LLC, L+650, 1.00% LIBOR Floor, 11/15/2018	1 Month LIBOR	Energy: Oil & Gas		3,350		3,199		(151)
BRG Sports, Inc., L+550, 1.00% LIBOR Floor, 4/15/2021	1 Month LIBOR	Consumer Goods: Durable		8,820		9,013		193
C.H.I. Overhead Doors, Inc., L+425, 1.25% LIBOR Floor, 3/18/2019	1 Month LIBOR	Construction & Building		5,638		5,638		-
Caraustar Industries, Inc., L+675, 1.25% LIBOR Floor, 5/1/2019	3 Month LIBOR	Forest Products & Paper		15,373		15,904		531
Caraustar Industries, Inc., L+675, 1.25% LIBOR Floor, 5/1/2019	3 Month LIBOR	Forest Products & Paper		914		914		-
Central Security Group, Inc., L+525, 1.00% LIBOR Floor, 10/6/2020	1 Month LIBOR	Services: Consumer		13,146		13,307		161
Charming Charlie, LLC, L+800, 1.00% LIBOR Floor, 12/24/2019	3 Month LIBOR	Retail		8,714		8,835		121
Chemstralia Pty Ltd., L+625, 1.00% LIBOR Floor, 2/28/2022(e)	3 Month LIBOR	Chemicals, Plastics & Rubber		3,239		3,392		153
Compuware Corporation, L+525, 1.00% LIBOR Floor, 12/15/2019	3 Month LIBOR	High Tech Industries		271		271		-
CSP Technologies North America, LLC, L+600, 1.00% LIBOR Floor, 1/29/2022	3 Month LIBOR	Chemicals, Plastics & Rubber		13,686		13,825		139
CT Technologies Intermediate Holdings, Inc., L+500, 1.00% LIBOR Floor, 12/1/2021	1 Month LIBOR	Healthcare & Pharmaceuticals		4,938		5,037		99
DBRS, Inc., L+525, 1.00% LIBOR Floor, 3/4/2022(e)	3 Month LIBOR	Services: Business		13,103		13,235		132
Diamond Resorts Corporation, L+450, 1.00% LIBOR Floor, 5/9/2021(e)	3 Month LIBOR	Consumer Goods: Non-Durable		3,007		3,017		10
Emmis Operating Company, L+500, 1.00% LIBOR Floor, 6/10/2021	1 Month LIBOR	Media: Broadcasting & Subscription		6,935		7,035		100
Evergreen Skills Lux S.À.R.L., L+475, 1.00% LIBOR Floor, 4/28/2021(e)	6 Month LIBOR	High Tech Industries		7,303		7,406		103
Global Cash Access, Inc., L+525, 1.00% LIBOR Floor, 12/18/2020	3 Month LIBOR	Hotel, Gaming & Leisure		9,726		9,834		108
GTCR Valor Companies, Inc., L+500, 1.00% LIBOR Floor, 5/30/2021	3 Month LIBOR	High Tech Industries		3,928		3,957		29
HC Group Holdings III, Inc., L+500, 1.00% LIBOR Floor, 4/7/2022(d)	12 Month LIBOR	Healthcare & Pharmaceuticals		497		504		7
Healogics, Inc., L+425, 1.00% LIBOR Floor, 7/1/2021	6 Month LIBOR	Healthcare & Pharmaceuticals		4,916		5,003		87
Hemisphere Media Holdings, LLC, L+400, 1.00% LIBOR Floor, 7/30/2020	3 Month LIBOR	Media: Broadcasting & Subscription		4,036		4,026		(10)
Hilex Poly Co. LLC, L+500, 1.00% LIBOR Floor, 12/5/2021	3 Month LIBOR	Containers, Packaging & Glass		8,359		8,487		128
Hyperion Finance S.Á.R.L, L+475, 1.00% LIBOR Floor, 10/17/2019(e)	3 Month LIBOR	Banking, Finance, Insurance & Real Estate		4,377		4,477		100
Hyperion Insurance Group Limited, L+450, 1.00% LIBOR Floor, 3/26/2022(d)(e)	(f)	Banking, Finance, Insurance & Real Estate		3,062		3,101		39
IMG Worldwide Holdings, LLC, L+425, 1.00% LIBOR Floor, 5/6/2021	3 Month LIBOR	Media: Diversified & Production		12,482		12,555		73
Integra Telecom Holdings, Inc., L+400, 1.25% LIBOR Floor, 2/22/2019	3 Month LIBOR	Telecommunications		4,930		5,000		70
inVentiv Health, Inc., L+625, 1.50% LIBOR Floor, 5/15/2018(d)	3 Month LIBOR	Healthcare & Pharmaceuticals		4,495		4,495		-
inVentiv Health, Inc., L+625, 1.50% LIBOR Floor, 5/15/2018(d)	3 Month LIBOR	Healthcare & Pharmaceuticals		1,696		1,693		(3)
Lanyon Solutions, Inc., L+450, 1.00% LIBOR Floor, 11/13/2020	3 Month LIBOR	High Tech Industries		1,157		1,162		5
LTCG Holdings Corp., L+500, 1.00% LIBOR Floor, 6/6/2020	1 Month LIBOR	Services: Business		7,978		7,957		(21)
LTI Flexible Products, Inc., L+450, 1.00% LIBOR Floor, 5/1/2021	1 Month LIBOR	Consumer Goods: Durable		6,409		6,421		12
Mohegan Tribal Gaming Authority, L+450, 1.00% LIBOR Floor, 11/19/2019	3 Month LIBOR	Hotel, Gaming & Leisure		5,790		5,955		165
Navex Global, Inc., L+475, 1.00% LIBOR Floor, 11/19/2021	6 Month LIBOR	High Tech Industries		13,840		13,930		90
Nielsen & Bainbridge, LLC, L+500, 1.00% LIBOR Floor, 8/15/2020	6 Month LIBOR	Consumer Goods: Durable		16,216		16,235		19
Oasis Outsourcing Holdings, Inc., L+475, 1.00% LIBOR Floor, 12/26/2021	1 Month LIBOR	Services: Business		9,875		10,050		175
Onex Wizard US Acquisition Inc., L+425, 1.00% LIBOR Floor, 3/11/2022(e)	1 Month LIBOR	Containers, Packaging & Glass		3,957		4,022		65
Opal Acquisition, Inc., L+400, 1.00% LIBOR Floor, 11/27/2020	3 Month LIBOR	Healthcare & Pharmaceuticals		7,425		7,500		75
Pelican Products, Inc., L+425, 1.00% LIBOR Floor, 4/10/2020	3 Month LIBOR	Chemicals, Plastics & Rubber		7,947		7,963		16
Peppermill Casinos, Inc., L+600, 1.25% LIBOR Floor, 11/9/2018	1 Month LIBOR	Hotel, Gaming & Leisure		965		980		15
Photonis Technologies SAS, L+750, 1.00% LIBOR Floor, 9/18/2019(e)	3 Month LIBOR	Aerospace & Defense		9,500		9,074		(426)
Pike Corporation, L+450, 1.00% LIBOR Floor, 12/22/2021	1 Month LIBOR	Energy: Electricity		2,500		2,499		(1)
PODS, LLC, L+425, 1.00% LIBOR Floor, 2/2/2022	6 Month LIBOR	Services: Consumer		7,960		8,085		125
Polyconcept Finance B.V., L+475, 1.25% LIBOR Floor, 6/28/2019(e)	1 Month LIBOR	Consumer Goods: Non-Durable		7,291		7,342		51
PSC Industrial Holdings Corp., L+475, 1.00% LIBOR Floor, 12/5/2020	1 Month LIBOR	Services: Business		4,938		4,958		20

27

CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

Underlying Loans(a)	Index Rate(b)	Industry	Notional Amount		Fair Value(c)		Unrealized Appreciation / (Depreciation)
Riverbed Technology, Inc., L+500, 1.00% LIBOR Floor, 2/25/2022(d)	2 Month LIBOR	High Tech Industries		1,638		1,663		25
RP Crown Parent, LLC, L+500, 1.00% LIBOR Floor, 12/21/2018(d)	3 Month LIBOR	High Tech Industries		11,657		11,709		52
Scientific Games International, Inc., L+500, 1.00% LIBOR Floor, 10/1/2021(d)(e)	1 Month LIBOR	Hotel, Gaming & Leisure		16,608		16,927		319
SESAC Holdco II LLC, L+400, 1.00% LIBOR Floor, 2/7/2019	1 Month LIBOR	Media: Broadcasting & Subscription		1,150		1,151		1
SG Acquisition, Inc., L+525, 1.00% LIBOR Floor, 8/19/2021	3 Month LIBOR	Banking, Finance, Insurance & Real Estate		14,576		14,709		133
SGS Cayman, L.P., L+500, 1.00% LIBOR Floor, 4/23/2021(e)	3 Month LIBOR	Services: Business		526		543		17
SI Organization, Inc., L+475, 1.00% LIBOR Floor, 11/23/2019	3 Month LIBOR	Services: Business		7,239		7,291		52
SK Spice S.Á.R.L, L+825, 1.25% LIBOR Floor, 9/30/2018(e)	3 Month LIBOR	Chemicals, Plastics & Rubber		8,289		8,309		20
Smile Brands Group, Inc., L+625, 1.25% LIBOR Floor, 8/16/2019	6 Month LIBOR	Healthcare & Pharmaceuticals		4,687		4,234		(453)
Southcross Holdings Borrower LP, L+500, 1.00% LIBOR Floor, 8/4/2021	3 Month LIBOR	Energy: Oil & Gas		1,258		1,205		(53)
SRA International Inc., L+525, 1.25% LIBOR Floor, 7/20/2018	3 Month LIBOR	High Tech Industries		2,149		2,207		58
Steward Health Care System, LLC, L+550, 1.25% LIBOR Floor, 4/10/2020	3 Month LIBOR	Healthcare & Pharmaceuticals		10,929		11,032		103
Styrolution US Holding LLC, L+550, 1.00% LIBOR Floor, 11/7/2019	3 Month LIBOR	Chemicals, Plastics & Rubber		3,963		4,064		101
Surgery Center Holdings, Inc., L+425, 1.00% LIBOR Floor, 11/3/2020	3 Month LIBOR	Healthcare & Pharmaceuticals		6,515		6,654		139
Survey Sampling International, LLC, L+500, 1.00% LIBOR Floor, 12/16/2020	3 Month LIBOR	Services: Business		7,920		7,940		20
Sutherland Global Services Inc., L+500, 1.00% LIBOR Floor, 4/23/2021	3 Month LIBOR	Services: Business		2,259		2,333		74
Tank Holding Corp., L+425, 1.00% LIBOR Floor, 3/16/2022	1 Month LIBOR	Capital Equipment		3,662		3,699		37
TASC, Inc., L+600, 1.00% LIBOR Floor, 5/23/2020(e)	3 Month LIBOR	Services: Business		10,937		11,467		530
TIBCO Software Inc., L+550, 1.00% LIBOR Floor, 12/4/2020(d)	1 Month LIBOR	High Tech Industries		17,483		18,058		575
TMFS Holdings, LLC, L+450, 1.00% LIBOR Floor, 7/30/2021	3 Month LIBOR	Banking, Finance, Insurance & Real Estate		14,768		14,858		90
TOPPS Company, Inc., L+600, 1.25% LIBOR Floor, 10/2/2018	3 Month LIBOR	Consumer Goods: Non-Durable		2,325		2,289		(36)
Travel Leaders Group, LLC, L+600, 1.00% LIBOR Floor, 12/5/2018	3 Month LIBOR	Services: Consumer		3,789		3,808		19
U.S. Farathane, LLC, L+575, 1.00% LIBOR Floor, 12/23/2021	3 Month LIBOR	Automotive		3,611		3,697		86
USS Parent Holdings Corp., L+475, 1.00% LIBOR Floor, 8/5/2021	1 Month LIBOR	Construction & Building		11,565		11,558		(7)
Vince, LLC, L+475, 1.00% LIBOR Floor, 11/27/2019(e)	3 Month LIBOR	Consumer Goods: Non-Durable		1,565		1,569		4
Western Dental Services, Inc., L+500, 1.00% LIBOR Floor, 11/1/2018	3 Month LIBOR	Healthcare & Pharmaceuticals		6,115		5,517		(598)
Total Senior Secured First Lien Debt				535,159		538,797		3,638
Senior Secured Second Lien Debt
AmWINS Group, LLC, L+850, 1.00% LIBOR Floor, 9/4/2020	3 Month LIBOR	Banking, Finance, Insurance & Real Estate		870		914		44
Asurion, LLC, L+750, 1.00% LIBOR Floor, 3/3/2021	3 Month LIBOR	Services: Consumer		7,717		7,827		110
Deltek, Inc., L+875, 1.25% LIBOR Floor, 10/10/2019	3 Month LIBOR	Services: Business		1,620		1,650		30
Evergreen Skills Lux S.À.R.L., L+825, 1.00% LIBOR Floor, 4/28/2022(e)	6 Month LIBOR	High Tech Industries		9,798		9,433		(365)
GOBP Holdings, Inc., L+825, 1.00% LIBOR Floor, 10/21/2022	3 Month LIBOR	Retail		3,940		3,940		-
Mergermarket USA, Inc., L+650, 1.00% LIBOR Floor, 2/4/2022	1 Month LIBOR	Services: Business		6,965		6,405		(560)
Onex Carestream Finance LP, L+850, 1.00% LIBOR Floor, 12/7/2019	1 Month LIBOR	Healthcare & Pharmaceuticals		9,616		9,698		82
Pelican Products, Inc., L+825, 1.00% LIBOR Floor, 4/11/2021	3 Month LIBOR	Chemicals, Plastics & Rubber		8,050		7,960		(90)
PFS Holding Corporation, L+725, 1.00% LIBOR Floor, 1/31/2022	1 Month LIBOR	Retail		4,973		3,711		(1,262)
Securus Technologies Holdings, Inc., L+775, 1.25% LIBOR Floor, 4/30/2021	3 Month LIBOR	Telecommunications		1,002		988		(14)
Telx Group, Inc., L+650, 1.00% LIBOR Floor, 4/9/2021	3 Month LIBOR	High Tech Industries		2,970		2,974		4
U.S. Renal Care, Inc., L+750, 1.00% LIBOR Floor, 7/3/2020	3 Month LIBOR	Healthcare & Pharmaceuticals		814		837		23
Total Senior Secured Second Lien Debt				58,335		56,337		(1,998)
Total			$	593,494	$	595,134	$	1,640

(a)	All of the underlying loans subject to the TRS are issued by eligible U.S. portfolio companies, as defined in the 1940 Act, except for investments specifically identified as non-qualifying per note (e) below. The Company does not control and is not an affiliate of any of the companies that are issuers of the underlying loans subject to the TRS.
(b)	The 1, 2, 3, 6 and 12 month LIBOR rates were 0.18%, 0.22%, 0.27%, 0.40% and 0.70%, respectively, as of March 31, 2015. The prime rate was 3.25% as of March 31, 2015.  The actual LIBOR rate for each loan listed may not be the applicable LIBOR rate as of March 31, 2015, as the loan may have been priced or repriced based on a LIBOR rate prior to or subsequent to March 31, 2015.
(c)	Fair value determined by the Company’s board of directors (see Note 8).
(d)	Position or portion thereof unsettled as of March 31, 2015.
(e)	All or a portion of the investment is not a qualifying asset under the 1940 Act. A business development company may not acquire any asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of that company’s total assets as defined under Section 55 of the 1940 Act. As of March 31, 2015, 87.3% of the Company’s total assets represented qualifying assets. In addition, as described in this Note 7, the Company calculates its compliance with the qualifying asset test on a “look through” basis by treating each loan underlying the TRS as either a qualifying asset or non-qualifying asset based on whether the obligor is an eligible portfolio company. On this basis, 83.3% of the Company’s total assets represented qualifying assets as of March 31, 2015.
(f)	As of May 8, 2015, no interest rate option had been elected as the entire position remained unsettled.

28

CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

The following is a summary of the underlying loans subject to the TRS as of December 31, 2014:

Underlying Loans(a)	Index Rate(b)	Industry	Notional Amount		Fair Value(c)		Unrealized Appreciation / (Depreciation)
Senior Secured First Lien Debt
ABG Intermediate Holdings 2 LLC, L+450, 1.00% LIBOR Floor, 5/27/2021	6 Month LIBOR	Retail	$	6,804	$	6,858	$	54
Alion Science and Technology Corp., L+1,000, 1.00% LIBOR Floor, 8/18/2019	1 Month LIBOR	Capital Equipment		6,085		6,168		83
ALM Media, LLC, L+450, 1.00% LIBOR Floor, 7/31/2020	3 Month LIBOR	Media: Advertising, Printing & Publishing		7,096		7,001		(95)
American Dental Partners, Inc., L+475, 1.00% LIBOR Floor, 8/29/2021	3 Month LIBOR	Healthcare & Pharmaceuticals		12,406		12,344		(62)
American Energy - Marcellus, LLC, L+425, 1.00% LIBOR Floor, 8/4/2020	3 Month LIBOR	Energy: Oil & Gas		4,254		3,800		(454)
American Residential Services, LLC, L+450, 1.00% LIBOR Floor, 6/30/2021	3 Month LIBOR	Construction & Building		14,355		14,255		(100)
American Tire Distributors, Inc., L+475, 1.00% LIBOR Floor, 6/1/2018(d)	1 Month LIBOR	Automotive		11,942		11,939		(3)
Aquilex, LLC, L+400, 1.00% LIBOR Floor, 12/31/2020	1 Month LIBOR	Chemicals, Plastics & Rubber		1,953		1,923		(30)
Azure Midstream Energy, LLC, L+550, 1.00% LIBOR Floor, 11/15/2018	1 Month LIBOR	Energy: Oil & Gas		4,161		3,750		(411)
BRG Sports, Inc., L+550, 1.00% LIBOR Floor, 4/15/2021	1 Month LIBOR	Consumer Goods: Durable		9,294		9,369		75
C.H.I. Overhead Doors, L+425, 1.25% LIBOR Floor, 3/18/2019	1 Month LIBOR	Construction & Building		5,731		5,699		(32)
Caraustar Industries, Inc., L+675, 1.25% LIBOR Floor, 5/1/2019(d)	3 Month LIBOR	Forest Products & Paper		9,650		9,944		294
Caraustar Industries, Inc., L+625, 1.25% LIBOR Floor, 5/1/2019	3 Month LIBOR	Forest Products & Paper		917		923		6
Central Security Group, Inc., L+525, 1.00% LIBOR Floor, 10/6/2020	1 Month LIBOR	Services: Consumer		13,178		13,174		(4)
Charming Charlie, LLC, L+800, 1.00% LIBOR Floor, 12/24/2019	3 Month LIBOR	Retail		8,736		8,681		(55)
Compuware Holdings, LLC (B1), L+525, 1.00% LIBOR Floor, 12/15/2019	3 Month LIBOR	High Tech Industries		274		274		-
Compuware Holdings, LLC (B2), L+525, 1.00% LIBOR Floor, 12/10/2021	3 Month LIBOR	High Tech Industries		552		552		-
CT Technologies Intermediate Holdings, Inc., L+500, 1.00% LIBOR Floor, 12/1/2021	1 Month LIBOR	Healthcare & Pharmaceuticals		4,950		4,981		31
Emmis Operating Company, L+500, 1.00% LIBOR Floor, 6/10/2021	3 Month LIBOR	Media: Broadcasting & Subscription		6,935		6,965		30
Evergreen Skills Lux S.À.R.L., L+475, 1.00% LIBOR Floor, 4/28/2021(d)(e)	6 Month LIBOR	High Tech Industries		2,947		2,944		(3)
Global Cash Access, Inc., L+525, 1.00% LIBOR Floor, 12/18/2020(d)	1 Month LIBOR	Hotel, Gaming & Leisure		7,806		7,786		(20)
GTCR Valor Companies, Inc., L+500, 1.00% LIBOR Floor, 5/30/2021	3 Month LIBOR	High Tech Industries		3,938		3,883		(55)
Hemisphere Media Holdings, LLC, L+400, 1.00% LIBOR Floor, 7/30/2020	3 Month LIBOR	Media: Broadcasting & Subscription		4,042		4,000		(42)
Hilex Poly Co. LLC, L+500, 1.00% LIBOR Floor, 12/5/2021(d)	1 Month LIBOR	Containers, Packaging & Glass		8,359		8,329		(30)
Hyperion Finance S.Á.R.L, L+475, 1.00% LIBOR Floor, 10/17/2019(e)	3 Month LIBOR	Banking, Finance, Insurance & Real Estate		4,388		4,455		67
inVentiv Health, Inc., L+625, 1.50% LIBOR Floor, 5/15/2018	3 Month LIBOR	Healthcare & Pharmaceuticals		2,490		2,472		(18)
Lanyon Solutions, Inc., L+450, 1.00% LIBOR Floor, 11/13/2020	3 Month LIBOR	High Tech Industries		1,160		1,142		(18)
LTCG Holdings Corp., L+500, 1.00% LIBOR Floor, 6/6/2020	1 Month LIBOR	Services: Business		8,081		8,010		(71)
LTI Flexible Products, Inc., L+450, 1.00% LIBOR Floor, 5/1/2021	3 Month LIBOR	Consumer Goods: Durable		6,425		6,417		(8)
Navex Global, Inc., L+475, 1.00% LIBOR Floor, 11/19/2021	3 Month LIBOR	Services: Business		9,900		9,900		-
Nielsen & Bainbridge, LLC, L+500, 1.00% LIBOR Floor, 8/15/2020	6 Month LIBOR	Consumer Goods: Durable		16,256		16,193		(63)
Oasis Outsourcing Holdings, Inc., L+475, 1.00% LIBOR Floor, 12/26/2021(d)	1 Month LIBOR	Services: Business		9,900		9,975		75
Peppermill Casinos, Inc., L+600, 1.25% LIBOR Floor, 11/9/2018	1 Month LIBOR	Hotel, Gaming & Leisure		968		977		9
Photonis Technologies SAS, L+750, 1.00% LIBOR Floor, 9/18/2019(e)	3 Month LIBOR	Aerospace & Defense		10,214		10,014		(200)
Polyconcept Finance B.V., L+475, 1.25% LIBOR Floor, 6/28/2019(e)	1 Month LIBOR	Consumer Goods: Non-Durable		7,310		7,389		79
PSC Industrial Holdings Corp., L+475, 1.00% LIBOR Floor, 12/5/2020	Prime	Services: Business		4,950		4,969		19
Scientific Games International, Inc., L+500, 1.00% LIBOR Floor, 10/1/2021(d)(e)	1 Month LIBOR	Hotel, Gaming & Leisure		3,796		3,843		47
SG Acquisition, Inc., L+525, 1.00% LIBOR Floor, 8/19/2021	3 Month LIBOR	Banking, Finance, Insurance & Real Estate		14,613		14,727		114
SGS Cayman, L.P., L+500, 1.00% LIBOR Floor, 4/23/2021(e)	3 Month LIBOR	Services: Business		527		539		12
SI Organization, Inc., L+475, 1.00% LIBOR Floor, 11/23/2019	3 Month LIBOR	Services: Business		7,256		7,236		(20)
SK Spice S.Á.R.L, L+825, 1.25% LIBOR Floor, 9/30/2018(e)	3 Month LIBOR	Chemicals, Plastics & Rubber		8,310		8,221		(89)
Smile Brands Group, Inc., L+625, 1.25% LIBOR Floor, 8/16/2019	6 Month LIBOR	Healthcare & Pharmaceuticals		4,699		4,533		(166)
Southcross Holdings Borrower LP, L+500, 1.00% LIBOR Floor, 8/4/2021	3 Month LIBOR	Energy: Oil & Gas		1,262		1,135		(127)
SRA International, L+525, 1.25% LIBOR Floor, 7/20/2018	1 Month LIBOR	High Tech Industries		2,149		2,186		37
Steward Health Care System, LLC, L+550, 1.25% LIBOR Floor, 4/10/2020(d)	3 Month LIBOR	Healthcare & Pharmaceuticals		10,957		10,949		(8)
Styrolution US Holding LLC, L+550, 1.00% LIBOR Floor, 11/7/2019	3 Month LIBOR	Chemicals, Plastics & Rubber		5,195		5,169		(26)

29

CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

Underlying Loans(a)	Index Rate(b)	Industry	Notional Amount		Fair Value(c)		Unrealized Appreciation / (Depreciation)
Survey Sampling International, LLC, L+500, 1.00% LIBOR Floor, 12/16/2020	3 Month LIBOR	Services: Business		7,920		7,940		20
Sutherland Global Services Inc., L+500, 1.00% LIBOR Floor, 4/23/2021	3 Month LIBOR	Services: Business		2,265		2,317		52
TASC, Inc., L+550, 1.00% LIBOR Floor, 5/23/2020(d)(e)	3 Month LIBOR	Services: Business		10,964		11,113		149
TIBCO Software Inc., L+550, 1.00% LIBOR Floor, 12/4/2020(d)	1 Month LIBOR	High Tech Industries		12,538		12,672		134
TMFS Holdings, LLC, L+450, 1.00% LIBOR Floor, 7/30/2021	3 Month LIBOR	Banking, Finance, Insurance & Real Estate		11,850		11,880		30
TOPPS Company, Inc., L+600, 1.25% LIBOR Floor, 10/2/2018	3 Month LIBOR	Consumer Goods: Non-Durable		2,331		2,263		(68)
Travel Leaders Group, LLC, L+600, 1.00% LIBOR Floor, 12/5/2018	3 Month LIBOR	Services: Consumer		3,840		3,849		9
USS Parent Holdings Corp., L+475, 1.00% LIBOR Floor, 8/5/2021	1 Month LIBOR	Construction & Building		11,594		11,529		(65)
Vince, LLC, L+475, 1.00% LIBOR Floor, 11/27/2019(e)	6 Month LIBOR	Consumer Goods: Non-Durable		1,736		1,727		(9)
Western Dental Services, Inc., L+500, 1.00% LIBOR Floor, 11/1/2018	3 Month LIBOR	Healthcare & Pharmaceuticals		6,131		5,869		(262)
William Morris Endeavor, L+425, 1.00% LIBOR Floor, 5/6/2021(d)	3 Month LIBOR	Media: Diversified & Production		10,554		10,239		(315)
Total Senior Secured First Lien Debt				378,894		377,391		(1,503)
Senior Secured Second Lien Debt
AmWINS Group, LLC, L+850, 1.00% LIBOR Floor, 9/4/2020(d)	3 Month LIBOR	Banking, Finance, Insurance & Real Estate		870		893		23
Arysta LifeScience SPC, LLC, L+700, 1.25% LIBOR Floor, 11/30/2020(e)	3 Month LIBOR	Chemicals, Plastics & Rubber		1,161		1,170		9
Deltek, Inc., L+875, 1.25% LIBOR Floor, 10/10/2019	3 Month LIBOR	Services: Business		1,620		1,648		28
Evergreen Skills Lux S.À.R.L., L+825, 1.00% LIBOR Floor, 4/28/2022(e)	6 Month LIBOR	High Tech Industries		9,798		9,425		(373)
GOBP Holdings, Inc., L+825, 1.00% LIBOR Floor, 10/21/2022	3 Month LIBOR	Retail		6,895		6,921		26
Mergermarket USA, Inc., L+650, 1.00% LIBOR Floor, 2/04/2022	1 Month LIBOR	Services: Business		6,965		6,633		(332)
Onex Carestream Finance LP, L+850, 1.00% LIBOR Floor, 12/7/2019	3 Month LIBOR	Healthcare & Pharmaceuticals		7,967		7,945		(22)
Pelican Products, Inc., L+825, 1.00% LIBOR Floor, 4/11/2021	3 Month LIBOR	Chemicals, Plastics & Rubber		8,050		7,820		(230)
PFS Holding Corporation, L+725, 1.00% LIBOR Floor, 1/31/2022	1 Month LIBOR	Retail		4,973		2,961		(2,012)
Securus Technologies Holdings, Inc., L+775, 1.25% LIBOR Floor, 4/30/2021	3 Month LIBOR	Telecommunications		1,002		988		(14)
Telx Group, Inc., L+650, 1.00% LIBOR Floor, 4/9/2021	3 Month LIBOR	High Tech Industries		2,970		2,951		(19)
U.S. Renal Care, Inc., L+750, 1.00% LIBOR Floor, 7/3/2020	3 Month LIBOR	Healthcare & Pharmaceuticals		814		824		10
Total Senior Secured Second Lien Debt				53,085		50,179		(2,906)
Total			$	431,979	$	427,570	$	(4,409)

(a)	All of the underlying loans subject to the TRS are issued by eligible U.S. portfolio companies, as defined in the 1940 Act, except for investments specifically identified as non-qualifying per note (e) below. The Company does not control and is not an affiliate of any of the companies that are issuers of the underlying loans subject to the TRS.
(b)	The 1, 3, and 6 month LIBOR rates were 0.17%, 0.26%, and 0.36%, respectively, as of December 31, 2014. The prime rate was 3.25% as of December 31, 2014. The actual LIBOR rate for each loan listed may not be the applicable LIBOR rate as of December 31, 2014, as the loan may have been priced or repriced based on a LIBOR rate prior to or subsequent to December 31, 2014.
(c)	Fair value determined by the Company’s board of directors (see Note 8).
(d)	Position or portion thereof unsettled as of December 31, 2014.
(e)	All or a portion of the investment is not a qualifying asset under the 1940 Act. A business development company may not acquire any asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of that company’s total assets as defined under Section 55 of the 1940 Act. As of December 31, 2014, 89.3% of the Company’s total assets represented qualifying assets. In addition, as described in this Note 7, the Company calculates its compliance with the qualifying asset test on a “look through” basis by treating each loan underlying the TRS as either a qualifying asset or non-qualifying asset based on whether the obligor is an eligible portfolio company. On this basis, 86.8% of the Company’s total assets represented qualifying assets as of December 31, 2014.

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CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

Note 8. Fair Value of Financial Instruments

The following table presents fair value measurements of the Company’s portfolio investments and TRS as of March 31, 2015 and December 31, 2014, according to the fair value hierarchy:

	March 31, 2015								December 31, 2014
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Senior secured first lien debt	$	-	$	-	$	80,663	$	80,663	$	-	$	-	$	69,204	$	69,204
Senior secured second lien debt		-		-		297,458		297,458		-		-		245,258		245,258
Collateralized securities and structured products - debt		-		-		28,247		28,247		-		-		27,965		27,965
Collateralized securities and structured products - equity		-		-		26,284		26,284		-		-		9,137		9,137
Short term investments		33,188		-		-		33,188		10,350		-		-		10,350
Total return swap		-		-		1,640		1,640		-		-		(4,409)		(4,409)
Total	$	33,188	$	-	$	434,292	$	467,480	$	10,350	$	-	$	347,155	$	357,505

The following tables provide a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the three March 31, 2015 and 2014:

	Three Months Ended March 31, 2015
	Senior Secured First Lien Debt		Senior Secured Second Lien Debt		Collateralized Securities and Structured Products - Debt		Collateralized Securities and Structured Products - Equity		Unsecured Debt		Total Return Swap		Total
Beginning balance, December 31, 2014	$	69,204	$	245,258	$	27,965	$	9,137	$	-	$	(4,409)	$	347,155
Investments purchased		41,627		52,037		-		17,163		4,701		-		115,528
Net realized gain		507		9		-		-		59		6,607		7,182
Net change in unrealized appreciation		293		950		256		(35)		-		6,049		7,513
Accretion of discount		100		59		26		19		-		-		204
Sales and principal repayments		(31,068)		(855)		-		-		(4,760)		(6,607)		(43,290)
Ending balance, March 31, 2015	$	80,663	$	297,458	$	28,247	$	26,284	$	-	$	1,640	$	434,292
Change in unrealized gains or losses for the period included in changes in net assets for assets held at the end of the reporting period	$	293	$	951	$	256	$	(35)	$	-	$	5,928	$	7,393

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CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

	Three Months Ended March 31, 2014
	Senior Secured First Lien Debt		Senior Secured Second Lien Debt		Collateralized Securities and Structured Products - Debt		Collateralized Securities and Structured Products - Equity		Total Return Swap		Total
Beginning balance, December 31, 2013	$	61,788	$	22,552	$	6,849	$	1,946	$	1,549	$	94,684
Investments purchased		39,067		25,637		2,293		-		-		66,997
Net realized gain		144		30		-		-		2,963		3,137
Net change in unrealized appreciation		313		342		9		(53)		1,208		1,819
Accretion of discount		41		4		1		-		-		46
Sales and principal repayments		(17,054)		(1,401)		-		-		(2,963)		(21,418)
Ending balance, March 31, 2014	$	84,299	$	47,164	$	9,152	$	1,893	$	2,757	$	145,265
Change in unrealized gains or losses for the period included in changes in net assets for assets held at the end of the reporting period	$	454	$	384	$	9	$	(53)	$	1,355	$	2,149

Significant Unobservable Inputs

The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements of investments as of March 31, 2015 and December 31, 2014 were as follows:

	March 31, 2015
	Fair Value		Valuation Techniques/ Methodologies	Unobservable Inputs	Range			Weighted Average(1)
Senior secured first lien debt	$	46,384	Discounted Cash Flow	Discount Rates	6.5%	-	8.6%	8.0%
		34,279	Broker Quotes	Broker Quotes	N/A			N/A
Senior secured second lien debt		175,785	Discounted Cash Flow	Discount Rates	8.2%	-	10.8%	9.3%
		121,673	Broker Quotes	Broker Quotes	N/A			N/A
Collateralized securities and structured products - debt		28,247	Discounted Cash Flow	Discount Rates	8.5%	-	12.3%	10.3%
Collateralized securities and structured products - equity		26,284	Discounted Cash Flow	Discount Rates	11.5%	-	15.0%	12.2%
Total Return Swap		491	Discounted Cash Flow	Discount Rates	5.2%	-	10.1%	6.9%
		1,149	Broker Quotes	Broker Quotes	N/A			N/A
Total	$	434,292

(1) Weighted average amounts are based on the estimated fair values.

32

CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

	December 31, 2014
	Fair Value		Valuation Techniques/ Methodologies	Unobservable Inputs	Range			Weighted Average(1)
Senior secured first lien debt	$	29,932	Discounted Cash Flow	Discount Rates	6.8%	-	10.0%	7.9%
		39,272	Broker Quotes	Broker Quotes	N/A			N/A
Senior secured second lien debt		147,914	Discounted Cash Flow	Discount Rates	8.1%	-	11.5%	9.4%
		97,344	Broker Quotes	Broker Quotes	N/A			N/A
Collateralized securities and structured products - debt		27,965	Discounted Cash Flow	Discount Rates	9.5%	-	12.3%	10.9%
Collateralized securities and structured products - equity		9,137	Discounted Cash Flow	Discount Rates	10.7%	-	14.0%	13.4%
Total Return Swap		(954)	Discounted Cash Flow	Discount Rates	5.8%	-	11.6%	7.2%
		(3,455)	Broker Quotes	Broker Quotes	N/A			N/A
Total	$	347,155

(1) Weighted average amounts are based on the estimated fair values.

The significant unobservable inputs used in the fair value measurement of the Company`s senior secured first lien debt, senior secured second lien debt, collateralized securities and structured products, and total return swap are discount rates. A significant increase or decrease in discount rates would result in a significantly lower or high fair value measurement, respectively.

Note 9. General and Administrative Expense

General and administrative expense consisted of the following items for the three months ended March 31, 2015 and 2014:

	Three Months Ended March 31,
	2015		2014
Due diligence fees	$	262	$	323
Professional fees expense		235		287
Transfer agent expense		225		116
Marketing expense		99		88
Dues and subscriptions		88		21
Director fees and expenses		64		32
Insurance expense		59		52
Printing and mailing expense		55		33
Filing fees		27		6
Other expenses		164		100
Total general and administrative expense	$	1,278	$	1,058

33

CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

Note 10. Commitments and Contingencies

The Company entered into certain contracts with other parties that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not experienced claims or losses pursuant to these contracts and believes the risk of loss related to such indemnifications to be remote.

As of March 31, 2015 and December 31, 2014, the Company’s commitments and contingencies were as follows:

Unfunded Commitments	March 31, 2015(1)		December 31, 2014(1)
SS&C Technologies, Inc.(2)	$	10,000	$	-
Studio Movie Grill Holdings, LLC(3)		4,010		6,388
ECI Acquisition Holdings, Inc.(3)		1,207		1,724
Dollar Tree, Inc.(4)		-		15,000
Total	$	15,217	$	23,112

(1)	Unless otherwise noted, the funding criteria for these unfunded commitments had not been met at the date indicated.
(2)	As of March 31, 2015, such commitment was subject to the execution of a definitive loan agreement and the consummation of the underlying corporate transaction, and conditional upon receipt of all necessary shareholder, regulatory and other applicable approvals. As of May 8, 2015, the Company's unfunded commitments included $10,000 to SS&C Technologies, Inc.
(3)	As of May 8, 2015, the Company's unfunded commitments were to portfolio companies ECI Acquisition Holdings, Inc. and Studio Movie Grill Holdings, LLC in the amount of $1,207 and $3,540, respectively, and included unfunded commitments to Tenet Healthcare and Informatica Corp. for $14,444 and $10,050, respectively.
(4)	As of December 31, 2014, such commitment was subject to the execution of a definitive loan agreement and the consummation of the underlying corporate transaction, and conditional upon receipt of all necessary shareholder, regulatory and other applicable approvals.  Prior to March 31, 2015, the Dollar Tree, Inc. unfunded commitment was terminated.

Unfunded commitments to provide funds to companies are not recorded on the Company’s consolidated balance sheets. Since these commitments may expire without being drawn upon, unfunded commitments do not necessarily represent future cash requirements or future earning assets for the Company.  The Company intends to use cash on hand, short-term investments and other liquid assets to fund these commitments should the need arise.For information on the companies to which the Company is committed to fund additional amounts as of March 31, 2015 and December 31, 2014, refer to the table above and the consolidated schedule of investments.

The Staff of the Division of Investment Management has recently informed the Company that it views unfunded commitments as senior securities under the 1940 Act.  The Company is reviewing the Staff’s position and its impact on the Company’s operations and business objectives and will continue to engage the Staff in discussions as to the appropriate treatment of unfunded commitments.  During the course of this review, analysis and discussions, the Company intends to comply with the Staff’s position by including unfunded commitments as a senior security in the asset coverage test or by segregating or setting aside liquid assets or engaging in other SEC or Staff-approved measures to “cover” unfunded commitments in an amount required to comply with the 1940 Act.

Note 11. Fee Income

Fee income consists of commitment fees and amendment fees. The following table summarizes the Company’s fee income for the three months ended March 31, 2015 and 2014:

	Three Months Ended March 31,
	2015		2014
Commitment fees	$	468	$	-
Amendment fees		2		-
Total	$	470	$	-

For the three months ended March 31, 2015 and 2014, all income from fees was non-recurring.

34

CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

Note 12. Financial Highlights

The following is a schedule of financial highlights as of and for the three months ended March 31, 2015 and 2014:

		As of and for the		As of and for the
		Three Months Ended		Three Months Ended
		March 31, 2015		March 31, 2014
Per share data:(1)
Net asset value at beginning of period		$	9.22	$	9.32
Results of operations:
	Net investment income (loss)(2)		0.04		(0.01)
	Net realized gain and net change in unrealized appreciation on investments(3)		0.03		0.04
	Net realized gain and net change in unrealized appreciation on total return swap		0.21		0.21
Net increase in net assets resulting from operations(3)			0.28		0.24
Shareholder distributions:
	Distributions from net investment income		(0.04)		(0.16)
	Distributions from net realized gains		(0.12)		(0.01)
	Distributions in excess of net investment income(4)		(0.02)		-
Net decrease in net assets from shareholder distributions			(0.18)		(0.17)
Capital share transactions:
	Issuance of common stock above net asset value(5)		0.03		0.01
Net increase in net assets resulting from capital share transactions			0.03		0.01
Net asset value at end of period		$	9.35	$	9.40
Shares of common stock outstanding at end of period			64,734,704		23,991,865
Total investment return-net asset value(6)			3.33%		2.63%
Net assets at beginning of period		$	496,389	$	144,571
Net assets at end of period		$	605,113	$	225,470
Average net assets		$	547,867	$	195,361
Ratio/Supplemental data:
Ratio of net investment income (loss) to average net assets(7)			0.39%		(0.13%)
Ratio of gross operating expenses to average net assets			1.24%		1.79%
Ratio of expenses (before recoupment of expense reimbursements) to average net assets(8)			1.09%		1.79%
Ratio of net operating expenses to average net assets(9)			1.24%		1.25%
Portfolio turnover rate(10)			9.63%		16.17%
Asset coverage ratio(11)			2.38		2.39

(1)	The per share data for the three months ended March 31, 2015 and 2014 was derived by using the weighted average shares of common stock outstanding during each period.
(2)	Net investment income (loss) per share includes expense reimbursements from IIG of $0.05 per share for the three months ended March 31, 2014 and expense recoupments of $0.01 per share for the three months ended March 31, 2015.
(3)	The amount shown for net realized gain and net change in unrealized appreciation on investments is the balancing figure derived from the other figures in the schedule. The amount shown at this caption for a share outstanding throughout the period may not agree with the change in the aggregate gains and losses in portfolio securities for the period because of the timing of sales and repurchases of the Company’s shares in relation to fluctuating market values for the portfolio. As a result, net increase in net assets resulting from operations in this schedule may vary from the consolidated statements of operations.
(4)	Distributions in excess of net investment income represent unearned capital gains incentive fees of $1,454, which reduce GAAP basis net investment income available for distributions but does not reduce tax basis net investment income.  This tax-related adjustment represents additional distributions for tax purposes. On a GAAP basis, distributions in excess of net investment income represent a return of capital.

35

CĪON Investment Corporation

Notes to Consolidated Financial Statements (unaudited)

March 31, 2015

(in thousands, except share and per share amounts)

(5)	The continuous issuance of shares of common stock may cause an incremental increase in net asset value per share due to the sale of shares at the then prevailing public offering price and the receipt of net proceeds per share by the Company in excess of net asset value per share on each subscription closing date.
(6)	Total investment return-net asset value is a measure of the change in total value for shareholders who held the Company’s common stock at the beginning and end of the period, including distributions paid or payable during the period. Total investment return-net asset value is based on (i) the beginning period net asset value per share on the first day of the period, (ii) the net asset value per share on the last day of the period of (A) one share plus (B) any fractional shares issued in connection with the reinvestment of monthly distributions, and (iii) the value of distributions payable, if any, on the last day of the period. The total investment return-net asset value calculation assumes that (i) monthly cash distributions are reinvested in accordance with the Company's distribution reinvestment plan and second amended and restated distribution reinvestment plan and (ii) the fractional shares issued pursuant to the distribution reinvestment plan and second amended and restated distribution reinvestment plan are issued at 95% (from January 1, 2013 through September 30, 2013) and 90% (from October 1, 2013 through March 31, 2015) of the then public offering price on the date of purchase, respectively. The total investment return-net asset value does not consider the effect of the sales load from the sale of the Company’s common stock. The total investment return-net asset value includes the effect of the issuance of shares at a net offering price that is greater than net asset value per share, which causes an increase in net asset value per share. Total returns covering less than a full period are not annualized.
(7)	Excluding the expense reimbursements from IIG and the recoupment of expense reimbursements during the period, the ratio of net investment income (loss) to average net assets would have been 0.54% and (0.66%) for the three months ended March 31, 2015 and 2014, respectively.
(8)	The ratio of expense reimbursements from IIG and expense recoupments to average net assets for the three months ended March 31, 2015 and 2014 were (0.15%) and 0.54%, respectively.
(9)	In order to record an obligation to reimburse IIG for expense support provided, the ratio of gross operating expenses to average net assets, when considering the reimbursement, in the period in which reimbursement is sought cannot exceeded the ratio of gross operating expenses to average net assets for the period when the expense support was provided. For purposes of this calculation, gross operating expenses include all expenses borne by the Company, except for offering and organizational costs, base management fees, incentive fees, administrative services expenses, other general and administrative expenses owed to CIM and its affiliates and interest expense. For the three months ended March 31, 2015 and 2014, the ratio of gross operating expenses to average net assets, when considering reimbursements, were 0.74% and 0.27%, respectively.
(10)	Portfolio turnover rate is calculated using the lesser of year-to-date sales or purchases over the average of the invested assets at fair value, excluding short term investments, and is not annualized.
(11)	Asset coverage ratio is equal to (i) the sum of (a) net assets at the end of the period and (b) total senior securities outstanding at the end of the period, divided by (ii) total senior securities outstanding at the end of the period. For purposes of the asset coverage ratio test applicable to the Company as a BDC, the Company treats the outstanding TRS notional amount at the end of the period, less the total amount of cash collateral posted by Flatiron under the TRS, as well as unfunded commitments, for the three months ended March 31, 2015, as senior securities.

Note 13. Subsequent Events

Registration Statement

On April 28, 2015, the Company filed a registration statement on Form N-2 to sell up to 100,000,000 additional shares of its common stock at an initial public offering price of $10.45 per share.

East West Bank Credit Facility

On April 30, 2015, the Company entered into a revolving credit facility, or the EWB Credit Facility, with East West Bank, or EWB. The EWB Credit Facility provides for borrowings in an aggregate principal amount of up to $40,000, subject to compliance with a borrowing base. As of May 8, 2015, the aggregate principal amount available in connection with the EWB Credit Facility was $40,000.

36

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

As used in this Quarterly Report on Form 10-Q, “we,” “us,” “our” or similar terms include CĪON Investment Corporation and its consolidated subsidiaries.

The following discussion should be read in conjunction with our unaudited consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2014. In addition to historical information, the following discussion and other parts of this Quarterly Report on Form 10-Q contain forward-looking information that involves risks and uncertainties. Amounts and percentages presented herein may have been rounded for presentation and all dollar amounts, excluding share and per share amounts, are presented in thousands unless otherwise noted.

Forward-Looking Statements

Some of the statements within this Quarterly Report on Form 10-Q may constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this Quarterly Report on Form 10-Q may include statements as to:

• our future operating results;

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

• the impact of the investments that we expect to make;

• the ability of our portfolio companies to achieve their objectives;

• our current and expected financings and investments;

• the adequacy of our cash resources, financing sources and working capital;

• the use of borrowed money to finance a portion of our investments;

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

• our contractual arrangements and relationships with third parties;

• the actual and potential conflicts of interest with CIM and Apollo and their respective affiliates;

• the ability of CIM and AIM to locate suitable investments for us and the ability of CIM to monitor and administer our investments;

• the ability of CIM and AIM and their respective affiliates to attract and retain highly talented professionals;

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

• the effects of a changing interest rate environment;

• our ability to source favorable private investments;

• our tax status;

• the effect of changes to tax legislation and our tax position;

• the tax status of the companies in which we invest; and

• the timing and amount of distributions and dividends from the companies in which we invest.

In addition, words such as “anticipate,” “believe,” “expect” and “intend” indicate a forward-looking statement, although not all forward-looking statements include these words. The forward-looking statements contained in this Quarterly Report on Form 10-Q involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Risk Factors” in Item 1A of Part II of this Quarterly Report on Form 10-Q. Other factors that could cause actual results to differ materially include:

• changes in the economy;

• risks associated with possible disruption in our operations or the economy generally due to terrorism or natural disasters; and

• future changes in laws or regulations and conditions in our operating areas.

37

We have based the forward-looking statements on information available to us on the date of this Quarterly Report on Form 10-Q. Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised to review any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. The forward-looking statements contained in this Quarterly Report on Form 10-Q are excluded from the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

Overview

We were incorporated under the general corporation laws of the State of Maryland on August 9, 2011 and commenced operations on December 17, 2012 upon raising proceeds of $2,500 from persons not affiliated with us, CIM or Apollo. We are an externally managed, non-diversified closed-end management investment company that has elected to be regulated as a BDC under the 1940 Act. We elected to be treated for federal income tax purposes as a RIC, as defined under Subchapter M of the Code.

Our investment objective is to generate current income and, to a lesser extent, capital appreciation for investors. Our portfolio is comprised primarily of investments in senior secured loans, including first lien loans, second lien loans and unitranche loans, and, to a lesser extent, collateralized securities, structured products and other similar securities and long-term subordinated loans, referred to as mezzanine loans, of private and thinly traded U.S. middle-market companies. In connection with our debt investments, we may receive equity interests such as warrants or options as additional consideration. We may also purchase minority interests in the form of common or preferred equity in our target companies, either in conjunction with one of our debt investments or through a co-investment with a financial sponsor. In addition, a portion of our portfolio may be comprised of corporate bonds and other debt securities. However, such investments are not expected to comprise a significant portion of our portfolio.

We are managed by CIM, our affiliate and a registered investment adviser. CIM oversees the management of our activities and is responsible for making investment decisions for our portfolio. We and CIM have engaged AIM to act as our investment sub-adviser. On October 31, 2014, our board of directors, including a majority of directors who are not interested persons, approved the renewal of the investment advisory agreement with CIM and the investment sub-advisory agreement with AIM, each for a period of twelve months commencing December 17, 2014.

We seek to meet our investment objective by utilizing the experienced management teams of both CIM and AIM, which includes their access to the relationships and human capital of Apollo, IIG and ICON Capital, in sourcing, evaluating and structuring transactions. We focus primarily on the senior secured debt of private and thinly-traded U.S. middle-market companies, which we define as companies that generally possess annual EBITDA of $50 million or less, with experienced management teams, significant free cash flow, strong competitive positions and potential for growth.

Revenue

We primarily generate revenue in the form of interest income on the debt securities that we hold and capital gains on debt or other equity interests that we acquire in portfolio companies. The majority of our senior debt investments bear interest at a floating rate. Interest on debt securities is generally payable quarterly or semiannually. In some cases, some of our investments may provide for deferred interest payments or PIK interest. The principal amount of the debt securities and any accrued, but unpaid, interest generally will become due at the maturity date. In addition, we may generate revenue in the form of commitment, structuring or diligence fees, monitoring fees, fees for providing managerial assistance and possibly consulting fees and performance-based fees. Any such fees generated in connection with our investments are recognized when earned.

Operating Expenses

Our primary operating expenses are the payment of advisory fees and other expenses under the investment advisory and administration agreements. Our investment advisory fee compensates CIM for its work in identifying, evaluating, negotiating, executing, monitoring and servicing our investments. CIM is responsible for compensating AIM for its services pursuant to the investment sub-advisory agreement. We bear all other expenses of our operations and transactions, including, without limitation:

·corporate expenses relating to borrowings and costs associated with the offering of our common stock, subject to limitations included in the administration agreement;

·the costs of calculating our net asset value, including the cost of any third-party valuation services;

·investment advisory fees;

·fees payable to third parties relating to, or associated with, making, monitoring and disposing of investments and valuing investments and enforcing our contractual rights, including fees and expenses associated with performing due diligence reviews of prospective investments;

·transfer agent and custodial fees;

·fees and expenses associated with our marketing efforts;

·interest payable on debt, if any, incurred to finance our investments;

·federal and state registration fees;

38

·federal, state and local taxes;

·independent directors’ fees and expenses;

·costs of proxy statements, tender offer materials, shareholders’ reports and notices;

·fidelity bond, directors and officers/errors and omissions liability insurance and other insurance premiums;

·direct costs such as printing, mailing, long distance telephone and staff;

·fees and expenses associated with independent audits and outside legal costs, including compliance with the Sarbanes-Oxley Act of 2002, as amended;

·costs associated with our reporting and compliance obligations under the 1940 Act and applicable federal and state securities laws;

·brokerage commissions for our investments; and

·all other expenses incurred by CIM, AIM or us in connection with administering our business, including expenses incurred by CIM or AIM in performing its obligations, and the reimbursement of the compensation of our chief financial officer and chief compliance officer and their respective staffs paid by CIM, to the extent that they are not a person with a controlling interest in CIM or any of its affiliates, in each case subject to the limitations included in the investment advisory and administration agreements, as applicable.

Portfolio Investment Activity for the Three Months Ended March 31, 2015 and 2014

The following table summarizes our investment activity, excluding short term investments, for the three months ended March 31, 2015 and 2014:

		Three Months Ended March 31,
		2015						2014
Net Investment Activity		Investment Portfolio		Total Return Swap		Total		Investment Portfolio		Total Return Swap		Total
Purchases and drawdowns
	Senior secured first lien debt	$	41,627	$	174,589	$	216,216	$	39,067	$	135,071	$	174,138
	Senior secured second lien debt		52,037		9,702		61,739		25,637		17,884		43,521
	Collateralized securities and structured products - debt		-		-		-		2,293		-		2,293
	Collateralized securities and structured products - equity		17,163		-		17,163		-		-		-
	Unsecured debt		4,701		-		4,701		-		-		-
Sales and principal repayments			(36,683)		(22,975)		(59,658)		(18,455)		(67,710)		(86,165)
Net portfolio activity		$	78,845	$	161,316	$	240,161	$	48,542	$	85,245	$	133,787

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The following table summarizes the composition of our investment portfolio at amortized cost and fair value and our underlying TRS loans portfolio at notional amount and fair value as of March 31, 2015 and December 31, 2014:

	March 31, 2015
	Investment Portfolio					Total Return Swap					Total
	Investments Amortized Cost(1)		Investments Fair Value		Percentage of Investment Portfolio	Notional Amount of Underlying TRS Loans		Fair Value of Underlying TRS Loans		Percentage of Underlying TRS Loans	Amortized Cost/ Notional Amount		Fair Value		Percentage
Senior secured first lien debt	$	80,405	$	80,663	18.6%	$	535,159	$	538,797	90.5%	$	615,564	$	619,460	60.3%
Senior secured second lien debt		297,144		297,458	68.8%		58,335		56,337	9.5%		355,479		353,795	34.4%
Collateralized securities and structured products - debt		28,778		28,247	6.5%		-		-	-		28,778		28,247	2.7%
Collateralized securities and structured products - equity		26,511		26,284	6.1%		-		-	-		26,511		26,284	2.6%
Subtotal/total percentage		432,838		432,652	100.0%		593,494		595,134	100.0%		1,026,332		1,027,786	100.0%
Short term investments(2)		33,188		33,188			-		-			33,188		33,188
Total investments	$	466,026	$	465,840		$	593,494	$	595,134		$	1,059,520	$	1,060,974
Number of portfolio companies					65					85					130(3)
Average annual EBITDA of portfolio companies				$65.5 million					$163.4 million					$125.3 million
Median annual EBITDA of portfolio companies				$57.6 million					$89.0 million					$65.0 million
Purchased at a weighted average price of par					96.75%					98.94%					98.00%
Gross annual portfolio yield based upon the purchase price(4)					9.39%					6.70%(5)					7.84%

(1)	Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, on our investments.
(2)	Short term investments represent an investment in a fund that invests in highly liquid investments with average original maturity dates of three months or less.
(3)	The sum of investment portfolio and TRS portfolio companies does not equal the total number of portfolio companies. This is due to 20 portfolio companies being in both the investment and TRS portfolios.
(4)	The portfolio yield does not represent an actual investment return to shareholders.
(5)	The portfolio yield for underlying TRS loans is determined without giving consideration to leverage.

	December 31, 2014
	Investment Portfolio					Total Return Swap					Total
	Investments Amortized Cost(1)		Investments Fair Value		Percentage of Investment Portfolio	Notional Amount of Underlying TRS Loans		Fair Value of Underlying TRS Loans		Percentage of Underlying TRS Loans	Amortized Cost/ Notional Amount(1)		Fair Value		Percentage
Senior secured first lien debt	$	69,239	$	69,204	19.7%	$	378,894	$	377,391	88.3%	$	448,133	$	446,595	57.3%
Senior secured second lien debt		245,894		245,258	69.8%		53,085		50,179	11.7%		298,979		295,437	37.9%
Collateralized securities and structured products - debt		28,752		27,965	8.0%		-		-	-		28,752		27,965	3.6%
Collateralized securities and structured products - equity		9,329		9,137	2.5%		-		-	-		9,329		9,137	1.2%
Subtotal/total percentage		353,214		351,564	100.0%		431,979		427,570	100.0%		785,193		779,134	100.0%
Short term investments(2)		10,350		10,350			-		-			10,350		10,350
Total investments	$	363,564	$	361,914		$	431,979	$	427,570		$	795,543	$	789,484
Number of portfolio companies					56					65					104(3)
Average annual EBITDA of portfolio companies				$62.9 million					$118.1 million					$94.8 million
Median annual EBITDA of portfolio companies				$53.2 million					$65.0 million					$60.1 million
Purchased at a weighted average price of par					98.09%					99.01%					98.59%
Gross annual portfolio yield based upon the purchase price(4)					9.23%					6.87%(5)					7.93%

(1)	Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, on our investments.
(2)	Short term investments represent an investment in a fund that invests in highly liquid investments with average original maturity dates of three months or less.
(3)	The sum of investment portfolio and TRS portfolio companies does not equal the total number of portfolio companies. This is due to 17 portfolio companies being in both the investment and TRS portfolios.
(4)	The portfolio yield does not represent an actual investment return to shareholders.
(5)	The portfolio yield for underlying TRS loans is determined without giving consideration to leverage.

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The following table summarizes the composition of our investment portfolio and our underlying TRS loans portfolio by the type of interest rate as of March 31, 2015 and December 31, 2014, excluding short term investments of $33,188 and $10,350, respectively:

	March 31, 2015
	Investment Portfolio					Total Return Swap					Total
Interest Rate Allocation	Investments Amortized Cost		Investments Fair Value		Percentage of Investment Portfolio	Notional Amount of Underlying TRS Loans		Fair Value of Underlying TRS Loans		Percentage of Underlying TRS Loans	Amortized Cost/ Notional Amount		Fair Value		Percentage
Floating interest rate investments	$	419,733	$	418,555	96.7%	$	593,494	$	595,134	100.0%	$	1,013,227	$	1,013,689	98.6%
Fixed interest rate investments		13,105		14,097	3.3%		-		-	-		13,105		14,097	1.4%
Total investments	$	432,838	$	432,652	100.0%	$	593,494	$	595,134	100.0%	$	1,026,332	$	1,027,786	100.0%

	December 31, 2014
	Investment Portfolio					Total Return Swap					Total
Interest Rate Allocation	Investments Amortized Cost		Investments Fair Value		Percentage of Investment Portfolio	Notional Amount of Underlying TRS Loans		Fair Value of Underlying TRS Loans		Percentage of Underlying TRS Loans	Amortized Cost/ Notional Amount		Fair Value		Percentage
Floating interest rate investments	$	346,115	$	344,067	97.9%	$	431,979	$	427,570	100.0%	$	778,094	$	771,637	99.0%
Fixed interest rate investments		7,099		7,497	2.1%		-		-	-		7,099		7,497	1.0%
Total investments	$	353,214	$	351,564	100.0%	$	431,979	$	427,570	100.0%	$	785,193	$	779,134	100.0%

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The following table shows the composition of our investment portfolio and our underlying TRS loans portfolio by industry classification and the percentage, by fair value, of the total assets in such industries as of March 31, 2015 and December 31, 2014:

	March 31, 2015
	Investment Portfolio			Total Return Swap			Total
Industry Classification	Investments Fair Value		Percentage of Investment Portfolio	Fair Value of Underlying TRS Loans		Percentage of Underlying TRS Loans	Fair Value		Percentage
Services: Business	$	81,783	18.9%	$	73,829	12.4%	$	155,612	15.1%
High Tech Industries		58,959	13.6%		72,770	12.2%		131,729	12.8%
Healthcare & Pharmaceuticals		12,924	3.0%		74,642	12.5%		87,566	8.5%
Banking, Finance, Insurance & Real Estate		25,249	5.8%		38,059	6.4%		63,308	6.2%
Beverage, Food & Tobacco		57,897	13.4%		3,702	0.6%		61,599	6.0%
Chemicals, Plastics & Rubber		9,642	2.2%		47,446	8.0%		57,088	5.6%
Hotel, Gaming & Leisure		22,194	5.1%		33,696	5.7%		55,890	5.4%
Diversified Financials		54,531	12.6%		-	-		54,531	5.3%
Services: Consumer		10,861	2.5%		33,027	5.6%		43,888	4.3%
Construction & Building		3,644	0.9%		31,541	5.3%		35,185	3.4%
Automotive		14,158	3.3%		19,594	3.3%		33,752	3.3%
Consumer Goods: Durable		-	-		31,669	5.3%		31,669	3.1%
Media: Advertising, Printing & Publishing		20,370	4.7%		7,931	1.3%		28,301	2.8%
Containers, Packaging & Glass		12,440	2.9%		12,509	2.1%		24,949	2.4%
Media: Diversified & Production		10,845	2.5%		12,555	2.1%		23,400	2.3%
Retail		-	-		23,367	3.9%		23,367	2.3%
Telecommunications		13,724	3.2%		5,988	1.0%		19,712	1.9%
Forest Products & Paper		-	-		16,818	2.8%		16,818	1.6%
Consumer Goods: Non-Durable		697	0.2%		14,217	2.4%		14,914	1.5%
Media: Broadcasting & Subscription		2,511	0.6%		12,212	2.1%		14,723	1.4%
Capital Equipment		2,611	0.6%		9,945	1.7%		12,556	1.2%
Energy: Electricity		9,975	2.3%		2,499	0.4%		12,474	1.2%
Aerospace & Defense		1,428	0.3%		9,074	1.5%		10,502	1.0%
Energy: Oil & Gas		1,359	0.3%		8,044	1.4%		9,403	0.9%
Environmental Industries		4,850	1.1%		-	-		4,850	0.5%
Subtotal/total percentage		432,652	100.0%		595,134	100.0%		1,027,786	100.0%
U.S. Treasury Securities		33,188			-			33,188
Total investments	$	465,840		$	595,134		$	1,060,974

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	December 31, 2014
	Investment Portfolio			Total Return Swap			Total
Industry Classification	Investments Fair Value		Percentage of Investment Portfolio	Fair Value of Underlying TRS Loans		Percentage of Underlying TRS Loans	Fair Value		Percentage
Services: Business	$	89,123	25.4%	$	70,280	16.4%	$	159,403	20.4%
High Tech Industries		45,737	13.0%		36,029	8.4%		81,766	10.5%
Healthcare & Pharmaceuticals		10,203	2.9%		49,917	11.7%		60,120	7.7%
Beverage, Food & Tobacco		42,962	12.2%		-	-		42,962	5.5%
Banking, Finance, Insurance & Real Estate		7,867	2.2%		31,955	7.5%		39,822	5.1%
Diversified Financials		37,102	10.6%		-	-		37,102	4.8%
Construction & Building		3,626	1.0%		31,483	7.4%		35,109	4.5%
Chemicals, Plastics & Rubber		9,107	2.6%		24,303	5.7%		33,410	4.3%
Hotel, Gaming & Leisure		19,703	5.6%		12,606	3.0%		32,309	4.1%
Consumer Goods: Durable		-	-		31,979	7.5%		31,979	4.1%
Media: Advertising, Printing & Publishing		20,235	5.8%		7,001	1.6%		27,236	3.5%
Automotive		14,123	4.0%		11,939	2.8%		26,062	3.3%
Retail		-	-		25,421	6.0%		25,421	3.3%
Containers, Packaging & Glass		9,800	2.8%		8,329	1.9%		18,129	2.3%
Services: Consumer		792	0.2%		17,023	4.0%		17,815	2.3%
Media: Diversified & Production		6,298	1.8%		10,239	2.4%		16,537	2.1%
Telecommunications		13,813	3.9%		988	0.2%		14,801	1.9%
Media: Broadcasting & Subscription		2,077	0.6%		10,965	2.6%		13,042	1.7%
Consumer Goods: Non-Durable		1,571	0.4%		11,379	2.7%		12,950	1.7%
Aerospace & Defense		1,370	0.4%		10,014	2.3%		11,384	1.5%
Forest Products & Paper		-	-		10,867	2.5%		10,867	1.4%
Capital Equipment		3,896	1.1%		6,168	1.4%		10,064	1.3%
Energy: Oil & Gas		1,377	0.4%		8,685	2.0%		10,062	1.3%
Energy: Electricity		5,932	1.7%		-	-		5,932	0.8%
Environmental Industries		4,850	1.4%		-	-		4,850	0.6%
Subtotal/total percentage		351,564	100.0%		427,570	100.0%		779,134	100.0%
U.S. Treasury Securities		10,350			-			10,350
Total investments	$	361,914		$	427,570		$	789,484

We do not “control” and are not an “affiliate” of any of our portfolio companies or any of the companies of the loans underlying the TRS, each as defined in the 1940 Act. In general, under the 1940 Act, we would be presumed to “control” a portfolio company or issuer if we owned 25% or more of its voting securities and would be an “affiliate” of a portfolio company or issuer if we owned 5% or more of its voting securities.

Our investment portfolio may contain senior secured investments that are in the form of lines of credit, revolving credit facilities, or unfunded commitments, which may require us to provide funding when requested in accordance with the terms of the underlying agreements. As of March 31, 2015 and December 31, 2014, our unfunded commitments amounted to $15,217 and $23,112, respectively. As of May 8, 2015, our unfunded commitments amounted to $39,241. Since these commitments may expire without being drawn upon, unfunded commitments do not necessarily represent future cash requirements or future earning assets for us. Refer to section “Commitments and Contingencies and Off-Balance Sheet Arrangements” for further details on our unfunded commitments.

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Investment Portfolio Asset Quality

CIM uses an investment rating system to characterize and monitor our expected level of returns on each investment in our portfolio. These ratings are just one of several factors that CIM uses to monitor our portfolio, are not in and of themselves determinative of fair value or revenue recognition and are presented for indicative purposes. CIM grades the credit risk of all investments on a scale of 1 to 5 no less frequently than quarterly. This system is intended primarily to reflect the underlying risk of a portfolio investment relative to our initial cost basis in respect of such portfolio investment (i.e., at the time of acquisition), although it may also take into account under certain circumstances the performance of the portfolio company’s business, the collateral coverage of the investment and other relevant factors.

The following is a description of the conditions associated with each investment rating used in this ratings system:

Investment Grade	Description
1	Indicates the least amount of risk to our initial cost basis. The trends and risk factors for this investment since origination or acquisition are generally favorable, which may include the performance of the portfolio company or a potential exit.
2	Indicates a level of risk to our initial cost basis that is similar to the risk to our initial cost basis at the time of origination or acquisition. This portfolio company is generally performing in accordance with our analysis of its business and the full return of principal and interest or dividend is expected.
3	Indicates that the risk to our ability to recoup the cost of such investment has increased since origination or acquisition, but full return of principal and interest or dividend is expected. A portfolio company with an investment grade of 3 requires closer monitoring.
4	Indicates that the risk to our ability to recoup the cost of such investment has increased significantly since origination or acquisition, including as a result of factors such as declining performance and noncompliance with debt covenants, and we expect some loss of interest, dividend or capital appreciation, but still expect an overall positive internal rate of return on the investment.
5	Indicates that the risk to our ability to recoup the cost of such investment has increased materially since origination or acquisition and the portfolio company likely has materially declining performance. Loss of interest or dividend and some loss of principal investment is expected, which would result in an overall negative internal rate of return on the investment.

For investments graded 3, 4, or 5, CIM enhances its level of scrutiny over the monitoring of such portfolio company.

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The following table summarizes the composition of our investment portfolio and our underlying TRS loans portfolio based on the 1 to 5 investment rating scale at fair value as of March 31, 2015 and December 31, 2014, excluding short term investments of $33,188 and $10,350, respectively:

	March 31, 2015
	Investment Portfolio			Total Return Swap			Total
Investment Rating	Investments Fair Value		Percentage of Investment Portfolio	Fair Value of Underlying TRS Loans		Percentage of Underlying TRS Loans	Fair Value		Percentage
1	$	-	-	$	-	-	$	-	-
2		420,642	97.2%		573,628	96.4%		994,270	96.7%
3		12,010	2.8%		17,795	3.0%		29,805	2.9%
4		-	-		3,711	0.6%		3,711	0.4%
5		-	-		-	-		-	-
	$	432,652	100.0%	$	595,134	100.0%	$	1,027,786	100.0%

	December 31, 2014
	Investment Portfolio			Total Return Swap			Total
Investment Rating	Investments Fair Value		Percentage of Investment Portfolio	Fair Value of Underlying TRS Loans		Percentage of Underlying TRS Loans	Fair Value		Percentage
1	$	-	-	$	-	-	$	-	-
2		342,922	97.5%		405,522	94.8%		748,444	96.1%
3		8,642	2.5%		19,087	4.5%		27,729	3.5%
4		-	-		2,961	0.7%		2,961	0.4%
5		-	-		-	-		-	-
	$	351,564	100.0%	$	427,570	100.0%	$	779,134	100.0%

The amount of the investment portfolio and underlying TRS loans in each grading category may vary substantially from period to period resulting primarily from changes in the composition of each portfolio as a result of new investment, repayment and exit activities. In addition, changes in the grade of investments may be made to reflect our expectation of performance and changes in investment values.

Current Investment Portfolio

As of May 8, 2015, our investment portfolio, excluding our short term investments and TRS, consisted of interests in 71 portfolio companies (19% in senior secured first lien debt, 68% in senior secured second lien debt, 12% in collateralized securities and structured products (comprised of 3% invested in rated debt, 3% invested in non-rated debt and 6% invested in non-rated equity of such securities and products) and 1% in unsecured debt with a total fair value of $500,670 with an average and median portfolio company annual EBITDA of $70.1 million and $58.7 million, respectively, at initial investment. As of May 8, 2015, investments in our portfolio, excluding our short term investments and TRS, were purchased at a weighted average price of 96.87% of par value. Our estimated gross annual portfolio yield was 9.28% based upon the purchase price of such investments. The estimated gross portfolio yield does not represent an actual investment return to shareholders. For the three months ended March 31, 2015, our total investment return-net asset value was 3.33%. Total investment return-net asset value is a measure of the change in total value for shareholders who held our common stock at the beginning and end of the period, including distributions paid or payable during the period, and is described further in Note 12 of our consolidated financial statements.

As of May 8, 2015, our short term investments included an investment in a U.S. Treasury Obligations Fund of $44,694.

Further, as of May 8, 2015, through a TRS (described further in Note 7 of our consolidated financial statements), we obtained the economic benefit of owning investments in first lien senior secured and second lien senior secured floating-rate loans of 92 portfolio companies.

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Results of Operations for the Three Months Ended March 31, 2015 and 2014

                Our results of operations for the three months ended March 31, 2015 and 2014 were as follows:

	Three Months Ended March 31,
	2015		2014
Investment income	$	8,914	$	2,200
Net operating expenses		6,783		2,450
Net investment income (loss)		2,131		(250)
Net realized gain on investments		575		174
Net change in unrealized appreciation on investments		1,464		611
Net realized gain on total return swap		6,607		2,963
Net change in unrealized appreciation on total return swap		6,049		1,208
Net increase in net assets resulting from operations	$	16,826	$	4,706

Investment Income

For the three months ended March 31, 2015 and 2014, we generated investment income of $8,914 and $2,200, respectively, consisting primarily of interest income on investments in senior secured loans, collateralized securities and structured products of 62 and 48 portfolio companies held during each respective period. During the three months ended March 31, 2015 and 2014, our investment portfolio, excluding short term investments and the TRS, increased $81,088 and $49,373, respectively, as we continued to deploy the net proceeds from our continuous offering. We expect our investment portfolio to continue to grow due to the anticipated increase in equity available to us for investment from our continuous offering. As a result, we believe that reported investment income for the three months ended March 31, 2015 and 2014 is not representative of our stabilized or future performance. Interest income earned by loans underlying the TRS is not included in investment income in the consolidated statements of operations, but rather it is recorded as part of net realized gain on total return swap.

Operating Expenses

The composition of our operating expenses for the three months ended March 31, 2015 and 2014 was as follows:

	Three Months Ended March 31,
	2015		2014
Management fees	$	2,760	$	909
Administrative services expense		454		415
Capital gains incentive fee	1,454			525
Offering, organizational and other costs - IIG		-		592
General and administrative		1,278		1,058
Total expenses	5,946			3,499
Expense reimbursements from IIG	-			(1,049)
Recoupment of expense reimbursements from IIG		837		-
Net operating expenses	$	6,783	$	2,450

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The composition of our general and administrative expenses for the three months ended March 31, 2015 and 2014 was as follows:

	Three Months Ended March 31,
	2015		2014
Due diligence fees	$	262	$	323
Professional fees expense		235		287
Transfer agent expense		225		116
Marketing expense		99		88
Dues and subscriptions		88		21
Director fees and expenses		64		32
Insurance expense		59		52
Printing and mailing expense		55		33
Filing fees		27		6
Other expenses		164		100
Total general and administrative expense	$	1,278	$	1,058

Expense Reimbursements

Our affiliate, IIG, agreed to reimburse us commencing with the quarter ended December 31, 2012 for certain expenses pursuant to the expense support and conditional reimbursement agreement. Refer to the discussion under “Related Party Transactions” below for further details about the expense support and conditional reimbursement agreement. Also, see Note 4 to our consolidated financial statements for additional disclosure regarding the expense reimbursements from IIG.

For the three months ended March 31, 2015, IIG recouped $837 of expense reimbursements made during the three months ended March 31, 2013 and June 30, 2013 in connection with the expense support and conditional reimbursement agreement. We did not receive any expense reimbursements from IIG for the three months ended March 31, 2015. For the three months ended March 31, 2014, we received expense reimbursements from IIG of $1,049.

Reimbursement of such costs will be determined as appropriate to meet the objectives of the expense support and conditional reimbursement agreement. As a result, we may or may not be requested to reimburse any further costs by IIG.

The table below presents a summary of all expenses supported by IIG and the associated dates through which such expenses are eligible for reimbursement by us for the following three month periods.

Three Months Ended	Expense Support Received from IIG		Expense Support Reimbursed to IIG		Unreimbursed Expense Support		Ratio of Operating Expense to Average Net Assets for the Period(1)	Annualized Distribution Rate for the Period(3)	Eligible for Reimbursement through
December 31, 2012	$	117	$	117	$	-	0.93%	0.00%(2)	December 31, 2015
March 31, 2013		819		819		-	2.75%	7.00%	March 31, 2016
June 30, 2013		1,148		523		625	1.43%	7.00%	June 30, 2016
September 30, 2013		1,297		-		1,297	0.49%	7.00%	September 30, 2016
December 31, 2013		695		-		695	0.31%	7.00%	December 31, 2016
March 31, 2014		1,049		-		1,049	0.27%	7.00%	March 31, 2017
June 30, 2014		-		-		-	0.31%	7.00%	June 30, 2017
September 30, 2014		-		-		-	0.13%	7.00%	September 30, 2017
December 31, 2014		831		-		831	0.15%	7.00%	December 31, 2017
March 31, 2015		-		-		-	0.74%	7.00%	March 31, 2018
Total	$	5,956	$	1,459	$	4,497

(1)	Operating expenses include all expenses borne by us, except for offering and organizational costs, base management fees, incentive fees, administrative services expenses, other general and administrative expenses owed to CIM and its affiliates, and interest expense.
(2)	We did not declare any distributions during the three months ended December 31, 2012.
(3)	Annualized Distribution Rate equals the annualized rate of distributions paid to shareholders based on the amount of the regular cash distributions paid immediately prior to the date the expense support payment obligation was incurred by CIM. Annualized Distribution Rate does not include special cash or stock distributions paid to shareholders.

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Net Investment Income (Loss)

Our net investment income (loss) totaled $2,131 and ($250) for the three months ended March 31, 2015 and 2014, respectively. The increase in net investment income was primarily due to an increase in the size of our investment portfolio relative to our expenses as we continued to achieve economies of scale.

Net Realized Gain on Investments

Our net realized gain on investments totaled $575 and $174 for the three months ended March 31, 2015 and 2014, respectively. The increase in net realized gain on investments was primarily due to an increase in sales activity during the three months ended March 31, 2015 compared to the three months ended March 31, 2014. During the three months ended March 31, 2015, we received sale proceeds and principal repayments of $35,565 and $1,118, respectively, for gains of $575. For the three months ended March 31, 2014, we realized gains of $174 on sale proceeds of $13,166 and principal repayments of $5,289.  

Net Change in Unrealized Appreciation on Investments

The net change in unrealized appreciation on our investments totaled $1,464 and $611 for the three months ended March 31, 2015 and 2014, respectively. This change was predominantly driven by primary and secondary investments sourced with the assistance of AIM, made available to us at advantageous purchase prices, as well as a tightening of credit spreads during the three months ended March 31, 2015.

Net Realized Gain on TRS

Our net realized gain on the TRS totaled $6,607 and $2,963 for the three months ended March 31, 2015 and 2014, respectively. The components of net realized gain on the TRS are summarized below for the three months ended March 31, 2015 and 2014:

	Three Months Ended March 31,
	2015		2014
Interest and other income from TRS portfolio	$	8,414	$	3,074
Interest and other expense from TRS portfolio		(2,006)		(714)
Net gain on TRS loan sales		199		603
Total	$	6,607	$	2,963

Net Change in Unrealized Appreciation on TRS

The net change in unrealized appreciation on the TRS totaled $6,049 and $1,208 for the three months ended March 31, 2015 and 2014, respectively. This change was predominantly driven by primary and secondary investments sourced with the assistance of AIM, made available to us at advantageous purchase prices, as well as a tightening of credit spreads during the three months ended March 31, 2015.

Net Increase in Net Assets Resulting from Operations

                For the three months ended March 31, 2015 and 2014, we recorded a net increase in net assets resulting from operations of $16,826 and $4,706, respectively.  

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 Net Asset Value per Share, Annual Investment Return and Total Return Since Inception

Our net asset value per share was $9.35 and $9.32 on March 31, 2015 and 2014, respectively. After considering (i) the overall changes in net asset value per share, (ii) paid distributions of approximately $0.1829 per share during the three months ended March 31, 2015, and (iii) the assumed reinvestment of those distributions at 90% of the prevailing offering price per share, the total investment return was 3.33% for the entire three-month period ended March 31, 2015. Total investment return-net asset value is a measure of the change in total value for shareholders who held our common stock at the beginning and end of the period, including distributions paid or payable during the period, and is described further in Note 12 of our consolidated financial statements.

Initial shareholders who subscribed to the offering in December 2012 with an initial investment of $10,000 and an initial purchase price equal to $9.00 per share (public offering price net of sales load) have seen an annualized return of 9.57% and a cumulative total return of 23.25% (see chart below). Initial shareholders who subscribed to the offering in December 2012 with an initial investment of $10,000 and an initial purchase price equal to $10.00 per share (the initial public offering price including sales load) have seen an annualized return of 4.63% and a cumulative total return of 10.92%. Over the same time period the S&P/LSTA Leveraged Loan Index, a primary measure of senior debt covering the U.S. leveraged loan market, which currently consists of approximately 1,000 credit facilities throughout numerous industries, and the BofA Merrill Lynch US High Yield Index, a primary measure of short-term US dollar denominated below investment grade corporate debt publicly issued in the US domestic market, registered cumulative total returns of approximately 10.11% and 13.10%, respectively, during the period from December 17, 2012 to March 31, 2015. In addition, the annualized return for the S&P/LSTA Leveraged Loan Index and the BofA Merrill Lynch US High Yield Index was 4.30% and 5.53%, respectively, during the period from December 17, 2012 to March 31, 2015.

The calculations for the Growth of $10,000 Initial Investment are based upon (i) an initial investment of $10,000 in our common stock at the beginning of the period, at a share price of $10.00 per share (including sales load) and $9.00 per share (excluding sales load), (ii) assumes reinvestment of monthly distributions in accordance with our second amended and restated distribution reinvestment plan, (iii) the sale of the entire investment position at the net asset value per share on the last day of the period, and (iv) the distributions declared and payable to shareholders, if any, on the last day of the period.

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Financial Condition, Liquidity and Capital Resources

We generate cash primarily from the net proceeds of our continuous public offering and from cash flows from fees, interest and dividends earned from our investments as well as principal repayments and proceeds from sales of our investments. We are engaged in a continuous offering of shares of our common stock. We accept subscriptions on a continuous basis and, as of February 1, 2014, issue shares at weekly closings at prices that, after deducting selling commissions and dealer manager fees, are at or above our net asset value per share.

We will sell our shares on a continuous basis at our latest public offering price of $10.45 per share; however, to the extent that our net asset value increases, we will sell at a price necessary to ensure that shares are not sold at a price, after deduction of selling commissions and dealer manager fees, that is below net asset value. In the event of a material decline in our net asset value per share, which we consider to be a 2.5% decrease below our current net offering price, and subject to certain conditions, we will reduce our offering price accordingly. Therefore, persons who tender subscriptions for shares of our common stock in the offering must submit subscriptions for a certain dollar amount, rather than a number of shares of common stock and, as a result, may receive fractional shares of our common stock. In connection with each weekly closing on the sale of shares of our common stock, our board of directors has delegated to management the authority to conduct such closings so long as there is no change to our public offering price. In the event of a change to our public offering price in connection with any weekly closing, our board of directors will approve the change prior to management conducting such closing. In connection with each weekly closing, we will, in each case if necessary, update the information contained in our prospectus by filing a prospectus supplement with the SEC, and we will also post any updated information to our website.

As of March 31, 2015, we sold 64,734,704 shares for net proceeds of $663,808 at an average price per share of $10.25. The net proceeds received include reinvested shareholder distributions of $18,950, for which we issued 2,014,344 shares of common stock, and gross proceeds paid for shares of common stock tendered for repurchased of $945, for which we repurchased 100,487 shares of common stock. Since commencing our continuous public offering on July 2, 2012 and through March 31, 2015, sales commissions and dealer manager feeds related to the sale of our common stock were $38,844 and $18,852, respectively.

As of May 8, 2015, we sold 71,372,505 shares of common stock for gross proceeds of $731,994 at an average price per share of $10.26. The gross proceeds received include reinvested shareholder distributions of $23,269, for which we issued 2,473,639 shares of common stock, and gross proceeds paid for shares of common stock tendered for repurchase for $1,343 which we repurchased 142,775 shares of common stock. Since commencing our continuous public offering on July 2, 2012 and through May 8, 2015, sales commissions and dealer manager fees related to the sale of our common stock were $42,716 and $20,758, respectively.

The net proceeds from our continuous offering will be invested primarily in cash, cash equivalents, U.S. government securities, repurchase agreements and high-quality debt instruments maturing in one year or less prior to being invested in debt securities of private U.S. companies.

As of March 31, 2015 and December 31, 2014, we had $33,188 and $10,350 in short term investments, respectively, invested in a fund that primarily invests in U.S. government securities.

On April 28, 2015, we filed a registration statement on Form N-2 to sell up to 100,000,000 additional shares of our common stock at an initial public offering price of $10.45 per share.

Total Return Swap

For a detailed discussion of our TRS, refer to Note 7 to our consolidated financial statements included in this report.

East West Bank Credit Facility

On April 30, 2015, we entered into the EWB Credit Facility with EWB. The EWB Credit Facility provides for borrowings in an aggregate principal amount of up to $40,000, subject to compliance with a borrowing base. As of May 8, 2015, the aggregate principal amount available in connection with the EWB Credit Facility was $40,000.

Advances under the EWB Credit Facility bear interest at a floating rate equal to (i) the greater of 3.25% per year or the variable rate of interest per year announced by EWB as its prime rate, plus (ii) a spread of 0.75%. Interest is payable quarterly in arrears. Each advance under the EWB Credit Facility will be due and payable on the earlier of 90 days from the date such advance was made by EWB, or April 29, 2016. We may prepay any advance without penalty or premium. We will also be subject to a non-usage fee of 0.50% per year on the amount, if any, of the aggregate principal amount available under the EWB Credit Facility that has not been borrowed. The non-usage fee, if any, is payable quarterly in arrears. Our obligations to EWB under the EWB Credit Facility are secured by a first priority security interest in certain eligible loans in which we have a beneficial interest, as updated from time to time. U.S. Bank National Association has agreed to serve as the collateral custodian under the EWB Credit Facility pursuant to a custody control agreement between us and EWB.

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RIC Status and Distributions

Our total investment portfolio includes loans and other securities on our consolidated balance sheets and loans underlying the TRS. Accordingly, we treat net interest and other income earned on all investments, including the loans underlying the TRS, as a component of investment company taxable income when determining our sources of distributions. The following table reflects the sources of our distributions on a tax basis for the three months ended March 31, 2015:

	Investment Portfolio		Total Return Swap Portfolio		Total Investment Portfolio		Percentage
Net investment income(1)	$	3,585	$	6,607	$	10,192	94.7%
Capital gains from the sale of assets(2)		575		-		575	5.3%
Total	$	4,160	$	6,607	$	10,767	100.0%

(1)	Tax basis net investment income does not include unearned capital gains incentive fees of $1,454 which reduce GAAP basis net investment income available for distributions.  This tax-related adjustment represents additional net investment income available for distribution to shareholders.
(2)	For the three months ended March 31, 2015, $6 of capital gains are classified as long-term. The final determination of the tax attributes of our distributions is made annually as of the end of our fiscal year.

For an additional discussion of our RIC status and distributions, refer to Note 2 and Note 5, respectively, to our consolidated financial statements included in this report.

Recent Accounting Pronouncements

In February 2015, the Financial Accounting Standard Board issued ASU 2015-02, Consolidation: Amendments to the Consolidation Analysis, or ASU 2015-02, which amends the criteria for determining which entities are considered variable interest entities, or VIEs, amends the criteria for determining if a service provider possesses a variable interest in a VIE and ends the deferral granted to investment companies for application of the VIE consolidation model. This guidance is effective for annual and interim reporting periods of public entities beginning after December 15, 2015 and early adoption is permitted. We are currently evaluating the impact ASU 2015-02 will have on our consolidated financial statements and/or disclosures.

Critical Accounting Policies

Our consolidated financial statements are prepared in conformity with GAAP, which 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 revenues and expenses during the reporting periods. Critical accounting policies are those that require the application of management’s most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods. In preparing the consolidated financial statements, we also utilize available information, including our past history, industry standards and the current economic environment, among other factors, in forming our estimates and judgments, giving due consideration to materiality. Actual results may differ from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations to those of companies in similar businesses.

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Valuation of Portfolio Investments

The value of our assets is determined quarterly and at such other times that an event occurs that materially affects the valuation. The valuation is made pursuant to Section 2(a)(41) of the 1940 Act, which requires that we value our assets as follows: (i) the market price for those securities for which a market quotation is readily available, and (ii) for all other securities and assets, at fair value, as determined in good faith by our board of directors. As a BDC, Section 2(a)(41) of the 1940 Act requires the board of directors to determine in good faith the fair value of portfolio securities for which a market price is not readily available, and it does so in conjunction with the application of our valuation procedures by CIM.

There is no single standard for determining fair value in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each asset while employing a valuation process that is consistently followed. Determinations of fair value involve subjective judgments and estimates. Accordingly, the notes to our consolidated financial statements refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations in our consolidated financial statements.

Valuation Methods

With respect to investments for which market quotations are not readily available, we undertake a multi-step valuation process each quarter, as described below:

·our quarterly valuation process begins with each portfolio company or investment being initially valued by certain of CIM’s investment professionals and certain members of its management team, with such valuation taking into account information received from various sources, including an independent valuation firm, if applicable;

·preliminary valuation conclusions are then documented and discussed with CIM’s valuation committee.

·CIM’s valuation committee reviews the preliminary valuation, and, if applicable, delivers such preliminary valuation to an independent valuation firm for its review;

·CIM’s valuation committee, or its designee, and, if appropriate, the relevant investment professionals meet with the independent valuation firm to discuss the preliminary valuation;

·designated members of CIM’s management team respond and supplement the preliminary valuation to reflect any comments provided by the independent valuation firm;

·our audit committee meets with members of CIM’s management team and the independent valuation firm to discuss the assistance provided and the results of the independent valuation firm’s review; and

·our board of directors discusses the valuation and determines the fair value of each investment in our portfolio in good faith based on various statistical and other factors, including the input and recommendation of CIM, the audit committee and any third-party valuation firm, if applicable.

In addition to the foregoing, certain investments for which a market price is not readily available are evaluated on a quarterly basis by an independent valuation firm and certain other investments are on a rotational basis reviewed once over a twelve-month period by an independent valuation firm. Finally, certain investments are not evaluated by an independent valuation firm unless the net asset value and other aspects of such investments in the aggregate exceed certain thresholds.

Given the expected types of investments, excluding short term investments that are classified as Level 1, management expects our portfolio holdings to be classified in Level 2 or Level 3. Due to the uncertainty inherent in the valuation process, particularly for Level 2 and Level 3 investments, such fair value estimates may differ significantly from the values that would have been used had an active market for the investments existed. 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 that we ultimately realize on these investments to materially differ from the valuations currently assigned. Inputs used in the valuation process are subject to variability in the future and can result in materially different fair values.

For an additional discussion of our investment valuation process, refer to Note 2 to our consolidated financial statements included in this report.

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Related Party Transactions

For the three months ended March 31, 2015 and 2014, we incurred fees and other expenses related to CIM and its affiliates as follows:

				Three Months Ended March 31,
Entity		Capacity	Description	2015		2014(3)
CĪON Securities, LLC		Dealer manager	Dealer manager fees(1)	$	3,251	$	2,513
CIM		Investment adviser	Management fees(2)		2,760		909
CIM		Investment adviser	Incentive fees(2)		1,454		525
ICON Capital, LLC		Administrative services provider	Administrative services expense(2)		454		415
IIG		Sponsor	Reimbursement of offering, organizational and other costs(2)		-		592
IIG		Sponsor	Recoupment of expense support(2)		837		-
				$	8,756	$	4,954
(1)	Amounts charged directly to equity.
(2)	Amounts charged directly to operations.
(3)	For the three months ended March 31, 2014, all management fees, $1 of administrative services expense, and $139 of incentive fees were supported pursuant to the expense support and conditional reimbursement agreement.

For an additional discussion of our relationship with CĪON Securities, CIM, ICON Capital, and IIG and amounts incurred under agreements with such related parties, refer to Note 4 to our consolidated financial statements included in this report.

Contractual Obligations

On December 17, 2012, Flatiron entered into a TRS with Citibank. Flatiron and Citibank have amended the TRS on numerous occasions including the most recent eighth amendment on March 4, 2015. See Note 7 to our consolidated financial statements for a more detailed description of the TRS.

On April 30, 2015, we entered into the EWB Credit Facility with EWB. See “Financial Condition, Liquidity and Capital Resources – East West Bank Credit Facility” above for a more detailed description of the EWB Credit Facility.

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Commitments and Contingencies and Off-Balance Sheet Arrangements

Commitments and Contingencies

We have entered into certain contracts with other parties that contain a variety of indemnifications. Our maximum exposure under these arrangements is unknown. However, we have not experienced claims or losses pursuant to these contracts and believe the risk of loss related to such indemnifications to be remote.

Our investment portfolio may contain debt investments that are in the form of lines of credit, revolving credit facilities, or other unfunded commitments, which may require us to provide funding when requested in accordance with the terms of the underlying agreement. As of March 31, 2015 and December 31, 2014, our commitments and contingencies were as follows:

Unfunded Commitments	March 31, 2015(1)		December 31, 2014(1)
SS&C Technologies, Inc.(2)	$	10,000	$	-
Studio Movie Grill Holdings, LLC(3)		4,010		6,388
ECI Acquisition Holdings, Inc.(3)		1,207		1,724
Dollar Tree, Inc.(4)		-		15,000
Total	$	15,217	$	23,112

(1)	Unless otherwise noted, the funding criteria for these unfunded commitments had not been met at the date indicated.
(2)	As of March 31, 2015, such commitment was subject to the execution of a definitive loan agreement and the consummation of the underlying corporate transaction, and conditional upon receipt of all necessary shareholder, regulatory and other applicable approvals. As of May 8, 2015, our unfunded commitments included $10,000 to SS&C Technologies, Inc.
(3)	As of May 8, 2015, our unfunded commitments were to portfolio companies ECI Acquisition Holdings, Inc. and Studio Movie Grill Holdings, LLC in the amount of $1,207 and $3,540, respectively, and included unfunded commitments to Tenet Healthcare and Informatica Corp. for $14,444 and $10,050, respectively.
(4)	As of December 31, 2014, such commitment was subject to the execution of a definitive loan agreement and the consummation of the underlying corporate transaction, and conditional upon receipt of all necessary shareholder, regulatory and other applicable approvals.  Prior to March 31, 2015, the Dollar Tree, Inc. unfunded commitment was terminated.

Unfunded commitments to provide funds to companies are not recorded on our consolidated balance sheets. Since these commitments may expire without being drawn upon, unfunded commitments do not necessarily represent future cash requirements or future earning assets for us. We believe we maintain sufficient liquidity in the form of cash on hand, short-term investments and other liquid assets to fund these unfunded commitments should the need arise.  For information on the companies to which we are committed to fund additional amounts as of March 31, 2015 and December 31, 2014, refer to the table above and the consolidated schedule of investments included in this report.

The Staff of the Division of Investment Management has recently informed us that it views our unfunded commitments as senior securities under the 1940 Act.  We are reviewing the Staff’s position and its impact on our operations and business objectives and will continue to engage the Staff in discussions as to the appropriate treatment of our unfunded commitments.  During the course of our review, analysis and discussions, we intend to comply with the Staff’s position by including unfunded commitments as a senior security in the asset coverage test or by segregating or setting aside liquid assets or engaging in other SEC or Staff-approved measures to “cover” our unfunded commitments in an amount required to comply with the 1940 Act.

Off-Balance Sheet Arrangements

We currently have no off-balance sheet arrangements except for those discussed in “Financial Condition, Liquidity and Capital Resources - Total Return Swap” and “Commitments and Contingencies and Off-Balance Sheet Arrangements - Commitments and Contingencies” above.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are subject to financial market risks, including changes in interest rates. As of March 31, 2015, 98.6% of our portfolio investments and underlying loans subject to the TRS paid variable interest rates. A rise in the general level of interest rates can be expected to lead to higher interest rates applicable to our debt investments, especially to the extent that we hold variable rate investments, and to declines in the value of any fixed rate investments we may hold. To the extent that a majority of our investments may be in variable rate investments, an increase in interest rates could make it easier for us to meet or exceed our incentive fee hurdle rate, as defined in our investment advisory agreement, and may result in a substantial increase in our net investment income, and also to the amount of incentive fees payable to CIM with respect to our pre-incentive fee net investment income.

Under the terms of the TRS with Citibank, we pay fees to Citibank at a floating rate based on LIBOR (and some cases prime rate) in exchange for the right to receive the economic benefit of a pool of loans. In addition, in the future we may seek to borrow funds in order to make additional investments. Our net investment income will depend, in part, upon the difference between the rate at which we borrow funds and the rate at which we invest those funds. As a result, we would be subject to risks relating to changes in market interest rates. In periods of rising interest rates when we have debt outstanding, our cost of funds would increase, which could reduce our net investment income, especially to the extent we hold fixed rate investments. We expect that our long-term investments will be financed primarily with equity and long-term debt. Our interest rate risk management techniques may include various interest rate hedging activities to the extent permitted by the 1940 Act. Adverse developments resulting from changes in interest rates could have a material adverse effect on our business, financial condition and results of operations.

The following table shows the effect over a twelve month period of changes in interest rates on our net interest income, excluding short term investments, assuming no changes in our investment portfolio and TRS Agreement in effect as of March 31, 2015:

Change in Interest Rates		Increase (Decrease) in Net Interest Income(1)			Percentage Change in Net Interest Income
Down 22 basis points		$	1,444	2.2%
Current base interest rate			-	-
Up 100 basis points			(3,510)	(5.3%)
Up 200 basis points			503	0.8%
Up 300 basis points			4,558	6.9%
(1)	Pursuant to the TRS, we receive from Citibank all interest payable in respect of the loans subject to the TRS and pay to Citibank interest at a rate equal to the floating rate index specified for each loan (typically LIBOR of varying maturities) plus 1.35% per year on the full notional amount of the loans subject to the TRS. As of March 31, 2015, all of the loans subject to the TRS paid variable interest rates. This table assumes no change in defaults or prepayments by portfolio companies over the next twelve months.

In addition, we may have risk regarding portfolio valuation as discussed in Note 2 to our consolidated financial statements included in this report.

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Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures

In connection with the preparation of this Quarterly Report on Form 10-Q for the three months ended March 31, 2015, we carried out an evaluation, under the supervision and with the participation of our management, including our Co-Chief Executive Officers and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15(b) and Rule 15d-15(b) of the Securities Exchange Act of 1934, as amended. Based on the foregoing evaluation, the Co-Chief Executive Officers and the Chief Financial Officer concluded that our disclosure controls and procedures were effective.

In designing and evaluating our disclosure controls and procedures, we recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met.  Our disclosure controls and procedures have been designed to meet reasonable assurance standards. Disclosure controls and procedures cannot detect or prevent all error and fraud. Some inherent limitations in disclosure controls and procedures include costs of implementation, faulty decision-making, simple error and mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based, in part, upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all anticipated and unanticipated future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with established policies or procedures.

Evaluation of internal control over financial reporting

There have been no changes in our internal control over financial reporting during the three months ended March 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From time to time, we may be party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies and other third parties. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that any such proceedings will have a material effect upon our financial condition or results of operations.

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2014.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Our registration statement on Form N-2, as amended, was declared effective by the SEC on July 2, 2012 (SEC File No. 333-178646). Our offering period commenced on July 2, 2012.

We did not engage in any unregistered sales of equity securities during the three months ended March 31, 2015.

The table below provides information concerning our repurchases of shares of our common stock during the three months ended March 31, 2015 pursuant to our share repurchase program.

Period		Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs
	January 1 to January 31, 2015	48,947	$	9.41	48,947	(1)
	February 1 to February 28, 2015	-		-	-	-
	March 1 to March 31, 2015	-		-	-	-
	Total	48,947	$	9.41	48,947	(1)
(1)	A description of the maximum number of shares of our common stock that may be repurchased under our share repurchase program is set forth in Note 3 to our unaudited consolidated financial statements contained in this Quarterly Report on Form 10-Q.

See Note 3 to our unaudited consolidated financial statements contained in this Quarterly Report on Form 10-Q for a more detailed discussion of the terms of our share repurchase program.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

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Item 6. Exhibits

Exhibit Number	Description of Document
3.1	Articles of Amendment and Restatement of the Articles of Incorporation of CĪON Investment Corporation (Incorporated by reference to Exhibit (A)(2) to Pre-Effective Amendment No. 4 to Registrant’s Registration Statement on Form N-2 filed with the SEC on June 29, 2012 (File No. 333-178646)).
3.2	Second Articles of Amendment and Restatement of the Articles of Incorporation of CĪON Investment Corporation (Incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed with the SEC on August 27, 2012 (File No. 814-00941)).
3.3	Bylaws of CĪON Investment Corporation (Incorporated by reference to Exhibit (B) to Pre-Effective Amendment No. 4 to Registrant’s Registration Statement on Form N-2 filed with the SEC on June 29, 2012 (File No. 333-178646)).
4.1	Form of Subscription Agreement (Incorporated by reference to Appendix A to Post-Effective Amendment No. 9 to Registrant’s Registration Statement on Form N-2 filed with the SEC on April 20, 2015 (File No. 333-178646)).
4.2	Second Amended and Restated Distribution Reinvestment Plan (Incorporated by reference to Exhibit 4.1 to Registrant’s Current Report on Form 8-K filed with the SEC on December 16, 2013 (File No. 814-00941)).
10.1	Investment Advisory Agreement by and between CĪON Investment Corporation and CĪON Investment Management, LLC (Incorporated by reference to Exhibit (G)(1) to Pre-Effective Amendment No. 4 to Registrant’s Registration Statement on Form N-2 filed with the SEC on June 29, 2012 (File No. 333-178646)).
10.2	Investment Sub-Advisory Agreement by and among CĪON Investment Management, LLC, CĪON Investment Corporation and Apollo Investment Management, L.P. (Incorporated by reference to Exhibit (G)(2) to Pre-Effective Amendment No. 4 to Registrant’s Registration Statement on Form N-2 filed with the SEC on June 29, 2012 (File No. 333-178646)).
10.3	Administration Agreement by and between CĪON Investment Corporation and ICON Capital Corp. (Incorporated by reference to Exhibit (K)(2) to Pre-Effective Amendment No. 4 to Registrant’s Registration Statement on Form N-2 filed with the SEC on June 29, 2012 (File No. 333-178646)).
10.4	Custody Agreement by and between CĪON Investment Corporation and U.S. Bank National Association (Incorporated by reference to Exhibit (J) to Pre-Effective Amendment No. 4 to Registrant’s Registration Statement on Form N-2 filed with the SEC on June 29, 2012 (File No. 333-178646)).
10.5	Escrow Agreement by and among CĪON Investment Corporation, UMB Bank, N.A., and ICON Securities Corp. (Incorporated by reference to Exhibit (K)(1) to Pre-Effective Amendment No. 4 to Registrant’s Registration Statement on Form N-2 filed with the SEC on June 29, 2012 (File No. 333-178646)).
10.6	Dealer Manager Agreement by and among CĪON Investment Corporation, CĪON Investment Management, LLC, and ICON Securities Corp. (Incorporated by reference to Exhibit (H)(1) to Pre-Effective Amendment No. 4 to Registrant’s Registration Statement on Form N-2 filed with the SEC on June 29, 2012 (File No. 333-178646)).
10.7	ISDA 2002 Master Agreement, together with the Schedule thereto and Credit Support Annex to such Schedule, each dated as of December 17, 2012, by and between Flatiron Funding, LLC and Citibank, N.A. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on December 19, 2012).
10.8	Eighth Amended and Restated Confirmation Letter Agreement dated as of March 4, 2015, by and between Flatiron Funding, LLC and Citibank, N.A. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 6, 2015).
10.9	Amended and Restated Expense Support and Conditional Reimbursement Agreement dated as of December 13, 2013, by and between CĪON Investment Corporation and ICON Investment Group, LLC (Incorporated by reference to Exhibit (K)(5) to Post-Effective Amendment No. 5 to Registrant’s Registration Statement on Form N-2 filed with the SEC on December 20, 2013 (File No. 333-178646)).

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Exhibit Number	Description of Document
10.10	Amendment No. 1 to the Amended and Restated Expense Support and Conditional Reimbursement Agreement dated as of January 16, 2015, by and between CĪON Investment Corporation and ICON Investment Group, LLC (Incorporated by reference to Exhibit (K)(6) to Post-Effective Amendment No. 8 to Registrant’s Registration Statement on Form N-2 filed with the SEC on January 16, 2015 (File No. 333-178646)).
10.11	Form of Follow-On Dealer Manager Agreement by and among CĪON Investment Corporation, CĪON Investment Management, LLC and CĪON Securities, LLC (Incorporated by reference to Exhibit (H)(3) to Registrant’s Registration Statement on Form N-2 filed with the SEC on April 28, 2015 (File No. 333-203683)).
10.12	Form of Follow-On Selected Dealer Agreement (Incorporated by reference to Exhibit (H)(4) to Registrant’s Registration Statement on Form N-2 filed with the SEC on April 28, 2015 (File No. 333-203683)).
10.13	Loan and Security Agreement, dated as of April 30, 2015, by and between CĪON Investment Corporation and East West Bank (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed with the SEC on May 6, 2015).
10.14	Custody Control Agreement, dated as of April 30, 2015, by and among CĪON Investment Corporation, East West Bank and U.S. Bank National Association (Incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed with the SEC on May 6, 2015).
31.1	Rule 13a-14(a)/15d-14(a) Certification of Co-Chief Executive Officer.
31.2	Rule 13a-14(a)/15d-14(a) Certification of Co-Chief Executive Officer.
31.3	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
32.1	Certification of Co-Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Co-Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.3	Certification of Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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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.

Date: May 13, 2015

CĪON Investment Corporation
(Registrant)

By:  /s/ Michael A. Reisner
        Michael A. Reisner
        Co-Chief Executive Officer and Co-President
        (Principal Executive Officer)

By:  /s/ Mark Gatto
        Mark Gatto
        Co-Chief Executive Officer and Co-President
        (Principal Executive Officer)

By:  /s/ Keith S. Franz
        Keith S. Franz
        Chief Financial Officer
        (Principal Financial and Accounting Officer)

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