UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [x]
 Quarterly Report Pursuant
  to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the Quarterly Period Ended June 30, 2013 or [  ]
 Transition Report Pursuant
  to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from
______________to_________________ Commission File Number: 000-54755 CĪON Investment Corporation (Exact name of registrant as specified in its charter) Maryland
 
 45-3058280(State or other jurisdiction of incorporation or
  organization)
 
 (I.R.S. Employer Identification No.)3 Park Avenue, 36th Floor
  New York, New York
 
 10016(Address of principal executive offices)
 
 (Zip Code)
  (212) 418-4700(Registrant’s telephone number, including area code)Not applicable(Former name, former address and former fiscal year,
  if changed since last report)
  Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes[x]No[  ] Indicate by check mark whether the registrant has
submitted electronically and posted on its corporate 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[  ]No[  ] Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,” “accelerated filer”
and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large
  Accelerated Filer[  ]
 
 Accelerated Filer[  ]Non-Accelerated Filer[x](Do not check if a smaller reporting company)
 
 Smaller
  Reporting Company[  ]
 Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act). Yes[  ]No[x] The number of shares of the registrant’s common stock,
$0.001 par value, outstanding as of August 9, 2013 was 5,839,032.


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CĪON
  INVESTMENT CORPORATION
  TABLE OF
  CONTENTS
  FORM 10-Q
 PagePART I -
  FINANCIAL INFORMATIONItem 1.  Financial StatementsConsolidated Balance Sheets as of June 30, 2013 (unaudited)
  and December 31, 2012
 1Consolidated Statements of Operations for
  the three and six months ended June 30, 2013 (unaudited)
 2Consolidated Statements of Changes in
  Net Assets for the six months ended June 30, 2013 and for the period from
  January 31, 2012 (Inception) through June 30, 2012 (unaudited)
 3Consolidated Statements of Cash Flows
  for the six months ended June 30, 2013 and for the period from January 31,
  2012 (Inception) through June 30, 2012 (unaudited)
 4Consolidated Schedule of Investments as of June
  30, 2013 (unaudited) and December 31, 2012
 5Notes to Consolidated Financial Statements
  (unaudited)
 8Item 2. Management’s Discussion and Analysis of
  Financial Condition and Results of Operations
 24Item 3. Quantitative and Qualitative Disclosures
  About Market Risk
 39Item 4. Controls and Procedures
 39PART II – OTHER INFORMATIONItem 1. Legal Proceedings
 40Item 1A. Risk Factors
 40Item 2. Unregistered Sales of Equity Securities
  and Use of Proceeds
 40Item 3. Defaults Upon Senior Securities
 40Item 4. Mine Safety Disclosures
 40Item 5. Other Information
 40Item 6. Exhibits
 41Signatures
 43


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PART I – FINANCIAL
INFORMATION  Item 1. Financial Statements  CĪON Investment CorporationConsolidated Balance SheetsJune 30,
  2013
 
 December 31,
  2012(unaudited)AssetsInvestments, at
  fair value (amortized cost of $30,147,318 and $3,787,873, respectively)
 $
 30,472,264
 
 $
 3,797,806Cash
 
 11,819
 
 
 -Due from
  counterparty(2)
 
 10,297,039
 
 
 729,325Reimbursement
  from IIG, net(1)
 
 991,154
 
 
 25,807Deferred
  offering expenses, net
 
 463,014
 
 
 958,904Prepaid expenses
 
 9,668
 
 
 105,802Interest
  receivable on investments
 
 71,437
 
 
 187Receivable due
  on investments sold and repaid
 
 25,000
 
 
 -Unrealized
  appreciation on total return swap(2)
 
 290,594
 
 
 12,493Receivable due
  on total return swap(2)
 
 171,146
 
 
 -Total assets
 $
 42,803,135
 
 $
 5,630,324Liabilities and Shareholders' EquityLiabilitiesPayable for
  investments purchased
 $
 5,710,900
 
 $
 990,000Shareholders'
  distributions payable(3)
 
 221,052
 
 
 -Accounts payable
  and accrued expenses
 
 549,265
 
 
 57,427Due to IIG -
  offering expenses(1)
 
 1,000,000
 
 
 -Commissions
  payable
 
 -
 
 
 23,100Financing
  arrangement
 
 -
 
 
 72,682Total
  liabilities
 
 7,481,217
 
 
 1,143,209Commitments and
  contingencies (Note 10)Shareholders'
  EquityCommon stock,
  $0.001 par value; 500,000,000 shares authorized;3,853,304 and
  500,338 shares issued and outstanding, respectively(1)
 
 3,853
 
 
 500Capital in
  excess of par value
 
 34,702,525
 
 
 4,461,453Accumulated
  undistributed net investment income
 
 -
 
 
 2,692Accumulated
  undistributed net realized gain from investments
 
 -
 
 
 44Accumulated net
  unrealized appreciation on investments
 
 324,946
 
 
 9,933Accumulated net
  unrealized appreciation on total return swap(2)
 
 290,594
 
 
 12,493Total
  shareholders' equity
 
 35,321,918
 
 
 4,487,115Total
  liabilities and shareholders' equity
 $
 42,803,135
 
 $
 5,630,324Net asset value
  per share of common stock at end of period
 $
 9.17
 
 $
 8.97Shares of common
  stock outstanding
 
 3,853,304
 
 
 500,338(1) See Note 3
  for a discussion of expense reimbursements from ICON Investment Group, LLC,
  or IIG.(2) See Note 6
  for a discussion of the Company’s total return swap agreement.(3) See Note 4
  for a discussion of the source of distributions paid by the Company.See accompanying notes to consolidated
  financial statements.
  1


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CĪON Investment Corporation Consolidated Statements of Operations (unaudited)  Three Months Ended
  June 30, 2013(1)
 
 Six Months Ended
  June 30, 2013(1)Investment
  incomeInterest income
 $
 245,494
 
 $
 313,620Operating
  expensesManagement fees
 
 120,781
 
 
 165,523Administrative
  services expense
 
 307,636
 
 
 571,191Capital gains
  incentive fee(2)
 
 57,705
 
 
 174,728General and
  administrative(3)
 
 752,015
 
 
 1,260,878Total expenses
 
 1,238,137
 
 
 2,172,320Less: expense
  reimbursement from IIG(4)
 
 (1,147,536)
 
 
 (1,966,909)Net operating
  expenses
 
 90,601
 
 
 205,411Net investment
  income
 
 154,893
 
 
 108,209Realized and
  unrealized gainsNet realized
  gain from investments
 
 10,438
 
 
 14,971Net change in
  unrealized appreciation on investments
 
 190,731
 
 
 315,013Net realized
  gain on total return swap(5)
 
 395,757
 
 
 601,480Net change in
  unrealized (depreciation) appreciation on total return swap(5)
 
 (53,189)
 
 
 278,101Total net
  realized and unrealized gains
 
 543,737
 
 
 1,209,565Net increase in
  net assets resulting from operations
 $
 698,630
 
 $
 1,317,774Per share
  information—basic and dilutedNet increase in
  net assets per share resulting from operations
 $
 0.24
 
 $
 0.65Weighted average
  shares of common stock outstanding
 
 2,878,270
 
 
 2,026,081(1)
 The Company
  commenced operations on December 17, 2012. Accordingly, there are no
  consolidated statements of operations data available for the three or six
  months ended June 30, 2012.(2)
 See Note 2 for a
  discussion of the methodology employed by the Company in calculating the
  capital gains incentive fee.(3)
 See Note 8 for
  details of the Company's general and administrative expenses.(4)
 See Note 3 for a
  discussion of expense reimbursements received by the Company from IIG.(5)
 See Note 6 for a
  discussion of the Company’s total return swap agreement.See accompanying notes to consolidated
  financial statements.
  2


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CĪON Investment Corporation Consolidated Statements of Changes in Net Assets (unaudited)  Six Months Ended
  June 30, 2013
 
 For the Period from January 31, 2012
  (Inception) through June 30, 2012Changes in
  net assets from operations:Net investment
  income
 $
 108,209
 
 $
 -Net realized
  gain from investments
 
 14,971
 
 
 -Net change in
  unrealized appreciation on investments
 
 315,013
 
 
 -Net realized
  gain on total return swap(1)
 
 601,480
 
 
 -Net change in
  unrealized appreciation on total return swap(1)
 
 278,101
 
 
 -Net increase in
  net assets resulting from operations
 
 1,317,774
 
 
 -Shareholder
  distributions:Distributions from
  net investment income(2)
 
 (110,901)
 
 
 -Distributions
  from net realized gains
 
 (616,495)
 
 
 -Net decrease in
  net assets from shareholder distributions
 
 (727,396)
 
 
 -Changes in
  net assets from capital share transactions:Issuance of
  common stock, net of issuance costs of $3,038,387 and $0, respectively
 
 30,527,165
 
 
 1,000Reinvestment of
  shareholder distributions
 
 213,150
 
 
 -Amortization of
  deferred offering expenses
 
 (495,890)
 
 
 -Net increase in
  net assets resulting from capital share transactions
 
 30,244,425
 
 
 1,000Total increase
  in net assets
 
 30,834,803
 
 
 1,000Net assets at
  beginning of period
 
 4,487,115
 
 
 -Net assets at
  end of period
 $
 35,321,918
 
 $
 1,000Net asset value
  per share of common stock at end of period
 $
 9.17
 
 $
 9.00Shares of common
  stock outstanding at end of period
 
 3,853,304
 
 
 111Undistributed
  net investment income at end of period
 $
 -
 
 $
 -(1) See Note 6
  for a discussion of the Company’s total return swap agreement.(2) See Note 4
  for a discussion of the source of the Company's distributions.See accompanying notes to consolidated
  financial statements.
 3


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CĪON Investment Corporation Consolidated Statements of Cash Flows (unaudited)  Six Months Ended
  June 30, 2013
 
 For the Period from January 31, 2012
  (Inception) through June 30, 2012Operating
  activities:Net increase in
  net assets resulting from operations
 $
 1,317,774
 
 $
 -Adjustments to
  reconcile net increase in net assets resulting fromoperations to
  net cash used in operating activities:Net accretion of
  discount on investments
 
 (7,011)
 
 
 -Proceeds from
  principal repayment of investments
 
 642,548
 
 
 -Purchase of
  investments
 
 (20,658,178)
 
 
 -Net change in
  short term investments
 
 (6,826,208)
 
 
 -Proceeds from
  sale of investments
 
 504,375
 
 
 -Net realized
  gain from investments
 
 (14,971)
 
 
 -Net change in
  unrealized appreciation on investments
 
 (315,013)
 
 
 -Net change in
  unrealized appreciation on total return swap
 
 (278,101)
 
 
 -Due from
  counterparty
 
 (9,567,714)
 
 
 -Reimbursement
  from IIG, net
 
 (965,347)
 
 
 -Prepaid expenses
 
 96,134
 
 
 -Interest
  receivable on investments
 
 (71,250)
 
 
 -Receivable due
  on investments sold and repaid
 
 (25,000)
 
 
 -Receivable due
  on total return swap
 
 (171,146)
 
 
 -Payable for
  investments purchased
 
 4,720,900
 
 
 -Accounts payable
  and accrued expenses
 
 491,838
 
 
 -Due to IIG -
  offering expenses
 
 1,000,000
 
 
 -Net cash used in
  operating activities
 
 (30,126,370)
 
 
 -Financing
  activities:Gross proceeds
  from issuance of common stock
 
 33,565,552
 
 
 1,000Commissions and
  dealer manager fees paid
 
 (3,061,487)
 
 
 -Reinvestment of
  shareholder distributions
 
 213,150
 
 
 -Shareholder
  distributions paid
 
 (506,344)
 
 
 -Repayment of
  financing arrangement
 
 (72,682)
 
 
 -Net cash
  provided by financing activities
 
 30,138,189
 
 
 1,000Net increase in
  cash
 
 11,819
 
 
 1,000Cash, beginning
  of period
 
 -
 
 
 -Cash, end of
  period
 $
 11,819
 
 $
 1,000Supplemental
  non-cash financing activities:Deferred
  offering expenses charged to shareholders' equity
 $
 495,890
 
 $
 -Shareholders'
  distributions payable
 $
 221,052
 
 $
 -See accompanying notes to consolidated
  financial statements.
  4


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CĪON
Investment Corporation Consolidated Schedule of Investments June 30, 2013 (unaudited)  Portfolio
  Company(a)
 
 Industry
 
 Principal/Par
  Amount
 
 Amortized
  Cost
 
 Fair Value(b)Senior
  Secured First Lien Term Loans - 46.5%Captive
  Resources Midco, LLC, L+550, 1.25% LIBOR Floor, 10/31/2018
 
 Insurance
 
 $
 992,500
 
 $
 976,672
 
 $
 975,131CHI Overhead
  Doors, L+425, 1.25% LIBOR Floor, 3/18/2019
 
 Building
  Materials
 
 
 1,000,000
 
 
 995,124
 
 
 1,002,500Custom Ecology,
  Inc., L+550, 1.25% LIBOR Floor, 6/26/2019(c)
 
 Environmental
  Services
 
 
 1,910,000
 
 
 1,890,900
 
 
 1,905,225Distribution
  International, Inc., L+650, 1.00% LIBOR Floor, 7/16/2019(c)
 
 Construction
 
 
 2,000,000
 
 
 1,980,000
 
 
 1,997,500F+W Media, Inc.,
  L+650, 1.25% LIBOR Floor, 6/30/2019(c)
 
 Media
 
 
 2,000,000
 
 
 1,840,000
 
 
 1,940,000Fender Musical
  Instruments Corp., L+450, 1.25% LIBOR Floor, 4/3/2019
 
 Entertainment
  & Leisure
 
 
 500,000
 
 
 495,103
 
 
 501,768H.D. Vest, Inc.,
  L+450, 1.25% LIBOR Floor, 12/18/2018(d)
 
 Financial
  Services
 
 
 605,000
 
 
 600,490
 
 
 601,975Medpace
  Intermediateco, Inc., L+425, 1.25% LIBOR Floor, 6/17/2017(d)
 
 Healthcare
 
 
 636,955
 
 
 636,955
 
 
 641,732Merrill Corp.,
  L+625, 1.00% LIBOR Floor, 3/8/2018
 
 Printing &
  Publishing
 
 
 699,248
 
 
 692,401
 
 
 703,618Plano Molding
  Co. Inc., L+425, 1.00% LIBOR Floor, 12/21/2017
 
 Chemicals
 
 
 975,000
 
 
 966,227
 
 
 979,875Prowler
  Acquisition Corp., L+475, 1.25% LIBOR Floor, 3/19/2019
 
 Oil & Gas
 
 
 1,975,000
 
 
 1,955,250
 
 
 1,955,250Sprint
  Industrial Holdings, LLC, L+575, 1.25% LIBOR Floor, 5/14/2019
 
 Oil & Gas
 
 
 1,200,000
 
 
 1,188,000
 
 
 1,209,000Telecommunications
  Management, LLC, L+400, 1.00% LIBOR Floor, 4/30/2020
 
 Telecommunications
 
 
 500,000
 
 
 497,547
 
 
 502,500Total Safety W3,
  L+450, 1.25% LIBOR Floor, 3/13/2020
 
 Professional
  & Business Services
 
 
 498,750
 
 
 496,298
 
 
 501,866Westway Group,
  L+400, 1.00% LIBOR Floor, 2/27/2020
 
 Food &
  Beverage
 
 
 997,500
 
 
 992,878
 
 
 999,994Total Senior
  Secured First Lien Term Loans
 
 
 
 
 
 
 
 16,203,845
 
 
 16,417,934Senior
  Secured Second Lien Term Loans - 15.3%Centaur Gaming,
  L+750, 1.25% LIBOR Floor, 2/20/2020
 
 Gaming & Hotels
 
 
 500,000
 
 
 495,154
 
 
 506,875GCA Services
  Group, Inc., L+800, 1.25% LIBOR Floor, 11/1/2020
 
 Professional
  & Business Services
 
 
 1,000,000
 
 
 995,530
 
 
 1,019,585H.D. Vest, Inc.,
  L+800, 1.25% LIBOR Floor, 6/18/2019(d)
 
 Financial
  Services
 
 
 854,000
 
 
 843,388
 
 
 845,460Healogics, Inc.,
  L+800, 1.25% LIBOR Floor, 2/5/2020
 
 Healthcare
 
 
 500,000
 
 
 495,326
 
 
 510,000LTS Buyer LLC,
  L+675, 1.25% LIBOR Floor, 4/12/2021
 
 Telecommunications
 
 
 500,000
 
 
 495,000
 
 
 502,500Securus
  Technologies Holdings, Inc., L+775, 1.25% LIBOR Floor, 4/30/2021
 
 Telecommunications
 
 
 500,000
 
 
 495,076
 
 
 500,315SESAC Holdco II,
  LLC, L+875, 1.25% LIBOR Floor, 8/8/2019
 
 Media
 
 
 500,000
 
 
 492,794
 
 
 515,625Sprint
  Industrial Holdings, LLC, L+1000, 1.25% LIBOR Floor, 11/14/2019
 
 Oil & Gas
 
 
 500,000
 
 
 492,158
 
 
 502,500Telecommunications
  Management, LLC, L+800, 1.00% LIBOR Floor, 10/30/2020
 
 Telecommunications
 
 
 500,000
 
 
 495,077
 
 
 507,500Total Senior
  Secured Second Lien Term Loans
 
 
 
 
 
 
 
 5,299,503
 
 
 5,410,360Short Term
  Investments - 24.5%(e)First American
  Treasury Obligations Fund, Class Z Shares(f)
 
 
 
 
 8,643,970
 
 
 8,643,970
 
 
 8,643,970Total Short
  Term Investments
 
 
 
 
 
 
 
 8,643,970
 
 
 8,643,970TOTAL
  INVESTMENTS - 86.3%
 
 
 
 
 
 
 $
 30,147,318
 
 $
 30,472,264OTHER ASSETS
  IN EXCESS OF LIABILITIES - 13.7%
 
 
 
 
 
 
 
 
 
 $
 4,849,654NET ASSETS -
  100%
 
 
 
 
 
 
 
 
 
 $
 35,321,918TOTAL RETURN
  SWAP - 0.8%
 
 
 
 Notional Amount
 
 
 
 
 Unrealized AppreciationCitibank TRS
  Facility (see Note 6)
 
 
 
 $
 37,683,784
 
 
 
 
 $
 290,594(a)
 All of the
  Company's debt investments are issued by eligible U.S. portfolio companies,
  as defined in the Investment Company Act of 1940, as amended, or the 1940
  Act, except for investments specifically identified as non-qualifying. The
  Company does not control and is not an affiliate of any of the portfolio
  companies in its investment portfolio.(b)
 Fair value
  determined by the Company’s board of directors (see Note 7).(c)
 Position or
  portion thereof unsettled as of June 30, 2013.(d)
 The investment
  is not a qualifying asset under the 1940 Act. A business development company
  may not acquire any asset other than qualifying assets, unless, at the time
  the acquisition is made, qualifying assets represent at least 70% of the
  Company’s total assets as defined under Section 55 of the 1940 Act. As of
  June 30, 2013, 94.1% of the Company’s total assets represented qualifying
  assets. In addition, as described in Note 6, the Company calculates its
  compliance with the qualifying asset test on a “look through” basis by
  treating each loan underlying the total return swap as either a qualifying
  asset or non-qualifying asset based on whether the obligor is an eligible
  portfolio company. On this basis, 77.5% of the Company’s total assets
  represented qualifying assets as of June 30, 2013.(e)
 Short term
  investments represent highly liquid investments with original maturity dates
  of three months or less.(f)
 Effective yield
  as of June 30, 2013 is <0.01%.See accompanying notes to consolidated
  financial statements.
 5


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CĪON Investment Corporation Consolidated Schedule of Investments December 31, 2012  Portfolio
  Company(a)
 
 Industry
 
 Principal/Par
  Amount
 
 Amortized
  Cost
 
 Fair Value(b)Senior
  Secured First Lien Term Loans - 44.1%Captive
  Resources Midco, LLC, L+550, 1.25% LIBOR Floor, 10/31/2018
 
 Insurance
 
 $
 997,500
 
 $
 980,111
 
 $
 980,044Plano Molding
  Co. Inc., L+450, 1.25% LIBOR Floor, 12/21/2017(c)
 
 Chemicals
 
 
 1,000,000
 
 
 990,000
 
 
 1,000,000Total Senior
  Secured First Lien Term Loans
 
 
 
 
 
 
 
 1,970,111
 
 
 1,980,044Short Term
  Investments - 40.5%(d)First American
  Treasury Obligations Fund, Class Z Shares(e)
 
 
 
 
 1,817,762
 
 
 1,817,762
 
 
 1,817,762Total Short
  Term Investments
 
 
 
 
 
 
 
 1,817,762
 
 
 1,817,762TOTAL
  INVESTMENTS - 84.6%
 
 
 
 
 
 
 $
 3,787,873
 
 $
 3,797,806OTHER ASSETS
  IN EXCESS OF LIABILITIES - 15.4%
 
 
 
 
 
 
 
 
 
 $
 689,309NET ASSETS -
  100%
 
 
 
 
 
 
 
 
 
 $
 4,487,115TOTAL RETURN
  SWAP - 0.3%
 
 
 
 Notional Amount
 
 
 
 
 Unrealized AppreciationCitibank TRS
  Facility (see Note 6)
 
 
 
 $
 2,883,100
 
 
 
 
 $
 12,493(a)
 All of the
  Company's debt investments are issued by eligible U.S. portfolio companies,
  as defined in the 1940 Act. The Company does not control and is not an
  affiliate of any of the portfolio companies in its investment portfolio.(b)
 Fair value
  determined by the Company’s board of directors (see Note 7).(c)
 Position or
  portion thereof unsettled as of December 31, 2012.(d)
 Short term
  investments represent highly liquid investments with original maturity dates
  of three months or less.(e)
 Effective yield
  as of December 31, 2012 is <0.01%.See accompanying notes to consolidated
  financial statements.
 7


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CĪON

INVESTMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL

STATEMENTS June 30, 2013 (unaudited)
 Note 1.
Organization and Principal Business CĪON Investment Corporation, or the Company, was
incorporated under the general corporation laws of the State of Maryland on
August 9, 2011. On December 17, 2012, the Company successfully raised gross
proceeds from unaffiliated outside investors of at least $2,500,000, or the
minimum offering requirement, and commenced operations. The Company is an
externally managed, non-diversified closed-end management investment company
that has elected to be regulated as a business development company, or BDC,
under the 1940 Act. The Company intends to elect to be treated for federal
income tax purposes as a regulated investment company, or RIC, as defined under
Subchapter M of the Internal Revenue Code of 1986, as amended, or the Code. The Company’s investment objective is to
generate current income and, to a lesser extent, capital appreciation for
investors. The Company anticipates that its portfolio will be comprised
primarily of investments in senior secured loans and, to a lesser extent,
second lien loans and long-term subordinated loans, referred to as mezzanine
loans, of private and thinly traded U.S. middle-market companies. The Company is managed by CĪON
Investment Management, LLC, or CIM, a registered investment adviser and an
affiliate of the Company. CIM oversees the management of the Company’s
activities and is responsible for making investment decisions for the Company’s
investment portfolio. The Company and CIM have engaged Apollo Investment
Management, L.P., or AIM, a subsidiary of Apollo Global Management, LLC, or,
together with its subsidiaries, Apollo, a leading global alternative investment
manager, to act as the Company’s investment sub-adviser. Since commencing its initial public
offering on July 2, 2012 and through August 9, 2013, the Company has sold 5,839,032
shares of common stock for gross proceeds of approximately $58,521,000 at an
average price per share of $10.02. The gross proceeds received include
reinvested shareholder distributions of $458,709, for which we issued 47,221
shares of common stock. As of June 30, 2013, the Company sold 3,853,304 shares
for gross proceeds of approximately $38,418,000 at an average price per share
of $9.97. The gross proceeds received include reinvested shareholder
distributions of $213,150, for which we issued 21,988 shares of common stock.  On December 28, 2012, January 31, 2013, March 14, 2013
and May 15, 2013, the Company’s board of directors increased the public
offering price per share of common stock under the Company’s offering to
$10.04, $10.13, $10.19 and $10.24 per share, respectively, to ensure that the
associated net offering price per share equaled or exceeded the net asset value
per share on each subsequent subscription closing date and distribution
reinvestment date.  Note 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited consolidated
financial statements of the Company have been prepared in accordance with U.S.
generally accepted accounting principles, or GAAP, for interim financial
information and with the instructions for Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by GAAP for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. For a more
complete discussion of significant accounting policies and certain other
information, the Company’s interim unaudited consolidated financial statements
should be read in conjunction with its audited consolidated financial
statements as of December 31, 2012 and for the period from January 31, 2012
(Inception) through December 31, 2012 included in the Company’s Annual Report
on Form 10-K/A. Operating results for the three and six months ended June 30,
2013 are not necessarily indicative of the results that may be expected for the
full year ending December 31, 2013. The December 31, 2012
consolidated balance sheet and the consolidated schedule of investments are
derived from the 2012 audited consolidated financial statements. Prior to satisfying the minimum offering
requirement on December 17, 2012, the Company had no operating activities
except for matters relating to its organization and registration as a
non-diversified, closed-end management investment company. As a result, there
are no consolidated statements of operations data for the three or six months
ended June 30, 2012. Certain reclassifications have been made
to the accompanying consolidated financial statements in prior periods to
conform to the current period presentation. Cash and Cash Equivalents Cash and cash equivalents include cash in
banks and highly liquid investments with original maturity dates of three
months or less. The Company’s cash and cash equivalents are held principally at
one financial institution and at times may exceed insured limits. The Company
periodically evaluates the creditworthiness of this institution and has not
experienced any losses on such deposits. Short Term Investments Short term investments include an
investment in a U.S. Treasury Obligations Fund, which seeks to provide current
income and daily liquidity by purchasing U.S. Treasury securities and
repurchase agreements that are collateralized by such securities. The Company
had $8,643,970 of such investments at June 30, 2013, which are included in
investments, at fair value on the accompanying consolidated balance sheets and
on the consolidated schedule of investments. 8


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CĪON

INVESTMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL

STATEMENTS June 30, 2013 (unaudited)
 Organization Costs Organization costs include, among other
things, the cost of organizing the Company as a Maryland corporation, including
the cost of legal services and other fees pertaining to the organization of the
Company. All organization costs have been funded by IIG and its affiliates and
there is no liability for these organization costs to the Company until IIG and
its affiliates submit such costs for reimbursement. The Company will expense
organization costs when incurred, if and when IIG and its affiliates submit such
costs for reimbursement. At June 30, 2013, IIG and its affiliates have incurred
approximately $192,000 of organization costs, which may be subject to
reimbursement by the Company. No additional organization costs have been
incurred subsequent to June 30, 2013 (see Note 3). Offering Expenses Offering expenses include, among other things, legal
fees and other costs pertaining to the preparation of the Company’s
registration statement in connection with the continuous public offering of the
Company’s shares. Certain offering expenses have been funded by IIG and its
affiliates and there is no liability for these offering expenses to the Company
until IIG and its affiliates submit such costs for reimbursement. Upon meeting
the minimum offering requirement on December 17, 2012, the Company incurred and
capitalized offering expenses of $1,000,000 that were submitted for
reimbursement by IIG (see Note 3). These expenses are amortized over a twelve
month period as an adjustment to capital in excess of par value. The
unamortized balance of these expenses is reflected in the consolidated balance
sheets as deferred offering expenses, net. The Company will expense any
additional offering expenses incurred by IIG and its affiliates if and when IIG
and its affiliates submit such costs for reimbursement. During the three and
six months ended June 30, 2013, the Company incurred $388,099 and $619,319,
respectively, in offering expenses included in general and administrative
expense in the consolidated statements of operations. At June 30, 2013, IIG and
its affiliates have incurred approximately $825,000 of unreimbursed offering
expenses, which may be subject to reimbursement by the Company. No additional material
offering expenses have been incurred by IIG and its affiliates subsequent to
June 30, 2013 (see Note 3).  Income Taxes The Company intends to elect to be
treated for federal income tax purposes as a RIC under Subchapter M of the
Code. To qualify and maintain qualification as a RIC, the Company must, among
other things, meet certain source of income and asset diversification
requirements and distribute to shareholders, for each taxable year, at least
90% of the Company’s “investment company taxable income,” which is generally
the Company’s net ordinary income plus the excess, if any, of realized net
short-term capital gains over realized net long-term capital losses. If the
Company qualifies as a RIC and satisfies the annual distribution requirement,
the Company will not have to pay corporate level federal income taxes on any
income that the Company distributes to its shareholders. The Company intends to
make distributions in an amount sufficient to maintain RIC status each year and
to avoid any federal income taxes on income. The Company will also be subject
to nondeductible federal excise taxes if the Company does not distribute at
least 98% of net ordinary income, 98.2% of any capital gains, if any, and any
recognized and undistributed income from prior years for which it paid no
federal income taxes. Book and tax basis differences relating to permanent
differences are reclassified among the Company’s capital accounts, as
appropriate. Additionally, the tax character of distributions is determined in
accordance with income tax regulations that may differ from GAAP. During the
three and six months ended June 30, 2013, the Company declared distributions of
approximately $518,000 and $727,000, respectively.  Uncertainty in Income Taxes The Company evaluates its tax positions
to determine if the tax positions taken meet the minimum recognition threshold
in connection with accounting for uncertainties in income tax positions taken
or expected to be taken for the purposes of measuring and recognizing tax
liabilities in the consolidated financial statements. Recognition of a tax
benefit or liability with respect to an uncertain tax position is required only
when the position is “more likely than not” to be sustained assuming
examination by the taxing authorities. The Company recognizes interest and
penalties, if any, related to unrecognized tax benefits as income tax expense
in the consolidated statements of operations. As of and for the three and six
months ended June 30, 2013, the Company did not have any uncertain tax
positions. Use of Estimates The preparation of the consolidated
financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results may materially differ from those estimates. Valuation of Portfolio Investments The fair value of the Company’s
investments is determined quarterly in good faith by the Company’s board of
directors pursuant to its consistently applied valuation procedures and
valuation process. Accounting Standards Codification Topic 820, Fair Value
Measurements and Disclosure, or ASC Topic 820, defines fair value as the price
that would be received from the sale of an asset or paid to transfer a
liability in an orderly transaction between market participants at the
measurement date. ASC Topic 820 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 where
there is 9


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CĪON

INVESTMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL

STATEMENTS June 30, 2013 (unaudited)
 little or no activity in the market; and
Level 3, defined as unobservable inputs for which little or no market data
exists, therefore requiring an entity to develop its own assumptions. For each investment, CIM will attempt to
obtain the most recent closing public market price. If no sales of such
investment occurred on the determination date, such investment will be valued
at the midpoint of the “bid” and the “ask” price at the close of business on
such day. Portfolio securities that carry certain restrictions on sale will
typically be consistently valued at a discount from the public market value of
the security. Loans or investments traded over the counter and not listed on an
exchange are valued at a price obtained from third-party pricing services,
including, where appropriate, multiple broker dealers, as determined by CIM. Notwithstanding the foregoing, if in the
reasonable judgment of CIM, the price for any securities held by the Company
and determined in the manner described above does not accurately reflect the fair
value of such security, CIM will value such security at a price that reflects
such security’s fair value and report such change in the valuation to the board
of directors or its designee as soon as practicable. Any securities or other assets that are not
publicly traded or for which a market price is not otherwise readily available
will be valued at a price that reflects such security’s fair value. With
respect to such investments, the investments will be reviewed and valued using
one or more of the following types of analyses: i.Market comparable statistics and
public trading multiples discounted for illiquidity, minority ownership and
other factors for companies with similar characteristics. ii.Valuations implied by third-party
investments in the applicable portfolio companies. iii.Discounted cash flow analysis,
including a terminal value or exit multiple.  Determination of fair value involves
subjective judgments and estimates. Accordingly, these notes to the Company’s
consolidated financial statements refer to the uncertainty with respect to the
possible effect of such valuations, and any change in such valuations, on the
Company’s consolidated financial statements. Below is a description of factors
that the Company’s board of directors may consider when valuing the Company’s
equity and debt investments where a market price is not readily available: ·the size and scope
of a portfolio company and its specific strengths and weaknesses; ·prevailing
interest rates for like securities; ·expected
volatility in future interest rates; ·leverage; ·call features, put
features and other relevant terms of the debt; ·the borrower’s
ability to adequately service its debt; ·the fair market
value of the portfolio company in relation to the face amount of its
outstanding debt; ·the quality of
collateral securing the Company’s debt investments; ·multiples of earnings before
interest, taxes, depreciation and amortization, or EBITDA, cash flows, net
income, revenues or, in some cases, book value or liquidation value; and ·other factors deemed
applicable. All of these factors may be subject to adjustment based
upon the particular circumstances of a portfolio company or the Company’s
actual investment position. For example, adjustments to EBITDA may take into
account compensation to previous owners, or acquisition, recapitalization, and
restructuring expenses or other related or non-recurring items. The choice of
analyses and the weight assigned to such factors may vary across investments
and may change within an investment if events occur that warrant such a change. Consistent with the
Company’s valuation policy, the Company evaluates the source of inputs,
including any markets in which the Company’s investments are trading, in
determining fair value. Given the expected types of investments,
excluding short term investments that are classified as Level 1, the Company
expects portfolio holdings to be classified as Level 2 or Level 3. Due to the
uncertainty inherent in the valuation process, particularly for Level 2 and
Level 3 investments, such fair value estimates may differ materially from the
values that would have been used had an active market for the securities
existed. In addition, changes in the market environment and other events that
may occur over the life of the investments may cause the gains or losses that
the Company ultimately realizes on these investments to materially differ from
the valuations currently assigned. Revenue Recognition Securities transactions are accounted for
on the trade date. The Company records interest and dividend income on an
accrual basis beginning on the trade settlement date or the ex-dividend date,
respectively, to the extent that the Company expects to collect such amounts.
The Company does 10


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CĪON

INVESTMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL

STATEMENTS June 30, 2013 (unaudited)
 not accrue as a receivable interest
or dividends on loans and debt securities if it has reason to doubt the ability
to collect such income. Loan origination fees, original issue discounts, and
market discounts/premiums are recorded and such amounts are amortized as
adjustments to interest income over the respective term of the loan. Upon the
prepayment of a loan or debt security, any unamortized loan origination fees
are recorded as interest income. The Company records prepayment premiums on
loans and debt securities as interest income when it receives such amounts. Net Realized Gains or Losses and Net
Change in Unrealized Appreciation or Depreciation Gains or losses on
the sale of investments are calculated by using the specific identification
method. The Company measures realized gains or losses by the difference between
the net proceeds from the repayment or sale and the amortized cost basis of the
investment, without regard to unrealized appreciation or depreciation
previously recognized, but considering unamortized upfront fees and prepayment
penalties. Net change in unrealized appreciation or depreciation reflects the
change in portfolio investment values during the reporting period, including
any reversal of previously recorded unrealized appreciation or depreciation
when gains or losses are realized. Derivative
Instrument The Company’s only derivative instrument
is a total return swap, or TRS. The Company marks its derivative to market
through net changes in unrealized appreciation (depreciation) on the TRS in the
consolidated statements of operations. Capital Gains Incentive Fee Pursuant to the terms
of the investment advisory agreement the Company entered into with CIM, the
incentive fee on capital gains earned on liquidated investments of the
Company’s investment portfolio during operations is determined and payable in
arrears as of the end of each calendar year. Such fee will equal 20% of the
Company’s incentive fee capital gains (i.e., the Company’s realized capital
gains on a cumulative basis from inception, calculated as of the end of each
calendar year, net of all realized capital losses and unrealized capital
depreciation on a cumulative basis), less the aggregate amount of any
previously paid capital gains incentive fees. On a cumulative basis and to the
extent that all realized capital losses and unrealized capital depreciation
exceed realized capital gains as well as the aggregate realized net capital
gains for which a fee has previously been paid, the Company would not be
required to pay CIM a capital gains incentive fee. On a quarterly basis, the
Company accrues for the capital gains incentive fee by calculating such fee as
if it were due and payable as of the end of such period. While the investment advisory agreement with CIM neither includes nor
contemplates the inclusion of unrealized gains in the calculation of the
capital gains incentive fee, pursuant to an interpretation of the American
Institute for Certified Public Accountants, or AICPA, Technical Practice Aid
for investment companies, the Company accrues capital gains incentive fees on
unrealized gains. This accrual reflects the incentive fees that would be
payable to CIM if the Company’s entire investment portfolio was liquidated at
its fair value as of the balance sheet date even though CIM is not entitled to
an incentive fee with respect to unrealized gains unless and until such gains
are actually realized. Net
Increase in Net Assets per Share Net increase in net assets per share is
calculated based upon the daily weighted average number of shares of common
stock outstanding during the reporting period. Distributions Distributions to shareholders are recorded
as of the record date. The amount to be paid as a distribution is determined by
the board of directors on a monthly basis. Net realized capital gains, if any,
are distributed or deemed distributed at least annually.  Note 3.
Transactions with Related Parties  The Company has entered into an investment advisory
agreement with CIM. Pursuant to the investment advisory agreement, CIM will be
paid an annual base management fee equal to 2.0% of the average value of the
Company’s gross assets, less cash and cash equivalents, and an incentive fee
based on the Company’s performance. The incentive fee consists of two parts.
The first part, which is referred to as the subordinated incentive fee on
income, will be calculated and payable quarterly in arrears based on
“pre-incentive fee net investment income” for the immediately preceding quarter
and will be subject to a hurdle rate, measured quarterly and expressed as a
rate of return on adjusted capital, as defined in the investment advisory
agreement, equal to 1.875% per quarter, or an annualized rate of 7.5%. The second
part of the incentive fee, which is referred to as the incentive fee on capital
gains, is an incentive fee on capital gains earned on liquidated investments
from the portfolio and is determined and payable in arrears as of the end of
each calendar year (or upon termination of the investment advisory agreement).
This fee will equal 20% of realized capital gains on a cumulative basis from
inception, calculated as of the end of each calendar year, computed net of all
realized capital losses and unrealized capital depreciation on a cumulative
basis, less the aggregate amount of any previously paid capital gains incentive
fees. On a cumulative basis and to the extent that all realized capital losses
and unrealized capital depreciation exceed realized capital gains as well as
the aggregate realized net capital gains for which a fee has previously been
paid, the Company would not be required to pay CIM a capital gains incentive
fee.  The Company began accruing fees under the investment
advisory agreement on December 17, 2012, upon the commencement of the Company’s
operations. For the three and six months ended June 30, 2013, CIM earned
$120,781 and $165,523, respectively, in management fees. 11


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CĪON

INVESTMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL

STATEMENTS June 30, 2013 (unaudited)
 For
the three and six months ended June 30, 2013, all management fees were
reimbursed to the Company by IIG in accordance with the expense support and
conditional reimbursement agreement entered into with IIG, or the expense
support and conditional reimbursement agreement.  The Company accrues the capital gains incentive fee
based on net realized and unrealized gains; however, under the terms of the
investment advisory agreement, the fee payable to CIM is based on net realized
gains and no such fee is payable with respect to unrealized gains unless and
until such gains are actually realized. For the three months ended June 30,
2013, the Company recorded capital gains incentive fees of $57,705 based on the
performance of its investment portfolio, of which $5,525 was based on net
unrealized gains and $52,180 was based on realized gains. For the six months
ended June 30, 2013, the Company recorded capital gains incentive fees of
$174,728 based on the performance of its investment portfolio, of which $80,497
was based on net unrealized gains and $94,231 was based on realized gains. For
the three and six months ended June 30, 2013, all incentive fees were
reimbursed to the Company by IIG in accordance with the expense support and
conditional reimbursement agreement.  On January 30, 2013, the Company entered into the
expense support and conditional reimbursement agreement with IIG, whereby IIG
agreed to reimburse the Company for expenses in an amount that is sufficient
to: (1) ensure that no portion of the Company’s distributions to shareholders
will be paid from its offering proceeds or borrowings, and/or (2) reduce the
Company’s operating expenses until it has achieved economies of scale
sufficient to ensure that it bears a reasonable level of expense in relation to
its investment income. Pursuant to the expense support and conditional
reimbursement agreement, the Company will have a conditional obligation to
reimburse IIG for any amounts funded by IIG under such agreement if, during any
fiscal quarter occurring within three years of the date on which IIG funded
such amount, the sum of the Company’s net investment income for tax purposes,
net capital gains and the amount of any dividends and other distributions paid
to the Company on account of investments in portfolio companies exceeds the
distributions paid by the Company to its shareholders. For the three and six
months ended June 30, 2013, the total expense reimbursement from IIG was $1,147,536
and $1,966,909, respectively, relating to certain operating expenses.  The Company may fund its cash distributions to
shareholders from any sources of funds available to the Company, including
offering proceeds, borrowings, net investment income from operations, capital
gains proceeds from the sale of assets, non-capital gains proceeds from the
sale of assets, dividends or other distributions paid to it on account of
preferred and common equity investments in portfolio companies and expense
reimbursements from IIG, which are subject to recoupment. The Company has not
established limits on the amount of funds it may use from available sources to
make distributions. For a significant time after the commencement of its
offering, a substantial portion of the Company’s distributions may result from
expense reimbursements from IIG, which are subject to repayment by the Company
within three years. The purpose of this arrangement is to avoid such
distributions being characterized as returns of capital. Shareholders should
understand that any such distributions are not based on the Company’s
investment performance, and can only be sustained if the Company achieves
positive investment performance in future periods and/or IIG continues to make
such expense reimbursements. Shareholders should also understand that the
Company’s future repayments will reduce the distributions that they would
otherwise receive.  There can be no assurance that the Company will
achieve such performance in order to sustain these distributions, or be able to
pay distributions at all.  IIG has no obligation to provide expense
reimbursements to the Company in future periods. For the three and six months
ended June 30, 2013, if expense reimbursements from IIG were not supported, some
or all of the distributions may be a return of capital.  The table below presents a summary of all expenses
supported by IIG and the associated dates through which such expenses are
eligible for reimbursement by the Company for each of the three months ended
December 31, 2012, March 31, 2013, and June 30, 2013.  Three Months
  Ended
 
 Expense Support
  Received from IIG
 
 Expense Support Reimbursed to IIG
 
 Unreimbursed Expense Support
 
 Ratio of Operating Expense to Average Net
  Assets for the Period(1)
 
 Annualized Distribution Rate for the
  Period(3)
 
 
 Eligible for Reimbursement throughDecember 31,
  2012
 
 $
 116,706
 
 $
 -
 
 $
 116,706
 
 0.93%
 
 0.00%
 (2)
 
 December 31, 2015March 31, 2013
 
 
 819,373
 
 
 -
 
 
 819,373
 
 2.75%
 
 7.00%
 
 
 March 31, 2016June 30, 2013
 
 
 1,147,536
 
 
 -
 
 
 1,147,536
 
 1.43%
 
 7.00%
 
 
 June 30, 2016Total
 
 $
 2,083,615
 
 $
 -
 
 $
 2,083,615(1)
 Operating
  expenses include all expenses borne by the Company, except for organizational
  and offering expenses, base management fees, incentive fees, administrative
  services expenses and other general and administrative expenses owed to CIM
  and its affiliates and interest expense.(2)
 The Company did
  not declare any distributions during the three months ended December 31,
  2012.(3)
 Annualized
  Distribution Rate equals the annualized rate of distributions paid to shareholders
  based on the amount of the regular cash distribution paid immediately prior
  to the date the expense support payment obligation was incurred by CIM.
  Annualized Distribution Rate does not include special cash or stock
  distributions paid to shareholders.
 Reimbursement of such costs will be determined as
appropriate to meet the objectives of the expense support and conditional
reimbursement agreement. As a result, the Company may or may not be requested
to reimburse any of these costs by IIG. As of June 30, 2013, the net
reimbursement from IIG was $991,154.  The Company or IIG may terminate the expense support
and conditional reimbursement agreement at any time. IIG has indicated that it
expects to continue such reimbursements until it deems that the Company has
achieved economies of scale sufficient to ensure that it bears a reasonable
level of expenses in relation to its income. If the Company terminates the
investment advisory agreement with CIM, the Company may be required to repay
IIG all reimbursements funded by IIG within three years of the date of
termination. The specific amount of expenses reimbursed by 12


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CĪON

INVESTMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL

STATEMENTS June 30, 2013 (unaudited)
 IIG,
if any, will be determined at the end of each quarter. There can be no
assurance that the expense support and conditional reimbursement agreement will
remain in effect or that IIG will reimburse any portion of the Company’s
expenses in future quarters.  The Company entered into an administration agreement
with CIM’s affiliate, ICON Capital, LLC, formerly known as ICON Capital Corp.,
or ICON Capital, pursuant to which ICON Capital furnishes the Company with
administrative services including accounting, investor relations and other
administrative services necessary to conduct its day-to-day operations. ICON
Capital is reimbursed for administrative expenses it incurs on the Company’s
behalf in performing its obligations, provided that such reimbursement will be
for the lower of ICON Capital’s actual costs or the amount that the Company
would be required to pay for comparable administrative services in the same
geographic location. Such costs will be reasonably allocated to the Company on
the basis of assets, revenues, time records or other reasonable methods. The
Company will not reimburse ICON Capital for any services for which it receives
a separate fee or for rent, depreciation, utilities, capital equipment or other
administrative items allocated to a person with a controlling interest in ICON
Capital. For the three and six months ended June 30, 2013, the Company incurred
administrative services expense from ICON Capital of $307,636 and $571,191,
respectively, of which $229,224 and $492,779, respectively, related to the
allocation of costs of administrative personnel for services rendered to the
Company and the remainder related to other reimbursable expenses. For the three
and six months ended June 30, 2013, all administrative expenses were reimbursed
by IIG in accordance with the expense support and conditional reimbursement
agreement.  The Company’s payment of organization costs and
offering expenses (including reimbursement of costs incurred by IIG and its
affiliates) is capped at 1.5% of the gross proceeds from the offering. If the
Company sells the maximum number of shares at its latest public offering price
of $10.24 per share, then the Company estimates that it may incur up to
approximately $15,360,000 of expenses. Under the terms of the investment
advisory agreement, CIM and certain of its affiliates, which includes IIG, will
become entitled to receive reimbursement of up to 1.5% of the gross proceeds
raised until all organization costs and offering expenses have been reimbursed.
Previously, the Company interpreted “raised” to mean all gross proceeds that
the Company expected to raise through the completion of the offering of its
shares, rather than actual gross proceeds raised through the date of the reimbursement.  Consistent
with such application and since the Company believed it would raise at least
$100 million through the completion of the offering of its shares, upon
commencement of operations on December 17, 2012, the Company issued 111,111 shares
of the Company’s common stock at $9.00 per share to IIG in lieu of payment of
$1,000,000 for organization and offering expenses submitted for
reimbursement.  The transaction satisfied an independent obligation
of IIG to invest $1,000,000 in the Company’s shares.  Through that
date, the Company had raised gross proceeds from unaffiliated outside investors
of $2,639,439 and from affiliated investors of $2,000,000, which, applying
1.5% of actual proceeds raised through the date of reimbursement, would have
resulted in CIM being entitled to $69,592.  With respect to any future reimbursements for
organization and offering costs, the Company will interpret the 1.5% cap based
on actual gross proceeds raised at the time of such
reimbursement.  In addition, the Company will not issue any of its
shares or other securities for services or for property other than cash or
securities except as a dividend or distribution to its security holders or in
connection with a reorganization.  Consistent with this interpretation,
on May 30, 2013, IIG paid the Company $1,000,000, plus interest accrued at a
rate of 7% per year. At June 30, 2013, IIG and its affiliates incurred
organization costs and offering expenses of approximately $2,017,000, of which
$1,000,000 have been recorded by the Company as a payable to IIG. No additional
material organization costs or offering expenses have been incurred by IIG or
its affiliates subsequent to June 30, 2013. The decision to fund the Company’s
organization costs and offering expenses and the decision to seek reimbursement
for such costs is solely at the discretion of IIG and its affiliates. As a
result, the Company may or may not be requested to reimburse any costs funded
by IIG and its affiliates.  The Company has entered into certain agreements with
ICON Securities, LLC, formerly known as ICON Securities Corp., or ICON
Securities, whereby the Company pays certain fees and reimbursements. ICON
Securities is entitled to receive a 3% dealer manager fee from the gross
offering proceeds from the sale of the Company’s shares. The selling dealers
are entitled to receive a sales commission of up to 7% of the gross offering
proceeds. Such costs are charged against capital in excess of par value when
incurred. For the three months ended June 30, 2013, the Company paid or accrued
commissions of $1,293,482 to the selling dealers and $617,001 to ICON
Securities. For the six months ended June 30, 2013, the Company paid or accrued
commissions of $2,063,117 to the selling dealers and $975,270 to ICON
Securities.  Fees and other expenses incurred by the Company related
to CIM or its affiliates were as follows:  Entity
 
 Capacity
 
 Description
 
 Three Months Ended
  June 30, 2013
 
 Six Months Ended
  June 30, 2013ICON Securities
 
 Dealer-manager
 
 Dealer-manager
  fees (1)
 
 $
 617,001
 
 $
 975,270CIM
 
 Investment
  adviser
 
 Management
  fees (2)(3)
 
 
 120,781
 
 
 165,523CIM
 
 Investment
  adviser
 
 Incentive
  fees (2)(3)
 
 
 57,705
 
 
 174,728ICON Capital
 
 Administrative
  services provider
 
 Administrative
  services expense (2)(3)
 
 
 307,636
 
 
 571,191$
 1,103,123
 
 $
 1,886,712(1)   Amount
  charged directly to equity.(2)   Amount
  charged directly to operations.(3)   Amount has
  been supported in connection with the expense support and conditional
  reimbursement agreement.
  13


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CĪON

INVESTMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL

STATEMENTS June 30, 2013 (unaudited)
 Because CIM’s senior
management team is comprised of substantially the same personnel as the senior
management team of the Company’s affiliate, ICON Capital, which is the
investment manager to certain oil and natural gas drilling partnerships, or the
oil and gas fund, and certain equipment finance funds, or equipment funds, such
members of senior management provide investment advisory and management
services to both the oil and gas fund and the equipment funds in addition to
the Company. In the event that CIM undertakes to provide investment advisory
services to other clients in the future, it will strive to allocate investment
opportunities in a fair and equitable manner consistent with the Company’s
investment objective and strategies so that the Company will not be
disadvantaged in relation to any other client of the investment adviser or its
senior management team. However, it is currently possible that some investment
opportunities will be provided to the oil and gas fund, equipment funds or
other clients of CIM rather than to the Company.  Indemnifications  The investment advisory agreement, the investment
sub-advisory agreement, the administration agreement and the dealer manager
agreement each provide certain indemnifications from the Company to the other
relevant parties to such agreements.  The Company’s maximum exposure under
these agreements is unknown. However, the Company has not experienced claims or
losses pursuant to these agreements and believes the risk of loss related to
such indemnifications to be remote.  Note 4. Distributions  The Company’s board of directors declared distributions
for twelve record dates in the six months ended June 30, 2013. Declared
distributions are paid monthly. The following table presents the cash
distributions per share that were declared during the six months ended June 30,
2013:  DistributionsThree Months Ended
 
 Per Share
 
 AmountMarch 31, 2013 (six record dates)
 
 $
 0.1769
 
 $
 208,766June 30, 2013 (six record dates)
 
 
 0.1788
 
 
 518,630Total Distributions for the six months ended June 30, 2013
 
 $
 0.3557
 
 $
 727,396
  On July 15, 2013, the Company’s board of directors
declared two regular semi-monthly cash distributions of $0.029867 per share
each, which were paid on August 1, 2013 to shareholders of record on July 15,
2013 and July 31, 2013, respectively. The timing and amount of any future
distributions to shareholders are subject to applicable legal restrictions and
the sole discretion of the Company’s board of directors.  The Company may fund cash distributions to shareholders
in the future from any sources of funds available, including offering proceeds,
borrowings, net investment income from operations, capital gains proceeds from
the sale of assets, non-capital gains proceeds from the sale of assets,
dividends or other distributions paid to the Company on account of preferred
and common equity investments in portfolio companies and expense reimbursements
from IIG, which are subject to recoupment. The Company has not established
limits on the amount of funds it may use from available sources to make
distributions.  The following table reflects the sources of the cash
distributions that the Company has declared on its shares of common stock
during the six months ended June 30, 2013:  Source of
  Distribution
 
 Distribution Amount
 
 PercentageRealized gain on
  investments and total return swap(1)
 
 $
 616,495
 
 84.8%Expense
  reimbursement from IIG
 
 
 110,901
 
 15.2%Total
 
 $
 727,396
 
 100.0%(1)
 Includes
  interest income and fees, net of financing amounts paid to Citibank, N.A., or
  Citibank, generated on the loans underlying the TRS of $145,295.
 The Company’s net investment income on a tax basis for
the six months ended June 30, 2013 was $108,209. As of June 30, 2013, the
Company has distributed all tax-basis net investment income.  There were no differences between the Company’s
GAAP-basis net investment income and the Company’s tax-basis net investment income.
The above sources are not currently estimated to be characterized as long-term
capital gains distributions.  The determination of the tax attributes of the
Company’s distributions is made annually as of the end of the Company’s fiscal
year based upon the Company’s taxable income for the full year and
distributions paid for the full year. Therefore, a determination made on a
quarterly basis may not be representative of the actual tax attributes of the
Company’s distributions for a full year. The actual tax characteristics of
distributions to shareholders are reported to shareholders annually on Form
1099-DIV.  As of June 30, 2013 and December 31, 2012, the
components of accumulated earnings on a tax basis were as follows: 14


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CĪON

INVESTMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL

STATEMENTS June 30, 2013 (unaudited)
  June 30, 2013
  (unaudited)
 
 December 31, 2012Undistributed
  net investment income
 
 $
 -
 
 $
 2,692Undistributed
  net realized gain from investments
 
 
 -
 
 
 44Net unrealized
  appreciation on investments and total return swap(1)
 
 
 615,540
 
 
 22,426$
 615,540
 
 $
 25,162(1)
 As of June 30, 2013 and December 31, 2012, the gross unrealized
  appreciation on the Company’s investments and the underlying loans of the TRS
  was $809,350 and $28,051, respectively, which included interest income and
  fees, net of financing amounts, generated on the loans underlying the TRS of
  $190,631 and $98, respectively.  As of June 30, 2013 and December 31, 2012,
  the gross unrealized depreciation on the Company’s investments and the
  underlying loans of the TRS was $193,810 and $5,625, respectively.
 The aggregate cost of the Company’s investments for
federal income tax purposes totaled $30,147,318 and $3,787,873 as of June 30,
2013 and December 31, 2012, respectively. The aggregate net unrealized
appreciation on a tax basis, including the Company’s TRS, was $615,540 and
$22,426 as of June 30, 2013 and December 31, 2012, respectively.  Note 5.
Investments  The composition of the Company’s investment portfolio
as of June 30, 2013 and December 31, 2012 at amortized cost and fair value was
as follows:  June 30, 2013
  (unaudited)
 
 December 31, 2012Amortized Cost(1)
 
 Fair Value
 
 Percentage of Investment Portfolio
 
 Amortized Cost(1)
 
 Fair Value
 
 Percentage of Investment PortfolioSenior Secured
  Term Loans - First lien(2)
 
 $
 16,203,845
 
 $
 16,417,934
 
 53.9%
 
 $
 1,970,111
 
 $
 1,980,044
 
 52.1%Senior Secured
  Term Loans - Second lien(2)
 
 
 5,299,503
 
 
 5,410,360
 
 17.7%
 
 
 -
 
 
 -
 
 -%Short term
  investments(3)
 
 
 8,643,970
 
 
 8,643,970
 
 28.4%
 
 
 1,817,762
 
 
 1,817,762
 
 47.9%Total
  investments
 
 $
 30,147,318
 
 $
 30,472,264
 
 100.0%
 
 $
 3,787,873
 
 $
 3,797,806
 
 100.0%(1)
 Amortized cost
  represents the original cost adjusted for the amortization of premiums and/or
  accretion of discounts, as applicable, on the Company’s investments.(2)
 The Company does
  not control and is not an affiliate of any of the portfolio companies in its
  investment portfolio.(3)
 Short term
  investments represent highly liquid investments with original maturity dates of
  three months or less.
 15


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CĪON

INVESTMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL

STATEMENTS June 30, 2013 (unaudited)
 The table below shows the
composition of the Company’s investment portfolio by industry classification
and the percentage, by fair value, of the total investment portfolio assets in
such industries as of June 30, 2013 and December 31, 2012:  June 30, 2013
  (unaudited)
 
 December 31, 2012Investments at Fair Value
 
 Percentage of
  Investment Portfolio
 
 Investments at Fair Value
 
 Percentage of
  Investment PortfolioOil & Gas
 
 $
 3,666,750
 
 12.0%
 
 $
 -
 
 -%Media
 
 
 2,455,625
 
 8.1%
 
 
 -
 
 -%Telecommunications
 
 
 2,012,815
 
 6.5%
 
 
 -
 
 -%Construction
 
 
 1,997,500
 
 6.5%
 
 
 -
 
 -%Environmental Services
 
 
 1,905,225
 
 6.3%
 
 
 -
 
 -%Professional & Business Services
 
 
 1,521,451
 
 5.0%
 
 
 -
 
 -%Financial Services
 
 
 1,447,435
 
 4.8%
 
 
 -
 
 -%Healthcare
 
 
 1,151,732
 
 3.8%
 
 
 -
 
 -%Building Materials
 
 
 1,002,500
 
 3.3%
 
 
 -
 
 -%Food & Beverage
 
 
 999,994
 
 3.3%
 
 
 -
 
 -%Chemicals
 
 
 979,875
 
 3.2%
 
 
 1,000,000
 
 26.3%Insurance
 
 
 975,131
 
 3.2%
 
 
 980,044
 
 25.8%Printing & Publishing
 
 
 703,618
 
 2.3%
 
 
 -
 
 -%Gaming & Hotels
 
 
 506,875
 
 1.7%
 
 
 -
 
 -%Entertainment & Leisure
 
 
 501,768
 
 1.6%
 
 
 -
 
 -%U.S. Treasury Securities
 
 
 8,643,970
 
 28.4%
 
 
 1,817,762
 
 47.9%Total
 
 $
 30,472,264
 
 100.0%
 
 $
 3,797,806
 
 100.0%
  Note 6.
Total Return Swap  On December 17, 2012, the Company, through its
wholly-owned subsidiary, Flatiron Funding, LLC, or Flatiron, entered into a TRS
with Citibank.  The agreements between Flatiron and Citibank, which
collectively establish the TRS, are referred to as the TRS Agreement.  A TRS is a contract in which one party agrees to make
periodic payments to another party based on the change in the market value of
the assets underlying the TRS and interest payments in return for periodic
payments based on a fixed or variable interest rate. A TRS effectively adds
leverage to a portfolio by providing investment exposure to a security or
market without owning or taking physical custody of such security or investing
directly in such market. Because of the unique structure of a TRS, a TRS
typically offers lower financing costs than are offered through more
traditional borrowing arrangements.  The TRS with Citibank enables the Company, through its
ownership of Flatiron, to obtain the economic benefit of owning the loans
subject to the TRS, without actually owning them, in return for an
interest-type payment to Citibank. As such, the TRS is analogous to Flatiron
borrowing funds to acquire loans and incurring interest expense to a lender.  The obligations of Flatiron under the TRS are
non-recourse to the Company and the Company’s exposure under the TRS is limited
to the value of the Company’s investment in Flatiron, which generally will
equal the value of cash collateral provided by Flatiron under the TRS. Pursuant
to the terms of the TRS, Flatiron may select loans with a maximum aggregate
market value (determined at the time each such loan becomes subject to the TRS)
of the lesser of (a) $150,000,000 and (b) 140% of the aggregate amount of cash
contributed to the equity capital of the Company during the first nine months
of the TRS and not withdrawn during that period, or the maximum portfolio
amount. Flatiron is required to initially cash collateralize a specified
percentage of each loan (generally 25% of the market value of such loan)
included under the TRS in accordance with margin requirements described in the
TRS Agreement. Under the terms of the TRS, Flatiron agreed not to draw upon, or
post as collateral, such cash collateral in respect of other financings or
operating requirements prior to the termination of the TRS. Neither the cash
collateral required to be posted with Citibank nor any other assets of Flatiron
are available to pay the debts of the Company.  Each individual loan must meet criteria described in
the TRS Agreement, including a requirement that substantially all of the loans
be rated by Moody’s and S&P and quoted by a nationally-recognized pricing
service. Under the terms of the TRS, Citibank, as calculation agent, determines
whether there has been a failure to satisfy the portfolio criteria in the TRS.
If such failure continues for 30 days following the delivery of notice thereof,
then Citibank has the right, but not the obligation, to terminate the TRS.
Flatiron receives from Citibank all interest and fees payable in respect of the
loans included in the TRS. Flatiron pays to Citibank interest at a rate equal
to, in respect of each loan included in the TRS, the floating rate index
specified for such loan + 1.25% per year. In addition, upon the termination or
repayment of any loan subject to the TRS, Flatiron will either receive from
Citibank the appreciation in the value of such loan or pay to Citibank any
depreciation in the value of such loan.  16


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CĪON

INVESTMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL

STATEMENTS June 30, 2013 (unaudited)
 Under the terms of the TRS,
Flatiron may be required to post additional cash collateral, on a
dollar-for-dollar basis, in the event of depreciation in the value of the
underlying loans after such value decreases below a specified amount. The limit
on the additional collateral that Flatiron may be required to post pursuant to
the TRS is equal to the difference between the full notional amount of the
loans underlying the TRS and the amount of cash collateral already posted by
Flatiron. The amount of collateral required to be posted by Flatiron is
determined primarily on the basis of the aggregate value of the underlying
loans.  The Company has no contractual obligation to post any
such additional collateral or to make any interest payments to Citibank on
behalf of Flatiron. The Company may, but is not obligated to, increase its
investment in Flatiron for the purpose of funding any additional collateral or
payment obligations for which Flatiron may become obligated during the term of
the TRS. If the Company does not make any such additional investment in
Flatiron and Flatiron fails to meet its obligations under the TRS, then
Citibank will have the right to terminate the TRS and seize the cash collateral
posted by Flatiron under the TRS. In the event of an early termination of the
TRS, Flatiron would be required to pay an early termination fee.  Citibank may terminate the TRS on or after December 17,
2013, or the call date. Flatiron may terminate the TRS at any time upon
providing no more than 30 days prior notice to Citibank. Any termination prior
to the call date will result in payment of an early termination fee to Citibank
based on the maximum portfolio amount of the TRS. Under the terms of the TRS,
the early termination fee will equal the present value of a stream of monthly
payments that would be owed by Flatiron to Citibank for the period from the
termination date through and including the call date. Such monthly payments
will equal the product of 60% of the maximum portfolio amount, multiplied by
1.25% per year. The Company estimates the early termination fee would have been
approximately $201,000 at June 30, 2013. Other than during the first nine
months and last 180 days of the term of the TRS, Flatiron may be required to
pay a minimum usage fee in connection with the TRS. At June 30, 2013, Flatiron
was not subject to a minimum usage fee.  In connection with the TRS, Flatiron is required to
comply with various covenants and reporting requirements as defined in the TRS
Agreement. As of June 30, 2013, Flatiron was in compliance with all covenants
and reporting requirements.  For purposes of computing the capital gains incentive
fee, the Company treats the net realized gains or losses on the sale or maturity
of the underlying TRS loans as realized gains or losses on the TRS.  For
purposes of computing the subordinated incentive fee on income, the Company
treats the interest spread, which represents the difference between i) the
interest and fees received on the underlying TRS loans and ii) the interest
paid to Citibank on the settled notional value of the TRS loans, as
pre-incentive fee net investment income on the TRS. Accordingly, all net
realized economic benefits associated with the underlying TRS loans, if any,
are included in the computation of either the capital gains incentive fee or
the subordinated incentive fee on income. Any unrealized appreciation on the
TRS is reflected in total assets on the Company’s consolidated balance sheets
and included in the computation of the base management fee.  For purposes of the asset coverage ratio test
applicable to the Company as a BDC, the Company will treat the outstanding
notional amount of the TRS, less the initial amount of any cash collateral
required to be posted by Flatiron under the TRS, as a senior security for the
life of that instrument. The Company may, however, accord different treatment
to the TRS in the future in accordance with any applicable new rules or
interpretations adopted by the staff of the Securities and Exchange Commission,
or SEC.  Further, for purposes of Section 55(a) under the 1940
Act, the Company will treat each loan underlying the TRS as a qualifying asset
if the obligor on such loan is an eligible portfolio company and as a non-qualifying
asset if the obligor is not an eligible portfolio company. The Company may,
however, accord different treatment to the TRS in the future in accordance with
any applicable new rules or interpretations adopted by the staff of the SEC.  As of June 30, 2013, the fair value of the TRS was $290,594.
The fair value of the TRS is reflected as unrealized appreciation on total
return swap on the Company’s consolidated balance sheets. The change in value
of the TRS is reflected in the Company’s consolidated statements of operations
as net change in unrealized appreciation on total return swap. As of June 30,
2013, Flatiron had selected 39 underlying loans with a total notional amount of
$37,683,784 and posted $10,334,242 in cash collateral held by Citibank (of
which only $10,297,039 was required to be posted, which is reflected in due
from counterparty on the Company’s consolidated balance sheets). 17


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CĪON

INVESTMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL

STATEMENTS June 30, 2013 (unaudited)
 The following is a summary of the underlying loans
subject to the TRS as of June 30, 2013:  Underlying
  Loans(a)
 
 Industry
 
 Notional Amount
 
 Market
  Value(b)
 
 Unrealized Appreciation (Depreciation)Senior
  Secured First Lien Term LoansABB Concise
  Optical Group, LLC, L+350, 1.00% LIBOR Floor, 2/6/2019(c)
 
 Healthcare
 
 $
 1,496,256
 
 $
 1,480,015
 
 $
 (16,241)Arysta
  LifeScience SPC, LLC, L+350, 1.00% LIBOR Floor, 5/29/2020(d)
 
 Chemicals
 
 
 800,975
 
 
 796,451
 
 
 (4,524)ATI Holdings,
  Inc., L+450, 1.25% LIBOR Floor, 12/21/2019
 
 Healthcare
 
 
 492,526
 
 
 499,366
 
 
 6,840Avaya Inc.,
  L+675, 1.25% LIBOR Floor, 3/31/2018
 
 Telecommunications
 
 
 2,005,045
 
 
 1,861,901
 
 
 (143,144)BBTS Borrower
  LP, L+650, 1.25% LIBOR Floor, 6/4/2019
 
 Oil & Gas
 
 
 1,368,180
 
 
 1,371,055
 
 
 2,875Caraustar
  Industries, Inc., L+625, 1.25% LIBOR Floor, 5/1/2019
 
 Packaging
 
 
 749,338
 
 
 758,775
 
 
 9,437Centaur Gaming,
  L+400, 1.25% LIBOR Floor, 2/20/2019
 
 Gaming &
  Hotels
 
 
 497,500
 
 
 497,500
 
 
 -Cole Haan LLC,
  L+450, 1.25% LIBOR Floor, 2/1/2020
 
 Textile &
  Apparel Mfg.
 
 
 496,342
 
 
 499,924
 
 
 3,582Cyanco
  Intermediate Corp., L+450, 1.00% LIBOR Floor, 5/1/2020(c)
 
 Chemicals
 
 
 761,310
 
 
 765,155
 
 
 3,845Grande
  Communications Networks LLC, L+350, 1.00% LIBOR Floor, 5/31/2020(c)
 
 Telecommunications
 
 
 1,008,930
 
 
 1,007,662
 
 
 (1,268)Herff Jones
  Inc., L+450, 1.00% LIBOR Floor, 6/25/2019(c)
 
 Textile &
  Apparel Mfg.
 
 
 1,983,650
 
 
 2,031,585
 
 
 47,935Integra Telecom,
  Inc., L+400, 1.25% LIBOR Floor, 2/22/2019
 
 Telecommunications
 
 
 493,763
 
 
 498,501
 
 
 4,738Ion Trading
  Technologies S.Á R.L., L+325, 1.25% Floor, 5/22/2020(d)
 
 Financial
  Services
 
 
 497,500
 
 
 496,665
 
 
 (835)KCG Holdings,
  Inc., L+450, 1.25% LIBOR Floor, 12/5/2017(c)(d)
 
 Financial
  Services
 
 
 495,000
 
 
 491,875
 
 
 (3,125)Lineage
  Logistics, LLC, L+350, 1.00% LIBOR Floor, 4/26/2019
 
 Diversified
  Support Services
 
 
 515,410
 
 
 515,628
 
 
 218Orbitz
  Worldwide, L+475, 1.00% LIBOR Floor, 3/25/2019(d)
 
 Entertainment
  & Leisure
 
 
 500,000
 
 
 500,415
 
 
 415Packaging
  Coordinators, Inc., L+425, 1.25% LIBOR Floor, 5/10/2020
 
 Packaging
 
 
 1,990,000
 
 
 2,010,000
 
 
 20,000Peppermill
  Casinos, L+600, 1.25% LIBOR Floor, 11/9/2018
 
 Gaming &
  Hotels
 
 
 982,563
 
 
 1,014,900
 
 
 32,337Polyconcept
  Finance B.V., L+475, 1.25% LIBOR Floor, 6/28/2019(c)(d)
 
 Professional
  & Business Services
 
 
 2,534,280
 
 
 2,534,280
 
 
 -Safe-Guard
  Products International, LLC, L+600, 1.25% LIBOR Floor, 12/21/2018
 
 Financial
  Services
 
 
 896,097
 
 
 940,902
 
 
 44,805SESAC Holdco II,
  LLC, L+475, 1.25% LIBOR Floor, 2/8/2019
 
 Media
 
 
 492,525
 
 
 498,744
 
 
 6,219SRA
  International, L+525, 1.25% LIBOR Floor, 7/20/2018
 
 Computers &
  Electronics
 
 
 1,957,500
 
 
 1,984,160
 
 
 26,660Steward Health
  Care System LLC, L+550, 1.25% LIBOR Floor, 4/10/2020
 
 Healthcare
 
 
 495,000
 
 
 502,500
 
 
 7,500Sutherland
  Global Services, L+600, 1.25% LIBOR Floor, 3/6/2019(d)
 
 Professional
  & Business Services
 
 
 1,971,633
 
 
 1,974,854
 
 
 3,221Tervita, L+500,
  1.25% LIBOR Floor, 5/15/2018(d)
 
 Ecological
 
 
 546,101
 
 
 548,308
 
 
 2,207Travelport LLC,
  L+500, 1.25% LIBOR Floor, 6/26/2019(d)
 
 Entertainment
  & Leisure
 
 
 1,093,350
 
 
 1,096,125
 
 
 2,775TriNet HR Corp.
  and SOI Holdings, Inc., L+450, 10/24/2017
 
 Professional
  & Business Services
 
 
 246,228
 
 
 244,994
 
 
 (1,234)TriNet HR Corp.
  and SOI Holdings, Inc., L+525, 1.25% LIBOR Floor, 10/24/2018
 
 Professional
  & Business Services
 
 
 249,374
 
 
 248,751
 
 
 (623)VFH Parent LLC,
  L+450, 1.25% LIBOR Floor, 7/8/2016
 
 Financial
  Services
 
 
 479,910
 
 
 483,369
 
 
 3,459Waupaca Foundry,
  Inc., L+350, 1.00% LIBOR Floor, 6/29/2017
 
 Steel
 
 
 487,272
 
 
 485,040
 
 
 (2,232)Washington
  Inventory Services, L+450, 1.25% LIBOR Floor, 12/20/2018
 
 Professional
  & Business Services
 
 
 495,013
 
 
 496,257
 
 
 1,244Total Senior
  Secured First Lien Term Loans
 
 
 
 
 29,078,571
 
 
 29,135,657
 
 
 57,086Senior
  Secured Second Lien Term LoansArysta
  LifeScience SPC, LLC, L+700, 1.25% LIBOR Floor, 11/30/2020(c)(d)
 
 Chemicals
 
 
 664,290
 
 
 659,257
 
 
 (5,033)Carestream
  Health, Inc., L+850, 1.00% LIBOR Floor, 12/7/2019(d)
 
 Healthcare
 
 
 980,000
 
 
 980,000
 
 
 -Deltek Inc.,
  L+875, 1.25% LIBOR Floor, 10/10/2019
 
 Computers &
  Electronics
 
 
 1,619,640
 
 
 1,646,912
 
 
 27,272Ion Trading
  Technologies S.Á R.L., L+700, 1.25% Floor, 5/22/2021(d)
 
 Financial
  Services
 
 
 495,000
 
 
 498,750
 
 
 3,750Performance Food
  Group, Inc., L+525, 1.00% LIBOR Floor, 11/14/2019
 
 Food &
  Beverage
 
 
 879,580
 
 
 875,160
 
 
 (4,420)Securus
  Technologies Holdings, Inc., L+775, 1.25% LIBOR Floor, 4/30/2021
 
 Telecommunications
 
 
 501,875
 
 
 500,315
 
 
 (1,560)TWCC Holding
  Corp., L+600, 1.00% LIBOR Floor, 6/26/2020(c)
 
 Media
 
 
 2,039,400
 
 
 2,070,300
 
 
 30,900Total Senior
  Secured Second Lien Term Loans
 
 
 
 
 7,179,785
 
 
 7,230,694
 
 
 50,909Subordinated
  Unsecured Term LoansCatalent Pharma
  Solutions Inc., L+525, 1.25% LIBOR Floor, 12/31/2017(c)(d)
 
 Healthcare
 
 
 1,425,428
 
 
 1,417,396
 
 
 (8,032)Total
 
 
 
 $
 37,683,784
 
 $
 37,783,747
 
 
 99,963Total interest
  income, net of expenses on TRS
 
 
 190,631Total Fair
  Value of TRS
 
 $
 290,594(a)
 All of the
  Company's debt investments are issued by eligible U.S. portfolio companies,
  as defined in the 1940 Act, except for investments specifically identified as
  non-qualifying. The Company does not control and is not an affiliate of any
  of the  companies that are issuers of the underlying loans subject to the
  TRS.(b)
 Fair value
  determined by the Company’s board of directors (see Note 7).(c)
 Position or
  portion thereof unsettled as of June 30, 2013.(d)
 The investment
  is not a qualifying asset under the 1940 Act. A business development company
  may not acquire any asset other than qualifying assets, unless, at the time
  the acquisition is made, qualifying assets represent at least 70% of the
  Company’s total assets as defined under Section 55 of the 1940 Act. As of
  June 30, 2013, 94.1% of the Company’s total assets represented qualifying
  assets. In addition, as described in Note 6, the Company calculates its
  compliance with the qualifying asset test on a “look through” basis by
  treating each loan underlying the total return swap as either a qualifying
  asset or non-qualifying asset based on whether the obligor is an eligible
  portfolio company. On this basis, 77.5% of the Company’s total assets
  represented qualifying assets as of June 30, 2013.
 18


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CĪON

INVESTMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL

STATEMENTS June 30, 2013 (unaudited)
  The following is a summary of the underlying loans
subject to the TRS as of December 31, 2012: Underlying Loans(a)
 
 Industry
 
 Notional Amount
 
 Market
  Value(b)
 
 Unrealized Appreciation / (Depreciation)Senior
  Secured First Lien Term LoansPeppermill Casinos Inc., L+600, 1.25% LIBOR Floor, 11/9/2018
 
 Gaming &
  Hotels
 
 $
 492,500
 
 $
 486,875
 
 $
 (5,625)Safe-Guard
  Products International, LLC, L+600, 1.25% LIBOR Floor, 12/21/2018
 
 Financial
  Services
 
 
 900,600
 
 
 905,340
 
 
 4,740Sequa Corporation, L+400, 1.25% LIBOR Floor, 6/19/2017
 
 Aerospace/Defense
 
 
 497,500
 
 
 502,655
 
 
 5,155TransFirst Holdings, Inc., L+500, 1.25% LIBOR Floor, 12/27/2017
 
 Computers &
  Electronics
 
 
 495,000
 
 
 500,000
 
 
 5,000Washington Inventory Service, L+450, 1.25% LIBOR Floor,
  12/20/2018
 
 Professional
  & Business Services
 
 
 497,500
 
 
 500,625
 
 
 3,125Total
 
 
 
 $
 2,883,100
 
 $
 2,895,495
 
 
 12,395Total
  interest income, net of expenses on TRS
 
 
 98Total Fair
  Value of TRS
 
 $
 12,493(a)
 All of the
  Company's debt investments are issued by eligible U.S. portfolio companies,
  as defined in the 1940 Act. The Company does not control and is not an
  affiliate of any of the  companies that are issuers of the underlying loans
  subject to the TRS.(b)
 Fair value
  determined by the Company’s board of directors (see Note 7).
  Note 7.
Fair Value of Financial Instruments  The Company determines the fair value of all portfolio
investments in accordance with ASC Topic 820. ASC Topic 820 requires enhanced
disclosures about assets and liabilities that are measured and reported at fair
value. As defined in ASC Topic 820, fair value is 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 Topic 820 establishes a hierarchical disclosure
framework that prioritizes and ranks the level of market price observability of
inputs used in measuring investments at fair value. Market price observability
is affected by a number of factors, including the type of investment and the
characteristics specific to the investment. Investments with readily available
active quoted prices or for which fair value can be measured from actively
quoted prices generally will have a higher degree of market price observability
and a lesser degree of judgment used in measuring fair value.  Based on the observability of the inputs used in the
valuation techniques, the Company is required to provide disclosures on fair
value measurements according to the fair value hierarchy. Investments carried
at fair value are classified and disclosed in one of the following three
categories:  ·Level
1—Valuations based on quoted prices in active markets for identical assets or
liabilities that the Company has the ability to access. The Company’s short
term investments are included in this category.  ·Level
2—Valuations based on inputs other than quoted prices in active markets, which
are either directly or indirectly observable.  ·Level
3—Valuations based on inputs that are unobservable and significant to the
overall fair value measurement. The inputs used in the determination of fair
value may require significant management judgment or estimation. Such
information may be the result of consensus pricing information or broker quotes
that include a disclaimer that the broker would not be held to such a price in
an actual transaction. The non-binding nature of consensus pricing and/or
quotes accompanied by the disclaimer would result in classification as a Level
3 asset, assuming no additional corroborating evidence.  The following table presents fair value measurements of
the Company’s portfolio investments and TRS as of June 30, 2013, according to
the fair value hierarchy:  Valuation
  Inputs
 
 First Lien Senior Secured Term Loans
 
 Second Lien Senior Secured Term Loans
 
 Short Term Investments
 
 Total Return SwapLevel 1—Price
  quotations in active markets
 
 $
 -
 
 $
 -
 
 $
 8,643,970
 
 $
 -Level
  2—Significant other observable inputs
 
 
 -
 
 
 -
 
 
 -
 
 
 -Level
  3—Significant unobservable inputs
 
 
 16,417,934
 
 
 5,410,360
 
 
 -
 
 
 290,594$
 16,417,934
 
 $
 5,410,360
 
 $
 8,643,970
 
 $
 290,594
  The following table presents fair value measurements of
the Company’s portfolio investments and TRS as of December 31, 2012, according
to the fair value hierarchy: 19


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CĪON

INVESTMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL

STATEMENTS June 30, 2013 (unaudited)
  Valuation
  Inputs
 
 First Lien Senior Secured Term Loans
 
 Short Term Investments
 
 Total Return SwapLevel 1—Price
  quotations in active markets
 
 $
 -
 
 $
 1,817,762
 
 $
 -Level
  2—Significant other observable inputs
 
 
 -
 
 
 -
 
 
 -Level
  3—Significant unobservable inputs
 
 
 1,980,044
 
 
 -
 
 
 12,493$
 1,980,044
 
 $
 1,817,762
 
 $
 12,493
  The Company’s investments as of June 30, 2013,
excluding short term investments, primarily consisted of debt securities that
are traded on a private over-the-counter market for institutional investors.
Except for investments specifically identified, the Company valued its portfolio
investments by using market comparables, discounted cash flow models and
independent third-party pricing services, which provided prevailing bid and ask
prices that were screened for validity by the pricing service from dealers on
the determination date of the relevant period end. The Company’s investments as of December 31, 2012,
excluding short term investments, primarily consisted of debt securities that
are traded on a private over-the-counter market for institutional investors.
Except for investments specifically identified, the Company valued its
portfolio investments by using market comparables, discounted cash flow models
and independent third-party pricing services, which provided prevailing bid and
ask prices that were screened for validity by the pricing service from dealers
on the determination date of the relevant period end. One senior secured loan
that was purchased near December 31, 2012 was valued at cost, as the
Company determined that the cost of the investment was the best indication of
its fair value.  The discounted cash flow model deemed appropriate by
CIM is prepared for the applicable investments and reviewed by the Company’s
valuation committee. Such models are prepared quarterly or on an as needed
basis. The model uses the estimated cash flow projections for the underlying
investments and an appropriate discount rate is determined based on the latest
financial information available for the borrower, prevailing market trends,
comparable analysis and other inputs. The model, key assumptions, inputs, and
results are reviewed by the Company’s valuation committee consisting of senior
management with final approval from the board of directors.  The Company periodically benchmarks the bid and ask
prices received from the third-party pricing services against the actual prices
at which it purchases and sells its investments. Based on the results of the
benchmark analysis and the Company’s experience in purchasing and selling these
investments, the Company believes that these prices are reliable indicators of
fair value. However, because of the private nature of this marketplace (meaning
actual transactions are not publicly reported), the Company believes that these
valuation inputs are classified as Level 3 within the fair value hierarchy. The
Company may also use other methods to determine fair value for securities for
which it cannot obtain prevailing bid and ask prices through third-party
pricing services or independent dealers, including the use of an independent
valuation firm. The Company intends to periodically benchmark the valuations
provided by the independent valuation firm against the actual prices at which
it purchases and sells its investments. The Company’s valuation committee and
board of directors intend to review and approve the valuation determinations
made with respect to these investments in a manner consistent with the
Company’s valuation process.  The Company valued its TRS in accordance with the TRS
Agreement. Pursuant to the TRS Agreement, the fair value of the TRS is based on
the increase or decrease in the value of the loans underlying the TRS, together
with accrued interest income, interest expense and certain other expenses
incurred under the TRS. The loans underlying the TRS are valued by Citibank. Citibank
bases its valuation primarily on the indicative bid prices provided by an
independent third-party pricing service. Bid prices reflect a price that market
participants may be willing to pay for an investment. These valuations are sent
to the Company for review and testing. The Company reviews and approves the
value of the TRS, as well as the value of the loans underlying the TRS, on a
quarterly basis as part of the quarterly valuation process. To the extent the
Company has any questions or concerns regarding the valuation of the loans
underlying the TRS, such valuations will be discussed or challenged pursuant to
the terms of the TRS. As a result of the private nature of this marketplace
(meaning actual transactions are not publicly reported), the Company believes
that the total fair value of the TRS should be classified as Level 3 within the
fair value hierarchy. The Company did not have any transfers between Level 1,
Level 2, and Level 3 of the fair value hierarchy for the three and six months
ended June 30, 2013. The Company’s policy is to recognize transfers in and out
as of the actual date of the event or change in circumstances that causes the
transfer.  The following table provides a reconciliation of the
beginning and ending balances for investments that use Level 3 inputs for the
six months ended June 30, 2013:  First Lien Senior Secured Term Loans
 
 Second Lien Senior Secured Term Loans
 
 Total Return Swap
 
 TotalBalance, as of
  December 31, 2012
 $
 1,980,044
 
 $
 -
 
 $
 12,493
 
 $
 1,992,537Investments
  purchased
 15,362,353
 
 5,295,825
 
 -
 
 20,658,178Net realized
  gain
 14,971
 
 -
 
 -
 
 14,971Net change in
  unrealized appreciation(1)
 204,156
 
 110,857
 
 278,101
 
 593,114Accretion of
  discount
 3,333
 
 3,678
 
 -
 
 7,011Sales and
  redemptions
 (1,146,923)
 
 -
 
 -
 
 (1,146,923)Balance, as of
  June 30, 2013
 $
 16,417,934
 
 $
 5,410,360
 
 $
 290,594
 
 $
 22,118,888(1)
 Represents the
  amount of total gains/losses for the period included in the change in
  unrealized appreciation on investments and change in unrealized appreciation
  on total return swap still held at the reporting date.
 20


---



CĪON

INVESTMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL

STATEMENTS June 30, 2013 (unaudited)
  Significant
Unobservable Inputs  The valuation techniques and significant unobservable
inputs used in recurring Level 3 fair value measurements of assets as of June
30, 2013 were as follows:  Fair Value(1)
 
 Valuation Technique
 
 Unobservable Inputs
 
 Range
  (Weighted Average)Senior Secured
  First Lien Term Loans
 $
 16,417,934
 
 Discounted cash flow
 
 Discount rates
 
 4.75% - 8.75%
  (6.51%)Senior Secured
  Second Lien Term Loans
 $
 5,410,360
 
 Discounted cash flow
 
 Discount rates
 
 7.91% - 11.25%
  (9.09%)(1)   The TRS
  was valued in accordance with the TRS Agreement as discussed above.
  The significant unobservable inputs used in the fair
value measurement of the Company’s senior secured first lien and second lien
term loans are the discount rates. A significant increase or decrease in the
discount rates would result in a significantly lower or higher fair value
measurement, respectively.  Note 8. General and
Administrative Expense  General and administrative expense consists of the following
items for the three and six months ended June 30, 2013:  Three Months Ended
  June 30, 2013
 
 Six Months Ended
  June 30, 2013Professional
  fees expense
 $
 408,062
 
 $
 687,649Marketing
  expense
 96,759
 
 183,399Printing and
  mailing expense
 73,738
 
 98,626Insurance
  expense
 52,901
 
 105,802Filing fees
 51,450
 
 57,550Director fees
  and expenses
 8,185
 
 16,024Other expenses
 60,920
 
 111,828Total general
  and administrative expense
 $
 752,015
 
 $
 1,260,878
  Note 9. Borrowings  In 2012, the Company entered into an unsecured
financing arrangement with Flatiron Capital, an unaffiliated third party, for
directors and officers insurance in an amount of approximately $179,000.
Payments under the financing arrangement were due in 10 equal installments,
with final payment made on April 19, 2013.  Note 10.
Commitments and Contingencies  The Company entered into certain contracts with other
parties that contain a variety of indemnifications. The Company’s maximum
exposure under these arrangements is unknown. However, the Company has not
experienced claims or losses pursuant to these contracts and believes the risk
of loss related to such indemnifications to be remote. 21


---



CĪON INVESTMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2013 (unaudited)
 Note 11. Financial Highlights  The following is a schedule of financial highlights as
of and for the six months ended June 30, 2013 and for the period from January
31, 2012 (Inception) through December 31, 2012: Six Months Ended June 30, 2013
 
 For the Period from January 31, 2012
  (Inception) through December 31, 2012Per share
  data:(1)Net asset value
  at beginning of period
 $
 8.97
 
 $
 -Results of
  operations:Net investment
  income(2)
 
 0.05
 
 
 0.01Net realized
  gain and net change in unrealized appreciation on investments
 
 0.16
 
 
 0.02Net realized
  gain and net change in unrealized appreciation on total return swap
 
 0.44
 
 
 0.02Net increase in
  net assets resulting from operations
 
 0.65
 
 
 0.05Shareholder
  distributions:Distributions
  from net investment income
 
 (0.06)
 
 
 -Distributions
  from net realized gains
 
 (0.30)
 
 
 -Net decrease in
  net assets from shareholder distributions
 
 (0.36)
 
 
 -Capital share transactions:Issuance of
  common stock above net asset value(3)
 
 0.15
 
 
 9.00Amortization of
  deferred offering expenses
 
 (0.24)
 
 
 (0.08)Net (decrease)
  increase in net assets resulting from capital share transactions
 
 (0.09)
 
 
 8.92Net asset value
  at end of period
 $
 9.17
 
 $
 8.97Shares of common
  stock outstanding at end of period
 
 3,853,304
 
 
 500,338Total investment
  return-net asset value(4)
 
 6.05%
 
 
 (0.35%)Net assets at beginning
  of period(5)
 $
 4,487,115
 
 $
 4,503,049Net assets at
  end of period
 $
 35,321,918
 
 $
 4,487,115Average net
  assets
 $
 19,904,517
 
 $
 4,495,082Ratio/Supplemental
  data:(5)Ratio of net
  investment income to average net assets(6)
 
 0.54%
 
 
 0.06%Ratio of net
  operating expenses to average net assets(6)
 
 1.03%
 
 
 0.00%Ratio of gross
  operating expenses to average net assets(7)
 
 3.22%
 
 
 0.93%Ratio of
  expenses reimbursed from IIG to average net assets(6)
 
 9.88%
 
 
 2.60%Portfolio
  turnover rate(8)
 
 11.95%
 
 
 0.13%Asset coverage
  ratio(9)
 
 2.29
 
 
 3.02
  22


---



CĪON INVESTMENT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2013 (unaudited)
 (1)
 The per share data for the period from January 31, 2012
  (Inception) through December 31, 2012 was derived by using the weighted
  average shares of common stock outstanding from the commencement of
  operations on December 17, 2012, through December 31, 2012.(2)
 Net investment income per share includes the expense
  reimbursement from IIG of $0.97 and $0.23 per share for the six months ended
  June 30, 2013 and the period from January 31, 2012 (Inception) through
  December 31, 2012, respectively.(3)
 The continuous issuance of shares of common stock may
  cause an incremental increase in net asset value per share due to the sale of
  shares at the then prevailing public offering price and the receipt of net
  proceeds per share by the Company in excess of net asset value per share on
  each subscription closing date.(4)
 Total investment return-net asset value is a measure of
  the change in total value for shareholders who held the Company’s common
  stock at the beginning and end of the period, including distributions paid or
  payable during the period. Total investment return-net asset value is based
  on (i) the beginning period net asset value per share on the first day of the
  period, (ii) the net asset value per share on the last day of the period of
  (A) one share plus (B) any fractional shares issued in connection with the
  reinvestment of monthly distributions, and (iii) the value of distributions
  payable, if any, on the last day of the period. The total investment
  return-net asset value calculation assumes that (i) monthly cash
  distributions are reinvested in accordance with the Company’s distribution
  reinvestment plan and (ii) the fractional shares issued pursuant to the
  distribution reinvestment plan are issued at 95% of the then public offering
  price on each monthly distribution payment date. The total investment
  return-net asset value for the period from January 31, 2012 (Inception)
  through December 31, 2012 was calculated by taking the difference between (i)
  the net asset value per share as of December 31, 2012 and (ii) the net asset
  value per share on the day the Company commenced operations (December 17,
  2012), and dividing such difference by the net asset value per share on the
  day the Company commenced operations. The total investment return-net asset
  value does not consider the effect of the sales load from the sale of the
  Company’s common stock. The total investment return-net asset value includes
  the effect of the issuance of shares at a net offering price that is greater
  than net asset value per share, which causes an increase in net asset value
  per share. Total returns covering less than a full period are not annualized.(5)
 For the period from January 31, 2012 (Inception) through
  December 31, 2012, the net assets at the beginning of the period were derived
  from the net assets from the commencement of operations on December 17, 2012.(6)
 Excluding the expense reimbursement from IIG during the
  period, the ratios of net investment (loss) income and net operating expenses
  to average net assets would have been (9.34%) and 10.91%, respectively, for
  the six months ended June 30, 2013, and (2.54%) and 2.60%, respectively, for
  the period from January 31, 2012 (Inception) through December 31, 2012.(7)
 Operating expenses include all expenses borne by the
  Company, except for organizational and offering expenses, base management
  fees, incentive fees, administrative services expenses and other general and
  administrative expenses owed to CIM and its affiliates, and interest expense.(8)
 Portfolio turnover rate is calculated using the lesser of
  year-to-date sales or purchases over the average of the invested assets at
  fair value and is not annualized.(9)
 Asset coverage ratio is equal to (i) the sum of (a) net
  assets at the end of the period and (b) total senior securities outstanding
  at the end of the period, divided by (ii) total senior securities outstanding
  at the end of the period. For purposes of the asset coverage ratio test
  applicable to the Company as a BDC, the Company treats the outstanding TRS
  notional amount at the end of the period, less the total amount of cash
  collateral posted by Flatiron under the TRS, as a senior security for the
  life of the TRS.
 23


---



Item
2. Management’s Discussion and
Analysis of Financial Condition andResults
of Operations  As used in this Quarterly Report on Form 10-Q, “we,”
“us,” “our” or similar terms include CĪON Investment Corporation and its
consolidated subsidiaries.  The following discussion should be read in conjunction
with our unaudited consolidated financial statements and related notes
appearing elsewhere in this Quarterly Report on Form 10-Q and the audited
consolidated financial statements and related notes included in our Annual
Report on Form 10-K/A for the period from January 31, 2012 (Inception) through
December 31, 2012. In addition to historical information, the following
discussion and other parts of this Quarterly Report on Form 10-Q contain
forward-looking information that involves risks and uncertainties.  Forward-Looking Statements  Some of the
statements within this Quarterly Report on Form 10-Q may constitute
forward-looking statements because they relate to future events or our future
performance or financial condition. The forward-looking statements contained in
this Quarterly Report on Form 10-Q may include statements as to: ·our future operating
results; ·our business prospects and
the prospects of the companies in which we may invest; ·the impact of the
investments that we expect to make; ·the ability of our
portfolio companies to achieve their objectives; ·our expected financings and
investments; ·the adequacy of our cash
resources, financing sources and working capital; ·the use of borrowed money
to finance a portion of our investments; ·the timing of cash flows,
if any, from the operations of our portfolio companies; ·our contractual
arrangements and relationships with third parties; ·the actual and potential
conflicts of interest with CIM and Apollo and their respective affiliates; ·the ability of CIM and AIM
to locate suitable investments for us and the ability of CIM to monitor and
administer our investments; ·the ability of CIM and AIM
and their respective affiliates to attract and retain highly talented
professionals; ·the dependence of our
future success on the general economy and its impact on the industries in which
we invest; ·our ability to source
favorable private investments; ·our tax status; ·the effect of changes to
tax legislation and our tax position; ·the tax status of the
companies in which we may invest; and ·the timing and amount of
distributions and dividends from the companies in which we may invest. In addition, words
such as “anticipate,” “believe,” “expect” and “intend” indicate a
forward-looking statement, although not all forward-looking statements include
these words. The forward-looking statements contained in this Quarterly Report
on Form 10-Q involve risks and uncertainties. Our actual results could differ
materially from those implied or expressed in the forward-looking statements
for any reason, including the factors set forth in “Risk Factors” in Item 1A of
Part II of this Quarterly Report on Form 10-Q. Other factors that could cause
actual results to differ materially include: ·changes in the economy; ·risks associated with
possible disruption in our operations or the economy generally due to terrorism
or natural disasters; and ·future changes in laws or
regulations and conditions in our operating areas. We have based the forward-looking
statements on information available to us on the date of this Quarterly Report
on Form 10-Q. Except as required by the federal securities laws, we undertake
no obligation to revise or update any forward-looking statements, whether as a
result of new information, future events or otherwise. You are advised to
review any additional disclosures that we may make directly to you or through
reports that we in the future may file with the SEC, including annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
The forward-looking statements contained in this Quarterly Report on Form 10-Q
are excluded from the safe harbor protection provided by Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. 24


---



Overview  We were incorporated under the general corporation laws
of the State of Maryland on August 9, 2011 and commenced operations on December
17, 2012 upon raising proceeds of $2,500,000 from persons not affiliated with
us, CIM or Apollo. We are a newly organized, externally managed,
non-diversified closed-end management investment company that has elected to be
regulated as a BDC under the 1940 Act. We intend to elect to be treated for
federal income tax purposes as a RIC, as defined under Subchapter M of the
Code.  Our investment objective is to generate current income
and, to a lesser extent, capital appreciation for investors. We anticipate that
our portfolio will be comprised primarily of investments in senior secured
loans and, to a lesser extent, second lien loans and long-term subordinated
loans, referred to as mezzanine loans, of private and thinly traded U.S.
middle-market companies. In connection with our debt investments, we may
receive equity interests such as warrants or options as additional
consideration. We may also purchase minority interests in the form of common or
preferred equity in our target companies, either in conjunction with one of our
debt investments or through a co-investment with a financial sponsor. In
addition, a portion of our portfolio may be comprised of corporate bonds and other
debt securities. However, such investments are not expected to comprise a
significant portion of our portfolio.  We are managed by CIM, our affiliate and a registered
investment adviser. CIM will oversee the management of our activities and will
be responsible for making investment decisions for our portfolio. We and CIM
have engaged AIM to act as our investment sub-adviser.  We will seek to meet our investment objective by
utilizing the experienced management teams of both CIM and AIM, which includes
their access to the relationships and human capital of Apollo, IIG and ICON
Capital, in sourcing, evaluating and structuring transactions. We intend to
focus primarily on the senior secured debt of private and thinly traded U.S.
middle-market companies, which we define as companies that generally possess
annual EBITDA of $50 million or less, with experienced management teams,
significant free cash flow, strong competitive positions and potential for
growth.  Revenue  We primarily generate revenue in the form of interest
income on the debt securities that we hold and capital gains on debt or other
equity interests that we acquire in portfolio companies. Our senior debt
investments bear interest at a floating rate. Interest on debt securities is
generally payable quarterly or semiannually. In some cases, some of our
investments may provide for deferred interest payments or “payment-in-kind” interest.
The principal amount of the debt securities and any accrued, but unpaid,
interest generally will become due at the maturity date. In addition, we may
generate revenue in the form of commitment, origination, structuring or
diligence fees, monitoring fees, fees for providing managerial assistance and
possibly consulting fees and performance-based fees. Any such fees generated in
connection with our investments will be recognized when earned.  Operating Expenses  Our primary operating expenses are the
payment of advisory fees and other expenses under the investment advisory and
administration agreements. Our investment advisory fee compensates CIM for its
work in identifying, evaluating, negotiating, executing, monitoring and
servicing our investments. CIM is responsible for compensating AIM for its
services pursuant to the investment sub-advisory agreement. We bear all other
expenses of our operations and transactions, including, without limitation: •
 corporate
  expenses relating to borrowings and costs associated with the offering of our
  common stock, subject to limitations included in the administration
  agreement;•
 the
  costs of calculating our net asset value, including the cost of any
  third-party valuation services;•
 investment
  advisory fees;•
 fees payable to third parties relating to, or
  associated with, making, monitoring and disposing of investments and valuing
  investments and enforcing our contractual rights, including fees and expenses
  associated with performing due diligence reviews of prospective investments;•
 transfer agent and custodial fees;•
 fees and expenses associated with our marketing
  efforts;•
 interest payable on debt, if any, incurred to finance
  our investments;•
 federal and state registration fees;•
 federal, state and local taxes;•
 independent directors’ fees and expenses;•
 costs of proxy statements, shareholders’ reports and
  notices;•
 fidelity bond, directors and officers/errors and
  omissions liability insurance and other insurance premiums;•
 direct costs such as printing, mailing, long distance
  telephone and staff;•
 fees
  and expenses associated with independent audits and outside legal costs,
  including compliance with the Sarbanes-Oxley Act of 2002;•
 costs
  associated with our reporting and compliance obligations under the 1940 Act
  and applicable federal and state securities laws;•
 brokerage commissions for our investments; and•
 all other expenses incurred by CIM, AIM or us in
  connection with administering our business, including expenses incurred by
  CIM or AIM in performing its obligations, and the reimbursement of the
  compensation of our chief financial officer and chief compliance officer and
  their respective staffs paid by CIM, to the extent that they are not a person
  with a controlling interest in CIM or any of its affiliates, in each case subject
  to the limitations included in the investment advisory and administration
  agreements, as applicable.
 25


---



Portfolio
Investment Activity for the Six Months Ended June 30, 2013 and the Period from
January 31, 2012 (Inception) through December 31, 2012 For the six months ended June 30, 2013, we made
investments in portfolio companies totaling $20,658,178. During the same
period, we sold investments totaling $504,375, received principal repayments of
$642,548, and recorded realized gains of $14,971. In addition, unrealized
appreciation on our investments increased by $315,013. As of June 30, 2013, our investment portfolio,
excluding our short term investments and TRS, consisted of interests in 21
portfolio companies (75% in first lien senior secured term loans and 25% in
second lien senior secured term loans) with a total fair value of $21,828,294
and an average and median annual EBITDA of $50.7 million and $37.9 million,
respectively, at initial investment. As of June 30, 2013, the investments in
our portfolio were purchased at a weighted average price of 98.41% of par
value. Our estimated gross annual yield on our investments was 7.50% based upon
the purchase price of our investments. As of December 31, 2012, our investment portfolio,
excluding our short term investments and TRS, consisted of interests in two
portfolio companies (100% in first lien senior secured term loans) with a total
fair value of $1,980,044 and an average and median annual EBITDA of $26.6
million and $26.5 million, respectively, at initial investment. As of
December 31, 2012, the investments in our portfolio were purchased at a
weighted average price of 98.63% of par value. Our estimated gross annual yield
on our investments was 6.55% based upon the purchase price of our investments. The portfolio yield does not represent an actual
investment return to shareholders.  As of June 30, 2013 and December 31, 2012, our short
term investments included an investment in a U.S. Treasury Obligations Fund of
$8,643,970 and $1,817,762, respectively, which is included in investments, at
fair value on the accompanying consolidated balance sheets and on the
consolidated schedule of investments. Further, through a TRS (more fully described in
“Financial Condition, Liquidity and Capital Resources” below), we obtained the
economic benefit of owning investments primarily in first lien senior secured
and second lien senior secured floating-rate term loans of 36 and 5 portfolio
companies as of June 30, 2013 and December 31, 2012, respectively. The TRS held
one investment position in common with our investment portfolio at June 30,
2013. The following table summarizes the
composition of our investment portfolio at amortized cost and fair value as of
June 30, 2013 and December 31, 2012:  June 30, 2013
  (unaudited)
 
 December 31, 2012Amortized Cost(1)
 
 Fair Value
 
 Percentage of
  Investment
  Portfolio
 
 Amortized Cost(1)
 
 Fair Value
 
 Percentage of
  Investment
  PortfolioSenior Secured
  Term Loans - First lien(2)
 
 $
 16,203,845
 
 $
 16,417,934
 
 53.9%
 
 $
 1,970,111
 
 $
 1,980,044
 
 52.1%Senior Secured
  Term Loans - Second lien(2)
 
 
 5,299,503
 
 
 5,410,360
 
 17.7%
 
 
 -
 
 
 -
 
 -%Short term
  investments(3)
 
 
 8,643,970
 
 
 8,643,970
 
 28.4%
 
 
 1,817,762
 
 
 1,817,762
 
 47.9%Total
  investments
 
 $
 30,147,318
 
 $
 30,472,264
 
 100.0%
 
 $
 3,787,873
 
 $
 3,797,806
 
 100.0%(1)
 Amortized cost
  represents the original cost adjusted for the amortization of premiums and/or
  accretion of discounts, as applicable, on our investments.(2)
 We do not
  control and are not an affiliate of any of the portfolio companies in our
  investment portfolio.(3)
 Short term
  investments represent highly liquid investments with original maturity dates
  of three months or less.
  The
following table summarizes the composition of our underlying TRS loans at cost
and fair value as of June 30, 2013 and December 31, 2012:  June 30, 2013
  (unaudited)
 
 December 31, 2012Cost
 
 Fair Value
 
 Percentage of
  Underlying TRS
  Loans
 
 Cost
 
 Fair Value
 
 Percentage of
  Underlying TRS LoansSenior Secured
  Term Loans - First lien(1)
 
 $
 29,078,571
 
 $
 29,135,657
 
 77.1%
 
 $
 2,883,100
 
 $
 2,895,495
 
 100.0%Senior Secured
  Term Loans - Second lien(1)
 
 
 7,179,785
 
 
 7,230,694
 
 19.1%
 
 
 -
 
 
 -
 
 -%Subordinated
  Debt(1)
 
 
 1,425,428
 
 
 1,417,396
 
 3.8%
 
 
 -
 
 
 -
 
 -%Total
  investments
 
 $
 37,683,784
 
 $
 37,783,747
 
 100.0%
 
 $
 2,883,100
 
 $
 2,895,495
 
 100.0%(1)
 We do not
  control and are not an affiliate of any of the companies of the loans
  underlying the TRS.
 26


---



The
following table summarizes the composition of our investment portfolio by the
type of interest rate as of June 30, 2013 and December 31, 2012, excluding
short term investments of $8,643,970 and $1,817,762, respectively:  June 30, 2013
  (unaudited)
 
 December 31, 2012Interest Rate
  Allocation
 
 Fair Value
 
 Percentage of Investment Portfolio
 
 Fair Value
 
 Percentage of Investment PortfolioFloating
  Interest Rate Investments
 
 $
 21,828,294
 
 100%
 
 $
 1,980,044
 
 100%Fixed Interest
  Rate Investments
 
 
 -
 
 -
 
 
 -
 
 -Total
 
 $
 21,828,294
 
 100%
 
 $
 1,980,044
 
 100%
  We do not “control” and are not an “affiliate” of any
of our portfolio companies, each as defined in the 1940 Act. In general, under
the 1940 Act, we would be presumed to “control” a portfolio company if we owned
more than 25% of its voting securities and would be an “affiliate” of a
portfolio company if we owned 5% or more of its voting securities.  The following table summarizes the composition of our
underlying TRS loans by the type of interest rate as of June 30, 2013 and
December 31, 2012:  June 30, 2013
  (unaudited)
 
 December 31, 2012Interest Rate
  Allocation
 
 Fair Value of Underlying TRS Loans
 
 Percentage of Underlying TRS Loans
 
 Fair Value of Underlying TRS Loans
 
 Percentage of Underlying TRS LoansFloating
  Interest Rate Investments
 
 $
 37,783,747
 
 100%
 
 $
 2,895,495
 
 100%Fixed Interest
  Rate Investments
 
 
 -
 
 -%
 
 
 -
 
 -%Total
 
 $
 37,783,747
 
 100%
 
 $
 2,895,495
 
 100%
  The table below shows the composition of our investment
portfolio by industry classification and the percentage, by fair value, of the
total investment portfolio assets in such industries as of June 30, 2013 and
December 31, 2012:  June 30, 2013
  (unaudited)
 
 December 31, 2012Investments at Fair Value
 
 Percentage of
  Investment Portfolio
 
 Investments at Fair Value
 
 Percentage of
  Investment PortfolioOil & Gas
 
 $
 3,666,750
 
 12.0%
 
 $
 -
 
 -%Media
 
 
 2,455,625
 
 8.1%
 
 
 -
 
 -%Telecommunications
 
 
 2,012,815
 
 6.5%
 
 
 -
 
 -%Construction
 
 
 1,997,500
 
 6.5%
 
 
 -
 
 -%Environmental Services
 
 
 1,905,225
 
 6.3%
 
 
 -
 
 -%Professional & Business Services
 
 
 1,521,451
 
 5.0%
 
 
 -
 
 -%Financial Services
 
 
 1,447,435
 
 4.8%
 
 
 -
 
 -%Healthcare
 
 
 1,151,732
 
 3.8%
 
 
 -
 
 -%Building Materials
 
 
 1,002,500
 
 3.3%
 
 
 -
 
 -%Food & Beverage
 
 
 999,994
 
 3.3%
 
 
 -
 
 -%Chemicals
 
 
 979,875
 
 3.2%
 
 
 1,000,000
 
 26.3%Insurance
 
 
 975,131
 
 3.2%
 
 
 980,044
 
 25.8%Printing & Publishing
 
 
 703,618
 
 2.3%
 
 
 -
 
 -%Gaming & Hotels
 
 
 506,875
 
 1.7%
 
 
 -
 
 -%Entertainment & Leisure
 
 
 501,768
 
 1.6%
 
 
 -
 
 -%U.S. Treasury Securities
 
 
 8,643,970
 
 28.4%
 
 
 1,817,762
 
 47.9%Total
 
 $
 30,472,264
 
 100.0%
 
 $
 3,797,806
 
 100.0%
 27


---



The table below summarizes the composition of our
underlying TRS loans by industry classification and the percentage, by fair
value, of the underlying TRS assets in such industries as of June 30, 2013 and
December 31, 2012:  June 30, 2013
  (unaudited)
 
 December 31, 2012Fair Value of Underlying TRS Loans
 
 Percentage of
  Underlying TRS Loans
 
 Fair Value of Underlying TRS Loans
 
 Percentage of
  Underlying TRS LoansProfessional & Business Services
 
 $
 5,499,136
 
 14.6%
 
 $
 500,625
 
 17.3%Healthcare
 
 
 4,879,277
 
 12.9%
 
 
 -
 
 -%Telecommunications
 
 
 3,868,379
 
 10.2%
 
 
 -
 
 -%Computers & Electronics
 
 
 3,631,072
 
 9.6%
 
 
 500,000
 
 17.3%Financial Services
 
 
 2,911,561
 
 7.7%
 
 
 905,340
 
 31.3%Packaging
 
 
 2,768,775
 
 7.3%
 
 
 -
 
 -%Media
 
 
 2,569,044
 
 6.8%
 
 
 -
 
 -%Textile & Apparel Mfg.
 
 
 2,531,509
 
 6.7%
 
 
 -
 
 -%Chemicals
 
 
 2,220,863
 
 5.9%
 
 
 -
 
 -%Entertainment & Leisure
 
 
 1,596,540
 
 4.2%
 
 
 -
 
 -%Gaming & Hotels
 
 
 1,512,400
 
 4.0%
 
 
 486,875
 
 16.8%Oil & Gas
 
 
 1,371,055
 
 3.6%
 
 
 -
 
 -%Food & Beverage
 
 
 875,160
 
 2.3%
 
 
 -
 
 -%Ecological
 
 
 548,308
 
 1.5%
 
 
 -
 
 -%Diversified Support Services
 
 
 515,628
 
 1.4%
 
 
 -
 
 -%Steel
 
 
 485,040
 
 1.3%
 
 
 -
 
 -%Aerospace/Defense
 
 
 -
 
 -%
 
 
 502,655
 
 17.3%Total
 
 $
 37,783,747
 
 100.0%
 
 $
 2,895,495
 
 100.0%
  Investment
Portfolio Asset Quality  CIM uses an investment rating system to characterize
and monitor our expected level of returns on each investment in our portfolio.
These ratings are just one of several factors that CIM uses to monitor our
portfolio, are not in and of themselves determinative of fair value or revenue
recognition and are presented for indicative purposes. CIM grades the credit
risk of all investments on a scale of 1 to 5 no less frequently than quarterly.
This system is intended primarily to reflect the underlying risk of a portfolio
investment relative to our initial cost basis in respect of such portfolio
investment (i.e., at the time of acquisition), although it may also take into
account under certain circumstances the performance of the portfolio company’s
business, the collateral coverage of the investment and other relevant factors.  The following is a description of the conditions
associated with each investment rating used in this ratings system:  Investment Grade
 Description1
 Indicates
  the least amount of risk to our initial cost basis. The trends and risk
  factors for this investment since origination or acquisition are generally
  favorable, which may include the performance of the portfolio company or a
  potential exit.2
 Indicates
  a level of risk to our initial cost basis that is similar to the risk to our
  initial cost basis at the time of origination or acquisition. This portfolio
  company is generally performing in accordance with our analysis of its
  business and the full return of principal and interest or dividend is
  expected.3
 Indicates
  that the risk to our ability to recoup the cost of such investment has
  increased since origination or acquisition, but full return of principal and
  interest or dividend is expected. A portfolio company with an investment
  grade of 3 requires closer monitoring.4
 Indicates
  that the risk to our ability to recoup the cost of such investment has
  increased significantly since origination or acquisition, including as a
  result of factors such as declining performance and noncompliance with debt
  covenants, and we expect some loss of interest, dividend or capital
  appreciation, but still expect an overall positive internal rate of return on
  the investment.5
 Indicates
  that the risk to our ability to recoup the cost of such investment has increased
  materially since origination or acquisition and the portfolio company likely
  has materially declining performance. Loss of interest or dividend and some
  loss of principal investment is expected, which would result in an overall
  negative internal rate of return on the investment.
 28


---



For investments graded
3, 4, or 5, CIM enhances its level of scrutiny over the monitoring of such
portfolio company.  The following table summarizes the composition of our
investment portfolio based on the 1 to 5 investment rating scale at fair value
as of June 30, 2013 and December 31, 2012, excluding short term
investments of $8,643,970 and $1,817,762, respectively:  June 30, 2013
  (unaudited)
 
 December 31, 2012Investment Rating
 
 Investments at Fair Value
 
 Percentage of Investment Portfolio
 
 Investments at Fair Value
 
 Percentage of Investment Portfolio1
 
 $
 -
 
 -%
 
 $
 -
 
 -%2
 
 
 21,828,294
 
 100%
 
 
 1,980,044
 
 100%3
 
 
 -
 
 -%
 
 
 -
 
 -%4
 
 
 -
 
 -%
 
 
 -
 
 -%5
 
 
 -
 
 -%
 
 
 -
 
 -%$
 21,828,294
 
 100%
 
 $
 1,980,044
 
 100%
  The following table summarizes the composition of our
underlying TRS loans based on the 1 to 5 investment rating scale at fair value
as of June 30, 2013 and December 31, 2012:  June 30, 2013
  (unaudited)
 
 December 31, 2012Investment Rating
 
 Fair Value of Underlying TRS Loans
 
 Percentage of Underlying TRS Loans
 
 Fair Value of Underlying TRS Loans
 
 Percentage of Underlying TRS Loans1
 
 $
 -
 
 -%
 
 $
 -
 
 -%2
 
 
 37,783,747
 
 100%
 
 
 2,895,495
 
 100%3
 
 
 -
 
 -%
 
 
 -
 
 -%4
 
 
 -
 
 -%
 
 
 -
 
 -%5
 
 
 -
 
 -%
 
 
 -
 
 -%$
 37,783,747
 
 100%
 
 $
 2,895,495
 
 100%
  The amount of the portfolio and underlying TRS loans in
each grading category may vary substantially from period to period resulting
primarily from changes in the composition of the investment portfolio as a
result of new investments, repayment and exit activities. In addition, changes
in the grade of investments may be made to reflect our expectation of performance
and changes in investment values.  Current
Investment Portfolio  As of August 9, 2013, our investment portfolio,
excluding our short term investments and TRS, consists of interests in 27 first
lien and second lien secured term loans primarily to private U.S. companies
with an average and median annual EBITDA of $51.5 million and $42.8 million,
respectively, at initial investment. The investments were purchased at a
weighted average price of 98.65% of par value and our estimated gross annual portfolio
yield is 6.95%. The portfolio yield does not represent an actual investment
return to shareholders.  As of August 9, 2013, our short term investments
include an investment in a U.S. Treasury Obligations Fund of approximately $10,757,000.  Further, as of August 9, 2013, through a TRS (more
fully described in “Financial Condition, Liquidity and Capital Resources”
below), we obtained the economic benefit of owning investments primarily in
first lien senior secured and second lien senior secured floating-rate loans of
45 portfolio companies.  Results
of Operations for the Three Months Ended June 30, 2013  On December 17, 2012, we raised proceeds of $2,500,000
from persons not affiliated with us or CIM and commenced operations. Prior to
satisfying the minimum offering requirement, we had no operations except for
matters relating to our organization and registration as a non-diversified,
closed-end management investment company. As a result, no comparisons with the
comparable 2012 period have been included.  Our
results of operations for the three months ended June 30, 2013 are as follows:  Investment income
 $
 245,494Net operating expenses
 90,601Net investment income
 154,893Net realized gain from investments
 10,438Net change in unrealized appreciation on investments
 190,731Net realized gain on total return swap
 395,757Net change in unrealized depreciation on total return swap
 (53,189)Net increase in net assets resulting from operations
 $
 698,630
 29


---



Investment
Income  For the three months ended June 30, 2013, we generated
investment income of $245,494, consisting primarily of interest income on
investments in senior secured loans of 22 portfolio companies held during the
period. Our investment portfolio, excluding short term investments and the TRS,
increased approximately $13,583,000 during the period as we continued to deploy
the net proceeds from our offering during the three months ended June 30, 2013.
We expect our investment portfolio to continue to grow due to the anticipated
increase in equity available to us for investment from our offering. As a
result, we believe that reported investment income for the three months ended
June 30, 2013 is not representative of our stabilized or future performance.
Interest income earned by loans underlying the TRS is not included in
investment income in the consolidated statements of operations, but rather it
is included in the fair value of the TRS, and eventually recorded as part of
realized gain or loss on total return swap.  Operating
expenses   The composition of our operating expenses for the three
months ended June 30, 2013 was as follows:  Management fees
 $
 120,781Administrative services expense
 307,636Capital gains incentive fee
 57,705General and administrative
 752,015Total expenses
 1,238,137Less: expense reimbursement from IIG
 (1,147,536)Net operating expenses
 $
 90,601
  Expense
Reimbursement  Our affiliate, IIG, has agreed to reimburse us
commencing with the quarter ended December 31, 2012 for certain expenses pursuant
to the expense support and conditional reimbursement agreement. See “Related
Party Transactions” below for further details about the expense support and
conditional reimbursement agreement. Also see Note 3 to our consolidated
financial statements for additional disclosures regarding the expense
reimbursements from IIG.  For the three months ended June 30, 2013, we recorded
$1,147,536 of expense reimbursement from IIG in connection with the expense
support and conditional reimbursement agreement.  Reimbursement of such costs will be determined as
appropriate to meet the objectives of the expense support and conditional
reimbursement agreement. As a result, we may or may not be requested to
reimburse any such costs by IIG.  The table below presents a summary of all expenses supported
by IIG and the associated dates through which such expenses are eligible for
reimbursement by us for the three months ended December 31, 2012, March 31,
2013, and June 30, 2013.  Three Months
  Ended
 
 Expense Support
  Received from IIG
 
 Expense Support Reimbursed to IIG
 
 Unreimbursed Expense Support
 
 Ratio of Operating Expense to Average Net
  Assets for the Period(1)
 
 Annualized Distribution Rate for the
  Period(3)
 
 
 Eligible for Reimbursement throughDecember 31,
  2012
 
 $
 116,706
 
 $
 -
 
 $
 116,706
 
 0.93%
 
 0.00%
 (2)
 
 December 31, 2015March 31, 2013
 
 
 819,373
 
 
 -
 
 
 819,373
 
 2.75%
 
 7.00%
 
 
 March 31, 2016June 30, 2013
 
 
 1,147,536
 
 
 -
 
 
 1,147,536
 
 1.43%
 
 7.00%
 
 
 June 30, 2016Total
 
 $
 2,083,615
 
 $
 -
 
 $
 2,083,615(1)
 Operating
  expenses include all expenses borne by us, except for organizational and
  offering expenses, base management fees, incentive fees, administrative
  services expenses and other general and administrative expenses owed to CIM
  and its affiliates and interest expense.(2)
 We did not
  declare any distributions during the three months ended December 31, 2012.(3)
 Annualized
  Distribution Rate equals the annualized rate of distributions paid to
  shareholders based on the amount of the regular cash distribution paid
  immediately prior to the date the expense support payment obligation was
  incurred by CIM. Annualized Distribution Rate does not include special cash
  or stock distributions paid to shareholders.
 30


---



Net Investment Income  Our net investment income totaled $154,893 for the
three months ended June 30, 2013.  Net
Realized Gain from Investments  For the three months ended June 30, 2013, we recorded a
net realized gain from investments of $10,438, which was primarily due to the
sale of an investment for a gain of $10,000.  Net
Change in Unrealized Appreciation on Investments  For the three months ended June 30, 2013, the net
change in unrealized appreciation on our investments totaled $190,731. This
change was predominantly driven by primary investments, sourced with the
assistance of AIM, made available to us at advantageous purchase prices.  Net
Realized Gain on TRS  For the three months ended June 30, 2013, we recorded a
net realized gain on the TRS of $395,757.  This realized gain was primarily due
to the sale of underlying loans subject to the TRS for a gain of approximately
$250,000.  Net
Change in Unrealized Depreciation on TRS  For the three months ended June 30, 2013, the net
change in unrealized depreciation on the TRS was $53,189. This change was
driven by a widening of credit spreads during the quarter, partially offset by an
increase in interest income, net of expenses on the TRS.  Net
Increase in Net Assets Resulting from Operations  For the three months ended June 30, 2013, we recorded a
net increase in net assets resulting from operations of $698,630.  Results of Operations for the Six Months Ended
June 30, 2013  On December 17, 2012, we raised proceeds of $2,500,000
from persons not affiliated with us or CIM and commenced operations. Prior to
satisfying the minimum offering requirement, we had no operations except for
matters relating to our organization and registration as a non-diversified,
closed-end management investment company. As a result, no comparisons with the
comparable 2012 period have been included.  Our
results of operations for the six months ended June 30, 2013 are as follows:  Investment income
 $
 313,620Net operating expenses
 205,411Net investment income
 108,209Net realized gain from investments
 14,971Net change in unrealized appreciation on investments
 315,013Net realized gain on total return swap
 601,480Net change in unrealized appreciation on total return swap
 278,101Net increase in net assets resulting from operations
 $
 1,317,774
  Investment
Income  For the six months ended June 30, 2013, we generated
investment income of $313,620, consisting primarily of interest income on
investments in senior secured loans of 23 portfolio companies held during the
period. Our investment portfolio, excluding short term investments and the TRS,
increased approximately $19,848,000 during the period as we continued to deploy
the net proceeds from our offering during the six months ended June 30, 2013.
We expect our investment portfolio to continue to grow due to the anticipated
increase in equity available to us for investment from our offering. As a
result, we believe that reported investment income for the six months ended
June 30, 2013 is not representative of our stabilized or future performance.
The interest income earned by the loans underlying the TRS is not included in
investment income in the consolidated statements of operations, but rather it
is included in the fair value of the TRS, and eventually recorded as part of
realized gain or loss on total return swap.  Operating
expenses   The composition of our operating expenses for the six
months ended June 30, 2013 was as follows:  Management fees
 $
 165,523Administrative services expense
 571,191Capital gains incentive fee
 174,728General and administrative
 1,260,878Total expenses
 2,172,320Less: expense reimbursement from IIG
 (1,966,909)Net operating expenses
 $
 205,411
 31


---



Expense
Reimbursement  Our affiliate, IIG, has agreed to reimburse us
commencing with the quarter ended December 31, 2012 for certain expenses pursuant
to the expense support and conditional reimbursement agreement. See Related
Party Transactions below for further details about the expense support and
conditional reimbursement agreement. Also see Note 3 to our consolidated
financial statements for additional disclosures regarding the expense
reimbursements from IIG.  For the six months ended June 30, 2013, we recorded
$1,966,909 of expense reimbursement from IIG in connection with the expense
support and conditional reimbursement agreement.  Reimbursement of such costs will be determined as
appropriate to meet the objectives of the expense support and conditional
reimbursement agreement. As a result, we may or may not be requested to
reimburse any such costs by IIG.  Net
Investment Income  Our net investment income totaled $108,209 for the six
months ended June 30, 2013.  Net
Realized Gain from Investments  For the six months ended June 30, 2013, we recorded a
net realized gain from investments of $14,971, which was primarily due to the
sale of investments for a gain of $14,375.  Net
Change in Unrealized Appreciation on Investments  For the six months ended June 30, 2013, the net change
in unrealized appreciation on our investments totaled $315,013. This change was
driven by a tightening of credit spreads during the period and primary
investments, sourced with the assistance of AIM, made available to us at advantageous
purchase prices.  Net
Realized Gain on TRS  For the six months ended June 30, 2013, we recorded a
net realized gain on the TRS of $601,480.  This realized gain was primarily due
to the sale of underlying loans subject to the TRS for a gain of approximately
$455,000.  Net
Change in Unrealized Appreciation on TRS  For the six months ended June 30, 2013, the net change
in unrealized appreciation on the TRS was $278,101. This change was driven by
tightening of credit spreads during the period and an increase in interest
income, net of expenses on the TRS.  Net
Increase in Net Assets Resulting from Operations  For the six months ended June 30, 2013, we recorded a
net increase in net assets resulting from operations of $1,317,774. 32


---



Financial
Condition, Liquidity and Capital Resources  We generate cash primarily from the net proceeds of our
ongoing continuous public offering and from cash flows from fees, interest and
dividends earned from our investments as well as principal repayments and
proceeds from sales of our investments. We are engaged in a continuous offering
of shares of our common stock. We accept subscriptions on a continuous basis
and issue shares at semi-monthly closings at prices that, after deducting
selling commissions and dealer manager fees, are at or above our net asset
value per share.  We will sell our shares on a continuous basis at our
latest public offering price of $10.24 per share; however, to the extent that
our net asset value increases, we will sell at a price necessary to ensure that
shares are not sold at a price, after deduction of selling commissions and
dealer manager fees, that is below net asset value. In the event of a material
decline in our net asset value per share, which we consider to be a 2.5%
decrease below our current net offering price, and subject to certain
conditions, we will reduce our offering price accordingly. Therefore, persons
who tender subscriptions for shares of our common stock in the offering must
submit subscriptions for a certain dollar amount, rather than a number of
shares of common stock and, as a result, may receive fractional shares of our
common stock. In connection with each semi-monthly closing on the sale of
shares of our common stock, our board of directors or a committee thereof is
required to make the determination that we are not selling shares of our common
stock at a price below our then current net asset value no later than 48 hours
prior to the time that we price our shares. In connection with each
semi-monthly closing, we will, in each case if necessary, update the
information contained in our prospectus by filing a prospectus supplement with
the SEC, and we will also post any updated information to our website.  Since commencing our continuous public offering on July
2, 2012, and through August 9, 2013, we have sold 5,839,032 shares of common
stock for gross proceeds of approximately $58,521,000 at an average price per
share of $10.02. As of June 30, 2013, we sold 3,853,304 shares for gross
proceeds of approximately $38,418,000 at an average price per share of $9.97.
The gross proceeds received include reinvested shareholder distributions of
$213,150, for which we issued 21,988 shares of common stock. As of June 30,
2013, the sales commissions and dealer manager fees related to the sale of our
common stock were $2,156,807 and $1,017,970, respectively.  The net proceeds from our continuous offering will be
invested primarily in cash, cash equivalents, U.S. government securities,
repurchase agreements and high-quality debt instruments maturing in one year or
less prior to being invested in debt securities of private U.S. companies. As of June 30, 2013, we had $8,643,970 in
short term investments, primarily invested in U.S. government securities. We may borrow funds to make investments,
to the extent we determine that additional capital would allow us to take
advantage of additional investment opportunities, if the market for debt
financing presents attractively priced debt financing opportunities, or if our
board of directors determines that leveraging our portfolio would be in our
best interests and the best interests of our shareholders. Any borrowings we
make are required to be in compliance with the provisions of the 1940 Act. We
do not currently anticipate issuing any preferred stock.  Total
Return Swap On December 17, 2012, Flatiron, our
newly-formed, wholly-owned, special purpose financing subsidiary, entered into
a TRS with Citibank.  A TRS is a contract in which one party agrees to make
periodic payments to another party based on the change in the market value of
the assets underlying the TRS and interest payments in return for periodic
payments based on a fixed or variable interest rate. A TRS effectively adds
leverage to a portfolio by providing investment exposure to a security or
market without owning or taking physical custody of such security or investing
directly in such market. Because of the unique structure of a TRS, a TRS
typically offers lower financing costs than are offered through more
traditional borrowing arrangements.  The TRS with Citibank enables us, through our ownership
of Flatiron, to obtain the economic benefit of owning the loans subject to the
TRS, without actually owning them, in return for an interest-type payment to
Citibank. As such, the TRS is analogous to Flatiron borrowing funds to acquire
loans and incurring interest expense to a lender.  The obligations of Flatiron under the TRS are
non-recourse to us and our exposure under the TRS is limited to the value of
our investment in Flatiron, which generally will equal the value of cash
collateral provided by Flatiron under the TRS. Pursuant to the terms of the
TRS, Flatiron may select loans with a maximum aggregate market value
(determined at the time each such loan becomes subject to the TRS) of the
lesser of (a) $150,000,000 and (b) 140% of the aggregate amount of cash
contributed to our equity capital during the first nine months of the TRS and
not withdrawn during that period, or the maximum portfolio amount. Flatiron is
required to initially cash collateralize a specified percentage of each loan
(generally 25% of the market value of such loan) included under the TRS in
accordance with margin requirements described in the TRS Agreement. Under the
terms of the TRS, Flatiron agreed not to draw upon, or post as collateral, such
cash collateral in respect of other financings or operating requirements prior
to the termination of the TRS. Neither the cash collateral required to be
posted with Citibank nor any other assets of Flatiron are available to pay our
debts.  Each individual loan must meet criteria described in
the TRS Agreement, including a requirement that substantially all of the loans
be rated by Moody’s and S&P and quoted by a nationally-recognized pricing
service. Under the terms of the TRS, Citibank, as calculation agent, determines
whether there has been a failure to satisfy the portfolio criteria in the TRS.
If such failure continues for 30 days following the delivery of notice thereof,
then Citibank has the right, but not the obligation, to terminate the TRS.
Flatiron receives from Citibank all interest and fees payable in respect of the
loans included in the TRS. Flatiron pays to Citibank interest at a rate equal
to, in respect of each loan included in the TRS, the floating rate index
specified for such loan + 1.25% per year. In addition, upon the termination or
repayment of any loan subject to the TRS, Flatiron will either receive from
Citibank the appreciation in the value of such loan or pay to Citibank any
depreciation in the value of such loan.  33


---



Under the terms of the TRS,
Flatiron may be required to post additional cash collateral, on a
dollar-for-dollar basis, in the event of depreciation in the value of the
underlying loans after such value decreases below a specified amount. The limit
on the additional collateral that Flatiron may be required to post pursuant to
the TRS is equal to the difference between the full notional amount of the
loans underlying the TRS and the amount of cash collateral already posted by
Flatiron. The amount of collateral required to be posted by Flatiron is
determined primarily on the basis of the aggregate value of the underlying
loans.  We have no contractual obligation to post any such
additional collateral or to make any interest payments to Citibank on behalf of
Flatiron. We may, but are not obligated to, increase our investment in Flatiron
for the purpose of funding any additional collateral or payment obligations for
which Flatiron may become obligated during the term of the TRS. If we do not
make any such additional investment in Flatiron and Flatiron fails to meet its
obligations under the TRS, then Citibank will have the right to terminate the
TRS and seize the cash collateral posted by Flatiron under the TRS. In the
event of an early termination of the TRS, Flatiron would be required to pay an
early termination fee.  Citibank may terminate the TRS on or after December 17,
2013, or the call date. Flatiron may terminate the TRS at any time upon
providing no more than 30 days prior notice to Citibank. Any termination prior
to the call date will result in payment of an early termination fee to Citibank
based on the maximum portfolio amount of the TRS. Under the terms of the TRS,
the early termination fee will equal the present value of a stream of monthly
payments that would be owed by Flatiron to Citibank for the period from the
termination date through and including the call date. Such monthly payments
will equal the product of 60% of the maximum portfolio amount, multiplied by
1.25% per year. We estimate the early termination fee would have been
approximately $201,000 as of June 30, 2013. Other than during the first nine
months and last 180 days of the term of the TRS, Flatiron may be required to
pay a minimum usage fee in connection with the TRS. At June 30, 2013, Flatiron
was not subject to a minimum usage fee.  In connection with the TRS, Flatiron is required to
comply with various covenants and reporting requirements as defined in the TRS
Agreement. Flatiron is in compliance with these covenants and reporting
requirements as of June 30, 2013.  For purposes of computing the capital gains incentive
fee, we treat the net realized gains or losses on the sale or maturity of the
underlying TRS loans as realized gains or losses on the TRS.  For purposes of
computing the subordinated incentive fee on income, we treat the interest
spread, which represents the difference between i) the interest and fees
received on the underlying TRS loans and ii) the interest paid to Citibank on
the settled notional value of the TRS loans, as pre-incentive fee net
investment income on the TRS. Accordingly, all net realized economic benefits
associated with the underlying TRS loans, if any, are included in the
computation of either the capital gains incentive fee or the subordinated
incentive fee on income. Any unrealized appreciation on the TRS is reflected in
total assets on our consolidated balance sheets and included in the computation
of the base management fee.  The value of the TRS is based primarily on the
valuation of the underlying portfolio of loans subject to the TRS. Pursuant to
the terms of the TRS, on each business day, Citibank values each underlying
loan in good faith on a mark-to-market basis by determining how much Citibank
would receive on such date if it sold the loan in the open market. Citibank
reports the mark-to-market values of the underlying loans to Flatiron. Each of
the loans underlying the TRS is required to be rated by Moody’s and S&P and
quoted by a nationally-recognized pricing service.  For purposes of the asset coverage ratio test
applicable to us as a BDC, we treat the outstanding notional amount of the TRS,
less the amount of any cash collateral required to be posted by Flatiron under
the TRS, as a senior security for the life of that instrument. We may, however,
accord different treatment to the TRS in the future in accordance with any
applicable new rules or interpretations adopted by the staff of the SEC.  Further, for purposes of Section 55(a) under the 1940
Act, we treat each loan underlying the TRS as a qualifying asset if the obligor
on such loan is an eligible portfolio company and as a non-qualifying asset if
the obligor is not an eligible portfolio company. We may, however, accord
different treatment to the TRS in the future in accordance with any applicable
new rules or interpretations adopted by the staff of the SEC.  As of June 30, 2013, the fair value of the TRS was $290,594.
The fair value of the TRS is reflected as unrealized appreciation on total
return swap on our consolidated balance sheets. The change in value of the TRS
is reflected in our consolidated statements of operations as net change in
unrealized appreciation on total return swap. As of June 30, 2013, Flatiron had
selected 39 underlying loans with a total notional amount of $37,683,784 and
posted $10,334,242 in cash collateral held by Citibank (of which only
$10,297,039 was required to be posted, which is reflected in due from
counterparty on our consolidated balance sheets).  RIC
Status and Distributions We declared our first distribution on
January 14, 2013. Subject to the board of directors’ discretion and
applicable legal restrictions, our board of directors intends to authorize and
declare on a monthly basis a semi-monthly distribution amount per share of our
common stock. From time to time, we may also pay special interim distributions
in the form of cash or shares of our common stock at the discretion of our
board of directors. During certain quarters, our distributions may exceed our
earnings. As a result, it is possible that a portion of the distributions we
make may represent a return of capital for tax purposes. Any distributions to
our shareholders will be declared and paid from assets legally available for
distribution. There can be no assurance that we will be able to sustain
distributions at any particular level.  Our board of directors declared distributions for 12
record dates in the six months ended June 30, 2013. Declared distributions are
paid monthly. The following table presents the cash distributions per share
that were declared during the six months ended June 30, 2013:  DistributionsThree Months
  Ended
 
 Per Share
 
 AmountMarch 31, 2013 (six record dates)
 
 $
 0.1769
 
 $
 208,766June 30,
  2013 (six record dates)
 
 
 0.1788
 
 
 518,630Total
  Distributions for the six months ended June 30, 2013
 
 $
 0.3557
 
 $
 727,396
 34


---



On July 15, 2013, our board of directors declared
two regular semi-monthly cash distributions of $0.029867 per share each, which
were paid on August 1, 2013 to shareholders of record on July 15, 2013 and July
31, 2013, respectively. The timing and amount of any future distributions to
shareholders are subject to applicable legal restrictions and the sole
discretion of our board of directors.  We make and intend to make our ordinary distributions
in the form of cash out of assets legally available for distribution, unless
shareholders elect to receive their distributions in additional shares of our
common stock under our distribution reinvestment plan. Any distributions
reinvested under the plan will nevertheless remain taxable to a U.S.
shareholder.  We intend to elect to be treated for federal income tax
purposes as a RIC under Subchapter M of the Code. Generally, a RIC is entitled
to a deduction for federal income tax purposes for distributions paid to
shareholders if it distributes at least 90% of its “investment company taxable
income,” as defined by the Code, each year. To qualify for and maintain RIC tax
treatment, we must, among other things, distribute at least 90% of our ordinary
income and realized net short-term capital gains in excess of realized net
long-term capital losses, if any. In order to avoid certain excise taxes
imposed on RICs, we would need to distribute during each calendar year an
amount at least equal to the sum of (1) 98% of our ordinary income for the
calendar year, (2) 98.2% of our capital gains in excess of capital losses for
the one-year period ending on October 31 of the calendar year and (3) any
ordinary income and net capital gains for preceding years that were not
distributed during such years and on which we paid no federal income tax.  Each year a statement on Internal Revenue Service Form
1099-DIV (or such successor form) identifying the source of the distribution
(i.e., paid from ordinary income, paid from net capital gain on the sale of
securities, or a return of capital) will be mailed to our shareholders. Our
distributions may exceed our earnings, especially during the period before we
have substantially invested the proceeds from this offering. The tax basis of
shares must be reduced by the amount of any return of capital distributions,
which will result in an increase in the amount of any taxable gain (or a
reduction in any deductible loss) on the sale of shares.  We have adopted an “opt in” distribution reinvestment
plan for our shareholders. As a result, if we make a distribution, our
shareholders will receive distributions in cash unless they specifically “opt
in” to the distribution reinvestment plan so as to have their cash
distributions reinvested in additional shares of our common stock.  We may fund our cash distributions to shareholders from
any sources of funds available to us, including offering proceeds, borrowings,
net investment income from operations, capital gains proceeds from the sale of
assets, non-capital gains proceeds from the sale of assets, dividends or other
distributions paid to us on account of preferred and common equity investments
in portfolio companies and expense reimbursements from IIG, which are subject
to recoupment. We have not established limits on the amount of funds we may use
from available sources to make distributions. For a significant time after
the commencement of our offering, a substantial portion of our distributions
may result from expense reimbursements from IIG, which are subject to repayment
by us within three years. The purpose of this arrangement is to avoid such
distributions being characterized as returns of capital. Shareholders should
understand that any such distributions are not based on our investment
performance, and can only be sustained if we achieve positive investment
performance in future periods and/or IIG continues to make such expense
reimbursements. Shareholders should also understand that our future repayments
will reduce the distributions that they would otherwise receive.  There
can be no assurance that we will achieve such performance in order to sustain
these distributions, or be able to pay distributions at all.  IIG has no
obligation to provide expense reimbursements to us in future periods. For the
three and six months ended June 30, 2013, if expense reimbursements from IIG of
$1,147,536 and $1,966,909, respectively, were not supported, some or all of the
distributions may be a return of capital.  The following table reflects the sources of the cash
distributions that we have declared on our common stock during the six months
ended June 30, 2013:  Source of
  Distribution
 
 Distribution Amount
 
 PercentageRealized gain on
  investments and total return swap(1)
 
 $
 616,495
 
 84.8%Expense
  reimbursement from IIG
 
 
 110,901
 
 15.2%Total
 
 $
 727,396
 
 100.0%(1)
 Includes
  interest income and fees, net of financing amounts paid to Citibank generated
  on the loans underlying the TRS of $145,295.
 Our net investment income on a tax basis for the six
months ended June 30, 2013 was $108,209. As of June 30, 2013, we have distributed
all tax-basis net investment income.  There were no differences between our
GAAP-basis net investment income and our tax-basis net investment income. The
above sources are not currently estimated to be characterized as long-term
capital gains distributions.  The determination of the tax attributes of our
distributions is made annually as of the end of our fiscal year based upon our
taxable income for the full year and distributions paid for the full year.
Therefore, a determination made on a quarterly basis may not be representative
of the actual tax attributes of our distributions for a full year. The actual
tax characteristics of distributions to shareholders are reported to
shareholders annually on Form 1099-DIV. 35


---



As of June 30, 2013 and December 31, 2012, the
components of accumulated earnings on a tax basis were as follows: June 30, 2013
  (unaudited)
 
 December 31, 2012Undistributed
  net investment income
 
 $
 -
 
 $
 2,692Undistributed
  net realized gain from investments
 
 
 -
 
 
 44Net unrealized
  appreciation on investments and total return swap(1)
 
 
 615,540
 
 
 22,426$
 615,540
 
 $
 25,162(1)
 As of June 30, 2013 and December 31, 2012, the gross unrealized
  appreciation on our investments and the underlying loans of our TRS was
  $809,350 and $28,051, respectively, which included interest income and fees,
  net of financing amounts paid to Citibank, generated on the loans underlying
  the TRS of $190,631 and $98, respectively.  As of June 30, 2013 and December
  31, 2012, the gross unrealized depreciation on our investments and the
  underlying loans of our TRS was $193,810 and $5,625, respectively.
 The aggregate cost of our investments for federal
income tax purposes totaled $30,147,318 and $3,787,873 as of June 30, 2013 and
December 31, 2012, respectively. The aggregate net unrealized appreciation on a
tax basis, including our TRS, was $615,540 and $22,426 as of June 30, 2013 and
December 31, 2012, respectively.  Recent
Accounting Pronouncements  We do not believe any recently issued, but not yet
effective, accounting pronouncements, if currently adopted, would have a
material adverse effect on our consolidated financial statements. Critical
Accounting Policies  For a detailed discussion of our critical accounting
policies, refer to “Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations – Critical Accounting Policies”
included in our Annual Report on Form 10-K/A for the period from January
31, 2012 (Inception) through December 31, 2012.  We consider these accounting
policies critical because they involve management judgments and assumptions,
require estimates about matters that are inherently uncertain and because they
are important for understanding and evaluating our reported financial results.
These judgments will affect the reported amounts of assets and liabilities and our
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenue and expenses during the
reporting periods. With different estimates or assumptions, materially
different amounts could be reported in our financial statements.  Related
Party Transactions  We have entered into an agreement with CIM to provide
us with investment advisory services. Payments for investment advisory services
under the investment advisory agreement in future periods will be equal to (a)
an annual base management fee of 2.0% of the average value of our gross assets,
excluding cash and cash equivalents, and (b) an incentive fee based on our
performance, as described below. ICON Capital and, to the extent requested to
provide such services and such services are so provided, CIM and AIM and their
respective affiliates, may be reimbursed for administrative expenses incurred
on our behalf.  The incentive fee consists of two parts.
The first part, which we refer to as the subordinated incentive fee on income,
will be calculated and payable quarterly in arrears based upon our
“pre-incentive fee net investment income” for the immediately preceding quarter
and will be subject to a hurdle rate, measured quarterly and expressed as a
rate of return on adjusted capital, as defined in our investment advisory
agreement, equal to 1.875% per quarter, or an annualized rate of 7.5%. The
second part of the incentive fee, which we refer to as the incentive fee on
capital gains, is an incentive fee on capital gains earned on liquidated
investments from the portfolio and is determined and payable in arrears as of
the end of each calendar year (or upon termination of the investment advisory
agreement). This fee is equal 20% of our realized capital gains on a cumulative
basis from inception, calculated as of the end of each calendar year, computed
net of all realized capital losses and unrealized capital depreciation on a
cumulative basis, less the aggregate amount of any previously paid capital
gains incentive fees.  On a cumulative basis and to the extent that all
realized capital losses and unrealized capital depreciation exceed realized
capital gains as well as the aggregate realized net capital gains for which a
fee has previously been paid, we would not be required to pay CIM a capital
gains incentive fee.  We and CIM have engaged AIM to act as our investment
sub-adviser, as AIM possesses skills that we believe will aid us in achieving
our investment objective. AIM will only assist CIM with identifying investment
opportunities and will make investment recommendations for approval by CIM
according to pre-established investment guidelines. On an annualized basis, AIM
will receive 50% of the fees payable to CIM under the investment advisory
agreement with respect to each year, which fees are payable to AIM quarterly in
arrears.  ICON Capital provides us with accounting, investor relations
and other administrative services. We entered into an administration agreement
with ICON Capital pursuant to which ICON Capital furnishes us with
administrative services necessary to conduct our day-to-day operations. ICON
Capital is reimbursed for administrative expenses it incurs on our behalf in
performing its obligations. Such costs will be reasonably allocated to us on
the basis of assets, revenues, time records or other reasonable methods. We
will not reimburse ICON Capital for any services for which it receives a
separate fee or for rent, depreciation, utilities, capital equipment or other
administrative items allocated to a person with a controlling interest in ICON
Capital.  In December 2012, pursuant to a private placement, IIG
completed the purchase of 111,111 shares of common stock, or the IIG Shares, at
$9.00 per share, which represents the initial public offering price of $10.00
per share net of selling commissions and dealer manager fees. IIG will not 36


---



tender its shares for repurchase as long as CIM remains
our investment adviser. Further, in December 2012, pursuant to a private
placement, Apollo Principal Holdings III, L.P., a subsidiary of Apollo, or APH
III, completed the purchase of 111,111 shares of common stock at $9.00 per
share, which represents the initial public offering price of $10.00 per share
net of selling commissions and dealer manager fees. APH III will not tender its
shares for repurchase as long as AIM remains our sub-adviser.  Our payment of organization costs and offering expenses
(including reimbursement of costs incurred by IIG and its affiliates) is capped
at 1.5% of the gross proceeds raised from our offering. If we sell the maximum
number of shares at our latest public offering price of $10.24 per share, then
we estimate that we may incur up to approximately $15,360,000 of expenses.
Under the terms of the investment advisory agreement, CIM and certain of its
affiliates, which includes IIG, will become entitled to receive reimbursement
of up to 1.5% of the gross proceeds raised until all organization costs and
offering expenses have been reimbursed. Previously, we interpreted “raised” to
mean all gross proceeds that we expected to raise through the completion of the
offering of our shares, rather than actual gross proceeds raised through the
date of the reimbursement.  Consistent with such application and
since we believed we would raise at least $100 million through the completion
of the offering of our shares, upon commencement of operations on December 17,
2012, we issued the IIG Shares to IIG in lieu of payment of $1,000,000 for
organization and offering expenses submitted for reimbursement.  The
transaction satisfied an independent obligation of IIG to invest $1,000,000 in
our shares.  Through that date, we had raised gross proceeds from
unaffiliated outside investors of $2,639,439 and from affiliated investors
of $2,000,000, which, applying 1.5% of actual proceeds raised through the date
of reimbursement, would have resulted in CIM being entitled to $69,592.  With respect to any future reimbursements for
organization and offering costs, we will interpret the 1.5% cap based on actual
gross proceeds raised at the time of such reimbursement.  In
addition, we will not issue any of our shares or other securities for services
or for property other than cash or securities except as a dividend or
distribution to our security holders or in connection with a
reorganization.  Consistent with this interpretation, on May 30,
2013, IIG paid us $1,000,000, plus interest accrued at a rate of 7% per year. At
June 30, 2013, IIG and its affiliates incurred organization costs and offering
expenses of approximately $2,017,000, of which $1,000,000 have been recorded by
us as a payable to IIG. No additional material organization costs or offering
expenses have been incurred by IIG and its affiliates subsequent to June 30,
2013. The decision to fund our organization costs and offering expenses and the
decision to seek reimbursement for such costs is solely at the discretion of
IIG and its affiliates. As a result, we may or may not be requested to
reimburse any costs funded by IIG and its affiliates.  On January 30, 2013 we entered into the expense support
and conditional reimbursement agreement with IIG, whereby IIG agreed to
reimburse us for expenses in an amount that is sufficient to: (1) ensure that
no portion of our distributions to shareholders will be paid from our offering
proceeds or borrowings, and/or (2) reduce our operating expenses until we have
achieved economies of scale sufficient to ensure that we bear a reasonable
level of expense in relation to our investment income. Pursuant to the expense
support and conditional reimbursement agreement, we will have a conditional
obligation to reimburse IIG for any amounts funded by IIG under such agreement
if, during any fiscal quarter occurring within three years of the date on which
IIG funded such amount, the sum of our net investment income for tax purposes,
net capital gains and the amount of any dividends and other distributions paid
to us on account of investments in portfolio companies (to the extent not
included in net investment income or net capital gains for tax purposes)
exceeds the distributions paid by us to shareholders. For the three and six
months ended June 30, 2013, we recorded $1,147,536 and $1,966,909, respectively
of expense reimbursement from IIG in connection with the expense support and
conditional reimbursement agreement.  During the six month period ended June 30, 2013,
expense reimbursements of $833,050 from IIG were offset on our consolidated
balance sheets against amounts due to affiliates of IIG for management fees,
administrative services expense, and incentive fees. As of June 30, 2013, the
net reimbursement from IIG was $991,154.  The table below presents a summary of all expenses supported
by IIG and the associated dates through which such expenses are eligible for
reimbursement by us for the three months ended December 31, 2012, March 31,
2013, and June 30, 2013.  Three Months
  Ended
 
 Expense Support
  Received from IIG
 
 Expense Support Reimbursed to IIG
 
 Unreimbursed Expense Support
 
 Ratio of Operating Expense to Average Net
  Assets for the Period(1)
 
 Annualized Distribution Rate for the
  Period(3)
 
 
 Eligible for Reimbursement throughDecember 31,
  2012
 
 $
 116,706
 
 $
 -
 
 $
 116,706
 
 0.93%
 
 0.00%
 (2)
 
 December 31, 2015March 31, 2013
 
 
 819,373
 
 
 -
 
 
 819,373
 
 2.75%
 
 7.00%
 
 
 March 31, 2016June 30, 2013
 
 
 1,147,536
 
 
 -
 
 
 1,147,536
 
 1.43%
 
 7.00%
 
 
 June 30, 2016Total
 
 $
 2,083,615
 
 $
 -
 
 $
 2,083,615(1)
 Operating
  expenses include all expenses borne by us, except for organizational and
  offering expenses, base management fees, incentive fees, administrative
  services expenses and other general and administrative expenses owed to CIM
  and its affiliates and interest expense.(2)
 We did not
  declare any distributions during the three months ended December 31, 2012.(3)
 Annualized
  Distribution Rate equals the annualized rate of distributions paid to
  shareholders based on the amount of the regular cash distribution paid
  immediately prior to the date the expense support payment obligation was
  incurred by CIM. Annualized Distribution Rate does not include special cash
  or stock distributions paid to shareholders.
 Reimbursement of such costs will be determined as
appropriate to meet the objectives of the expense support and conditional
reimbursement agreement. As a result, we may or may not be requested to
reimburse any such costs funded by IIG.  We or IIG may terminate the expense support and
conditional reimbursement agreement at any time. IIG has indicated that it
expects to continue such reimbursements until it deems that we have achieved
economies of scale sufficient to ensure that we bear a reasonable level of
expenses in relation to our income. If we terminate the investment advisory
agreement with CIM, we may be required to repay IIG all 37


---



reimbursements
funded by IIG within three years of the date of termination. The specific
amount of expenses reimbursed by IIG, if any, will be determined at the end of
each quarter. There can be no assurance that the expense support and
conditional reimbursement agreement will remain in effect or that IIG will
reimburse any portion of our expenses in future quarters.  The investment advisory agreement, the investment
sub-advisory agreement, the administration agreement and the dealer manager
agreement each provide certain indemnifications from us to the other relevant
parties to such agreements.  Our maximum exposure under these agreements is
unknown. However, we have not experienced claims or losses pursuant to these
agreements and believe the risk of loss related to such indemnifications to be
remote.  If any of our contractual obligations discussed above
are terminated, our costs may increase under any new agreements that we enter
into as replacements. We would also likely incur expenses in locating
alternative parties to provide the services that we expect to receive pursuant
to our investment advisory agreement, the investment sub-advisory agreement,
the administration agreement and the dealer-manager agreement. Any new
investment advisory agreement would also be subject to approval by our
shareholders.  Contractual Obligations  In 2012, we entered into an unsecured financing
arrangement with Flatiron Capital, an unaffiliated third party, for directors
and officers insurance in an amount of approximately $179,000. Payments under
the financing arrangement were due in 10 equal installments, with final payment
made on April 19, 2013.  Commitments and
Contingencies and Off-Balance Sheet Arrangements  Commitments and
Contingencies  We have entered into certain contracts with other
parties that contain a variety of indemnifications. Our maximum exposure under
these arrangements is unknown. However, we have not experienced claims or
losses pursuant to these contracts and believe the risk of loss related to such
indemnifications to be remote.  Off-Balance Sheet
Arrangements  As
of June 30, 2013, we did not have any off-balance sheet arrangements. 38


---



Item
3.    Quantitative and Qualitative
Disclosures about Market Risk  We are subject to financial market risks, including
changes in interest rates. As of June 30, 2013, 100% of our portfolio
investments and underlying loans subject to the TRS paid variable interest
rates, except for our short term investments, which are invested in U.S.
Treasury securities and repurchase agreements and have fixed rates. A rise in
the general level of interest rates can be expected to lead to higher interest
rates applicable to our debt investments, especially to the extent that we hold
variable rate investments, and to declines in the value of any fixed rate
investments we may hold. To the extent that a majority of our investments may
be in variable rate investments, an increase in interest rates could make it
easier for us to meet or exceed our incentive fee preferred return, as defined
in our investment advisory agreement, and may result in a substantial increase
in our net investment income, and also to the amount of incentive fees payable
to CIM with respect to our pre-incentive fee net investment income.  Under the terms of the TRS with Citibank, we pay fees
to Citibank at a floating rate based on LIBOR (and some cases prime rate) in
exchange for the right to receive the economic benefit of a pool of loans. In
addition, in the future we may seek to borrow funds in order to make additional
investments. Our net investment income will depend, in part, upon the
difference between the rate at which we borrow funds and the rate at which we
invest those funds. As a result, we would be subject to risks relating to
changes in market interest rates. In periods of rising interest rates when we
have debt outstanding, our cost of funds would increase, which could reduce our
net investment income, especially to the extent we hold fixed rate investments.
We expect that our long-term investments will be financed primarily with equity
and long-term debt. Our interest rate risk management techniques may include
various interest rate hedging activities to the extent permitted by the 1940
Act. Adverse developments resulting from changes in interest rates could have a
materially adverse effect on our business, financial condition and results of
operations.  The following table shows the effect over a twelve
month period of changes in interest rates on our net interest income, excluding
short term investments, assuming no changes in our investment portfolio and TRS
Agreement in effect as of June 30, 2013: LIBOR Basis
  Point Change
 
 Increase (Decrease) in Net Interest
  Income(1)
 
 Percentage Change in Net Interest IncomeDown 28 basis
  points
 
 $
 104,910
 3.1%Current LIBOR
 
 
 -
 0.0%Up 100 basis
  points
 
 
 (316,407)
 (9.3%)Up 200 basis
  points
 
 
 (104,033)
 (3.1%)Up 300 basis
  points
 
 
 108,341
 3.2%(1)
 Includes the net
  effect of the change in interest rates on the unrealized appreciation
  (depreciation) on the TRS. Pursuant to the TRS, we receive from Citibank all
  interest payable in respect of the loans subject to the TRS and pay to
  Citibank interest at a rate equal to the floating rate index specified for
  each loan (typically LIBOR of varying maturities) plus 1.25% per year on the
  full notional amount of the loans subject to the TRS. As of June 30, 2013,
  all of the loans subject to the TRS paid variable interest rates. This table
  assumes no change in defaults or prepayments by portfolio companies over the
  next twelve months.
 In addition, we may have risk regarding portfolio
valuation. See Note 2 to our consolidated financial statements included in this
Quarterly Report on Form 10-Q.  Item 4.    Controls and Procedures  Evaluation of disclosure
controls and procedures  In connection with the preparation of this Quarterly
Report on Form 10-Q for the three months ended June 30, 2013, we carried out an
evaluation, under the supervision and with the participation of our management,
including our Co-Chief Executive Officers and our Chief Financial Officer, of
the effectiveness of the design and operation of our disclosure controls and
procedures as of the end of the period covered by this report pursuant to Rule
13a-15(b) and Rule 15d-15(b) of the Securities Exchange Act of 1934, as
amended. Based on the foregoing evaluation, the Co-Chief Executive Officers and
the Chief Financial Officer concluded that our disclosure controls and
procedures were effective.  In designing and evaluating our disclosure controls and
procedures, we recognized that disclosure controls and procedures, no matter
how well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the disclosure controls and procedures are
met. Our disclosure controls and procedures have been designed to meet
reasonable assurance standards. Disclosure controls and procedures cannot
detect or prevent all error and fraud. Some inherent limitations in disclosure
controls and procedures include costs of implementation, faulty
decision-making, simple error and mistake. Additionally, controls can be
circumvented by the individual acts of some persons, by collusion of two or
more people, or by management override of the controls. The design of any
system of controls is based, in part, upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all anticipated and unanticipated
future conditions. Over time, controls may become inadequate because of changes
in conditions, or the degree of compliance with established policies or
procedures.  Evaluation of internal
control over financial reporting  There have been no changes in our internal control over
financial reporting during the three months ended June 30, 2013 that have
materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting. 39


---



PART II
- OTHER INFORMATION  Item 1. Legal Proceedings  We are not currently subject to any material legal
proceedings, nor, to our knowledge, is any material legal proceeding threatened
against us. From time to time, we may be party to certain legal proceedings in
the ordinary course of business, including proceedings relating to the
enforcement of our rights under contracts with our portfolio companies and
other third parties. While the outcome of these legal proceedings cannot be
predicted with certainty, we do not expect that any such proceedings will have
a material effect upon our financial condition or results of operations.  Item 1A. Risk Factors  There
have been no material changes from the risk factors disclosed in “Item 1A. Risk
Factors” of our Annual Report on Form 10-K for the year ended December 31,
2012.  Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds  Our registration statement on Form N-2, as
amended, was declared effective by the SEC on July 2, 2012 (SEC File No.
333-178646). Our offering period commenced on July 2, 2012.  We did not engage in any unregistered sales
of equity securities during the three months ended June 30, 2013.  Item 3. Defaults Upon Senior Securities  Not
applicable.  Item 4. Mine Safety Disclosures  Not
applicable.  Item 5. Other Information  Not
applicable.  40


---



Item 6. Exhibits  Exhibit
  Number
 
 Description of Document3.1
 
 Articles of Amendment and Restatement of the Articles of
  Incorporation of CĪON Investment Corporation (Incorporated by reference
  to Exhibit (A)(2) to Pre-Effective Amendment No. 4 to Registrant’s
  Registration Statement on Form N-2 filed with the SEC on June 29, 2012 (File
  No. 333-178646)).3.2
 
 Second Articles of Amendment and Restatement of the Articles of
  Incorporation of CĪON Investment Corporation (Incorporated by reference
  to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed with the SEC
  on August 27, 2012 (File No. 814-00941)).3.3
 
 Bylaws of CĪON Investment Corporation (Incorporated by
  reference to Exhibit (B) to Pre-Effective Amendment No. 4 to Registrant’s
  Registration Statement on Form N-2 filed with the SEC on June 29, 2012 (File
  No. 333-178646)).4.1
 
 Form of Subscription Agreement (Incorporated by reference to the
  Form of Subscription Agreement included in Registrant’s  Prospectus
  Supplement No. 2 filed with the SEC on July 19, 2013 (File No. 333-178646)).4.2
 
 Distribution Reinvestment Plan (Incorporated by reference to
  Exhibit (E) to Pre-Effective Amendment No. 1 to the Registrant’s Registration
  Statement on Form N-2 filed with the SEC on February 17, 2012 (File No.
  333-178646)).10.1
 
 Investment Advisory Agreement Between CĪON Investment
  Corporation and CĪON Investment Management, LLC (Incorporated by
  reference to Exhibit (G)(1) to Pre-Effective Amendment No. 4 to Registrant’s
  Registration Statement on Form N-2 filed with the SEC on June 29, 2012 (File
  No. 333-178646)).10.2
 
 Investment Sub-Advisory Agreement by and among CĪON
  Investment Management, LLC, CĪON Investment Corporation and Apollo
  Investment Management, L.P. (Incorporated by reference to Exhibit (G)(2) to
  Pre-Effective Amendment No. 4 to Registrant’s Registration Statement on Form
  N-2 filed with the SEC on June 29, 2012 (File No. 333-178646)).10.3
 
 Administration Agreement by and between CĪON Investment
  Corporation and ICON Capital Corp. (Incorporated by reference to Exhibit
  (K)(2) to Pre-Effective Amendment No. 4 to Registrant’s Registration
  Statement on Form N-2 filed with the SEC on June 29, 2012 (File No.
  333-178646)).10.4
 
 Custody Agreement by and between CĪON Investment
  Corporation and U.S. Bank National Association (Incorporated by reference to
  Exhibit (J) to Pre-Effective Amendment No. 4 to Registrant’s Registration
  Statement on Form N-2 filed with the SEC on June 29, 2012 (File No.
  333-178646)).10.5
 
 Escrow Agreement by and among CĪON Investment Corporation,
  UMB Bank, N.A., and ICON Securities Corp. (Incorporated by reference to
  Exhibit (K)(1) to Pre-Effective Amendment No. 4 to Registrant’s Registration
  Statement on Form N-2 filed with the SEC on June 29, 2012 (File No.
  333-178646)).10.6
 
 Dealer Manager Agreement by and among CĪON Investment
  Corporation, CĪON Investment Management, LLC, and ICON Securities Corp.
  (Incorporated by reference to Exhibit (H)(1) to Pre-Effective Amendment No. 4
  to Registrant’s Registration Statement on Form N-2 filed with the SEC on June
  29, 2012 (File No. 333-178646)).10.7
 
 ISDA 2002 Master Agreement, together with the Schedule thereto
  and Credit Support Annex to such Schedule, each dated as of December 17,
  2012, by and between Flatiron Funding, LLC and Citibank, N.A. (Incorporated
  by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K
  filed with the SEC on December 19, 2012).10.8
 
 Confirmation Letter Agreement, dated as of December 17, 2012, by
  and between Flatiron Funding, LLC and Citibank, N.A. (Incorporated by
  reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K
  filed with the SEC on December 19, 2012).10.9
 
 Expense Support and Conditional Reimbursement Agreement dated as
  of January 30, 2013, by and between C?ON Investment Corporation and ICON
  Investment Group, LLC (Incorporated by reference to Exhibit (K)(5) to
  Post-Effective Amendment No.1 to Registrant’s Registration Statement on Form
  N-2 filed with the SEC on January 31, 2013 (File No. 333-178646)).31.1
 
 Rule 13a-14(a)/15d-14(a) Certification of Co-Chief Executive
  Officer.31.2
 
 Rule 13a-14(a)/15d-14(a) Certification of Co-Chief Executive
  Officer.31.3
 
 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial
  Officer.
 41


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Exhibit
  Number
 
 Description of Document32.1
 
 Certification of Co-Chief Executive Officer pursuant to 18
  U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.32.2
 
 Certification of Co-Chief Executive Officer pursuant to 18
  U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.32.3
 
 Certification of Chief Financial Officer pursuant to 18 U.S.C.
  §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 42


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SIGNATURES  Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.   Date:
  August 13, 2013CĪON
  Investment Corporation
  (Registrant)By
 /s/
  Michael A. ReisnerMichael
  A. ReisnerCo-Chief
  Executive Officer and Co-President
  (Principal
  Executive Officer)By
 /s/
  Mark GattoMark
  GattoCo-Chief
  Executive Officer and Co-President
  (Principal
  Executive Officer)By
 /s/
  Keith S. FranzKeith
  S. FranzChief
  Financial Officer
  (Principal
  Financial and Accounting Officer)
  43


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