UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 
 FORM 10-Q 
  (Mark One)x

          

          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2013  o

          

          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 COMMISSION FILE NUMBER: 0-50398 
 TICC CAPITAL CORP. (Exact name of registrant as specified in its charter) 
  MARYLAND

          

          20-0188736(State or other jurisdiction of incorporation or organization)

          

          (I.R.S. Employer Identification No.)
 8 SOUND SHORE DRIVE, SUITE 255 GREENWICH, CONNECTICUT 06830 (Address of principal executive office) (203) 983-5275 (Registrants telephone number, including area code) 
 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 o Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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 o No o 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 definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.  Large accelerated filer o

          

          Accelerated filer xNon-accelerated filer o

          

          Smaller reporting company o
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date. The number of shares of the issuers Common Stock, $0.01 par value, outstanding as of November 11, 2013 was 53,326,368.
     TABLE OF CONTENTS TICC CAPITAL CORP. TABLE OF CONTENTS  PART I. FINANCIAL INFORMATION





1Item 1.Financial Statements (Unaudited)





1Consolidated Statements of Assets and Liabilities as of September 30, 2013 and December 31, 2012





1Consolidated Schedule of Investments as of September 30, 2013





2Consolidated Schedule of Investments as of December 31, 2012





7Consolidated Statements of Operations for the three and nine months ended September 30, 2013 and 2012





12Consolidated Statements of Changes in Net Assets for the nine months ended September 30, 2013 and for the year ended December 31, 2012





13Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 and 2012





14Notes to Consolidated Financial Statements





15Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations





41Cautionary Statements Regarding Forward-Looking Statements





41Overview





43Critical Accounting Policies





45Portfolio Composition and Investment Activity





50Liquidity and Capital Resources





69Recent Developments





73Item 3.Quantitative and Qualitative Disclosures About Market Risk.





73Item 4.Controls and Procedures





73PART II. OTHER INFORMATION





74Item 1.Legal Proceedings





74Item 1A.Risk Factors





74Item 2.Unregistered Sales of Equity Securities and Use of Proceeds





77Item 3.Defaults Upon Senior Securities





77Item 4.Mine Safety Disclosures





77Item 5.Other Information





77Item 6.Exhibits





78SIGNATURES





80
 i    TABLE OF CONTENTS PART I  FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) TICC CAPITAL CORP.   CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (unaudited)  September 30, 2013

          

          December 31, 2012ASSETSNon-affiliated/non-control investments (cost: $908,253,220 @ 9/30/13; $634,081,527 @ 12/31/12)

          

          $

          925,230,532

          

          

          $

          651,099,873Control investments (cost: $17,000,000 @ 9/30/13; $17,256,179 @ 12/31/12)

          

          

          16,150,000

          

          

          

          16,450,000Total investments at fair value (cost: $925,253,220 @ 9/30/13; $651,337,706 @ 12/31/12)

          

          

          941,380,532

          

          

          

          667,549,873Cash and cash equivalents

          

          

          29,016,511

          

          

          

          51,392,949Restricted cash

          

          

          28,568,347

          

          

          

          21,240,508Deferred debt issuance costs

          

          

          8,304,521

          

          

          

          8,154,925Interest and distributions receivable

          

          

          9,221,072

          

          

          

          5,986,122Securities sold not settled

          

          

          4,911,617

          

          

          

          1,516,875Other assets

          

          

          248,612

          

          

          

          181,788Total assets

          

          $

          1,021,651,212

          

          

          $

          756,023,040LIABILITIESAccrued interest payable

          

          $

          4,745,820

          

          

          $

          4,234,376Investment advisory fee payable to affiliate

          

          

          6,724,619

          

          

          

          4,930,908Accrued capital gains incentive fee to affiliate

          

          

          4,650,831

          

          

          

          6,617,810Securities purchased not settled

          

          

          25,800,000

          

          

          

          Accrued expenses

          

          

          1,141,597

          

          

          

          302,971Notes payable  TICC CLO LLC, net of discount

          

          

          100,001,227

          

          

          

          99,882,627Notes payable  TICC CLO 2012-1 LLC, net of discount

          

          

          235,524,451

          

          

          

          115,451,819Convertible senior notes payable

          

          

          115,000,000

          

          

          

          115,000,000Total liabilities

          

          

          493,588,545

          

          

          

          346,420,511COMMITMENTS (Note 14)NET ASSETSCommon stock, $0.01 par value, 100,000,000 shares authorized, and 53,326,368 and 41,371,286 issued and outstanding, respectively

          

          

          533,264

          

          

          

          413,713Capital in excess of par value

          

          

          569,499,065

          

          

          

          451,157,297Net unrealized appreciation on investments

          

          

          16,127,312

          

          

          

          16,212,167Accumulated net realized losses on investments

          

          

          (46,779,660

          )

          

          

          (53,906,504

          )Distributions in excess of investment income

          

          

          (11,317,314

          )

          

          

          (4,274,144

          )Total net assets

          

          

          528,062,667

          

          

          

          409,602,529Total liabilities and net assets

          

          $

          1,021,651,212

          

          

          $

          756,023,040Net asset value per common share

          

          $

          9.90

          

          

          $

          9.90
 See Accompanying Notes.
 1    TABLE OF CONTENTS TICC CAPITAL CORP.CONSOLIDATED SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2013 (unaudited)  COMPANY(1)

          

          INDUSTRY

          

          INVESTMENT

          

          PRINCIPAL AMOUNT

          

          COST

          

          FAIR VALUE(2)

          

          % of Net AssetsSenior Secured NotesABB/Con Cise Optical Group

          

          

          retail

          

          

          

          tranche B term loan(4)(5)(6)(10)(4.50%, due February 06, 2019)

          

          

          $

          6,633,333

          

          

          $

          6,602,441

          

          

          $

          6,616,750Algorithmic Implementations, Inc. (d/b/a Ai Squared)

          

          

          software

          

          

          

          senior secured notes(4)(5)(6)(9.84%, due September 11, 2016)

          

          

          

          14,000,000

          

          

          

          14,000,000

          

          

          

          14,000,000ARSLOANE Intermediate, LLC (D/B/A Pitney Bowes Management Services, Inc.)

          

          

          printing and publishing

          

          

          

          first lien senior secured notes(4)(5)(9)(10)(7.50%, due October 01, 2019)

          

          

          

          16,000,000

          

          

          

          15,900,000

          

          

          

          16,000,000Attachmate Corporation

          

          

          enterprise software

          

          

          

          senior secured notes(4)(5)(6)(9)(10)(7.25%, due November 22, 2017)

          

          

          

          7,157,825

          

          

          

          7,038,811

          

          

          

          7,153,387second lien senior secured notes(4)(5)(6)(9)(10)(11.00%, due November 22, 2018)

          

          

          

          17,514,795

          

          

          

          17,285,323

          

          

          

          17,193,749Blue Coat System, Inc.

          

          

          software

          

          

          

          second lien senior secured notes(4)(5)(10)(9.50%, due June 28, 2020)

          

          

          

          15,000,000

          

          

          

          14,853,259

          

          

          

          15,037,500Compucom Systems, Inc.

          

          

          IT outsourcing

          

          

          

          first lien senior secured notes(4)(5)(10)(4.25%, due May 09, 2020)

          

          

          

          6,982,500

          

          

          

          6,948,963

          

          

          

          6,842,850CRCI Holdings, Inc.

          

          

          utilities

          

          

          

          first lien senior secured notes(4)(5)(9)(10)(5.00%, due July 10, 2019)

          

          

          

          7,750,000

          

          

          

          7,711,250

          

          

          

          7,672,500Cunningham Lindsey Group Inc.

          

          

          insurance

          

          

          

          first lien senior secured notes(4)(5)(6)(9)(10)(5.00%, due December 10, 2019)

          

          

          

          3,970,000

          

          

          

          3,933,937

          

          

          

          3,940,225Deltek Systems Inc

          

          

          enterprise software

          

          

          

          first lien senior secured notes(4)(5)(6)(10)(5.00%, due October 10, 2018)

          

          

          

          4,615,125

          

          

          

          4,588,275

          

          

          

          4,618,586second lien senior secured notes(4)(5)(10.00%, due October 10, 2019)

          

          

          

          10,000,000

          

          

          

          9,884,074

          

          

          

          10,031,300DG Fastchannel Inc

          

          

          advertising

          

          

          

          first lien senior secured notes(4)(5)(6)(10)(11)(7.25%, due July 26, 2018)

          

          

          

          5,214,056

          

          

          

          5,157,497

          

          

          

          5,153,208Drew Marine Partners

          

          

          shipping and transportation

          

          

          

          first lien senior secured notes(4)(5)(6)(9)(6.25%, due September 01, 2014)

          

          

          

          3,281,250

          

          

          

          3,258,654

          

          

          

          3,289,453Edmentum, Inc. (F/K/A Plato, Inc.)

          

          

          education

          

          

          

          first lien senior secured notes(4)(5)(6)(9)(10)(6.00%, due May 17, 2018)

          

          

          

          6,620,122

          

          

          

          6,551,013

          

          

          

          6,642,167Endurance International Group,

          

          

          web hosting

          

          

          

          first lien senior secured notes(4)(5)(6)(9)(10)(14)(6.25%, due November 09, 2019)

          

          

          

          11,047,173

          

          

          

          10,950,705

          

          

          

          11,081,751second lien senior secured notes(4)(5)(14)(10.25%, due May 09, 2020)

          

          

          

          18,000,000

          

          

          

          17,834,710

          

          

          

          18,045,000First American Payment Systems

          

          

          financial intermediaries

          

          

          

          first lien senior secured notes(4)(5)(6)(10)(5.75%, due October 04, 2018)

          

          

          

          3,810,000

          

          

          

          3,815,817

          

          

          

          3,771,900second lien senior secured notes(4)(5)(9)(10)(10.75%, due April 12, 2019)

          

          

          

          15,000,000

          

          

          

          14,732,402

          

          

          

          14,950,050First Data Corporation

          

          

          financial intermediaries

          

          

          

          first lien senior secured notes(4)(5)(9)(10)(4.18%, due March 24, 2017)

          

          

          

          16,050,721

          

          

          

          15,995,885

          

          

          

          15,883,472tranche B term loan(4)(5)(9)(10)(4.18%, due September 24, 2018)

          

          

          

          880,952

          

          

          

          880,952

          

          

          

          871,482Global Tel Link Corp

          

          

          telecommunication services

          

          

          

          second lien senior secured notes(4)(5)(9.00%, due November 23, 2020)

          

          

          

          13,000,000

          

          

          

          12,845,094

          

          

          

          12,653,290Grede Holdings LLC

          

          

          auto parts manufacturer

          

          

          

          senior secured notes(4)(5)(6)(9)(10)(4.50%, due April 03, 2017)

          

          

          

          8,043,728

          

          

          

          7,965,854

          

          

          

          8,043,728GXS Worldwide, Inc.

          

          

          business services

          

          

          

          senior secured notes(5)(9)(9.75%, due June 15, 2015)

          

          

          

          8,000,000

          

          

          

          7,950,093

          

          

          

          8,230,000Harvard Drug Group, LLC

          

          

          pharmaceutical

          

          

          

          senior secured notes(4)(5)(6)(10)(5.00%, due October 29, 2019)

          

          

          

          3,500,000

          

          

          

          3,499,763

          

          

          

          3,504,375Healogics, Inc. (F/K/A National Healing Corp.)

          

          

          healthcare

          

          

          

          senior secured notes(4)(5)(6)(10)(5.25%, due February 05, 2019)

          

          

          

          3,316,667

          

          

          

          3,301,529

          

          

          

          3,327,048second lien senior secured notes(4)(5)(10)(9.25%, due February 05, 2020)

          

          

          

          4,000,000

          

          

          

          3,962,620

          

          

          

          4,076,680
 (Continued on next page) See Accompanying Notes.
 2    TABLE OF CONTENTS TICC CAPITAL CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS  (Continued) SEPTEMBER 30, 2013 (unaudited)  COMPANY(1)

          

          INDUSTRY

          

          INVESTMENT

          

          PRINCIPAL AMOUNT

          

          COST

          

          FAIR VALUE(2)

          

          % of Net AssetsSenior Secured Notes  (continued)Help/Systems Holdings, Inc.

          

          

          software

          

          

          

          senior secured notes(4)(5)(9)(10)(14)(5.50%, due June 28, 2019)

          

          

          $

          15,000,000

          

          

          $

          14,853,715

          

          

          $

          14,887,500second lien senior secured notes(4)(5)(14)(9.50%, due June 28, 2020)

          

          

          

          15,000,000

          

          

          

          14,778,966

          

          

          

          15,000,000HHI Holdings LLC

          

          

          auto parts manufacturer

          

          

          

          senior secured notes(4)(5)(6)(10)(5.00%, due October 05, 2018)

          

          

          

          4,033,097

          

          

          

          4,001,364

          

          

          

          4,041,929Hoffmaster Group, Inc.

          

          

          retail

          

          

          

          first lien senior secured notes(4)(5)(6)(9)(10)(6.50%, due January 03, 2018)

          

          

          

          6,684,258

          

          

          

          6,661,461

          

          

          

          6,650,837iEnergizer Limited

          

          

          printing and publishing

          

          

          

          first lien senior secured notes(4)(5)(6)(10)(7.25%, due May 01, 2019)

          

          

          

          7,800,000

          

          

          

          7,656,135

          

          

          

          7,722,000Immucor, Inc.

          

          

          healthcare

          

          

          

          senior secured term B notes

          (4)(5)(6)(9)

          

          

          4,408,374

          

          

          

          4,287,117

          

          

          

          4,415,251InfoNXX, Inc

          

          

          telecommunication services

          

          

          

          second lien senior secured notes(4)(5)(6)(9)(6.43%, due December 01, 2013)

          

          

          

          1,960,000

          

          

          

          1,952,117

          

          

          

          1,943,928Integra Telecom Holdings, Inc

          

          

          telecommunication services

          

          

          

          first lien senior secured notes(4)(5)(6)(9)(10)(5.25%, due February 22, 2019)

          

          

          

          7,442,600

          

          

          

          7,394,457

          

          

          

          7,479,813second lien senior secured notes(4)(5)(6)(9.75%, due February 22, 2020)

          

          

          

          7,000,000

          

          

          

          7,000,000

          

          

          

          7,169,540Jackson Hewitt Tax Service, Inc.

          

          

          consumer services

          

          

          

          second lien senior secured notes(4)(5)(6)(9)(10)(10.00%, due October 17, 2017)

          

          

          

          24,218,750

          

          

          

          23,373,391

          

          

          

          23,855,469JHCI Holdings, Inc.

          

          

          logistics

          

          

          

          first lien senior secured notes(4)(5)(6)(10)(7.00%, due July 11, 2019)

          

          

          

          8,977,500

          

          

          

          8,941,927

          

          

          

          8,916,543Mercury Payment Systems, LLC

          

          

          financial intermediaries

          

          

          

          senior secured notes(4)(6)(9)(10)(5.50%, due July 01, 2017)

          

          

          

          4,900,084

          

          

          

          4,900,084

          

          

          

          4,924,584Merrill Communications, LLC

          

          

          printing and publishing

          

          

          

          first lien senior secured notes(4)(5)(6)(9)(10)(14)(7.31%, due March 08, 2018)

          

          

          

          17,540,039

          

          

          

          17,512,504

          

          

          

          17,605,814Mirion Technologies, Inc

          

          

          utilities

          

          

          

          senior secured notes(4)(5)(6)(9)(5.75%, due March 30, 2018)

          

          

          

          2,445,824

          

          

          

          2,406,845

          

          

          

          2,436,652Mmodal, Inc.

          

          

          healthcare

          

          

          

          first lien senior secured notes(4)(5)(6)(9)(10)(7.50%, due August 17, 2019)

          

          

          

          9,541,573

          

          

          

          9,445,163

          

          

          

          9,255,326NAB Holdings, LLC

          

          

          financial intermediaries

          

          

          

          first lien senior secured notes(4)(5)(6)(9)(10)(7.00%, due April 24, 2018)

          

          

          

          8,437,500

          

          

          

          8,410,051

          

          

          

          8,469,141National Vision, Inc.

          

          

          retail

          

          

          

          senior secured term B notes(4)(5)(6)(9)(10)(7.00%, due August 02, 2018)

          

          

          

          5,266,667

          

          

          

          5,216,812

          

          

          

          5,266,667New Breed Logistics

          

          

          logistics

          

          

          

          senior secured term B notes(4)(5)(6)(9)(10)(6.00%, due October 01, 2019)

          

          

          

          9,925,000

          

          

          

          9,916,124

          

          

          

          9,909,517Nextag, Inc.

          

          

          retail

          

          

          

          senior secured notes(4)(5)(6)(9)(10)(9.25%, due January 27, 2016)

          

          

          

          13,682,343

          

          

          

          13,236,515

          

          

          

          12,587,756Otter Products, LLC

          

          

          chemicals and plastics

          

          

          

          first lien senior secured notes(4)(5)(6)(9)(10)(5.25%, due April 30, 2020)

          

          

          

          14,852,000

          

          

          

          14,852,263

          

          

          

          14,888,833Packaging Coordinators, Inc.

          

          

          packaging and containers

          

          

          

          first lien senior secured notes(4)(5)(10)(5.50%, due May 10, 2020)

          

          

          

          5,000,000

          

          

          

          4,976,002

          

          

          

          5,000,000Philips Plastics Corporation

          

          

          healthcare

          

          

          

          senior secured notes(4)(5)(6)(9)(4.75%, due February 12, 2017)

          

          

          

          2,940,282

          

          

          

          2,923,133

          

          

          

          2,942,134Presidio IS Corp.

          

          

          business services

          

          

          

          senior secured notes(4)(5)(6)(9)(10)(5.75%, due March 31, 2017)

          

          

          

          9,900,000

          

          

          

          9,876,535

          

          

          

          9,867,033Radnet Management, Inc.

          

          

          medical services

          

          

          

          senior secured notes(4)(5)(6)(10)(4.25%, due October 10, 2018)

          

          

          

          3,960,010

          

          

          

          3,971,629

          

          

          

          3,961,673RBS Holding Company

          

          

          printing and publishing

          

          

          

          second lien senior secured notes(3)(4)(5)(6)(9)(8.25% Cash/1.25% PIK, due March 23, 2017)

          

          

          

          22,672,607

          

          

          

          10,777,929

          

          

          

          16,301,604Renaissance Learning

          

          

          education

          

          

          

          senior secured notes(4)(5)(6)(9)(10)(5.75%, due November 13, 2018)

          

          

          

          9,900,000

          

          

          

          9,833,251

          

          

          

          9,887,625Renfro Corporation

          

          

          clothing

          

          

          

          senior secured notes(4)(5)(6)(9)(10)(5.75%, due January 30, 2019)

          

          

          

          4,643,333

          

          

          

          4,670,971

          

          

          

          4,631,725Roundys Supermarkets, Inc.

          

          

          grocery

          

          

          

          term B senior secured notes(4)(5)(6)(10)(11)(5.75%, due February 13, 2019)

          

          

          

          8,909,480

          

          

          

          8,581,586

          

          

          

          8,715,342SCS Holdings I Inc. (Sirius Computer Solutions, Inc.)

          

          

          electronics

          

          

          

          second lien senior secured notes(4)(5)(6)(9)(7.00%, due December 07, 2018)

          

          

          

          4,064,904

          

          

          

          4,026,870

          

          

          

          4,146,202
 (Continued on next page) See Accompanying Notes.
 3    TABLE OF CONTENTS TICC CAPITAL CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS  (Continued) SEPTEMBER 30, 2013 (unaudited)  COMPANY(1)

          

          INDUSTRY

          

          INVESTMENT

          

          PRINCIPAL AMOUNT

          

          COST

          

          FAIR VALUE(2)

          

          % of Net AssetsSenior Secured Notes  (continued)Securus Technologies, Inc.

          

          

          telecommunication services

          

          

          

          first lien senior secured notes(4)(5)(9)(4.75%, due April 30, 2020)

          

          

          $

          4,000,000

          

          

          $

          3,961,981

          

          

          $

          3,925,000second lien senior secured notes(4)(5)(9.00%, due April 30, 2021)

          

          

          

          6,400,000

          

          

          

          6,369,072

          

          

          

          6,276,032Sedgwick Claims Management Services, Inc.

          

          

          insurance

          

          

          

          first lien senior secured notes(4)(6)(10)(4.25%, due June 12, 2018)

          

          

          

          1,995,000

          

          

          

          1,995,000

          

          

          

          1,993,125second lien senior secured notes(4)(5)(10)(8.00%, due December 12, 2018)

          

          

          

          1,500,000

          

          

          

          1,492,791

          

          

          

          1,525,320Sesac Holdco II LLC

          

          

          radio and television

          

          

          

          first lien senior secured notes(4)(5)(6)(10)(6.00%, due February 08, 2019)

          

          

          

          8,257,600

          

          

          

          8,313,237

          

          

          

          8,278,244second lien senior secured notes(4)(5)(10)(10.00%, due July 12, 2019)

          

          

          

          2,000,000

          

          

          

          1,972,043

          

          

          

          2,040,000Six3 Systems, Inc.

          

          

          IT consulting

          

          

          

          term B senior secured notes(4)(5)(6)(9)(10)(7.00%, due October 04, 2019)

          

          

          

          10,917,500

          

          

          

          10,834,754

          

          

          

          11,081,263Skillsoft Corporation

          

          

          business services

          

          

          

          senior secured notes(4)(5)(6)(10)(5.00%, due May 26, 2017)

          

          

          

          2,554,762

          

          

          

          2,568,446

          

          

          

          2,562,758Source Hov, LLC

          

          

          business services

          

          

          

          first lien senior secured notes(4)(6)(10)(5.25%, due April 30, 2018)

          

          

          

          4,788,000

          

          

          

          4,787,376

          

          

          

          4,811,940second lien senior secured notes(4)(5)(10)(8.75%, due April 30, 2019)

          

          

          

          2,000,000

          

          

          

          1,999,613

          

          

          

          2,018,340Sportsman's Warehouse Holdings

          

          

          retail

          

          

          

          first lien senior secured notes(4)(5)(9)(10)(7.25%, due July 11, 2019)

          

          

          

          15,000,000

          

          

          

          14,850,000

          

          

          

          15,000,000Sterling Infosystems, Inc.

          

          

          business services

          

          

          

          senior secured notes(4)(5)(6)(9)(5.75%, due February 01, 2018)

          

          

          

          2,557,588

          

          

          

          2,515,639

          

          

          

          2,557,588STG-Fairway Acquistions

          

          

          business services

          

          

          

          first lien senior secured notes(4)(5)(6)(9)(10)(6.25%, due February 28, 2019)

          

          

          

          9,328,125

          

          

          

          9,241,615

          

          

          

          9,299,021Stratus Technologies, Inc.

          

          

          computer hardware

          

          

          

          first lien high yield notes(5)(9)(12.00%, due March 29, 2015)

          

          

          

          9,282,000

          

          

          

          8,932,320

          

          

          

          9,282,000Sumtotal Systems, Inc.

          

          

          business services

          

          

          

          first lien senior secured notes(4)(5)(6)(9)(6.25%, due November 16, 2018)

          

          

          

          4,692,230

          

          

          

          4,650,558

          

          

          

          4,670,740second lien senior secured notes(4)(5)(10)(10.25%, due May 16, 2019)

          

          

          

          11,250,000

          

          

          

          11,043,910

          

          

          

          11,165,625Technimark LLC

          

          

          chemicals and plastics

          

          

          

          senior secured notes(4)(5)(6)(9)(10)(5.50%, due April 17, 2019)

          

          

          

          15,076,500

          

          

          

          15,021,806

          

          

          

          15,001,118Teleguam Holdings LLC

          

          

          telecommunication services

          

          

          

          second lien senior secured notes(4)(5)(9)(10)(8.75%, due June 10, 2019)

          

          

          

          10,000,000

          

          

          

          9,914,915

          

          

          

          10,000,000The TOPPS Company, Inc.

          

          

          leisure goods

          

          

          

          first lien senior secured notes(4)(5)(9)(10)(7.25%, due October 02, 2018)

          

          

          

          10,000,000

          

          

          

          9,900,000

          

          

          

          10,000,000Travelclick Inc

          

          

          travel

          

          

          

          first lien senior secured notes(4)(5)(6)(9)(10)(5.75%, due March 16, 2016)

          

          

          

          10,529,192

          

          

          

          10,484,734

          

          

          

          10,529,192Unitek Global Services, Inc.

          

          

          IT consulting

          

          

          

          tranche B term loan(3)(4)(5)(6)(9)(10)(11.00% Cash/4.00% PIK, due April 15, 2018)

          

          

          

          11,511,009

          

          

          

          11,293,048

          

          

          

          11,424,676US FT HoldCo. Inc. (A/K/A Fundtech)

          

          

          financial intermediaries

          

          

          

          senior secured notes(4)(6)(10)(4.50%, due November 30, 2017)

          

          

          

          3,482,278

          

          

          

          3,482,278

          

          

          

          3,490,984Vision Solutions

          

          

          software

          

          

          

          second lien senior secured notes(4)(5)(9)(10)(9.50%, due July 23, 2016)

          

          

          

          10,000,000

          

          

          

          9,932,824

          

          

          

          9,800,000Wall Street Systems

          

          

          financial intermediaries

          

          

          

          first lien senior secured notes(4)(5)(6)(9)(10)(5.75%, due October 25, 2019)

          

          

          

          4,962,500

          

          

          

          4,895,094

          

          

          

          4,974,906second lien senior secured notes(4)(5)(9.25%, due October 23, 2020)

          

          

          

          10,000,000

          

          

          

          9,816,400

          

          

          

          10,062,500Waupaca Foundry, Inc.

          

          

          IT consulting

          

          

          

          senior secured notes(4)(5)(6)(9)(10)(4.50%, due June 29, 2017)

          

          

          

          15,101,849

          

          

          

          15,038,707

          

          

          

          15,076,629Web.Com Group, Inc.

          

          

          web hosting

          

          

          

          senior secured notes(4)(5)(6)(9)(10)(11)(4.50%, due October 27, 2017)

          

          

          

          3,521,744

          

          

          

          3,491,563

          

          

          

          3,545,234Total Senior Secured Notes

          

          

          

          

          

          

          

          

          

          

          

          

          

          $

          672,683,562

          

          

          $

          681,903,124

          

          

          

          129.1%Senior Unsecured NotesMerrill Communications, LLC

          

          

          printing and publishing

          

          

          

          senior unsecured PIK notes(3)(5)(9)(14)(0.00% Cash/10.00% PIK, due March 08, 2023)

          

          

          

          5,720,396

          

          

          

          2,902,920

          

          

          

          5,577,386Total Senior Unsecured Notes

          

          

          

          

          

          

          

          

          

          

          

          

          

          $

          2,902,920

          

          

          $

          5,577,386

          

          

          

          1.1%
 (Continued on next page) See Accompanying Notes.
 4    TABLE OF CONTENTS TICC CAPITAL CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS  (Continued) SEPTEMBER 30, 2013 (unaudited)  COMPANY(1)

          

          INDUSTRY

          

          INVESTMENT

          

          PRINCIPAL AMOUNT

          

          COST

          

          FAIR VALUE(2)

          

          % of Net AssetsCollateralized Loan Obligation  Debt InvestmentsACA CLO 2007-1A E

          

          

          structured finance

          

          

          

          CLO secured notes(4)(5)(11)(12)(5.02%, due June 15, 2022)

          

          

          $

          1,957,994

          

          

          $

          1,767,027

          

          

          $

          1,764,936AMMC CLO XII, Limited 2013-12A F

          

          

          structured finance

          

          

          

          CLO secured notes(4)(5)(11)(12)(5.31%, due May 10, 2025)

          

          

          

          4,500,000

          

          

          

          3,891,655

          

          

          

          3,791,250Carlyle Global Market Strategies 2013-2A F

          

          

          structured finance

          

          

          

          CLO secured notes(4)(5)(11)(12)(5.67%, due April 18, 2025)

          

          

          

          6,000,000

          

          

          

          5,122,563

          

          

          

          5,247,000Catamaran CLO LTD 2012-1A F

          

          

          structured finance

          

          

          

          CLO secured notes(4)(5)(11)(12)(6.50%, due December 20, 2023)

          

          

          

          6,000,000

          

          

          

          5,061,302

          

          

          

          5,486,400CIFC Funding 2013-II, Ltd.

          

          

          structured finance

          

          

          

          CLO secured notes(4)(5)(11)(12)(6.08%, due July 18, 2025)

          

          

          

          4,000,000

          

          

          

          3,586,091

          

          

          

          3,590,000Emporia Preferred Funding III CLO 2007-3A, 3X E

          

          

          structured finance

          

          

          

          CLO secured notes(4)(5)(11)(12) (3.96%, due April 23, 2021)

          

          

          

          10,991,000

          

          

          

          8,015,025

          

          

          

          8,826,872Telos CLO 2013-3 Ltd. Class F

          

          

          structured finance

          

          

          

          CLO secured notes(4)(5)(11)(12)(5.77%, due January 17, 2024)

          

          

          

          3,000,000

          

          

          

          2,720,599

          

          

          

          2,611,203Total Collateralized Loan Obligation  Debt Investments

          

          

          

          

          

          

          

          

          

          

          

          

          

          $

          30,164,262

          

          

          $

          31,317,661

          

          

          

          5.9%
  COMPANY(1)

          

          INDUSTRY

          

          INVESTMENT

          

          PRINCIPAL AMOUNT/SHARES

          

          COST

          

          FAIR VALUE(2)

          

          % of Net AssetsCollateralized Loan Obligation   Equity InvestmentsACA CLO 2007-1A Sub

          

          

          structured finance

          

          

          

          CLO subordinated notes

          (11)(12)

          

          

          

          

          

          

          10,583,500

          

          

          

          9,272,000ACAS CLO 2012-1A Sub

          

          

          structured finance

          

          

          

          CLO subordinated notes

          (11)(12)

          

          

          

          

          

          

          4,050,000

          

          

          

          4,200,000AMMC CLO XII, Limited 2013-12 Sub

          

          

          structured finance

          

          

          

          CLO subordinated notes

          (11)(12)

          

          

          

          

          

          

          9,949,500

          

          

          

          10,595,572Apidos CLO XIV 2013-14A Sub

          

          

          structured finance

          

          

          

          CLO subordinated notes

          (11)(12)

          

          

          

          

          

          

          3,569,719

          

          

          

          3,749,625ARES 2012-3X Sub

          

          

          structured finance

          

          

          

          CLO subordinated notes

          (11)(12)

          

          

          

          

          

          

          12,620,875

          

          

          

          13,175,000ARES XXVI CLO Ltd. 2013-26A Sub

          

          

          structured finance

          

          

          

          CLO subordinated notes

          (11)(12)

          

          

          

          

          

          

          15,234,375

          

          

          

          16,687,500Benefit Street Partners CLO II Ltd.

          

          

          structured finance

          

          

          

          CLO subordinated notes

          (11)(12)

          

          

          

          

          

          

          12,870,000

          

          

          

          13,520,000Canaras Summit CLO 2007-1A Ltd Inc.

          

          

          structured finance

          

          

          

          CLO income notes

          (11)(12)

          

          

          

          

          

          

          4,355,000

          

          

          

          4,095,000Carlyle Global Market Strategies 2013-2A Sub

          

          

          structured finance

          

          

          

          CLO subordinated notes

          (11)(12)

          

          

          

          

          

          

          7,955,000

          

          

          

          8,972,500Catamaran CLO LTD 2012-1A Sub

          

          

          structured finance

          

          

          

          CLO subordinated notes

          (11)(12)

          

          

          

          

          

          

          20,075,000

          

          

          

          17,380,000Cedar Funding II CLO Ltd. 2013-1A Sub

          

          

          structured finance

          

          

          

          CLO subordinated notes

          (11)(12)

          

          

          

          

          

          

          15,656,250

          

          

          

          15,568,541Columbus Park CDO Ltd. 2008-1A Sub

          

          

          structured finance

          

          

          

          CLO subordinated notes

          (11)(12)

          

          

          

          

          

          

          8,150,000

          

          

          

          7,950,000Galaxy XV CLO Ltd. 2013-15A Sub

          

          

          structured finance

          

          

          

          CLO income notes

          (11)(12)

          

          

          

          

          

          

          7,012,500

          

          

          

          7,436,550Gale Force 4 2007-4A CLO Inc.

          

          

          structured finance

          

          

          

          CLO income notes

          (11)(12)

          

          

          

          

          

          

          1,965,000

          

          

          

          2,010,000Halcyon Loan Advisors Funding 2012-2A Sub

          

          

          structured finance

          

          

          

          CLO subordinated notes

          (11)(12)

          

          

          

          

          

          

          6,750,000

          

          

          

          7,575,000HarbourView CLO 2006-1 LTD 6A Sub

          

          

          structured finance

          

          

          

          CLO subordinated notes

          (11)(12)

          

          

          

          

          

          

          3,639,870

          

          

          

          4,066,400Jersey Street CLO 2006-1A LTD

          

          

          structured finance

          

          

          

          CLO income notes

          (11)(12)

          

          

          

          

          

          

          7,535,613

          

          

          

          6,598,800Lightpoint CLO III 2005-3X Inc.

          

          

          structured finance

          

          

          

          CLO income notes

          (11)(12)

          

          

          

          

          

          

          3,330,000

          

          

          

          3,150,000Lightpoint CLO VIII LTD 2007-8A Sub

          

          

          structured finance

          

          

          

          CLO subordinated notes

          (11)(12)

          

          

          

          

          

          

          4,612,500

          

          

          

          3,150,000Marea CLO 2012-1A Inc.

          

          

          structured finance

          

          

          

          CLO income notes

          (11)(12)

          

          

          

          

          

          

          10,934,215

          

          

          

          10,995,300North End CLO 2013-1A Sub

          

          

          structured finance

          

          

          

          CLO income notes

          (11)(12)

          

          

          

          

          

          

          4,615,234

          

          

          

          4,615,234Octagon Investment Partners XI 2007-1A Inc.

          

          

          structured finance

          

          

          

          CLO income notes

          (11)(12)

          

          

          

          

          

          

          2,434,163

          

          

          

          2,673,000Sargas CLO 2006-1A Sub

          

          

          structured finance

          

          

          

          CLO subordinated notes

          (11)(12)

          

          

          

          

          

          

          4,945,500

          

          

          

          3,535,000Sheridan Square CLO Ltd. 2013-1A Inc.

          

          

          structured finance

          

          

          

          CLO subordinated notes

          (11)(12)

          

          

          

          

          

          

          4,136,511

          

          

          

          4,094,302Stone Tower CLO VII LTD 2007-7X Sub

          

          

          structured finance

          

          

          

          CLO subordinated notes

          (11)(12)

          

          

          

          

          

          

          12,739,000

          

          

          

          9,720,000Telos 2013-3A Sub

          

          

          structured finance

          

          

          

          CLO subordinated notes

          (11)(12)

          

          

          

          

          

          

          8,633,333

          

          

          

          8,120,000Other CLO equity related investments

          

          

          structured finance

          

          

          

          CLO other

          (11)(13)

          

          

          

          

          

          

          

          

          

          

          3,977,615Total Collateralized Loan Obligation  Equity Investments

          

          

          

          

          

          

          

          

          

          

          

          

          

          $

          208,352,658

          

          

          $

          206,882,939

          

          

          

          39.2%
 (Continued on next page) See Accompanying Notes.
 5    TABLE OF CONTENTS TICC CAPITAL CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS  (Continued) SEPTEMBER 30, 2013 (unaudited)  COMPANY(1)

          

          INDUSTRY

          

          INVESTMENT

          

          PRINCIPAL AMOUNT/SHARES

          

          COST

          

          FAIR VALUE(2)

          

          % of Net AssetsCommon StockAlgorithmic Implementations, Inc. (d/b/a Ai Squared)

          

          

          software

          

          

          

          common stock

          

          

          

          100

          

          

          $

          3,000,000

          

          

          $

          2,150,000Integra Telecom Holdings, Inc.

          

          

          telecommunication services

          

          

          

          common stock

          (7)

          

          

          775,846

          

          

          

          1,712,397

          

          

          

          3,554,724Merrill Communications, LLC

          

          

          printing and publishing

          

          

          

          common equity

          (7)(14)

          

          

          728,442

          

          

          

          3,425,244

          

          

          

          9,105,525Pegasus Solutions, Inc.

          

          

          enterprise software

          

          

          

          common equity

          (7)

          

          

          15,333

          

          

          

          62,595

          

          

          

          Stratus Technologies, Inc.

          

          

          computer hardware

          

          

          

          common equity

          (7)

          

          

          223,210

          

          

          

          379,810

          

          

          

          6,696Total Common Stock Investments

          

          

          

          

          

          

          

          

          

          

          

          

          

          $

          8,580,046

          

          

          $

          14,816,945

          

          

          

          2.8%Preferred EquityPegasus Solutions, Inc.

          

          

          enterprise software

          

          

          

          preferred equity(3)(14.00% PIK dividend)

          

          

          

          8,050

          

          

          

          1,627,488

          

          

          

          Stratus Technologies, Inc.

          

          

          computer hardware

          

          

          

          preferred equity

          (7)

          

          

          50,796

          

          

          

          217,284

          

          

          

          359,128Total Preferred Equity Investments

          

          

          

          

          

          

          

          

          

          

          

          

          

          $

          1,844,772

          

          

          $

          359,128

          

          

          

          0.1%WarrantsFusionstorm, Inc.

          

          

          IT value-added reseller

          

          

          

          warrants to purchase common stock

          (7)

          

          

          540,371

          

          

          

          725,000

          

          

          

          225,062Unitek Global Services, Inc.

          

          

          IT consulting

          

          

          

          warrants to purchase common stock

          (7)

          

          

          309,080

          

          

          

          0

          

          

          

          298,287Total Warrants

          

          

          

          

          

          

          

          

          

          

          

          

          

          $

          725,000

          

          

          $

          523,349

          

          

          

          0.1%Total Investments

          

          

          

          

          

          

          

          

          

          

          

          

          

          $

          925,253,220

          

          

          $

          941,380,532

          

          

          

          178.3%
  (1)

          Other than Algorithmic Implementation, Inc. (d/b/a Ai Squared), which we may be deemed to control, we do not control and are not an affiliate of any of our portfolio companies, each as defined in the Investment Company Act of 1940 (the 1940 Act). In general, under the 1940 Act, we would be presumed to control a portfolio company if we owned 25% or more of its voting securities and would be an affiliate of a portfolio company if we owned 5% or more of its voting securities. (2)

          Fair value is determined in good faith by the Board of Directors of the Company. (3)

          Portfolio includes approximately $39.9 million of principal amount of debt investments which contain a PIK provision. Portfolio also includes one preferred equity position which contains a PIK dividend provision. (4)

          Notes bear interest at variable rates. (5)

          Cost value reflects accretion of original issue discount or market discount. (6)

          Cost value reflects repayment of principal. (7)

          Non-income producing at the relevant period end. (8)

          Aggregate gross unrealized appreciation for federal income tax purposes is $31,630,880; aggregate gross unrealized depreciation for federal income tax purposes is $33,746,420. Net unrealized depreciation is $2,115,540 based upon a tax cost basis of $943,496,072. (9)

          All or a portion of this investment represents TICC CLO LLC collateral. (10)

          All or a portion of this investment represents TICC CLO 2012-1 LLC collateral. (11)

          Indicates assets that the Company believes do not represent qualifying assets under Section 55(a) of the Investment Company Act of 1940, as amended. Qualifying assets must represent at least 70% of the Company's total assets at the time of acquisition of any additional non-qualifying assets. (12)

          Investment not domiciled in the United States. (13)

          Fair value represents discounted cash flows associated with fees from CLO equity investments. (14)

          Aggregate investments represent greater than 5% of net assets. See Accompanying Notes.
 6    TABLE OF CONTENTS TICC CAPITAL CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS DECEMBER 31, 2012  COMPANY(1)

          

          INDUSTRY

          

          INVESTMENT

          

          PRINCIPAL AMOUNT

          

          COST

          

          FAIR VALUE(1)

          

          % of Net AssetsSenior Secured NotesAlgorithmic Implementations, Inc. (d/b/a Ai Squared)

          

          

          software

          

          

          

          senior secured notes(4)(5)(6)(9.84%, due September 11, 2013)

          

          

          $

          14,300,000

          

          

          $

          14,256,179

          

          

          $

          14,300,000Attachmate Corporation

          

          

          enterprise software

          

          

          

          senior secured notes(4)(5)(6)(9)(10)(7.25%, due November 22, 2017)

          

          

          

          7,700,000

          

          

          

          7,554,783

          

          

          

          7,757,750second lien senior secured notes(4)(5)(9) (11.00%, due November 22, 2018)

          

          

          

          13,000,000

          

          

          

          12,669,026

          

          

          

          12,759,500Band Digital Inc. (F/K/A WHITTMANHART, Inc.)

          

          

          IT consulting

          

          

          

          senior secured notes(4)(6)(7)(13)(0.0%, due December 31, 2013)

          

          

          

          1,901,444

          

          

          

          1,773,000

          

          

          

          470,513Blue Coat System, Inc.

          

          

          software

          

          

          

          first lien senior secured notes(4)(5)(9)(10)(5.75%, due February 15, 2018)

          

          

          

          9,681,618

          

          

          

          9,663,415

          

          

          

          9,736,126BNY Convergex

          

          

          financial intermediaries

          

          

          

          second lien senior secured notes(4)(9)(8.75%, due December 17, 2017)

          

          

          

          1,875,000

          

          

          

          1,875,000

          

          

          

          1,763,681Compucom Systems, Inc.

          

          

          IT outsourcing

          

          

          

          first lien senior secured notes(4)(5)(10)(6.50%, due October 4, 2018)

          

          

          

          5,000,000

          

          

          

          4,951,308

          

          

          

          5,016,650second lien senior secured notes(4)(5) (10.25%, due October 4, 2019)

          

          

          

          10,000,000

          

          

          

          9,803,805

          

          

          

          9,962,500Cunningham Lindsey Group Inc.

          

          

          Insurance

          

          

          

          first lien senior secured notes(4)(5)(9)(10)(5.00%, due December 10, 2019)

          

          

          

          4,000,000

          

          

          

          3,960,243

          

          

          

          3,985,000second lien senior secured notes(4)(5) (9.25%, due June 10, 2020)

          

          

          

          4,000,000

          

          

          

          3,960,211

          

          

          

          4,070,000Deltek Systems Inc

          

          

          enterprise software

          

          

          

          first lien senior secured notes(4)(5)(10)(6.00%, due October 10, 2018)

          

          

          

          4,650,000

          

          

          

          4,621,586

          

          

          

          4,679,900second lien senior secured notes(4)(5) (10.00%, due October 10, 2019)

          

          

          

          5,000,000

          

          

          

          4,926,687

          

          

          

          5,070,850DG Fastchannel Inc

          

          

          advertising

          

          

          

          first lien senior secured notes(4)(5)(10)(5.75%, due July 26, 2018)

          

          

          

          2,984,025

          

          

          

          2,911,864

          

          

          

          2,852,221Drew Marine Partners

          

          

          shipping and transportation

          

          

          

          first lien senior secured notes(4)(5)(6)(9)(6.25%, due September 1, 2014)

          

          

          

          3,412,500

          

          

          

          3,377,717

          

          

          

          3,421,031Endurance International Group,

          

          

          web hosting

          

          

          

          first lien senior secured notes(4)(5)(9)(10)(6.25%, due November 9, 2019)

          

          

          

          10,000,000

          

          

          

          9,901,062

          

          

          

          9,991,700second lien senior secured notes(4)(5) (10.25%, due May 9, 2020)

          

          

          

          18,000,000

          

          

          

          17,821,968

          

          

          

          17,910,000First American Payment Systems

          

          

          financial intermediaries

          

          

          

          first lien senior secured notes(4)(5)(10)(5.75%, due October 4, 2018)

          

          

          

          4,000,000

          

          

          

          4,004,973

          

          

          

          3,994,160second lien senior secured notes(4)(5) (10.75%, due April 12, 2019)

          

          

          

          15,000,000

          

          

          

          14,706,660

          

          

          

          14,850,000First Data Corporation

          

          

          financial intermediaries

          

          

          

          first lien senior secured notes(4)(5)(9)(10)(5.21%, due March 24, 2017)

          

          

          

          10,000,000

          

          

          

          9,888,213

          

          

          

          9,807,800Genutec Business Solutions

          

          

          interactive voice messaging services

          

          

          

          senior secured notes(4)(5)(7)(0.0%, due October 30, 2014)

          

          

          

          3,476,000

          

          

          

          3,199,138

          

          

          

          Global Tel Link Corp

          

          

          telecommunication services

          

          

          

          senior secured notes(4)(5)(6)(9)(10)(6.00%, due December 14, 2017)

          

          

          

          8,096,192

          

          

          

          8,109,800

          

          

          

          8,108,741Grede Holdings LLC

          

          

          auto parts manufacturer

          

          

          

          senior secured notes(4)(5)(6)(9)(10)(7.00%, due April 3, 2017)

          

          

          

          8,371,429

          

          

          

          8,279,470

          

          

          

          8,371,429GXS Worldwide, Inc.

          

          

          business services

          

          

          

          senior secured notes(5)(9)(9.75%, due June 15, 2015)

          

          

          

          8,000,000

          

          

          

          7,930,627

          

          

          

          8,310,000Harvard Drug Group, LLC

          

          

          pharmaceutical

          

          

          

          senior secured notes(4)(5)(10)(6.00%, due October 29, 2019)

          

          

          

          3,478,261

          

          

          

          3,478,261

          

          

          

          3,495,652HHI Holdings LLC

          

          

          auto parts manufacturer

          

          

          

          senior secured notes(4)(5)(10)(6.00%, due October 5, 2018)

          

          

          

          4,500,000

          

          

          

          4,460,281

          

          

          

          4,545,000Hoffmaster Group, Inc.

          

          

          retail

          

          

          

          first lien senior secured notes(4)(5)(6)(9)(10)(6.50%, due January 3, 2018)

          

          

          

          6,824,588

          

          

          

          6,797,810

          

          

          

          6,784,801Immucor, Inc.

          

          

          healthcare

          

          

          

          senior secured term B notes(4)(5)(6)(9)(5.75%, due August 19, 2018)

          

          

          

          4,443,919

          

          

          

          4,306,480

          

          

          

          4,495,691Info USA, Inc.

          

          

          enterprise software

          

          

          

          first lien senior secured notes(4)(5)(6)(10)(5.25%, due April 5, 2018)

          

          

          

          2,992,500

          

          

          

          3,004,732

          

          

          

          3,017,068Integra Telecom Holdings, Inc

          

          

          telecommunication services

          

          

          

          first lien senior secured notes(4)(5)(6)(10)(9.25%, due April 15, 2015)

          

          

          

          7,784,106

          

          

          

          7,468,133

          

          

          

          7,780,837
 (Continued on next page) See Accompanying Notes.
 7    TABLE OF CONTENTS TICC CAPITAL CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS  (Continued) DECEMBER 31, 2012  COMPANY(1)

          

          INDUSTRY

          

          INVESTMENT

          

          PRINCIPAL AMOUNT

          

          COST

          

          FAIR VALUE(1)

          

          % of Net AssetsSenior Secured Notes  (continued)InfoNXX, Inc

          

          

          telecommunication services

          

          

          

          second lien senior secured notes(4)(5)(6)(9)(6.46%, due December 1, 2013)

          

          

          $

          5,028,800

          

          

          $

          4,919,170

          

          

          $

          4,727,072Jackson Hewitt Tax Service, Inc.

          

          

          consumer services

          

          

          

          second lien senior secured notes(4)(5)(9)(10)(10.00%, due October 16, 2017)

          

          

          

          25,000,000

          

          

          

          24,032,274

          

          

          

          24,125,000Mercury Payment Systems, LLC

          

          

          financial intermediaries

          

          

          

          senior secured notes(4)(6)(9)(10)(5.50%, due July 1, 2017)

          

          

          

          4,937,521

          

          

          

          4,937,521

          

          

          

          4,974,552Merrill Communications, LLC

          

          

          printing and publishing

          

          

          

          second lien senior secured notes(3)(4)(5)(9)(12.00% cash/5.01% PIK, due November 15, 2013)

          

          

          

          6,440,539

          

          

          

          6,421,156

          

          

          

          5,503,441Mirion Technologies, Inc

          

          

          utilities

          

          

          

          senior secured notes(4)(5)(6)(9)(6.25%, due March 30, 2018)

          

          

          

          2,464,417

          

          

          

          2,419,955

          

          

          

          2,464,417Mmodal, Inc.

          

          

          healthcare

          

          

          

          first lien senior secured notes(4)(5)(6)(9)(10)(6.75%, due August 17, 2019)

          

          

          

          9,975,281

          

          

          

          9,864,517

          

          

          

          9,559,611National Healing Corp

          

          

          healthcare

          

          

          

          senior secured notes(4)(5)(6)(9)(10)(8.25%, due November 30, 2017)

          

          

          

          10,697,719

          

          

          

          10,449,913

          

          

          

          10,724,463National Vision, Inc.

          

          

          retail

          

          

          

          senior secured term B notes(4)(5)(6)(9)(10)(7.00%, due August 2, 2018)

          

          

          

          5,293,333

          

          

          

          5,236,855

          

          

          

          5,346,266New Breed Logistics

          

          

          logistics

          

          

          

          senior secured term B notes(4)(5)(9)(10)(6.00%, due October 1, 2019)

          

          

          

          10,000,000

          

          

          

          9,990,220

          

          

          

          9,875,000Nextag, Inc.

          

          

          retail

          

          

          

          senior secured notes(4)(5)(6)(9)(10)(7.00%, due January 27, 2016)

          

          

          

          15,023,278

          

          

          

          14,538,665

          

          

          

          14,547,492NAB Holdings, LLC

          

          

          financial intermediaries

          

          

          

          first lien senior secured notes(4)(5)(6)(9)(10)(7.00%, due April 24, 2018)

          

          

          

          8,775,000

          

          

          

          8,743,346

          

          

          

          8,862,750Pegasus Solutions, Inc.

          

          

          enterprise software

          

          

          

          first lien senior secured notes(3)(4)(5)(6)(9)(10)(7.75% cash/0.75% PIK, due April 17, 2013)

          

          

          

          9,029,074

          

          

          

          8,828,973

          

          

          

          8,607,686second lien senior secured notes(3)(5)(6)(0.00% Cash/13.00% PIK, due April 15, 2014)

          

          

          

          6,806,299

          

          

          

          5,683,076

          

          

          

          6,680,382Petco, Inc.

          

          

          retail

          

          

          

          senior secured notes(4)(5)(6)(9)(4.50%, due November 24, 2017)

          

          

          

          4,949,495

          

          

          

          4,754,521

          

          

          

          4,982,211Philips Plastics Corporation

          

          

          healthcare

          

          

          

          senior secured notes(4)(5)(6)(9)(6.50%, due February 12, 2017)

          

          

          

          2,962,500

          

          

          

          2,941,877

          

          

          

          2,940,281Plato, Inc.

          

          

          education

          

          

          

          first lien senior secured notes(4)(5)(6)(9)(7.50%, due May 17, 2018)

          

          

          

          4,875,000

          

          

          

          4,800,697

          

          

          

          4,893,281Presidio IS Corp.

          

          

          business services

          

          

          

          senior secured notes(4)(6)(9)(10)(5.75%, due March 31, 2017)

          

          

          

          9,975,000

          

          

          

          9,947,111

          

          

          

          9,975,000Radnet Management, Inc.

          

          

          medical services

          

          

          

          senior secured notes(4)(6)(10)(5.50%, due October 10, 2018)

          

          

          

          3,990,000

          

          

          

          4,001,997

          

          

          

          3,991,676RBS Holding Company

          

          

          printing and publishing

          

          

          

          term B senior secured notes(4)(5)(6)(9)(9.25%, due March 23, 2017)

          

          

          

          4,912,500

          

          

          

          4,888,084

          

          

          

          2,326,069Renaissance Learning

          

          

          education

          

          

          

          senior secured notes(4)(5)(6)(9)(10)(5.75%, due November 13, 2018)

          

          

          

          9,975,000

          

          

          

          9,899,045

          

          

          

          9,993,753Roundys Supermarkets, Inc.

          

          

          grocery

          

          

          

          term B senior secured notes(4)(5)(6)(10)(11)(5.75%, due February 13, 2019)

          

          

          

          3,979,950

          

          

          

          3,830,541

          

          

          

          3,734,944Rovi Solutions Corp.

          

          

          digital media

          

          

          

          senior secured notes(4)(5)(6)(10)(11)(4.00%, due March 29, 2019)

          

          

          

          2,984,962

          

          

          

          2,876,998

          

          

          

          2,973,768Securus Technologies, Inc.

          

          

          telecommunication services

          

          

          

          second lien senior secured notes(4)(5)(9)(10.75%, due May 18, 2018)

          

          

          

          5,400,000

          

          

          

          5,310,431

          

          

          

          5,402,268Sirius Computer Solutions

          

          

          electronics

          

          

          

          second lien senior secured notes(4)(5)(6)(9)(8.00%, due December 7, 2018)

          

          

          

          4,658,654

          

          

          

          4,612,067

          

          

          

          4,687,771Six3 Systems, Inc.

          

          

          IT consulting

          

          

          

          term B senior secured notes(4)(5)(9)(10)(7.00%, due October 4, 2019)

          

          

          

          11,000,000

          

          

          

          10,909,200

          

          

          

          10,945,000Skillsoft Corporation

          

          

          business services

          

          

          

          senior secured notes(4)(5)(6)(9)(10)(5.00%, due May 26, 2017)

          

          

          

          7,760,711

          

          

          

          7,778,381

          

          

          

          7,818,916Source Hov, LLC

          

          

          business services

          

          

          

          second lien senior secured notes(4)(5)(10)(10.50%, due April 29, 2018)

          

          

          

          12,000,000

          

          

          

          11,031,772

          

          

          

          10,860,000Sportsman's Warehouse Holdings

          

          

          retail

          

          

          

          first lien senior secured notes(4)(5)(9)(10)(8.50%, due November 13, 2018)

          

          

          

          8,000,000

          

          

          

          7,921,017

          

          

          

          7,920,000
 (Continued on next page) See Accompanying Notes.
 8    TABLE OF CONTENTS TICC CAPITAL CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS  (Continued) DECEMBER 31, 2012  COMPANY(1)

          

          INDUSTRY

          

          INVESTMENT

          

          PRINCIPAL AMOUNT

          

          COST

          

          FAIR VALUE(1)

          

          % of Net AssetsSenior Secured Notes  (continued)Sterling Infosystems, Inc.

          

          

          business services

          

          

          

          senior secured notes(4)(5)(6)(9)(5.75%, due February 1, 2018)

          

          

          $

          2,736,250

          

          

          $

          2,687,979

          

          

          $

          2,729,409Stratus Technologies, Inc.

          

          

          computer hardware

          

          

          

          first lien high yield notes(5)(9)(12.00%, due March 29, 2015)

          

          

          

          9,520,000

          

          

          

          9,040,061

          

          

          

          9,520,000Sumtotal Systems, Inc.

          

          

          business services

          

          

          

          first lien senior secured notes(4)(5)(9)(6.25%, due November 16, 2018)

          

          

          

          5,000,000

          

          

          

          4,950,620

          

          

          

          4,965,650second lien senior secured notes(4)(5)(10.25%, due May 16, 2019)

          

          

          

          11,250,000

          

          

          

          11,026,661

          

          

          

          11,081,250Teleguam Holdings LLC

          

          

          telecommunication services

          

          

          

          second lien senior secured notes(4)(5)(9)(9.75%, due June 9, 2017)

          

          

          

          4,687,500

          

          

          

          4,650,285

          

          

          

          4,593,750Trinet Group, Inc.

          

          

          business services

          

          

          

          first lien senior secured notes(4)(5)(9)(10)(6.50%, due October 24, 2018)

          

          

          

          5,000,000

          

          

          

          4,975,586

          

          

          

          5,006,250Unitek Global Services, Inc.

          

          

          IT consulting

          

          

          

          tranche B term loan(4)(5)(6)(9)(10)(9.00%, due April 15, 2018)

          

          

          

          10,845,000

          

          

          

          10,588,639

          

          

          

          10,600,988US FT HoldCo. Inc. (A/K/A Fundtech)

          

          

          financial intermediaries

          

          

          

          senior secured notes(4)(5)(6)(9)(10)(5.75%, due November 30, 2017)

          

          

          

          5,940,000

          

          

          

          5,940,000

          

          

          

          5,966,017Vision Solutions

          

          

          software

          

          

          

          second lien senior secured notes(4)(5)(9)(10)(9.50%, due July 23, 2016)

          

          

          

          10,000,000

          

          

          

          9,922,165

          

          

          

          9,700,000Wall Street Systems

          

          

          financial intermediaries

          

          

          

          first lien senior secured notes(4)(5)(9)(10)(5.75%, due October 25, 2019)

          

          

          

          5,000,000

          

          

          

          4,925,809

          

          

          

          4,993,750second lien senior secured notes(4)(5)(9.25%, due October 23, 2020)

          

          

          

          10,000,000

          

          

          

          9,801,683

          

          

          

          9,966,700Web.Com Group, Inc.

          

          

          web hosting

          

          

          

          senior secured notes(4)(5)(6)(9)(10)(11)(5.50%, due October 27, 2017)

          

          

          

          8,977,500

          

          

          

          8,888,659

          

          

          

          9,016,821Total Senior Secured Notes

          

          

          

          

          

          

          

          

          

          

          

          

          

          $

          498,629,956

          

          

          $

          494,892,256

          

          

          

          120.8%Subordinated NotesFusionstorm, Inc.

          

          

          IT value-added reseller

          

          

          

          subordinated notes(4)(5)(6)(11.74%, due February 28, 2013)

          

          

          

          122,500

          

          

          

          122,351

          

          

          

          122,500Total Subordinated Notes

          

          

          

          

          

          

          

          

          

          

          

          

          

          $

          122,351

          

          

          $

          122,500

          

          

          

          0.0%Collateralized Loan Obligation  Debt InvestmentsCarlyle Global Market Strategies 2012-3A D

          

          

          structured finance

          

          

          

          CLO secured notes(4)(5)(11)(12)(6.14%, due October 4, 2024)

          

          

          

          3,000,000

          

          

          

          2,624,911

          

          

          

          2,731,200Catamaran CLO LTD 2012-1A F

          

          

          structured finance

          

          

          

          CLO secured notes(4)(5)(11)(12)(6.76%, due December 20, 2023)

          

          

          

          6,000,000

          

          

          

          5,034,736

          

          

          

          5,034,000CIFC CLO  2006-1A B2L

          

          

          structured finance

          

          

          

          CLO secured notes(4)(5)(11)(12)(4.32%, due October 20, 2020)

          

          

          

          3,247,284

          

          

          

          1,776,359

          

          

          

          2,604,647Emporia CLO 2007-3A, 3X E

          

          

          structured finance

          

          

          

          CLO secured notes(4)(5)(11)(12)(4.02%, due April 23, 2021)

          

          

          

          10,991,000

          

          

          

          7,819,199

          

          

          

          8,572,980Flagship 2005-4A D

          

          

          structured finance

          

          

          

          CLO secured notes(4)(5)(11)(12)(5.06%, due June 1, 2017)

          

          

          

          2,612,988

          

          

          

          1,769,969

          

          

          

          2,387,226HarbourView CLO VI LTD 6 6X D

          

          

          structured finance

          

          

          

          CLO secured notes(4)(5)(11)(12)(4.01%, due December 27, 2019)

          

          

          

          5,000,000

          

          

          

          3,332,765

          

          

          

          3,953,500Hewetts Island CDO III 2005-1A D

          

          

          structured finance

          

          

          

          CDO secured notes(4)(5)(6)(11)(12)(6.06%, due August 9, 2017)

          

          

          

          6,345,091

          

          

          

          3,805,058

          

          

          

          5,994,208Hewetts Island CDO IV 2006-4 E

          

          

          structured finance

          

          

          

          CDO secured notes(4)(5)(11)(12)(4.86%, due May 9, 2018)

          

          

          

          7,897,268

          

          

          

          5,810,698

          

          

          

          6,954,334Landmark V CDO LTD 2005-1X B2L

          

          

          structured finance

          

          

          

          CDO senior secured notes(4)(5)(6)(11)(12)(5.56%, due June 1, 2017)

          

          

          

          3,646,669

          

          

          

          2,412,575

          

          

          

          3,304,246Lightpoint CLO VIII 2007-8A

          

          

          structured finance

          

          

          

          CDO secured notes(4)(5)(11)(12)(6.84%, due July 25, 2018)

          

          

          

          5,000,000

          

          

          

          3,084,107

          

          

          

          4,779,500Muir Grove CLO LTD 2007-1X E

          

          

          structured finance

          

          

          

          CDO secured notes(4)(5)(11)(12)(8.32%, due March 25, 2020)

          

          

          

          7,690,915

          

          

          

          6,826,284

          

          

          

          7,690,915Sargas CLO I LTD 2006-1X D

          

          

          structured finance

          

          

          

          CLO senior secured notes(4)(5)(11)(12)(4.31%, due August 27, 2020)

          

          

          

          2,000,000

          

          

          

          1,599,337

          

          

          

          1,650,000Total Collateralized Loan Obligation  Debt Investments

          

          

          

          

          

          

          

          

          

          

          

          

          

          $

          45,895,998

          

          

          $

          55,656,756

          

          

          

          13.6%
 (Continued on next page) See Accompanying Notes.
 9    TABLE OF CONTENTS TICC CAPITAL CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS  (Continued) DECEMBER 31, 2012  COMPANY(1)

          

          INDUSTRY

          

          INVESTMENT

          

          PRINCIPAL AMOUNT/SHARES

          

          COST

          

          FAIR VALUE(1)

          

          % of Net AssetsCollateralized Loan Obligation  Equity InvestmentsACA CLO 2006-2, Limited Pref

          

          

          structured finance

          

          

          

          CLO preferred equity

          (11)(12)

          

          $

          

          

          

          $

          2,200,000

          

          

          $

          4,400,000ACA CLO 2007-1A Sub

          

          

          structured finance

          

          

          

          CLO subordinated notes

          (11)(12)

          

          

          

          

          

          

          10,583,500

          

          

          

          11,224,000ACAS CLO 2012-1A Sub

          

          

          structured finance

          

          

          

          CLO subordinated notes

          (11)(12)

          

          

          

          

          

          

          4,050,000

          

          

          

          4,150,000Catamaran CLO LTD 2012-1A Sub

          

          

          structured finance

          

          

          

          CLO subordinated notes

          (11)(12)

          

          

          

          

          

          

          20,075,000

          

          

          

          20,075,000Canaras Summit CLO 2007-1A Ltd Inc.

          

          

          structured finance

          

          

          

          CLO income notes

          (11)(12)

          

          

          

          

          

          

          4,355,000

          

          

          

          5,760,000Gale 2007-4A CLO Inc.

          

          

          structured finance

          

          

          

          CLO income notes

          (11)(12)

          

          

          

          

          

          

          1,965,000

          

          

          

          2,947,500GSC Group CDO 2007-8X Sub

          

          

          structured finance

          

          

          

          CLO subordinated notes

          (11)(12)

          

          

          

          

          

          

          4,110,000

          

          

          

          6,300,000Halcyon Loan Advisors Funding 2012-2A Sub

          

          

          structured finance

          

          

          

          CLO subordinated notes

          (11)(12)

          

          

          

          

          

          

          6,750,000

          

          

          

          6,750,000HarbourView CLO VI LTD 6 6A Sub

          

          

          structured finance

          

          

          

          CDO subordinated notes

          (11)(12)

          

          

          

          

          

          

          3,639,870

          

          

          

          3,889,600Jersey Street 2006-1A CLO LTD Inc.

          

          

          structured finance

          

          

          

          CLO income notes

          (11)(12)

          

          

          

          

          

          

          4,924,238

          

          

          

          5,560,100Kingsland LTD 2007-4X Sub

          

          

          structured finance

          

          

          

          CLO subordinated notes

          (11)(12)

          

          

          

          

          

          

          402,500

          

          

          

          537,500Lightpoint CLO III 2005-3X Inc.

          

          

          structured finance

          

          

          

          CLO income notes

          (11)(12)

          

          

          

          

          

          

          3,330,000

          

          

          

          2,632,500Lightpoint CLO VII LTD 2007-7X, 7A Sub

          

          

          structured finance

          

          

          

          CDO subordinated notes

          (11)(12)

          

          

          

          

          

          

          1,562,500

          

          

          

          1,760,000Marea CLO 2012-1A Inc.

          

          

          structured finance

          

          

          

          CLO income notes

          (11)(12)

          

          

          

          

          

          

          10,934,215

          

          

          

          11,117,470Marlborough Street 2007-1A Inc.

          

          

          structured finance

          

          

          

          CLO income notes

          (11)(12)

          

          

          

          

          

          

          1,739,000

          

          

          

          2,068,000Octagon Investment Partners XI 2007-1A Inc.

          

          

          structured finance

          

          

          

          CLO income notes

          (11)(12)

          

          

          

          

          

          

          2,434,163

          

          

          

          2,846,250Rampart CLO 2007-1A Sub

          

          

          structured finance

          

          

          

          CDO subordinated notes

          (11)(12)

          

          

          

          

          

          

          3,412,500

          

          

          

          3,465,000Sargas CLO 2006-1A Sub

          

          

          structured finance

          

          

          

          CDO subordinated notes

          (11)(12)

          

          

          

          

          

          

          4,945,500

          

          

          

          6,565,000Stone Tower CLO LTD 2007-7X Sub

          

          

          structured finance

          

          

          

          CDO subordinated notes

          (11)(12)

          

          

          

          

          

          

          6,265,000

          

          

          

          7,210,000Total Collateralized Loan Obligation  Equity Investments

          

          

          

          

          

          

          

          

          

          

          

          

          

          $

          97,677,985

          

          

          $

          109,257,920

          

          

          

          26.7%Common StockAlgorithmic Implementations, Inc. (d/b/a Ai Squared)

          

          

          software

          

          

          

          common stock

          

          

          

          100

          

          

          

          3,000,000

          

          

          

          2,150,000Integra Telecom Holdings, Inc.

          

          

          telecommunication services

          

          

          

          common stock

          (7)

          

          

          775,846

          

          

          

          1,712,397

          

          

          

          2,203,403Pegasus Solutions, Inc.

          

          

          enterprise software

          

          

          

          common equity

          (7)

          

          

          15,333

          

          

          

          62,595

          

          

          

          37,719Stratus Technologies, Inc.

          

          

          computer hardware

          

          

          

          common equity

          (7)

          

          

          206,100

          

          

          

          377,928

          

          

          

          Total Common Stock Investments

          

          

          

          

          

          

          

          

          

          

          

          

          

          $

          5,152,920

          

          

          $

          4,391,122

          

          

          

          1.1%Preferred EquityGenuTec Business Solutions, Inc.

          

          

          interactive voice messaging services

          

          

          

          convertible preferred stock

          (7)(14)

          

          

          

          

          

          

          1,500,000

          

          

          

          Pegasus Solutions, Inc.

          

          

          enterprise software

          

          

          

          preferred equity(3) (14.00% PIK dividend)

          

          

          

          8,050

          

          

          

          1,446,874

          

          

          

          2,273,481Stratus Technologies, Inc.

          

          

          computer hardware

          

          

          

          preferred equity

          (7)

          

          

          46,900

          

          

          

          186,622

          

          

          

          413,189Total Preferred Equity Investments

          

          

          

          

          

          

          

          

          

          

          

          

          

          $

          3,133,496

          

          

          $

          2,686,670

          

          

          

          0.7%WarrantsBand Digital Inc. (F/K/A WHITTMANHART, Inc.)

          

          

          IT consulting

          

          

          

          warrants to purchase common stock

          (7)(14)

          

          

          

          

          

          

          

          

          

          

          Fusionstorm, Inc.

          

          

          IT value-added reseller

          

          

          

          warrants to purchase common stock

          (7)

          

          

          540,371

          

          

          

          725,000

          

          

          

          542,649Total Warrants

          

          

          

          

          

          

          

          

          

          

          

          

          

          $

          725,000

          

          

          $

          542,649

          

          

          

          0.1%Total Investments

          

          

          

          

          

          

          

          

          

          

          

          

          

          $

          651,337,706

          

          

          $

          667,549,873

          

          

          

          163.0%
 (Continued on next page) See Accompanying Notes.
 10    TABLE OF CONTENTS TICC CAPITAL CORP. CONSOLIDATED SCHEDULE OF INVESTMENTS  (Continued) DECEMBER 31, 2012  (1)

          Other than Algorithmic Implementation, Inc. (d/b/a Ai Squared) , which we may be deemed to control, we do not control and are not an affiliate of any of our portfolio companies, each as defined in the Investment Company Act of 1940 (the 1940 Act). In general, under the 1940 Act, we would be presumed to control a portfolio company if we owned 25% or more of its voting securities and would be an affiliate of a portfolio company if we owned 5% or more of its voting securities. (2)

          Fair value is determined in good faith by the Board of Directors of the Company. (3)

          Portfolio includes approximately $22,3 million of principal amount of debt investments which contain a PIK provision. Portfolio also includes one preferred equity position which contains a PIK dividend provision. (4)

          Notes bear interest at variable rates. (5)

          Cost value reflects accretion of original issue discount or market discount. (6)

          Cost value reflects repayment of principal. (7)

          Non-income producing at the relevant period end. (8)

          Aggregate gross unrealized appreciation for federal income tax purposes is $29,973,250; aggregate gross unrealized depreciation for federal income tax purposes is $32,003,935. Net unrealized depreciation is $2,030,685 based upon a tax cost basis of $669,580,558. (9)

          All or a portion of this investment represents TICC CLO LLC collateral. (10)

          All or a portion of this investment represents TICC CLO 2012-1 LLC collateral. (11)

          Indicates assets that the Company believes do not represent qualifying assets under Section 55(a) of the Investment Company Act of 1940, as amended. Qualifying assets must represent at least 70% of the Companys total assets at the time of acquisition of any additional non-qualifying assets. (12)

          Investment not domiciled in the United States. (13)

          Debt investment on non-accrual status at the relevant period end. (14)

          Subject to an economic share adjustment, upon a realization event, with equity co-owner. See Accompanying Notes.
 11    TABLE OF CONTENTS TICC CAPITAL CORP.   CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)  Three Months Ended September 30, 2013

          

          Three Months Ended September 30, 2012

          

          Nine Months Ended September 30, 2013

          

          Nine Months Ended September 30, 2012INVESTMENT INCOMEFrom non-affiliated/non-control investments:Interest income  debt investments

          

          $

          14,039,082

          

          

          $

          8,908,966

          

          

          $

          38,334,197

          

          

          $

          27,159,248Distributions from securitization vehicles and equity investments

          

          

          12,256,961

          

          

          

          6,025,634

          

          

          

          31,676,007

          

          

          

          17,919,415Commitment, amendment fee income and other income

          

          

          787,777

          

          

          

          278,613

          

          

          

          3,505,135

          

          

          

          4,524,825Total investment income from non-affiliated/non-control investments

          

          

          27,083,820

          

          

          

          15,213,213

          

          

          

          73,515,339

          

          

          

          49,603,488From control investments:Interest income  debt investments

          

          

          364,557

          

          

          

          377,401

          

          

          

          1,088,641

          

          

          

          1,136,010Distributions from equity investments

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          62,041Total investment income from control investments

          

          

          364,557

          

          

          

          377,401

          

          

          

          1,088,641

          

          

          

          1,198,051Total investment income

          

          

          27,448,377

          

          

          

          15,590,614

          

          

          

          74,603,980

          

          

          

          50,801,539EXPENSESCompensation expense

          

          

          310,415

          

          

          

          289,361

          

          

          

          924,818

          

          

          

          839,049Investment advisory fees

          

          

          4,932,640

          

          

          

          2,796,873

          

          

          

          13,912,382

          

          

          

          7,390,894Professional fees

          

          

          386,793

          

          

          

          420,696

          

          

          

          1,474,966

          

          

          

          1,647,733Interest expense and other debt financing expenses

          

          

          4,977,313

          

          

          

          1,398,975

          

          

          

          13,980,611

          

          

          

          3,052,056General and administrative

          

          

          540,512

          

          

          

          423,884

          

          

          

          1,453,455

          

          

          

          1,151,363Total expenses before incentive fees

          

          

          11,147,673

          

          

          

          5,329,789

          

          

          

          31,746,232

          

          

          

          14,081,095Net investment income incentive fees

          

          

          1,791,981

          

          

          

          1,003,437

          

          

          

          4,426,322

          

          

          

          4,360,917Capital gains incentive fees

          

          

          2,270,014

          

          

          

          4,649,814

          

          

          

          (414,404

          )

          

          

          4,559,957Total incentive fees

          

          

          4,061,995

          

          

          

          5,653,251

          

          

          

          4,011,918

          

          

          

          8,920,874Total expenses

          

          

          15,209,668

          

          

          

          10,983,040

          

          

          

          35,758,150

          

          

          

          23,001,969Net investment income

          

          

          12,238,709

          

          

          

          4,607,574

          

          

          

          38,845,830

          

          

          

          27,799,570Net change in unrealized appreciation on investmentsNon-Affiliate/non-control investments

          

          

          12,704,136

          

          

          

          21,489,492

          

          

          

          (41,034

          )

          

          

          23,814,346Control investments

          

          

          (12,093

          )

          

          

          (17,986

          )

          

          

          (43,821

          )

          

          

          (969,732

          )Total net change in unrealized appreciation on investments

          

          

          12,692,043

          

          

          

          21,471,506

          

          

          

          (84,855

          )

          

          

          22,844,614Net realized (losses) gains on investmentsNon-Affiliate/non-control investments

          

          

          (1,341,975

          )

          

          

          1,777,564

          

          

          

          7,126,844

          

          

          

          3,555,702Control investments

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          Total realized (losses) gain on investments

          

          

          (1,341,975

          )

          

          

          1,777,564

          

          

          

          7,126,844

          

          

          

          3,555,702Net increase in net assets resulting from operations

          

          $

          23,588,777

          

          

          $

          27,856,644

          

          

          $

          45,887,819

          

          

          $

          54,199,886Net increase in net assets resulting from net investment income per common share:Basic

          

          $

          0.23

          

          

          $

          0.12

          

          

          $

          0.77

          

          

          $

          0.75Diluted

          

          $

          0.22

          

          

          $

          0.12

          

          

          $

          0.74

          

          

          $

          0.75Net increase in net assets resulting from operations per common share:Basic

          

          $

          0.45

          

          

          $

          0.71

          

          

          $

          0.91

          

          

          $

          1.47Diluted

          

          $

          0.41

          

          

          $

          0.70

          

          

          $

          0.85

          

          

          $

          1.47Weighted average shares of common stock outstanding:Basic

          

          

          52,751,722

          

          

          

          39,383,076

          

          

          

          50,314,364

          

          

          

          36,859,005Diluted

          

          

          62,784,874

          

          

          

          39,880,940

          

          

          

          60,347,516

          

          

          

          37,026,172
 See Accompanying Notes.
 12    TABLE OF CONTENTS TICC CAPITAL CORP.   CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (unaudited)  Nine Months Ended September 30, 2013

          

          Year Ended December 31, 2012Increase in net assets from operations:Net investment income

          

          $

          38,845,830

          

          

          $

          37,177,354Net realized gains on investments

          

          

          7,126,844

          

          

          

          16,876,880Net change in unrealized appreciation on investments

          

          

          (84,855

          )

          

          

          14,268,954Net increase in net assets resulting from operations

          

          

          45,887,819

          

          

          

          68,323,188Distributions to shareholders

          

          

          (45,889,000

          )

          

          

          (44,319,394

          )Capital share transactions:Issuance of common stock (net of offering costs of $4,460,619 and $3,545,895, respectively)

          

          

          116,022,771

          

          

          

          78,426,107Reinvestment of dividends

          

          

          2,438,548

          

          

          

          2,070,637Net increase in net assets from capital share transactions

          

          

          118,461,319

          

          

          

          80,496,744Total increase in net assets

          

          

          118,460,138

          

          

          

          104,500,538Net assets at beginning of period

          

          

          409,602,529

          

          

          

          305,101,991Net assets at end of period (including over distributed net investment income of $11,317,314 and $4,274,144, respectively)

          

          $

          528,062,667

          

          

          $

          409,602,529Capital share activity:Shares sold

          

          

          11,692,173

          

          

          

          8,337,500Shares issued from reinvestment of dividends

          

          

          262,909

          

          

          

          215,358Net increase in capital share activity

          

          

          11,955,082

          

          

          

          8,552,858
 See Accompanying Notes.
 13    TABLE OF CONTENTS TICC CAPITAL CORP.   CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)  Nine Months Ended September 30, 2013

          

          Nine Months Ended September 30, 2012CASH FLOWS FROM OPERATING ACTIVITIESNet increase in net assets resulting from operations

          

          $

          45,887,819

          

          

          $

          54,199,886Adjustments to reconcile net increase in net assets resulting from operations to net cash used by operating activities:Accretion of discounts on investments

          

          

          (2,899,992

          )

          

          

          (4,289,325

          )Accretion of discount on notes payable and deferred debt issuance costs

          

          

          1,364,824

          

          

          

          430,826Increase in investments due to PIK

          

          

          (1,827,150

          )

          

          

          (4,380,550

          )Purchases of investments

          

          

          (466,565,850

          )

          

          

          (226,365,499

          )Repayments of principal and reductions to investment cost value

          

          

          137,939,868

          

          

          

          115,860,293Proceeds from the sale of investments

          

          

          88,969,712

          

          

          

          20,051,265Net realized gains on investments

          

          

          (7,126,844

          )

          

          

          (3,555,702

          )Net change in unrealized appreciation on investments

          

          

          84,855

          

          

          

          (22,844,614

          )Increase in interest and distributions receivable

          

          

          (3,234,950

          )

          

          

          (2,659,130

          )(Increase) decrease in other assets

          

          

          (66,824

          )

          

          

          136,347Increase (decrease) in accrued interest payable

          

          

          511,444

          

          

          

          (48,482

          )Increase in investment advisory fee payable

          

          

          1,793,711

          

          

          

          904,512(Decrease) increase in accrued capital gains incentive fee

          

          

          (1,966,979

          )

          

          

          4,559,957Increase in accrued expenses

          

          

          838,626

          

          

          

          346,954Net cash used by operating activities

          

          

          (206,297,730

          )

          

          

          (67,653,263

          )CASH FLOWS FROM INVESTING ACTIVIESChange in restricted cash

          

          

          (7,327,839

          )

          

          

          (73,546,292

          )Net cash used by investing activities

          

          

          (7,327,839

          )

          

          

          (73,546,292

          )CASH FLOWS FROM FINANCING ACTIVITIESProceeds from the issuance of Notes Payable  TICC CLO 2012-1 LLC (net of discount of $253,875 and $4,440,163, respectively)

          

          

          119,746,125

          

          

          

          112,559,837Proceeds from the issuance of convertible senior notes

          

          

          

          

          

          

          105,000,000Deferred debt issuance costs

          

          

          (1,069,313

          )

          

          

          (5,545,177

          )Proceeds from the issuance of common stock

          

          

          120,483,390

          

          

          

          81,972,002Offering expenses from the issuance of common stock

          

          

          (4,460,619

          )

          

          

          (3,545,895

          )Distributions paid (net of stock issued under dividend reinvestment plan of $2,438,548 and $1,508,158, respectively)

          

          

          (43,450,452

          )

          

          

          (30,830,535

          )Net cash provided by financing activities

          

          

          191,249,131

          

          

          

          259,610,232Net (decrease) increase in cash and cash equivalents

          

          

          (22,376,438

          )

          

          

          118,410,677Cash and cash equivalents, beginning of period

          

          

          51,392,949

          

          

          

          4,494,793Cash and cash equivalents, end of period

          

          $

          29,016,511

          

          

          $

          122,905,470NON-CASH FINANCING ACTIVITIESValue of shares issued in connection with dividend reinvestment plan

          

          $

          2,438,548

          

          

          $

          1,508,158SUPPLEMENTAL DISCLOSURESSecurities sold not settled

          

          $

          4,911,617

          

          

          $

          503,750Securities purchased not settled

          

          $

          25,800,000

          

          

          $

          34,561,217Cash paid for interest

          

          $

          12,104,347

          

          

          $

          2,669,712
 See Accompanying Notes.
 14    TABLE OF CONTENTS TICC CAPITAL CORP.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2013 NOTE 1. UNAUDITED INTERIM FINANCIAL STATEMENTS Interim consolidated financial statements of TICC Capital Corp. (TICC and, together with its subsidiaries, the Company) are prepared in accordance with generally accepted accounting principles (GAAP) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with GAAP are omitted. In the opinion of management, all adjustments, consisting solely of normal recurring accruals, necessary for the fair statement of
consolidated financial results for the interim periods have been included. The current periods consolidated results of operations are not necessarily indicative of results that may be achieved for the year. The interim consolidated financial statements and notes thereto should be read in conjunction with the financial statements and notes thereto included in the Companys Form 10-K for the year ended December 31, 2012, as filed with the Securities and Exchange Commission (SEC). Certain amounts have been reclassified in the 2012 financial statements to conform to the 2013 presentation. NOTE 2. ORGANIZATION TICC was incorporated under the General Corporation Laws of the State of Maryland on July 21, 2003 and is a non-diversified, closed-end investment company. TICC has elected to be treated as a business development company under the Investment Company Act of 1940, as amended (the 1940 Act). In addition, TICC has elected to be treated for tax purposes as a regulated investment company (RIC), under Subchapter M of the Internal Revenue Code of 1986, as amended (the Code). The Companys investment objective is to maximize its total return, by investing primarily in corporate debt securities. TICCs investment activities are managed by TICC Management, LLC, (TICC Management), a registered investment adviser under the Investment Advisers Act of 1940, as amended. BDC Partners, LLC (BDC Partners) is the managing member of TICC Management and serves as the administrator of TICC. On August 10, 2011, the Company completed a $225.0 million debt securitization financing transaction. The Class A Notes and the subordinated notes offered in the debt securitization were issued by TICC CLO LLC (2011 Securitization Issuer or TICC CLO), a subsidiary of TICC Capital Corp. 2011-1 Holdings, LLC (Holdings), which is in turn a direct subsidiary of TICC. The Class A Notes are secured by the assets held by the 2011 Securitization Issuer. The securitization was executed through a private placement of $101.25 million of secured notes rated AAA/Aaa by Standard & Poors Rating
Service (S&P) and Moodys Investors Service Inc. (Moodys), respectively, and bearing interest at the three-month LIBOR plus 2.25%. Holdings retained all of the subordinated notes, which totaled $123.75 million (the 2011 Subordinated Notes), and retained all the membership interests in the 2011 Securitization Issuer. For further information on this securitization, see Note 4 to the financial statements. On August 23, 2012, the Company completed a $160 million debt securitization financing transaction, consisting of $120 million in secured notes and $40 million of subordinated notes issued by TICC CLO 2012-1 LLC (TICC CLO 2012-1 or 2012 Securitization Issuer). On February 25, 2013 and May 28, 2013, TICC CLO 212-1 issued additional secured notes totaling an aggregate of $120 million and subordinated notes totaling an aggregate of $40 million. All of the subordinated notes were purchased by the Company. It is not necessary that the Company own all or any of the subordinated notes, which may affect the
accounting treatment of the debt securitization financing transaction. As of September 30, 2013 the secured notes of the 2012 Securitization Issuer have an aggregate face amount of $240 million and were issued in four classes. The class A-1 notes have a current face amount of $176 million, are rated AAA(sf)/Aaa(sf) by Standard & Poors Ratings Services (S&P) and Moodys Investors Service, Inc. (Moodys), respectively, and bear interest at three-month LIBOR plus 1.75%. The class B-1 notes have a current face amount of $20 million, are rated AA(sf)/Aa2(sf) by S&P and Moodys, respectively, and bear interest at three-month
 15    TABLE OF CONTENTS TICC CAPITAL CORP.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2013 NOTE 2. ORGANIZATION   (continued) LIBOR plus 3.50%. The class C-1 notes have a current face amount of $23 million, are rated A(sf)/A2(sf) by S&P and Moodys, respectively, and bear interest at three-month LIBOR plus 4.75%. The class D-1 notes have a current face amount of $21 million, are rated BBB(sf)/Baa2(sf) by S&P and Moodys, respectively, and bear interest at three-month LIBOR plus 5.75%. TICC presently owns all of the subordinated notes, which totaled $80 million as of September 30, 2013. For further information on this securitization, see Note 4 to the financial statements. The Company consolidated the results of its subsidiaries, Holdings, TICC CLO and TICC CLO 2012-1, in its consolidated financial statements as the subsidiaries are operated solely for investment activities of the Company, and the Company has substantial equity at risk. The creditors of TICC CLO and TICC CLO 2012-1 have received security interests in the assets owned by TICC CLO and TICC CLO 2012-1, respectively, and such assets are not intended to be available to the creditors of TICC (or any other affiliate of TICC). On September 26, 2012, the Company closed a private placement of 5-year unsecured 7.50% Senior Convertible Notes Due 2017 (the Convertible Notes). A total of $105 million aggregate principal amount of the Convertible Notes were issued at the closing. An additional $10 million aggregate principal amount of the Convertible Notes were issued on October 22, 2012 pursuant to the exercise of the initial purchasers option to purchase additional Convertible Notes. The Convertible Notes are convertible into shares of the Companys common stock based on an initial conversion rate of 87.2448 shares of the
Companys common stock per $1,000 principal amount of Convertible Notes, which is equivalent to an initial conversion price of approximately $11.46 per share of common stock, representing an approximately 10.0% conversion premium over the last reported sale price of the Companys common stock on September 20, 2012, which was $10.42 per share. The conversion price for the Convertible Notes will be reduced for quarterly cash dividends paid to common shares to the extent that the quarterly dividend exceeds $0.29 cents per share, subject to adjustment. The Convertible Notes bear interest at an annual rate of 7.50%, payable semiannually in arrears on May 1 and November 1 of each year, beginning May 1, 2013. The Convertible Notes mature on November 1, 2017, unless previously converted in accordance with their terms. The Convertible Notes are general unsecured obligations of the Company, rank equally in right of payment with the Companys future senior unsecured debt, and rank
senior in right of payment to any potential subordinated debt, should any be issued in the future. NOTE 3. INVESTMENT VALUATION The most significant estimate inherent in the preparation of our consolidated financial statements is the valuation of investments and the related amounts of unrealized appreciation and depreciation of investments recorded. There is no single method 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 portfolio investment while employing a consistently applied valuation process for the types of investments we make. We are required to specifically fair value each individual investment on a quarterly basis. ASC 820-10, Fair Value Measurements and Disclosure, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820-10 also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, which includes inputs such as quoted prices for similar securities in active markets and quoted prices for identical securities in markets that are not active;
and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions. We have determined that due to the general illiquidity of the market for our investment portfolio, whereby little or no market data exists, substantially all of our investments are based upon Level 3 inputs.
 16    TABLE OF CONTENTS TICC CAPITAL CORP.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2013 NOTE 3. INVESTMENT VALUATION   (continued) Our Board of Directors determines the value of our investment portfolio each quarter. In connection with that determination, members of TICC Managements portfolio management team prepare portfolio company valuations using the most recent portfolio company financial statements and forecasts. Since March 2004, we have engaged third-party valuation firms to provide assistance in valuing our bilateral investments and, more recently, for certain of our syndicated loans, although our Board of Directors ultimately determines the appropriate valuation of each such investment. Our process for determining the fair value of a bilateral investment begins with determining the enterprise value of the portfolio company. Enterprise value means the entire value of the company to a potential buyer, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time. The fair value of our investment is based, in part, on the enterprise value at which the portfolio company could be sold in an orderly disposition over a reasonable period of time between willing parties other than in a forced or liquidation sale. The liquidity event whereby we exit a private
investment is generally the sale, the recapitalization or, in some cases, the initial public offering of the portfolio company. There is no one methodology to determine enterprise value and, in fact, for any one portfolio company, enterprise value is best expressed as a range of fair values, from which we derive a single estimate of enterprise value. To determine the enterprise value of a portfolio company, we analyze the historical and projected financial results, as well as the nature and value of any collateral. We also use industry valuation benchmarks and public market comparables. We also consider other events, including private mergers and acquisitions, a purchase transaction, public offering or subsequent debt or equity sale or restructuring,
and include these events in the enterprise valuation process. We generally require portfolio companies to provide annual audited and quarterly unaudited financial statements, as well as annual projections for the upcoming fiscal year. Typically, our bilateral debt investments are valued on the basis of a fair value determination arrived at through an analysis of the borrowers financial and operating condition or other factors, as well as consideration of the entitys enterprise value. The types of factors that we may take into account in valuing our investments include: market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, the nature and realizable value of any collateral, the portfolio companys ability to make payments and its earnings and discounted cash flows,
among other factors. The fair value of equity interests in portfolio companies is determined based on various factors, including the enterprise value remaining for equity holders after the repayment of the portfolio companys debt and other preference capital, and other pertinent factors such as recent offers to purchase a portfolio company, recent transactions involving the purchase or sale of the portfolio companys equity securities, or other liquidity events. The determined equity values are generally discounted when we have a minority position, restrictions on resale, specific concerns about the receptivity of the capital markets to a specific company at a certain time, or other factors. We will record unrealized depreciation on bilateral investments when we believe that an investment has become impaired, including where collection of a loan or realization of an equity security is doubtful. To the extent that we believe that it has become probable that a loan is not collectible or probable that an equity investment is not realizable, we will classify that amount as a realized loss. We will record unrealized appreciation if we believe that the underlying portfolio company has appreciated in value and our equity security has also appreciated in value. Changes in fair value, other than such changes that are
considered probable of non-collection or non-realization, as described above, are recorded in the statement of operations as net change in unrealized appreciation or depreciation. Under the valuation procedures approved by our Board of Directors, upon the recommendation of the Valuation Committee, a third-party valuation firm will prepare valuations for each of our bilateral investments for which market quotations are not readily available that, when combined with all other investments in the
 17    TABLE OF CONTENTS TICC CAPITAL CORP.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2013 NOTE 3. INVESTMENT VALUATION   (continued) same portfolio company, (i) have a value as of the previous quarter of greater than or equal to 2.5% of our total assets as of the previous quarter, and (ii) have a value as of the current quarter of greater than or equal to 2.5% of our total assets as of the previous quarter, after taking into account any repayment of principal during the current quarter. In addition, the frequency of those third-party valuations of our portfolio securities is based upon the grade assigned to each such security under our credit grading system as follows: Grade 1, at least annually; Grade 2, at least semi-annually; Grades 3, 4, and 5, at least
quarterly. TICC Management also retains the authority to seek, on our behalf, additional third party valuations with respect to both our bilateral portfolio securities and our syndicated loan investments. Our Board of Directors retains ultimate authority as to the third-party review cycle as well as the appropriate valuation of each investment. ASC 820-10-35, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, provides guidance on factors that should be considered in determining when a previously active market becomes inactive and whether a transaction is orderly. In accordance with ASC 820-10-35, our valuation procedures specifically provide for the review of indicative quotes supplied by the large agent banks that make a market for each security. However, the marketplace for which we obtain indicative bid quotes for purposes of determining
the fair value of our syndicated loan investments have shown these attributes of illiquidity as described by ASC-820-10-35. Due to limited market liquidity in the syndicated loan market, TICC believes that the non-binding indicative bids received from agent banks for certain syndicated investments that we own may not be determinative of their fair value and therefore alternative valuation procedures may need to be undertaken. As a result, TICC has engaged third-party valuation firms to provide assistance in valuing certain syndicated investments that we own. In addition, TICC Management prepares an analysis of each syndicated loan, including a financial summary, covenant compliance review, recent trading activity in the security, if known, and other business developments related to the portfolio company. All available information, including non-binding indicative bids which may not be determinative of fair value, is presented to the Valuation Committee to consider in its determination
of fair value. In some instances, there may be limited trading activity in a security even though the market for the security is considered not active. In such cases the Valuation Committee will consider the number of trades, the size and timing of each trade, and other circumstances around such trades, to the extent such information is available, in its determination of fair value. The Valuation Committee will evaluate the impact of such additional information, and factor it into its consideration of the fair value that is indicated by the analysis provided by third-party valuation firms. We have considered the factors described in ASC 820-10 and have determined that we are properly valuing the securities in our portfolio. During the past few years, we have acquired a number of debt and equity positions in CLO investment vehicles. These investments are special purpose financing vehicles. In valuing such investments, we consider the operating metrics of the specific investment vehicle, including compliance with collateralization tests, defaulted and restructured securities, and payment defaults, if any. In addition, we consider the indicative prices provided by the broker who arranges transactions in such investment vehicles, as well as any available information on other relevant transactions in the market. TICC Management or the Valuation
Committee may request an additional analysis by a third-party firm to assist in the valuation process of CLO investment vehicles. All information is presented to our Board of Directors for its determination of fair value of these investments.
 18    TABLE OF CONTENTS TICC CAPITAL CORP.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2013 NOTE 3. INVESTMENT VALUATION   (continued) The Companys assets measured at fair value on a recurring basis at September 30, 2013, were as follows:  ($ in millions)

          

          Fair Value Measurements at Reporting Date UsingAssets

          

          Quoted Prices in Active Markets for Identical Assets (Level 1)

          

          Significant Other Observable Inputs (Level 2)

          

          Significant Unobservable Inputs (Level 3)

          

          TotalSenior Secured Notes

          

          $

          0.0

          

          

          $

          16.8

          

          

          $

          665.1

          

          

          $

          681.9Senior Unsecured Notes

          

          

          0.0

          

          

          

          0.0

          

          

          

          5.6

          

          

          

          5.6CLO Debt

          

          

          0.0

          

          

          

          0.0

          

          

          

          31.3

          

          

          

          31.3CLO Equity

          

          

          0.0

          

          

          

          0.0

          

          

          

          206.9

          

          

          

          206.9Subordinated Notes

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0Common Stock

          

          

          0.0

          

          

          

          0.0

          

          

          

          14.8

          

          

          

          14.8Preferred Shares

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.4

          

          

          

          0.4Warrants to purchase equity

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.5

          

          

          

          0.5Total

          

          $

          0.0

          

          

          $

          16.8

          

          

          $

          924.6

          

          

          $

          941.4
 Level 2 securities are valued based on quotations for those identical securities received from independent pricing services or from dealers who make markets in such securities in markets that are not considered active. If there are several different sources of quotations and there is a reasonable level of trading activity, we will categorize these investments as Level 2 in the hierarchy. Significant Unobservable Inputs for Level 3 Investments The following table provides quantitative information about the Companys Level 3 fair value measurements as of September 30, 2013. The Companys valuation policy, as described above, establishes parameters for the sources and types of valuation analysis, as well as the methodologies and inputs that the Company uses in determining fair value. If the Valuation Committee or TICC Management determines that additional techniques, sources or inputs are appropriate or necessary in a given situation, such additional work will be undertaken. The table, therefore, is not all-inclusive, but provides information on the
significant Level 3 inputs that are pertinent to the Companys fair value measurements. The weighted average calculations in the table below are based on principal balances for all debt related calculations and CLO equity.  ($ in millions)

          

          Quantitative Information about Level 3 Fair Value MeasurementsAssets

          

          Fair Value as ofSeptember 30, 2013

          

          Valuation Techniques/ Methodologies

          

          Unobservable Input

          

          Range/Weighted AverageCorporate debt investmentssyndicated

          

          $

          656.7

          

          

          

          market quotes

          

          

          

          NBIB(1)

          

          

          

          71.9% - 102.9%/98.6%bilateral

          

          

          14.0

          

          

          

          valuation analysis(2)/

          

          

          

          EBITDA(3)

          

          

          $

          3.0/ncm(6)enterprise value

          

          

          

          market multiples(3)

          

          

          

          5.5x - 6.5x/ncm(6)ICG(4)

          

          

          

          3/3.0CLO debt

          

          

          31.3

          

          

          

          market quotes

          

          

          

          NBIB(1)

          

          

          

          80.3% - 91.4%/85.9%CLO equity

          

          

          206.9

          

          

          

          market quotes

          

          

          

          NBIB(1)

          

          

          

          35.0% - 108.0%/82.4%Other investments

          

          

          15.7

          

          

          

          valuation analysis(2)/

          

          

          

          EBITDA(3)

          

          

          $

          12.3 - $185.9/ncm(6)enterprise value

          

          

          

          market multiples(3)

          

          

          

          2.4x - 16.2x/ncm(6)discount rates(5)

          

          

          

          20.0% - 30.0%/ncm(6)Total Fair Value for Level 3 Investments

          

          $

          924.6
 19    TABLE OF CONTENTS TICC CAPITAL CORP.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2013 NOTE 3. INVESTMENT VALUATION   (continued)  (1)

          The Company generally uses prices provided by an independent pricing service, or broker or agent bank non-binding indicative bid prices (NBIB) on or near the valuation date as the primary basis for the fair value determinations for syndicated notes, and CLO debt and equity investments. These bid prices are non-binding, and may not be determinative of fair value. Each bid price is evaluated by the Valuation Committee in conjunction with additional information compiled by TICC Management, including financial performance, recent business developments, and, in the case of CLO debt and equity investments, performance and covenant compliance information as provided by the independent trustee. (2)

          For the Companys bilateral debt investments and equity investments, third-party valuation firms evaluate the financial and operational information of the portfolio companies that the Company provides to them, as well as independent market and industry information that they consider appropriate in forming an opinion as to the fair value of the Companys securities. In those instances where the carrying value and/or internal credit rating of the investment does not require the use of a third-party valuation firm, a valuation is prepared by TICC Management, which may include liquidation analysis or which may utilize a subsequent transaction to provide an indication of fair value. (3)

          EBITDA, or earnings before interest expense, taxes, depreciation and amortization, is an unobservable input which is generally based on most recently available twelve month financial statements provided by the portfolio company. Market multiples, also an unobservable input, represent an estimation of where market participants might value an enterprise based upon information available for comparable companies in the market. (4)

          The Company has adopted a credit grading system for its debt investments as part of the valuation process. The internal credit grading (ICG), which ranges from 1 (highest) to 5 (lowest), is an unobservable input which represents a proprietary grading system developed by TICC Management. (5)

          Discount rate represents the rate at which future cash flows are discounted to calculate a present value, reflecting market assumptions for risk. (6)

          The calculation of weighted average for a range of values, for multiple investments within a given asset category, is not considered to provide a meaningful representation (ncm). Significant increases or decreases in any of the unobservable inputs in isolation may result in a significantly lower or higher fair value measurement. The following table provides quantitative information about the Companys Level 3 fair value measurements as of December 31, 2012:  ($ in millions)

          

          Quantitative Information about Level 3 Fair Value MeasurementsAssets

          

          Fair Value as ofDecember 31, 2012

          

          ValuationTechniques/ Methodologies

          

          Unobservable Input

          

          Range/Weighted AverageCorporate debt investmentssyndicated

          

          $

          470.3

          

          

          

          market quotes

          

          

          

          NBIB(1)

          

          

          

          47.4% - 103.9%/98.3%bilateral

          

          

          14.9

          

          

          

          valuation analysis(2)/

          

          

          

          EBITDA(3)

          

          

          $

          3.1 - $14.2/ncm(6)enterprise value

          

          

          

          market multiples(3)

          

          

          

          3.3 - 6.5x/ncm(6)ICG(4)

          

          

          

          3 - 5/3.1CLO debt

          

          

          55.6

          

          

          

          market quotes

          

          

          

          NBIB(1)

          

          

          

          78.0% - 100.0%/87.7%CLO equity

          

          

          109.3

          

          

          

          market quotes

          

          

          

          NBIB(1)

          

          

          

          58.5% - 128.0%/90.9%Other investments

          

          

          7.6

          

          

          

          valuation analysis(2)/

          

          

          

          EBITDA(3)

          

          

          $

          3.1 - $171.9/ncm(6)enterprise value

          

          

          

          market multiples(3)

          

          

          

          3.3 - 7.5x/ncm(6)discount rates(5)

          

          

          

          20% - 35.0%/ncm(6)Total Fair Value for Level 3 Investments

          

          $

          657.7
 20    TABLE OF CONTENTS TICC CAPITAL CORP.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2013 NOTE 3. INVESTMENT VALUATION   (continued)  (1)

          The Company generally uses prices provided by an independent pricing service, or broker or agent bank non-binding indicative bid prices (NBIB) on or near the valuation date as the primary basis for the fair value determinations for syndicated notes, and CLO debt and equity investments. These bid prices are non-binding, and may not be determinative of fair value. Each bid price is evaluated by the Valuation Committee in conjunction with additional information compiled by TICC Management, including financial performance, recent business developments, and, in the case of CLO debt and equity investments, performance and covenant compliance information as provided by the independent trustee. (2)

          For the Companys bilateral debt investments and equity investments, third-party valuation firms evaluate the financial and operational information of the portfolio companies that the Company provides to them, as well as independent market and industry information that they consider appropriate in forming an opinion as to the fair value of the Companys securities. In those instances where the carrying value and/or internal credit rating of the investment does not require the use of a third-party valuation firm, a valuation is prepared by TICC Management, which may include liquidation analysis or which may utilize a subsequent transaction to provide an indication of fair value. (3)

          EBITDA, or earnings before interest expense, taxes, depreciation and amortization, is an unobservable input which is generally based on most recently available twelve month financial statements provided by the portfolio company. Market multiples, also an unobservable input, represent an estimation of where market participants might value an enterprise based upon information available for comparable companies in the market. (4)

          The Company has adopted a credit grading system for its debt investments as part of the valuation process. The internal credit grading (ICG), which ranges from 1 (highest) to 5 (lowest), is an unobservable input which represents a proprietary grading system developed by TICC Management. (5)

          Discount rate represents the rate at which future cash flows are discounted to calculate a present value, reflecting market assumptions for risk. (6)

          The calculation of weighted average for a range of values, for multiple investments within a given asset category, is not considered to provide a meaningful representation (ncm). Significant increases or decreases in any of the unobservable inputs in isolation may result in a significantly lower or higher fair value measurement.
 21    TABLE OF CONTENTS TICC CAPITAL CORP.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2013 NOTE 3. INVESTMENT VALUATION   (continued) Financial Instruments Disclosed, But Not Carried, At Fair Value The following table presents the carrying value and fair value of the Companys financial liabilities disclosed, but not carried, at fair value as of September 30, 2013 and the level of each financial liability within the fair value hierarchy.  ($ in thousands)

          

          Carrying Value

          

          Fair Value

          

          Level 1

          

          Level 2

          

          Level 3TICC CLO LLC Class A Notes, net of discount

          

          $

          100,001

          

          

          $

          100,997

          

          

          $

          

          

          

          $

          

          

          

          $

          100,997TICC CLO 2012-1 LLC Class A-1 Notes, net of discount

          

          

          174,022

          

          

          

          175,560

          

          

          

          

          

          

          

          

          

          

          

          175,560TICC CLO 2012-1 LLC Class B-1 Notes, net of discount

          

          

          19,457

          

          

          

          19,950

          

          

          

          

          

          

          

          

          

          

          

          19,950TICC CLO 2012-1 LLC Class C-1 Notes, net of discount

          

          

          22,083

          

          

          

          22,942

          

          

          

          

          

          

          

          

          

          

          

          22,942TICC CLO 2012-1 LLC Class D-1 Notes, net of discount

          

          

          19,962

          

          

          

          21,000

          

          

          

          

          

          

          

          

          

          

          

          21,0002017 Convertible Notes

          

          

          115,000

          

          

          

          120,750

          

          

          

          

          

          

          

          

          

          

          

          120,750Total

          

          $

          450,525

          

          

          $

          461,199

          

          

          $

          

          

          

          $

          

          

          

          $

          461,199
 The following table presents the carrying value and fair value of the Companys financial liabilities disclosed, but not carried, at fair value as of December 31, 2012 and the level of each financial liability within the fair value hierarchy:  ($ in thousands)

          

          Carrying Value

          

          Fair Value

          

          Level 1

          

          Level 2

          

          Level 3TICC CLO LLC Class A Notes, net of discount

          

          $

          99,883

          

          

          $

          101,250

          

          

          $

          

          

          

          $

          

          

          

          $

          101,250TICC CLO 2012-1 LLC Class A-1 Notes, net of discount

          

          

          86,149

          

          

          

          87,780

          

          

          

          

          

          

          

          

          

          

          

          87,780TICC CLO 2012-1 LLC Class B-1 Notes, net of discount

          

          

          9,455

          

          

          

          9,875

          

          

          

          

          

          

          

          

          

          

          

          9,875TICC CLO 2012-1 LLC Class C-1 Notes, net of discount

          

          

          10,501

          

          

          

          11,155

          

          

          

          

          

          

          

          

          

          

          

          11,155TICC CLO 2012-1 LLC Class D-1 Notes, net of discount

          

          

          9,347

          

          

          

          10,382

          

          

          

          

          

          

          

          

          

          

          

          10,3822017 Convertible Notes

          

          

          115,000

          

          

          

          113,131

          

          

          

          

          

          

          

          

          

          

          

          113,131Total

          

          $

          330,335

          

          

          $

          333,573

          

          

          $

          

          

          

          $

          

          

          

          $

          333,573
 The fair values of the Companys debt are determined in accordance with ASC 820, which defines fair value in terms of the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. Fair value is based upon quotations received from dealers who make markets in these securities. Such quotations are based upon actual trades or actual bids and offers, to the extent that they are available, or by reference to comparable securities in the marketplace. As of September 30, 2013 and December 31, 2012, the debt would be deemed to be
level 3 of the fair value hierarchy due to the general illiquidity of the market for these instruments.
 22    TABLE OF CONTENTS TICC CAPITAL CORP.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2013 NOTE 3. INVESTMENT VALUATION   (continued) A reconciliation of the fair value of investments for the three months ended September 30, 2013, utilizing significant unobservable inputs, is as follows:  ($ in millions)

          

          Senior Secured Note Investments

          

          Senior Unsecured Note Investments

          

          Collateralized Loan Obligation Debt Investments

          

          Collateralized Loan Obligation Equity Investments

          

          Subordinated Note Investments

          

          Common Stock Investments

          

          Preferred Share Equity Investments

          

          Warrants to Purchase Equity Investments

          

          TotalBalance at June 30, 2013

          

          $

          627.6

          

          

          $

          5.3

          

          

          $

          45.0

          

          

          $

          195.9

          

          

          $

          0.0

          

          

          $

          14.5

          

          

          $

          0.4

          

          

          $

          0.5

          

          

          $

          889.2Realized gains (losses) included in earnings

          

          

          (3.4

          )

          

          

          0.0

          

          

          

          3.3

          

          

          

          0.3

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          (1.5

          )

          

          

          0.0

          

          

          

          (1.3

          )Unrealized (depreciation) appreciation included in earnings(1)

          

          

          12.2

          

          

          

          0.1

          

          

          

          (3.2

          )

          

          

          1.6

          

          

          

          0.0

          

          

          

          0.3

          

          

          

          1.5

          

          

          

          0.0

          

          

          

          12.5Accretion of discount

          

          

          0.5

          

          

          

          0.0

          

          

          

          0.1

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.6Purchases(1)

          

          

          62.1

          

          

          

          0.0

          

          

          

          5.6

          

          

          

          17.3

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          85.0Repayments and Sales

          

          

          (34.3

          )

          

          

          0.0

          

          

          

          (19.5

          )

          

          

          (8.2

          )

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          (62.0

          )Payment in Kind income

          

          

          0.4

          

          

          

          0.2

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.6Transfers in and/or out of level 3

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0Balance at September 30, 2013

          

          $

          665.1

          

          

          $

          5.6

          

          

          $

          31.3

          

          

          $

          206.9

          

          

          $

          0.0

          

          

          $

          14.8

          

          

          $

          0.4

          

          

          $

          0.5

          

          

          $

          924.6The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to our Level 3 assets still held at the reporting date and reported within the net change in unrealized gains or losses on investments in our Statement of Operations

          

          $

          9.2

          

          

          $

          0.0

          

          

          $

          0.0

          

          

          $

          4.4

          

          

          $

          0.0

          

          

          $

          0.3

          

          

          $

          0.0

          

          

          $

          0.0

          

          

          $

          13.9
  (1)

          Includes rounding adjustments to reconcile period balances.
 23    TABLE OF CONTENTS TICC CAPITAL CORP.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2013 NOTE 3. INVESTMENT VALUATION   (continued) A reconciliation of the fair value of investments for the nine months ended September 30, 2013, utilizing significant unobservable inputs, is as follows:  ($ in millions)

          

          Senior Secured Note Investments

          

          Senior Unsecured Note Investments

          

          Collateralized Loan Obligation Debt Investments

          

          Collateralized Loan Obligation Equity Investments

          

          Subordinated Note Investments

          

          Common Stock Investments

          

          Preferred Share Equity Investments

          

          Warrants to Purchase Equity Investments

          

          TotalBalance at December 31, 2012

          

          $

          485.1

          

          

          $

          0.0

          

          

          $

          55.6

          

          

          $

          109.3

          

          

          $

          0.1

          

          

          $

          4.4

          

          

          $

          2.7

          

          

          $

          0.5

          

          

          $

          657.7Realized gains (losses) included in earnings

          

          

          (2.3

          )

          

          

          0.6

          

          

          

          10.9

          

          

          

          (0.5

          )

          

          

          0.0

          

          

          

          0.0

          

          

          

          (1.5

          )

          

          

          0.0

          

          

          

          7.2Unrealized (depreciation) appreciation included in earnings

          

          

          12.9

          

          

          

          2.8

          

          

          

          (8.6

          )

          

          

          (13.1

          )

          

          

          0.0

          

          

          

          7.0

          

          

          

          (1.0

          )

          

          

          0.0

          

          

          

          0.0Accretion of discount

          

          

          2.0

          

          

          

          0.0

          

          

          

          0.8

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          2.8Purchases

          

          

          332.7

          

          

          

          3.1

          

          

          

          17.0

          

          

          

          124.2

          

          

          

          0.0

          

          

          

          3.4

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          480.4Repayments and Sales

          

          

          (166.7

          )

          

          

          (1.1

          )

          

          

          (44.4

          )

          

          

          (13.0

          )

          

          

          (0.1

          )

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          (225.3

          )Payment in Kind income

          

          

          1.4

          

          

          

          0.2

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.2

          

          

          

          0.0

          

          

          

          1.8Transfers in and/or out of level 3

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0Balance at September 30, 2013

          

          $

          665.1

          

          

          $

          5.6

          

          

          $

          31.3

          

          

          $

          206.9

          

          

          $

          0.0

          

          

          $

          14.8

          

          

          $

          0.4

          

          

          $

          0.5

          

          

          $

          924.6The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to our Level 3 assets still held at the reporting date and reported within the net change in unrealized gains or losses on investments in our Statement of Operations

          

          $

          9.8

          

          

          $

          2.7

          

          

          $

          0.4

          

          

          $

          (8.0

          )

          

          $

          0.0

          

          

          $

          7.0

          

          

          $

          (2.5

          )

          

          $

          0.0

          

          

          $

          9.4
 24    TABLE OF CONTENTS TICC CAPITAL CORP.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2013 NOTE 3. INVESTMENT VALUATION   (continued) Our assets measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820-10-35 at December 31, 2012, were as follows:  ($ in millions)

          

          Fair Value Measurements at Reporting Date UsingAssets

          

          Quoted Prices in Active Markets for Identical Assets (Level 1)

          

          Significant Other Observable Inputs (Level 2)

          

          Significant Unobservable Inputs (Level 3)

          

          TotalSenior Secured Notes

          

          $

          0.0

          

          

          $

          9.8

          

          

          $

          485.1

          

          

          $

          494.9CLO Debt

          

          

          0.0

          

          

          

          0.0

          

          

          

          55.6

          

          

          

          55.6CLO Equity

          

          

          0.0

          

          

          

          0.0

          

          

          

          109.3

          

          

          

          109.3Subordinated Notes

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.1

          

          

          

          0.1Common Stock

          

          

          0.0

          

          

          

          0.0

          

          

          

          4.4

          

          

          

          4.4Preferred Shares

          

          

          0.0

          

          

          

          0.0

          

          

          

          2.7

          

          

          

          2.7Warrants to purchase equity

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.5

          

          

          

          0.5Total

          

          $

          0.0

          

          

          $

          9.8

          

          

          $

          657.7

          

          

          $

          667.5
 A reconciliation of the fair value of investments for the year ended December 31, 2012, utilizing significant unobservable inputs, is as follows:  ($ in millions)

          

          Senior Secured Note Investments

          

          Collateralized Loan Obligation Debt Investments

          

          Collateralized Loan Obligation Equity Investments

          

          Subordinated Note Investments

          

          Common Stock Investments

          

          Preferred Share Equity Investments

          

          Warrants to Purchase Equity Investments

          

          TotalBalance at December 31, 2011

          

          $

          279.2

          

          

          $

          51.0

          

          

          $

          39.3

          

          

          $

          4.9

          

          

          $

          3.1

          

          

          $

          2.5

          

          

          $

          0.8

          

          

          $

          380.8Realized gains included in earnings

          

          

          4.0

          

          

          

          12.4

          

          

          

          0.0

          

          

          

          0.1

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.1

          

          

          

          16.6Unrealized (depreciation) appreciation included in earnings

          

          

          (2.6

          )

          

          

          4.5

          

          

          

          11.3

          

          

          

          0.2

          

          

          

          1.3

          

          

          

          (0.2

          )

          

          

          0.1

          

          

          

          14.6Accretion of discount

          

          

          2.9

          

          

          

          2.8

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          5.7Purchases

          

          

          398.7

          

          

          

          27.3

          

          

          

          58.7

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          484.7Repayments and Sales(1)

          

          

          (201.6

          )

          

          

          (42.4

          )

          

          

          0.0

          

          

          

          (5.2

          )

          

          

          0.0

          

          

          

          0.0

          

          

          

          (0.5

          )

          

          

          (249.7

          )Payment in Kind income

          

          

          4.5

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.1

          

          

          

          0.0

          

          

          

          0.4

          

          

          

          0.0

          

          

          

          5.0Transfers in and/or out of level 3

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0Balance at December 31, 2012

          

          $

          485.1

          

          

          $

          55.6

          

          

          $

          109.3

          

          

          $

          0.1

          

          

          $

          4.4

          

          

          $

          2.7

          

          

          $

          0.5

          

          

          $

          657.7The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to our Level 3 assets still held at the reporting date and reported within the net change in unrealized gains or losses on investments in our Statement of Operations

          

          $

          (1.7

          )

          

          $

          8.0

          

          

          $

          11.3

          

          

          $

          0.1

          

          

          $

          1.3

          

          

          $

          (0.1

          )

          

          $

          0.0

          

          

          $

          18.9
  (1)

          Includes rounding adjustments to reconcile period balances.
 25    TABLE OF CONTENTS TICC CAPITAL CORP.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2013 NOTE 3. INVESTMENT VALUATION   (continued) The following table shows the fair value of TICCs portfolio of investments by asset class as of September 30, 2013 and December 31, 2012:  September 30, 2013

          

          December 31, 2012Investments at Fair Value

          

          Percentage of Total Portfolio

          

          Investments at Fair Value

          

          Percentage of Total Portfolio(dollars in millions)

          

          (dollars in millions)Senior Secured Notes

          

          $

          681.9

          

          

          

          72.4

          %

          

          $

          494.9

          

          

          

          74.1

          %Senior Unsecured Notes

          

          

          5.6

          

          

          

          0.6

          %

          

          

          0.0

          

          

          

          0.0

          %CLO Debt

          

          

          31.3

          

          

          

          3.3

          %

          

          

          55.6

          

          

          

          8.3

          %CLO Equity

          

          

          206.9

          

          

          

          22.0

          %

          

          

          109.3

          

          

          

          16.4

          %Subordinated Notes

          

          

          0.0

          

          

          

          0.0

          %

          

          

          0.1

          

          

          

          0.0

          %Common Stock

          

          

          14.8

          

          

          

          1.6

          %

          

          

          4.4

          

          

          

          0.7

          %Preferred Shares

          

          

          0.4

          

          

          

          0.0

          %

          

          

          2.7

          

          

          

          0.4

          %Warrants

          

          

          0.5

          

          

          

          0.1

          %

          

          

          0.5

          

          

          

          0.1

          %Total

          

          $

          941.4

          

          

          

          100.0

          %

          

          $

          667.5

          

          

          

          100.0

          %
 NOTE 4. BORROWINGS In accordance with the 1940 Act, with certain limited exceptions, the Company is only allowed to borrow amounts such that its asset coverage, as defined in the 1940 Act, is at least 200% after such borrowing. As of September 30, 2013, the Companys asset coverage for borrowed amounts was 214.5%. The following are the Companys outstanding principal amounts, carrying values and fair values of the Companys notes payable as of September 30, 2013 and December 31, 2012. Fair values of our notes payable are based upon the bid price provided by the placement agent at the measurement date:  As ofSeptember 30, 2013

          

          December 31, 2012($ in thousands)

          

          Principal Amount

          

          Carrying Value

          

          Fair Value

          

          Principal Amount

          

          Carrying Value

          

          Fair ValueTICC CLO LLC 2021 Notes

          

          $

          101,250

          

          

          $

          100,001

          (1)

          

          $

          100,997

          

          

          $

          101,250

          

          

          $

          99,883

          (1)

          

          $

          101,250TICC CLO 2012-1 LLC Class A-1 2023 Notes(2)

          

          

          176,000

          

          

          

          174,022

          (1)

          

          

          175,560

          

          

          

          88,000

          

          

          

          86,149

          (1)

          

          

          87,780TICC CLO 2012-1 LLC Class B-1 2023 Notes(2)

          

          

          20,000

          

          

          

          19,457

          (1)

          

          

          19,950

          

          

          

          10,000

          

          

          

          9,455

          (1)

          

          

          9,875TICC CLO 2012-1 LLC Class C-1 2023 Notes(2)

          

          

          23,000

          

          

          

          22,083

          (1)

          

          

          22,942

          

          

          

          11,500

          

          

          

          10,501

          (1)

          

          

          11,155TICC CLO 2012-1 LLC Class D-1 2023 Notes(2)

          

          

          21,000

          

          

          

          19,962

          (1)

          

          

          21,000

          

          

          

          10,500

          

          

          

          9,347

          (1)

          

          

          10,382Sub-total TICC CLO 2012-1, LLC

          

          

          240,000

          

          

          

          235,524

          

          

          

          239,452

          

          

          

          120,000

          

          

          

          115,452

          

          

          

          119,1922017 Convertible Notes

          

          

          115,000

          

          

          

          115,000

          

          

          

          120,750

          

          

          

          115,000

          

          

          

          115,000

          

          

          

          113,131$

          456,250

          

          

          $

          450,525

          

          

          $

          461,199

          

          

          $

          336,250

          

          

          $

          330,335

          

          

          $

          333,573
  (1)

          Represents the aggregate principal amount outstanding less the unaccreted discount. As of September 30, 2013, the total unaccreted discount for the 2021 Notes, the 2023 Class A Notes, the 2023 Class B Notes, the 2023 Class C Notes and the 2023 Class D Notes was approximately $1,249, $1,978, $543, $917 and $1,038, respectively. As of December 31, 2012, the total unaccreted discount for the 2021 Notes, the 2023 Class A Notes, the 2023 Class B Notes, the 2023 Class C Notes and the 2023 Class D Notes was approximately $1,367, $1,851, $545, $999 and $1,153, respectively. (2)

          The TICC CLO 2012-1 debt securitization financing transaction has an accordion feature which allows, under certain circumstances and subject to the satisfaction of certain conditions, for an increase in the amount of secured and subordinated notes issued by the special purpose vehicle. On February 25, 2013, the special purpose vehicle issued additional secured notes of $60 million and subordinated notes of $20 million under the accordion feature. Additionally, on May 28, 2013, the special purpose vehicle
 26    TABLE OF CONTENTS TICC CAPITAL CORP.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2013 NOTE 4. BORROWINGS   (continued) issued additional secured notes of $60 million and subordinated notes of $20 million under the accordion feature and, as a result of the all TICC CLO 2012-1 issuances, the maximum aggregate increase limit of $160 million was reached-refer to Notes Payable  TICC CLO 2012-1 LLC, below. The weighted average stated interest rate and weighted average maturity on all our debt outstanding as of September 30, 2013 were 3.92% and 7.98 years, respectively, and as of December 31, 2012 were 4.50% and 8.1 years, respectively. Debt Securitization Notes Payable  TICC CLO LLC On August 10, 2011, the Company completed a $225.0 million debt securitization financing transaction. The Class A Notes and the subordinated notes offered in the debt securitization were issued by TICC CLO, a subsidiary of Holdings, which is in turn a direct subsidiary of TICC. The Class A Notes are secured by the assets held by the 2011 Securitization Issuer. The securitization was executed through a private placement of $101.25 million of secured notes rated AAA/Aaa by S&P and Moodys, respectively, and bearing interest at the three-month LIBOR plus 2.25%. Holdings retained all of the subordinated notes, which
totaled $123.75 million, and retained all the membership interests in the 2011 Securitization Issuer. The notes were sold at a discount to par, and the amount of the discount is being amortized over the term of the notes. The Class A Notes are included in the September 30, 2013 consolidated statements of assets and liabilities. For the three months and nine months ended September 30, 2013, respectively, the Class A note holders were paid interest on the Class A notes of approximately $0.6 million and $2.0 million. Holdings retained all of the 2011 Subordinated Notes totaling $123.75 million and all of the membership interests in the 2011 Securitization Issuer. The 2011 Subordinated Notes do not bear interest, but are entitled to the residual economic interest in the 2011 Securitization Issuer. During a period of up to three years from the closing date, all principal collections received on the underlying collateral may be used by the Securitization Issuer to purchase new collateral under our direction in our capacity as collateral manager of the 2011 Securitization Issuer and in accordance with our investment strategy, allowing us to maintain the initial leverage in the securitization for such three-year period. The Class A Notes are scheduled to mature on July 25, 2021. The proceeds of the private placement of the Class A Notes, net of discount and debt issuance costs, were used for investment purposes. As part of the securitization, we entered into a master loan sale agreement with Holdings and the 2011 Securitization Issuer under which we agreed to sell or contribute certain senior secured and second lien loans (or participation interests therein) to Holdings, and Holdings agreed to sell or contribute such loans (or participation interests therein) to the 2011 Securitization Issuer and to purchase or otherwise acquire subordinated notes issued by the Securitization Issuer. The Class A Notes
are the secured obligations of the 2011 Securitization Issuer, and an indenture governing the Notes includes customary covenants and events of default. We serve as collateral manager to the 2011 Securitization Issuer under a collateral management agreement. We are entitled to a deferred fee for our services as collateral manager. The deferred fee is eliminated in consolidation. As of September 30, 2013, there were 48 investments in portfolio companies with a total fair value of approximately $240.4 million, securing the Class A Notes. The pool of loans in the securitization must meet certain requirements, including asset mix and concentration, collateral coverage, term, agency rating, minimum coupon, minimum spread and sector diversity requirements. Effective January 1, 2013 and through January 24, 2013, the interest rate of 2.57% charged under the securitization was based on three-month LIBOR of 0.32%. Effective January 25, 2013 and through April 24, 2013, the interest rate of 2.55% charged under the securitization was based on three-month LIBOR of 0.30%.
 27    TABLE OF CONTENTS TICC CAPITAL CORP.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2013 NOTE 4. BORROWINGS   (continued) Effective April 25, 2013 and through June 30, 2013, the interest rate of 2.53% charged under the securitization was based on three-month LIBOR of 0.28%. Effective July 25, 2013 and through September 30, 2013, the interest rate of 2.52% charged under the securitization was based on the three-month LIBOR of 0.27%. Deferred debt issuance costs represent fees and other direct incremental costs incurred in connection with the Companys debt securitization. As of September 30, 2013, the Company had deferred debt issuance costs of approximately $2.4 million. Discount on the notes of the 2011 Securitization Issuer at the time of issuance totaled approximately $1.6 million. These amounts are being amortized and included in interest expense in the consolidated statements of operations over the term of the debt securitization. The following table sets forth the components of interest expense, effective annualized average interest rates and cash paid for interest for the three months and nine months ended September 30, 2013 and 2012, respectively:  TICC CLO LLC

          

          Three Months Ended September 30, 2013

          

          Nine Months Ended September 30, 2013

          

          Three Months Ended September 30, 2012

          

          Nine Months Ended September 30, 2012Stated interest expense

          

          $

          651,644

          

          

          $

          1,946,438

          

          

          $

          699,892

          

          

          $

          2,110,184Amortization of deferred issuance costs

          

          

          76,251

          

          

          

          226,266

          

          

          

          76,251

          

          

          

          227,095Note discount expense

          

          

          39,983

          

          

          

          118,600

          

          

          

          39,920

          

          

          

          131,866Total interest expense

          

          $

          767,878

          

          

          $

          2,291,304

          

          

          $

          816,063

          

          

          $

          2,469,145Effective annualized average interest rate

          

          

          3.01

          %

          

          

          3.03

          %

          

          

          3.20

          %

          

          

          3.25

          %Cash paid for interest

          

          $

          646,396

          

          

          $

          1,955,876

          

          

          $

          695,037

          

          

          $

          2,669,712
 Notes Payable  TICC CLO 2012-1 LLC On August 23, 2012, the Company completed a $160 million debt securitization financing transaction, consisting of $120 million in secured notes and $40 million of subordinated notes. On February 25, 2013 and May 28, 2013, TICC CLO 2012-1 LLC issued additional secured notes totaling an aggregate of $120 million and subordinated notes totaling an aggregate of $40 million, which subordinated notes were purchased by the Company, under the accordion feature of the debt securitization which allowed, under certain circumstances and subject to the satisfaction of certain conditions, for an increase in the amount of secured
and subordinated notes. It is not necessary that the Company own all or any of the notes permitted by this feature, which may affect the accounting treatment of the debt securitization financing transaction. As of September 30, 2013 the secured notes of the 2012 Securitization Issuer have an aggregate face amount of $240 million and were issued in four classes. The class A-1 notes have a current face amount of $176 million, are rated AAA(sf)/ Aaa(sf) by Standard & Poors Ratings Services (S&P) and Moodys Investors Service, Inc. (Moodys), respectively, and bear interest at three-month LIBOR plus 1.75%. The class B-1 notes have a current face amount of $20 million, are rated AA(sf)/Aa2(sf) by S&P and Moodys, respectively, and bear interest at three-month LIBOR plus 3.50%. The class C-1 notes have a current face amount of $23 million, are rated A(sf)/A2(sf) by S&P and Moodys, respectively, and bear
interest at three-month LIBOR plus 4.75%. The class D-1 notes have a current face amount of $21 million, are rated BBB(sf)/Baa2(sf) by S&P and Moodys, respectively, and bear interest at three-month LIBOR plus 5.75%. TICC presently owns all of the subordinated notes, which totaled $80 million as of September 30, 2013. During a period of up to four years from the closing date, all principal collections received on the underlying collateral may be used by the 2012 Securitization Issuer to purchase new collateral under the direction of TICC in its capacity as collateral manager of the 2012 Securitization Issuer and in accordance with the Companys investment strategy, allowing the Company to maintain the initial leverage in the securitization for such four-year period. All note classes are scheduled to mature on August 25, 2023.
 28    TABLE OF CONTENTS TICC CAPITAL CORP.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2013 NOTE 4. BORROWINGS   (continued) The proceeds of the private placement of the Classes A, B, C, D and 2012 Subordinated Notes of the 2012 Securitization Issuer, net of discount and debt issuance costs, were used for investment purposes. As part of the securitization, TICC entered into a master loan sale agreement with TICC CLO 2012-1 pursuant to which TICC agreed to sell or contribute certain senior secured and second lien loans (or participation interests therein) to TICC CLO 2012-1, and to purchase or otherwise acquire the 2012 Subordinated Notes. The Classes A, B, C, D and 2012 Subordinated Notes of the 2012 Securitization Issuer are the secured obligations
of TICC CLO 2012-1, and an indenture governing the notes of the 2012 Securitization Issuer includes customary covenants and events of default. As of September 30, 2013, there were 54 investments in portfolio companies with a total fair value of approximately $322.0 million, collateralizing the secured notes of the 2012 Securitization Issuer. The pool of loans in the securitization must meet certain requirements, including asset mix and concentration, collateral coverage, term, agency rating, minimum coupon, minimum spread and sector diversity requirements. Deferred debt issuance costs represent fees and other direct incremental costs incurred in connection with the Companys debt securitization. As of September 30, 2013, the Company had deferred debt issuance costs of approximately $3.4 million. Aggregate net discount on the notes of the 2012 Securitization Issuer at the time of issuance totaled approximately $4.9 million. These amounts are being amortized and included in interest expense in the consolidated statements of operations over the term of the debt securitization. The following table sets forth the components of interest expense, effective annualized average
interest rates and cash paid for interest of the Class A-1, B-1, C-1 and D-1 for the three months and nine months ended September 30, 2013 and 2012, respectively:  TICC CLO 2012-1 LLC

          

          Three Months Ended September 30, 2013

          

          Nine Months Ended September 30, 2013

          

          Three Months Ended September 30, 2012

          

          Nine Months Ended September 30, 2012Stated interest expense

          

          $

          1,718,508

          

          

          $

          4,248,519

          

          

          $

          401,672

          

          

          $

          401,672Amortization of deferred issuance costs

          

          

          86,662

          

          

          

          228,597

          

          

          

          25,089

          

          

          

          25,089Note discount expense

          

          

          110,502

          

          

          

          326,507

          

          

          

          40,637

          

          

          

          40,637Total interest expense

          

          $

          1,915,672

          

          

          $

          4,803,623

          

          

          $

          467,398

          

          

          $

          467,398Effective annualized average interest rate

          

          

          3.17

          %

          

          

          3.34

          %

          

          

          3.74

          %

          

          

          3.74

          %Cash paid for interest

          

          $

          1,683,650

          

          

          $

          4,997,429

          

          

          $

          

          

          

          $

          
 Effective January 1, 2013 and through February 24, 2013, the interest charged under the securitization was based on six-month LIBOR, which was 0.72%. Effective February 25, 2013 and through May 27, 2013, the interest charged under the securitization was based on three month LIBOR, which was approximately 0.29%. Effective May 28, 2013 and as of June 30, 2013, the interest charged under the securitization was based on three-month LIBOR, which was approximately 0.27%. Effective August 26, 2013 and as of September 30, 2013, the interest charged under the securitization was based on the three-month LIBOR which was approximately
0.26%.
 29    TABLE OF CONTENTS TICC CAPITAL CORP.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2013 NOTE 4. BORROWINGS   (continued) The classes, interest rates, spread over LIBOR, cash paid for interest, stated interest expense and note discount expense of each of the Class A-1, B-1, C-1 and D-1 for the three and nine months ended September 30, 2013 are as follows:  Three Months Ended September 30, 2013

          

          Nine Months Ended September 30, 2013TICC CLO 2012-1 LLC

          

          Stated Interest Rate

          

          LIBOR Spread (basis points)

          

          Cash Paid for Interest

          

          Stated Interest Expense

          

          Note Discount Expense

          

          Cash Paid for Interest

          

          Stated Interest Expense

          

          Note Discount ExpenseClass A-1 Notes

          

          

          2.01210

          %

          

          

          175

          

          

          $

          890,010

          

          

          $

          907,914

          

          

          $

          49,854

          

          

          $

          2,699,715

          

          

          $

          2,263,488

          

          

          $

          143,936Class B-1 Notes

          

          

          3.76210

          %

          

          

          350

          

          

          

          188,638

          

          

          

          192,616

          

          

          

          13,469

          

          

          

          551,786

          

          

          

          473,534

          

          

          

          39,372Class C-1 Notes

          

          

          5.01210

          %

          

          

          475

          

          

          

          288,808

          

          

          

          294,981

          

          

          

          22,314

          

          

          

          835,803

          

          

          

          722,255

          

          

          

          67,730Class D-1 Notes

          

          

          6.01210

          %

          

          

          575

          

          

          

          316,194

          

          

          

          322,997

          

          

          

          24,865

          

          

          

          910,125

          

          

          

          789,242

          

          

          

          75,469Total

          

          

          

          

          

          

          

          

          

          $

          1,683,650

          

          

          $

          1,718,508

          

          

          $

          110,502

          

          

          $

          4,997,429

          

          

          $

          4,248,519

          

          

          $

          326,507
 The classes, interest rates, spread over LIBOR, cash paid for interest, stated interest expense and note discount expense of each of the Class A-1, B-1, C-1 and D-1 for the three and nine months ended September 30, 2012 are as follows:  Three Months Ended September 30, 2012

          

          Nine Months Ended September 30, 2012TICC CLO 2012-1 LLC

          

          Stated Interest Rate

          

          LIBOR Spread (basis points)

          

          Cash Paid for Interest

          

          Stated Interest Expense

          

          Note Discount Expense

          

          Cash Paid for Interest

          

          Stated Interest Expense

          

          Note Discount ExpenseClass A-1 Notes

          

          

          2.46815

          %

          

          

          175

          

          

          $

          

          

          

          $

          235,297

          

          

          $

          17,891

          

          

          $

          

          

          

          $

          235,297

          

          

          $

          17,891Class B-1 Notes

          

          

          4.21815

          %

          

          

          350

          

          

          

          

          

          

          

          45,697

          

          

          

          5,169

          

          

          

          

          

          

          

          45,697

          

          

          

          5,169Class C-1 Notes

          

          

          5.46815

          %

          

          

          475

          

          

          

          

          

          

          

          68,124

          

          

          

          9,310

          

          

          

          

          

          

          

          68,124

          

          

          

          9,310Class D-1 Notes

          

          

          6.46815

          %

          

          

          575

          

          

          

          

          

          

          

          52,554

          

          

          

          8,267

          

          

          

          

          

          

          

          52,554

          

          

          

          8,267Total

          

          

          

          

          

          

          

          

          

          $

          

          

          

          $

          401,672

          

          

          $

          40,637

          

          

          $

          

          

          

          $

          401,672

          

          

          $

          40,637
 30    TABLE OF CONTENTS TICC CAPITAL CORP.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2013 NOTE 4. BORROWINGS   (continued) The amounts, ratings and interest rates (expressed as a spread to LIBOR) of the Class A-1, B-1, C-1, D-1 and 2012 Subordinated Notes as of September 30, 2013 are as follows:  Description

          

          Class A-1 Notes

          

          Class B-1 Notes

          

          Class C-1 Notes

          

          Class D-1 Notes

          

          Subordinated NotesType

          

          

          Senior Secured Floating Rate

          

          

          

          Senior Secured Floating Rate

          

          

          

          Secured Deferrable Floating Rate

          

          

          

          Secured Deferrable Floating Rate

          

          

          

          SubordinatedAmount Outstanding

          

          

          $176,000,000

          

          

          

          $20,000,000

          

          

          

          $23,000,000

          

          

          

          $21,000,000

          

          

          

          $80,000,000Moodys Rating

          

          

          Aaa

          

          

          

          Aa2

          

          

          

          A2

          

          

          

          Baa2

          

          

          

          N/AStandard & Poors Rating

          

          

          AAA

          

          

          

          AA

          

          

          

          A

          

          

          

          BBB

          

          

          

          N/AInterest Rate

          

          

          LIBOR + 1.75%

          

          

          

          LIBOR + 3.50%

          

          

          

          LIBOR + 4.75%

          

          

          

          LIBOR + 5.75%

          

          

          

          N/AStated Maturity

          

          

          August 25, 2023

          

          

          

          August 25, 2023

          

          

          

          August 25, 2023

          

          

          

          August 25, 2023

          

          

          

          August 25, 2023Junior Classes

          

          

          B-1, C-1, D-1 and Subordinated

          

          

          

          C-1, D-1 and Subordinated

          

          

          

          D-1 and Subordinated

          

          

          

          Subordinated

          

          

          

          None
 The amounts, ratings and interest rates (expressed as a spread to LIBOR) of the Class A-1, B-1, C-1, D-1 and 2012 Subordinated Notes as of September 30, 2012 are as follows:  Description

          

          Class A-1 Notes

          

          Class B-1 Notes

          

          Class C-1 Notes

          

          Class D-1 Notes

          

          Subordinated NotesType

          

          

          Senior Secured Floating Rate

          

          

          

          Senior Secured Floating Rate

          

          

          

          Secured Deferrable Floating Rate

          

          

          

          Secured Deferrable Floating Rate

          

          

          

          SubordinatedAmount Outstanding

          

          

          $88,000,000

          

          

          

          $10,000,000

          

          

          

          $11,500,000

          

          

          

          $10,500,000

          

          

          

          $40,000,000Moodys Rating

          

          

          Aaa

          

          

          

          Aa2

          

          

          

          A2

          

          

          

          Baa2

          

          

          

          N/AStandard & Poors Rating

          

          

          AAA

          

          

          

          AA

          

          

          

          A

          

          

          

          BBB

          

          

          

          N/AInterest Rate

          

          

          LIBOR + 1.75%

          

          

          

          LIBOR + 3.50%

          

          

          

          LIBOR + 4.75%

          

          

          

          LIBOR + 5.75%

          

          

          

          N/AStated Maturity

          

          

          August 25, 2023

          

          

          

          August 25, 2023

          

          

          

          August 25, 2023

          

          

          

          August 25, 2023

          

          

          

          August 25, 2023Junior Classes

          

          

          B-1, C-1, D-1 and Subordinated

          

          

          

          C-1, D-1 and Subordinated

          

          

          

          D-1 and Subordinated

          

          

          

          Subordinated

          

          

          

          None
 TICC serves as collateral manager to the 2012 Securitization Issuer under a collateral management agreement. TICC is entitled to a deferred fee for its services as collateral manager. The deferred fee is eliminated in consolidation.
 31    TABLE OF CONTENTS TICC CAPITAL CORP.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2013 NOTE 4. BORROWINGS   (continued) 2017 Convertible Notes On September 26, 2012, the Company issued $105,000,000 aggregate principal amount of the Convertible Notes and an additional $10,000,000 aggregate principal amount of the Convertible Notes was issued on October 22, 2012 pursuant to the exercise of the initial purchasers option to purchase additional Convertible Notes. The Convertible Notes bear interest at a rate of 7.50% per year, payable semi-annually in arrears on May 1 and November 1 of each year, commencing on May 1, 2013. The Convertible Notes are convertible into shares of our common stock based on an initial conversion rate of 87.2448 shares of our common stock
per $1,000 principal amount of Convertible Notes, which is equivalent to an initial conversion price of approximately $11.46 per share of common stock. The conversion price for the Convertible Notes will be reduced for quarterly cash dividends paid to common shares to the extent that the quarterly dividend exceeds $0.29 cents per share, subject to adjustment. The Convertible Notes mature on November 1, 2017, unless previously converted in accordance with their terms. The Company does not have the right to redeem the Convertible Notes prior to maturity. Deferred debt issuance costs represent fees and other direct incremental costs incurred in connection with the Convertible Notes. As of September 30, 2013, the Company had deferred debt issuance costs of approximately $2.5 million. This amount is being amortized and is included in interest expense in the consolidated statements of operations over the term of the Convertible Notes. The following table sets forth the components of interest expense, effective annualized average interest rates and cash paid for interest of the 2017 Convertible Notes for the three months and nine months ended September 30, 2013 and 2012, respectively:  2017 Convertible Notes

          

          Three Months Ended September 30, 2013

          

          Nine Months Ended September 30, 2013

          

          Three Months Ended September 30, 2012

          

          Nine Months Ended September 30, 2012Stated interest expense

          

          $

          2,132,292

          

          

          $

          6,420,833

          

          

          $

          109,375

          

          

          $

          109,375Amortization of deferred issuance costs

          

          

          161,474

          

          

          

          464,854

          

          

          

          6,139

          

          

          

          6,139Total interest expense

          

          $

          2,293,766

          

          

          $

          6,885,687

          

          

          $

          115,514

          

          

          $

          115,514Effective annualized average interest rate

          

          

          7.91

          %

          

          

          8.01

          %

          

          

          8.03

          %

          

          

          8.03

          %Cash paid for interest

          

          $

          

          

          

          $

          5,151,042

          

          

          $

          

          

          

          $

          
 In certain circumstances, the Convertible Notes will be convertible into shares of the Companys common stock at its initial conversion rate (listed below) subject to customary anti-dilution adjustments and the requirements of its indenture, at any time on or prior to the close of business on the business day immediately preceding the maturity date. We will in certain circumstances increase the conversion rate by a number of additional shares.  November 2017 Convertible NotesConversion premium

          

          

          10.00%Closing stock price

          

          

          $10.42Closing stock price date

          

          

          September 20, 2012Initial conversion price

          

          

          $11.46Initial conversion rate (shares per one thousand dollar principal amount)

          

          

          87.2448Maturity date

          

          

          November 1, 2017
 32    TABLE OF CONTENTS TICC CAPITAL CORP.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2013 NOTE 4. BORROWINGS   (continued) As of September 30, 2013, the principal amount of the Convertible Notes exceeded the value of the underlying shares multiplied by the per share closing price of the Companys common stock. The Convertible Notes are the Companys general, unsecured obligations and rank equal in right of payment with all of the Companys existing and future senior, unsecured indebtedness and senior in right of payment to any of the Companys subordinated indebtedness. As a result, the Convertible Notes will be effectively subordinated to the Companys existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness and structurally subordinated to any existing and future liabilities and other indebtedness of the Companys subsidiaries. NOTE 5. EARNINGS PER SHARE The following table sets forth the computation of basic and diluted net increase in net assets resulting from investment income per share for the three and nine months ended September 30, 2013 and 2012, respectively:  Three Months Ended September 30, 2013

          

          Three Months Ended September 30, 2012

          

          Nine Months Ended September 30, 2013

          

          Nine Months Ended September 30, 2012Earnings per common share  basic:Net increase in net assets resulting from investment income

          

          $

          12,238,709

          

          

          $

          4,607,574

          

          

          $

          38,845,830

          

          

          $

          27,799,570Weighted average common shares outstanding  basic

          

          

          52,751,722

          

          

          

          39,383,076

          

          

          

          50,314,364

          

          

          

          36,859,005Earnings per common share  basic

          

          $

          0.23

          

          

          $

          0.12

          

          

          $

          0.77

          

          

          $

          0.75Earnings per common share  diluted:Net increase in net assets resulting from investment income, before adjustments

          

          $

          12,238,709

          

          

          $

          4,607,574

          

          

          $

          38,845,830

          

          

          $

          27,799,570Adjustments for interest on convertible senior notes, base management fees and incentive fees

          

          

          1,845,550

          

          

          

          93,042

          

          

          

          5,541,657

          

          

          

          93,042Net increase in net assets resulting from investment income, as adjusted

          

          $

          14,084,259

          

          

          $

          4,700,616

          

          

          $

          44,387,487

          

          

          $

          27,892,612Weighted average common shares outstanding  basic

          

          

          52,751,722

          

          

          

          39,383,076

          

          

          

          50,314,364

          

          

          

          36,859,005Adjustments for dilutive effect of convertible notes

          

          

          10,033,152

          

          

          

          497,864

          

          

          

          10,033,152

          

          

          

          167,167Weighted average common shares outstanding  diluted

          

          

          62,784,874

          

          

          

          39,880,940

          

          

          

          60,347,516

          

          

          

          37,026,172Earnings per common share  diluted

          

          $

          0.22

          

          

          $

          0.12

          

          

          $

          0.74

          

          

          $

          0.75
 33    TABLE OF CONTENTS TICC CAPITAL CORP.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2013 NOTE 5. EARNINGS PER SHARE   (continued) The following table sets forth the computation of basic and diluted net increase in net assets resulting from operations per share for the three and nine months ended September 30, 2013 and 2012, respectively:  Three Months Ended September 30, 2013

          

          Three Months Ended September 30, 2012

          

          Nine Months Ended September 30, 2013

          

          Nine Months Ended September 30, 2012Earnings per common share  basic:Net increase in net assets resulting from operations

          

          $

          23,588,777

          

          

          $

          27,856,644

          

          

          $

          45,887,819

          

          

          $

          54,199,886Weighted average common shares outstanding  basic

          

          

          52,751,722

          

          

          

          39,383,076

          

          

          

          50,314,364

          

          

          

          36,859,005Earnings per common share  basic

          

          $

          0.45

          

          

          $

          0.71

          

          

          $

          0.91

          

          

          $

          1.47Earnings per common share  diluted:Net increase in net assets resulting from operations, before adjustments

          

          $

          23,588,777

          

          

          $

          27,856,644

          

          

          $

          45,887,819

          

          

          $

          54,199,886Adjustments for interest on convertible senior notes, deferred issuance costs and incentive fees

          

          

          1,845,550

          

          

          

          93,042

          

          

          

          5,541,657

          

          

          

          93,042Net increase in net assets resulting from operations, as adjusted

          

          $

          25,434,327

          

          

          $

          27,949,686

          

          

          $

          51,429,476

          

          

          $

          54,292,928Weighted average common shares outstanding  basic

          

          

          52,751,722

          

          

          

          39,383,076

          

          

          

          50,314,364

          

          

          

          36,859,005Adjustments for dilutive effect of convertible notes

          

          

          10,033,152

          

          

          

          497,864

          

          

          

          10,033,152

          

          

          

          167,167Weighted average common shares outstanding  diluted

          

          

          62,784,874

          

          

          

          39,880,940

          

          

          

          60,347,516

          

          

          

          37,026,172Earnings per common share  diluted

          

          $

          0.41

          

          

          $

          0.70

          

          

          $

          0.85

          

          

          $

          1.47
 NOTE 6. RELATED PARTY TRANSACTIONS TICC has entered into an investment advisory agreement with TICC Management (the Investment Advisory Agreement) under which TICC Management, subject to the overall supervision of TICCs Board of Directors, manages the day-to-day operations of, and provides investment advisory services to, TICC. For providing these services TICC Management receives a fee from TICC, consisting of two components: a base management fee (the Base Fee) and an incentive fee. The Base Fee is calculated at an annual rate of 2.00%. The Base Fee is payable quarterly in arrears, and is calculated based on the average value of
TICCs gross assets at the end of the two most recently completed calendar quarters, and appropriately adjusted for any equity or debt capital raises, repurchases or redemptions during the current calendar quarter. Accordingly, the Base Fee will be payable regardless of whether the value of TICCs gross assets have decreased during the quarter. The incentive fee has two parts. The first part is calculated and payable quarterly in arrears based on the Companys Pre-Incentive Fee Net Investment Income for the immediately preceding calendar quarter. For this purpose, Pre-Incentive Fee Net Investment Income means interest income, dividend income and any other income (including any other fees, such as commitment, origination, structuring, diligence and consulting fees or other fees that TICC receives from portfolio companies) accrued during the calendar quarter, minus the Companys operating expenses for the quarter (including the Base
Fee, expenses payable under the Companys administration agreement with BDC Partners (the Administration Agreement), and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-Incentive Fee Net Investment Income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with PIK interest and zero coupon securities), accrued income that the Company has not yet received in cash. Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. Pre-Incentive Fee Net Investment Income, expressed as a rate of return on the value of the Companys net assets at the end of the immediately preceding calendar quarter, is compared to one- fourth of an annual hurdle rate. Given
 34    TABLE OF CONTENTS TICC CAPITAL CORP.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2013 NOTE 6. RELATED PARTY TRANSACTIONS   (continued) that this portion of the incentive fee is payable without regard to any capital gain, capital loss or unrealized depreciation that may occur during the quarter, this portion of TICC Managements incentive fee may also be payable notwithstanding a decline in net asset value that quarter. For each year commencing on or after January 1, 2005, the annual hurdle rate has been determined as of the immediately preceding December 31st by adding 5.0% to the interest rate then payable on the most recently issued five-year U.S. Treasury Notes, up to a maximum annual hurdle rate of 10.0%. The annual hurdle rates for the 2012, 2011 and 2010 calendar years were 5.83% 7.01% and 7.69%, respectively. The current hurdle rate for the 2013 calendar year, calculated as of December 31, 2012, is 5.72%. The second part of the incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, as of the termination date), and equals 20% of the Companys Incentive Fee Capital Gains, which consist of the Companys realized capital gains for each calendar year, computed net of all realized capital losses and unrealized capital depreciation for that calendar year. For accounting purposes only, in order to reflect the theoretical capital gains incentive fee that would be payable for a given period as if all unrealized gains were
realized, we will accrue a capital gains incentive fee based upon net realized capital gains and unrealized capital depreciation for that calendar year (in accordance with the terms of the Investment Advisory Agreement), plus unrealized capital appreciation on investments held at the end of the period. It should be noted that a fee so calculated and accrued would not necessarily be payable under the Investment Advisory Agreement, and may never be paid based upon the computation of capital gains incentive fees in subsequent periods. Amounts paid under the Investment Advisory Agreement will be consistent with the formula reflected in the Investment Advisory Agreement. Incentive fees, based upon pre-incentive fee net investment income, were approximately $1.8 million and $1.0 million for the three months ended September 30, 2013 and 2012, respectively; for the nine month periods ended September 30, 2013 and 2012, TICC incurred pre-incentive fee net investment income incentive fees of approximately $4.4 and $4.4 million, respectively. The net investment income incentive fee payable to TICC Management as of September 30, 2013 and 2012, was approximately $1.8 million and $1.0 million, respectively. For the quarter ended September 30, 2013, the capital gains incentive fee was approximately $2.3 million compared with an expense of approximately $4.6 million for the quarter ended September 30, 2012. For the nine months ended September 30, 2013, the capital gains incentive fee liability was reduced by approximately $0.4 million compared with expenses of approximately $4.6 million for the nine months ended September 30, 2012. The amount of capital gains incentive fee related to the hypothetical liquidation of the portfolio (and assuming no other changes in realized or unrealized gains and losses) would only become payable to
TICC Management in the event of a complete liquidation of TICCs portfolio as of period end and the termination of the Investment Advisory Agreement on such date. Also, it should be noted that the capital gains incentive fee fluctuates with the Companys overall investment results. The accrued capital gains incentive fee payable as of September 30, 2013 and 2012, was approximately $4.7 million and $5.7 million, respectively. In addition, in the event the Company recognizes payment-in-kind, or PIK, interest income in excess of its available capital, the Company may be required to liquidate assets in order to pay a portion of the incentive fee. TICC Management, however, is not required to reimburse the Company for the portion of any incentive fees attributable to PIK loan interest income in the event of a subsequent default. TICC Management is controlled by BDC Partners, its managing member. Charles M. Royce, as the non-managing member, holds a minority, non-controlling interest in TICC Management. BDC Partners, as the managing member of TICC Management, manages the business and internal affairs of TICC Management. In addition, BDC Partners provides TICC with office facilities and administrative services pursuant to an amended and restated administration agreement (the Administration Agreement). Jonathan H. Cohen, the Companys Chief Executive Officer, as well as a Director, is the managing member of BDC Partners.
 35    TABLE OF CONTENTS TICC CAPITAL CORP.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2013 NOTE 6. RELATED PARTY TRANSACTIONS   (continued) Saul B. Rosenthal, the Companys President and Chief Operating Officer, is also the President and Chief Operating Officer of TICC Management and a member of BDC Partners. Messrs. Cohen and Rosenthal have an equal equity interest in BDC Partners. Charles M. Royce, the Companys non-executive Chairman of the Board of Directors, does not take part in the management or participate in the operations of TICC Management; however, Mr. Royce is expected to be available from time to time to TICC Management to provide certain consulting services without compensation. Messrs. Cohen and Rosenthal also currently serve as Chief Executive Officer and President, respectively, for T2 Advisers, LLC, which serves as the Collateral Manager of T2 Income Fund CLO I Ltd. BDC Partners is the managing member of T2 Advisers, LLC. Further, Messrs. Cohen and Rosenthal currently serve as Chief Executive Officer and President, respectively, of Oxford Lane Capital Corp., a non-diversified closed-end management investment company that currently invests primarily in CLO debt and equity tranches, and its investment adviser, Oxford Lane Management. BDC Partners provides Oxford Lane Capital Corp. with office
facilities and administrative services pursuant to an administration agreement and also serves as the managing member of Oxford Lane Management. In addition, Patrick F. Conroy, the Chief Financial Officer, Chief Compliance Officer and Corporate Secretary of TICC Management, BDC Partners and TICC, serves in the same capacities for Oxford Lane Capital Corp. and Oxford Lane Management and also serves as the Chief Financial Officer, Chief Compliance Officer and Treasurer of T2 Advisers, LLC. Because of these possible conflicts of interest, these individuals may direct potential business and investment opportunities to other entities rather than to the Company or such individuals may undertake or otherwise engage in activities or conduct on behalf of such other entities that is not in, or which may be adverse to, the Companys best interests. BDC Partners has adopted a written policy with respect to the allocation of investment opportunities among the Company, Oxford Lane Capital Corp. and T2 Income Fund CLO I Ltd. in view of the potential conflicts of interest raised by the relationships described above. Under the Administration Agreement, BDC Partners provides administrative services for TICC. The Company pays BDC Partners an allocable portion of overhead and other expenses incurred by BDC Partners in performing its obligations under the Administration Agreement, including a portion of the rent and the compensation of the chief financial officer, chief compliance officer, controller and other administrative support personnel, which creates potential conflicts of interest that the Board of Directors must monitor. For the quarters ended September 30, 2013 and 2012, respectively, the base investment advisory fees, calculated in accordance with the terms of the Investment Advisory Agreement were approximately $5.1 million and $2.8 million; however TICC Management waived approximately $0.2 million of its fee for the quarter ended September 30, 2013. For the nine months ended September 30, 2013 and 2012, TICC incurred investment advisory fees of approximately $13.9 and $7.4 million, respectively, of which amounts $4.9 million and $2.8 million remained payable to TICC Management at the end of each respective period. For the quarters ended
September 30, 2013 and 2012, respectively, TICC incurred approximately $310,000 and $289,000, respectively, in compensation expenses for the services of employees allocated to the administrative activities of TICC, pursuant to the Administration Agreement with BDC Partners; for the nine months ended September 30, 2013 and 2012, TICC incurred compensation expenses of approximately $925,000 and $839,000, respectively, of which amounts approximately $498,000 and $450,000 were accrued for compensation expense at the end of each respective period. In addition, TICC incurred approximately $20,000 and $17,000 for reimbursement of facility costs allocated under the Administration Agreement for the quarters ended September 30, 2013 and 2012, respectively; for the nine months ended September 30, 2013 and 2012, TICC incurred approximately $62,000 and $51,000, respectively, of which amounts approximately $7,000 and $0 remained payable at the end of each respective period.
 36    TABLE OF CONTENTS TICC CAPITAL CORP.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2013 NOTE 7. DIVIDENDS The Company intends to continue to operate so as to qualify to be taxed as a RIC under the Code and, as such, the Company would not be subject to federal income tax on the portion of its taxable income and gains distributed to stockholders. To qualify as a RIC, the Company is required, among other requirements, to distribute at least 90% of its annual investment company taxable income, as defined by the Code. The amount to be paid out as a dividend is determined by the Board of Directors each quarter and is based upon the annual earnings estimated by the management of the Company. To the extent that the Companys taxable
earnings falls below the amount of dividends declared, however, a portion of the total amount of the Companys dividends for the fiscal year may be deemed a return of capital for tax purposes to the Companys stockholders. The Company intends to comply with the applicable provisions of the Code pertaining to regulated investment companies to make distributions of taxable income sufficient to relieve it of substantially all Federal income taxes. The Company, at its discretion, may carry forward taxable income in excess of calendar year distributions and pay a 4% excise tax on this income. The Company will accrue excise tax on estimated excess taxable income, if any, as required. On September 30, 2013, the Company paid a dividend of $0.29 per share. The Company has a dividend reinvestment plan under which all distributions are paid to stockholders in the form of additional shares, unless a stockholder elects to receive cash. The plan was amended to provide a 5% discount for shares purchased under the dividend reinvestment plan. NOTE 8. NET ASSET VALUE PER SHARE The Companys net asset value per share at September 30, 2013 was $9.90, and at December 31, 2012 was $9.90. In determining the Companys net asset value per share, the Board of Directors determined in good faith the fair value of the Companys portfolio investments for which reliable market quotations are not readily available. NOTE 9. PAYMENT-IN-KIND The Company has investments in its portfolio which contain a payment-in-kind, or PIK, provision. The PIK interest and PIK fee is added to the cost basis of the investment and recorded as income. To maintain the Companys status as a RIC (as discussed in Note 7 above), this non-cash source of income must be paid out to stockholders in the form of dividends, even though the Company has not yet collected the cash. Amounts necessary to pay these dividends may come from available cash or the liquidation of certain investments. For the three months ended September 30, 2013 and 2012, the Company recorded approximately $600,000
and $201,000 in PIK income, respectively. For the nine months ended September 30, 2013 and 2012, the Company recorded approximately $1.8 million and $4.4 million in PIK income, respectively. In addition, the Company recorded original issue discount income of approximately $0.7 million and $1.4 million for the three months ended September 30, 2013 and 2012, respectively, representing the amortization of the discount attributed to certain debt securities purchased by the Company, including original issue discount (OID) and market discount. The Company had discount income of approximately $2.9 million and $4.3 million for the nine months ended September 30, 2013 and 2012, respectively. NOTE 10. OTHER INCOME Other income generally includes closing fees, origination fees and amendment fees associated with investments in portfolio companies. Such fees may be paid at closing of the Companys investments or at the time the terms of the underlying loan agreement are revised and are generally fully earned, non-refundable, and non-recurring. Also, the Company may receive fees in connection with the origination of CLO equity investments; those fees may be paid over the life of the underlying CLO vehicle.
 37    TABLE OF CONTENTS TICC CAPITAL CORP.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2013 NOTE 10. OTHER INCOME   (continued) For the three months ended September 30, 2013, the Company recorded other income of approximately $0.8 million which includes income of approximately $0.3 million representing origination fees associated with two of the Companys CLO equity investments. For the three months ended September 30, 2012, the Company recorded other income of approximately $0.3 million. The Company earned approximately $3.5 million and $4.5 million in other income for the nine months ended September 30, 2013 and 2012, respectively. The 1940 Act requires that a business development company make available managerial assistance to its portfolio companies. The Company may receive fee income for managerial assistance it renders to portfolio companies in connection with its investments. For the three and nine months ended September 30, 2013 and 2012, respectively, the Company received no fee income for managerial assistance. NOTE 11. DISTRIBUTIONS FROM SECURITIZATION VEHICLES AND EQUITY INVESTMENTS The Company receives distributions on the equity tranches of securitization vehicles in which it invests. These tranches represent the residual economic interests in such securitization vehicles, and those distributions are determined by the respective trustee on a quarterly basis. The distributions are recognized in the period that they are finally determined and payable. The Company earned approximately $12.3 million in such distributions during the quarter ended September 30, 2013, compared to approximately $6.0 million during the quarter ended September 30, 2012. The Company earned approximately $31.7 million
in such distributions during the nine months ended September 30, 2013, compared to approximately $17.9 million during the nine months ended September 30, 2012. NOTE 12. FINANCIAL HIGHLIGHTS Financial highlights for the three and nine months ending September 30, 2013 and 2012, respectively, are as follows:  Three Months Ended September 30, 2013 (unaudited)

          

          Three Months Ended September 30, 2012 (unaudited)

          

          Nine Months Ended September 30, 2013 (unaudited)

          

          Nine Months Ended September 30, 2012 (unaudited)Per Share DataNet asset value at beginning of period

          

          $

          9.75

          

          

          $

          9.47

          

          

          $

          9.90

          

          

          $

          9.30Net investment income(1)

          

          

          0.23

          

          

          

          0.12

          

          

          

          0.77

          

          

          

          0.75Net realized and unrealized capital gains

          

          

          0.22

          

          

          

          0.59

          

          

          

          0.14

          

          

          

          0.72Total from net investment operations

          

          

          0.45

          

          

          

          0.71

          

          

          

          0.91

          

          

          

          1.47Distributions per share from net investment income

          

          

          (0.29

          )

          

          

          (0.29

          )

          

          

          (0.87

          )

          

          

          (0.83

          )Distributions based on weighted average share impact

          

          

          (0.01

          )

          

          

          (0.03

          )

          

          

          (0.04

          )

          

          

          (0.08

          )Total distributions(2)

          

          

          (0.30

          )

          

          

          (0.32

          )

          

          

          (0.91

          )

          

          

          (0.91

          )Effect of shares issued, net of offering expenses

          

          

          

          

          

          

          (0.01

          )

          

          

          

          

          

          

          (0.01

          )Net asset value at end of period

          

          $

          9.90

          

          

          $

          9.85

          

          

          $

          9.90

          

          

          $

          9.85Per share market value at beginning of period

          

          $

          9.62

          

          

          $

          9.69

          

          

          $

          10.12

          

          

          $

          8.65Per share market value at end of period

          

          $

          9.74

          

          

          $

          10.40

          

          

          $

          9.74

          

          

          $

          10.40Total return(3)(4)

          

          

          4.26

          %

          

          

          10.32

          %

          

          

          4.90

          %

          

          

          30.55

          %Shares outstanding at end of period

          

          

          53,326,368

          

          

          

          41,312,780

          

          

          

          53,326,368

          

          

          

          41,312,780
 38    TABLE OF CONTENTS TICC CAPITAL CORP.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2013 NOTE 12. FINANCIAL HIGHLIGHTS   (continued) Three Months Ended September 30, 2013 (unaudited)

          

          Three Months Ended September 30, 2012 (unaudited)

          

          Nine Months Ended September 30, 2013 (unaudited)

          

          Nine Months Ended September 30, 2012 (unaudited)Ratios/Supplemental DataNet assets at end of period (000s)

          

          $

          528,063

          

          

          $

          406,897

          

          

          $

          528,063

          

          

          $

          406,897Average net assets (000s)

          

          $

          520,602

          

          

          $

          374,696

          

          

          $

          499,240

          

          

          $

          349,297Ratio of expenses to average net assets:Expenses before incentive fees(4)

          

          

          8.57

          %

          

          

          5.69

          %

          

          

          8.48

          %

          

          

          5.37

          %Net investment income incentive fees(4)

          

          

          1.38

          %

          

          

          1.07

          %

          

          

          1.18

          %

          

          

          1.67

          %Capital gains incentive fees(4)

          

          

          1.74

          %

          

          

          4.96

          %

          

          

          (0.11

          )%

          

          

          1.74

          %Total ratio of expenses to average net assets(4)

          

          

          11.69

          %

          

          

          11.72

          %

          

          

          9.55

          %

          

          

          8.78

          %Ratio of expenses, excluding interest expense, to average net assets(4)

          

          

          7.86

          %

          

          

          10.23

          %

          

          

          5.82

          %

          

          

          7.62

          %Ratio of net investment income to average net assets(4)

          

          

          9.40

          %

          

          

          4.92

          %

          

          

          10.37

          %

          

          

          10.61

          %
  (1)

          Represents per share net investment income for the period, based upon average shares outstanding. (2)

          Management monitors available taxable earnings, including net investment income and realized capital gains, to determine if a tax return of capital may occur for the year. To the extent the Companys taxable earnings fall below the total amount of the Companys distributions for that fiscal year, a portion of those distributions may be deemed a tax return of capital to the Companys stockholders. The tax character of distributions will be determined at the end of the fiscal year. (3)

          Total return equals the increase or decrease of ending market value over beginning market value, plus distributions, divided by the beginning market value, assuming dividend reinvestment prices obtained under the Companys dividend reinvestment plan. Total return is not annualized. (4)

          Annualized. NOTE 13. CASH AND CASH EQUIVALENTS At September 30, 2013 and December 31, 2012, respectively, cash and cash equivalents consisted of:  September 30, 2013

          

          December 31, 2012Cash Equivalents

          

          $

          

          

          

          $

          Cash

          

          

          29,016,511

          

          

          

          51,392,949Restricted Cash

          

          

          28,568,347

          

          

          

          21,240,508Total Cash and Cash Equivalents

          

          $

          57,584,858

          

          

          $

          72,633,457
 Restricted cash represents amounts that are collected and are held by Bank of New York as trustee and custodian of the assets for both of the Companys debt securitization vehicles. Restricted cash is held by the trustee for payment of interest expense and principal on the outstanding borrowings or reinvestment in new assets.
 39    TABLE OF CONTENTS TICC CAPITAL CORP.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2013 NOTE 14. COMMITMENTS In the normal course of business, the Company enters into a variety of undertakings containing warranties and indemnifications that may expose the Company to some risk of loss. The risk of future loss arising from such undertakings, while not quantifiable, is expected to be remote. As of September 30, 2013, the Company had a delayed draw commitment of approximately $2.25 million for its debt investment in CRCI Holdings, for which TICC receives a ticking fee of 1.25% per annum on the delayed draw until its funded. As of September 30, 2013, the Company did not have any commitments to purchase additional debt or equity investments. The Company is not currently subject to any material legal proceedings. From time to time, the Company may be a party to certain legal proceedings in the ordinary course of business, including proceedings related to the enforcement of the Companys rights under contracts with its portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, the Company does not expect that these proceedings will have a material impact upon its financial condition or results of operations. NOTE 15. SUBSEQUENT EVENTS On October 29, 2013, the Board of Directors declared a distribution of $0.29 per share for the fourth quarter, payable on December 31, 2013 to shareholders of record as of December 17, 2013.
 40    TABLE OF CONTENTS ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about TICC, our current and prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as anticipates, expects, intends, plans, will, may, continue, believes, seeks, estimates, would, could,
should, targets, projects, and variations of these words and similar expressions are intended to identify forward-looking statements. The forward-looking statements contained in this Quarterly Report on Form 10-Q involve risks and uncertainties, including statements as to: 

          our future operating results; 

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

          the impact of investments that we expect to make; 

          our contractual arrangements and relationships with third parties; 

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

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

          our expected financings and investments; 

          the adequacy of our cash resources and working capital; and 

          the timing of cash flows, if any, from the operations of our portfolio companies. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation: 

          an economic downturn could impair our portfolio companies ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies; 

          a contraction of available credit and/or an inability to access the equity markets could impair our lending and investment activities; 

          interest rate volatility could adversely affect our results, particularly because we use leverage as part of our investment strategy; 

          currency fluctuations could adversely affect the results of our investments in foreign companies, particularly to the extent that we receive payments denominated in foreign currency rather than U.S. dollars; and 

          the risks, uncertainties and other factors we identify in Item 1A.  Risk Factors contained in our Annual Report on Form 10-K for the year ended December 31, 2012, elsewhere in this Quarterly Report on Form 10-Q and in our filings with the SEC. Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. Important assumptions include our ability to originate new loans and investments, certain margins and levels of profitability and the availability of additional capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly Report on Form 10-Q should not be regarded as a representation by us that our
plans and objectives will be achieved. These risks and uncertainties include those described or identified in Item 1A.  Risk Factors contained in our Annual Report on Form 10-K for the year ended December 31,
 41    TABLE OF CONTENTS 2012, and elsewhere in this Quarterly Report on Form 10-Q. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q. Except where the context requires otherwise, the terms TICC, Company, we, us and our refer to TICC Capital Corp. together with its subsidiaries, TICC Capital Corp. 2011-1 Holdings LLC (Holdings), TICC CLO LLC (2011 Securitization Issuer or TICC CLO) and TICC CLO 2012-1 LLC (2012 Securitization Issuer or TICC CLO 2012-1); TICC Management refers to TICC Management, LLC; and BDC Partners refers to BDC Partners, LLC. The following analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes thereto contained elsewhere in this Quarterly Report on Form 10-Q.
 42    TABLE OF CONTENTS OVERVIEW Our investment objective is to maximize our portfolios total return. Our primary focus is to seek current income by investing in corporate debt securities. We have also invested and may continue to invest in structured finance investments, including CLO vehicles, which own debt securities. We may also invest in publicly traded debt and/or equity securities. We operate as a closed-end, non-diversified management investment company and have elected to be treated as a business development company under the Investment Company Act of 1940, as amended (the 1940 Act). We have elected to be treated for tax purposes
as a regulated investment company (RIC), under the Internal Revenue Code of 1986, as amended (the Code), beginning with our 2003 taxable year. Our investment activities are managed by TICC Management, a registered investment adviser under the Investment Advisers Act of 1940, as amended. TICC Management is owned by BDC Partners, its managing member, and Charles M. Royce, our non-executive Chairman, who holds a minority, non-controlling interest in TICC Management. Jonathan H. Cohen, our Chief Executive Officer, and Saul B. Rosenthal, our President and Chief Operating Officer, are the controlling members of BDC Partners. Under an investment advisory agreement (the Investment Advisory Agreement), we have agreed to pay TICC Management an annual base fee
calculated on gross assets, and an incentive fee based upon our performance. Under an amended and restated administration agreement (the Administration Agreement), we have agreed to pay or reimburse BDC Partners, as administrator, for certain expenses incurred in operating TICC. Our executive officers and directors, and the executive officers of TICC Management and BDC Partners, serve or may serve as officers and directors of entities that operate in a line of business similar to our own. Accordingly, they may have obligations to investors in those entities, the fulfillment of which might not be in the best interests of us or our stockholders. On August 10, 2011, we completed a $225.0 million debt securitization financing transaction. On August 23, 2012, we completed our second such transaction, a $160.0 million debt securitization financing. On February 25, 2013 and on May 28, 2013, we completed the sale of an aggregate of $120.0 million of additional secured notes and an aggregate of $40.0 million of subordinated notes in connection with these transactions. On September 26, 2012, we completed a private placement of 5-year unsecured 7.50% Senior Convertible Notes Due 2017 (the Convertible Notes). A total of $105.0 million aggregate principal amount of
the Convertible Notes were issued at the closing. An additional $10.0 million aggregate principal amount of the Convertible Notes were issued on October 22, 2012 pursuant to the exercise of the initial purchasers option to purchase additional Convertible Notes. For more information about these transactions, see  Liquidity and Capital Resources  Borrowings. We generally expect to invest between $5 million and $50 million in each of our portfolio companies, although this investment size may vary proportionately as the size of our capital base changes and market conditions warrant, and accrue interest at fixed or variable rates. We expect that our investment portfolio will be diversified among a large number of investments with few investments, if any, exceeding 5% of the total portfolio. As of September 30, 2013, our debt investments had stated interest rates of between 3.96% and 15.00% and maturity dates of between 2 and 142 months. In addition, our total portfolio had a weighted
average yield on debt investments of approximately 8.7%. Our loans may carry a provision for deferral of some or all of the interest payments and amendment fees, which will be added to the principal amount of the loan. This form of deferred income is referred to as payment-in-kind, or PIK, interest or other income and, when earned, is recorded as interest or other income and an increase in the principal amount of the loan. For the quarter ended September 30, 2013, we recognized approximately $0.6 million from PIK interest income associated with our investments in Unitek Global Solutions, Inc., Merrill Communications, LLC and RBS Holding Company compared to
PIK interest of approximately $0.2 million for the quarter ended September 30, 2012. In the event we recognize deferred loan interest income in excess of our available capital as a result of our receipt of PIK income, we may be required to liquidate assets in order to pay a portion of the incentive fee due to TICC Management. We have historically and may continue to borrow funds to make investments. As a result, we are exposed to the risks of leverage, which may be considered a speculative investment technique. Borrowings, also known as leverage, magnify the potential for gain and loss on amounts invested and therefore increase the risks
 43    TABLE OF CONTENTS associated with investing in our securities. In addition, the costs associated with our borrowings, including any increase in the management fee payable to TICC Management, will be borne by our common stockholders. In addition, as a BDC under the 1940 Act, we are required to make available significant managerial assistance, for which we may receive fees, to our portfolio companies. These fees would be generally non-recurring, however in some instances they may have a recurring component. We have received no fee income for managerial assistance to date. Prior to making an investment, we may enter into a non-binding term sheet with the potential portfolio company. These term sheets are generally subject to a number of conditions, including but not limited to the satisfactory completion of our due diligence investigations of the companys business and legal documentation for the loan. To the extent possible, we will generally seek to invest in loans that are collateralized by a security interest in the borrowers assets or guaranteed by a principal to the transaction. Interest payments, if not deferred, are normally payable quarterly with most debt investments having scheduled principal payments on a monthly or quarterly basis. When we receive a warrant to purchase stock in a portfolio company, the warrant will typically have a nominal strike price, and will entitle us to purchase a modest percentage of the borrowers stock. During the quarter ended September 30, 2013, we closed approximately $85.0 million in portfolio investments, including additional investments of approximately $19.6 million in existing portfolio companies and approximately $65.4 million in new portfolio companies. During the quarter ended September 30, 2013, we recognized a total of $22.3 million from repayments on debt investments, and we recognized approximately $39.6 million from the sale of portfolio investments. We realized net losses on investments during the quarter ended September 30, 2013 in the amount of approximately $1.3 million. For the quarter ended September 30,
2013, we had net unrealized appreciation of approximately $12.7 million.
 44    TABLE OF CONTENTS CRITICAL ACCOUNTING POLICIES The preparation of financial statements and related disclosures in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified our investment valuation policy as a critical accounting policy. Investment Valuation The most significant estimate inherent in the preparation of our consolidated financial statements is the valuation of investments and the related amounts of unrealized appreciation and depreciation of investments recorded. There is no single method 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 portfolio investment while employing a consistently applied valuation process for the types of investments we make. We are required to specifically fair value each individual investment on a quarterly basis. ASC 820-10, Fair Value Measurements and Disclosure, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820-10 also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, which includes inputs such as quoted prices for similar securities in active markets and quoted prices for identical securities in markets that are not active;
and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions. We have determined that due to the general illiquidity of the market for our investment portfolio, whereby little or no market data exists, substantially all of our investments are based upon Level 3 inputs. Our Board of Directors determines the value of our investment portfolio each quarter. In connection with that determination, members of TICC Managements portfolio management team prepare portfolio company valuations using the most recent portfolio company financial statements and forecasts. Since March 2004, we have engaged third-party valuation firms to provide assistance in valuing our bilateral investments and, more recently, for certain of our syndicated loans, although our Board of Directors ultimately determines the appropriate valuation of each such investment. Our process for determining the fair value of a bilateral investment begins with determining the enterprise value of the portfolio company. Enterprise value means the entire value of the company to a potential buyer, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time. The fair value of our investment is based, in part, on the enterprise value at which the portfolio company could be sold in an orderly disposition over a reasonable period of time between willing parties other than in a forced or liquidation sale. The liquidity event whereby we exit a private
investment is generally the sale, the recapitalization or, in some cases, the initial public offering of the portfolio company. There is no one methodology to determine enterprise value and, in fact, for any one portfolio company, enterprise value is best expressed as a range of fair values, from which we derive a single estimate of enterprise value. To determine the enterprise value of a portfolio company, we analyze the historical and projected financial results, as well as the nature and value of any collateral. We also use industry valuation benchmarks and public market comparables. We also consider other events, including private mergers and acquisitions, a purchase transaction, public offering or subsequent debt or equity sale or restructuring,
and include these events in the enterprise valuation process. We generally require portfolio companies to provide annual audited and quarterly unaudited financial statements, as well as annual projections for the upcoming fiscal year. Typically, our bilateral debt investments are valued on the basis of a fair value determination arrived at through an analysis of the borrowers financial and operating condition or other factors, as well as consideration of the entitys enterprise value. The types of factors that we may take into account in valuing our investments include: market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, the nature and realizable value of any collateral, the portfolio companys ability to make payments and its earnings and discounted cash flows,
among other factors. The fair
 45    TABLE OF CONTENTS value of equity interests in portfolio companies is determined based on various factors, including the enterprise value remaining for equity holders after the repayment of the portfolio companys debt and other preference capital, and other pertinent factors such as recent offers to purchase a portfolio company, recent transactions involving the purchase or sale of the portfolio companys equity securities, or other liquidity events. The determined equity values are generally discounted when we have a minority position, restrictions on resale, specific concerns about the receptivity of the capital markets to a
specific company at a certain time, or other factors. We will record unrealized depreciation on bilateral investments when we believe that an investment has become impaired, including where collection of a loan or realization of an equity security is doubtful. To the extent that we believe that it has become probable that a loan is not collectible or probable that an equity investment is not realizable, we will classify that amount as a realized loss. We will record unrealized appreciation if we believe that the underlying portfolio company has appreciated in value and our equity security has also appreciated in value. Changes in fair value, other than such changes that are
considered probable of non-collection or non-realization, as described above, are recorded in the statement of operations as net change in unrealized appreciation or depreciation. Under the valuation procedures approved by our Board of Directors, upon the recommendation of the Valuation Committee, a third-party valuation firm will prepare valuations for each of our bilateral investments for which market quotations are not readily available that, when combined with all other investments in the same portfolio company, (i) have a value as of the previous quarter of greater than or equal to 2.5% of our total assets as of the previous quarter, and (ii) have a value as of the current quarter of greater than or equal to 2.5% of our total assets as of the previous quarter, after taking into account any
repayment of principal during the current quarter. In addition, the frequency of those third-party valuations of our portfolio securities is based upon the grade assigned to each such security under our credit grading system as follows: Grade 1, at least annually; Grade 2, at least semi-annually; Grades 3, 4, and 5, at least quarterly. TICC Management also retains the authority to seek, on our behalf, additional third party valuations with respect to both our bilateral portfolio securities and our syndicated loan investments. Our Board of Directors retains ultimate authority as to the third-party review cycle as well as the appropriate valuation of each investment. ASC 820-10-35, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, which provides guidance on factors that should be considered in determining when a previously active market becomes inactive and whether a transaction is orderly. In accordance with ASC 820-10-35, our valuation procedures specifically provide for the review of indicative quotes supplied by the large agent banks that make a market for each security. However, the marketplace for which we obtain indicative bid quotes for purposes of
determining the fair value of our syndicated loan investments have shown these attributes of illiquidity as described by ASC-820-10-35. Due to limited market liquidity in the syndicated loan market, TICC believes that the non-binding indicative bids received from agent banks for certain syndicated investments that we own may not be determinative of their fair value and therefore alternative valuation procedures may need to be undertaken. As a result, TICC has engaged third-party valuation firms to provide assistance in valuing certain syndicated investments that we own. In addition, TICC Management prepares an analysis of each syndicated loan, including a financial summary, covenant compliance review, recent trading activity in the security, if known, and other business developments related to the portfolio company. All available information, including non-binding indicative bids which may not be determinative of fair value, is presented to the Valuation Committee to consider in its
determination of fair value. In some instances, there may be limited trading activity in a security even though the market for the security is considered not active. In such cases the Valuation Committee will consider the number of trades, the size and timing of each trade, and other circumstances around such trades, to the extent such information is available, in its determination of fair value. The Valuation Committee will evaluate the impact of such additional information, and factor it into its consideration of the fair value that is indicated by the analysis provided by third-party valuation firms. We have considered the factors described in ASC 820-10 and have determined that we are properly valuing the securities in our portfolio. During the past few years, we have acquired a number of debt and equity positions in CLO investment vehicles. These investments are special purpose financing vehicles. In valuing such investments, we consider
 46    TABLE OF CONTENTS the operating metrics of the specific investment vehicle, including compliance with collateralization tests, defaulted and restructured securities, and payment defaults, if any. In addition, we consider the indicative prices provided by the broker who arranges transactions in such investment vehicles, as well as any available information on other relevant transactions in the market. TICC Management or the Valuation Committee may request an additional analysis by a third-party firm to assist in the valuation process of CLO investment vehicles. All information is presented to our Board of Directors for its determination of fair
value of these investments. Our assets measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820-10 at September 30, 2013, were as follows:  ($ in millions)

          

          Fair Value Measurements at Reporting Date UsingAssets

          

          Quoted Prices in Active Markets for Identical Assets (Level 1)

          

          Significant Other Observable Inputs (Level 2)

          

          Significant Unobservable Inputs (Level 3)

          

          TotalSenior Secured Notes

          

          $

          0.0

          

          

          $

          16.8

          

          

          $

          665.1

          

          

          $

          681.9Senior Unsecured Notes

          

          

          0.0

          

          

          

          0.0

          

          

          

          5.6

          

          

          

          5.6CLO Debt

          

          

          0.0

          

          

          

          0.0

          

          

          

          31.3

          

          

          

          31.3CLO Equity

          

          

          0.0

          

          

          

          0.0

          

          

          

          206.9

          

          

          

          206.9Subordinated Notes

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0Common Stock

          

          

          0.0

          

          

          

          0.0

          

          

          

          14.8

          

          

          

          14.8Preferred Shares

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.4

          

          

          

          0.4Warrants to purchase equity

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.5

          

          

          

          0.5Total

          

          $

          0.0

          

          

          $

          16.8

          

          

          $

          924.6

          

          

          $

          941.4
 A reconciliation of the fair value of investments for the three months ended September 30, 2013, utilizing significant unobservable inputs, is as follows:  ($ in millions)

          

          Senior Secured Note Investments

          

          Senior Unsecured Note Investments

          

          Collateralized Loan Obligation Debt Investments

          

          Collateralized Loan Obligation Equity Investments

          

          Subordinated Note Investments

          

          Common Stock Investments

          

          Preferred Share Equity Investments

          

          Warrants to Purchase Equity Investments

          

          TotalBalance at June 30, 2013

          

          $

          627.6

          

          

          $

          5.3

          

          

          $

          45.0

          

          

          $

          195.9

          

          

          $

          0.0

          

          

          $

          14.5

          

          

          $

          0.4

          

          

          $

          0.5

          

          

          $

          889.2Realized gains (losses) included in earnings

          

          

          (3.4

          )

          

          

          0.0

          

          

          

          3.3

          

          

          

          0.3

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          (1.5

          )

          

          

          0.0

          

          

          

          (1.3

          )Unrealized (depreciation) appreciation included in earnings(1)

          

          

          12.2

          

          

          

          0.1

          

          

          

          (3.2

          )

          

          

          1.6

          

          

          

          0.0

          

          

          

          0.3

          

          

          

          1.5

          

          

          

          0.0

          

          

          

          12.5Accretion of discount

          

          

          0.5

          

          

          

          0.0

          

          

          

          0.1

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.6Purchases(1)

          

          

          62.1

          

          

          

          0.0

          

          

          

          5.6

          

          

          

          17.3

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          85.0Repayments and Sales

          

          

          (34.3

          )

          

          

          0.0

          

          

          

          (19.5

          )

          

          

          (8.2

          )

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          (62.0

          )Payment in Kind income

          

          

          0.4

          

          

          

          0.2

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.6Transfers in and/or out of level 3

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0Balance at September 30, 2013

          

          $

          665.1

          

          

          $

          5.6

          

          

          $

          31.3

          

          

          $

          206.9

          

          

          $

          0.0

          

          

          $

          14.8

          

          

          $

          0.4

          

          

          $

          0.5

          

          

          $

          924.6The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to our Level 3 assets still held at the reporting date and reported within the net change in unrealized gains or losses on investments in our Statement of Operations

          

          $

          9.2

          

          

          $

          0.0

          

          

          $

          0.0

          

          

          $

          4.4

          

          

          $

          0.0

          

          

          $

          0.3

          

          

          $

          0.0

          

          

          $

          0.0

          

          

          $

          13.9
  (1)

          Includes rounding adjustments to reconcile period balances.
 47    TABLE OF CONTENTS A reconciliation of the fair value of investments for the nine months ended September 30, 2013, utilizing significant unobservable inputs, is as follows:  ($ in millions)

          

          Senior Secured Note Investments

          

          Senior Unsecured Note Investments

          

          Collateralized Loan Obligation Debt Investments

          

          Collateralized Loan Obligation Equity Investments

          

          Subordinated Note Investments

          

          Common Stock Investments

          

          Preferred Share Equity Investments

          

          Warrants to Purchase Equity Investments

          

          TotalBalance at December 31, 2012

          

          $

          485.1

          

          

          $

          0.0

          

          

          $

          55.6

          

          

          $

          109.3

          

          

          $

          0.1

          

          

          $

          4.4

          

          

          $

          2.7

          

          

          $

          0.5

          

          

          $

          657.7Realized gains (losses) included in earnings

          

          

          (2.3

          )

          

          

          0.6

          

          

          

          10.9

          

          

          

          (0.5

          )

          

          

          0.0

          

          

          

          0.0

          

          

          

          (1.5

          )

          

          

          0.0

          

          

          

          7.2Unrealized (depreciation) appreciation included in earnings

          

          

          12.9

          

          

          

          2.8

          

          

          

          (8.6

          )

          

          

          (13.1

          )

          

          

          0.0

          

          

          

          7.0

          

          

          

          (1.0

          )

          

          

          0.0

          

          

          

          0.0Accretion of discount

          

          

          2.0

          

          

          

          0.0

          

          

          

          0.8

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          2.8Purchases

          

          

          332.7

          

          

          

          3.1

          

          

          

          17.0

          

          

          

          124.2

          

          

          

          0.0

          

          

          

          3.4

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          480.4Repayments and Sales

          

          

          (166.7

          )

          

          

          (1.1

          )

          

          

          (44.4

          )

          

          

          (13.0

          )

          

          

          (0.1

          )

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          (225.3

          )Payment in Kind income

          

          

          1.4

          

          

          

          0.2

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.2

          

          

          

          0.0

          

          

          

          1.8Transfers in and/or out of level 3

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0Balance at September 30, 2013

          

          $

          665.1

          

          

          $

          5.6

          

          

          $

          31.3

          

          

          $

          206.9

          

          

          $

          0.0

          

          

          $

          14.8

          

          

          $

          0.4

          

          

          $

          0.5

          

          

          $

          924.6The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to our Level 3 assets still held at the reporting date and reported within the net change in unrealized gains or losses on investments in our Statement of Operations

          

          $

          9.8

          

          

          $

          2.7

          

          

          $

          0.4

          

          

          $

          (8.0

          )

          

          $

          0.0

          

          

          $

          7.0

          

          

          $

          (2.5

          )

          

          $

          0.0

          

          

          $

          9.4
 Our assets measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820-10 at December 31, 2012, were as follows:  ($ in millions)

          

          Fair Value Measurements at Reporting Date UsingAssets

          

          Quoted Prices in Active Markets for Identical Assets (Level 1)

          

          Significant Other Observable Inputs (Level 2)

          

          Significant Unobservable Inputs (Level 3)

          

          TotalSenior Secured Notes

          

          $

          0.0

          

          

          $

          9.8

          

          

          $

          485.1

          

          

          $

          494.9CLO Debt

          

          

          0.0

          

          

          

          0.0

          

          

          

          55.6

          

          

          

          55.6CLO Equity

          

          

          0.0

          

          

          

          0.0

          

          

          

          109.3

          

          

          

          109.3Subordinated Notes

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.1

          

          

          

          0.1Common Stock

          

          

          0.0

          

          

          

          0.0

          

          

          

          4.4

          

          

          

          4.4Preferred Shares

          

          

          0.0

          

          

          

          0.0

          

          

          

          2.7

          

          

          

          2.7Warrants to purchase equity

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.5

          

          

          

          0.5Total

          

          $

          0.0

          

          

          $

          9.8

          

          

          $

          657.7

          

          

          $

          667.5
 48    TABLE OF CONTENTS A reconciliation of the fair value of investments for the year ended December 31, 2012, utilizing significant unobservable inputs, is as follows:  ($ in millions)

          

          Senior Secured Note Investments

          

          Collateralized Loan Obligation Debt Investments

          

          Collateralized Loan Obligation Equity Investments

          

          Subordinated Note Investments

          

          Common Stock Investments

          

          Preferred Share Equity Investments

          

          Warrants to Purchase Equity Investments

          

          TotalBalance at December 31, 2011

          

          $

          279.2

          

          

          $

          51.0

          

          

          $

          39.3

          

          

          $

          4.9

          

          

          $

          3.1

          

          

          $

          2.5

          

          

          $

          0.8

          

          

          $

          380.8Realized gains included in earnings

          

          

          4.0

          

          

          

          12.4

          

          

          

          0.0

          

          

          

          0.1

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.1

          

          

          

          16.6Unrealized (depreciation) appreciation included in earnings

          

          

          (2.6

          )

          

          

          4.5

          

          

          

          11.3

          

          

          

          0.2

          

          

          

          1.3

          

          

          

          (0.2

          )

          

          

          0.1

          

          

          

          14.6Accretion of discount

          

          

          2.9

          

          

          

          2.8

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          5.7Purchases

          

          

          398.7

          

          

          

          27.3

          

          

          

          58.7

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          484.7Repayments and Sales(1)

          

          

          (201.6

          )

          

          

          (42.4

          )

          

          

          0.0

          

          

          

          (5.2

          )

          

          

          0.0

          

          

          

          0.0

          

          

          

          (0.5

          )

          

          

          (249.7

          )Payment in Kind income

          

          

          4.5

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.1

          

          

          

          0.0

          

          

          

          0.4

          

          

          

          0.0

          

          

          

          5.0Transfers in and/or out of level 3

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0

          

          

          

          0.0Balance at December 31, 2012

          

          $

          485.1

          

          

          $

          55.6

          

          

          $

          109.3

          

          

          $

          0.1

          

          

          $

          4.4

          

          

          $

          2.7

          

          

          $

          0.5

          

          

          $

          657.7The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to our Level 3 assets still held at the reporting date and reported within the net change in unrealized gains or losses on investments in our Statement of Operations

          

          $

          (1.7

          )

          

          $

          8.0

          

          

          $

          11.3

          

          

          $

          0.1

          

          

          $

          1.3

          

          

          $

          (0.1

          )

          

          $

          0.0

          

          

          $

          18.9
  (1)

          Includes rounding adjustments to reconcile period balances.
 49    TABLE OF CONTENTS PORTFOLIO COMPOSITION AND INVESTMENT ACTIVITY The total fair value of our investment portfolio was approximately $941.4 million and $667.5 million as of September 30, 2013 and December 31, 2012, respectively. The increase in investments during the nine month period was due primarily to purchases of investments of approximately $492.3 million, partially offset by debt repayments and sales of securities totaling approximately $230.2 million. Funding for these new investments was provided by equity capital raises, the issuance by TICC CLO 2012-1 of additional secured notes totaling $120 million and the deployment of capital available as of December 31, 2012. In certain instances, we receive payments based on scheduled amortization of the outstanding balances and sales of portfolio investments. In addition, we receive repayments of some of our debt investments prior to their scheduled maturity date. The frequency or volume of these repayments may fluctuate significantly from period to period. For the quarter ended September 30, 2013, we recognized proceeds of approximately $39.6 million largely from the aggregate proceeds from the sale of several of our CLO debt and equity investments ($27.7 million), whereas for the year ended December 31, 2012, we recognized proceeds of
approximately $69.3 million from the sales of securities. Also, during the quarter ended September 30, 2013, we had repayments and amortization payments of approximately $22.3 million, whereas, for the year ended December 31, 2012, we had repayments and amortization payments of approximately $191.2 million. As of September 30, 2013, we had investments in debt securities of, or loans to, 75 portfolio companies, with a fair value of approximately $718.8 million, and equity investments in 33 portfolio companies, with a fair value of approximately $222.6 million. As of December 31, 2012, we had investments in debt securities of, or loans to, 73 portfolio companies, with a fair value of approximately $550.6 million, and equity investments in 26 portfolio companies, with a fair value of approximately $116.9 million. A reconciliation of the investment portfolio for the nine months ended September 30, 2013 and the year ended December 31, 2012 follows:  September 30, 2013

          

          December 31, 2012(dollars in millions)

          

          (dollars in millions)Beginning Investment Portfolio

          

          $

          667.5

          

          

          $

          391.5Portfolio Investments Acquired

          

          

          492.3

          

          

          

          494.6Debt repayments

          

          

          (137.9

          )

          

          

          (191.2

          )Sales of securities

          

          

          (92.3

          )

          

          

          (69.3

          )Payment in Kind

          

          

          1.8

          

          

          

          4.9Original Issue Discount(1)

          

          

          3.0

          

          

          

          5.8Net Unrealized Appreciation

          

          

          (0.1

          )

          

          

          14.3Net Realized Gains

          

          

          7.1

          

          

          

          16.9$

          941.4

          

          

          $

          667.5
  (1)

          table includes rounding adjustments to reconcile period balances.
 50    TABLE OF CONTENTS The following table indicates the quarterly portfolio investment activity for the past seven quarters:  New Investments

          

          Debt Repayments

          

          Sales of Securities(dollars in millions)

          

          (dollars in millions)

          

          (dollars in millions)Quarter endedSeptember 30, 2013

          

          $

          85.0

          

          

          $

          22.3

          

          

          $

          39.6June 30, 2013

          

          

          190.8

          

          

          

          85.8

          

          

          

          17.7March 31, 2013

          

          

          216.5

          

          

          

          29.8

          

          

          

          35.0Total

          

          $

          492.3

          

          

          $

          137.9

          

          

          $

          92.3December 31, 2012

          

          $

          247.0

          

          

          $

          75.3

          

          

          $

          48.8September 30, 2012

          

          

          128.0

          

          

          

          45.3

          

          

          

          9.0June 30, 2012

          

          

          62.1

          

          

          

          66.2

          

          

          

          2.5March 31, 2012

          

          

          57.5

          

          

          

          4.4

          

          

          

          9.0Total

          

          $

          494.6

          

          

          $

          191.2

          

          

          $

          69.3
 The following table shows the fair value of our portfolio of investments by asset class as of September 30, 2013 and December 31, 2012:  September 30, 2013

          

          December 31, 2012Investments at Fair Value

          

          Percentage of Total Portfolio

          

          Investments at Fair Value

          

          Percentage of Total Portfolio(dollars in millions)

          

          

          

          (dollars in millions)Senior Secured Notes

          

          $

          681.9

          

          

          

          72.4

          %

          

          $

          494.9

          

          

          

          74.1

          %Senior Unsecured Notes

          

          

          5.6

          

          

          

          0.6

          %

          

          

          0.0

          

          

          

          0.0

          %CLO Debt

          

          

          31.3

          

          

          

          3.3

          %

          

          

          55.6

          

          

          

          8.3

          %CLO Equity

          

          

          206.9

          

          

          

          22.0

          %

          

          

          109.3

          

          

          

          16.4

          %Subordinated Notes

          

          

          0.0

          

          

          

          0.0

          %

          

          

          0.1

          

          

          

          0.0

          %Common Stock

          

          

          14.8

          

          

          

          1.6

          %

          

          

          4.4

          

          

          

          0.7

          %Preferred Shares

          

          

          0.4

          

          

          

          0.0

          %

          

          

          2.7

          

          

          

          0.4

          %Warrants

          

          

          0.5

          

          

          

          0.1

          %

          

          

          0.5

          

          

          

          0.1

          %Total

          

          $

          941.4

          

          

          

          100.0

          %

          

          $

          667.5

          

          

          

          100.0

          %
 51    TABLE OF CONTENTS The following table shows our portfolio of investments by industry at fair value, as of September 30, 2013 and December 31, 2012:  September 30, 2013

          

          December 31, 2012Investments at Fair Value

          

          Percentage of Fair Value

          

          Investments at Fair Value

          

          Percentage of Fair ValueStructured finance

          

          $

          238.2

          

          

          

          25.3

          %

          

          $

          164.9

          

          

          

          24.7

          %Printing and publishing

          

          

          72.3

          

          

          

          7.7

          %

          

          

          7.8

          

          

          

          1.2

          %Software

          

          

          70.9

          

          

          

          7.5

          %

          

          

          35.9

          

          

          

          5.4

          %Financial intermediaries

          

          

          67.4

          

          

          

          7.2

          %

          

          

          65.2

          

          

          

          9.8

          %Business services

          

          

          55.2

          

          

          

          5.9

          %

          

          

          60.7

          

          

          

          9.1

          %Telecommunication services

          

          

          53.0

          

          

          

          5.6

          %

          

          

          32.8

          

          

          

          4.9

          %Retail

          

          

          46.1

          

          

          

          4.9

          %

          

          

          39.6

          

          

          

          5.9

          %Enterprise software

          

          

          39.0

          

          

          

          4.2

          %

          

          

          50.9

          

          

          

          7.6

          %IT consulting

          

          

          37.9

          

          

          

          4.0

          %

          

          

          22.0

          

          

          

          3.3

          %Web hosting

          

          

          32.7

          

          

          

          3.5

          %

          

          

          36.9

          

          

          

          5.5

          %Chemicals and plastics

          

          

          29.9

          

          

          

          3.2

          %

          

          

          0.0

          

          

          

          0.0

          %Healthcare

          

          

          24.0

          

          

          

          2.6

          %

          

          

          27.7

          

          

          

          4.2

          %Consumer services

          

          

          23.9

          

          

          

          2.5

          %

          

          

          24.1

          

          

          

          3.6

          %Logistics

          

          

          18.8

          

          

          

          2.0

          %

          

          

          9.9

          

          

          

          1.5

          %Education

          

          

          16.5

          

          

          

          1.8

          %

          

          

          14.9

          

          

          

          2.2

          %Auto parts manufacturer

          

          

          12.1

          

          

          

          1.3

          %

          

          

          12.9

          

          

          

          1.9

          %Travel

          

          

          10.5

          

          

          

          1.1

          %

          

          

          0.0

          

          

          

          0.0

          %Radio and television

          

          

          10.3

          

          

          

          1.1

          %

          

          

          0.0

          

          

          

          0.0

          %Utilities

          

          

          10.1

          

          

          

          1.1

          %

          

          

          2.5

          

          

          

          0.4

          %Leisure goods

          

          

          10.0

          

          

          

          1.1

          %

          

          

          0.0

          

          

          

          0.0

          %Computer hardware

          

          

          9.7

          

          

          

          1.0

          %

          

          

          9.9

          

          

          

          1.5

          %Grocery

          

          

          8.7

          

          

          

          0.9

          %

          

          

          3.7

          

          

          

          0.6

          %Insurance

          

          

          7.5

          

          

          

          0.8

          %

          

          

          8.0

          

          

          

          1.2

          %IT outsourcing

          

          

          6.8

          

          

          

          0.7

          %

          

          

          15.0

          

          

          

          2.2

          %Advertising

          

          

          5.2

          

          

          

          0.5

          %

          

          

          2.9

          

          

          

          0.4

          %Packaging and containers

          

          

          5.0

          

          

          

          0.5

          %

          

          

          0.0

          

          

          

          0.0

          %Clothing

          

          

          4.6

          

          

          

          0.5

          %

          

          

          0.0

          

          

          

          0.0

          %Electronics

          

          

          4.1

          

          

          

          0.4

          %

          

          

          4.7

          

          

          

          0.7

          %Medical services

          

          

          4.0

          

          

          

          0.4

          %

          

          

          4.0

          

          

          

          0.6

          %Pharmaceutical

          

          

          3.5

          

          

          

          0.4

          %

          

          

          3.5

          

          

          

          0.5

          %Shipping and transportation

          

          

          3.3

          

          

          

          0.3

          %

          

          

          3.4

          

          

          

          0.5

          %IT value-added reseller

          

          

          0.2

          

          

          

          0.0

          %

          

          

          0.7

          

          

          

          0.1

          %Digital media

          

          

          0.0

          

          

          

          0.0

          %

          

          

          3.0

          

          

          

          0.5

          %Total

          

          $

          941.4

          

          

          

          100.0

          %

          

          $

          667.5

          

          

          

          100.0

          %
 52    TABLE OF CONTENTS PORTFOLIO GRADING We have adopted a credit grading system to monitor the quality of our debt investment portfolio. As of September 30, 2013 and December 31, 2012, our portfolio had a weighted average grade of 2.1 and 2.1, respectively, based upon the fair value of the debt investments in the portfolio. Equity securities are not graded. At September 30, 2013, and December 31, 2012, our debt investment portfolio was graded as follows:  September 30, 2013Grade

          

          Summary Description

          

          Principal Value

          

          Percentage of Total Portfolio

          

          Portfolio at Fair Value

          

          Percentage of Total Portfolio(dollars in millions)

          

          

          

          (dollars in millions)1

          

          

          Company is ahead of expectations and/or out performing financial covenant requirements and such trend is expected to continue.

          

          

          $

          

          

          

          

          0.0

          %

          

          $

          

          

          

          

          0.0

          %2

          

          

          Full repayment of principal and interest is expected

          

          

          

          623.8

          

          

          

          85.1

          %

          

          

          617.0

          

          

          

          85.8

          %3

          

          

          Closer monitoring is required. Full repayment of principal and interest is expected.

          

          

          

          109.6

          

          

          

          14.9

          %

          

          

          101.8

          

          

          

          14.2

          %4

          

          

          A reduction of interest income has occurred or is expected to occur. No loss of principal is expected.

          

          

          

          

          

          

          

          0.0

          %

          

          

          

          

          

          

          0.0

          %5

          

          

          A loss of some portion of principal is expected.

          

          

          

          

          

          

          

          0.0

          %

          

          

          

          

          

          

          0.0

          %$

          733.4

          

          

          

          100.0

          %

          

          $

          718.8

          

          

          

          100.0

          %
  December 31, 2012Grade

          

          Summary Description

          

          Principal Value

          

          Percentage of Total Portfolio

          

          Portfolio at Fair Value

          

          Percentage of Total Portfolio(dollars in millions)

          

          

          

          (dollars in millions)1

          

          

          Company is ahead of expectations and/or out performing financial covenant requirements and such trend is expected to continue.

          

          

          $

          

          

          

          

          0.0

          %

          

          $

          

          

          

          

          0.0

          %2

          

          

          Full repayment of principal and interest is expected

          

          

          

          495.5

          

          

          

          86.7

          %

          

          

          483.3

          

          

          

          87.8

          %3

          

          

          Closer monitoring is required. Full repayment of principal and interest is expected.

          

          

          

          59.7

          

          

          

          10.4

          %

          

          

          59.1

          

          

          

          10.7

          %4

          

          

          A reduction of interest income has occurred or is expected to occur. No loss of principal is expected.

          

          

          

          6.4

          

          

          

          1.1

          %

          

          

          5.5

          

          

          

          1.0

          %5

          

          

          A loss of some portion of principal is expected.

          

          

          

          10.3

          

          

          

          1.8

          %

          

          

          2.8

          

          

          

          0.5

          %$

          571.9

          

          

          

          100.0

          %

          

          $

          550.7

          

          

          

          100.0

          %
 We expect that a portion of our investments will be in the grades 3, 4 or 5 categories from time to time, and, as such, we will be required to work with troubled portfolio companies to improve their business and protect our investment. The number and amount of investments included in grades 3, 4 or 5 may fluctuate from period to period. Further discussion regarding the other investments which experienced significant unrealized depreciation is presented in Results of Operations.
 53    TABLE OF CONTENTS RESULTS OF OPERATIONS Set forth below is a comparison of our results of operations for the three months ended September 30, 2013 to the three months ended September 30, 2012. Investment Income As of September 30, 2013, our debt investments had stated interest rates of between 3.96% and 15.00% and maturity dates of between 2 and 142 months. In addition, our total portfolio had a weighted average yield on debt investments of approximately 8.7%, compared with 10.3% as of September 30, 2012. The reduction in the weighted average yield on our debt portfolio over the past year is primarily a result of the investment restrictions of the securitization vehicles that we have sponsored, which require us to generally invest in higher-rated and/or larger corporate loans which carry correspondingly lower yields, as well as the
refinancing and repricing of many of those loans at lower rates due to current market conditions. Investment income for the three months ended September 30, 2013 was approximately $27.4 million compared to approximately $15.6 million for the three months ended September 30, 2012. This increase was due in part to an increase in the amount of distributions from the equity interests in our CLO vehicle investments and the amount of performing assets in the portfolio. The total principal value of income producing debt investments as of September 30, 2013 and September 30, 2012 was approximately $733.4 million and $474.9 million, respectively. For the quarter ended September 30, 2013, investment income consisted of approximately
$13.0 million in cash interest from portfolio investments, approximately $0.7 million in amortization of original issue and market discount, approximately $12.3 million in distributions from the equity interest in securitized vehicle investments, as well as approximately $0.6 million in PIK interest income. For the quarter ended September 30, 2013, other income of approximately $0.8 million was recorded, including approximately $0.3 million representing fees associated with two of our CLO equity investments, compared to other income of approximately $0.3 million for the quarter ended September 30, 2012. Other income generally includes closing fees, origination fees and amendment fees associated with investments in portfolio companies. Such fees may be paid at closing of our investments or at the time the terms of the underlying loan agreement are revised and are generally fully earned, non-refundable, and non-recurring. Also, the
Company may receive fees in connection with CLO equity investments which may be paid over the life of the underlying CLO vehicle; such fees are recognized as income when earned. Operating Expenses Total expenses for the quarter ended September 30, 2013 were approximately $15.2 million, which includes the capital gains incentive fee accrual of approximately $2.3 million. Expenses before incentive fees, for the quarter ended September 30, 2013, were approximately $11.1 million. This amount consisted of investment advisory fees, interest expense and other debt financing expenses, professional fees, compensation expense, and general and administrative expenses. Expenses before incentive fees increased approximately $5.8 million from the quarter ended September 30, 2012, attributable primarily to higher interest expense associated with the secured notes issued under our debt securitization transactions and convertible notes issued in September 2012 and increased investment advisory fees
(consisting of the base management fee). Expenses before incentive fees for the quarter ended September 30, 2012 were approximately $5.3 million. The investment advisory base fee for the quarter ended September 30, 2013 was approximately $5.1 million; however, the advisor waived approximately $0.2 million of its fee for the quarter ended September 30, 2013. The investment advisory fee in the comparable period in 2012 was approximately $2.8 million. The increase in the base management fee is due to an increase in average gross assets. At each of September 30, 2013 and December 31, 2012, respectively, approximately $6.7 million and $4.9 million of investment advisory fees remained payable to TICC Management, including the net investment income incentive fee discussed
below. Interest expense and other debt financing expenses for the third quarter of 2013 was approximately $5.0 million, which was directly related to our debt securitization financing transactions as well as our convertible note transaction. Interest expense for the third quarter of 2012 was approximately $1.4 million.
 54    TABLE OF CONTENTS TICC CLO LLC In August 2011, secured notes in the amount of $101,250,000 were issued by a newly formed special purpose vehicle in which a wholly-owned subsidiary of TICC owns all of the equity. Under this structure, the notes bear interest, after the effective date, at three-month London Inter Bank Offered Rate (LIBOR) plus 2.25% (prior to the effective date, the Class A Notes bear interest at five-month LIBOR plus 2.25%). For the three months ended September 30, 2013, the total interest expense under the securitization was approximately $768,000, comprised of stated interest expense (approximately $652,000), accreted discount
(approximately $40,000) and amortized deferred debt issuance costs (approximately $76,000). The accrued interest payable on the Class A Notes during the third quarter of 2013 was approximately $481,000. At December 31, 2012, interest expense of approximately $491,000 remained payable. For further information on this securitization, see  Liquidity and Capital Resources-Borrowings. TICC CLO 2012-1 LLC On August 23, 2012, the Company completed a $160 million debt securitization financing transaction, consisting of $120 million in secured notes and $40 million of subordinated notes. On February 25, 2013 and May 28, 2013, TICC CLO 2012-1 issued additional secured notes totaling an aggregate of $120 million and subordinated notes totaling an aggregate of $40 million, which subordinated notes were purchased by the Company, under the accordion feature of the debt securitization which allowed, under certain circumstances and subject to the satisfaction of certain conditions, for an increase in the amount of secured and
subordinated notes. It is not necessary that the Company own all or any of the notes permitted by this feature, which may affect the accounting treatment of the debt securitization financing transaction. As of September 30, 2013, the secured notes of the 2012 Securitization Issuer have an aggregate face amount of $240 million and were issued in four classes. The class A-1 notes have a current face amount of $176 million, are rated AAA(sf)/ Aaa(sf) by Standard & Poors Ratings Services (S&P) and Moodys Investors Service, Inc. (Moodys), respectively, and bear interest at three-month LIBOR plus 1.75%. The class B-1 notes have a current face amount of $20 million, are rated AA(sf)/Aa2(sf) by S&P and Moodys, respectively, and bear interest at three-month LIBOR plus 3.50%. The class C-1 notes have a current face amount of $23 million, are rated A(sf)/A2(sf) by S&P and Moodys, respectively, and bear
interest at three-month LIBOR plus 4.75%. The class D-1 notes have a current face amount of $21 million, are rated BBB(sf)/Baa2(sf) by S&P and Moodys, respectively, and bear interest at three-month LIBOR plus 5.75%. TICC presently owns all of the subordinated notes, which totaled $80 million as of September 30, 2013. For further information on this securitization, see  Liquidity and Capital Resources-Borrowings. For the three months ended September 30, 2013, the aggregate interest expense under the securitization was approximately $1.9 million, comprised of stated interest expense (approximately $1.7 million), accreted discount (approximately $0.1 million) and amortized deferred debt issuance costs (approximately $0.1 million). The aggregate accrued interest payable on the notes of the 2012 Securitization Issuer during the third quarter of 2013 was approximately $671,000. At December 31, 2012, aggregate interest expense of approximately $1.4 million remained payable. 2017 Convertible Notes On September 26, 2012, we issued $105,000,000 aggregate principal amount of the Convertible Notes. An additional $10.0 million aggregate principal amount of the Convertible Notes were issued on October 22, 2012 pursuant to the exercise of the initial purchasers option to purchase additional Convertible Notes. The Convertible Notes mature on November 1, 2017. The Convertible Notes bear interest at a rate of 7.50% per year, payable semi-annually in arrears on May 1 and November 1 of each year, which commenced on May 1, 2013. For the three months ended September 30, 2013, the aggregate interest expense on the Convertible
Notes was approximately $2.3 million, comprised of stated interest expense (approximately $2.1 million) and amortized deferred debt issuance costs (approximately $0.2 million). The accrued interest payable on the Convertible Notes during the third quarter of 2013 was approximately $3.6 million. At December 31, 2012, aggregate interest expense on the Convertible Notes of approximately $2.3 million remained payable. The table below summarizes the components of interest expense for the three months ended September 30, 2013 and 2012:
 55    TABLE OF CONTENTS  Three Months Ended September 30, 2013

          

          Three Months Ended September 30, 2012(dollars in thousands)

          

          Stated Interest Expense

          

          Note Discount Expense

          

          Amortization of Deferred Debt Issuance Costs

          

          Total

          

          Stated Interest Expense

          

          Note Discount Expense

          

          Amortization of Deferred Debt Issuance Costs

          

          TotalTICC CLO LLC Class A Notes

          

          $

          651.6

          

          

          $

          40.0

          

          

          $

          76.2

          

          

          $

          767.8

          

          

          $

          699.9

          

          

          $

          39.9

          

          

          $

          76.3

          

          

          $

          816.1TICC CLO 2012-1 LLC Class A-1 Notes

          

          

          907.9

          

          

          

          49.8

          

          

          

          

          

          

          

          957.7

          

          

          

          235.3

          

          

          

          17.9

          

          

          

          

          

          

          

          253.2TICC CLO 2012-1 LLC Class B-1 Notes

          

          

          192.6

          

          

          

          13.5

          

          

          

          

          

          

          

          206.1

          

          

          

          45.7

          

          

          

          5.1

          

          

          

          

          

          

          

          50.8TICC CLO 2012-1 LLC Class C-1 Notes

          

          

          295.0

          

          

          

          22.3

          

          

          

          

          

          

          

          317.3

          

          

          

          68.1

          

          

          

          9.3

          

          

          

          

          

          

          

          77.4TICC CLO 2012-1 LLC Class D-1 Notes

          

          

          323.0

          

          

          

          24.9

          

          

          

          

          

          

          

          347.9

          

          

          

          52.6

          

          

          

          8.3

          

          

          

          

          

          

          

          60.9TICC CLO 2012-1 amortization of deferred debt

          

          

          

          

          

          

          

          

          

          

          86.7

          

          

          

          86.7

          

          

          

          

          

          

          

          

          

          

          

          25.1

          

          

          

          25.12017 Convertible Notes

          

          

          2,132.3

          

          

          

          

          

          

          

          161.5

          

          

          

          2,293.8

          

          

          

          109.4

          

          

          

          

          

          

          

          6.1

          

          

          

          115.5Total

          

          $

          4,502.4

          

          

          $

          150.5

          

          

          $

          324.4

          

          

          $

          4,977.3

          

          

          $

          1,211.0

          

          

          $

          80.5

          

          

          $

          107.5

          

          

          $

          1,399.0
 Professional fees, consisting of legal, valuation, audit and tax fees, were approximately $387,000 for the quarter ended September 30, 2013, compared to approximately $421,000 for the quarter ended September 30, 2012. This decrease was the result of audit fees which were lower by approximately $70,000, partially offset by legal and valuation fees which were each higher by approximately $14,000. Compensation expenses were approximately $310,000 for the quarter ended September 30, 2013 compared to approximately $289,000 for the quarter ended September 30, 2012 reflecting the allocation of compensation expenses for the services of our chief financial officer, chief compliance officer, controller and senior accountants, and other administrative support personnel. At September 30, 2013 and December 31, 2012, respectively, approximately $498,000 and $0 of compensation expenses remained payable. General and administrative expenses, consisting primarily of directors fees, insurance, listing fees, transfer agent and custodian fees, office supplies, facilities costs and other expenses, were approximately $540,000 for the three months ended September 30, 2013 compared to approximately $424,000 for the same period in 2012. Office supplies, facilities costs and other expenses are allocated to us under the terms of the Administration Agreement. Incentive Fees The net investment income incentive fee for the third quarter of 2013 was approximately $1.8 million compared to $1.0 million in the third quarter of 2012. The net investment income incentive fee is calculated and payable quarterly in arrears based on our Pre-Incentive Fee Net Investment Income for the immediately preceding calendar quarter subject to a hurdle rate which is determined as of December 31 of the preceding year. For this purpose, Pre-Incentive Fee Net Investment Income means interest income, dividend income and any other income accrued during the calendar quarter minus our operating
expenses for the quarter (including the base fee, expenses payable under the Administration Agreement with BDC Partners, and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). The capital gains incentive fee expense for the quarter ended September 30, 2013 was approximately $2.3 million. The capital gains incentive fee expense, as reported under generally accepted accounting principles, is calculated on the basis of net realized and unrealized gains and losses at the end of each period. The expense related to the hypothetical liquidation of the portfolio (and assuming no other changes in realized or unrealized gains and losses) would only have become payable to our investment adviser in the event of a complete liquidation of our portfolio as of period end and the termination of the Investment
Advisory Agreement on such date. The $4.7 million capital gains incentive fee accrual as of September 30, 2013 relates entirely to this hypothetical liquidation calculation. For the quarter ended September 30, 2012, a capital gains incentive fee of approximately $4.6 million was recorded under the hypothetical liquidation calculation.
 56    TABLE OF CONTENTS The amount of the capital gains incentive fee which will actually be payable is determined in accordance with the terms of the Investment Advisory Agreement and is calculated as of the end of each calendar year (or upon termination of the Investment Advisory Agreement). The terms of the Investment Advisory Agreement state that the capital gains incentive fee calculation is based on net realized gains, if any, offset by gross unrealized depreciation for the calendar year. No effect is given to gross unrealized appreciation in this calculation. For the year ended December 31, 2012, the amount calculated, and payable, under the
terms of the Investment Advisory Agreement was approximately $1,553,000. Realized and Unrealized Gains/Losses on Investments For the quarter ended September 30, 2013, we recorded net realized losses on investments of approximately $1.3 million, which primarily represents the loss on the write-off of our debt and equity investments in Genutec Business Solutions of approximately $4.7 million. This loss was partially offset by the net realized gains from the sale of several of our CLO debt and equity investments which totaled approximately $3.5 million.
 57    TABLE OF CONTENTS Based upon the fair value determinations made in good faith by the Board of Directors, during the quarter ended September 30, 2013, we had net unrealized appreciation of approximately $12.7 million, comprised of $22.3 million in gross unrealized appreciation, $8.2 million in gross unrealized depreciation and approximately $1.4 million relating to the reversal of prior period net unrealized appreciation as investments were realized. The most significant changes in net unrealized appreciation and depreciation during the quarter ended September 30, 2013 were as follows (in millions):  Portfolio Company

          

          Changes in unrealized appreciation (depreciation)RBS Holding Company

          

          $

          7.9Genutec Business Solutions

          

          

          4.7Other equity related investments

          

          

          4.0ARES 2013-26 Sub

          

          

          1.5Unitek Global Services, Inc

          

          

          1.1Marea 2012-1A CLO

          

          

          0.9Integra Telecom Holdings, Inc

          

          

          0.7Benefit Street Partners CLO II Ltd.

          

          

          0.7AMMC 2013-12 Sub

          

          

          0.6Jersey Street 2006-1A CLO LTD

          

          

          (0.7

          )Muir Grove CLO LTD 2007 1X E

          

          

          (0.7

          )Stone Tower CLO LTD 2007 7X

          

          

          (0.8

          )Harbourview CLO VI LTD 6 6X D

          

          

          (0.8

          )ACA CLO 2007-1a sub

          

          

          (1.0

          )Sargas CLO 2006 -1A

          

          

          (1.0

          )ACA CLO 2006-2, Limited

          

          

          (1.4

          )Hewetts Island CDO IV 2006-4 E

          

          

          (1.6

          )GSC Partners 2007-8X CDO

          

          

          (1.9

          )Net all other

          

          

          0.5Total

          

          $

          12.7
 For the quarter ended September 30, 2012, we recorded net realized gains on investments of approximately $1.8 million.
 58    TABLE OF CONTENTS Based upon the fair value determinations made in good faith by the Board of Directors, during the quarter ended September 30, 2012, we had net unrealized appreciation of approximately $21.5 million, comprised of $25.4 million in gross unrealized appreciation, $2.4 million in gross unrealized depreciation and approximately $1.5 million relating to the reversal of prior period net unrealized appreciation as an investment was realized. The most significant changes in net unrealized appreciation and depreciation during the quarter ended September 30, 2012 were as follows (in millions):  Portfolio Company

          

          Changes in Unrealized appreciation (depreciation)Jersey Street 2006-1A CLO LTD.

          

          $

          1.5Canaras CLO Equity  2007-1A, 1X

          

          

          1.4Emporia CLO 2007 3A E

          

          

          1.2Stone Tower CLO LTD 2007 7X

          

          

          1.1ACA CLO 2007-1a sub

          

          

          1.1Muir Grove CLO LTD 2007 1X E

          

          

          1.0GSC Partners 2007-8X Sub CDO

          

          

          0.9Rampart 2007-1A CLO Equity

          

          

          0.7OCT11 2007-1A CLO

          

          

          0.7ACA CLO 2006-2, Limited

          

          

          0.7Merrill Communications, LLC

          

          

          0.6Fusionstorm, Inc. 2

          

          

          0.6Prospero CLO II BV

          

          

          0.6Band Digital Inc.

          

          

          (0.7

          )American Integration Technologies, LLC

          

          

          (1.4

          )Net all other

          

          

          11.5Total

          

          $

          21.5
 Please see  Portfolio Grading for more information. Net Increase in Net Assets Resulting from Net Investment Income Net investment income for the quarter ended September 30, 2013 and 2012 was approximately $12.2 million and $4.6 million, respectively. This increase was due to an increase in the amount of performing assets in the portfolio and distributions from the CLO equity investments in our portfolio as well as lower capital gains incentive fees. These were partially offset by increased interest expense as well as a higher base management fee. Excluding the impact of the capital gains incentive fee of approximately $2.3 million, core net investment income for the quarter ended September 30, 2013 was approximately $14.5 million compared to approximately $9.3 million for the same period in 2012. Based on weighted-average shares outstanding of 52,751,722 (basic) and 62,784,874 (diluted), the net increase in net assets resulting from net investment income per common share for the quarter ended September 30, 2013 was approximately $0.23 (basic) and $0.22 (diluted), compared to approximately $0.12 per share (basic and diluted) for the same period in 2012. Excluding the impact of the capital gains incentive fee accrual reduction, the net increase in net assets resulting from core net investment income per common share for the quarter ended September 30, 2013 would have been $0.28 (basic) and $0.26 (diluted), compared to $0.24 per share (basic) and $0.23 per share (diluted), for the same period in 2012. Please see  Supplemental Information Regarding Core Net Investment Income and Core Net Increase in Net Assets Resulting from Operations below for more information.
 59    TABLE OF CONTENTS Net Increase in Net Assets Resulting from Operations We had a net increase in net assets resulting from operations of approximately $23.6 million for the quarter ended September 30, 2013, compared to a net increase of approximately $27.9 million for the comparable period in 2012. This decrease was attributable to greater interest expense, increased management fees as well as greater unrealized depreciation and realized losses. This decrease was partially offset by an increase in the amount of performing assets in the portfolio and distributions from the CLO equity investments in our portfolio and lower capital gains incentive fees. Based on weighted-average shares outstanding of 52,751,722 (basic) and 62,784,874 (diluted), the net increase in net assets resulting from operations per common share for the quarter ended September 30, 2013 was approximately $0.45 (basic) and approximately $0.41 (diluted), compared to a net increase in net assets resulting from operations per share of approximately $0.71 (basic) and $0.70 (diluted) for the same period in 2012. Excluding the impact of the capital gains incentive fee accrual reduction, we would have had a core net increase in net assets resulting from operations per common share of $0.49 (basic) and a core net increase in net assets resulting from operations per common share of $0.44 (diluted), compared to $0.83 per share (basic) and $0.82 per share (diluted) for the same period in 2012. Please see  Supplemental Information Regarding Core Net Investment Income and Core Net Increase in Net Assets Resulting from Operations below for more information. Set forth below is a comparison of our results of operations for the nine months ended September 30, 2013 to the nine months ended September 30, 2012. Investment Income As of September 30, 2013, our debt investments had stated interest rates of between 3.96% and 15.00% and maturity dates of between 2 and 142 months. In addition, our total portfolio had a weighted average yield on debt investments of approximately 8.7%, compared with 10.3% as of September 30, 2012. The reduction in the weighted average yield on our debt portfolio over the past year is primarily a result of the investment restrictions of the securitization vehicles that we have sponsored, which require us to generally invest in higher-rated and/or larger corporate loans which carry correspondingly lower yields, as well as the
refinancing and repricing of many of those loans at lower rates due to current market conditions. Investment income for the nine months ended September 30, 2013 was approximately $74.6 million compared to approximately $50.8 million for the nine months ended September 30, 2012. This increase was due in part to an increase in the amount of distributions from the equity interests in our CLO vehicle investments and the amount of performing assets in the portfolio. The total principal value of income producing debt investments as of September 30, 2013 and September 30, 2012 was approximately $733.4 million and $474.9 million, respectively. For the nine months ended September 30, 2013, investment income consisted of
approximately $34.5 million in cash interest from portfolio investments, approximately $2.9 million in amortization of original issue and market discount, approximately $0.2 million of discount income derived from unscheduled principal cash remittances at par on discounted debt securities, approximately $31.7 million in distributions from the equity interest in securitized vehicle, as well as approximately $1.8 million in PIK interest income. For the nine months ended September 30, 2013, other income of approximately $3.5 million was recorded, compared to other income of approximately $4.5 million for the nine months ended September 30, 2012. Other income generally includes closing fees, origination fees and amendment fees associated with investments in portfolio companies. Such fees may be paid at closing of our investments or at the time the terms of the underlying loan agreement are revised and are generally fully earned, non-refundable, and non-recurring. Also, the Company may receive fees in connection with CLO equity investments which may be paid over the
life of the underlying CLO vehicle; such fees are recognized as income when earned.
 60    TABLE OF CONTENTS Operating Expenses Total expenses for the nine months ended September 30, 2013 were approximately $35.8 million, which includes the reduction of the accrued capital gains incentive fee of approximately $0.4 million. Expenses before incentive fees, for the nine months ended September 30, 2013, were approximately $31.7 million. This amount consisted of investment advisory fees, interest expense and other debt financing expenses, professional fees, compensation expense, and general and administrative expenses. Expenses before incentive fees increased approximately $17.7 million from the nine months ended September 30, 2012, attributable primarily to higher interest expense associated with the secured notes issued under our debt securitization transactions and convertible notes issued in September 2012 and increased investment advisory fees
(consisting of the base management fee). Expenses before incentive fees for the nine months ended September 30, 2012 were approximately $14.1 million. The investment advisory base fee for the nine months ended September 30, 2013 was approximately $14.1 million; however the advisor waived approximately $0.2 million of its fee for the quarter ended September 30, 2013. The investment advisory fee in the comparable period in 2012 was approximately $7.4 million. The increase in the base management fee is due to an increase in average gross assets. At each of September 30, 2013 and December 31, 2012, respectively, approximately $6.7 million and $4.9 million of investment advisory fees remained payable to TICC Management, including the net investment income incentive fee discussed
below. Interest expense and other debt financing expenses for the nine months ended September 30, 2013 was approximately $14.0 million, which was directly related to our debt securitization financing transactions as well as our convertible note transaction. Interest expense for the nine months ended September 30, 2012 was approximately $3.1 million. TICC CLO LLC In August 2011, secured notes in the amount of $101,250,000 were issued by a newly formed special purpose vehicle in which a wholly-owned subsidiary of TICC owns all of the equity. Under this structure, the notes bear interest, after the effective date, at three-month London Inter Bank Offered Rate (LIBOR) plus 2.25% (prior to the effective date, the Class A Notes bear interest at five-month LIBOR plus 2.25%). For the nine months ended September 30, 2013, the total interest expense under the securitization was approximately $2.3 million, comprised of stated interest expense (approximately $1.9 million), accreted
discount (approximately $119,000) and amortized deferred debt issuance costs (approximately $226,000). The accrued interest payable on the Class A Notes during the third quarter of 2013 was approximately $481,000. At December 31, 2012, interest expense of approximately $491,000 remained payable. For further information on this securitization, see  Liquidity and Capital Resources-Borrowings. TICC CLO 2012-1 LLC On August 23, 2012, the Company completed a $160 million debt securitization financing transaction, consisting of $120 million in secured notes and $40 million of subordinated notes. On February 25, 2013 and May 28, 2013, TICC CLO 2012-1 issued additional secured notes totaling an aggregate of $120 million and subordinated notes totaling an aggregate of $40 million, which subordinated notes were purchased by the Company, under the accordion feature of the debt securitization which allowed, under certain circumstances and subject to the satisfaction of certain conditions, for an increase in the amount of secured and
subordinated notes. It is not necessary that the Company own all or any of the notes permitted by this feature, which may affect the accounting treatment of the debt securitization financing transaction. As of September 30, 2013, the secured notes of the 2012 Securitization Issuer have an aggregate face amount of $240 million and were issued in four classes. The class A-1 notes have a current face amount of $176 million, are rated AAA(sf)/ Aaa(sf) by Standard & Poors Ratings Services (S&P) and Moodys Investors Service, Inc. (Moodys), respectively, and bear interest at three-month LIBOR plus 1.75%. The class B-1 notes have a current face amount of $20 million, are rated AA(sf)/Aa2(sf) by S&P and Moodys, respectively, and bear interest at three-month LIBOR plus 3.50%. The class C-1 notes have a current face amount of $23 million, are rated A(sf)/A2(sf) by S&P and Moodys, respectively, and bear
interest at three-month LIBOR plus 4.75%. The class D-1 notes have a current face amount of $21 million, are rated BBB(sf)/Baa2(sf) by S&P and Moodys,
 61    TABLE OF CONTENTS respectively, and bear interest at three-month LIBOR plus 5.75%. TICC presently owns all of the subordinated notes, which totaled $80 million as of September 30, 2013. For further information on this securitization, see  Liquidity and Capital Resources-Borrowings. For the nine months ended September 30, 2013, the aggregate interest expense under the securitization was approximately $4.8 million, comprised of stated interest expense (approximately $4.2 million), accreted discount (approximately $229,000) and amortized deferred debt issuance costs (approximately $327,000). The aggregate accrued interest payable on the notes of the 2012 Securitization Issuer during the third quarter of 2013 was approximately $671,000. At December 31, 2012, aggregate interest expense of approximately $1.4 million remained payable. 2017 Convertible Notes On September 26, 2012, we issued $105,000,000 aggregate principal amount of the Convertible Notes. An additional $10.0 million aggregate principal amount of the Convertible Notes were issued on October 22, 2012 pursuant to the exercise of the initial purchasers option to purchase additional Convertible Notes. The Convertible Notes mature on November 1, 2017. The Convertible Notes bear interest at a rate of 7.50% per year, payable semi-annually in arrears on May 1 and November 1 of each year, which commenced on May 1, 2013. For the nine months ended September 30, 2013, the aggregate interest expense on the Convertible
Notes was approximately $6.9 million, comprised of stated interest expense (approximately $6.4 million) and amortized deferred debt issuance costs (approximately $0.5 million). The accrued interest payable on the Convertible Notes during the third quarter of 2013 was approximately $3.6 million. At December 31, 2012, aggregate interest expense on the Convertible Notes of approximately $2.3 million remained payable. The table below summarizes the components of interest expense for the nine months ended September 30, 2013 and 2012:  Nine Months Ended September 30, 2013

          

          Nine Months Ended September 30, 2012(dollars in thousands)

          

          Stated Interest Expense

          

          Note Discount Expense

          

          Amortization of Deferred Debt Issuance Costs

          

          Total

          

          Stated Interest Expense

          

          Note Discount Expense

          

          Amortization of Deferred Debt Issuance Costs

          

          TotalTICC CLO LLC Class A Notes

          

          $

          1,946.4

          

          

          $

          118.6

          

          

          $

          226.3

          

          

          $

          2,291.3

          

          

          $

          2,110.2

          

          

          $

          131.9

          

          

          $

          227.1

          

          

          $

          2,469.2TICC CLO 2012-1 LLC Class A-1 Notes

          

          

          2,263.5

          

          

          

          143.9

          

          

          

          

          

          

          

          2,407.4

          

          

          

          235.3

          

          

          

          17.9

          

          

          

          

          

          

          

          253.2TICC CLO 2012-1 LLC Class B-1 Notes

          

          

          473.5

          

          

          

          39.4

          

          

          

          

          

          

          

          512.9

          

          

          

          45.7

          

          

          

          5.1

          

          

          

          

          

          

          

          50.8TICC CLO 2012-1 LLC Class C-1 Notes

          

          

          722.3

          

          

          

          67.7

          

          

          

          

          

          

          

          790.0

          

          

          

          68.1

          

          

          

          9.3

          

          

          

          

          

          

          

          77.4TICC CLO 2012-1 LLC Class D-1 Notes

          

          

          789.2

          

          

          

          75.5

          

          

          

          

          

          

          

          864.7

          

          

          

          52.6

          

          

          

          8.3

          

          

          

          

          

          

          

          60.9TICC CLO 2012-1 amortization of deferred debt

          

          

          

          

          

          

          

          

          

          

          228.6

          

          

          

          228.6

          

          

          

          

          

          

          

          

          

          

          

          25.1

          

          

          

          25.12017 Convertible Notes

          

          

          6,420.8

          

          

          

          

          

          

          

          464.9

          

          

          

          6,885.7

          

          

          

          109.4

          

          

          

          

          

          

          

          6.1

          

          

          

          115.5Total

          

          $

          12,615.7

          

          

          $

          445.1

          

          

          $

          919.8

          

          

          $

          13,980.6

          

          

          $

          2,621.3

          

          

          $

          172.5

          

          

          $

          258.3

          

          

          $

          3,052.1
 Professional fees, consisting of legal, valuation, audit and tax fees, were approximately $1.5 million for the nine months ended September 30, 2013, compared to approximately $1.6 million for the nine months ended September 30, 2012. This decrease was the result of legal fees which were lower by approximately $400,000, partially offset by audit fees which were higher by approximately $238,000. Compensation expenses were approximately $925,000 for the nine months ended September 30, 2013 compared to approximately $839,000 for the nine months ended September 30, 2012 reflecting the allocation of compensation expenses for the services of our chief financial officer, chief compliance officer, controller and senior accountants, and other administrative support personnel. At September 30, 2013 and December 31, 2012, respectively, approximately $498,000 and $0 of compensation expenses remained payable.
 62    TABLE OF CONTENTS General and administrative expenses, consisting primarily of directors fees, insurance, listing fees, transfer agent and custodian fees, office supplies, facilities costs and other expenses, were approximately $1.5 million for the nine months ended September 30, 2013 compared to approximately $1.2 million for the same period in 2012. Office supplies, facilities costs and other expenses are allocated to us under the terms of the Administration Agreement. Incentive Fees The net investment income incentive fee for the nine months ended September 2013 was approximately $4.4 million compared to approximately $4.4 million for the nine months ended September 30, 2012. The net investment income incentive fee is calculated and payable quarterly in arrears based on our Pre-Incentive Fee Net Investment Income for the immediately preceding calendar quarter subject to a hurdle rate which is determined as of December 31 of the preceding year. For this purpose, Pre-Incentive Fee Net Investment Income means interest income, dividend income and any other income accrued during the
calendar quarter minus our operating expenses for the quarter (including the base fee, expenses payable under the Administration Agreement with BDC Partners, and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). The capital gains incentive fee expense for the nine months ended September 30, 2013 resulted in an accrual reversal of approximately $0.4 million. The capital gains incentive fee expense, as reported under generally accepted accounting principles, is calculated on the basis of net realized and unrealized gains and losses at the end of each period. The expense related to the hypothetical liquidation of the portfolio (and assuming no other changes in realized or unrealized gains and losses) would only become payable to our investment adviser in the event of a complete liquidation of our portfolio as of period end and the
termination of the Investment Advisory Agreement on such date. The $4.7 million capital gains incentive fee accrual as of September 30, 2013 relates entirely to this hypothetical liquidation calculation. For the nine months ended September 30, 2012, an expense of approximately $4.6 million was recorded under the hypothetical liquidation calculation. The amount of the capital gains incentive fee which will actually be payable is determined in accordance with the terms of the Investment Advisory Agreement and is calculated as of the end of each calendar year (or upon termination of the Investment Advisory Agreement). The terms of the Investment Advisory Agreement state that the capital gains incentive fee calculation is based on net realized gains, if any, offset by gross unrealized depreciation for the calendar year. No effect is given to gross unrealized appreciation in this calculation. For the year ended December 31, 2012, the amount calculated, and payable, under the
terms of the Investment Advisory Agreement was approximately $1,553,000. Realized and Unrealized Gains/Losses on Investments For the nine months ended September 30, 2013, we recorded net realized gains on investments of approximately $7.1 million, which primarily represents the gain on the sale of several of our CLO debt and equity investments which totaled approximately $10.4 million and was partially offset by the loss associated with the write-off of our investment in Genutec Business Solutions of approximately $4.7 million.
 63    TABLE OF CONTENTS Based upon the fair value determinations made in good faith by the Board of Directors, during the nine months ended September 30, 2013, we had net unrealized depreciation of approximately $0.1 million, comprised of $34.0 million in gross unrealized appreciation, $24.6 million in gross unrealized depreciation and approximately $9.5 million relating to the reversal of prior period net unrealized appreciation as investments were realized. The most significant changes in net unrealized appreciation and depreciation during the nine months ended September 30, 2013 were as follows (in millions):  Portfolio Company

          

          Changes in unrealized appreciation (depreciation)Merrill Communications, LLC

          

          $

          9.4RBS Holding Company

          

          

          8.1Genutec Business Solutions

          

          

          4.7Other equity related investments

          

          

          4.0ARES 2013-26 Sub

          

          

          1.5Band Digital, Inc.

          

          

          1.3Integra Telecom Holdings, Inc.

          

          

          1.3Carlyle 2013-2 Sub

          

          

          1.0Halcyon Loan Advisors Funding

          

          

          0.8Benefit Street Partners CLO II Ltd.

          

          

          0.7AMMC 2013-12 Sub

          

          

          0.6Flagship 2005-4A D

          

          

          (0.6

          )Harbourview CLO VI LTD 6 6X D

          

          

          (0.6

          )Nextag, Inc.

          

          

          (0.7

          )Lightpoint CLO VII LTD 2007-8

          

          

          (0.7

          )CIFC CLO  2006-1A B2L

          

          

          (0.8

          )Muir Grove CLO LTD 2007 1X E

          

          

          (0.9

          )Landmark V CDO LTD.

          

          

          (0.9

          )Gale 2007-4A CLO

          

          

          (0.9

          )Lightpoint CLO VII LTD 2007-7

          

          

          (1.0

          )Hewetts Island CDO IV 2006-4 E

          

          

          (1.1

          )Jersey Street 2006-1A CLO LTD.

          

          

          (1.6

          )Canaras CLO Equity  2007-1A, 1X Sub

          

          

          (1.7

          )Lightpoint CLO 2007-8A

          

          

          (1.7

          )ACA CLO 2007-1a sub

          

          

          (2.0

          )Hewetts Island CDO III 2005-1A D

          

          

          (2.2

          )GSC Partners 2007-8X CDO

          

          

          (2.2

          )ACA CLO 2006-2, Limited

          

          

          (2.2

          )Catamaran CLO LTD 2012-1A

          

          

          (2.7

          )Sargas CLO 2006 -1A

          

          

          (3.0

          )Pegasus Solutions, Inc.

          

          

          (3.3

          )Stone Tower CLO LTD 2007 7X

          

          

          (4.0

          )Net all other

          

          

          1.3Total

          

          $

          (0.1

          )
 For the nine months ended September 30, 2012, we recorded net realized gains on investments of approximately $3.6 million. Based upon the fair value determinations made in good faith by the Board of Directors, during the nine months ended September 30, 2012, we had net unrealized appreciation of approximately $22.8 million, comprised of $44.1 million in gross unrealized appreciation, $19.2 million in gross unrealized depreciation and approximately $2.1 million relating to the reversal of prior period net unrealized appreciation as an
 64    TABLE OF CONTENTS investment was realized. The most significant changes in net unrealized appreciation and depreciation during the nine months ended September 30, 2012 were as follows (in millions):  Portfolio Company

          

          Changes in Unrealized appreciation (depreciation)Jersey Street 2006-1A CLO LTD.

          

          $

          1.7Canaras CLO Equity  2007-1A, 1X

          

          

          1.6Harbourview  2006A CLO Equity

          

          

          1.5GSC Partners 2007-8X Sub CDO

          

          

          1.4Emporia CLO 2007 3A E

          

          

          1.4Prospero CLO II BV

          

          

          1.3Integra Telecom Holdings, Inc.

          

          

          1.2Hewetts Island CDO IV 2006-4 E

          

          

          1.2Muir Grove CLO LTD 2007 1X E

          

          

          1.0Algorithmic Implementations, Inc.

          

          

          1.0SourceHOV, LLC

          

          

          1.0Power Tools, Inc.

          

          

          0.9GALE 2007-4A CLO

          

          

          0.8Stone Tower CLO LTD 2007 7X

          

          

          0.8Rampart 2007-1A CLO Equity

          

          

          0.8Lightpoint CLO 2007-8A

          

          

          0.8ACA CLO 2007-1a sub

          

          

          0.8Harch 2005-2A BB CLO

          

          

          0.8ACA CLO 2006-2, Limited

          

          

          0.8RBS Holding Company

          

          

          (0.9

          )Stratus Technologies, Inc.

          

          

          (1.0

          )American Integration Technologies, LLC

          

          

          (1.5

          )Merrill Communications, LLC

          

          

          (1.5

          )GenuTec Business Solutions, Inc.

          

          

          (2.0

          )Pegasus Solutions, Inc.

          

          

          (2.5

          )Net all other

          

          

          11.4Total

          

          $

          22.8
 Please see  Portfolio Grading for more information. Net Increase in Net Assets Resulting from Net Investment Income Net investment income for the nine months ended September 30, 2013 and 2012 was $38.8 million and $27.8 million, respectively. This increase was due to an increase in the amount of performing assets in the portfolio and distributions from the CLO equity investments in our portfolio as well as lower capital gains incentive fees. These were partially offset by increased interest expense as well as higher base management fees. Excluding the impact of the capital gains incentive fee accrual reduction of approximately $0.4 million, core net investment income for the nine months ended September 30, 2013 was approximately $38.4 million compared to approximately $32.4 million for the same period in 2012. Based on weighted-average shares outstanding of 50,314,364 (basic) and 60,347,516 (diluted), the net increase in net assets resulting from net investment income per common share for the nine months ended September 30, 2013 was approximately $0.77 (basic) and $0.74 (diluted), compared to approximately $0.75 per share (basic and diluted) for the same period in 2012.
 65    TABLE OF CONTENTS Excluding the impact of the accrued capital gains incentive fee, the net increase in net assets resulting from core net investment income per common share would have been approximately $0.76 (basic) and $0.73 (diluted), compared to $0.88 per share (basic) and $0.87 (diluted), for the same period in 2012. Please see  Supplemental Information Regarding Core Net Investment Income and Core Net Increase in Net Assets Resulting from Operations below for more information. Net Increase in Net Assets Resulting from Operations We had a net increase in net assets resulting from operations of approximately $45.9 million for the nine months ended September 30, 2013, compared to a net increase of approximately $54.2 million for the comparable period in 2012. This decrease was attributable to greater interest expense, increased management fees as well as greater unrealized depreciation, partially offset by an increase in the amount of performing assets in the portfolio and distributions from the CLO equity investments in our portfolio, greater net realized capital gains and lower capital gains incentive fees. Based on weighted-average shares outstanding of 50,314,364 (basic) and 60,347,516 (diluted), the net increase in net assets resulting from operations per common share for the nine months ended September 30, 2013 was approximately $0.91 (basic) and approximately $0.85 (diluted), compared to a net increase in net assets resulting from operations of approximately $1.47 per share (basic and diluted) for the same period in 2012. Excluding the impact of the accrued capital gains incentive fee, the core net increase in net assets resulting from operations per common share would have been approximately $0.90 (basic) and $0.85 (diluted), compared to $1.59 per share (basic and diluted) for the same period in 2012. Please see  Supplemental Information Regarding Core Net Investment Income and Core Net Increase in Net Assets Resulting from Operations below for more information. On a supplemental basis, we provide information relating to core net investment income, its ratio to net assets, and core net increase in net assets resulting from operations, which are non-GAAP measures. These measures are provided in addition to, but not as a substitute for, net investment income and net increase in net assets resulting from operations. The Companys non-GAAP measures may differ from similar measures by other companies, even if similar terms are used to identify such measures. Core net investment income represents net investment income excluding our capital gains incentive fee. Core net increase in net
assets resulting from operations represents net increase in net assets resulting from operations excluding the capital gains incentive fee. As the capital gains incentive fee is based on a hypothetical event that did not occur, we believe that core net investment income and core net increase in net assets resulting from operations are useful indicators of performance during this period. Further, as the capital gains incentive fee is not a currently tax deductible expense and as the RIC requirements are to distribute taxable earnings, the core net investment income provides an indication of taxable income for the year to date.
 66    TABLE OF CONTENTS The following tables provide a reconciliation of net investment income to core net investment income (for the three and nine months ended September 30, 2013 and 2012, respectively):  Three Months Ended September 30, 2013

          

          Nine Months Ended September 30, 2013Amount

          

          Per Share Amounts

          

          Amount

          

          Per Share AmountsNet investment income

          

          $

          12,238,709

          

          

          $

          0.232

          

          

          $

          38,845,830

          

          

          $

          0.772Capital gains incentive fee

          

          

          2,270,014

          

          

          

          0.043

          

          

          

          (414,404

          )

          

          

          (0.008

          )Core net investment income

          

          $

          14,508,723

          

          

          $

          0.275

          

          

          $

          38,431,426

          

          

          $

          0.764
  Three Months Ended September 30, 2012

          

          Nine Months Ended September 30, 2012Amount

          

          Per Share Amounts

          

          Amount

          

          Per Share AmountsNet investment income

          

          $

          4,607,574

          

          

          $

          0.117

          

          

          $

          27,799,570

          

          

          $

          0.754Capital gains incentive fee

          

          

          4,649,814

          

          

          

          0.118

          

          

          

          4,559,957

          

          

          

          0.124Core net investment income

          

          $

          9,257,388

          

          

          $

          0.235

          

          

          $

          32,359,527

          

          

          $

          0.878
 The following tables provide a reconciliation of net increase in net assets resulting from operations to core net increase in net assets resulting from operations (for the three and nine months ended September 30, 2013 and 2012, respectively):  Three Months Ended September 30, 2013

          

          Nine Months Ended September 30, 2013Amount

          

          Per Share Amounts

          

          Amount

          

          Per Share AmountsNet increase in net assets resulting from operations

          

          $

          23,588,777

          

          

          $

          0.447

          

          

          $

          45,887,819

          

          

          $

          0.912Capital gains incentive fee

          

          

          2,270,014

          

          

          

          0.043

          

          

          

          (414,404

          )

          

          

          (0.008

          )Core net (decrease) increase in net assets resulting from operations

          

          $

          25,858,791

          

          

          $

          0.490

          

          

          $

          45,473,415

          

          

          $

          0.904
  Three Months Ended September 30, 2012

          

          Nine Months Ended September 30, 2012Amount

          

          Per Share Amounts

          

          Amount

          

          Per Share AmountsNet increase in net assets resulting from operations

          

          $

          27,856,644

          

          

          $

          0.707

          

          

          $

          54,199,886

          

          

          $

          1.470Capital gains incentive fee

          

          

          4,649,814

          

          

          

          0.118

          

          

          

          4,559,957

          

          

          

          0.124Core net increase in net assets resulting from operations

          

          $

          32,506,458

          

          

          $

          0.825

          

          

          $

          58,759,843

          

          

          $

          1.594
 In addition, the following ratio is presented to supplement the financial highlights included in Note 10 to the financial statements:  2013

          

          2012Three Months Ended September 30, 2013

          

          Nine Months Ended September 30, 2013

          

          Three Months Ended September 30, 2012

          

          Nine Months Ended September 30, 2012Ratio of core net investment income to average net assets, for the three and nine month periods ended September 30, 2013 and 2012, respectively

          

          

          11.15

          %

          

          

          10.26

          %

          

          

          9.88

          %

          

          

          12.35

          %
 67    TABLE OF CONTENTS The following table provides a reconciliation of the ratio of net investment income to average net assets to the ratio of core net investment income to average net assets, for the three and nine month periods ended September 30, 2013 and 2012, respectively.  2013

          

          2012Three Months Ended September 30, 2013

          

          Nine Months Ended September 30, 2013

          

          Three Months Ended September 30, 2012

          

          Nine Months Ended September 30, 2012Ratio of net investment income to average net assets

          

          

          9.40

          %

          

          

          10.37

          %

          

          

          4.92

          %

          

          

          10.61

          %Ratio of capital gain incentive fee to average net assets

          

          

          1.75

          %

          

          

          (0.11

          )%

          

          

          4.96

          %

          

          

          1.74

          %Ratio of core net investment income to average net assets

          

          

          11.15

          %

          

          

          10.26

          %

          

          

          9.88

          %

          

          

          12.35

          %
 68    TABLE OF CONTENTS LIQUIDITY AND CAPITAL RESOURCES During the nine months ended September 30, 2013, we issued approximately 11.7 million shares in two equity offerings and in connection with an at-the-market share issuance plan. During the nine months ended September 30, 2013, cash and cash equivalents decreased from approximately $51.4 million at the beginning of the period to approximately $29.0 million at the end of the period. Net cash used by operating activities for the period, consisting primarily of the items described in  Results of Operations, was approximately $206.3 million, largely reflecting purchases of new investments of approximately $466.6 million partially offset by proceeds from principal repayments and sales of investments of approximately $226.9 million. Net cash used by investing activities reflects the
change in restricted cash in the debt securitization entity. During the period, net cash provided by financing activities was approximately $191.2 million, reflecting primarily the net proceeds of approximately $118.7 million from the February 11, 2013 and May 28, 2013 sale of an aggregate $120.0 million of incremental secured debt in connection with the collateralized loan obligation transaction that originally closed on August 23, 2012, and $116.0 million resulting from two equity offerings and participation in an at-the-market share issuance plan, partially offset by the distribution of dividends and deferred debt issuance costs. Equity Follow-On Offerings On February 11, 2013, we completed a public offering of 6,325,000 shares of our common stock at a public offering price of $10.36 per share for total gross proceeds of approximately $65.5 million. On March 22, 2013, we completed a public offering of 3,450,000 shares of our common stock at a public offering price of $10.20 per share for total gross proceeds of approximately $35.2 million. At-the-Market Share Issuance Plan During the first and third quarters of 2013, we sold 1,312,828 and 604,345 shares, respectively, of our common stock pursuant to an at-the-market share issuance plan. Barclays Capital Inc. acted as the sales agent. The total amount of capital raised under these issuances was approximately $13.7 million and $6.0 million, respectively, and net proceeds were approximately $13.5 million and $5.9 million, respectively, after deducting sales agents commissions. We have used, and will continue to use, the net proceeds from these offerings for investing in debt or equity securities, and other general corporate
purposes. Contractual Obligations We have certain obligations with respect to the investment advisory and administration services we receive. See  Overview. We incurred approximately $13.9 million for investment advisory services, excluding pre-incentive net investment income incentive fees and approximately $1.5 million for administrative services for the nine months ended September 30, 2013. A summary of our significant contractual payment obligations is as follows as of September 30, 2013. See Note 4 to the financial statements, Borrowings.  Contractual obligations

          

          Total

          

          Payments Due by PeriodLess than 1 year

          

          1  3 years

          

          3  5 years

          

          More than 5 yearsLong-term debt obligations:TICC CLO LLC

          

          $

          101,250,000

          

          

          $

          

          

          

          $

          

          

          

          $

          

          

          

          $

          101,250,000TICC CLO 2012-1 LLC

          

          

          240,000,000

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          240,000,000TICC Convertible Notes

          

          

          115,000,000

          

          

          

          

          

          

          

          

          

          

          

          115,000,000

          

          

          

          Total

          

          $

          456,250,000

          

          

          $

          

          

          

          $

          

          

          

          $

          115,000,000

          

          

          $

          341,250,000
 Off-Balance Sheet Arrangements We currently have no off-balance sheet arrangements, including any risk management of commodity pricing or other hedging practices.
 69    TABLE OF CONTENTS Borrowings On August 10, 2011, the Company completed a $225.0 million debt securitization financing transaction. The Class A Notes offered in the securitization were issued by TICC CLO, and are secured by the assets held by the trustee on behalf of the 2011 Securitization Issuer. The notes are an obligation of TICC CLO. The securitization was executed through a private placement of $101.25 million of Aaa/AAA Class A Notes which bear interest, after the effective date, at three-month LIBOR plus 2.25% (prior to the effective date, the Class A Notes bear interest at five-month LIBOR plus 2.25%). The notes were sold at a discount to par, and
the amount of the discount is being amortized over the term of the notes. The Class A Notes are included in the September 30, 2013 consolidated statements of assets and liabilities. For the three and nine month period ended September 30, 2013, the Class A note holders were paid interest on the Class A notes of approximately $0.6 million and $2.0 million, respectively. Holdings retained all of the 2011 Subordinated Notes totaling $123.75 million and all of the membership interests in the 2011 Securitization Issuer. The 2011 Subordinated Notes do not bear interest, but are entitled to the residual economic interest in the 2011 Securitization Issuer. On August 23, 2012, the Company completed a $160 million debt securitization financing transaction, consisting of $120 million in secured notes and $40 million of subordinated notes. On February 25, 2013 and May 28, 2013, TICC CLO 2012-1 issued an additional secured notes totaling an aggregate of $120 million and subordinated notes totaling an aggregate of $40 million, which subordinated notes were purchased by the Company, under the accordion feature of the debt securitization which allowed, under certain circumstances and subject to the satisfaction of certain conditions, for an increase in the amount of secured
and subordinated notes. It is not necessary that the Company own all or any of the notes permitted by this feature, which may affect the accounting treatment of the debt securitization financing transaction. As of September 30, 2013 the secured notes of the 2012 Securitization Issuer have an aggregate face amount of $240 million and were issued in four classes. The class A-1 notes have a current face amount of $176 million, are rated AAA(sf)/ Aaa(sf) by Standard & Poors Ratings Services (S&P) and Moodys Investors Service, Inc. (Moodys), respectively, and bear interest at three-month LIBOR plus 1.75%. The class B-1 notes have a current face amount of $20 million, are rated AA(sf)/Aa2(sf) by S&P and Moodys, respectively, and bear interest at three-month LIBOR plus 3.50%. The class C-1 notes have a current face amount of $23 million, are rated A(sf)/A2(sf) by S&P and Moodys, respectively, and bear
interest at three-month LIBOR plus 4.75%. The class D-1 notes have a current face amount of $21 million, are rated BBB(sf)/Baa2(sf) by S&P and Moodys, respectively, and bear interest at three-month LIBOR plus 5.75%. TICC presently owns all of the subordinated notes, which totaled $80 million as of September 30, 2013. For the three and nine month period ending September 30, 2013, the class A-1, B-1, C-1 and D-1 were paid in aggregate $1.7 million and $5.0 million, respectively. On September 26, 2012, the Company issued $105,000,000 aggregate principal amount of the Convertible Notes and an additional $10,000,000 aggregate principal amount of the Convertible Notes was issued on October 22, 2012. The Convertible Notes are convertible into shares of our common stock based on an initial conversion rate of 87.2448 shares of our common stock per $1,000 principal amount of Convertible Notes, which is equivalent to an initial conversion price of approximately $11.46 per share of common stock. The conversion price for the Convertible Notes will be reduced for quarterly cash dividends paid to common shares to
the extent that the quarterly dividend exceeds $0.29 cents per share, subject to adjustment. The Convertible Notes mature on November 1, 2017, unless previously converted in accordance with their terms. The Convertible Notes are our general unsecured obligations, rank equally in right of payment with our future senior unsecured debt, and rank senior in right of payment to any potential subordinated debt, should any be issued in the future. For the three and nine month period ended September 30, 2013, note holders were paid interest of $0 and $5.2 million, respectively. Distributions In order to qualify as a regulated investment company and to avoid corporate level tax on the income we distribute to our stockholders, we are required, under Subchapter M of the Code, to distribute at least 90% of our ordinary income and short-term capital gains to our stockholders on an annual basis.
 70    TABLE OF CONTENTS The following table reflects the cash distributions, including dividends and returns of capital, if any, per share that we have declared on our common stock since the beginning of 2010:  Date Declared

          

          Record Date

          

          Payment Date

          

          AmountFiscal 2013October 29, 2013

          

          

          December 17, 2013

          

          

          

          December 31, 2013

          

          

          $

          0.29July 30, 2013

          

          

          September 16, 2013

          

          

          

          September 30, 2013

          

          

          

          0.29April 30, 2013

          

          

          June 14, 2013

          

          

          

          June 28, 2013

          

          

          

          0.29February 28, 2013

          

          

          March 22, 2013

          

          

          

          March 29, 2013

          

          

          

          0.29Total (2013)

          

          

          

          

          

          

          

          

          

          $

          1.16Fiscal 2012November 1, 2012

          

          

          December 17, 2012

          

          

          

          December 31, 2012

          

          

          $

          0.29July 26, 2012

          

          

          September 14, 2012

          

          

          

          September 28, 2012

          

          

          

          0.29May 2, 2012

          

          

          June 15, 2012

          

          

          

          June 29, 2012

          

          

          

          0.27March 1, 2012

          

          

          March 21, 2012

          

          

          

          March 30, 2012

          

          

          

          0.27Total (2012)

          

          

          

          

          

          

          

          

          

          $

          1.12

          (1)Fiscal 2011November 3, 2011

          

          

          December 16, 2011

          

          

          

          December 30, 2011

          

          

          $

          0.25July 28, 2011

          

          

          September 16, 2011

          

          

          

          September 30, 2011

          

          

          

          0.25May 3, 2011

          

          

          June 16, 2011

          

          

          

          June 30, 2011

          

          

          

          0.25March 3, 2011

          

          

          March 21, 2011

          

          

          

          March 31, 2011

          

          

          

          0.24Total (2011)

          

          

          

          

          

          

          

          

          

          $

          0.99

          (1)Fiscal 2010November 2, 2010

          

          

          December 10, 2010

          

          

          

          December 31, 2010

          

          

          $

          0.24July 29, 2010

          

          

          September 10, 2010

          

          

          

          September 30, 2010

          

          

          

          0.22April 29, 2010

          

          

          June 10, 2010

          

          

          

          June 30, 2010

          

          

          

          0.20March 4, 2010

          

          

          March 24, 2010

          

          

          

          March 31, 2010

          

          

          

          0.15Total (2010)

          

          

          

          

          

          

          

          

          

          $

          0.81

          (1)
  (1)

          Distributions for the fiscal years ended December 31, 2012, 2011 and 2010 were funded from taxable earnings. Related Parties We have a number of business relationships with affiliated or related parties, including the following: 

          We have entered into the Investment Advisory Agreement with TICC Management. TICC Management is controlled by BDC Partners, its managing member. Charles M. Royce, as the non-managing member, holds a minority, non-controlling interest in TICC Management. BDC Partners, as the managing member of TICC Management, manages the business and internal affairs of TICC Management. In addition, BDC Partners provides us with office facilities and administrative services pursuant to the Administration Agreement. 

          Messrs. Cohen and Rosenthal currently serve as Chief Executive Officer and President, respectively, for T2 Advisers, LLC, which serves as the collateral manager of T2 Income Fund CLO I Ltd. BDC Partners is the managing member of T2 Advisers, LLC. In addition, Mr. Conroy serves as the Chief Financial Officer, Chief Compliance Officer and Treasurer of T2 Advisers, LLC.
 71    TABLE OF CONTENTS 

          Messrs. Cohen and Rosenthal currently serve as Chief Executive Officer and President, respectively, of Oxford Lane Capital Corp., a non-diversified closed-end management investment company that invests primarily in leveraged corporate loans, and its investment adviser, Oxford Lane Management, LLC (Oxford Lane Management). BDC Partners provides Oxford Lane Capital Corp. with office facilities and administrative services pursuant to an administration agreement and also serves as the managing member of Oxford Lane Management. In addition, Patrick F. Conroy serves as the Chief Financial Officer, Chief Compliance Officer and Corporate Secretary of Oxford Lane Capital Corp. and Chief Financial Officer, Chief Compliance Officer and Treasurer of Oxford Lane Management. BDC Partners has adopted a written policy with respect to the allocation of investment opportunities among TICC, Oxford Lane Capital Corp. and T2 Income Fund CLO I Ltd. in view of the potential conflicts of interest raised by the relationships described above. In the ordinary course of business, we may enter into transactions with portfolio companies that may be considered related party transactions. In order to ensure that we do not engage in any prohibited transactions with any persons affiliated with us, we have implemented certain policies and procedures whereby our executive officers screen each of our transactions for any possible affiliations between the proposed portfolio investment, us, companies controlled by us and our employees and directors. We will not enter into any agreements unless and until we are satisfied that doing so will not raise concerns under the 1940 Act
or, if such concerns exist, we have taken appropriate actions to seek board review and approval or exemptive relief for such transaction. Our Board of Directors reviews these procedures on an annual basis. We have also adopted a Code of Ethics which applies to, among others, our senior officers, including our Chief Executive Officer and Chief Financial Officer, as well as all of our officers, directors and employees. Our Code of Ethics requires that all employees and directors avoid any conflict, or the appearance of a conflict, between an individuals personal interests and our interests. Pursuant to our Code of Ethics, each employee and director must disclose any conflicts of interest, or actions or relationships that might give rise to a conflict, to our Chief Compliance Officer. Our Audit Committee is charged with
approving any waivers under our Code of Ethics. As required by the NASDAQ Global Select Market corporate governance listing standards, the Audit Committee of our Board of Directors is also required to review and approve any transactions with related parties (as such term is defined in Item 404 of Regulation S-K).
 72    TABLE OF CONTENTS RECENT DEVELOPMENTS On October 29, 2013, the Board of Directors declared a distribution of $0.29 per share for the fourth quarter, payable on December 31, 2013 to shareholders of record as of December 17, 2013. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are subject to financial market risks, including changes in interest rates. As of September 30, 2013, three debt investments in our portfolio were at a fixed rate, and the remaining eighty-seven debt investments were at variable rates, representing approximately $23.0 million and $710.4 million in principal debt, respectively. At September 30, 2013, all of our variable rate investments were income producing. The variable rates are based upon the five-year Treasury note, the Prime rate or LIBOR, and, in the case of our bilateral investments, are generally reset annually, whereas our non-bilateral investments generally reset
quarterly. We expect that future debt investments will generally be made at variable rates. Many of the variable rate investments contain floors. To illustrate the potential impact of a change in the underlying interest rate on our net increase in net assets resulting from operations, we have assumed a 1% increase or decrease in the underlying five-year Treasury note, the Prime rate or LIBOR, and no other change in our portfolio as of September 30, 2013. We have also assumed outstanding borrowings, which bear interest at variable rates, of $341,250,000. Under this analysis, net investment income would decrease by approximately $2.5 million on an annual basis, due to the amount of investments in our portfolio which have implied floors that would be unaffected by a 1%
change in the underlying interest rate. However, if the increase in rates was more significant, such as 5%, the net effect on the net increase in net assets resulting from operations would be an increase of approximately $11.6 million. To the extent that the rate underlying certain investments, as well as our borrowings, is at an historic low, it may not be possible for the underlying rate to decrease by 1% or 5%, and the impact of that reality is reflected in this analysis. It should also be noted that as the available cash is invested, the impact of this analysis will change. Although management believes that this analysis is indicative of our existing interest rate sensitivity, it does not adjust for changes in the credit quality, size and composition of our portfolio, and other business developments, including a change in the level of our borrowings, that could affect the net increase in net assets resulting from operations. Accordingly, no assurances can be given that actual
results would not differ materially from the results under this hypothetical analysis. We may in the future hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in the benefits of lower interest rates with respect to the investments in our portfolio with fixed interest rates. ITEM 4. CONTROLS AND PROCEDURES. As of September 30, 2013, we, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective in timely alerting management, including the Chief Executive Officer and Chief Financial Officer, of material information about us required to be included in periodic SEC filings. There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) that occurred during the quarter ended September 30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 73    TABLE OF CONTENTS PART II  OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. We are not currently subject to any material legal proceedings. From time to time, we may be a 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. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations. ITEM 1A. RISK FACTORS In addition to the other information set forth in this report, you should carefully consider the factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012 and the additional risk factors set forth below, which could materially affect our business, financial condition and/or operating results. The risks described below and in our Annual Report on Form 10-K are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial
condition and/or operating results. There have been no other material changes during the nine months ended September 30, 2013 to the risk factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2012. We are permitted to borrow money, which magnifies the potential for gain or loss on amounts invested and may increase the risk of investing in us. On August 10, 2011, we completed a $225.0 million debt securitization financing transaction. The Class A Notes and the subordinated notes offered in the debt securitization were issued by TICC CLO LLC (2011 Securitization Issuer or TICC CLO), a subsidiary of TICC Capital Corp. 2011-1 Holdings, LLC (Holdings), which is in turn a direct subsidiary of TICC. The Class A Notes are secured by the assets held by the 2011 Securitization Issuer. The securitization was executed through a private placement of $101.25 million of secured notes rated AAA/Aaa by Standard & Poors Rating Service
(S&P) and Moodys Investors Service Inc. (Moodys), respectively, and bearing interest at the three-month LIBOR plus 2.25%. Holdings retained all of the subordinated notes, which totaled $123.75 million (the 2011 Subordinated Notes), and retained all the membership interests in the 2011 Securitization Issuer. On August 23, 2012, the Company completed a $160 million debt securitization financing transaction, consisting of $120 million in secured notes and $40 million of subordinated notes. On February 25, 2013 and May 28, 2013, TICC CLO 2012-1 LLC (TICC CLO 2012-1 or the 2012 Securitization Issuer) issued additional secured notes totaling an aggregate of $120 million and subordinated notes totaling an aggregate of $40 million, which subordinated notes were purchased by the Company, under the accordion feature of the debt securitization which allowed, under certain circumstances and subject to the
satisfaction of certain conditions, for an increase in the amount of secured and subordinated notes. It is not necessary that the Company own all or any of the notes permitted by this feature, which may affect the accounting treatment of the debt securitization financing transaction. As of September 30, 2013 the secured notes of the 2012 Securitization Issuer have an aggregate face amount of $240 million and were issued in four classes. The class A-1 notes have a current face amount of $176 million, are rated AAA(sf)/Aaa(sf) by Standard & Poors Ratings Services (S&P) and Moodys Investors Service, Inc. (Moodys), respectively, and bear interest at three-month LIBOR plus 1.75%. The class B-1 notes have a current face amount of $20 million, are rated AA(sf)/Aa2(sf) by S&P and Moodys, respectively, and bear interest at three-month LIBOR plus 3.50%. The class C-1 notes have a current face amount of $23 million, are rated A(sf)/A2(sf) by S&P and Moodys, respectively, and bear interest at three-month LIBOR plus 4.75%. The class D-1 notes have a current face amount of $21 million, are rated BBB(sf)/Baa2(sf) by S&P and Moodys, respectively, and bear interest at three-month LIBOR plus 5.75%. TICC presently owns all of the subordinated notes, which totaled $80 million as of September 30, 2013.
 74    TABLE OF CONTENTS On September 26, 2012, we completed a private placement of Convertible Notes. A total of $105.0 million aggregate principal amount of the Convertible Notes were issued at the closing. An additional $10.0 million aggregate principal amount of the Convertible Notes were issued on October 22, 2012 pursuant to the exercise of the initial purchasers option to purchase additional Convertible Notes. The Convertible Notes are convertible into shares of our common stock based on an initial conversion rate of 87.2448 shares of our common stock per $1,000 principal amount of Convertible Notes, which is equivalent to an initial
conversion price of approximately $11.46 per share of common stock. The conversion price for the Convertible Notes will be reduced for quarterly cash dividends paid to common shares to the extent that the quarterly dividend exceeds $0.29 cents per share, subject to adjustment. The Convertible Notes will bear interest at an annual rate of 7.50%, payable semiannually in arrears on May 1 and November 1 of each year, beginning May 1, 2013. The Convertible Notes bear interest at an annual rate of 7.50%, payable semiannually in arrears on May 1 and November 1 of each year, beginning May 1, 2013. The Convertible Notes mature on November 1, 2017, unless previously converted in accordance with their terms. The Convertible Notes are our general unsecured obligations, rank equally in right of payment with our future senior unsecured debt, and rank senior in right of payment to any potential subordinated debt, should any be issued in the future. Borrowings (including through the securitization transactions described above, which are consolidated in our financial statements), also known as leverage, magnify the potential for gain or loss on amounts invested and, therefore, increase the risks associated with investing in our securities. We may borrow from and issue senior debt securities to banks, insurance companies, and other lenders. Lenders of these senior securities have fixed dollar claims on our assets that are superior to the claims of our common stockholders. If the value of our assets increases, then leveraging would cause the net asset value attributable to
our common stock to increase more sharply than it would have had we not leveraged. Conversely, if the value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not leveraged. Similarly, any increase in our income in excess of interest payable on the borrowed funds would cause our net income to increase more than it would without the leverage, while any decrease in our income would cause net income to decline more sharply than it would have had we not borrowed. Such a decline could negatively affect our ability to make common stock dividend payments. Leverage is generally considered a speculative investment technique. Our ability to service any debt that we incur will depend largely on our financial performance and will be subject to prevailing economic conditions and competitive pressures. Moreover, as the management fee payable to TICC Management will be payable on our gross assets, including those assets acquired
through the use of leverage, TICC Management may have a financial incentive to incur leverage which may not be consistent with our stockholders interests. In addition, our common stockholders will bear the burden of any increase in our expenses as a result of leverage, including any increase in the management fee payable to TICC Management. Illustration.  The following table illustrates the effect of leverage on returns from an investment in our common stock assuming various annual returns on the portfolio, net of expenses. The calculations in the table below are hypothetical and actual returns may be higher or lower than those appearing in the table below.  Assumed total return on our portfolio (net of expenses)(10.0)%

          

          (5.0)%

          

          0.0%

          

          5.0%

          

          10.0%Corresponding return to stockholder(1)

          

          

          (21.2

          )%

          

          

          (12.2

          )%

          

          

          (3.2

          )%

          

          

          5.9

          %

          

          

          14.9

          %
  (1)

          Assumes $1.022 billion in total assets and $456.3 million in total debt outstanding, which reflects our total assets and total debt outstanding as of September 30, 2013, and a cost of funds of approximately 3.92%. There are significant potential conflicts of interest between TICC and our management team. In the course of our investing activities, we pay management and incentive fees to TICC Management, and reimburse BDC Partners for certain expenses it incurs. As a result, investors in our common stock invest on a gross basis and receive distributions on a net basis after expenses, resulting in, among other things, a lower rate of return than one might achieve through direct investments. As a result of this arrangement, there may be times when the management team of TICC Management has interests that differ from those of our stockholders, giving rise to a conflict.
 75    TABLE OF CONTENTS TICC Management receives a quarterly incentive fee based, in part, on our Pre-Incentive Fee Net Investment Income, if any, for the immediately preceding calendar quarter. This incentive fee is subject to a quarterly hurdle rate before providing an incentive fee return to TICC Management. To the extent we or TICC Management are able to exert influence over our portfolio companies, the quarterly pre-incentive fee may provide TICC Management with an incentive to induce our portfolio companies to accelerate or defer interest or other obligations owed to us from one calendar quarter to another. In addition, our executive officers and directors, and the executive officers of TICC Management, and its managing member, BDC Partners, serve or may serve as officers and directors of entities that operate in a line of business similar to our own. Accordingly, they may have obligations to investors in those entities, the fulfillment of which might not be in the best interests of us or our stockholders. Charles M. Royce, the non-executive Chairman of our Board of Directors, holds a minority, non-controlling interest in our investment adviser. Messrs. Cohen and Rosenthal also currently serve as Chief Executive Officer and President, respectively, for T2 Advisers, LLC, which serves as the Collateral Manager of T2 Income Fund CLO I Ltd. BDC Partners is the managing member of T2 Advisers, LLC. Further, Messrs. Cohen and Rosenthal currently serve as Chief Executive Officer and President, respectively, of Oxford Lane Capital Corp., a non-diversified closed-end management investment company that currently invests primarily in CLO debt and equity tranches, and its investment adviser, Oxford Lane Management. BDC Partners provides Oxford Lane Capital Corp. with office
facilities and administrative services pursuant to an administration agreement and also serves as the managing member of Oxford Lane Management. In addition, Patrick F. Conroy, the Chief Financial Officer, Chief Compliance Officer and Corporate Secretary of TICC Management, BDC Partners and TICC, serves in the same capacities for Oxford Lane Capital Corp. and Oxford Lane Management and also serves as the Chief Financial Officer, Chief Compliance Officer and Treasurer of T2 Advisers, LLC. Because of these possible conflicts of interest, these individuals may direct potential business and investment opportunities to other entities rather than to us or such individuals may undertake or otherwise engage in activities or conduct on behalf of such other entities that is not in, or which may be adverse to, our best interests. BDC Partners has adopted a written policy with respect to the allocation of investment opportunities among TICC, Oxford Lane Capital Corp. and T2 Income Fund CLO Ltd. in view of the potential conflicts of interest raised by the relationships described above. In the ordinary course of business, we may enter into transactions with portfolio companies that may be considered related party transactions. In order to ensure that we do not engage in any prohibited transactions with any persons affiliated with us, we have implemented certain policies and procedures whereby our executive officers screen each of our transactions for any possible affiliations between the proposed portfolio investment, us, companies controlled by us and our employees and directors. We will not enter into any agreements unless and until we are satisfied that doing so will not raise concerns under the 1940 Act
or, if such concerns exist, we have taken appropriate actions to seek board review and approval or exemptive relief for such transaction. Our Board of Directors reviews these procedures on an annual basis. We have also adopted a Code of Ethics which applies to, among others, our senior officers, including our Chief Executive Officer and Chief Financial Officer, as well as all of our officers, directors and employees. Our Code of Ethics requires that all employees and directors avoid any conflict, or the appearance of a conflict, between an individuals personal interests and our interests. Pursuant to our Code of Ethics, each employee and director must disclose any conflicts of interest, or actions or relationships that might give rise to a conflict, to our Chief Compliance Officer. Our Audit Committee is charged with
approving any waivers under our Code of Ethics. As required by the NASDAQ Global Select Market corporate governance listing standards, the Audit Committee of our Board of Directors is also required to review and approve any transactions with related parties (as such term is defined in Item 404 of Regulation S-K).
 76    TABLE OF CONTENTS ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. While we did not engage in unregistered sales of equity securities during the nine months ended September 30, 2013, we issued a total of 262,909 shares of common stock under our dividend reinvestment plan. This issuance was not subject to the registration requirements of the Securities Act of 1933, as amended. The aggregate valuation price for the shares of common stock issued under the dividend reinvestment plan was approximately $2,438,548. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ITEM 5. OTHER INFORMATION. None.
 77    TABLE OF CONTENTS ITEM 6. EXHIBITS. The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC:  3.1

          

          Articles of Incorporation (Incorporated by reference to the Registrants Registration Statement on Form N-2 (File No. 333-109055), filed on September 23, 2003).3.2

          

          Articles of Amendment (Incorporated by reference to Current Report on Form 8-K (File No. 814-00638) filed December 3, 2007).3.3

          

          Amended and Restated Bylaws (Incorporated by reference to Pre-Effective Amendment No. 2 to the Registrants Registration Statement on Form N-2 (File No. 333-109055), filed on November 19, 2003).4.1

          

          Form of Share Certificate (Incorporated by reference to the Registrants Registration Statement on Form N-2 (File No. 333-109055), filed on September 23, 2003).4.2

          

          Indenture, dated September 26, 2012, relating to the 7.50% Senior Convertible Notes due 2017, by and between the Registrant and the Bank of New York Mellon, as trustee (Incorporated by reference to Exhibit 4.1 to the Registrants report on Form 8-K filed on September 27, 2012).10.1

          

          Investment Advisory Agreement between Registrant and TICC Management, LLC (Incorporated by reference to Exhibit 10.1 to the Registrants report on Form 8-K filed on July 1, 2011).10.2

          

          Custodian Agreement between Registrant and State Street Bank and Trust Company (Incorporated by reference to Pre-Effective Amendment No. 2 to the Registrants Registration Statement on Form N-2 (File No. 333-109055), filed on November 19, 2003).10.3

          

          Amended and Restated Administration Agreement between Registrant and BDC Partners, LLC. (Incorporated by reference to Exhibit 10.3 to the Registrants quarterly report on Form 10-Q filed on May 10, 2012).10.4

          

          Amended and Restated Dividend Reinvestment Plan (Incorporated by reference to Exhibit 4.1 to the Registrants report on Form 8-K filed on May 30, 2012).10.5

          

          Purchase Agreement by and among the Registrant, TICC Capital Corp. 2011-1 Holdings, LLC, TICC CLO LCC and Guggenheim Securities, LLC (Incorporated by reference to Exhibit 10.1 to the Registrants report on Form 8-K filed on August 11, 2011).10.6

          

          Master Loan Sale Agreement by and among the Registrant, TICC Capital Corp. 2011-1 Holdings, LLC and TICC CLO LLC (Incorporated by reference to Exhibit 10.2 to the Registrants report on Form 8-K filed on August 11, 2011).10.7

          

          Indenture by and between TICC CLO LLC and The Bank of New York Mellon Trust Company, National Association (Incorporated by reference to Exhibit 10.3 to the Registrants report on Form 8-K filed on August 11, 2011).10.8

          

          Collateral Management Agreement by and between TICC CLO LLC and the Registrant (Incorporated by reference to Exhibit 10.4 to the Registrants report on Form 8-K filed on August 11, 2011).10.9

          

          Collateral Administration Agreement by and among TICC CLO LLC, the Registrant and The Bank of New York Mellon Trust Company, National Association (Incorporated by reference to Exhibit 10.5 to the Registrants report on Form 8-K filed on August 11, 2011).10.10

          

          Purchase Agreement, dated August 13, 2012, by and among TICC Capital Corp., TICC CLO 2012-1 LLC and Guggenheim Securities, LLC (Incorporated by reference to Exhibit 10.1 to the Registrants report on Form 8-K filed on August 23, 2012).10.11

          

          Master Loan Sale Agreement, dated August 23, 2012, by and among TICC Capital Corp. and TICC CLO 2012-1 LLC (Incorporated by reference to Exhibit 10.2 to the Registrants report on Form 8-K filed on August 23, 2012).10.12

          

          Indenture, dated August 23, 2012, by and between TICC CLO 2012-1 LLC and The Bank of New York Mellon Trust Company, National Association (Incorporated by reference to Exhibit 10.3 to the Registrants report on Form 8-K filed on August 23, 2012).
 78    TABLE OF CONTENTS  10.13

          

          Collateral Management Agreement, dated August 23, 2012, by and between TICC CLO 2012-1 LLC and TICC Capital Corp. (Incorporated by reference to Exhibit 10.4 to the Registrants report on Form 8-K filed on August 23, 2012).10.14

          

          Collateral Administration Agreement, dated August 23, 2012, by and among TICC CLO 2012-1 LLC, TICC Capital Corp. and The Bank of New York Mellon Trust Company, National Association (Incorporated by reference to Exhibit 10.5 to the Registrants report on Form 8-K filed on August 23, 2012).10.15

          

          Upsize Purchase Agreement, dated January 24, 2013, by and among TICC Capital Corp., TICC CLO 2012-1 LLC and Guggenheim Securities, LLC (Incorporated by reference to the Registrants report on Form 8-K filed on February 26, 2013).10.16

          

          Subordinated Note Purchase Agreement, dated February 25, 2013, by and among TICC Capital Corp. and TICC CLO 2012-1 LLC (Incorporated by reference to the Registrants report on Form 8-K filed on February 26, 2013).10.17

          

          Second Upsize Purchase Agreement, dated May 21, 2013, by and among TICC Capital Corp., TICC CLO 2012-1 LLC and Guggenheim Securities, LLC (Incorporated by reference to the Registrants report on Form 8-K filed on May 29, 2013).10.18

          

          Subordinated Note Purchase Agreement, dated May 28, 2013, by and among TICC Capital Corp. and TICC CLO 2012-1 LLC (Incorporated by reference to the Registrants report on Form 8-K filed on May 29, 2013).11

          

          Computation of Per Share Earnings (included in the notes to the financial statements contained in this report).31.1

          

          Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.31.2

          

          Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.32.1

          

          Certification of Chief Executive Officer pursuant to section 906 of The Sarbanes-Oxley Act of 2002.32.2

          

          Certification of Chief Financial Officer pursuant to section 906 of The Sarbanes-Oxley Act of 2002.
 79    TABLE OF CONTENTS SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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.  TICC CAPITAL CORP.Date: November 12, 2013

          

          By:/s/ Jonathan H. CohenJonathan H. Cohen Chief Executive Officer (Principal Executive Officer)Date: November 12, 2013

          

          By:/s/ Patrick F. ConroyPatrick F. Conroy Chief Financial Officer (Principal Financial and Accounting Officer)
 80